[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9252 Introduced in House (IH)]
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117th CONGRESS
2d Session
H. R. 9252
To amend the Internal Revenue Code of 1986 to provide incentives for
the use of automatic portability arrangements under defined
contribution plans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 28, 2022
Mr. Schneider (for himself and Mr. Estes) introduced the following
bill; which was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide incentives for
the use of automatic portability arrangements under defined
contribution plans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Advancing Auto-Portability Act of
2022''.
SEC. 2. FINDINGS.
Congress finds as follows:
(1) Up to $105,000,000,000 of retirement savings leaves the
defined contribution pension plan system annually because
employees cash out their savings after a job change.
(2) Federal law should encourage the private sector to
reduce such cash-outs by developing automated solutions to
improve defined contribution plan portability.
SEC. 3. PROHIBITED TRANSACTION EXEMPTION.
(a) In General.--Section 4975(d) of the Internal Revenue Code of
1986 is amended--
(1) by striking ``or'' at the end of paragraph (22)(I),
(2) by striking the period at the end of paragraph (23) and
inserting ``, or'', and
(3) by adding at the end the following new paragraph:
``(24) any transaction described in subparagraph (D) or (E)
of subsection (c)(1) which consists of the receipt of fees by
an automatic portability provider in connection with such
provider's exercise of discretion with respect to an automatic
portability transaction.''.
(b) Definitions.--Section 4975(f) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(12) Rules relating to automatic portability
transactions.--
``(A) In general.--For purposes of subsection
(d)(24)--
``(i) Automatic portability transaction.--
An automatic portability transaction is a
transfer of assets made--
``(I) from an individual retirement
plan which is established on behalf of
an individual and to which amounts were
transferred under section
401(a)(31)(B)(i),
``(II) to an employer-sponsored
retirement plan described in clause
(iii), (iv), (v), or (vi) of section
402(c)(8)(B) (other than a defined
benefit plan) in which such individual
is an active participant, and
``(III) after such individual has
been given advance notice of the
transfer and has not affirmatively
opted out of such transfer.
``(ii) Automatic portability provider.--An
automatic portability provider is a person that
executes transfers described in clause (i).
``(B) Conditions for automatic portability
transactions.--Subsection (d)(24) shall not apply to an
automatic portability transaction unless the following
requirements are satisfied:
``(i) Acknowledgment of fiduciary status.--
An automatic portability provider shall
acknowledge in writing, at such time and format
as specified by the Secretary, that the
provider is a fiduciary with respect to the
individual on whose behalf the individual
retirement plan described in subparagraph
(A)(i)(I) is established.
``(ii) Fees.--The fees and compensation
received by the automatic portability provider
in connection with the automatic portability
transaction shall not exceed reasonable
compensation and must be approved in writing by
the plan fiduciary for the plan described in
subparagraph (A)(i)(II).
``(iii) Data usage.--The automatic
portability provider shall not market or sell
data relating to the individual retirement plan
described in subparagraph (A)(i)(I).
``(iv) Open participation.--The automatic
portability provider shall offer automatic
portability transactions on the same terms to
any plan described in subparagraph (A)(i)(II)
regardless of whether the provider provides
other services for such plan.
``(v) Pre-transaction notice.--At least 30
days in advance of an automatic portability
transaction, the automatic portability provider
shall provide notice to the individual on whose
behalf the individual retirement plan described
in subparagraph (A)(i)(I) is established which
includes--
``(I) a description of the
automatic portability transaction and
the fees which will be charged in
connection with the transaction,
``(II) a description of the
individual's right to affirmatively
elect not to participate in the
transaction, the procedures for such an
election, and a telephone number at
which the individual can contact the
automatic portability provider, and
``(III) such other disclosures as
the Secretary may require by
regulation.
``(vi) Post-transaction notice.--Not later
than 3 business days after an automatic
portability transaction, the automatic
portability provider shall provide notice to
the individual on whose behalf the individual
retirement plan described in subparagraph
(A)(i)(I) is established of--
``(I) the actions taken by the
automatic portability provider with
respect to the individual's account,
``(II) all relevant information
regarding the location and amount of
any transferred assets,
``(III) a statement of fees charged
against the account by the automatic
portability provider or its affiliates
in connection with the transfer,
``(IV) a telephone number at which
the individual can contact the
automatic portability provider, and
``(V) such other disclosures as the
Secretary may require by regulation.
``(vii) Notice requirements.--The notices
required under clauses (v) and (vi) shall be
written in a manner calculated to be understood
by the average intended recipient and shall not
include materially misleading statements.
``(viii) Timeliness of execution.--After
liquidating the assets of an individual
retirement plan described in subparagraph
(A)(i)(I) to cash, an automatic portability
provider shall transfer the account balance of
such plan as soon as practicable to the plan
described in subparagraph (A)(i)(II).
``(ix) Record retention and audits.--
``(I) In general.--An automatic
portability provider shall, for 6
years, maintain the records sufficient
to demonstrate the terms of this
subparagraph have been met.
``(II) Audits.--An automatic
portability provider shall conduct an
annual audit of automatic portability
transactions occurring during the
calendar year to demonstrate compliance
with this subparagraph, and shall
submit such audit annually to the
Secretary, in such form and manner as
specified by the Secretary.''.
(c) Effective Date.--The amendments made by this section shall
apply to transactions occurring after December 31, 2023.
SEC. 4. EMPLOYER AUTOMATIC PORTABILITY ARRANGEMENT TAX CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45U. EMPLOYER AUTOMATIC PORTABILITY ARRANGEMENT CREDIT.
``(a) In General.--For purposes of section 38, in the case of an
eligible employer, the automatic portability arrangement credit
determined under this section for the adoption year is an amount equal
to $500.
``(b) Eligible Employer.--For purposes of this section, the term
`eligible employer' has the meaning given the term by section
408(p)(2)(C)(i) (without regard to subclause (II) thereof).
``(c) Adoption Year.--For purposes of this section--
``(1) In general.--The term `adoption year' means the
taxable year during which the eligible employer adopts an
automatic portability arrangement as part of an eligible plan
maintained by the employer.
``(2) Automatic portability arrangement.--
``(A) In general.--The term `automatic portability
arrangement' means an arrangement providing for
automatic portability transactions.
``(B) Automatic portability transaction.--The term
`automatic portability transaction' means a transaction
in which amounts distributed pursuant to section
401(a)(31)(B)(i) from a plan to an individual
retirement plan established on behalf of an individual
are subsequently transferred to an eligible plan in
which such individual is an active participant, after
such individual has been given advance notice of the
transfer and has not affirmatively opted out of such
transfer.
``(3) Eligible plan.--The term `eligible plan' means a
qualified employer plan as defined in section 4972(d)(1), other
than a defined benefit plan.''.
(b) Credit To Be Part of General Business Credit.--Subsection (b)
of section 38 of the Internal Revenue Code of 1986 is amended by
striking ``plus'' at the end of paragraph (32), by striking the period
at the end of paragraph (33) and inserting ``, plus'', and by adding at
the end the following new paragraph:
``(34) in the case of an eligible employer (as defined in
section 45U(b)), the automatic portability arrangement credit
determined under section 45U(a).''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 45U. Employer automatic portability arrangement credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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