Multiple employer 403(b) plans

(a)

In general

Section 403(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(15)

Multiple employer plans

(A)

In general

Except in the case of a church plan, this subsection shall not be treated as failing to apply to an annuity contract solely by reason of such contract being purchased under a plan maintained by more than 1 employer.(B)

Treatment of employers failing to meet requirements of plan

(i)

In general

In the case of a plan maintained by more than 1 employer, this subsection shall not be treated as failing to apply to an annuity contract held under such plan merely because of 1 or more employers failing to meet the requirements of this subsection, if such plan satisfies rules similar to the rules of section 413(e)(2) with respect to any such employer failure.(ii)

Additional requirements in case of non-governmental plans

A plan shall not be treated as meeting the requirements of this subsection unless the plan meets the requirements of subparagraph (A) or (B) of section 413(e)(1), except in the case of a multiple employer plan maintained solely by a State, a political subdivision of a State, or an agency or instrumentality thereof.

(b)

Annual registration for 403(b) multiple employer plan

Section 6057 of the Internal Revenue Code of 1986 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

(g)

403(b) multiple employer plans treated as 1 plan

In the case of annuity contracts to which this section applies and to which section 403(b) applies by reason of the plan under which such contracts are purchased meeting the requirements of paragraph (15) thereof, such plan shall be treated as a single plan for purposes of this section.

(c)

Annual information returns for 403(b) multiple employer plan

Section 6058 of the Internal Revenue Code of 1986 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

(f)

403(b) multiple employer plans treated as 1 plan

(d)

Amendments to Employee Retirement Income Security Act of 1974

(1)

Treated as pooled employer plan

(A)

In general

Section 3(43)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(43)(A)) is amended—(i)in clause (ii), by striking section 501(a) of such Code or and inserting 501(a) of such Code, a plan that consists of contracts described in section 403(b) of such Code, or; and(ii)in the flush text at the end, by striking the plan. and inserting the plan, but such term shall include any program (other than a governmental plan) maintained for the benefit of the employees of more than 1 employer that consists of contracts described in section 403(b) of such Code and that meets the requirements of subparagraph (A) or (B) of section 413(e)(1) of such Code.. (B)

Conforming amendments

Paragraphs (43)(B)(v)(II) and (44)(A)(i)(I) of section 3 of such Act (29 U.S.C. 1002) are each amended by striking section 401(a) of such Code or and inserting 401(a) of such Code, a plan that consists of contracts described in section 403(b) of such Code, or.(2)

Fiduciaries

Section 3(43)(B)(ii) of such Act (29 U.S.C. 1002(43)(B)(ii)) is amended—(A)by striking trustees meeting the requirements of section 408(a)(2) of the Internal Revenue Code of 1986 and inserting trustees (or other fiduciaries in the case of a plan that consists of contracts described in section 403(b) of the Internal Revenue Code of 1986) meeting the requirements of section 408(a)(2) of such Code; and(B)by striking holding and inserting holding (or causing to be held under the terms of a plan consisting of such contracts).(e)

Regulations

(1)

Plan termination

The Secretary of the Treasury (or the Secretary’s designee) shall prescribe such regulations as may be necessary to clarify the treatment of a plan termination by an employer in the case of plans to which section 403(b)(15) of the Internal Revenue Code of 1986 applies.(2)

Educational outreach to employers exempt from tax

The Secretary of the Treasury (or the Secretary's designee), in consultation with the Secretary of Labor, shall provide education and outreach to increase awareness among employers which are exempt from tax under section 501(a) of such Code that—(A)multiple employer plans are subject to the Employee Retirement Income Security Act of 1974, and(B)each employer is a plan sponsor with respect to its employees participating in the multiple employer plan and, as such, has certain fiduciary duties with respect to the plan and to its employees.(f)

Modification of model plan language

(1)

Plan notifications

The Secretary of the Treasury (or the Secretary’s designee) shall modify the model plan language published under section 413(e)(5) of the Internal Revenue Code of 1986 to include language which notifies participating employers which are exempt from tax under section 501(a) of such Code that the plan is subject to the Employee Retirement Income Security Act of 1974 and that such employer is a plan sponsor with respect to its employees participating in the multiple employer plan and, as such, has certain fiduciary duties with respect to the plan and to its employees.(2)

Model plans for multiple employer 403(b) non-governmental plans

For plans to which section 403(b)(15)(A) of the Internal Revenue Code of 1986 applies (other than a plan maintained for its employees by a State, a political subdivision of a State, or an agency or instrumentality thereof) the Secretary shall publish model plan language similar to model plan language published under section 413(e)(5) of such Code.(g)

No inference with respect to church plans

Regarding any application of section 403(b) of the Internal Revenue Code of 1986 to an annuity contract purchased under a church plan (as defined in section 414(e) of such Code) maintained by more than 1 employer, or to any application of rules similar to section 413(e) of such Code to such a plan, no inference shall be drawn solely because section 403(b)(15)(A) of such Code (as added by this Act) does not apply to such plans.(h)

Effective date

(1)

In general

The amendments made by this section shall apply to plan years beginning after December 31, 2022.(2)

Rule of construction

Nothing in the amendments made by subsection (a) shall be construed as limiting the authority of the Secretary of the Treasury or the Secretary’s delegate (determined without regard to such amendment) to provide for the proper treatment of a failure to meet any requirement applicable under the Internal Revenue Code of 1986 with respect to one employer (and its employees) in the case of a plan to which section 403(b)(15) applies.

Safe harbor for corrections of employee elective deferral failures

(a)

In general

Section 414 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(aa)

Correcting automatic contribution errors

(1)

In general

Any plan or arrangement shall not fail to be treated as a plan described in section 401(a), 403(b), 408, or 457(b), as applicable, solely by reason of a corrected error.(2)

Corrected error

For purposes of this subsection, the term corrected error means a reasonable administrative error in implementing an automatic enrollment or automatic escalation feature in accordance with the terms of an eligible automatic contribution arrangement (as defined under subsection (w)(3)), provided that such implementation error—(A)is corrected by the date which is 9½ months after the end of the plan year during which the failure occurred,(B)is corrected in a manner which is favorable to the participant, and(C)is of a type which is so corrected for all similarly situated participants in a nondiscriminatory manner.

Such correction may occur before or after the participant has terminated employment and may occur without regard to whether the error is identified by the Secretary.

(3)

Regulations and guidance for favorable correction methods

The Secretary shall, by regulations or other guidance of general applicability, specify the correction methods which are in a manner favorable to the participant for purposes of paragraph (2)(B).

(b)

Effective date

The amendment made by this section shall apply to the correction of any error with respect to which the date described in section 414(aa)(2)(A) of the Internal Revenue Code of 1986 (as added by this section) is after the date of enactment of this Act.