[Congressional Record Volume 144, Number 86 (Friday, June 26, 1998)]
[Senate]
[Pages S7264-S7280]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. DASCHLE (for himself, Mrs. Boxer, Mr. Kennedy, Mr. 
        Bingaman, Ms. Moseley-Braun, Mr. Rockefeller, Ms. Mikulski, Mr. 
        Reid, Mr. Durbin, Mr. Inouye, and Mr. Torricelli):
  S. 2249. A bill to provide retirement security for all Americans; to 
the Committee on Finance.


     Retirement Accessibility, Security and Portability Act of 1998

  Mr. DASCHLE. Mr. President, today, Democrats are offering identical 
bills in the House and the Senate--the ``Retirement Accessibility, 
Security and Portability Act of 1998''--to make the prospect of 
retirement less frightening for millions of American workers. Right 
now, just under half of all American workers have pension plans, and 
the number is far worse for women and low- and moderate-income workers.
  Our plan would increase the number of Americans with pensions by 
making it easier and cheaper for small businesses to set up pension 
funds. It would create a new system to help workers who have no pension 
coverage to build their own retirement savings through direct 
contributions from their paychecks into an IRA.
  Our plan would make it easier for workers to take their pensions with 
them from one job to the next. This is incredibly important in an 
economy where the average worker will change careers an average of 7 
times.
  Our plan would increase pension security to ensure retirees will 
actually have a pension when they leave the work force. And, it would 
help close the huge pension gap that now exists between men and women 
and that leaves far too many older women who are widowed or divorced 
living in near-poverty.
  Mr. President, I talk frequently to people all the time who are 
worried they won't be able to afford the ``luxury'' of retirement. I 
say, we can't afford the luxury of ignoring the coming retirement 
crisis. Retirement shouldn't mean an economic freefall. And it doesn't 
have to.
  The first of the baby boomers turns 50 this year. We still have time 
to make the changes that will allow us to enjoy a secure retirement. 
But it will take change from individuals, employers and from the 
government.
  That's what this bill provides.
  This bill would expand pension coverage and access to more Americans 
by establishing an easy-to-administer defined benefit plan option for 
small businesses known as the SMART Plan; providing a maximum credit of 
$1,000 to help small business cover the cost of setting up new pension 
plans; and modifying new rules for the ``SIMPLE'' and 401(k) plans to 
encourage the provision of pensions to low-to-moderate income 
employees.
  This bill would encourage pension portability by requiring faster 
vesting of employers' matching contributions under defined contribution 
plans, including 401(k) plans, so that employees would have rights to 
the contributions after the least 3 years of employment; allowing 
rollovers between 401(k) and similar plans set up by non-profit 
organizations, including 403(b) plans; and allowing participants in 
plans set up by state and local governments to roll over their account 
balances to IRAs.

  This bill would protect and strengthen pensions by establishing 
greater safeguards to prevent corporations from raiding their 
employees' pension plans; creating stricter requirements for audits of 
plan assets and how companies are investing these assets; prohibiting 
employers from making credit card loans against pension assets; and 
providing pension plan participants with regular and informative 
benefit statements so they can monitor the activity and value of their 
pension assets.
  In addition, this bill would reduce the wide gap in pension coverage 
between men and women, as well as provide greater protections for older 
women by creating new safeguards to ensure that pension benefits are 
not overlooked when a couple divides assets upon divorce; a new option 
for federal workers to provide a greater benefit for women who outlive 
their husbands; protections for low-income women against the loss of 
their Social Security benefits; a new women's pension information 
hotline; and a requirement that additional hours taken under the Family 
and Medical leave Act are credited to one's pension plan for purposes 
of participation and vesting in their plan benefits.
  In 1994, President Clinton signed a bill protecting the pensions of 
more than 40 million American workers and retirees against risky 
investments and corporate raids. In 1996, he signed additional 
legislation cutting red tape and start-up costs for pension plans, so 
more small businesses could create retirement plans for their workers.
  Before 1998 is over, we intend to give the President another 
retirement security bill to sign.
  This Congress has done precious little so far to address the concerns 
of America's working families. passing this bill--increasing Americans' 
retirement security--would do a lot to fill that void. We urge our 
Republican colleagues to join us in passing it.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2249

       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 ``Retirement Accessibility, 
     Security and Portability Act of 1998''.

     SEC. 2. TABLE OF CONTENTS.

       The table of contents for this Act is as follows:

Sec. 1. Short title.
Sec. 2. Table of contents.

                  TITLE I--PENSION ACCESS AND COVERAGE

Sec. 100. Amendment of 1986 Code.

      Subtitle A--Improved Access to Individual Retirement Savings

Sec. 101. Credit for pension plan startup costs of small employers.
Sec. 102. Exclusion for payroll deduction contributions to IRAs.
Sec. 103. Nonrefundable tax credit for contributions to individual 
              retirement plans.
Sec. 104. Distributions from certain plans may be used without penalty 
              during periods of unemployment.

     Subtitle B--Secure Money Annuity or Retirement (SMART) Trusts

Sec. 111. Secure money annuity or retirement (SMART) trusts.

       Subtitle C--Improved Fairness in Retirement Plan Benefits

Sec. 121. Amendments to SIMPLE retirement accounts.
Sec. 122. Nondiscrimination rules for qualified cash or deferred 
              arrangements and matching contributions.
Sec. 123. Definition of highly compensated employees.
Sec. 124. Treatment of multiemployer plans under section 415.
Sec. 125. Exemption of mirror plans from section 457 limits.
Sec. 126. Immediate participation in the thrift savings plan for 
              Federal employees.
Sec. 127. Full funding limitation for multiemployer plans.
Sec. 128. Elimination of partial termination rules for multiemployer 
              plans.
Sec. 129. Repeal of 150 percent of current liability funding limit.

                           TITLE II--SECURITY

Sec. 200. Amendment of ERISA.

                     Subtitle A--General Provisions

Sec. 201. Periodic pension benefits statements.
Sec. 202. Requirement of annual, detailed investment reports applied to 
              certain 401(k) plans.
Sec. 203. Information required to be provided to investment managers of 
              401(k) plans.

[[Page S7265]]

Sec. 204. Study on investments in collectibles.
Sec. 205. Qualified employer plans prohibited from making loans through 
              credit cards and other intermediaries.
Sec. 206. Multiemployer plan benefits guaranteed.
Sec. 207. Prohibited transactions.
Sec. 208. Substantial owner benefits.
Sec. 209. Reversion report.

                     Subtitle B--ERISA Enforcement

Sec. 211. Civil penalties for breach of fiduciary responsibilities made 
              discretionary, etc.
Sec. 212. Reporting and enforcement requirements for employee benefit 
              plans.
Sec. 213. Additional requirements for qualified public accountants.
Sec. 214. Inspector General study.

       Subtitle C--Increase in Excise Tax on Employer Reversions

Sec. 221. Increase in excise tax.

                         TITLE III--PORTABILITY

Sec. 301. Faster vesting of employer matching contributions.
Sec. 302. Rationalization of the restrictions on distributions from 
              401(k) plans.
Sec. 303. Treatment of transfers between defined contribution plans.
Sec. 304. Missing participants.
Sec. 305. Allowance of rollovers from and to 403(b) plans.
Sec. 306. Rollover contributions from deferred compensation plans of 
              State and local governments.
Sec. 307. Extension of 60-day rollover period in the case of 
              Presidentially declared disasters and service in combat 
              zone.
Sec. 308. Purchase of service credit in governmental defined benefit 
              plans.

           TITLE IV--COMPREHENSIVE WOMEN'S PENSION PROTECTION

                       Subtitle A--Pension Reform

Sec. 401. Pension right to know proposals.
Sec. 402. Women's pension toll-free phone number.
Sec. 403. Modification of government pension offset.
Sec. 404. Family leave provisions.
Sec. 405. Pension integration rules.
Sec. 406. Division of pension benefits upon divorce.
Sec. 407. Entitlement of divorced spouses to railroad retirement 
              annuities independent of actual entitlement of employee.
Sec. 408. Effective dates.

Subtitle B--Protection of Rights of Former Spouses to Pension Benefits 
 Under Certain Government and Government-Sponsored Retirement Programs

Sec. 411. Extension of tier II railroad retirement benefits to 
              surviving former spouses pursuant to divorce agreements.
Sec. 412. Survivor annuities for widows, widowers, and former spouses 
              of Federal employees who die before attaining age for 
              deferred annuity under civil service retirement system.
Sec. 413. Payment of lump-sum benefits to former spouses of Federal 
              employees.

  Subtitle C--Modifications of Joint and Survivor Annuity Requirements

Sec. 421. Modifications of joint and survivor annuity requirements.
Sec. 422. Spousal consent required for distributions from defined 
              contribution plans.

             TITLE V--DATE FOR ADOPTION OF PLAN AMENDMENTS

Sec. 501. Date for adoption of plan amendments.

                  TITLE I--PENSION ACCESS AND COVERAGE

     SEC. 100. AMENDMENT OF 1986 CODE.

       Except as otherwise expressly provided, whenever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Internal Revenue Code of 1986.

      Subtitle A--Improved Access to Individual Retirement Savings

     SEC. 101. CREDIT FOR PENSION PLAN STARTUP COSTS OF SMALL 
                   EMPLOYERS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 (relating to business related credits) is amended 
     by adding at the end the following new section:

     ``SEC. 45D. SMALL EMPLOYER PENSION PLAN STARTUP COSTS.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of an eligible employer, the small employer pension plan 
     startup cost credit determined under this section for any 
     taxable year is an amount equal to 50 percent of the 
     qualified startup costs paid or incurred by the taxpayer 
     during the taxable year.
       ``(b) Dollar Limitation.--The amount of the credit 
     determined under this section for any taxable year shall not 
     exceed--
       ``(1) $1,000 for the first credit year,
       ``(2) $500 for each of the 2 taxable years immediately 
     following the first credit year, and
       ``(3) zero for any other taxable year.
       ``(c) Eligible Employer.--For purposes of this section--
       ``(1) In general.--The term `eligible employer' has the 
     meaning given such term by section 408(p)(2)(C)(i).
       ``(2) Employers maintaining qualified plans during 1997 not 
     eligible.--Such term shall not include an employer if such 
     employer (or any predecessor employer) maintained a qualified 
     plan (as defined in section 408(p)(2)(D)(ii)) with respect to 
     which contributions were made, or benefits were accrued, for 
     service in 1997. If only individuals other than employees 
     described in subparagraph (A) or (B) of section 410(b)(3) are 
     eligible to participate in the qualified employer plan 
     referred to in subsection (d)(1), then the preceding sentence 
     shall be applied without regard to any qualified plan in 
     which only employees so described are eligible to 
     participate.
       ``(d) Other Definitions.--For purposes of this section--
       ``(1) Qualified startup costs.--
       ``(A) In general.--The term `qualified startup costs' means 
     any ordinary and necessary expenses of an eligible employer 
     which are paid or incurred in connection with--
       ``(i) the establishment or administration of an eligible 
     employer plan, or
       ``(ii) the retirement-related education of employees with 
     respect to such plan.
       ``(B) Plan must have at least 2 participants.--Such term 
     shall not include any expense in connection with a plan that 
     does not have at least 2 individuals who are eligible to 
     participate.
       ``(C) Plan must be established before january 1, 2001.--
     Such term shall not include any expense in connection with a 
     plan established after December 31, 2000.
       ``(2) Eligible employer plan.--The term `eligible employer 
     plan' means a qualified employer plan within the meaning of 
     section 4972(d), or a qualified payroll deduction arrangement 
     within the meaning of section 408(q)(1) (whether or not an 
     election is made under section 408(q)(2)). A qualified 
     payroll deduction arrangement shall be treated as an eligible 
     employer plan only if all employees of the employer who--
       ``(A) have been employed for 90 days, and
       ``(B) are not described in subparagraph (A) or (C) of 
     section 410(b)(3),
     are eligible to make the election under section 408(q)(1)(A).
       ``(3) First credit year.--The term `first credit year' 
     means--
       ``(A) the taxable year which includes the date that the 
     eligible employer plan to which such costs relate becomes 
     effective, or
       ``(B) at the election of the eligible employer, the taxable 
     year preceding the taxable year referred to in subparagraph 
     (A).
       ``(e) Special Rules.--For purposes of this section--
       ``(1) Aggregation rules.--All persons treated as a single 
     employer under subsection (a) or (b) of section 52, or 
     subsection (n) or (o) of section 414, shall be treated as one 
     person. All eligible employer plans shall be treated as 1 
     eligible employer plan.
       ``(2) Disallowance of deduction.--No deduction shall be 
     allowed for that portion of the qualified startup costs paid 
     or incurred for the taxable year which is equal to the credit 
     determined under subsection (a).
       ``(3) Election not to claim credit.--This section shall not 
     apply to a taxpayer for any taxable year if such taxpayer 
     elects to have this section not apply for such taxable 
     year.''
       (b) Credit Allowed as Part of General Business Credit.--
     Section 38(b) (defining current year business credit) is 
     amended by striking ``plus'' at the end of paragraph (11), by 
     striking the period at the end of paragraph (12) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(13) in the case of an eligible employer (as defined in 
     section 45D(c)), the small employer pension plan startup cost 
     credit determined under section 45D(a).''
       (c) Conforming Amendments.--
       (1) Section 39(d) is amended by adding at the end the 
     following new paragraph:
       ``(8) No carryback of small employer pension plan startup 
     cost credit before effective date.--No portion of the unused 
     business credit for any taxable year which is attributable to 
     the small employer pension plan startup cost credit 
     determined under section 45D may be carried back to a taxable 
     year ending on or before the date of the enactment of section 
     45D.''
       (2) Subsection (c) of section 196 is amended by striking 
     ``and'' at the end of paragraph (7), by striking the period 
     at the end of paragraph (8) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(9) the small employer pension plan startup cost credit 
     determined under section 45D(a).''
       (3) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 45D. Small employer pension plan startup costs.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to costs paid or incurred in taxable years ending 
     after the date of the enactment of this Act.

     SEC. 102. EXCLUSION FOR PAYROLL DEDUCTION CONTRIBUTIONS TO 
                   IRAS.

       (a) In General.--Section 408 (relating to individual 
     retirement accounts) is amended by redesignating subsection 
     (q) as subsection (r) and by inserting after subsection (p) 
     the following new subsection:
       ``(q) qualified Payroll Deduction Arrangement for IRA 
     Contributions.--
       ``(1) In general.--For purposes of this title, the term 
     `qualified payroll deduction

[[Page S7266]]

     arrangement' means a written arrangement of an employer under 
     which--
       ``(A) an employee eligible to participate in the 
     arrangement may elect to have the employer make payments--
       ``(i) to the employee directly in cash, or
       ``(ii) as elective employer contributions to an individual 
     retirement plan (as defined in section 7701(a)(37)), other 
     than an individual retirement plan described in section 
     408(k), 408(p), or 408A(b), on behalf of the employee for the 
     taxable year in which the payments otherwise would have been 
     made to the employee directly in cash,
       ``(B) the amount which the employee may elect under 
     subparagraph (A) for any year may not exceed a total of 
     $2,000,
       ``(C) no other contributions may be made other than 
     contributions described in subparagraph (A),
       ``(D) the employee's rights to any contributions made to an 
     individual retirement plan are nonforfeitable (for this 
     purpose, rules similar to the rules of subsection (k)(4) 
     shall apply), and
       ``(E) the employer makes the elective employer 
     contributions under subparagraph (A) not later than the close 
     of the 30-day period following the last day of the month with 
     respect to which the contributions are to be made.
       ``(2) Election not to have subsection apply.--An employer 
     that maintains an arrangement otherwise described in 
     paragraph (1) may elect to have contributions treated as 
     though they were not made under such an arrangement. If an 
     employer does not make an election described in the preceding 
     sentence, an employee may elect, before any contributions are 
     made for the calendar year, to have contributions on behalf 
     of the employee treated as though they were not made under an 
     arrangement described in paragraph (1). An employer shall be 
     deemed to have made an election under this paragraph for a 
     year if the employer maintained a qualified plan with respect 
     to which contributions were made or benefits were accrued for 
     such year. For purposes of the preceding sentence, the term 
     `qualified plan' means a plan, contract, pension, or trust 
     described in subparagraph (A) or (B) of section 219(g)(5).''.
       (b) Tax Treatment of Employer Contributions Made Under a 
     Qualified Payroll Deduction Arrangement.--
       (1) Coordination with deduction under section 219.--
       (A) Section 219(b) (relating to maximum amount of 
     deduction) is amended by adding at the end the following new 
     paragraph:
       ``(5) Special rule for contributions under a qualified 
     payroll deduction arrangement.--This section shall not apply 
     with respect to any amount contributed under a qualified 
     payroll deduction arrangement described in section 408(q)(1) 
     (for which an election has not been made under section 
     408(q)(2)).''.
       (B) Section 219(g)(1) (relating to the limitation on 
     deduction for active participants) is amended to read as 
     follows:
       ``(1) In general.--If (for any part of any plan year ending 
     with or within a taxable year) an individual is an active 
     participant, each of the dollar limitations contained in 
     subsections (b)(1)(A) and (c)(1)(A) for such taxable year 
     shall be reduced (but not below zero) by the sum of--
       ``(A) the amount determined under paragraph (2), and
       ``(B) the amount contributed for the taxable year under a 
     qualified payroll deduction arrangement described in section 
     408(q)(1) (for which an election has not been made under 
     section 408(q)(2)).''.
       (2) Deductibility of employer contributions.--Section 404 
     (relating to deductions for contributions of an employer to 
     pension, etc., plans) is amended by adding at the end the 
     following new subsection:
       ``(n) Special Rules for Contributions Under a Qualified 
     Payroll Deduction Arrangement.--Rules similar to the rules of 
     subsection (m) shall apply to employer contributions made 
     under a qualified payroll deduction arrangement described in 
     section 408(q)(1) (for which an election has not been made 
     under section 408(q)(2)).''.
       (3) Contributions and distributions.--Section 402 (relating 
     to taxability of beneficiary of employees' trust) is amended 
     by adding at the end the following new subsection:
       ``(l) Treatment of Contributions and Distributions Under a 
     Qualified Payroll Deduction Arrangement.--Rules similar to 
     the rules of paragraphs (1) and (3) of subsection (h) shall 
     apply to contributions and distributions made with respect to 
     an individual retirement plan under a qualified payroll 
     deduction arrangement described in section 408(q)(1) (for 
     which an election has not been made under section 408(q)(2)), 
     except that contributions made by an employer on behalf of an 
     employee for a taxable year shall be excluded from income 
     only to the extent such contributions would have been 
     deductible for such taxable year under section 219, if such 
     section applied, without regard to section 219(g)(1)(B). 
     Contributions that are not excluded from income under the 
     preceding sentence shall be treated as designated 
     nondeductible contributions under section 408(o).''.
       (c) Exemption From Withholding.--Subsection (a) of section 
     3401 (defining wages) is amended by striking ``or'' at the 
     end of paragraph (20), by striking the period at the end of 
     paragraph (21) and inserting ``; or'', and by inserting after 
     paragraph (21) the following new paragraph:
       ``(22) for any payment made for the benefit of the employee 
     to an individual retirement plan if the amount of such 
     payment was deducted and withheld under section 408(q).''.
       (d) Exclusion Shown on W-2.--Subsection (a) of section 6051 
     (relating to receipts for employees) is amended by striking 
     ``and'' at the end of paragraph (10), by striking the period 
     at the end of paragraph (11) and inserting ``, and'', and by 
     inserting after paragraph (11) the following new paragraph:
       ``(12) the total amount deducted and withheld pursuant to 
     section 408(q).''.
       (e) Effective Date.--The amendments made by this section 
     shall apply to remuneration paid after December 31, 1998.

     SEC. 103. NONREFUNDABLE TAX CREDIT FOR CONTRIBUTIONS TO 
                   INDIVIDUAL RETIREMENT PLANS.

       (a) In General.--Subpart A of part IV of subchapter A of 
     chapter 1 (relating to nonrefundable personal credits) is 
     amended by inserting after section 25A the following new 
     section:

     ``SEC. 25B. RETIREMENT SAVINGS.

       ``(a) Allowance of Credit.--There shall be allowed as a 
     credit against the tax imposed by this chapter so much of the 
     qualified retirement contributions of the taxpayer for the 
     taxable year as does not exceed the applicable amount of the 
     adjusted gross income of the taxpayer for such year.
       ``(b) Applicable Amount.--For purposes of subsection (a), 
     the applicable amount is determined in accordance with the 
     following table:

The applicable amount is:e is:
Not over $15,000..................................................$450.
Over $15,000 but not over $20,000.................................$400.
Over $20,000 but not over $25,000.................................$350.
Over $25,000 but not over $30,000.................................$300.
Over $30,000........................................................$0.

       ``(c) Section Not To Apply to Certain Contributions.--This 
     section shall not apply with respect to--
       ``(1) an employer contribution to a simplified employee 
     pension,
       ``(2) any amount contributed to a simple retirement account 
     established under section 408(p),
       ``(3) any amount contributed to a Roth IRA, and
       ``(4) any designated nondeductible contribution (as defined 
     in section 408(o)(2)(C)).
       ``(d) Other Limitations and Restrictions.--
       ``(1) Beneficiary must be under age 70\1/2\.--No credit 
     shall be allowed under this section with respect to any 
     qualified retirement contribution for the benefit of an 
     individual if such individual has attained age 70\1/2\ before 
     the close of such individual's taxable year for which the 
     contribution was made.
       ``(2) Recontributed amounts.--No credit shall be allowed 
     under this section with respect to a rollover contribution 
     described in section 402(c), 403(a)(4), 403(b)(8), or 
     408(d)(3).
       ``(3) Amounts contributed under endowment contract.--In the 
     case of an endowment contract described in section 408(b), no 
     credit shall be allowed under this section for that portion 
     of the amounts paid under the contract for the taxable year 
     which is properly allocable, under regulations prescribed by 
     the Secretary, to the cost of life insurance.
       ``(4) Denial of credit for amount contributed to inherited 
     annuities or accounts.--No credit shall be allowed under this 
     section with respect to any amount paid to an inherited 
     individual retirement account or individual retirement 
     annuity (within the meaning of section 408(d)(3)(C)(ii)).
       ``(5) No double benefit.--No credit shall be allowed under 
     this section for any taxable year with respect to the amount 
     of any qualified retirement contribution for the benefit of 
     an individual if such individual takes a deduction with 
     respect to such amount under section 219 for such taxable 
     year.
       ``(e) Qualified Retirement Contribution.--For purposes of 
     this section, the term `qualified retirement contribution' 
     means--
       ``(1) any amount paid in cash for the taxable year by or on 
     behalf of an individual to an individual retirement plan for 
     such individual's benefit, and
       ``(2) any amount contributed on behalf of any individual to 
     a plan described in section 501(c)(18).
       ``(f) Other Definitions and Special Rules.--
       ``(1) Compensation.--For purposes of this section, the term 
     `compensation' has the meaning given in section 219(f)(1).
       ``(2) Married couples must file joint return.--If the 
     taxpayer is married at the close of the taxable year, the 
     credit shall be allowed under subsection (a) only if the 
     taxpayer and the taxpayer's spouse file a joint return for 
     the taxable year.
       ``(3) Time when contributions deemed made.--For purposes of 
     this section, a taxpayer shall be deemed to have made a 
     contribution to an individual retirement plan on the last day 
     of the preceding taxable year if the contribution is made on 
     account of such taxable year and is made not later than the 
     time prescribed by law for filing the return for such taxable 
     year (not including extensions thereof).
       ``(4) Employer payments.--For purposes of this title, any 
     amount paid by an employer to an individual retirement plan 
     shall be treated as payment of compensation to the employee 
     (other than a self-employed individual who is an employee 
     within the meaning of section 401(c)(1)) includible in his 
     gross income in the taxable year for which the

[[Page S7267]]

     amount was contributed, whether or not a credit for such 
     payment is allowable under this section to the employee.''
       (b) Conforming Amendments.--
       (1) Section 86(f) is amended by redesignating paragraphs 
     (2), (3), and (4) as paragraphs (3), (4), and (5), 
     respectively, and by inserting after paragraph (1) the 
     following new paragraph:
       ``(2) section 25B(f)(1) (defining compensation),''.
       (2) Clause (i) of section 501(c)(18)(D) is amended by 
     inserting ``which may be taken into account in computing the 
     credit allowable under section 25B or'' before ``with 
     respect''.
       (3) Section 6047(c) is amended by inserting ``section 25B 
     or'' before ``section 219''.
       (4) Section 6652(g) is amended by inserting ``Creditable'' 
     before ``Deductible'' in the heading thereof.
       (5) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 is amended by inserting after the 
     item relating to section 25A the following new item:

``Sec. 25B. Retirement savings.''

       (c) Effective Date.--The amendments made by this section 
     apply to taxable years beginning after December 31, 1998.

     SEC. 104. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED 
                   WITHOUT PENALTY DURING PERIODS OF UNEMPLOYMENT.

       (a) In General.--Paragraph (2) of section 72(t) (relating 
     to exceptions to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new subparagraph:
       ``(G) Additional distributions to unemployed individuals.--
       ``(i) In general.--Distributions from an individual 
     retirement plan, or from amounts attributable to employer 
     contributions made pursuant to elective deferrals described 
     in subparagraph (A) or (C) of section 402(g)(3) or section 
     501(c)(18)(D)(iii), to an individual after separation from 
     employment if--

       ``(I) such individual has received unemployment 
     compensation for 12 consecutive weeks under any Federal or 
     State unemployment compensation law by reason of such 
     separation, and
       ``(II) such distributions are made during the 1-year period 
     beginning on the date of such separation.

       ``(ii) Distributions after reemployment.--Clause (i) shall 
     not apply to any distribution made after the individual has 
     been employed for at least 60 days after the separation from 
     employment to which clause (i) applies.
       ``(iii) Coordination with subparagraph (d).--Distributions 
     during the 1-year period described in clause (i)(II) shall 
     not be taken into account in applying the limitation under 
     subparagraph (D)(i)(III).''
       (b) Conforming Amendments.--
       (1) Section 401(k)(2)(B)(i) is amended by striking ``or'' 
     at the end of subclause (III), by striking ``and'' at the end 
     of subclause (IV) and inserting ``or'', and by inserting 
     after subclause (IV) the following new subclause:

       ``(V) the date on which a period referred to in section 
     72(t)(2)(G) begins, and''.

       (2) Section 403(b)(11) is amended by striking ``or'' at the 
     end of subparagraph (A), by striking the period at the end of 
     subparagraph (B) and inserting ``, or'', and by inserting 
     after subparagraph (B) the following new subparagraph:
       ``(C) for distributions to which section 72(t)(2)(G) 
     applies.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after the date of the enactment 
     of this Act.

     Subtitle B--Secure Money Annuity or Retirement (SMART) Trusts

     SEC. 111. SECURE MONEY ANNUITY OR RETIREMENT (SMART) TRUSTS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 is amended by inserting after section 408A the 
     following new section:

     ``SEC. 408B. SMART PLANS.

       ``(a) Employer Eligibility.--
       ``(1) In general.--An employer may establish and maintain a 
     SMART annuity or a SMART trust for any year only if--
       ``(A) the employer is an eligible employer (as defined in 
     section 408(p)(2)(C)), and
       ``(B) the employer does not maintain (and no predecessor of 
     the employer maintains) a qualified plan (other than a 
     permissible plan) with respect to which contributions were 
     made, or benefits were accrued, for service in any year in 
     the period beginning with the year such annuity or trust 
     became effective and ending with the year for which the 
     determination is being made.

     The period described in subparagraph (B) shall include the 
     period of 5 years before the year such trust or annuity 
     became effective with respect to qualified plans which are 
     defined benefit plans or money purchase pension plans.
       ``(2) Definitions.--For purposes of paragraph (1)--
       ``(A) Qualified plan.--The term `qualified plan' has the 
     meaning given such term by section 408(p)(2)(D)(ii).
       ``(B) Permissible plan.--The term `permissible plan' 
     means--
       ``(i) a SIMPLE plan described in section 408(p),
       ``(ii) a SIMPLE 401(k) plan described in section 
     401(k)(11),
       ``(iii) an eligible deferred compensation plan described in 
     section 457(b),
       ``(iv) a collectively bargained plan but only if the 
     employees eligible to participate in such plan are not also 
     entitled to a benefit described in subsection (b)(5) or 
     (c)(5), or
       ``(v) a plan under which there may be made only--

       ``(I) elective deferrals described in section 402(g)(3), 
     and
       ``(II) employer matching contributions not in excess of the 
     amounts described in subclauses (I) and (II) of section 
     401(k)(12)(B)(i).

       ``(b) SMART Annuity.--
       ``(1) In general.--For purposes of this title, the term 
     `SMART annuity' means an individual retirement annuity (as 
     defined in section 408(b) without regard to paragraph (2) 
     thereof and without regard to the limitation on aggregate 
     annual premiums contained in the flush language of section 
     408(b)) if--
       ``(A) such annuity meets the requirements of paragraphs (2) 
     through (8), and
       ``(B) the only contributions to such annuity are employer 
     contributions.

     Nothing in this section shall be construed as preventing an 
     employer from using a group annuity contract which is 
     divisible into individual retirement annuities for purposes 
     of providing SMART annuities.
       ``(2) Participation requirements.--
       ``(A) In general.--The requirements of this paragraph are 
     met for any year only if all employees of the employer who--
       ``(i) received at least $5,000 in compensation from the 
     employer during any 2 consecutive preceding years, and
       ``(ii) received at least $5,000 in compensation during the 
     year,

     are entitled to the benefit described in paragraph (5) for 
     such year.
       ``(B) Excludable employees.--An employer may elect to 
     exclude from the requirements under subparagraph (A) 
     employees described in subparagraph (A) or (C) of section 
     410(b)(3).
       ``(3) Vesting.--The requirements of this paragraph are met 
     if the employee's rights to any benefits under the annuity 
     are nonforfeitable.
       ``(4) Benefit form.--The requirements of this paragraph are 
     met if the only form of benefit is--
       ``(A) a benefit payable annually in the form of a single 
     life annuity with monthly payments (with no ancillary 
     benefits) beginning at age 65, or
       ``(B) any other form of benefit which is the actuarial 
     equivalent (based on the assumptions specified in the SMART 
     annuity) of the benefit described in subparagraph (A).
       ``(5) Amount of annual accrued benefit.--
       ``(A) In general.--The requirements of this paragraph are 
     met for any plan year if the accrued benefit of each 
     participant derived from employer contributions for such 
     year, when expressed as a benefit described in paragraph 
     (4)(A), equals the applicable percentage of the participant's 
     compensation for such year.
       ``(B) Applicable percentage.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable percentage' means 2 
     percent.
       ``(ii) Election of different percentage.--An employer may 
     elect to apply an applicable percentage of 1 percent for any 
     year for all employees eligible to participate in the plan 
     for such year, if the employer notifies the employees of such 
     percentage within a reasonable period before the beginning of 
     such year. An employer may also elect to apply an applicable 
     percentage of 3 percent for any of the first 5 years that the 
     plan is effective for all employees eligible to participate 
     in the plan for such year, if the employer so notifies the 
     employees.
       ``(C) Compensation limit.--
       ``(i) In general.--The compensation taken into account 
     under this paragraph for any year shall not exceed $100,000.
       ``(ii) Cost-of-living adjustment.--The Secretary shall 
     adjust annually the $100,000 amount in clause (i) for 
     increases in the cost-of-living at the same time and in the 
     same manner as adjustments under section 415(d); except that 
     the base period shall be the calendar quarter beginning 
     October 1, 1998, and any increase which is not a multiple of 
     $5,000 shall be rounded to the next lowest multiple of 
     $5,000.
       ``(6) Funding.--
       ``(A) In general.--The requirements of this paragraph are 
     met only if the employer is required to contribute to the 
     annuity for each plan year the amount necessary to purchase a 
     SMART annuity in the amount of the benefit accrued for such 
     year for each participant entitled to such benefit. Such 
     contribution must be made no later than 8\1/2\ months after 
     the end of the plan year.
       ``(B) Penalty for failure to make required contribution.--
     The taxes imposed by section 4971 shall apply to a failure to 
     make the contribution required by this paragraph in the same 
     manner as if the amount of the failure were an accumulated 
     funding deficiency to which such section applies.
       ``(7) Limitation on distributions.--
       ``(A) In general.--The requirements of this paragraph are 
     met only if distributions may be paid only when the employee 
     attains age 65, separates from service, dies, or becomes 
     disabled (within the meaning of section 72(m)(7)).
       ``(B) Limitation on distributions on separation from 
     service of employees who have not attained age 65.--
     Subparagraph (A) shall apply to a distribution on separation 
     of service of an employee who has not attained age 65 only 
     if--

[[Page S7268]]

       ``(i) the aggregate cash value of an employee's SMART 
     annuities does not exceed the dollar limit in effect under 
     section 411(a)(11)(A), or
       ``(ii) the distribution is a direct trustee-to-trustee 
     transfer of the entire balance to the credit of the employee 
     to a SMART trust described in subsection (c), a SMART 
     rollover plan, or a SMART annuity for the benefit of such 
     employee.
       ``(8) Joint and survivor annuity rules applicable.--The 
     requirements of this paragraph are met only if the annuity 
     satisfies section 401(a)(11).
       ``(9) Definitions and special rule.--
       ``(A) Definitions.--The definitions in section 408(p)(6) 
     shall apply for purposes of this subsection.
       ``(B) Use of designated financial institutions.--A rule 
     similar to the rule of section 408(p)(7) (without regard to 
     the last sentence thereof) shall apply for purposes of this 
     subsection.
       ``(C) SMART rollover plan.--For purposes of this section, 
     the term `SMART rollover plan' means an individual retirement 
     plan for the benefit of the employee to which a rollover was 
     made from a SMART Annuity, SMART trust, or another SMART 
     Rollover plan.
       ``(c) SMART Trust.--
       ``(1) In general.--For purposes of this title, the term 
     `SMART trust' means a trust forming part of a defined benefit 
     plan if--
       ``(A) such trust meets the requirements of section 401(a) 
     as modified by subsection (d),
       ``(B) such plan meets the requirements of paragraphs (2) 
     through (8), and
       ``(C) the only contributions to such trust are employer 
     contributions.
       ``(2) Participation requirements.--A plan meets the 
     requirements of this paragraph for any year only if the 
     requirements of subsection (b)(2) are met for such year.
       ``(3) Vesting.--A plan meets the requirements of this 
     paragraph for any year only if the requirements of subsection 
     (b)(3) are met for such year.
       ``(4) Benefit form.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     a plan meets the requirements of this paragraph only if the 
     trustee distributes a SMART annuity that satisfies subsection 
     (b)(4) where the annual benefit described in subsection 
     (b)(4)(A) is no less than the accrued benefit determined 
     under paragraph (5).
       ``(B) Direct transfers to individual retirement plan or 
     smart annuity.--A plan shall not fail to meet the 
     requirements of this paragraph by reason of permitting, as an 
     optional form of benefit, the distribution of the entire 
     balance to the credit of the employee. If the employee is 
     under age 65, such distribution must be in the form of a 
     direct trustee-to-trustee transfer to a SMART annuity, 
     another SMART trust, or a SMART rollover plan (or, in the 
     case of a distribution that does not exceed the dollar limit 
     in effect under section 411(a)(11)(A), any other individual 
     retirement plan).
       ``(5) Amount of annual accrued benefit.--A plan meets the 
     requirements of this paragraph for any year only if the 
     requirements of subsection (b)(5) are met for such year.
       ``(6) Funding.--
       ``(A) In general.--A plan meets the requirements of this 
     paragraph for any year only if--
       ``(i) the requirements of subparagraph (A) of subsection 
     (b)(6) are met for such year,
       ``(ii) in the case of a plan which has an unfunded annuity 
     amount with respect to the account of any participant, the 
     plan requires that the employer make an additional 
     contribution to such plan (at the time the annuity contract 
     to which such amount relates is purchased) equal to the 
     unfunded annuity amount, and
       ``(iii) in the case of a plan which has an unfunded prior 
     year liability as of the close of such plan year, the plan 
     requires that the employer make an additional contribution to 
     such plan for such year equal to the amount of such unfunded 
     prior year liability no later than 8\1/2\ months following 
     the end of the plan year.
       ``(B) Unfunded annuity amount.--For purposes of this 
     paragraph, the term `unfunded annuity amount' means, with 
     respect to the account of any participant for whom an annuity 
     is being purchased, the excess (if any) of--
       ``(i) the amount necessary to purchase an annuity contract 
     which meets the requirements of subsection (b)(4) in the 
     amount of the participant's accrued benefit determined under 
     paragraph (5), over
       ``(ii) the balance in such account at the time such 
     contract is purchased.
       ``(C) Unfunded prior year liability.--For purposes of this 
     paragraph, the term `unfunded prior year liability' means, 
     with respect to any plan year, the excess (if any) of--
       ``(i) the aggregate of the present value under the plan as 
     of the close of the prior plan year, over
       ``(ii) the value of the plan's assets determined under 
     section 412(c)(2) as of the close of the plan year 
     (determined without regard to any contributions for such plan 
     year).

     Such present value shall be determined using the assumptions 
     specified in subparagraph (D).
       ``(D) Actuarial assumptions.--In determining the amount 
     required to be contributed under subparagraph (A)--
       ``(i) the assumed interest rate shall be 5 percent per 
     year,
       ``(ii) the assumed mortality shall be determined under the 
     applicable mortality table (as defined in section 417(e)(3), 
     as modified by the Secretary so that it does not include any 
     assumption for preretirement mortality), and
       ``(iii) the assumed retirement age shall be 65.
       ``(E) Changes in mortality table.--If the applicable 
     mortality table under section 417(e)(3) for any plan year is 
     not the same as such table for the prior plan year, the 
     Secretary shall prescribe regulations which phase in the 
     effect of the changes over a reasonable period of plan years 
     determined by the Secretary.
       ``(F) Penalty for failure to make required contribution.--
     The taxes imposed by section 4971 shall apply to a failure to 
     make the contribution required by this paragraph in the same 
     manner as if the amount of the failure were an accumulated 
     funding deficiency to which such section applies.
       ``(7) Separate accounts for participants.--A plan meets the 
     requirements of this paragraph for any year only if the plan 
     provides--
       ``(A) for an individual account for each participant, and
       ``(B) for benefits based solely on--
       ``(i) the amount contributed to the participant's account,
       ``(ii) any income, expenses, gains and losses, and any 
     forfeitures of accounts of other participants which may be 
     allocated to such participant's account, and
       ``(iii) the amount of any unfunded annuity amount with 
     respect to the participant.
       ``(8) Trust may not hold securities which are not readily 
     tradable.--A plan meets the requirements of this paragraph 
     only if the plan prohibits the trust from holding directly or 
     indirectly securities which are not readily tradable on an 
     established securities market. Nothing in this paragraph 
     shall prohibit the trust from holding insurance company 
     products regulated by State law.
       ``(9) Definitions.--The definitions applicable under 
     subsection (b)(8) shall apply for purposes of this 
     subsection.
       ``(d) Special Rules for SMART Annuities and Trusts.--For 
     purposes of section 401(a), a SMART annuity and a SMART trust 
     shall be treated as meeting the requirements of the following 
     provisions:
       ``(1) Section 401(a)(4) (relating to nondiscrimination 
     rules).
       ``(2) Section 401(a)(26) (relating to minimum 
     participation).
       ``(3) Section 410 (relating to minimum participation and 
     coverage requirements).
       ``(4) Section 411(b) (relating to accrued benefit 
     requirements).
       ``(5) Section 416 (relating to special rules for top-heavy 
     plans).''
       (b) Deduction Rules.--
       (1) In general.--Section 404 is amended by adding at the 
     end the following new subsection:
       ``(n) Special Rules for SMART Annuities and Trusts.--
       ``(1) In general.--Employer contributions to a SMART 
     annuity shall be treated as if they are made to a plan 
     described in paragraph (1) of subsection (a).
       ``(2) Deductible limit.--For purposes of section 
     404(a)(1)(A)(i), the amount necessary to satisfy the minimum 
     funding requirement of section 408B (b)(6) or (c)(6) shall be 
     treated as the amount necessary to satisfy the minimum 
     funding requirement of section 412.''
       (2) Coordination with deduction under section 219.--
       (A) Section 219(b) is amended by adding at the end the 
     following new paragraph:
       ``(5) Special rule for smart annuities.--This section shall 
     not apply with respect to any amount contributed to a SMART 
     annuity established under section 408B(b).''
       (B) Section 219(g)(5)(A) (defining active participant) is 
     amended by striking ``or'' at the end of clause (v) and by 
     adding at the end the following new clause:
       ``(vii) any SMART annuity (within the meaning of section 
     408B), or''.
       (c) Contributions and Distributions.--
       (1) Section 402 is amended by adding at the end the 
     following new subsection:
       ``(l) Treatment of SMART Annuities.--Rules similar to the 
     rules of paragraphs (1) and (3) of subsection (h) shall apply 
     to contributions and distributions with respect to SMART 
     annuities under section 408B.''
       (2) Section 408(d)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(H) SMART annuities.--This paragraph shall not apply to 
     any amount paid or distributed out of a SMART annuity (as 
     defined in section 408B) unless it is paid in a trustee-to-
     trustee transfer into a SMART rollover plan.''
       (3)(A) Section 412(h) is amended by striking ``or'' at the 
     end of paragraph (5), by striking the period at the end of 
     paragraph (6) and inserting ``, or'', and by inserting after 
     paragraph (6) the following new paragraph:
       ``(7) any plan providing for the purchase of any SMART 
     annuity or any SMART plan.''
       (B) Section 301(a) of Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1081) is amended by striking ``or'' at 
     the end of paragraph (9), by striking the period at the end 
     of paragraph (10) and inserting ``; or'', and by adding at 
     the end the following new paragraph:
       ``(11) any plan providing for the purchase of any SMART 
     annuity or any SMART plan (as such terms are defined in 
     section 408B of such Code).''
       (4) Section 415(b) is amended by adding at the end the 
     following new paragraph:

[[Page S7269]]

       ``(12) Treatment of smart annuities and trusts.--A SMART 
     annuity and a SMART trust shall be treated as meeting the 
     requirements of this section, but distributions from such an 
     annuity or trust shall be taken into account in determining 
     whether any other plan satisfies the requirements of this 
     section.''
       (d) Increased Penalty on Early Withdrawals.--Section 72(t) 
     (relating to additional tax on early distributions) is 
     amended by adding at the end the following new paragraph:
       ``(9) Special rules for smart annuities and trusts.--In the 
     case of any amount received from a SMART annuity, a SMART 
     trust, or a SMART rollover plan (within the meaning of 
     section 408B), paragraph (1) shall be applied by substituting 
     `20 percent' for `10 percent' and paragraph (2) shall be 
     applied by substituting `age 65' for `age 59\1/2\'.''
       (e) Simplified Employer Reports.--
       (1) SMART annuities.--Section 408(l) (relating to 
     simplified employer reports) is amended by adding at the end 
     the following new paragraph:
       ``(3) SMART annuities.--
       ``(A) Simplified report.--The employer maintaining any 
     SMART annuity (within the meaning of section 408B) shall file 
     a simplified annual return with the Secretary containing only 
     the information described in subparagraph (B).
       ``(B) Contents.--The return required by subparagraph (A) 
     shall set forth--
       ``(i) the name and address of the employer,
       ``(ii) the date the plan was adopted,
       ``(iii) the number of employees of the employer,
       ``(iv) the number of such employees who are eligible to 
     participate in the plan,
       ``(v) the total amount contributed by the employer to each 
     such annuity for such year and the minimum amount required 
     under section 408B to be so contributed,
       ``(vi) the percentage elected under section 408B(b)(5)(B),
       ``(vii) the name of the issuer,
       ``(viii) the employer identification number,
       ``(ix) the name of the plan, and
       ``(x) the date of the contribution.
       ``(C) Reporting by issuer of smart annuity.--
       ``(i) In general.--The issuer of each SMART annuity shall 
     provide to the owner of the annuity for each year a statement 
     setting forth as of the close of such year--

       ``(I) the benefits guaranteed at age 65 under the annuity, 
     and
       ``(II) the cash surrender value of the annuity.

       ``(ii) Summary description.--The issuer of any SMART 
     annuity shall provide to the employer maintaining the annuity 
     for each year a description containing the following 
     information:

       ``(I) The name and address of the employer and the issuer.
       ``(II) The requirements for eligibility for participation.
       ``(III) The benefits provided with respect to the annuity.
       ``(IV) The procedures for, and effects of, withdrawals 
     (including rollovers) from the annuity.

       ``(D) Time and manner of reporting.--Any return, report, or 
     statement required under this paragraph shall be made in such 
     form and at such time as the Secretary shall prescribe.''
       (2) SMART trusts.--Section 6059 (relating to actuarial 
     reports) is amended by redesignating subsections (c) and (d) 
     as subsections (d) and (e), respectively, and by inserting 
     after subsection (b) the following new subsection:
       ``(c) SMART Trusts.--In the case of a SMART trust (within 
     the meaning of section 408B), the Secretary shall require a 
     simplified actuarial report which contains--
       ``(1) information similar to the information required in 
     section 408(l)(3)(B),
       ``(2) the fair market value of the assets of the trust,
       ``(3) the amounts distributed directly to participants,
       ``(4) the amounts transferred to SMART rollover plans, and
       ``(5) the present value of the annual accrued benefits 
     under the plan to which the trust relates.''
       (f) Conforming Amendments.--
       (1) Subparagraph (A) of section 219(g)(5) is amended by 
     striking ``or'' at the end of clause (v) and by inserting 
     after clause (vi) the following new clause:
       ``(vii) any SMART trust or SMART annuity (within the 
     meaning of section 408B), or''.
       (2) Section 280G(b)(6) is amended by striking ``or'' at the 
     end of subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, or'' and by adding after 
     subparagraph (D) the following new subparagraph:
       ``(E) a SMART annuity described in section 408B.''
       (3) Subsections (b), (c), (m)(4)(B), and (n)(3)(B) of 
     section 414 are each amended by inserting ``408B,'' after 
     ``408(p),''.
       (4) Section 4972(d)(1)(A) is amended by striking ``and'' at 
     the end of clause (iii), by striking the period at the end of 
     clause (iv) and inserting ``, and'', and by adding after 
     clause (iv) the following new clause:
       ``(v) any SMART annuity (within the meaning of section 
     408B).''
       (g) Reporting Requirements Under ERISA.--Section 101 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1021) is amended by redesignating subsection (h) as 
     subsection (i) and by inserting after subsection (g) the 
     following new subsection:
       ``(h) SMART Annuities.--
       ``(1) No employer reports.--Except as provided in this 
     subsection, no report shall be required under this section by 
     an employer maintaining a SMART annuity under section 408B(b) 
     of the Internal Revenue Code of 1986.
       ``(2) Summary description.--The issuer of any SMART annuity 
     shall provide to the employer maintaining the annuity for 
     each year a description containing the following information:
       ``(A) The name and address of the employer and the issuer.
       ``(B) The requirements for eligibility for participation.
       ``(C) The benefits provided with respect to the annuity.
       ``(D) The procedures for, and effects of, withdrawals 
     (including rollovers) from the annuity.''
       ``(3) Employee notification.--The employer shall provide 
     each employee eligible to participate in the SMART annuity 
     with the description described in paragraph (2) at the same 
     time as the notification required under section 408B(b)(5)(B) 
     of the Internal Revenue Code of 1986.''
       (h) $5 Per Participant PBGC Premium.--Subparagraph (A) of 
     section 4006(a)(3) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1306) is amended--
       (1) by inserting ``not described in clause (iv)'' after 
     ``in the case of a single-employer plan'' in clause (i),
       (2) by striking the period at the end of clause (iii) and 
     inserting ``; and'', and
       (3) by inserting after clause (iii) the following new 
     clause:
       ``(iv) in the case of a single-employer plan described in 
     section 408B(c) of the Internal Revenue Code of 1986, an 
     amount equal to $5 for each participant.''.
       (i) Clerical Amendment.--The table of sections for subpart 
     A of part I of subchapter D of chapter 1 is amended by 
     inserting after the item relating to section 408A the 
     following new item:

``Sec. 408B. SMART plans.''

       (j) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1998.

       Subtitle C--Improved Fairness in Retirement Plan Benefits

     SEC. 121. AMENDMENTS TO SIMPLE RETIREMENT ACCOUNTS.

       (a) Minimum Contribution Requirement.--
       (1) In general.--Paragraph (2) of section 408(p) (defining 
     qualified salary reduction arrangement) is amended--
       (A) by striking clauses (iii) and (iv) of subparagraph (A) 
     and inserting the following new clauses:
       ``(iii) the employer is required to make a matching 
     contribution to the simple retirement account for any year in 
     an amount equal to--

       ``(I) so much of the amount the employee elects under 
     clause (i)(I) as does not exceed 3 percent of compensation 
     for the year, and
       ``(II) a uniform percentage (which is at least 50 percent 
     but not more than 100 percent) of the amount the employee 
     elects under clause (i)(I) to the extent that such amount 
     exceeds 3 percent but does not exceed 5 percent of the 
     employee's compensation,

       ``(iv) the employer is required to make nonelective 
     contributions of 1 percent of compensation for each employee 
     eligible to participate in the arrangement who has at least 
     $5,000 of compensation from the employer for the year, and
       ``(v) no contributions may be made other than contributions 
     described in clause (i), (iii), or (iv).'', and
       (B) by striking subparagraph (B) and inserting the 
     following new subparagraph:
       ``(B) Contribution rules.--
       ``(i) Employer may elect 3-percent nonelective 
     contribution.--An employer shall be treated as meeting the 
     requirements of clauses (iii) and (iv) of subparagraph (A) 
     for any year if, in lieu of the contributions described in 
     such clauses, the employer elects to make nonelective 
     contributions of 3 percent of compensation for each employee 
     who is eligible to participate in the arrangement and who has 
     at least $5,000 of compensation from the employer for the 
     year. If an employer makes an election under this clause for 
     any year, the employer shall notify employees of such 
     election within a reasonable period of time before the 60-day 
     period for such year under paragraph (5)(C).
       ``(ii) Discretionary contributions.--A plan shall not be 
     treated as failing to meet the requirements of subparagraph 
     (A)(v) merely because, pursuant to the terms of the plan, an 
     employer makes nonelective contributions under subparagraph 
     (A)(iv) or clause (i) of this subparagraph in excess of 1 
     percent or 3 percent of compensation, respectively, but only 
     if all such contributions bear a uniform relationship to the 
     compensation of each eligible employee and do not exceed 5 
     percent of compensation for any eligible employee.
       ``(iii) Compensation limitation.--The compensation taken 
     into account under this paragraph for any year shall not 
     exceed the limitation in effect for such year under section 
     401(a)(17).''
       (2) Matching contributions.--Subparagraph (B) of section 
     401(k)(11) (relating to adoption of simple plan to meet 
     nondiscrimination tests) is amended--
       (A) by striking subclauses (II) and (III) of clause (i) and 
     inserting the following new subclauses:

[[Page S7270]]

       ``(II) the employer is required to make a matching 
     contribution to the trust for any year in an amount equal 
     to--

       ``(aa) so much of the amount the employee elects under 
     subclause (I) as does not exceed 3 percent of compensation 
     for the year, and
       ``(bb) a uniform percentage (which is at least 50 percent 
     but not more than 100 percent) of the amount the employee 
     elects under subclause (I) to the extent that such amount 
     exceeds 3 percent but does not exceed 5 percent of the 
     employee's compensation,

       ``(III) the employer is required to make nonelective 
     contributions of 1 percent of compensation for each employee 
     eligible to participate in the arrangement who has at least 
     $5,000 of compensation from the employer for the year, and
       ``(IV) no other contributions may be made other than 
     contributions described in subclause (I), (II), or (III).'', 
     and

       (B) by striking clause (ii) and inserting the following new 
     clause:
       ``(ii) Contribution rules.--

       ``(I) Employer may elect 3-percent nonelective 
     contribution.--An employer shall be treated as meeting the 
     requirements of subclauses (II) and (III) of clause (i) for 
     any year if, in lieu of the contributions described in such 
     subclauses, the employer elects to make nonelective 
     contributions of 3 percent of compensation for each employee 
     who is eligible to participate in the arrangement and who has 
     at least $5,000 of compensation from the employer for the 
     year. If an employer makes an election under this subclause 
     for any year, the employer shall notify employees of such 
     election within a reasonable period of time before the 60th 
     day before the beginning of such year.

       ``(II) Discretionary contributions.--A plan shall not be 
     treated as failing to meet the requirements of clause (i)(IV) 
     merely because, pursuant to the terms of the plan, an 
     employer makes nonelective contributions under clause 
     (i)(III) or subclause (I) of this clause in excess of 1 
     percent or 3 percent of compensation, respectively, but only 
     if all such contributions bear a uniform relationship to the 
     compensation of each eligible employee and do not exceed 5 
     percent of compensation for any eligible employee.''

       (b) Option To Suspend Contributions.--Section 408(p) 
     (relating to simple retirement accounts) is amended by adding 
     at the end the following new paragraph:
       ``(10) Suspension of plan.--Except as provided by the 
     Secretary, a plan shall not be treated as failing to meet the 
     requirements of this subsection if, under the plan, the 
     employer may suspend all elective, matching, and nonelective 
     contributions under the plan after notifying employees 
     eligible to participate in the arrangement of such suspension 
     in writing at least 30 days in advance. Such suspension shall 
     apply to contributions with respect to compensation earned 
     after the effective date of the suspension. Only 1 suspension 
     under this paragraph may take effect during any year.''
       (c) Conforming Amendments.--Section 408(p)(2)(C) is 
     amended--
       (1) by striking clause (ii),
       (2) by striking ``Definitions'' in the heading and 
     inserting ``Eligible employer'',
       (3) by striking ``(i) Eligible employer.--'', and
       (4) by redesignating subclauses (I) and (II) as clauses (i) 
     and (ii), respectively.
       (d) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 1998.
       (2) Delayed effective date for plans established in 1997 or 
     1998.--In the case of plans established in 1997 or 1998 under 
     section 408(p) of the Internal Revenue Code of 1986, the 
     amendments made by this section shall apply to taxable years 
     beginning after December 31, 2002.

     SEC. 122. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR 
                   DEFERRED ARRANGEMENTS AND MATCHING 
                   CONTRIBUTIONS.

       (a) Alternative Methods of Satisfying Section 401(k) 
     Nondiscrimination Tests.--Subparagraph (B) of section 
     401(k)(12) (relating to alternative methods of meeting 
     nondiscrimination requirements) is amended to read as 
     follows:
       ``(B) Nonelective and matching contributions.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Nonelective contributions.--The requirements of this 
     clause are met if, under the arrangement, the employer is 
     required, without regard to whether the employee makes an 
     elective contribution or employee contribution, to make a 
     contribution to a defined contribution plan on behalf of each 
     employee who is not a highly compensated employee and who is 
     eligible to participate in the arrangement in an amount equal 
     to at least 1 percent of the employee's compensation.
       ``(iii) Matching contributions.--The requirements of this 
     clause are met if, under the arrangement, the employer makes 
     matching contributions on behalf of each employee who is not 
     a highly compensated employee in an amount equal to--

       ``(I) 100 percent of the elective contributions of the 
     employee to the extent such elective contributions do not 
     exceed 3 percent of the employee's compensation, and
       ``(II) 50 percent of the elective contributions of the 
     employee to the extent that such elective contributions 
     exceed 3 percent but do not exceed 5 percent of the 
     employee's compensation.

       ``(iv) Rate for highly compensated employees.--The 
     requirements of clause (iii) are not met if, under the 
     arrangement, the rate of matching contribution with respect 
     to any rate of elective contribution of a highly compensated 
     employee is greater than that with respect to an employee who 
     is not a highly compensated employee. For purposes of this 
     clause, to the extent provided in regulations, the last 
     sentences of paragraph (3)(A) and subsection (m)(2)(B) shall 
     not apply.
       ``(v) Alternative plan designs.--If the rate of matching 
     contribution with respect to any rate of elective 
     contribution is not equal to the percentage required under 
     clause (iii), an arrangement shall not be treated as failing 
     to meet the requirements of clause (iii) if--

       ``(I) the rate of an employer's matching contribution does 
     not increase as an employee's rate of elective contribution 
     increase, and
       ``(II) the aggregate amount of matching contributions at 
     such rate of elective contribution is at least equal to the 
     aggregate amount of matching contributions which would be 
     made if matching contributions were made on the basis of the 
     percentages described in clause (iii).''

       (b) Contributions Part of Qualified Cash or Deferred 
     Arrangement.--Subparagraph (E)(ii) of section 401(k)(12) is 
     amended to read as follows:
       ``(ii) Social security and similar contributions not taken 
     into account.--Except as provided in regulations, an 
     arrangement shall not be treated as meeting the requirements 
     of subparagraph (B) or (C) unless such requirements are met 
     without regard to subsection (l), and, for purposes of 
     subsection (l), and determining whether contributions 
     provided under a plan satisfy subsection (a)(4) on the basis 
     of equivalent benefits, employer contributions under 
     subparagraph (B) or (C) shall not be taken into account.''
       (c) Alternative Methods of Satisfying Section 401(m) 
     Nondiscrimination Tests.--Section 401(m)(11) (relating to 
     alternative method of satisfying tests) is amended--
       (1) by striking ``subparagraph (B)'' in subparagraph 
     (A)(iii) and inserting ``subparagraphs (B) and (C)'',
       (2) by adding at the end of subparagraph (B) the following 
     new flush sentence:
     ``To the extent provided in regulations, the last sentences 
     of paragraph (2)(B) and subsection (k)(3)(A) shall not apply 
     for purposes of clause (iii).'', and
       (3) by adding at the end the following new subparagraph:
       ``(C) Test must be met separately.--If this paragraph 
     applies to any matching contributions, such contributions 
     shall not be taken into account in determining whether 
     employee contributions satisfy the requirements of this 
     subsection.''
       (d) Special Rule for Determining Average Deferral 
     Percentage for First Plan Year, Etc.--Subparagraph (E) of 
     section 401(k)(3) is amended to read as follows:
       ``(E) For purposes of this paragraph, in the case of the 
     first plan year of any plan, the amount taken into account as 
     the actual deferral percentage of nonhighly compensated 
     employees for the preceding plan year shall be--
       ``(i) 3 percent, or
       ``(ii) the actual deferral percentage of nonhighly 
     compensated employees determined for such first plan year in 
     the case of--

       ``(I) an employer who elects to have this clause apply, or
       ``(II) except to the extent provided by the Secretary, a 
     successor plan.''

       (e) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1998.

     SEC. 123. DEFINITION OF HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Subparagraph (B) of section 414(q)(1) 
     (defining highly compensated employee) is amended to read as 
     follows:
       ``(B) for the preceding year had compensation from the 
     employer in excess of $80,000.''
       (b) Conforming Amendments.--
       (1)(A) Subsection (q) of section 414 is amended by striking 
     paragraphs (3), (5), and (7) and by redesignating paragraphs 
     (4), (6), (8), and (9) as paragraphs (3) through (6), 
     respectively.
       (B) Sections 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C), 
     and 416(i)(1)(D) are each amended by striking ``section 
     414(q)(4)'' and inserting ``section 414(q)(3)''.
       (C) Section 416(i)(1)(A) is amended by striking ``section 
     414(q)(5)'' and inserting ``section 414(r)(9)''.
       (2)(A) Section 414(r) is amended by adding at the end the 
     following new paragraph:
       ``(9) Excluded employees.--For purposes of paragraph 
     (2)(A), the following employees shall be excluded:
       ``(A) Employees who have not completed 6 months of service.
       ``(B) Employees who normally work less than 17\1/2\ hours 
     per week.
       ``(C) Employees who normally work during not more than 6 
     months during any year.
       ``(D) Employees who have not attained the age of 21.
       ``(E) Except to the extent provided in regulations, 
     employees who are included in a unit of employees covered by 
     an agreement which the Secretary of Labor finds to be a 
     collective bargaining agreement between employee 
     representatives and the employer.''
       (B) Subparagraph (A) of section 414(r)(2) is amended by 
     striking ``subsection (q)(5)'' and inserting ``paragraph 
     (9)''.

[[Page S7271]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1998.

     SEC. 124. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--Paragraph (11) of section 415(b) 
     (relating to limitation for defined benefit plans) is amended 
     to read as follows:
       ``(11) Special limitation rule for governmental and 
     multiemployer plans.--In the case of a governmental plan (as 
     defined in section 414(d)) or a multiemployer plan (as 
     defined in section 414(f)), subparagraph (B) of paragraph (1) 
     shall not apply.''
       (b) Exemption for Survivor and Disability Benefits.--
     Subparagraph (I) of section 415(b)(2) (relating to limitation 
     for defined benefit plans) is amended--
       (1) by inserting ``or a multiemployer plan (as defined in 
     section 414(f))'' after ``section 414(d))'' in clause (i),
       (2) by inserting ``or multiemployer plan'' after 
     ``governmental plan'' in clause (ii), and
       (3) by inserting ``and multiemployer'' after 
     ``governmental'' in the heading.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1998.

     SEC. 125. EXEMPTION OF MIRROR PLANS FROM SECTION 457 LIMITS.

       (a) In General.--Subsection (e) of section 457 (relating to 
     deferred compensation plans of State and local governments 
     and tax-exempt organizations) is amended by adding at the end 
     the following new paragraph:
       ``(16) Exemption for mirror plans.--
       ``(A) In general.--Amounts of compensation deferred under a 
     mirror plan shall not be taken into account in applying this 
     section to amounts of compensation deferred under any other 
     deferred compensation plan.
       ``(B) Mirror plan.--The term `mirror plan' means a plan, 
     program, or arrangement maintained solely for the purpose of 
     providing retirement benefits for employees in excess of the 
     limitations imposed by section 401(a)(17) or section 415, or 
     both.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1998.

     SEC. 126. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN 
                   FOR FEDERAL EMPLOYEES.

       (a) Elimination of Certain Waiting Periods for Purposes of 
     Employee Contributions.--Paragraph (4) of section 8432(b) of 
     title 5, United States Code, is amended to read as follows:
       ``(4) The Executive Director shall prescribe such 
     regulations as may be necessary to carry out the following:
       ``(A) Notwithstanding subparagraph (A) of paragraph (2), an 
     employee or Member described in such subparagraph shall be 
     afforded a reasonable opportunity to first make an election 
     under this subsection beginning on the date of commencing 
     service or, if that is not administratively feasible, 
     beginning on the earliest date thereafter that such an 
     election becomes administratively feasible, as determined by 
     the Executive Director.
       ``(B) An employee or Member described in subparagraph (B) 
     of paragraph (2) shall be afforded a reasonable opportunity 
     to first make an election under this subsection (based on the 
     appointment or election described in such subparagraph) 
     beginning on the date of commencing service pursuant to such 
     appointment or election or, if that is not administratively 
     feasible, beginning on the earliest date thereafter that such 
     an election becomes administratively feasible, as determined 
     by the Executive Director.
       ``(C) Notwithstanding the preceding provisions of this 
     paragraph, contributions under paragraphs (1) and (2) of 
     subsection (c) shall not be payable with respect to any pay 
     period before the earliest pay period for which such 
     contributions would otherwise be allowable under this 
     subsection if this paragraph had not been enacted.
       ``(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2), 
     8440c(a)(2), and 8440d(a)(2) shall be applied in a manner 
     consistent with the purposes of subparagraphs (A) and (B), to 
     the extent those subparagraphs can be applied with respect 
     thereto.
       ``(E) Nothing in this paragraph shall affect paragraph 
     (3).''
       (b) Technical and Conforming Amendments.--
       (1) Section 8432(a) of title 5, United States Code, is 
     amended--
       (A) in the first sentence by striking ``(b)(1)'' and 
     inserting ``(b)''; and
       (B) by amending the second sentence to read as follows: 
     ``Contributions under this subsection pursuant to such an 
     election shall, with respect to each pay period for which 
     such election remains in effect, be made in accordance with a 
     program of regular contributions provided in regulations 
     prescribed by the Executive Director.''
       (2) Section 8432(b)(1)(B) of such title is amended by 
     inserting ``(or any election allowable by virtue of paragraph 
     (4))'' after ``subparagraph (A)''.
       (3) Section 8432(b)(3) of such title is amended by striking 
     ``Notwithstanding paragraph (2)(A), an'' and inserting 
     ``An''.
       (4) Section 8432(i)(1)(B)(ii) of such title is amended by 
     striking ``either elected to terminate individual 
     contributions to the Thrift Savings Fund within 2 months 
     before commencing military service or''.
       (5) Section 8439(a)(1) of such title is amended by 
     inserting ``who makes contributions or'' after ``for each 
     individual'' and by striking ``section 8432(c)(1)'' and 
     inserting ``section 8432''.
       (6) Section 8439(c)(2) of such title is amended by adding 
     at the end the following: ``Nothing in this paragraph shall 
     be considered to limit the dissemination of information only 
     to the times required under the preceding sentence.''
       (7) Sections 8440a(a)(2) and 8440d(a)(2) of such title are 
     amended by striking all after ``subject to'' and inserting 
     ``subject to this chapter.''
       (c) Effective Date.--This section shall take effect 6 
     months after the date of the enactment of this Act or such 
     earlier date as the Executive Director may by regulation 
     prescribe.

     SEC. 127. FULL FUNDING LIMITATION FOR MULTIEMPLOYER PLANS.

       (a) Amendments to Code.--
       (1) Full funding limitation.--Section 412(c)(7)(C) 
     (relating to full funding limitation) is amended--
       (A) by inserting ``or in the case of a multiemployer 
     plan,'' after ``paragraph (6)(B),'', and
       (B) by inserting ``and multiemployer plans'' after 
     ``paragraph (6)(b)'' in the heading thereof.
       (2) Valuation.--Section 412(c)(9) (relating to annual 
     valuation) is amended--
       (A) by inserting ``(3 years in the case of a multiemployer 
     plan)'' after ``year'', and
       (B) by striking ``Annual valuation'' in the heading and 
     inserting ``Valuation''.
       (b) Amendments to ERISA.--
       (1) Full funding limitation.--Section 302(c)(7)(C) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1082(c)(7)(C)) is amended--
       (A) by inserting ``or in the case of a multiemployer 
     plan,'' after ``paragraph (6)(B),'', and
       (B) by inserting ``and multiemployer plans'' after 
     ``paragraph (6)(b)'' in the heading thereof.
       (2) Valuation.--Section 302(c)(9) of such Act (29 U.S.C. 
     1082(c)(9)) is amended--
       (A) by inserting ``(3 years in the case of a multiemployer 
     plan)'' after ``year'', and
       (B) by striking ``Annual valuation'' in the heading and 
     inserting ``Valuation''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1998.

     SEC. 128. ELIMINATION OF PARTIAL TERMINATION RULES FOR 
                   MULTIEMPLOYER PLANS.

       (a) Partial Termination Rules for Multiemployer Plans.--
     Section 411(d)(3) (relating to termination or partial 
     termination; discontinuance of contributions) is amended by 
     adding at the end the following new sentence: ``This 
     paragraph shall not apply in the case of a partial 
     termination of a multiemployer plan.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to partial terminations beginning after December 
     31, 1998.

     SEC. 129. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

       (a) In General.--Section 412(c)(7) (relating to full-
     funding limitation) is amended--
       (1) by striking ``150 percent'' in subparagraph (A)(i)(I) 
     and inserting ``the applicable percentage'', and
       (2) by adding at the end the following new subparagraph:
       ``(F) Applicable percentage.--For purposes of subparagraph 
     (A)(i)(I), the applicable percentage is determined according 
     to the following table:

The applicable percentage is-- beginning in--
  1998.........................................................155 ....

  1999.........................................................160 ....

  2000.........................................................165 ....

  2001.........................................................170 ....

  2002 and succeeding years....................................0.''....

       (b) Special Amortization Rule.--
       (1) In general.--Section 412(c)(7), as amended by 
     subsection (a), is amended by adding at the end the following 
     new subparagraph:
       ``(G) Special amortization rule.--Contributions that would 
     be required to be made under the plan but for the provisions 
     of subparagraph (A)(i)(I) shall be amortized over a 20-year 
     period.''
       (2) Conforming amendment.--Section 412(c)(7)(D) is amended 
     by adding ``and'' at the end of clause (i), by striking ``, 
     and'' at the end of clause (ii) and inserting a period, and 
     by striking clause (iii).
       (3) Effective date.--The amendments made by this subsection 
     shall apply to any unamortized bases with respect to plan 
     years beginning before, on, or after December 31, 1998.

                           TITLE II--SECURITY

     SEC. 200. AMENDMENT OF ERISA.

       Except as otherwise expressly provided, whenever in this 
     title an amendment or repeal is expressed in terms of an 
     amendment to, or repeal of, a section or other provision, the 
     reference shall be considered to be made to a section or 
     other provision of the Employee Retirement Income Security 
     Act of 1974.

                     Subtitle A--General Provisions

     SEC. 201. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) In General.--Subsection (a) of section 105 (29 U.S.C. 
     1025) is amended--
       (1) by striking ``shall furnish to any plan participant or 
     beneficiary who so requests in writing,'' and inserting 
     ``shall furnish at least once every 3 years, in the case of a 
     participant in a defined benefit plan who has attained age 
     35, and annually, in the case of a

[[Page S7272]]

     defined contribution plan, to each plan participant, and 
     shall furnish to any plan participant or beneficiary who so 
     requests,'', and
       (2) by adding at the end the following flush sentence:

     ``Information furnished under the preceding sentence to a 
     participant in a defined benefit plan (other than at the 
     request of the participant) may be based on reasonable 
     estimates determined under regulations prescribed by the 
     Secretary.''
       (b) Rule for Multiemployer Plans.--Subsection (d) of 
     section 105 (29 U.S.C. 1025) is amended to read as follows:
       ``(d) Each administrator of a plan to which more than 1 
     unaffiliated employer is required to contribute shall furnish 
     to any plan participant or beneficiary who so requests in 
     writing, a statement described in subsection (a).''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after the later of--
       (1) the date of issuance by the Secretary of Labor of 
     regulations providing guidance for simplifying defined 
     benefit plan calculations with respect to the information 
     required under section 105 of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1025), or
       (2) December 31, 1998.

     SEC. 202. REQUIREMENT OF ANNUAL, DETAILED INVESTMENT REPORTS 
                   APPLIED TO CERTAIN 401(K) PLANS.

       (a) In General.--Section 104(b)(3) (29 U.S.C. 1024(b)(3)) 
     is amended--
       (1) by inserting ``(A)'' after ``(3)''; and
       (2) by adding at the end the following new subparagraph:
       ``(B)(i) If, for any plan year, a plan includes a qualified 
     cash or deferred arrangement (as defined in section 401(k)(2) 
     of the Internal Revenue Code of 1986) and such plan covers 
     less than 100 participants, the administrator shall furnish 
     (within 60 days after the end of such plan year) to each 
     participant and to each beneficiary receiving benefits under 
     the plan an annual investment report detailing such 
     information as the Secretary by regulation shall require.
       ``(ii) Clause (i) shall not apply with respect to any 
     participant described in section 404(c).''
       (b) Regulations.--
       (1) In general.--The Secretary of Labor, in prescribing 
     regulations required under section 104(b)(3)(B)(i) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1023(b)(3)(B)(i)), as added by subsection (a), shall consider 
     including in the information required in an annual investment 
     report the following:
       (A) Total plan assets and liabilities as of the beginning 
     and ending of the plan year.
       (B) Plan income and expenses and contributions made and 
     benefits paid for the plan year.
       (C) Any transaction between the plan and the employer, any 
     fiduciary, or any 10-percent owner during the plan year, 
     including the acquisition of any employer security or 
     employer real property.
       (D) Any noncash contributions made to or purchases of 
     nonpublicly traded securities made by the plan during the 
     plan year without an appraisal by an independent third party.
       (2) Electronic transfer.--The Secretary of Labor in 
     prescribing such regulations shall also make provision for 
     the electronic transfer of the required annual investment 
     report by a plan administrator to plan participants and 
     beneficiaries.
       (c) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after the date of the 
     enactment of this Act.

     SEC. 203. INFORMATION REQUIRED TO BE PROVIDED TO INVESTMENT 
                   MANAGERS OF 401(K) PLANS.

       (a) In General.--Section 105 (29 U.S.C. 1025) is amended by 
     adding at the end the following new subsection:
       ``(e) If--
       ``(1) the administrator of an individual account plan 
     described in section 401(k) of the Internal Revenue Code of 
     1986 provides for investment of the plan assets by means of a 
     contractual arrangement with another party, and
       ``(2) such other party is not required under such 
     arrangement to separately account for benefits accrued with 
     respect to each participant and beneficiary under this plan,

     such administrator shall be treated as failing to meet the 
     requirements of subsection (a) unless, under such contractual 
     arrangement, such administrator provides to such other party 
     such information as is necessary to enable such party to 
     separately account at any time for benefits accrued with 
     respect to each participant and beneficiary.''
       (b) Civil Penalty for Violations.--Paragraph (1) of section 
     502(c) (29 U.S.C. 1132(c)(1)) is amended by striking ``or 
     section 101(e)(1)'' and inserting ``, section 101(e)(1), or 
     section 105(e)''.

     SEC. 204. STUDY ON INVESTMENTS IN COLLECTIBLES.

       (a) Study.--The Secretary of Labor, in consultation with 
     the Secretary of the Treasury, shall study the extent to 
     which pension plans invest in collectibles and whether such 
     investments present a risk to the pension security of the 
     participants and beneficiaries of such plans.
       (b) Report.--Not later than 12 months after the date of the 
     enactment of this Act, the Secretary of Labor shall submit a 
     report to the Congress containing the findings of the study 
     described in subsection (a) and any recommendations for 
     legislative action.

     SEC. 205. QUALIFIED EMPLOYER PLANS PROHIBITED FROM MAKING 
                   LOANS THROUGH CREDIT CARDS AND OTHER 
                   INTERMEDIARIES.

       (a) In General.--Subsection (a) of section 401 of the 
     Internal Revenue Code of 1986 is amended by adding after 
     paragraph (34) the following new paragraph:
       ``(35) Prohibition of loans through credit cards and other 
     intermediaries.--A trust shall not constitute a qualified 
     trust under this section if the plan makes any loan to any 
     beneficiary under the plan through the use of any credit card 
     or any other intermediary.''
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after the date of the 
     enactment of this Act.

     SEC. 206. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.

       (a) In General.--Section 4022A(c) (29 U.S.C. 1322a(c)) is 
     amended--
       (1) by striking ``$5'' each place it appears in paragraph 
     (1) and inserting ``$11'',
       (2) by striking ``$15'' in paragraph (1) and inserting 
     ``$33'', and
       (3) by striking paragraphs (2), (5), and (6) and by 
     redesignating paragraphs (3) and (4) as paragraphs (2) and 
     (3), respectively.
       (b) Effective Date.--The amendments made by this section 
     shall apply to any multiemployer plan that has not received 
     financial assistance (within the meaning of section 4261 of 
     the Employee Retirement Income Security Act of 1974) within 
     the 1-year period ending on the date of the enactment of this 
     Act.

     SEC. 207. PROHIBITED TRANSACTIONS.

       (a) In General.--Section 502(i) (29 U.S.C. 1132(i)) is 
     amended by striking ``5 percent'' and inserting ``15 
     percent''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to prohibited transactions occurring after the 
     date of the enactment of this Act.

     SEC. 208. SUBSTANTIAL OWNER BENEFITS.

       (a) Modification of Phase-in of Guarantee.--Subparagraphs 
     (B) and (C) of section 4022(b)(5) (29 U.S.C. 1322(b)(5)) are 
     amended to read as follows:
       ``(B) For purposes of this title, the term `majority owner' 
     has the same meaning as substantial owner under subparagraph 
     (A), except that subparagraph (A) shall be applied by 
     substituting `50 percent or more' for `more than 10 percent' 
     each place it appears.
       ``(C) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     not exceed the product of--
       ``(i) a fraction (not to exceed 1) the numerator of which 
     is the number of years from the later of the effective date 
     or the adoption date of the plan to the termination date, and 
     the denominator of which is 30, and
       ``(ii) the amount of the majority owner's monthly benefits 
     guaranteed under subsection (a) (as limited by paragraph (3) 
     of this subsection).''
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) (29 U.S.C. 1344(a)(4)(B)) is 
     amended by striking ``section 4022(b)(5)'' and inserting 
     ``section 4022(b)(5)(C)''.
       (2) Section 4044(b) (29 U.S.C. 1344(b)) is amended--
       (A) by striking ``(5)'' in paragraph (2) and inserting 
     ``(4), (5),'', and
       (B) by redesignating paragraphs (3) through (6) as 
     paragraphs (4) through (7), respectively, and by inserting 
     after paragraph (2) the following new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to subparagraph (B). 
     If assets allocated to subparagraph (B) are insufficient to 
     satisfy in full the benefits in that subparagraph, the assets 
     shall be allocated pro rata among individuals on the basis of 
     the present value (as of the termination date) of their 
     respective benefits described in that subparagraph.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan terminations--
       (1) under section 4041(c) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1341(c)) with respect to 
     which notices of intent to terminate are provided under 
     section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) on or 
     after the date of the enactment of this Act, or
       (2) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation on or after such date.

     SEC. 209. REVERSION REPORT.

       (a) In General.--Section 4008 (29 U.S.C. 1308) is amended 
     by adding at the end the following new subsection:
       ``(b) Reversion Report.--As soon as practicable after the 
     close of each fiscal year, the Secretary of Labor (acting in 
     the Secretary's capacity as chairman of the corporation's 
     board) shall transmit to the President and the Congress a 
     report providing information on plans from which residual 
     assets were distributed to employers pursuant to section 
     4044(d).''
       (b) Conforming Amendment.--Section 4008 (29 U.S.C. 1308) is 
     amended by striking ``Sec. 4008.'' and inserting ``Sec. 4008. 
     (a) Annual Report.--''.

[[Page S7273]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to fiscal years beginning after September 30, 
     1998.

                     Subtitle B--ERISA Enforcement

     SEC. 211. CIVIL PENALTIES FOR BREACH OF FIDUCIARY 
                   RESPONSIBILITIES MADE DISCRETIONARY, ETC.

       (a) Imposition and Amount of Penalty Made Discretionary.--
     Section 502(l)(1) (29 U.S.C. 1132(l)) is amended--
       (1) by striking ``shall'' and inserting ``may'', and
       (2) by striking ``equal to'' and inserting ``not greater 
     than''.
       (b) Applicable Recovery Amount.--Section 502(l)(2) (29 
     U.S.C. 1132(l)(2)) is amended to read as follows:
       ``(2) For purposes of paragraph (1), the term `applicable 
     recovery amount' means any amount which is recovered from (or 
     on behalf of) any fiduciary or other person with respect to a 
     breach or violation described in paragraph (1) on or after 
     the 30th day following receipt by such fiduciary or other 
     person of written notice from the Secretary of the violation, 
     whether paid voluntarily or by order of a court in a judicial 
     proceeding instituted by the Secretary under paragraph (2) or 
     (5) of subsection (a). The Secretary may, in the Secretary's 
     sole discretion, extend the 30-day period described in the 
     preceding sentence.''.
       (c) Other Rules.--Section 502(l) is amended by adding at 
     the end the following new paragraphs:
       ``(5) A person shall be jointly and severally liable for 
     the penalty described in paragraph (1) to the same extent 
     that such person is jointly and severally liable for the 
     applicable recovery amount on which the penalty is based.
       ``(6) No penalty shall be assessed under this subsection 
     unless the person against whom the penalty is assessed is 
     given notice and opportunity for a hearing with respect to 
     the violation and applicable recovery amount.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to any breach of fiduciary responsibility or other 
     violation of part 4 of title I of the Employee Retirement 
     Income Security Act of 1974 occurring on or after the date of 
     the enactment of this Act.
       (2) Transition rule.--In applying the amendment made by 
     subsection (b), a breach or other violation occurring before 
     the date of the enactment of this Act which continues after 
     the 180th day after such date (and which may be discontinued 
     at any time during its existence) shall be treated as having 
     occurred on the day after such date of enactment.

     SEC. 212. REPORTING AND ENFORCEMENT REQUIREMENTS FOR EMPLOYEE 
                   BENEFIT PLANS.

       (a) In General.--Part 1 of subtitle B of title I (29 U.S.C. 
     1021 et seq.) is amended--
       (1) by redesignating section 111 as section 112, and
       (2) inserting after section 110 the following new section:


                  ``direct reporting of certain events

       ``Sec. 111. (a) Required Notifications.--
       ``(1) Notifications by plan administrator.--Within 5 
     business days after an administrator of an employee benefit 
     plan determines that there is evidence (or after the 
     administrator is notified under paragraph (2)) that an 
     irregularity may have occurred with respect to the plan, the 
     administrator shall--
       ``(A) notify the Secretary of the irregularity in writing; 
     and
       ``(B) furnish a copy of such notification to the accountant 
     who is currently engaged under section 103(a)(3)(A).
       ``(2) Notifications by accountant.--
       ``(A) In general.--Within 5 business days after an 
     accountant engaged by the administrator of an employee 
     benefit plan under section 103(a)(3)(A) determines in 
     connection with such engagement that there is evidence that 
     an irregularity may have occurred with respect to the plan, 
     the accountant shall--
       ``(i) notify the plan administrator of the irregularity in 
     writing, or
       ``(ii) if the accountant determines that there is evidence 
     that the irregularity may have involved an individual who is 
     the plan administrator or who is a senior official of the 
     plan administrator, notify the Secretary of the irregularity 
     in writing.
       ``(B) Notification upon failure of plan administrator to 
     notify.--If an accountant who has provided notification to 
     the plan administrator pursuant to subparagraph (A)(i) does 
     not receive a copy of the administrator's notification to the 
     Secretary required in paragraph (1) within the 5-business day 
     period specified therein, the accountant shall furnish to the 
     Secretary a copy of the accountant's notification made to the 
     plan administrator on the next business day following such 
     period.
       ``(3) Irregularity defined.--
       ``(A) For purposes of this subsection, the term 
     `irregularity' means--
       ``(i) a theft, embezzlement, or a violation of section 664 
     of title 18, United States Code (relating to theft or 
     embezzlement from an employee benefit plan);
       ``(ii) an extortion or a violation of section 1951 of title 
     18, United States Code (relating to interference with 
     commerce by threats or violence);
       ``(iii) a bribery, a kickback, or a violation of section 
     1954 of title 18, United States Code (relating to offer, 
     acceptance, or solicitation to influence operations of an 
     employee benefit plan);
       ``(iv) a violation of section 1027 of title 18, United 
     States Code (relating to false statements and concealment of 
     facts in relation to employee benefit plan records); or
       ``(v) a violation of section 411, 501, or 511 of this title 
     (relating to criminal violations).
       ``(B) The term `irregularity' does not include any act or 
     omission described in this paragraph involving less than 
     $1,000 unless there is reason to believe that the act or 
     omission may bear on the integrity of plan management.
       ``(b) Notification Upon Termination of Engagement of 
     Accountant.--
       ``(1) Notification by plan administrator.--Within 5 
     business days after the termination of an engagement of an 
     accountant under section 103(a)(3)(A) with respect to an 
     employee benefit plan, the administrator of such plan shall--
       ``(A) notify the Secretary in writing of such termination, 
     giving the reasons for such termination, and
       ``(B) furnish the accountant whose engagement was 
     terminated with a copy of the notification sent to the 
     Secretary.
       ``(2) Notification by accountant.--If the accountant 
     referred to in paragraph (1)(B) has not received a copy of 
     the administrator's notification to the Secretary as required 
     under paragraph (1)(B), or if the accountant disagrees with 
     the reasons given in the notification of termination of the 
     engagement for auditing services, the accountant shall notify 
     the Secretary in writing of the termination, giving the 
     reasons for the termination, within 10 business days after 
     the termination of the engagement.
       ``(c) Determination of Periods Required for Notification.--
     In determining whether a notification required under this 
     section with respect to any act or omission has been made 
     within the required number of business days--
       ``(1) the day on which such act or omission begins shall 
     not be included; and
       ``(2) Saturdays, Sundays, and legal holidays shall not be 
     included.

     For purposes of this subsection, the term `legal holiday' 
     means any Federal legal holiday and any other day appointed 
     as a holiday by the State in which the person responsible for 
     making the notification principally conducts business.
       ``(d) Immunity for Good Faith Notification.--No accountant 
     or plan administrator shall be liable to any person for any 
     finding, conclusion, or statement made in any notification 
     made pursuant to subsection (a)(2) or (b)(2), or pursuant to 
     any regulations issued under those subsections, if the 
     finding, conclusion, or statement is made in good faith.''
       (b) Civil Penalty.--
       (1) In general.--Section 502(c) (29 U.S.C. 1132(c)) is 
     amended by inserting after paragraph (6) the following new 
     paragraph:
       ``(8)(A) The Secretary may assess a civil penalty of up to 
     $50,000 against any administrator who fails to provide the 
     Secretary with any notification as required under section 
     111.
       ``(B) The Secretary may assess a civil penalty of up to 
     $50,000 against any accountant who knowingly and willfully 
     fails to provide the Secretary with any notification as 
     required under section 111.''
       (2) Conforming amendment.--Section 502(a)(6) (29 U.S.C. 
     1132(a)(6)) is amended by striking ``or (6)'' and inserting 
     ``(6), or (8)''.
       (c) Clerical Amendments.--
       (1) Section 514(d) (29 U.S.C. 114(d)) is amended by 
     striking ``111'' and inserting ``112''.
       (2) The table of contents in section 1 is amended by 
     striking the item relating to section 111 and inserting the 
     following new items:

``Sec. 111. Direct reporting of certain events.
``Sec. 112. Repeal and effective date.''
       (d) Effective Date.--The amendments made by this section 
     shall apply with respect to any irregularity or termination 
     of engagement described in the amendments only if the 5-day 
     period described in the amendments in connection with the 
     irregularity or termination commences at least 90 days after 
     the date of the enactment of this Act.

     SEC. 213. ADDITIONAL REQUIREMENTS FOR QUALIFIED PUBLIC 
                   ACCOUNTANTS.

       (a) In General.--Section 103(a)(3)(D) (29 U.S.C. 
     1023(a)(3)(D)) is amended--
       (1) by inserting ``(i)'' after ``(D)'';
       (2) by inserting ``, with respect to any engagement of an 
     accountant under subparagraph (A)'' after ``means'';
       (3) by redesignating clauses (i), (ii), and (iii) as 
     subclauses (I), (II), and (III), respectively;
       (4) by striking the period at the end of subclause (III) 
     (as so redesignated) and inserting a comma;
       (5) by adding after and below subclause (III) (as so 
     redesignated), the following: ``but only if such person meets 
     the requirements of clauses (ii) and (iii), with respect to 
     such engagement.''; and
       (6) by adding at the end the following new clauses:
       ``(ii) A person meets the requirements of this clause with 
     respect to an engagement of the person as an accountant under 
     subparagraph (A) if the person--
       ``(I) has in operation an appropriate internal quality 
     control system;
       ``(II) has undergone a qualified external quality control 
     review of the person's accounting and auditing practices, 
     including such practices relevant to employee benefit plans 
     (if any), during the 3-year period immediately preceding such 
     engagement; and
       ``(III) has completed, within the 2 calendar years 
     immediately preceding such engagement, such continuing 
     education or training

[[Page S7274]]

     as the Secretary in regulations determines is necessary to 
     maintain professional proficiency in connection with employee 
     benefit plans.
       ``(iii) A person meets the requirements of this clause with 
     respect to an engagement of the person as an accountant under 
     subparagraph (A) if the person meets such additional 
     requirements and qualifications of regulations which the 
     Secretary deems necessary to ensure the quality of plan 
     audits.
       ``(iv) For purposes of clause (ii)(II), an external quality 
     control review shall be treated as qualified with respect to 
     a person referred to in clause (ii) if--
       ``(I) such review is performed in accordance with the 
     requirements of external quality control review programs of 
     recognized auditing standard setting bodies, as determined in 
     regulations of the Secretary, and
       ``(II) in the case of any such person who has, during the 
     peer review period, conducted 1 or more previous audits of 
     employee benefit plans, such review includes the review of an 
     appropriate number (determined as provided in such 
     regulations, but in no case less than 1) of plan audits in 
     relation to the scale of the person's auditing practice.
       (b) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section apply with respect to plan 
     years beginning on or after the date which is 3 years after 
     the date of the enactment of this Act.
       (2) Restrictions on conducting examinations.--Clause (iii) 
     of section 103(a)(1)(D) of the Employee Retirement Income 
     Security Act of 1974 (as added by subsection (a)(6)) takes 
     effect on the date of enactment of this Act.
       (3) Regulations.--The Secretary shall issue regulations 
     under this section no later than December 31, 1999.

     SEC. 214. INSPECTOR GENERAL STUDY.

       (a) Study.--The Inspector General of the Department of 
     Labor shall conduct a study on the need for regulatory 
     standards and procedures to authorize the Secretary, in 
     appropriate cases, to prohibit persons from serving as 
     qualified accountants for purposes of section 103 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1023).
       (b) Matters To Be Studied.--In conducting the study under 
     this section, the Inspector General shall address whether 
     standards and procedures to prohibit persons from serving as 
     qualified public accountants are likely to improve the 
     quality of employee benefit plan audits, and the potential 
     for increased costs to plans. If the Inspector General 
     concludes that regulations incorporating standards and 
     procedures would be appropriate, the study shall include 
     recommended standards and procedures.
       (c) Report.--Not later than 1 year after the date of the 
     enactment of this Act, the Inspector General shall submit a 
     report on the results of the study conducted pursuant to this 
     section to each house of Congress and the Secretary of Labor.

       Subtitle C--Increase in Excise Tax on Employer Reversions

     SEC. 221. INCREASE IN EXCISE TAX.

       (a) In General.--Section 4980 of the Internal Revenue Code 
     of 1986 (relating to tax on reversion of qualified plan 
     assets to employer) is amended--
       (1) in subsection (a), by striking ``20 percent'' and 
     inserting ``35 percent''; and
       (2) in subsection (d)(1), by striking ``substituting `50 
     percent' for `20 percent' with respect to any employer 
     reversion'' and inserting ``substituting `65 percent' for `35 
     percent' with respect to any employer reversion''.
       (b) Effective Date.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendment made by this section shall apply to reversions 
     occurring after December 31, 1998.
       (2) Exception.--The amendment made by this section shall 
     not apply to any reversion after December 31, 1998, if--
       (A) in the case of plans subject to title IV of the 
     Employee Retirement Income Security Act of 1974, a notice of 
     intent to terminate under such title was provided to 
     participants (or if no participants, to the Pension Benefit 
     Guaranty Corporation) before June 25, 1998,
       (B) in the case of plans subject to title I (and not to 
     title IV) of such Act, a notice of intent to reduce future 
     accruals under section 204(h) of such Act was provided to 
     participants in connection with the termination before June 
     25, 1998,
       (C) in the case of plans not subject to title I or IV of 
     such Act, a request for a determination letter with respect 
     to the termination was filed with the Secretary of the 
     Treasury or the Secretary's delegate before June 25, 1998, or
       (D) in the case of plans not subject to title I or IV of 
     such Act and having only 1 participant, a resolution 
     terminating the plan was adopted by the employer before June 
     25, 1998.

                         TITLE III--PORTABILITY

     SEC. 301. FASTER VESTING OF EMPLOYER MATCHING CONTRIBUTIONS.

       (a) Amendment of Internal Revenue Code.--Paragraph (2) of 
     section 411(a) of the Internal Revenue Code of 1986 (relating 
     to employer contributions) is amended--
       (1) by inserting ``, and, if applicable, (C)'' after ``or 
     (B)'', and
       (2) by adding at the end the following new subparagraph:
       ``(C) Matching contributions.--In the case of a plan that 
     includes an accrued benefit derived from matching 
     contributions (as defined in section 401(m)(4)(A)), the plan 
     satisfies the requirements of this subparagraph if--
       ``(i) an employee who has completed at least 3 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived from such matching 
     contributions, or
       ``(ii) an employee has a nonforfeitable right to a 
     percentage of the employee's accrued benefit derived from 
     employer matching contributions (as so defined) determined 
     under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
  2.............................................................20 ....

  3.............................................................40 ....

  4.............................................................60 ....

  5.............................................................80 ....

  6..........................................................100.''....

       (b) Amendment of ERISA.--Paragraph (2) of section 203(a) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1053(a)) is amended--
       (1) by inserting ``, and, if applicable, (C)'' after ``or 
     (B)'', and
       (2) by adding at the end the following new subparagraph:
       ``(C) Matching contributions.--In the case of a plan that 
     includes an accrued benefit derived from matching 
     contributions (as defined in section 401(m)(4)(A) of the 
     Internal Revenue Code of 1986), the plan satisfies the 
     requirements of this subparagraph if--
       ``(i) an employee who has completed at least 3 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived from such matching 
     contributions, or
       ``(ii) an employee has a nonforfeitable right to a 
     percentage of the employee's accrued benefit derived from 
     employer matching contributions (as so defined) determined 
     under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
  2.............................................................20 ....

  3.............................................................40 ....

  4.............................................................60 ....

  5.............................................................80 ....

  6..........................................................100.''....

       (c) Effective Date.--
       (1) In general.--Except as provided in paragraphs (2) and 
     (3), the amendments made by this section shall apply to plan 
     years beginning after December 31, 1998.
       (2) Application to current employees.--The amendments made 
     by this section shall not apply to any employee who does not 
     have at least 1 hour of service in any plan year beginning 
     after December 31, 1998.
       (3) Collective bargaining agreements.--In the case of a 
     plan maintained pursuant to 1 or more collective bargaining 
     agreements between employee representatives and 1 or more 
     employers ratified by the date of the enactment of this Act, 
     the amendments made by this section shall not apply to 
     employees covered by any such agreement in plan years 
     beginning before the earlier of--
       (A) the later of--
       (i) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof on or after such date of enactment), 
     or
       (ii) January 1, 1999, or
       (B) January 1, 2003.

     SEC. 302. RATIONALIZATION OF THE RESTRICTIONS ON 
                   DISTRIBUTIONS FROM 401(K) PLANS.

       (a) In General.--Section 401(k)(2)(B)(i)(I) of the Internal 
     Revenue Code of 1986 (relating to qualified cash or deferred 
     arrangements) is amended by striking ``separation from 
     service'' and inserting ``severance from employment''.
       (b) Business Sale Requirements Deleted.--
       (1) In general.--Section 401(k)(2)(B)(i)(II) of the 
     Internal Revenue Code of 1986 (relating to qualified cash or 
     deferred arrangements) is amended by striking ``an event'' 
     and inserting ``a plan termination''.
       (2) Conforming amendments.--Section 401(k)(10) of such Code 
     is amended--
       (A) by striking subparagraph (A) and inserting the 
     following:
       ``(A) In general.--A plan termination is described in this 
     paragraph if the termination of the plan is without 
     establishment or maintenance of another defined contribution 
     plan (other than an employee stock ownership plan as defined 
     in section 4975(e)(7)).'',
       (B) by striking subparagraph (C), and
       (C) by striking ``or disposition of assets or subsidiary'' 
     in the heading.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 1998.

     SEC. 303. TREATMENT OF TRANSFERS BETWEEN DEFINED CONTRIBUTION 
                   PLANS.

       (a) In General.--Section 411(d)(6) of the Internal Revenue 
     Code of 1986 (relating to accrued benefit not to be decreased 
     by amendment) is amended by adding at the end the following 
     new subparagraph:
       ``(D) Plan transfers.--A defined contribution plan (in this 
     subparagraph referred to as the `transferee plan') shall not 
     be treated as failing to meet the requirements of this 
     paragraph merely because the transferee plan does not provide 
     some or all of the forms of distribution previously available 
     under another defined contribution plan (in this subparagraph 
     referred to as the `transferor plan') to the extent that--
       ``(i) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary

[[Page S7275]]

     under the transferor plan that was transferred from the 
     transferor plan to the transferee plan pursuant to a direct 
     transfer rather than pursuant to a distribution from the 
     transferor plan,
       ``(ii) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in clause 
     (i),
       ``(iii) the transfer described in clause (i) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan,
       ``(iv) the election described in clause (iii) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election,
       ``(v) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 417, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     417(a)(2), and
       ``(vi) the transferee plan allows the participant or 
     beneficiary described in clause (iii) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under transferee plan in the form of a single sum 
     distribution.''
       (b) Conforming Amendment.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following new paragraph:
       ``(4) A defined contribution plan (in this paragraph 
     referred to as the `transferee plan') shall not be treated as 
     failing to meet the requirements of this subsection merely 
     because the transferee plan does not provide some or all of 
     the forms of distribution previously available under another 
     defined contribution plan (in this paragraph referred to as 
     the `transferor plan') to the extent that--
       ``(A) the forms of distribution previously available under 
     the transferor plan applied to the account of a participant 
     or beneficiary under the transferor plan that was transferred 
     from the transferor plan to the transferee plan pursuant to a 
     direct transfer rather than pursuant to a distribution from 
     the transferor plan,
       ``(B) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in 
     subparagraph (A),
       ``(C) the transfer described in subparagraph (A) was made 
     pursuant to a voluntary election by the participant or 
     beneficiary whose account was transferred to the transferee 
     plan,
       ``(D) the election described in subparagraph (C) was made 
     after the participant or beneficiary received a notice 
     describing the consequences of making the election,
       ``(E) if the transferor plan provides for an annuity as the 
     normal form of distribution under the plan in accordance with 
     section 205, the transfer is made with the consent of the 
     participant's spouse (if any), and such consent meets 
     requirements similar to the requirements imposed by section 
     205(c)(2), and
       ``(F) the transferee plan allows the participant or 
     beneficiary described in subparagraph (C) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under transferee plan in the form of a single sum 
     distribution.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to transfers after December 31, 1998.

     SEC. 304. MISSING PARTICIPANTS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (e) and by 
     inserting after subsection (b) the following new subsections:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.
       ``(d) Plans Not Otherwise Subject to Title.--
       ``(1) Transfer to corporation.--The plan administrator of a 
     plan described in paragraph (4) may elect to transfer a 
     missing participant's benefits to the corporation upon 
     termination of the plan.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (4) shall, upon termination of the 
     plan, provide the corporation information with respect to 
     benefits of a missing participant if the plan transfers such 
     benefits--
       ``(A) to the corporation, or
       ``(B) to an entity other than the corporation or a plan 
     described in paragraph (4)(B)(ii).
       ``(3) Payment by the corporation.--If benefits of a missing 
     participant were transferred to the corporation under 
     paragraph (1), the corporation shall, upon location of the 
     participant or beneficiary, pay to the participant or 
     beneficiary the amount transferred (or the appropriate 
     survivor benefit) either--
       ``(A) in a single sum (plus interest), or
       ``(B) in such other form as is specified in regulations of 
     the corporation.
       ``(4) Plans described.--A plan is described in this 
     paragraph if--
       ``(A) the plan is a pension plan (within the meaning of 
     section 3(2))--
       ``(i) to which the provisions of this section do not apply 
     (without regard to this subsection), and
       ``(ii) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b), and
       ``(B) at the time the assets are to be distributed upon 
     termination, the plan--
       ``(i) has missing participants, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants to another pension 
     plan (within the meaning of section 3(2)).
       ``(5) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (4).''
       (b) Conforming Amendments.--
       (1) Section 206(f) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1056(f)) is amended--
       (A) by striking ``title IV'' and inserting ``section 
     4050'', and
       (B) by striking ``the plan shall provide that,''.
       (2) Section 401(a)(34) of the Internal Revenue Code of 1986 
     (relating to benefits of missing participants on plan 
     termination) is amended by striking ``title IV'' and 
     inserting ``section 4050''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions made after final regulations 
     implementing subsections (c) and (d) of section 4050 of the 
     Employee Retirement Income Security Act of 1974 (as added by 
     subsection (a)), respectively, are prescribed.

     SEC. 305. ALLOWANCE OF ROLLOVERS FROM AND TO 403(B) PLANS.

       (a) Rollovers From Section 403(b) Plans.--Section 
     403(b)(8)(A)(ii) of the Internal Revenue Code of 1986 
     (relating to rollover amounts) is amended by striking ``such 
     distribution'' and all that follows and inserting ``such 
     distribution to an eligible retirement plan described in 
     section 402(c)(8)(B), and''.
       (b) Rollovers to Section 403(b) Plans.--Section 
     402(c)(8)(B) of such Code (defining eligible retirement plan) 
     is amended by striking ``and'' at the end of clause (ii), by 
     striking the period at the end of clause (iv) and inserting 
     ``, and'', and by adding at the end the following:
       ``(v) an annuity contract described in section 403(b).''
       (c) Conforming Amendments.--
       (1) Section 72(o)(4) of such Code is amended by striking 
     ``and 408(d)(3)'' and inserting ``403(b)(8), and 408(d)(3)''.
       (2) Section 401(a)(31)(B) of such Code is amended by 
     striking ``and 403(a)(4)'' and inserting ``, 403(a)(4), and 
     403(b)(8)''.
       (3) Subparagraph (B) of section 403(b)(8) of such Code is 
     amended by inserting ``and (9)'' after ``through (7)''.
       (4) Subparagraphs (A) and (B) of section 415(b)(2) of such 
     Code are each amended by striking ``and 408(d)(3)'' and 
     inserting ``403(b)(8), and 408(d)(3)''.
       (d) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 1998.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
     Reform Act of 1986 shall not apply to any distribution from 
     an eligible retirement plan on behalf of an individual if 
     there was a rollover to such plan on behalf of such 
     individual which is permitted solely by reason of any 
     amendment made by this section.

     SEC. 306. ROLLOVER CONTRIBUTIONS FROM DEFERRED COMPENSATION 
                   PLANS OF STATE AND LOCAL GOVERNMENTS.

       (a) Rollovers From Section 457 Plans.--
       (1) In general.--Section 457(e) of the Internal Revenue 
     Code of 1986 (relating to other definitions and special 
     rules) is amended by adding at the end the following:
       ``(16) Rollover amounts.--
       ``(A) General rule.--In the case of an eligible deferred 
     compensation plan of an eligible employer described in 
     paragraph (1)(A), if--
       ``(i) any portion of the balance to the credit of an 
     employee in such plan is paid to such employee in a rollover 
     distribution (other than a distribution described in 
     subsection (d)(1)(A)(iii) or in subparagraph (A) or (B) of 
     section 402(c)(4)),
       ``(ii) the employee transfers any portion of the property 
     such employee receives in such distribution to an individual 
     retirement plan (as defined in section 7701(a)(37), and
       ``(iii) in the case of a distribution of property other 
     than money, the amount so transferred consists of the 
     property distributed,

     then such distribution (to the extent so transferred) shall 
     not be includible in gross income for the taxable year in 
     which paid.
       ``(B) Certain rules made applicable.--Rules similar to the 
     rules of section 401(a)(31), paragraphs (2), (3), (5), (6), 
     (7), and (9) of section 402(c), and section 402(f) shall 
     apply for purposes of subparagraph (A).''
       (2) Distribution requirements.--Section 457(d)(1)(A) of 
     such Code (relating to distribution requirements) is amended 
     by inserting ``except as provided in subsection (e)(16),'' 
     after ``(A)''.
       (3) Conforming amendments.--
       (A) Section 72(o)(4) of such Code is amended--
       (i) by striking ``and 408(d)(3)'' and inserting 
     ``408(d)(3), and 457(e)(16)'',
       (ii) by inserting ``or excludable'' after ``deductible'' 
     each place it appears, and
       (iii) in the heading by inserting ``or Excludable'' after 
     ``Deductible''.
       (B) Section 219(d)(2) of such Code is amended by striking 
     ``or 408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (C) Section 401(a)(31)(B) of such Code is amended by 
     striking ``and 403(b)(8)'' and inserting ``, 403(b)(8), and 
     457(e)(16)''.
       (D) Paragraph (4) of section 402(c) of such Code is amended 
     by inserting ``or in an eligible deferred compensation plan 
     (as defined in

[[Page S7276]]

     section 457(b)) of an eligible employer described in section 
     457(e)(1)(A)'' after ``qualified trust''.
       (E) Section 408(a)(1) of such Code is amended by striking 
     ``or 403(b)(8)'' and inserting ``, 403(b)(8), or 
     457(e)(16)''.
       (F) Section 408(d)(3)(A)(ii) of such Code is amended by 
     striking ``or'' after ``501(a)'' and inserting a comma, and 
     by inserting ``, or from an eligible deferred compensation 
     plan described in section 457(b)'' after ``contribution)''.
       (G) Subparagraphs (A) and (B) of section 415(b)(2) of such 
     Code are each amended by striking ``and 408(d)(3)'' and 
     inserting ``408(d)(3), and 457(e)(16)''.
       (H) Section 4973(b)(1)(A) of such Code is amended by 
     striking ``or 408(d)(3)'' and inserting ``408(d)(3), or 
     457(e)(16)''.
       (d) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 1998.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
     Reform Act of 1986 shall not apply to any distribution from 
     an individual retirement plan on behalf of an individual if 
     there was a rollover to such plan on behalf of such 
     individual which is permitted solely by reason of any 
     amendment made by this section.

     SEC. 307. EXTENSION OF 60-DAY ROLLOVER PERIOD IN THE CASE OF 
                   PRESIDENTIALLY DECLARED DISASTERS AND SERVICE 
                   IN COMBAT ZONE.

       (a) In General.--Paragraph (1) of section 7508(a) of the 
     Internal Revenue Code of 1986 (relating to time postponed for 
     performing certain acts) is amended by striking ``and'' at 
     the end of subparagraph (J), by redesignating subparagraph 
     (K) as subparagraph (L), and by inserting after subparagraph 
     (J) the following new subparagraph:
       ``(K) Rollover of any distribution within the 60-day period 
     specified in section 402(c)(3) or 408(d)(3)(A); and''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to distributions made after December 31, 1998.

     SEC. 308. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED 
                   BENEFIT PLANS.

       (a) 403(b) Plans.--Subsection (b) of section 403 of the 
     Internal Revenue Code of 1986 is amended by adding at the end 
     the following new paragraph:
       ``(13) Trustee-to-trustee transfers to purchase permissive 
     service credit.--No amount shall be includible in gross 
     income by reason of a direct trustee-to-trustee transfer to a 
     defined benefit governmental plan (as defined in section 
     414(d)) if such transfer is--
       ``(A) for the purchase of permissive service credit (as 
     defined in section 415(n)(3)(A)) under such plan, or
       ``(B) a repayment to which section 415 does not apply by 
     reason of subsection (k)(3) thereof.''
       (b) 457 Plans.--Subsection (e) of section 457 of such Code, 
     as amended by section 306, is amended by adding at the end 
     the following new paragraph:
       ``(17) Trustee-to-trustee transfers to purchase permissive 
     service credit.--No amount shall be includible in gross 
     income by reason of a direct trustee-to-trustee transfer to a 
     defined benefit governmental plan (as defined in section 
     414(d)) if such transfer is--
       ``(A) for the purchase of permissive service credit (as 
     defined in section 415(n)(3)(A)) under such plan, or
       ``(B) a repayment to which section 415 does not apply by 
     reason of subsection (k)(3) thereof.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to trustee-to-trustee transfers after December 
     31, 1998.

           TITLE IV--COMPREHENSIVE WOMEN'S PENSION PROTECTION

                       Subtitle A--Pension Reform

     SEC. 401. PENSION RIGHT TO KNOW PROPOSALS.

       (a) Spouse's Right To Know Distribution Information.--
       (1) Amendment of internal revenue code.--Paragraph (3) of 
     section 417(a) of the Internal Revenue Code of 1986 (relating 
     to definitions and special rules for purposes of minimum 
     survivor annuity requirements) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Explanation to spouse.--At the time a plan provides a 
     participant with a written explanation under subparagraph (A) 
     or (B), such plan shall provide a copy of such explanation to 
     such participant's spouse. If the last known address of the 
     spouse is the same as the last known address of the 
     participant, the requirement of the preceding sentence shall 
     be treated as met if the copy referred to in the preceding 
     sentence is included in a single mailing made to such address 
     and addressed to both such participant and spouse.''
       (2) Amendment of erisa.--Paragraph (3) of section 205(c) of 
     Employee Retirement Income Security Act of 1974 is amended by 
     adding at the end the following new subparagraph:
       ``(C) Explanation to spouse.--At the time a plan provides a 
     participant with a written explanation under subparagraph (A) 
     or (B), such plan shall provide a copy of such explanation to 
     such participant's spouse. If the last known address of the 
     spouse is the same as the last known address of the 
     participant, the requirement of the preceding sentence shall 
     be treated as met if the copy referred to in the preceding 
     sentence is included in a single mailing made to such address 
     and addressed to both such participant and spouse.''
       (b) Employee's Right To Know of Opportunity for Elective 
     Contributions Under 401(k) Plans.--Subparagraph (D) of 
     section 401(k)(12) of the Internal Revenue Code of 1986 
     (relating to notice requirements) is amended--
       (1) by striking ``, within a reasonable period before any 
     year,'' and inserting ``before the 60th day before the 
     beginning of any year'', and
       (2) by adding at the end the following new flush sentence:

     ``The requirements of paragraph (11)(B)(iii) shall apply for 
     purposes of this subparagraph.''

     SEC. 402. WOMEN'S PENSION TOLL-FREE PHONE NUMBER.

       (a) In General.--The Secretary of Labor shall contract with 
     an independent organization to create a women's pension toll-
     free telephone number and contact to serve as--
       (1) a resource for women on pension questions and issues;
       (2) a source for referrals to appropriate agencies; and
       (3) a source for printed information.
       (b) Authorization of Appropriations.--There are authorized 
     to be appropriated $1,000,000 for each of the fiscal years 
     1999, 2000, 2001, and 2002 to carry out subsection (a).

     SEC. 403. MODIFICATION OF GOVERNMENT PENSION OFFSET.

       (a) Wife's Insurance Benefits.--Section 202(b)(4)(A) of the 
     Social Security Act (42 U.S.C. 402(b)(4)(A)) is amended--
       (1) by inserting ``the amount (if any) by which the sum of 
     such benefit (before reduction under this paragraph) and'' 
     after ``two-thirds of ''; and
       (2) by inserting ``exceeds the amount described in 
     subsection (z) for such month,'' before ``if ''.
       (b) Husband's Insurance Benefits.--Section 202(c)(2)(A) of 
     such Act (42 U.S.C. 402(c)(2)(A)) is amended--
       (1) by inserting ``the amount (if any) by which the sum of 
     such benefit (before reduction under this paragraph) and'' 
     after ``two-thirds of ''; and
       (2) by inserting ``exceeds the amount described in 
     subsection (z) for such month,'' before ``if ''.
       (c) Widow's Insurance Benefits.--Section 202(e)(7)(A) of 
     such Act (42 U.S.C. 402(e)(7)(A)) is amended--
       (1) by inserting ``the amount (if any) by which the sum of 
     such benefit (before reduction under this paragraph) and'' 
     after ``two-thirds of ''; and
       (2) by inserting ``exceeds the amount described in 
     subsection (z) for such month,'' before ``if ''.
       (d) Widower's Insurance Benefits.--Section 202(f)(2)(A) of 
     such Act (42 U.S.C. 402(f)(2)(A)) is amended--
       (1) by inserting ``the amount (if any) by which the sum of 
     such benefit (before reduction under this paragraph) and'' 
     after ``two-thirds of ''; and
       (2) by inserting ``exceeds the amount described in 
     subsection (z) for such month,'' before ``if ''.
       (e) Mother's and Father's Insurance Benefits.--Section 
     202(g)(4)(A) of such Act (42 U.S.C. 402(g)(4)(A)) is 
     amended--
       (1) by inserting ``the amount (if any) by which the sum of 
     such benefit (before reduction under this paragraph) and'' 
     after ``two-thirds of ''; and
       (2) by inserting ``exceeds the amount described in 
     subsection (z) for such month,'' before ``if ''.
       (f) Amount Described.--Section 202 of such Act (42 U.S.C. 
     402) is amended by adding at the end the following:
       ``(z) The amount described in this subsection is, for 
     months in each 12-month period beginning in December of 1998, 
     and each succeeding calendar year, the greater of--
       ``(1) $1200; or
       ``(2) the amount applicable for months in the preceding 12-
     month period, increased by the cost-of-living adjustment for 
     such period determined for an annuity under section 8340 of 
     title 5, United States Code (without regard to any other 
     provision of law).''
       (g) Limitations on Reductions in Benefits.--Section 202 of 
     such Act (42 U.S.C. 402), as amended by subsection (f), is 
     amended by adding at the end the following:
       ``(aa) For any month after December 1998, in no event shall 
     an individual receive a reduction in a benefit under 
     subsection (b)(4)(A), (c)(2)(A), (e)(7)(A), (f)(2)(A), or 
     (g)(4)(A) for the month that is more than the reduction in 
     such benefit that would have applied for such month under 
     such subsections as in effect on December 1, 1998.''
       (h) Effective Date.--The amendments made by this section 
     shall apply with respect to monthly insurance benefits 
     payable under title II of the Social Security Act for months 
     after December 1998.

     SEC. 404. PERIODS OF FAMILY AND MEDICAL LEAVE TREATED AS 
                   HOURS OF SERVICE FOR PENSION PARTICIPATION AND 
                   VESTING.

       (a) Amendments of Internal Revenue Code.--
       (1) Participation.--
       (A) In general.--Paragraph (3) of section 410(a) of the 
     Internal Revenue Code of 1986 (relating to minimum 
     participation standards) is amended by adding at the end the 
     following new subparagraph:
       ``(E) Family and medical leave treated as service.--

[[Page S7277]]

       ``(i) In general.--For purposes of this subsection, in the 
     case of an individual who is absent from work on leave 
     required to be given to such individual under the Family and 
     Medical Leave Act of 1993, the plan shall treat as hours of 
     service--

       ``(I) the hours of service which otherwise would normally 
     have been credited to such individual but for such absence, 
     or
       ``(II) in any case in which the plan is unable to determine 
     the hours described in subclause (I), 8 hours of service per 
     day of absence.

       ``(ii) Year to which hours are credited.--The hours 
     described in clause (i) shall be treated as hours of service 
     as provided in this subparagraph--

       ``(I) only in the year in which the absence from work 
     begins, if a participant would have a year of service solely 
     because the period of absence is treated as hours of service 
     as provided in clause (i); or
       ``(II) in any other case, in the immediately following 
     year.''

       (B) Coordination with treatment of maternity and paternity 
     absences under break in service rules.--Subparagraph (E) of 
     section 410(a)(5) of such Code is amended--
       (i) by inserting ``not under family and medical leave act 
     of 1993'' after ``absences'' in the heading, and
       (ii) by adding at the end of clause (i) the following new 
     sentence: ``The preceding sentence shall apply to an absence 
     from work only if no part of such absence is required to be 
     given under the Family and Medical Leave Act of 1993.''
       (2) Vesting.--
       (A) In general.--Paragraph (5) of section 411(a) of such 
     Code (relating to minimum vesting standards) is amended by 
     adding at the end the following new subparagraph:
       ``(E) Family and medical leave treated as service.--
       ``(i) In general.--For purposes of this subsection, in the 
     case of an individual who is absent from work on leave 
     required to be given to such individual under the Family and 
     Medical Leave Act of 1993, the plan shall treat as hours of 
     service--

       ``(I) the hours of service which otherwise would normally 
     have been credited to such individual but for such absence, 
     or
       ``(II) in any case in which the plan is unable to determine 
     the hours described in subclause (I), 8 hours of service per 
     day of absence.

       ``(ii) Year to which hours are credited.--The hours 
     described in clause (i) shall be treated as hours of service 
     as provided in this subparagraph--

       ``(I) only in the year in which the absence from work 
     begins, if a participant would have a year of service solely 
     because the period of absence is treated as hours of service 
     as provided in clause (i); or
       ``(II) in any other case, in the immediately following 
     year.''

       (B) Coordination with treatment of maternity and paternity 
     absences under break in service rules.--Subparagraph (E) of 
     section 411(a)(6) of such Code is amended--
       (i) by inserting ``not under family and medical leave act 
     of 1993'' after ``absences'' in the heading, and
       (ii) by adding at the end of clause (i) the following new 
     sentence: ``The preceding sentence shall apply to an absence 
     from work only if no part of such absence is required to be 
     given under the Family and Medical Leave Act of 1993.''
       (b) Amendments of ERISA.--
       (1) Participation.--
       (A) In general.--Paragraph (3) of section 202(a) of the 
     Employee Retirement Income Security Act of 1974 (relating to 
     minimum participation standards) is amended by adding at the 
     end the following new subparagraph:
       ``(E)(i) For purposes of this subsection, in the case of an 
     individual who is absent from work on leave required to be 
     given to such individual under the Family and Medical Leave 
     Act of 1993, the plan shall treat as hours of service--
       ``(I) the hours of service which otherwise would normally 
     have been credited to such individual but for such absence, 
     or
       ``(II) in any case in which the plan is unable to determine 
     the hours described in subclause (I), 8 hours of service per 
     day of absence.
       ``(ii) The hours described in clause (i) shall be treated 
     as hours of service as provided in this subparagraph--
       ``(I) only in the year in which the absence from work 
     begins, if a participant would have a year of service solely 
     because the period of absence is treated as hours of service 
     as provided in clause (i); or
       ``(II) in any other case, in the immediately following 
     year.''
       (B) Coordination with treatment of maternity and paternity 
     absences under break in service rules.--Subparagraph (A) of 
     section 202(b)(5) of such Act is amended by adding at the end 
     of clause (i) the following new sentence: ``The preceding 
     sentence shall apply to an absence from work only if no part 
     of such absence is required to be given under the Family and 
     Medical Leave Act of 1993.''
       (2) Vesting.--
       (A) In general.--Paragraph (2) of section 203(b) of such 
     Act (relating to minimum vesting standards) is amended by 
     adding at the end the following new subparagraph:
       ``(E)(i) For purposes of this subsection, in the case of an 
     individual who is absent from work on leave required to be 
     given to such individual under the Family and Medical Leave 
     Act of 1993, the plan shall treat as hours of service--
       ``(I) the hours of service which otherwise would normally 
     have been credited to such individual but for such absence, 
     or
       ``(II) in any case in which the plan is unable to determine 
     the hours described in subclause (I), 8 hours of service per 
     day of absence.
       ``(ii) The hours described in clause (i) shall be treated 
     as hours of service as provided in this subparagraph--
       ``(I) only in the year in which the absence from work 
     begins, if a participant would have a year of service solely 
     because the period of absence is treated as hours of service 
     as provided in clause (i); or
       ``(II) in any other case, in the immediately following 
     year.''
       (B) Coordination with treatment of maternity and paternity 
     absences under break in service rules.--Clause (i) of section 
     203(b)(3)(E) of such Act is amended by adding at the end of 
     clause (i) the following new sentence: ``The preceding 
     sentence shall apply to an absence from work only if no part 
     of such absence is required to be given under the Family and 
     Medical Leave Act of 1993.''

     SEC. 405. PENSION INTEGRATION RULES.

       (a) Applicability of New Integration Rules Extended to All 
     Existing Accrued Benefits.--Notwithstanding subsection (c)(1) 
     of section 1111 of the Tax Reform Act of 1986 (relating to 
     effective date of application of nondiscrimination rules to 
     integrated plans) (100 Stat. 2440), effective for plan years 
     beginning after the date of the enactment of this Act, the 
     amendments made by subsection (a) of such section 1111 shall 
     also apply to benefits attributable to plan years beginning 
     on or before December 31, 1988.
       (b) Integration Disallowed for Simplified Employee 
     Pensions.--
       (1) In general.--Subparagraph (D) of section 408(k)(3) of 
     the Internal Revenue Code of 1986 (relating to permitted 
     disparity under rules limiting discrimination under 
     simplified employee pensions) is repealed.
       (2) Conforming amendment.--Subparagraph (C) of such section 
     408(k)(3) is amended by striking ``and except as provided in 
     subparagraph (D),''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply with respect to taxable years beginning on or 
     after January 1, 1998.
       (c) Eventual Repeal of Integration Rules.--Effective for 
     plan years beginning on or after January 1, 2004--
       (1) subparagraphs (C) and (D) of section 401(a)(5) of the 
     Internal Revenue Code of 1986 (relating to pension 
     integration exceptions under nondiscrimination requirements 
     for qualification) are repealed, and subparagraph (E) of such 
     section 401(a)(5) is redesignated as subparagraph (C); and
       (2) subsection (l) of section 401 of such Code (relating to 
     nondiscriminatory coordination of defined contribution plans 
     with OASDI) is repealed.

     SEC. 406. DIVISION OF PENSION BENEFITS UPON DIVORCE.

       (a) Amendments to the Internal Revenue Code of 1986.--
     Section 414(p) of the Internal Revenue Code of 1986 (relating 
     to qualified domestic relations order defined) is amended by 
     redesignating paragraph (12) as paragraph (13) and by adding 
     at the end the following new paragraph:
       ``(12) Special rules and procedures for domestic relations 
     orders not specifying division of pension benefits.--
       ``(A) In general.--If--
       ``(i) a domestic relations order (including an annulment or 
     other order of marital dissolution) relates to provision of 
     marital property with respect to a marriage of at least 5 
     years duration between the participant and the former spouse,
       ``(ii)(I) such order (and any prior order) does not 
     specifically provide that pension benefits were considered by 
     the parties and no division is intended, and
       ``(II) such order is not a qualified domestic relations 
     order without regard to this paragraph and there is no other 
     prior qualified domestic relations order issued in connection 
     with the dissolution of the marriage to which such order 
     relates, and
       ``(iii) the former spouse notifies a plan within the period 
     prescribed under subparagraph (C) that the former spouse is 
     entitled to benefits under the plan in accordance with the 
     provisions of this paragraph,

     then such domestic relations order shall be treated as a 
     qualified domestic relations order for purposes of this 
     subsection and section 401(a)(13).
       ``(B) Amount of benefit.--
       ``(i) In general.--Any domestic relations order treated as 
     a qualified domestic relations order under subparagraph (A) 
     shall be treated as specifying that the former spouse is 
     entitled to the applicable percentage of the marital share of 
     the participant's accrued benefit.
       ``(ii) Marital share.--For purposes of clause (i), the 
     marital share of a participant's accrued benefit is an amount 
     equal to the product of--

       ``(I) such benefit as of the date of the first payment 
     under the plan (to the extent such accrued benefit is vested 
     at the date of the divorce or any later date), and
       ``(II) a fraction the numerator of which is the period of 
     participation by the participant under the plan starting with 
     the date of marriage and ending with the date of divorce, and 
     the denominator of which is the total period of participation 
     by the participant under the plan.

[[Page S7278]]

       ``(iii) Applicable percentage.--For purposes of this 
     subparagraph, the applicable percentage is--

       ``(I) except as provided in subclause (II), 50 percent, and
       ``(II) in the case of a participant who fails to provide 
     the plan with notice of a domestic relations order within the 
     time prescribed under subparagraph (C), 67 percent.

       ``(C) Notice requirements.--
       ``(i) Notice by employee.--Each employee who is a 
     participant in a pension plan shall, within 60 days after the 
     dissolution of the marriage of the employee--

       ``(I) notify the plan administrator of the plan of such 
     dissolution, and
       ``(II) provide to the plan administrator a copy of the 
     domestic relations order (including an annulment or other 
     order of marital dissolution) providing for such dissolution 
     and the last known address of the employee's former spouse.

       ``(ii) Notice by plan administrator.--Each plan 
     administrator receiving notice under clause (i) shall 
     promptly notify the former spouse of a participant of such 
     spouse's rights under this paragraph, including the time 
     period within which such spouse is required to notify the 
     plan of the spouse's intention to claim rights under this 
     paragraph.
       ``(iii) Notice by former spouse.--A former spouse may 
     notify the plan administrator of such spouse's intent to 
     claim rights under this paragraph at any time before the last 
     day of the 1-year period following receipt of notice under 
     clause (ii).
       ``(iv) Coordination with plan procedures.--The 
     determination under paragraph (6)(A)(ii) with respect to a 
     domestic relations order to which this paragraph applies 
     shall be made within a reasonable period of time after the 
     plan administrator receives the notice described in clause 
     (iii).
       ``(D) Interpretation as qualified domestic relations 
     order.--Each plan shall establish reasonable rules for 
     determining how any such deemed domestic relations order is 
     to be interpreted under the plan so as to constitute a 
     qualified domestic relations order that satisfies paragraphs 
     (2) through (4) (and a copy of such rules shall be provided 
     to such former spouse promptly after delivery of the divorce 
     decree). Such rules--
       ``(i) may delay the effect of such an order until the 
     earlier of the date the participant is fully vested or has 
     terminated employment,
       ``(ii) may allow the former spouse to be paid out 
     immediately,
       ``(iii) shall permit the former spouse to be paid not later 
     than the earliest retirement age under the plan or the 
     participant's death,
       ``(iv) may require the submitter of the divorce decree to 
     present a marriage certificate or other evidence of the 
     marriage date to assist in benefit calculations, and
       ``(v) may conform to the rules applicable to qualified 
     domestic relations orders regarding form or type of 
     benefit.''
       (b) Amendments to the Employee Retirement Income Security 
     Act of 1974.--Section 206(d)(3) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1056(d)(3)) is amended 
     by redesignating subparagraph (N) as subparagraph (O) and by 
     inserting after subparagraph (M) the following new 
     subparagraph:
       ``(N) Special rules and procedures for domestic relations 
     orders not specifying division of pension benefits.--
       ``(i) In general.--If--

       ``(I) a domestic relations order (including an annulment or 
     other order of marital dissolution) relates to provision of 
     marital property with respect to a marriage of at least 5 
     years duration between the participant and the former spouse,
       ``(II)(aa) such order (and any prior order) does not 
     specifically provide that pension benefits were considered by 
     the parties and no division is intended, or
       ``(bb) such order is a qualified domestic relations order 
     without regard to this subparagraph or there is no other 
     prior qualified domestic relations order issued in connection 
     with the dissolution of the marriage to which such order 
     relates, and
       ``(III) the former spouse notifies a plan within the period 
     prescribed under clause (iii) that the former spouse is 
     entitled to benefits under the plan in accordance with the 
     provisions of this subparagraph,

     then such domestic relations order shall be treated as a 
     qualified domestic relations order for purposes of this 
     paragraph.
       ``(ii) Amount of benefit.--

       ``(I) In general.--Any domestic relations order treated as 
     a qualified domestic relations order under clause (i) shall 
     be treated as specifying that the former spouse is entitled 
     to the applicable percentage of the marital share of the 
     participant's accrued benefit.
       ``(II) Marital share.--For purposes of subclause (I), the 
     marital share of a participant's accrued benefit is an amount 
     equal to the product of--

       ``(aa) such benefit as of the date of the first payment 
     under the plan (to the extent such accrued benefit is vested 
     at the date of the divorce or any later date), and
       ``(bb) the numerator of which is the period of 
     participation by the participant under the plan starting with 
     the date of marriage and ending with the date of divorce, and 
     the denominator of which is the total period of participation 
     by the participant under the plan.

       ``(III) Applicable percentage.--For purposes of this 
     clause, the applicable percentage is--

       ``(aa) except as provided in item (bb), 50 percent, and
       ``(bb) in the case of a participant who fails to provide 
     the plan with notice of a domestic relations order within the 
     time prescribed under clause (iii), 67 percent.
       ``(iii) Notice requirements.--

       ``(I) Notice by employee.--Each employee who is a 
     participant in a pension plan shall, within 60 days after the 
     dissolution of the marriage of the employee--

       ``(aa) notify the plan administrator of the plan of such 
     dissolution, and
       ``(bb) provide to the plan administrator a copy of the 
     domestic relations order (including an annulment or other 
     order of marital dissolution) providing for such dissolution 
     and the last known address of the employee's former spouse.

       ``(II) Notice by plan administrator.--Each plan 
     administrator receiving notice under subclause (I) shall 
     promptly notify the former spouse of a participant of such 
     spouse's rights under this subparagraph, including the time 
     period within which such spouse is required to notify the 
     plan of the spouse's intention to claim rights under this 
     subparagraph.
       ``(III) Notice by former spouse.--A former spouse may 
     notify the plan administrator of such spouse's intent to 
     claim rights under this subparagraph at any time before the 
     last day of the 1-year period following receipt of notice 
     under subclause (II).
       ``(IV) Coordination with plan procedures.--The 
     determination under subparagraph (G)(i)(II) with respect to a 
     domestic relations order to which this subparagraph applies 
     shall be made within a reasonable period of time after the 
     plan administrator receives the notice described in subclause 
     (III).

       ``(iv) Interpretation as qualified domestic relations 
     order.--Each plan shall establish reasonable rules for 
     determining how any such deemed domestic relations order is 
     to be interpreted under the plan so as to constitute a 
     qualified domestic relations order that satisfies 
     subparagraphs (C) through (E) (and a copy of such rules shall 
     be provided to such former spouse promptly after delivery of 
     the divorce decree). Such rules--

       ``(I) may delay the effect of such an order until the 
     earlier of the date the participant is fully vested or has 
     terminated employment,
       ``(II) may allow the former spouse to be paid out 
     immediately,
       ``(III) shall permit the former spouse to be paid not later 
     than the earliest retirement age under the plan or the 
     participant's death,
       ``(IV) may require the submitter of the divorce decree to 
     present a marriage certificate or other evidence of the 
     marriage date to assist in benefit calculations, and

       ``(V) may conform to the rules applicable to qualified 
     domestic relations orders regarding form or type of 
     benefit.''

     SEC. 407. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD 
                   RETIREMENT ANNUITIES INDEPENDENT OF ACTUAL 
                   ENTITLEMENT OF EMPLOYEE.

       Section 2 of the Railroad Retirement Act of 1974 (45 U.S.C. 
     231a) is amended--
       (1) in subsection (c)(4)(i), by striking ``(A) is entitled 
     to an annuity under subsection (a)(1) and (B)''; and
       (2) in subsection (e)(5), by striking ``or divorced wife'' 
     the second place it appears.

     SEC. 408. EFFECTIVE DATES.

       (a) In General.--Except as provided in subsection (b), the 
     amendments made by this subtitle, other than sections 403 and 
     405, shall apply with respect to plan years beginning on or 
     after January 1, 1999, and the amendments made by section 406 
     shall apply only with respect to divorces becoming final in 
     such plan years.
       (b) Special Rule for Collectively Bargained Plans.--In the 
     case of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, subsection (a) shall be applied to 
     benefits pursuant to, and individuals covered by, any such 
     agreement by substituting for ``January 1, 1999'' the date of 
     the commencement of the first plan year beginning on or after 
     the earlier of--
       (1) the later of--
       (A) January 1, 2000, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2001.

Subtitle B--Protection of Rights of Former Spouses to Pension Benefits 
 Under Certain Government and Government-Sponsored Retirement Programs

     SEC. 411. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS 
                   TO SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE 
                   AGREEMENTS.

       (a) In General.--Section 5 of the Railroad Retirement Act 
     of 1974 (45 U.S.C. 231d) is amended by adding at the end the 
     following new subsection:
       ``(d) Notwithstanding any other provision of law, the 
     payment of any portion of an annuity computed under section 
     3(b) to a surviving former spouse in accordance with a court 
     decree of divorce, annulment, or legal separation or the 
     terms of any court-approved property settlement incident to 
     any such court decree shall not be terminated

[[Page S7279]]

     upon the death of the individual who performed the service 
     with respect to which such annuity is so computed unless such 
     termination is otherwise required by the terms of such court 
     decree.''
       (b) Effective Date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 412. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS, AND FORMER 
                   SPOUSES OF FEDERAL EMPLOYEES WHO DIE BEFORE 
                   ATTAINING AGE FOR DEFERRED ANNUITY UNDER CIVIL 
                   SERVICE RETIREMENT SYSTEM.

       (a) Benefits for Widow or Widower.--Section 8341(f) of 
     title 5, United States Code, is amended--
       (1) in the matter preceding paragraph (1) by--
       (A) by inserting ``a former employee separated from the 
     service with title to deferred annuity from the Fund dies 
     before having established a valid claim for annuity and is 
     survived by a spouse, or if'' before ``a Member''; and
       (B) by inserting ``of such former employee or Member'' 
     after ``the surviving spouse'';
       (2) in paragraph (1)--
       (A) by inserting ``former employee or'' before ``Member 
     commencing''; and
       (B) by inserting ``former employee or'' before ``Member 
     dies''; and
       (3) in the undesignated sentence following paragraph (2)--
       (A) in the matter preceding subparagraph (A) by inserting 
     ``former employee or'' before ``Member''; and
       (B) in subparagraph (B) by inserting ``former employee or'' 
     before ``Member''.
       (b) Benefits for Former Spouse.--Section 8341(h) of title 
     5, United States Code, is amended--
       (1) in paragraph (1) by adding after the first sentence 
     ``Subject to paragraphs (2) through (5) of this subsection, a 
     former spouse of a former employee who dies after having 
     separated from the service with title to a deferred annuity 
     under section 8338(a) but before having established a valid 
     claim for annuity is entitled to a survivor annuity under 
     this subsection, if and to the extent expressly provided for 
     in an election under section 8339(j)(3) of this title, or in 
     the terms of any decree of divorce or annulment or any court 
     order or court-approved property settlement agreement 
     incident to such decree.''; and
       (2) in paragraph (2)--
       (A) in subparagraph (A)(ii) by striking ``or annuitant,'' 
     and inserting ``annuitant, or former employee''; and
       (B) in subparagraph (B)(iii) by inserting ``former employee 
     or'' before ``Member''.
       (c) Protection of Survivor Benefit Rights.--Section 
     8339(j)(3) of title 5, United States Code, is amended by 
     inserting at the end the following: ``The Office shall 
     provide by regulation for the application of this subsection 
     to the widow, widower, or surviving former spouse of a former 
     employee who dies after having separated from the service 
     with title to a deferred annuity under section 8338(a) but 
     before having established a valid claim for annuity.''
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act 
     and shall apply only in the case of a former employee who 
     dies on or after such date.

     SEC. 413. PAYMENT OF LUMP-SUM BENEFITS TO FORMER SPOUSES OF 
                   FEDERAL EMPLOYEES.

       (a) Civil Service Retirement System.--Chapter 83 of title 
     5, United States Code, is amended--
       (1) in section 8342(c), by striking ``Lump-sum'' and 
     inserting ``Except as provided in section 8345(j), lump-
     sum'';
       (2) in section 8345(j) by adding at the end of paragraph 
     (1) the following: ``Except for purposes of subparagraph (B), 
     the first sentence of this paragraph shall be deemed to be 
     amended by inserting after `that individual' the following: 
     `, and any lump-sum benefits authorized by section 8342(d) 
     through (f) which would otherwise be paid to any person or 
     persons under section 8342(c),' ''; and
       (B) by adding at the end the following:
       ``(4) Any payment under this subsection to a person bars 
     recovery by any other person.''
       (b) Federal Employees' Retirement System.--Chapter 84 of 
     title 5, United States Code, is amended--
       (1) in section 8424(d), by striking ``Lump-sum'' and 
     inserting ``Except as provided in section 8467(a), lump-
     sum''; and
       (2) in section 8467--
       (A) in subsection (a), by adding at the end the following: 
     ``Except for purposes of paragraph (2), the first sentence of 
     this subsection shall be deemed to be amended by inserting 
     after `that individual' the following: `, and any lump-sum 
     benefits authorized by section 8424(e) through (g) which 
     would otherwise be paid to any individual or individuals 
     under section 8424(d),' ''; and
       (B) by adding at the end the following:
       ``(d) Any payment under this section to a person bars 
     recovery by any other person.''
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to any amount payable by reason of 
     any death occurring on or after the date of the enactment of 
     this Act.

  Subtitle C--Modifications of Joint and Survivor Annuity Requirements

     SEC. 421. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY 
                   REQUIREMENTS.

       (a) Amendments to ERISA.--
       (1) Amount of annuity.--
       (A) In general.--Paragraph (1) of section 205(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(a)) is amended by inserting ``or, at the election of the 
     participant, shall be provided in the form of a qualified 
     joint and \2/3\ survivor annuity'' after ``survivor 
     annuity,''.
       (B) Definition.--Subsection (d) of section 205 of such Act 
     (29 U.S.C. 1055) is amended--
       (i) by redesignating paragraphs (1) and (2) as 
     subparagraphs (A) and (B), respectively,
       (ii) by inserting ``(1)'' after ``(d)'', and
       (iii) by adding at the end the following new paragraph:
       ``(2) For purposes of this section, the term ``qualified 
     joint and \2/3\ survivor annuity'' means a joint and survivor 
     annuity under which the survivor annuity for the life of the 
     surviving spouse is equal to at least \2/3\ of the amount of 
     the annuity which is payable during the joint lives of the 
     participant and spouse.''
       (2) Illustration requirement.--Clause (i) of section 
     205(c)(3)(A) of such Act (29 U.S.C. 1055(c)(3)(A)) is amended 
     to read as follows:
       ``(i) the terms and conditions of each qualified joint and 
     survivor annuity and qualified joint and \2/3\ survivor 
     annuity offered, accompanied by an illustration of the 
     benefits under each such annuity for the particular 
     participant and spouse and an acknowledgement form to be 
     signed by the participant and the spouse that they have read 
     and considered the illustration before any form of retirement 
     benefit is chosen,''.
       (b) Amendments to Internal Revenue Code.--
       (1) Amount of annuity.--
       (A) In general.--Clause (i) of section 401(a)(11)(A) of the 
     Internal Revenue Code of 1986 (relating to requirement of 
     joint and survivor annuity and preretirement survivor 
     annuity) is amended by inserting ``or, at the election of the 
     participant, shall be provided in the form of a qualified 
     joint and \2/3\ survivor annuity'' after ``survivor 
     annuity,''.
       (B) Definition.--Section 417 of such Code (relating to 
     definitions and special rules for purposes of minimum 
     survivor annuity requirements), as amended by section 422, is 
     amended by redesignating subsection (f) as subsection (g) and 
     by inserting after subsection (e) the following new 
     subsection:
       ``(f) Definition of Qualified Joint and \2/3\ Survivor 
     Annuity.--For purposes of this section and section 
     401(a)(11), the term ``qualified joint and \2/3\ survivor 
     annuity'' means a joint and survivor annuity under which the 
     survivor annuity for the life of the surviving spouse is 
     equal to at least \2/3\ of the amount of the annuity which is 
     payable during the joint lives of the participant and 
     spouse.''
       (2) Illustration requirement.--Clause (i) of section 
     417(a)(3)(A) of such Code (relating to explanation of joint 
     and survivor annuity) is amended to read as follows:
       ``(i) the terms and conditions of each qualified joint and 
     survivor annuity and qualified joint and \2/3\ survivor 
     annuity offered, accompanied by an illustration of the 
     benefits under each such annuity for the particular 
     participant and spouse and an acknowledgement form to be 
     signed by the participant and the spouse that they have read 
     and considered the illustration before any form of retirement 
     benefit is chosen,''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning on or after January 1, 
     1999.

     SEC. 422. SPOUSAL CONSENT REQUIRED FOR DISTRIBUTIONS FROM 
                   DEFINED CONTRIBUTION PLANS.

       (a) Amendments to Internal Revenue Code of 1986.--
       (1) In general.--Section 401(a)(11) of the Internal Revenue 
     Code of 1986 (relating to requirement of joint and survivor 
     annuity and preretirement survivor annuity) is amended by 
     striking subparagraphs (B), (C), and (D), by redesignating 
     subparagraphs (E) and (F) as subparagraphs (C) and (D), 
     respectively, and by inserting after subparagraph (A) the 
     following new subparagraph:
       ``(B) Plans to which paragraph applies.--This paragraph 
     shall apply to any defined benefit plan and to any defined 
     contribution plan.''
       (2) Exception for hardship distributions.--Section 417(f) 
     of such Code is amended by adding at the end the following 
     new paragraph:
       ``(8) Hardship distributions.--The requirements of section 
     401(a)(11) and this section shall not apply to a hardship 
     distribution under section 401(k)(2)(B)(i)(IV).''
       (3) Special rule for cash-outs.--Section 417(e) of such 
     Code is amended by adding at the end the following new 
     paragraph:
       ``(4) Special rule for defined contribution plans.--
       ``(A) In general.--In the case of a defined contribution 
     plan, notwithstanding paragraph (2), if the present value of 
     the qualified joint and survivor annuity does not exceed 
     $10,000, the plan may immediately distribute 50 percent of 
     the present value of such annuity to each spouse.
       ``(B) Exception.--The plan may distribute a different 
     percentage of the present value of an annuity to each spouse 
     if a court order or contractual agreement provides for such 
     different percentage.''
       (b) Amendments to ERISA.--
       (1) In general.--Section 205(b) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1055(b)) is amended to 
     read as follows:
       ``(b)(1) This section shall apply to any defined benefit 
     plan and to any individual account plan.
       ``(2) This section shall not apply to a plan which the 
     Secretary of the Treasury or his delegate has determined is a 
     plan described

[[Page S7280]]

     in section 404(c) of the Internal Revenue Code of 1986 (or a 
     continuation thereof) in which participation is substantially 
     limited to individuals who, before January 1, 1976, ceased 
     employment covered by the plan.''
       (2) Hardship distribution.--Section 205 of such Act (29 
     U.S.C. 1055) is amended by adding at the end the following 
     new subsection:
       ``(m) This section shall not apply to a hardship 
     distribution under section 401(k)(2)(B)(i)(IV) of the 
     Internal Revenue Code of 1986.''
       (3) Special rule for cash-outs.--Section 205(g) of such Act 
     (29 U.S.C. 1055(g)) is amended by adding at the end the 
     following new paragraph:
       ``(4) Special rule for defined contribution plans.--
       ``(A) In general.--In the case of an individual account 
     plan, notwithstanding paragraph (2), if the present value of 
     the qualified joint and survivor annuity or the qualified 
     preretirement survivor annuity exceeds $10,000, the plan may 
     immediately distribute 50 percent of the present value of 
     such annuity to each spouse.
       ``(B) Exception.--The plan may distribute a different 
     percentage of the present value of an annuity to each spouse 
     if a court order or contractual agreement provides for such 
     different percentage.''
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1999.

             TITLE V--DATE FOR ADOPTION OF PLAN AMENDMENTS

     SEC. 501. DATE FOR ADOPTION OF PLAN AMENDMENTS.

       (a) In General.--Except as otherwise provided in this Act, 
     if any amendment made by this Act requires an amendment to 
     any plan, such plan amendment shall not be required to be 
     made before the last day of the first plan year beginning on 
     or after January 1, 1999, if--
       (1) during the period after such amendment takes effect and 
     before the last day of such first plan year, the plan is 
     operated in accordance with the requirements of such 
     amendment, and
       (2) such plan amendment applies retroactively to such 
     period.

     A plan shall not be treated as failing to provide definitely 
     determinable benefits or contributions, or to be operated in 
     accordance with the provisions of the plan, merely because it 
     operates in accordance with this subsection.
       (b) Governmental Plans.--In the case of a governmental plan 
     (as defined in section 414(d) of the Internal Revenue Code of 
     1986), subsection (a) shall be applied by substituting for 
     ``January 1, 1999'' the later of--
       (1) January 1, 2000, or
       (2) the date which is 90 days after the opening of the 
     first legislative session beginning after January 1, 1999, of 
     the governing body with authority to amend the plan, but only 
     if such governing body does not meet continuously.
       (c) Special Rule for Collectively Bargained Plans.--
     Notwithstanding any other provision of this Act, in the case 
     of a plan maintained pursuant to 1 or more collective 
     bargaining agreements between employee representatives and 1 
     or more employers ratified on or before the date of the 
     enactment of this Act, any amendment made by this Act which 
     requires an amendment to such plan shall not be required to 
     be made before the last day of the first plan year beginning 
     on or after the earlier of--
       (1) the later of--
       (A) January 1, 1999, or
       (B) the date on which the last of such collective 
     bargaining agreements terminates (determined without regard 
     to any extension thereof after the date of the enactment of 
     this Act), or
       (2) January 1, 2000.
                                 ______