[Congressional Record Volume 146, Number 94 (Wednesday, July 19, 2000)]
[House]
[Pages H6476-H6529]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        COMPREHENSIVE RETIREMENT SECURITY AND PENSION REFORM ACT

  Mr. REYNOLDS. Mr. Speaker, by direction of the Committee on Rules, I 
call up House Resolution 557 and ask for its immediate consideration.
  The Clerk read the resolution, as follows:

                              H. Res. 557

         Resolved, That upon the adoption of this resolution it 
     shall be in order without intervention of any point of order 
     to consider in the House the bill (H.R. 1102) to provide for 
     pension reform, and for other purposes. The bill shall be 
     considered as read for amendment. In lieu of the amendment 
     recommended by the Committee on Education and the Workforce 
     now printed in the bill, an amendment in the nature of a 
     substitute consisting of the text of the amendment 
     recommended by the Committee on Ways and Means now printed in 
     H.R. 4843 shall be considered as adopted. The previous 
     question shall be considered as ordered on the bill, as 
     amended, and on any further amendment thereto to final 
     passage without intervening motion except: (1) one hour of 
     debate on the bill, as amended, equally divided and 
     controlled by the chairman and ranking minority member of the 
     Committee on Ways and Means; (2) the amendment printed in the 
     report of the Committee on Rules accompanying this 
     resolution, if offered by Representative Rangel or his 
     designee, which shall be in order without intervention of any 
     point of order, shall be considered as read, and shall be 
     separately debatable for one hour equally divided and 
     controlled by the proponent and an opponent; and (3) one 
     motion to recommit with or without instructions.

  The SPEAKER pro tempore (Mr. Ose). The gentleman from New York (Mr. 
Reynolds) is recognized for 1 hour.
  Mr. REYNOLDS. Mr. Speaker, for purposes of debate only, I yield the 
customary 30 minutes to the gentlewoman from New York (Ms. Slaughter), 
pending which I yield myself such time as I may consume. During 
consideration of the resolution, all time yielded is for the purpose of 
debate only.
  (Mr. REYNOLDS asked and was given permission to revise and extend his 
remarks, and include extraneous material.)
  Mr. REYNOLDS. Mr. Speaker, last night the Committee on Rules met and 
granted a modified closed rule for H.R. 1102, the Comprehensive 
Retirement Security and Pension Reform Act of 2000. The rule provides 
that in lieu of the amendment recommended by the Committee on Education 
and the Workforce now printed in the bill, the text of H.R. 4843 as 
reported by the Committee on Ways and Means shall be considered as 
adopted. Additionally, the rule waives all points of order against the 
bill and against consideration of the amendment printed in this report.
  The rule also provides 1 hour of debate equally divided and 
controlled by the chairman and ranking member of the Committee on Ways 
and Means.
  The rule further provides for consideration of the amendment printed 
in the Committee on Rules report accompanying the resolution, if 
offered by the gentleman from New York (Mr. Rangel) or his designee, 
which shall be considered as read and shall be separately debatable for 
1 hour equally divided and controlled by a proponent and an opponent.
  Finally, the rule provides for one motion to recommit with or without 
instructions.
  Mr. Speaker, this is a completely fair rule for reform of our 
Nation's pension and retirement security laws. Not only is the 
underlying bill a completely balanced, bipartisan measure, but the rule 
also makes in order a minority substitute amendment providing for a 
full hour for debate. In short, the rule allows for a comprehensive 
debate on this very important matter.
  Mr. Speaker, Americans are investing far less than they should to 
prepare for their retirement. Half of all private-sector workers still 
have no pension coverage. Over a fifth of small businesses with 25 or 
fewer employees offer a pension plan, and members of the baby boomers 
generation, 76 million of whom will retire in the next 15 years, have 
less than 40 percent of the savings needed to maintain their standard 
of living.
  In fact, retirement savings in the United States are at extremely low 
levels, even as our economy is reaching record highs. The reason 
Americans are saving less than they need for their retirement is 
simple, because the Federal Government has discouraged them from doing 
so.
  For too long the Federal Government has been an impediment to 
American workers planning and preparing for their retirement security.
  Mr. Speaker, contribution limits on pensions and IRAs have not kept 
with the times. In fact, they have been stuck at the 1980s level. 
Worse, over the past 2 decades Congress has actually reduced 
contribution limits and, as a double hit on working Americans, the 
Federal Government at the same time introduced burdensome and costly 
regulatory restrictions on pension plans. The result, in 1987 there 
were 114,000 of these pension plans across America. Ten years later, 
there were only 45,000. Since 1990 pension coverage has declined from 
40 to 33 percent among workers making less than $20,000; and despite a 
booming economy, the personal savings rate has dropped every year since 
1992 and is at its lowest point in 66 years.
  The underlying bipartisan bill is a historic measure that will 
strengthen individual retirement accounts, 401(k) plans and small 
business retirement plans, finally bringing retirement savings into the 
21st century and helping ensure retirement security of countless 
Americans.
  The Comprehensive Retirement Security and Pension Reform Act allows 
working Americans to set more of their hard-earned money aside in an 
IRA or 401(k)-type plan, modernizes pension laws, and provides 
regulatory relief to encourage more small businesses to offer 
retirement plans.
  The bill increases the old IRA contribution limit from $2,000 to 
$5,000 over the next 3 years for both traditional and Roth IRAs, and 
the bill includes an important fairness provision to allow workers over 
50 years of age to catch up with contributions for 401(k) plans by 
increasing the contribution level immediately.
  This bipartisan measure will remove excessive, burdensome and 
unnecessary Federal regulations, providing relief to American 
businesses and workers by encouraging small businesses to offer pension 
plans. By removing these restrictions, Americans will be allowed the 
freedom to invest in their future as never before.
  Mr. Speaker, H.R. 1102 is a fair, balanced and bipartisan plan that 
will help millions of Americans. I would like to commend the chairman 
of the Committee on Ways and Means, the gentleman from Texas (Mr. 
Archer), and the gentleman from New York (Mr. Rangel), for their hard 
work on this bill. Additionally, I would like to commend the gentleman 
from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin), 
the sponsors of the underlying legislation, for their dedication to 
pension and retirement reform for America.
  I urge my colleagues to support this fair rule, the underlying 
measure.
  Mr. Speaker, I reserve the balance of my time.
  Ms. SLAUGHTER. Mr. Speaker, I thank the gentleman from New York for 
yielding me the customary 30 minutes and yield myself such time as I 
may consume.
  (Ms. SLAUGHTER asked and was given permission to revise and extend 
her remarks.)

[[Page H6477]]

  Ms. SLAUGHTER. Mr. Speaker, this is a modified closed rule; but H.R. 
4843 deserves full and open debate, and an open rule would have ensured 
that no one would be shut out of the process.
  Mr. Speaker, I strongly support the underlying goals of H.R. 4843, to 
provide expanded opportunities for working Americans to save for their 
retirement. The bill includes a number of provisions which improve 
current protections for workers and retirees, such as a reduction of 
vesting to 3 years for 401(k) plan-matching contributions, encouraging 
rollovers of pension plans when workers switch employment, and 
eliminating compensation caps that unfairly affect the pension benefits 
of rank and file workers.
  Even during this period of strong economic growth, more people are 
joining the workforce than are receiving pension coverage. Only half 
the workforce is covered by a pension plan; and, worse, there is reason 
to believe it will not provide them with an adequate level of 
supplemental income in their retirement.
  Although there is insufficient data to measure contributions and 
benefits, data from the Federal Reserve shows pension plan 
contributions declining by 50 percent in recent years.
  While the underlying bill provides significant opportunities for 
those workers who can most afford to save the maximum amount allowed, 
few or no opportunities are available to low- and moderate-income 
workers under the bill. We must continue to work together to improve 
this aspect of the bill and ensure that no segment of our workforce is 
excluded from the opportunity to financially improve their retirement 
years.

                              {time}  1030

  The pressure to save adequately for retirement affects all working 
Americans. Statistics confirm that low-income workers are far less 
likely to participate in an employment-based retirement savings plan 
than workers with higher incomes, even when the plan is available to 
them. Individuals who are in between $10,000 and $14,000 annually 
participate at a rate of 31 percent, even though 51 percent of them 
have access to plans at work. However, the participation rate for 
workers earning $50,000 or more increased to 83 percent, with 88 
percent of such workers having access to employer-sponsored plans.
  During the consideration of the underlying bill, the gentleman from 
New York (Mr. Rangel) will offer a substitute that incorporates the 
text of H.R. 4843, as well as provisions to encourage the participation 
of the low-income workers. Specifically, the substitute provides a 
refundable credit for low- and middle-income workers who save for their 
retirement, makes small business employers eligible to claim a credit 
for certain expenses incurred as the result of establishing a qualified 
pension plan, provides relief from certain section 415 rules and 
benefit limits, and expresses a Sense of Congress that issues 
concerning cash balance plans should be resolved.
  Mr. Speaker, I urge that my colleagues support these important 
improvements to the bill.
  Mr. Speaker, I yield back the balance of my time.
  Mr. REYNOLDS. Mr. Speaker, I yield back the balance of my time, and I 
move the previous question on the resolution.
  The previous question was ordered.
  The resolution was agreed to.
  A motion to reconsider was laid on the table.
  Mr. ARCHER. Mr. Speaker, pursuant to House Resolution 557, I call up 
the bill (H.R. 1102), to provide for pension reform, and for other 
purposes, and ask for its immediate consideration in the House.
  The Clerk read the title of the bill.
  The SPEAKER pro tempore. Pursuant to House Resolution 557, the bill 
is considered read for amendment.
  The text of H.R. 1102 is as follows:

                               H.R. 1102

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Comprehensive Retirement Security and Pension Reform Act''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act 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.
       (c) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

                      TITLE I--EXPANDING COVERAGE

Sec. 101. Restoration of limits formerly in effect.
Sec. 102. Plan loans for subchapter S owners, partners, and sole 
              proprietors.
Sec. 103. Salary reduction only simple plans.
Sec. 104. Modification of top-heavy rules.
Sec. 105. Elective deferrals not taken into account for purposes of 
              limits.
Sec. 106. Reduced PBGC premium for new plans of small employers.
Sec. 107. Phase-in of additional premium for new plans.
Sec. 108. Repeal of coordination requirements for deferred compensation 
              plans of State and local governments and tax-exempt 
              organizations.
Sec. 109. Elimination of user fee for requests to IRS regarding pension 
              plans.
Sec. 110. Alternative method of meeting nondiscrimination requirements 
              for automatic contribution trust.
Sec. 111. Deduction limits.
Sec. 112. Option to treat elective deferrals as after-tax 
              contributions.
Sec. 113. Credit for pension plan startup costs of small employers.

          TITLE II--ENHANCING FAIRNESS FOR WOMEN AND CHILDREN

Sec. 201. Additional salary reduction catch-up contributions.
Sec. 202. Equitable treatment for contributions of employees to defined 
              contribution plans.
Sec. 203. Faster vesting of certain employer matching contributions.
Sec. 204. Deferred annuities for surviving spouses of Federal 
              employees.
Sec. 205. Simplify and update the minimum distribution rules.
Sec. 206. Clarification of tax treatment of division of section 457 
              plan benefits upon divorce.
Sec. 207. Percentage limitations on contributions.
Sec. 208. Eligible rollover distributions.
Sec. 209. Immediate participation in the Thrift Savings Plan.

           TITLE III--INCREASING PORTABILITY FOR PARTICIPANTS

Sec. 301. Rollovers allowed among various types of plans.
Sec. 302. Rollovers of IRAs into workplace retirement plans.
Sec. 303. Rollovers of after-tax contributions.
Sec. 304. Treatment of forms of distribution.
Sec. 305. Rationalization of restrictions on distributions.
Sec. 306. Purchase of service credit in governmental defined benefit 
              plans.
Sec. 307. Employers may disregard rollovers for purposes of cash-out 
              amounts.

        TITLE IV--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

Sec. 401. Repeal of 150 percent of current liability funding limit.
Sec. 402. Missing participants.
Sec. 403. Periodic pension benefits statements.
Sec. 404. Civil penalties for breach of fiduciary responsibility.
Sec. 405. Penalty tax relief for sound pension funding.
Sec. 406. Protection of investment of employee contributions to 401(k) 
              plans.
Sec. 407. Notice of significant reduction in benefit accruals.

                  TITLE V--REDUCING REGULATORY BURDENS

Sec. 501. Intermediate sanctions for inadvertent failures.
Sec. 502. Repeal of the multiple use test.
Sec. 503. Safety valve from mechanical rules.
Sec. 504. Reform of the line of business rules.
Sec. 505. Coverage test flexibility.
Sec. 506. Increase in retirement plan cash-out amount.
Sec. 507. Modification of timing of plan valuations.
Sec. 508. Section 457 inapplicable to certain mirror plans.
Sec. 509. Substantial owner benefits in terminated plans.
Sec. 510. ESOP dividends may be reinvested without loss of dividend 
              deduction.
Sec. 511. Modification of 403(b) exclusion allowance to conform to 415 
              modification.
Sec. 512. Treatment of multiemployer plans under section 415.
Sec. 513. Elimination of partial termination rules for multiemployer 
              plans.
Sec. 514. Notice and consent period regarding distributions.
Sec. 515. Conforming amendments relating to election to receive taxable 
              cash compensation in lieu of nontaxable parking benefits.
Sec. 516. Extension to international organizations of moratorium on 
              application of certain nondiscrimination rules applicable 
              to State and local plans.

[[Page H6478]]

Sec. 517. Employees of tax-exempt entities.
Sec. 518. Permissive aggregation of collective bargaining units.
Sec. 519. Repeal of transition rule relating to certain highly 
              compensated employees.
Sec. 520. Clarification of treatment of employer-provided retirement 
              advice.
Sec. 521. Annual report dissemination.
Sec. 522. Excess benefit plans.
Sec. 523. Benefit suspension notice.
Sec. 524. Provisions relating to plan amendments.
Sec. 525. Reporting simplification.
Sec. 526. Model plans for small businesses.

                      TITLE I--EXPANDING COVERAGE

     SEC. 101. RESTORATION OF LIMITS FORMERLY IN EFFECT.

       (a) Defined Benefit Plans.--
       (1) Dollar limit.--(A) Subparagraph (A) of section 
     415(b)(1) (relating to limitation for defined benefit plans) 
     is amended by striking ``$90,000'' and inserting 
     ``$180,000''.
       (B) Subparagraphs (C) and (D) of section 415(b)(2) are each 
     amended by striking ``$90,000'' each place it appears in the 
     headings and the text and inserting ``$180,000''.
       (C) Paragraph (7) of section 415(b) (relating to benefits 
     under certain collectively bargained plans) is amended by 
     striking ``the greater of $68,212 or one-half the amount 
     otherwise applicable for such year under paragraph (1)(A) for 
     `$90,000' '' and inserting ``one-half the amount otherwise 
     applicable for such year under paragraph (1)(A) for 
     `$180,000' ''.
       (2) Limit reduced when benefit begins before age 62.--
     Subparagraph (C) of section 415(b)(2) is amended by striking 
     ``the social security retirement age'' each place it appears 
     in the heading and text and inserting ``age 62''.
       (3) Limit increased when benefit begins after age 65.--
     Subparagraph (D) of section 415(b)(2) is amended by striking 
     ``the social security retirement age'' each place it appears 
     in the heading and text and inserting ``age 65''.
       (4) Multiemployer plans and plans maintained by governments 
     and tax exempt organizations.--Subparagraph (F) of section 
     415(b)(2) is amended to read as follows:
       ``(F) Multiemployer plans and plans maintained by 
     governments and tax exempt organizations.--
       ``(i) In general.--In the case of a governmental plan 
     (within the meaning of section 414(d)), a plan maintained by 
     an organization (other than a governmental unit) exempt from 
     tax under this subtitle, a multiemployer plan (as defined in 
     section 414(f)), or a qualified merchant marine plan, 
     subparagraph (C) shall be applied as if the last sentence 
     thereof read as follows: `The reduction under this 
     subparagraph shall not reduce the limitation of paragraph 
     (1)(A) below (i) $130,000 if the benefit begins at or after 
     age 55, or (ii) if the benefit begins before age 55, the 
     equivalent of the $130,000 limitation for age 55.'
       ``(ii) Definitions.--For purposes of this subparagraph--

       ``(I) Qualified merchant marine plan.--The term `qualified 
     merchant marine plan' means a plan in existence on January 1, 
     1986, the participants in which are merchant marine officers 
     holding licenses issued by the Secretary of Transportation 
     under title 46, United States Code.
       ``(II) Exempt organization plan covering 50 percent of its 
     employees.--A plan shall be treated as a plan maintained by 
     an organization (other than a governmental unit) exempt from 
     tax under this subtitle if at least 50 percent of the 
     employees benefiting under the plan are employees of an 
     organization (other than a governmental unit) exempt from tax 
     under this subtitle. If less than 50 percent of the employees 
     benefiting under a plan are employees of an organization 
     (other than a governmental unit) exempt from tax under this 
     subtitle, the plan shall be treated as a plan maintained by 
     an organization (other than a governmental unit) exempt from 
     tax under this subtitle only with respect to employees of 
     such an organization.''.

       (5) Cost-of-living adjustments.--Subsection (d) of section 
     415 (related to cost-of-living adjustments) is amended--
       (A) in paragraph (1)(A) by striking ``$90,000'' and 
     inserting ``$180,000'', and
       (B) in paragraph (3)(A)--
       (i) by striking ``$90,000'' in the heading and inserting 
     ``$180,000'', and
       (ii) by striking ``October 1, 1986'' and inserting ``July 
     1, 1999''.
       (b) Defined Contribution Plans.--
       (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
     (relating to limitation for defined contribution plans) is 
     amended by striking ``$30,000'' and inserting ``$45,000''.
       (2) Cost-of-living adjustments.--Subsection (d) of section 
     415 (related to cost-of-living adjustments) is amended--
       (A) in paragraph (1)(C) by striking ``$30,000'' and 
     inserting ``$45,000'', and
       (B) in paragraph (3)(D)--
       (i) by striking ``$30,000'' in the heading and inserting 
     ``$45,000'', and
       (ii) by striking ``October 1, 1993'' and inserting ``July 
     1, 1999''.
       (c) Qualified Trusts.--
       (1) Compensation limit.--Sections 401(a)(17), 404(l), 
     408(k), and 505(b)(7) are each amended by striking 
     ``$150,000'' each place it appears and inserting 
     ``$235,000''.
       (2) Base period and rounding of cost-of-living 
     adjustment.--Subparagraph (B) of section 401(a)(17) is 
     amended--
       (A) by striking ``October 1, 1993'' and inserting ``July 1, 
     1999'', and
       (B) by striking ``$10,000'' both places it appears and 
     inserting ``$5,000''.
       (d) Elective Deferrals.--
       (1) In general.--Paragraphs (1) and (5) of section 402(g) 
     (relating to limitation on exclusion for elective deferrals) 
     are each amended by striking ``$7,000'' and inserting 
     ``$15,000''.
       (2) Conforming amendments.--
       (A) Section 402(g) (relating to limitation on exclusion for 
     elective deferrals), as amended by paragraph (1), is further 
     amended by striking paragraph (4) and redesignating 
     paragraphs (5), (6), (7), (8), and (9) as paragraphs (4), 
     (5), (6), (7), and (8), respectively.
       (B) Clause (iii) of section 501(c)(18)(D) is amended by 
     striking ``(other than paragraph (4) thereof)''.
       (e) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--Section 457 
     (relating to deferred compensation plans of State and local 
     governments and tax-exempt organizations) is amended--
       (1) in subsections (b)(2)(A), (c)(1), and (e)(15) by 
     striking ``$7,500'' each place it appears and inserting 
     ``$15,000'',
       (2) in subsection (b)(3)(A) by striking ``$15,000'' and 
     inserting ``$30,000'', and
       (3) in subsection (e)(15)--
       (A) by inserting ``and the $30,000 amount specified in 
     subsection (b)(3)(A)'' after ``(c)(1)'', and
       (B) by striking ``September 30, 1994'' and inserting 
     ``September 30, 1999''.
       (f) Simple Retirement Accounts.--
       (1) Limitation.--Sections 408(p)(2)(A)(ii), 408(p)(2)(E), 
     401(k)(11)(B)(i)(I), and 401(k)(11)(E) are each amended by 
     striking ``$6,000'' and inserting ``$10,000''.
       (2) Base period for cost-of-living adjustment.--
     Subparagraph (E) of section 408(p)(2) is amended by striking 
     ``September 30, 1996'' and inserting ``September 30, 1999''.
       (g) Cost-of-Living Adjustments.--
       (1) Plans maintained by governments and tax exempt 
     organizations.--Paragraph (1) of section 415(d) (as amended 
     by subsection (b)) is amended by striking ``and'' at the end 
     of subparagraph (B), by redesignating subparagraph (C) as 
     subparagraph (D), and by inserting after subparagraph (B) the 
     following new subparagraph:
       ``(C) the $130,000 amount in subsection (b)(2)(F), and''.
       (2) Base period.--Paragraph (3) of section 415(d) (as 
     amended by subsection (b)) is further amended by 
     redesignating subparagraph (D) as subparagraph (E) and by 
     inserting after subparagraph (C) the following new 
     subparagraph:
       ``(D) $130,000 amount.--The base period taken into account 
     for purposes of paragraph (1)(C) is the calendar quarter 
     beginning July 1, 1999.''.
       (3) Rounding rule relating to defined benefit plans and 
     defined contribution plans.--Paragraph (4) of section 415(d) 
     is amended to read as follows:
       ``(4) Rounding.--
       ``(A) $180,000 amount.--Any increase under subparagraph (A) 
     of paragraph (1) which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.
       ``(B) $130,000 and $45,000 amounts.--Any increase under 
     subparagraph (C) or (D) of paragraph (1) which is not a 
     multiple of $1,000 shall be rounded to the next lowest 
     multiple of $1,000.''.
       (4) Conforming amendment.--Subparagraph (D) of section 
     415(d)(3) (as amended by paragraph (2)) is amended by 
     striking ``paragraph (1)(C)'' and inserting ``paragraph 
     (1)(D)''.
       (h) Increase in Amount of Deductible IRA Contributions.--
       (1) Increase in maximum amount of deduction.--Subparagraph 
     (A) of section 219(b)(1) (relating to maximum amount of 
     deduction) is amended by striking ``$2,000'' and inserting 
     ``$5,000''.
       (2) Conforming amendments.--
       (A) Subsections (a)(1), (b)(2), (j), and (p)(8) of section 
     408 are each amended by striking ``$2,000'' each place it 
     appears and inserting ``$5,000''.
       (B) Clause (i) of section 408(o)(2)(B) is amended by 
     inserting ``the lesser of $2,000, or'' after ``means''.
       (C) Paragraph (2) of section 408A(c) is amended by 
     inserting ``the lesser of $2,000, or'' after ``shall not 
     exceed''.
       (D) Subparagraph (B) of section 4973(b)(1) is amended by 
     inserting ``(or in the case of a nondeductible individual 
     retirement plan, the amount allowable as a contribution under 
     section 408(o))'' after ``contributions,''.
       (i) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply to years beginning after December 31, 1999.
       (2) 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 enactment of this Act, the 
     amendments made by this section shall not apply to 
     contributions or benefits pursuant to any such agreement for 
     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, 2000, or

[[Page H6479]]

       (B) January 1, 2004.

     SEC. 102. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND 
                   SOLE PROPRIETORS.

       (a) Amendment to 1986 Code.--Subsection (f) of section 4975 
     (relating to other definitions and special rules) is amended 
     by striking paragraph (6).
       (b) Amendments to ERISA.--
       (1) Section 408 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1108) is amended--
       (A) by striking subsection (d); and
       (B) by redesignating subsections (e) and (f) as subsections 
     (d) and (e), respectively.
       (2) Section 407(b)(3)(B) of such Act (29 U.S.C. 
     1107(b)(3)(B)) is amended by striking ``section 408(e)'' and 
     inserting ``section 408(d)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.

     SEC. 103. SALARY REDUCTION ONLY SIMPLE PLANS.

       (a) Simple Retirement Accounts.--
       (1) In general.--Paragraph (2) of section 408(p) (as 
     amended by section 101(f)) is further amended--
       (A) by redesignating subparagraphs (C), (D), and (E) as 
     subparagraphs (D), (E), and (F), respectively; and
       (B) by inserting after subparagraph (B) the following:
       ``(C) Employer may elect salary reduction only 
     arrangement.--
       ``(i) In general.--An employer shall be treated as meeting 
     the requirements of subparagraph (A)(iii) for any year if, in 
     lieu of the contributions described in such subparagraph, the 
     employer elects to limit the amount which an employee may 
     elect under subparagraph (A)(i) to a total of $5,000 for the 
     year. If an employer makes an election under this 
     subparagraph 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) Exception.--This subparagraph shall not apply to an 
     employer if such employer (or any predecessor employer) 
     maintained another qualified plan (as defined in subparagraph 
     (D)(ii)) with respect to which contributions were made, or 
     benefits were accrued, for service during the year in which 
     the arrangement described in clause (i) became effective or 
     either of the 2 preceding years. If only individuals other 
     than employees described in subparagraph (A) of section 
     410(b)(3) are eligible to participate in the arrangement 
     described in clause (i), then the preceding sentence shall be 
     applied without regard to any qualified plan in which only 
     employees so described are eligible to participate.''.
       (2) Special rule for acquisitions, dispositions, and 
     similar transactions.--Subparagraph (B) of section 408(p)(10) 
     is amended by striking ``and'' at the end of clause (ii), by 
     striking the period at the end of clause (iii) and inserting 
     ``; and'', and by inserting after clause (iii) the following:
       ``(iv) the requirement under paragraph (2)(C) that the 
     employer not have maintained another qualified plan described 
     therein.''.
       (3) Cost-of-living adjustment.--Subparagraph (F) of section 
     408(p)(2) (as so redesignated) is amended by inserting ``and 
     the $5,000 amount under subparagraph (C)'' after 
     ``subparagraph (A)(ii)''.
       (4) Coordination with maximum limitation.--Paragraph (8) of 
     section 408(p) (relating to coordination with maximum 
     limitation under subsection (a)) is amended by striking 
     ``paragraph (2)(A)(ii) of this subsection'' and inserting 
     ``subparagraph (A)(ii) or (C) of paragraph (2) of this 
     subsection, whichever is applicable,''.
       (5) Conforming amendment.--Clause (ii) of section 
     408(p)(10)(B) is amended by striking ``paragraph (2)(D)'' and 
     inserting ``paragraph (2)(E)''.
       (b) Adoption of Simple Plan To Meet Nondiscrimination 
     Tests.--
       (1) Simple plan.--Subparagraph (B) of section 401(k)(11) is 
     amended by redesignating clause (iii) as clause (iv) and by 
     inserting after clause (ii) the following new clause:
       ``(iii) Employer may elect salary reduction only 
     arrangement.--

       ``(I) In general.--An employer shall be treated as meeting 
     the requirements of clause (i)(II) for any year if, in lieu 
     of the contributions described in such clause, the employer 
     elects to limit the amount which an employee may elect under 
     clause (i) to a total of $5,000 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 clause (iv)(II).
       ``(II) Exception.--This clause shall not apply to an 
     employer if such employer (or any predecessor employer) 
     maintained another qualified plan (as defined in section 
     408(p)(2)(D)(ii)) with respect to which contributions were 
     made, or benefits were accrued, for service during the year 
     in which the arrangement described in subclause (I) became 
     effective or either of the 2 preceding years. This subclause 
     shall not apply if such contributions or benefits were solely 
     on behalf of employees who are not eligible to participate in 
     the arrangement described in subclause (I).''.

       (2) Cost-of-living adjustment.--Subparagraph (E) of section 
     401(k)(11) is amended by inserting ``and the $5,000 amount 
     under subparagraph (B)(iii)'' after ``subparagraph 
     (B)(i)(I)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 104. MODIFICATION OF TOP-HEAVY RULES.

       (a) Repeal of Family Aggregation Rules.--Section 
     416(i)(1)(B)(i)(I) (defining 5-percent owner) is amended by 
     inserting ``(without regard to subsection (a)(1) thereof)'' 
     after ``section 318''.
       (b) Simplification of Definition of Key Employee.--
       (1) In general.--Section 416(i)(1)(A) (defining key 
     employee) is amended--
       (A) by striking ``or any of the 4 preceding plan years'' in 
     the matter preceding clause (i),
       (B) by striking clause (i) and inserting the following:
       ``(i) an officer of the employer who has compensation from 
     the employer of more than $150,000,'',
       (C) by striking clause (ii) and redesignating clauses (iii) 
     and (iv) as clauses (ii) and (iii), respectively, and
       (D) by striking the second sentence in the matter following 
     clause (iii), as redesignated by subparagraph (C).
       (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
     amended by striking ``and subparagraph (A)(ii)''.
       (c) Employee Elective Contributions to Plan Not Taken Into 
     Account.--
       (1) Definition of top-heavy plan.--Section 416(g)(4) 
     (relating to other special rules) is amended by adding at the 
     end the following:
       ``(H) Employee elective contributions to plan not taken 
     into account.--At the election of the employer, any employee 
     elective contribution described in section 415(c)(3)(D) to a 
     plan (and earnings allocable thereto) shall not be taken into 
     account for purposes of determining whether a plan is a top-
     heavy plan (or whether any aggregation group which includes 
     such plan is a top-heavy group).''.
       (2) Definition of compensation.--Section 416(i)(1)(D) 
     (defining compensation) is amended to read as follows:
       ``(D) Compensation.--
       ``(i) In general.--For purposes of this paragraph, except 
     as provided in clause (ii), the term `compensation' has the 
     meaning given such term by section 414(q)(4).
       ``(ii) Employee elective contributions to plan not taken 
     into account.--At the election of the employer, any employee 
     elective contribution described in section 415(c)(3)(D) to a 
     plan shall not be taken into account for purposes of 
     determining compensation.''.
       (d) Matching Contributions Taken Into Account for Minimum 
     Contribution Requirements.--Section 416(c)(2)(A) (relating to 
     defined contribution plans) is amended by adding at the end 
     the following: ``Employer matching contributions (as defined 
     in section 401(m)(4)(A)) shall be taken into account for 
     purposes of this subparagraph.''.
       (e) Requirements for Qualifications.--Clause (ii) of 
     section 401(a)(10)(B) (relating to requirements for 
     qualifications for top-heavy plans) is amended by adding at 
     the end the following new flush sentence:

     ``The preceding sentence shall not apply to a plan if the 
     plan is not top-heavy and if it is not reasonable to expect 
     that the plan will become top-heavy.''.
       (f) Distributions During Last Year Before Determination 
     Date Taken Into Account.--Section 416(g) is amended--
       (1) in paragraph (3)--
       (A) by striking ``last 5 years'' in the heading and 
     inserting ``last year before determination date'', and
       (B) in the matter following subparagraph (B), by striking 
     ``5-year period'' and inserting ``1-year period'', and
       (2) in paragraph (4)(E)--
       (A) by striking ``last 5 years'' in the heading and 
     inserting ``last year before determination date'', and
       (B) by striking ``5-year period'' and inserting ``1-year 
     period''.
       (g) Definition of Top-Heavy Plans.--
       (1) Exclusion of certain plans from definition of top-heavy 
     plan.--Paragraph (4) of section 416(d) (relating to other 
     special rules for top-heavy plans) is amended by adding at 
     the end the following new subparagraphs:
       ``(H) Cash or deferred arrangements using alternative 
     methods of meeting nondiscrimination requirements.--The term 
     `top-heavy plan' shall not include a cash or deferred 
     arrangement to the extent that such arrangement meets the 
     requirements of section 401(k)(12). This subparagraph shall 
     also apply to contributions that are not required to satisfy 
     the requirements of section 401(k)(12) but are consistent 
     with the purposes of such section, as permitted under 
     regulations which the Secretary shall prescribe. Nothing in 
     this subparagraph shall preclude an employer from taking into 
     account contributions made under the cash or deferred 
     arrangement when determining whether any plan of such 
     employer satisfies the requirements of this section.
       ``(I) Defined contribution plans using alternative methods 
     of meeting nondiscrimination requirements.--The term `top-
     heavy plan' shall not include a defined contribution plan to 
     the extent that such plan meets the requirements of section 
     401(m)(11). This subparagraph shall also apply to 
     contributions that are not required to satisfy the 
     requirements of section 401(m)(11) but are consistent with 
     the purposes of such section, as permitted under regulations 
     which the Secretary shall prescribe. Nothing in this 
     subparagraph shall

[[Page H6480]]

     preclude an employer from taking into account contributions 
     made under the defined contribution plan when determining 
     whether any plan of such employer satisfies the requirements 
     of this section.''.
       (2) Aggregation group not required to include certain 
     plans.--Clause (i) of section 416(g)(2)(A) of such Code 
     (relating to required aggregation) is amended by adding at 
     the end the following new flush sentence:

     ``Such term shall not include a plan or arrangement described 
     in subparagraph (H) or (I) of paragraph (4).''.
       (h) Elective Deferrals Not Taken Into Account.--Clause (i) 
     of section 416(c)(2)(B) (relating to special rule where 
     maximum contribution less than 3 percent) is amended by 
     inserting ``(other than elective deferrals (as defined in 
     section 402(g)(3))'' after ``contributions''.
       (i) Frozen Plan Exempt From Minimum Benefit Requirement.--
     Subparagraph (C) of section 416(c)(1) (relating to defined 
     benefit plans) is amended--
       (1) in clause (i) by striking ``clause (ii)'' and inserting 
     ``clause (ii) or (iii)'', and
       (2) by adding at the end the following:
       ``(iii) For purposes of determining an employee's years of 
     service with the employer, any service with the employer 
     shall be disregarded to the extent that such service occurs 
     during a plan year when no employee or former employee 
     benefits under the plan within the meaning of section 
     410(b).''.
       (j) Alternative 60 Percent.--Subsection (g) of section 416 
     (relating to top heavy plan defined) is amended by adding at 
     the end the following:
       ``(5) Alternative 60 percent test.--
       ``(A) In general.--For any plan year, an employer may elect 
     for this paragraph to apply to all plans maintained by such 
     employer. If this paragraph applies to a plan, the term `top-
     heavy plan' shall have the meaning set forth in subparagraph 
     (B) and the term `top-heavy group' shall have the meaning set 
     forth in subparagraph (C).
       ``(B) Top-heavy plan defined.--In the case of any plan to 
     which this paragraph applies, the term `top-heavy plan' 
     means, with respect to any plan year--
       ``(i) any defined benefit plan if, for the plan year ending 
     on the determination date, the present value of the accruals 
     for key employees exceeds 60 percent of the present value of 
     the accruals for all employees, and
       ``(ii) any defined contribution plan if, for the plan year 
     ending on the determination date, the annual additions for 
     key employees exceed 60 percent of the annual additions for 
     all employees.
       ``(C) Top-heavy group.--In the case of any plan to which 
     this paragraph applies, the term `top-heavy group' means any 
     aggregation group if--
       ``(i) the sum, for the plan year ending on the 
     determination date, of--

       ``(I) the present value of the accruals for key employees 
     under all defined benefit plans included in such group, and
       ``(II) the aggregate of the annual additions of key 
     employees under all defined contribution plans included in 
     such group,

       ``(ii) exceeds 60 percent of a similar sum determined for 
     all employees.
       ``(D) Annual addition.--For purposes of this paragraph, the 
     term `annual addition' shall have the same meaning as when 
     used in section 415(c)(2) (without regard to section 415(l) 
     or section 419A(d)(2)).
       ``(E) Certain rules not to apply.--Paragraphs (3) and (4) 
     (other than subparagraphs (B), (C), (D), (E), and (G) of 
     paragraph (4)) shall not apply for purposes of this 
     paragraph.''.
       (k) Conforming Amendments.--
       (1) Subparagraph (A) of section 416(g)(1) is amended by 
     striking ``subparagraph (B)'' and inserting ``subparagraph 
     (B) and paragraph (5)''.
       (2) Subparagraph (B) of section 416(g)(2) is amended by 
     striking ``The term'' and inserting ``Except as provided in 
     paragraph (5), the term''.
       (3) Subparagraph (A) of section 415(b)(5) is amended by 
     adding at the end the following: ``An employee shall not be 
     credited with a year of participation in a defined benefit 
     plan for any year in which such employee does not benefit 
     under the plan within the meaning of section 410(b).''.
       (l) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 105. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF LIMITS.

       (a) In General.--Section 404 is amended by adding at the 
     end the following new subsection:
       ``(n) Elective Deferrals Not Taken Into Account for 
     Purposes of Limits.--Elective deferrals (as defined in 
     section 402(g)(3)) shall not be subject to any limitations 
     described in this section (other than subsection (a)), and 
     such elective deferrals shall not be taken into account in 
     applying such limitations to any other contributions.''.
       (b) Conforming Amendments.--Paragraph (3) of section 
     4972(c) is amended to read as follows:
       ``(3) Contributions not taken into account.--In determining 
     the amount of nondeductible contributions for any taxable 
     year, there shall not be taken into account--
       ``(A) any elective deferral (as defined in section 
     402(g)(3)), or
       ``(B) any contribution for such taxable year which is 
     distributed to the employer in a distribution described in 
     section 4980(c)(2)(B)(ii) if such distribution is made on or 
     before the last day on which a contribution may be made for 
     such taxable year under section 404(a)(6).''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 106. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL 
                   EMPLOYERS.

       (a) In General.--Subparagraph (A) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(A)) is amended--
       (1) by inserting ``other than a new single-employer plan of 
     a small employer (as defined 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 new single-employer plan of a small 
     employer, $5 for each individual who is a participant in such 
     plan during the plan year. For purposes of this clause (iv):
       ``(I) The term `new single-employer plan' means a single-
     employer plan during its first five plan years; provided, 
     however, that a single-employer plan is not a new single-
     employer plan if any contributing sponsor or any member of 
     its controlled group (including any predecessor of a 
     contributing sponsor or member of such predecessor's 
     controlled group) had established or maintained a plan to 
     which this title applied that included substantially the same 
     employees as such new plan, at any time within the 36-month 
     period preceding the adoption of such new plan.
       ``(II) The term `small employer` means a contributing 
     sponsor that on the first day of the plan year has, in 
     combination with all members of its controlled group, 100 or 
     fewer employees.
       ``(III) In the case of a plan maintained by two or more 
     contributing sponsors that are not part of the same 
     controlled group, the employees of all contributing sponsors 
     and their controlled groups shall be aggregated for purposes 
     of determining whether the plan shall be considered to be a 
     plan of a small employer.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1999.

     SEC. 107. PHASE-IN OF ADDITIONAL PREMIUM FOR NEW PLANS.

       (a) In General.--Subparagraph (E) of section 4006(a)(3) of 
     the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1306(a)(3)(E)) is amended--
       (1) by inserting ``(or, in the case of a new single-
     employer plan described in clause (vi), the amount determined 
     under clause (v))'' after ``determined under clause (ii)'' in 
     clause (i), and
       (2) by inserting after clause (iv) the following new 
     clauses:
       ``(v) The amount determined under this clause for any plan 
     year of a new single-employer plan (as described in clause 
     (vi)) shall be an amount equal to the product derived by 
     multiplying the amount determined under clause (ii) by the 
     applicable percentage. For purposes of this clause (v), the 
     term `applicable percentage' means--
       ``(I) 0 percent, for the first plan year,
       ``(II) 20 percent, for the second plan year,
       ``(III) 40 percent, for the third plan year,
       ``(IV) 60 percent, for the fourth plan year, and
       ``(V) 80 percent, for the fifth plan year.
       ``(vi) For purposes of clause (v), the term `new single-
     employer plan' means a single-employer plan during its first 
     five plan years; provided, however, that a single-employer 
     plan is not a new single-employer plan if any contributing 
     sponsor or any member of its controlled group (including any 
     predecessor of a contributing sponsor or member of such 
     predecessor's controlled group) had established or maintained 
     a plan to which this title applied that included 
     substantially the same employees as such new plan, at any 
     time within the 36-month period preceding the adoption of 
     such new plan.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1999.

     SEC. 108. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED 
                   COMPENSATION PLANS OF STATE AND LOCAL 
                   GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.

       (a) In General.--Subsection (c) of section 457 (relating to 
     deferred compensation plans of State and local governments 
     and tax-exempt organizations) is amended to read as follows:
       ``(c) Limitation.--The maximum amount of the compensation 
     of any one individual which may be deferred under subsection 
     (a) during any taxable year shall not exceed $15,000 (as 
     modified by any adjustment provided under subsection 
     (b)(3)).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 1999.

     SEC. 109. ELIMINATION OF USER FEE FOR REQUESTS TO IRS 
                   REGARDING PENSION PLANS.

       (a) Elimination of Certain User Fees.--The Secretary of the 
     Treasury or the Secretary's delegate shall not require 
     payment of user fees under the program established under 
     section 10511 of the Revenue Act of 1987 for requests to the 
     Internal Revenue Service for ruling letters, opinion letters, 
     and determination letters or similar requests with respect to 
     the qualified status of a pension benefit plan maintained 
     solely by one or more eligible employers or any trust which 
     is part of the plan.
       (b) Pension Benefit Plan.--For purposes of this section, 
     the term `pension benefit

[[Page H6481]]

     plan' means a pension, profit-sharing, stock bonus, annuity, 
     or employee stock ownership plan.
       (c) Eligible Employer.--For purposes of this section, the 
     term ``eligible employer'' has the same meaning given such 
     term in section 408(p)(2)(C)(i)(I) of the Internal Revenue 
     Code of 1986. The determination of whether an employer is an 
     eligible employer under this section shall be made as of the 
     date of the request described in subsection (a).
       (d) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 1999.

     SEC. 110. ALTERNATIVE METHOD OF MEETING NONDISCRIMINATION 
                   REQUIREMENTS FOR AUTOMATIC CONTRIBUTION TRUST.

       (a) In General.--Section 401(k) (relating to cash or 
     deferred arrangement) is amended by adding at the end the 
     following new paragraph:
       ``(13) Nondiscrimination requirements for automatic 
     contribution trusts.--
       ``(A) In general.--A cash or deferred arrangement shall be 
     treated as meeting the requirements of paragraph (3)(A)(ii) 
     if such arrangement constitutes an automatic contribution 
     trust.
       ``(B) Automatic contribution trust.--For purposes of this 
     paragraph, the term `automatic contribution trust' means an 
     arrangement--
       ``(i) under which each employee eligible to participate in 
     the arrangement is treated as having elected to have the 
     employer make elective contributions in an amount equal to 
     the uniform percentage (not less than 3 percent) of 
     compensation provided under the arrangement until the 
     employee specifically elects not to have such contributions 
     made, and
       ``(ii) which meets the other requirements of this 
     paragraph.

     Clause (i) of this subparagraph shall not apply to any 
     employee who was eligible to participate in the arrangement 
     (or a predecessor arrangement) immediately before the first 
     date on which the arrangement is an automatic contribution 
     trust. The election treated as having been made under clause 
     (i) shall cease to apply to compensation paid after the 
     specific election by the employee.
       ``(C) Participation.--
       ``(i) Except as provided in clause (ii), an arrangement 
     meets the requirements of this subparagraph for any year if, 
     during the plan year or the preceding plan year, elective 
     contributions are made on behalf of at least 70 percent of 
     employees other than highly compensated employees eligible to 
     participate in the arrangement.
       ``(ii) An arrangement (other than a successor arrangement) 
     shall be treated as meeting the requirements of this 
     subparagraph with respect to the first plan year in which the 
     arrangement is effective.
       ``(D) Matching or nonelective contributions.--The 
     requirements of this subparagraph are met if, under the 
     arrangement, the employer--
       ``(i) makes matching contributions on behalf of each 
     employee who is not a highly compensated employee in an 
     amount equal to 50 percent of the elective contributions of 
     the employee to the extent such elective contributions do not 
     exceed 5 percent of compensation, or
       ``(ii) 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 2 percent of the employee's 
     compensation.

     The rules of clauses (ii), (iii), and (iv) of paragraph 
     (12)(B) shall apply for purposes of clause (i).
       ``(E) Vesting.--The requirements of this subparagraph are 
     met if the requirements of subparagraph (C) of paragraph (2) 
     are met with respect to all employer contributions (including 
     matching contributions) taken into account in determining 
     whether the requirements of subparagraph (B) or (C) are met.
       ``(F) Notice requirements.--
       ``(i) In general.--The requirements of this subparagraph 
     are met if the requirements of clauses (ii) and (iii) are 
     met.
       ``(ii) Reasonable period to make election.--The 
     requirements of this clause are met if each employee to whom 
     subparagraph (B)(i) applies--

       ``(I) receives a notice explaining the employee's right 
     under the arrangement to elect not to have elective 
     contributions made on the employee's behalf, and
       ``(II) has a reasonable period of time after receipt of 
     such notice and before the first elective contribution is 
     made to make such election.

       ``(iii) Annual notice of rights and obligations.--The 
     requirements of this clause are met if each employee eligible 
     to participate in the arrangement is, within a reasonable 
     period before any year, given notice of the employee's rights 
     and obligations under the arrangement.

     The requirements of clauses (i) and (ii) of paragraph (12)(D) 
     shall be met with respect to the notices described in clauses 
     (ii) and (iii) of this subparagraph.''.
       (b) Matching Contributions.--Section 401(m) (relating to 
     nondiscrimination test for matching contributions and 
     employee contributions) is amended by redesignating paragraph 
     (12) as paragraph (13) and by inserting after paragraph (11) 
     the following new paragraph:
       ``(12) Alternative method for automatic contribution 
     trusts.--
       ``(A) In general.--A defined contribution plan shall be 
     treated as meeting the requirements of paragraph (2) with 
     respect to matching contributions if the plan--
       ``(i) meets the contribution requirements of subparagraphs 
     (B)(i) and (D) of subsection (k)(13),
       ``(ii) meets the participation requirements of subsection 
     (k)(13)(C),
       ``(iii) meets the vesting and notice requirements of 
     subparagraphs (E) and (F) of subsection (k)(13), and
       ``(iv) meets the requirements of paragraph (11)(B).
       ``(B) Matching contributions.--An annuity contract under 
     section 403(b) shall be treated as meeting the requirements 
     of paragraph (2) with respect to matching contributions if 
     such contract meets requirements similar to the requirements 
     under subparagraph (A).''.
       (c) Exclusion From Definition of Top-Heavy Plans.--
     Paragraph (4) of section 416(d) (relating to other special 
     rules for top-heavy plans), as amended by section 104(g), is 
     amended by adding at the end the following new subparagraph:
       ``(J) Automatic contribution trust.--The term `top-heavy 
     plan' shall not include an automatic contribution trust under 
     section 401(k)(13). Nothing in this subparagraph shall 
     preclude an employer from taking into account 
     contributions made under the automatic contribution trust 
     when determining whether any plan of such employer 
     satisfies the requirements of this section.''.
       (d) Definition of Compensation.--
       (1) In general.--Paragraph (9) of section 401(k) is amended 
     to read as follows:
       ``(9) Compensation.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     for purposes of this section, the term `compensation' has the 
     meaning given such term by section 414(s).
       ``(B) Use of base pay.--For purposes of paragraph (12)(B), 
     the term `compensation' means the definition of compensation 
     used by the cash or deferred arrangement if such 
     compensation--
       ``(i) meets the requirements of section 414(s), or
       ``(ii) constitutes base pay.
       ``(C) Base pay.--For purposes of subparagraph (B), the term 
     `base pay' means a reasonable definition of compensation that 
     does not by design favor highly compensated employees and 
     that excludes on a consistent basis all irregular or 
     additional compensation.''.
       (2) Automatic contribution trusts.--Paragraph (9)(B) of 
     section 401(k) (as amended by paragraph (1)) is amended by 
     striking ``paragraph (12)(B)'' and inserting ``paragraphs 
     (12)(B), (13)(B), and (13)(D)(i)''.
       (3) Matching contributions.--Paragraph (11) of section 
     401(m) is amended by adding at the end the following:
       ``(C) Definition of compensation.--For purposes of 
     subparagraph (B), the term ``compensation'' has the meaning 
     given such term by subsection (k)(9)(B).''.
       (e) Application by Year or Payroll Period.--
       (1) Cash or deferred arrangements.--Subparagraph (B) of 
     section 401(k)(12) is amended by adding at the end the 
     following:
       ``(iv) Application by year or payroll period.--The 
     requirements of this subparagraph may be met for a plan year 
     by meeting such requirements either--

       ``(I) with respect to the plan year as a whole, or
       ``(II) separately with respect to each payroll period (or 
     other payment of compensation) taken into account under the 
     arrangement for the plan year.''.

       (2) Defined contribution plans.--Paragraph (11) of section 
     401(m) (as amended by this section) is amended by adding at 
     the end the following:
       ``(D) Application by year or payroll period.--The 
     requirements of subparagraph (B) may be met for a plan year 
     by meeting such requirements either--
       ``(i) with respect to the plan year as a whole, or
       ``(ii) separately with respect to each payroll period (or 
     other payment of compensation) taken into account under the 
     plan for the plan year.''.
       (f) Section 403(b) Contracts.--Paragraph (11) of section 
     401(m) (as amended by this section) is amended by adding at 
     the end the following:
       ``(E) Section 403(b) contracts.--An annuity contract under 
     section 403(b) shall be treated as meeting the requirements 
     of paragraph (2) with respect to matching contributions if 
     such contract meets requirements similar to the requirements 
     under subparagraph (A).''.
       (e) Effective Date.--
       (1) In general.--Except as provided by paragraph (2), the 
     amendments made by this section shall apply to plan years 
     beginning after December 31, 1999.
       (2) Exception.--The amendments made by subsections (d)(1), 
     (d)(3), (e), and (f) shall apply to years beginning after 
     December 31, 1998.

     SEC. 111. DEDUCTION LIMITS.

       (a) In General.--
       (1) Stock bonus and profit sharing trusts.--Subclause (I) 
     of section 404(a)(3)(A)(i) (relating to stock bonus and 
     profit sharing trusts) is amended by striking ``15 percent'' 
     and inserting ``25 percent''.

[[Page H6482]]

       (2) Compensation.--Section 404(a) (relating to general 
     rule) is amended by adding at the end the following:
       ``(12) Definition of compensation.--For purposes of 
     paragraphs (3), (7), and (9), the term `compensation 
     otherwise paid or accrued during the taxable year' shall 
     include amounts treated as `participant's compensation' 
     under subparagraph (C) or (D) of section 415(c)(3).''.
       (3) Defined contribution plans.--Subparagraph (A) of 
     section 404(a)(3) (relating to stock bonus and profit sharing 
     trusts) is amended by adding at the end the following:
       ``(vi) Defined contribution plans subject to the funding 
     standards.--Except as provided by the Secretary, for purposes 
     of this subparagraph, a defined contribution plan which is 
     subject to the funding standards of section 412 shall be 
     treated in the same manner as a stock bonus or profit-sharing 
     plan.''.
       (b) Conforming Amendments.--
       (1) Subparagraph (A) of section 404(a)(3) is amended by 
     striking clause (v) and by redesignating clause (vi) (as 
     added by subsection (a)(3) of this section) as clause (v).
       (2) Subparagraph (B) of section 404(a)(3) is amended by 
     striking the last sentence thereof.
       (3) Subparagraph (D) of section 404(a)(8) is amended by 
     striking the period at the end and inserting the following: 
     ``, except that such earned income shall be adjusted under 
     rules similar to the rules of paragraph (12).''.
       (4) Subparagraph (C) of section 404(h)(1) is amended by 
     striking ``15 percent'' each place it appears and inserting 
     ``25 percent''.
       (5) Paragraph (2) of section 404(h) is amended by striking 
     ``stock bonus or profit-sharing trust'' and inserting ``trust 
     subject to subsection (a)(3)(A)''.
       (6) Clause (i) of section 4972(c)(6)(B) is amended by 
     striking ``(within the meaning of section 404(a))'' and 
     inserting ``(within the meaning of section 404(a) and as 
     adjusted under section 404(a)(12))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 112. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
                   CONTRIBUTIONS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to deferred compensation, etc.) is 
     amended by inserting after section 402 the following new 
     section:

     ``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS 
                   CONTRIBUTIONS.

       ``(a) General Rule.--If an applicable retirement plan 
     includes a qualified plus contribution program--
       ``(1) any designated plus contribution made by an employee 
     pursuant to the program shall be treated as an elective 
     deferral for purposes of this chapter, except that such 
     contribution shall not be excludable from gross income, and
       ``(2) such plan (and any arrangement which is part of such 
     plan) shall not be treated as failing to meet any requirement 
     of this chapter solely by reason of including such program.
       ``(b) Qualified Plus Contribution Program.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified plus contribution 
     program' means a program under which an employee may elect to 
     make designated plus contributions in lieu of all or a 
     portion of elective deferrals the employee is otherwise 
     eligible to make under the applicable retirement plan.
       ``(2) Separate accounting required.--A program shall not be 
     treated as a qualified plus contribution program unless the 
     applicable retirement plan--
       ``(A) establishes separate accounts (`designated plus 
     accounts') for the designated plus contributions of each 
     employee and any earnings properly allocable to the 
     contributions, and
       ``(B) maintains separate recordkeeping with respect to each 
     account.
       ``(c) Definitions and Rules Relating to Designated Plus 
     Contributions.--For purposes of this section--
       ``(1) Designated plus contribution.--The term `designated 
     plus contribution' means any elective deferral which--
       ``(A) is excludable from gross income of an employee 
     without regard to this section, and
       ``(B) the employee designates (at such time and in such 
     manner as the Secretary may prescribe) as not being so 
     excludable.
       ``(2) Designation limits.--The amount of elective deferrals 
     which an employee may designate under paragraph (1) shall not 
     exceed the excess (if any) of--
       ``(A) the maximum amount of elective deferrals excludable 
     from gross income of the employee for the taxable year 
     (without regard to this section), over
       ``(B) the aggregate amount of elective deferrals of the 
     employee for the taxable year which the employee does not 
     designate under paragraph (1).
       ``(3) Rollover contributions.--
       ``(A) In general.--A rollover contribution of any payment 
     or distribution from a designated plus account which is 
     otherwise allowable under this chapter may be made only if 
     the contribution is to--
       ``(i) another designated plus account of the individual 
     from whose account the payment or distribution was made, or
       ``(ii) a Roth IRA of such individual.
       ``(B) Coordination with limit.--Any rollover contribution 
     to a designated plus account under subparagraph (A) shall not 
     be taken into account for purposes of paragraph (1).
       ``(d) Distribution Rules.--For purposes of this title--
       ``(1) Exclusion.--Any qualified distribution from a 
     designated plus account shall not be includible in gross 
     income.
       ``(2) Qualified distribution.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified distribution' has 
     the meaning given such term by section 408A(d)(2)(A).
       ``(B) Distributions within nonexclusion period.--A payment 
     or distribution from a designated plus account shall not be 
     treated as a qualified distribution if such payment or 
     distribution is made within the 5-taxable-year period 
     beginning with the earlier of--
       ``(i) the earlier of--

       ``(I) the 1st taxable year for which the individual made a 
     designated plus contribution to any designated plus account 
     established for such individual under the same applicable 
     retirement plan, or
       ``(II) if a rollover contribution was made to such 
     designated plus account from a designated plus account 
     previously established for such individual under another 
     applicable retirement plan, the 1st taxable year for which 
     the individual made a designated plus contribution to such 
     previously established account), or

       ``(ii) the 1st taxable year for which the individual (or 
     the individual's spouse) made a contribution to a Roth IRA 
     established for such individual.
       ``(C) Distributions of excess deferrals and earnings.--The 
     term `qualified distribution' shall not include any 
     distribution of any excess deferral under section 402(g)(2) 
     and any income on the excess deferral.
       ``(3) Aggregation rules.--Section 72 shall be applied 
     separately with respect to distributions and payments from a 
     designated plus account and other distributions and payments 
     from the plan.
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Applicable retirement plan.--The term `applicable 
     retirement plan' means--
       ``(A) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a), and
       ``(B) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b).
       ``(2) Elective deferral.--The term `elective deferral' 
     means any elective deferral described in subparagraph (A) or 
     (C) of section 402(g)(3).''
       (b) Excess Deferrals.--Section 402(g) (relating to 
     limitation on exclusion for elective deferrals) is amended--
       (1) by adding at the end of paragraph (1) the following new 
     sentence: ``The preceding sentence shall not apply to so much 
     of such excess as does not exceed the designated plus 
     contributions of the individual for the taxable year.'', and
       (2) by inserting ``(or would be included but for the last 
     sentence thereof)'' after ``paragraph (1)'' in paragraph 
     (2)(A).
       (c) Rollovers.--Subparagraph (B) of section 402(c)(7) (as 
     amended by sections 301 and 302) is amended by adding at the 
     end the following:

     ``Without regard to the foregoing provisions of this 
     paragraph, if any portion of an eligible rollover 
     distribution is attributable to payments or distributions 
     from a designated plus account (as defined in section 402A), 
     an eligible retirement plan with respect to such portion 
     shall include only another designated plus account and a Roth 
     IRA.''
       (d) Reporting Requirements.--
       (1) W-2 information.--Section 6051(a)(8) is amended by 
     inserting ``, including the amount of designated plus 
     contributions (as defined in section 402A)'' before the comma 
     at the end.
       (2) Information.--Section 6047 is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Designated Plus Contributions.--The Secretary shall 
     require the plan administrator of each applicable retirement 
     plan (as defined in section 402A) to make such returns and 
     reports regarding designated plus contributions (as so 
     defined) to the Secretary, participants and beneficiaries of 
     the plan, and such other persons as the Secretary may 
     prescribe.''
       (e) Conforming Amendments.--
       (1) Section 408A(e) is amended by adding after the first 
     sentence the following new sentence: ``Such term includes a 
     rollover contribution described in section 402A(c)(3)(A).''
       (2) 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 402 the following new item:

``Sec. 402A. Optional treatment of elective deferrals as plus 
              contributions.''

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 113. 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

[[Page H6483]]

     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 1998 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 1998. If only individuals other than employees 
     described in subparagraph (A) 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, 2002.--
     Such term shall not include any expense in connection with a 
     plan established after December 31, 2001.
       ``(2) Eligible employer plan.--The term `eligible employer 
     plan' means a qualified employer plan within the meaning of 
     section 4972(d).
       ``(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.

     TITLE II--ENHANCING FAIRNESS FOR WOMEN AND CHILDREN

     SEC. 201. ADDITIONAL SALARY REDUCTION CATCH-UP CONTRIBUTIONS.

       (a) Limitation on Exclusion for Elective Deferrals.--
       (1) In general.--Subsection (g) of section 402 (as amended 
     by section 101(d)) is further amended by adding at the end 
     the following:
       ``(9) Catch-up contributions for those approaching 
     retirement.--In the case of an individual who has attained 
     age 50 during any taxable year, the limitation of paragraph 
     (1) for such year, after the application of paragraph (8), 
     shall be increased by $5,000.''.
       (2) Cost-of-living adjustment.--Paragraph (4) of section 
     402(g) (relating to cost-of-living adjustment), as amended by 
     section 101(d), is further amended by inserting ``and the 
     $5,000 amount under paragraph (9)'' after ``paragraph (1)''.
       (b) Simple Retirement Accounts.--
       (1) In general.--Paragraph (2) of section 408(p) (relating 
     to qualified salary reduction arrangement) (as amended by 
     sections 101(f) and 103(a)) is further amended by 
     redesignating subparagraph (F) as subparagraph (G) and by 
     inserting after subparagraph (E) the following new 
     subparagraph:
       ``(F) Catch-up contributions for those approaching 
     retirement.--In the case of an individual who has attained 
     age 50 during any taxable year, the limitation of 
     subparagraph (A)(ii) for such year shall be increased by 
     $5,000.''.
       (2) Cost-of-living adjustment.--Subparagraph (G) of section 
     408(p)(2) (as so redesignated) is amended by inserting ``and 
     the $5,000 amount under subparagraph (F)'' after 
     ``subparagraph (A)(ii)''.
       (c) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--
       (1) In general.--Subsection (b) of section 457 (relating to 
     definition of eligible deferred compensation plan) is amended 
     by adding at the end the following new paragraph:
       ``(7) Catch-up contributions for those approaching 
     retirement.--In the case of an individual who has attained 
     age 50 during any taxable year, the limitation of paragraph 
     (2)(A) for such year shall be increased by $5,000.''.
       (2) Cost-of-living adjustment.--Paragraph (15) of section 
     457(e) (relating to cost-of-living adjustment) is amended by 
     inserting ``, and the $5,000 amount specified in subsection 
     (b)(7),'' after ``(c)(1)''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 202. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES 
                   TO DEFINED CONTRIBUTION PLANS.

       (a) In General.--
       (1) Subparagraph (B) of section 415(c)(1) (relating to 
     limitation for defined contribution plans) is amended to read 
     as follows:
       ``(B) the participant's compensation.''.
       (2) Conforming amendments.--
       (A) Subsection (f) of section 72 is amended by striking 
     ``section 403(b)(2)(D)(iii))'' and inserting ``section 
     403(b)(2)(D)(iii), as in effect on December 31, 1998)''.
       (B) Section 403(b) is amended--
       (i) by striking ``the exclusion allowance for such taxable 
     year'' in paragraph (1) and inserting ``the applicable limit 
     under section 415'',
       (ii) by striking paragraph (2), and
       (iii) by inserting ``or any amount received by a former 
     employee after the 5th taxable year following the taxable 
     year in which such employee was terminated'' before the 
     period at the end of the second sentence of paragraph (3).
       (C) Section 404(a)(10)(B) is amended by striking ``, the 
     exclusion allowance under section 403(b)(2),''.
       (D) Section 415(a)(2) is amended by striking ``, and the 
     amount of the contribution for such portion shall reduce the 
     exclusion allowance as provided in section 403(b)(2)''.
       (E) Section 415(c)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(E) Annuity contracts.--In the case of an annuity 
     contract described in section 403(b), the term `participant's 
     compensation' means the participant's includible compensation 
     determined under section 403(b)(3).''.
       (F) Section 415(c) is amended by striking paragraph (4).
       (G) Section 415(c)(7) is amended to read as follows:
       ``(7) Certain contributions by church plans not treated as 
     exceeding limit.--
       ``(A) In general.--Notwithstanding any other provision of 
     this subsection, at the election of a participant who is an 
     employee of a church, a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(B)(ii), contributions and other additions for an 
     annuity contract or retirement income account described in 
     section 403(b) with respect to such participant, when 
     expressed as an annual addition to such participant's 
     account, shall be treated as not exceeding the limitation of 
     paragraph (1) if such annual addition is not in excess of 
     $10,000.
       ``(B) $40,000 aggregate limitation.--The total amount of 
     additions with respect to any participant which may be taken 
     into account for purposes of this subparagraph for all years 
     may not exceed $40,000.
       ``(C) Annual addition.--For purposes of this paragraph, the 
     term `annual addition' has the meaning given such term by 
     paragraph (2).''.
       (H) Section 415(e)(5) is amended--
       (i) by striking ``(except in the case of a participant who 
     has elected under subsection (c)(4)(D) to have the provisions 
     of subsection (c)(4)(C) apply)'', and
       (ii) by striking the last sentence.
       (I) Section 415(n)(2)(B) is amended by striking 
     ``percentage''.

[[Page H6484]]

       (J) Subparagraph (B) of section 402(g)(7) (as amended by 
     section 101(d)) is amended by inserting before the period at 
     the end the following: ``(as in effect on the date of the 
     enactment of the Retirement Security for the 21st Century 
     Act)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 1999.
       (b) Special Rules for Sections 403(b) and 408.--
       (1) In general.--Subsection (k) of section 415 is amended 
     by adding at the end the following new paragraph:
       ``(4) Special rules for sections 403(b) and 408.--For 
     purposes of this section, any annuity contract described in 
     section 403(b) for the benefit of a participant shall be 
     treated as a defined contribution plan maintained by each 
     employer with respect to which the participant has the 
     control required under subsection (b) or (c) of section 414 
     (as modified by subsection (h)). For purposes of this 
     section, any contribution by an employer to a simplified 
     employee pension plan for an individual for a taxable year 
     shall be treated as an employer contribution to a defined 
     contribution plan for such individual for such year.''.
       (2) Effective date.--The amendment made by paragraph (1) 
     shall apply to limitation years beginning after December 31, 
     1999.
       (c) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--Subparagraph (B) 
     of section 457(b)(2) (relating to salary limitation on 
     eligible deferred compensation plans) is amended by striking 
     ``33\1/3\ percent'' and inserting ``100 percent''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 203. FASTER VESTING OF CERTAIN EMPLOYER MATCHING 
                   CONTRIBUTIONS.

       (a) Amendments to 1986 Code.--Section 411(a) (relating to 
     minimum vesting standards) is amended--
       (1) in paragraph (2), by striking ``A plan'' and inserting 
     ``Except as provided in paragraph (12), a plan'', and
       (2) by adding at the end the following:
       ``(12) Faster vesting for matching contributions.--In the 
     case of matching contributions (as defined in section 
     401(m)(4)(A)), paragraph (2) shall be applied--
       ``(A) by substituting `3 years' for `5 years' in 
     subparagraph (A), and
       ``(B) by substituting the following table for the table 
     contained in subparagraph (B):

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      1.............................................................20 
      2.............................................................40 
      3.............................................................60 
      4.............................................................80 
      5.........................................................100.''.
       (b) Amendments to ERISA.--Section 203(a) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is 
     amended--
       (1) in paragraph (2), by striking ``A plan'' and inserting 
     ``Except as provided in paragraph (4), a plan'', and
       (2) by adding at the end the following:
       ``(4) In the case of matching contributions (as defined in 
     section 401(m)(4)(A) of the Internal Revenue Code of 1986), 
     paragraph (2) shall be applied--
       ``(A) by substituting `3 years' for `5 years' in 
     subparagraph (A), and
       ``(B) by substituting the following table for the table 
     contained in subparagraph (B):

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      1.............................................................20 
      2.............................................................40 
      3.............................................................60 
      4.............................................................80 
      5.........................................................100.''.
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to contributions 
     for plan years beginning after December 31, 1999.
       (2) 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 enactment of this Act, the 
     amendments made by this section shall not apply to 
     contributions on behalf of employees covered by any such 
     agreement for 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, 2000, or
       (B) January 1, 2004.
       (3) Service required.--With respect to any plan, the 
     amendments made by this section shall not apply to any 
     employee before the date that such employee has 1 hour of 
     service under such plan in any plan year to which the 
     amendments made by this section apply.

     SEC. 204. DEFERRED ANNUITIES FOR SURVIVING SPOUSES OF FEDERAL 
                   EMPLOYEES.

       (a) In General.--Section 8341 of title 5, United States 
     Code, is amended--
       (1) in subsection (h)(1), by striking ``section 8338(b) of 
     this title'' and inserting ``section 8338(b), and a former 
     spouse of a deceased former employee who separated from the 
     service with title to a deferred annuity under section 
     8338 (if they were married to one another prior to the 
     date of separation),''; and
       (2) by adding at the end the following:
       ``(j)(1) If a former employee dies after having separated 
     from the service with title to a deferred annuity under 
     section 8338 but before having established a valid claim for 
     annuity, and is survived by a spouse to whom married on the 
     date of separation, the surviving spouse may elect to 
     receive--
       ``(A) an annuity, commencing on what would have been the 
     former employee's 62d birthday, equal to 55 percent of the 
     former employee's deferred annuity;
       ``(B) an annuity, commencing on the day after the date of 
     death of the former employee, such that, to the extent 
     practicable, the present value of the future payments of the 
     annuity would be actuarially equivalent to the present value 
     of the future payments under subparagraph (A) as of the day 
     after the former employee's death; or
       ``(C) the lump-sum credit, if the surviving spouse is the 
     individual who would be entitled to the lump-sum credit and 
     if such surviving spouse files application therefor.
       ``(2) An annuity under this subsection and the right 
     thereto terminate on the last day of the month before the 
     surviving spouse remarries before becoming 55 years of age, 
     or dies.''.
       (b) Corresponding Amendment for FERS.--Section 8445(a) of 
     title 5, United States Code, is amended--
       (1) by striking ``(or of a former employee or'' and 
     inserting ``(or of a former''; and
       (2) by striking ``annuity)'' and inserting ``annuity, or of 
     a former employee who dies after having separated from the 
     service with title to a deferred annuity under section 8413 
     but before having established a valid claim for annuity (if 
     such former spouse was married to such former employee prior 
     to the date of separation))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply with respect to surviving spouses and former 
     spouses (whose marriage, in the case of the amendments made 
     by subsection (a), terminated after May 6, 1985) of former 
     employees who die after the date of the enactment of this 
     Act.

     SEC. 205. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

       (a) Simplification and Finalization of Minimum Distribution 
     Requirements.--
       (1) In general.--The Secretary of the Treasury shall--
       (A) simplify and finalize the regulations relating to 
     minimum distribution requirements under sections 401(a)(9), 
     408(a)(6) and (b)(3), 403(b)(10), and 457(d)(2) of the 
     Internal Revenue Code of 1986, and
       (B) modify such regulations to--
       (i) reflect increases in life expectancy, and
       (ii) revise the required distribution methods so that, 
     under reasonable assumptions, the amount of the required 
     minimum distribution does not decrease over a participant's 
     life expectancy.
       (2) Fresh start.--Notwithstanding subparagraph (D) of 
     section 401(a)(9) of such Code, during the first year that 
     regulations are in effect under this subsection, required 
     distributions for future years may be redetermined to reflect 
     changes under such regulations. Such redetermination shall 
     include the opportunity to choose a new designated 
     beneficiary and to elect a new method of calculating life 
     expectancy.
       (3) Effective date for regulations.--Regulations referred 
     to in paragraph (1) shall be effective for years beginning 
     after December 31, 2000, and shall apply in such years 
     without regard to whether an individual had previously begun 
     receiving minimum distributions.
       (b) Amount Not Subject to Minimum Distribution 
     Requirements.--Paragraph (9) of section 401(a) is amended--
       (1) in subparagraph (A), by inserting ``(minus the 
     exclusion amount)'' after ``the entire interest''; and
       (2) by adding at the end the following:
       ``(H) Exclusion amount.--
       ``(i) In general.--For purposes of this paragraph, the term 
     `exclusion amount' means--

       ``(I) $100,000 in the case of a defined contribution plan;
       ``(II) $100,000 in the case of an individual retirement 
     plan; and
       ``(III) $0 in the case of a defined benefit plan.

       ``(ii) Aggregation of plans.--For purposes of determining 
     the exclusion amount under clause (i)--

       ``(I) all defined contribution plans maintained by the same 
     employer shall be treated as a single plan; and
       ``(II) all individual retirement plans (other than Roth 
     IRAs) of the individual shall be treated as a single plan.

       ``(iii) Cost-of-living adjustment.--The Secretary shall 
     adjust the $100,000 exclusion amount specified in clause (i) 
     at the same time and in the same manner as under section 
     415(d), except that the base period shall be the calendar 
     quarter ending September 30, 1999.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2000.
       (c) Repeal of Rule Where Distributions Had Begun Before 
     Death Occurs.--
       (1) In general.--Subparagraph (B) of section 401(a)(9) is 
     amended by striking clause (i) and redesignating clauses 
     (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
     respectively.
       (2) Conforming changes.--
       (A) Clause (i) of section 401(a)(9)(B) (as so redesignated) 
     is amended--
       (i) by striking ``for other cases'' in the heading, and

[[Page H6485]]

       (ii) by striking ``the distribution of the employee's 
     interest has begun in accordance with subparagraph (A)(ii)'' 
     and inserting ``his entire interest has been distributed to 
     him,''.
       (B) Clause (ii) of section 401(a)(9)(B) (as so 
     redesignated) is amended by striking ``clause (ii)'' and 
     inserting ``clause (i)''.
       (C) Clause (iii) of section 401(a)(9)(B)(iii) (as so 
     redesignated) is amended--
       (i) by striking ``clause (iii)(I)'' and inserting ``clause 
     (ii)(I)'',
       (ii) in subclause (I) by striking ``clause (iii)(III)'' and 
     inserting ``clause (ii)(III)'',
       (iii) in subclause (I) by striking ``the date on which the 
     employee would have attained the age 70\1/2\,'' and inserting 
     ``April 1 of the calendar year following the calendar year in 
     which the spouse attains 70\1/2\, and clause (ii) shall not 
     apply to the exclusion amount,'', and
       (iv) in subclause (II) by striking ``the distributions to 
     such spouse begin,'' and inserting ``his entire interest has 
     been distributed to him,''.
       (3) Reduction in excise tax.--Subsection (a) of section 
     4974 is amended by striking ``50 percent'' and inserting ``10 
     percent''.
       (4) Effective date.--
       (A) In general.--Except as provided by subparagraph (B), 
     the amendments made by this subsection shall apply to years 
     beginning after December 31, 2000.
       (B) Excise tax.--The amendment made by paragraph (3) shall 
     apply to years beginning after December 31, 1999.

     SEC. 206. CLARIFICATION OF TAX TREATMENT OF DIVISION OF 
                   SECTION 457 PLAN BENEFITS UPON DIVORCE.

       (a) In General.--Section 414(p)(11) (relating to 
     application of rules to governmental and church plans) is 
     amended--
       (1) by inserting ``or an eligible deferred compensation 
     plan (within the meaning of section 457(b))'' after 
     ``subsection (e))'', and
       (2) in the heading, by striking ``governmental and church 
     plans'' and inserting ``certain other plans''.
       (b) Waiver of Certain Distribution Requirements.--Paragraph 
     (10) of section 414(p) is amended by striking ``and section 
     409(d)'' and inserting ``section 409(d), and section 
     457(d)''.
       (c) Tax Treatment of Payments From a Section 457 Plan.--
     Subsection (p) of section 414 is amended by redesignating 
     paragraph (12) as paragraph (13) and inserting after 
     paragraph (11) the following new paragraph:
       ``(12) Tax treatment of payments from a section 457 plan.--
     If a distribution or payment from an eligible deferred 
     compensation plan described in section 457(b) is made 
     pursuant to a qualified domestic relations order, rules 
     similar to the rules of section 402(e)(1)(A) shall apply to 
     such distribution or payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transfers, distributions, and payments made 
     after the date of enactment of this Act.

     SEC. 207. PERCENTAGE LIMITATIONS ON CONTRIBUTIONS.

       (a) Amendments Relating to FERS.--
       (1) In general.--
       (A) Subsection (a) of section 8432 of title 5, United 
     States Code, is amended by striking ``10 percent of ''.
       (B) Subsection (d) of section 8432 of title 5, United 
     States Code, is amended by striking ``section 415'' and 
     inserting ``section 401(a)(30) or 415''.
       (2) Justices and judges.--Subsection (b) of section 8440a 
     of title 5, United States Code, is amended--
       (A) by striking paragraph (2) and by redesignating 
     paragraphs (3) through (7) as paragraphs (2) through (6), 
     respectively; and
       (B) in paragraph (6) (as so redesignated by subparagraph 
     (A)) by striking ``paragraphs (4) and (5)'' and inserting 
     ``paragraphs (3) and (4)''.
       (3) Bankruptcy judges and magistrates.--Subsection (b) of 
     section 8440b of title 5, United States Code, is amended--
       (A) by striking paragraph (2) and by redesignating 
     paragraphs (3) through (8) as paragraphs (2) through (7), 
     respectively;
       (B) in paragraph (4) (as so redesignated by subparagraph 
     (A)) by striking ``paragraph (4)(A), (B), or (C)'' and 
     inserting ``paragraph (3)(A), (B), or (C)''; and
       (C) in paragraph (7) (as so redesignated by subparagraph 
     (A)) by striking ``Notwithstanding paragraph (4),'' and 
     inserting ``Notwithstanding paragraph (3),''.
       (4) Court of federal claims judges.--Subsection (b) of 
     section 8440c of title 5, United States Code, is amended--
       (A) by striking paragraph (2) and by redesignating 
     paragraphs (3) through (8) as paragraphs (2) through (7), 
     respectively;
       (B) in paragraph (4) (as so redesignated by subparagraph 
     (A)) by striking ``paragraph (4)(A) or (B)'' and inserting 
     ``paragraph (3)(A) or (B)''; and
       (C) in paragraph (7) (as so redesignated by subparagraph 
     (A)) by striking ``Notwithstanding paragraph (4),'' and 
     inserting ``Notwithstanding paragraph (3),''.
       (5) Judges of the united states court of veterans 
     appeals.--Paragraph (2) of section 8440d(b) of title 5, 
     United States Code, is amended to read as follows:
       ``(2) For purposes of contributions made to the Thrift 
     Savings Fund, basic pay does not include any retired pay paid 
     pursuant to section 7296 of title 38.''.
       (b) Amendments Relating to CSRS.--Paragraph (2) of section 
     8351(b) of title 5, United States Code, is amended by 
     striking ``5 percent of ''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     take effect on the date of enactment of this Act.
       (2) Coordination with election periods.--The Executive 
     Director shall by regulation determine the first election 
     period in which elections may be made consistent with the 
     amendments made by this section.
       (3) Definitions.--For purposes of this section--
       (A) the term ``election period'' means a period afforded 
     under section 8432(b) of title 5, United States Code; and
       (B) the term ``Executive Director'' has the meaning given 
     such term by section 8401(13) of title 5, United States Code.

     SEC. 208. ELIGIBLE ROLLOVER DISTRIBUTIONS.

       Section 8432 of title 5, United States Code, is amended by 
     adding at the end the following:
       ``(j)(1) For the purpose of this subsection--
       ``(A) the term `eligible rollover distribution' has the 
     meaning given such term by section 402(c)(3) of the Internal 
     Revenue Code of 1986; and
       ``(B) the term `eligible retirement plan' has the meaning 
     given such term by section 402(c)(7) of the Internal Revenue 
     Code of 1986.
       ``(2) An employee or Member may contribute to the Thrift 
     Savings Fund an eligible rollover distribution from an 
     eligible retirement plan. A contribution made under this 
     subsection shall be made by means of a direct rollover from 
     an eligible retirement plan in a manner that is similar to a 
     direct rollover under section 401(a)(31) of the Internal 
     Revenue Code of 1986. In the case of an eligible rollover 
     distribution, the maximum amount transferred to the Thrift 
     Savings Fund shall not exceed the amount which would 
     otherwise have been included in the employee's or Member's 
     gross income for Federal income tax purposes.
       ``(3) The Executive Director shall prescribe regulations to 
     carry out this subsection.''.

     SEC. 209. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN.

       (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 title 5, United States Code, 
     is amended by inserting ``(or any election allowable by 
     virtue of paragraph (4))'' after ``subparagraph (A)''.
       (3) Section 8432(b)(3) of title 5, United States Code, is 
     amended by striking ``Notwithstanding paragraph (2)(A), an'' 
     and inserting ``An''.
       (4) Section 8432(i)(1)(B)(ii) of title 5, United States 
     Code, 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 title 5, United States Code, 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 title 5, United States Code, 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 title 5, United 
     States Code, are amended by

[[Page H6486]]

     striking all after ``subject to'' and inserting ``this 
     chapter.''.
       (c) Effective Date.--This section shall take effect 6 
     months after the date of enactment of this Act or such 
     earlier date as the Executive Director (within the meaning of 
     section 8401(13) of title 5, United States Code) may by 
     regulation prescribe.

           TITLE III--INCREASING PORTABILITY FOR PARTICIPANTS

     SEC. 301. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

       (a) Rollovers From and to Section 457 Plans.--
       (1) Rollovers from section 457 plans.--
       (A) In general.--Section 457(e) (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, if--
       ``(i) any portion of the balance to the credit of an 
     employee in such plan is paid to such employee in an eligible 
     rollover distribution (within the meaning of section 
     402(c)(4) (other than section 402(c)(4)(C)),
       ``(ii) the employee transfers any portion of the property 
     such employee receives in such distribution to an eligible 
     retirement plan described in section 402(c)(8)(B), 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.--The rules of 
     paragraphs (2) through (7) (other than paragraph (4)(C)) and 
     (9) of section 402(c) and section 402(f) shall apply for 
     purposes of subparagraph (A).
       ``(C) Reporting.--Rollovers under this paragraph shall be 
     reported to the Secretary in the same manner as rollovers 
     from qualified retirement plans (as defined in section 
     4974(c)).''.
       (B) Deferral limit determined without regard to rollover 
     amounts.--Section 457(b)(2) (defining eligible deferred 
     compensation plan) is amended by inserting ``(other than 
     rollover amounts)'' after ``taxable year''.
       (C) Direct rollover.--Paragraph (1) of section 457(d) is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period at the end of subparagraph (B) and 
     inserting ``, and'', and by inserting after subparagraph (B) 
     the following:
       ``(C) the plan meets requirements similar to the 
     requirements of section 401(a)(31).

     Any amount transferred in a direct trustee-to-trustee 
     transfer in accordance with section 401(a)(31) shall not be 
     includible in gross income for the taxable year of 
     transfer.''.
       (D) Withholding.--
       (i) Paragraph (12) of section 3401(a) is amended by adding 
     at the end the following:
       ``(E) under or to an eligible deferred compensation plan 
     which, at the time of such payment, is a plan described in 
     section 457(b);''.
       (ii) Paragraph (5) of section 3405(e) is amended by adding 
     at the end the following: ``Such term shall include an 
     eligible deferred compensation plan described in section 
     457(b).''.
       (iii) Paragraph (3) of section 3405(c) is amended to read 
     as follows:
       ``(3) Eligible rollover distribution.--For purposes of this 
     subsection, the term `eligible rollover distribution' has the 
     meaning given such term by section 402(f)(2)(A).''.
       (iv) Liability for withholding.--Subparagraph (B) of 
     section 3405(d)(2) is amended by striking ``or'' at the end 
     of clause (ii), by striking the period at the end of clause 
     (iii) and inserting ``, or'', and by adding at the end the 
     following:
       `(iv) section 457(b).''.
       (2) Rollovers to section 457 plans.--
       (A) Section 402(c)(8)(B) (defining eligible retirement 
     plan) 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 at the end the following:
       ``(v) an eligible deferred compensation plan described in 
     section 457(b) of an eligible employer described in section 
     457(e)(1)(A).''.
       (B) Paragraph (9) of section 402(c) is amended by striking 
     ``except that'' and all that follows and inserting ``except 
     that only an account or annuity described in clause (i) or 
     (ii) of paragraph (8)(B) shall be treated as an eligible 
     retirement plan with respect to such distribution.''.
       (C) Subsection (t) of section 72 (relating to 10-percent 
     additional tax on early distributions from qualified 
     retirement plans) is amended by adding at the end the 
     following new paragraph:
       ``(9) Special rule for rollovers to section 457 plans.--For 
     purposes of this subsection, a distribution from an eligible 
     deferred compensation plan (as defined in section 457(b)) of 
     an employer described in section 457(e)(1)(A) shall be 
     treated as a distribution from a qualified retirement plan to 
     the extent that such distribution is attributable to an 
     amount transferred to an eligible deferred compensation plan 
     from a qualified retirement plan (as defined in section 
     4974(c)). For purposes of this subsection, any such 
     distribution shall be treated as if made from a qualified 
     retirement plan described in section 4974(c)(1). This 
     paragraph shall only apply to a transfer that is in excess of 
     $50,000 and that is permitted by reason of section 
     402(c)(8)(B)(v) or section 408(d)(3)(A)(ii).''.
       (D) Subsection (a) of section 457 (relating to year of 
     inclusion in gross income) is amended--
       (i) by striking ``or otherwise made available'', and
       (ii) by adding at the end the following: ``To the extent 
     provided in section 72(t)(9), section 72(t) shall apply to 
     any amount includible in gross income under this 
     subsection.''.
       (3) Minimum distributions.--Paragraph (2) of section 457(d) 
     is amended to read as follows:
       ``(2) Minimum distribution requirements.--A plan meets the 
     distribution requirements of this paragraph if the plan meets 
     the requirements of section 401(a)(9).''.
       (4) Conforming amendment.--Paragraph (9) of section 457(e) 
     is amended to read as follows:
       ``(9) Benefits not treated as failing to meet distribution 
     requirements of subsection (d).--A plan shall not be treated 
     as failing to meet the distribution requirements of 
     subsection (d) by reason of a distribution of the total 
     amount payable to a participant under the plan if--
       ``(A) such amount does not exceed the dollar limit under 
     section 411(a)(11)(A), and
       ``(B) such amount may be distributed only if--
       ``(i) no amount has been deferred under the plan with 
     respect to such participant during the 2-year period ending 
     on the date of the distribution, and
       ``(ii) there has been no prior distribution under the plan 
     to such participant to which this paragraph applied.''.
       (b) Allowance of Rollovers From and to 403(b) Plans.--
       (1) Rollovers from section 403(b) plans.--Section 
     403(b)(8)(A)(ii) (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''.
       (2) Rollovers to section 403(b) plans.--Section 
     402(c)(8)(B) (defining eligible retirement plan), as amended 
     by subsection (a), is amended by striking ``and'' at the end 
     of clause (iv), by striking the period at the end of clause 
     (v) and inserting 
     ``, and'', and by adding at the end the following:
       ``(vi) an annuity contract described in section 403(b).''
       (3) Conforming amendment.--Subparagraph (B) of section 
     403(b)(8) is amended by striking ``Rules similar to the'' and 
     inserting ``The''.
       (c) Expanded Explanation to Recipients of Rollover 
     Distributions.--Paragraph (1) of section 402(f) (relating to 
     written explanation to recipients of distributions eligible 
     for rollover treatment) is amended by striking ``and'' at the 
     end of subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(E) of the provisions under which distributions from the 
     eligible retirement plan receiving the distribution may be 
     subject to restrictions and tax consequences which are 
     different from those applicable to distributions from the 
     plan making such distribution.''.
       (d) Conforming Amendments.--
       (1) Section 72(o)(4) is amended by striking ``and 
     408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
     457(e)(16)''.
       (2) Section 219(d)(2) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (3) Section 401(a)(31)(B) is amended by striking ``and 
     403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
     457(e)(16)''.
       (4) Subparagraph (A) of section 402(f)(2) is amended by 
     striking ``or paragraph (4) of section 403(a)'' and inserting 
     ``, paragraph (4) of section 403(a), subparagraph (A) of 
     section 403(b)(8), or subparagraph (A) of section 
     457(e)(16)''.
       (5) Paragraph (1) of section 402(f) is amended by striking 
     ``from an eligible retirement plan''.
       (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
     amended by striking ``another eligible retirement plan'' and 
     inserting ``an eligible retirement plan''.
       (7) Subparagraph (B) of section 403(b)(8) is amended by 
     striking ``shall apply for purposes of subparagraph (A)'' and 
     inserting ``and section 402(f) shall apply for purposes of 
     subparagraph (A), except that section 402(f) shall be applied 
     to the payor in lieu of the plan administrator''.
       (8) Subparagraph (B) of section 403(b)(8) is amended by 
     inserting ``and (9)'' after ``through (7)''.
       (9) Section 408(a)(1) is amended by striking ``or 
     403(b)(8)'' and inserting ``, 403(b)(8), or 457(e)(16)''.
       (10) Subparagraphs (A) and (B) of section 415(b)(2) are 
     each amended by striking ``and 408(d)(3)'' and inserting 
     ``403(b)(8), 408(d)(3), and 457(e)(16)''.
       (11) Section 415(c)(2) is amended by striking ``and 
     408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
       (12) Section 4973(b)(1)(A) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (e) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 1999.
       (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 (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) on behalf

[[Page H6487]]

     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. 302. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

       (a) In General.--Subparagraph (A) of section 408(d)(3) 
     (relating to rollover amounts) is amended by adding ``or'' at 
     the end of clause (i), by striking clauses (ii) and (iii), 
     and by adding at the end the following:
       ``(ii) the entire amount received (including money and any 
     other property) is paid into an eligible retirement plan for 
     the benefit of such individual not later than the 60th day 
     after the date on which he receives the payment or 
     distribution.

     For purposes of clause (ii), the term `eligible retirement 
     plan' has the meaning given such term by clauses (iii), (iv), 
     (v), and (vi) of section 402(c)(8)(B).''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 403(b) is amended by striking 
     ``section 408(d)(3)(A)(iii)'' and inserting ``section 
     408(d)(3)(A)(ii)''.
       (2) Clause (i) of section 408(d)(3)(D) is amended by 
     striking ``(i), (ii), or (iii)'' and inserting ``(i) or 
     (ii)''.
       (3) Subparagraph (G) of section 408(d)(3) is amended to 
     read as follows:
       ``(G) Simple retirement accounts.--In the case of any 
     payment or distribution out of a simple retirement account 
     (as defined in subsection (p)) to which section 72(t)(6) 
     applies, this paragraph shall not apply unless such payment 
     or distribution is paid into another simple retirement 
     account.''.
       (c) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 1999.
       (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 (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) 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 the amendments made by this section.

     SEC. 303. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

       (a) In General.--
       (1) Subsection (c) of section 402 (relating to rules 
     applicable to rollovers from exempt trusts) (as amended by 
     section 2) is amended by striking paragraph (2) and 
     redesignating paragraphs (3) through (10) as paragraphs (2) 
     through (9), respectively.
       (2) Paragraph (31) of section 401(a) (relating to optional 
     direct transfer of eligible rollover distributions) is 
     amended by striking subparagraph (B) and redesignating 
     subparagraphs (C) and (D) as subparagraphs (B) and (C), 
     respectively.
       (3) Subparagraph (B) of section 408(d)(3) (relating to 
     rollover contributions) is amended by striking ``which was 
     not includible in his gross income because of the application 
     of this paragraph'' and inserting ``to which this paragraph 
     applied''.
       (4) Paragraph (7)(B) of section 402(c) (as redesignated by 
     subsection (a)(1) and as amended by section 301) is amended--
       (A) by striking ``The term'' and inserting ``Except as 
     provided in this subparagraph, the term'', and
       (B) by adding at the end the following:
     ``Arrangements described in clauses (iii), (iv) (v), and (vi) 
     shall not be treated as eligible retirement plans for 
     purposes of receiving a rollover contribution of an eligible 
     rollover distribution to the extent that such eligible 
     rollover distribution is not includible in gross income 
     (determined without regard to paragraph (1)).''.
       (5) Paragraph (2) of section 408(d) is amended--
       (A) by striking ``For purposes'' and inserting the 
     following:
       ``(A) In general.--Except as provided in this paragraph, 
     for purposes'',
       (B) by striking ``(A) all'' and inserting ``(i) all'';
       (C) by striking ``(B) all'' and inserting ``(ii) all'';
       (D) by striking ``(C) the'' and inserting ``(iii) the'',
       (E) by striking ``subparagraph (C)'' and inserting ``clause 
     (iii)'', and
       (F) by inserting at the end the following:
       ``(B) Application of section 72.--For purposes of applying 
     section 72, if--
       ``(i) a distribution is made from an individual retirement 
     plan, and
       ``(ii) a rollover contribution described in paragraph (3) 
     is made to an eligible retirement plan described in section 
     402(c)(7)(B)(iii), (iv), (v), or (vi) with respect to all or 
     part of such distribution,

     the includible amount in the individual's individual 
     retirement plans shall be reduced by the amount described in 
     subparagraph (C). As of the close of the calendar year in 
     which the taxable year begins, the reduction of all amounts 
     described in subparagraph (C)(i) shall be applied prior to 
     the computations described in subparagraph (A)(iii). The 
     amount of any distribution with respect to which there is a 
     rollover contribution described in clause (ii) shall not be 
     treated as a distribution for purposes of subparagraph (A).
       ``(C) Amount described.--The amount described in this 
     subparagraph is the sum of--
       ``(i) the amount of the rollover contribution described in 
     subparagraph (B)(ii), and
       ``(ii) in the case of any portion of the distribution with 
     respect to which there is not a rollover contribution 
     described in paragraph (3), the amount of such portion that 
     is included in gross income under section 72.
       ``(D) Includible amount.--For purposes of this paragraph, 
     the term `includible amount' shall mean the amount that is 
     not investment in the contract (as defined in section 72).''.
       (6) Subparagraph (C) of section 402(c)(5) (as redesignated 
     by subsection (a)(1)) is amended by inserting after ``other 
     than money'' the following: ``or where the amount of the 
     distribution exceeds the amount of the rollover 
     contribution''.
       (b) Hardship Exception to 60-Day Rule.--
       (1) Paragraph (2) of section 402(c) (as so redesignated) is 
     amended to read as follows:
       ``(2) Transfer must be made within 60 days of receipt.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     paragraph (1) shall not apply to any transfer of a 
     distribution made after the 60th day following the day on 
     which the distributee received the property distributed.
       ``(B) Hardship exception.--The Secretary may waive the 60-
     day requirement under subparagraph (A) where the failure to 
     waive such requirement would be against equity or good 
     conscience, including casualty, disaster, or other events 
     beyond the reasonable control of the individual subject to 
     such requirement.''.
       (2) Paragraph (3) of section 408(d) (relating to rollover 
     contributions) is amended by adding at the end the following 
     new subparagraph:
       ``(H) Waiver of 60-day requirement.--The Secretary may 
     waive the 60-day requirement under subparagraphs (A) and (D) 
     where the failure to waive such requirement would be against 
     equity or good conscience, including casualty, disaster, or 
     other events beyond the reasonable control of the individual 
     subject to such requirement.''.
       (c) Conforming Amendments.--
       (1) Paragraph (4) of section 402(c) (as redesignated by 
     subsection (a)(1)) is amended by striking ``(8)(B)'' and 
     inserting ``(7)(B)''.
       (2) Subparagraph (B) of section 403(a)(4) is amended by 
     striking ``(2) through (7)'' and inserting ``(2) through 
     (6)''.
       (3) Section 403(b)(8)(A)(ii) (as amended by section 301) is 
     amended by striking ``section 402(c)(8)(B)'' and inserting 
     ``section 402(c)(7)(B)''.
       (4) Subparagraph (B) of section 403(b)(8) (as amended by 
     section 301) is amended by striking ``(2) through (7) and (9) 
     of section 402(c) (including paragraph (4)(C) thereof)'' and 
     inserting ``(2) through (6) and (8) of section 402(c) 
     (including paragraph (3)(C) thereof)''.
       (5) Subparagraph (A) of section 408(d)(3) (as amended by 
     section 302) is amended by striking ``402(c)(8)'' and 
     inserting ``402(c)(7)''.
       (6) Paragraph (16) of section 457(e) (as added by section 
     301) is amended--
       (A) in subparagraph (A)(i) by striking ``402(c)(4) (other 
     than section 402(c)(4)(C))'' and inserting ``section 
     402(c)(3) (other than section 402(c)(3)(C))'',
       (B) in subparagraph (A)(ii) by striking ``402(c)(8)(B)'' 
     and inserting ``402(c)(7)(B)'', and
       (C) in subparagraph (B) by striking ``paragraphs (2) 
     through (7) (other than paragraph (4)(C)) and (9) of section 
     402(c)'' and inserting ``paragraphs (2) through (6) (other 
     than paragraph (3)(C)) and (8) of section 402(c)''.
       (d) Effective Date.--
       (1) In general.--Except as provided by paragraph (2), the 
     amendments made by this section shall apply to distributions 
     made after December 31, 1999.
       (2) Hardship exception.--The amendments made by subsection 
     (b) shall apply to 60-day periods ending after the date of 
     the enactment of this Act.

     SEC. 304. TREATMENT OF FORMS OF DISTRIBUTION.

       (a) In General.--
       (1) Plan transfers.--Paragraph (6) of section 411(d) 
     (relating to accrued benefit not to be decreased by 
     amendment) is amended by adding at the end the following:
       ``(D) Plan transfers.--
       ``(i) 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 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--

       ``(I) 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;
       ``(II) the terms of both the transferor plan and the 
     transferee plan authorize the transfer described in subclause 
     (I);
       ``(III) the transfer described in subclause (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 subclause (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

[[Page H6488]]

       ``(VI) the transferee plan allows the participant or 
     beneficiary described in subclause (III) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the transferee plan in the form of a single 
     sum distribution.

       ``(ii) Clause (i) shall apply to plan mergers and other 
     transactions having the effect of a direct transfer, 
     including consolidations of benefits attributable to 
     different employers within a multiple employer plan.
       ``(E) Elimination of form of distribution.--Except to the 
     extent provided in regulations, a defined contribution plan 
     shall not be treated as failing to meet the requirements of 
     this section merely because of the elimination of a form of 
     distribution previously available thereunder. This 
     subparagraph shall not apply to the elimination of a form of 
     distribution with respect to any participant unless--
       ``(i) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated; and
       ``(ii) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''.
       (2) Regulations.--The last sentence of paragraph (6)(B) of 
     section 411(d) (relating to accrued benefit not to be 
     decreased by amendment) is amended to read as follows: ``The 
     Secretary may by regulations provide that this subparagraph 
     shall not apply to any plan amendment that does not adversely 
     affect the rights of participants in a material manner.
       (3) Secretary directed.--Not later than December 31, 2001, 
     the Secretary of the Treasury is directed to issue final 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986. Such regulations shall apply to plan years 
     beginning after December 31, 2001 or such earlier date as is 
     specified by the Secretary of the Treasury. Under such 
     regulations, section 411(d)(6) of such Code shall not apply 
     to plan amendments that do not adversely affect the rights of 
     participants in a material manner. In determining whether a 
     plan amendment has such a materially adverse effect on a 
     participant, the factors taken into account shall include--
       (A) all of the participant's early retirement benefits, 
     retirement-type subsidies, and optional forms of benefit that 
     are reduced or eliminated by the plan amendment,
       (B) the extent to which early retirement benefits, 
     retirement-type subsidies, and optional forms of benefit in 
     effect with respect to a participant after the effective date 
     of the plan amendment provide rights that are comparable to 
     the rights that are reduced or eliminated by the plan 
     amendment,
       (C) the number of years before the participant attains 
     normal retirement age under the plan (or early retirement 
     age, as applicable),
       (D) the size of the participant's benefit that is affected 
     by the plan amendment, in relation to the amount of the 
     participant's compensation, and
       (E) the number of years before the plan amendment is 
     effective.

     The regulations described in this paragraph are intended to 
     permit the elimination or reduction of early retirement 
     benefits, retirement-type subsidies, and optional forms of 
     benefit that do not have a material value for a plan's 
     participants but create significant burdens and complexities 
     for the plan and its participants.
       (b) Conforming Amendment.--(1) Subsection (g) of section 
     204 of the Employee Retirement Income Security Act of 1974 
     (29 U.S.C. 1054) is amended by adding at the end the 
     following:
       ``(4)(A) 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 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--
       ``(i) 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;
       ``(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 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
       ``(vi) the transferee plan allows the participant or 
     beneficiary described in clause (iii) to receive any 
     distribution which the participant or beneficiary is entitled 
     under transferee plan in the form of a single sum 
     distribution.
       ``(B) Subparagraph (A) shall apply to plan mergers and 
     other transactions having the effect of a direct transfer, 
     including consolidations of benefits attributable to 
     different employers within a multiple employer plan.
       ``(5) Except to the extent provided in regulations, a 
     defined contribution plan shall not be treated as failing to 
     meet the requirements of this section merely because of the 
     elimination of a form of distribution previously available 
     thereunder. This paragraph shall not apply to the elimination 
     of a form of distribution with respect to any participant 
     unless--
       ``(A) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated; and
       ``(B) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''.
       (2) Paragraph (2) of section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054) is 
     amended by striking the last sentence and inserting the 
     following: ``The Secretary of the Treasury may by regulations 
     provide that this paragraph shall not apply to any plan 
     amendment that does not adversely affect the rights of 
     participants in a material manner.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 305. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

       (a) Modification of Same Desk Exception.--
       (1) Section 401(k).--Section 401(k)(2)(B)(i)(I) (relating 
     to qualified cash or deferred arrangements) is amended by 
     striking ``separation from service'' and inserting 
     ``severance from employment''.
       (2) Section 403(b).--
       (A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are 
     each amended by striking ``separates from service'' and 
     inserting ``has a severance from employment''.
       (B) The heading for paragraph (11) of section 403(b) is 
     amended by striking ``separation from service'' and inserting 
     ``severance from employment''.
       (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
     amended by striking ``is separated from service'' and 
     inserting ``has a severance from employment''.
       (b) Business Sale Requirements Repealed.--
       (1) In general.--Section 401(k)(2)(B)(i)(II) (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) 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 does not involve the 
     establishment or maintenance of another defined contribution 
     plan (other than an employee stock ownership plan as defined 
     in section 4975(e)(7)).'',
       (B) in subparagraph (B)--
       (i) by striking ``An event'' and inserting ``A 
     termination'', and
       (ii) by striking ``the event'' and inserting ``the 
     termination'',
       (C) by striking subparagraph (C), and
       (D) 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, 1999.

     SEC. 306. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED 
                   BENEFIT PLANS.

       (a) 403(b) Plans.--Subsection (b) of section 403 (as 
     amended by section 501) is amended by adding at the end the 
     following new paragraph:
       ``(14) 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.--
       (1) Subsection (e) of section 457 (as amended by section 
     509) is amended by adding at the end the following new 
     paragraph:
       ``(18) 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.''.
       (2) Section 457(b)(2), as amended by sections 101, 202, and 
     301, is amended by striking ``(other than rollover amounts)'' 
     and inserting ``(other than rollover amounts and amounts 
     received in a transfer referred to in subsection (e)(16))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to trustee-to-trustee transfers after December 
     31, 1999.

     SEC. 307. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF 
                   CASH-OUT AMOUNTS.

       (a) Amendments to 1986 Code.--

[[Page H6489]]

       (1) Section 411(a)(11) (relating to restrictions on certain 
     mandatory distributions) is amended by adding at the end the 
     following:
       ``(D) Special rule for rollover contributions.--A plan 
     shall not fail to meet the requirements of this paragraph if, 
     under the terms of the plan, the present value of the 
     nonforfeitable accrued benefit is determined without regard 
     to that portion of such benefit which is attributable to 
     rollover contributions (and earnings allocable thereto). For 
     purposes of this subparagraph, the term `rollover 
     contributions' means any rollover contribution under sections 
     402(c), 403(a)(4), 403(b)(8), clause (ii), (iii), or (iv) of 
     408(d)(3)(A), and 457(e)(16).''.
       (2) Clause (i) of section 457(e)(9)(A) is amended by 
     striking ``such amount'' and inserting ``the portion of such 
     amount which is not attributable to rollover contributions 
     (as defined in section 411(a)(11)(D))''.
       (b) Amendment to ERISA.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(e)) is 
     amended by adding at the end the following:
       ``(4) A plan shall not fail to meet the requirements of 
     this subsection if, under the terms of the plan, the present 
     value of the nonforfeitable accrued benefit is determined 
     without regard to that portion of such benefit which is 
     attributable to rollover contributions (and earnings 
     allocable thereto). For purposes of this paragraph, the term 
     `rollover contributions' means any rollover contribution 
     under sections 402(c), 403(a)(4), 403(b)(8), clause (ii), 
     (iii), or (iv) of 408(d)(3)(A), and 457(e)(16) of the 
     Internal Revenue Code of 1986.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 1999.

        TITLE IV--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

     SEC. 401. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

       (a) In General.--
       (1) Code amendment.--Section 412(c)(7) (relating to full-
     funding limitation) is amended--
       (A) by striking ``the applicable percentage'' in 
     subparagraph (A)(i)(I) and inserting ``in the case of plan 
     years beginning before January 1, 2003, the applicable 
     percentage'', and
       (B) by amending subparagraph (F) to read as follows:
       ``(F) Applicable percentage.--For purposes of subparagraph 
     (A)(i)(I), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of any plan year beginning The applicable percentage is--
      2000.........................................................160 
      2001.........................................................165 
      2002......................................................170.''.

       (2) ERISA amendment.--Section 302(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) 
     is amended--
       (A) by striking ``the applicable percentage'' in 
     subparagraph (A)(i)(I) and inserting ``in the case of plan 
     years beginning before January 1, 2003, the applicable 
     percentage'', and
       (B) by amending subparagraph (F) to read as follows:
       ``(F) Applicable percentage.--For purposes of subparagraph 
     (A)(i)(I), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of any plan year beginning The applicable percentage is--
      2000.........................................................160 
      2001.........................................................165 
      2002......................................................170.''.

       (3) Effective dates.--The amendments made by this 
     subsection shall apply to plan years beginning after December 
     31, 1999.
       (b) Maximum Contribution Deduction Rules Modified and 
     Applied to All Defined Benefit Plans.--
       (1) In general.--Section 404(a)(1)(D) (relating to special 
     rule in case of certain plans) is amended--
       (A) by striking ``which has more than 100 participants for 
     the plan year'',
       (B) by striking ``unfunded current liability determined 
     under section 414(l)'' and inserting ``unfunded termination 
     liability (determined as if the proposed termination date 
     referred to in section 4041(b)(2)(A)(i)(II) of the Employee 
     Retirement Income Security Act of 1974 were the last day of 
     the plan year)'',
       (C) by inserting after the first sentence the following: 
     ``For purposes of this subparagraph, in the case of a plan 
     which has less than 100 participants for the plan year, 
     termination liability shall not include the liability 
     attributable to benefit increases for highly compensated 
     employees (as defined in section 414(q)) brought about by 
     plan amendment within the last 2 years before the termination 
     date.'', and
       (D) by striking ``(other than a multiemployer plan)''.
       (2) Conforming amendment.--Paragraph (6) of section 4972(c) 
     is amended by striking the sentence preceding the last 
     sentence thereof.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to plan years beginning after the date of 
     enactment of this Act.

     SEC. 402. 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:
       ``(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 such Act (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. 403. PERIODIC PENSION BENEFITS STATEMENTS.

       (a) In General.--Section 105(a) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1025(a)) is amended by 
     striking ``shall furnish to any plan participant or 
     beneficiary who so requests in writing, a statement'' and 
     inserting ``shall furnish to each plan participant at least 
     once each year (in the case of a defined contribution plan) 
     and upon written request of a plan participant or beneficiary 
     (in the case of a defined benefit plan), a statement in 
     written or electronic form''.
       (b) Required Periodic Statements for Plans With More Than 
     One Unaffiliated Employer.--Section 105(d) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1025(d)) is 
     repealed.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 1999.

     SEC. 404. CIVIL PENALTIES FOR BREACH OF FIDUCIARY 
                   RESPONSIBILITY.

       (a) Imposition and Amount of Penalty Made Discretionary.--
     Section 502(l)(1) of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1132(l)(1)) 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) of such 
     Act (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 any 
     fiduciary or other person (or from any other person on behalf 
     of any such 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 subsection 
     (a)(2) or (a)(5). 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) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1132(l)) is amended by 
     adding at the end the following:
       ``(5) A person shall be jointly and severally liable for 
     the penalty described in paragraph (1) to the same extent 
     that such person is

[[Page H6490]]

     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 subtitle B of title I of the Employee 
     Retirement Income Security Act of 1974 occurring on or after 
     the date of enactment of this Act.
       (2) Transition rule.--In applying the amendment made by 
     subsection (b) (relating to applicable recovery amount), a 
     breach or other violation occurring before the date of 
     enactment of this Act which continues after the 180th day 
     after such date (and which may have been discontinued at any 
     time during its existence) shall be treated as having 
     occurred after such date of enactment.

     SEC. 405. PENALTY TAX RELIEF FOR SOUND PENSION FUNDING.

       (a) In General.--Subsection (c) of section 4972 (relating 
     to nondeductible contributions) is amended by adding at the 
     end the following new paragraph:
       ``(7) Defined benefit plan exception.--In determining the 
     amount of nondeductible contributions for any taxable year, 
     an employer may elect for such year not to take into account 
     any contributions to a defined benefit plan except to the 
     extent that such contributions exceed the full-funding 
     limitation (as defined in section 412(c)(7), determined 
     without regard to subparagraph (A)(i)(I) thereof). For 
     purposes of this paragraph, the deductible limits under 
     section 404(a)(7) shall first be applied to amounts 
     contributed to defined contribution plans and then to amounts 
     described in this paragraph. If an employer makes an election 
     under this paragraph for a taxable year, paragraph (6) shall 
     not apply to such employer for such taxable year.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 406. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS 
                   TO 401(K) PLANS.

       (a) In General.--Section 1524(b) of the Taxpayer Relief Act 
     of 1997 is amended to read as follows:
       ``(b) Effective Date.--
       ``(1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to elective 
     deferrals for plan years beginning after December 31, 1998.
       ``(2) Nonapplication to previously acquired property.--The 
     amendments made by this section shall not apply to any 
     elective deferral if such deferral is used for the payment of 
     indebtedness incurred before January 1, 1999 (or any 
     refinancing thereof) on the acquisition by the plan of 
     employer securities or employer real property--
       ``(A) before January 1, 1999, or
       ``(B) after such date pursuant to a written contract which 
     was binding on such date and at all times thereafter on such 
     plan.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply as if included in the provision of the Taxpayer 
     Relief Act of 1997 to which it relates.

     SEC. 407. NOTICE OF SIGNIFICANT REDUCTION IN BENEFIT 
                   ACCRUALS.

       (a) In General.--Subsection (h) of section 204 of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1054) is amended to read as follows:
       ``(h) Notice of Significant Reduction in Benefit 
     Accruals.--
       ``(1) If a plan described in paragraph (4) is amended to 
     provide for a significant reduction in the rate of future 
     benefit accrual, the plan administrator shall provide a 
     notice to--
       ``(A) each affected participant in the plan,
       ``(B) each affected beneficiary who is an alternate payee 
     (within the meaning of section 206(d)(3)(K)) under an 
     applicable qualified domestic relations order (within the 
     meaning of section 206(d)(3)(B)(i)), and
       ``(C) each employee organization representing affected 
     participants in the plan, except that such notice shall 
     instead be provided to a person designated to receive such 
     notice on behalf of any person referred to in paragraph (A), 
     (B), or (C). For purposes of this paragraph, an affected 
     participant or beneficiary is a participant or beneficiary to 
     whom the significant reduction described in this paragraph is 
     reasonably expected to apply.
       ``(2) The notice required by paragraph (1) shall--
       ``(A) include the plan amendment, or a summary of such plan 
     amendment, and its effective date, and
       ``(B) provide a notification and description of the 
     reduction described in paragraph (1).

     A notification and description shall not fail to satisfy 
     paragraph (2)(B) by reason of a failure to provide the 
     specific amount of the reduction with respect to any 
     participant or beneficiary.
       ``(3) The notice required by paragraph (1) shall be 
     provided no less than 30 days prior to the effective date of 
     the plan amendment.
       ``(4) A plan is described in this paragraph if such plan 
     is--
       ``(A) a defined benefit plan, or
       ``(B) an individual account plan which is subject to the 
     funding standards of section 302.
       ``(5) In the case of a material failure to comply with 
     requirements of this subsection with respect to more than a 
     de minimis number of persons described in paragraph (1), the 
     plan amendment to which the failure relates shall not be 
     effective with respect to such persons for any period prior 
     to the expiration of 30 days following the date on which a 
     notice is provided in accordance with this subsection. For 
     purposes of this paragraph, the term `material failure' 
     includes any failure that results in materially less 
     information being provided to the persons described in 
     paragraph (1).''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan amendments that are adopted more than 120 
     days after the date of enactment of this Act.

                  TITLE V--REDUCING REGULATORY BURDENS

     SEC. 501. INTERMEDIATE SANCTIONS FOR INADVERTENT FAILURES.

       (a) In General.--Section 401(a) (relating to qualified 
     pension, profit-sharing, and stock bonus plans) is amended by 
     inserting after paragraph (34) the following:
       ``(35) Protection from disqualification upon timely 
     correction or payment of fine.--A trust shall not fail to 
     constitute a qualified trust under this section if the plan 
     of which such trust is a part has made good faith efforts to 
     meet the requirements of this section, has inadvertently 
     failed to satisfy 1 or more of such requirements, and 
     either--
       ``(A) substantially corrects (to the extent possible) such 
     failure before the date the plan becomes subject to a plan 
     examination for the applicable year (as determined under 
     rules prescribed by the Secretary), or
       ``(B) substantially corrects (to the extent possible) such 
     failure on or after such date.

     If the plan satisfies the requirement under subparagraph (B), 
     the Secretary may require the sponsoring employer to make a 
     payment to the Secretary in an amount that does not exceed an 
     amount that bears a reasonable relationship to the severity 
     of the plan's failure to satisfy the requirements of this 
     section.''.
       (b) Application to Cash or Deferred Arrangements.--Section 
     401(k) is amended by inserting after paragraph (12) the 
     following new paragraph:
       ``(13) Protection from disqualification.--Rules similar to 
     the rules set forth in section 401(a)(35) shall apply for 
     purposes of determining whether a cash or deferred 
     arrangement is a qualified cash or deferred arrangement.''.
       (c) Application to Section 403(b) Annuity Contracts.--
     Section 403(b) is amended by inserting after paragraph (12) 
     the following:
       ``(13) Correction of errors.--For purposes of determining 
     whether the exclusion from gross income under paragraph (1) 
     is applicable to an employee for any taxable year, rules 
     similar to the rules set forth in section 401(a)(35) shall 
     apply to any annuity contract purchased under this subsection 
     or any plan established to meet the requirements of this 
     subsection.''.
       (d) Income Inclusion for Disqualification Not Applicable to 
     Nonhighly Compensated Employees.--Section 402(b) (relating to 
     taxability of beneficiary of nonexempt trust) is amended by 
     striking paragraph (4) and inserting the following:
       ``(4) Income inclusion for disqualification not applicable 
     to nonhighly compensated employees.--Paragraphs (1) and (2) 
     shall not apply to employees who are not highly compensated 
     employees.
       ``(5) Failure to meet requirements of section 401(a)(26) or 
     410(b).--If 1 of the reasons a trust is not exempt from tax 
     under section 501(a) is the failure of the plan to meet the 
     requirements of section 401(a)(26) or 410(b), then a highly 
     compensated employee shall, in lieu of the amount determined 
     under paragraph (1) or (2), include in gross income for the 
     taxable year with or within which the taxable year of the 
     trust ends an amount equal to the vested accrued benefit of 
     such employee (other than the employee's investment in the 
     contract) as of the close of such taxable year of the trust.
       ``(6) Highly compensated employee.--For purposes of this 
     subsection, the term `highly compensated employee' has the 
     meaning given such term by section 414(q).''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of enactment of this Act.

     SEC. 502. REPEAL OF THE MULTIPLE USE TEST.

       (a) In General.--Paragraph (9) of section 401(m) is amended 
     to read as follows:
       ``(9) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection and subsection (k), including regulations 
     permitting appropriate aggregation of plans and 
     contributions.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 503. SAFETY VALVE FROM MECHANICAL RULES.

       (a) In General.--The Secretary of the Treasury, by 
     regulation, shall provide that the plan shall be deemed to 
     satisfy the requirements of section 401(a)(4) of the Internal 
     Revenue Code of 1986 if such plan satisfies the facts and 
     circumstances test under section 401(a)(4) of such Code, as 
     in effect before January 1, 1994, if--
       (1) the plan satisfies conditions prescribed by the 
     Secretary to appropriately limit the availability of such 
     test, and
       (2) the plan is submitted to the Secretary for a 
     determination of whether it satisfies such test.


[[Page H6491]]


     Paragraph (2) shall only apply to the extent provided by the 
     Secretary.
       (b) Effective Dates.--
       (1) Regulations.--The regulation required by subsection (a) 
     shall apply to years beginning after December 31, 2000.
       (2) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under subsection 
     (a)(1) shall not apply before the first year beginning not 
     less than 120 days after the date on which such condition is 
     prescribed.

     SEC. 504. REFORM OF THE LINE OF BUSINESS RULES.

       (a) Repeal of Gateway Test.--Paragraph (5) of section 
     410(b) is amended to read as follows:
       ``(5) Line of business exception.--If, under section 
     414(r), an employer is treated as operating separate lines of 
     business for a year, the employer may apply the requirements 
     of this subsection for such year separately with respect to 
     employees in each separate line of business.''.
       (b) Regulations.--The Secretary of the Treasury shall 
     modify the regulations issued under section 414(r) of the 
     Internal Revenue Code of 1986 (relating to special rules for 
     separate line of business) to--
       (1) simplify the administrability of the rules for both the 
     Secretary and plans, and
       (2) permit employees to be allocated among lines of 
     business based on all the facts and circumstances.
       (c) Effective Dates.--
       (1) Repeal.--The repeal made by subsection (a) shall apply 
     to years beginning after December 31, 2000.
       (2) Regulations.--The regulations modified under subsection 
     (b) shall apply to years beginning after December 31, 2000.

     SEC. 505. COVERAGE TEST FLEXIBILITY.

       (a) In General.--Paragraph (1) of section 410(b) is amended 
     by adding at the end the following:
       ``(D) In the case that the plan fails to meet the 
     requirements of subparagraphs (A), (B) and (C), the plan--
       ``(i) satisfies subparagraph (B), as in effect immediately 
     before the enactment of the Tax Reform Act of 1986,
       ``(ii) is submitted to the Secretary for a determination of 
     whether it satisfies the requirement described in clause (i), 
     and
       ``(iii) satisfies conditions prescribed by the Secretary by 
     regulation that appropriately limit the availability of this 
     subparagraph.

     Clause (ii) shall apply only to the extent provided by the 
     Secretary.''.
       (b) Effective Dates.--
       (1) In general.--The amendment made by subsection (a) shall 
     apply to years beginning after December 31, 2000.
       (2) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under regulations 
     prescribed by the Secretary under section 410(a)(1)(D) of the 
     Internal Revenue Code of 1986 shall not apply before the 
     first year beginning not less than 120 days after the date on 
     which such condition is prescribed.

     SEC. 506. INCREASE IN RETIREMENT PLAN CASH-OUT AMOUNT.

       (a) Amendments to 1986 Code.--Section 411(a)(11) (relating 
     to restrictions on certain mandatory distributions) is 
     amended by adding at the end the following:
       ``(D) Inflation adjustment.--In the case of any plan year 
     beginning in a calendar year after 1999, the Secretary shall 
     adjust annually the $5,000 amount contained in subparagraph 
     (A) 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 
     ending September 30, 1999, and any increase which is not a 
     multiple of $500 shall be rounded to the next lowest multiple 
     of $500.''.
       (b) Amendments to ERISA.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(e)) is 
     amended by adding at the end the following:
       ``(4) Inflation adjustment.--In the case of any plan year 
     beginning in a calendar year after 1999, the Secretary shall 
     adjust annually the $5,000 amount contained in paragraph (1) 
     for increases in the cost of living at the same time and in 
     the same manner as adjustments under section 415(d) of the 
     Internal Revenue Code of 1986; except that the base period 
     shall be the calendar quarter ending September 30, 1999, and 
     any increase which is not a multiple of $500 shall be rounded 
     to the next lowest multiple of $500.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning on or after the date of 
     enactment of this Act.

     SEC. 507. MODIFICATION OF TIMING OF PLAN VALUATIONS.

       (a) In General.--Section 412(c)(9) (relating to annual 
     valuation) is amended--
       (1) by striking ``For purposes'' and inserting the 
     following:
       ``(A) In general.--For purposes'', and
       (2) by adding at the end the following:
       ``(B) Election to use prior year valuation.--
       ``(i) In general.--If, for any plan year--

       ``(I) an election is in effect under this subparagraph with 
     respect to a plan, and
       ``(II) the assets of the plan are not less than 125 percent 
     of the plan's current liability (as defined in paragraph 
     (7)(B)), determined as of the valuation date for the 
     preceding plan year, then this section shall be applied using 
     the information available as of such valuation date.

       ``(ii) Adjustments.--Information under clause (i) shall, in 
     accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iii) Election.--An election under this subparagraph, 
     once made, shall be irrevocable without the consent of the 
     Secretary.''.
       (b) Amendments to ERISA.--Paragraph (9) of section 302(c) 
     of the Employee Retirement Income Security Act of 1974 (29 
     U.S.C. 1053(c)) is amended--
       (1) by inserting ``(A)'' after ``(9)'', and
       (2) by adding at the end the following:
       ``(B)(i) If, for any plan year--
       ``(I) an election is in effect under this subparagraph with 
     respect to a plan, and
       ``(II) the assets of the plan are not less than 125 percent 
     of the plan's current liability (as defined in paragraph 
     (7)(B)), determined as of the valuation date for the 
     preceding plan year,
     then this section shall be applied using the information 
     available as of such valuation date.
       ``(ii) Information under clause (i) shall, in accordance 
     with regulations, be actuarially adjusted to reflect 
     significant differences in participants.
       ``(iii) An election under this subparagraph, once made, 
     shall be irrevocable without the consent of the Secretary of 
     the Treasury.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning on or after the date of 
     enactment of this Act.

     SEC. 508. SECTION 457 INAPPLICABLE TO CERTAIN MIRROR PLANS.

       (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:
       ``(17) This section shall not apply to a plan, program, or 
     arrangement maintained solely for the purposes of providing 
     retirement benefits for employees in excess of the 
     limitations imposed by sections 401(a)(17) or 415.''.
       (b) Certain Deferred Compensation Not Taken Into Account.--
     Subsection (c) of section 457 (relating to individuals who 
     are participants in more than 1 plan) (as amended by section 
     108(a)) is amended by adding at the end the following: ``This 
     section shall be applied without regard to a plan, program, 
     or arrangement described in subsection (e)(17).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 509. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

       (a) Modification of Phase-In of Guarantee.--Section 
     4022(b)(5) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
       ``(5)(A) For purposes of this paragraph, the term `majority 
     owner' means an individual who, at any time during the 60-
     month period ending on the date the determination is being 
     made--
       ``(i) owns the entire interest in an unincorporated trade 
     or business,
       ``(ii) in the case of a partnership, is a partner who owns, 
     directly or indirectly, 50 percent or more of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(iii) in the case of a corporation, owns, directly or 
     indirectly, 50 percent or more in value of either the voting 
     stock of that corporation or all the stock of that 
     corporation.
     For purposes of clause (iii), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).
       ``(B) In the case of a participant who is a majority owner, 
     the amount of benefits guaranteed under this section shall 
     equal 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 10, and
       ``(ii) the amount of benefits that would be guaranteed 
     under this section if the participant were not a majority 
     owner.''.
       (b) Modification of Allocation of Assets.--
       (1) Section 4044(a)(4)(B) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by 
     striking ``section 4022(b)(5)'' and inserting ``section 
     4022(b)(5)(B)''.
       (2) Section 4044(b) of such Act (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:
       ``(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 benefits 
     described in subparagraph (B) of that paragraph. If assets 
     allocated to such subparagraph (B) are insufficient to 
     satisfy in full the benefits described 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) Conforming Amendments.--
       (1) Section 4021 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1321) is amended--

[[Page H6492]]

       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following:
       ``(d) For purposes of subsection (b)(9), the term 
     ``substantial owner'' means an individual who, at any time 
     during the 60-month period ending on the date the 
     determination is being made--
       ``(1) owns the entire interest in an unincorporated trade 
     or business,
       ``(2) in the case of a partnership, is a partner who owns, 
     directly or indirectly, more than 10 percent of either the 
     capital interest or the profits interest in such partnership, 
     or
       ``(3) in the case of a corporation, owns, directly or 
     indirectly, more than 10 percent in value of either the 
     voting stock of that corporation or all the stock of that 
     corporation.
     For purposes of paragraph (3), the constructive ownership 
     rules of section 1563(e) of the Internal Revenue Code of 1986 
     shall apply (determined without regard to section 
     1563(e)(3)(C)).''.
       (2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) 
     is amended by striking ``section 4022(b)(6)'' and inserting 
     ``section 4021(d)''.
       (d) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan 
     terminations--
       (A) 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 enactment of this Act, and
       (B) 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.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on the date of enactment of 
     this Act.

     SEC. 510. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF 
                   DIVIDEND DEDUCTION.

       (a) In General.--Section 404(k)(2)(A) (defining applicable 
     dividends) is amended by striking ``or'' at the end of clause 
     (ii), by redesignating clause (iii) as clause (iv), and by 
     inserting after clause (ii) the following new clause:
       ``(iii) is, at the election of such participants or their 
     beneficiaries--

       ``(I) payable as provided in clause (i) or (ii), or
       ``(II) paid to the plan and reinvested in qualifying 
     employer securities, or''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     1999.

     SEC. 511. MODIFICATION OF 403(B) EXCLUSION ALLOWANCE TO 
                   CONFORM TO 415 MODIFICATION.

       The Secretary of the Treasury shall modify the regulations 
     regarding the exclusion allowance under section 403(b)(2) of 
     the Internal Revenue Code of 1986 to render void the 
     requirement that contributions to a defined benefit pension 
     plan be treated as previously excluded amounts for purposes 
     of the exclusion allowance. For taxable years beginning after 
     December 31, 1999, such regulations shall be applied as if 
     such requirement were void.

     SEC. 512. 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) Combining and Aggregation of Plans.--
       (1) Combining of plans.--Subsection (f) of section 415 
     (relating to combining of plans) is amended by adding at the 
     end the following:
       ``(3) Exception for multiemployer plans.--Notwithstanding 
     paragraph (1) and subsection (g), a multiemployer plan (as 
     defined in section 414(f)) shall not be combined or 
     aggregated with any other plan maintained by an employer for 
     purposes of applying the limitations established in this 
     section.''.
       (2) Conforming amendment for aggregation of plans.--
     Subsection (g) of section 415 (relating to aggregation of 
     plans) is amended by striking ``The Secretary'' and inserting 
     ``Except as provided in subsection (f)(3), the Secretary''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 513. 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, 1999.

     SEC. 514. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) In general.--
       (A) Subparagraph (A) of section 417(a)(6) is amended by 
     striking ``90-day'' and inserting ``one-year''.
       (B) Subparagraph (A) of section 205(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1055) is 
     amended by striking ``90-day'' and inserting ``one-year''.
       (2) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
     substitute ``one year'' for ``90 days'' each place it appears 
     in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
     and 1.417(e)-1(b).
       (3) Effective date.--The amendments made by paragraph (1) 
     and the modifications required by paragraph (2) shall apply 
     to years beginning after December 31, 1999.
       (b) Consent Regulation Inapplicable to Certain 
     Distributions.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 to provide that the description of a 
     participant's right, if any, to defer receipt of a 
     distribution shall also describe the consequences of failing 
     to defer such receipt.
       (2) Effective date.--The modifications required by 
     paragraph (1) shall apply to years beginning after December 
     31, 1999.

     SEC. 515. CONFORMING AMENDMENTS RELATING TO ELECTION TO 
                   RECEIVE TAXABLE CASH COMPENSATION IN LIEU OF 
                   NONTAXABLE PARKING BENEFITS.

       (a) In General.--
       (1) Clause (ii) of section 415(c)(3)(D) and subparagraph 
     (B) of section 403(b)(3) are each amended by striking 
     ``section 125 or'' and inserting ``section 125, 132(f)(4), 
     or''.
       (2) Paragraph (2) of section 414(s) is amended by striking 
     ``section 125, 402(e)(3)'' and inserting ``section 125, 
     132(f)(4), 402(e)(3)''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect as if included in the amendment made by 
     section 1072 of the Taxpayer Relief Act of 1997.

     SEC. 516. EXTENSION TO INTERNATIONAL ORGANIZATIONS OF 
                   MORATORIUM ON APPLICATION OF CERTAIN 
                   NONDISCRIMINATION RULES APPLICABLE TO STATE AND 
                   LOCAL PLANS.

       (a) In General.--Subparagraph (G) of section 401(a)(5), 
     subparagraph (H) of section 401(a)(26), subparagraph (G) of 
     section 401(k)(3), and paragraph (2) of section 1505(d) of 
     the Taxpayer Relief Act of 1997 are each amended by inserting 
     ``or by an international organization which is described in 
     section 414(d)'' after ``or instrumentality thereof)''.
       (b) Conforming Amendments.--
       (1) The headings for subparagraph (G) of section 401(a)(5) 
     and subparagraph (H) of section 401(a)(26) are each amended 
     by inserting ``and international organization'' after 
     ``governmental''.
       (2) Subparagraph (G) of section 401(k)(3) is amended by 
     inserting ``State and local governmental and international 
     organization plans.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendment made by 
     section 1505 of the Taxpayer Relief Act of 1997.

     SEC. 517. EMPLOYEES OF TAX-EXEMPT ENTITIES.

       (a) In General.--The Secretary of the Treasury shall modify 
     Treasury Regulations section 1.410(b)-6(g) to provide that 
     employees of an organization described in section 
     403(b)(1)(A)(i) of the Internal Revenue Code of 1986 who are 
     eligible to make contributions under section 403(b) pursuant 
     to a salary reduction agreement may be treated as excludable 
     with respect to a plan under section 401(k), or section 
     401(m) of such Code that is provided under the same general 
     arrangement as a plan under such section 401(k), if--
       (1) no employee of an organization described in section 
     403(b)(1)(A)(i) of such Code is eligible to participate in 
     such section 401(k) plan or section 401(m) plan, and
       (2) 95 percent of the employees who are not employees of an 
     organization described in section 403(b)(1)(A)(i) of such 
     Code are eligible to participate in such section 401(k) plan 
     or section 401(m) plan.
       (b) Effective Date.--The modification required by 
     subsection (a) shall apply as of the same date set forth in 
     section 1426(b) of the Small Business Job Protection Act of 
     1996.

     SEC. 518. PERMISSIVE AGGREGATION OF COLLECTIVE BARGAINING 
                   UNITS.

       (a) In General.--Paragraph (3) of section 410(b) is amended 
     by inserting the following immediately before the last 
     sentence thereof: ``Solely for purposes of applying this 
     subsection to employees who are not described in subparagraph 
     (A), an employer may elect to have subparagraph (A) not apply 
     to one or more units of employees who are described in 
     subparagraph (A).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 519. REPEAL OF TRANSITION RULE RELATING TO CERTAIN 
                   HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Paragraph (4) of section 1114(c)(4) of the 
     Tax Reform Act of 1986 is hereby repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to plan years beginning on or after January 1, 
     2000.

[[Page H6493]]

     SEC. 520. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED 
                   RETIREMENT ADVICE.

       (a) In General.--Section 132(e) (defining de minimis 
     fringe) is amended by adding at the end the following:
       ``(3) Treatment of certain retirement planning services.--
     The provision of retirement planning services by an employer 
     to employees, to the extent not described in subsection (d), 
     shall be treated as a de minimis fringe.''.
       (b) No Constructive Receipt.--Section 132 is amended by 
     redesignating subsection (m) as subsection (n) and by 
     inserting after subsection (l) the following:
       ``(m) Retirement Planning.--
       ``(1) In general.--No amount shall be included in the gross 
     income of an employee solely because the employee may choose 
     between any retirement planning fringe and compensation which 
     would otherwise be includible in the gross income of such 
     employee.
       ``(2) Nondiscrimination requirement.--Paragraph (1) shall 
     apply to a highly compensated employee only if the choice 
     described in such paragraph is available on substantially the 
     same terms to each member of a group of employees which is 
     defined under a reasonable classification set up by the 
     employer which does not discriminate in favor of highly 
     compensated employees.
       ``(3) Retirement planning fringe.--For purposes of this 
     subsection, the term `retirement planning fringe' means any 
     retirement planning services provided by an employer to an 
     employee which are not included in the gross income of the 
     employee by reason of subsection (d) or (e).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 521. ANNUAL REPORT DISSEMINATION.

       (a) In General.--Section 104(b)(3) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) 
     is amended by striking ``shall furnish'' and inserting 
     ``shall make available for examination (and, upon request, 
     shall furnish)''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     1998.

     SEC. 522. EXCESS BENEFIT PLANS.

       (a) In General.--Section 3(36) of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1002(36)) is amended 
     to read as follows:
       ``(36) The term `excess benefit plan' means a plan, without 
     regard to whether such plan is funded, maintained by an 
     employer solely for the purpose of providing benefits to 
     employees in excess of the limitations imposed by 1 or more 
     of sections 401(a)(17), 401(k), 401(m), 402(g), 403(b), 
     408(k), 408(p), or 415 of the Internal Revenue Code of 1986 
     or any other limitation on contributions or benefits in such 
     Code on plans to which any of such sections apply. To the 
     extent that a separable part of a plan (as determined by the 
     Secretary of Labor) maintained by an employer is maintained 
     for such purpose, that part shall be treated as a separate 
     plan which is an excess benefit plan.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 1999.

     SEC. 523. BENEFIT SUSPENSION NOTICE.

       (a) Modification of Regulation.--The Secretary of Labor 
     shall modify the regulation under section 203(a)(3)(B) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1053(a)(3)(B)) to provide that the notification required by 
     such regulation--
       (1) may be included in the summary plan description for the 
     plan furnished in accordance with section 104(b) of such Act 
     (29 U.S.C. 1024(b)), rather than in a separate notice, and
       (2) need not include a copy of the relevant plan 
     provisions.
       (b) Effective Date.--The modification made under subsection 
     (a) shall apply to plan years beginning after December 31, 
     1999.

     SEC. 524. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any plan or 
     contract amendment--
       (1) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A), and
       (2) such plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 or 
     section 204(g) of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1054(g)) by reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any plan or annuity contract which is made--
       (A) pursuant to any amendment made by this Act, or pursuant 
     to any regulation issued under this Act, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2002.
     In the case of a government plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986 and section 3(32) 
     of the Employee Retirement Income Security Act of 1974), this 
     paragraph shall be applied by substituting ``2004'' for 
     ``2002''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan), and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted),
     the plan or contract is operated as if such plan or contract 
     amendment were in effect, and
       (B) such plan or contract amendment applies retroactively 
     for such period.

     SEC. 525. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the requirements for filing annual returns with respect to 
     one-participant retirement plans to ensure that such plans 
     with assets of $500,000 or less as of the close of the plan 
     year need not file a return for that year.
       (2) One-participant retirement plan defined.--For purposes 
     of this subsection, the term ``one-participant retirement 
     plan'' means a retirement plan that--
       (A) on the first day of the plan year--
       (i) covered only the employer (and the employer's spouse) 
     and the employer owned the entire business (whether or not 
     incorporated), or
       (ii) covered only one or more partners (and their spouses) 
     in a business partnership (including partners in an S or C 
     corporation),
       (B) meets the minimum coverage requirements of section 
     410(b) of the Internal Revenue Code of 1986 without being 
     combined with any other plan of the business that covers the 
     employees of the business,
       (C) does not provide benefits to anyone except the employer 
     (and the employer's spouse) or the partners (and their 
     spouses),
       (D) does not cover a business that is a member of an 
     affiliated service group, a controlled group of corporations, 
     or a group of businesses under common control, and
       (E) does not cover a business that leases employees.
       (3) Other definitions.--Terms used in paragraph (2) which 
     are also used in section 414 of the Internal Revenue Code of 
     1986 shall have the respective meanings given such terms by 
     such section.
       (b) Simplified Annual Filing Requirement for Plans With 
     Fewer Than 25 Employees.--In the case of a retirement plan 
     which covers less than 25 employees on the 1st day of the 
     plan year and meets the requirements described in 
     subparagraphs (B), (D), and (E) of subsection (a)(2), the 
     Secretary of the Treasury shall provide for the filing of a 
     simplified annual return that is substantially similar to the 
     annual return required to be filed by a one-participant 
     retirement plan.

     SEC. 526. MODEL PLANS FOR SMALL BUSINESSES.

       (a) In General.--Not later than December 31, 2000, the 
     Secretary of the Treasury is directed to issue at least one 
     model defined contribution plan and at least one model 
     defined benefit plan that fit the needs of small businesses 
     and that shall be treated as meeting the requirements of 
     section 401(a) of the Internal Revenue Code of 1986 with 
     respect to the form of the plan. To the extent that the 
     requirements of section 401(a) of such Code are modified 
     after the issuance of such plans, the Secretary of the 
     Treasury shall, in a timely manner, issue model amendments 
     that, if adopted in a timely manner by an employer that has a 
     model plan in effect, shall cause such model plan to be 
     treated as meeting the requirements of section 401(a) of such 
     Code, as modified, with respect to the form of the plan.
       (b) Master and Prototype Plan Alternative.--The Secretary 
     of the Treasury may, in its discretion, satisfy the 
     requirements of subsection (a) through the enhancement and 
     simplification of the Secretary's programs for master and 
     prototype plans in such a manner as to achieve the purposes 
     of subsection (a).
  The SPEAKER pro tempore. In lieu of the amendment recommended by the 
Committee on Education and the Workforce printed in House Report 106-
331 accompanying the bill H.R. 1102, an amendment in the nature of a 
substitute recommended by the Committee on Ways and Means printed in 
H.R. 4843 is adopted.
  The text of the committee amendment in the nature of a substitute is 
as follows:

                               H.R. 4843

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the 
     ``Comprehensive Retirement Security and Pension Reform Act of 
     2000''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act 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.
       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; references; table of contents.

           TITLE I--INDIVIDUAL RETIREMENT ACCOUNT PROVISIONS

Sec. 101. Modification of IRA contribution limits.

[[Page H6494]]

                      TITLE II--EXPANDING COVERAGE

Sec. 201. Increase in benefit and contribution limits.
Sec. 202. Plan loans for subchapter S owners, partners, and sole 
              proprietors.
Sec. 203. Modification of top-heavy rules.
Sec. 204. Elective deferrals not taken into account for purposes of 
              deduction limits.
Sec. 205. Repeal of coordination requirements for deferred compensation 
              plans of State and local governments and tax-exempt 
              organizations.
Sec. 206. Elimination of user fee for requests to IRS regarding pension 
              plans.
Sec. 207. Deduction limits.
Sec. 208. Option to treat elective deferrals as after-tax 
              contributions.

                TITLE III--ENHANCING FAIRNESS FOR WOMEN

Sec. 301. Catch-up contributions for individuals age 50 or over.
Sec. 302. Equitable treatment for contributions of employees to defined 
              contribution plans.
Sec. 303. Faster vesting of certain employer matching contributions.
Sec. 304. Simplify and update the minimum distribution rules.
Sec. 305. Clarification of tax treatment of division of section 457 
              plan benefits upon divorce.
Sec. 306. Modification of safe harbor relief for hardship withdrawals 
              from cash or deferred arrangements.

           TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS

Sec. 401. Rollovers allowed among various types of plans.
Sec. 402. Rollovers of IRAs into workplace retirement plans.
Sec. 403. Rollovers of after-tax contributions.
Sec. 404. Hardship exception to 60-day rule.
Sec. 405. Treatment of forms of distribution.
Sec. 406. Rationalization of restrictions on distributions.
Sec. 407. Purchase of service credit in governmental defined benefit 
              plans.
Sec. 408. Employers may disregard rollovers for purposes of cash-out 
              amounts.
Sec. 409. Minimum distribution and inclusion requirements for section 
              457 plans.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

Sec. 501. Repeal of 150 percent of current liability funding limit.
Sec. 502. Maximum contribution deduction rules modified and applied to 
              all defined benefit plans.
Sec. 503. Excise tax relief for sound pension funding.
Sec. 504. Excise tax on failure to provide notice by defined benefit 
              plans significantly reducing future benefit accruals.
Sec. 505. Treatment of multiemployer plans under section 415.
Sec. 506. Prohibited allocations of stock in S corporation ESOP.

                 TITLE VI--REDUCING REGULATORY BURDENS

Sec. 601. Modification of timing of plan valuations.
Sec. 602. ESOP dividends may be reinvested without loss of dividend 
              deduction.
Sec. 603. Repeal of transition rule relating to certain highly 
              compensated employees.
Sec. 604. Employees of tax-exempt entities.
Sec. 605. Clarification of treatment of employer-provided retirement 
              advice.
Sec. 606. Reporting simplification.
Sec. 607. Improvement of employee plans compliance resolution system.
Sec. 608. Repeal of the multiple use test.
Sec. 609. Flexibility in nondiscrimination, coverage, and line of 
              business rules.
Sec. 610. Extension to all governmental plans of moratorium on 
              application of certain nondiscrimination rules applicable 
              to State and local plans.
Sec. 611. Notice and consent period regarding distributions.

                       TITLE VII--PLAN AMENDMENTS

Sec. 701. Provisions relating to plan amendments.

                TITLE I--INDIVIDUAL RETIREMENT ACCOUNTS

     SEC. 101. MODIFICATION OF IRA CONTRIBUTION LIMITS.

       (a) Increase in Contribution Limit.--
       (1) In general.--Paragraph (1)(A) of section 219(b) 
     (relating to maximum amount of deduction) is amended by 
     striking ``$2,000'' and inserting ``the deductible amount''.
       (2) Deductible amount.--Section 219(b) is amended by adding 
     at the end the following new paragraph:
       ``(5) Deductible amount.--For purposes of paragraph 
     (1)(A)--
       ``(A) In general.--The deductible amount shall be 
     determined in accordance with the following table:

    ``For taxable years                                  The deductible
      beginning in:                                        amount is:  
      2001..................................................$3,000 .

      2002..................................................$4,000 .

      2003 and thereafter...................................$5,000..

       ``(B) Catch-up contributions for individuals 50 or older.--
     In the case of an individual who has attained the age of 50 
     before the close of the taxable year, the deductible amount 
     for taxable years beginning in 2001 or 2002 shall be $5,000.
       ``(C) Cost-of-living adjustment.--
       ``(i) In general.--In the case of any taxable year 
     beginning in a calendar year after 2003, the $5,000 amount 
     under subparagraph (A) shall be increased by an amount equal 
     to--

       ``(I) such dollar amount, multiplied by
       ``(II) the cost-of-living adjustment determined under 
     section 1(f )(3) for the calendar year in which the taxable 
     year begins, determined by substituting `calendar year 2002' 
     for `calendar year 1992' in subparagraph (B) thereof.

       ``(ii) Rounding rules.--If any amount after adjustment 
     under clause (i) is not a multiple of $500, such amount shall 
     be rounded to the next lower multiple of $500.''.
       (b) Conforming Amendments.--
       (1) Section 408(a)(1) is amended by striking ``in excess of 
     $2,000 on behalf of any individual'' and inserting ``on 
     behalf of any individual in excess of the amount in effect 
     for such taxable year under section 219(b)(1)(A)''.
       (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
     and inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (3) Section 408(b) is amended by striking ``$2,000'' in the 
     matter following paragraph (4) and inserting ``the dollar 
     amount in effect under section 219(b)(1)(A)''.
       (4) Section 408( j) is amended by striking ``$2,000''.
       (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
     inserting ``the dollar amount in effect under section 
     219(b)(1)(A)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

                      TITLE II--EXPANDING COVERAGE

     SEC. 201. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.

       (a) Defined Benefit Plans.--
       (1) Dollar limit.--
       (A) Subparagraph (A) of section 415(b)(1) (relating to 
     limitation for defined benefit plans) is amended by striking 
     ``$90,000'' and inserting ``$160,000''.
       (B) Subparagraphs (C) and (D) of section 415(b)(2) are each 
     amended by striking ``$90,000'' each place it appears in the 
     headings and the text and inserting ``$160,000''.
       (C) Paragraph (7) of section 415(b) (relating to benefits 
     under certain collectively bargained plans) is amended by 
     striking ``the greater of $68,212 or one-half the amount 
     otherwise applicable for such year under paragraph (1)(A) for 
     `$90,000' '' and inserting ``one-half the amount otherwise 
     applicable for such year under paragraph (1)(A) for 
     `$160,000' ''.
       (2) Limit reduced when benefit begins before age 62.--
     Subparagraph (C) of section 415(b)(2) is amended by striking 
     ``the social security retirement age'' each place it appears 
     in the heading and text and inserting ``age 62''.
       (3) Limit increased when benefit begins after age 65.--
     Subparagraph (D) of section 415(b)(2) is amended by striking 
     ``the social security retirement age'' each place it appears 
     in the heading and text and inserting ``age 65''.
       (4) Cost-of-living adjustments.--Subsection (d) of section 
     415 (related to cost-of-living adjustments) is amended--
       (A) by striking ``$90,000'' in paragraph (1)(A) and 
     inserting ``$160,000''; and
       (B) in paragraph (3)(A)--
       (i) by striking ``$90,000'' in the heading and inserting 
     ``$160,000''; and
       (ii) by striking ``October 1, 1986'' and inserting ``July 
     1, 2000''.
       (5) Conforming amendment.--Section 415(b)(2) is amended by 
     striking subparagraph (F).
       (b) Defined Contribution Plans.--
       (1) Dollar limit.--Subparagraph (A) of section 415(c)(1) 
     (relating to limitation for defined contribution plans) is 
     amended by striking ``$30,000'' and inserting ``$40,000''.
       (2) Cost-of-living adjustments.--Subsection (d) of section 
     415 (related to cost-of-living adjustments) is amended--
       (A) by striking ``$30,000'' in paragraph (1)(C) and 
     inserting ``$40,000''; and
       (B) in paragraph (3)(D)--
       (i) by striking ``$30,000'' in the heading and inserting 
     ``$40,000''; and
       (ii) by striking ``October 1, 1993'' and inserting ``July 
     1, 2000''.
       (c) Qualified Trusts.--
       (1) Compensation limit.--Sections 401(a)(17), 404(l), 
     408(k), and 505(b)(7) are each amended by striking 
     ``$150,000'' each place it appears and inserting 
     ``$200,000''.
       (2) Base period and rounding of cost-of-living 
     adjustment.--Subparagraph (B) of section 401(a)(17) is 
     amended--
       (A) by striking ``October 1, 1993'' and inserting ``July 1, 
     2000''; and
       (B) by striking ``$10,000'' both places it appears and 
     inserting ``$5,000''.
       (d) Elective Deferrals.--
       (1) In general.--Paragraph (1) of section 402(g) (relating 
     to limitation on exclusion for elective deferrals) is amended 
     to read as follows:
       ``(1) In general.--
       ``(A) Limitation.--Notwithstanding subsections (e)(3) and 
     (h)(1)(B), the elective deferrals of any individual for any 
     taxable year shall be included in such individual's gross 
     income to the extent the amount of such deferrals for the 
     taxable year exceeds the applicable dollar amount.
       ``(B) Applicable dollar amount.--For purposes of 
     subparagraph (A), the applicable dollar amount shall be the 
     amount determined in accordance with the following table:

    ``For taxable years                                  The applicable
      beginning in                                       dollar amount:
      calendar year:
      2001.....................................................$11,000 
      2002.....................................................$12,000 
      2003.....................................................$13,000 
      2004.....................................................$14,000 
      2005 or thereafter....................................$15,000.''.
       (2) Cost-of-living adjustment.--Paragraph (5) of section 
     402(g) is amended to read as follows:

[[Page H6495]]

       ``(5) Cost-of-living adjustment.--In the case of taxable 
     years beginning after December 31, 2005, the Secretary shall 
     adjust the $15,000 amount under paragraph (1)(B) at the same 
     time and in the same manner as under section 415(d), except 
     that the base period shall be the calendar quarter beginning 
     July 1, 2004, and any increase under this paragraph which is 
     not a multiple of $500 shall be rounded to the next lowest 
     multiple of $500.''.
       (3) Conforming amendments.--
       (A) Section 402(g) (relating to limitation on exclusion for 
     elective deferrals), as amended by paragraphs (1) and (2), is 
     further amended by striking paragraph (4) and redesignating 
     paragraphs (5), (6), (7), (8), and (9) as paragraphs (4), 
     (5), (6), (7), and (8), respectively.
       (B) Paragraph (2) of section 457(c) is amended by striking 
     ``402(g)(8)(A)(iii)'' and inserting ``402(g)(7)(A)(iii)''.
       (C) Clause (iii) of section 501(c)(18)(D) is amended by 
     striking ``(other than paragraph (4) thereof)''.
       (e) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--
       (1) In general.--Section 457 (relating to deferred 
     compensation plans of State and local governments and tax-
     exempt organizations) is amended--
       (A) in subsections (b)(2)(A) and (c)(1) by striking 
     ``$7,500'' each place it appears and inserting ``the 
     applicable dollar amount''; and
       (B) in subsection (b)(3)(A) by striking ``$15,000'' and 
     inserting ``twice the dollar amount in effect under 
     subsection (b)(2)(A)''.
       (2) Applicable dollar amount; cost-of-living adjustment.--
     Paragraph (15) of section 457(e) is amended to read as 
     follows:
       ``(15) Applicable dollar amount.--
       ``(A) In general.--The applicable dollar amount shall be 
     the amount determined in accordance with the following table:

    ``For taxable years                                  The applicable
      beginning in                                       dollar amount:
      calendar year:
      2001.....................................................$11,000 
      2002.....................................................$12,000 
      2003.....................................................$13,000 
      2004.....................................................$14,000 
      2005 or thereafter.......................................$15,000.
       ``(B) Cost-of-living adjustments.--In the case of taxable 
     years beginning after December 31, 2005, the Secretary shall 
     adjust the $15,000 amount specified in the table in 
     subparagraph (A) at the same time and in the same manner as 
     under section 415(d), except that the base period shall be 
     the calendar quarter beginning July 1, 2004, and any increase 
     under this paragraph which is not a multiple of $500 shall be 
     rounded to the next lowest multiple of $500.''.
       (f) Simple Retirement Accounts.--
       (1) Limitation.--Clause (ii) of section 408(p)(2)(A) 
     (relating to general rule for qualified salary reduction 
     arrangement) is amended by striking ``$6,000'' and inserting 
     ``the applicable dollar amount''.
       (2) Applicable dollar amount.--Subparagraph (E) of 
     408(p)(2) is amended to read as follows:
       ``(E) Applicable dollar amount; cost-of-living 
     adjustment.--
       ``(i) In general.--For purposes of subparagraph (A)(ii), 
     the applicable dollar amount shall be the amount determined 
     in accordance with the following table:

    ``For taxable years                                  The applicable
      beginning in                                       dollar amount:
      calendar year:
        2001....................................................$7,000 
        2002....................................................$8,000 
        2003....................................................$9,000 
        2004 or thereafter.....................................$10,000.
       ``(ii) Cost-of-living adjustment.--In the case of a year 
     beginning after December 31, 2004, the Secretary shall adjust 
     the $10,000 amount under clause (i) at the same time and in 
     the same manner as under section 415(d), except that the base 
     period taken into account shall be the calendar quarter 
     beginning July 1, 2003, and any increase under this 
     subparagraph which is not a multiple of $500 shall be rounded 
     to the next lower multiple of $500.''.
       (3) Conforming amendments.--
       (A) Clause (I) of section 401(k)(11)(B)(i) is amended by 
     striking ``$6,000'' and inserting ``the amount in effect 
     under section 408(p)(2)(A)(ii)''.
       (B) Section 401(k)(11) is amended by striking subparagraph 
     (E).
       (g) Rounding Rule Relating to Defined Benefit Plans and 
     Defined Contribution Plans.--Paragraph (4) of section 415(d) 
     is amended to read as follows:
       ``(4) Rounding.--
       ``(A) $160,000 amount.--Any increase under subparagraph (A) 
     of paragraph (1) which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.
       ``(B) $40,000 amount.--Any increase under subparagraph (C) 
     of paragraph (1) which is not a multiple of $1,000 shall be 
     rounded to the next lowest multiple of $1,000.''.
       (h) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 202. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND 
                   SOLE PROPRIETORS.

       (a) In General.--Subparagraph (B) of section 4975(f)(6) 
     (relating to exemptions not to apply to certain transactions) 
     is amended by adding at the end the following new clause:
       ``(iii) Loan exception.--For purposes of subparagraph 
     (A)(i), the term `owner-employee' shall only include a person 
     described in subclause (II) or (III) of clause (i).''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to loans made after December 31, 2000.

     SEC. 203. MODIFICATION OF TOP-HEAVY RULES.

       (a) Simplification of Definition of Key Employee.--
       (1) In general.--Section 416(i)(1)(A) (defining key 
     employee) is amended--
       (A) by striking ``or any of the 4 preceding plan years'' in 
     the matter preceding clause (i);
       (B) by striking clause (i) and inserting the following:
       ``(i) an officer of the employer having an annual 
     compensation greater than $150,000,'';
       (C) by striking clause (ii) and redesignating clauses (iii) 
     and (iv) as clauses (ii) and (iii), respectively; and
       (D) by striking the second sentence in the matter following 
     clause (iii), as redesignated by subparagraph (C).
       (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
     amended by striking ``and subparagraph (A)(ii)''.
       (b) Matching Contributions Taken Into Account for Minimum 
     Contribution Requirements.--Section 416(c)(2)(A) (relating to 
     defined contribution plans) is amended by adding at the end 
     the following: ``Employer matching contributions (as defined 
     in section 401(m)(4)(A)) shall be taken into account for 
     purposes of this subparagraph.''.
       (c) Distributions During Last Year Before Determination 
     Date Taken Into Account.--
       (1) In general.--Paragraph (3) of section 416(g) is amended 
     to read as follows:
       ``(3) Distributions during last year before determination 
     date taken into account.--
       ``(A) In general.--For purposes of determining--
       ``(i) the present value of the cumulative accrued benefit 
     for any employee, or
       ``(ii) the amount of the account of any employee,
     such present value or amount shall be increased by the 
     aggregate distributions made with respect to such employee 
     under the plan during the 1-year period ending on the 
     determination date. The preceding sentence shall also apply 
     to distributions under a terminated plan which if it had not 
     been terminated would have been required to be included in an 
     aggregation group.
       ``(B) 5-year period in case of in-service distribution.--In 
     the case of any distribution made for a reason other than 
     separation from service, death, or disability, subparagraph 
     (A) shall be applied by substituting `5-year period' for `1-
     year period'.''.
       (2) Benefits not taken into account.--Subparagraph (E) of 
     section 416(g)(4) is amended--
       (A) by striking ``last 5 years'' in the heading and 
     inserting ``last year before determination date''; and
       (B) by striking ``5-year period'' and inserting ``1-year 
     period''.
       (d) Definition of Top-Heavy Plans.--Paragraph (4) of 
     section 416(g) (relating to other special rules for top-heavy 
     plans) is amended by adding at the end the following new 
     subparagraph:
       ``(H) Cash or deferred arrangements using alternative 
     methods of meeting nondiscrimination requirements.--The term 
     `top-heavy plan' shall not include a plan which consists 
     solely of--
       ``(i) a cash or deferred arrangement which meets the 
     requirements of section 401(k)(12), and
       ``(ii) matching contributions with respect to which the 
     requirements of section 401(m)(11) are met.
     If, but for this subparagraph, a plan would be treated as a 
     top-heavy plan because it is a member of an aggregation group 
     which is a top-heavy group, contributions under the plan may 
     be taken into account in determining whether any other plan 
     in the group meets the requirements of subsection (c)(2).''.
       (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
     Subparagraph (C) of section 416(c)(1) (relating to defined 
     benefit plans) is amended--
       (A) by striking ``clause (ii)'' in clause (i) and inserting 
     ``clause (ii) or (iii)''; and
       (B) by adding at the end the following:
       ``(iii) Exception for frozen plan.--For purposes of 
     determining an employee's years of service with the employer, 
     any service with the employer shall be disregarded to the 
     extent that such service occurs during a plan year when the 
     plan benefits (within the meaning of section 410(b)) no 
     employee or former employee.''.
       (f) Elimination of Family Attribution.--Section 
     416(i)(1)(B) (defining 5-percent owner) is amended by adding 
     at the end the following new clause:
       ``(iv) Family attribution disregarded.--Solely for purposes 
     of applying this paragraph (and not for purposes of any 
     provision of this title which incorporates by reference the 
     definition of a key employee or 5-percent owner under this 
     paragraph), section 318 shall be applied without regard to 
     subsection (a)(1) thereof in determining whether any person 
     is a 5-percent owner.''.
       (g) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 204. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR 
                   PURPOSES OF DEDUCTION LIMITS.

       (a) In General.--Section 404 (relating to deduction for 
     contributions of an employer to an employees' trust or 
     annuity plan and compensation under a deferred payment plan) 
     is amended by adding at the end the following new subsection:
       ``(n) Elective Deferrals Not Taken Into Account for 
     Purposes of Deduction Limits.--Elective deferrals (as defined 
     in section 402(g)(3)) shall not be subject to any limitation 
     contained in paragraph (3), (7), or (9) of subsection (a), 
     and such elective deferrals shall not be taken into account 
     in applying any such limitation to any other 
     contributions.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2000.

[[Page H6496]]

     SEC. 205. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED 
                   COMPENSATION PLANS OF STATE AND LOCAL 
                   GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.

       (a) In General.--Subsection (c) of section 457 (relating to 
     deferred compensation plans of State and local governments 
     and tax-exempt organizations), as amended by section 201, is 
     amended to read as follows:
       ``(c) Limitation.--The maximum amount of the compensation 
     of any one individual which may be deferred under subsection 
     (a) during any taxable year shall not exceed the amount in 
     effect under subsection (b)(2)(A) (as modified by any 
     adjustment provided under subsection (b)(3)).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to years beginning after December 31, 2000.

     SEC. 206. ELIMINATION OF USER FEE FOR REQUESTS TO IRS 
                   REGARDING PENSION PLANS.

       (a) Elimination of Certain User Fees.--The Secretary of the 
     Treasury or the Secretary's delegate shall not require 
     payment of user fees under the program established under 
     section 7527 of the Internal Revenue Code of 1986 for 
     requests to the Internal Revenue Service for determination 
     letters with respect to the qualified status of a pension 
     benefit plan maintained solely by one or more eligible 
     employers or any trust which is part of the plan. The 
     preceding sentence shall not apply to any request--
       (1) made after the fifth plan year the pension benefit plan 
     is in existence; or
       (2) made by the sponsor of any prototype or similar plan 
     which the sponsor intends to market to participating 
     employers.
       (b) Pension Benefit Plan.--For purposes of this section, 
     the term ``pension benefit plan'' means a pension, profit-
     sharing, stock bonus, annuity, or employee stock ownership 
     plan.
       (c) Eligible Employer.--For purposes of this section, the 
     term ``eligible employer'' has the same meaning given such 
     term in section 408(p)(2)(C)(i)(I) of the Internal Revenue 
     Code of 1986. The determination of whether an employer is an 
     eligible employer under this section shall be made as of the 
     date of the request described in subsection (a).
       (d) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 2000.

     SEC. 207. DEDUCTION LIMITS.

       (a) In General.--
       (1) Stock bonus and profit sharing trusts.--Subclause (I) 
     of section 404(a)(3)(A)(i) (relating to stock bonus and 
     profit sharing trusts) is amended by striking ``15 percent'' 
     and inserting ``20 percent''.
       (2) Compensation.--Section 404(a) (relating to general 
     rule) is amended by adding at the end the following:
       ``(12) Definition of compensation.--For purposes of 
     paragraphs (3), (7), (8), and (9), the term `compensation 
     otherwise paid or accrued during the taxable year' shall 
     include amounts treated as `participant's compensation' under 
     subparagraph (C) or (D) of section 415(c)(3).''.
       (b) Conforming Amendments.--
       (1) Subparagraph (B) of section 404(a)(3) is amended by 
     striking the last sentence thereof.
       (2) Subparagraph (C) of section 404(h)(1) is amended by 
     striking ``15 percent'' each place it appears and inserting 
     ``20 percent''.
       (3) Clause (i) of section 4972(c)(6)(B) is amended by 
     striking ``(within the meaning of section 404(a))'' and 
     inserting ``(within the meaning of section 404(a) and as 
     adjusted under section 404(a)(12))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 208. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
                   CONTRIBUTIONS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to deferred compensation, etc.) is 
     amended by inserting after section 402 the following new 
     section:

     ``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS 
                   CONTRIBUTIONS.

       ``(a) General Rule.--If an applicable retirement plan 
     includes a qualified plus contribution program--
       ``(1) any designated plus contribution made by an employee 
     pursuant to the program shall be treated as an elective 
     deferral for purposes of this chapter, except that such 
     contribution shall not be excludable from gross income, and
       ``(2) such plan (and any arrangement which is part of such 
     plan) shall not be treated as failing to meet any requirement 
     of this chapter solely by reason of including such program.
       ``(b) Qualified Plus Contribution Program.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified plus contribution 
     program' means a program under which an employee may elect to 
     make designated plus contributions in lieu of all or a 
     portion of elective deferrals the employee is otherwise 
     eligible to make under the applicable retirement plan.
       ``(2) Separate accounting required.--A program shall not be 
     treated as a qualified plus contribution program unless the 
     applicable retirement plan--
       ``(A) establishes separate accounts (`designated plus 
     accounts') for the designated plus contributions of each 
     employee and any earnings properly allocable to the 
     contributions, and
       ``(B) maintains separate recordkeeping with respect to each 
     account.
       ``(c) Definitions and Rules Relating to Designated Plus 
     Contributions.--For purposes of this section--
       ``(1) Designated plus contribution.--The term `designated 
     plus contribution' means any elective deferral which--
       ``(A) is excludable from gross income of an employee 
     without regard to this section, and
       ``(B) the employee designates (at such time and in such 
     manner as the Secretary may prescribe) as not being so 
     excludable.
       ``(2) Designation limits.--The amount of elective deferrals 
     which an employee may designate under paragraph (1) shall not 
     exceed the excess (if any) of--
       ``(A) the maximum amount of elective deferrals excludable 
     from gross income of the employee for the taxable year 
     (without regard to this section), over
       ``(B) the aggregate amount of elective deferrals of the 
     employee for the taxable year which the employee does not 
     designate under paragraph (1).
       ``(3) Rollover contributions.--
       ``(A) In general.--A rollover contribution of any payment 
     or distribution from a designated plus account which is 
     otherwise allowable under this chapter may be made only if 
     the contribution is to--
       ``(i) another designated plus account of the individual 
     from whose account the payment or distribution was made, or
       ``(ii) a Roth IRA of such individual.
       ``(B) Coordination with limit.--Any rollover contribution 
     to a designated plus account under subparagraph (A) shall not 
     be taken into account for purposes of paragraph (1).
       ``(d) Distribution Rules.--For purposes of this title--
       ``(1) Exclusion.--Any qualified distribution from a 
     designated plus account shall not be includible in gross 
     income.
       ``(2) Qualified distribution.--For purposes of this 
     subsection--
       ``(A) In general.--The term `qualified distribution' has 
     the meaning given such term by section 408A(d)(2)(A) (without 
     regard to clause (iv) thereof).
       ``(B) Distributions within nonexclusion period.--A payment 
     or distribution from a designated plus account shall not be 
     treated as a qualified distribution if such payment or 
     distribution is made within the 5-taxable-year period 
     beginning with the earlier of--
       ``(i) the first taxable year for which the individual made 
     a designated plus contribution to any designated plus account 
     established for such individual under the same applicable 
     retirement plan, or
       ``(ii) if a rollover contribution was made to such 
     designated plus account from a designated plus account 
     previously established for such individual under another 
     applicable retirement plan, the first taxable year for which 
     the individual made a designated plus contribution to such 
     previously established account.
       ``(C) Distributions of excess deferrals and earnings.--The 
     term `qualified distribution' shall not include any 
     distribution of any excess deferral under section 402(g)(2) 
     and any income on the excess deferral.
       ``(3) Aggregation rules.--Section 72 shall be applied 
     separately with respect to distributions and payments from a 
     designated plus account and other distributions and payments 
     from the plan.
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Applicable retirement plan.--The term `applicable 
     retirement plan' means--
       ``(A) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a), and
       ``(B) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b).
       ``(2) Elective deferral.--The term `elective deferral' 
     means any elective deferral described in subparagraph (A) or 
     (C) of section 402(g)(3).''.
       (b) Excess Deferrals.--Section 402(g) (relating to 
     limitation on exclusion for elective deferrals) is amended--
       (1) by adding at the end of paragraph (1) the following new 
     sentence: ``The preceding sentence shall not apply to so much 
     of such excess as does not exceed the designated plus 
     contributions of the individual for the taxable year.''; and
       (2) by inserting ``(or would be included but for the last 
     sentence thereof)'' after ``paragraph (1)'' in paragraph 
     (2)(A).
       (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is 
     amended by adding at the end the following:
     ``If any portion of an eligible rollover distribution is 
     attributable to payments or distributions from a designated 
     plus account (as defined in section 402A), an eligible 
     retirement plan with respect to such portion shall include 
     only another designated plus account and a Roth IRA.''.
       (d) Reporting Requirements.--
       (1) W-2 information.--Section 6051(a)(8) is amended by 
     inserting ``, including the amount of designated plus 
     contributions (as defined in section 402A)'' before the comma 
     at the end.
       (2) Information.--Section 6047 is amended by redesignating 
     subsection (f) as subsection (g) and by inserting after 
     subsection (e) the following new subsection:
       ``(f) Designated Plus Contributions.--The Secretary shall 
     require the plan administrator of each applicable retirement 
     plan (as defined in section 402A) to make such returns and 
     reports regarding designated plus contributions (as so 
     defined) to the Secretary, participants and beneficiaries of 
     the plan, and such other persons as the Secretary may 
     prescribe.''.
       (e) Conforming Amendments.--
       (1) Section 408A(e) is amended by adding after the first 
     sentence the following new sentence: ``Such term includes a 
     rollover contribution described in section 402A(c)(3)(A).''.
       (2) 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 402 the following new item:

``Sec. 402A. Optional treatment of elective deferrals as plus 
              contributions.''.

[[Page H6497]]

       (f) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

                TITLE III--ENHANCING FAIRNESS FOR WOMEN

     SEC. 301. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR 
                   OVER.

       (a) In General.--Section 414 (relating to definitions and 
     special rules) is amended by adding at the end the following 
     new subsection:
       ``(v) Catch-up Contributions for Individuals Age 50 or 
     Over.--
       ``(1) In general.--An applicable employer plan shall not be 
     treated as failing to meet any requirement of this title 
     solely because the plan permits an eligible participant to 
     make additional elective deferrals in any plan year.
       ``(2) Limitation on amount of additional deferrals.--A plan 
     shall not permit additional elective deferrals under 
     paragraph (1) for any year in an amount greater than the 
     lesser of--
       ``(A) $5,000, or
       ``(B) the excess (if any) of--
       ``(i) the participant's compensation for the year, over
       ``(ii) any other elective deferrals of the participant for 
     such year which are made without regard to this subsection.
       ``(3) Treatment of contributions.--In the case of any 
     contribution to a plan under paragraph (1), such contribution 
     shall not, with respect to the year in which the contribution 
     is made--
       ``(A) be subject to any otherwise applicable limitation 
     contained in section 402(g), 402(h)(2), 404(a), 404(h), 
     408(p)(2)(A)(ii), 415, or 457, or
       ``(B) be taken into account in applying such limitations to 
     other contributions or benefits under such plan or any other 
     such plan.
       ``(4) Eligible participant.--For purposes of this 
     subsection, the term `eligible participant' means, with 
     respect to any plan year, a participant in a plan--
       ``(A) who has attained the age of 50 before the close of 
     the plan year, and
       ``(B) with respect to whom no other elective deferrals may 
     (without regard to this subsection) be made to the plan for 
     the plan year by reason of the application of any limitation 
     or other restriction described in paragraph (3) or comparable 
     limitation contained in the terms of the plan.
       ``(5) Other definitions and rules.--For purposes of this 
     subsection--
       ``(A) Applicable employer plan.--The term `applicable 
     employer plan' means--
       ``(i) an employees' trust described in section 401(a) which 
     is exempt from tax under section 501(a),
       ``(ii) a plan under which amounts are contributed by an 
     individual's employer for an annuity contract described in 
     section 403(b),
       ``(iii) an eligible deferred compensation plan under 
     section 457 of an eligible employer as defined in section 
     457(e)(1)(A), and
       ``(iv) an arrangement meeting the requirements of section 
     408 (k) or (p).
       ``(B) Elective deferral.--The term `elective deferral' has 
     the meaning given such term by subsection (u)(2)(C).
       ``(C) Exception for section 457 plans.--This subsection 
     shall not apply to an applicable employer plan described in 
     subparagraph (A)(iii) for any year to which section 457(b)(3) 
     applies.
       ``(D) Cost-of-living adjustment.--For years beginning after 
     December 31, 2005, the Secretary shall adjust annually the 
     $5,000 amount in subparagraph (A) 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 July 1, 2004, and any 
     increase which is not a multiple of $500 shall be rounded to 
     the next lowest multiple of $500.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2000.

     SEC. 302. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES 
                   TO DEFINED CONTRIBUTION PLANS.

       (a) Equitable Treatment.--
       (1) In general.--Subparagraph (B) of section 415(c)(1) 
     (relating to limitation for defined contribution plans) is 
     amended by striking ``25 percent'' and inserting ``100 
     percent''.
       (2) Application to section 403(b).--Section 403(b) is 
     amended--
       (A) by striking ``the exclusion allowance for such taxable 
     year'' in paragraph (1) and inserting ``the applicable limit 
     under section 415'';
       (B) by striking paragraph (2); and
       (C) by inserting ``or any amount received by a former 
     employee after the fifth taxable year following the taxable 
     year in which such employee was terminated'' before the 
     period at the end of the second sentence of paragraph (3).
       (3) Conforming amendments.--
       (A) Subsection (f) of section 72 is amended by striking 
     ``section 403(b)(2)(D)(iii))'' and inserting ``section 
     403(b)(2)(D)(iii), as in effect before the enactment of the 
     Comprehensive Retirement Security and Pension Reform Act of 
     2000)''.
       (B) Section 404(a)(10)(B) is amended by striking ``, the 
     exclusion allowance under section 403(b)(2),''.
       (C) Section 415(a)(2) is amended by striking ``, and the 
     amount of the contribution for such portion shall reduce the 
     exclusion allowance as provided in section 403(b)(2)''.
       (D) Section 415(c)(3) is amended by adding at the end the 
     following new subparagraph:
       ``(E) Annuity contracts.--In the case of an annuity 
     contract described in section 403(b), the term `participant's 
     compensation' means the participant's includible compensation 
     determined under section 403(b)(3).''.
       (E) Section 415(c) is amended by striking paragraph (4).
       (F) Section 415(c)(7) is amended to read as follows:
       ``(7) Certain contributions by church plans not treated as 
     exceeding limit.--
       ``(A) In general.--Notwithstanding any other provision of 
     this subsection, at the election of a participant who is an 
     employee of a church or a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(B)(ii), contributions and other additions for an 
     annuity contract or retirement income account described in 
     section 403(b) with respect to such participant, when 
     expressed as an annual addition to such participant's 
     account, shall be treated as not exceeding the limitation of 
     paragraph (1) if such annual addition is not in excess of 
     $10,000.
       ``(B) $40,000 aggregate limitation.--The total amount of 
     additions with respect to any participant which may be taken 
     into account for purposes of this subparagraph for all years 
     may not exceed $40,000.
       ``(C) Annual addition.--For purposes of this paragraph, the 
     term `annual addition' has the meaning given such term by 
     paragraph (2).''.
       (G) Subparagraph (B) of section 402(g)(7) (as redesignated 
     by section 211) is amended by inserting before the period at 
     the end the following: ``(as in effect before the enactment 
     of the Comprehensive Retirement Security and Pension Reform 
     Act of 2000)''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2000.
       (b) Special Rules for Sections 403(b) and 408.--
       (1) In general.--Subsection (k) of section 415 is amended 
     by adding at the end the following new paragraph:
       ``(4) Special rules for sections 403(b) and 408.--For 
     purposes of this section, any annuity contract described in 
     section 403(b) for the benefit of a participant shall be 
     treated as a defined contribution plan maintained by each 
     employer with respect to which the participant has the 
     control required under subsection (b) or (c) of section 414 
     (as modified by subsection (h)). For purposes of this 
     section, any contribution by an employer to a simplified 
     employee pension plan for an individual for a taxable year 
     shall be treated as an employer contribution to a defined 
     contribution plan for such individual for such year.''.
       (2) Effective date.--
       (A) In general.--The amendment made by paragraph (1) shall 
     apply to limitation years beginning after December 31, 1999.
       (B) Exclusion allowance.--Effective for limitation years 
     beginning in 2000, in the case of any annuity contract 
     described in section 403(b) of the Internal Revenue Code of 
     1986, the amount of the contribution disqualified by reason 
     of section 415(g) of such Code shall reduce the exclusion 
     allowance as provided in section 403(b)(2) of such Code.
       (3) Modification of 403(b) exclusion allowance to conform 
     to 415 modification.--The Secretary of the Treasury shall 
     modify the regulations regarding the exclusion allowance 
     under section 403(b)(2) of the Internal Revenue Code of 1986 
     to render void the requirement that contributions to a 
     defined benefit pension plan be treated as previously 
     excluded amounts for purposes of the exclusion allowance. For 
     taxable years beginning after December 31, 1999, such 
     regulations shall be applied as if such requirement were 
     void.
       (c) Deferred Compensation Plans of State and Local 
     Governments and Tax-Exempt Organizations.--
       (1) In general.--Subparagraph (B) of section 457(b)(2) 
     (relating to salary limitation on eligible deferred 
     compensation plans) is amended by striking ``33\1/3\ 
     percent'' and inserting ``100 percent''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to years beginning after December 31, 2000.

     SEC. 303. FASTER VESTING OF CERTAIN EMPLOYER MATCHING 
                   CONTRIBUTIONS.

       (a) In General.--Section 411(a) (relating to minimum 
     vesting standards) is amended--
       (1) in paragraph (2), by striking ``A plan'' and inserting 
     ``Except as provided in paragraph (12), a plan''; and
       (2) by adding at the end the following:
       ``(12) Faster vesting for matching contributions.--In the 
     case of matching contributions (as defined in section 
     401(m)(4)(A)), paragraph (2) shall be applied--
       ``(A) by substituting `3 years' for `5 years' in 
     subparagraph (A), and
       ``(B) by substituting the following table for the table 
     contained in subparagraph (B):

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      2............................................................20  
      3............................................................40  
      4............................................................60  
      5............................................................80  
      6.........................................................100.''.
       (b) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to contributions 
     for plan years beginning after December 31, 2000.
       (2) Collective bargaining agreements.--In the case of a 
     plan maintained pursuant to one or more collective bargaining 
     agreements between employee representatives and one or more 
     employers ratified by the date of the enactment of this Act, 
     the amendments made by this section shall not apply to 
     contributions on behalf of employees covered by any such 
     agreement for 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 the 
     enactment); or
       (ii) January 1, 2001; or
       (B) January 1, 2005.
       (3) Service required.--With respect to any plan, the 
     amendments made by this section shall

[[Page H6498]]

     not apply to any employee before the date that such employee 
     has 1 hour of service under such plan in any plan year to 
     which the amendments made by this section apply.

     SEC. 304. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

       (a) Simplification and Finalization of Minimum Distribution 
     Requirements.--
       (1) In general.--The Secretary of the Treasury shall--
       (A) simplify and finalize the regulations relating to 
     minimum distribution requirements under sections 401(a)(9), 
     408(a)(6) and (b)(3), 403(b)(10), and 457(d)(2) of the 
     Internal Revenue Code of 1986; and
       (B) modify such regulations to--
       (i) reflect current life expectancy; and
       (ii) revise the required distribution methods so that, 
     under reasonable assumptions, the amount of the required 
     minimum distribution does not decrease over a participant's 
     life expectancy.
       (2) Fresh start.--Notwithstanding subparagraph (D) of 
     section 401(a)(9) of such Code, during the first year that 
     regulations are in effect under this subsection, required 
     distributions for future years may be redetermined to reflect 
     changes under such regulations. Such redetermination shall 
     include the opportunity to choose a new designated 
     beneficiary and to elect a new method of calculating life 
     expectancy.
       (3) Effective date for regulations.--Regulations referred 
     to in paragraph (1) shall be effective for years beginning 
     after December 31, 2000, and shall apply in such years 
     without regard to whether an individual had previously begun 
     receiving minimum distributions.
       (b) Repeal of Rule Where Distributions Had Begun Before 
     Death Occurs.--
       (1) In general.--Subparagraph (B) of section 401(a)(9) is 
     amended by striking clause (i) and redesignating clauses 
     (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
     respectively.
       (2) Conforming changes.--
       (A) Clause (i) of section 401(a)(9)(B) (as so redesignated) 
     is amended--
       (i) by striking ``for other cases'' in the heading; and
       (ii) by striking ``the distribution of the employee's 
     interest has begun in accordance with subparagraph (A)(ii)'' 
     and inserting ``his entire interest has been distributed to 
     him''.
       (B) Clause (ii) of section 401(a)(9)(B) (as so 
     redesignated) is amended by striking ``clause (ii)'' and 
     inserting ``clause (i)''.
       (C) Clause (iii) of section 401(a)(9)(B) (as so 
     redesignated) is amended--
       (i) by striking ``clause (iii)(I)'' and inserting ``clause 
     (ii)(I)'';
       (ii) by striking ``clause (iii)(III)'' in subclause (I) and 
     inserting ``clause (ii)(III)'';
       (iii) by striking ``the date on which the employee would 
     have attained age 70\1/2\,'' in subclause (I) and inserting 
     ``April 1 of the calendar year following the calendar year in 
     which the spouse attains 70\1/2\,''; and
       (iv) by striking ``the distributions to such spouse 
     begin,'' in subclause (II) and inserting ``his entire 
     interest has been distributed to him,''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2000.
       (c) Reduction in Excise Tax.--
       (1) In general.--Subsection (a) of section 4974 is amended 
     by striking ``50 percent'' and inserting ``10 percent''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to years beginning after December 31, 2000.

     SEC. 305. CLARIFICATION OF TAX TREATMENT OF DIVISION OF 
                   SECTION 457 PLAN BENEFITS UPON DIVORCE.

       (a) In General.--Section 414(p)(11) (relating to 
     application of rules to governmental and church plans) is 
     amended--
       (1) by inserting ``or an eligible deferred compensation 
     plan (within the meaning of section 457(b))'' after 
     ``subsection (e))''; and
       (2) in the heading, by striking ``governmental and church 
     plans'' and inserting ``certain other plans''.
       (b) Waiver of Certain Distribution Requirements.--Paragraph 
     (10) of section 414(p) is amended by striking ``and section 
     409(d)'' and inserting ``section 409(d), and section 
     457(d)''.
       (c) Tax Treatment of Payments From a Section 457 Plan.--
     Subsection (p) of section 414 is amended by redesignating 
     paragraph (12) as paragraph (13) and inserting after 
     paragraph (11) the following new paragraph:
       ``(12) Tax treatment of payments from a section 457 plan.--
     If a distribution or payment from an eligible deferred 
     compensation plan described in section 457(b) is made 
     pursuant to a qualified domestic relations order, rules 
     similar to the rules of section 402(e)(1)(A) shall apply to 
     such distribution or payment.''.
       (d) Effective Date.--The amendments made by this section 
     shall apply to transfers, distributions, and payments made 
     after December 31, 2000.

     SEC. 306. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP 
                   WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.

       (a) In General.--The Secretary of the Treasury shall revise 
     the regulations relating to hardship distributions under 
     section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
     1986 to provide that the period an employee is prohibited 
     from making elective and employee contributions in order for 
     a distribution to be deemed necessary to satisfy financial 
     need shall be equal to 6 months.
       (b) Effective Date.--The revised regulations under 
     subsection (a) shall apply to years beginning after December 
     31, 2000.

           TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS

     SEC. 401. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

       (a) Rollovers From and to Section 457 Plans.--
       (1) Rollovers from section 457 plans.--
       (A) In general.--Section 457(e) (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 established and maintained by an employer 
     described in subsection (e)(1)(A), if--
       ``(i) any portion of the balance to the credit of an 
     employee in such plan is paid to such employee in an eligible 
     rollover distribution (within the meaning of section 
     402(c)(4) without regard to subparagraph (C) thereof),
       ``(ii) the employee transfers any portion of the property 
     such employee receives in such distribution to an eligible 
     retirement plan described in section 402(c)(8)(B), 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.--The rules of 
     paragraphs (2) through (7) (other than paragraph (4)(C)) and 
     (9) of section 402(c) and section 402(f) shall apply for 
     purposes of subparagraph (A).
       ``(C) Reporting.--Rollovers under this paragraph shall be 
     reported to the Secretary in the same manner as rollovers 
     from qualified retirement plans (as defined in section 
     4974(c)).''.
       (B) Deferral limit determined without regard to rollover 
     amounts.--Section 457(b)(2) (defining eligible deferred 
     compensation plan) is amended by inserting ``(other than 
     rollover amounts)'' after ``taxable year''.
       (C) Direct rollover.--Paragraph (1) of section 457(d) is 
     amended by striking ``and'' at the end of subparagraph (A), 
     by striking the period at the end of subparagraph (B) and 
     inserting ``, and'', and by inserting after subparagraph (B) 
     the following:
       ``(C) in the case of a plan maintained by an employer 
     described in subsection (e)(1)(A), the plan meets 
     requirements similar to the requirements of section 
     401(a)(31).
     Any amount transferred in a direct trustee-to-trustee 
     transfer in accordance with section 401(a)(31) shall not be 
     includible in gross income for the taxable year of 
     transfer.''.
       (D) Withholding.--
       (i) Paragraph (12) of section 3401(a) is amended by adding 
     at the end the following:
       ``(E) under or to an eligible deferred compensation plan 
     which, at the time of such payment, is a plan described in 
     section 457(b) maintained by an employer described in section 
     457(e)(1)(A); or''.
       (ii) Paragraph (3) of section 3405(c) is amended to read as 
     follows:
       ``(3) Eligible rollover distribution.--For purposes of this 
     subsection, the term `eligible rollover distribution' has the 
     meaning given such term by section 402(f)(2)(A).''.
       (iii) Liability for withholding.--Subparagraph (B) of 
     section 3405(d)(2) is amended by striking ``or'' at the end 
     of clause (ii), by striking the period at the end of clause 
     (iii) and inserting ``, or'', and by adding at the end the 
     following:
       ``(iv) section 457(b).''.
       (2) Rollovers to section 457 plans.--
       (A) In general.--Section 402(c)(8)(B) (defining eligible 
     retirement plan) 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 inserting after clause 
     (iv) the following new clause:
       ``(v) an eligible deferred compensation plan described in 
     section 457(b) of an employer described in section 
     457(e)(1)(A).''.
       (B) Separate accounting.--Section 402(c) is amended by 
     adding at the end the following new paragraph:
       ``(11) Separate accounting.--Unless a plan described in 
     clause (v) of paragraph (8)(B) agrees to separately account 
     for amounts rolled into such plan from eligible retirement 
     plans not described in such clause, the plan described in 
     such clause may not accept transfers or rollovers from such 
     retirement plans.''.
       (C) 10 percent additional tax.--Subsection (t) of section 
     72 (relating to 10-percent additional tax on early 
     distributions from qualified retirement plans) is amended by 
     adding at the end the following new paragraph:
       ``(9) Special rule for rollovers to section 457 plans.--For 
     purposes of this subsection, a distribution from an eligible 
     deferred compensation plan (as defined in section 457(b)) of 
     an employer described in section 457(e)(1)(A) shall be 
     treated as a distribution from a qualified retirement plan 
     described in 4974(c)(1) to the extent that such distribution 
     is attributable to an amount transferred to an eligible 
     deferred compensation plan from a qualified retirement plan 
     (as defined in section 4974(c)).''.
       (b) Allowance of Rollovers From and to 403(b) Plans.--
       (1) Rollovers from section 403(b) plans.--Section 
     403(b)(8)(A)(ii) (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''.
       (2) Rollovers to section 403(b) plans.--Section 
     402(c)(8)(B) (defining eligible retirement plan), as amended 
     by subsection (a), is amended by striking ``and'' at the end 
     of clause (iv), by striking the period at the end of clause 
     (v) and inserting ``, and'', and by inserting after clause 
     (v) the following new clause:
       ``(vi) an annuity contract described in section 403(b).''.
       (c) Expanded Explanation to Recipients of Rollover 
     Distributions.--Paragraph (1) of section 402(f) (relating to 
     written explanation to recipients of distributions eligible 
     for rollover

[[Page H6499]]

     treatment) is amended by striking ``and'' at the end of 
     subparagraph (C), by striking the period at the end of 
     subparagraph (D) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(E) of the provisions under which distributions from the 
     eligible retirement plan receiving the distribution may be 
     subject to restrictions and tax consequences which are 
     different from those applicable to distributions from the 
     plan making such distribution.''.
       (d) Spousal Rollovers.--Section 402(c)(9) (relating to 
     rollover where spouse receives distribution after death of 
     employee) is amended by striking ``; except that'' and all 
     that follows up to the end period.
       (e) Conforming Amendments.--
       (1) Section 72(o)(4) is amended by striking ``and 
     408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
     457(e)(16)''.
       (2) Section 219(d)(2) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (3) Section 401(a)(31)(B) is amended by striking ``and 
     403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
     457(e)(16)''.
       (4) Subparagraph (A) of section 402(f)(2) is amended by 
     striking ``or paragraph (4) of section 403(a)'' and inserting 
     ``, paragraph (4) of section 403(a), subparagraph (A) of 
     section 403(b)(8), or subparagraph (A) of section 
     457(e)(16)''.
       (5) Paragraph (1) of section 402(f) is amended by striking 
     ``from an eligible retirement plan''.
       (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
     amended by striking ``another eligible retirement plan'' and 
     inserting ``an eligible retirement plan''.
       (7) Subparagraph (B) of section 403(b)(8) is amended to 
     read as follows:
       ``(B) Certain rules made applicable.--The rules of 
     paragraphs (2) through (7) and (9) of section 402(c) and 
     section 402(f) shall apply for purposes of subparagraph (A), 
     except that section 402(f) shall be applied to the payor in 
     lieu of the plan administrator.''.
       (8) Section 408(a)(1) is amended by striking ``or 
     403(b)(8),'' and inserting ``403(b)(8), or 457(e)(16)''.
       (9) Subparagraphs (A) and (B) of section 415(b)(2) are each 
     amended by striking ``and 408(d)(3)'' and inserting 
     ``403(b)(8), 408(d)(3), and 457(e)(16)''.
       (10) Section 415(c)(2) is amended by striking ``and 
     408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
       (11) Section 4973(b)(1)(A) is amended by striking ``or 
     408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
       (f) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.
       (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 (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) 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. 402. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

       (a) In General.--Subparagraph (A) of section 408(d)(3) 
     (relating to rollover amounts) is amended by adding ``or'' at 
     the end of clause (i), by striking clauses (ii) and (iii), 
     and by adding at the end the following:
       ``(ii) the entire amount received (including money and any 
     other property) is paid into an eligible retirement plan for 
     the benefit of such individual not later than the 60th day 
     after the date on which the payment or distribution is 
     received, except that the maximum amount which may be paid 
     into such plan may not exceed the portion of the amount 
     received which is includible in gross income (determined 
     without regard to this paragraph).

     For purposes of clause (ii), the term `eligible retirement 
     plan' means an eligible retirement plan described in clause 
     (iii), (iv), (v), or (vi) of section 402(c)(8)(B).''.
       (b) Conforming Amendments.--
       (1) Paragraph (1) of section 403(b) is amended by striking 
     ``section 408(d)(3)(A)(iii)'' and inserting ``section 
     408(d)(3)(A)(ii)''.
       (2) Clause (i) of section 408(d)(3)(D) is amended by 
     striking ``(i), (ii), or (iii)'' and inserting ``(i) or 
     (ii)''.
       (3) Subparagraph (G) of section 408(d)(3) is amended to 
     read as follows:
       ``(G) Simple retirement accounts.--In the case of any 
     payment or distribution out of a simple retirement account 
     (as defined in subsection (p)) to which section 72(t)(6) 
     applies, this paragraph shall not apply unless such payment 
     or distribution is paid into another simple retirement 
     account.''.
       (c) Effective Date; Special Rule.--
       (1) Effective date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.
       (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 (as defined in clause (iii) or 
     (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 
     1986) 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 the amendments made by this section.

     SEC. 403. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

       (a) Rollovers From Exempt Trusts.--Paragraph (2) of section 
     402(c) (relating to maximum amount which may be rolled over) 
     is amended by adding at the end the following: ``The 
     preceding sentence shall not apply to such distribution to 
     the extent--
       ``(A) such portion is transferred in a direct trustee-to-
     trustee transfer to a qualified trust which is part of a plan 
     which is a defined contribution plan and which agrees to 
     separately account for amounts so transferred, including 
     separately accounting for the portion of such distribution 
     which is includible in gross income and the portion of such 
     distribution which is not so includible, or
       ``(B) such portion is transferred to an eligible retirement 
     plan described in clause (i) or (ii) of paragraph (8)(B).''.
       (b) Optional Direct Transfer of Eligible Rollover 
     Distributions.--Subparagraph (B) of section 401(a)(31) 
     (relating to limitation) is amended by adding at the end the 
     following: ``The preceding sentence shall not apply to such 
     distribution if the plan to which such distribution is 
     transferred--
       ``(i) agrees to separately account for amounts so 
     transferred, including separately accounting for the portion 
     of such distribution which is includible in gross income and 
     the portion of such distribution which is not so includible, 
     or
       ``(ii) is an eligible retirement plan described in clause 
     (i) or (ii) of section 402(c)(8)(B).''.
       (c) Rules for Applying Section 72 to IRAs.--Paragraph (3) 
     of section 408(d) (relating to special rules for applying 
     section 72) is amended by inserting at the end the following:
       ``(H) Application of section 72.--
       ``(i) In general.--If--

       ``(I) a distribution is made from an individual retirement 
     plan, and
       ``(II) a rollover contribution is made to an eligible 
     retirement plan described in section 402(c)(8)(B)(iii), (iv), 
     (v), or (vi) with respect to all or part of such 
     distribution,

     then, notwithstanding paragraph (2), the rules of clause (ii) 
     shall apply for purposes of applying section 72.
       ``(ii) Applicable rules.--In the case of a distribution 
     described in clause (i)--

       ``(I) section 72 shall be applied separately to such 
     distribution,
       ``(II) notwithstanding the pro rata allocation of income 
     on, and investment in, the contract to distributions under 
     section 72, the portion of such distribution rolled over to 
     an eligible retirement plan described in clause (i) shall be 
     treated as from income on the contract (to the extent of the 
     aggregate income on the contract from all individual 
     retirement plans of the distributee), and
       ``(III) appropriate adjustments shall be made in applying 
     section 72 to other distributions in such taxable year and 
     subsequent taxable years.''.

       (d) Effective Date.--The amendments made by this section 
     shall apply to distributions made after December 31, 2000.

     SEC. 404. HARDSHIP EXCEPTION TO 60-DAY RULE.

       (a) Exempt Trusts.--Paragraph (3) of section 402(c) 
     (relating to transfer must be made within 60 days of receipt) 
     is amended to read as follows:
       ``(3) Transfer must be made within 60 days of receipt.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     paragraph (1) shall not apply to any transfer of a 
     distribution made after the 60th day following the day on 
     which the distributee received the property distributed.
       ``(B) Hardship exception.--The Secretary may waive the 60-
     day requirement under subparagraph (A) where the failure to 
     waive such requirement would be against equity or good 
     conscience, including casualty, disaster, or other events 
     beyond the reasonable control of the individual subject to 
     such requirement.''.
       (b) IRAs.--Paragraph (3) of section 408(d) (relating to 
     rollover contributions), as amended by section 403, is 
     amended by adding after subparagraph (H) the following new 
     subparagraph:
       ``(I) Waiver of 60-day requirement.--The Secretary may 
     waive the 60-day requirement under subparagraphs (A) and (D) 
     where the failure to waive such requirement would be against 
     equity or good conscience, including casualty, disaster, or 
     other events beyond the reasonable control of the individual 
     subject to such requirement.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

     SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.

       (a) Plan Transfers.--
       (1) In general.--Paragraph (6) of section 411(d) (relating 
     to accrued benefit not to be decreased by amendment) is 
     amended by adding at the end the following:
       ``(D) Plan transfers.--
       ``(i) In general.--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 
     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 
     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 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 subclause 
     (I),
       ``(III) the transfer described in subclause (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 subclause (III) was made 
     after the participant or beneficiary

[[Page H6500]]

     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 subclause (III) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the transferee plan in the form of a single 
     sum distribution.

       ``(ii) Exception.--Clause (i) shall apply to plan mergers 
     and other transactions having the effect of a direct 
     transfer, including consolidations of benefits attributable 
     to different employers within a multiple employer plan.
       ``(E) Elimination of form of distribution.--Except to the 
     extent provided in regulations, a defined contribution plan 
     shall not be treated as failing to meet the requirements of 
     this section merely because of the elimination of a form of 
     distribution previously available thereunder. This 
     subparagraph shall not apply to the elimination of a form of 
     distribution with respect to any participant unless--
       ``(i) a single sum payment is available to such participant 
     at the same time or times as the form of distribution being 
     eliminated, and
       ``(ii) such single sum payment is based on the same or 
     greater portion of the participant's account as the form of 
     distribution being eliminated.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to years beginning after December 31, 2000.
       (b) Regulations.--
       (1) In general.--The last sentence of paragraph (6)(B) of 
     section 411(d) (relating to accrued benefit not to be 
     decreased by amendment) is amended to read as follows: ``The 
     Secretary shall by regulations provide that this subparagraph 
     shall not apply to any plan amendment that does not adversely 
     affect the rights of participants in a material manner.''.
       (2) Secretary directed.--Not later than December 31, 2001, 
     the Secretary of the Treasury is directed to issue final 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986, including the regulations required by the 
     amendments made by this subsection. Such regulations shall 
     apply to plan years beginning after December 31, 2001, or 
     such earlier date as is specified by the Secretary of the 
     Treasury.

     SEC. 406. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

       (a) Modification of Same Desk Exception.--
       (1) Section 401(k).--
       (A) Section 401(k)(2)(B)(i)(I) (relating to qualified cash 
     or deferred arrangements) is amended by striking ``separation 
     from service'' and inserting ``severance from employment''.
       (B) Subparagraph (A) of section 401(k)(10) (relating to 
     distributions upon termination of plan or disposition of 
     assets or subsidiary) is amended to read as follows:
       ``(A) In general.--An event described in this subparagraph 
     is the termination of the plan without establishment or 
     maintenance of another defined contribution plan (other than 
     an employee stock ownership plan as defined in section 
     4975(e)(7)).''.
       (C) Section 401(k)(10) is amended--
       (i) in subparagraph (B)--

       (I) by striking ``An event'' in clause (i) and inserting 
     ``A termination''; and
       (II) by striking ``the event'' in clause (i) and inserting 
     ``the termination'';

       (ii) by striking subparagraph (C); and
       (iii) by striking ``or disposition of assets or 
     subsidiary'' in the heading.
       (2) Section 403(b).--
       (A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are 
     each amended by striking ``separates from service'' and 
     inserting ``has a severance from employment''.
       (B) The heading for paragraph (11) of section 403(b) is 
     amended by striking ``separation from service'' and inserting 
     ``severance from employment''.
       (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
     amended by striking ``is separated from service'' and 
     inserting ``has a severance from employment''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

     SEC. 407. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED 
                   BENEFIT PLANS.

       (a) 403(b) Plans.--Subsection (b) of section 403 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 is amended by 
     adding after paragraph (16) 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, 2000.

     SEC. 408. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF 
                   CASH-OUT AMOUNTS.

       (a) Qualified Plans.--Section 411(a)(11) (relating to 
     restrictions on certain mandatory distributions) is amended 
     by adding at the end the following:
       ``(D) Special rule for rollover contributions.--A plan 
     shall not fail to meet the requirements of this paragraph if, 
     under the terms of the plan, the present value of the 
     nonforfeitable accrued benefit is determined without regard 
     to that portion of such benefit which is attributable to 
     rollover contributions (and earnings allocable thereto). For 
     purposes of this subparagraph, the term `rollover 
     contributions' means any rollover contribution under sections 
     402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 
     457(e)(16).''.
       (b) Eligible Deferred Compensation Plans.--Clause (i) of 
     section 457(e)(9)(A) is amended by striking ``such amount'' 
     and inserting ``the portion of such amount which is not 
     attributable to rollover contributions (as defined in section 
     411(a)(11)(D))''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

     SEC. 409. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR 
                   SECTION 457 PLANS.

       (a) Minimum Distribution Requirements.--Paragraph (2) of 
     section 457(d) (relating to distribution requirements) is 
     amended to read as follows:
       ``(2) Minimum distribution requirements.--A plan meets the 
     minimum distribution requirements of this paragraph if such 
     plan meets the requirements of section 401(a)(9).''.
       (b) Inclusion in Gross Income.--
       (1) Year of inclusion.--Subsection (a) of section 457 
     (relating to year of inclusion in gross income) is amended to 
     read as follows:
       ``(a) Year of inclusion in gross income.--
       ``(1) In general.--Any amount of compensation deferred 
     under an eligible deferred compensation plan, and any income 
     attributable to the amounts so deferred, shall be includible 
     in gross income only for the taxable year in which such 
     compensation or other income--
       ``(A) is paid to the participant or other beneficiary, in 
     the case of a plan of an eligible employer described in 
     subsection (e)(1)(A), and
       ``(B) is paid or otherwise made available to the 
     participant or other beneficiary, in the case of a plan of an 
     eligible employer described in subsection (e)(1)(B).
       ``(2) Special rule for rollover amounts.--To the extent 
     provided in section 72(t)(9), section 72(t) shall apply to 
     any amount includible in gross income under this 
     subsection.''.
       (2) Conforming amendments.--
       (A) So much of paragraph (9) of section 457(e) as precedes 
     subparagraph (A) is amended to read as follows:
       ``(9) Benefits of tax exempt organization plans not treated 
     as made available by reason of certain elections, etc.--In 
     the case of an eligible deferred compensation plan of an 
     employer described in subsection (e)(1)(B)--''.
       (B) Section 457(d) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rule for government plan.--An eligible 
     deferred compensation plan of an employer described in 
     subsection (e)(1)(A) shall not be treated as failing to meet 
     the requirements of this subsection solely by reason of 
     making a distribution described in subsection (e)(9)(A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2000.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

     SEC. 501. 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 ``the applicable percentage'' in 
     subparagraph (A)(i)(I) and inserting ``in the case of plan 
     years beginning before January 1, 2004, the applicable 
     percentage''; and
       (2) by amending subparagraph (F) to read as follows:
       ``(F) Applicable percentage.--For purposes of subparagraph 
     (A)(i)(I), the applicable percentage shall be determined in 
     accordance with the following table:

``In the case of any plan year beginning The applicable percentage is--
      2001........................................................160  
      2002........................................................165  
      2003......................................................170.''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 502. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND 
                   APPLIED TO ALL DEFINED BENEFIT PLANS.

       (a) In General.--Subparagraph (D) of section 404(a)(1) 
     (relating to special rule in case of certain plans) is 
     amended to read as follows:
       ``(D) Special rule in case of certain plans.--
       ``(i) In general.--In the case of any defined benefit plan, 
     except as provided in regulations, the maximum amount 
     deductible under the limitations of this paragraph shall not 
     be less than the unfunded termination liability (determined 
     as if the proposed termination date referred to in section 
     4041(b)(2)(A)(i)(II) of the Employee Retirement Income 
     Security Act of 1974 were the last day of the plan year).
       ``(ii) Plans with less than 100 participants.--For purposes 
     of this subparagraph, in

[[Page H6501]]

     the case of a plan which has less than 100 participants for 
     the plan year, termination liability shall not include the 
     liability attributable to benefit increases for highly 
     compensated employees (as defined in section 414(q)) 
     resulting from a plan amendment which is made or becomes 
     effective, whichever is later, within the last 2 years before 
     the termination date.
       ``(iii) Rule for determining number of participants.--For 
     purposes of determining whether a plan has more than 100 
     participants, all defined benefit plans maintained by the 
     same employer (or any member of such employer's controlled 
     group (within the meaning of section 412(l)(8)(C))) shall be 
     treated as one plan, but only employees of such member or 
     employer shall be taken into account.
       ``(iv) Plans established and maintain by professional 
     service employers.--Clause (i) shall not apply to a plan 
     described in section 4021(b)(13) of the Employee Retirement 
     Income Security Act of 1974.''.
       (b) Conforming Amendment.--Paragraph (6) of section 4972(c) 
     is amended to read as follows:
       ``(6) Exceptions.--In determining the amount of 
     nondeductible contributions for any taxable year, there shall 
     not be taken into account so much of the contributions to one 
     or more defined contribution plans which are not deductible 
     when contributed solely because of section 404(a)(7) as does 
     not exceed the greater of--
       ``(A) the amount of contributions not in excess of 6 
     percent of compensation (within the meaning of section 
     404(a)) paid or accrued (during the taxable year for which 
     the contributions were made) to beneficiaries under the 
     plans, or
       ``(B) the sum of--
       ``(i) the amount of contributions described in section 
     401(m)(4)(A), plus
       ``(ii) the amount of contributions described in section 
     402(g)(3)(A).

     For purposes of this paragraph, the deductible limits under 
     section 404(a)(7) shall first be applied to amounts 
     contributed to a defined benefit plan and then to amounts 
     described in subparagraph (B).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 503. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.

       (a) In General.--Subsection (c) of section 4972 (relating 
     to nondeductible contributions) is amended by adding at the 
     end the following new paragraph:
       ``(7) Defined benefit plan exception.--In determining the 
     amount of nondeductible contributions for any taxable year, 
     an employer may elect for such year not to take into account 
     any contributions to a defined benefit plan except to the 
     extent that such contributions exceed the full-funding 
     limitation (as defined in section 412(c)(7), determined 
     without regard to subparagraph (A)(i)(I) thereof). For 
     purposes of this paragraph, the deductible limits under 
     section 404(a)(7) shall first be applied to amounts 
     contributed to defined contribution plans and then to amounts 
     described in this paragraph. If an employer makes an election 
     under this paragraph for a taxable year, paragraph (6) shall 
     not apply to such employer for such taxable year.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 504. EXCISE TAX ON FAILURE TO PROVIDE NOTICE BY DEFINED 
                   BENEFIT PLANS SIGNIFICANTLY REDUCING FUTURE 
                   BENEFIT ACCRUALS.

       (a) In General.--Chapter 43 (relating to qualified pension, 
     etc., plans) is amended by adding at the end the following 
     new section:

     ``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT 
                   ACCRUALS TO SATISFY NOTICE REQUIREMENTS.

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any applicable pension plan to meet the 
     requirements of subsection (e) with respect to any applicable 
     individual.
       ``(b) Amount of Tax.--
       ``(1) In general.--The amount of the tax imposed by 
     subsection (a) on any failure with respect to any applicable 
     individual shall be $100 for each day in the noncompliance 
     period with respect to such failure.
       ``(2) Noncompliance period.--For purposes of this section, 
     the term `noncompliance period' means, with respect to any 
     failure, the period beginning on the date the failure first 
     occurs and ending on the date the failure is corrected.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Overall limitation for unintentional failures.--In 
     the case of failures that are due to reasonable cause and not 
     to willful neglect, the tax imposed by subsection (a) for 
     failures during the taxable year of the employer (or, in the 
     case of a multiemployer plan, the taxable year of the trust 
     forming part of the plan) shall not exceed $500,000. For 
     purposes of the preceding sentence, all multiemployer plans 
     of which the same trust forms a part shall be treated as one 
     plan. For purposes of this paragraph, if not all persons who 
     are treated as a single employer for purposes of this section 
     have the same taxable year, the taxable years taken into 
     account shall be determined under principles similar to the 
     principles of section 1561.
       ``(2) Waiver by secretary.--In the case of a failure which 
     is due to reasonable cause and not to willful neglect, the 
     Secretary may waive part or all of the tax imposed by 
     subsection (a) to the extent that the payment of such tax 
     would be excessive relative to the failure involved.
       ``(d) Liability for Tax.--The following shall be liable for 
     the tax imposed by subsection (a):
       ``(1) In the case of a plan other than a multiemployer 
     plan, the employer.
       ``(2) In the case of a multiemployer plan, the plan.
       ``(e) Notice Requirements for Plans Significantly Reducing 
     Benefit Accruals.--
       ``(1) In general.--If an applicable pension plan is amended 
     to provide for a significant reduction in the rate of future 
     benefit accrual, the plan administrator shall provide written 
     notice to each applicable individual (and to each employee 
     organization representing applicable individuals).
       ``(2) Notice.--The notice required by paragraph (1) shall 
     be written in a manner calculated to be understood by the 
     average plan participant and shall provide sufficient 
     information (as determined in accordance with regulations 
     prescribed by the Secretary) to allow applicable individuals 
     to understand the effect of the plan amendment.
       ``(3) Timing of notice.--Except as provided in regulations, 
     the notice required by paragraph (1) shall be provided within 
     a reasonable time before the effective date of the plan 
     amendment.
       ``(4) Designees.--Any notice under paragraph (1) may be 
     provided to a person designated, in writing, by the person to 
     which it would otherwise be provided.
       ``(5) Notice before adoption of amendment.--A plan shall 
     not be treated as failing to meet the requirements of 
     paragraph (1) merely because notice is provided before the 
     adoption of the plan amendment if no material modification of 
     the amendment occurs before the amendment is adopted.
       ``(f) Applicable Individual; Applicable Pension Plan.--For 
     purposes of this section--
       ``(1) Applicable individual.--The term `applicable 
     individual' means, with respect to any plan amendment--
       ``(A) any participant in the plan, and
       ``(B) any beneficiary who is an alternate payee (within the 
     meaning of section 414(p)(8)) under an applicable qualified 
     domestic relations order (within the meaning of section 
     414(p)(1)(A)),
     who may reasonably be expected to be affected by such plan 
     amendment.
       ``(2) Applicable pension plan.--The term `applicable 
     pension plan' means--
       ``(A) any defined benefit plan, or
       ``(B) an individual account plan which is subject to the 
     funding standards of section 412,
     which had 100 or more participants who had accrued a benefit, 
     or with respect to whom contributions were made, under the 
     plan (whether or not vested) as of the last day of the plan 
     year preceding the plan year in which the plan amendment 
     becomes effective. Such term shall not include a governmental 
     plan (within the meaning of section 414(d)) or a church plan 
     (within the meaning of section 414(e)) with respect to which 
     the election provided by section 410(d) has not been made.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     43 is amended by adding at the end the following new item:

 ``Sec. 4980F. Failure of applicable plans reducing benefit accruals to 
              satisfy notice requirements.''.

       (c) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan amendments taking effect on or after the date 
     of the enactment of this Act.
       (2) Transition.--Until such time as the Secretary of the 
     Treasury issues regulations under sections 4980F(e)(2) and 
     (3) of the Internal Revenue Code of 1986 (as added by the 
     amendments made by this section), a plan shall be treated as 
     meeting the requirements of such sections if it makes a good 
     faith effort to comply with such requirements.
       (3) Special rule.--The period for providing any notice 
     required by the amendments made by this section shall not end 
     before the date which is 3 months after the date of the 
     enactment of this Act.
       (d) Study.--The Secretary of the Treasury shall prepare a 
     report on the effects of conversions of traditional defined 
     benefit plans to cash balance or hybrid formula plans. Such 
     study shall examine the effect of such conversions on longer 
     service participants, including the incidence and effects of 
     ``wear away'' provisions under which participants earn no 
     additional benefits for a period of time after the 
     conversion. As soon as practicable, but not later than 60 
     days after the date of the enactment of this Act, the 
     Secretary shall submit such report, together with 
     recommendations thereon, to the Committee on Ways and Means 
     of the House of Representatives and the Committee on Finance 
     of the Senate.

     SEC. 505. 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) Combining and Aggregation of Plans.--
       (1) Combining of plans.--Subsection (f) of section 415 
     (relating to combining of plans) is amended by adding at the 
     end the following:
       ``(3) Exception for multiemployer plans.--Notwithstanding 
     paragraph (1) and subsection (g), a multiemployer plan (as 
     defined in section 414(f)) shall not be combined or 
     aggregated with any other plan maintained by an employer for 
     purposes of applying the limitations established in this 
     section, except that such plan shall be combined or 
     aggregated with another plan which is not such a 
     multiemployer plan solely for purposes of determining whether 
     such other plan meets the requirements of subsections 
     (b)(1)(A) and (c).''.
       (2) Conforming amendment for aggregation of plans.--
     Subsection (g) of section 415 (relating to aggregation of 
     plans) is amended by striking ``The Secretary'' and inserting 
     ``Except as provided in subsection (f)(3), the Secretary''.

[[Page H6502]]

       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 506. PROHIBITED ALLOCATIONS OF STOCK IN S CORPORATION 
                   ESOP.

       (a) In General.--Section 409 (relating to qualifications 
     for tax credit employee stock ownership plans) is amended by 
     redesignating subsection (p) as subsection (q) and by 
     inserting after subsection (o) the following new subsection:
       ``(p) Prohibited Allocations of Securities in an S 
     Corporation.--
       ``(1) In general.--An employee stock ownership plan holding 
     employer securities consisting of stock in an S corporation 
     shall provide that no portion of the assets of the plan 
     attributable to (or allocable in lieu of) such employer 
     securities may, during a nonallocation year, accrue (or be 
     allocated directly or indirectly under any plan of the 
     employer meeting the requirements of section 401(a)) for the 
     benefit of any disqualified person.
       ``(2) Failure to meet requirements.--
       ``(A) In general.--If a plan fails to meet the requirements 
     of paragraph (1), the plan shall be treated as having 
     distributed to any disqualified person the amount allocated 
     to the account of such person in violation of paragraph (1) 
     at the time of such allocation.
       ``(B) Cross reference.--

  ``For excise tax relating to violations of paragraph (1) and 
ownership of synthetic equity, see section 4979A.
       ``(3) Nonallocation year.--For purposes of this 
     subsection--
       ``(A) In general.--The term `nonallocation year' means any 
     plan year of an employee stock ownership plan if, at any time 
     during such plan year--
       ``(i) such plan holds employer securities consisting of 
     stock in an S corporation, and
       ``(ii) disqualified persons own at least 50 percent of the 
     number of shares of stock in the S corporation.
       ``(B) Attribution rules.--For purposes of subparagraph 
     (A)--
       ``(i) In general.--The rules of section 318(a) shall apply 
     for purposes of determining ownership, except that--

       ``(I) in applying paragraph (1) thereof, the members of an 
     individual's family shall include members of the family 
     described in paragraph (4)(D), and
       ``(II) paragraph (4) thereof shall not apply.

       ``(ii) Deemed-owned shares.--Notwithstanding the employee 
     trust exception in section 318(a)(2)(B)(i), individual shall 
     be treated as owning deemed-owned shares of the individual.
     Solely for purposes of applying paragraph (5), this 
     subparagraph shall be applied after the attribution rules of 
     paragraph (5) have been applied.
       ``(4) Disqualified person.--For purposes of this 
     subsection--
       ``(A) In general.--The term `disqualified person' means any 
     person if--
       ``(i) the aggregate number of deemed-owned shares of such 
     person and the members of such person's family is at least 20 
     percent of the number of deemed-owned shares of stock in the 
     S corporation, or
       ``(ii) in the case of a person not described in clause (i), 
     the number of deemed-owned shares of such person is at least 
     10 percent of the number of deemed-owned shares of stock in 
     such corporation.
       ``(B) Treatment of family members.--In the case of a 
     disqualified person described in subparagraph (A)(i), any 
     member of such person's family with deemed-owned shares shall 
     be treated as a disqualified person if not otherwise treated 
     as a disqualified person under subparagraph (A).
       ``(C) Deemed-owned shares.--
       ``(i) In general.--The term `deemed-owned shares' means, 
     with respect to any person--

       ``(I) the stock in the S corporation constituting employer 
     securities of an employee stock ownership plan which is 
     allocated to such person under the plan, and
       ``(II) such person's share of the stock in such corporation 
     which is held by such plan but which is not allocated under 
     the plan to participants.

       ``(ii) Person's share of unallocated stock.--For purposes 
     of clause (i)(II), a person's share of unallocated S 
     corporation stock held by such plan is the amount of the 
     unallocated stock which would be allocated to such person if 
     the unallocated stock were allocated to all participants in 
     the same proportions as the most recent stock allocation 
     under the plan.
       ``(D) Member of family.--For purposes of this paragraph, 
     the term `member of the family' means, with respect to any 
     individual--
       ``(i) the spouse of the individual,
       ``(ii) an ancestor or lineal descendant of the individual 
     or the individual's spouse,
       ``(iii) a brother or sister of the individual or the 
     individual's spouse and any lineal descendant of the brother 
     or sister, and
       ``(iv) the spouse of any individual described in clause 
     (ii) or (iii).
     A spouse of an individual who is legally separated from such 
     individual under a decree of divorce or separate maintenance 
     shall not be treated as such individual's spouse for purposes 
     of this subparagraph.
       ``(5) Treatment of synthetic equity.--For purposes of 
     paragraphs (3) and (4), in the case of a person who owns 
     synthetic equity in the S corporation, except to the extent 
     provided in regulations, the shares of stock in such 
     corporation on which such synthetic equity is based shall be 
     treated as outstanding stock in such corporation and deemed-
     owned shares of such person if such treatment of synthetic 
     equity of 1 or more such persons results in--
       ``(A) the treatment of any person as a disqualified person, 
     or
       ``(B) the treatment of any year as a nonallocation year.
     For purposes of this paragraph, synthetic equity shall be 
     treated as owned by a person in the same manner as stock is 
     treated as owned by a person under the rules of paragraphs 
     (2) and (3) of section 318(a). If, without regard to this 
     paragraph, a person is treated as a disqualified person or a 
     year is treated as a nonallocation year, this paragraph shall 
     not be construed to result in the person or year not being so 
     treated.
       ``(6) Definitions.--For purposes of this subsection--
       ``(A) Employee stock ownership plan.--The term `employee 
     stock ownership plan' has the meaning given such term by 
     section 4975(e)(7).
       ``(B) Employer securities.--The term `employer security' 
     has the meaning given such term by section 409(l).
       ``(C) Synthetic equity.--The term `synthetic equity' means 
     any stock option, warrant, restricted stock, deferred 
     issuance stock right, or similar interest or right that gives 
     the holder the right to acquire or receive stock of the S 
     corporation in the future. Except to the extent provided in 
     regulations, synthetic equity also includes a stock 
     appreciation right, phantom stock unit, or similar right to a 
     future cash payment based on the value of such stock or 
     appreciation in such value.
       ``(7) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection.''.
       (b) Coordination With Section 4975(e)(7).--The last 
     sentence of section 4975(e)(7) (defining employee stock 
     ownership plan) is amended by inserting ``, section 409(p),'' 
     after ``409(n)''.
       (c) Excise Tax.--
       (1) Application of tax.--Subsection (a) of section 4979A 
     (relating to tax on certain prohibited allocations of 
     employer securities) is amended--
       (A) by striking ``or'' at the end of paragraph (1), and
       (B) by striking all that follows paragraph (2) and 
     inserting the following:
       ``(3) there is any allocation of employer securities which 
     violates the provisions of section 409(p), or a nonallocation 
     year described in subsection (e)(2)(C) with respect to an 
     employee stock ownership plan, or
       ``(4) any synthetic equity is owned by a disqualified 
     person in any nonallocation year,
     there is hereby imposed a tax on such allocation or ownership 
     equal to 50 percent of the amount involved.''.
       (2) Liability.--Section 4979A(c) (defining liability for 
     tax) is amended to read as follows:
       ``(c) Liability for Tax.--The tax imposed by this section 
     shall be paid--
       ``(1) in the case of an allocation referred to in paragraph 
     (1) or (2) of subsection (a), by--
       ``(A) the employer sponsoring such plan, or
       ``(B) the eligible worker-owned cooperative,
     which made the written statement described in section 
     664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may 
     be), and
       ``(2) in the case of an allocation or ownership referred to 
     in paragraph (3) or (4) of subsection (a), by the S 
     corporation the stock in which was so allocated or owned.''.
       (3) Definitions.--Section 4979A(e) (relating to 
     definitions) is amended to read as follows:
       ``(e) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Definitions.--Except as provided in paragraph (2), 
     terms used in this section have the same respective meanings 
     as when used in sections 409 and 4978.
       ``(2) Special rules relating to tax imposed by reason of 
     paragraph (3) or (4) of subsection (a).--
       ``(A) Prohibited allocations.--The amount involved with 
     respect to any tax imposed by reason of subsection (a)(3) is 
     the amount allocated to the account of any person in 
     violation of section 409(p)(1).
       ``(B) Synthetic equity.--The amount involved with respect 
     to any tax imposed by reason of subsection (a)(4) is the 
     value of the shares on which the synthetic equity is based.
       ``(C) Special rule during first nonallocation year.--For 
     purposes of subparagraph (A), the amount involved for the 
     first nonallocation year of any employee stock ownership plan 
     shall be determined by taking into account the total value of 
     all the deemed-owned shares of all disqualified persons with 
     respect to such plan.
       ``(D) Statute of limitations.--The statutory period for the 
     assessment of any tax imposed by this section by reason of 
     paragraph (3) or (4) of subsection (a) shall not expire 
     before the date which is 3 years from the later of--
       ``(i) the allocation or ownership referred to in such 
     paragraph giving rise to such tax, or
       ``(ii) the date on which the Secretary is notified of such 
     allocation or ownership.''.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to plan years beginning after December 31, 2001.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after July 
     11, 2000, or
       (B) employee stock ownership plan established on or before 
     such date if employer securities held by the plan consist of 
     stock in a corporation with respect to which an election 
     under section 1362(a) of the Internal Revenue Code of 1986 is 
     not in effect on such date,
     the amendments made by this section shall apply to plan years 
     ending after July 11, 2000.

                 TITLE VI--REDUCING REGULATORY BURDENS

     SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.

       (a) In General.--Paragraph (9) of section 412(c)(9) 
     (relating to annual valuation) is amended to read as follows:
       ``(9) Annual valuation.--

[[Page H6503]]

       ``(A) In general.--For purposes of this section, a 
     determination of experience gains and losses and a valuation 
     of the plan's liability shall be made not less frequently 
     than once every year, except that such determination shall be 
     made more frequently to the extent required in particular 
     cases under regulations prescribed by the Secretary.
       ``(B) Valuation date.--
       ``(i) Current year.--Except as provided in clause (ii), the 
     valuation referred to in subparagraph (A) shall be made as of 
     a date within the plan year to which the valuation refers or 
     within one month prior to the beginning of such year.
       ``(ii) Election to use prior year valuation.--The valuation 
     referred to in subparagraph (A) may be made as of a date 
     within the plan year prior to the year to which the valuation 
     refers if--

       ``(I) an election is in effect under this clause with 
     respect to the plan, and
       ``(II) as of such date, the value of the assets of the plan 
     are not less than 125 percent of the plan's current liability 
     (as defined in paragraph (7)(B)).

       ``(iii) Adjustments.--Information under clause (ii) shall, 
     in accordance with regulations, be actuarially adjusted to 
     reflect significant differences in participants.
       ``(iv) Election.--An election under clause (ii), once made, 
     shall be irrevocable without the consent of the Secretary.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 602. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF 
                   DIVIDEND DEDUCTION.

       (a) In General.--Section 404(k)(2)(A) (defining applicable 
     dividends) is amended by striking ``or'' at the end of clause 
     (ii), by redesignating clause (iii) as clause (iv), and by 
     inserting after clause (ii) the following new clause:
       ``(iii) is, at the election of such participants or their 
     beneficiaries--

       ``(I) payable as provided in clause (i) or (ii), or
       ``(II) paid to the plan and reinvested in qualifying 
     employer securities, or''.

       (b) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2000.

     SEC. 603. REPEAL OF TRANSITION RULE RELATING TO CERTAIN 
                   HIGHLY COMPENSATED EMPLOYEES.

       (a) In General.--Paragraph (4) of section 1114(c) of the 
     Tax Reform Act of 1986 is hereby repealed.
       (b) Effective Date.--The repeal made by subsection (a) 
     shall apply to plan years beginning after December 31, 2000.

     SEC. 604. EMPLOYEES OF TAX-EXEMPT ENTITIES.

       (a) In General.--The Secretary of the Treasury shall modify 
     Treasury Regulations section 1.410(b)-6(g) to provide that 
     employees of an organization described in section 
     403(b)(1)(A)(i) of the Internal Revenue Code of 1986 who are 
     eligible to make contributions under section 403(b) of such 
     Code pursuant to a salary reduction agreement may be treated 
     as excludable with respect to a plan under section 401(k) or 
     (m) of such Code that is provided under the same general 
     arrangement as a plan under such section 401(k), if--
       (1) no employee of an organization described in section 
     403(b)(1)(A)(i) of such Code is eligible to participate in 
     such section 401(k) plan or section 401(m) plan; and
       (2) 95 percent of the employees who are not employees of an 
     organization described in section 403(b)(1)(A)(i) of such 
     Code are eligible to participate in such plan under such 
     section 401(k) or (m).
       (b) Effective Date.--The modification required by 
     subsection (a) shall apply as of the same date set forth in 
     section 1426(b) of the Small Business Job Protection Act of 
     1996.

     SEC. 605. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED 
                   RETIREMENT ADVICE.

       (a) In General.--Subsection (a) of section 132 (relating to 
     exclusion from gross income) 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 adding at the 
     end the following new paragraph:
       ``(7) qualified retirement planning services.''.
       (b) Qualified Retirement Planning Services Defined.--
     Section 132 is amended by redesignating subsection (m) as 
     subsection (n) and by inserting after subsection (l) the 
     following:
       ``(m) Qualified Retirement Planning Services.--
       ``(1) In general.--For purposes of this section, the term 
     `qualified retirement planning services' means any retirement 
     planning service provided to an employee and his spouse by an 
     employer maintaining a qualified employer plan.
       ``(2) Nondiscrimination rule.--Subsection (a)(7) shall 
     apply in the case of highly compensated employees only if 
     such services are available on substantially the same terms 
     to each member of the group of employees normally provided 
     education and information regarding the employer's qualified 
     employer plan.
       ``(3) Qualified employer plan.--For purposes of this 
     subsection, the term `qualified employer plan' means a plan, 
     contract, pension, or account described in section 
     219(g)(5).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 606. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the requirements for filing annual returns with respect to 
     one-participant retirement plans to ensure that such plans 
     with assets of $250,000 or less as of the close of the plan 
     year need not file a return for that year.
       (2) One-participant retirement plan defined.--For purposes 
     of this subsection, the term ``one-participant retirement 
     plan'' means a retirement plan that--
       (A) on the first day of the plan year--
       (i) covered only the employer (and the employer's spouse) 
     and the employer owned the entire business (whether or not 
     incorporated); or
       (ii) covered only one or more partners (and their spouses) 
     in a business partnership (including partners in an S or C 
     corporation);
       (B) meets the minimum coverage requirements of section 
     410(b) of the Internal Revenue Code of 1986 without being 
     combined with any other plan of the business that covers the 
     employees of the business;
       (C) does not provide benefits to anyone except the employer 
     (and the employer's spouse) or the partners (and their 
     spouses);
       (D) does not cover a business that is a member of an 
     affiliated service group, a controlled group of corporations, 
     or a group of businesses under common control; and
       (E) does not cover a business that leases employees.
       (3) Other definitions.--Terms used in paragraph (2) which 
     are also used in section 414 of the Internal Revenue Code of 
     1986 shall have the respective meanings given such terms by 
     such section.
       (b) Simplified Annual Filing Requirement for Plans With 
     Fewer Than 25 Employees.--In the case of a retirement plan 
     which covers less than 25 employees on the first day of the 
     plan year and meets the requirements described in 
     subparagraphs (B), (D), and (E) of subsection (a)(2), the 
     Secretary of the Treasury shall provide for the filing of a 
     simplified annual return that is substantially similar to the 
     annual return required to be filed by a one-participant 
     retirement plan.
       (c) Effective Date.--The provisions of this section shall 
     take effect on January 1, 2001.

     SEC. 607. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION 
                   SYSTEM.

       The Secretary of the Treasury shall continue to update and 
     improve the Employee Plans Compliance Resolution System (or 
     any successor program) giving special attention to--
       (1) increasing the awareness and knowledge of small 
     employers concerning the availability and use of the program;
       (2) taking into account special concerns and circumstances 
     that small employers face with respect to compliance and 
     correction of compliance failures;
       (3) extending the duration of the self-correction period 
     under the Administrative Policy Regarding Self-Correction for 
     significant compliance failures;
       (4) expanding the availability to correct insignificant 
     compliance failures under the Administrative Policy Regarding 
     Self-Correction during audit; and
       (5) assuring that any tax, penalty, or sanction that is 
     imposed by reason of a compliance failure is not excessive 
     and bears a reasonable relationship to the nature, extent, 
     and severity of the failure.

     SEC. 608. REPEAL OF THE MULTIPLE USE TEST.

       (a) In General.--Paragraph (9) of section 401(m) is amended 
     to read as follows:
       ``(9) Regulations.--The Secretary shall prescribe such 
     regulations as may be necessary to carry out the purposes of 
     this subsection and subsection (k), including regulations 
     permitting appropriate aggregation of plans and 
     contributions.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 609. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND 
                   LINE OF BUSINESS RULES.

       (a) Nondiscrimination.--
       (1) In general.--The Secretary of the Treasury shall, by 
     regulation, provide that a plan shall be deemed to satisfy 
     the requirements of section 401(a)(4) of the Internal Revenue 
     Code of 1986 if such plan satisfies the facts and 
     circumstances test under section 401(a)(4) of such Code, as 
     in effect before January 1, 1994, but only if--
       (A) the plan satisfies conditions prescribed by the 
     Secretary to appropriately limit the availability of such 
     test; and
       (B) the plan is submitted to the Secretary for a 
     determination of whether it satisfies such test.
     Subparagraph (B) shall only apply to the extent provided by 
     the Secretary.
       (2) Effective dates.--
       (A) Regulations.--The regulation required by paragraph (1) 
     shall apply to years beginning after December 31, 2000.
       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under paragraph 
     (1)(A) shall not apply before the first year beginning not 
     less than 120 days after the date on which such condition is 
     prescribed.
       (b) Coverage Test.--
       (1) In general.--Section 410(b)(1) (relating to minimum 
     coverage requirements) is amended by adding at the end the 
     following:
       ``(D) In the case that the plan fails to meet the 
     requirements of subparagraphs (A), (B) and (C), the plan--
       ``(i) satisfies subparagraph (B), as in effect immediately 
     before the enactment of the Tax Reform Act of 1986,
       ``(ii) is submitted to the Secretary for a determination of 
     whether it satisfies the requirement described in clause (i), 
     and
       ``(iii) satisfies conditions prescribed by the Secretary by 
     regulation that appropriately limit the availability of this 
     subparagraph.
     Clause (ii) shall apply only to the extent provided by the 
     Secretary.''.
       (2) Effective dates.--
       (A) In general.--The amendment made by paragraph (1) shall 
     apply to years beginning after December 31, 2000.

[[Page H6504]]

       (B) Conditions of availability.--Any condition of 
     availability prescribed by the Secretary under regulations 
     prescribed by the Secretary under section 410(b)(1)(D) of the 
     Internal Revenue Code of 1986 shall not apply before the 
     first year beginning not less than 120 days after the date on 
     which such condition is prescribed.
       (c) Line of Business Rules.--The Secretary of the Treasury 
     shall, on or before December 31, 2000, modify the existing 
     regulations issued under section 414(r) of the Internal 
     Revenue Code of 1986 in order to expand (to the extent that 
     the Secretary determines appropriate) the ability of a 
     pension plan to demonstrate compliance with the line of 
     business requirements based upon the facts and circumstances 
     surrounding the design and operation of the plan, even though 
     the plan is unable to satisfy the mechanical tests currently 
     used to determine compliance.

     SEC. 610. EXTENSION TO ALL GOVERNMENTAL PLANS OF MORATORIUM 
                   ON APPLICATION OF CERTAIN NONDISCRIMINATION 
                   RULES APPLICABLE TO STATE AND LOCAL PLANS.

       (a) In General.--
       (1) Subparagraph (G) of section 401(a)(5) and subparagraph 
     (H) of section 401(a)(26) are each amended by striking 
     ``section 414(d))'' and all that follows and inserting 
     ``section 414(d)).''.
       (2) Subparagraph (G) of section 401(k)(3) and paragraph (2) 
     of section 1505(d) of the Taxpayer Relief Act of 1997 are 
     each amended by striking ``maintained by a State or local 
     government or political subdivision thereof (or agency or 
     instrumentality thereof)''.
       (b) Conforming Amendments.--
       (1) The heading for subparagraph (G) of section 401(a)(5) 
     is amended to read as follows: ``Governmental plans''.
       (2) The heading for subparagraph (H) of section 401(a)(26) 
     is amended to read as follows: ``Exception for governmental 
     plans''.
       (3) Subparagraph (G) of section 401(k)(3) is amended by 
     inserting ``Governmental plans.--'' after ``(G)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) In general.--Subparagraph (A) of section 417(a)(6) is 
     amended by striking ``90-day'' and inserting ``180-day''.
       (2) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under sections 402(f), 
     411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
     substitute ``180 days'' for ``90 days'' each place it appears 
     in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
     and 1.417(e)-1(b).
       (3) Effective date.--The amendment made by paragraph (1) 
     and the modifications required by paragraph (2) shall apply 
     to years beginning after December 31, 2000.
       (b) Consent Regulation Inapplicable to Certain 
     Distributions.--
       (1) In general.--The Secretary of the Treasury shall modify 
     the regulations under section 411(a)(11) of the Internal 
     Revenue Code of 1986 to provide that the description of a 
     participant's right, if any, to defer receipt of a 
     distribution shall also describe the consequences of failing 
     to defer such receipt.
       (2) Effective date.--The modifications required by 
     paragraph (1) shall apply to years beginning after December 
     31, 2000.

                       TITLE VII--PLAN AMENDMENTS

     SEC. 701. PROVISIONS RELATING TO PLAN AMENDMENTS.

       (a) In General.--If this section applies to any plan or 
     contract amendment--
       (1) such plan or contract shall be treated as being 
     operated in accordance with the terms of the plan during the 
     period described in subsection (b)(2)(A); and
       (2) such plan shall not fail to meet the requirements of 
     section 411(d)(6) of the Internal Revenue Code of 1986 by 
     reason of such amendment.
       (b) Amendments to Which Section Applies.--
       (1) In general.--This section shall apply to any amendment 
     to any plan or annuity contract which is made--
       (A) pursuant to any amendment made by this Act, or pursuant 
     to any regulation issued under this Act, and
       (B) on or before the last day of the first plan year 
     beginning on or after January 1, 2003.
     In the case of a governmental plan (as defined in section 
     414(d) of the Internal Revenue Code of 1986), this paragraph 
     shall be applied by substituting ``2005'' for ``2003''.
       (2) Conditions.--This section shall not apply to any 
     amendment unless--
       (A) during the period--
       (i) beginning on the date the legislative or regulatory 
     amendment described in paragraph (1)(A) takes effect (or in 
     the case of a plan or contract amendment not required by such 
     legislative or regulatory amendment, the effective date 
     specified by the plan); and
       (ii) ending on the date described in paragraph (1)(B) (or, 
     if earlier, the date the plan or contract amendment is 
     adopted),
     the plan or contract is operated as if such plan or contract 
     amendment were in effect; and
       (B) such plan or contract amendment applies retroactively 
     for such period.
  The SPEAKER pro tempore. After 1 hour of debate on the bill, as 
amended, it shall be in order to consider the amendment printed in 
House Report 106-760, if offered by the gentleman from New York (Mr. 
Rangel) or his designee, which shall be considered read and shall be 
debatable for 1 hour, equally divided and controlled by the proponent 
and an opponent.
  The gentleman from Texas (Mr. Archer) and the gentleman from 
Massachusetts (Mr. Neal) each will control 30 minutes.
  The Chair recognizes the gentleman from Texas (Mr. Archer).


                             General Leave

  Mr. ARCHER. Mr. Speaker, I ask unanimous consent that all Members may 
have 5 legislative days within which to revise and extend their remarks 
and include extraneous material on H.R. 1102.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Texas?
  There was no objection.
  Mr. ARCHER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, we have accomplished a great deal this year for older 
Americans and for baby boomers who are nearing retirement. We repealed 
the punitive Social Security earnings penalty so that seniors who 
wanted to continue to work could do so without the loss of their 
benefits. We protected the Social Security and Medicare trust funds 
from being spent, put them in a lock box, and we are paying down the 
debt by historic levels. Today, we continue our broad agenda to help 
Americans enjoy a healthier and more fulfilling retirement.
  If there is one cloud on our economic horizon, it is the lack of 
personal savings, private savings in the private sector in this 
country, which is at an all time low. In fact, negative. We as a people 
borrow more than we save. We should be encouraging Americans to save 
more, and one of the proven methods of doing that is simple: do not tax 
savings or the interest earned on savings.
  While we have tried many times, and the last time IRA contribution 
limits were raised was almost 20 years ago in 1981, there is wide 
bipartisan support for raising the limits from $2,000 to $5,000. At 
least 90 Democrats cosponsored the Portman-Cardin bill, which includes 
an increase in IRA limits, and 60 Democrats cosponsored a straight 
expansion of IRA limits from $2,000 to $5,000.
  The Committee on Ways and Means reported this bill with a strong 
bipartisan vote, and I expect that support will be reflected by the 
full House of Representatives today.
  Mr. Speaker, I particularly thank the gentleman from Ohio (Mr. 
Portman) and the gentleman from Maryland (Mr. Cardin), who have really 
provided the bipartisan leadership on this issue. This should be the 
hallmark of Congress, that we come together to do the right thing for 
the American people. I also must mention the leadership of the 
gentleman from California (Mr. Gallegly) on IRA expansions.
  This bill also strengthens our pension system, and it expands 
opportunities for Americans to get pension coverage, especially women. 
As we know, women live longer than men and have special retirement 
needs, but only 32 percent of retired women have pensions as opposed to 
55 percent for men.
  This bill includes catchup provisions so women who have to leave the 
workforce, perhaps for a period of time to rear children and then 
reenter later in life, can increase their contributions to make up for 
the lost time when they were not in the workforce.
  So this is the right legislation at the right time. The workplace has 
changed, our retirement needs have changed, and the pension system has 
changed. Now is the time to expand IRAs, improve 401(k)s, update our 
pension system so more Americans have the opportunity for a safe and 
secure retirement. We particularly help small businesses to create 
pension plans where there is a great need for workers to be covered. 
This is a good bill, one that should get a resounding bipartisan vote.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, we have an honest disagreement here today reflected in 
the proposals that are before this House. This honest disagreement I 
think crystallizes along the lines of who is to benefit from this 
legislation. Once again, on the Democratic side, we argue, I think with 
considerable merit, that the legislation in front of us does not do 
enough to help middle-income Americans or low-income wage earners.

[[Page H6505]]

  The substitute that we will discuss later on today offered by the 
gentleman from New York (Mr. Rangel) is, I believe, the only way that 
we can bring a balanced pension package to the President that he will 
sign this year. The substitute that we will offer later on will add a 
dimension that the underlying bill lacks and which it badly needs.
  One of the key criticisms of the bill before us is that the benefit 
increases go only to those lucky few who make a maximum contribution 
under current law. The retirement savings account proposal takes a good 
first step at addressing this lack of balance. It gives a refundable 
tax credit to low- and moderate-income workers who participate in an 
employer-sponsored pension plan or an individual retirement account. 
The maximum credit is 50 percent of qualifying contributions, and would 
be available to married workers earning less than $25,000 when fully 
phased in. The credit phases down to zero at $75,000 for married 
workers filing jointly.
  Mr. Speaker, it is important to understand that the RSA proposal does 
not create a separate account like an individual retirement account. 
With all of the pension vehicles currently in law, placing one more 
into law really did not seem to make a lot of sense. Rather, the tax 
credit is tied to contributions made to an IRA, or a qualified 
employer-sponsored pension plan like a 401(k) plan, or another similar 
defined contribution plan. This was done for simplicity, and to ease 
the administration of plan sponsors.
  The RSA proposal before us today has gone through similar and many 
versions. In its final version, it preserves the original goal of the 
administration, which is to provide a real incentive for low- and 
moderate-income workers to participate in our retirement system while 
meeting concerns expressed by the pension community that the proposal 
be administrable.
  For example, the original RSA proposal was designed to deliver the 
tax credit to business or financial institutions as reimbursement for 
making employer contributions to eligible employees. The pension 
community argued that this design was too complex, and that some small 
businesses or tax-exempt entities would not have the ability to absorb 
tax credits because they may have little or no tax liability. Thus, the 
proposal was changed to a tax credit for individuals.
  The proposal is intended to provide a stronger incentive for 
individuals to save for retirement, of which we all agree. For those 
who have not done so to date, a 50 percent credit encourages them to 
take the first step in the right direction. For those who currently 
save a little, it encourages them to save more. Given all of the 
competing demands, it is often very hard for many workers, even middle 
income workers, to set aside a percentage of their wages toward 
retirement. Refundability is a key feature of this credit. It allows us 
to provide a strong incentive to some workers who simply could not 
otherwise participate in a pension plan.
  This is not a panacea for low-income workers. The average deferral 
rate for nonhighly compensated workers who make less than $30,000 a 
year is less than 6 percent. The RSA proposal is the only thing that 
would help us to help these workers, and it is crucial to do so if we 
wish to bring some balance to this package.
  Likewise, the small business tax credits contained in the amendment 
may provide a significant increase in pension coverage and pension 
participation for employees of small businesses. The first proposal 
gives a 50 percent tax credit for 3 years to small businesses for their 
start-up costs associated with a new pension plan. That is their 
administrative and retirement education costs. Not only would this 
provide an incentive for small businesses to offer a plan to employees, 
but it also could be used as a marketing tool by financial institutions 
or pension advisors to promote the adoption of a pension plan to small 
business.
  The second small business credit would provide a 50 percent credit 
for employer contributions to a pension plan for nonhighly compensated 
employees if the employer is willing to contribute 1 to 3 percent of 
compensation through their employees' accounts. This credit is designed 
to encourage small businesses to make employer contributions to the 
plan they sponsored for their employees.

                              {time}  1045

  By encouraging small employers to make contributions on behalf of 
their non-highly compensated employees, retirement savings for all 
these workers will increase.
  Clearly the Rangel substitute will make this a much better bill. It 
will provide significant incentives for low- and middle-income workers 
to participate in those pension plans that are offered by their 
employers. This is clearly where we need to concentrate our incentives 
because this is where the need is greatest, among low- and moderate-
income wage-earners.
  For higher-income wage-earners, those who already save a maximum 
under current law, the bill in front of us provides a boost for their 
savings. So as long as that increase does not lead to any pension 
coverage being dropped, as some strongly argue, then there is nothing 
wrong with the increases, as long as we consider low- and moderate-
income wage-earners.
  However, the debate today is over the possible unintended 
consequences of this and other provisions in the underlying bill. It 
certainly will continue throughout the year.
  There are additional controversies that surround this legislation. 
For example, the Department of the Treasury and some outside groups 
argue strongly that some of the provisions of this bill can actually 
lead to a shrinking of pension coverage for low- and moderate-income 
workers. They cite most often the provisions of the bill that weaken 
the so-called top-heavy rules and the nondiscrimination rules which are 
designed to protect non-key employees by making sure they get a minimum 
amount of benefit from an employer's pension plan.
  I know the authors of this bill, the gentleman from Ohio (Mr. 
Portman) included, strongly believe the opposite, and that these are 
just simplification proposals that will do no harm. But there are many 
others, myself included, who feel just as strongly that the proposals 
will do harm.
  For example, we have a letter from 30 organizations, including the 
AARP, the Gray Panthers, the Pension Rights Centers, the National Urban 
League, the Older Women's League, and others who argue that if we look 
at the changes in this bill that affect top-heavy rules and 
nondiscrimination rules, that taken together, these provisions would 
serve to aggravate the imbalances in our current pension system.
  We urge Members to drop these provisions from their bill. A top-heavy 
plan, by example, is a definition which we offer to the value of 
benefits when top employees exceed 60 percent of the package. In order 
to make sure that all other employees receive a benefit, the rules 
require faster vesting and a certain minimum benefit for non-key 
employees. This has led to an increased benefit for those employees.
  While top-heavy rules are not being repealed, the changes made by the 
bill may redefine some plans as being not top-heavy, which in turn 
means that the workers covered by those plans lose their current 
protections.
  Ironically, one of the arguments for keeping the changes in the top-
heavy rules is that there are nondiscrimination rules in place to 
protect workers. A top-heavy plan already meets the nondiscrimination 
rules, yet gives key employees more than 60 percent of the benefits, so 
Congress has already made a judgment that nondiscrimination rules are 
not enough protection in a top-heavy plan.
  Moreover, the other major complaint about this bill is that the 
nondiscrimination rules are weakened, which in turn will provide, again 
from the letter, ``less protection and ultimately less retirement 
security'' for workers and their families.
  Mr. Speaker, these are some of the concerns that have been expressed 
and some of the provisions that need to get worked out by the end of 
this legislative year. There is still time to work these proposals out 
with President Clinton.
  I believe that every one of us on this floor wants to see a balanced 
pension package that can reach the President's desk in October and be 
signed into law. Unfortunately, this bill will not be signed into law. 
We may have somewhat different views as to where that

[[Page H6506]]

balance is, but that is what the legislative process is for.
  With that in mind, the substitute that the Democratic Party will 
offer today is as constructive an approach as is possible, signalling 
where some of us continue to have problems with the underlying bill, as 
well as sending a clear message that we would like to try to bridge the 
gap.
  I hope everyone will take this in the spirit in which it is offered, 
and that we can make real progress on pension reform this year. Having 
said that, I also think that the gentleman from Ohio (Mr. Portman) and 
the gentleman from Maryland (Mr. Cardin) have served an important 
purpose, and that is to generate considerable attention to the issue of 
pension legislation.
  I believe there is still time to work out the differences that we 
currently hold and to get a good pension reform bill that President 
Clinton will sign. Given the knowledge I have of the gentleman from 
Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin), I 
think that is still possible.
  Mr. Speaker, I reserve the balance of my time.
  The SPEAKER pro tempore. Without objection, the gentleman from Ohio 
(Mr. Portman) will control the time on the majority side.
  There was no objection.
  The SPEAKER pro tempore. The Chair recognizes the gentleman from Ohio 
(Mr. Portman).
  Mr. PORTMAN. Mr. Speaker, I want to thank the gentleman from Texas 
(Chairman Archer) for his leadership over the years, and all he has 
done to expand saving options for all Americans, and in particular, his 
personal commitment to moving this bill to the floor today. Without his 
help and his support, we would not be here.
  I would also like to thank my colleague, the gentleman from Maryland 
(Mr. Cardin) on the other side of the aisle, who has been a true 
partner over the past 3 years as we have developed this bipartisan 
legislation before us today.
  In the face of some very real political pressure from the 
administration and others, the gentleman from Maryland (Mr. Cardin) has 
remained committed to doing what he believes is right to help people 
save for retirement. He deserves great credit for that.
  I rise in very enthusiastic support of H.R. 1102, the legislation 
before us today. This is great legislation, because it allows all 
workers to put more aside in a 401(k) type plan, a traditional pension 
plan, or in an individual retirement account, an IRA. It makes it 
easier for employers to offer plans and maintain and establish them, 
and it makes it easier for workers to roll over their retirement nest 
egg from job to job.
  Let us look at the problem that we face today. Seventy million 
Americans, that is half the American work force, today do not have a 
pension, either a 401(k) or any kind of a pension plan. The problem, of 
course, is much worse in American smaller businesses. In fact we are 
told that only 19 percent of businesses with 25 or fewer employees have 
any kind of pension at all today.
  Unbelievably, there has been virtually no growth in pension coverage 
for the past 2 decades. Retirement savings in general is so low that 
many experts believe that most older baby-boomers have not put nearly 
enough away for their retirement. The estimates are that they have put 
away only 40 percent of what they will need to have a comfortable 
retirement.
  Part of the problem has been right here in Congress. Over the past 20 
years this Congress has done the wrong thing, not the right thing, with 
regard to pensions. We have lowered the contribution and the benefit 
levels. We have made pensions more costly by, yes, increasing the 
number of rules and regulations and mathematical tests and the burdens 
and costs of establishing and maintaining a pension plan.
  What impact did that have? Let me give some specific examples. First, 
from 1982 to 1994, the limits on defined benefit plans, these are the 
wonderful traditional guaranteed defined benefit plans, the limits on 
these plans were repeatedly reduced by Congress from 1982 to 1994 and 
new restrictions were added, primarily I am told for purpose of 
generating more Federal revenue.
  As these cutbacks began to take effect, the number of traditional 
defined benefit plans insured by PBGC dropped from 114,000 plans in 
1987 to only 45,000 plans in 1997. Those are the facts.
  Let me share another example. Within a year after Congress reduced 
the compensation limit from $235,000 to $160,000 in 1993, the 
percentage of companies offering so-called non-qualified plans, these 
are non-insured plans, focused on higher-paids, went from 20 percent of 
companies to 67 percent of companies.
  These non-qualified plans basically ensure that highly-paid executive 
and managers have retirement coverage, but they do nothing to help 
lower- and middle-level income employees. That is the record.
  Yes, in this legislation we do believe strongly that we ought to 
increase those limits, at least restore them back to where they were 20 
years ago. Yes, we believe strongly that we ought to do something to 
reduce some of the costs and burdens of establishing and maintaining 
these plans.
  Over the past two decades, overall pension coverage has remained 
stagnant. It is time for Congress to now take these steps to reverse 
the trend. This bill before us today does just that. It is a 
comprehensive approach. It has been developed over the past 3 years, 
after careful consultations with small business people, who we want to 
have offer more of these plans, with labor organizations, with pension 
law experts in the private sector, in academia, in the administration, 
at the Treasury Department, at PBGC, at the Department of Labor, and 
most importantly, with workers themselves and individuals who will be 
affected by these changes.
  They have been fully vetted. These proposals have been through the 
wringer. In fact, most or the great majority of them have now passed 
this House twice.
  About 200 Members of this House, just over 200 as of this morning, 
almost equally divided between Republicans and Democrats, have now 
cosponsored this bill. More than 85 outside groups, business groups 
like the Chamber and the NFIB, labor organizations like the Building 
and Construction Trades Council of the AFL-CIO, have endorsed this 
legislation.
  The approach is fiscally responsible. It is also straightforward. 
First, again, we allow all workers to set aside more for their 
retirement in 401(k) type plans. We address union multi-employer plans. 
We made those plans fairer for all working union Members. We raise 
limits for defined benefit plans and for other pensions, as well as for 
IRAs, moving from $2,000 to $5,000. Again, what we are really trying to 
do is at least restore these limits back to where they were in the 
1980s.
  In some cases, we do not even go that far. This $2,000 to $5,000 
increase in the IRA limit, incidentally, is right about where it would 
be had we simply indexed in 1974 the IRA limits.
  We also allow special catch-up contributions for those workers who 
are 50 years old or older. This is done, this accelerated contribution, 
so older workers, especially women who will be returning to the work 
force, have the opportunity to build up that retirement nest egg more 
quickly at a time in their lives when they need it the most and frankly 
can afford to put some money aside.
  Second, after the contribution increases, we are modernizing pension 
laws to adapt to what we have learned about the realities of an 
increasingly mobile work force.  So we make defined contribution plans 
portable so workers can roll over their retirement nest egg between 
various types of qualified plans, 401(k)s, 403(b)s, and 457 plans for 
public employees.

  We require employers to allow workers to become vested in their plans 
more quickly. Instead of 5 years, we move it down to 3 years. This lets 
workers get a piece of the action earlier.
  Finally, yes, we listened to those in the trenches. We paid attention 
to the surveys out there that are very clear, clearly demonstrating 
that if we do not reduce the complexities and the burdens in our 
current very complex, very burdensome pension laws, we are not going to 
be able to expand pension opportunities for those who work in small 
businesses, which is where most lower-paid and middle-income workers 
now find their jobs.
  That is why we make it easier for employers, particularly small 
businesses, to establish and maintain plans

[[Page H6507]]

by reducing the costs and the liabilities, including modernizing 
outdated laws, streamlining complex rules. Yet, we keep in place the 
very important protections to ensure fairness in our pension system.
  My friend, the gentleman from Massachusetts (Mr. Neal) talked a while 
ago about his concerns about these provisions. I would love to have a 
debate over these specific provisions. There are many people, including 
the President's ERISA Advisory Council, that reported to the Department 
of Labor, that said we should repeal the top-heavy rules that were 
discussed a moment ago.
  In fact, there are many on my side of the aisle who would like to do 
that. We do not do that. The changes we make in the top-heavy rules are 
minor, but yes, they will help the small businesses to be able to offer 
and maintain a pension plan. We keep in place the 3 percent 
contribution limit. We keep in place all the fundamentals of the top-
heavy rules. Yet, we do go into them, we roll up our sleeves, as the 
gentleman from Maryland (Mr. Cardin) and I will hope to have a chance 
to talk about in more detail, and we do make it easier to offer these 
plans.
  We keep the nondiscrimination tests in place. Again some in the 
business community would like for us to have gone further. We think it 
is important that every time a pension is offered to a higher-paid 
worker, it must be offered right down the line to workers of all 
incomes. That is why we keep the rules in place.
  We do change them a little. The major change is, we say after you 
have gone through all the incredibly complicated mathematical 
computations and tests, then the Department of the Treasury would have 
the discretion in some cases to look at a plan and say, even though you 
seem to have failed this extremely complicated mathematical test, when 
we look at your plan, if it retains fairness to workers in that 
business, we will let you continue with this plan.
  Is that too much to ask, to give a little discretion, so that it is 
not all based on computations and mechanical tests? I have to tell the 
Members, I think this is the least we can do to try to get at what we 
know is the problem, which is the cost, the burdens, and the 
liabilities that small businesses face today if they want to offer 
pension plans. Unless we want to have a mandate and tell every business 
in America, you have to offer a plan, and I do not think anybody is 
advocating that here today, we have to deal with the reality.
  I have to tell the Members, I am surprised that the Clinton 
administration continues, despite this broad bipartisan support, 
despite a 3-year vetting process, despite going through a process of 
consultation with all the outside groups, including the Department of 
the Treasury, that they continue to oppose this legislation.
  It is amazing to me. They have brought out the tired class warfare 
argument again over the last 24 hours, saying this is somehow tax cuts 
for the rich. That is wrong.

                              {time}  1100

  Americans who are struggling to try to meet their retirement needs do 
not think they are rich when they make less than $62,000 a year, which 
is the cap on IRAs, and they are told they can now go from $2,000 to 
$5,000 a year. It is hard to build up an adequate retirement putting 
$2,000 aside, less than 200 bucks a month. That is hard.
  Yes, we think it ought to be indexed to inflation, which means it 
goes up above $5,000, letting more people save.
  I have got to remind people here who benefits the most from this. 
Seventy-seven percent of the American workers who participate in 
pension plans today make less than $50,000 a year. So much for tax cuts 
for the rich. These are the people who need it most.
  We ought to be getting out of the way and helping them save for their 
retirement, not creating more obstacles for them to be able to have a 
comfortable retirement.
  Again, I want to thank Members on both sides of the aisle who 
contributed so much over the years. I see the gentleman from North 
Dakota (Mr. Pomeroy) here who has been a leader on the portability 
provisions which are so commonsensical. I see the gentleman from 
Maryland (Mr. Cardin), who we talked about earlier who is here. The 
gentleman from California (Mr. Gallegly) and the gentleman from Kansas 
(Mr. Moore) who have taken the lead on the IRA contributions. I see the 
gentleman from California (Mr. Gallegly) is here, and I hope he will 
speak in a minute about his wonderful legislation that is incorporated 
as part of this legislation as well. The gentlewoman from New Mexico 
(Mrs. Wilson) and the gentleman from Maryland (Mr. Wynn), both of whom 
I hope will talk later today. There are so many, many others who I do 
not have time to mention, but who have been part of this process and 
have contributed to it in valuable ways.
  I want to end by urging my colleagues to join us in this crusade, in 
this movement to try to expand retirement savings for all Americans. 
This should be bipartisan today. It should be a very strong message. I 
hope we can get well over a veto-proof majority of the House, 
Republicans and Democrats together, because if we do not, we probably 
will not be able to send a strong enough message to the Senate, to the 
White House and the administration that we are committed to getting 
this done, not next year, not in some new Congress, but getting it done 
this year for people who need it badly.
  We need to provide this retirement security. We need to provide the 
peace of mind that Americans deserve in their retirement years. I hope 
we will send that strong message today with a strong bipartisan vote.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I want to briefly reference what the gentleman from Ohio 
(Mr. Portman) has said. We continue to hold on this side that the tax 
proposals and tax cuts that have been proposed in this House over the 
last 6 weeks overwhelmingly are skewed toward helping the well off.
  Mr. Speaker, I yield 5 minutes to the gentleman from Maryland (Mr. 
Cardin).
  Mr. CARDIN. Mr. Speaker, first, if I might, let me thank my 
colleagues on the Democratic side of the aisle, particularly the 
gentleman from Massachusetts (Mr. Neal) for his long work on pension 
issues, on his interest in improving retirement savings accounts for 
all workers; the gentleman from North Dakota (Mr. Pomeroy), who has 
been one of the real spokespersons for pension reform since his first 
day in the House; the gentleman from Texas (Mr. Bentsen), who has been 
a key player on the pension reform issues; and I know the gentleman 
from Kansas (Mr. Moore), who is not on the floor, he will be here 
later; and the gentlewoman from Florida (Mrs. Thurman) who has a 
provision in this bill as it relates to ESOPs.
  As the gentleman from Ohio (Mr. Portman) pointed out, this is truly a 
bipartisan bill. But I particularly want to recognize the gentleman 
from Ohio for his leadership on this issue. The gentleman has 
demonstrated amazing patience in working with all elements, not only 
here in Congress, but the different interest groups so that we could 
fashion the bill that could truly be a bill that all of us should be 
proud of and a bill that has been developed in a very bipartisan way. 
The gentleman from Ohio (Mr. Portman) has reached out to all of us, and 
I thank him for that.
  The process that has been used for this legislation is the right 
process. Each provision has been well vetted. We have had public 
hearings in the Committee on Ways and Means. We have established the 
record. We have had a mark-up in the committee. We have brought forward 
a bill that is deserving Members' support.
  Why do we need this legislation? Well, it is pretty self-obvious. We 
brag about the economic progress of our Nation, low inflation rates, 
high economic growth, stock market still growing; but our saving ratios 
over the last 2 decades have steadily declined. In fact, we have had 
negative quarters. We actually spend more money than we earn as a 
Nation. That is certainly nothing that we can be proud of.
  We understand that income security retirement requires, not only a 
strong Social Security system, but a strong private retirement system; 
and this is what the legislation is aimed at doing.
  So what do we do? Well, we adjust limits to try to bring it back to 
where

[[Page H6508]]

they used to be. Let me just give my colleagues a couple of examples. 
The gentleman from Ohio (Mr. Portman) mentioned the defined benefit. In 
1982, that was $136,000. If we adjusted for inflation, it would be 
$242,000. Instead, it is $135,000 and we raise it to $160,000.
  How about the 401(k)'s that many of our constituents are well aware 
of. In 1986, that was $30,000. If we adjust it for inflation, it would 
be $47,000 today. Instead, it is $10,500. We make a modest change to 
$5,000.
  Why do we do this? Well, it is interesting. When we reduce the 
limits, and we did reduce the compensation limit in 1993, we reduced it 
from 235,000 to 170,000. What happened? What happened? We found that 
employers dropped their plans. They went to nonqualified plans. We had 
a threefold increase in nonqualified plans that year. These 
compensation limits are important if employers are going to be 
sponsoring plans for all of their employees.
  We provide special benefits for women. Women many times enter the 
workforce; later they take time out of the workforce. We reduce the 
vesting so that workers can be entitled to defined contribution 
benefits by their employers earlier, 3 years rather than 6.
  We allow for catch-up contributions, because many times one is a 
little bit older before one is able to put money away, so we allow an 
extra $5,000 contribution when someone reaches the age of 50. One is 
finished paying one's children's college education bills, maybe one has 
got the mortgage down to a more realistic level. Now one can start 
thinking about retirement; we allow one to do that. We put the 415 
provisions in there for people who work for labor unions. We help all 
workers.
  Mr. Speaker, I am still somewhat disappointed by criticisms that this 
bill is aimed at wealthy high-paid workers. It is not. It is aimed at 
allowing employers to continue pension plans that help all workers.
  If one has an employer-sponsored plan, the employer puts money on the 
table. That helps the lower-wage workers. We want to encourage those 
types of pension plans. The IRA provisions, most of the money goes into 
the IRA provisions. That goes to workers basically who are making less 
than $60,000 a year. These provisions are well targeted.
  The gentleman from Ohio (Mr. Portman) pointed out the top-heavy 
changes. We do not eliminate top-heavy rules; we make them work. We 
make them effective. The one provision we change in top heavy is, say, 
that if an employer has a matched contribution, that should count 
towards the 3 percent. For my colleagues see, if a pension plan is top 
heavy, the employer is required to make a 3 percent contribution. Under 
current law, that employer cannot count their matched contributions. 
What does that do? Employers drop their matched contribution. This 
encourages employers to continue to put money on the table which helps 
lower-wage workers and younger workers actually participate in a 
pension plan.
  It is a well-balanced approach. Sure, one might want to pick at one 
provision and say, does this not help one special group? All of the 
provisions help all of our workers. It will help us plan for people's 
retirement. I urge my colleagues to support the legislation.
  Mr. PORTMAN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from Pennsylvania (Mr. English).
  The gentleman from Pennsylvania (Mr. English) has been a leader on 
the multiemployer plan provisions in this bill, which help section 415.
  Mr. ENGLISH. Mr. Speaker, I would like to join the individuals who 
have spoken today in congratulating the gentleman from Ohio (Mr. 
Portman) for his Herculean efforts on behalf of this legislation.
  Mr. Speaker, working families must be able to fall back on strong 
private pension plans when they are planning for retirement. Social 
Security is simply not enough. This landmark legislation will allow 
more families to save with greater flexibility for retirement.
  This legislation has many simple changes, but the cumulative effect 
is profound. It would allow families to secure their retirement future 
by increasing the IRA contributions limits and increasing the 401(k) 
limits, long overdue changes.
  It would also allow baby boomers who are discovering that their 
retirement is seriously underfunded to catch up through higher 
contribution limits.
  But particularly I wanted to note that the changes in the current 
section 415 would address the unintended consequences of this 
legislation which have hurt many, many of the working families in my 
district.
  Currently section 415 seriously hampers the ability of America's 
workers, not the rich, but rank and file workers, to collect their full 
pension amounts that they have earned.
  Slashing the pensions of workers who retire before normal Social 
Security retirement age has caused financial hardship for many workers, 
especially in my district. Many of these workers have physically 
demanding jobs and frequently negotiate and contribute to pension plans 
specifically with the goal of being able to retire before age 65.
  Thousands of retiring workers have carefully saved and planned for 
their retirement. They are depending on their pensions. But when they 
retire, there are arbitrary cuts in the amount they can collect. 
Americans are living longer, but are not saving enough to sustain them 
through an extended retirement.
  This legislation goes a great distance toward improving our 
retirement system and creating a greater incentive for employers to 
offer private retirement plans and for individuals to save for their 
retirement.
  Some have labeled this as tax cuts for the rich, and I find that to 
be an extraordinary claim. The fact is this legislation is clearly pro-
savings, pro-worker, pro-union, pro-taxpayer, and pro-small business.
  Mr. Speaker, I urge every Member of the House to join us in support 
of this very important initiative.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 4 minutes to the 
gentleman from North Dakota (Mr. Pomeroy) whose work in the pension 
arena has been invaluable to this Congress.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman from Massachusetts 
for yielding me this time.
  Mr. Speaker, I want to begin by commending the gentleman from 
Massachusetts (Mr. Neal) and in particular the sponsors of this 
legislation, the gentleman from Ohio (Mr. Portman) and the gentleman 
from Maryland (Mr. Cardin) for the detailed work they have done.
  Just listening to the debate and their presentations on the floor 
leave one well aware of the depth of knowledge they have acquired on 
this complex subject during the time of their work on the legislation.
  In balance, especially as to the Portman-Cardin proper, not 
addressing the IRA adjustment, but Portman-Cardin proper, I believe 
that they have made decisions that are well founded in terms of trying 
to continue support for defined benefit plans in the workplace.
  We have seen a collapse in the workers covered by defined benefit 
plans, the traditional pension coverages. In fact, from 1975 to 1995, 
the number, percentage of covered workers has fallen 40 percent in 
defined pension plans. The number of actual defined benefit plans in 
the marketplace has gone from 114,000 in 1987 to 45,000 in 1997.
  It is time we address this subject head on, and that is what the 
Portman-Cardin legislation does. I have enjoyed working with the 
gentleman on it.
  I believe that there is much to be said for the traditional pension 
plan in terms of protecting workers. It shifts investment risk away 
from workers who are least able to bear it, and it provides lifelong 
guaranteed benefits sustaining people in retirement years, no matter 
how long they live. Let us face it, workers are living longer today, so 
these features of defined benefit plans are very, very important.
  This legislation also incorporates a bill that I had introduced as a 
stand-alone measure called the Retirement Account Portability Act, and 
it will allow much greater portability across different types of 
defined contribution plans.
  Right now, if one works for a nonprofit corporation, one will have a 
403(b) plan. If one works for a for-profit, one will have a 401(k) 
plan. If one works for a State government, one will have a 457 plan. As 
one moves in the workplace between these categories of employers, one 
cannot move one's defined contribution money with one. There is no 
public policy purpose served by the existing law with those

[[Page H6509]]

prohibitions. It is time we knocked them down. I am very pleased this, 
along with the reduction investing schedule from 5 years to 3 years for 
defined contribution, was incorporated in this legislation.
  So there is much to commend this bill and particularly the effort 
behind it by the gentleman from Ohio (Mr. Portman) and the gentleman 
from Maryland (Mr. Cardin).
  The problem I have today is not with what is in the bill; it is what 
was left out of the bill as the Committee on Ways and Means marked it 
up. And that is a special savings incentive for workers needing 
additional help in saving for retirement.
  This chart makes it very clear that savings rates are lower among 
households who earn less money. There is no rocket science there. It is 
just obvious. Families that have incomes well in excess of $100,000 can 
save much more than families earning under $35,000.
  This legislation basically fails to address this savings issue. It 
addresses pension, but only 27 percent of workers under 415,000 have 
access to workplace retirement savings. It increases the IRA limits, 
but only 7 percent of households under $50,000 are accessing the tax-
deductible IRA.
  These people need a more powerful savings incentive, and it is time 
we address the savings needs of middle- and modest-income households. 
They have not had an additional savings incentive passed since 1981, 
and the Democrat substitute, which we will debate next, would provide a 
powerful new savings incentive for these families.

                              {time}  1115

  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to my friend, the 
gentleman from California (Mr. Gallegly), who has been a leader on IRS 
expansion. In particular, he has added valuable contributions to this 
legislation on increasing the limit and indexing IRA contributions.
  (Mr. GALLEGLY asked and was given permission to revise and extend his 
remarks.)
  Mr. GALLEGLY. Mr. Speaker, I rise today in strong support of H.R. 
1102, a bill that will enhance retirement security for all Americans.
  I want to particularly recognize my good friend, the gentleman from 
Ohio (Mr. Portman), my classmate, and my good friend, the gentleman 
from Maryland (Mr. Cardin), and the gentleman from Texas (Chairman 
Archer) for their leadership, along with many other Members on both 
sides of the aisle in bringing this legislation to the floor in a 
timely fashion.
  This legislation includes a provision that increases from $2,000 to 
$5,000 per year the amount a person can contribute to their IRA. This 
mirrors the language in a bill I introduced, H.R. 1322, which has 
garnered strong bipartisan support, in fact, 220 cosponsors and also 
the endorsement of numerous groups representing senior citizen groups 
across this country.
  Increasing the annual IRA contribution limit is a matter of 
fundamental fairness. Since 1974, the year IRAs were created, the 
Consumer Price Index has increased 240 percent. Yet during the same 
period, the IRA level has only increased once; and this was way back in 
1981. Had it simply kept pace with inflation, Americans would now be 
able to contribute over $5,000 instead of only $2,000.
  Mr. Speaker, a very important point of this legislation is that it 
has recently been brought to the attention of Members of this body that 
the net savings rate has dropped to zero for the first time since the 
Great Depression. If we do not reverse this trend, we threaten the long 
economic prosperity of our country.
  Finally, I would like to commend the authors for including language 
in H.R. 1102 that I strongly supported that indexes the IRA amount to 
the rate of inflation. We must never again let inflation eat away the 
amount that people can save.
  I would also like to thank the gentlewoman from New Mexico (Mrs. 
Wilson) and the gentleman from Kansas (Mr. Moore) for all their help in 
working with me on this very important issue.
  I urge my colleagues to strongly support H.R. 1102.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
gentleman from Oregon (Mr. Blumenauer), whose concern for quality-of-
life issues speaks well of retirees.
  Mr. BLUMENAUER. Mr. Speaker, I thank the gentleman for his courtesy 
in yielding me the time.
  I appreciate the hard work that has been going on both sides of the 
aisle in moving this legislation forward.
  I would speak just briefly to one particular item that does speak to 
the quality of life of our families, who we want to be able to be safe, 
healthy, and economically secure.
  The section 415 modifications speak to a very real problem we have 
now where working men and women who are covered by pension retirement 
programs are not able to collect the full amount of money that they 
would otherwise be granted. This is a problem.
  H.R. 1102 would correct this. It recognizes that hard physical labor 
oftentimes requires people to retire earlier.
  The substitute that is going to be offered and the bill before us now 
both deal with the 100 percent of compensation problem, this speaks to 
the potential disparity to the lower-paid employees who do not get all 
that they would otherwise be entitled because some of these programs 
are based on years of service, not simply to the amount of salary.
  The second provision that both bills have that I am pleased to see 
deals with aggregation. In many cases we have employees who are part of 
two pension plans, one that is a multiemployer plan and another that is 
simply their own union or company. It is important that we include this 
piece.
  Finally, I would commend my colleague, the gentleman from 
Massachusetts (Mr. Neal), who talked about some of the improvements 
that are being made for the people most in need. These employees who 
oftentimes are required to retire earlier are subjected to a problem 
where there is money in the pension program, but they are not allowed 
to collect it. The substitute would put an 80 percent floor and protect 
them.
  These are important provisions that I hope will ultimately find their 
way into law.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to my colleague, the 
gentlewoman from New York (Mrs. Kelly), for the purpose of a colloquy.
  Mrs. KELLY. Mr. Speaker, I rise for the purpose of entering into a 
colloquy with my friend, the gentleman from Ohio (Mr. Portman), the 
author of this legislation.
  I am grateful for the hard work my colleagues on the Committee on 
Ways and Means have done in putting together a strong package of tax 
relief to ensure retirement security for working Americans.
  Unfortunately, I have been contacted by constituents concerned about 
potential interpretations of sections 405, 501, and 701 of H.R. 1102. 
They fear these could negatively affect pension benefits.
  Over the past months, I appreciate the time the gentleman from Ohio 
(Mr. Portman) and members of the committee concerned with pension 
issues have spent as we have worked together to ensure that these 
concerns are properly addressed.
  I thank the gentleman from Ohio and the committee for the report 
language which addresses some of my concerns. But, Mr. Speaker, I would 
like to get assurances that these sections I have mentioned are not 
intended to be used to harm participants.
  It is my understanding that these provisions are not intended to be 
interpreted in such a way as to reduce pension benefits, discourage 
companies from increasing pension benefits, or to allow violations of 
the Tax Code.
  So I ask my friend, the gentleman from the State of Ohio (Mr. 
Portman), is my understanding correct?
  Mr. Speaker, I yield to the gentleman from Ohio.
  Mr. PORTMAN. Mr. Speaker, I thank the gentlewoman from New York for 
yielding, and I tell her that absolutely, her interpretation is 
correct. Indeed, the provisions that she mentioned are in the bill with 
the intent that we will be able to expand pension coverage and 
protections for American workers who are in defined benefit plans.
  Mrs. KELLY. Mr. Speaker, reclaiming my time, I thank my friend, the 
gentleman from Ohio (Mr. Portman), for his assurances and his 
continuing efforts on the legislation. With these efforts, we can 
assure concerned individuals that pensions are enhanced and protected 
by this legislation.

[[Page H6510]]

  We have an opportunity today to enhance retirement security for 
Americans. These are all initiatives I have long advocated. I look 
forward to voting in support of this important legislation today, and I 
urge all of my colleagues to join me in strong support.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the 
gentleman from Texas (Mr. Bentsen), whose work in retirement savings is 
well known to this body.
  (Mr. BENTSEN asked and was given permission to revise and extend his 
remarks.)
  Mr. BENTSEN. Mr. Speaker, I thank the gentleman from Massachusetts 
for yielding me the time.
  Mr. Speaker, I rise today in support of H.R. 1102, the Comprehensive 
Retirement Security and Pension Reform Act of 2000.
  Presently, our Nation is experiencing the lowest unemployment rate in 
a generation. This recent boom in job creation has been driven in large 
part by the growth of a number of small businesses. Even as more 
Americans work and incomes rise, we as a Nation have an abysmally low 
savings rate of 3.8 percent in disposable personal income. If the 
economy slows in the near future, that figure may rise by only one or 
two percentage points, which is still low by historical standards.
  Further, with fewer companies offering defined benefit plans, the 
percentage of private workers covered by pension plans has decreased by 
2 percent from 45 percent in 1970 to 43 percent in 1990. This is not 
progress.
  Finally, with Social Security as the main source of income for 80 
percent of retirees, the approaching retirement of today's aging 
workforce will surely place additional stress on Social Security's 
ability to pay out benefits.
  In short, the three-leg stool of retirement security is in jeopardy. 
Plans where employers make automatic, mandatory contributions have been 
replaced by plans where employees make voluntary contributions. No 
longer do companies automatically bear the risks and costs of 
professionally made investment decisions. Today, workers have to bear 
the risks and costs of their investment decisions.
  Passage of H.R. 1102 will set us on the path of enhancing retirement 
security by not only increasing the annual contribution limit for IRAs 
and providing catch-up provisions for older workers and easing 
administrative burdens to allow employers to offer pension plans.
  In particular, H.R. 1102 includes provisions of a bill, H.R. 352, 
which I introduced with the gentleman from Missouri (Mr. Blunt) which 
would allow small businesses to establish qualified small employer 
pension plans for small businesses of less than 100 employees.
  The provisions of the Bentsen bill would provide an easing of the 
establishment of qualified pension plans while still requiring employer 
matches and contributions for all employees.
  Small businesses with less than 100 employees can participate in this 
plan, yet only 21 percent of individuals employed by such businesses 
have such pension plans at this time, compared with 64 percent of those 
who work for businesses with more than 100 employees.
  Overall I want to say, H.R. 1102 will clear up many of the problems 
in the current pension programs. I know there have been a number of 
criticisms about whether or not this would skew benefits to the upper 
income. I might say this is somewhat different than tax cut bills we 
have had before because this is about savings and not consumption. It 
is voluntary.
  We do not know if the bill will work or not, but we do know that the 
current regulatory scheme for pensions and savings is not working, and 
we ought to try this bill to see if it will work to increase the amount 
of pensions to as many American workers as possible.
  I encourage my colleagues to support the bill.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Illinois (Mr. Weller), my colleague on the Committee on Ways and Means, 
who played a big role in putting together not only the multiemployer 
provisions but also the catch-up provisions on the 401(k) and IRA side.
  (Mr. WELLER asked and was given permission to revise and extend his 
remarks.)
  Mr. WELLER. Mr. Speaker, I am fortunate to represent a very diverse 
district, representing the south side of Chicago, the south suburbs and 
rural areas. And when I listen, whether in the city, the suburbs or the 
country, my neighbors tell me how frustrated they are with their Tax 
Code. Not only are taxes too high, but they are frustrated with the 
complexity and the unfairness of the Tax Code; and they greatly point 
time and time again about how unfair our Tax Code is where it treats 
retirement savings, where it treats those who want to set aside more 
for their retirement.
  They also tell me that women in particular have a harder time saving 
for their retirement. In fact, in 1999 only 23 percent of those who 
were out of the workforce, usually for raising a family, were able to 
contribute to an IRA in 1999. That is less than one-fourth contributed 
to their IRA.
  When I think of that example, I think of my sister Pat. She and her 
husband, Rich, are in their 50s. They live near Sheldon, Illinois, on 
their farm. One is a farmer. One is a school teacher. But a few years 
back, my sister and her husband, Rich, decided to have a family. Pat 
took 7 years out of the workforce in order to be home with the kids. 
And when the kids were old enough to go into school, she went back into 
the workforce. But during that period of time the family income was a 
lot less, it was cut in half, and expenses were up because they had 
little children. During that time, Pat and Rich really could not really 
set aside much more retirement savings.
  That is why I think it is so important to point out in this 
legislation that we help people like my sister, Pat, working moms, 
empty-nesters who now have a little extra money after the kids are out 
of the household, those who may have missed a little work because of 
health reasons, but give them an opportunity to catchup on their 
contributions to their IRA as well as their 401(k).
  That is why I am so proud that provisions from H.R. 4546 were 
included in this legislation allowing an individual when they turn 50 
to put a full $5,000 into their IRA immediately in 2001.
  As my colleagues know, the increased $5,000 is phased in over three 
years. Those over age 50 will get the immediate benefit allowing them 
to catch up. And also, if they have a 401(k), they will be able to put 
in an additional $5,000 in every year beginning in 2001. That will be a 
big help, particularly to working moms and empty-nesters, important 
legislation to help those save for retirement, particularly women 
making up missed contributions.
  I also want to point out another key provision in this legislation. I 
think of folks back home in the district, working people, building 
tradesmen, carpenters, cement finishers, iron workers, operating 
engineers, those who get up early, work hard all day, get their hands 
dirty, and of course put in many, many hours.
  Unfortunately, and I will give an example, Larry Kohr, a retired 
laborer from La Salle, Illinois. Larry pointed out to me that because 
of section 415 limitations in our Tax Code that he does not get what he 
was promised on his pension. According to his pension plan, he should 
be getting about $39,000 a year. But because of the pension limitations 
under section 415, he and other building tradespeople only get about 
half of what they deserve, in Larry's case about $15,000 to $16,000.

                              {time}  1130

  Now, think about that, 30 years you get up at 6 a.m. and go out and 
work hard all day, you only get half of what you were promised. I am so 
proud our legislation today that helps 10 million building 
tradespeople, people like Larry Kohr by giving them 100 percent of what 
they deserve on their pension.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
distinguished gentleman from Kansas (Mr. Moore), who has been a welcome 
new addition to this House.
  Mr. MOORE. Mr. Speaker, I appreciate the gentleman from Massachusetts 
(Mr. Neal) yielding me this time.
  Mr. Speaker, I rise today in strong support of H.R. 1102, and I urge 
my colleagues in this body to pass 1102 today.
  Back as a new freshman Member of this body, in February of last year, 
I introduced H.R. 802, which would basically increase the contribution 
limit from $2,000 to $5,000. That concept at least was incorporated in 
this bill, and

[[Page H6511]]

I am very, very proud today to stand here in support of again H.R. 
1102.
  As a matter of national policy, I think it makes perfect sense that 
we try to encourage Americans to save more, number one; and, number 
two, to save more in private retirement accounts to supplement Social 
Security accounts for later on to take the stress and the strain off of 
Social Security.
  Mr. Speaker, I am very proud to have had an opportunity to work on a 
bipartisan basis with the gentleman from California (Mr. Gallegly), the 
gentlewoman from New Mexico (Mrs. Wilson), the gentleman from Ohio (Mr. 
Portman), the gentleman from Maryland (Mr. Cardin), the gentleman from 
Illinois (Mr. Weller), and others who have spoken here today in support 
of this legislation.
  It truly is a good experience to work in a bipartisan basis. When I 
go home, I talk to my constituents back home, they tell me, they are 
really tired of all the partisan bickering in Congress. They are tired 
of hearing the Republicans did this, the Democrats did this, and what 
they would like to see us doing is working together.
  This is a perfect example of where Republicans and Democrats have 
come together across the aisle and worked on behalf of the American 
people. This is not a Republican idea. This is not a Democrat idea. It 
is a good idea and should be law, and I urge its passage.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from New 
Hampshire (Mr. Bass), my colleague who has been very helpful on the 
small business provisions of this legislation.
  Mr. BASS. Mr. Speaker, I thank the gentleman from Ohio (Mr. Portman) 
for yielding the time to me.
  Mr. Speaker, I rise in strong support of H.R. 1002. Mr. Speaker I 
want to congratulate the gentleman from Ohio (Mr. Portman) for his 
tireless efforts on working on behalf of this important issue.
  Earlier this year, I introduced a bill which would reduce the 
premiums paid to the Pension Benefit Guarantee Corporation by small 
businesses that are looking to offer new plans. This bipartisan 
initiative already had been passed by the House on a previous occasion 
and was also included in the original version of the bill we are 
debating today.
  I fully understand the reasons for removing all nontax provisions 
from the bill, but I do hope that Members who may be appointed to the 
conference committee will work for the inclusion of these provisions 
that were in my bill and other pension reforms that may have been 
removed from the bill. With the inclusion of that, we will be assured 
that we will have a bill that will encourage employers to offer 
pensions, as this one does, increase participation by eligible 
employees, raise the limits on benefits and contributions, improve 
asset portability, strengthen legal protections for planned 
participants, and reduce regulatory burdens on plan sponsors.
  Mr. Speaker, I also urge Members not to lose sight of the fact that 
during debate regarding who will benefit from this bill, we should 
consider the fact that when IRAs were created in 1974, they were widely 
regarded as a great new step in encouraging retirement savings for all 
Americans, and the original limit of $1,500 was not criticized as a 
giveaway for the most wealthy, but was hailed by both parties as the 
introduction of a planning tool for working Americans.
  Had this limit been adjusted yearly to account for increases in the 
CPI, the Consumer Price Index, it would be today $5,353 each year. This 
bill will not adjust the limit to $5,000 until 2003, and I think we 
would do well to keep this in mind as we debate this important bill on 
a bipartisan basis.
  Mr. Speaker, I urge support for this bill.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
gentleman from New Jersey (Mr. Andrews), who once again has helped us 
reinforce the arguments that we are undertaking today.
  (Mr. ANDREWS asked and was given permission to revise and extend his 
remarks.)
  Mr. ANDREWS. Mr. Speaker, I thank my friend from Massachusetts (Mr. 
Neal) for yielding the time to me.
  Mr. Speaker, I rise in support of the underlying legislation. I also 
support the Democratic substitute because I believe that it more fairly 
targets the benefits of the legislation. I commend the gentleman from 
Massachusetts (Mr. Neal) and his colleagues for offering it, and I look 
forward to voting for it. But I want to say to my friend, the gentleman 
from Maryland (Mr. Cardin), and the gentleman from Ohio (Mr. Portman) 
that they have demonstrated that people can come together on very 
contentious issues and do good for the country.
  Mr. Speaker, I very much appreciate the work they have done on this 
bill. Americans are going to have more years of retirement and, 
therefore, need more income, and that is a great thing; but it is a 
thing we need to be prepared for.
  Mr. Speaker, I support this bill for four significant reasons. First 
of all, it repeals what I view as a very strange provision that makes 
it illegal for employers to put too much into the pension plan for 
their employees. That makes no sense at all. This will result in more 
money being put away for employees.
  Second, I support this because I believe it is great news for people 
who have left the labor force for a while, usually to raise children, 
and then rejoin the labor force and want to catch up for those years 
when they could not put money away. Very frequently women are in this 
position, although it is not only women. And this is very strong news 
for those who will benefit from that provision.
  Third, this legislation corrects what I believe is a glaring inequity 
and anomaly in the Internal Revenue Code with respect to pension 
payments made to people very often associated with the building trades 
or other unions or other crafts who have earned their pensions and 
because of a quirk in the law had been unable to collect them fairly. 
This bill corrects that.
  Finally, the increase in contributions that would be made to 
individual retirement accounts are a benefit to the economy, as well as 
to the families who will benefit from those.
  To the gentleman from Maryland (Mr. Cardin), who has shown great 
leadership on this, and to the gentleman from Ohio (Mr. Portman), I am 
pleased that our committee, chaired by my friend, the gentleman from 
Ohio (Mr. Boehner), has been able to help shepherd this legislation 
along. I rise in support of it and look forward to its adoption by this 
House.
  Mr. PORTMAN. Mr. Speaker, I understand we have about 3 minutes 
remaining.
  The SPEAKER pro tempore (Mr. Ose). The gentleman from Ohio (Mr. 
Portman) has 3 minutes remaining, and the gentleman from Massachusetts 
(Mr. Neal) has 2\1/2\ minutes remaining.
  Mr. PORTMAN. Mr. Speaker, who has the right to close?
  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Portman) has 
the right to close.
  Mr. PORTMAN. Mr. Speaker, I yield 2\1/2\ minutes to the gentleman 
from New York (Mr. Lazio), my colleague who has been a leader on this 
legislation and in expanding retirement security.
  Mr. LAZIO. Mr. Speaker, let me begin by saying how thrilled I am to 
be here today, and I rise in strong support of this legislation.
  I want to commend my good friend, the gentleman from Ohio (Mr. 
Portman) who has spearheaded the efforts to provide pension and 
retirement security for millions of Americans, as well as the gentleman 
from Maryland (Mr. Cardin). I want to thank him as well for his great 
help. We would not be here without the partnership and bipartisanship 
that both have exhibited.
  Mr. Speaker, the baby boom generation is graying. I ought to know, I 
am one of them, and I can see myself in the mirror every day. Over 60 
million baby boomers will be retiring over the next 20 years.
  Let me talk for a moment about the typical baby boomer generation 
story. It is a story of a typical middle-class couple who are beginning 
to approach retirement age. Their children have moved out of their 
house. These prototypical baby boomers have been working hard, day in 
and day out, since graduating high school. They have been exemplary 
members of their community, providing for their families, perhaps 
volunteering for a local charity, maybe serving on a local school 
board.
  Throughout the years, they did all right financially, but they were 
not millionaires. They never got really

[[Page H6512]]

rich. They owned their own home. They scrimped and saved to send their 
kids to school and often they did not have enough left over at the end 
of the month to save enough maybe for their own retirement.
  When the kids are grown and educated, when the house is almost paid 
off and they have a few more dollars in their pocket, you would think 
they would be okay. But the fact of the matter is, they have not been 
able to save that much.
  The current law contribution limit for IRAs is only $2,000, the same 
amount that it was 20 years ago. In today's dollars, $2,000 per year 
does not add up to much. Once they retire without a steady income, many 
baby boomers will have to think twice before taking all of their 
grandchildren out for the ball game or for a concert, and they dare not 
even dream about visiting that vacation spot that has always caught 
their eye.
  Mr. Speaker, the bill we debate on the floor today will help 70 
million Americans who lack access to any type of pension. This bill 
will allow more Americans to save more of their own hard-earned dollars 
for their retirement years. It will encourage more small businesses to 
set up retirement plans for their employees.
  This is a bipartisan bill. It has been a result of a lot of hard 
work. It enjoys the support of over 190 cosponsors from both sides of 
the aisle. Let me say, there is only one thing standing between us and 
actual passage, and, that is, the opposition of the administration.
  I do not know why anybody would object to a bipartisan bill that 
would give Americans security in their retirement years. I do not know 
why anybody would stand opposed to a bill that would help pensionless 
low- and middle-income workers save for their retirement. We need to 
pass this bill today.
  Mr. NEAL of Massachusetts. Mr. Speaker, the gentleman from New York 
(Mr. Lazio) mentioned there was bipartisan support for the bill. I am 
pleased to announce there is bipartisan opposition to the bill.
  Mr. Speaker, I yield 2 minutes to the gentleman from Minnesota (Mr. 
Gutknecht).
  Mr. GUTKNECHT. Mr. Speaker, virtually everything that has been said 
this morning about this bill is true, and it is a bipartisan bill. I am 
delighted with the work that has gone into it, but I reluctantly rise 
in opposition to the bill.
  Mr. Speaker, I want my colleagues to all consider for a moment the 
term ``vested.'' I think we all think we know what that term means. The 
dictionary says it is law, settled, if fixed, absolute, being without 
contingency, as in a vested right.
  About 2 years ago, thousands of employees that worked for IBM 
Corporation found out that vested does not mean what we think it means, 
and all of a sudden these people who had calculators on their 
computers, as part of their tool kit so they could calculate what their 
pension benefit would be when they retired, all of a sudden woke up and 
the company had unilaterally changed the pension formula.
  They had gone from a defined benefit program to a cash balance 
program, and they were given no choice. And I had offered to the 
authors language to give them that choice, just for the vested 
employees, because once those rights are vested, it seems to me we have 
a moral obligation as a Congress, as employers. In fact, the term in 
pension policy is fiduciary responsibility, and that transcends legal.
  Yes, it was legal for IBM, and many of these other corporations, to 
convert their pension plans into cash balanced plans. It was legal, I 
think. I am not so certain, but it was not moral. It was the wrong 
thing to do.
  As a result, I have to rise in opposition to this bill because we 
have an opportunity in this Congress to solve this problem; and just 
because it is IBM this year does not mean it is not going to be another 
employer next year. This is ultimately going to affect millions and 
millions of Americans, and everyone in this room knows that it is 
wrong. It is wrong to allow large employers to abuse their employees, 
to convert these pension plans without their knowledge and without 
their choice.
  Mr. Speaker, I have to congratulate the authors for working together, 
but this bill has one glaring omission.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself 30 seconds.
  Mr. Speaker, I want to thank the gentleman from Minnesota (Mr. 
Gutknecht) for those very telling comments, and at the same time point 
out that we do not on this side hold opposition to this bill, as much 
as we argue that the bill can be improved.
  In the closing days of this Congress, there is going to be ample 
opportunity to do that. And I would close with the remarks that I 
opened with, the legislation in front of us does not do enough to help 
low- and middle-income workers, and when we look at the statistical 
data of the companies of the proposal in front of us, one would quickly 
conclude that is the case.
  We have an opportunity. The President says he will sign a pension 
bill. Secretary Summers has told me he will recommend to the President 
that he veto this legislation in its current form.
  Mr. Speaker, I yield back the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I want to thank my friend from Minnesota (Mr. Gutknecht) 
for his help on the cash balance issue. As the gentleman knows, in this 
legislation we expand disclosure and expand information provided so we 
improve the cash balance situation. I appreciate his help in getting us 
to that point and tell the gentleman that he is welcome to come to this 
side to get time any time he wants.
  Mr. Speaker, I would also say at the end here that we need to be 
clear, that this legislation is not only bipartisan, it has not only 
been fully vetted over a 3-year period, but it does strike the right 
balance. It is fair.
  Most of those lower- and middle-income workers we are all concerned 
about work in these small businesses that do not offer any kind of 
pension coverage today, that is precisely where this bill is targeted; 
that is what we are trying to do. We are trying to reverse what this 
Congress has done over the past couple of decades in terms of 
restricting pension access to all workers.
  Mr. Speaker, I would encourage all of my colleagues on the both sides 
of the aisle to support the legislation before us.
  Mr. FRELINGHUYSEN. Mr. Speaker, I rise in support of H.R. 1102, the 
Comprehensive Retirement Security and Pension Reform Act.
  This bill contains a number of common-sense provisions to make it 
easier for Americans to build a stronger financial future for 
themselves. First and foremost, the bill increases the amount of money 
an individual can contribute to an Individual Retirement Account (IRA). 
The current $2,000 a year level, which has remained unchanged since 
1981, would be increased to $5,000. An estimated 35 million Americans 
have some sort of IRA account, and nearly 70 percent of them contribute 
the maximum amount each year. Passage of H.R. 1102 will allow these 
individuals to set aside an even greater amount of money to prepare for 
their future retirement security.
  Second, the bill allows workers to become vested in less time--three 
years instead of five--and makes 401(k)-type plans more portable. As we 
know, workers no longer spend their entire careers with the same 
company. Instead, workers increasingly change jobs several times over 
the course of their careers. Under the provisions of H.R. 1102, these 
workers will be able to bring their accumulated retirement savings with 
them when they switch jobs.
  Lastly, this bill also allows older men and women, aged 50 and up, to 
make a $5,000 ``catch up'' contribution to their IRAs and increases the 
limit on salary reduction contributions to 401(k)-type plans to 
$15,000. Further, H.R. 1102 reduces administrative burdens, such as 
reporting requirements, to encourage small businesses to offer pension 
plans.
  According to the Treasury Department, there are 75 million Americans 
who do not participate in a retirement pension plan and have little or 
no other retirement savings. For these individuals, as well as the 
millions of Americans who already contribute to IRAs or other 
retirement accounts, I urge my colleagues to support this bill. All of 
us benefit when citizens prepare for their future retirement security 
and families have incentives to save.
  Mr. WELDON of Florida. Mr. Speaker, today I rise in strong support of 
H.R. 1102, the 401-K--IRA Pension Expansion Plan. Mr. Speaker, I am a 
co-sponsor of this measure that will help the over 70 million Americans 
who need the benefits of this plan. It is imperative that

[[Page H6513]]

we pass this bill today to help millions of American families save for 
their retirement security, and to be able to carry those pension funds 
with them when they change jobs.
  In 1981, workers were permitted to put aside up to $2,000 in an 
Individual Retirement Account (IRA) tax-free. Oddly, that amount has 
never been raised, even in the face of inflation and increased per 
capita earnings. Also, with the 1986 Tax Reform Act the number of 
participants dropped dramatically because of the disincentives it 
introduced. This bill addresses those shortcomings. It phases in 
increases for the maximum individual contribution reaching $5,000 by 
2003. That means, that over the course of ten or twenty years, a couple 
can save tens of thousands of dollars more towards their retirement; 
that doesn't even begin to touch on interest and any additional 
matching funds from an employer. The $5,000 annual limit is also 
increased annually to ensure that inflation does not again erode the 
contributions that can be set aside for retirement.
  Today, only half of all private sector workers have any kind of 
pension plan, and only 20 percent of small businesses offer retirement 
plans. However, we have seen over the past two decades that IRAs are an 
effective way for all Americans to save for their future, and with the 
proper incentives in this bill, it will significantly expand the rate 
of savings. This measure will help all workers. It can especially help 
among Generation X-ers, many of whom are already deciding to save for 
their retirement. In our expanding, technology driven economy, today's 
twenty- and thirty-somethings have taken it upon themselves to begin 
saving for the long-term. This bill helps them by enabling and 
encouraging them to set aside more of their own money over their 
working years for their own retirement.
  Another component of the bill is targeted to my generation. It allows 
workers age 50 and above to be permitted to contribute up to $5,000 
immediately in order to ``catch-up'' with years of being limited to 
only $2,000/year. Estimates indicate that over the next two decades 
over 16 million Baby Boomers will retire. So many of these hard-working 
Americans have scrimped and saved to put aside some money for their 
senior years. Now as they begin to see their personal incomes rise they 
are not able to set aside as much money as they would like to in their 
IRAs. We should enable them to put aside more money as their incomes 
grow and as they seriously consider their financial planning for their 
retirement.
  In addition, this bill provides incentives to promote the portability 
of IRAs. With the expanding and ever-changing economy workers are 
changing jobs with increased frequency. The prospect of spending thirty 
or forty years with an American institution like a General Motors or a 
Ford are less likely today than they were in past generations. With the 
increased portability provision in this bill it will be easier for 
workers to take their retirement savings from one job to another. They 
can roll over their money into an IRA with their new employer and take 
it with them without penalties and continue to expand the growth of 
their retirement savings.
  In closing, statistics indicate that personal savings among Americans 
has been down every year since 1992, and now it is at its lowest point 
in decades. Also, many women put their careers on hold to raise their 
children. These families not only gave up a second income for these 
years, but these women were not able to contribute to an IRA. This bill 
allows them to make-up contributions for those years. We should 
encourage savings and the best way to do that is to promote tax-free 
savings for retirement. This bill is a good bill. It is good for hard-
working Americans and their families, and I encourage my colleagues to 
support it.
  Mr. BILIRAKIS. Mr. Speaker, I rise in support of H.R. 1102, the 
Comprehensive Retirement Security and Pension Reform Act.
  The authors of H.R. 1102 are to be commended for their work in 
drafting a bill to address the retirement savings gap by expanding 
small business retirement plans, allowing workers to save more, 
providing portability in retirement benefits for an increasingly mobile 
workforce, and securing the pensions of America's workers. I am pleased 
to see that H.R. 1102 increases IRA contribution and benefit limits, 
provides rollovers of retirement plan and IRA distributions, and 
reduces vesting requirements for employer matching contributions. These 
provisions will help Americans save more for their retirement needs.
  However, I still have concerns about the protection of pension 
benefits of workers and retirees.
  Over the years, I have heard from many of my constituents who have 
lost pension benefits as the result of their employer declaring 
bankruptcy or merging with another company. Current law does not do 
enough to protect the retirement benefits of these employees and the 
company's retirees.
  Mr. Speaker, hard-working Americans do not deserve to lose their 
hard-earned benefits due to a company's declaration of bankruptcy or 
merger with another corporation.
  As Members of Congress, we spend a lot of time and effort debating 
what we can do to improve the lives of our constituents. Providing 
additional protections for the retirement benefits of hard-working 
Americans is a step in the right direction, and I hope my colleagues 
will work with me to ensure that changes in a company's structure will 
not result in the loss of benefits for our constituents.
  Mr. PORTMAN. Mr. Speaker, I yield back the balance of my time.


    Amendment In the Nature of a Substitute Offered by Mr. Neal of 
                             Massachusetts

  Mr. NEAL of Massachusetts. Mr. Speaker, I offer an amendment in the 
nature of substitute.
  The SPEAKER pro tempore. The Clerk will designate the amendment in 
the nature of a substitute.
  The text of the amendment in the nature of a substitute is as 
follows:

       Amendment in the nature of a substitute offered by Mr. Neal 
     of Massachusetts:
       Strike all after the enacting clause and insert the text of 
     H.R. 4843, as reported, and add at the end the following new 
     title:

                   TITLE VIII--ADDITIONAL PROVISIONS

     SEC. 801. REFUNDABLE CREDIT TO CERTAIN INDIVIDUALS FOR 
                   ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS.

       (a) In General.--Subpart C of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     refundable credits) is amended by redesignating section 35 as 
     section 36 and by inserting after section 34 the following 
     new section:

     ``SEC. 35. ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY 
                   CERTAIN INDIVIDUALS.

       ``(a) Allowance of Credit.--In the case of an eligible 
     individual, there shall be allowed as a credit against the 
     tax imposed by this subtitle for the taxable year an amount 
     equal to the applicable percentage of so much of the 
     qualified retirement savings contributions of the eligible 
     individual for the taxable year as do not exceed $2,000.
       ``(b) Applicable Percentage.--For purposes of this section, 
     the applicable percentage is the percentage determined in 
     accordance with the following table:

 
----------------------------------------------------------------------------------------------------------------
                                      Adjusted Gross Income
-------------------------------------------------------------------------------------------------
          Joint return                  Head of a household               All other cases           Applicable
-------------------------------------------------------------------------------------------------   percentage
      Over           Not over          Over          Not over          Over          Not over
----------------------------------------------------------------------------------------------------------------
           $0          $25,000               $0         $18,750              $0         $12,500              50
       25,000           35,000           18,750          26,250          12,500          17,500              45
       35,000           45,000           26,250          33,750          17,500          22,500              35
       45,000           55,000           33,750          41,250          22,500          27,500              25
       55,000           75,000           41,250          56,250          27,500          37,500              15
       75,000    ...............         56,250   ..............         37,500   ..............              0
----------------------------------------------------------------------------------------------------------------


       ``(c) Eligible Individual.--For purposes of this section--
       ``(1) In general.--The term `eligible individual' means any 
     individual if--
       ``(A) such individual has attained the age of 18, but has 
     not attained the age of 61, as of the close of the taxable 
     year, and
       ``(B) the compensation (as defined in section 219(f)(1)) 
     includible in the gross income of the individual (or, in the 
     case of a joint return, of the taxpayer) for such taxable 
     year is at least $5,000.
       ``(2) Dependents and full-time students not eligible.--The 
     term `eligible individual' shall not include--
       ``(A) any individual with respect to whom a deduction under 
     section 151 is allowable to another taxpayer for a taxable 
     year beginning in the calendar year in which such 
     individual's taxable year begins, and
       ``(B) any individual who is a student (as defined in 
     section 151(c)(4)).
       ``(3) Individuals receiving certain retirement 
     distributions not eligible.--
       ``(A) In general.--The term `eligible individual' shall not 
     include, with respect to a taxable year, any individual who 
     received during the testing period--
       ``(i) any distribution from a qualified retirement plan (as 
     defined in section 4974(c)),

[[Page H6514]]

     or from an eligible deferred compensation plan (as defined in 
     section 457(b)), which is includible in gross income, or
       ``(ii) any distribution from a Roth IRA which is not a 
     qualified rollover contribution (as defined in section 
     408A(e)) to a Roth IRA.
       ``(B) Testing period.--For purposes of subparagraph (A), 
     the testing period, with respect to a taxable year, is the 
     period which includes--
       ``(i) such taxable year,
       ``(ii) the 2 preceding taxable years, and
       ``(iii) the period after such taxable year and before the 
     due date (without extensions) for filing the return of tax 
     for such taxable year.
       ``(C) Excepted distributions.--There shall not be taken 
     into account under subparagraph (A)--
       ``(i) any distribution referred to in section 72(p), 
     401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4),
       ``(ii) any distribution to which section 408A(d)(3) 
     applies, and
       ``(iii) any distribution before January 1, 2002.
       ``(D) Treatment of distributions received by spouse of 
     individual.--For purposes of determining whether an 
     individual is an eligible individual for any taxable year, 
     any distribution received by the spouse of such individual 
     shall be treated as received by such individual if such 
     individual and spouse file a joint return for such taxable 
     year and for the taxable year during which the spouse 
     receives the distribution.
       ``(d) Qualified Retirement Savings Contributions.--For 
     purposes of this section, the term `qualified retirement 
     savings contributions' means the sum of--
       ``(1) the amount of the qualified retirement contributions 
     (as defined in section 219(e)) for the benefit of the 
     eligible individual,
       ``(2) the amount of the elective deferrals (as defined in 
     section 414(u)(2)(C)) of such individual, and
       ``(3) the amount of voluntary employee contributions by 
     such individual to any qualified retirement plan (as defined 
     in section 4974(c)).
       ``(e) Adjusted Gross Income.--For purposes of this section, 
     adjusted gross income shall be determined without regard to 
     sections 911, 931, and 933.
       ``(f) Investment in the Contract.--Notwithstanding any 
     other provision of law, a qualified retirement savings 
     contribution shall not fail to be included in determining the 
     investment in the contract for purposes of section 72 by 
     reason of the credit under this section.
       ``(g) Transitional Rules.--In the case of taxable years 
     beginning before January 1, 2008--
       ``(1) Contribution limit.--Subsection (a) shall be applied 
     by substituting for `$2,000'--
       ``(A) $600 in the case of taxable years beginning in 2002, 
     2003, or 2004, and
       ``(B) $1,000 in the case of taxable years beginning in 
     2005, 2006, or 2007.
       ``(2) Applicable percentage.--The applicable percentage 
     shall be determined under the following table (in lieu of the 
     table in subsection (b)):

 
----------------------------------------------------------------------------------------------------------------
                                      Adjusted Gross Income
-------------------------------------------------------------------------------------------------
          Joint return                  Head of a household               All other cases           Applicable
-------------------------------------------------------------------------------------------------   percentage
      Over           Not over          Over          Not over          Over          Not over
----------------------------------------------------------------------------------------------------------------
           $0          $20,000               $0         $15,000              $0         $10,000              50
       20,000           25,000           15,000          18,750          10,000          12,500              45
       25,000           30,000           18,750          22,500          12,500          15,000              35
       30,000           35,000           22,500          26,250          15,000          17,500              25
       35,000           40,000           26,250          30,000          17,500          20,000              15
       40,000    ...............         30,000   ..............         20,000   ..............           0.''
----------------------------------------------------------------------------------------------------------------

       
       (b) Conforming Amendments.--
       (1) Paragraph (2) of section 1324(b) of title 31, United 
     States Code, is amended by inserting before the period ``, or 
     from section 35 of such Code''.
       (2) The table of sections for subpart C of part IV of 
     subchapter A of chapter 1 of such Code is amended by striking 
     the last item and inserting the following new items:

``Sec. 35. Elective deferrals and IRA contributions by certain 
              individuals.
``Sec. 36. Overpayments of tax.''

       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 802. 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 1998 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 1998. 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, 2010.--
     Such term shall not include any expense in connection with a 
     plan established after December 31, 2009.
       ``(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

[[Page H6515]]

     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. 803. CREDIT FOR QUALIFIED PENSION PLAN CONTRIBUTIONS 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. 45E. SMALL EMPLOYER PENSION PLAN CONTRIBUTIONS.

       ``(a) General Rule.--For purposes of section 38, in the 
     case of an eligible employer, the small employer pension plan 
     contribution credit determined under this section for any 
     taxable year is an amount equal to 50 percent of the amount 
     which would (but for subsection (f)(1)) be allowed as a 
     deduction under section 404 for such taxable year for 
     qualified employer contributions made to any qualified 
     retirement plan on behalf of any nonhighly compensated 
     employee.
       ``(b) Credit Limited to 3 Years.--The credit allowable by 
     this section shall be allowed only with respect to the period 
     of 3 taxable years beginning with the taxable year in which 
     the qualified retirement plan becomes effective.
       ``(c) Qualified Employer Contribution.--For purposes of 
     this section--
       ``(1) Defined contribution plans.--In the case of a defined 
     contribution plan, the term `qualified employer contribution' 
     means the amount of nonelective and matching contributions to 
     the plan made by the employer on behalf of any nonhighly 
     compensated employee to the extent such amount does not 
     exceed 3 percent of such employee's compensation from the 
     employer for the year.
       ``(2) Defined benefit plans.--In the case of a defined 
     benefit plan, the term `qualified employer contribution' 
     means the amount of employer contributions to the plan made 
     on behalf of any nonhighly compensated employee to the extent 
     that the accrued benefit of such employee derived from such 
     contributions for the year do not exceed the equivalent (as 
     determined under regulations prescribed by the Secretary and 
     without regard to contributions and benefits under the Social 
     Security Act) of 3 percent of such employee's compensation 
     from the employer for the year.
       ``(d) Qualified Retirement Plan.--
       ``(1) In general.--The term `qualified retirement plan' 
     means any plan described in section 401(a) which includes a 
     trust exempt from tax under section 501(a) if the plan 
     meets--
       ``(A) the contribution requirements of paragraph (2),
       ``(B) the vesting requirements of paragraph (3), and
       ``(C) the distributions requirements of paragraph (4).
       ``(2) Contribution requirements.--
       ``(A) In general.--The requirements of this paragraph are 
     met if, under the plan--
       ``(i) the employer is required to make nonelective 
     contributions of at least 1 percent of compensation (or the 
     equivalent thereof in the case of a defined benefit plan) for 
     each nonhighly compensated employee who is eligible to 
     participate in the plan, and
       ``(ii) allocations of nonelective employer contributions 
     are either in equal dollar amounts for all employees covered 
     by the plan or bear a uniform relationship to the total 
     compensation, or the basic or regular rate of compensation, 
     of the employees covered by the plan.
       ``(B) Compensation limitation.--The compensation taken into 
     account under subparagraph (A) for any year shall not exceed 
     the limitation in effect for such year under section 
     401(a)(17).
       ``(3) Vesting requirements.--The requirements of this 
     paragraph are met if the plan satisfies the requirements of 
     subparagraph (A) or (B).
       ``(A) 3-year vesting.--A plan satisfies the requirements of 
     this subparagraph if 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 employer 
     contributions.
       ``(B) 5-year graded vesting.--A plan satisfies the 
     requirements of this subparagraph if an employee has a 
     nonforfeitable right to a percentage of the employee's 
     accrued benefit derived from employer contributions 
     determined under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
  1.............................................................20 ....

  2.............................................................40 ....

  3.............................................................60 ....

  4.............................................................80 ....

  5............................................................100.....

       ``(4) Distribution requirements.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     the requirements of this paragraph are met if, under the 
     plan--
       ``(i) in the case of a profit-sharing or stock bonus plan, 
     amounts are distributable only as provided in section 
     401(k)(2)(B), and
       ``(ii) in the case of a pension plan, amounts are 
     distributable subject to the limitations applicable to other 
     distributions from the plan.
       ``(B) Distributions within 5 years after separation, etc.--
     In no event shall a plan meet the requirements of this 
     paragraph unless, under the plan, amounts distributed--
       ``(i) after separation from service or severance from 
     employment, and
       ``(ii) within 5 years after the date of the earliest 
     employer contribution to the plan,

     may be distributed only in a direct trustee-to-trustee 
     transfer to a plan having the same distribution restrictions 
     as the distributing plan.
       ``(e) Other Definitions.--For purposes of this section--
       ``(1) Eligible employer.--The term `eligible employer' has 
     the meaning given such term by section 408(p)(2)(C)(i).
       ``(2) Nonhighly compensated employees.--The term `highly 
     compensated employee' has the meaning given such term by 
     section 414(q) (determined without regard to section 
     414(q)(1)(B)(ii)).
       ``(f) Special Rules.--
       ``(1) Disallowance of deduction.--No deduction shall be 
     allowed for that portion of the qualified employer 
     contributions paid or incurred for the taxable year which is 
     equal to the credit determined under subsection (a).
       ``(2) 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.
       ``(g) Recapture of Credit on Forfeited Contributions.--If 
     any accrued benefit which is forfeitable by reason of 
     subsection (d)(3) is forfeited, the employer's tax imposed by 
     this chapter for the taxable year in which the forfeiture 
     occurs shall be increased by 35 percent of the employer 
     contributions from which such benefit is derived to the 
     extent such contributions were taken into account in 
     determining the credit under this section.
       ``(h) Regulations.--The Secretary shall prescribe such 
     regulations as may be appropriate to carry out the purposes 
     of this section, including regulations to prevent the abuse 
     of the purposes of this section through the use of multiple 
     plans.
       ``(i) Termination.--This section shall not apply to any 
     plan established after December 31, 2009.''
       (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 (12), by 
     striking the period at the end of paragraph (13) and 
     inserting ``, plus'', and by adding at the end the following 
     new paragraph:
       ``(14) in the case of an eligible employer (as defined in 
     section 45E(e)), the small employer pension plan contribution 
     credit determined under section 45E(a).''
       (c) Conforming Amendments.--
       (1) Section 39(d) is amended by adding at the end the 
     following new paragraph:
       ``(9) No carryback of small employer pension plan 
     contribution credit before january 1, 2002.--No portion of 
     the unused business credit for any taxable year which is 
     attributable to the small employer pension plan contribution 
     credit determined under section 45E may be carried back to a 
     taxable year beginning before January 1, 2002.''
       (2) Subsection (c) of section 196 is amended by striking 
     ``and'' at the end of paragraph (8), by striking the period 
     at the end of paragraph (9) and inserting ``, and'', and by 
     adding at the end the following new paragraph:
       ``(10) the small employer pension plan contribution credit 
     determined under section 45E(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. 45E. Small employer pension plan contributions.''

       (d) Effective Date.--The amendments made by this section 
     shall apply to contributions paid or incurred in taxable 
     years beginning after December 31, 2001.

     SEC. 804. LIMITATION ON CATCH-UP CONTRIBUTIONS.

       (a) In General.--Section 414(v), as added by section 301, 
     is amended by adding at the end the following new paragraph:
       ``(6) Limitation.--This subsection shall apply with respect 
     to a participant for a year only if the participant is not a 
     highly compensated employee and certifies to the plan 
     administrator that the participant has been out of the 
     workforce for at least 2 of the preceding 7 years. A plan 
     shall not be treated as failing to meet the requirements of 
     this subsection by reason of reliance on an incorrect

[[Page H6516]]

     certification under this paragraph unless the plan 
     administrator knew, or reasonably should have known, that the 
     certification was incorrect.''
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2000.

     SEC. 805. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Early Retirement Limits for Certain Plans.--
     Subparagraph (F) of section 415(b)(2) is amended to read as 
     follows:
       ``(F) Multiemployer plans and plans maintained by 
     governments and tax exempt organizations.--In the case of a 
     governmental plan (within the meaning of section 414(d)), a 
     plan maintained by an organization (other than a governmental 
     unit) exempt from tax under this subtitle, a multiemployer 
     plan (as defined in section 414(f)), or a qualified merchant 
     marine plan--
       ``(i) subparagraph (C) shall be applied--

       ``(I) by substituting `age 62' for `social security 
     retirement age' each place it appears, and
       ``(II) as if the last sentence thereof read as follows: 
     `The reduction under this subparagraph shall not reduce the 
     limitation of paragraph (1)(A) below (i) 80 percent of such 
     limitation as in effect for the year, or (ii) if the benefit 
     begins before age 55, the equivalent of such 80 percent 
     amount for age 55.', and

       ``(ii) subparagraph (D) shall be applied by substituting 
     `age 65' for `social security retirement age' each place it 
     appears.

     For purposes of this subparagraph, the term `qualified 
     merchant marine plan' means a plan in existence on January 1, 
     1986, the participants in which are merchant marine officers 
     holding licenses issued by the Secretary of Transportation 
     under title 46, United States Code.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2000.

     SEC. 806. SENSE OF THE HOUSE OF REPRESENTATIVES REGARDING 
                   CASH BALANCE PENSION PLAN CONVERSIONS.

       (a) Findings.--The House of Representatives finds the 
     following:
       (1) Defined benefit pension plans are guaranteed by the 
     Pension Benefit Guaranty Corporation and provide a lifetime 
     benefit for a beneficiary and spouse.
       (2) Defined benefit pension plans provide meaningful 
     retirement benefits to rank and file workers, since such 
     plans are generally funded by employer contributions.
       (3) Employers should be encouraged to establish and 
     maintain defined benefit pension plans.
       (4) An increasing number of major employers have been 
     converting their traditional defined benefit plans to ``cash 
     balance'' or other hybrid defined benefit plans.
       (5) Under current law, employers are not required to 
     provide plan participants with meaningful disclosure of the 
     impact of converting a traditional defined benefit plan to a 
     ``cash balance'' or other hybrid formula.
       (6) For a number of years after a conversion, the cash 
     balance or other hybrid benefit formula may result in a 
     period of ``wear away'' during which older and longer service 
     participants earn no additional benefits.
       (7) Federal law prohibits pension plan participants from 
     being discriminated against on the basis of age in the 
     provision of pension benefits.
       (b) Sense of the House.--It is the sense of the House of 
     Representatives that pension plan participants whose plans 
     are changed to cause older or longer service workers to earn 
     less retirement income, including conversions to ``cash 
     balance plans'', should receive additional protection under 
     the Internal Revenue Code of 1986 than what is currently 
     provided, and Congress should act this year to address this 
     important issue. In particular, the tax laws, at a minimum, 
     should provide that--
       (1) all pension plan participants receive adequate, 
     accurate, and timely notice of any change to a plan that will 
     cause participants to earn less retirement income in the 
     future; and
       (2) pension plans that are changed to a cash balance or 
     other hybrid formula not be permitted to ``wear away'' 
     participants' benefits in such a manner that older and longer 
     service participants earn no additional pension benefits for 
     a period of time after the change.

  The SPEAKER pro tempore. Pursuant to House Resolution 557, the 
gentleman from Massachusetts (Mr. Neal) and a Member opposed each will 
control 30 minutes.
  The Chair recognizes the gentleman from Massachusetts (Mr. Neal).
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  In the last hour, we have really gone through I think a very helpful 
exercise, and that is to point out that the differences are really not 
that large as currently proposed.

                              {time}  1145

  Even though the differences are not large, they remain for low-income 
and moderate-income workers substantial. If we let this get away from 
us in its current form, if the President were to sign this legislation, 
which I suggest that he will not, we would find ourselves quickly 
coming back to an issue in succeeding sessions of the Congress on how 
to deal with what is the most prickly part of the problem, and that is 
how do we get low-income wage earners into a pension system? How do we 
provide the necessary incentives for employers to do precisely that? 
How do we speak to moderate-income workers who find themselves perhaps 
in mid-life without the benefits of a pension plan as well?
  The amendment today that we offer in the nature of a substitute would 
accomplish this goal by encouraging individuals, all workers, to save 
better for retirement through adding retirement savings accounts as 
proposed by the President and the Secretary of the Treasury, Mr. 
Summers. This proposal would provide a refundable credit to low- and 
middle-income workers who participate in an employer-sponsored pension 
plan or an individual retirement account. The credit would equal up to 
50 percent of the annual contribution allowed under a traditional IRA.
  Let me say that 2 years ago, the gentleman from California (Mr. 
Thomas) and I led the fight here in a bipartisan manner on this floor 
in support of the Roth IRA. I hold no intransigence or opposition to 
the nature of expanding individual retirement accounts. I think that 
there is significant data, however, that indicates that the problem 
with IRAs is they tend to reward those who already have the ability to 
save for retirement. No problem with getting more people in, but at the 
same time we want to extend this benefit to low- and moderate-income 
workers.
  Under this proposal, eligible taxpayers would receive an immediate 
credit equal up to $300, which would be phased up to $1,000. When fully 
phased in, individuals filing a joint return with adjusted gross income 
up to $75,000 would be eligible for the credit. Taxpayers filing as 
heads of households with an adjusted gross income of up to $56,000 
would be eligible for the credit as well, and individuals filing as 
single would receive the credit if their adjusted gross income does not 
exceed $37,500.
  Now, we have once again an opportunity in the closing days of this 
Congress to accomplish something that is very important to average 
Americans, and that is the opportunity, given the uncertainty that so 
many people feel about pension benefits that are allegedly set aside, 
we have watched the collapse in different States across the country of 
pension benefits and it is clearly an issue that is on the minds of the 
American people. So I ask in the spirit of bipartisanship that we take 
an opportunity in the next 6 weeks as the Congress adjourns to come 
back here in September, refreshed and energetic, with the goal of some 
tangible achievements.
  I would alert the Members of Congress again that President Clinton 
has argued, through Secretary Summers, that he will not sign this 
legislation into law. That should be the stop sign that we all see at 
the intersection. Let us come back and revisit it. I think the 
gentleman from Ohio (Mr. Portman) has done a commendable job. I think 
the gentleman from Maryland (Mr. Cardin) has done a commendable job. 
The problem is that they have, in my judgment, not accomplished enough 
for moderate- and low-income workers.


Modification of Amendment in the Nature of a Substitute Offered by Mr. 
                         Neal of Massachusetts

  Mr. NEAL of Massachusetts. Mr. Speaker, I ask unanimous consent to 
modify this amendment. The modification is at the desk.
  The SPEAKER pro tempore (Mr. Ose). The Clerk will report the 
modification.
  The Clerk read as follows:

       Modification to amendment offered by Mr. Neal of 
     Massachusetts:
       Strike out section 804, and renumber succeeding sections 
     accordingly.

  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts that the amendment in the nature of a 
substitute be modified?
  Mr. PORTMAN. Mr. Speaker, reserving the right to object, I would just 
like to get a quick explanation of the legislation.
  Mr. NEAL of Massachusetts. Mr. Speaker, will the gentleman yield?
  Mr. PORTMAN. I yield to the gentleman from Massachusetts.

[[Page H6517]]

  Mr. NEAL of Massachusetts. Mr. Speaker, I would say to the gentleman 
from Ohio (Mr. Portman), my understanding is that this was not part of 
the amendment as proposed; that it was supposed to be deleted last 
evening and it was not.
  Mr. PORTMAN. Is this on the catch-up provisions?
  Mr. NEAL of Massachusetts. Yes, it is.
  Mr. PORTMAN. I think this House ought to give unanimous consent to 
this. This essentially, as I understand it, would move the Democrat 
substitute into a similar position of where the underlying legislation 
is with regard to catch-ups. Is that correct?
  Mr. NEAL of Massachusetts. Yes, that is correct.
  Mr. PORTMAN. Otherwise, we would be gutting the catch-up provisions 
in the Democrat substitute, which none of us want to do.
  Mr. NEAL of Massachusetts. This was supposed to be deleted last 
evening; and it is my understanding, based upon what the staff tells 
me, that it simply was a miscalculation.
  Mr. PORTMAN. Mr. Speaker, I withdraw my reservation of objection. I 
think we ought to agree with the gentleman and give him unanimous 
consent.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  The SPEAKER pro tempore. Does the gentleman from Ohio (Mr. Portman) 
claim the time in opposition?
  Mr. PORTMAN. Yes, Mr. Speaker. I am opposed to the substitute and 
would claim the time in opposition.
  Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. 
Horn).
  Mr. HORN. Mr. Speaker, a few months ago a constituent wrote me about 
him and his wife. They had been burdened 20 years before with student 
loans, and they had only recently paid them off. They never had a 
chance to vest money into an Individual Retirement Account. I 
introduced H.R. 3620, the Second Chance IRA Act, to allow workers to 
make up for years when they missed out or simply failed to make IRA 
contributions.
  My legislation would have essentially doubled the IRA contribution 
and tax deductions from the current $2,000 to the $4,000 to catch up on 
those lost years.
  Before us is H.R. 1102. It has provided a similar ``catch-up.'' This 
bill would allow those workers to immediately contribute up to $5,000 a 
year to an IRA. That achieves a good part of the goal to encourage a 
buildup of savings for workers who are nearing retirement and never had 
the opportunity to invest in an IRA.
  I thank the gentleman from Texas (Mr. Archer), the gentleman from 
Ohio (Mr. Portman), and the gentleman from Maryland (Mr. Cardin) for 
their bipartisan effort which resulted in this legislation.
  It is an important help for the women who are retiring and reentering 
the workforce after raising a family, and for many other Americans who 
want and need a significant retirement savings account so they can have 
security in their golden years.
  Let us help retirement.
  Let us encourage saving.
  Let us vote for H.R. 1102.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 5 minutes to the 
gentleman from Maryland (Mr. Cardin), who I indicated earlier has done 
a terrific job with the legislation, and our difference here is a small 
one. We have time to correct it. He has done a good job with this work.
  Mr. CARDIN. Mr. Speaker, I thank the gentleman from Massachusetts 
(Mr. Neal) for yielding me this time.
  Mr. Speaker, let me point out that the Democratic substitute is an 
add-on to the underlying Portman-Cardin H.R. 1102 legislation. By that 
I mean that all of the provisions of H.R. 1102 remain if one votes for 
the Democratic substitute. It adds some additional provisions to 
provide more incentives for particularly low-wage workers to be able to 
put money away for their retirement.
  When the gentleman from Ohio (Mr. Portman) and I started working on 
this legislation 3 years ago, we were very sensitive to the fact that 
we had not balanced the Federal budget and that we should be very 
cautious on the use of tax revenues. We were very conservative in our 
approach. Quite frankly, we did not think that there would be as much 
money available for savings incentives as now appears to be the case as 
we start considering legislation, not only to reform our pension laws 
but to reform Social Security and the ability of individuals to have 
private accounts, whether they are part of Social Security or 
independent add-ons to Social Security.
  So I think the discussion has changed somewhat.
  The Democratic substitute provides for retirement savings accounts. 
That will help low-wage workers. Let me indicate some of the problems 
that we encountered as we worked on H.R. 1102. We were looking for ways 
to help low-wage workers and to help young workers, because the truth 
is young workers and low-wage workers are very difficult to get their 
attention to put money away for savings. I am proud of the provisions 
in the underlying bill that will help low-wage workers and will help 
young workers, because the underlying bill encourages employers to 
sponsor retirement plans and to use some of the same tools that we use 
in the thrift savings by offering employer contribution to retirement 
and to offer match by employer. That is good and that will help, and 
that is why this is an important bill.
  The RSAs go to the next step and say let us have the government as a 
partner in providing incentives for particularly lower-wage workers to 
set up their own retirement funds.
  There is another important part to the Democratic substitute I would 
like to mention, and that is the provision that deals with small 
business, small business credits. It was actually in the Portman-Cardin 
bill, H.R. 1102; and as has been pointed out in a little bit earlier 
debate, I hope it does make its way into the bill as it works its way 
through Congress. The gentlewoman from Michigan (Ms. Stabenow) first 
introduced this bill, H.R. 1021, that provides this credit.
  We have incorporated it in the Democratic substitute. It was in H.R. 
1102, and I think it is an improvement to add an additional tool for 
small business to set up pension plans. There is already important 
provisions in H.R. 1102 that are going to help small business. This 
improves it.
  So, basically, the substitute is an improvement of the underlying 
bill and spends a lot more money than the underlying bill that we did 
not want to do when we originally looked at H.R. 1102. So I hope my 
colleagues will look favorably upon this substitute. I think it does 
provide a bridge for us to ultimately work out an arrangement with the 
White House on tax legislation.
  I hope regardless of how one feels on the Democratic substitute, and 
I do hope that they will support it, I hope they will support the 
underlying bill.
  I think this legislation is extremely important. I think we can 
improve it with the substitute; but regardless of what happens with the 
substitute, I urge my colleagues to support the legislation so that we 
can move forward to help secure retirement for those people when they 
retire.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Florida (Mr. Foley), a member of the Committee on Ways and Means who 
has been a leader on retirement security.
  Mr. FOLEY. Mr. Speaker, let me first thank the gentleman from Ohio 
(Mr. Portman) and the gentleman from Maryland (Mr. Cardin) for their 
excellent work on this legislation that is important to all Americans.
  Relative to the substitute retirement savings account, let me make 
certain people understand this is a new proposal. This has not been 
vetted yet. In fact, we first saw this proposal during markup and it 
has since been modified so we are still trying to grapple with the 
underlying assumptions that are made in the request.
  The first we heard about it was the President's State of the Union 
address and budget proposal. So we have a lot to work out before we 
accept the substitute.
  Let me again answer another claim that was made during debate 
relative to IRAs. Low- and middle-income Americans use IRAs to save for 
retirement. This is an absolute certainty. In fact, the median income 
of new IRA contributors dropped from $41,277 in 1982 to $28,677 in 
1986. The vast majority of taxpayers making IRA contributions are 
lower- and middle-income

[[Page H6518]]

Americans. The inflation rate would have brought it to $5,000 today had 
it been adjusted, but it has had one increase, one increase alone from 
$1,500 to $2,000.
  This very bill encapsulates an option to bring it up to $5,000, which 
I think is significantly important.
  One of the greatest fears most Americans have is will they have 
enough savings and money to retire comfortably to take care of their 
health care needs, purchase prescription drugs, do the things that are 
required as one ages. This bill, a bipartisan bill, provides that kind 
of opportunity.
  Let me also underscore that there are 106 Republican co-sponsors and 
94 Democrats, for a total of 200 Members of the House of 
Representatives, that support this initiative. I am delighted today to 
at least hear positive things about a bill in Congress coming out of 
the Committee on Ways and Means. Oftentimes these bills we introduce 
are derided as reckless and risky. Today, we are hearing a celebration 
of bipartisanship on this floor talking about legislation that will 
advance the opportunities of all Americans, and I celebrated that. I am 
thrilled and delighted that this House finally has the common voice in 
supporting legislation authorized and issued by the committee, and I 
congratulate again the gentleman from Ohio (Mr. Portman) for his fine 
work on this proposal.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the 
gentleman from California (Mr. Matsui), a senior and distinguished 
member of the Committee on Ways and Means who is well known for his 
work on retirement savings.

                              {time}  1200

  Mr. MATSUI. Mr. Speaker, I thank the gentleman from Massachusetts for 
yielding me this time.
  I would like to congratulate the gentleman from Ohio (Mr. Portman) 
and certainly the gentleman from Maryland (Mr. Cardin). They made a 
good try and made a good effort on this legislation.
  However, I have to say that there are fundamental flaws in this 
legislation. First of all, it does make significant changes, although 
the authors talk about technical changes, in the top-heavy rules and 
the anti-discrimination rules. But these changes are actually 
substantive changes and, in fact, what they will do is make it more 
difficult for lower- and middle-income wage earners, employees, to be 
able to get pension benefits.
  In addition, statistically, a number of outside groups, because we do 
not have a joint tax committee distribution table, but a number of 
outside groups have said that the top 10 percent of the taxpayers will 
get 62 percent of the benefits in this legislation, and that is taking 
into consideration the additional employees that will be covered under 
the original Portman-Cardin legislation. But this is not unusual, 
because all of the tax bills that we have seen coming from my 
Republican colleagues over the last 4 or 5 months have been basically 
for upper-income folks anyway. So I would not make that as a major 
argument. The marriage penalty and all of these others have been 
basically for them.
  But it is very important that if this legislation passes, and I 
believe it will, that we add on the substitute provisions here. Because 
at least then, it will help the distribution of where the benefits will 
go and it will actually then, in fact, help wage earners and not the 
top management employees or the employers themselves.
  But nevertheless, this bill is a bill that if it is unchanged, is not 
a good piece of legislation.
  Let me just conclude by making one observation. There was an add-on 
to this bill. Right now, people that want to have IRAs can have up to 
$2,000 per individual per year on IRA accounts, individual retirement 
accounts. This will increase that number to $5,000. So a couple will be 
able to then put $10,000 a year into an IRA.
  Now, I will tell my colleagues that there are not many Americans that 
even put $4,000 a year into IRAs. This means that a small business 
owner will probably say, I will just eliminate my entire pension 
program, because why should I give to my employees and share my 
profits? Why not just take two IRAs out at $5,000 each, husband and 
wife, and essentially then, I can take care of my retirement and let my 
employees deal with it themselves. So to a large extent, this 
legislation will actually reduce, in my opinion, the opportunities for 
small business to cover their employees. That is why this legislation 
standing by itself is not a good piece of legislation. It will be 
vetoed by the President if it stands by itself, and that is why this 
substitute is so critical to make this legislation work and to make 
sure that we take care of the average American taxpayer.
  Mr. PORTMAN. Mr. Speaker, I yield myself 15 seconds to respond 
briefly to my friend from California. The intent of this legislation 
is, of course, just the opposite. It is to expand pension coverage to 
small businesses. It is an interesting theory that he plays out; but if 
we are to take the facts, it would be that that small business owner 
could put $20,000 aside now, $15,000 plus $5,000 catch-up for himself 
and if his spouse or her spouse is working, another $20,000. So it does 
not seem to make much sense to shift over to the IRA. If we were just 
increasing IRAs, the gentleman might have a good point.
  Finally, of course, this goes to middle-income workers. We have 
already talked about that, both on the IRA side and the 401(k) side.
  Mr. Speaker, I yield 3 minutes to the gentleman from Ohio (Mr. 
Boehner), the chair of the Subcommittee on Employer-Employee Relations, 
who has been a leader in expanding pension coverage and reforming 
ERISA.
  Mr. BOEHNER. Mr. Speaker, let me thank the gentleman from Ohio (Mr. 
Portman) and congratulate both him and the gentleman from Maryland (Mr. 
Cardin) for their tireless work over the last 3 years of bringing this 
bill to the floor.
  Clearly, improving retirement security is a top priority this year, 
as Congress works to secure America's future. But improving retirement 
security is just not about fixing Social Security. It is also about 
expanding access to private pensions and making innovations that will 
maximize every American's opportunity for a safe and secure retirement.
  I want to commend the gentleman from Texas (Mr. Archer) for his work 
in crafting this bill along with the two authors and for all of his 
efforts in this and past Congresses relating to retirement security and 
improving our Nation's Tax Code to the benefit of all Americans.
  Rarely has an ambitious legislation such as this earned such broad 
support from the AFSCME and Teamsters and other labor unions, to the 
U.S. Chamber of Commerce, the National Federation of Independent 
Business and other folks in the private sector. As I said earlier, I 
think it is a real tribute to the two authors, the gentleman from Ohio 
(Mr. Portman) and the gentleman from Maryland (Mr. Cardin) and the work 
that they have done.
  The reforms in this bill will directly improve the retirement 
security of millions of workers by expanding small business retirement 
plans, allowing workers to save more, making pensions more secure, and 
cutting red tape, that have hamstrung employers who want to establish 
pension plans for their employees.
  Mr. Speaker, H.R. 1102 was reported out of the Committee on Education 
and the Workforce on July 14, 1999 with a bipartisan vote. Our 
committee made amendments to the Employee Retirement Income Security 
Act, or ERISA, as we know it, that complement the Tax Code provisions 
that are on the floor today. And while the ERISA provisions were 
removed by the Committee on Rules for procedural reasons, the gentleman 
from Texas (Mr. Archer) has pledged to seek the restoration in 
conference, and I thank the gentleman for this commitment and I look 
forward to working with him to ensure enactment of H.R. 1102.
  Mr. Speaker, we have a new world that we are living in today. As 
people retire, they are living much longer than anyone had ever 
anticipated; and if we want to make sure that people have safe and 
secure retirements, they are going to need more assets than our parents 
did when they retired. As a result, we all know about the three legs of 
the retirement security stool: Social Security, private pensions, and 
personal savings.
  The bill we have before us today makes important strides in making 
sure that people have safe and secure

[[Page H6519]]

private pension plans and expands access to them, especially by small 
business owners. The incentives in this bill to expand the amount of 
money that can be set aside for private savings is also very important. 
Clearly, shoring up Social Security for the long term is something that 
we know is going to have to be done in the next Congress.
  Just today, Mr. Speaker, the subcommittee that I chair, the 
Subcommittee on Employer-Employee Relations, moved out a bill that 
would expand investment advice provided by employers to their 
employees. It is another piece to this puzzle to help employees give 
them all of the advice and effort that they need to maximize their 
private pensions.
  So I encourage my colleagues today to support the bill.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 4 minutes to the 
gentleman from North Dakota (Mr. Pomeroy), whose work in pension 
security is well known to all Members of this House. In fact, I would 
submit that there are very few, if any, Members of this House that have 
more knowledge on this issue.
  Mr. POMEROY. Mr. Speaker, I rise in response to a preceding speaker 
who said the Democrat substitute has not been vetted. It is based 
essentially on a proposal known as First Credit which I introduced last 
Congress and I introduced this Congress. We do not run the Committee on 
Ways and Means, but there have certainly been proposals out there to 
gear savings incentives to modest- and middle-income households to 
accelerate the rate of savings, and any fair-minded look at the savings 
issue in this country would identify that the lower-income, modest-
income, middle-income levels are having the harder time saving.
  Let me just say about the underlying legislation, the problem is not 
so much what is in it; the problem is what is left out. That is why the 
Democrat substitute is additive, not detractive. It does not change the 
underlying bill; it adds to it in a very important way, savings 
incentives for families who need it.
  We have learned that the underlying bill addresses workplace savings. 
That is great, except half of the people in the workforce today have no 
workplace savings, half have no workplace savings. As we get down to 
lower levels of earnings, the percentage goes up. In fact, 70 percent 
of workers earning under $15,000 have no workplace savings in the 
workplace, 70 percent. Portman-Cardin will not relate to that group.
  We know that the other second major component of the legislation is 
the IRA, taking the IRA from $2,000 to $5,000. Treasury data tells us 
that 93 percent of those eligible to use the tax deductible IRA, those 
earning $50,000 and below, do not use it as of 1995. Mr. Speaker, 93 
percent. It is used by only 7 percent.
  So if a family cannot afford to save $2,000 a year, our response 
saying, well, great, now you can save $5,000 a year is completely 
ridiculous. It misses the point. They need additional help. That is 
what our substitute offers, a tax credit on savings. For those income 
eligible, we would match 50 percent of the contribution. I consider 
this like an ``Uncle Sam'' match, much like an employer match on 
savings incentives. You save $2,000, the IRA tax credit of $1,000, 
matching your savings effort. I believe that this will accelerate 
savings for those most needing to save.
  This chart shows that savings rates is related to income. Twenty-
three percent earning between $15,000 and $25,000 are projected to be 
saving enough for retirement, whereas well over 60 percent earning over 
$100,000 are saving at the savings rate. We know that this tax credit 
incentive on savings will work because it is modeled after the savings 
incentive most effective in the marketplace, the 401(k) match. When 
employers provide savings opportunities with no match, 65 percent save. 
When there is a 50 percent match like this bill would provide, there is 
a 78 percent response in saving.
  As Members of Congress, we have access to the Thrift Savings Plan and 
the Federal Government matches our savings contribution 100 percent on 
the dollar. Do we not think it is only fair that we extend a match 
opportunity to American workers who have no savings at the workplace 
and no opportunity to save in light of sparse discretionary dollars.
  This is a tax cut, but it is tax relief to those who need it most, 
those earning up to $80,000 a year, struggling to save for retirement. 
It is time we take this step. Last Congress we passed the Roth IRA, we 
increased the limits on the spousal IRA. We did a lot of things for a 
lot of people, but we did not do anything new by way of savings 
incentives for those earning $50,000 and below.
  Mr. Speaker, it is time we take this step, and that is what the 
substitute is all about.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
Maryland (Mrs. Morella).
  Mrs. MORELLA. Mr. Speaker, I thank the gentleman for yielding me this 
time. I want to thank him and congratulate him for his diligent work 
over a long period of time on this important legislation.
  My accolades also to the gentleman from Maryland (Mr. Cardin) for the 
work that he has done, the fine work in a very bipartisan manner.
  I am a cosponsor of H.R. 1102, and I rise in strong support of it, 
because it addresses the retirement savings gap by expanding small 
business retirement plans, allowing workers to save more, addressing 
the needs of an increasingly mobile workforce through portability and 
other changes, making pensions more secure, cutting the red tape that 
has hamstrung employers who want to establish pension plans for their 
employees.
  Mr. Speaker, we all know that incentives are necessary to increase 
retirement savings for all Americans. Our savings rate is much too low 
to ensure the retirement security of American families. Statistics 
indicate that a typical household would need to triple its rate of 
asset accumulation in order to finance its retirement. Simply put, the 
current savings rate is not sufficient to fund retirement expenditures.
  Even more alarming is that the U.S. personal savings rates dropped 
6.3 percent of GDP in 1960 through 1980, to 4.1 percent in 1991 through 
the first quarter of this year, 2000. We need to take action now. H.R. 
1102 provides incentives for reversing this alarming trend.
  Mr. Speaker, I want to point out something else that needs to be done 
in this legislation. Unfortunately, the legislation does not address 
the unfair situation which exists under current law in which Federal 
employees are prohibited from saving for their retirement in the same 
manner as private sector 401(k) plans. Currently, FERS employees can 
contribute up to 10 percent of their salary with a government match of 
up to 5 percent, and CSRS employees can invest up to 5 percent of their 
salary.
  For example, a FERS employee earning $35,498 per year may only 
contribute $3,550 annually into his or her Thrift Savings Plan account, 
while someone in the private sector earning the same amount may 
contribute $6,450 more annually into their 401(k) account.
  Mr. Speaker, I have introduced legislation, H.R. 483, the Federal 
Thrift Savings Enhancement Act, which would eliminate that 10 percent 
and 5 percent restrictions and allow all Federal employees to make TSP 
contributions up to the IRS limit without changing the government 
contribution. This is fair and equitable.
  Mr. Speaker, I would hope that during the conference on this 
legislation, our Federal workforce will be taken into consideration and 
the provisions of H.R. 483 will be included in the final conference 
report.

                              {time}  1215

  It is important. It is equitable. Let us pass the bill and add that 
provision.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 5 minutes to the 
gentleman from Missouri (Mr. Gephardt), the highly effective minority 
leader in this House.
  (Mr. GEPHARDT asked and was given permission to revise and extend his 
remarks.)
  Mr. GEPHARDT. Mr. Speaker, I rise to argue that this reform bill is 
in many ways a very good example of bipartisan legislation, and all of 
us I think can agree that tax incentives for retirement savings are 
needed, warranted, the right thing to do for our workers, and good for 
our country in general.
  But as currently written, I think this reform bill is flawed, or not 
including

[[Page H6520]]

enough features that should be included, because it targets simply 
those Americans who need incentives for saving the least: corporate 
executives, managers, big business owners.
  This legislation, as the Center on Budget Policy and Priorities wrote 
recently, ``would substantially expand pension tax preferences for 
high-income executives, but likely lead to reductions in pension 
coverage among low- and moderate-income workers and employees of small 
businesses.''
  I am not opposed to helping upper-income Americans by raising the 
ceilings on their annual IRA contributions. These men and women have 
worked hard and deserve their piece of the pie. But I am very afraid 
that with this bill, as with many of the tax-cutting measures that we 
have seen in this Congress, we have lost sight of our principal 
challenge and concern. We have lost sight of our goal to provide tax 
relief for middle-income Americans and very small businesses, the men 
and women who really deserve a real reduction in their income taxes.
  The greatest failing of this bill is that it does little to encourage 
retirement saving by lower- and middle-income workers, those Americans 
who simply are not saving enough because they do not have enough to 
save.
  We have offered an alternative that we think addresses this 
shortcoming and that rights the playing field so middle-income 
Americans, not just the well off, receive the lion's share of 
incentives to boost their retirement accounts.
  We have offered an amendment, supported by the administration, that 
will create retirement savings accounts in which the government will 
give refundable tax credits to the retirement accounts of millions of 
Americans.
  Our amendment caps the level at which people can receive the tax cut 
at $75,000, so that the bulk of the incentives to invest in retirement 
accounts flow to the middle-income group. Our amendment provides tax 
credits to small businesses of up to 50 percent of the start-up and 
initial administration costs to set up businesses.
  I have said many times in the last several weeks and I will say 
again, I believe that all of us, Democrats and Republicans, can come 
together, negotiate on the issues of taxes and spending, hammer out tax 
cuts that help the vast majority of Americans, while making sure that 
we address the issues that concern the American people the most: paying 
down the debt, strengthening social security and Medicare, providing a 
real prescription medicine reform, and sending the President a total 
budget that he can sign.
  I ask all of us to work together to amend this legislation so that it 
truly benefits Americans most in need of tax relief; that we fashion 
these other tax bills so that the President will sign them, and the 
middle-income Americans and Americans trying to get in the middle class 
will get the bulk of the help; and that we enact these other reforms, 
like prescription drugs, medicine, a Patients' Bill of Rights, a 
minimum wage increase, doing something that is sensible about gun 
safety, trying to get smaller classroom sizes, which are the issues, 
along with tax cuts, that really have attracted the interest of the 
American people.
  So I ask Members to vote for our alternative. Let us get a good piece 
of legislation done that can get the support of the administration and 
the bulk of the American people.
  Mr. PORTMAN. Mr. Speaker, I yield myself 15 seconds.
  I would like to say I agree with the minority leader, we need to work 
on a bipartisan basis to come together. That is what we have done here 
over the last 3 years. We have over 200 cosponsors, almost equally 
divided.
  Second, I want to assure him that we have indeed not lost sight of 
the need to help middle- and lower-income categories. That is precisely 
where we target this legislation.
  Mr. Speaker, I yield 2\1/2\ minutes to the gentleman from Arizona 
(Mr. Hayworth), a member of the Committee on Ways and Means.
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague for yielding time to 
me, and I thank my friends, the gentleman from Ohio (Mr. Portman) and 
the gentleman from Maryland (Mr. Cardin), who have brought forth this 
commonsense bipartisan piece of legislation.
  Mr. Speaker, I listened with great interest to my friend, the 
minority leader, and coincidentally, I want to wish him well in future 
endeavors that may extend beyond this House, as the Vice President of 
the United States may be looking for a partner in the upcoming general 
election, and want to salute him for coming out with a poll-tested 
speech.
  Mr. Speaker, when all is said and done, I rise in opposition to the 
Democrat alternative and rise in strong support of our bipartisan bill 
with 200 cosponsors. I sympathize with the minority leader, because he 
is finding himself in a situation where we have sought consensus and 
compromise, we have come up with a commonsense piece of legislation 
that encourages savings accounts, that protects and builds pension 
plans.
  So with this constructive piece of legislation, and now confronting 
an election, what is a minority party to do? Well, of course, stand and 
offer the curious paradox to say, we want cooperation, but this is not 
good enough.
  Therein lies the fundamental problem. We encourage personal savings 
for every American. Our friends on the left in the substitute say, if 
you are American, you exist; therefore, you are entitled. It is not 
enough for one's personal initiative. No, the Federal government needs 
to step in with a plan that, by the way, as cobbled together here, is 
eminently unworkable. They ask their friends at the Internal Revenue 
Service to stick their magnifying glasses and microscopes into the 
affairs of Americans, because this very provision invites fraud. It 
appeals to what is the wrong course of action for Americans.
  We have a simple, straightforward plan. We strengthen pensions, we 
build retirement savings accounts, and we do not set up a Rube 
Goldbergesque machination of entitlement that over the next 10 years 
will cost close to a quarter of a trillion dollars.
  Support the underlying bill and reject the desperate Democrat 
substitute.
  Mr. PORTMAN. Mr. Speaker, I yield 4 minutes to the gentleman from 
Illinois (Mr. Crane), the chairman of the Subcommittee on Trade and an 
active member of the Committee on Ways and Means.
  Mr. CRANE. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I want to commend our two colleagues, the gentleman from 
Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin), for 
their work on this bill. This bill proves that Republicans and 
Democrats can work together in a bipartisan way to achieve worthwhile 
reforms.
  I note that the ranking member of the Committee on Ways and Means 
often urges us to work together in a bipartisan way, and I appreciate 
that input from him. I am hopeful that he, too, will strongly support 
this bill.
  This bill also proves that it can sometimes take more than one try to 
get important legislation passed. Members may have a sense of deja vu 
because we enacted this bill last year, only to have the President veto 
it. I hope this year he is able to sign this bill when it comes to his 
desk.
  This is important legislation, Mr. Speaker, for at least two other 
reasons. The first is that we must do everything we can to encourage 
savings in America. The figures say our private savings rate is very 
low. I suspect it is lower than it should be. But I am sure we would be 
better off saving more than we do.
  One way to do that is through fundamental tax reform, and that is 
just not in the cards right now. I hope we can focus on fundamental 
reform before long, perhaps with a change in administration.
  In the meantime, by rationalizing the laws relating to pensions, by 
making it easier for businesses, and especially small businesses to 
establish and maintain pension plans for their workers, this bill will 
encourage more businesses to establish pension plans and it will 
encourage more workers to participate. In the end, I believe private 
saving will result as a consequence.
  I also believe private saving will increase through the increase in 
the contribution limits on individual retirement accounts to $5,000. 
For individuals who do not have the benefit of an employer-based 
pension system this is terribly important. It is also, I would point 
out, a baby step towards tax reform.

[[Page H6521]]

  Why is that so important? Why is it so important that individuals 
save more? First, savings is the key to acquiring wealth. It is the key 
to financial security to us as individuals. Financial security enhances 
our sense of personal freedom.
  Second, the level of saving in America also goes a long way towards 
determining who owns the Nation's capital stock: the land, buildings, 
the plant, and equipment.
  We have a very high rate of investment right now that has contributed 
mightily to our rapid rate of economic growth. If Americans do not save 
enough to fund this capital expansion, then our open economy and 
advanced capital markets permit us to lure foreign savings to make up 
the difference.
  That is the good news. We can import the capital, the foreign savings 
necessary to keep our rate of investment high.
  The bad news is that that means that foreign savers reap the lion's 
share of the benefits from that investment. If Members want a sense of 
the magnitude of this effect, just look at our persistent and high 
trade deficit. Our trade deficit represents the flip side in the 
balance of payments to all of the capital we are importing from abroad.
  As we find ways to increase our rate of savings at home, at the very 
least we help Americans to own a greater share of the capital stock 
driving our economy.
  The second reason this bill is so important is because it strengthens 
the private pension leg of our national pension system at a time when 
the public leg of that system, social security, is under a cloud.
  We have heard about the troubled financial State of social security 
many times in the Committee on Ways and Means. Fortunately, we have the 
lockbox in place to keep the Congress from its former practice of 
spending the American workers' payroll taxes on anything but paying 
social security benefits. The lockbox performs a function very much 
like the medical profession's dictum: First, do no harm.
  The first step towards restoring social security's financial 
soundness is to keep Washington from spending payroll taxes on other 
programs. The lockbox achieves that goal. But beyond that, once again, 
it appears we must wait for the next administration to take on social 
security reform.
  Until then, and even after we have enacted social security reform, we 
must do everything we can to strengthen the private pension and savings 
system. That means eliminating unnecessary rules and regulations and 
other accumulated barnacles that have attached themselves to this part 
of the tax law.
  I want to thank our two colleagues for undertaking the hard work 
necessary to bring this to the floor, and urge our colleagues to 
support it.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
gentlewoman from New York (Mrs. Maloney), who is well known for her 
work on retirement savings.
  Mrs. MALONEY of New York. Mr. Speaker, I rise in support of the 
Democratic substitute, which would more fairly distribute the benefits 
to lower-income people, but also for the underlying comprehensive 
reform legislation.
  Mr. Speaker, we all know that our population is graying. Fifty years 
from now, more than 80 million people will be over the age of 65. In 
order to help retirees in the near term and many decades from now, it 
is critical that we provide them the maximum flexibility to supplement 
social security.
  While President Clinton's plans to dedicate surplus money to social 
security and Medicare are an important step in preserving these 
programs for the long-term, individuals should have a range of options 
for their retirement savings.
  This is especially true and important for women. Sixty percent of 
social security beneficiaries are women. Women are heavily reliant on 
social security benefits because women earn less than men and because 
they spend less time in the work force. Women live, on average, 7 years 
longer. Less than one-third of all women retirees over age 55 receive 
pension benefits, yet the typical American woman who retires can expect 
to live approximately 19 years longer.
  Women often choose to take time out of their working careers to 
attend to their families. This bill will allow them to catch up on 
their pension contributions and increase the yearly amount they can 
contribute to IRAs and 401(k) plans to make up for lost time, up to an 
additional $5,000 per year.
  I strongly support the fair Rangel substitute and urge my colleagues 
to support it, and the underlying bill.

                              {time}  1230

  Mr. PORTMAN. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman 
from California (Mr. Thomas), another distinguished member of the 
Committee on Ways and Means, chairman of the Subcommittee on Health, 
who has been very active on the IRA front for many years.
  (Mr. THOMAS asked and was given permission to revise and extend his 
remarks.)
  Mr. THOMAS. Mr. Speaker, first of all, the fact that we are on the 
floor today with a bipartisan proposal to reform the pension and the 
individual retirement accounts is quite an accomplishment, and I want 
to compliment the gentleman from Ohio (Mr. Portman) and the gentleman 
from Maryland (Mr. Cardin). It has been more than 20 years since we 
made an adjustment in this important savings area.
  I heard the gentleman from North Dakota (Mr. Pomeroy) say that the 
substitute had been looked at and that it was thoroughly understood. I 
do have to say it is fundamentally different than the President's 
initial offering. In fact, it is substantially different than the 
offering that the Democrats have presented in the Committee on Ways and 
Means just last week.
  Last week's offering cost $225 billion over 10 years on top of the 
fund. This one only costs $105 billion over 10 years. In one narrow 
particular area, the refundable credit, which was not in the 
President's initial budget proposal, cost $35 billion. So it is 
substantially different. It has not been aired in committee as this 
bipartisan proposal has.
  I heard the minority leader say that this plan simply did not treat 
low-income people fairly. Well, I know the gentleman from Maryland (Mr. 
Cardin), I know the gentleman from Maryland (Mr. Wynn), I know the 
gentleman from Kansas (Mr. Moore), I know the gentleman from Tennessee 
(Mr. Tanner), I know the gentlewoman from Florida (Mrs. Thurman), and I 
know the more than 100 Democrats who cosponsor this proposal. They 
would not cosponsor this proposal if it did not treat low-income people 
fairly.
  Now, I heard my friend from California give my colleagues an example 
of what would happen under this bill with the expanded IRAs and that, 
in fact, the employers, while looking out for their self-interest, 
could in fact damage the savings interest of their employees. The 
response we heard from the cosponsor was I think significant, and I 
want to make sure everyone understands it.
  This is a bipartisan proposal, precisely because, under all aspects 
of the bill, the employers maximize their benefit by utilizing all of 
the portions of the bill; and in pursuing their self-interest and 
maximizing it, it in fact maximizes the employees' savings 
capabilities.
  It is the way in which this proposal is integrated that makes it 
really superior. It is the product of the bipartisan working 
relationship. It is the best of what this House does.
  As far as the veto threat, around here we learn to read the tea 
leaves, and the tea leaves are very clear. The message was very clear, 
it did not say veto. It does not say veto. Treasury is trying to buy 
leverage. As a matter of fact, once this moves out of here with the 
bipartisan majority and off the floor of the Senate, the President does 
not dare veto this piece of legislation because the last thing he wants 
is an override of his veto.
  The way this piece of legislation was put together, frankly, the 
House owes a debt of gratitude to the gentleman from Ohio (Mr. Portman) 
and the gentleman from Maryland (Mr. Cardin) and all of those who have 
worked together to make these changes. They are long overdue. They are 
much appreciated. It fits our needs today.
  Vote no on the substitute, vote yes on H.R. 1102, and send the 
President a message. This Congress is working, and it is working for 
the American people in a bipartisan way.

[[Page H6522]]

  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, let me reiterate quickly, Secretary Summers has told me 
in a phone conversation he will recommend a veto of this legislation as 
currently proposed if it goes to the President's desk.
  Mr. Speaker, I yield 2 minutes to the gentleman from Vermont (Mr. 
Sanders), who worked on a recent pension case in the State of Vermont 
who has been an inspiration for all of us.
  (Mr. SANDERS asked and was given permission to revise and extend his 
remarks.)
  Mr. SANDERS. Mr. Speaker, I thank the gentleman from Massachusetts 
for yielding to me.
  Mr. Speaker, I rise in opposition to H.R. 1102. This bill is being 
touted as a package of pension provisions designed to increase pension 
benefits for Americans; yet some of the pension provisions included in 
the bill are simply new tax breaks that mostly accrues to the 
wealthiest Americans and may have the effect of slashing the pensions 
of lower- and middle-income families.
  Mr. Speaker, if Congress is really concerned about protecting the 
pensions of American workers, it should quickly address the cash 
balance pension rip-off scheme being implemented by hundreds of large 
corporations all over this country.
  Since 1985, despite large profits and growing surpluses in their 
pension funds, over 300 companies have slashed the retirement benefits 
that they promised their employees. Cash balance schemes typically 
reduce the future pension benefits of older workers by as much as 50 
percent. Not only is this immoral, it is also illegal, because the 
reductions in benefits are in violation of Federal age-discrimination 
laws.
  What makes the conversions even more indefensible is the fact that 
many of these companies have pension fund surpluses in the billions of 
dollars, and these surpluses have grown significantly in recent years.
  Frankly, it is simply unacceptable that, during a time of record-
breaking corporate profits, huge pension fund surpluses, massive 
compensations for CEOs, including, interestingly, very generous 
retirement benefits, that corporate America renege on the commitments 
that they have made to workers by slashing their pensions.
  Last year, I held a town meeting in Winooski, Vermont, for IBM 
workers, the older IBM workers who had seen their pensions cut by as 
much as 50 percent. Over 700 older workers came out and expressed their 
outrage at what the company had done. I congratulate the IBM workers 
and look forward to working with them.
  Mr. Speaker, I rise in opposition to H.R. 1102. This bill is being 
touted as a package of pension provisions designed to increase pension 
benefits for Americans. Yet some of the pension provisions included in 
the bill are simply new tax breaks that mostly accrue to the wealthiest 
Americans and may have the effect of slashing the pensions of lower and 
middle income families.
  Last November, Treasury Secretary Summers and Labor Secretary Herman, 
criticized these pension provisions, saying that they ``could lead to 
reductions in retirement benefits for moderate and lower-income 
workers.''
  Mr. Speaker, if Congress is really concerned about protecting the 
pensions of American workers it should quickly address the cash balance 
pension rip off scheme being implemented by hundreds of large 
corporations all over this country. In fact if this Congress is really 
concerned about protecting the pensions of American workers it should 
pass H.R. 2902, the Pension Benefits Preservation and Protection Act, 
legislation that I authored and that now has a total of 84 co-sponsors.
  Mr. Speaker, all across this country, American workers are deeply 
concerned about the status of their pension plans. That concern is well 
founded. Since 1985, despite large profits and growing surpluses in 
their pension funds, over 300 companies have slashed the retirement 
benefits that they promised their employees. Cash balance schemes 
typically reduce the future pension benefits of older workers by as 
much as 50 percent. Not only is this immoral, it is also illegal 
because the reductions in benefits are in violation of Federal age 
discrimination law. What makes the conversions even more indefensible 
is the fact that many of these companies have pension fund surpluses in 
the billions of dollars and that have grown huge in recent years.
  Frankly, it is simply unacceptable that during a time of record 
breaking corporate profits, huge pension fund surpluses, massive 
compensation for CEOs (including very generous retirement benefits), 
that corporate America renege on the commitments that they have made to 
workers by slashing their pensions.
  Last summer, I held a town meeting in Vermont for IBM workers who 
live there. Seven hundred came out.
  According to the Office of Management and Budget, corporations 
currently receive $100 billion a year in federal government subsidies 
through the tax code by offering pension plans. American taxpayers have 
a right to expect that corporations who take advantage of this special 
tax treatment will not slash the pensions of American workers.
  Yet, hundreds of corporations throughout the country from IBM to AT&T 
are doing just that by converting their traditional defined benefit 
pension plans to these cash balance schemes.
  Cash balance schemes are nothing but a replay of the corporate 
pension raids we experienced during the 1980's. While these companies 
claim that they are converting to cash balance plans to attract younger 
workers into their workforce, the fact of the matter is that cash 
balance plans are intentional attempts to slash the pension benefits of 
older workers.
  The reason why large corporations are targeting their older workers' 
pensions is easy to understand. Millions and millions of Americans in 
the so-called ``baby boom'' generation are rapidly approaching 
retirement age. Companies that reduce the pensions of older workers 
will thus realize tremendous cost savings when these people retire.
  Companies claim that they are converting to cash balance schemes to 
attract a younger, more mobile workforce. But, worker mobility is not 
the rationale for converting to a cash balance plan, money is. As 
11,000 people a day turn 50, which cash balance promoter Watson Wyatt 
claims will turn us into a ``Nation of Floridas,'' employers are 
looking for any way possible to reduce older workers' promised 
benefits. This is outrageous.
  But, what is even more outrageous is that they are not being honest 
to the employees whose pensions they are slashing. As Joseph Edmunds 
stated at a 1987 Conference of Consulting Actuaries, ``It is easy to 
install a cash balance plan in place of a traditional defined benefit 
plan and cover up cutbacks in future benefits.''
  Despite the protestations of cash balance promoters, cash balance 
schemes are implemented to unlawfully cut the benefits of older 
employees and to disguise those cuts by implementing a plan that makes 
it virtually impossible for employees to make an ``apples to apples'' 
comparison of their benefits under the old and new plans.
  Not only does the federal government need to enforce the laws that 
are on the books, Congress also must pass meaningful pension 
protections right now. That is why I introduced H.R. 2902. This 
legislation would primarily do three things:
  (1) It would send a directive to the Secretary of Treasury to enforce 
the laws that are already on the books;
  (2) It would provide a safe harbor making cash balance plans legal 
only if employees are given the choice to remain in their old pension 
plan with detailed disclosure; and
  (3) It would provide a major disincentive for companies to slash the 
future pension benefits of employees.
  Mr. Speaker, H.R. 2902 would provide meaningful pension protection to 
millions of Americans, unlike the current bill being considered right 
now. My legislation is being supported by the Pension Rights Center, 
the National Council of Senior Citizens, the Communications Workers of 
America, the IBM Employees Benefits Action Coalition, and several other 
groups. I urge my colleagues to defeat H.R. 1102, and work with me to 
pass real pension protection.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Louisiana (Mr. McCrery), a colleague on the Committee on Ways and Means 
who has been actively involved and a leader on this issue of expanding 
retirement savings.
  Mr. McCRERY. Mr. Speaker, I thank the gentleman from Ohio for 
yielding me this time, and I commend him on his efforts as well as 
those of the gentleman from Maryland (Mr. Cardin) in a bipartisan 
effort to improve pensions in this country.
  The gentleman from Vermont (Mr. Sanders) spoke about the cash balance 
programs, and it just so happens that the gentleman from Maryland (Mr. 
Cardin) and the gentleman from Ohio (Mr. Portman) recognize that there 
are some problems with those, and they call for full disclosure and 
transparency in those programs. The gentleman from Vermont ought to be 
supporting this bill.
  Mr. SANDERS. Mr. Speaker, will the gentleman yield?

[[Page H6523]]

  Mr. McCRERY. I am glad to yield to the gentleman from Vermont.
  Mr. SANDERS. Mr. Speaker, there are tens of thousands of IBM workers 
and millions of other workers who have seen significant reductions as 
the result of the conversion to cash balance. What will this 
legislation do for any one of those people?
  Mr. McCRERY. Mr. Speaker, reclaiming my time, if the gentleman from 
Vermont would allow me to reiterate that this bill does provide for 
accounting disclosure of every parcel of those plans so that those 
employees will have access to the information that they have not had 
access to in some of those situations that the gentleman from Vermont 
presents. So while this bill may not do everything the gentleman wants, 
it certainly improves the situation, and he should support that. But 
the gentleman from Vermont certainly should take some solace in the 
provisions that are in this bill.
  The substitute, on the other hand, is something that this House 
should not support for a couple of reasons. Number one, it has not been 
properly vetted. It was sprung on the Committee on Ways and Means for 
the first time last week, and today we have an even different version 
from that that was sprung on the Committee on Ways and Means just last 
week.
  It doubles the cost of the underlying bill, the new substitute does. 
The version that was sprung on us last week actually increased the cost 
by four or five times. Today's version only doubles the cost of the 
underlying bill.
  The substitute is patterned after the earned income tax credit. Now, 
while I support the EIC, we should know that, before we create yet 
another program based upon that concept, that the Taxpayer Advocate's 
1999 Annual Report to Congress identified the refundable earned income 
credit as one of the most serious problems facing taxpayers and the 
Internal Revenue Service in terms of its complexity, compliance, and 
litigation associated with it. Surely we do not want to double the 
problems with the IRS by creating a new program based on that concept.
  Number two, this proposal would give refundable tax credits only to 
people who cannot afford now to put part of their salaries forward. So 
it really would have no effect. It would not help those folks at all.
  This substitute, while well-intentioned is wrong headed. They came up 
with it very quickly to try to obfuscate the issue, try to detract 
attention from the fact that this is a bipartisan proposal. If the 
President wants to veto this, shame on him. We are finally doing what 
he asked us to do in a bipartisan way. He ought to sign it.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the 
gentleman from New York (Mr. Rangel), the distinguished leader of the 
Democratic members on the Committee on Ways and Means. He is very 
effective.
  (Mr. RANGEL asked and was given permission to revise and extend his 
remarks.)
  Mr. RANGEL. Mr. Speaker, the gentleman from Louisiana (Mr. McCrery), 
the previous speaker, said, if the President intends to veto this, 
shame on him. This really shatters the whole concept of the 
bipartisanship which the gentleman from Ohio (Mr. Portman) and the 
gentleman from Maryland (Mr. Cardin) had tried and continue to try to 
bring to this House.
  Whether the majority likes it or not, the President of the United 
States is a part of the equation. When he presented the retirement 
savings accounts to this Congress, it would seem to me that the 
majority, as well as the minority, should at least look at these 
concepts and to see what could be worked out for true bipartisanship.
  The whole idea that people would complain that the substitute had not 
passed the committee when, even yesterday, we had budget issues coming 
to the floor for votes that did not even come to the committee, this 
whole idea that Committee on Ways and Means issues and tax issues 
should come before the Committee on Ways and Means is relatively new. I 
thought my colleagues just went to the Committee on Rules for these 
issues to be before us.
  But I am convinced that those who put this bill together, if they had 
any idea that we would have the type of cash flow, the type of 
surpluses that are available today, when they put together their bill, 
that it would have been more expansive, and they would have concerned 
themselves with those group of Americans that do not have disposable 
income in order to have pensions.
  We have less than one-third of those small business people that have 
any pensions at all. Yet, two out of five of every working people work 
for small businesses.
  The Social Security system was not created to be a pension. It was 
created to supplement a pension. So while work has been done to be of 
assistance to those in the higher income tax brackets, what this does 
is provide incentives, not only for employees, but it provides an 
incentive for small employers to be able to do what they would want to 
do for the employees and, therefore, would enhance and supplement the 
Social Security benefits.
  So the substitute takes into consideration the fine work that has 
been done by our colleagues and just broadens it to enhance those 
people who, by any standard, have been excluded from the bill that is 
before us.
  So I ask my colleagues to support the substitute; and I also ask 
them, when they think in terms of bipartisanship, would they please 
include my President.
  Mr. PORTMAN. Mr. Speaker, may I inquire how much time is remaining on 
each side.
  The SPEAKER pro tempore (Mr. Simpson). The gentleman from Ohio (Mr. 
Portman) has 7 minutes remaining. The gentleman from Massachusetts (Mr. 
Neal) has 3 minutes remaining.

                              {time}  1245

  Mr. PORTMAN. Mr. Speaker, I yield 1\1/2\ minutes to the gentleman 
from New York (Mr. Fossella).
  (Mr. FOSSELLA asked and was given permission to revise and extend his 
remarks.)
  Mr. FOSSELLA. Mr. Speaker, I applaud the gentleman from Ohio (Mr. 
Portman) and the gentleman from Maryland (Mr. Cardin) for pursuing this 
legislation because it is truly of benefit to the American people.
  And the distinctions are very clear, as I see it, because we believe 
that individuals should have more power, more freedom, and more 
opportunities to save for their retirement. This legislation allows 
individuals to do so.
  We believe that creating wealth for Americans and their families, for 
their retirement, are good things. This legislation allows those 
Americans to do so.
  We believe that small business owners who want to create pensions for 
their employees to keep them with them so that they and their employees 
can save for their retirement, should be able to do that effectively. 
This legislation allows them to do so.
  We believe that firefighters and police officers who want to save a 
little bit more each year for their retirement, for themselves and 
their families, should have the opportunity to do so. This legislation 
allows them to do it.
  Yes, we give to Americans the power, the freedom and the opportunity 
to save a little more if they want to. That is what this Nation is all 
about. And I think that is what this legislation attempts to do and, 
indeed, does.
  With that, Mr. Speaker, I compliment all those Members, Democrats and 
Republicans, who give Americans more power to save for their 
retirement.
  Mr. PORTMAN. Mr. Speaker, I yield 30 seconds to the gentleman from 
California (Mr. Royce).
  Mr. ROYCE. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, clearly Social Security alone is not enough for 
retirement in relative comfort today. The private pension system is an 
indispensable part of retirement security, and this underlying bill, 
which I have been proud to coauthor, would give American workers more 
tools to prepare for a better future.
  The pension reforms we are considering today will help individuals to 
save more for retirement. Increased pension portability will allow 
workers to roll over their pension savings between plans when they 
change jobs. And streamlined rules and regulations would make it easier 
for small businesses to offer pensions.
  If these changes are enacted, they will give millions of American 
workers better tools to prepare for retirement.

[[Page H6524]]

  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Missouri (Mr. Blunt), who put together his own legislation, which was 
very popular here in the House. He had a number of cosponsors for the 
Blunt-Bentsen legislation on expanding small business retirement plans. 
I thank the gentleman for his contributions to this effort.
  Mr. BLUNT. Mr. Speaker, I thank the gentleman for yielding me this 
time and for his great work, as well as the work of the gentleman from 
Maryland (Mr. Cardin) on this bipartisan legislation for retirement 
security.
  I also want to thank the gentleman from Texas (Mr. Archer) for seeing 
that this bill gets to the floor. It makes a difference for the future 
of Americans.
  I want to thank the gentleman from Texas (Mr. Bentsen), who joined me 
2 years ago to come up with legislation that really tried to fill the 
gap for small business in America, small business and their employees, 
who really had been left out of retirement security.
  Today, as we talk about this bill, 84 percent of all Americans who 
work for employers with 1,000 or more employees have access to 
employer-sponsored pension plans. Sixty-nine percent of people who work 
for employers that have between 100 and 1,000 employees have access to 
pension plans. Only 42 percent of people who work for employers who 
have fewer than 100 employees and only 17 percent of small businesses 
that have fewer than 25 employees have access to a pension plan.
  As America gets more focused on retirement security, as Americans 
understand that that has to be a combination of personal savings and 
Social Security and a pension, they are more and more concerned about 
working somewhere where that pension is available. We have kept small 
business, the engine that runs America, out of the pension environment. 
This bill removes many of the obstacles. This bill makes it possible 
for employers of a few people to have the same kind of access to long-
term retirement security that mega corporations have today.
  It is unfair for an employer in Joplin, Missouri or Springfield, 
Missouri that has 20 hard-working employees, the people who work to 
make that business a reality, to not have access to pensions. That 
happens with this bill.
  This is an important bill, and I urge my colleagues to vote for H.R. 
1102. This is a giant step for retirement security in America. It is a 
giant step for small business. It is a giant step for those who would 
like to see their own IRA have a meaningful annual contribution.
  This legislation creates significant new opportunities for small 
businesses and individuals to establish retirement security plans. It 
does so by expanding small business retirement plans, such as 
unnecessary regulations and expenses. This bill also increases the 
limit on IRA's from $2,000 to $5,000, which is a long overdue updating 
of a limit set almost 20 years ago.
  I feel fortunate that I've had the opportunity to work closely with 
Congressman Portman and Congressman Cardin on the provisions of this 
bill that specifically affect small businesses. In fact, H.R. 1102 
includes several key features from legislation I introduced, H.R. 352, 
the Blunt/Bentsen Retirement Plan.
  Why do small employers offer retirement benefits so less frequently 
than their larger counterparts? According to the 1998 Small Employer 
Retirement Survey conducted by the Employee Benefit Research Institute 
Research Institute, small businesses do not offer retirement benefits 
because, among other things, their revenue stream is too uncertain to 
commit to a plan, because their employees prefer immediate wages or 
other benefits, and because plans are too complex and expensive to set 
up and maintain. In exchange for the tax benefits of an employer 
sponsored retirement plan, current law imposes myriad requirements on 
employers. Unfortunately, the complexity of these requirements make the 
cost of administering these plans prohibitively expensive for small 
employers.
  H.R. 1102 includes several key provisions that address this problem. 
Under current law, an employer's contributions are effectively limited 
to 15 percent of the employer's payroll because contributions in excess 
of 15 percent are nondeductible and subject to a 10 percent excise tax. 
H.R. 1102 increases the limit on an employer's deduction for 
contributions to a defined contribution plan from 15 percent to 20 
percent. This will enable employers to provide more generous benefits 
to employees and reduce the need for complex two-plan arrangements. 
H.R. 1102 also increases the amount that can be contributed on behalf 
of individuals to $40,000 or 100 percent of pay and provides regulatory 
relief to encourage small businesses to offer plans. Employer sponsored 
retirement plans are good for employees because they are proven to be 
among the most effective ways for individuals to accumulate retirement 
savings. They are good for employers because they help them to attract 
and retain workers they need to remain competitive in the global 
economy. These statements do not apply only to multi-national 
corporations and their employees; they are every bit as relevant for 
the small manufacturer in Joplin or Springfield, Missouri and their 20 
hard-working employees. Unfortunately, whether or not a particular 
individual has access to a retirement plan depends a great deal on the 
size of his employer. H.R. 1102 is a giant step toward correcting this 
inequity and I urge my colleagues to support this legislation.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
gentleman from Connecticut (Mr. Gejdenson), the very erudite gentleman.
  Mr. GEJDENSON. Mr. Speaker, I thank the gentleman from Massachusetts 
for yielding me this time and for his generosity.
  It is astounding to me, when we listen to this debate, where the 
division is once again. There is no debate about the underlying bill. 
And what has been ignored by our colleagues on the Republican side of 
the aisle again is whether, in this time of great surpluses thanks to 
the Clinton-Gore economic plan, whether we are going to be able to get 
a few resources for the poorest of the poor, for women, and for small 
businesses. That is the real debate.
  It is kind of like the pension debate. The Democrats were ready to 
give $4 million estates tax exempt. On the Republican side they had to 
go to Bill Gates, $70 billion tax exempt. It was not enough that Bill 
Gates would pass his kids $35 billion, he had to go to $70 billion.
  We are not arguing with helping people who are better off in this 
society and making it easier for people who own the companies to do 
better in pensions. What we are frustrated by is the failure to support 
the chairman and the gentleman from Massachusetts by reaching out to 
the poorest of the poor, to working poor people; making sure that those 
who have the least in this society get a little bit of assistance.
  For a long time the Reagan-Bush deficits prevented us from having the 
resources to do that job. Now, with the fiscal situation we are in 
today, we have some resources. Yes, we ought to use some of those for 
upper-income people, to give them a break, but why can we never seem to 
have enough money at the table to take care of women, who are working 
often in places without pensions; why can we not provide some 
assistance to the smallest businesses to provide pensions for the 
poorest people, to make sure those who are at the bottom of the 
economic ladder get some benefit out of this society?
  It seems to me to be clear that the gentleman from Massachusetts and 
the ranking member, soon hopefully to be chairman of this committee, 
offer an opportunity to make sure that we take care of average people 
and working people to some small degree.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself the balance of 
my time.
  Mr. Speaker, we do not object to the legislation necessarily that has 
been proposed here. We believe that the amendment that we have offered 
can actually strengthen this legislation.
  I think the gentleman from Connecticut (Mr. Gejdenson) adequately 
summed up the arguments that we offer. If an individual is willing to 
go to work in America, they ought to be in a pension system. That is 
precisely what our legislation, my amendment, proposes to do.
  This is a decent start that has been offered here today. We can 
improve this legislation, thereby providing an opportunity for people 
who do get out of bed every morning and go to work to have pension 
rights.
  It is our argument today, based upon the evidence in front of us, 
that the legislation as proposed does not go far enough. We speak to 
those in the middle-income range, we speak to those in the lower-income 
range based upon the notion that if an individual goes to work, they 
ought to have pension rights. In the end, that is what our proposal is 
all about. That is what our substitute stands for.

[[Page H6525]]

  We have had a good debate today; a clarifying debate. We think our 
substitute stands up under the magnifying glass. While we believe the 
legislation proposed is a good start, it is simply not enough.
  Mr. Speaker, I yield back the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield myself the balance of my time.
  I would like to start by thanking the gentleman from Massachusetts 
for a good debate today and thank him for his support of the process 
and saying a moment ago that he thinks the underlying legislation is a 
good start and that he does not necessarily oppose it. He would like to 
add to it.
  I want to tell him that I share his concern about those lower- and 
middle-income workers who are not saving enough for their retirement. 
We think we address that here.
  The previous speaker from Connecticut talked about how we are trying 
to help Bill Gates. Let me tell my colleagues who we are trying to 
help. Seventy-seven percent of pension plan participants make less than 
$50,000 a year. Seventy-seven percent of them. The average salary of 
someone who contributes to an IRA is less than $30,000 a year.
  Those are precisely the people who are going to be helped most by 
this legislation; workers making between $15,000 and $50,000 a year 
benefit most from pension plans. They get two-thirds of pension 
accruals, even though they pay only about one-third of Federal taxes. 
These are the folks we are going to help with this underlying 
legislation.
  Now, the substitute is before us. And again I share the concern that 
the gentleman has addressed. We think we address the problem that he 
states. But let us look at the substitute, because we do not know much 
about it yet. It came at the committee markup level, it has been 
changed a little, and now it is on the floor. We know it doubles the 
cost of this legislation.
  It is interesting, as a Republican, for me to be talking about the 
cost of tax provisions, because the Democrats have been saying all 
year, these tax relief proposals are too costly. We cannot afford to do 
it because we have to save Medicare, Social Security, and so on. But 
here they are doubling the cost of a tax bill. But my more fundamental 
concern with it is we just do not know how it would work.
  Let me give an example, and it has been talked about a little today. 
If an individual was to take advantage of this new government program 
and have the government contribute a 100 percent match into that plan, 
then that individual could take that money out the next year. And we do 
not know that there is a mechanism to keep that person from doing that; 
or, if there is, how it could be administered by the Internal Revenue 
Service.
  We talked about the fraud in existing refundable tax credit programs. 
We have a concern about that. Is it administrable? It is something I 
would love to sit down with the gentleman and work out with him. I 
would love to sit with the Treasury Department and work on it. This has 
not been vetted.
  In contrast, the underlying bill before us has gone through a 3-year 
bipartisan process, reaching out across the spectrum from labor unions 
to small businesses to put together something that is really going to 
work in the real world to expand pension coverage and IRA coverage for 
those middle-income and lower-income workers we talked about a moment 
ago. Those are precisely the people who will benefit from this.
  Yes, it is important to backstop Social Security. Yes, it is 
important to increase the savings rate in this country that is at an 
all-time low. But it is most important of all to give American workers, 
particularly those baby boomers who have not saved enough, more 
security in their retirement. This underlying legislation does it. It 
provides for that comfort level in retirement; that peace of mind in 
retirement.
  I ask my colleagues to oppose the Democrat substitute; to stick to 
the real thing, and vote for H.R. 1102.
  Mr. KENNEDY of Rhode Island. Mr. Speaker, I rise today in support of 
the Democratic substitute to the underlying bill.
  I want to commend the hard work and efforts of the authors of the 
bill we have before us today.
  I also want to thank the authors of the Democratic substitute, and 
the ranking member of the committee, Mr. Rangel, a champion for 
retirement security and the preservation of our Social Security system.
  It is no secret that many families have great difficulties setting 
aside even nominal amounts in savings accounts or other means of asset 
development. Most families are living paycheck to paycheck and at the 
same time that many families are struggling, there is a high 
correlation between income levels and the ability to save.
  Reports show that fifty percent of American households have total 
financial assets of $1000 or less; and that half of American families 
have less than two percent of America's net financial assets.
  The Congressional Research Service notes that 60 percent of Americans 
have no other retirement plan than Social Security.
  Today, I would have liked to offer an amendment to the bill, 
providing the support of the Congress for increasing individual savings 
and investment, with specific notice given to the needs of lower income 
families, and the support of the Congress for moving forward 
legislation that will encourage education and opportunity in the area 
of personal savings and investment.
  Unfortunately, under the closed rule that we were given, I did not 
have an opportunity to offer this amendment, but the Democratic 
substitute that we are debating allows for a vote of these principals.
  The Democratic substitute provides assistance to low and middle 
income workers and gives small business employees eligibility for 
credits on their retirement plans.
  This would help level the playing field in the area of retirement 
security.
  This is important because, in the last decade years we have witnessed 
the emergence of a new wealth gap in America which threatens our sense 
of fairness and our fundamental tradition of equal economic 
opportunity. The division is largely between those who have savings and 
investment and those who don't.
  The Retirement Savings Account proposal that was included in the 
substitute, is designed to provide incentives for low and middle income 
workers to save or add additional money to their investment plans. In 
addition to this very necessary effort, we need to move forward with 
further legislation that will address the special need to close the 
income gap through facilitation and education on personal savings and 
investment.
  The American Dream for many families revolves around the future of 
their children. They want their children to be able to receive higher 
education, own a home or a business, and certainly have retirement 
security. Yet, this creates a dilemma, because while meaningful savings 
are required to attain the American Dream, as many as two out of three 
Americans are shut out from this opportunity.
  One way to make the American Dream more accessible is to increase 
wages and assure livable incomes. That is why I so strongly support our 
public schools and education reform. But this will get us only part of 
the way.
  I strongly believe that we need to pass an equity and assert rights 
act that is modeled after the Full Employment Act of 1946. After World 
War II, Congress understood that we needed to create the national 
opportunity for all Americans to have a decent job. As we head into the 
21st Century, we need to understand the importance of savings--so that 
all Americans can have a stake in the earning power of America's future 
economic growth.
  In short, if we enable families to save and invest, we facilitate the 
economic freedom that will allow all Americans to afford higher 
education, buy a home, and have security in their senior years.
  I urge all my colleagues to vote for the substitute, which ensures 
that all Americans are given a chance at greater retirement security.
  Mr. PORTMAN. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Simpson). Pursuant to House Resolution 
557, the previous question is ordered on the bill and on the amendment, 
as modified, offered by the gentleman from Massachusetts (Mr. Neal).
  The question is on the amendment in the nature of a substitute, as 
modified, offered by the gentleman from Massachusetts (Mr. Neal).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. NEAL of Massachusetts. Mr. Speaker, I object to the vote on the 
ground that a quorum is not present and make the point of order that a 
quorum is not present.
  The SPEAKER pro tempore. Evidently a quorum is not present.
  The Sergeant at Arms will notify absent Members.
  The vote was taken by electronic device, and there were--yeas 200, 
nays 221, not voting 13, as follows:

[[Page H6526]]

                             [Roll No. 410]

                               YEAS--200

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett (WI)
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boucher
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Forbes
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hastings (FL)
     Hill (IN)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Hooley
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pickett
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sandlin
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Shows
     Sisisky
     Skelton
     Slaughter
     Snyder
     Spratt
     Stabenow
     Stark
     Stenholm
     Strickland
     Stupak
     Tanner
     Tauscher
     Taylor (MS)
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Wise
     Woolsey
     Wu
     Wynn

                               NAYS--221

     Aderholt
     Archer
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Barrett (NE)
     Bartlett
     Bass
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Boyd
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Crane
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ewing
     Fletcher
     Foley
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Green (WI)
     Greenwood
     Gutknecht
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     King (NY)
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCollum
     McCrery
     McHugh
     McInnis
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Paul
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sanders
     Sanford
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--13

     Baca
     Barton
     Bateman
     Boswell
     Campbell
     Kennedy
     Klink
     Martinez
     McIntosh
     Smith (WA)
     Vento
     Weldon (PA)
     Weygand

                              {time}  1319

  Mr. PITTS and Mr. HOBSON changed their vote from ``yea'' to ``nay.''
  Mr. BERRY, Mr. DOOLEY of California, Ms. BROWN of Florida, and Mr. 
INSLEE changed their vote from ``nay'' to ``yea.''
  So the amendment in the nature of a substitute, as modified, was 
rejected.
  The result of the vote was announced as above recorded.
  Stated for:
  Mr. KENNEDY of Rhode Island. Mr. Speaker, today I was accompanying 
President Clinton to a funeral in the First District of Rhode Island 
and consequently I missed one vote. Had I been here I would have voted 
``yes'' on rollcall No. 410, the Neal amendment.
  The SPEAKER pro tempore (Mr. Simpson). The question is on the 
engrossment and third reading of the bill.
  The bill was ordered to be engrossed and read a third time, and was 
read the third time.


        Motion to Recommit Offered by Mr. Neal of Massachusetts

  Mr. NEAL of Massachusetts. Mr. Speaker, I offer a motion to recommit.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. NEAL of Massachusetts. I am opposed to the bill in its current 
form, Mr. Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:
       Mr. Neal of Massachusetts moves to recommit the bill H.R. 
     1102 to the Committee on Ways and Means with instructions to 
     report the same back to the House forthwith with the 
     following amendment:

       Add at the end of the bill the following new title:

TITLE VIII--CONTINGENCY BASED ON MEDICARE PRESCRIPTION DRUG BENEFIT AND 
                          NO ON-BUDGET DEFICIT

     SEC. 801. CONTINGENCY BASED ON MEDICARE PRESCRIPTION DRUG 
                   BENEFIT AND NO ON-BUDGET DEFICIT.

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

     ``SEC. 409A. CONTINGENCY BASED ON MEDICARE PRESCRIPTION DRUG 
                   BENEFIT AND NO ON-BUDGET DEFICIT.

       ``(a) Comprehensive Retirement Security and Pension Reform 
     Act of 2000 to Apply If Certain Conditions Met.--The 
     Comprehensive Retirement Security and Pension Reform Act of 
     2000 and the amendments made by such Act shall apply to any 
     taxable year beginning in a calendar year after 2000 only if 
     the Secretary of the Treasury certifies (before the close of 
     such calendar year) that each of the conditions specified in 
     subsection (b) are met with respect to such calendar year.
       ``(b) Conditions.--For purposes of subsection (a), the 
     conditions specified in this subsection for any calendar year 
     are the following:
       ``(1) No on-budget deficit.--Allowing subsection (a) to be 
     effective for taxable years beginning in the calendar year, 
     when added to the cost of the coverage described in paragraph 
     (2), would not create or increase an on-budget deficit 
     (determined by excluding the receipts and disbursements of 
     part A of the medicare program) for the fiscal year beginning 
     in such calendar year.
       ``(2) Prescription drug coverage.--Coverage for outpatient 
     prescription drugs is provided for Medicare beneficiaries 
     under the Medicare Program on a voluntary basis at all times 
     during the calendar year with--
       ``(A) the premium for such coverage being not more than $25 
     per month (adjusted for cost increases after 2003) with low-
     income assistance for Medicare beneficiaries having incomes 
     below 135 percent of the Federal poverty level and phasing 
     out for such beneficiaries having incomes between 135 percent 
     and 150 percent of the Federal poverty level,
       ``(B) no deductible required before such coverage is 
     provided,
       ``(C) the amount of the benefit being at least 50 percent 
     of prescription drug expenses not in excess of the coverage 
     limit (as defined in subsection (c)),
       ``(D) a $4,000 limitation (adjusted for cost increases 
     after 2003) on out-of-pocket prescription drug expenses of 
     electing Medicare beneficiaries, and
       ``(E) all Medicare beneficiaries entitled to receive the 
     discounts (otherwise available to large prescription drug 
     purchasers) on their purchases of prescription drugs.
       ``(c) Coverage Limit.--The coverage limit is $2,000 for 
     calendar years 2003 and 2004, $3,000 for calendar years 2005 
     and 2006, $4,000 for calendar years 2007 and 2008, and $5,000 
     for calendar year 2009 and thereafter (with adjustments for 
     cost increases).
       ``(d) Transition rule.--For calendar years 2001 and 2002, 
     the conditions specified in subsection (b)(2) shall be 
     treated as met if the Secretary of the Treasury certifies 
     that coverage described in such subsection will be available 
     as of January 1, 2003.''.

[[Page H6527]]

       (b) Clerical Amendment.--The table of sections for subpart 
     A of part 1 of subchapter D of chapter 1 is amended by adding 
     after the item relating to section 409 the following new 
     item:

``SEC. 409A. Contingency based on medicare prescription drug benefit 
              and no on-budget deficit.''.

       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

  Mr. NEAL of Massachusetts (during the reading). Mr. Speaker, I ask 
unanimous consent that the motion to recommit be considered as read and 
printed in the Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Massachusetts?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Massachusetts (Mr. Neal) is recognized for 5 minutes in support of his 
motion.
  Mr. NEAL of Massachusetts. Mr. Speaker, for the last 3 hours, we have 
had an opportunity to clarify many differences about the legislation 
that is in front of us. I think all of us would acknowledge that the 
work that the gentleman from Maryland (Mr. Cardin) and the gentleman 
from Ohio (Mr. Portman) have done on this legislation has been a decent 
start. In fact, we believe that the substitute we offered was Cardin-
Portman improved. Cardin-Portman plus. We also would argue, I think, 
that the substitute that we offered spoke to the issue that the 
gentleman from Ohio (Mr. Portman) acknowledged about doing more for 
middle-income and lower-income wage earners in America.
  What is important about this discussion, I think, is simply this. 
Some of the people that have spoken today on this legislation have 
suggested that there is some doubt as to whether or not the President 
will veto this legislation in its current form. Let me reiterate as I 
did an hour ago. Secretary Summers has told me in a phone conversation 
he will recommend to the President that this legislation in its current 
form be vetoed. We have an opportunity to fix this legislation, 
acknowledging a good start but an improved opportunity.
  Let me speak specifically, if I can, to the motion to recommit that 
is in front of this body. We all acknowledge that there is a desire for 
tax cuts based upon the current surplus projections. But the question 
before us now is whether or not those tax cuts leave sufficient 
resources for other priorities. This motion to recommit provides that 
the tax reductions proposed will not go into effect unless the 
Secretary of the Treasury certifies the following: that the bill will 
not invade the portion of existing surpluses dedicated to Medicare and 
Social Security programs, and--and the most important part of this 
motion to recommit--a meaningful Medicare prescription medicine benefit 
be enacted.
  The motion to recommit is also required because of a Republican 
strategy of considering separate tax bills without taking into account 
their overall cost. Voting against the motion to recommit is a vote for 
placing these tax reductions ahead of Social Security and Medicare 
solvency and a meaningful Medicare prescription drug benefit.
  It is simple; it is clarifying. I am not intending to belabor the 
point. What we have now in front of us is a very simple measure, 
whether or not we will proceed with these cuts or we will proceed with 
a healthy discussion about a Medicare prescription drug benefit. This 
is not the end of the debate by any stretch of the imagination. When we 
come back in September because of the President's veto pen, we are 
going to have a chance to improve this legislation.
  I hope that my colleagues will vote ``no'' on the measure in front of 
us after we vote for the motion to recommit.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. Is the gentleman from Ohio (Mr. Portman) 
opposed to the motion?
  Mr. PORTMAN. I am, Mr. Speaker.
  The SPEAKER pro tempore. The gentleman is recognized for 5 minutes in 
opposition to the motion.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
California (Mr. Thomas), the chairman of the Subcommittee on Health.
  Mr. THOMAS. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Bear with me, folks. Let us take a look at this motion to recommit. 
Let us find out exactly what it says. Less than 5 minutes ago, the 
Democrats offered their substitute which was double the Portman-Cardin 
bill. You would think that they had enough pride in authorship to 
require their substitute to be in this motion to recommit. Well, that 
is not true. The Portman-Cardin bill is in this motion to recommit. The 
only problem is, how do you get to this new pension relief in the 
Portman-Cardin bill? The motion to recommit says you have to do two 
things, because it says Comprehensive Retirement Security and Pension 
Reform Act of 2000, Portman-Cardin legislation, to apply if certain 
conditions are met.
  Now, what are those certain conditions? Number one, you have a zero 
budget deficit. Number two, we have to pass and make law the Democrats' 
prescription drug proposal which was defeated in the House 2 weeks ago. 
So, one, they do not even have pride in authorship, including their 
Democrat substitute in the motion to recommit. Secondly, they frankly 
in my opinion lower the level of this debate to say, one, if you really 
want this, you have to do these two other things, but here is the 
insidious part about this motion to recommit: because it is 
conditional, because we will not get the Portman-Cardin bill unless 
these other two conditions are met, the Joint Committee on Taxation 
says this has a zero score.
  What does it mean? If you vote for the motion to recommit, you 
defeat, not that you are cute about it, you defeat the Portman-Cardin 
legislation. Frankly, the gentleman from Ohio and the gentleman from 
Maryland deserve a better motion to recommit than this. This is not the 
kind of motion that lends the kind of sobriety to the debate that we 
have. What we need to do is hopefully not have a recorded vote on this 
motion to recommit and move rapidly to the passage of much-needed 
pension reform, the Portman-Cardin bill.

                              {time}  1330

  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  This has been a refreshing debate on the House floor today, because 
it has been an honest discussion of some differences and how we would 
approach IRAs and pension expansion, but in the end, as the gentleman 
from Massachusetts (Mr. Neal) said, Democrat opposition to the 
underlying legislation has really not surfaced, in the sense that the 
gentleman from Massachusetts (Mr. Neal) has said this is a good start.
  I applaud the gentleman for this motion to recommit, because it 
essentially says that the Portman-Cardin legislation, H.R. 1102, that 
over 200 Members of this House have cosponsored, about half Democrats, 
about half Republicans, ought to become law. It is just that the motion 
says there ought to be a couple of things that happen in between; one, 
we have to be sure we have a surplus; the second is we offer 
prescription drug coverage.
  Unfortunately, the prescription drug coverage that is being suggested 
here that would have to be enacted into law is not precisely what this 
House just voted on in terms of prescription drug coverage. It is much 
different.
  I want to thank the gentleman from Massachusetts (Mr. Neal) for 
implicitly supporting Portman-Cardin. I want to thank all of the 
Members of this House who have played such an important role in getting 
us to this point. This has been a 3-year bipartisan process where we 
have done precisely what so many of us talk about around here, which is 
engage in a bipartisan consultative process with the people who are 
most affected, that is, small businesses, labor unions, individuals who 
are trying to save more in their IRAs, workers who are trying to save 
more in their 401(k) plans and other pension plans.
  This legislation is going to help precisely those lower income and 
middle income workers out there who we talked about earlier today as 
needing to save more for retirement.
  We would not be here today but for the help of the gentleman from 
Maryland (Mr. Cardin), who has been my partner in this for the last 3 
years, also but for the help of the gentleman from Texas (Mr. Archer), 
who has spent a career coming up with ways to expand savings options 
for Americans and got

[[Page H6528]]

this through the committee and to the floor today.
  Ladies and gentleman, I urge a no on this motion to recommit. Again, 
I thank the authors of it for the implicit support of the underlying 
legislation, and I strongly urge Members on both sides of the aisle to 
vote yes on final passage, to send a strong message to the United 
States Senate, a strong message to the President of the United States 
that we, on a bipartisan basis, want to provide for retirement security 
for all Americans, and we want to do it this year.
  Mr. Speaker, many have dubbed this as a partisan, political year, we 
want to show the American people we can get something done together. 
Let us continue this 3-year bipartisan process. Let us vote yes on 
final passage and let us help all of our constituents have more 
financial security in their retirement.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Simpson). Without objection, the 
previous question is ordered on the motion to recommit.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to recommit.
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. NEAL of Massachusetts. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 9 of rule XX, the Chair 
will reduce to 5 minutes the minimum time for any electronic vote on 
the question of passage.
  The vote was taken by electronic device, and there were--yeas 185, 
nays 239, not voting 10, as follows:

                             [Roll No. 411]

                               YEAS--185

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baldacci
     Baldwin
     Barrett (WI)
     Becerra
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Carson
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Danner
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doyle
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank (MA)
     Frost
     Gejdenson
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hastings (FL)
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Hooley
     Hoyer
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Lantos
     Larson
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Moakley
     Mollohan
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pickett
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sanders
     Sawyer
     Schakowsky
     Scott
     Serrano
     Sherman
     Shows
     Sisisky
     Skelton
     Slaughter
     Snyder
     Spratt
     Stabenow
     Stark
     Strickland
     Stupak
     Tanner
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Turner
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Wise
     Woolsey
     Wu
     Wynn

                               NAYS--239

     Aderholt
     Archer
     Armey
     Bachus
     Baird
     Baker
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Bartlett
     Bass
     Bateman
     Bentsen
     Bereuter
     Biggert
     Bilbray
     Bilirakis
     Bliley
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Cardin
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Coble
     Coburn
     Collins
     Combest
     Cook
     Cooksey
     Cox
     Crane
     Cubin
     Cunningham
     Davis (VA)
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dickey
     Doolittle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ewing
     Fletcher
     Foley
     Forbes
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goodling
     Goss
     Graham
     Granger
     Green (WI)
     Greenwood
     Gutknecht
     Hall (TX)
     Hansen
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (IN)
     Hill (MT)
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Istook
     Jenkins
     Johnson (CT)
     Johnson, Sam
     Jones (NC)
     Kasich
     Kelly
     King (NY)
     Kingston
     Knollenberg
     Kolbe
     Kuykendall
     LaHood
     Largent
     Latham
     LaTourette
     Lazio
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Luther
     Manzullo
     McCollum
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Metcalf
     Mica
     Miller (FL)
     Miller, Gary
     Minge
     Moore
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ose
     Oxley
     Packard
     Paul
     Pease
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Pombo
     Pomeroy
     Porter
     Portman
     Pryce (OH)
     Quinn
     Radanovich
     Ramstad
     Regula
     Reynolds
     Riley
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sandlin
     Sanford
     Saxton
     Scarborough
     Schaffer
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Shuster
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stenholm
     Stump
     Sununu
     Sweeney
     Talent
     Tancredo
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Toomey
     Traficant
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Young (AK)
     Young (FL)

                             NOT VOTING--10

     Baca
     Barton
     Boswell
     Campbell
     Klink
     Martinez
     McIntosh
     Smith (WA)
     Vento
     Weygand

                              {time}  1351

  Mr. MINGE and Mr. LUTHER changed their vote from ``yea'' to ``nay.''
  So the motion to instruct was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Simpson). The question is on the passage 
of the bill.
  The question was taken; and the Speaker pro tempore announced that 
the ayes appeared to have it.


                             Recorded Vote

  Mr. PORTMAN. Mr. Speaker, I demand a recorded vote.
  A recorded vote was ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--ayes 401, 
noes 25, not voting 9, as follows:

                             [Roll No. 412]

                               AYES--401

     Abercrombie
     Ackerman
     Aderholt
     Allen
     Andrews
     Archer
     Armey
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Bass
     Bateman
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilbray
     Bilirakis
     Bishop
     Blagojevich
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Borski
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Canady
     Cannon
     Capps
     Capuano
     Cardin
     Carson
     Castle
     Chabot
     Chambliss
     Chenoweth-Hage
     Clayton
     Clement
     Clyburn
     Coble
     Coburn
     Collins
     Combest
     Condit
     Cook
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crowley
     Cubin
     Cummings
     Cunningham
     Danner
     Davis (FL)
     Davis (IL)
     Davis (VA)
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Ewing
     Farr
     Fattah
     Fletcher
     Foley
     Forbes
     Ford
     Fossella
     Fowler
     Franks (NJ)
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gejdenson
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Goodling
     Gordon
     Goss
     Graham
     Granger

[[Page H6529]]


     Green (TX)
     Green (WI)
     Greenwood
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hansen
     Hastert
     Hastings (FL)
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill (IN)
     Hill (MT)
     Hilleary
     Hilliard
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inslee
     Isakson
     Istook
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kaptur
     Kasich
     Kelly
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kingston
     Kleczka
     Knollenberg
     Kolbe
     Kucinich
     Kuykendall
     LaFalce
     LaHood
     Lampson
     Lantos
     Largent
     Larson
     Latham
     LaTourette
     Lazio
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Lucas (OK)
     Luther
     Maloney (CT)
     Maloney (NY)
     Manzullo
     Mascara
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McGovern
     McHugh
     McInnis
     McIntyre
     McKeon
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Metcalf
     Mica
     Millender-McDonald
     Miller (FL)
     Miller, Gary
     Miller, George
     Minge
     Mink
     Moakley
     Mollohan
     Moore
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Oberstar
     Obey
     Ortiz
     Ose
     Owens
     Oxley
     Packard
     Pallone
     Pascrell
     Pastor
     Paul
     Payne
     Pease
     Pelosi
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pickett
     Pitts
     Pombo
     Pomeroy
     Porter
     Portman
     Price (NC)
     Pryce (OH)
     Quinn
     Radanovich
     Rahall
     Ramstad
     Regula
     Reyes
     Reynolds
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogan
     Rogers
     Rohrabacher
     Ros-Lehtinen
     Rothman
     Roukema
     Royce
     Rush
     Ryan (WI)
     Ryun (KS)
     Salmon
     Sanchez
     Sandlin
     Sanford
     Sawyer
     Saxton
     Scarborough
     Schaffer
     Schakowsky
     Scott
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Shuster
     Simpson
     Sisisky
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Snyder
     Souder
     Spence
     Spratt
     Stabenow
     Stearns
     Stenholm
     Strickland
     Stump
     Stupak
     Sununu
     Sweeney
     Talent
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tierney
     Toomey
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Vitter
     Walden
     Walsh
     Wamp
     Waters
     Watkins
     Watt (NC)
     Watts (OK)
     Waxman
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Weygand
     Whitfield
     Wicker
     Wilson
     Wise
     Wolf
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                                NOES--25

     Becerra
     Bonior
     Brown (OH)
     Clay
     Conyers
     Filner
     Frank (MA)
     Gephardt
     Gutknecht
     Hinchey
     Jackson (IL)
     Kennedy
     Lee
     Markey
     Matsui
     McDermott
     Neal
     Olver
     Rangel
     Roybal-Allard
     Sabo
     Sanders
     Serrano
     Stark
     Visclosky

                             NOT VOTING--9

     Baca
     Barton
     Boswell
     Campbell
     Klink
     Martinez
     McIntosh
     Smith (WA)
     Vento

                              {time}  1359

  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________