[Congressional Record (Bound Edition), Volume 147 (2001), Part 5]
[House]
[Pages 6758-6840]
[From the U.S. Government Publishing Office, www.gpo.gov]



    COMPREHENSIVE RETIREMENT SECURITY AND PENSION REFORM ACT OF 2001

  Mr. THOMAS. Mr. Speaker, pursuant to House Resolution 127, I call up 
the bill (H.R. 10) 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 (Mr. Bass). Pursuant to House Resolution 127, 
the bill is considered read for amendment.
  The text of H.R. 10 is as follows:

                                H.R. 10

       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 
     2001''.
       (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:


[[Page 6759]]


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

           TITLE I--INDIVIDUAL RETIREMENT ACCOUNT PROVISIONS

Sec. 101. Modification of IRA contribution limits.

                      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 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. Protection of investment of employee contributions to 401(k) 
              plans.
Sec. 507. Periodic pension benefits statements.
Sec. 508. 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.
Sec. 612. Annual report dissemination.
Sec. 613. Technical corrections to SAVER Act.

                   TITLE VII--OTHER ERISA PROVISIONS

Sec. 701. Missing participants.
Sec. 702. Reduced PBGC premium for new plans of small employers.
Sec. 703. Reduction of additional PBGC premium for new and small plans.
Sec. 704. Authorization for PBGC to pay interest on premium overpayment 
              refunds.
Sec. 705. Substantial owner benefits in terminated plans.
Sec. 706. Civil penalties for breach of fiduciary responsibility.
Sec. 707. Benefit suspension notice.

                      TITLE VIII--PLAN AMENDMENTS

Sec. 801. 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'' and by 
     striking the second sentence.
       (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 amendments.--
       (A) Section 415(b)(2) is amended by striking subparagraph 
     (F).
       (B) Section 415(b)(9) is amended to read as follows:

[[Page 6760]]

       ``(9) Special rule for commercial airline pilots.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in the case of any participant who is a commercial airline 
     pilot, if, as of the time of the participant's retirement, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining any age occurring on 
     or after age 60 and before age 62, paragraph (2)(C) shall be 
     applied by substituting such age for age 62.
       ``(B) Individuals who separate from service before age 
     60.--If a participant described in subparagraph (A) separates 
     from service before age 60, the rules of paragraph (2)(C) 
     shall apply.''.
       (C) Section 415(b)(10)(C)(i) is amended by striking 
     ``applied without regard to paragraph (2)(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:
       ``(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 under 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) Subclause (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) Amendment of Internal Revenue Code.--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) Amendment of ERISA.--Section 408(d)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) For purposes of paragraph (1)(A), the term `owner-
     employee' shall only include a person described in clause 
     (ii) or (iii) of subparagraph (A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     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.''.

[[Page 6761]]

       (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 key 
     employee or former key 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, 2001.

     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, 2001.

     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, 2001.

     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 10511 of the Revenue Act of 1987 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 later of--
       (A) the fifth plan year the pension benefit plan is in 
     existence; or
       (B) the end of any remedial amendment period with respect 
     to the plan beginning within the first 5 plan years; 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) Determination of Average Fees Charged.--For purposes of 
     any determination of average fees charged, any request to 
     which subsection (a) applies shall not be taken into account.
       (e) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 2001.

     SEC. 207. DEDUCTION LIMITS.

       (a) Stock Bonus and Profit Sharing Trusts.--
       (1) In general.--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) Conforming amendment.--Subparagraph (C) of section 
     404(h)(1) is amended by striking ``15 percent'' each place it 
     appears and inserting ``20 percent''.
       (b) Compensation.--
       (1) In general.--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).''.
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 404(a)(3) is amended by 
     striking the last sentence thereof.
       (B) 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, 2001.

     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

[[Page 6762]]

     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.''.

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

                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) Application of nondiscrimination rules.--
       ``(A) In general.--An applicable employer plan shall not be 
     treated as failing to meet the nondiscrimination requirements 
     under section 401(a)(4) with respect to benefits, rights, and 
     features if the plan allows all eligible participants to make 
     the same election with respect to the additional elective 
     deferrals under this subsection.
       ``(B) Aggregation.--For purposes of subparagraph (A), all 
     plans maintained by employers who are treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 shall be treated as 1 plan.
       ``(5) 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.
       ``(6) 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.--In the case of a year 
     beginning after December 31, 2005, the Secretary shall adjust 
     annually the $5,000 amount in paragraph (2)(A) for increases 
     in the cost-of-living at the same time and in the same manner 
     as adjustments

[[Page 6763]]

     under section 415(d); except that the base period taken into 
     account shall be the calendar quarter beginning July 1, 2004, 
     and any increase under this subparagraph which is not a 
     multiple of $500 shall be rounded to the next lower 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 
     2001)''.
       (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 201) 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 2001)''.
       (H) Section 664(g) is amended--
       (i) in paragraph (3)(E) by striking ``limitations under 
     section 415(c)'' and inserting ``applicable limitation under 
     paragraph (7)'', and
       (ii) by adding at the end the following new paragraph:
       ``(7) Applicable limitation.--
       ``(A) In general.--For purposes of paragraph (3)(E), the 
     applicable limitation under this paragraph with respect to a 
     participant is an amount equal to the lesser of--
       ``(i) $30,000, or
       ``(ii) 25 percent of the participant's compensation (as 
     defined in section 415(c)(3)).
       ``(B) Cost-of-living adjustment.--The Secretary shall 
     adjust annually the $30,000 amount under subparagraph (A)(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 beginning October 1, 1993, and any increase under 
     this subparagraph which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.''.
       (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) Amendment of Internal Revenue 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:  
      2............................................................20  
      3............................................................40  
      4............................................................60  
      5............................................................80  
      6.........................................................100.''.

       (b) Amendment of 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:  
      2............................................................20  
      3............................................................40  
      4............................................................60  
      5............................................................80  
      6.........................................................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, 2001.
       (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, 2002; or
       (B) January 1, 2006.
       (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. 304. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

       (a) Simplification and Finalization of Minimum Distribution 
     Requirements.--

[[Page 6764]]

       (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) Date for regulations.--Not later than December 31, 
     2002, the Secretary shall issue final regulations described 
     in paragraph (1) and such regulations shall apply 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.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall apply to years 
     beginning after December 31, 2001.
       (B) Distributions to surviving spouse.--
       (i) In general.--In the case of an employee described in 
     clause (ii), distributions to the surviving spouse of the 
     employee shall not be required to commence prior to the date 
     on which such distributions would have been required to begin 
     under section 401(a)(9)(B) of the Internal Revenue Code of 
     1986 (as in effect on the day before the date of the 
     enactment of this Act).
       (ii) Certain employees.--An employee is described in this 
     clause if such employee dies before--

       (I) the date of the enactment of this Act, and

       (II) the required beginning date (within the meaning of 
     section 401(a)(9)(C) of the Internal Revenue Code of 1986) of 
     the employee.

       (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, 2001.

     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, 2001.

     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, 2001.

           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) and which is maintained by an 
     eligible employer described in section 457(e)(1)(A).''.
       (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) which is maintained by an eligible 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

[[Page 6765]]

     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 eligible 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 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 the date of the enactment 
     of this Act.
       (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 the date of the enactment 
     of this Act.
       (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 the date of the 
     enactment of this Act.

     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

[[Page 6766]]

     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 the date of the enactment 
     of this Act.

     SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.

       (a) Plan Transfers.--
       (1) Amendment of internal revenue code.--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 received a notice 
     describing the consequences of making the election, and
       ``(V) 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) Amendment of erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following:
       ``(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 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 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; and
       ``(v) the transferee plan allows the participant or 
     beneficiary described in clause (iii) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the 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 
     promulgated by the Secretary of the Treasury, a defined 
     contribution plan shall not be treated as failing to meet the 
     requirements of this subsection 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.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (b) Regulations.--
       (1) Amendment of internal revenue code.--Paragraph (6)(B) 
     of section 411(d) (relating to accrued benefit not to be 
     decreased by amendment) is amended by inserting after the 
     second sentence the following new sentence: ``The Secretary 
     shall by regulations provide that this subparagraph shall not 
     apply to any plan amendment which reduces or eliminates 
     benefits or subsidies which create significant burdens or 
     complexities for the plan and plan participants and does not 
     adversely affect the rights of any participant in a more than 
     de minimis manner.''.
       (2) Amendment of erisa.--Section 204(g)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)(2)) 
     is amended by inserting before the last sentence the 
     following new sentence: ``The Secretary of the Treasury shall 
     by regulations provide that this paragraph shall not apply to 
     any plan amendment which reduces or eliminates benefits or 
     subsidies which create significant burdens or complexities 
     for the plan and plan participants and does not adversely 
     affect the rights of any participant in a more than de 
     minimis manner.''.
       (3) Secretary directed.--Not later than December 31, 2003, 
     the Secretary of the Treasury is directed to issue 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986 and section 204(g) of the Employee Retirement 
     Income Security Act of 1974, including the regulations 
     required by the amendment made by this subsection. Such 
     regulations shall apply to plan years beginning after 
     December 31, 2003, 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 the date of the enactment 
     of this Act.

[[Page 6767]]



     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 the date of 
     the enactment of this Act.

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

       (a) Qualified Plans.--
       (1) Amendment of internal revenue code.--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).''.
       (2) Amendment of erisa.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) 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 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) of the Internal Revenue Code 
     of 1986.''.
       (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, 2001.

     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 the date of the enactment 
     of this Act.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

     SEC. 501. REPEAL OF PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

       (a) Amendment of Internal Revenue Code.--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--
      2002........................................................165  
      2003......................................................170.''.

       (b) Amendment of ERISA.--Section 302(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) 
     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--
      2002........................................................165  
      2003......................................................170.''.

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

     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 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 maintained 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

[[Page 6768]]

       ``(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, 2001.

     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, 2001.

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

       (a) Amendment of Internal Revenue Code.--
       (1) 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. The Secretary 
     may provide a simplified form of notice for, or exempt from 
     any notice requirement, a plan--
       ``(A) which has fewer than 100 participants who have 
     accrued a benefit under the plan, or
       ``(B) which offers participants the option to choose 
     between the new benefit formula and the old benefit formula.
       ``(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) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable individual.--The term `applicable 
     individual' means, with respect to any plan amendment--
       ``(A) each 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)),

     whose rate of future benefit accrual under the plan may 
     reasonably be expected to be significantly reduced 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.

     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.
       ``(3) Early retirement.--A plan amendment which eliminates 
     or significantly reduces any early retirement benefit or 
     retirement-type subsidy (within the meaning of section 
     411(d)(6)(B)(i)) shall be treated as having the effect of 
     significantly reducing the rate of future benefit accrual.
       ``(g) New Technologies.--The Secretary may by regulations 
     allow any notice under subsection (e) to be provided by using 
     new technologies.''.
       (2) 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.''.

       (b) Amendment of ERISA.--Section 204(h) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is 
     amended by adding at the end the following new paragraphs:
       ``(3)(A) An applicable pension plan to which paragraph (1) 
     applies shall not be treated as meeting the requirements of 
     such paragraph unless, in addition to any notice required to 
     be provided to an individual or organization under such 
     paragraph, the plan administrator provides the notice 
     described in subparagraph (B) to each applicable individual 
     (and to each employee organization representing applicable 
     individuals).
       ``(B) The notice required by subparagraph (A) 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 of the Treasury) to allow 
     applicable individuals to understand the effect of the plan 
     amendment. The Secretary of the Treasury may provide a 
     simplified form of notice for, or exempt from any notice 
     requirement, a plan--
       ``(i) which has fewer than 100 participants who have 
     accrued a benefit under the plan, or
       ``(ii) which offers participants the option to choose 
     between the new benefit formula and the old benefit formula.
       ``(C) Except as provided in regulations prescribed by the 
     Secretary of the Treasury, the notice required by 
     subparagraph (A) shall be provided within a reasonable time 
     before the effective date of the plan amendment.
       ``(D) Any notice under subparagraph (A) may be provided to 
     a person designated, in writing, by the person to which it 
     would otherwise be provided.
       ``(E) A plan shall not be treated as failing to meet the 
     requirements of subparagraph (A) 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) The Secretary of the Treasury may by regulations 
     allow any notice under this paragraph to be provided by using 
     new technologies.
       ``(4) For purposes of paragraph (3)--
       ``(A) The term `applicable individual' means, with respect 
     to any plan amendment--
       ``(i) each participant in the plan; and
       ``(ii) any 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)),

     whose rate of future benefit accrual under the plan may 
     reasonably be expected to be significantly reduced by such 
     plan amendment.
       ``(B) The term `applicable pension plan' means--
       ``(i) any defined benefit plan; or

[[Page 6769]]

       ``(ii) an individual account plan which is subject to the 
     funding standards of section 412 of the Internal Revenue Code 
     of 1986.
       ``(C) A plan amendment which eliminates or significantly 
     reduces any early retirement benefit or retirement-type 
     subsidy (within the meaning of subsection (g)(2)(A)) shall be 
     treated as having the effect of significantly reducing the 
     rate of future benefit accrual.''.
       (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, and section 
     204(h)(3) of the Employee Retirement Income Security Act of 
     1974, 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 notice 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 
     and the Committee on Education and the Workforce of the House 
     of Representatives and the Committee on Finance and the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate.

     SEC. 505. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--
       (1) In general.--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.''.
       (2) Conforming amendment.--Section 415(b)(7) (relating to 
     benefits under certain collectively bargained plans) is 
     amended by inserting ``(other than a multiemployer plan)'' 
     after ``defined benefit plan'' in the matter preceding 
     subparagraph (A).
       (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''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 506. 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 which is invested in assets consisting of 
     qualifying employer securities, qualifying employer real 
     property, or both, if such assets were acquired before 
     January 1, 1999.''.
       (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. 507. 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 
     to read as follows:
       ``(a)(1) Except as provided in paragraph (2)--
       ``(A) the administrator of an individual account plan shall 
     furnish a pension benefit statement--
       ``(i) to a plan participant at least once annually, and
       ``(ii) to a plan beneficiary upon written request, and
       ``(B) the administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a plan participant or plan beneficiary of the 
     plan upon written request.
       ``(2) Notwithstanding paragraph (1), the administrator of a 
     plan to which more than 1 unaffiliated employer is required 
     to contribute shall only be required to furnish a pension 
     benefit statement under paragraph (1) upon the written 
     request of a participant or beneficiary of the plan.
       ``(3) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written, electronic, telephonic, 
     or other appropriate form.
       ``(4)(A) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator provides 
     the participant at least once each year with notice of the 
     availability of the pension benefit statement and the ways in 
     which the participant may obtain such statement. Such notice 
     shall be provided in written, electronic, telephonic, or 
     other appropriate form, and may be included with other 
     communications to the participant if done in a manner 
     reasonably designed to attract the attention of the 
     participant.
       ``(B) The Secretary may provide that years in which no 
     employee or former employee benefits (within the meaning of 
     section 410(b) of the Internal Revenue Code of 1986) under 
     the plan need not be taken into account in determining the 3-
     year period under paragraph (1)(B)(i).''.
       (b) Conforming Amendments.--
       (1) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is 
     applicable, in any 12-month period.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2002.

     SEC. 508. 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

[[Page 6770]]

     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, 2004.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after March 
     14, 2001, 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 March 14, 2001.

                 TITLE VI--REDUCING REGULATORY BURDENS

     SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.

       (a) Amendment of Internal Revenue Code.--Paragraph (9) of 
     section 412(c)(9) (relating to annual valuation) is amended 
     to read as follows:
       ``(9) Annual valuation.--
       ``(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.

[[Page 6771]]

       ``(iv) Election.--An election under clause (ii), once made, 
     shall be irrevocable without the consent of the Secretary.''.
       (b) Amendment of 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) 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) 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) Information under clause (ii) shall, in accordance 
     with regulations, be actuarially adjusted to reflect 
     significant differences in participants.
       ``(iv) An election under clause (ii), 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 after December 31, 2001.

     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, 2001.

     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 advice or information 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, 2001.

     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, 2002.

     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, 2001.

     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, 2003.
       (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

[[Page 6772]]

     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, 2003.
       (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, 2003, 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, 2001.

     SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) Amendment of internal revenue code.--
       (A) In general.--Subparagraph (A) of section 417(a)(6) is 
     amended by striking ``90-day'' and inserting ``180-day''.
       (B) 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).
       (2) Amendment of erisa.--Section 205(c)(7)(A) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(c)(7)(A)) is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (3) Effective date.--The amendments made by paragraph 
     (1)(A) and (2) and the modifications required by paragraph 
     (1)(B) shall apply to years beginning after December 31, 
     2001.




       (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, 2001.

     SEC. 612. ANNUAL REPORT DISSEMINATION.

       (a) Report Available Through Electronic Means.--Section 
     104(b)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1024(b)(3)) is amended by adding at the end 
     the following new sentence: ``The requirement to furnish 
     information under the previous sentence shall be satisfied if 
     the administrator makes such information reasonably available 
     through electronic means or other new technology.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     2000.

     SEC. 623. TECHNICAL CORRECTIONS TO SAVER ACT.

       Section 517 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1147) is amended--
       (1) in subsection (a), by striking ``2001 and 2005 on or 
     after September 1 of each year involved'' and inserting 
     ``2001, 2005, and 2009 in the month of September of each year 
     involved'';
       (2) in subsection (b), by adding at the end the following 
     new sentence: ``To effectuate the purposes of this paragraph, 
     the Secretary may enter into a cooperative agreement, 
     pursuant to the Federal Grant and Cooperative Agreement Act 
     of 1977 (31 U.S.C. 6301 et seq.), with the American Savings 
     Education Council.'';
       (3) in subsection (e)(2)--
       (A) by striking ``Committee on Labor and Human Resources'' 
     in subparagraph (D) and inserting ``Committee on Health, 
     Education, Labor, and Pensions'';
       (B) by striking subparagraph (F) and inserting the 
     following:
       ``(F) the Chairman and Ranking Member of the Subcommittee 
     on Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the House of Representatives 
     and the Chairman and Ranking Member of the Subcommittee on 
     Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the Senate;'';
       (C) by redesignating subparagraph (G) as subparagraph (J); 
     and
       (D) by inserting after subparagraph (F) the following new 
     subparagraphs:
       ``(G) the Chairman and Ranking Member of the Committee on 
     Finance of the Senate;
       ``(H) the Chairman and Ranking Member of the Committee on 
     Ways and Means of the House of Representatives;
       ``(I) the Chairman and Ranking Member of the Subcommittee 
     on Employer-Employee Relations of the Committee on Education 
     and the Workforce of the House of Representatives; and'';
       (4) in subsection (e)(3)(A)--
       (A) by striking ``There shall be no more than 200 
     additional participants.'' and inserting ``The participants 
     in the National Summit shall also include additional 
     participants appointed under this subparagraph.'';
       (B) by striking ``one-half shall be appointed by the 
     President,'' in clause (i) and inserting ``not more than 100 
     participants shall be appointed under this clause by the 
     President,'', and by striking ``and'' at the end of clause 
     (i);
       (C) by striking ``one-half shall be appointed by the 
     elected leaders of Congress'' in clause (ii) and inserting 
     ``not more than 100 participants shall be appointed under 
     this clause by the elected leaders of Congress'', and by 
     striking the period at the end of clause (ii) and inserting 
     ``; and'';
       (D) by adding at the end the following new clause:
       ``(iii) The President, in consultation with the elected 
     leaders of Congress referred to in subsection (a), may 
     appoint under this clause additional participants to the 
     National Summit. The number of such additional participants 
     appointed under this clause may not exceed the lesser of 3 
     percent of the total number of all additional participants 
     appointed under this paragraph, or 10. Such additional 
     participants shall be appointed from persons nominated by the 
     organization referred to in subsection (b)(2) which is made 
     up of private sector businesses and associations partnered 
     with Government entities to promote long term financial 
     security in retirement through savings and with which the 
     Secretary is required thereunder to consult and cooperate and 
     shall not be Federal, State, or local government 
     employees.'';
       (5) in subsection (e)(3)(B), by striking ``January 31, 
     1998'' in subparagraph (B) and inserting ``May 1, 2001, May 
     1, 2005, and May 1, 2009, for each of the subsequent summits, 
     respectively'';
       (6) in subsection (f)(1)(C), by inserting ``, no later than 
     90 days prior to the date of the commencement of the National 
     Summit,'' after ``comment'' in paragraph (1)(C);
       (7) in subsection (g), by inserting ``, in consultation 
     with the congressional leaders specified in subsection 
     (e)(2),'' after ``report'';
       (8) in subsection (i)--
       (A) by striking ``beginning on or after October 1, 1997'' 
     in paragraph (1) and inserting ``2001, 2005, and 2009''; and
       (B) by adding at the end the following new paragraph:
       ``(3) Reception and representation authority.--The 
     Secretary is hereby granted reception and representation 
     authority limited specifically to the events at the National 
     Summit. The Secretary shall use any private contributions 
     accepted in connection with the National Summit prior to 
     using funds appropriated for purposes of the National Summit 
     pursuant to this paragraph.''; and
       (9) in subsection (k)--
       (A) by striking ``shall enter into a contract on a sole-
     source basis'' and inserting ``may enter into a contract on a 
     sole-source basis''; and

[[Page 6773]]

       (B) by striking ``fiscal year 1998'' and inserting ``fiscal 
     years 2001, 2005, and 2009''.

                   TITLE VII--OTHER ERISA PROVISIONS

     SEC. 701. MISSING PARTICIPANTS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (e) and by 
     inserting after subsection (b) the following new subsections:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.
       ``(d) Plans Not Otherwise Subject to Title.--
       ``(1) Transfer to corporation.--The plan administrator of a 
     plan described in paragraph (4) may elect to transfer a 
     missing participant's benefits to the corporation upon 
     termination of the plan.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (4) shall, upon termination of the 
     plan, provide the corporation information with respect to 
     benefits of a missing participant if the plan transfers such 
     benefits--
       ``(A) to the corporation, or
       ``(B) to an entity other than the corporation or a plan 
     described in paragraph (4)(B)(ii).
       ``(3) Payment by the corporation.--If benefits of a missing 
     participant were transferred to the corporation under 
     paragraph (1), the corporation shall, upon location of the 
     participant or beneficiary, pay to the participant or 
     beneficiary the amount transferred (or the appropriate 
     survivor benefit) either--
       ``(A) in a single sum (plus interest), or
       ``(B) in such other form as is specified in regulations of 
     the corporation.
       ``(4) Plans described.--A plan is described in this 
     paragraph if--
       ``(A) the plan is a pension plan (within the meaning of 
     section 3(2))--
       ``(i) to which the provisions of this section do not apply 
     (without regard to this subsection), and
       ``(ii) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b), and
       ``(B) at the time the assets are to be distributed upon 
     termination, the plan--
       ``(i) has missing participants, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants to another pension 
     plan (within the meaning of section 3(2)).
       ``(5) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (4).''.
       (b) Effective Date.--The amendment 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. 702. 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) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''.
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) did 
     not establish or maintain a plan to which this title applies 
     with respect to which benefits were accrued for substantially 
     the same employees as are in the new single-employer plan.
       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) 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 controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2001.

     SEC. 703. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND 
                   SMALL PLANS.

       (a) New Plans.--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 by adding at the end the 
     following new clause:
       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, 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.
       ``(V) 80 percent, for the fifth plan year.

     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     each of its first 5 plan years if, during the 36-month period 
     ending on the date of the adoption of the plan, the sponsor 
     and each member of any controlled group including the sponsor 
     (or any predecessor of either) did not establish or maintain 
     a plan to which this title applies with respect to which 
     benefits were accrued for substantially the same employees as 
     are in the new plan.''.
       (b) Small Plans.--Paragraph (3) of section 4006(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)), as amended by section 702(b), is amended--
       (1) by striking ``The'' in subparagraph (E)(i) and 
     inserting ``Except as provided in subparagraph (G), the'', 
     and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) In the case of an employer who has 25 or fewer 
     employees on the first day of the plan year, the additional 
     premium determined under subparagraph (E) for each 
     participant shall not exceed $5 multiplied by the number of 
     participants in the plan as of the close of the preceding 
     plan year.
       ``(ii) For purposes of clause (i), whether an employer has 
     25 or fewer employees on the first day of the plan year is 
     determined taking into consideration all of the employees of 
     all members of the contributing sponsor's controlled group. 
     In the case of a plan maintained by two or more contributing 
     sponsors, the employees of all contributing sponsors and 
     their controlled groups shall be aggregated for purposes of 
     determining whether the 25-or-fewer-employees limitation has 
     been satisfied.''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to plans established after December 31, 2001.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 704. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM 
                   OVERPAYMENT REFUNDS.

       (a) In General.--Section 4007(b) of the Employment 
     Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is 
     amended--
       (1) by striking ``(b)'' and inserting ``(b)(1)'', and
       (2) by inserting at the end the following new paragraph:
       ``(2) The corporation is authorized to pay, subject to 
     regulations prescribed by the corporation, interest on the 
     amount of any overpayment of premium refunded to a designated 
     payor. Interest under this paragraph shall be calculated at 
     the same rate and in the same manner as interest is 
     calculated for underpayments under paragraph (1).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to interest accruing for periods beginning not 
     earlier than the date of the enactment of this Act.

     SEC. 705. 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.''.

[[Page 6774]]

       (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 new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to 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--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following new subsection:
       ``(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)) after 
     December 31, 2001, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2002.

     SEC. 706. 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 new paragraph:
       ``(5) A person shall be jointly and severally liable for 
     the penalty described in paragraph (1) to the same extent 
     that such person is jointly and severally liable for the 
     applicable recovery amount on which the penalty is based.
       ``(6) No penalty shall be assessed under this subsection 
     unless the person against whom the penalty is assessed is 
     given notice and opportunity for a hearing with respect to 
     the violation and applicable recovery amount.''.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to any breach of fiduciary responsibility or other 
     violation of part 4 of 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. 707. 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) in the case of an employee who returns to work for a 
     former employer after commencement of payment of benefits 
     under the plan shall--
       (A) be made during the first calendar month or payroll 
     period in which the plan withholds payments, and
       (B) if a reduced rate of future benefit accruals will apply 
     to the returning employee (as of the first date of 
     participation in the plan by the employee after returning to 
     work), include a statement that the rate of future benefit 
     accruals will be reduced, and
       (2) in the case of any employee who is not described in 
     paragraph (1)--
       (A) 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
       (B) need not include a copy of the relevant plan 
     provisions.
       (b) Effective Date.--The modification made under this 
     section shall apply to plan years beginning after December 
     31, 2001.

                      TITLE VIII--PLAN AMENDMENTS

     SEC. 801. 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) except as provided by the Secretary of the Treasury, 
     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 
     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, 2004.

     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 ``2006'' for ``2004''.
       (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 (Mr. Thornberry). In lieu of the amendment 
recommended by the Committee on Ways and Means and the amendment 
recommended by the Committee on Education and the Workforce printed in 
the bill, the amendment in the nature of a substitute printed in the 
Congressional Record and numbered 1 is adopted.
  The text of H.R. 10, as amended pursuant to House Resolution 127 is 
as follows:

     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 
     2001''.
       (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.

[[Page 6775]]

           TITLE I--INDIVIDUAL RETIREMENT ACCOUNT PROVISIONS

Sec. 101. Modification of IRA contribution limits.

                      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.
Sec. 209. Availability of qualified plans to self-employed individuals 
              who are exempt from the self-employment tax by reason of 
              their religious beliefs.
Sec. 210. Certain nonresident aliens excluded in applying minimum 
              coverage requirements.

                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. Modifications to minimum distribution rules.
Sec. 305. Clarification of tax treatment of division of section 457 
              plan benefits upon divorce.
Sec. 306. Provisions relating to hardship distributions.
Sec. 307. Waiver of tax on nondeductible contributions for domestic or 
              similar workers.

           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 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. Protection of investment of employee contributions to 401(k) 
              plans.
Sec. 507. Periodic pension benefits statements.
Sec. 508. 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.
Sec. 612. Annual report dissemination.
Sec. 613. Technical corrections to SAVER Act.

                   TITLE VII--OTHER ERISA PROVISIONS

Sec. 701. Missing participants.
Sec. 702. Reduced PBGC premium for new plans of small employers.
Sec. 703. Reduction of additional PBGC premium for new and small plans.
Sec. 704. Authorization for PBGC to pay interest on premium overpayment 
              refunds.
Sec. 705. Substantial owner benefits in terminated plans.
Sec. 706. Civil penalties for breach of fiduciary responsibility.
Sec. 707. Benefit suspension notice.
Sec. 708. Studies.

                      TITLE VIII--PLAN AMENDMENTS

Sec. 801. 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:  
      2002..................................................$3,000 .

      2003..................................................$4,000 .

      2004 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 2002 or 2003 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 2004, 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 2003' 
     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, 
     2001.

                      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'' and by 
     striking the second sentence.
       (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

[[Page 6776]]

       (ii) by striking ``October 1, 1986'' and inserting ``July 
     1, 2001''.
       (5) Conforming amendments.--
       (A) Section 415(b)(2) is amended by striking subparagraph 
     (F).
       (B) Section 415(b)(9) is amended to read as follows:
       ``(9) Special rule for commercial airline pilots.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in the case of any participant who is a commercial airline 
     pilot, if, as of the time of the participant's retirement, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining any age occurring on 
     or after age 60 and before age 62, paragraph (2)(C) shall be 
     applied by substituting such age for age 62.
       ``(B) Individuals who separate from service before age 
     60.--If a participant described in subparagraph (A) separates 
     from service before age 60, the rules of paragraph (2)(C) 
     shall apply.''.
       (C) Section 415(b)(10)(C)(i) is amended by striking 
     ``applied without regard to paragraph (2)(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, 2001''.
       (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, 
     2001''; 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:
      2002.....................................................$11,000 
      2003.....................................................$12,000 
      2004.....................................................$13,000 
      2005.....................................................$14,000 
      2006 or thereafter....................................$15,000.''.

       (2) Cost-of-living adjustment.--Paragraph (5) of section 
     402(g) is amended to read as follows:
       ``(5) Cost-of-living adjustment.--In the case of taxable 
     years beginning after December 31, 2006, 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, 2005, 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:
      2002.....................................................$11,000 
      2003.....................................................$12,000 
      2004.....................................................$13,000 
      2005.....................................................$14,000 
      2006 or thereafter.......................................$15,000.

       ``(B) Cost-of-living adjustments.--In the case of taxable 
     years beginning after December 31, 2006, the Secretary shall 
     adjust the $15,000 amount under 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, 2005, 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:
        2002....................................................$7,000 
        2003....................................................$8,000 
        2004....................................................$9,000 
        2005 or thereafter.....................................$10,000.

       ``(ii) Cost-of-living adjustment.--In the case of a year 
     beginning after December 31, 2005, 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, 2004, 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) Subclause (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, 2001.

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

       (a) Amendment of Internal Revenue Code.--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) Amendment of ERISA.--Section 408(d)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) For purposes of paragraph (1)(A), the term `owner-
     employee' shall only include a person described in clause 
     (ii) or (iii) of subparagraph (A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     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

[[Page 6777]]

     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 key 
     employee or former key 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, 2001.

     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, 2001.

     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, 2001.

     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 10511 of the Revenue Act of 1987 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 later of--
       (A) the fifth plan year the pension benefit plan is in 
     existence; or
       (B) the end of any remedial amendment period with respect 
     to the plan beginning within the first 5 plan years; 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) Determination of Average Fees Charged.--For purposes of 
     any determination of average fees charged, any request to 
     which subsection (a) applies shall not be taken into account.
       (e) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 2001.

     SEC. 207. DEDUCTION LIMITS.

       (a) Stock Bonus and Profit Sharing Trusts.--
       (1) In general.--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) Conforming amendment.--Subparagraph (C) of section 
     404(h)(1) is amended by striking ``15 percent'' each place it 
     appears and inserting ``20 percent''.
       (b) Compensation.--
       (1) In general.--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).''.
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 404(a)(3) is amended by 
     striking the last sentence.
       (B) 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, 2001.

     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--

[[Page 6778]]

       ``(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 contributions 
     and earnings thereon.--The term `qualified distribution' 
     shall not include any distribution of an excess deferral 
     under section 402(g)(2) or any excess contribution under 
     section 401(k)(8), and any income on the excess deferral or 
     contribution.
       ``(3) Treatment of distributions of certain excess 
     deferrals.--Notwithstanding section 72, if any excess 
     deferral under section 402(g)(2) attributable to a designated 
     plus contribution is not distributed on or before the 1st 
     April 15 following the close of the taxable year in which 
     such excess deferral is made, the amount of such excess 
     deferral shall--
       ``(A) not be treated as investment in the contract, and
       ``(B) be included in gross income for the taxable year in 
     which such excess is distributed.
       ``(4) 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)(A) (as added by 
     section 201(d)(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.''.

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

     SEC. 209. AVAILABILITY OF QUALIFIED PLANS TO SELF-EMPLOYED 
                   INDIVIDUALS WHO ARE EXEMPT FROM THE SELF-
                   EMPLOYMENT TAX BY REASON OF THEIR RELIGIOUS 
                   BELIEFS.

       (a) In General.--Subparagraph (A) of section 401(c)(2) 
     (defining earned income) is amended by adding at the end 
     thereof the following new sentence: ``For purposes of this 
     part only (other than sections 419 and 419A), this 
     subparagraph shall be applied as if the term `trade or 
     business' for purposes of section 1402 included service 
     described in section 1402(c)(6).''.
       (b) Simple Retirement Accounts.--Clause (ii) of section 
     408(p)(6)(A) (defining self-employed) is amended by adding at 
     the end the following new sentence: ``The preceding sentence 
     shall be applied as if the term `trade or business' for 
     purposes of section 1402 included service described in 
     section 1402(c)(6).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 210. CERTAIN NONRESIDENT ALIENS EXCLUDED IN APPLYING 
                   MINIMUM COVERAGE REQUIREMENTS.

       (a) In General.--Subparagraph (C) of section 410(b)(3) 
     (relating to exclusion of certain employees) is amended by 
     inserting ``, determined without regard to the reference to 
     subchapter D in the last sentence thereof'' after ``section 
     861(a)(3)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after December 31, 2001.

                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) Application of nondiscrimination rules.--
       ``(A) In general.--An applicable employer plan shall not be 
     treated as failing to meet

[[Page 6779]]

     the nondiscrimination requirements under section 401(a)(4) 
     with respect to benefits, rights, and features if the plan 
     allows all eligible participants to make the same election 
     with respect to the additional elective deferrals under this 
     subsection.
       ``(B) Aggregation.--For purposes of subparagraph (A), all 
     plans maintained by employers who are treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 shall be treated as 1 plan.
       ``(5) 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.
       ``(6) 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.--In the case of a year 
     beginning after December 31, 2006, the Secretary shall adjust 
     annually the $5,000 amount in paragraph (2)(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 taken into account shall be the calendar quarter 
     beginning July 1, 2005, and any increase under this 
     subparagraph which is not a multiple of $500 shall be rounded 
     to the next lower multiple of $500.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2001.

     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 
     2001)''.
       (B) Section 404(a)(10)(B) is amended by striking ``, the 
     exclusion allowance under section 403(b)(2),''.
       (C) Section 404(j) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rule for money purchase plans.--For purposes 
     of paragraph (1)(B), in the case of a defined contribution 
     plan which is subject to the funding standards of section 
     412, section 415(c)(1)(B) shall be applied by substituting 
     `25 percent' for `100 percent'.''.
       (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 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).''.
       (H) Subparagraph (B) of section 402(g)(7) (as redesignated 
     by section 201) 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 2001)''.
       (I) Section 664(g) is amended--
       (i) in paragraph (3)(E) by striking ``limitations under 
     section 415(c)'' and inserting ``applicable limitation under 
     paragraph (7)'', and
       (ii) by adding at the end the following new paragraph:
       ``(7) Applicable limitation.--
       ``(A) In general.--For purposes of paragraph (3)(E), the 
     applicable limitation under this paragraph with respect to a 
     participant is an amount equal to the lesser of--
       ``(i) $30,000, or
       ``(ii) 25 percent of the participant's compensation (as 
     defined in section 415(c)(3)).
       ``(B) Cost-of-living adjustment.--The Secretary shall 
     adjust annually the $30,000 amount under subparagraph (A)(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 beginning October 1, 1993, and any increase under 
     this subparagraph which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (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, 2001.

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

       (a) Amendment of Internal Revenue Code.--Section 411(a) 
     (relating to minimum vesting standards) is amended--
       (1) in paragraph (2) in the matter preceding subparagraph 
     (A), 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):


[[Page 6780]]


                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      2............................................................20  
      3............................................................40  
      4............................................................60  
      5............................................................80  
      6.........................................................100.''.

       (b) Amendment of 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), in the matter preceding subparagraph 
     (A), 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:  
      2............................................................20  
      3............................................................40  
      4............................................................60  
      5............................................................80  
      6.........................................................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, 2001.
       (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, 2002; or
       (B) January 1, 2006.
       (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. 304. MODIFICATIONS TO MINIMUM DISTRIBUTION RULES.

       (a) Life Expectancy Tables.--The Secretary of the Treasury 
     shall modify the life expectancy tables under 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 to reflect current life expectancy.
       (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.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall apply to years 
     beginning after December 31, 2001.
       (B) Distributions to surviving spouse.--
       (i) In general.--In the case of an employee described in 
     clause (ii), distributions to the surviving spouse of the 
     employee shall not be required to commence prior to the date 
     on which such distributions would have been required to begin 
     under section 401(a)(9)(B) of the Internal Revenue Code of 
     1986 (as in effect on the day before the date of the 
     enactment of this Act).
       (ii) Certain employees.--An employee is described in this 
     clause if such employee dies before--

       (I) the date of the enactment of this Act, and
       (II) the required beginning date (within the meaning of 
     section 401(a)(9)(C) of the Internal Revenue Code of 1986) of 
     the employee.

       (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, 2001.

     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, 2001.

     SEC. 306. PROVISIONS RELATING TO HARDSHIP DISTRIBUTIONS.

       (a) Safe Harbor Relief.--
       (1) 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.
       (2) Effective date.--The revised regulations under this 
     subsection shall apply to years beginning after December 31, 
     2001.
       (b) Hardship Distributions Not Treated as Eligible Rollover 
     Distributions.--
       (1) Modification of definition of eligible rollover.--
     Subparagraph (C) of section 402(c)(4) (relating to eligible 
     rollover distribution) is amended to read as follows:
       ``(C) any distribution which is made upon hardship of the 
     employee.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to distributions made after December 31, 2001.

     SEC. 307. WAIVER OF TAX ON NONDEDUCTIBLE CONTRIBUTIONS FOR 
                   DOMESTIC OR SIMILAR WORKERS.

       (a) In General.--Section 4972(c)(6) (relating to exceptions 
     to nondeductible contributions), as amended by section 502, 
     is amended by striking ``or'' at the end of subparagraph (A), 
     by striking the period and inserting ``, and'' at the end of 
     subparagraph (B), and by inserting after subparagraph (B) the 
     following new subparagraph:
       ``(C) so much of the contributions to a simple retirement 
     account (within the meaning of section 408(p)) or a simple 
     plan (within the meaning of section 401(k)(11)) which are not 
     deductible when contributed solely because such contributions 
     are not made in connection with a trade or business of the 
     employer.''
       (b) Exclusion of Certain Contributions.--Section 4972(c)(6) 
     is amended by adding at the end the following new sentence: 
     ``Subparagraph (C) shall not apply to contributions made on 
     behalf of the employer or a member of the employer's family 
     (as defined in section 447(e)(1)).''.
       (c) No Inference.--Nothing in the amendments made by this 
     section shall be construed to infer the proper treatment of 
     nondeductible contributions under the laws in effect before 
     such amendments.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

           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

[[Page 6781]]

       ``(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) and which is maintained by an 
     eligible employer described in section 457(e)(1)(A).''.
       (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) which is maintained by an eligible 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:
       ``(10) 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 eligible employer described in section 457(e)(1)(A) shall 
     be treated as a distribution from a qualified retirement plan 
     described in section 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 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, 2001.
       (2) Reasonable notice.--No penalty shall be imposed on a 
     plan for the failure to provide the information required by 
     the amendment made by subsection (c) with respect to any 
     distribution made before the date that is 90 days after the 
     date on which the Secretary of the Treasury issues a safe 
     harbor rollover notice after the date of the enactment of 
     this Act, if the administrator of such plan makes a 
     reasonable attempt to comply with such requirement.
       (3) 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, 2001.
       (2) Special rule.--Notwithstanding any other provision of 
     law, subsections (h)(3) and

[[Page 6782]]

     (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 after December 31, 2001.

     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, 2001.

     SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.

       (a) Plan Transfers.--
       (1) Amendment of internal revenue code.--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 received a notice 
     describing the consequences of making the election, and
       ``(V) 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) Amendment of erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following:
       ``(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 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 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; and
       ``(v) the transferee plan allows the participant or 
     beneficiary described in clause (iii) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the 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 
     promulgated by the Secretary of the Treasury, a defined 
     contribution plan shall not be treated as failing to meet the 
     requirements of this subsection 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.''.

[[Page 6783]]

       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (b) Regulations.--
       (1) Amendment of internal revenue code.--Paragraph (6)(B) 
     of section 411(d) (relating to accrued benefit not to be 
     decreased by amendment) is amended by inserting after the 
     second sentence the following new sentence: ``The Secretary 
     shall by regulations provide that this subparagraph shall not 
     apply to any plan amendment which reduces or eliminates 
     benefits or subsidies which create significant burdens or 
     complexities for the plan and plan participants and does not 
     adversely affect the rights of any participant in a more than 
     de minimis manner.''.
       (2) Amendment of erisa.--Section 204(g)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)(2)) 
     is amended by inserting before the last sentence the 
     following new sentence: ``The Secretary of the Treasury shall 
     by regulations provide that this paragraph shall not apply to 
     any plan amendment which reduces or eliminates benefits or 
     subsidies which create significant burdens or complexities 
     for the plan and plan participants and does not adversely 
     affect the rights of any participant in a more than de 
     minimis manner.''.
       (3) Secretary directed.--Not later than December 31, 2003, 
     the Secretary of the Treasury is directed to issue 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986 and section 204(g) of the Employee Retirement 
     Income Security Act of 1974, including the regulations 
     required by the amendment made by this subsection. Such 
     regulations shall apply to plan years beginning after 
     December 31, 2003, 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, 2001.

     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, 2001.

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

       (a) Qualified Plans.--
       (1) Amendment of internal revenue code.--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).''.
       (2) Amendment of erisa.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) 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 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) of the Internal Revenue Code 
     of 1986.''.
       (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, 2001.

     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, 2001.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

     SEC. 501. REPEAL OF PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

       (a) Amendment of Internal Revenue Code.--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                                 The applicable
      plan year beginning                               percentage is--
      in--
      2002........................................................165  
      2003......................................................170.''.

       (b) Amendment of ERISA.--Section 302(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) 
     is amended--

[[Page 6784]]

       (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                                 The applicable
      plan year beginning                               percentage is--
      in--
      2002........................................................165  
      2003......................................................170.''.

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

     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 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 maintained 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), as amended by section 207, 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, 2001.

     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, 2001.

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

       (a) Amendment of Internal Revenue Code.--
       (1) 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 notice to which the failure 
     relates is provided or the failure is otherwise corrected.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Tax not to apply where failure not discovered and 
     reasonable diligence exercised.--No tax shall be imposed by 
     subsection (a) on any failure during any period for which it 
     is established to the satisfaction of the Secretary that any 
     person subject to liability for the tax under subsection (d) 
     did not know that the failure existed and exercised 
     reasonable diligence to meet the requirements of subsection 
     (e).
       ``(2) Tax not to apply to failures corrected within 30 
     days.--No tax shall be imposed by subsection (a) on any 
     failure if--
       ``(A) any person subject to liability for the tax under 
     subsection (d) exercised reasonable diligence to meet the 
     requirements of subsection (e), and
       ``(B) such person provides the notice described in 
     subsection (e) during the 30-day period beginning on the 
     first date such person knew, or exercising reasonable 
     diligence would have known, that such failure existed.
       ``(3) Overall limitation for unintentional failures.--
       ``(A) In general.--If the person subject to liability for 
     tax under subsection (d) exercised reasonable diligence to 
     meet the requirements of subsection (e), 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 1 plan.
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(4) 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 or otherwise inequitable 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. The Secretary 
     may provide a simplified form of notice for, or exempt from 
     any notice requirement, a plan--
       ``(A) which has fewer than 100 participants who have 
     accrued a benefit under the plan, or
       ``(B) which offers participants the option to choose 
     between the new benefit formula and the old benefit formula.
       ``(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) Definitions and Special Rules.--For purposes of this 
     section--

[[Page 6785]]

       ``(1) Applicable individual.--The term `applicable 
     individual' means, with respect to any plan amendment--
       ``(A) each 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)),

     whose rate of future benefit accrual under the plan may 
     reasonably be expected to be significantly reduced 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.

     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.
       ``(3) Early retirement.--A plan amendment which eliminates 
     or significantly reduces any early retirement benefit or 
     retirement-type subsidy (within the meaning of section 
     411(d)(6)(B)(i)) shall be treated as having the effect of 
     significantly reducing the rate of future benefit accrual.
       ``(g) New Technologies.--The Secretary may by regulations 
     allow any notice under subsection (e) to be provided by using 
     new technologies.''.
       (2) 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.''.

       (b) Amendment of ERISA.--Section 204(h) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is 
     amended by adding at the end the following new paragraphs:
       ``(3)(A) An applicable pension plan to which paragraph (1) 
     applies shall not be treated as meeting the requirements of 
     such paragraph unless, in addition to any notice required to 
     be provided to an individual or organization under such 
     paragraph, the plan administrator provides the notice 
     described in subparagraph (B) to each applicable individual 
     (and to each employee organization representing applicable 
     individuals).
       ``(B) The notice required by subparagraph (A) 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 of the Treasury) to allow 
     applicable individuals to understand the effect of the plan 
     amendment. The Secretary of the Treasury may provide a 
     simplified form of notice for, or exempt from any notice 
     requirement, a plan--
       ``(i) which has fewer than 100 participants who have 
     accrued a benefit under the plan, or
       ``(ii) which offers participants the option to choose 
     between the new benefit formula and the old benefit formula.
       ``(C) Except as provided in regulations prescribed by the 
     Secretary of the Treasury, the notice required by 
     subparagraph (A) shall be provided within a reasonable time 
     before the effective date of the plan amendment.
       ``(D) Any notice under subparagraph (A) may be provided to 
     a person designated, in writing, by the person to which it 
     would otherwise be provided.
       ``(E) A plan shall not be treated as failing to meet the 
     requirements of subparagraph (A) 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) The Secretary of the Treasury may by regulations 
     allow any notice under this paragraph to be provided by using 
     new technologies.
       ``(4) For purposes of paragraph (3)--
       ``(A) The term `applicable individual' means, with respect 
     to any plan amendment--
       ``(i) each participant in the plan; and
       ``(ii) any 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)),

     whose rate of future benefit accrual under the plan may 
     reasonably be expected to be significantly reduced by such 
     plan amendment.
       ``(B) The term `applicable pension plan' means--
       ``(i) any defined benefit plan; or
       ``(ii) an individual account plan which is subject to the 
     funding standards of section 412 of the Internal Revenue Code 
     of 1986.
       ``(C) A plan amendment which eliminates or significantly 
     reduces any early retirement benefit or retirement-type 
     subsidy (within the meaning of subsection (g)(2)(A)) shall be 
     treated as having the effect of significantly reducing the 
     rate of future benefit accrual.''.
       (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, and section 
     204(h)(3) of the Employee Retirement Income Security Act of 
     1974, 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 notice rule.--
       (A) In general.--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.
       (B) Reasonable notice.--The amendments made by this section 
     shall not apply to any plan amendment taking effect on or 
     after the date of the enactment of this Act if, before April 
     25, 2001, notice was provided to participants and 
     beneficiaries adversely affected by the plan amendment (or 
     their representatives) which was reasonably expected to 
     notify them of the nature and effective date of the plan 
     amendment.
       (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 
     and the Committee on Education and the Workforce of the House 
     of Representatives and the Committee on Finance and the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate.

     SEC. 505. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--
       (1) In general.--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.''.
       (2) Conforming amendment.--Section 415(b)(7) (relating to 
     benefits under certain collectively bargained plans) is 
     amended by inserting ``(other than a multiemployer plan)'' 
     after ``defined benefit plan'' in the matter preceding 
     subparagraph (A).
       (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--
       ``(A) with any other plan which is not a multiemployer plan 
     for purposes of applying subsection (b)(1)(B) to such other 
     plan, or
       ``(B) with any other multiemployer plan 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''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 506. 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 which is invested in assets consisting of 
     qualifying employer securities, qualifying employer real 
     property, or both, if such assets were acquired before 
     January 1, 1999.''.
       (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. 507. 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 
     to read as follows:
       ``Sec. 105. (a)(1)(A) The administrator of an individual 
     account plan shall furnish a pension benefit statement--
       ``(i) to a plan participant at least once annually, and
       ``(ii) to a plan beneficiary upon written request.
       ``(B) The administrator of a defined benefit plan shall 
     furnish a pension benefit statement--

[[Page 6786]]

       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a plan participant or plan beneficiary of the 
     plan upon written request.
       ``(2) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written, electronic, or other 
     appropriate form.
       ``(3)(A) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator provides 
     the participant at least once each year with notice of the 
     availability of the pension benefit statement and the ways in 
     which the participant may obtain such statement. Such notice 
     shall be provided in written, electronic, or other 
     appropriate form, and may be included with other 
     communications to the participant if done in a manner 
     reasonably designed to attract the attention of the 
     participant.
       ``(B) The Secretary may provide that years in which no 
     employee or former employee benefits (within the meaning of 
     section 410(b) of the Internal Revenue Code of 1986) under 
     the plan need not be taken into account in determining the 3-
     year period under paragraph (1)(B)(i).''.
       (b) Conforming Amendments.--
       (1) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is 
     applicable, in any 12-month period.''.
       (c) Model Statements.--The Secretary of Labor shall develop 
     a model benefit statement, written in a manner calculated to 
     be understood by the average plan participant, that may be 
     used by plan administrators in complying with the 
     requirements of section 105 of the Employee Retirement Income 
     Security Act of 1974.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2002.

     SEC. 508. 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

[[Page 6787]]

       ``(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, 2004.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after March 
     14, 2001, 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 March 14, 2001.

                 TITLE VI--REDUCING REGULATORY BURDENS

     SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.

       (a) Amendment of Internal Revenue Code.--Paragraph (9) of 
     section 412(c) (relating to annual valuation) is amended to 
     read as follows:
       ``(9) Annual valuation.--
       ``(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) Amendment of 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) 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) 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) Information under clause (ii) shall, in accordance 
     with regulations, be actuarially adjusted to reflect 
     significant differences in participants.
       ``(iv) An election under clause (ii), 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 after December 31, 2001.

     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) Standards for Disallowance.--Section 404(k)(5)(A) 
     (relating to disallowance of deduction) is amended by 
     inserting ``avoidance or'' before ``evasion''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     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, 2001.

     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 advice or information 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).''.

[[Page 6788]]

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

     SEC. 606. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury and the 
     Secretary of Labor 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 plan years beginning 
     after December 31, 2002, the Secretary of the Treasury and 
     the Secretary of Labor shall provide for the filing of a 
     simplified annual return for any retirement plan which covers 
     less than 25 employees on the first day of a plan year and 
     which meets the requirements described in subparagraphs (B), 
     (D), and (E) of subsection (a)(2).
       (c) Effective Date.--The provisions of this section shall 
     take effect on January 1, 2002.

     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 Self-Correction Program for significant compliance 
     failures;
       (4) expanding the availability to correct insignificant 
     compliance failures under the Self-Correction Program 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, 2001.

     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, 2003.
       (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, 2003.
       (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, 2003, 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) of the Internal 
     Revenue Code of 1986 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, 2001.

     SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

       (a) Expansion of Period.--
       (1) Amendment of internal revenue code.--
       (A) In general.--Subparagraph (A) of section 417(a)(6) is 
     amended by striking ``90-day'' and inserting ``180-day''.
       (B) 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).
       (2) Amendment of erisa.--
       (A) In general.--Section 205(c)(7)(A) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(c)(7)(A)) is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (B) Modification of regulations.--The Secretary of the 
     Treasury shall modify the regulations under part 2 of 
     subtitle B of title I of the Employee Retirement Income 
     Security Act of 1974 to the extent that they relate to 
     sections 203(e) and 205 of such Act to substitute ``180 
     days'' for ``90 days'' each place it appears.
       (3) Effective date.--The amendments made by paragraph 
     (1)(A) and (2)(A) and the modifications required by paragraph 
     (1)(B) shall apply to years beginning after December 31, 
     2001.
       (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 and under section 205 of the Employee 
     Retirement Income Security Act of 1974 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, 2001.

[[Page 6789]]



     SEC. 612. ANNUAL REPORT DISSEMINATION.

       (a) Report Available Through Electronic Means.--Section 
     104(b)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1024(b)(3)) is amended by adding at the end 
     the following new sentence: ``The requirement to furnish 
     information under the previous sentence shall be satisfied if 
     the administrator makes such information reasonably available 
     through electronic means or other new technology.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     2000.

     SEC. 613. TECHNICAL CORRECTIONS TO SAVER ACT.

       Section 517 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1147) is amended--
       (1) in subsection (a), by striking ``2001 and 2005 on or 
     after September 1 of each year involved'' and inserting 
     ``2001, 2005, and 2009 in the month of September of each year 
     involved'';
       (2) in subsection (b), by adding at the end the following 
     new sentence: ``To effectuate the purposes of this paragraph, 
     the Secretary may enter into a cooperative agreement, 
     pursuant to the Federal Grant and Cooperative Agreement Act 
     of 1977 (31 U.S.C. 6301 et seq.), with the American Savings 
     Education Council or any other appropriate, qualified 
     entity.'';
       (3) in subsection (e)(2)--
       (A) by striking ``Committee on Labor and Human Resources'' 
     in subparagraph (D) and inserting ``Committee on Health, 
     Education, Labor, and Pensions'';
       (B) by striking subparagraph (F) and inserting the 
     following:
       ``(F) the Chairman and Ranking Member of the Subcommittee 
     on Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the House of Representatives 
     and the Chairman and Ranking Member of the Subcommittee on 
     Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the Senate;'';
       (C) by redesignating subparagraph (G) as subparagraph (J); 
     and
       (D) by inserting after subparagraph (F) the following new 
     subparagraphs:
       ``(G) the Chairman and Ranking Member of the Committee on 
     Finance of the Senate;
       ``(H) the Chairman and Ranking Member of the Committee on 
     Ways and Means of the House of Representatives;
       ``(I) the Chairman and Ranking Member of the Subcommittee 
     on Employer-Employee Relations of the Committee on Education 
     and the Workforce of the House of Representatives; and'';
       (4) in subsection (e)(3)--
       (A) by striking ``There shall be not more than 200 
     additional participants.'' in subparagraph (A) and inserting 
     ``The participants in the National Summit shall also include 
     additional participants appointed under this subparagraph.'';
       (B) by striking ``one-half shall be appointed by the 
     President,'' in subparagraph (A)(i) and inserting ``not more 
     than 100 participants shall be appointed under this clause by 
     the President,'';
       (C) by striking ``one-half shall be appointed by the 
     elected leaders of Congress'' in subparagraph (A)(ii) and 
     inserting ``not more than 100 participants shall be appointed 
     under this clause by the elected leaders of Congress'';
       (D) by redesignating subparagraph (B) as subparagraph (C); 
     and
       (E) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) Presidential authority for additional appointments.--
     The President, in consultation with the elected leaders of 
     Congress referred to in subsection (a), may appoint under 
     this subparagraph additional participants to the National 
     Summit. The number of such additional participants appointed 
     under this subparagraph may not exceed the lesser of 3 
     percent of the total number of all additional participants 
     appointed under this paragraph, or 10. Such additional 
     participants shall be appointed from persons nominated by the 
     organization referred to in subsection (b)(2) which is made 
     up of private sector businesses and associations partnered 
     with Government entities to promote long term financial 
     security in retirement through savings and with which the 
     Secretary is required thereunder to consult and cooperate and 
     shall not be Federal, State, or local government 
     employees.'';
       (5) in subsection (e)(3)(C) (as redesignated), by striking 
     ``January 31, 1998'' and inserting ``May 1, 2001, May 1, 
     2005, and May 1, 2009, for each of the subsequent summits, 
     respectively'';
       (6) in subsection (f)(1)(C), by inserting ``, no later than 
     90 days prior to the date of the commencement of the National 
     Summit,'' after ``comment'';
       (7) in subsection (g), by inserting ``, in consultation 
     with the congressional leaders specified in subsection 
     (e)(2),'' after ``report'' the first place it appears;
       (8) in subsection (i)--
       (A) by striking ``beginning on or after October 1, 1997'' 
     in paragraph (1) and inserting ``2001, 2005, and 2009''; and
       (B) by adding at the end the following new paragraph:
       ``(3) Reception and representation authority.--The 
     Secretary is hereby granted reception and representation 
     authority limited specifically to the events at the National 
     Summit. The Secretary shall use any private contributions 
     accepted in connection with the National Summit prior to 
     using funds appropriated for purposes of the National Summit 
     pursuant to this paragraph.''; and
       (9) in subsection (k)--
       (A) by striking ``shall enter into a contract on a sole-
     source basis'' and inserting ``may enter into a contract on a 
     sole-source basis''; and
       (B) by striking ``fiscal year 1998'' and inserting ``fiscal 
     years 2001, 2005, and 2009''.

                   TITLE VII--OTHER ERISA PROVISIONS

     SEC. 701. MISSING PARTICIPANTS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (e) and by 
     inserting after subsection (b) the following new subsections:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.
       ``(d) Plans Not Otherwise Subject to Title.--
       ``(1) Transfer to corporation.--The plan administrator of a 
     plan described in paragraph (4) may elect to transfer a 
     missing participant's benefits to the corporation upon 
     termination of the plan.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (4) shall, upon termination of the 
     plan, provide the corporation information with respect to 
     benefits of a missing participant if the plan transfers such 
     benefits--
       ``(A) to the corporation, or
       ``(B) to an entity other than the corporation or a plan 
     described in paragraph (4)(B)(ii).
       ``(3) Payment by the corporation.--If benefits of a missing 
     participant were transferred to the corporation under 
     paragraph (1), the corporation shall, upon location of the 
     participant or beneficiary, pay to the participant or 
     beneficiary the amount transferred (or the appropriate 
     survivor benefit) either--
       ``(A) in a single sum (plus interest), or
       ``(B) in such other form as is specified in regulations of 
     the corporation.
       ``(4) Plans described.--A plan is described in this 
     paragraph if--
       ``(A) the plan is a pension plan (within the meaning of 
     section 3(2))--
       ``(i) to which the provisions of this section do not apply 
     (without regard to this subsection), and
       ``(ii) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b), and
       ``(B) at the time the assets are to be distributed upon 
     termination, the plan--
       ``(i) has missing participants, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants to another pension 
     plan (within the meaning of section 3(2)).
       ``(5) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (4).''.
       (b) Conforming Amendments.--Section 206(f) of such Act (29 
     U.S.C. 1056(f)) is amended--
       (1) by striking ``title IV'' and inserting ``section 
     4050''; and
       (2) by striking ``the plan shall provide that,''.
       (c) Effective Date.--The amendment 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. 702. 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) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''.
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) did 
     not establish or maintain a plan to which this title applies 
     with

[[Page 6790]]

     respect to which benefits were accrued for substantially the 
     same employees as are in the new single-employer plan.
       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) 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 controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2001.

     SEC. 703. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND 
                   SMALL PLANS.

       (a) New Plans.--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 by adding at the end the 
     following new clause:
       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, 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.
       ``(V) 80 percent, for the fifth plan year.

     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     each of its first 5 plan years if, during the 36-month period 
     ending on the date of the adoption of the plan, the sponsor 
     and each member of any controlled group including the sponsor 
     (or any predecessor of either) did not establish or maintain 
     a plan to which this title applies with respect to which 
     benefits were accrued for substantially the same employees as 
     are in the new plan.''.
       (b) Small Plans.--Paragraph (3) of section 4006(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)), as amended by section 702(b), is amended--
       (1) by striking ``The'' in subparagraph (E)(i) and 
     inserting ``Except as provided in subparagraph (G), the'', 
     and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) In the case of an employer who has 25 or fewer 
     employees on the first day of the plan year, the additional 
     premium determined under subparagraph (E) for each 
     participant shall not exceed $5 multiplied by the number of 
     participants in the plan as of the close of the preceding 
     plan year.
       ``(ii) For purposes of clause (i), whether an employer has 
     25 or fewer employees on the first day of the plan year is 
     determined taking into consideration all of the employees of 
     all members of the contributing sponsor's controlled group. 
     In the case of a plan maintained by two or more contributing 
     sponsors, the employees of all contributing sponsors and 
     their controlled groups shall be aggregated for purposes of 
     determining whether the 25-or-fewer-employees limitation has 
     been satisfied.''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to plans established after December 31, 2001.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 704. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM 
                   OVERPAYMENT REFUNDS.

       (a) In General.--Section 4007(b) of the Employment 
     Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is 
     amended--
       (1) by striking ``(b)'' and inserting ``(b)(1)'', and
       (2) by inserting at the end the following new paragraph:
       ``(2) The corporation is authorized to pay, subject to 
     regulations prescribed by the corporation, interest on the 
     amount of any overpayment of premium refunded to a designated 
     payor. Interest under this paragraph shall be calculated at 
     the same rate and in the same manner as interest is 
     calculated for underpayments under paragraph (1).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to interest accruing for periods beginning not 
     earlier than the date of the enactment of this Act.

     SEC. 705. 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 new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to 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--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following new subsection:
       ``(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)) after 
     December 31, 2001, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2002.

     SEC. 706. 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 by inserting after 
     ``fiduciary or other person'' the following: ``(or from any 
     other person on behalf of any such fiduciary or other 
     person)''.
       (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 new paragraphs:
       ``(5) A person shall be jointly and severally liable for 
     the penalty described in paragraph (1) to the same extent 
     that such person is jointly and severally liable for the 
     applicable recovery amount on which the penalty is based.

[[Page 6791]]

       ``(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 Date.--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 the enactment of this Act.

     SEC. 707. BENEFIT SUSPENSION NOTICE.

       (a) Modification of Regulation.--The Secretary of Labor 
     shall modify the regulation under subparagraph (B) of section 
     203(a)(3) 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 in connection with 
     any suspension of benefits described in such subparagraph--
       (1) in the case of an employee who returns to service under 
     the plan after commencement of payment of benefits under the 
     plan--
       (A) shall be made during the first calendar month or 
     payroll period in which the plan withholds payments, and
       (B) if a reduced rate of future benefit accrual will apply 
     to the returning employee (as of the first date of 
     participation in the plan by the employee after returning to 
     work), shall include a statement that the rate of future 
     benefit accrual will be reduced, and
       (2) in the case of any employee who is not described in 
     paragraph (1)--
       (A) 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
       (B) need not include a copy of the relevant plan 
     provisions.
       (b) Effective Date.--The modification made under this 
     section shall apply to plan years beginning after December 
     31, 2001.

     SEC. 708. STUDIES.

       (a) Model Small Employer Group Plans Study.--As soon as 
     practicable after the date of the enactment of this Act, the 
     Secretary of Labor, in consultation with the Secretary of the 
     Treasury, shall conduct a study to determine--
       (1) the most appropriate form or forms of--
       (A) employee pension benefit plans which would--
       (i) be simple in form and easily maintained by multiple 
     small employers, and
       (ii) provide for ready portability of benefits for all 
     participants and beneficiaries,
       (B) alternative arrangements providing comparable benefits 
     which may be established by employee or employer 
     associations, and
       (C) alternative arrangements providing comparable benefits 
     to which employees may contribute in a manner independent of 
     employer sponsorship, and
       (2) appropriate methods and strategies for making pension 
     plan coverage described in paragraph (1) more widely 
     available to American workers.
       (b) Matters To Be Considered.--In conducting the study 
     under subsection (a), the Secretary of Labor shall consider 
     the adequacy and availability of existing employee pension 
     benefit plans and the extent to which existing models may be 
     modified to be more accessible to both employees and 
     employers.
       (c) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary of Labor shall report 
     the results of the study under subsection (a), together with 
     the Secretary's recommendations, to the Committee on 
     Education and the Workforce and the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Health, Education, Labor, and Pensions and the Committee on 
     Finance of the Senate. Such recommendations shall include one 
     or more model plans described in subsection (a)(1)(A) and 
     model alternative arrangements described in subsections 
     (a)(1)(B) and (a)(1)(C) which may serve as the basis for 
     appropriate administrative or legislative action.
       (d) Study on Effect of Legislation.--Not later than 5 years 
     after the date of the enactment of this Act, the Secretary of 
     Labor shall submit to the Committee on Education and the 
     Workforce of the House of Representatives and the Committee 
     on Health, Education, Labor, and Pensions of the Senate a 
     report on the effect of the provisions of this Act on pension 
     plan coverage, including any change in--
       (1) the extent of pension plan coverage for low and middle-
     income workers,
       (2) the levels of pension plan benefits generally,
       (3) the quality of pension plan coverage generally,
       (4) workers' access to and participation in pension plans, 
     and
       (5) retirement security.

                      TITLE VIII--PLAN AMENDMENTS

     SEC. 801. 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) except as provided by the Secretary of the Treasury, 
     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 
     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, 2004.

     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 ``2006'' for ``2004''.
       (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 90 minutes of debate on the bill as 
amended, it shall be in order to consider the further amendment printed 
in House Report 107-53, which may be offered only by a Member 
designated in the report, shall be considered read and shall be 
debatable for 1 hour, equally divided and controlled by the proponent 
and an opponent.
  The gentleman from California (Mr. Thomas) and the gentleman from New 
York (Mr. Rangel) each will control 30 minutes of debate on the bill, 
and the gentleman from Ohio (Mr. Boehner) and the gentleman from New 
Jersey (Mr. Andrews) each will control 15 minutes of debate on the 
bill.
  The Chair understands that the representatives of the Committee on 
Education and the Workforce will manage their time at the outset of the 
debate.
  The Chair recognizes the gentleman from Ohio (Mr. Boehner).
  Mr. BOEHNER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in strong support of H.R. 10. Improving 
retirement security is a top priority of this Congress as we work to 
secure America's future.
  Mr. Speaker, improving retirement security is not just about fixing 
Social Security. It is also about expanding access to private pension 
plans and making innovations that will maximize every American's 
opportunity for a safe and secure retirement. We are committed to 
strengthening the retirement security of workers and their families by 
expanding pension coverage and protecting their pensions and their 
retirement savings.
  Today, we take up a bill that will directly improve the retirement 
security of American workers. The Comprehensive Retirement Security and 
Pension Reform Act of 2001 makes retirement security more available to 
millions of workers by, one, expanding small business retirement plans, 
which cover 75 percent of the workforce; two, allowing workers to save 
more; three, addressing the needs of an increasingly mobile workforce 
through greater portability; four, making pensions more secure; and 
five, cutting the red tape that has hamstrung employers who want to 
establish pension plans for their employees.
  This legislation, introduced by my two colleagues, the gentleman from 
Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin), is 
truly bipartisan. They have done a great job for this House on this 
issue over 3 years now, and our committee, the Committee on Education 
and the Workforce, reported H.R. 10 by a bipartisan voice vote. In July 
2000, the House passed a virtually identical bill, H.R. 1102, by a vote 
of 401 to 25.
  The committee has made every effort to maintain this bipartisan 
approach. Both this Congress and last, we have kept our Democrat 
counterparts and the administration fully informed as to procedural and 
substantive issues related to the bill. We have solicited

[[Page 6792]]

their input and sought to accommodate their concerns. In addition, we 
have worked closely with our colleagues on the Committee on Ways and 
Means, and I want to thank the gentleman from California (Chairman 
Thomas) and his staff for their help and leadership in moving this bill 
to the floor.
  Rarely has such an ambitious piece of legislation earned such broad 
support. Today, about 175 Republicans and 130 Democrats are cosponsors 
of the bill. More than 100 groups have endorsed the bill, both 
businesses and unions, from AFSCME, the Teamsters, the Laborers 
International, and the NEA to the U.S. Chamber, the National Federation 
of Independent Business, the National Association of Manufacturers, the 
American Benefits Council, and the American Council of Life Insurers.
  The bill contains 22 amendments to the Employee Retirement Income 
Security Act of 1974. The important changes within our committee's 
jurisdiction include granting relief from excessive PBGC premiums for 
new small business plans; accelerating the vesting of workers' 
accounts; repealing and modifying a wide range of unnecessary and 
outdated rules and regulations; providing more frequent benefit 
statements to workers; requiring enhanced disclosure and other 
protections when future pension benefits are reduced, as in the case of 
conversion to cash balance accounts; and repealing the so-called full 
funding limit that arbitrarily limits defined benefit plan funding to a 
less than actuarially sound level.
  Pension reform is a critical issue for our Nation's increasingly 
mobile workforce, and it spans the generation gap. It concerns both 
younger workers, whose retirement security is most in doubt today, and 
older workers, the 76 million baby boomers who are now approaching 
retirement age.
  Whether you are an older worker, a member of Generation X or someone 
who falls in between, we all have a stake in this issue. Through 
passage of this bill, we can all take credit for making a real 
difference in the lives of our constituents.
  Mr. Speaker, I reserve the balance of my time.
  Mr. ANDREWS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise in support of the legislation. I congratulate our 
friends, the gentleman from Ohio (Mr. Portman), the gentleman from 
Maryland (Mr. Cardin), and on behalf of our ranking member, the 
gentleman from California (Mr. George Miller), we extend our 
appreciation to the gentleman from Ohio (Chairman Boehner), and the 
subcommittee chairman, the gentleman from Texas (Mr. Sam Johnson), for 
their courtesy and cooperation in this bipartisan effort.
  I concur with the remarks the chairman just made that this bill will 
make a positive difference in a lot of people's lives. It will make a 
difference when people are determining how much they can afford to put 
into their 401(k) or IRA. It will positively affect that decision, 
because they will be able to put more in.
  It will positively affect people's lives when a small business person 
sits down at the end of the year and decides what to do with the excess 
earnings that he or she has generated during the year. Because of so-
called overfunding provisions in the present law, we actually have a 
law that makes it illegal for small business owners to put substantial 
amounts of money into a pension fund. We agree that the opposite ought 
to be the case, that we should encourage people to put as much as 
possible for as many people as possible into their funds, and that is 
an achievement of this legislation.

                              {time}  1200

  It will make a difference when many Americans who have left the 
workforce for a while want to catch up for the years that they have 
missed. Whether it was for raising children or for pursuing an 
education, for various reasons, people leave the workforce. Their 
income either declines or disappears altogether. They are unable to put 
money away during those years. When they return to the workforce and 
wish to catch up for those lost years, there are artificial limitations 
on what Americans can save.
  This legislation removes those artificial limitations and will help 
many people, especially women, catch up for those missed years in the 
workforce.
  We are particularly pleased that this legislation corrects an unfair 
and anomalous situation referred to as the section 415 problem. There 
are many Americans across the country who for years have driven a truck 
or worked on construction sites or worked for a public employer who 
have earned substantial pensions, but when they go to collect those 
pensions when they retire, they find that they cannot collect all that 
they are entitled to because of an anomaly that exists under section 
415 of the Internal Revenue Code.
  This bill corrects that problem. It says to those individuals that 
they will be able to draw down the income that their plan promised them 
and that they thought they had earned during those years. This is by no 
means an attribute or asset for people at the very top of the income 
scale, it is for people that have driven trucks and built buildings and 
worked in public hospitals and for governments and schools.
  It is one of the reasons why this legislation enjoys the support of 
AFCSME, the National Education Association, and many, many other labor 
organizations across the country.
  We understand, and later there will be an amendment offered that 
speaks to this point, that there are many Americans left out of the 
private pension system altogether, about 70 million of them. We believe 
that our amendment, offered by the gentleman from Massachusetts (Mr. 
Neal), cosponsored by myself and others, will help address that 
problem. But it is clear that the underlying bill achieves a number of 
positive things for people across the spectrum.
  For this reason, I am pleased to join both Republican and Democratic 
colleagues in support.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield 3 minutes to the gentleman from 
Texas (Mr. Sam Johnson), the chairman of the Subcommittee on Employer-
Employee Relations.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I thank the gentleman for 
yielding time to me.
  Mr. Speaker, I thank our Democratic colleagues for supporting us on 
this. It is with great pleasure that I rise today, because I think this 
is the most significant overhaul of retirement law in 25 years.
  Twenty-five years ago, it was common for someone to work an entire 
lifetime in one job and retire with a pension. A generation later, 
America has a mobile workforce, and it is not uncommon for employees to 
spend just a few years at one job and then move to another. As a 
result, it is harder and harder for people to add to their nest egg 
with employer support.
  It is not that employers do not want to help out. It is just that 
rules and regulations make it difficult. To these Americans, both 
employers and employees who want to sock away something for retirement, 
help is on the way. This Comprehensive Retirement Security and Pension 
Reform Act of 2001 is going to do just that.
  As chair of the Subcommittee on Employer-Employee Relations as well 
as a member of the Committee on Ways and Means, one of my objectives 
has been to find ways to expand retirement coverage, and I have had a 
lot of help from my Democrat colleagues and by small businesses, as 
well as to search for ways to make retirement plans more friendly.
  It is no secret that the cooling economy has bothered people, and 
people have watched their retirement accounts, their balances, fall. Of 
course, this makes them uneasy. They are saving for their golden years, 
retirement; and their nest egg is getting smaller and smaller.
  It is time to act now. This Congress is going to do that. To better 
prepare for the day when they no longer show up for work every morning, 
the best way to give these people peace of mind is to enact H.R. 10. If 
we want to secure America's future, people have to feel confident about 
their retirement; and

[[Page 6793]]

by passing this bill, we have taken a long step toward making them feel 
that way.
  I think this step down the road to strengthening our private 
employer-based pension system for all Americans, especially for all of 
the 70 million baby boomers who are nearing retirement age, is very 
important. We have to continue down this bipartisan path to ensure that 
our American workers can enjoy their golden years comfortably and 
securely. Let us pass this bill to protect our seniors.
  Mr. ANDREWS. Mr. Speaker, I am pleased to yield 3 minutes to our 
friend, the gentleman from Massachusetts (Mr. Tierney), a strong 
supporter of retiree rights, particularly those in the 
telecommunications industry, and the author of important legislation in 
that area.
  Mr. TIERNEY. Mr. Speaker, I thank the gentleman not only for the 
time, but for the tremendous effort he has made in trying to make this 
decent bill even better.
  Mr. Speaker, I am what we might term a conditional supporter of H.R. 
10. While I believe that this legislation is in fact a step in the 
right direction toward ensuring retirement security for Americans, I do 
not think that this legislation really goes far enough in achieving 
this goal for everyone.
  As it stands, this bill is certainly not as comprehensive as it could 
be, and is not as comprehensive as it should be, a fact that I think is 
clearly recognized by those of us who join the gentleman from 
Massachusetts (Mr. Neal) in support of his amendment that will be 
offered in a little while.
  Today, despite the best intentions of others, the underlying 
legislation does not quite live up to its billing. Even more important, 
it does not quite live up enough to the ideal of this representative 
body attending to the needs of all the Nation's people.
  The Portman-Cardin bill does not have something for everyone, but it 
certainly has a lot for a few. In fact, the Center on Budget and Policy 
Priorities has most recently published a paper on this bill based on a 
rather extensive study.
  It finds that while the pension provisions will increase savings for 
some, it does little or nothing to increase savings for the people who 
are most in need of our help, low- and middle-income workers that 
comprise the majority of our workforce.
  Specifically, the Institute for Taxation and Economic Policy has 
found that 76.9 percent of the pension and IRA tax reductions that will 
result in this bill would go to people making $67,000 or more. So if 
you earn less than $66,000, you will not be able to expect as much as 
you should if the bill becomes law in its current form.
  That same institute has also found that less than 1 percent of the 
pension and IRA tax provisions of this bill would go to persons making 
25 percent or less. That is 40 percent of our Nation's working 
population. I want to repeat that for those who might not have heard 
what I just said. Forty percent of the members of our workforce will 
receive only 1 percent of the benefits yielded as a result of this 
bill.
  Fortunately, we have a way to make this bill actually work better for 
all people. We can do that. The way to do it is to adopt a substitute 
that will be offered a little while later.
  As we have heard and we will hear again, that substitute would leave 
intact the base bill and add a few provisions that, by their addition, 
actually make this a bill that we can be proud of and a bill that would 
truly make a difference.
  As we know, the version of this legislation being considered in the 
Senate includes measures that would address the needs of those low- and 
moderate-income savers who contribute to retirement plans. This 
amendment seeks to bring H.R. 10 more in line with that version.
  Specifically, what this amendment would do is simply expand the 
existing pension coverage for those who currently contribute to pension 
plans, but also extend it to those who, for whatever reason, do not and 
cannot.
  The fact is that when weighed against paying medical bills, planning 
for a child's college education, and making mortgage payments, 
retirement planning remains a low priority for many families and 
working people.
  Mr. Speaker, this is a legitimate concern that I do not believe H.R. 
10 alone takes any significant steps to address.
  One final point, Mr. Speaker. If the argument is ever raised that the 
provisions of this bill are too expensive, let us remember that it is 
only a fraction of the cost of the base bill, and we have started in 
this body to have the majority try to give away billions of dollars to 
the wealthiest 2 percent through estate tax provisions.
  We can do better. We should do better with this bill.
  The SPEAKER pro tempore (Mr. Thornberry). Without objection, the 
gentleman from Texas (Mr. Sam Johnson) will control the time of the 
gentleman from Ohio (Mr. Boehner).
  There was no objection.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I would just like to comment that this bill has helped 
small businesses, those with less than 50 employees, right on down to 
one. So in order to help those guys who have not in the past been able 
to fund retirement plans, they now can, if this bill passes.
  Mr. Speaker, I yield 1 minute to the gentlewoman from New Jersey 
(Mrs. Roukema).
  Mrs. ROUKEMA. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, as an original cosponsor of this bill, I rise in strong 
support of it. I want to associate my comments and observations about 
the merits of the bill with what the gentleman from Ohio (Chairman 
Boehner) and our colleague, the gentleman from Texas (Mr. Johnson), 
have said.
  I also want to say that the legislation is overdue, as has already 
been pointed out, but that it is particularly appropriate at this time 
because it has strong support from both employers and employees and is 
the kind of tax reform that will help Americans save and invest in the 
future. It complements the tax bill that we are soon to have enacted 
into law.
  I guess I just want to say that I am very confident that President 
Bush will be signing this legislation in the near future. When it was 
passed last year it had overwhelming support, bipartisan support; and I 
fully expect that this will be a supplement to tax reform this year.

  This legislation has vast bipartisan support including over 300 
cosponsors. Last year, the same legislation passed by a vote of 401 to 
25.
  Mr. Speaker, this legislation is vitally needed. Only half of all 
private sector workers have any kind of pension and only 20 percent of 
small businesses offer retirement plans.
  H.R. 10 allows workers to save more money in their IRAs and 401(k) 
plans. Congress has not raised the contribution limits on IRAs and 
pensions since the early 1980s. This legislation is timely because it 
addresses a very real and growing concern for millions of Americans 
trying to figure out how best to save for their retirement. With this 
bill, we can change the retirement outlook for millions of Americans.
  The provisions in this bill are the most significant expansion of 
pension law in recent history. Both employers and employees are 
encouraged to create and participate in pension plans.
  Specifically, the current $2,000 IRA contribution limit for both 
traditional and Roth IRAs are increased to $5,000 by 2003 and indexed 
for inflation thereafter.
  Second, the bill provides increased contribution limits on pre-tax 
salary contribution to pension plans. For example, the limit on salary 
reduction contributions to 401(k)-type plans will be raised to $15,000 
by 2005.
  Third, the legislation includes additional ``catch-up'' provisions 
that allow workers aged 50 and older to save even more for their 
retirement needs.
  Fourth, the bill includes a portability provision which allows 
workers to ``roll over'' their pension savings between plans when they 
change jobs.
  Finally, the vesting requirements for employer matching contributions 
would be reduced to three years from five.
  I believe that this bill is a significant step forward in encouraging 
American workers to save and invest in America. This is an important 
element of tax reform that this House will

[[Page 6794]]

overwhelmingly endorse. I am confident that there will be significant 
pension and IRA reform in the final tax bill that President Bush will 
sign into law.
  I strongly urge my colleagues to support the important legislation.

  Mr. ANDREWS. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentleman from Wisconsin (Mr. Kind), who has spoken very strongly for 
small business throughout his tenure.
  Mr. KIND. Mr. Speaker, I thank my friend, the gentleman from New 
Jersey, for yielding me this time, and I commend his leadership and the 
leadership on the committee for putting together a bipartisan package 
that is going to be very important to American workers throughout the 
country and to their retirement security.
  According to the Social Security Administration, many retirees 
receive 19 percent of their income from employer-provided pensions. 
However, half of private sector workers have no pension coverage at 
all. In addition, only 29 percent of small businesses with 25 or fewer 
employees offer pension plans to their employees.
  H.R. 10 expands pension coverage and will help to provide retirement 
plans for those workers who are currently without such a plan. It 
increases the amount an individual can contribute to retirement 
accounts, and it allows individuals 50 years and older to make catch-up 
contributions to their 401(k) plans beginning in 2002, and in 2005 it 
will be indexed for inflation.
  This measure will also require faster vesting of pensions, increase 
pension portability, and reduce fees for smaller business pension 
plans.
  In the next 15 years, Mr. Speaker, 76 million baby boomers will 
retire. It is time that we pass legislation that helps encourage 
retirement and pension savings for all workers.
  With the Social Security trust fund currently expected to be 
exhausted by 2037, we must act now to ensure the financial security of 
future generations. I believe H.R. 10 is a step in that direction.
  I also want to commend my friend, the gentleman from Massachusetts 
(Mr. Tierney), for working hard to include language in this bill that 
would require the Department of Labor to conduct a study on the impact 
of H.R. 10 on low- and moderate-income workers. I believe we need to be 
fair in providing incentives to these low- and moderate-income workers, 
as well as for those in the upper income brackets, to participate in 
their retirement plans.
  Mr. Speaker, I urge my colleagues today to support this bipartisan 
bill. Retirement benefits are critical to ensuring that our aging 
population has the income to live out their golden years.
  Again, I commend the leadership, the chairman, and the ranking member 
on the committee for the fine work they have done with this 
legislation.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2 minutes to the 
gentleman from California (Mr. McKeon), a subcommittee chairman.
  Mr. McKEON. Mr. Speaker, I thank the gentleman for yielding time to 
me.
  Mr. Speaker, I rise today as a proud cosponsor of this legislation.
  First, I would like to thank the committee chairman, the gentleman 
from Ohio (Mr. Boehner), of the Committee on Education and the 
Workforce, and the subcommittee chairman, the gentleman from Texas (Mr. 
Johnson), for their work in bringing this bill to the floor.
  I would also like to thank the gentleman from Ohio (Mr. Portman) and 
the gentleman from Maryland (Mr. Cardin) for their tireless efforts in 
seeking pension reform.
  Mr. Speaker, this bill provides $52 billion in tax relief to help 
hard-working Americans save for their retirement and their own 
security. Furthermore, H.R. 10 encourages small businesses to propose 
pension plans for its workers.
  As a former small businessman, I recognize the need to encourage 
small businesses to offer pension plans. H.R. 10 does just that. This 
bill streamlines pension laws and repeals and modifies a wide range of 
unnecessary and outdated rules and regulations.
  Specifically, it treats business owners like other pension plan 
participants by allowing them to take out loans from their retirement 
plans. This will go a long way in encouraging small businesses to 
establish benefit plans. For those companies that offer plans already, 
it will allow them to include a loan feature which will help persuade 
lower-income individuals to contribute to the plan.
  Additionally, several studies show that one of the many reasons small 
business employers do not establish pension plans is the administrative 
costs associated with maintaining the plans. H.R. 10 would modify this 
problem by lowering the Pension Benefit Guaranty Corporation premiums 
for the new small business defined benefit plans.
  Mr. Speaker, the small business education communities believe this 
reform is vital to encourage greater income security for all Americans. 
Therefore, I urge all my colleagues to support H.R. 10.

                              {time}  1215

  Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New York (Mrs. McCarthy), one of the strongest voices for fixing the 
415 problem that I spoke to earlier.
  Mrs. McCARTHY of New York. Mr. Speaker, I rise in support of H.R. 10 
and its impact on American workers across this country. The United 
States savings rate is at a level that has not been seen since the 
Great Depression. This is unfortunate because it forces more people to 
work later in life to supplement their retirement.
  Retirees can no longer live solely on Social Security. Furthermore, 
not everyone employed is offered a pension or some form of retirement 
plan. That is why individual retirement accounts initially gained so 
much support when created in the 1970s. However, the contribution limit 
was never adjusted for inflation. The current cap of $2,000 does not 
provide much of an incentive to save as it used to. People are making 
more money and should be able to save more.
  As we have witnessed in the last few months, the stock market is 
bound to constrict, and those who solely rely upon their stocks as a 
pension plan will feel the strain the most. That is why it is important 
to increase the IRA contribution limit to $5,000 and increase the 
amount contributed to 401(k) plans. H.R. 10 does this and more. It also 
takes into consideration those on the verge of retirement with catch-up 
contributions, which will help those people we refer to as the baby 
boomers, myself included.
  We need to provide hard working Americans the option of saving more 
and relying less on Social Security when they retire. The Portman-
Cardin bill allows this to occur.
  The SPEAKER pro tempore (Mr. Thornberry). The Chair would announce 
the gentleman from Texas (Mr. Sam Johnson) has 4\1/2\ minutes remaining 
and the gentleman from New Jersey (Mr. Andrews) has 4\1/2\ minutes 
remaining.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield 2\1/2\ minutes to the 
gentleman from Virginia (Mr. Goodlatte).
  Mr. GOODLATTE. Mr. Speaker, I thank the gentleman from Texas for 
yielding me the time to speak on this important legislation that will 
modernize pension laws and provide regulatory relief to encourage more 
small businesses to offer retirement plans.
  Mr. Speaker, while Social Security has been one of our greatest 
success stories, longer life expectancies, accompanied by a wave of 
baby boomers that will soon begin to reach retirement age, pose new and 
difficult challenges to our Social Security system. However, Social 
Security was never intended to be the sole source of income for 
retirees. Unfortunately, it has become the primary source of income 
rather than a safety net for many elderly individuals.
  In order to alleviate this problem, I urge my colleagues to support 
H.R. 10, the Comprehensive Retirement Security and Pension Reform Act. 
This bill is important because it will encourage individual savings, 
such as IRAs as well as 401(k) plans and other employer-supported 
retirement plans. By

[[Page 6795]]

knocking down barriers to savings, by raising limits and allowing 
workers to set more aside tax free for their retirement, retirees will 
have the option of saving more for their later years.
  I am proud to support this bill because it contains a provision that 
permits older workers who are returning to the workforce to put even 
more aside for their pension. Under this bill, workers over 50 can 
contribute up to $5,000 in catch-up contributions for 401(k)-type 
plans.
  H.R. 10 also responds to the needs of the increasingly mobile 
workforce we have in this country by allowing people to vest faster in 
their pension plans and by allowing portability so Americans can move 
their pension plans from job to job. Workers should be comfortable to 
change jobs without the worry of managing separate pension plans.
  This bill will also modernize and streamline pension laws to 
encourage small business to offer pension plans. As we all know, 
employers are not required to offer these plans and many do not do so 
due to fiscal constraints. However, H.R. 10 repeals and modifies a wide 
range of unnecessary and outdated rules and regulations. Specifically, 
H.R. 10 provides incentives to small businesses to offer pension plans 
to their workers by lowering Pension Benefit Guaranty Corporation 
premiums for new small business defined benefit plans and eliminates 
the business user fee for new retirement plans established by small 
businesses.
  I would like to thank the sponsors of this legislation, the gentleman 
from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin); 
along with the chairman of the subcommittee, the gentleman from Ohio 
(Mr. Boehner); and the gentleman from California (Mr. Thomas), chairman 
of the Ways and Means Committee, for their efforts in supporting this 
bill.
  I urge my colleagues to support this legislation.
  Mr. ANDREWS. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
New York (Mrs. Maloney), one of the Members who represents the heart of 
the financial center of the world.
  Mrs. MALONEY of New York. Mr. Speaker, I thank the gentleman for 
yielding me this time and for his leadership on this issue and in so 
many other areas.
  Despite the current question about the direction of our economy, 
there is no doubt that our Nation has been transformed in recent years 
by the technology sector and the incredible American entrepreneurial 
spirit that has led small start-up companies to become the most 
successful businesses in history. I strongly endorse the Portman-Cardin 
legislation, in part because I believe it helps bring retirement 
savings programs up to speed with the new economy.
  While much of our manufacturing sector has struggled over the last 
decade, the U.S. has created millions of good-paying new technology 
jobs, many in my district. This change in our workforce and the 
transformation of the American workplace has had a major impact on 
government, on financial services, and on savings. One of the major 
changes in worker attitudes is that technology workers expect to change 
jobs several times over their careers. Given the constant change in the 
technology sector, workers demand pension portability and retirement 
plans that will travel with them from job to job.
  By passing this legislation, we are taking a critical step in 
allowing an important government saving stimulus to catch up with the 
reality of today's employment market. Importantly, this legislation 
also encourages saving by including substantial increases in the IRA 
limit to $5,000, and 401(k), 403(b) and 457 plan limits to $15,000.
  While this legislation benefits younger workers over the long haul, 
it also provides important catch-up contributions for workers who are 
50 or older, so that people who have been out of the workforce for a 
number of years can build their own nest eggs. Often these older 
workers are women who, without this provision, would be punished for 
having taken off time to raise their families. I strongly support this 
bill.
  Mr. ANDREWS. Mr. Speaker, I yield myself the balance of my time and 
will simply close out for our side reiterating again my appreciation of 
the gentleman from Ohio (Mr. Portman) and the gentleman from Maryland 
(Mr. Cardin) for their outstanding work on this legislation. I think we 
can see from the breadth of speakers that there is strong support 
across the spectrum for this bill.
  One of the blessings of this life is that we can reasonably 
anticipate our children, perhaps some of us, will live to be 100 years 
old. One of the problems is that we have an income retirement system 
set up for 75 years' worth of life. I believe that the very wise steps 
that we are about to take today, and I hope through conference and 
final passage, will help alleviate that problem. We are very pleased to 
support this legislation.
  Mr. Speaker, I yield back the balance of my time.
  Mr. BOEHNER. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, let me salute the authors of this bill, the gentleman 
from Maryland (Mr. Cardin) and the gentleman from Ohio (Mr. Portman), 
who really have spent a great deal of time over the last 3 years 
building support and fine-tuning this legislation. They really have 
done very good work.
  I also want to thank my colleagues on my committee, both the 
gentleman from Texas (Mr. Sam Johnson), the chairman of the 
Subcommittee on Employer-Employee Relations; and most notably the 
gentleman from California (Mr. George Miller) and the gentleman from 
New Jersey (Mr. Andrews), who we have worked closely together with over 
the last 3 years as well.
  As the gentleman from New Jersey (Mr. Andrews) just pointed out, this 
is a very good bill that will help American workers. We do believe it 
will help employers who do not currently offer pensions; give them the 
ability and the flexibility and encouragement to offer pensions to 
their employees. Our goal ought to be to see that all American workers 
have access to high-quality pension and profit sharing plans. This bill 
is a major step in that direction.
  Let me also add to something the gentleman from New Jersey pointed 
out, and that is that the baby boomers are beginning to retire. Most do 
not have the kind of resources they need to get them through their 
retirement years. I think that the bill we are about to pass will, in 
fact, help baby boomers and younger workers begin to set aside more of 
their income so that when they get into their golden years, they will 
actually be able to have a happy and successful and productive 
retirement with the kind of financial security that they need in order 
to enjoy their retirement years.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. All time for the Committee on Education and 
the Workforce has expired.
  The gentleman from California (Mr. Thomas) and the gentleman from New 
York (Mr. Rangel) are now each recognized for 30 minutes.
  The Chair recognizes the gentleman from California (Mr. Thomas).
  Mr. THOMAS. Mr. Speaker, I yield myself such time as I may consume.
  I also would thank the Committee on Education and the Workforce for 
the cooperative effort on the product that we have in front of us, H.R. 
10, but also just as importantly on the inter-committee relationship 
where committees share jurisdiction on a particular piece of 
legislation. The quality of the product will be seen, as was said 
earlier, on the basis of the number of speakers on both sides of the 
aisle supporting the document that is in front of us; but it would not 
have been possible without the willingness of the committees to work 
together in a bipartisan way.
  In turning to the Committee on Ways and Means, I clearly want to give 
enormous credit to the co-sponsors of this bill, the gentleman from 
Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin). It is 
extraordinarily easy to take an issue like this and produce a really 
good looking $200 billion bill. It is also relatively easy to produce 
an okay $100 billion bill. It took extraordinary effort to focus on

[[Page 6796]]

what needed to be changed, overdue adjustments on amounts contributed, 
and produce this evenhanded excellent piece of work for $51.5 billion 
over 10 years.
  Why do I say that? Because it is exceedingly easy to double the cost 
of this bill because we want to do as much as we can for as many people 
as we can. Of course, that is a positive motivating effort; but what I 
would hope most Members do is focus on the particulars in this bill. 
Frankly, some of the adjustments are overdue. If it were based upon an 
indexing on inflation from the time that these numbers were first 
created, at the time we were talking about creating super IRAs as the 
Bentsen-Roth-Pickle-Thomas bill did, $2,000 seemed like a major 
achievement. Today, in this bill, moving it to $5,000 is a significant 
advancement, but all of us would like to say we would like to do more.
  I find it interesting that those who might oppose this bill want to 
increase the amount that we are going to spend and provide support for 
people slightly different than the fundamental underlying intention of 
this bill. The fundamental underlying intention of this bill is to 
assist people, without punishing them, in putting their own money away 
to assist in retirement. In that aspect, the Tax Code should reward 
people who do this; should create incentives and support for people who 
do that.
  The question of assisting people who do not have the wherewithal to 
do it themselves is a question worthy of consideration, but not at the 
time that we are considering this particular bill; shaped the way it 
has been shaped, to make it easier for employers to offer, to allow 
those who want these various programs to put more of their own money 
away under the fundamental structure, adjusted to make it timely today. 
So I just want to underscore to my colleagues that there are a number 
of issues that we could debate; but they ought to be debated at a 
different time, under a different forum, if in fact we want to do 
something fundamentally different than what we are doing in this bill.
  This bill is excellent as it has been crafted. The evidence of that 
is the list, which I am sure is growing, of the more than 100 
supporters of H.R. 10, ranging alphabetically from the Airline Pilots 
Association, the American Bankers Association, all the way down to the 
United Brotherhood of Carpenters, the U.S. Chamber of Commerce, and 
virtually every labor and business and corporate group in between.
  This bill is frankly overdue. It is time to move it. It is modest and 
appropriate. And from the chairman of the committee's point of view, it 
was a real pleasure to work on a measure that passes the committee 35 
to six and will be discussed on the floor in the way we would prefer, 
all of us would prefer, more bills being discussed, and that is, we 
would like to do more. But this is an excellent work product, the 
authors are to be complimented, and we ought to support it.
  Mr. Speaker, I reserve the balance of my time.
  And, Mr. Speaker, I yield the balance of my time to the gentleman 
from Ohio (Mr. Portman) and ask unanimous consent that he be allowed to 
control the balance of the time.

                              {time}  1230

  The SPEAKER pro tempore (Mr. Thornberry). Is there objection to the 
request of the gentleman from California?
  There was no objection.
  Mr. CARDIN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I thank the gentleman from California (Mr. Thomas) for 
his kind comments; but I really want to thank the gentleman for the 
manner in which he has led our committee in consideration of the 
pension legislation. The gentleman from California has allowed us to 
work in a constructive environment so we could reach the point of 
having a bill that enjoys broad support on both sides of the aisle. 
That is indicative of the gentleman's leadership.
  Mr. Speaker, I thank the gentleman from Ohio (Mr. Portman) for his 
extraordinary work. The gentleman from Ohio has worked in a bipartisan 
way so we could reach this point of having a major, comprehensive 
pension reform bill that enjoys strong bipartisan support, and support 
not only in this body, but in the other body. We are going to pass this 
legislation with a strong vote, and we hope that it will pass the other 
body and be enacted into law this year.
  Mr. Speaker, this bill provides individual tax relief. It will 
provide billions of dollars of tax relief to individual taxpayers by 
allowing them to defer their tax liability by putting more of their own 
resources and their company's resources into retirement plans. That is 
very important for our country. It is very important for individuals. 
It is the building block, and we will hear a lot today about other 
problems that we have in our society. We need to reform the Social 
Security system. We agree on that. We need to get lower-wage workers to 
put more money away; and the government should maybe offer some 
incentives to do that. Congress needs to fix Social Security and offer 
retirement accounts for individuals.
  Fixing our current retirement system is the first building block in 
accomplishing those results. I think that my colleagues agree that the 
legislation before us should pass, and should pass quickly. I am not 
going to go into great deal of detail. We have heard why this bill is 
important. It allows small businesses the opportunity to provide 
pension plans for their employees. That will help workers today who do 
not have an employer-sponsored plan. Lower-wage workers need their 
company to offer incentives so they can participate in a pension plan. 
It raises all of the limits on defined contribution and defined benefit 
plans.
  Mr. Speaker, in raising the limits, we are trying to make up for what 
inflation has done in reducing the limits by allowing people to make up 
and be as secure as they used to be in putting money away for their own 
retirements.
  The portability issue, many people change jobs regularly. This bill 
allows for the combination of those different plans to manage your own 
retirement. We also shorten the vesting rules which is a very important 
point.
  The bottom line is in the last decade when we started talking about 
changing our pension laws, we knew that the savings ratios in the 
United States was too low. Yes, we have had some very impressive 
economic growth over the last decade. But in one staring example, we 
are not doing well, and that is the amount of money that we put away as 
a Nation in savings. Eight years ago, that was about 9 percent of our 
earnings. Today it is negative. We have actually spent more as a Nation 
than we earn. We need to do something about increasing savings. This 
legislation will move us in that direction. I am proud to be associated 
with this legislation. I know that it will enjoy broad support in this 
body.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, this afternoon we are here on the floor of the House to 
talk about a very serious problem which faces our country, which is a 
retirement savings problem. It affects millions of Americans; but 
importantly, we are also talking about a bipartisan and very 
constructive solution which addresses the problem directly.
  I want to thank Members on both sides of the aisle, many of whom have 
already spoken, for their hard work on this issue. The gentleman from 
Maryland (Mr. Cardin) has been my partner on this effort for the last 3 
or 4 or 5 years. We have been to the floor of the House on this very 
bill, and he has been instrumental in making this a better bill.
  I thank the gentleman from California (Mr. Thomas), the chairman of 
the Committee on Ways and Means, who is responsible for getting this 
bill to the floor. He has been a leader on this issue over the year. We 
all know about the Roth IRA. Here on the House side, we call it the 
Thomas IRA because he was the House author of that new IRA provision, 
and for years the gentleman from California has taken a

[[Page 6797]]

leadership role on expanding retirement security through IRA 
contributions.
  I thank the gentleman from Ohio (Mr. Boehner), the chairman of the 
Committee on Education and the Workforce who spoke earlier. His 
committee looked at the ERISA provisions and improved them through the 
process. They are an important component of expanding retirement 
savings. The gentleman went into that in some detail.
  The gentleman from Texas (Mr. Sam Johnson), the subcommittee chairman 
who is also on the Committee on Ways and Means, and has taken a 
leadership role this year; and I thank the gentleman from New Jersey 
(Mr. Andrews), the ranking member, who has taken a courageous stand on 
some tough issues on the ERISA side, and taken the correct stand 
because he has focused on the goal here which is expanding the ability 
for everybody to save more for their retirement.
  Mr. Speaker, this legislation does a number of things, but it can be 
probably summarized three ways. One, it lets everybody save more for 
retirement. We move IRA contributions from $2,000 to $5,000 a year. It 
is just adjusting it for inflation.
  We also allow people in 401(k)s to go from $10,500 a year to $15,000 
a year, really just restoring these limits to where they were in the 
1980s. On 401(k)s, after adjusting for inflation, a taxpayer could save 
more in the 1980s than they can under our bill. We were constrained by 
some fiscal concerns that the gentleman from California (Mr. Thomas) 
talked about. This is a dramatic increase in what our constituents, 
millions of Americans, will be able to save for their own retirement.
  Second, we help to address the concerns that people have about an 
increasingly mobile workforce. We increase the vesting time from 5 
years down to 3 years so people who are moving from job to job can get 
into a pension sooner.
  We also allow portability between defined contribution plans. The 
gentleman from North Dakota (Mr. Pomeroy) will talk about this, but his 
legislation is incorporated as part of this legislation to let people 
as they move from job to job keep their pension in one account. That is 
very important as more and more people are moving from job to job more 
and more quickly.
  Very importantly, we want to make sure that companies that want to 
offer pensions can do so without a lot of red tape. This is very 
important. I would underscore what someone already talked about, it is 
really a small business problem. An American who works for a large 
business probably has a pension, and it is probably a pretty decent 
one. An American who works for a small business probably does not. 
There is a 1 in 4 chance. Twenty-five or fewer employees, there is only 
a 19 percent chance that there is a pension at all, even a simple plan.
  This Congress passed the Portman-Cardin legislation a few years ago, 
a SEP plan, for the most basic 401(k). This is where the problem is. 
This is where most of the low- and moderate-income workers work. This 
is the focus of this legislation, to give those employers more 
encouragement and more incentive to offer plans to cover more people so 
everybody has more retirement security.
  The gentleman from California (Mr. Thomas) and others have talked 
about what Congress has done over the years. Over the last 20 or 30 
years, Congress has done the wrong things in terms of pension coverage. 
That is why pension coverage is totally flat. That is why 70 million 
Americas, half the workforce, have nothing at all today. No pension at 
all. Social Security is not enough. It is hard to live on $900 a month. 
People need to have increased private savings; and that is what we need 
to do as a Congress, start making it easier, not more difficult.
  Mr. Speaker, we have lowered limits. We have added to the rules and 
regulations. From 1982 to 1994, the number of traditional defined 
benefit plans, the good plans, decreased from 114,000 to 45,000. The 
gentleman from North Dakota (Mr. Pomeroy) talked earlier today about 
how 40 percent fewer people are in these defined benefit plans today. 
The data is unbelievable.
  We need to do more to ensure that low- and moderate-income workers 
have access to pension plans, and that is why this legislation is so 
important.
  Mr. Speaker, it is a comprehensive approach. It is the most sweeping 
change in our pension laws since the 1970s. It is something that is 
going to help everybody, and it is something that every American worker 
has the ability to benefit from. Seventy-seven percent of the people 
who are involved in pensions today make less than $50,000 a year. You 
are going to hear some discussion today how we should target this more 
towards low- and moderate-income folks. These are the people that are 
going to get help under this legislation.
  Finally, I thank all Members of Congress who have supported this 
effort over the year. We have over 300 cosponsors of the legislation as 
of today. We have, on the outside, over 100 groups who have supported 
this, from the National Federation of Independent Businesses and other 
groups supporting small businesses, and the Chamber of Commerce, to the 
Building and Trades Construction Department of the AFL-CIO. It is a 
broad cross-section. It is a bipartisan product. It is the product of 
several years of working carefully together to ensure that we have the 
best possible way in order to help people save for their own 
retirement.
  Mr. Speaker, the bill is good for our future, our families. It is 
good for small businesses. It is great for workers, and I hope that we 
can pass it with a resounding vote in the House of Representatives to 
give it the momentum that it needs to get through the Senate and end up 
on the President's desk to be signed into law, and help Americans have 
more peace of mind and security in their retirement years.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CARDIN. Mr. Speaker, I yield 5 minutes to the gentlewoman from 
Florida (Mrs. Thurman).
  Mrs. THURMAN. Mr. Speaker, let me give accolades to the gentleman 
from Maryland (Mr. Cardin) and the gentleman from Ohio (Mr. Portman), 
because I do not believe that this bill would have come to the floor 
with such bipartisanship if they had not allowed Members to add in and 
talk about issues which were important.
  I think this is a very good bill. I think we could do better with the 
Democratic substitute, which we will talk about later. But what I would 
like to discuss is how this bill will help working women.
  Mr. Speaker, we talk about families, but women in this bill are going 
to be helped because the bill contains several provisions to help 
women, especially those who return to the workforce after their 
children are grown. Let me give you some ideas.
  The catch-up provision would allow women who have taken time out to 
raise a family to make additional contributions of up to $5,000 per 
year. In addition, the provision that accelerates vesting of employer-
matching contributions will disproportionately help women.
  In IRA language, H.R. 10 accelerates the deductible contribution to 
$5,000 in 2002, and increases the contribution by $5,000 beginning in 
2005 for people over the age of 50. This bill includes comparable 
language for 401(k) and other deferred compensation plans.
  Mr. Speaker, in 1997, a GAO study found that women have significantly 
different work patterns than men. Women are much more likely to leave 
the workforce and three times as likely to work part-time to 
accommodate care-giving responsibilities. Women spend roughly 11\1/2\ 
years out of the workforce, caring for children and their families. 
They also are three times as likely to accommodate care-giving 
responsibilities, this often during their most lucrative earning years 
when they could be building their retirement portfolio.
  This bill addresses another problem associated with women moving in 
and out of the workforce: vesting. Women over 25 tend to stay in jobs 
an average of 4.7 years, often not long enough to obtain the right to 
the employee's share of the contribution. H.R. 10

[[Page 6798]]

makes it easier for workers to keep the employee's share of pension 
contributions. The result, working women will have a larger retirement 
nest egg.
  When they are working, women's savings priorities are often focused 
on their children's education and not retirement. Once the children are 
grown, women need this extra assistance to take care of their own 
needs.
  In addition, women continue to earn less, an average of 26 percent 
less, than men. Based on this alone, it stands to reason that women 
would have much less to invest for their retirement.

                              {time}  1245

  When they do return to the workforce, they deserve a chance to save 
more for retirement.
  We all know that Social Security is particularly important to women. 
For most elderly unmarried women, 51 percent of their income is from 
Social Security. For 25 percent of unmarried women, Social Security is 
their only source of income. Anything that Congress can do to encourage 
women to save more for retirement reduces their dependency on Social 
Security.




  Finally, women tend to move to other jobs more frequently than men. 
The portability provisions of H.R. 10 will let them concentrate their 
separate retirement accounts for a better rate of return.
  As I said, we are going to see a Democratic substitute. I just want 
to mention a few things in there that I think are critically important 
to women:
  The retirement security account tax credit would be up to a 50 
percent refundable credit for low- and middle-income workers who 
contribute up to $2,000 annually to an employer-sponsored plan or a 
deductible individual retirement account, better known as an IRA.
  The tax credit for small employers' pension plan start-up costs. 
Small employers, less than 100 employees, would be eligible for a tax 
credit in an amount equal to 50 percent for the costs that would be 
incurred as a result of establishing these new qualified pension plans.
  Last would be the small employers would be eligible for a tax credit 
equal to 50 percent of certain employer contributions made to a pension 
plan on behalf of its non-highly compensated employees.
  Mr. Speaker, all these provisions in H.R. 10 and if we include the 
Democratic substitute I think are a historic opportunity for this 
House.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Minnesota (Mr. Ramstad), my colleague on the Committee on Ways and 
Means, who has been the leader on including very important provisions 
in this bill that help ESOP companies.
  Mr. RAMSTAD. Mr. Speaker, I thank my colleague for yielding me this 
time. I rise in strong support of this landmark bipartisan package of 
pension reforms that will vastly improve the retirement security of 
American workers. I want to thank the gentleman from Ohio (Mr. Portman) 
and the gentleman from Maryland (Mr. Cardin), two colleagues and 
friends on the Committee on Ways and Means, because without their 
tireless efforts and their leadership on this important pension reform 
package, we would not be here today.
  The need, Mr. Speaker, is clear. Americans are living longer but 
often they lack the savings needed for a secure retirement. The typical 
45-year-old has only 40 percent of the savings needed to avoid a 
decline in standard of living during retirement. Half of all private 
sector workers, in fact, still have no pension coverage at all. Worse 
yet, only 20 percent of job-creating small businesses even offer a 
pension plan because of the expense and the difficulty of administering 
such plans.
  This legislation, H.R. 10, will help reverse this dire situation. I 
want to highlight, Mr. Speaker, one of the over 50 provisions in this 
package which will give American workers a meaningful opportunity to 
save for their retirement. The provision I am referring to would 
preserve employee stock ownership plans, or as they are called, ESOPs, 
for the workers of S corporations, many of which are small businesses. 
ESOPs give workers an opportunity to own a piece of their business, a 
piece of the rock, which boosts productivity, morale and retirement 
savings. This proposal is based on a bill that I introduced last year 
which was cosponsored by 30 members of the Committee on Ways and Means. 
It would remove a cloud that was left by the previous administration by 
preserving this highly effective retirement savings program for broad-
based S corporation ESOPs.
  Mr. Speaker, H.R. 10 is a win-win for America. That is why it is 
supported by such a diverse group of small and large businesses, labor 
organizations and members of both parties. Most importantly, it is 
strongly supported by the working people of America. I urge my 
colleagues to pass this important legislation for a secure future for 
America's workers.
  Mr. CARDIN. Mr. Speaker, I am pleased to yield 4 minutes to the 
gentleman from North Dakota (Mr. Pomeroy), my colleague on the 
Committee on Ways and Means, part of whose bill is included in ours 
dealing with the portability and vesting.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this 
time and specifically commend the gentleman from Maryland (Mr. Cardin) 
and the gentleman from Ohio (Mr. Portman). Their work has been 
exemplary bipartisanship in advancing a substantive response on one of 
the most troubling issues facing the country and, that is, the 
insufficiency of retirement savings. As in every instance when there is 
exemplary congressional performance, there are some outstanding staff 
performances backing it up. I want to cite particularly David 
Koshgarian backing up the gentleman from Maryland (Mr. Cardin) and 
Barbara Pate backing up the gentleman from Ohio (Mr. Portman). Their 
work has contributed immeasurably to this legislation.
  I think there are three things about this bill we should cite in 
particular. First of all, it makes a direct effort at revitalizing 
defined benefit pensions in the marketplace today. As the gentleman 
from Ohio (Mr. Portman) noted, the number of workers covered by the 
reliable, traditional pension program has fallen 40 percent during the 
20-year period between 1975 and 1995; and I believe it has fallen, no 
doubt, significantly further even today. By raising the limits, you 
bring the employers, you bring the decisionmakers within a company back 
into the qualified plan and, I believe, enhance the prospects that the 
worker on the line, on the shop floor keeps the pension in its 
traditional form.
  Secondly, the bill advances portability by incorporating the 
retirement account portability legislation I have introduced in the 
last three Congresses. We have a hodgepodge in the Tax Code of 
retirement savings provisions, different ones for for-profit, different 
ones for nonprofit, different ones for State and local government.
  You can have, for example, a worker through their career, let us say 
they come out of college and go into nursing for a nonprofit hospital. 
They would have a 403(b) defined contribution plan. Let us say after 
that they go to State government and work in the health department. 
They would have a 457 plan. Ultimately they end up in a private for-
profit clinic where they would have a 401(k) plan. Each of these is 
incompatible with the other under existing law and you could not 
combine your accounts. The result is people have their accounts 
distributed. We know that in over half the cases where they take the 
lump sum distribution, they do not reinvest them in retirement savings.
  This is a case where the Tax Code, rather than trying to incent 
Americans to save, actually discourages savings. It is 100 percent the 
wrong way to go. That is why the portability feature is so important. 
Finally, vesting. We know that on average workers are staying with an 
employer in the workforce about 4\1/2\ years. It takes 5 years before 
the employer's share is vested in a retirement savings account where 
the employer has that provision. Under Federal law, they are allowed to 
have vesting be a 5-year period. This brings that down to 3 years, 
recognizing that

[[Page 6799]]

there is very substantial mobility in the workforce today and that 
after 3 years in the workforce for one employer, the employer's share 
should accrue at that point to the employee. They will be vested. They 
will have that to take with them as they move on in the workforce.
  All in all, the bill will enhance retirement savings efforts of 
American workers. It is extremely important. Again I commend the 
sponsors and ask for broad bipartisan support on the House floor today.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to the gentleman from 
Arizona (Mr. Hayworth), my friend and colleague on the Committee on 
Ways and Means, who has been one of the leaders on this, focusing on 
the importance of this bill to savings and to our economy.
  Mr. HAYWORTH. Mr. Speaker, I thank my colleague from Ohio and my 
colleague from Maryland for once again bringing to the floor of this 
House landmark legislation. We have been involved and engaged in 
cheerful persistence, for this marks the sixth time we have brought 
this legislation to the floor. And each time, Mr. Speaker, we reaffirm 
the essential common sense of the measure we prepare to pass yet again.
  Mr. Speaker, I would ask you to think back to your own experience in 
terms of saving or preparing for your retirement. Not once on a 
financial form in planning for my family's future, for my retirement, 
have I ever been asked to list a political registration. The banks, 
financial institutions, employers, do not ask whether you are 
Republican, Democrat, Libertarian, vegetarian, they simply ask you to 
think about your future.
  Now, to return to the political parlance for a second, because I 
think since this is the people's House and we stand at the bar of 
public opinion every 2 years, we know in political parlance that we 
regard a landslide election as procuring 60 percent of the popular 
vote. Mr. Speaker, I regret to inform this House that the American 
people are currently on the wrong side of a landslide. Only 40 percent 
of Americans as baby boomers are taking advantage of retirement savings 
to avoid a decline in their standard of living once they decide to 
retire. In other words, 60 percent of the people are not taking 
advantage of these provisions. With this legislation today, we are 
asking Americans to choose to save. That is what we do with this 
legislation.
  Mr. Speaker, what we are doing is saying to the American people, here 
is an enhanced choice for you. We ask you to choose to save. 
Portability of the accounts; raising the limits, especially for those 
who will encounter retirement decisions first, for those age 50 and 
above, no phase-in, immediately raising that limit to $5,000; phasing 
that in for traditional and Roth IRAs, increasing that through the 
years; and indexing this for inflation, so that the inflation monster 
cannot touch retirement savings, taking those realities into account.
  And as mentioned by my colleague from North Dakota, the notion of 
portability. As we have many different freedoms, many different 
options, as we see people make changes in jobs and in our mobile 
society and in our fast-changing economy, to have the ability to move 
this money from job to job and keep it in the same account, portability 
is key, too.
  Choose to save. Vote yes on this legislation.
  Mr. CARDIN. Mr. Speaker, I am pleased to yield 6 minutes to the 
gentleman from Massachusetts (Mr. Neal), my colleague on the Committee 
on Ways and Means who has been very active on the pension issues.
  Mr. NEAL of Massachusetts. Mr. Speaker, I cannot agree more with the 
authors of this legislation that our common goal here today is to 
provide meaningful retirement benefits for all working men and women of 
this country. Expanded pension coverage and an increased rate of 
participation in employment-based plans are more important now than 
ever, given our current savings rate and the imminent retirement of the 
baby boom generation.
  Our current system is built upon the assumption that the minimal 
level of income provided under Social Security would indeed in the end 
be supplemented by other sources of income such as an employer-based 
pension plan as well as personal savings. Thus, it is very important to 
make sure that the pension reform legislation today includes incentives 
for all Americans to increase retirement savings.
  There are many provisions in this bill that are desirable by 
increasing benefits and contribution limits for those currently saving 
the maximum in their current pension plans or for those currently 
saving in individual retirement accounts. I would remind both sides 
here today that, with the gentleman from California (Mr. Thomas), we 
were responsible for the Roth IRA here in the House of Representatives. 
But my primary concern with this legislation today is that it does not 
provide the same opportunity for all Americans to save who are not 
currently in a retirement system. It could be fixed through the 
amendment process.
  H.R. 10 contains many provisions designed to enhance and expand the 
portability of pension benefits. The current level of mobility among 
workers requires a modified approach to our retirement system. The lack 
of portability can result in workers being shortchanged in pension 
benefits merely because they change jobs. This bill responds to the 
need by giving workers greater flexibility to transfer their pension 
benefits between employer plans or to an IRA. These provisions have 
been in many bills over the last two sessions of the Congress. They 
were strongly backed by myself and members of the Clinton 
administration.
  There are also provisions in this legislation that would enhance 
benefits for women and we acknowledge that. However, while this bill 
contains many provisions such as those I have mentioned that are 
designed to achieve worthy goals, on the whole, the bill is not 
balanced. Under the bill, high-income workers would receive very 
generous benefits with no corresponding meaningful direct incentives to 
expand and increase retirement savings for low- and moderate-income 
workers.

                              {time}  1300

  One analysis of this bill showed that workers earning less than 
$41,000, the bottom 60 percent of the American workforce, would 
receive, listen to this, 4.3 percent of the benefits; and the top 5 
percent of American workers with incomes of more than $134,000 would 
receive, and listen to this number, 42.4 percent of the benefits.
  I do not oppose increasing retirement savings for workers at the top 
of the income scale, but I am concerned that the workers who are most 
in need of our assistance today in saving for retirement are being 
excluded from our efforts here.
  In its current form, the legislation would fail to provide a secure 
and adequate retirement for all Americans. The retirement savings 
account proposal that will be offered later today as an addition to 
this bill would provide the balance that is necessary for a successful 
accomplishment of our shared goal, which is a secure retirement for all 
workers.
  The RSA proposal builds on our current system by providing an 
incentive for low- and middle-income workers to participate in an 
employment-based retirement system. Under the proposal, the worker 
would receive an annual credit of up to $1,000 for contributions made 
to an individual retirement account or an employer-based pension plan.
  In addition, this bill must do more to provide direct incentives for 
small businesses to establish and administer pension plans.
  In a recent Small Employer Retirement survey conducted by the 
Employee Benefit Research Institute, 65 percent of small employers 
stated that tax credits for starting a pension plan would be a major 
contributing factor for them to establish a pension plan for their 
employees. This factor was second only to an increase in business 
profits.
  With this compelling evidence, I would like to encourage my 
colleagues

[[Page 6800]]

here today to seriously consider another amendment that will be offered 
later on as well that would include two tax credits as an incentive for 
small employers to offer pension plans to their employees and to make 
contributions to those plans on behalf of their employees.
  The gentleman from Ohio (Mr. Portman) has been more than kind and 
more than receptive to that notion. Why we cannot do it today, I do not 
understand it. This bill could pass this House today 435 to 0 if those 
incentives were simply offered, which I have been assured they are 
going to be offered when the Senate brings back its version. I hope at 
that time we will have an opportunity for this bill to pass almost or 
nearly unanimously.
  I would be remiss if I did not mention the additional controversies 
with provisions underlying this bill. Last year, the Department of 
Treasury and outside groups argued strongly that some of the provisions 
of this bill could actually lead to a shrinking of pension coverage for 
low- and moderate-income workers. They cited most often changes in top 
heavy rules and nondiscrimination rules which are designed to protect 
non-key employees by making sure that they get a minimum amount of the 
benefit from an employer's pension plan.
  Now I know the authors of this bill believe the opposite; but a blend 
of my tax credit proposal, along with the efforts that they have made 
here today, could secure truly one of the great feats of this Congress; 
and I expect when it comes back from the Senate that provision will be 
included and we will have an opportunity, as I indicated earlier, to 
nearly unanimously pass this very important legislation with some 
technical corrections.
  Mr. PORTMAN. Mr. Speaker, I yield myself 30 seconds just for a quick 
response to my friend and colleague, the gentleman from Massachusetts 
(Mr. Neal). He, in a good faith effort, is trying to expand the 
opportunities for low- and middle-income workers, and I commend him for 
that. I also appreciate the kind words he says about the underlying 
bill, but I cannot let one thing stand and I am disappointed that he 
has raised it and I just want to get this out because we are going to 
hear a lot more about it in the Democrat substitute, it sounds like. He 
uses an outside group that opposes not only this bill but all tax 
relief that we have tried to do, that people that are making $41,000 or 
less are only going to get 4.3 percent of the benefits. There is no 
way, no way, that he could know that; and I am just disappointed that 
we are getting into that because this is going to help all Americans, 
including those making less than $41,000.
  Mr. Speaker, I yield 3 minutes to my colleague, the gentleman from 
Pennsylvania (Mr. English); and I appreciate his help on this 
legislation, particularly on some provisions that help with regard to 
labor union members.
  Mr. ENGLISH. Mr. Speaker, I thank the gentleman from Ohio (Mr. 
Portman) for yielding me this time.
  Mr. Speaker, in the last 40 years, Americans have gone from saving 
6.2 percent of their disposable personal income to saving less than .1 
percent. In fact, Americans lag behind Canada, Germany, and Japan by as 
much as 4 percent when it comes to our national savings rate.
  The rate of decline in national savings is greater in the United 
States than in most of the industrialized world. Today, as a result, we 
import capital into our country to finance our improving standard of 
living. In my view, addressing this problem is as important to our 
national economic future as addressing our reliance on foreign oil. We 
need to end our dependence on imported capital, and this landmark 
legislation will address that problem by allowing families to increase 
their retirement savings.
  H.R. 10 will increase the national savings rate, increase our 
national prosperity, and provide for a stable retirement for millions 
of working families through better access to pension plans and expanded 
IRAs. The Comprehensive Retirement Security and Pension Reform Act 
provides individuals with a variety of retirement savings incentives, 
such as lifting limits to IRA and 401(k) plans. These limits are 
currently stuck at 1980 levels. Baby boomers who are discovering that 
their retirement is severely underfunded because they stopped working 
to raise a family can catch up under this plan through higher 
contribution limits.
  In addition, I am particularly pleased to see that this bill 
addresses the unintended consequences of section 415. Currently, 
section 415 seriously hampers the ability of America's workers, not the 
wealthy but rank and file workers, to collect their full pension 
amounts which they have earned. Reducing the pensions of workers who 
retire before normal Social Security retirement age has caused enormous 
financial hardship for many workers in places like western 
Pennsylvania. Thousands of retiring workers have carefully saved and 
planned for their retirement, and they are relying on their private 
pension funds. This legislation will allow them to have the full 
benefit of the pension that they themselves worked so hard to build.
  I urge my colleagues to support this landmark legislation.
  Mr. CARDIN. Mr. Speaker, I yield myself 30 seconds to clarify a point 
on the Democratic substitute. I am pleased that it adds to the 
underlying bill. It accepts the fact that the underlying bill is very 
important and tries to improve upon it. I just want to make it clear 
that nothing in the Democratic substitute would distract or take away 
from the underlying Portman-Cardin legislation.
  Mr. Speaker, I yield 3 minutes to the gentleman from Wisconsin (Mr. 
Kleczka), a distinguished member of the Committee on Ways and Means and 
one of those individuals who has also been involved in helping us 
formulate the underlying legislation.
  Mr. KLECZKA. Mr. Speaker, over the next 40 years, the percentage of 
the U.S. population over 65 will almost double. Unfortunately, at a 
time when more and more people should be putting money away for their 
retirement, personal savings are at historically low levels. Twenty 
years ago, Americans saved at a rate of about 10 percent, but by last 
year that rate had plummeted to one-tenth of 1 percent. Americans must 
become more proactive in saving and planning for their retirement, and 
the bill before us today provides the incentives to do so.
  Retirement security has often been described as being like a three-
legged stool because people depend on three means of savings for their 
retirement: one is Social Security; one is personal savings; and 
another one, a very important one, is employer-provided pensions.
  H.R. 10 makes great strides in strengthening the footing for the last 
two of those legs.
  One of the most important adjustments this bill makes will be to 
increase the current limit on annual individual retirement account 
contributions from $2,000 to $5,000 per year. IRAs are one of the 
principal instruments used for savings, and this increase will make 
them a much more valuable tool in retirement planning.
  It has been almost 20 years since the retirement cap was raised, so 
an adjustment today is long overdue. To make sure that the benefits of 
IRAs continue to keep pace with the times, this bill will adjust the 
cap annually to reflect the effects of inflation.
  Regarding employer-provided pensions, the bill allows for faster 
investing so that workers will become eligible for employer-matching 
contributions to their pension plans in 3 years rather than the current 
5. It also breaks down the barriers between private sector 401(k) 
plans, nonprofit employer 403(b) plans, and local government 457 plans, 
allowing workers to roll over funds in their pension plans when they 
move from one job to another.
  The bill includes catch-up provisions that allow workers 50 years of 
age and older to save even more for their retirement needs by allowing 
them to increase by $5,000 the limits on all employee pension 
contributions. H.R. 10 also streamlines rules and regulations to make 
it easier for businesses, particularly small businesses, to offer 
pension plans by eliminating the user fees

[[Page 6801]]

imposed by the IRS on businesses when they set up a pension plan.
  It would also ensure that these higher contributions to the pension 
plans may be deducted by employers.
  Mr. Speaker, this legislation will help provide the peace of mind 
that Americans deserve in their retirement years. I urge my colleagues 
to support this measure.
  In closing, let me applaud the efforts of the gentleman from Maryland 
(Mr. Cardin) and also the gentleman from Ohio (Mr. Portman) and thank 
them for including the changes in section 415, which increases the 
pension benefits for working men and women. Again, I urge my colleagues 
to support this bill.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Wisconsin (Mr. Ryan), my friend on the Committee on Ways and Means, who 
has been a leader on the 415 provisions in this bill and also in 
focusing on the savings incentives in the legislation.
  Mr. RYAN of Wisconsin. Mr. Speaker, I thank the gentleman from Ohio 
(Mr. Portman) for yielding me this time.
  Mr. Speaker, I would like to right now just thank the gentleman from 
Maryland (Mr. Cardin) and the gentleman from Ohio (Mr. Portman) for 
putting this excellent piece of legislation together. Specifically, I 
want to thank them for including that section 415 provision. This 
affects thousands of building trades workers in southern Wisconsin who 
because of this law are going to have a better pension system that they 
deserve, that they paid into. So I want to thank them for including 
this very valuable provision.
  There is another important part of this, and that is times have 
changed. When our pension laws were written a generation ago, it was a 
different kind of an economy. People had the same job for 30 or 40 
years of their working lives. They did not move from jobs, but that is 
not the case today. People change jobs all of the time, but the problem 
is our economy and our pension laws have not caught up with those 
times.
  This important piece of legislation catches up with the times and 
allows pensions to become portable so as people change jobs they can 
bring their pensions with them without an adverse consequence on the 
Tax Code; and most importantly, this thing does great things in two 
great ways for our society. It allows people to save for their 
retirement, improve the savings rate, so they can maintain the kind of 
standard of living they enjoyed during their working years in their 
retirement years. Again, by saving, by putting more money aside, we are 
putting more money into the economy. We are improving the liquidity of 
capital for small businesses, for job creation, for entrepreneurial 
activity.
  So when we increase our savings rate, not only do we help the actual 
person who is saving in their retirement, we are helping the ability to 
create jobs in this country. We are sparking economic growth in job 
creation. So this bill not only fixes many problems that are facing 
building tradesmen, people who are just nearing retirement, women in 
the labor force, it is updating our pension laws so they respond to the 
types of jobs we have in today's economy. It is improving people's 
standard of living, and it is helping grow the economy and produce jobs 
in the economy.
  This bill is clearly a win/win for America. That is why it received 
such bipartisan support. I urge my colleagues to vote yes on this bill.
  Mr. CARDIN. Mr. Speaker, I yield 2 minutes to the gentleman from New 
York (Mr. Crowley).
  Mr. CROWLEY. Mr. Speaker, I rise in strong support of H.R. 10, the 
Comprehensive Retirement Security and Pension Reform Act, introduced by 
the gentleman from Ohio (Mr. Portman) and the gentleman from Maryland 
(Mr. Cardin). I want to thank both gentlemen for all their hard work in 
getting this bill to the floor today.
  This legislation provides portability between the employer-sponsored 
plans, a key component of any provision security reform, as we are in 
an era where Americans are no longer expected to work for one company 
until retirement but, rather, many employers and many corporations over 
a period of a lifetime.

                              {time}  1315

  This bill also provides incentives to retirement savings by 
increasing the IRA contribution limit from the present $2,000 to 
$5,000, and expanding eligibility for deductible IRAs.
  Most importantly in this ever-changing workforce, this bill contains 
vital catch-up provisions to encourage both older workers and women 
workers to increase their retirement savings to make up for missed 
contribution opportunities. This is key for women, as many of them have 
previously left the workforce for the time being, quite often to raise 
a family, and now will no longer be blocked from providing for herself 
or her family's retirement security.
  This is solid legislation that will help all Americans who plan ahead 
for their retirement, and I urge all of my colleagues to support this 
critical, critical piece of legislation.
  Once again, I wanted to thank both gentlemen for getting this bill to 
the floor today.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to the gentlewoman from 
Washington (Ms. Dunn) a member of the Committee on Ways and Committee, 
who has taken a leadership role in assuring there is a catch-up 
contribution, both on the pension side and on the IRA contributions.
  Ms. DUNN. Mr. Speaker, I rise today in support of H.R. 10. I think 
this is a fabulous bill, and I commend the gentleman from Maryland (Mr. 
Cardin) and the gentleman from Ohio (Mr. Portman) for the great work 
they did in bringing us together and consulting with us and allowing us 
to make our opinions heard.
  I think it does some very, very fine things, but I am particularly 
enthusiastic about the very explicit focus that this bill has taken on 
the sometimes unique needs of the American working woman.
  This bill will enable women to devote more money to retirement 
savings, accumulate assets more quickly, and it will enable them to 
keep their benefits in one retirement plan when they change jobs. So it 
is going to let women have a much better sense of peace of mind as they 
move toward retirement, and I think it will make them feel also that 
they are more fully participating in planning for that time, to make it 
a very happy time and a secure time.
  As we have heard from many previous speakers, women choose to leave 
the workforce for many reasons, including to raise a family or to take 
care of their loved ones. I left the workforce for 8 years to raise my 
little children. I was a lucky person. When I came back in, I would 
have appreciated the opportunity that this bill provides to catch up 
with the losses sustained during those years to my IRA.
  Women are often unable to take full advantage, for that reason, of 
employer-sponsored pension plans as well. H.R. 10 helps women make 
catch-up contributions to their pension plans.
  Right now, for example, you are able to contribute $2,000 each year 
to an IRA. This bill says that if you are over 50 years old, a man or a 
woman, but specifically interesting more, I think, to women, you can 
begin to contribute up to $5,000. That is $3,000 additional dollars 
each year you can put away in your IRA. Also when it comes to the 
employee pension plan, a 401(k) or a thrift savings plan, women like me 
can begin, as soon as this bill is signed, to contribute $5,000 more 
every single year into their pension plan.
  Current law also makes it very difficult to consolidate retirement 
funds from different plans into one plan. Removing these restrictions 
is very important, considering the fluid employment situation in 
America today. This is especially true for working women who change 
jobs more frequently than men do. The portability provisions in H.R. 10 
will ensure that retirement benefits follow the employee as the 
employee changes jobs.
  H.R. 10, Mr. Speaker, is a very well-crafted bill. It has strong 
bipartisan support, and I am among the many who urge my colleagues to 
support this bill.

[[Page 6802]]


  Mr. CARDIN. Mr. Speaker, I am pleased to yield 2 minutes to the 
gentlewoman from California (Ms. Eshoo).
  Ms. ESHOO. Mr. Speaker, thanks and congratulations, first, to the two 
major sponsors of this bill, the gentleman from Maryland (Mr. Cardin) 
and the gentleman from Ohio (Mr. Portman). I think the quality of this 
bill and the amount of support that it enjoys today really speaks to 
the eloquence of their work.
  We come to the floor every day to cast votes. Sometimes we hold our 
noses over what we have to vote for; other times we say, if I had 
designed this, it would be so much better.
  This is a very, very good bill, it is a sound bill, and I cannot help 
but think of FDR's quote that ``True individual freedom cannot exist 
without economic security and independence.'' I think that those are 
the two things that this bill provides for millions of workers in our 
country by making retirement security more available to them.
  Our savings rate in our country is at an historically low level, and 
this is a critically important piece of legislation to advance people's 
being able to save and encouraging them to.
  It also addresses the needs of an increasingly mobile workforce. The 
average worker today will hold nine jobs by the age of 32, and workers 
typically do not stay in any job for more than 5 years until they are 
40 years old. So portability and being able to accumulate benefits and 
then move it from job to job, I think is essential.
  So, Mr. Speaker, I am proud to support this legislation. I think it 
is not only good for my constituents, I think it is good for all of the 
people of this country; and I think the Congress will take a very 
important step by establishing better pension funds for employees, 
helping employers to do that, and by the IRA contribution being raised.
  So I ask my colleagues to join me and many others in the House on a 
bipartisan basis to support this bill, pass it, and help it become law. 
It is going to make our country better and stronger.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Illinois (Mr. Weller), a member of the Committee on Ways and Means, who 
has played a leadership role on the catch-up contributions and the 415 
provisions.
  Mr. WELLER. Mr. Speaker, this is a great day. We are doing something, 
and the question to ask as we work on this legislation is, is it not 
about time?
  If you think about it, I think this is the third or the fourth time 
we have passed this legislation out of the House, and we finally have a 
President now that will sign it into law. It has been a bipartisan 
effort over the last several years. My friends, the gentleman from Ohio 
(Mr. Portman) and the gentleman from Maryland (Mr. Cardin) have done a 
great job working with the committee and showing leadership in 
assembling a great package that will help millions of middle-class 
Americans and families save for their retirement.
  I think it is a tremendous achievement, recognizing that when 
individual retirement accounts were created way back in the early 
1980s, that the limit was set at $2,000. If you factor in inflation, it 
should be well over $5,000 today. We accomplish that goal by phasing in 
an increase in the contribution level for IRAs to $5,000.
  There are two other provisions that I want to highlight, and I really 
want to commend the leadership on our committee for including these two 
provisions in this package. Those are provisions that deal with catch-
up provisions, which will help working moms and empty-nesters, as well 
as the 415 provisions, which will help 10 million building tradesmen 
and women across America.
  Let me point out, the catch-up provisions, why are they important? I 
always use my sister Pat as an example. She is now teaching school, but 
when her children, when she and Rich decided to have kids, she took 
some time out of the workforce to be home with the children; and then 
once the kids were in school, she went back into the workforce. During 
that period of time, my sister Pat and my brother-in-law Rich, they 
were not able to make contributions to their IRAs because their income 
was essentially cut in half and their expenses were up because they had 
children.
  Under this legislation, once they turn 50 they can make an extra 
contribution, which they are, they can make an extra contribution to 
their 401(k) of $5,000, and we immediately allow, once this legislation 
is signed into law, someone age 50 or older to contribute up to $5,000, 
recognizing the $5,000 increase is phased in over 3 years. So if you 
are age 50, you benefit immediately, allowing you the opportunity to 
make up.
  The 415 provision, people like Larry Correl, a laborer from La Salle 
County, will now see his full pension as a result of this legislation.
  Mr. CARDIN. Mr. Speaker, I am now pleased to yield 1\1/2\ minutes to 
the gentleman from Texas (Mr. Bentsen), the sponsor of many of the 
provisions in the bill that deal with small business.
  Mr. BENTSEN. Mr. Speaker, I thank the gentleman for yielding me time.
  I rise in strong support of the bill, H.R. 10. I want to commend the 
gentleman from Ohio and the gentleman from Maryland for bringing up 
this bill.
  This bill may not be the most politically salable of all the tax 
bills we are considering this year, but it is, in my opinion, probably 
the most economically correct bill, because it deals more with savings 
than consumption. I think this bill arguably will have the broadest 
long-term impact on our general economy by increasing the savings 
rates, as well as putting more money into investment in the economy.
  A lot has been said about the underlying bill. I want to thank both 
the gentlemen for including provisions from H.R. 738, which the 
gentleman from Missouri (Mr. Blunt) and I introduced, that would ease 
the restrictions on small employers, employers of 100 or fewer 
employees, who, statistics show, are the least likely to have a pension 
program or retirement program. This bill would go a long way toward 
making that better.
  I also want to commend my colleagues for the amendment that will be 
offered by the gentleman from Massachusetts (Mr. Neal) and others that 
would provide a tax credit for small employers who want to set up a 
pension program for their employees. I would encourage the House to 
adopt that, and to adopt the idea of providing credits to low-income 
individuals so that they can save as well.
  We should not leave out any sector in society that we want to save. 
As the gentleman from Illinois who just spoke said, we do have 
situations where working families do not have the disposable income to 
set aside in these programs. If we pass the Neal amendment, we can make 
this good bill an even better bill.
  Mr. CARDIN. Mr. Speaker, I am pleased to yield 1\1/2\ minutes to the 
gentleman from Texas (Mr. Green).
  Mr. GREEN of Texas. Mr. Speaker, I am glad to follow my colleague 
from Texas. With a Texan in the chair, I hope we are not overdoing it 
today on this bill.
  Mr. Speaker, I rise in support of H.R. 10, the Comprehensive 
Retirement Security and Pension Reform Act, and congratulate our 
sponsors for their persistence in this effort, not only this year, but 
last year.
  Mr. Speaker, the private pension plans are crucial to the retirement 
security of millions of Americans, and yet only half of our private 
sector employees have any kind of pension, and only 20 percent of the 
small businesses offer their employees retirement benefits.
  Currently, Americans save only 4 percent of our income, the smallest 
amount among industrial nations. If this trend continues, young 
Americans will be ill-prepared for their retirement years. That is why 
it is important that our current system not only does not reward enough 
to encourage savings; it is in dire need of reform.
  The legislation we are considering today makes a number of important 
changes and encourages individuals to save for their retirement. We all 
know that saving $2,000 a year for your IRA

[[Page 6803]]

is not enough. It raises it to $5,000. It raises the 401(k) limit to 
$15,000.
  It also addresses the needs of older workers, allowing people 50 
years or older to make that annual catch-up, $5,000, for years that 
they could not do it. It helps, particularly the provision for women 
who have left the workforce and then come back, to be able to catch up 
on their retirement effort. There are a number of important components.
  Of course, the bill is not perfect and there are things we could do, 
particularly for lower-wage workers, and I know there is an amendment, 
the Rangel-Neal substitute, that will add that. I encourage folks not 
only to vote for that substitute, but ultimately, the bill, Mr. 
Speaker.
  Mr. PORTMAN. Mr. Speaker, I yield 1 minute to the gentlewoman from 
Maryland (Mrs. Morella), for the purpose of entering into a colloquy.
  Mrs. MORELLA. Mr. Speaker, I thank the gentleman for yielding. I am 
proud to be a cosponsor of this bill.
  I just wanted to make sure that the revenue estimate of this bill 
assumes that the Federal Employees Thrift Savings Plan will permit 
catch-up contributions. By that that I mean, any revenue loss 
associated with such contributions would be accounted for and is in the 
cost of this bill.
  Mr. PORTMAN. Mr. Speaker, will the gentlewoman yield?
  Mrs. MORELLA. I yield to the gentleman from Ohio.
  Mr. PORTMAN. Mr. Speaker, first I want to thank the gentlewoman from 
Maryland (Mrs. Morella) for her help in putting this bill together and 
being sure that Federal employees are covered.
  Yes, the answer is, the catch-up contributions in this bill lists 
types of plans to which the provision applies. Included on that list is 
a trust described in the code under section 401(a). Under an existing 
section of that code, section 7701(j), the Thrift Savings Plan fund is 
created as a trust described in that code section 401(a). Therefore, 
the catch-up contributions do apply to the Thrift Savings Plan in the 
same manner as it would apply to a 401(k) plan.
  Mrs. MORELLA. Mr. Speaker, reclaiming my time, I thank the gentleman 
from Ohio for the assurance that he has just given us.
  I also want to congratulate him and his coauthor, the gentleman from 
Maryland (Mr. Cardin), for putting this great bill together.

                              {time}  1330

  Mr. PORTMAN. Mr. Speaker, I yield 45 seconds to the gentlewoman from 
New York (Mrs. Kelly).
  Mrs. KELLY. Mr. Speaker, I rise for the purpose of entering into a 
colloquy with my friend, the gentleman from Ohio.
  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 the retirement security for working Americans. 
Unfortunately, I have been contacted by my constituents who are 
concerned about potential interpretations of sections 405, 501, and 801 
of H.R. 10. They fear they could negatively affect pension benefits.
  I would like to get assurances that these sections I have mentioned 
are not intended to harm participants. It is my understanding that 
these sections are not intended to reduce pension benefits, eliminate 
early retirement benefits, retirement-type subsidies, or optional forms 
of benefits, or discourage companies from increasing pension benefits.
  Mr. PORTMAN. Mr. Speaker, will the gentlewoman yield?
  Mrs. KELLY. I yield to the gentleman from Ohio.
  Mr. PORTMAN. I would say to my friend, the gentlewoman from New York, 
Mr. Speaker, she is absolutely right. Her understanding is correct.
  In fact, just the opposite of the concerns she expressed are 
intended. We have, in fact, made several adjustments in the language to 
ensure that these provisions will achieve their intended effect, which 
is, of course, to expand pension coverage and protections for American 
workers.
  I thank the gentlewoman for her help on this bill and for helping us 
to refine it.
  Mr. CARDIN. Mr. Speaker, I yield myself the balance of our time.
  The SPEAKER pro tempore (Mr. Thornberry). The gentleman from Maryland 
(Mr. Cardin) is recognized for 1\1/2\ minutes.
  Mr. CARDIN. Mr. Speaker, as the general debate has indicated, there 
is strong support for this legislation. I thank my colleagues who have 
come to the floor to express their views on this legislation. It is 
clear that it will help American workers, it will help people save for 
their own retirement.
  Let me just point out the Congressional Research Service on November 
6 pointed out that if employers offer plans, workers at all income 
levels participate and benefit. Eighty-five percent of the workers 
earning less than $40,000 will participate in the plans, and 68 percent 
of the workers earning less than $20,000.
  This bill will make it easier for companies to provide pension plans, 
and more workers at all levels will participate.
  I again want to thank the gentleman from Ohio (Mr. Portman) for his 
work. On my side of the aisle, I want to thank the gentleman from New 
Jersey (Mr. Andrews), the gentleman from North Dakota (Mr. Pomeroy), 
and the gentleman from Texas (Mr. Bentsen) for their contributions to 
the legislation that is before us.
  Lastly, let me thank my staff person, David Koshgarian, for all the 
work that he put in.
  Mr. Speaker, I yield back the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield the balance of my time to the 
gentleman from Illinois (Mr. Crane), senior Republican on the 
committee, who was very helpful in putting on this legislation.
  The SPEAKER pro tempore. The gentleman from Illinois (Mr. Crane) is 
recognized for 1\3/4\ minutes.
  Mr. CRANE. Mr. Speaker, I thank my friend for yielding time to me, 
and I rise in support of the Comprehensive Retirement Security and 
Pension Reform Act of 2001.
  In a voluntary, employer-sponsored pension system, businesses must be 
given incentives to start, maintain, and expand their plans. H.R. 10 
dramatically increases contribution and benefit levels available under 
these private plans. However, to take advantage of these increased 
levels, key decision-makers will have to establish a qualified 
retirement plan or make benefit improvements in their existing plan.
  Likewise, we should not create disincentives that might bar an 
employer from establishing a pension plan. Toward this end, the 
Committee on Ways and Means in this legislation has called for further 
study into the issue of whether our tax laws create disincentives for 
pension plan funding by employers who are experiencing economic 
hardships.
  Specifically, H.R. 10 would require the General Accounting Office to 
consider whether pension funding would be enhanced if section 172(f) of 
the Internal Revenue Code were modified to list payments to defined 
benefit plans as an item for which 10-year specified liability loss 
carrybacks may be available.
  The committee's call for this study arose out of a concern that 
restrictions under section 172(f) imposed by Congress in 1998 may have 
inadvertently undercut the goal of secure pension funding.
  Following the 1998 change, I am concerned that taxpayers experiencing 
financial losses are not able to carry back pension contributions under 
section 172(f). As a result, such taxpayers are subject to a higher 
after-tax cost of maintaining pension funding levels. This could 
jeopardize the employer's ability to meet future funding obligations, 
and act as a disincentive to making contributions beyond the minimum 
requirements.
  I look forward to the GAO report. Ultimately, I am hopeful we will 
consider enactment of legislation restoring pension contributions as an 
item eligible for a 10-year carryback under section 172(f). The GAO's 
findings will help us to weigh the merits of such legislation.
  I congratulate my colleagues, the gentleman from Ohio (Mr. Portman) 
and the gentleman from Maryland (Mr. Cardin), on this outstanding bill 
and look forward to seeing it signed into law.

[[Page 6804]]


  Mr. FRELINGHUYSEN. Mr. Speaker, today I rise in support of H.R. 10, 
the Comprehensive Retirement Security and Pension Reform Act of 2001. 
This legislation will help millions of working Americans plan for a 
secure retirement by giving them the ability and incentive to save 
during their working years. It will also allow many small businesses 
the opportunity to provide pension coverage for their employees.
  A main component of H.R. 10 will raise the contribution limit for 
both traditional and Roth Individual Retirement Accounts (IRA's) from 
$2,000 to $5,000. This even includes a ``catch-up'' provision allowing 
workers age 50 and older to make an immediate contribution of up to 
$5,000 to their IRA's. This provision is helpful to Older Americans who 
may not have had the opportunity to contribute to a retirement savings 
plan in their earlier working years and especially critical to women 
who enter the workforce later in life.
  Second, this bill provides portability for individuals with 401k-type 
plans. As you know, in today's changing economy, statistics show that 
an average worker does not stay in one job for more than five years. To 
accommodate the needs of a growing mobile workforce, H.R. 10 will allow 
workers to change jobs without fear of losing their accumulated 
retirement savings. In addition, workers will also be able to become 
vested in a pension plan in 3 years instead of the current 5.
  Finally, this legislation removes many of the burdensome regulations 
and administrative costs, such as an IRS ``user fee,'' which in many 
cases prevent small businesses from offering employer pension plans. 
This freedom and flexibility will not only allow small businesses to 
provide a pension plan, but just as important, gives an incentive for 
employees to stay in the workforce and make important contributions to 
company growth and productivity.
  Mr. Speaker, today's vote is important because it reaffirms our 
bipartisan commitment to providing a safe and secure retirement for 
generations of Americans. We have already stopped the ``raid'' on 
Social Security and locked away the $2.6 trillion Social Security 
surplus from other government spending. Now, we are helping American 
families and individuals, especially the seventy million Americans who 
do not have a retirement savings plan or pension, with incentives to 
take that extra step in making critical, short-term investments in 
retirement savings. People will now be able to fulfill and enjoy their 
long-term hopes and dreams during their retirement years.
  Mr. BLUMENAUER. Mr. Speaker, I rise today to support both H.R. 10 and 
the substitute amendment. I am gratified to see this bipartisan 
legislation improving pension and retirement savings vehicles has been 
brought before the House of Representatives for consideration.
  I am especially pleased with one provision that I have been working 
to change since coming to Congress: Section 415. The current statutes 
establish arbitrary and punitive levels on working people by not 
allowing those who are covered by pension programs to collect the full 
benefits they have accrued. This is wrong and H.R. 10 will fix this 
inequity and allow all hard working citizens to collect their full 
pension.
  Both H.R. 10 and the substitute deal with the 100 percent of 
compensation problem, which speaks to the disparity lower-paid 
employees face when they do not get the pension they should because 
programs are based on years of service, rather than salary amounts.
  Those who retire early due to the difficult and often physical nature 
of their work currently are not allowed to withdraw the full amount of 
their pension. This legislation would address that problem.
  These are important issues and the legislation is long overdue.
  Mr. GRAVES. Mr. Speaker, I rise today in strong support of the 
Comprehensive Retirement Security and Pension Reform Act. Seventy 
million Americans do not have a 401(k)-type plan or any kind of 
pension--roughly half the workforce. In fact, the problem is worse 
among small businesses--less than 20 percent of small businesses with 
25 or fewer employees offer any kind of pension coverage today. Mr. 
Speaker, it is time we make retirement security a reality for more 
Americans.
  The Comprehensive Retirement Security and Pension Reform Act 
modernizes pension laws, provides regulatory relief to encourage more 
small businesses to offer retirement plans and allows Americans to set 
more aside in an IRA or 401(k)-type plan. In addition, this plan 
expands opportunities for women to place retirement savings in IRAs 
when they take time away from the work place, opens the door for women 
to make catch-up contributions to IRAs later in life when they are 
likely to earn more money, and increases the overall amount they can 
contribute to their retirement savings.
  I am pleased to vote today to pass this fair, balanced and bipartisan 
plan to strengthen the economy, increase savings and investment, and 
provide a more secure retirement for all Americans.
  Mr. UDALL of Colorado. Mr. Speaker, Mr. Speaker, I rise in support of 
H.R. 10, the Comprehensive Retirement Security and Pension Reform Act 
of 2001.
  H.R. 10 increases the maximum amount that can be contributed annually 
to both traditional Individual Retirement Accounts and Roth IRAs from 
the current $2,000 to $5,000 over the next three years. In addition, 
the bill increases the limits on annual contributions to 401(k) and 
other defined contribution plans from the current $10,000 to $15,000 
over five years. Workers who are 50 or older the bill would allow 
additional annual contributions of up to $5,000 to both IRAs and 401(k) 
plans. This provision is particularly important for women who may have 
entered and left the workforce during their careers to respond to the 
needs of their families.
  This bill does more than just raise contribution limits. H.R. 10 
accelerates vesting of employer matching contributions to defined 
contribution plans from five years to three years, and increases the 
portability of account balances in pension plans when workers change 
jobs.
  While H.R. 10 is a good step forward, it is important to note that 
only half of our workforce is covered by any type of pension plan. Of 
those workers who are covered by a pension plan, only about one-quarter 
of low- and moderate-income workers actually participate in them.
  As a member of the House Small Business Committee, I am committed to 
helping small businesses provide pension plans that help lower- and 
moderate-income workers save for retirement. That is why I support the 
Rangel-Neal-Andrews-Tierney amendment to add three small business tax 
credits to H.R. 10.
  The first provision in the Rangel-Neal-Andrews-Tierney amendment is a 
refundable tax credit of up to 50 percent of an employee's contribution 
to a traditional IRA or employer-sponsored plan up to a maximum credit 
of $1,000 per year. This credit would be available for people earning 
at least $5,000 and would phase-out as income increases from $25,000 to 
$75,000 for married couples and $12,500 to $37,500 for single people. 
The second tax credit is to encourage employers that do not currently 
have pension plans to start one. Employers of fewer than 100 people 
could receive a tax credit of 50 percent of contributions up to 3 
percent of payroll for the first three years they have a plan. The 
final tax credit in the Rangel-Neal-Andrews-Tierney amendment will be 
available for three years to help small employers with the initial 
administrative costs for setting up a plan.
  Mr. COYNE. Mr. Speaker, I rise in support of H.R. 10. but, at the 
same time, I rise to emphasize that important work still needs to be 
done, that this is only the beginning, to improve the retirement 
opportunities of those citizens for whom this bill will have limited 
benefit at best.
  For many years, we have attempted to address the issue of pension 
reform. In doing so, we have learned that this is, in reality, not a 
simple, single issue, but a set of issues as complex as they are broad. 
The challenge for us is to determine what aspects of the pension system 
are most in need of legislative remedy, then to direct our energies 
toward creating the best solutions. Often we have found that our 
efforts can lead to competing, contradictory results.
  I believe that this bill is a worthwhile beginning to addressing the 
many gaps and shortfalls in pension coverage. I especially commend the 
section 415 changes, which will alleviate the restrictive rules for our 
many citizens who are covered by multiemployer plans.
  However, I think that incentives beyond the expansion of contribution 
limits are needed to help employees to fund their retirement accounts 
and to assist small business owners to start pension plans for 
themselves and their employees.
  We have an obligation to all Americans to craft legislation that 
reaches down to everyone in its support of pension income enhancement. 
The two amendments offered by the Democrats do just that.
  The first amendment would help those with little or no retirement 
savings, who cannot begin to contemplate making contributions in the 
amounts addressed in this bill. It would provide a refundable tax 
credit on contributions made to traditional savings plans and IRA's. I 
support such a program.
  The second amendment would assist those small business owners wishing 
to offer pension coverage, and their employees who desperately need it. 
It would provide a tax credit

[[Page 6805]]

for pension plan start-up costs and contributions. Recent data shows 
only 42 percent of full-time employees in businesses with fewer than 
100 employees participated in an employer-sponsored pension or 
retirement savings plans. Small businesses are a vital part of our 
economy; they deserve our help.
  When the Committee on Ways and Means next takes up the pension issue, 
and we need to do so this year, we must address the following important 
areas: (1) the expansion of pension coverage to workers without 
pensions; (2) the expansion of coverage for low-wage workers; (3) the 
expansion of coverage for part-time workers; (4) the improvement of 
pension coverage for women; (5) the improvement of vesting and 
portability for workers who change jobs; and (6) the improvement of 
available information about retirement planning and pension choices.
  Research has shown that part-time and lower-income workers are much 
less likely than full-time and more highly paid workers to be 
participants in pension or retirement savings plans. We must direct our 
focus to those workers who toil at the margins of pension coverage.
  The lack of pension coverage is a particular problem for women, whose 
circumstances are often made worse by years spent out of the workforce 
tending to family responsibilities. No pension legislation can be 
considered complete without a targeted effort to help women secure the 
pension benefits which all manner of their contributions have earned 
for them.
  And, we must assure that all workers are offered the information 
needed to understand their pension and retirement savings plans, and 
the choices inherent in those plans.
  Mr. Speaker, this bill, which I support today, is a starting point to 
improve the pension system that we already have. I now would urge my 
colleagues to work together to develop the pension system that we need, 
one that will provide a dignified retirement for all workers, 
regardless of their income or career paths.
  Mr. STARK. Mr. Speaker, half of the American workforce lacks pension 
coverage. The majority of those who lack pension coverage are low- to 
moderate-income workers and employees in small businesses. Therefore, 
pension reform should be aimed at providing coverage for those who 
currently lack it. Any pension reform package should be judged 
primarily in terms of how much additional coverage for moderate and 
low-income workers the legislation provides and at what cost in terms 
of lost revenue. The biggest problem with the overall bill is that the 
bulk of it is spent to help relatively few workers who already have 
pensions and save for retirement. The biggest potential problem with 
the bill is that it could actually provide a disincentive for small 
business owners to provide any pension coverage at all.
  Increasing the IRA contribution limits to $5,000 is likely to hurt 
some low and mid-income workers by inducing small businesses not to 
offer an employer-sponsored pension plan. Under H.R. 10, the small 
business owner will be able to contribute $10,000 to an IRA combined 
for himself and his spouse. This additional contribution may be 
sufficient enough for the owner's retirement savings that he may not 
perceive a need, nor want to incur the cost, to set-up an employer-
sponsored pension plan.
  Over three-fourths of the pension and IRA tax benefits in H.R. 10 
would accrue to the 20 percent of Americans with the highest incomes. 
In addition to increasing IRA contribution limits, this bill helps 
executives and those employees who already earn the most lucrative 
salaries and already contribute to some type of tax-preferred 
retirement plan. The bill increases the $135,000 annual benefit limit 
for defined benefit plans to $160,000. Clearly this only helps those 
who currently earn the maximum defined benefit plan limit of $135,000. 
The rank and file workers don't earn pension benefits in excess of 
$135,000 so they don't need an increase on the annual limit on defined 
benefit plans. This is exclusively designed for those at the top.
  Currently, there is an employee limit of $10,500 on deposits to 
401(k)s, and the combined employer-employee contribution may not exceed 
the lesser of $30,000 or 25 percent of pay. The bill before us raises 
the maximum combined contribution to $40,000 and eliminates the 
requirement that it not exceed 25 percent of pay. This is yet another 
example of a provision that is purely intended for high-income workers 
who already contribute greatly to their pensions.
  Under current law, tax-preferred pension plans must not discriminate 
in favor of highly compensated employees. For example, employers must 
not discriminate between executives and the rank-and-file workers in 
the formulas used to calculate employer contributions. This ensures 
that tax preferences for pension plans serve the public purpose of 
boosting pensions among a wide array of workers. Instead of 
strengthening these rules, the pension reform bill loosens the 
nondiscrimination rules.
  The bill also seeks to relax the ``top heavy'' protections that serve 
a similar purpose in ensuring that the pension wealth is not 
concentrated amongst the top tier income-earners. These safeguards 
apply to plans in which 60 percent or more of the pension contributions 
or benefits accrue to company officers and owners (``key'' employees). 
The protections require firms to take additional steps to protect the 
rank-and-file workers through accelerated vesting and certain minimum 
contributions or benefits than would otherwise be required under the 
general rules. H.R. 10 relaxes these safeguards to the detriment of 
employees working for these firms.
  There are a few relatively miniscule provisions that would actually 
be good policy changes for a broad range of workers if they were pulled 
out from the bill and addressed in separate legislation.
  The legislation would allow rollovers across defined contribution 
plan types so that, for example, 401(k) assets could be rolled over 
into 403(b) accounts. This will allow employees to move from public, 
private and non-profit jobs with fewer pension constraints. This 
amounts to .004 percent of the bill's total cost. The legislation also 
allows for faster vesting under employer-matching contribution plans. 
The bill accelerates the schedule for cliff vesting from 5 years to 3 
years, and from 7 years to 6 years under graded vesting, reflecting the 
shorter commitments employees make to any one employer. This provision 
has a negligible revenue effect.
  Section 415(b), Multi-Employer Pensions limits are increased allowing 
those in the construction industry to earn the pensions negotiated for 
in their contracts. Although this provision may only effect a small 
group of workers, it accounts for just one percent of the overall bill. 
It is unfortunate that a little over 1 percent of today's bill actually 
provides for sound policy changes to help those who really need it.
  This bill does nothing to induce those who currently don't save for 
retirement to do so, and it gives those who do save more ways to shift 
funds. The Washington Post Editorial Department recognizes this fact, 
and I would like to submit the following Op-Ed for the Record.
  I urge my colleagues to vote no on H.R. 10.

               [From the Washington Post, Apr. 29, 2001]

                        A Miserable Pension Bill

       The House Ways and Means Committee has approved still 
     another tax cut bill, the third this year. Unlike the first 
     two, this one is relatively small, was not proposed by 
     President Bush and has strong bipartisan support. The House 
     is expected to pass it overwhelmingly this week. But that's 
     unfortunate, because the bill would not produce the healthy 
     result its sponsors suggest.
       The bill, whose principal sponsors are Reps. Rob Portman 
     and Benjamin Cardin, is presented as a way of increasing the 
     retirement savings of the middle class. But in fact the tax 
     savings, an estimated $52 billion over 10 years--would go 
     mainly to people whose incomes already permit them to save a 
     great deal. The committee rightly observes that too many 
     workers approach retirement with insufficient savings; half 
     of all private-sector workers lack pension coverage. But most 
     of them will continue to lack it if this bill is passed. 
     Those who already have the most coverage will be eligible for 
     more; that will be the main effect.
       The bill would significantly increase the amounts of money 
     that can be set aside each year in tax-favored individual 
     retirement and 401(k) accounts. An estimated three-fourths of 
     the benefit of the bill would go to taxpayers in the highest 
     income quintile, and two-fifths would go to the highest 
     income 5 percent. Democratic efforts to broaden the bill to 
     benefit lower-income taxpayers failed. This bill also 
     contains provisions that critics think would induce small 
     employers to reduce pension coverage rather than expand it, 
     as the sponsors suggest.
       This one won't break the bank, but neither is it likely to 
     increase savings that much. For the most part, it will confer 
     in the name of savings a tidy tax break on people who were 
     going to save anyway. It ought not to pass.

  Mr. CANTOR. Mr. Speaker, I rise today in support of H.R. 10, the 
Comprehensive Retirement Security and Pension Reform Act and commend 
Messrs. Portman and Cardin for introducing this important legislation.
  Financial security in retirement is the cornerstone of the American 
dream and a critical component of ensuring the health and well-being of 
our society for generations to come. Long-term financial planning 
provides vast benefits to our national economy, and all hard-working 
Americans deserve to retire in comfort without worrying about whether 
they will become a burden to their families or reliant upon the Federal 
Government for health care and daily subsistence.

[[Page 6806]]

  H.R. 10 would allow Americans to make a greater investment in their 
own retirement plans through expanded individual retirement accounts 
and 401(k)s. This provision alone would permit Americans to accumulate 
more wealth as they work toward retirement and would have an immediate 
beneficial impact upon our slowing economy. In addition, this bill 
contains a special catch-up contribution for those age 50 and older who 
perhaps were unable to save for retirement to the maximum extent 
possible early in their careers.
  Another important aspect of this measure is that it would greatly 
enhance pension portability, so that workers who change jobs can take 
their pension benefits with them. This common sense provision is long 
overdue and enjoys overwhelming support among working men and women 
across the United States. Finally, the bill includes provisions that 
would make it easier for our Nation's small businesses to start 
retirement plans, helping bring new pension coverage to millions of 
small business workers.
  Mr. Speaker, the time has come to enact this bipartisan legislation 
into law. No longer can we discuss Social Security and Medicare reform, 
the rising costs of health care for our senior citizens, and their 
inability to meet daily living expenses on a fixed income without 
enabling them to adequately plan and save for their retirement.
  I join the overwhelming majority of my colleagues in the House in 
support of H.R. 10 and urge the immediate adoption of this important 
legislation.
  Ms. HARMAN. Mr. Speaker, I rise today to support H.R. 10, the 
Comprehensive Retirement Security and Pension Reform Act of 2001, which 
will improve the ability of all Americans to save for retirement.
  Since 1981, the IRA contribution limit has not been adjusted for 
inflation. This legislation increases the contribution limit over the 
next 3 years to $5,000. Additionally, those who are over 50 are given 
the opportunity to ``catch up'' through an increased contribution limit 
of $5,000 beginning in 2002. This legislation also addresses the needs 
of the increasingly mobile workforce through provisions which provide 
quicker vesting for employer matching funds, a simpler pension system 
to encourage small businesses to provide pension plans and a faster 
vesting of employer matching contributions. These provisions will allow 
the younger generation of workers to better plan and adequately prepare 
for retirement.
  Mr. Speaker, I was not here the last time this legislation was 
considered on the House floor, but had I been, this legislation would 
have had my full support.
  I urge my colleagues to support H.R. 10.
  Mr. BEREUTER. Mr. Speaker, this Member rises today to express his 
support for H.R. 10, the Comprehensive Retirement Security Pension 
Reform Act of 2001, of which this Member is an original cosponsor. In 
fact, this Member also cosponsored similar legislation (H.R. 1102) in 
the prior 106th Congress. Therefore, this Member would like to thank 
both of the main sponsors of H.R. 10--the distinguished gentleman from 
Ohio, Rob Portman and the distinguished gentleman from Maryland, Ben 
Cardin--and the chairman of the House Ways and Means Committee, the 
distinguished gentleman from California, Mr. Bill Thomas, for their 
instrumental role in bringing H.R. 10 to the House floor.
  The pension reform provisions as provided in H.R. 10 are all too 
necessary as half of the people in the American workforce, 70 million 
workers, lack access to any sort of pension. Less than 20 percent of 
small businesses, businesses with 25 or fewer employees, offer any kind 
of pension coverage today. And, there has been almost no growth in 
pension coverage over the past 20 years.
  Between 1982 and 1994, Congress repeatedly reduced the limits on 
traditional defined benefit pension plans, and costly new regulatory 
restrictions were added. As a result, the number of these plans dropped 
from 114,000 to 45,000 between 1987 and 1997. And, contribution limits 
on pensions and individual retirement accounts (IRAs) are stuck at 
1980s levels. You could set more aside in a 401(k) plan in 1986 than 
you can today. Unfortunately, these cutbacks hurt the workers who need 
the most help in saving for retirement--those at lower and middle 
income levels. Since 1990, pension coverage has dropped from 40 to 33 
percent among workers who make less than $20,000 per year.
  To address these concerns H.R. 10 will provide $52 million in tax 
relief to help Americans save for retirement by making it easier for 
small businesses to offer retirement plans, allowing workers to save 
more, addressing the needs of an increasingly mobile workforce through 
portability, making pensions more secure, and cutting the bureaucracy 
of red tape that has thwarted employers in establishing employee 
pension plans. The bill will increase the IRA contribution limit from 
$2,000 to $5,000 over 3 years; subsequently, it will be indexed to 
inflation in $500 increments. It would increase the maximum annual 
contribution employees can make to their employer-sponsored 401(k) 
accounts from $10,500 to $15,000 over 5 years; subsequently, the annual 
contribution limit will be indexed to inflation in $500 increments. 
And, it would allow taxpayers age 50 and over to contribute $5,000 
immediately beginning in 2001 as ``catch up'' contributions for those 
people who may have left the workforce for a time period--this is 
especially important for women as they often have brief or intermittent 
work histories.
  This is a fair, balanced, bipartisan plan that will help millions of 
American workers, including school teachers, union workers, the 
financial services industry, State officials, and educational 
institutions. It includes provisions that will make it easier for small 
businesses to start retirement plans, helping to bring new pension 
coverage to millions of small business workers. And, H.R. 10 will 
greatly enhance pension portability, so that workers who change jobs 
can take their pension benefits with them.
  Mr. Speaker, for all of these important reasons for comprehensive 
pension reform and coverage, this Member strongly urges his colleagues 
to vote for H.R. 10.
  Mr. WELDON of Florida. Mr. Speaker, I rise in strong support of H.R. 
10. As a proud cosponsor of this bill I am pleased that we are moving 
forward with this legislation at the outset of the 107th Congress. Last 
year this bill received overwhelming support in the House and Senate. 
We now have a President, George W. Bush, who indicated his support of 
the bill and his willingness to sign it into law.
  It is critical that we do all that we can to help Americans better 
prepare for their retirement. H.R. 10 makes it easier for small 
businesses to offer retirement plans, allows workers to save more of 
their income for retirement. It makes it easier for an increasingly 
mobile workforce to carry their retirement benefits from one job to 
another, makes pensions more secure, and cuts the red tape that has 
hamstrung employers who want to establish pension plans for their 
employees.
  With regard to individual retirement accounts (IRAs), the bill 
increases that annual contribution limit from $2,000 to $3,000 in 2002, 
$4,000 in 2003 and $5,000 by 2004. Thereafter, the contribution limit 
is indexed for inflation. The current $2,000 limit has not been 
increased since 1981. Additionally, taxpayers that are over 50 years of 
age are allowed to contribute up to $5,000 a year beginning immediately 
in 2002, allowing these older Americans to make ``catch up'' 
contributions for retirement.
  This bill includes over 50 provisions to improve the retirement 
security of American workers. I am pleased that this bill enjoys broad 
bipartisan support, and I look forward to its passage.
  Mr. TOM DAVIS of Virginia. Mr. Speaker, I rise today in strong 
support of H.R. 10, the Comprehensive Retirement Security and Pension 
Reform Act, a bill I consider to be one of the most important pieces of 
legislation we will consider during this Congress.
  Americans want to be self-sufficient. That desire is at the core of 
the vast majority of legislation we consider here in Congress, be it 
tax-related, healthcare-related, pension-related, or education-related. 
Americans want the resources available in their old age that will allow 
them to live in dignity, without dependency on the government or the 
charity of others, and without becoming a burden to their children. 
This is a simple request, but in order to make it possible, years of 
careful planning and savings are required. How can we as Members of 
Congress help in this process, Mr. Speaker? We have social security, 
but we all realize this is a program in need of comprehensive reform in 
order to remain viable. Many are skeptical that the money they pay into 
social security will be there to help them when they retire. Whatever 
is done--or not done with respect to social security, we all realize 
that depending heavily on social security to provide a secure 
retirement is a bad idea. In fact, it was never intended to be more 
than one leg, of a three-legged stool, the other legs of which were 
personal savings and pension plans. Unfortunately, with the level of 
personal savings in this country at its lowest level since 1933, this 
three-legged stool is becoming more of a pogo stick.
  Therefore, it is paramount that we in Congress give Americans tools 
to save more of their personal income for retirement. IRAs and 401(k)s 
have been excellent instruments to accomplish this goal, but allowable 
contributions need to be raised to more realistic levels. H.R. 10 
raises the limit for IRA contributions to $5000 and the 401(k) limit to 
$15,000, then indexes them for inflation. It gives individuals

[[Page 6807]]

over 50 years old the opportunity to ``catch up'' by making 
contributions of up to $5000 immediately. H.R. 10 also makes it easier 
for workers to move their pension savings when they change jobs, and 
eliminates regulatory barriers that discourage small businesses from 
setting up pension programs.
  There are other important provisions in H.R. 10, but I would like to 
summarize by saying that Messrs. Portman and Cardin have done an 
outstanding job crafting a comprehensive bill that will help Americans 
prepare for retirement. I commend them on their outstanding work, and I 
urge my colleagues to support this bill.
  Mr. BRADY of Pennsylvania. Mr. Speaker, I rise in strong support of 
pension provisions in H.R. 10 and the Rangel-Neal substitute. This 
legislation will make life better for the 10 million hard working 
Americans, retirees and their families who depend on multi-employer 
plans for retirement, health and other benefits.
  I support this legislation for one simple reason. It restores 
fairness to the tax code. Many working Americans, especially union 
members in the building trades work their whole lives and pay into 
pension funds. They expect to get back what they put in.
  Instead, Section 415 of the IRS code treats union multi-employer 
pension plans the same way it treats wealthy tax dodgers. Section 415 
limits were designed to prevent high income individuals from using 
pension plans to shelter excessive benefits.
  But these limits are being applied to multi-employer plans, whose 
beneficiaries are typical working men and women. Multi-employer plan 
retirees need relief and they need it now.
  H.R. 10 and the substitute allow working people to receive more of 
their retirement benefits that they have worked for and earned.
  Mr. Speaker, I want to thank my friends Ben Cardin and Rob Portman 
for working so hard to bring this much needed relief to working 
Americans. I urge my colleagues to support this bill.
  Mrs. MINK of Hawaii. Mr. Speaker, I rise in support of H.R. 10, the 
Portman-Cardin pension reform bill. I am proud to be an original 
cosponsor of this legislation.
  According to the Social Security Administration, the average retiree 
gets only 40 percent of her income from Social Security. Another 19 
percent comes from employer-provided pensions, 18 percent from personal 
savings and 20 percent from earnings. Unfortunately, half of all 
private sector workers have no pension coverage. In businesses with 
less than 25 workers, only 20 percent have pension plans. Workers in 
such positions need incentives to save for their retirement.
  H.R. 10 is designed to encourage retirement and pension savings.
  First, the bill increases the amount an individual can contribute to 
an Individual Retirement Account (IRA) and $2,000 per year to $5,000 
per year by 2004. Beginning in 2005, the amount would be indexed for 
inflation in $500 increments. The contribution limit is increased for 
both traditional IRAs (contributions are tax deductible and not taxed 
until withdrawn) and Roth IRAs (contributions are not deductible but 
withdrawals are not taxed).
  Second, the bill increases the amount an individual can contribute to 
a 401(k) plan, a tax-sheltered annuity or a salary-reduction Simplified 
Employee Pension (SEP) plan is increased from $10,500 to $15,000 by 
2006.
  Third, the bill increases the amount that may be contributed to a 
small business SIMPLE plan from $6,500 to $10,000 by 2006.
  Fourth, the amount that an individual employee of a state or local 
government or a non-profit organization can contribute to a Section 457 
plan is increased from $8,500 to $15,000 by 2006. In addition, the 
amount of contributions can be doubled during the last three years 
before retirement.
  Together, these provisions provide workers with increased 
opportunities to save for retirement.
  Next, the bill increases the portability of pensions. This is 
increasingly important to the modern workforce, with its high degree of 
mobility. Under the provision, workers will be able to roll-over 
pension savings from one type of plan to another as they move from job 
to job.
  The bill also contains an extremely important provision relating to 
vesting of pension rights. Under current law, a worker can lose their 
employer's pension benefits if they do not work for the employer for 
five years. The bill changes the vesting rule so that a worker's rights 
to pension benefits vests with three years of employment.
  I would like to see greater protections for workers whose employers 
are converting their pension plans to so-called cash balance plans. 
Employers often do not disclose to older workers that a conversion to a 
cash balance plan may contain a ``wear-away'' provision under which a 
worker may not earn any additional pension benefits for several years. 
Employees also do not receive adequate explanation of the effect that a 
conversion has on pension benefits because employers are not required 
to provide an explanation.
  On balance, however, the bill is a step in the right direction of 
assisting Americans to increasing their savings toward their retirement 
and I urge its passage.
  The SPEAKER pro tempore. All time for general debate has expired.


    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 a 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 
     following:

     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 
     2001''.
       (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.

                      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.
Sec. 209. Availability of qualified plans to self-employed individuals 
              who are exempt from the self-employment tax by reason of 
              their religious beliefs.
Sec. 210. Certain nonresident aliens excluded in applying minimum 
              coverage requirements.
Sec. 211. Refundable credit to certain individuals for elective 
              deferrals and IRA contributions.
Sec. 212. Credit for pension plan startup costs of small employers.
Sec. 213. Credit for qualified pension plan contributions of small 
              employers.

                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. Modifications to minimum distribution rules.
Sec. 305. Clarification of tax treatment of division of section 457 
              plan benefits upon divorce.
Sec. 306. Provisions relating to hardship distributions.
Sec. 307. Waiver of tax on nondeductible contributions for domestic or 
              similar workers.

           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 percent of current liability funding limit.

[[Page 6808]]

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. Protection of investment of employee contributions to 401(k) 
              plans.
Sec. 507. Periodic pension benefits statements.
Sec. 508. 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.
Sec. 612. Annual report dissemination.
Sec. 613. Technical corrections to SAVER Act.

                   TITLE VII--OTHER ERISA PROVISIONS

Sec. 701. Missing participants.
Sec. 702. Reduced PBGC premium for new plans of small employers.
Sec. 703. Reduction of additional PBGC premium for new and small plans.
Sec. 704. Authorization for PBGC to pay interest on premium overpayment 
              refunds.
Sec. 705. Substantial owner benefits in terminated plans.
Sec. 706. Civil penalties for breach of fiduciary responsibility.
Sec. 707. Benefit suspension notice.
Sec. 708. Studies.

                      TITLE VIII--PLAN AMENDMENTS

Sec. 801. 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:  
      2002..................................................$3,000 .

      2003..................................................$4,000 .

      2004 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 2002 or 2003 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 2004, 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 2003' 
     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, 
     2001.

                      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'' and by 
     striking the second sentence.
       (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, 2001''.
       (5) Conforming amendments.--
       (A) Section 415(b)(2) is amended by striking subparagraph 
     (F).
       (B) Section 415(b)(9) is amended to read as follows:
       ``(9) Special rule for commercial airline pilots.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     in the case of any participant who is a commercial airline 
     pilot, if, as of the time of the participant's retirement, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining any age occurring on 
     or after age 60 and before age 62, paragraph (2)(C) shall be 
     applied by substituting such age for age 62.
       ``(B) Individuals who separate from service before age 
     60.--If a participant described in subparagraph (A) separates 
     from service before age 60, the rules of paragraph (2)(C) 
     shall apply.''.
       (C) Section 415(b)(10)(C)(i) is amended by striking 
     ``applied without regard to paragraph (2)(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, 2001''.
       (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, 
     2001''; 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:
      2002.....................................................$11,000 

[[Page 6809]]

      2003.....................................................$12,000 
      2004.....................................................$13,000 
      2005.....................................................$14,000 
      2006 or thereafter....................................$15,000.''.

       (2) Cost-of-living adjustment.--Paragraph (5) of section 
     402(g) is amended to read as follows:
       ``(5) Cost-of-living adjustment.--In the case of taxable 
     years beginning after December 31, 2006, 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, 2005, 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:
      2002.....................................................$11,000 
      2003.....................................................$12,000 
      2004.....................................................$13,000 
      2005.....................................................$14,000 
      2006 or thereafter.......................................$15,000.

       ``(B) Cost-of-living adjustments.--In the case of taxable 
     years beginning after December 31, 2006, the Secretary shall 
     adjust the $15,000 amount under 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, 2005, 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:
        2002....................................................$7,000 
        2003....................................................$8,000 
        2004....................................................$9,000 
        2005 or thereafter.....................................$10,000.

       ``(ii) Cost-of-living adjustment.--In the case of a year 
     beginning after December 31, 2005, 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, 2004, 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) Subclause (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, 2001.

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

       (a) Amendment of Internal Revenue Code.--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) Amendment of ERISA.--Section 408(d)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(C) For purposes of paragraph (1)(A), the term `owner-
     employee' shall only include a person described in clause 
     (ii) or (iii) of subparagraph (A).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     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

[[Page 6810]]

     plan year when the plan benefits (within the meaning of 
     section 410(b)) no key employee or former key 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, 2001.

     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, 2001.

     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, 2001.

     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 10511 of the Revenue Act of 1987 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 later of--
       (A) the fifth plan year the pension benefit plan is in 
     existence; or
       (B) the end of any remedial amendment period with respect 
     to the plan beginning within the first 5 plan years; 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) Determination of Average Fees Charged.--For purposes of 
     any determination of average fees charged, any request to 
     which subsection (a) applies shall not be taken into account.
       (e) Effective Date.--The provisions of this section shall 
     apply with respect to requests made after December 31, 2001.

     SEC. 207. DEDUCTION LIMITS.

       (a) Stock Bonus and Profit Sharing Trusts.--
       (1) In general.--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) Conforming amendment.--Subparagraph (C) of section 
     404(h)(1) is amended by striking ``15 percent'' each place it 
     appears and inserting ``20 percent''.
       (b) Compensation.--
       (1) In general.--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).''.
       (2) Conforming amendments.--
       (A) Subparagraph (B) of section 404(a)(3) is amended by 
     striking the last sentence.
       (B) 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, 2001.

     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 contributions 
     and earnings thereon.--

[[Page 6811]]

     The term `qualified distribution' shall not include any 
     distribution of an excess deferral under section 402(g)(2) or 
     any excess contribution under section 401(k)(8), and any 
     income on the excess deferral or contribution.
       ``(3) Treatment of distributions of certain excess 
     deferrals.--Notwithstanding section 72, if any excess 
     deferral under section 402(g)(2) attributable to a designated 
     plus contribution is not distributed on or before the 1st 
     April 15 following the close of the taxable year in which 
     such excess deferral is made, the amount of such excess 
     deferral shall--
       ``(A) not be treated as investment in the contract, and
       ``(B) be included in gross income for the taxable year in 
     which such excess is distributed.
       ``(4) 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)(A) (as added by 
     section 201(d)(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.''.

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

     SEC. 209. AVAILABILITY OF QUALIFIED PLANS TO SELF-EMPLOYED 
                   INDIVIDUALS WHO ARE EXEMPT FROM THE SELF-
                   EMPLOYMENT TAX BY REASON OF THEIR RELIGIOUS 
                   BELIEFS.

       (a) In General.--Subparagraph (A) of section 401(c)(2) 
     (defining earned income) is amended by adding at the end 
     thereof the following new sentence: ``For purposes of this 
     part only (other than sections 419 and 419A), this 
     subparagraph shall be applied as if the term `trade or 
     business' for purposes of section 1402 included service 
     described in section 1402(c)(6).''.
       (b) Simple Retirement Accounts.--Clause (ii) of section 
     408(p)(6)(A) (defining self-employed) is amended by adding at 
     the end the following new sentence: ``The preceding sentence 
     shall be applied as if the term `trade or business' for 
     purposes of section 1402 included service described in 
     section 1402(c)(6).''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     SEC. 210. CERTAIN NONRESIDENT ALIENS EXCLUDED IN APPLYING 
                   MINIMUM COVERAGE REQUIREMENTS.

       (a) In General.--Subparagraph (C) of section 410(b)(3) 
     (relating to exclusion of certain employees) is amended by 
     inserting ``, determined without regard to the reference to 
     subchapter D in the last sentence thereof'' after ``section 
     861(a)(3)''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 211. 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 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)), 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 preceding taxable year, 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.

[[Page 6812]]

       ``(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)) made by the eligible 
     individual,
       ``(2) the amount of--
       ``(A) any elective deferrals (as defined in section 
     402(g)(3)) of such individual, and
       ``(B) any elective deferral of compensation by such 
     individual under an eligible deferred compensation plan (as 
     defined in section 457(b)) of an eligible employer described 
     in section 457(e)(1)(A), 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. 212. CREDIT FOR PENSION PLAN STARTUP COSTS OF SMALL 
                   EMPLOYERS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business related credits) is amended by adding at the end the 
     following new section:

     ``SEC. 45E. 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) of such Code (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(c)), the small employer pension plan startup cost 
     credit determined under section 45E(a).''
       (c) Conforming Amendments.--
       (1) Section 39(d) of such Code is amended by adding at the 
     end the following new paragraph:
       ``(10) No carryback of small employer pension plan startup 
     cost 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 startup cost credit 
     determined under section 45E may be carried back to a taxable 
     year beginning before January 1, 2002.''
       (2) Subsection (c) of section 196 of such Code 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 startup cost credit 
     determined under section 45E(a).''
       (3) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 of such Code is amended by adding 
     at the end the following new item:


[[Page 6813]]


``Sec. 45E. 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 
     beginning after December 31, 2001.

     SEC. 213. CREDIT FOR QUALIFIED PENSION PLAN CONTRIBUTIONS OF 
                   SMALL EMPLOYERS.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business related credits) is amended by adding at the end the 
     following new section:

     ``SEC. 45F. 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) except in the case of a defined benefit plan, 
     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) of such Code (defining current year business 
     credit) is amended by striking ``plus'' at the end of 
     paragraph (13), by striking the period at the end of 
     paragraph (14) and inserting ``, plus'', and by adding at the 
     end the following new paragraph:
       ``(15) in the case of an eligible employer (as defined in 
     section 45F(e)), the small employer pension plan contribution 
     credit determined under section 45F(a).''
       (c) Conforming Amendments.--
       (1) Section 39(d) of such Code is amended by adding at the 
     end the following new paragraph:
       ``(11) 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 45F may be carried back to a 
     taxable year beginning before January 1, 2002.''
       (2) Subsection (c) of section 196 of such Code is amended 
     by striking ``and'' at the end of paragraph (9), by striking 
     the period at the end of paragraph (10) and inserting ``, 
     and'', and by adding at the end the following new paragraph:
       ``(11) the small employer pension plan contribution credit 
     determined under section 45F(a).''
       (3) The table of sections for subpart D of part IV of 
     subchapter A of chapter 1 of such Code is amended by adding 
     at the end the following new item:

``Sec. 45F. 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.

                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,

[[Page 6814]]

     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) Application of nondiscrimination rules.--
       ``(A) In general.--An applicable employer plan shall not be 
     treated as failing to meet the nondiscrimination requirements 
     under section 401(a)(4) with respect to benefits, rights, and 
     features if the plan allows all eligible participants to make 
     the same election with respect to the additional elective 
     deferrals under this subsection.
       ``(B) Aggregation.--For purposes of subparagraph (A), all 
     plans maintained by employers who are treated as a single 
     employer under subsection (b), (c), (m), or (o) of section 
     414 shall be treated as 1 plan.
       ``(5) 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.
       ``(6) 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.--In the case of a year 
     beginning after December 31, 2006, the Secretary shall adjust 
     annually the $5,000 amount in paragraph (2)(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 taken into account shall be the calendar quarter 
     beginning July 1, 2005, and any increase under this 
     subparagraph which is not a multiple of $500 shall be rounded 
     to the next lower multiple of $500.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to contributions in taxable years beginning after 
     December 31, 2001.

     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 
     2001)''.
       (B) Section 404(a)(10)(B) is amended by striking ``, the 
     exclusion allowance under section 403(b)(2),''.
       (C) Section 404(j) is amended by adding at the end the 
     following new paragraph:
       ``(3) Special rule for money purchase plans.--For purposes 
     of paragraph (1)(B), in the case of a defined contribution 
     plan which is subject to the funding standards of section 
     412, section 415(c)(1)(B) shall be applied by substituting 
     `25 percent' for `100 percent'.''.
       (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 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).''.
       (H) Subparagraph (B) of section 402(g)(7) (as redesignated 
     by section 201) 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 2001)''.
       (I) Section 664(g) is amended--
       (i) in paragraph (3)(E) by striking ``limitations under 
     section 415(c)'' and inserting ``applicable limitation under 
     paragraph (7)'', and
       (ii) by adding at the end the following new paragraph:
       ``(7) Applicable limitation.--
       ``(A) In general.--For purposes of paragraph (3)(E), the 
     applicable limitation under this paragraph with respect to a 
     participant is an amount equal to the lesser of--
       ``(i) $30,000, or
       ``(ii) 25 percent of the participant's compensation (as 
     defined in section 415(c)(3)).
       ``(B) Cost-of-living adjustment.--The Secretary shall 
     adjust annually the $30,000 amount under subparagraph (A)(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 beginning October 1, 1993, and any increase under 
     this subparagraph which is not a multiple of $5,000 shall be 
     rounded to the next lowest multiple of $5,000.''.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (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, 2001.

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

       (a) Amendment of Internal Revenue Code.--Section 411(a) 
     (relating to minimum vesting standards) is amended--

[[Page 6815]]

       (1) in paragraph (2) in the matter preceding subparagraph 
     (A), 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) Amendment of 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:  
      2............................................................20  
      3............................................................40  
      4............................................................60  
      5............................................................80  
      6.........................................................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, 2001.
       (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, 2002; or
       (B) January 1, 2006.
       (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. 304. MODIFICATIONS TO MINIMUM DISTRIBUTION RULES.

       (a) Life Expectancy Tables.--The Secretary of the Treasury 
     shall modify the life expectancy tables under 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 to reflect current life expectancy.
       (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.--
       (A) In general.--Except as provided in subparagraph (B), 
     the amendments made by this subsection shall apply to years 
     beginning after December 31, 2001.
       (B) Distributions to surviving spouse.--
       (i) In general.--In the case of an employee described in 
     clause (ii), distributions to the surviving spouse of the 
     employee shall not be required to commence prior to the date 
     on which such distributions would have been required to begin 
     under section 401(a)(9)(B) of the Internal Revenue Code of 
     1986 (as in effect on the day before the date of the 
     enactment of this Act).
       (ii) Certain employees.--An employee is described in this 
     clause if such employee dies before--

       (I) the date of the enactment of this Act, and
       (II) the required beginning date (within the meaning of 
     section 401(a)(9)(C) of the Internal Revenue Code of 1986) of 
     the employee.

       (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, 2001.

     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, 2001.

     SEC. 306. PROVISIONS RELATING TO HARDSHIP DISTRIBUTIONS.

       (a) Safe Harbor Relief.--
       (1) 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.
       (2) Effective date.--The revised regulations under this 
     subsection shall apply to years beginning after December 31, 
     2001.
       (b) Hardship Distributions Not Treated as Eligible Rollover 
     Distributions.--
       (1) Modification of definition of eligible rollover.--
     Subparagraph (C) of section 402(c)(4) (relating to eligible 
     rollover distribution) is amended to read as follows:
       ``(C) any distribution which is made upon hardship of the 
     employee.''.
       (2) Effective date.--The amendment made by this subsection 
     shall apply to distributions made after December 31, 2001.

     SEC. 307. WAIVER OF TAX ON NONDEDUCTIBLE CONTRIBUTIONS FOR 
                   DOMESTIC OR SIMILAR WORKERS.

       (a) In General.--Section 4972(c)(6) (relating to exceptions 
     to nondeductible contributions), as amended by section 502, 
     is amended by striking ``and'' at the end of subparagraph 
     (A), by striking the period and inserting ``, and'' at the 
     end of subparagraph (B), and by inserting after subparagraph 
     (B) the following new subparagraph:
       ``(C) so much of the contributions to a simple retirement 
     account (within the meaning of section 408(p)) or a simple 
     plan (within the meaning of section 401(k)(11)) which are not 
     deductible when contributed solely because such contributions 
     are not made in connection with a trade or business of the 
     employer.''
       (b) Exclusion of Certain Contributions.--Section 4972(c)(6) 
     is amended by adding at the end the following new sentence: 
     ``Subparagraph (C) shall not apply to contributions made on 
     behalf of the employer or a member of the employer's family 
     (as defined in section 447(e)(1)).''.
       (c) No Inference.--Nothing in the amendments made by this 
     section shall be construed to infer the proper treatment of 
     nondeductible contributions under the laws in effect before 
     such amendments.
       (d) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

           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.--

[[Page 6816]]

       ``(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) and which is maintained by an 
     eligible employer described in section 457(e)(1)(A).''.
       (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) which is maintained by an eligible 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:
       ``(10) 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 eligible employer described in section 457(e)(1)(A) shall 
     be treated as a distribution from a qualified retirement plan 
     described in section 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 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, 2001.
       (2) Reasonable notice.--No penalty shall be imposed on a 
     plan for the failure to provide the information required by 
     the amendment made by subsection (c) with respect to any 
     distribution made before the date that is 90 days after the 
     date on which the Secretary of the Treasury issues a safe 
     harbor rollover notice after the date of the enactment of 
     this Act, if the administrator of such plan makes a 
     reasonable attempt to comply with such requirement.
       (3) 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:

[[Page 6817]]

       ``(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, 2001.
       (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 after December 31, 2001.

     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, 2001.

     SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.

       (a) Plan Transfers.--
       (1) Amendment of internal revenue code.--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 received a notice 
     describing the consequences of making the election, and
       ``(V) 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) Amendment of erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following:
       ``(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 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 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; and
       ``(v) the transferee plan allows the participant or 
     beneficiary described in clause (iii) to receive any 
     distribution to which the participant or beneficiary is 
     entitled under the 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 
     promulgated by the Secretary of the Treasury, a defined 
     contribution plan shall not be treated as failing to meet the 
     requirements of this subsection merely because of the 
     elimination of a form of distribution previously available 
     thereunder. This paragraph

[[Page 6818]]

     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.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to years beginning after December 31, 2001.
       (b) Regulations.--
       (1) Amendment of internal revenue code.--Paragraph (6)(B) 
     of section 411(d) (relating to accrued benefit not to be 
     decreased by amendment) is amended by inserting after the 
     second sentence the following new sentence: ``The Secretary 
     shall by regulations provide that this subparagraph shall not 
     apply to any plan amendment which reduces or eliminates 
     benefits or subsidies which create significant burdens or 
     complexities for the plan and plan participants and does not 
     adversely affect the rights of any participant in a more than 
     de minimis manner.''.
       (2) Amendment of erisa.--Section 204(g)(2) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)(2)) 
     is amended by inserting before the last sentence the 
     following new sentence: ``The Secretary of the Treasury shall 
     by regulations provide that this paragraph shall not apply to 
     any plan amendment which reduces or eliminates benefits or 
     subsidies which create significant burdens or complexities 
     for the plan and plan participants and does not adversely 
     affect the rights of any participant in a more than de 
     minimis manner.''.
       (3) Secretary directed.--Not later than December 31, 2003, 
     the Secretary of the Treasury is directed to issue 
     regulations under section 411(d)(6) of the Internal Revenue 
     Code of 1986 and section 204(g) of the Employee Retirement 
     Income Security Act of 1974, including the regulations 
     required by the amendment made by this subsection. Such 
     regulations shall apply to plan years beginning after 
     December 31, 2003, 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, 2001.

     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, 2001.

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

       (a) Qualified Plans.--
       (1) Amendment of internal revenue code.--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).''.
       (2) Amendment of erisa.--Section 203(e) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) 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 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) of the Internal Revenue Code 
     of 1986.''.
       (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, 2001.

     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, 2001.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

     SEC. 501. REPEAL OF PERCENT OF CURRENT LIABILITY FUNDING 
                   LIMIT.

       (a) Amendment of Internal Revenue Code.--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

[[Page 6819]]

       (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                                 The applicable
      plan year beginning                               percentage is--
      in--
      2002........................................................165  
      2003......................................................170.''.

       (b) Amendment of ERISA.--Section 302(c)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) 
     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                                 The applicable
      plan year beginning                               percentage is--
      in--
      2002........................................................165  
      2003......................................................170.''.

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

     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 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 maintained 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), as amended by section 207, 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, 2001.

     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, 2001.

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

       (a) Amendment of Internal Revenue Code.--
       (1) 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 notice to which the failure 
     relates is provided or the failure is otherwise corrected.
       ``(c) Limitations on Amount of Tax.--
       ``(1) Tax not to apply where failure not discovered and 
     reasonable diligence exercised.--No tax shall be imposed by 
     subsection (a) on any failure during any period for which it 
     is established to the satisfaction of the Secretary that any 
     person subject to liability for the tax under subsection (d) 
     did not know that the failure existed and exercised 
     reasonable diligence to meet the requirements of subsection 
     (e).
       ``(2) Tax not to apply to failures corrected within 30 
     days.--No tax shall be imposed by subsection (a) on any 
     failure if--
       ``(A) any person subject to liability for the tax under 
     subsection (d) exercised reasonable diligence to meet the 
     requirements of subsection (e), and
       ``(B) such person provides the notice described in 
     subsection (e) during the 30-day period beginning on the 
     first date such person knew, or exercising reasonable 
     diligence would have known, that such failure existed.
       ``(3) Overall limitation for unintentional failures.--
       ``(A) In general.--If the person subject to liability for 
     tax under subsection (d) exercised reasonable diligence to 
     meet the requirements of subsection (e), 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 1 plan.
       ``(B) Taxable years in the case of certain controlled 
     groups.--For purposes of this paragraph, if all persons who 
     are treated as a single employer for purposes of this section 
     do not have the same taxable year, the taxable years taken 
     into account shall be determined under principles similar to 
     the principles of section 1561.
       ``(4) 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 or otherwise inequitable 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. The Secretary 
     may provide a simplified form of notice for, or exempt from 
     any notice requirement, a plan--
       ``(A) which has fewer than 100 participants who have 
     accrued a benefit under the plan, or
       ``(B) which offers participants the option to choose 
     between the new benefit formula and the old benefit formula.

[[Page 6820]]

       ``(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) Definitions and Special Rules.--For purposes of this 
     section--
       ``(1) Applicable individual.--The term `applicable 
     individual' means, with respect to any plan amendment--
       ``(A) each 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)),

     whose rate of future benefit accrual under the plan may 
     reasonably be expected to be significantly reduced 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.

     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.
       ``(3) Early retirement.--A plan amendment which eliminates 
     or significantly reduces any early retirement benefit or 
     retirement-type subsidy (within the meaning of section 
     411(d)(6)(B)(i)) shall be treated as having the effect of 
     significantly reducing the rate of future benefit accrual.
       ``(g) New Technologies.--The Secretary may by regulations 
     allow any notice under subsection (e) to be provided by using 
     new technologies.''.
       (2) 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.''.

       (b) Amendment of ERISA.--Section 204(h) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is 
     amended by adding at the end the following new paragraphs:
       ``(3)(A) An applicable pension plan to which paragraph (1) 
     applies shall not be treated as meeting the requirements of 
     such paragraph unless, in addition to any notice required to 
     be provided to an individual or organization under such 
     paragraph, the plan administrator provides the notice 
     described in subparagraph (B) to each applicable individual 
     (and to each employee organization representing applicable 
     individuals).
       ``(B) The notice required by subparagraph (A) 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 of the Treasury) to allow 
     applicable individuals to understand the effect of the plan 
     amendment. The Secretary of the Treasury may provide a 
     simplified form of notice for, or exempt from any notice 
     requirement, a plan--
       ``(i) which has fewer than 100 participants who have 
     accrued a benefit under the plan, or
       ``(ii) which offers participants the option to choose 
     between the new benefit formula and the old benefit formula.
       ``(C) Except as provided in regulations prescribed by the 
     Secretary of the Treasury, the notice required by 
     subparagraph (A) shall be provided within a reasonable time 
     before the effective date of the plan amendment.
       ``(D) Any notice under subparagraph (A) may be provided to 
     a person designated, in writing, by the person to which it 
     would otherwise be provided.
       ``(E) A plan shall not be treated as failing to meet the 
     requirements of subparagraph (A) 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) The Secretary of the Treasury may by regulations 
     allow any notice under this paragraph to be provided by using 
     new technologies.
       ``(4) For purposes of paragraph (3)--
       ``(A) The term `applicable individual' means, with respect 
     to any plan amendment--
       ``(i) each participant in the plan; and
       ``(ii) any 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)),

     whose rate of future benefit accrual under the plan may 
     reasonably be expected to be significantly reduced by such 
     plan amendment.
       ``(B) The term `applicable pension plan' means--
       ``(i) any defined benefit plan; or
       ``(ii) an individual account plan which is subject to the 
     funding standards of section 412 of the Internal Revenue Code 
     of 1986.
       ``(C) A plan amendment which eliminates or significantly 
     reduces any early retirement benefit or retirement-type 
     subsidy (within the meaning of subsection (g)(2)(A)) shall be 
     treated as having the effect of significantly reducing the 
     rate of future benefit accrual.''.
       (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, and section 
     204(h)(3) of the Employee Retirement Income Security Act of 
     1974, 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 notice rule.--
       (A) In general.--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.
       (B) Reasonable notice.--The amendments made by this section 
     shall not apply to any plan amendment taking effect on or 
     after the date of the enactment of this Act if, before April 
     25, 2001, notice was provided to participants and 
     beneficiaries adversely affected by the plan amendment (or 
     their representatives) which was reasonably expected to 
     notify them of the nature and effective date of the plan 
     amendment.
       (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 
     and the Committee on Education and the Workforce of the House 
     of Representatives and the Committee on Finance and the 
     Committee on Health, Education, Labor, and Pensions of the 
     Senate.

     SEC. 505. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

       (a) Compensation Limit.--
       (1) In general.--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.''.
       (2) Conforming amendment.--Section 415(b)(7) (relating to 
     benefits under certain collectively bargained plans) is 
     amended by inserting ``(other than a multiemployer plan)'' 
     after ``defined benefit plan'' in the matter preceding 
     subparagraph (A).
       (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--
       ``(A) with any other plan which is not a multiemployer plan 
     for purposes of applying subsection (b)(1)(B) to such other 
     plan, or
       ``(B) with any other multiemployer plan 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''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2001.

     SEC. 506. 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 which is invested in assets consisting of 
     qualifying employer securities, qualifying employer real 
     property, or both, if such assets were acquired before 
     January 1, 1999.''.

[[Page 6821]]

       (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. 507. 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 
     to read as follows:
       ``(a)(1) Except as provided in paragraph (2)--
       ``(A) the administrator of an individual account plan shall 
     furnish a pension benefit statement--
       ``(i) to a plan participant at least once annually, and
       ``(ii) to a plan beneficiary upon written request, and
       ``(B) the administrator of a defined benefit plan shall 
     furnish a pension benefit statement--
       ``(i) at least once every 3 years to each participant with 
     a nonforfeitable accrued benefit who is employed by the 
     employer maintaining the plan at the time the statement is 
     furnished to participants, and
       ``(ii) to a plan participant or plan beneficiary of the 
     plan upon written request.
       ``(2) Notwithstanding paragraph (1), the administrator of a 
     plan to which more than 1 unaffiliated employer is required 
     to contribute shall only be required to furnish a pension 
     benefit statement under paragraph (1) upon the written 
     request of a participant or beneficiary of the plan.
       ``(3) A pension benefit statement under paragraph (1)--
       ``(A) shall indicate, on the basis of the latest available 
     information--
       ``(i) the total benefits accrued, and
       ``(ii) the nonforfeitable pension benefits, if any, which 
     have accrued, or the earliest date on which benefits will 
     become nonforfeitable,
       ``(B) shall be written in a manner calculated to be 
     understood by the average plan participant, and
       ``(C) may be provided in written, electronic, telephonic, 
     or other appropriate form.
       ``(4)(A) In the case of a defined benefit plan, the 
     requirements of paragraph (1)(B)(i) shall be treated as met 
     with respect to a participant if the administrator provides 
     the participant at least once each year with notice of the 
     availability of the pension benefit statement and the ways in 
     which the participant may obtain such statement. Such notice 
     shall be provided in written, electronic, telephonic, or 
     other appropriate form, and may be included with other 
     communications to the participant if done in a manner 
     reasonably designed to attract the attention of the 
     participant.
       ``(B) The Secretary may provide that years in which no 
     employee or former employee benefits (within the meaning of 
     section 410(b) of the Internal Revenue Code of 1986) under 
     the plan need not be taken into account in determining the 3-
     year period under paragraph (1)(B)(i).''.
       (b) Conforming Amendments.--
       (1) Section 105 of the Employee Retirement Income Security 
     Act of 1974 (29 U.S.C. 1025) is amended by striking 
     subsection (d).
       (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
     amended to read as follows:
       ``(b) In no case shall a participant or beneficiary of a 
     plan be entitled to more than one statement described in 
     subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is 
     applicable, in any 12-month period.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2002.

     SEC. 508. 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.

[[Page 6822]]

       ``(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, 2004.
       (2) Exception for certain plans.--In the case of any--
       (A) employee stock ownership plan established after March 
     14, 2001, 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 March 14, 2001.

                 TITLE VI--REDUCING REGULATORY BURDENS

     SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.

       (a) Amendment of Internal Revenue Code.--Paragraph (9) of 
     section 412(c) (relating to annual valuation) is amended to 
     read as follows:
       ``(9) Annual valuation.--
       ``(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) Amendment of 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) 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) 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) Information under clause (ii) shall, in accordance 
     with regulations, be actuarially adjusted to reflect 
     significant differences in participants.
       ``(iv) An election under clause (ii), 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 after December 31, 2001.

     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) Standards for Disallowance.--Section 404(k)(5)(A) 
     (relating to disallowance of deduction) is amended by 
     inserting ``avoidance or'' before ``evasion''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to taxable years beginning after December 31, 
     2001.

     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, 2001.

     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.--

[[Page 6823]]

       ``(1) In general.--For purposes of this section, the term 
     `qualified retirement planning services' means any retirement 
     planning advice or information 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, 2001.

     SEC. 606. REPORTING SIMPLIFICATION.

       (a) Simplified Annual Filing Requirement for Owners and 
     Their Spouses.--
       (1) In general.--The Secretary of the Treasury and the 
     Secretary of Labor 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 plan years beginning 
     after December 31, 2002, the Secretary of the Treasury and 
     the Secretary of Labor shall provide for the filing of a 
     simplified annual return for any retirement plan which covers 
     less than 25 employees on the first day of a plan year and 
     which meets the requirements described in subparagraphs (B), 
     (D), and (E) of subsection (a)(2).
       (c) Effective Date.--The provisions of this section shall 
     take effect on January 1, 2002.

     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, 2001.

     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, 2003.
       (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, 2003.
       (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, 2003, 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) of the Internal 
     Revenue Code of 1986 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, 2001.

     SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.




       (a) Expansion of Period.--
       (1) Amendment of internal revenue code.--
       (A) In general.--Subparagraph (A) of section 417(a)(6) is 
     amended by striking ``90-day'' and inserting ``180-day''.
       (B) 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).
       (2) Amendment of erisa.--Section 205(c)(7)(A) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1055(c)(7)(A)) is amended by striking ``90-day'' and 
     inserting ``180-day''.
       (3) Effective date.--The amendments made by paragraph 
     (1)(A) and (2) and the modifications required by paragraph 
     (1)(B) shall apply to years beginning after December 31, 
     2001.
       (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

[[Page 6824]]

     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, 2001.

     SEC. 612. ANNUAL REPORT DISSEMINATION.

       (a) Report Available Through Electronic Means.--Section 
     104(b)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1024(b)(3)) is amended by adding at the end 
     the following new sentence: ``The requirement to furnish 
     information under the previous sentence shall be satisfied if 
     the administrator makes such information reasonably available 
     through electronic means or other new technology.''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to reports for years beginning after December 31, 
     2000.

     SEC. 613. TECHNICAL CORRECTIONS TO SAVER ACT.

       Section 517 of the Employee Retirement Income Security Act 
     of 1974 (29 U.S.C. 1147) is amended--
       (1) in subsection (a), by striking ``2001 and 2005 on or 
     after September 1 of each year involved'' and inserting 
     ``2001, 2005, and 2009 in the month of September of each year 
     involved'';
       (2) in subsection (b), by adding at the end the following 
     new sentence: ``To effectuate the purposes of this paragraph, 
     the Secretary may enter into a cooperative agreement, 
     pursuant to the Federal Grant and Cooperative Agreement Act 
     of 1977 (31 U.S.C. 6301 et seq.), with the American Savings 
     Education Council.'';
       (3) in subsection (e)(2)--
       (A) by striking ``Committee on Labor and Human Resources'' 
     in subparagraph (D) and inserting ``Committee on Health, 
     Education, Labor, and Pensions'';
       (B) by striking subparagraph (F) and inserting the 
     following:
       ``(F) the Chairman and Ranking Member of the Subcommittee 
     on Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the House of Representatives 
     and the Chairman and Ranking Member of the Subcommittee on 
     Labor, Health and Human Services, and Education of the 
     Committee on Appropriations of the Senate;'';
       (C) by redesignating subparagraph (G) as subparagraph (J); 
     and
       (D) by inserting after subparagraph (F) the following new 
     subparagraphs:
       ``(G) the Chairman and Ranking Member of the Committee on 
     Finance of the Senate;
       ``(H) the Chairman and Ranking Member of the Committee on 
     Ways and Means of the House of Representatives;
       ``(I) the Chairman and Ranking Member of the Subcommittee 
     on Employer-Employee Relations of the Committee on Education 
     and the Workforce of the House of Representatives; and'';
       (4) in subsection (e)(3)(A)--
       (A) by striking ``There shall be no more than 200 
     additional participants.'' and inserting ``The participants 
     in the National Summit shall also include additional 
     participants appointed under this subparagraph.'';
       (B) by striking ``one-half shall be appointed by the 
     President,'' in clause (i) and inserting ``not more than 100 
     participants shall be appointed under this clause by the 
     President,'', and by striking ``and'' at the end of clause 
     (i);
       (C) by striking ``one-half shall be appointed by the 
     elected leaders of Congress'' in clause (ii) and inserting 
     ``not more than 100 participants shall be appointed under 
     this clause by the elected leaders of Congress'', and by 
     striking the period at the end of clause (ii) and inserting 
     ``; and'';
       (D) by adding at the end the following new clause:
       ``(iii) The President, in consultation with the elected 
     leaders of Congress referred to in subsection (a), may 
     appoint under this clause additional participants to the 
     National Summit. The number of such additional participants 
     appointed under this clause may not exceed the lesser of 3 
     percent of the total number of all additional participants 
     appointed under this paragraph, or 10. Such additional 
     participants shall be appointed from persons nominated by the 
     organization referred to in subsection (b)(2) which is made 
     up of private sector businesses and associations partnered 
     with Government entities to promote long term financial 
     security in retirement through savings and with which the 
     Secretary is required thereunder to consult and cooperate and 
     shall not be Federal, State, or local government 
     employees.'';
       (5) in subsection (e)(3)(B), by striking ``January 31, 
     1998'' in subparagraph (B) and inserting ``May 1, 2001, May 
     1, 2005, and May 1, 2009, for each of the subsequent summits, 
     respectively'';
       (6) in subsection (f)(1)(C), by inserting ``, no later than 
     90 days prior to the date of the commencement of the National 
     Summit,'' after ``comment'' in paragraph (1)(C);
       (7) in subsection (g), by inserting ``, in consultation 
     with the congressional leaders specified in subsection 
     (e)(2),'' after ``report'';
       (8) in subsection (i)--
       (A) by striking ``beginning on or after October 1, 1997'' 
     in paragraph (1) and inserting ``2001, 2005, and 2009''; and
       (B) by adding at the end the following new paragraph:
       ``(3) Reception and representation authority.--The 
     Secretary is hereby granted reception and representation 
     authority limited specifically to the events at the National 
     Summit. The Secretary shall use any private contributions 
     accepted in connection with the National Summit prior to 
     using funds appropriated for purposes of the National Summit 
     pursuant to this paragraph.''; and
       (9) in subsection (k)--
       (A) by striking ``shall enter into a contract on a sole-
     source basis'' and inserting ``may enter into a contract on a 
     sole-source basis''; and
       (B) by striking ``fiscal year 1998'' and inserting ``fiscal 
     years 2001, 2005, and 2009''.

                   TITLE VII--OTHER ERISA PROVISIONS

     SEC. 701. MISSING PARTICIPANTS.

       (a) In General.--Section 4050 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1350) is amended by 
     redesignating subsection (c) as subsection (e) and by 
     inserting after subsection (b) the following new subsections:
       ``(c) Multiemployer Plans.--The corporation shall prescribe 
     rules similar to the rules in subsection (a) for 
     multiemployer plans covered by this title that terminate 
     under section 4041A.
       ``(d) Plans Not Otherwise Subject to Title.--
       ``(1) Transfer to corporation.--The plan administrator of a 
     plan described in paragraph (4) may elect to transfer a 
     missing participant's benefits to the corporation upon 
     termination of the plan.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (4) shall, upon termination of the 
     plan, provide the corporation information with respect to 
     benefits of a missing participant if the plan transfers such 
     benefits--
       ``(A) to the corporation, or
       ``(B) to an entity other than the corporation or a plan 
     described in paragraph (4)(B)(ii).
       ``(3) Payment by the corporation.--If benefits of a missing 
     participant were transferred to the corporation under 
     paragraph (1), the corporation shall, upon location of the 
     participant or beneficiary, pay to the participant or 
     beneficiary the amount transferred (or the appropriate 
     survivor benefit) either--
       ``(A) in a single sum (plus interest), or
       ``(B) in such other form as is specified in regulations of 
     the corporation.
       ``(4) Plans described.--A plan is described in this 
     paragraph if--
       ``(A) the plan is a pension plan (within the meaning of 
     section 3(2))--
       ``(i) to which the provisions of this section do not apply 
     (without regard to this subsection), and
       ``(ii) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b), and
       ``(B) at the time the assets are to be distributed upon 
     termination, the plan--
       ``(i) has missing participants, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants to another pension 
     plan (within the meaning of section 3(2)).
       ``(5) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (4).''.
       (b) Effective Date.--The amendment 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. 702. 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) in clause (i), by inserting ``other than a new single-
     employer plan (as defined in subparagraph (F)) maintained by 
     a small employer (as so defined),'' after ``single-employer 
     plan,'',
       (2) in clause (iii), by striking the period at the end and 
     inserting ``, and'', and
       (3) by adding at the end the following new clause:
       ``(iv) in the case of a new single-employer plan (as 
     defined in subparagraph (F)) maintained by a small employer 
     (as so defined) for the plan year, $5 for each individual who 
     is a participant in such plan during the plan year.''.
       (b) Definition of New Single-Employer Plan.--Section 
     4006(a)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end 
     the following new subparagraph:
       ``(F)(i) For purposes of this paragraph, a single-employer 
     plan maintained by a contributing sponsor shall be treated as 
     a new single-employer plan for each of its first 5 plan years 
     if, during the 36-month period ending on the date of the 
     adoption of such plan, the sponsor or any member of such 
     sponsor's controlled group (or any predecessor of either) did 
     not establish or maintain a plan to which this title applies 
     with respect to which benefits were accrued for substantially 
     the same employees as are in the new single-employer plan.

[[Page 6825]]

       ``(ii)(I) For purposes of this paragraph, the term `small 
     employer' means an employer which on the first day of any 
     plan year has, in aggregation with all members of the 
     controlled group of such employer, 100 or fewer employees.
       ``(II) 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 controlled groups of such sponsors shall be aggregated 
     for purposes of determining whether any contributing sponsor 
     is a small employer.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to plans established after December 31, 2001.

     SEC. 703. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND 
                   SMALL PLANS.

       (a) New Plans.--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 by adding at the end the 
     following new clause:
       ``(v) In the case of a new defined benefit plan, the amount 
     determined under clause (ii) for any plan year shall be an 
     amount equal to the product of the amount determined under 
     clause (ii) and the applicable percentage. For purposes of 
     this clause, 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.
       ``(V) 80 percent, for the fifth plan year.

     For purposes of this clause, a defined benefit plan (as 
     defined in section 3(35)) maintained by a contributing 
     sponsor shall be treated as a new defined benefit plan for 
     each of its first 5 plan years if, during the 36-month period 
     ending on the date of the adoption of the plan, the sponsor 
     and each member of any controlled group including the sponsor 
     (or any predecessor of either) did not establish or maintain 
     a plan to which this title applies with respect to which 
     benefits were accrued for substantially the same employees as 
     are in the new plan.''.
       (b) Small Plans.--Paragraph (3) of section 4006(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1306(a)), as amended by section 702(b), is amended--
       (1) by striking ``The'' in subparagraph (E)(i) and 
     inserting ``Except as provided in subparagraph (G), the'', 
     and
       (2) by inserting after subparagraph (F) the following new 
     subparagraph:
       ``(G)(i) In the case of an employer who has 25 or fewer 
     employees on the first day of the plan year, the additional 
     premium determined under subparagraph (E) for each 
     participant shall not exceed $5 multiplied by the number of 
     participants in the plan as of the close of the preceding 
     plan year.
       ``(ii) For purposes of clause (i), whether an employer has 
     25 or fewer employees on the first day of the plan year is 
     determined taking into consideration all of the employees of 
     all members of the contributing sponsor's controlled group. 
     In the case of a plan maintained by two or more contributing 
     sponsors, the employees of all contributing sponsors and 
     their controlled groups shall be aggregated for purposes of 
     determining whether the 25-or-fewer-employees limitation has 
     been satisfied.''.
       (c) Effective Dates.--
       (1) Subsection (a).--The amendments made by subsection (a) 
     shall apply to plans established after December 31, 2001.
       (2) Subsection (b).--The amendments made by subsection (b) 
     shall apply to plan years beginning after December 31, 2001.

     SEC. 704. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM 
                   OVERPAYMENT REFUNDS.

       (a) In General.--Section 4007(b) of the Employment 
     Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is 
     amended--
       (1) by striking ``(b)'' and inserting ``(b)(1)'', and
       (2) by inserting at the end the following new paragraph:
       ``(2) The corporation is authorized to pay, subject to 
     regulations prescribed by the corporation, interest on the 
     amount of any overpayment of premium refunded to a designated 
     payor. Interest under this paragraph shall be calculated at 
     the same rate and in the same manner as interest is 
     calculated for underpayments under paragraph (1).''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to interest accruing for periods beginning not 
     earlier than the date of the enactment of this Act.

     SEC. 705. 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 new paragraph:
       ``(3) If assets available for allocation under paragraph 
     (4) of subsection (a) are insufficient to satisfy in full the 
     benefits of all individuals who are described in that 
     paragraph, the assets shall be allocated first to benefits 
     described in subparagraph (A) of that paragraph. Any 
     remaining assets shall then be allocated to 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--
       (A) in subsection (b)(9), by striking ``as defined in 
     section 4022(b)(6)'', and
       (B) by adding at the end the following new subsection:
       ``(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)) after 
     December 31, 2001, and
       (B) under section 4042 of such Act (29 U.S.C. 1342) with 
     respect to which proceedings are instituted by the 
     corporation after such date.
       (2) Conforming amendments.--The amendments made by 
     subsection (c) shall take effect on January 1, 2002.

     SEC. 706. 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.''.

[[Page 6826]]

       (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 new paragraph:
       ``(5) A person shall be jointly and severally liable for 
     the penalty described in paragraph (1) to the same extent 
     that such person is jointly and severally liable for the 
     applicable recovery amount on which the penalty is based.
       ``(6) No penalty shall be assessed under this subsection 
     unless the person against whom the penalty is assessed is 
     given notice and opportunity for a hearing with respect to 
     the violation and applicable recovery amount.''.
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     apply to any breach of fiduciary responsibility or other 
     violation of part 4 of 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. 707. 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) in the case of an employee who returns to work for a 
     former employer after commencement of payment of benefits 
     under the plan shall--
       (A) be made during the first calendar month or payroll 
     period in which the plan withholds payments, and
       (B) if a reduced rate of future benefit accruals will apply 
     to the returning employee (as of the first date of 
     participation in the plan by the employee after returning to 
     work), include a statement that the rate of future benefit 
     accruals will be reduced, and
       (2) in the case of any employee who is not described in 
     paragraph (1)--
       (A) 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
       (B) need not include a copy of the relevant plan 
     provisions.
       (b) Effective Date.--The modification made under this 
     section shall apply to plan years beginning after December 
     31, 2001.

     SEC. 708. STUDIES.

       (a) Model Small Employer Group Plans Study.--As soon as 
     practicable after the date of the enactment of this Act, the 
     Secretary of Labor, in consultation with the Secretary of the 
     Treasury, shall conduct a study to determine--
       (1) the most appropriate form or forms of--
       (A) employee pension benefit plans which would--
       (i) be simple in form and easily maintained by multiple 
     small employers, and
       (ii) provide for ready portability of benefits for all 
     participants and beneficiaries,
       (B) alternative arrangements providing comparable benefits 
     which may be established by employee or employer 
     associations, and
       (C) alternative arrangements providing comparable benefits 
     to which employees may contribute in a manner independent of 
     employer sponsorship, and
       (2) appropriate methods and strategies for making pension 
     plan coverage described in paragraph (1) more widely 
     available to American workers.
       (b) Matters to Be Considered.--In conducting the study 
     under subsection (a), the Secretary of Labor shall consider 
     the adequacy and availability of existing employee pension 
     benefit plans and the extent to which existing models may be 
     modified to be more accessible to both employees and 
     employers.
       (c) Report.--Not later than 18 months after the date of the 
     enactment of this Act, the Secretary of Labor shall report 
     the results of the study under subsection (a), together with 
     the Secretary's recommendations, to the Committee on 
     Education and the Workforce and the Committee on Ways and 
     Means of the House of Representatives and the Committee on 
     Health, Education, Labor, and Pensions and the Committee on 
     Finance of the Senate. Such recommendations shall include one 
     or more model plans described in subsection (a)(1)(A) and 
     model alternative arrangements described in subsections 
     (a)(1)(B) and (a)(1)(C) which may serve as the basis for 
     appropriate administrative or legislative action.
       (d) Study on Effect of Legislation.--Not later than 5 years 
     after the date of the enactment of this Act, the Secretary of 
     Labor shall submit to the Committee on Education and the 
     Workforce of the House of Representatives and the Committee 
     on Health, Education, Labor, and Pensions of the Senate a 
     report on the effect of the provisions of this Act on pension 
     plan coverage, including any change in--
       (1) the extent of pension plan coverage for low and middle-
     income workers,
       (2) the levels of pension plan benefits generally,
       (3) the quality of pension plan coverage generally,
       (4) workers' access to and participation in pension plans, 
     and
       (5) retirement security.

                      TITLE VIII--PLAN AMENDMENTS

     SEC. 801. 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) except as provided by the Secretary of the Treasury, 
     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 
     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, 2004.

     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 ``2006'' for ``2004''.
       (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. Pursuant to House Resolution 127, the 
gentleman from Massachusetts (Mr. Neal) and a Member opposed each will 
control 30 minutes.
  Does the gentleman from Ohio (Mr. Portman) seek to control the time 
in opposition to the amendment?
  Mr. PORTMAN. I do, Mr. Speaker.
  The SPEAKER pro tempore. The gentleman from Ohio (Mr. Portman) will 
be recognized.
  The Chair recognizes the gentleman from Massachusetts (Mr. Neal) for 
30 minutes.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I would like to begin by pointing out that this 
amendment is being offered by myself, the gentleman from New York (Mr. 
Rangel), the gentleman from New Jersey (Mr. Andrews), and the gentleman 
from Massachusetts (Mr. Tierney).
  The amendment is comprised of three parts, and is the same as the 
amendment I offered in the Committee on Ways and Means last week.
  In the last hour, we have really gone through a very helpful debate. 
I think it demonstrates that we are not as far apart on this 
legislation as some might think.
  Even though our differences may not be that large, they remain 
substantial for low- and moderate-income workers. As I said earlier, if 
we do not deal with the issue of providing direct incentives for small 
businesses to offer pension plans and direct incentives for workers to 
participate, then we are going to be right back here again in the near 
future arguing over these same issues.
  While 70.8 percent of workers with adjusted gross incomes between 
$75,000 and $100,000 participate in an employer pension plan, only 17.9 
percent of those workers whose gross adjusted income is between $10,000 
and $15,000 participate.
  The current system clearly fails these workers with little or no 
disposable income. I do not believe that H.R. 10 in its current form 
will achieve much success with these workers, as well. This amendment 
deals with these issues by establishing a refundable retirement savings 
credit for low- and moderate-income workers. The purpose is to 
encourage those who have little if any disposable income to make the 
effort to save, or if they can, to save

[[Page 6827]]

even more. The credit would be up to 50 percent of annual contributions 
to a traditional individual retirement account or to a qualified 
pension plan like a 401(k), 403(b), or a 457 plan.
  It is important to understand that this amendment does not establish 
a new savings vehicle. It only establishes an incentive to use current 
pension vehicles. The eligible contribution would not exceed $2,000, 
thus resulting in a maximum credit of $1,000 when the proposal is fully 
phased in. The credit amount phases down as income increases, phasing 
out at $75,000 for a married couple.
  The two other credits that would be added to the bill would reward 
small businesses for establishing new pension plans. Many small 
employers would like to establish qualified pension plans for their 
employees but they need some help in getting there.
  We are all aware of how small employers struggle to attract and 
retain quality employees, particularly today. They can be successful in 
this effort only if they can compete with large businesses and the 
benefits they offer to their employees. Moreover, the 38 million 
employees who work in small businesses deserve the same secured 
retirement as employees in large businesses. Yet, pension coverage of 
this group of workers continues to lag behind the coverage available 
for employees of large companies.
  In a recent survey conducted by the Employee Benefit Research 
Institute, 65 percent of small employers stated that the availability 
of tax credits was a significant factor in their decision on whether to 
offer a pension plan to their employees, second only to an increase in 
business profits.
  Sixty-five percent is a most substantial number. Clearly the two 
small business credits in the amendment would go a long way to 
increasing the number of small business pension plans. The gentleman 
from Ohio (Mr. Portman) acknowledged this in the committee debate.
  The first small business credit would provide a tax credit for 
expenses incurred by small businesses, employers with 100 or fewer 
employees, for costs associated with starting up new pension plans. 
Under this credit, small employers would be eligible to claim a 3-year 
tax credit for an amount equal to 50 percent of administrative and 
retirement education expenses incurred as a result of offering a new 
qualified pension plan.
  Eligible expenses for the credit would be capped at $2,000 for the 
first year and $1,000 for the second and third years.
  The second small business credit would allow these same employers to 
be eligible for a tax credit for employer contributions to a pension 
plan. This credit would be equal to 50 percent of the employer 
contributions to a qualified retirement plan made on behalf of their 
non-highly-compensated employees. Qualifying contributions would be 
both non-elected employer contributions and employer matching 
contributions, up to a total of 3 percent of compensation for non-
highly-compensated employees.
  This is important to hear, Mr. Speaker. The additional cost of this 
amendment is $46 billion over 10 years. When coupled with the cost of 
H.R. 10, the total cost remains under $100 billion. We have managed to 
fit that into our $900 billion tax cut proposal on the Democratic side. 
Surely the other side would not be asking too much if they could put 
that into the $1.6 trillion tax cut that they have offered. It is 
simply today a matter of political will.
  I would predict when the legislation comes back from the Senate, it 
will involve at least one and perhaps two of these amendments.
  In conclusion, let me say what I have said repeatedly, I think the 
gentleman from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. 
Cardin) did a good job with this legislation. I have supported 
expanding IRA limits since the day I arrived in the House 13 years ago, 
and along with the gentleman from California (Mr. Thomas), carried the 
Roth IRA in the House.
  There are many good provisions in this bill. But at the same time, we 
have a remarkable opportunity today. With just a couple of small 
changes on the edges, which the gentleman from Ohio (Mr. Portman) has 
at least grudgingly acknowledged in committee were worthwhile, we could 
pass this bill today almost unanimously here.
  If we do not accept this challenge today, we are going to be back 
here next year and the year after and the year after.
  I do not know what is so difficult today about addressing a couple of 
small issues that would allow low- and moderate-income Americans who go 
to work every day to participate in a good and predictable retirement 
savings plan. I know in his heart that the gentleman from Ohio (Mr. 
Portman) would really like to do that today. He has that opportunity 
with simply a nod to move on his side, and I hope that as this debate 
proceeds for the next few minutes we will have a chance to say, look, 
there are many portions of this bill that are indeed desirable, but 
there are also two small portions of this bill on which we could 
improve upon today.
  Mr. Speaker, I reserve the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I applaud my friend, the gentleman from Massachusetts, 
for his concern about expanding pension coverage to low- and moderate-
income Americans. That is, as he knows, precisely what we are trying to 
do in this underlying legislation.
  The small changes around the edges that he was just talking about 
happen to just about double the cost of the bill. The underlying bill 
is about $52 billion over 10 years, which we hope to be able to fit 
into the reduced tax bill number. The amendments the gentleman is 
offering through the substitute add another $45 billion, taking it up 
to $97 billion over 10 years, so it is doubling the cost. These are not 
small changes.
  In terms of the changes, I do like the start-up credit, which is $177 
million over the 10-year period. The other two, the employer credit, 
which is $5.4 billion, and the individual credit, $35.5 billion, I have 
problems with.
  The gentleman mentioned that the Senate is likely to add these. I 
think the Senate is likely to do something in terms of the small 
business start-up, which is, again, a relatively small part. It is 
tinkering around the edges, I believe, in terms of the costs and impact 
it will have, but it is important for small business.
  But I do not think they are going to do the employer credit or the 
individual credit. I say that because legislation that was introduced 
on a bipartisan basis in the Senate by the Chair and ranking members of 
the Finance Committee did not include a refundable tax credit. It was a 
nonrefundable credit at a much lower cost, as a result.
  Second, on the merits of this, having a refundable tax credit does 
create a new entitlement program. At a time when we are struggling to 
try to make the earned income tax credit work in terms of the 
compliance costs, and the Treasury Department under the Clinton 
administration told us there was a mispayment of about 25 percent under 
that program, I think it would be ill advised for us to start a new 
entitlement program until we have at least tried some of these other 
things that we are talking about under this proposal.
  What we are talking about in this proposal is primarily expanding 
pension coverage to small- and mid-sized businesses where there is very 
little coverage today.
  Again, I commend the gentleman for focusing on that, but that is what 
we do in our underlying legislation. This is where most of the low- and 
moderate-income workers are working today, where the folks are working 
who do not have pension coverage. We are trying to do this through the 
increased limits in this legislation, through the complexity 
provisions, which are very important to get at the costs and burdens. 
We know from the surveys that have been done they will help to expand 
coverage.
  Also, though in terms of the portability provisions, there will be 
faster vesting. All of this is going to help precisely the people that 
the gentleman's

[[Page 6828]]

refundable tax credit is aimed at, and without all of the complexity 
and all of the compliance problems that are inherent in that kind of a 
problem.
  Finally, on the business tax credit, which is the third piece of the 
gentleman's proposal today, I have some concerns about how that would 
work. It does not cover the plans that many small businesses use, the 
SIMPLE plan, the SEP plan, in any way. It also does not cover some of 
the other plans, the 403(b)s, 457s, and so on. It also would be very 
difficult for businesses to administer the way in which this credit is 
put together.
  The Clinton administration Treasury Department had some of these 
changes they wanted to see to our underlying legislation. We thought 
they were ill-advised because they went the wrong way, adding more 
complexity, more regulation and regulations.

                              {time}  1345

  So I do not think this is the way to do it.
  Instead, let us stick to the underlying bill, of which I appreciate 
the gentleman's support. It is focused exactly on these workers, 
focused on trying to expand the coverage to the small companies. 
Remember, only 19 percent of companies with 25 or fewer employees offer 
any kind of pension today. Those are the people we are trying to help. 
Those are the people we are trying to encourage and incentivize to 
offer a plan.
  So I hope we can stick to that today, rather than doubling the cost 
of the bill with something that is not tested, something that is going 
to create a lot more complexity.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself 30 seconds.
  That is precisely the point. We can fit $100 billion into a $900 
billion tax cut proposal on the Democratic side, and the gentleman from 
Ohio (Mr. Portman) has acknowledged they find difficulty in including 
it in a $1.6 trillion tax cut, even though, as he has pointed out, and 
again I think in a very sincere form, that there is at least part of 
this he believes at the end of the day is desirable.
  Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. 
Levin).
  (Mr. LEVIN asked and was given permission to revise and extend his 
remarks.)
  Mr. LEVIN. Mr. Speaker, I wanted to join the debate because it is an 
important debate. Pension reform and expansion are clearly necessary. 
There are some very strong provisions in this bill, and I think we all 
appreciate the work of the chief sponsors of this.
  I do, though, want to very much rise in support of the amendment of 
the gentleman from Massachusetts (Mr. Neal) and address the underlying 
reasons for it and to respond to some of the criticisms.
  We all agree the savings rate needs to be increased, and I hope we 
all agree that we want more and more people into this effort. Two-
thirds of the cost of this bill are the IRA expansion. Two-thirds. I 
asked the Joint Tax Committee to put together an analysis of the impact 
of this, and they did not have it before; but they have now provided 
it. Essentially what they show is that two-thirds, two-thirds, of the 
benefit would go to families making $75,000 or more.
  So, essentially, we have a bill two-thirds of it IRAs and two-thirds 
of the benefit going to families with incomes of $75,000 and more. 
Almost half would go to families with incomes of $100,000 or more. And 
those are not all rich people. Many of these families, $75,000 or 
$100,000, they are hard working. In most cases both husband and wife 
are working, and they are earning their income. They are not just 
clipping coupons.
  But, look, that is the fact; that most of the benefit of most of the 
cost of this would go to families making $75,000 and more. And, 
essentially, I think this undercuts the notion that this is a bill 
aimed at mainly low- and middle-income families. Surely not low-income 
families and surely not most middle-income families.
  What the gentleman from Massachusetts (Mr. Neal) is suggesting is 
that we expand this bill so that we try to bring everybody into the 
system, and that is a very good idea. And to suggest that a tax credit 
is a bad idea because of the error rate, we have argued this endlessly 
within Ways and Means. The EITC error rate has been going down. It is 
not clear it is much higher than a lot of other error rates.
  And there is the argument that tax credits are suspect. The majority 
leader here has proposed a refundable health insurance tax credit. If 
it is good enough for health insurance, I would think it is good enough 
for a pension program.
  So I would hope we would take this seriously and that we would pass 
it. At the least, if the majority here is not going to vote for it, is 
going to march in lockstep against it, I hope there will be adequate 
numbers of people voting for this so we send a message to the Senate 
that they should try to do better. We can do better than this.
  The strong provisions in this bill can be enhanced by spreading the 
net of pension reform and pension participation to millions of other 
workers and millions of other families in the United States of America. 
That is good public policy. So I would hope we would pass this 
amendment as part of this bill which will certainly pass the House.
  Mr. PORTER. Mr. Speaker, I yield 3\1/2\ minutes to the gentleman from 
Florida (Mr. Shaw), a member of the Committee on Ways and Means, 
chairman of the Subcommittee on Social Security.
  Mr. SHAW. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  I think it is important to point out that there is great bipartisan 
support for the underlying bill in this Chamber. And although it does 
have broad bipartisan support, we have heard a few of our colleagues 
say that the proposed reforms in this bill are a giveaway to those who 
are already wealthy; that this bill will make it less likely rather 
than more likely that companies will sponsor plans.
  For the last 20 years, we have heard that cutbacks in benefits and 
contribution limits and so-called top-heavy and other provisions were 
necessary to increase plan coverage and benefits for the most 
vulnerable employees. So what has happened? Approximately 50 million 
Americans now lack private pension coverage, while senior executives 
have made increasing use of nonqualified plans.
  Since 1985, the number of defined benefit pension plans has dropped 
from 114,000 to 45,000. In 1993, the year after Congress reduced the 
compensation limit for calculating pension benefits from $235,425 to 
$150,000, the number of companies in nonqualified plans tripled from 20 
to 67 percent.
  Only 20 percent of small businesses with 25 or fewer workers now 
offer a retirement plan. Our savings rate is one-half of 1 percent, 
which is the lowest level since the Great Depression. Seventy-six 
million baby boomers will retire within the next 10 years. But studies 
show older baby boomers have less than 40 percent of the savings needed 
to avoid a decline in their standard of living after they retire.
  Social Security was never designed to be the sole source of 
retirement income. It was intended to be one leg of a three-legged 
stool that included employer-sponsored retirement plans and individual 
savings. This bill will restore the incentive for qualified plans and 
increase savings, which will benefit all American workers.
  The bill restores the contribution and benefit amounts to what they 
would have been had they not been repeatedly cut back. In order for 
highly paid employees to take advantage of the higher limits and still 
pass the nondiscrimination test, companies will have to provide greater 
benefits to all other workers. The bill's simplifications of the top-
heavy and nondiscriminatory rules do not weaken the protection afforded 
to our workers.
  My colleagues also give little attention to the large number of 
measures in the bill that are specifically designed to promote the 
retirement security of rank-and-file workers. The bill reduces the 
vesting period for employer-matching contributions from 5 to 3 years, 
ensuring that amounts are

[[Page 6829]]

not forfeited when workers change jobs or leave the workforce for care 
of their children.
  Workers 50 years and older can make additional catch-up contributions 
to their retirement plan. The security of the private employer-
sponsored retirement system will be strengthened when all workers, 
regardless of income level, share a significant stake in their same 
retirement plan. This bill provides positive incentives for employers 
to do exactly that.
  And I would hope that the gentleman from Massachusetts would review 
his speech and review this particular bill when we bring out individual 
retirement accounts for American workers as part of Social Security. It 
is the key to saving Social Security, and I think the refundable tax 
credit going into individual retirement accounts is something I look 
forward to the gentleman supporting.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield myself 30 seconds.
  There was no one on this side who said that this was a giveaway to 
the rich in the 2 hours of debate that we have been pursuing here. I 
think, instead, we suggested it was not a balanced proposal, in the 
sense that the very people that the gentleman from Florida (Mr. Shaw) 
has referenced here, people that make under $30,000 a year, they are 
the ones that depend upon Social Security.
  We are never going to have a healthy discussion about Social Security 
and its future in this country as long as we leave those people out of 
defined pension benefit plans.
  Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota 
(Mr. Pomeroy), one of the experts in the House on retirement savings 
plans, a friend and a member of the Committee on Ways and Means, and a 
very competent individual.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding me this 
time and for his kind remarks. I believe he has made a significant 
contribution to the debate today by offering the substitute, which I 
intend to support.
  As I said when we considered this last Congress, the problem with 
Portman-Cardin is not what is in the bill, the problem is what is left 
out. And what is left out is a more meaningful incentive to those who 
are having the most difficult time saving, moderate-earning households, 
that simply do not have adequate discretionary income. For that reason 
we have structured the substitute as an additive proposal. It takes all 
of Portman-Cardin and adds this to it.
  After all, the last two Congresses have passed a variety of new 
incentives for saving for retirement, but have done virtually nothing 
for the $50,000 and below household who already had the tax deductible 
IRA. I think we ought to look at what is actually happening out there.
  In a recent study commissioned by the Consumer Federation of America, 
and conducted by Ohio State economist Catherine Montalto, indicates 
exactly the problem. Only 44 percent of households in this country are 
saving at a rate that will provide them an adequate retirement income. 
Not surprisingly, that is differentiated exactly along earnings lines. 
Twenty-three percent of those earning between $10,000 and $25,000 have 
adequate savings; one out of four, one out of four of those earning 
below $25,000. Fifty-four percent of those $50,000 to a $100,000 
households have adequate savings; 69 percent of those over $100,000.
  Now that tells us that right across the board we have a lot of work 
to do, but nowhere do we have more work to do in this than in the 
plight of moderate- to middle-earning households. For me, the situation 
for this Congress is to basically pay now or pay later. Either we 
enhance the ability of these families to accumulate some of their own 
assets in retirement savings, help them accumulate assets to pay for 
their own retirement income security, or we are going to have to 
provide government programs in the future for destitute elderly that 
were unable to acquire savings.
  Ten percent of those presently eligible are saving in IRAs. Ten 
percent. So for us to say, well, now you can save $5,000 as opposed to 
$2,000 really may fall short of what they need. If they cannot save 
$2,000, let me tell my colleagues, they are not going to save $5,000. 
We need to help them save. I believe conceptually the simplest way to 
do it on a universal basis is by taking that tax deduction and making a 
tax credit.
  I would frankly structure it slightly differently than the substitute 
puts this provision forward, but I think the substitute offers a way 
for us to examine the legitimacy of strengthening savings incentives 
for modest-earning households. It is basically market principles. They 
need more incentive to save. Let us help them save, as the substitute 
does.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentlewoman from 
Connecticut (Mrs. Johnson), who, as chair of the Subcommittee on 
Oversight, was one of the people who helped draft this legislation, and 
continues to be very important to focusing this legislation on defined 
benefit plans and on small businesses.

                              {time}  1400

  Mrs. JOHNSON of Connecticut. Mr. Speaker, I thank the gentleman for 
yielding me this time.
  Mr. Speaker, I rise in strong support of the underlying bill and in 
equally strong opposition to the amendment before us. First of all, the 
amendment does not take into account the remarkable effect this bill is 
going to have on the availability of pensions to employees across 
America. It particularly does not seem to notice that by making pension 
plans far simpler to offer to your employees, stripping out a lot of 
the regulation, stripping out the cost, many, many employers are going 
to be able to offer their employees a defined benefit pension plan.
  We have seen a sharp decline in the number of defined benefit pension 
plans offered by employers in America in recent years because of the 
heavy regulation. They often require no contribution by the employee, 
and they guarantee you a benefit when you retire, as opposed to the 
defined contribution plans which only guarantee you what benefit your 
contribution was able to create.
  Why are we helping low-income people by offering them a defined 
contribution plan when by expanding the number of defined benefit 
plans, which often do not require any contribution, we are going to 
create a far better option for them?
  Furthermore, many defined benefit plans also do allow you to 
contribute. The very people that they are concerned about, the 
amendment is concerned about, the low-income worker who works for a 
small business, the person earning $10,000 to $15,000, they are the 
people who get the biggest bang from the tax cut. That is why our tax 
bill that gives those low-income workers the biggest tax break between 
the drop to a 10 percent bracket, the marriage penalty relief, the 
child relief, and the bracket drops, these are the very people who are 
going to get more dollars and can put those dollars into savings 
vehicles.
  But if they put them into savings vehicles like a defined benefit 
plan, they will get the expander effect of the employer contribution. 
So this bill is dynamite for low-income workers and small businesses.
  In a country where past pension policy has forced employers to drop 
their pensions because the regulations have been so heavy and so 
complicated, and the court costs so great, for a country that now has 
50 percent of its working people working for employers who do not 
provide any pension plan at all for their employees, this bill is an 
imperative to pass now in the full form of its underlying legislation.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
gentleman from New Jersey (Mr. Andrews), who is the ranking member on 
the Subcommittee on Employer-Employee Relations.
  Mr. ANDREWS. Mr. Speaker, I thank the gentleman for yielding me this 
time.
  Mr. Speaker, I rise in support of this amendment of which I am 
pleased to be a cosponsor. I am a strong supporter of

[[Page 6830]]

the underlying bill, but I believe this amendment complements the 
underlying bill in a very positive way. Seventy-nine percent of working 
Americans who work for an employer with 25 or fewer employees do not 
have a pension.
  I think that some of those Americans will be helped by the underlying 
bill, but I think those who work in narrow-margin industries, that is, 
companies with small profit margins and particularly those people who 
work at the entry level, will not be largely helped by the underlying 
bill. They will be helped by the substitute by the gentleman from 
Massachusetts (Mr. Neal).
  This amendment is about the people who wait on tables and work in the 
child care centers and work in the retail stores. They are at the 
bottom of the pay grade. They are in industries where margins are very 
thin, and I believe we can put any amount of tax incentives for an 
employer in the bill, and those employees cannot because they cannot 
afford to reach pension coverage. A plan that says the government will 
match part of the contributions for these employees is one that will 
work.
  I agree with the gentleman from North Dakota (Mr. Pomeroy). We are 
either going to pay now or pay later. People are going to live longer, 
their resources are going to be stretched further. If they do not have 
private pension coverage, the Treasury will be called upon to meet 
those needs in future years. This is a wise amendment that complements 
the underlying bill. I urge its adoption.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Texas (Mr. Brady), a member of the Committee on Ways and Means, who has 
taken an active role on this legislation.
  Mr. BRADY of Texas. Mr. Speaker, I join others in congratulating the 
bipartisan authors of this bill, the gentleman from Ohio (Mr. Portman) 
and the gentleman from Maryland (Mr. Cardin), because we make saving so 
difficult in this country. Every one of us knows that to have a good, 
safe retirement, we have to have a three-legged stool: Social Security 
that you can count on, personal savings in the bank, and a retirement 
plan at work.
  President Bush has signaled today that he is dead serious about 
preserving Social Security once and for all. The timing of this bill 
could not be better because we are trying to address the other two legs 
of that stool: personal savings and retirement plans at work.
  Some people call this tax relief. I disagree. I do not know why we 
tax people at all for savings. I think we ought to encourage them to 
save for their retirement, for education, for college, for health care. 
This is merely Washington getting out of the way and allowing people to 
put money aside.
  I think the original bill is much stronger for small businesses and 
for low- and moderate-income savers because of a simple approach. Under 
the amendment that is proposed right now, we basically say to small 
businesses, if you are eligible under plan A and institute plans B, C 
and D, and file under E and F, you may be eligible for a partial tax 
credit. In other words, we will pay you to file more paperwork to 
endure all of this paperwork.
  The Portman plan does the opposite. It says regulation complicates 
and frustrates savings.
  We are going to remove the regulation. We are going to encourage 
small businesses to set up plans for their employees. We know it works 
because in 1984 when we started regulating these plans, the number of 
savings plans went from 114,000 to 45,000. We drove proven savers out 
of the market, and it is time to put those saving plans back into 
place. Low- and moderate-income people normally do not have the ability 
to save on their own. They save at work.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the 
gentlewoman from Ohio (Mrs. Jones).
  Mrs. JONES of Ohio. Mr. Speaker, I thank the gentleman for yielding 
me this time.
  Mr. Speaker, I want to commend the gentleman from Maryland (Mr. 
Cardin) and the gentleman from Ohio (Mr. Portman) for the underlying 
bill. I am on record supporting the underlying bill, but I rise in 
support of the Democratic substitute because I think it addresses an 
area that is not addressed by the underlying bill.
  Since I came to Congress, a lot of people say, what are you going to 
be remembered for when you leave Congress. One of the things that I 
want to be remembered for is helping my constituents and people across 
the country develop economic wealth, because I believe economic 
empowerment is the tool that is the equalizer for all people in this 
country.
  If we can give them economic sufficiency, then they can live in 
wonderful homes where they can raise their families. If we can give 
them economic sufficiency, they can afford to pay the taxes to support 
their school systems and feel good about themselves and make a decent 
wage and take a vacation once in awhile.
  One of the keys to economic wealth development is the ability to 
purchase a home. The home becomes the wealth that one generation passes 
to the next in a low- or moderate-income family. Another way is a 
savings account, and one of the ways that we begin to look at or deal 
with low-income families who have attempted to begin the process of 
saving is through IDAs, where we match the income, that match the 
dollars that they save through saving programs. In Ohio right now, we 
have a wonderful program called Cleveland Saves that is being funded by 
the Ford Foundation to encourage low- and moderate-income families to 
save.
  The third way is a retirement plan. It is my belief that the 
retirement plan under H.R. 10 does not focus in on the low- and 
moderate-income worker, and that the tax cut that is being proposed or 
is on the table does not truly benefit the low- and moderate-income 
worker. The only way we can assist them in creating their own 
retirement plan is through the adoption of the substitute bill that is 
being offered by my colleague, the gentleman from Massachusetts (Mr. 
Neal).
  It is very, very important that we start now to benefit families in 
low- and moderate-income areas to build retirement plans so they 
understand, as time goes along, they will have something in addition to 
Social Security to support their families.
  Mr. Speaker, again I say to my colleagues, the gentleman from Ohio 
(Mr. Portman) and the gentleman from Maryland (Mr. Cardin), thank you 
for offering this legislation, but step a little bit to the left or a 
little bit to the right, whichever way you choose to express it, and 
adopt the Democratic substitute on top of this underlying bill, and 
then all Americans in this country will be able to benefit from your 
proposal.
  Mr. PORTMAN. Mr. Speaker, I yield 2 minutes to the gentleman from 
Minnesota (Mr. Gutknecht).
  Mr. GUTKNECHT. Mr. Speaker, I thank the gentleman for yielding me 
this time; and it is especially unusual for the gentleman from Ohio 
(Mr. Portman) to yield to me because I rise in the uncomfortable 
position of opposing both the bill and the substitute, and I would like 
to explain why.
  I am not an expert on pension policy, but I did serve on the pension 
commission in the State of Minnesota, and I think I know a little bit 
about pension policy.
  Mr. Speaker, virtually everything in this bill is a good provision. 
Frankly, I think what the gentleman from Massachusetts (Mr. Neal) is 
talking about is something that deserves serious consideration as we 
talk about the future of Social Security. The fatal flaw of this bill 
is, it fails to deal with one of the most important issues, and that is 
a definition of the term ``vested.''
  A few minutes ago, the gentlewoman from Connecticut (Mrs. Johnson) 
said that she hoped this would mean more companies would be offering 
defined benefit programs. I hope that is true. The problem is, even if 
they offer those programs, the companies will have the chance to change 
those after the plan has started. This has happened to literally 
thousands of employees here in the United States.
  It happened to many of the people in my district who worked for a 
great

[[Page 6831]]

company, IBM. After they had been vested, IBM changed their pension 
plan from a defined benefit plan to a new, convoluted program that they 
call a cash balance plan. None of those employees were given a choice 
to stay with the plan that they were vested in.
  The dictionary defines ``vested'' very clearly. It is law. It is 
settled. It is fixed. It is absolute, being without contingency, a 
vested right. If we asked every Member of Congress and every American 
if that is how they define ``vested,'' that is how we would define it. 
But that is not how the law defines it.
  That is a fundamental flaw of this legislation. It is a glaring 
mistake that this Congress has failed to address. And my colleagues, I 
promise, as sure as this is spring back in Minnesota, this is going to 
come raining down on this Congress or future Congresses. If we do not 
deal with this issue, sooner or later, America is going to have 
hundreds of thousands of employees who thought their programs were 
vested, and they are going to find out that they were not.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 2 minutes to the 
gentleman from Vermont (Mr. Sanders) whose pitched battle with IBM is 
on the cutting edge of what the gentleman from Minnesota (Mr. 
Gutknecht) just pointed out.
  Mr. SANDERS. Mr. Speaker, I thank the gentleman for yielding me this 
time, and I want to echo the remarks of the gentleman from Mr. 
Minnesota (Mr. Gutknecht).
  Mr. Speaker, I think there is a lot to be said for the underlying 
bill. I think the Democratic amendment makes the bill stronger, but I 
am going to vote against the Republican bill and the Democratic 
alternative because in my State and throughout this country, there are 
huge numbers of workers who were promised benefits when they signed up 
for the job, and then those benefits were taken away from them in the 
dead of night when the defined benefits that they had signed on for 
were converted into cash balance payments.
  I personally regard it as an immoral outrage that IBM, among many 
other companies, which has a CEO that has received $175 million in 
compensation in a 2-year period, has $500 million in unexercised stock 
options, felt it necessary when they had a pension surplus to cut back 
on the pension promises made to tens of thousands of their workers, not 
to mention the health care promises made to their retirees.
  Mr. Speaker, it is my intention to offer a motion to recommit, which 
is cosponsored by the gentleman from Minnesota (Mr. Gutknecht), among 
others, which basically says that when a company makes an agreement 
with a worker and promises defined benefit, that they cannot simply in 
the middle of the night change their minds and convert that to a cash 
balance payment which could cost those workers up to 50 percent of the 
benefits that they were promised.
  All over this country there is what I call pension anxiety, and that 
is workers who are 50-55 years of age who are wondering whether or not 
they will receive the benefits, the retirement benefits, they were 
promised. I think they should, and I think it is unfortunate that the 
underlying bill and the amendment do not address this important issue.

                              {time}  1415

  Mr. PORTMAN. Mr. Speaker, I yield myself 1 minute just to respond 
briefly to the gentleman from Minnesota (Mr. Gutknecht) and the 
gentleman from Vermont (Mr. Sanders). I think we will have this on a 
motion to recommit as well, but the point ought to be made and made 
very clearly that the underlying legislation actually addresses this 
issue. It actually moves the ball forward. It provides disclosure. It 
provides notification in the case of cash balance conversions. It also, 
as compared to last year, actually deals with the issue of early 
retirement, so it not only is an improvement from current law, it is an 
improvement from last year's bill, partly because of the comments that 
were made to me by the gentleman from Minnesota (Mr. Gutknecht), the 
gentleman from Vermont (Mr. Sanders), and others. So we do address the 
issue, and we do it in a responsible way.
  Mr. Speaker, I yield 2 minutes to the gentleman from California (Mr. 
Royce).
  Mr. ROYCE. Mr. Speaker, I want to begin by thanking the gentleman 
from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. Cardin) 
for their effective effort to get this bill to the House floor. Let me 
just say that it was only a few generations ago that pensions were 
almost exclusive to a privileged few in this country. For too many, the 
golden years were marked by financial insecurity. Today, the majority 
of American workers and their families have the opportunity to spend 
their retirement years in relative comfort.
  Our private pension system has played a crucial role to accomplish 
this turnaround. Clearly, Social Security alone is not enough. The 
private pension system is an indispensable part of the retirement 
security of American workers. I believe this bill encourages American 
workers to start saving for tomorrow today. I think the pension reforms 
we are considering will help individuals prepare for a better future. I 
also believe that the potential for fraud and abuse with regard to the 
substitute proposal is significant. I think it would certainly be very 
difficult to administer.
  I support the underlying pension reform bill. And I think with that 
bill, we are raising the limit on IRA contributions, we have increased 
pension portability to allow workers to roll over their pension savings 
between plans when they change jobs, we have basically streamlined 
rules and regulations to make it easier for small businesses to offer 
pensions; and the underlying bill increases protection for workers by 
increasing notification and disclosure in the area of cash balance 
conversion compared to existing law. I think if all these changes are 
enacted, they will provide millions of American workers with much 
better tools to prepare for retirement.
  Let us help Americans with their retirement security. I am pleased to 
be a cosponsor of this legislation. I urge my colleagues to pass H.R. 
10 and oppose the substitute.
  Mr. PORTMAN. Mr. Speaker, I yield 3 minutes to the gentleman from New 
York (Mr. Fossella).
  Mr. FOSSELLA. Mr. Speaker, I thank the gentleman from Ohio for 
yielding me this time.
  I think, as has been said many times today, this bill is long overdue 
and it is a tremendous benefit for the American people. Essentially 
what it does and if you ask any American, I know if you ask anybody 
back home in Staten Island or Brooklyn, if they are given the 
opportunity to set a little more money aside for their retirement, will 
they take advantage of it? This bill does that. This bill for the first 
time in years says to that hardworking individual or two, you can take 
a little more money and save it for your golden years. Is that not what 
we should be trying to do? Should we not be empowering Americans to say 
that they should have the freedom to spend a little more money for 
their own retirement as they see fit?
  We all know that different families have different needs, young, old. 
But we also should have a fundamental agreement that when Americans, 
when individuals are given the freedom to invest and to save on their 
own, we are doing not only them a service but we are doing the entire 
Nation a service. On Staten Island, for example, we have a lot of 
police officers, firefighters, sanitation workers, a lot of civil 
servants, city workers. Right now, if they decide to change careers, 
which is their right, they cannot roll over their contributions into 
another retirement plan, a 401(k) or an IRA. This bill solves that 
problem, giving them more freedom and more flexibility. For the 
carpenter, the tradesman, right now he is limited upon retirement with 
his benefits. This bill allows him more money. It raises that cap. Is 
that not what we should be trying to do?
  In short, I credit the gentleman from Ohio and all Members of this 
body who support this legislation, because at its core it says to the 
American people, we trust you. We want to give you more

[[Page 6832]]

incentives, more opportunities and more freedom to set aside your hard-
earned money as you see fit for your retirement. Then you can go off 
and buy that second home, invest in your grandchildren's education, buy 
that second car but it is up to you.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 30 seconds to the 
gentleman from Vermont (Mr. Sanders).
  Mr. SANDERS. I thank the gentleman for yielding time.
  Mr. Speaker, a moment ago the gentleman from Ohio (Mr. Portman) 
indicated that his legislation deals with the fact that millions of 
workers have seen reductions in the pensions promised to them by 
companies converting from defined benefits to cash balance payments. I 
wonder if the gentleman from Ohio can be specific and tell those 
millions of workers who were double-crossed by large companies like IBM 
how his legislation is going to improve their situation.
  Mr. PORTMAN. Mr. Speaker, I yield myself 30 seconds to respond to the 
question from the gentleman since he asked for a question on our time. 
What I said is accurate which is that this bill does address the 
question of cash balance conversions. It does so in three very 
important ways: number one, it addresses the issue of disclosure. It 
says the disclosure has to be in plain English which is also in their 
motion to recommit, I understand. It also addresses the issue of 
notification. It makes sure that not only do we have disclosure but it 
is notification in advance of what current law requires. It also says, 
as compared to last year's legislation, that changes to early 
retirement benefits would also have to be disclosed, which is not 
current legislation, not even the last year's law. My only point is 
that in a responsible way we have tried to address this issue, and we 
have done it in a bipartisan manner.
  Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. 
Kirk), a new Member of the Congress who has spent a lot of time looking 
at these retirement issues.
  Mr. KIRK. Mr. Speaker, I rise in support of the majority bill here. 
H.R. 10 has a particular provision in it which I strongly support, and, 
that is, the catch-up provision for individuals age 50 and above. This 
is particularly important for working women. The provision allows women 
entering the workforce, presumably after raising children, to make an 
additional contribution of up to $5,000 to their IRA or their 401(k) 
plan.
  Within the next 15 years, more than 76 million baby boomers will 
retire. Studies have shown that older baby boomers have less than 40 
percent of the savings they will need to maintain their standard of 
living in retirement.
  For women who have chosen to raise children at home and work 
intermittently, their situation is even more dire. The Department of 
Labor estimates that less than one in every three women are covered by 
a retirement pension plan. These plans are proven to pay out greater 
benefits than Social Security, yet they are not readily available to 
most women and employees of small businesses. H.R. 10 will allow women 
approaching retirement age to save the extra money they need, or to 
catch up on their retirement savings lost because of time off from 
work. H.R. 10 truly enhances retirement pension fairness for women, an 
important fact that is often overlooked in discussions about this 
legislation.
  H.R. 10 will improve the quality of life for millions of Americans 
during their retirement. I urge my colleagues to support these 
important modernizations and to oppose the substitute.
  Mr. NEAL of Massachusetts. Mr. Speaker, I yield 3 minutes to the 
gentleman from California (Mr. Becerra), a valued member of the 
Committee on Ways and Means.
  Mr. BECERRA. Mr. Speaker, I thank the gentleman for yielding time. 
Let me begin by complimenting the principal authors of this 
legislation. I know that the gentleman from Ohio (Mr. Portman) and the 
gentleman from Maryland (Mr. Cardin) have been working for many years 
to get us to this point. I want to applaud their efforts to try to 
improve the retirement system we have which will allow pensions to be a 
more fruitful vehicle for people in this country who work to have a 
chance to really live out their retirement in comfort.
  I believe that we have reached a new age, though. This is an age 
where chances are a teenager has secured a credit card before he or she 
has secured a driver's license. With that being said, it seems to me 
that we have to do everything we can to make it possible for all 
Americans to save and not just to save but to save for their 
retirement.
  It is time for us to make it possible for all workers in this country 
to engage in pension investments. Unfortunately, we are not there yet. 
While H.R. 10, I believe, does a tremendous job of improving those 
opportunities for workers who currently have access to pensions, I 
believe we have to go that extra mile now and talk about a lot of 
America's workers, principally low- and moderate-income working 
Americans who have not yet had the opportunity to invest in pensions. 
It is time for us to do that, because if we do not, we will pay the 
price once they retire.
  Let us remember that H.R. 10 gives incentives principally through 
increases in opportunities to invest, to put more money in, whether it 
is your IRA or your 401(k). But if you do not have the money left over 
at the end of the year to invest, you cannot take advantage of those 
vehicles. It is time for us to give the incentives for lower-income 
workers to do exactly that, to say, I am going to save, I am going to 
pinch a little bit more because if I do, I am going to get a tax credit 
for having done so.
  For that small businessman or woman who would love to be able to 
offer his or her workers those pension opportunities, if we give them a 
credit, the incentive, it is going to cost you a little bit of money 
but we are going to give you some of that back because we are going to 
give you a tax credit for having participated, what we in essence have 
done is said to all Americans, all workers in this country, we want you 
to also participate in these savings.
  H.R. 10 does a tremendous job of making retirement savings even more 
important to the average American who wants to prepare for retirement. 
What we do not do through H.R. 10 is go the extra mile and talk to low- 
and moderate-income working Americans and say we want you to 
participate as well. We need to bring them into the fold. If we do not, 
we will pay the price in the end of the game. I think what the 
gentleman from Ohio (Mr. Portman) and the gentleman from Maryland (Mr. 
Cardin) have done is a tremendous effort. I think if we pass the Neal 
substitute, we make this an even better bill and we do it for all 
Americans. I urge everyone to vote for the Neal substitute.
  Mr. PORTMAN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I want to start by thanking the gentleman from 
California (Mr. Becerra) for his comments about the underlying bill and 
the way in which he and other members of our committee on the other 
side of the aisle have worked with us on this legislation. As I said at 
the outset, this has been a 4- or 5-year process, bipartisan from the 
start.
  We have refined it through that process. We believe that this 
legislation, the underlying bill, addresses the problem that confronts 
us, which is again that half the American workforce does not have that 
critical third leg of the retirement savings stool which is employer-
sponsored plans. We also help with regard to personal savings, the 
critical second leg of that stool, by expanding IRAs. Finally, as 
someone has said earlier today, the President today has indicated his 
strong interest in moving forward on that third important leg, Social 
Security.
  All three are important. What we can do today is make tremendous 
progress focusing on where the most potential for gain is, and that is 
among our small business employers.
  I have talked a little about the substitute today and some of the 
concerns I have with it. First is the cost. It almost doubles the size 
of the legislation before us. We are trying to keep this a fiscally 
conservative bill so that it can

[[Page 6833]]

be part of any final tax relief package that goes to the President's 
desk. Second on the merits, the refundable tax credit has a number of 
problems in terms of its implementation, administerability and this is 
something that has happened over the years with the earned income tax 
credit.
  We know from the Treasury Department in the Clinton years that the 
mispayment rate is about 25 percent. We do not believe getting into 
that kind of a program is necessary, and we think it has a lot of 
hazards to it particularly in the area of trying to administer it with 
the small business tax credits. I also have some concerns about the way 
in which it is drafted. It does not cover some of the plans that most 
small businesses use. And finally it adds some new restrictions to 
small businesses that we do not think are important, in fact go the 
wrong way in terms of loosening up the requirements and letting small 
business offer more of these plans to their workers.

                              {time}  1430

  Finally, I will say that the legislation, the underlying legislation, 
targets precisely those people that the gentleman from Massachusetts 
(Mr. Neal), in a good faith effort, is attempting to target in this 
substitute.
  Let me be more specific. Again, in the area of small business, we 
only have 19 percent of companies with 25 or fewer employees offering 
any kind of pension at all today. Those are the very people who we are 
targeting by, yes, lessening the restrictions, the costs, the burdens, 
the liabilities in these plans, by directly giving the people who make 
the decisions in these plans more incentives to offer the plans by 
increased contributions. This is the whole focus of the legislation.
  Let me give some very interesting statistics. I have heard here today 
how low-income workers are not going to participate and so on. If an 
employer offers a plan, people will participate. If they build it, they 
will come. Among people who make $20,000 to $39,000 a year, 85 percent 
participate when an employer offers a plan, even a SIMPLE plan, a SEP 
plan, the most simple of plans. A 401(k), it is even more than that. 
Among people who make less than $20,000 a year, 68 percent, Mr. 
Speaker, over two-thirds of those people participate when an employer 
offers a plan.
  These statistics are from the Congressional Research Service, by the 
way. This is not from even the Committee on Ways and Means, much less 
the Republican side. This is unbiased information that shows that the 
great potential here is to get these small business employers in plans. 
That is what we do. We do it through a number of different ways that I 
have talked about, but we also help with regard to vesting, taking it 
from 5 years to 3 years because these very workers tend to move jobs 
more quickly, more often. We do it by dramatically improving the idea 
that someone ought to offer a defined benefit plan. This is where the 
employee makes no contribution. So the low-income employees who are in 
companies that are now going to offer defined benefit plans, thanks to 
this legislation, are going to benefit directly.
  We do it by a very interesting change in the law that says there 
should no longer be an arbitrary limit, that 25 percent of your 
compensation is all that can be put into a pension. Who does that hurt? 
That hurts the low- and moderate-income worker; well-meaning 
restriction put in place by this Congress. It does not make any sense 
because it actually erodes the ability of the low-income worker and the 
moderate-income worker to put what they want to put aside for their 
retirement. We eliminate the 25 percent of comp rule altogether.
  We also have increased portability, as I said earlier, which will 
extremely focus on the folks who are moving around a lot, folks who now 
cash out their plan because when they move from job to job, say from a 
schoolteacher to a job in the private sector, they end up with two 
plans and most of those people actually cash out. We are now saying 
those plans can come together in a seamless way.
  The point, Mr. Speaker, is this: the underlying legislation addresses 
the problem in the substitute. It addresses it in a conservative way in 
terms of the fiscal impact. It addresses it in a way that directly 
relates to the existing problem, what we know about it, and it has 
been, as I said, over the last 4 or 5 years an entirely bipartisan 
effort, a comprehensive look at our problems and the best ways to 
address them.
  I urge my colleagues to vote, therefore, against the substitute and 
support the underlying legislation.
  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, at this time I would close on our side. I want to thank 
the gentleman from Ohio (Mr. Portman) for the quality of the debate 
that has taken place here today and also to thank the gentleman from 
New York (Mr. Rangel) and the gentleman from California (Mr. Thomas) 
because the debate in committee I thought was good as well. I also 
appreciate the fact that the gentleman from Ohio (Mr. Portman) said 
just a few moments ago that he had honest information that came from 
the Congressional Research Bureau, that the information did not come 
from the Republican side or it did not come from the Committee on Ways 
and Means. So we do appreciate that statement that the gentleman was 
able to offer for us.
  This has been a good debate, and it has been legitimate. There is a 
sincere difference of opinion here on how to proceed. I have 
acknowledged time and again that I believe that the underlying support 
for this bill is indicative of the fact that it does address many of 
the problems that we have spoken to in committee during the last few 
years.
  The key question that we face today, Mr. Speaker, is essentially 
this: How do we get low- and moderate-income workers to be full 
participants in the private retirement system of this country? We must 
help those who are not covered by a pension plan or who are covered by 
a pension plan but do not participate, or those who simply cannot put 
enough money away in their retirement plan, although they are trying 
very hard to make modest contributions.
  I submit that H.R. 10 as currently constructed really does not 
address those issues, although it does solve a number of other problems 
in our pension system. I believe the issue of low- and moderate-income 
workers needs to be faced this year, or surely we are going to be back 
here very soon attempting to do something. Why not do it today?
  I do not think the cost is very great given the size of the tax bills 
both Democrats and Republicans are talking about, and I do not believe 
that there will be a great deal of administrative complexity 
surrounding the retirement saving account proposals. Workers know how 
much they put into their pension plans, and there is a paper trail that 
everybody can easily check, just like every other line on our income 
tax forms. Pension contributions are a document that on a taxpayer's W-
2 form right now, contributions under my RSA proposal, would receive 
the same scrutiny and treatment.
  H.R. 10 increases contribution limits on individual retirement 
accounts and on qualified pension plans in hopes that business owners 
will bring other employees along as they take advantage of these new 
provisions. The gentleman from California (Mr. Thomas) and I pursued 
this last year, the Roth IRA. I do not object to that at all, but the 
underlying tone of this debate today is, maybe so but maybe not so as 
well. Either way, it simply makes sense to give small business owners a 
direct incentive to offer pension plans to their employees.
  Tax credits to cover the part of administrative costs of opening up a 
new pension plan and tax credits to help employers with the cost of 
making contributions on behalf of their employees in the early years 
simply makes very good sense.
  In fact, it makes so much sense that these issues are going to be in 
the conference report one way or another.
  I would urge us today to do it right now in the next half hour to 45 
minutes. I hope my colleagues will support

[[Page 6834]]

the substitute. It is anything but partisan. It speaks to a legitimate 
interest that we all have, and that is how do we get low- and moderate-
income workers into a bona fide retirement plan? The proposal before us 
is a sound one. With this substitute, we can improve upon the work of 
the gentleman from Ohio (Mr. Portman) and the gentleman from Maryland 
(Mr. Cardin). I would ask a favorable consideration at the right time.
  Mr. Speaker, I yield back the balance of my time.
  Mr. PORTMAN. Mr. Speaker, I would like to commend the gentleman from 
Massachusetts (Mr. Neal) for a good debate here on the floor, and I 
yield the remainder of our time to the distinguished gentleman from 
Texas (Mr. Armey), the majority leader. There is no Member of Congress 
in leadership or otherwise, Mr. Speaker, who is more committed to 
passage of this legislation and has been more helpful to it than the 
gentleman from Texas (Mr. Armey).
  The SPEAKER pro tempore (Mr. Quinn). The gentleman from Texas (Mr. 
Armey), the majority leader, is recognized for 3 minutes.
  Mr. ARMEY. Mr. Speaker, I thank the gentleman from Ohio (Mr. Portman) 
for yielding me this time, and I thank the gentleman from Massachusetts 
(Mr. Neal) for his comments.
  Mr. Speaker, I would have and had planned to be here to speak in the 
general debate on the underlying bill but was called to the White House 
to discuss the overall budget circumstances, the overall tax bill. So 
if I may just take a moment to apologize to the gentleman from 
Massachusetts (Mr. Neal) for speaking about the underlying bill during 
time on his substitute.
  At the White House, of course, we are very excited and enthusiastic 
about the possibility of completing the budget, which we may expect to 
see on the floor tomorrow, and then subsequently to move forward and 
talk about the reduction in taxes that we have available for the 
American people within that some $1.3 trillion over the next 10 years.
  As I approached that discussion, I looked at all the things that we 
are trying to accomplish in tax reduction, and the fact of the matter 
is we have so much to do and so little room within $1.3 trillion to 
accomplish it all. Certainly we want to set some things right, end the 
marriage penalty and the death taxes; reduce rates across the board on 
all taxpayers who are overtaxed.
  I was acutely aware that one of my personal objectives, my second 
highest priority for what I would expect to be in that package, is this 
exact bill. I wanted to thank the gentleman from Ohio (Mr. Portman) for 
bringing this bill forward, as he has remained faithful to it.
  Why do I feel so strongly about this? Because like the other things 
we try to do, it speaks to the heart and the objectives and the hopes 
and the dreams of the American family. The American working man and 
woman get a bum rap every now and then from the pundits, the 
commentators. All too often I hear that America is a Nation of people 
that are poor savers. That is not fair. That is not right. We are a 
Nation of people that understand our hopes and dreams for a lifetime, 
and we understand that in our younger working years a very big part of 
what we may do then and now is to care for what we will be able to have 
as resources in our older years and, therefore, saving is important to 
us, but we struggle. We struggle in all those younger years when we 
have our young children to raise and all the expenses and all the 
things we would like to accomplish, in the building of a home, 
sometimes the building of a business, for some opportunity to save, 
against the fact that all too often we are asked to save after-tax 
dollars. What this bill is doing to some extent is saying, let us get 
the Government out of the way. Remove the Government from between a 
person and their dream by giving them an enhanced opportunity to save 
tax-exempt dollars in the current time period and catch up with that 
later but now to get that money forward.
  So the first reason I like this bill is it enhances our opportunity 
for saving, first by expanding the opportunity to take tax-exempt 
dollars to our savings accounts. It also enhances our opportunity by 
removing government red tape and giving more institutions, more small 
businesses in particular, more opportunity to offer savings as an 
option at the world of work for these men and women.
  Yes, it increases the dollars. It expands the opportunity by dealing 
with those spouses in America, most of whom are women, who choose to 
make their living for their family at home, where they specialize in 
what I like to call the things one does for love and their pay is not 
there in the form of a paycheck, who are today, under today's laws, 
foreclosed from equal access to savings opportunity with women who 
choose to work outside the home.
  It should be only fair that we give everybody an equal opportunity of 
this chance to save for their retirement years, irrespective of how 
they make their living for their family, outside the house doing, of 
course, important things, or back home and doing at least what we would 
have to recognize as the more heartwarming things, if not indeed the 
more important things.
  Then the final thing that I like about this, especially in today's 
world of work, where we have so much mobility, is the opportunity for 
one to feel free to move from this job to a better job, from this 
employer to a better employer, to a new opportunity and take their 
pension with them. This portability feature is important. So this is a 
good bill.
  There are a couple of problems I have with the substitute. I will 
just mention them: one, as soon as one moves from a tax exemption to a 
tax credit, one deals the Government back in. What we are trying to do 
is get the Government of the United States out from between the 
American citizen and their savings hopes. As soon as the Government is 
back in, the Government will reintroduce its red tape; and we will be 
back to where we were with a complicated system of government 
regulations.
  The other is the cost. I am committed, with my highest sense of 
priority, to not only passing this bill today but to seeing this bill 
included in the reconciliation package that will result in real tax 
enacted in law signed by the President in the next few weeks. It is 
going to be tough enough for me to say to everybody with all their 
other priorities, move over and let Portman-Cardin have their place in 
here. It is just, unfortunately, not something we could do if it was 
carrying that larger price tag.
  So let us recognize we have a good effort here, an effort that is 
doable and when it is doable for us to accomplish the right thing to do 
for the good and true working men and women of this country, to help 
them on their own terms with their own resources fulfill their own 
dreams. We ought to do it. So I would ask my colleagues, please, vote 
against the substitute. Vote for the bill, and let us get about the 
business of making more savings opportunities more richly available for 
more working men and women in this country.
  Mr. HEFLEY. Mr. Speaker, I am opposed to the Substitute Amendment. 
Americans should be allowed to prepare for their own retirement and 
should be encouraged to do so. The national savings rate is at an all 
time low. We must improve our retirement plans so that Americans may 
take full advantage of the opportunities that they provide.
  H.R. 10 expands and strengthens our nation's private retirement 
savings system, making it easier for Americans to save. The Substitute 
only creates a costly new entitlement program. The Substitute Amendment 
adds three new tax credits to H.R. 10, which only complicate the Tax 
Code. A new refundable tax credit for savers, as proposed in the 
Substitute, would be difficult to monitor. Also, the Substitute 
includes new Small Business Tax Credits. Employers could only claim 
these credits for three years, reducing their value as incentives to 
start and maintain plans. H.R. 10 already helps small businesses by 
reducing administrative burdens.
  H.R. 10 simplifies the administrative rules that apply to retirement 
plans. The Substitute Amendment only complicates the rules. H.R. 10 
encourages individual retirement savings by providing greater pension 
simplification and

[[Page 6835]]

increased savings opportunities. For these reasons and more, I 
encourage my colleagues to support H.R. 10 and oppose this Amendment.

                              {time}  1445

  The SPEAKER pro tempore (Mr. Quinn). Pursuant to House Resolution 
127, the previous question is ordered on the bill, as amended, and on 
the amendment in the nature of a substitute offered by the gentleman 
from Massachusetts (Mr. Neal).
  The question is on the amendment in the nature of a substitute 
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 207, 
nays 223, not voting 1, as follows:

                             [Roll No. 94]

                               YEAS--207

     Abercrombie
     Ackerman
     Allen
     Andrews
     Baca
     Baird
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Berry
     Bishop
     Blagojevich
     Blumenauer
     Bonior
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clement
     Clyburn
     Condit
     Conyers
     Costello
     Coyne
     Cramer
     Crowley
     Cummings
     Davis (CA)
     Davis (FL)
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Dooley
     Doyle
     Edwards
     Engel
     Eshoo
     Etheridge
     Evans
     Farr
     Fattah
     Filner
     Ford
     Frank
     Frost
     Gephardt
     Gonzalez
     Gordon
     Green (TX)
     Gutierrez
     Hall (OH)
     Hall (TX)
     Harman
     Hastings (FL)
     Hill
     Hilliard
     Hinchey
     Hinojosa
     Hoeffel
     Holden
     Holt
     Honda
     Hooley
     Hoyer
     Inslee
     Israel
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     John
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Lampson
     Langevin
     Lantos
     Larsen (WA)
     Larson (CT)
     Lee
     Levin
     Lewis (GA)
     Lipinski
     Lofgren
     Lowey
     Lucas (KY)
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matheson
     Matsui
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McDermott
     McGovern
     McIntyre
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (VA)
     Murtha
     Nadler
     Napolitano
     Neal
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Phelps
     Pomeroy
     Price (NC)
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Roemer
     Ross
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanchez
     Sandlin
     Sawyer
     Schakowsky
     Schiff
     Scott
     Serrano
     Sherman
     Shows
     Skelton
     Slaughter
     Smith (WA)
     Snyder
     Solis
     Spratt
     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
     Woolsey
     Wu
     Wynn

                               NAYS--223

     Aderholt
     Akin
     Armey
     Bachus
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Biggert
     Bilirakis
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Castle
     Chabot
     Chambliss
     Coble
     Collins
     Combest
     Cooksey
     Cox
     Crane
     Crenshaw
     Cubin
     Culberson
     Cunningham
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Goode
     Goodlatte
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Gutknecht
     Hansen
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hilleary
     Hobson
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Issa
     Istook
     Jenkins
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Largent
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     LoBiondo
     Lucas (OK)
     Manzullo
     McCrery
     McHugh
     McInnis
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moran (KS)
     Morella
     Myrick
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Portman
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Sanders
     Saxton
     Scarborough
     Schaffer
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherwood
     Shimkus
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Souder
     Spence
     Stearns
     Stump
     Sununu
     Sweeney
     Tancredo
     Tauzin
     Taylor (NC)
     Terry
     Thomas
     Thornberry
     Thune
     Tiahrt
     Tiberi
     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--1

       
     Moakley
       

                              {time}  1506

  Messrs. FOLEY, FRELINGHUYSEN, KING, TOM DAVIS of Virginia, TIBERI, 
GREENWOOD, and SAXTON changed their vote from ``yea'' to ``nay.''
  Mr. MOORE and Ms. HARMAN changed their vote from ``nay'' to ``yea''.
  So the amendment in the nature of a substitute was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Quinn). 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.
  The SPEAKER pro tempore. The question is on the passage of the bill.


               Motion to Recommit Offered by Mr. Sanders

  Mr. SANDERS. Mr. Speaker, I offer a motion to recommit with 
instructions.
  The SPEAKER pro tempore. Is the gentleman opposed to the bill?
  Mr. SANDERS. I am opposed to the bill in its present form, Mr. 
Speaker.
  The SPEAKER pro tempore. The Clerk will report the motion to 
recommit.
  The Clerk read as follows:
       Mr. Sanders of Vermont moves to recommit the bill (H.R. 10) 
     to the Committee on Education and the Workforce and the 
     Committee on Ways and Means with instructions to report the 
     same back to the House forthwith with the following 
     amendment:
       Strike section 504 and insert the following new section:

     SEC. 504. TREATMENT OF PLAN AMENDMENTS SIGNIFICANTLY REDUCING 
                   FUTURE BENEFIT ACCRUALS.

       (a) Notice Requirements for Defined Benefit Plans of 100 or 
     More Participants.--
       (1) Plan requirement.--Section 401(a) of the Internal 
     Revenue Code of 1986 (relating to qualified pension, profit-
     sharing, and stock bonus plans) is amended by inserting after 
     paragraph (34) the following new paragraph:
       ``(35) Notice requirements for defined benefit plans of 100 
     or more participants significantly reducing future benefit 
     accruals.--
       ``(A) In general.--If a large defined benefit plan adopts 
     an amendment which has the effect of significantly reducing 
     the rate of future benefit accrual of 1 or more participants, 
     a trust which is part of such plan shall not constitute a 
     qualified trust under this section unless, after adoption of 
     such amendment and not less than 45 days before its effective 
     date, the plan administrator provides--
       ``(i) a written statement of benefit change described in 
     subparagraph (B) to each applicable individual, and
       ``(ii) a written notice setting forth the plan amendment 
     and its effective date to each employee organization 
     representing participants in the plan.

     Any such notice may be provided to a person designated, in 
     writing, by the person to

[[Page 6836]]

     which it would otherwise be provided. The plan administrator 
     shall not be treated as failing to meet the requirements of 
     this subparagraph merely because the statement or notice is 
     provided before the adoption of the plan amendment if no 
     material modification of the amendment occurs before the 
     amendment is adopted.
       ``(B) Statement of benefit change.--A statement of benefit 
     change described in this subparagraph shall--
       ``(i) be written in a manner calculated to be understood by 
     the average plan participant, and
       ``(ii) include the information described in subparagraph 
     (C).
       ``(C) Information contained in statement of benefit 
     change.--The information described in this subparagraph 
     includes the following:
       ``(i) Notice setting forth the plan amendment and its 
     effective date.
       ``(ii) A comparison of the following amounts under the plan 
     with respect to an applicable individual, determined both 
     with and without regard to the plan amendment:

       ``(I) The accrued benefit and the present value of the 
     accrued benefit as of the effective date.
       ``(II) The projected accrued benefit and the projected 
     present value of the accrued benefit as of the date which is 
     3 years, 5 years, and 10 years from the effective date and as 
     of the normal retirement age.

       ``(iii) A table of all annuity factors used to calculate 
     benefits under the plan, presented in the form provided in 
     section 72 and the regulations thereunder.

     Benefits described in clause (ii) shall be stated separately 
     and shall be calculated by using the applicable mortality 
     table and the applicable interest rate under section 
     417(e)(3)(A).
       ``(D) Large defined benefit plan; applicable individual.--
     For purposes of this paragraph--
       ``(i) Large defined benefit plan.--The term `large defined 
     benefit plan' means any defined benefit plan which had 100 or 
     more participants who had accrued a benefit 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.
       ``(ii) Applicable individual.--The term `applicable 
     individual' means--

       ``(I) each participant in the plan, and
       ``(II) each 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)).

       ``(E) Accrued benefit; projected retirement benefit.--For 
     purposes of this paragraph--
       ``(i) Present value of accrued benefit.--The present value 
     of an accrued benefit of any applicable individual shall be 
     calculated as if the accrued benefit were in the form of a 
     single life annuity commencing at the participant's normal 
     retirement age (and by taking into account any early 
     retirement subsidy).
       ``(ii) Projected accrued benefit.--

       ``(I) In general.--The projected accrued benefit of any 
     applicable individual shall be calculated as if the benefit 
     were payable in the form of a single life annuity commencing 
     at the participant's normal retirement age (and by taking 
     into account any early retirement subsidy).
       ``(II) Compensation and other assumptions.--Such benefit 
     shall be calculated by assuming that compensation and all 
     other benefit factors would increase for each plan year 
     beginning after the effective date of the plan amendment at a 
     rate equal to the median average of the CPI increase 
     percentage (as defined in section 215(i) of the Social 
     Security Act) for the 5 calendar years immediately preceding 
     the calendar year before the calendar year in which such 
     effective date occurs.
       ``(III) Benefit factors.--For purposes of subclause (II), 
     the term `benefit factors' means social security benefits and 
     all other relevant factors under section 411(b)(1)(A) used to 
     compute benefits under the plan which had increased from the 
     2d plan year preceding the plan year in which the effective 
     date of the plan amendment occurs to the 1st such preceding 
     plan year.

       ``(iii) Normal retirement age.--The term `normal retirement 
     age' means the later of--

       ``(I) the date determined under section 411(a)(8), or
       ``(II) the date a plan participant attains age 62.''.

       (2) Amendments to ERISA.--
       (A) Benefit statement requirement.--Section 204(h) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1054(h)) is amended by adding at the end the following new 
     paragraphs:
       ``(3)(A) If paragraph (1) applies to the adoption of a plan 
     amendment by a large defined benefit plan, the plan 
     administrator shall, after adoption of such amendment and not 
     less than 45 days before its effective date, provide with the 
     notice under paragraph (1) a written statement of benefit 
     change described in subparagraph (B) to each applicable 
     individual.
       ``(B) A statement of benefit change described in this 
     subparagraph shall--
       ``(i) be written in a manner calculated to be understood by 
     the average plan participant, and
       ``(ii) include the information described in subparagraph 
     (C).
       ``(C) The information described in this subparagraph 
     includes the following:
       ``(i) A comparison of the following amounts under the plan 
     with respect to an applicable individual, determined both 
     with and without regard to the plan amendment:
       ``(I) The accrued benefit and the present value of the 
     accrued benefit as of the effective date.
       ``(II) The projected accrued benefit and the projected 
     present value of the accrued benefit as of the date which is 
     3 years, 5 years, and 10 years from the effective date and as 
     of the normal retirement age.
       ``(ii) A table of all annuity factors used to calculate 
     benefits under the plan, presented in the form provided in 
     section 72 of the Internal Revenue Code of 1986 and the 
     regulations thereunder.

     Benefits described in clause (i) shall be stated separately 
     and shall be calculated by using the applicable mortality 
     table and the applicable interest rate under section 
     417(e)(3)(A) of such Code.
       ``(D) For purposes of this paragraph--
       ``(i) The term `large defined benefit plan' means any 
     defined benefit plan which had 100 or more participants who 
     had accrued a benefit 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.
       ``(ii) The term `applicable individual' means an individual 
     described in subparagraph (A) or (B) of paragraph (1).
       ``(E) For purposes of this paragraph--
       ``(i) The present value of an accrued benefit of any 
     applicable individual shall be calculated as if the accrued 
     benefit were in the form of a single life annuity commencing 
     at the participant's normal retirement age (and by taking 
     into account any early retirement subsidy).
       ``(ii)(I) The projected accrued benefit of any applicable 
     individual shall be calculated as if the benefit were payable 
     in the form of a single life annuity commencing at the 
     participant's normal retirement age (and by taking into 
     account any early retirement subsidy).
       ``(II) Such benefit shall be calculated by assuming that 
     compensation and all other benefit factors would increase for 
     each plan year beginning after the effective date of the plan 
     amendment at a rate equal to the median average of the CPI 
     increase percentage (as defined in section 215(i) of the 
     Social Security Act) for the 5 calendar years immediately 
     preceding the calendar year before the calendar year in which 
     such effective date occurs.
       ``(III) For purposes of subclause (II), the term `benefit 
     factors' means social security benefits and all other 
     relevant factors under section 204(b)(1)(A) used to compute 
     benefits under the plan which had increased from the 2d plan 
     year preceding the plan year in which the effective date of 
     the plan amendment occurs to the 1st such preceding plan 
     year.
       ``(iii) The term `normal retirement age' means the later 
     of--
       ``(I) the date determined under section 3(24), or
       ``(II) the date a plan participant attains age 62.
       ``(4) A plan administrator shall not be treated as failing 
     to meet the requirements of this subsection merely because 
     the notice or statement is provided before the adoption of 
     the plan amendment if no material modification of the 
     amendment occurs before the amendment is adopted.''.
       (B) Conforming amendment.--Section 204(h)(1) of such Act 
     (29 U.S.C. 1054(h)(1)) is amended by inserting ``(including 
     any written statement of benefit change if required by 
     paragraph (3))'' after ``written notice''.
       (3) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply to plan amendments taking effect in plan years 
     beginning after December 31, 1998.
       (B) Special rule.--The period for providing any notice 
     required by the amendments made by this subsection shall not 
     end before the date which is 3 months after the date of the 
     enactment of this Act.
       (b) Age-Based Reductions in the Rate at Which Benefits 
     Accrue under a Cash Balance Plan Violate Age Discrimination 
     Rule.--
       (1) Directive.--The Secretary of the Treasury shall apply 
     section 411(b)(1)(H) of the Internal Revenue Code of 1986 
     without regard to the portion of the preamble to Treasury 
     Decision 8360 (56 Fed. Reg. 47524-47603, September 19, 1991) 
     which relates to the allocation of interest adjustments 
     through normal retirement age under a cash balance plan, as 
     such preamble is and has been since its adoption without the 
     force of law.
       (2) Safe harbor if notice and election to continue benefit 
     accruals under former defined benefit plan instead of under 
     cash balance plan.--
       (A) Amendment to internal revenue code.--Paragraph (1) of 
     section 411(b) of the Internal Revenue Code of 1986 (relating 
     to defined benefit plans) is amended by adding at the end the 
     following new subparagraph:

[[Page 6837]]

       ``(I) Election to continue benefit accruals under former 
     defined benefit plan instead of under cash balance plan.--
       ``(i) In general.--A large defined benefit plan that adopts 
     an amendment which results in such plan becoming a cash 
     balance plan shall be treated as not meeting the requirements 
     of this paragraph unless such plan provides each participant 
     with--

       ``(I) notice and a written statement of benefit change 
     which meets the requirements of section 401(a)(35), and
       ``(II) an election to continue to accrue benefits under 
     such plan, determined under the terms of such plan as in 
     effect immediately before the effective date of such plan 
     amendment.

       ``(ii) Protected accrued benefit.--For purposes of clause 
     (i), an accrued benefit shall include any early retirement 
     benefit or retirement-type subsidy (within the meaning of 
     subsection (d)(6)(B)(i)), but only with respect to a 
     participant who satisfies (either before or after the 
     effective date of the amendment) the conditions for the 
     benefit or subsidy under the terms of the plan as in effect 
     immediately before such date.
       ``(iii) Timing of election.--Except as provided in 
     regulations, the election required by clause (i)(II) shall be 
     provided within a reasonable time before the effective date 
     of the amendment resulting in the plan becoming a cash 
     balance plan.
       ``(iv) Cash balance plan.--For purposes of this paragraph, 
     the term `cash balance plan' means a defined benefit plan 
     under which the rate of benefit accrual of any 1 participant 
     for a year of service is reduced as the years of service of 
     such participant increase.''.
       (B) Amendment to erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following new paragraph:
       ``(4)(A) For purposes of paragraph (1), in the case of a 
     plan amendment adopted by a large defined benefit plan (as 
     defined in subsection (h)(3)) which results in such plan 
     becoming a cash balance plan, such defined benefit plan shall 
     be treated as not satisfying the requirements of this section 
     unless such plan provides each participant with--
       ``(i) notice and a written statement of benefit change 
     which meets the requirements of subsection (h)(3), and
       ``(ii) an election to continue to accrue benefits under 
     such plan, determined under the terms of such plan as in 
     effect immediately before the effective date of such plan 
     amendment.
       ``(B) For purposes of subparagraph (A), an accrued benefit 
     shall include any early retirement benefit or retirement-type 
     subsidy (within the meaning of paragraph (2)(A)), but only 
     with respect to a participant who satisfies (either before or 
     after the effective date of the amendment) the conditions for 
     the benefit or subsidy under the terms of the plan as in 
     effect immediately before such date.
       ``(C) Except as provided in regulations, the election 
     required by subparagraph (A)(ii) shall be provided within a 
     reasonable time before the effective date of the amendment 
     resulting in the plan becoming a cash balance plan.
       ``(D) For purposes of this paragraph, the term `cash 
     balance plan' means a defined benefit plan under which the 
     rate of benefit accrual of any 1 participant for a year of 
     service is reduced as the years of service of such 
     participant increase.''.
       (3) Excise tax on failure to offer election.--
       (A) In general.--Chapter 43 of subtitle D of the Internal 
     Revenue Code of 1986 (relating to qualified pension, etc., 
     plans) is amended by adding at the end the following new 
     section:

     ``SEC. 4980F. FAILURE TO OFFER ELECTION TO CONTINUE BENEFIT 
                   ACCRUALS UNDER FORMER DEFINED BENEFIT PLAN IN 
                   EVENT OF SIGNIFICANT REDUCTIONS IN FUTURE 
                   BENEFIT ACCRUALS.

       ``(a) Imposition of Tax.--There is hereby imposed a tax on 
     the failure of any applicable pension plan to meet the 
     requirements of subsection (d).
       ``(b) Amount of Tax.--
       ``(1) In general.--The amount of the tax imposed by 
     subsection (a) shall be 50 percent of the amount of the 
     excess pension assets in such plan, determined as of the 
     effective date of the amendment which has the effect of 
     significantly reducing the rate of future benefit accrual of 
     1 or more participants.
       ``(2) Excess pension assets.--For purposes of paragraph 
     (1), the term `excess pension assets' has the meaning given 
     to such term by section 420(e)(2).
       ``(c) 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.

     For purposes of the preceding sentence, all multiemployer 
     plans of which the same trust forms a part shall be treated 
     as 1 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.
       ``(d) Election To Continue Benefit Accruals Under Former 
     Defined Benefit Plan In Event of Significant Reductions in 
     Future Benefit Accruals.--In the case that an applicable 
     pension plan adopts an amendment which has the effect of 
     significantly reducing the rate of future benefit accrual of 
     1 or more participants, the requirements of this subsection 
     are met if the plan administrator provides each participant 
     who has a nonforfeitable right to 100 percent of his accrued 
     benefits with--
       ``(1) notice and a written statement of benefit change 
     which meets the requirements of section 401(a)(35), and
       ``(2) an election to continue to accrue benefits under such 
     plan, determined under the terms of such plan as in effect 
     immediately before the effective date of such plan amendment.
       ``(e) Timing of Election.--Except as provided in 
     regulations, the election required by subsection (d) shall be 
     provided within a reasonable time before the effective date 
     of such amendment.
       ``(f) Protected Accrued Benefit.--For purposes of this 
     section, an accrued benefit shall include any early 
     retirement benefit or retirement-type subsidy (within the 
     meaning of section 411(d)(6)(B)(i)), but only with respect to 
     a participant who satisfies (either before or after the 
     effective date of the amendment) the conditions for the 
     benefit or subsidy under the terms of the plan as in effect 
     immediately before such date.
       ``(g) Applicable Pension Plan.--For purposes of this 
     section, the term `applicable pension plan' means a defined 
     benefit plan that is subject to the notice requirements of 
     section 401(a)(35).''.
       (B) Clerical amendment.--The table of sections for chapter 
     43 of subtitle D of such Code is amended by adding at the end 
     the following new item:

``Sec. 4980F. Failure to offer election to continue benefit accruals 
              under former defined benefit plan in event of significant 
              reductions in future benefit accruals.''.

       (4) Effective dates.--
       (A) In general.--The amendments made by this subsection 
     shall apply to plans and plan amendments taking effect after 
     December 31, 1998.
       (B) Special rule.--The period for providing any notice 
     required by the amendments made by this subsection shall not 
     end before the date which is 3 months after the date of the 
     enactment of this Act.
       (c) Prevention of Wearing Away of Employee's Accrued 
     Benefit.--
       (1) Amendment to internal revenue code.--Section 411(d)(6) 
     of the Internal Revenue Code of 1986 (relating to accrued 
     benefit may not be decreased by amendment) is amended by 
     adding at the end the following new subparagraph:
       ``(D) Treatment of plan amendments wearing away accrued 
     benefit.--
       ``(i) In general.--For purposes of subparagraph (A), a plan 
     amendment adopted by a large defined benefit plan shall be 
     treated as reducing accrued benefits of a participant if, 
     under the terms of the plan after the adoption of the 
     amendment, the accrued benefit of the participant may at any 
     time be less than the sum of--

       ``(I) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect 
     immediately before the effective date, plus
       ``(II) the participant's accrued benefit determined under 
     the formula applicable to benefit accruals under the current 
     plan as applied to years of service after such effective 
     date.

       ``(ii) Large defined benefit plan.--For purposes of this 
     subparagraph, the term `large defined benefit plan' means any 
     defined benefit plan which had 100 or more participants who 
     had accrued a benefit 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.
       ``(iii) Protected accrued benefit.--For purposes of this 
     subparagraph, an accrued benefit shall include any early 
     retirement benefit or retirement-type subsidy (within the 
     meaning of subparagraph (B)(i)), but only with respect to a 
     participant who satisfies (either before or after the 
     effective date of the amendment) the conditions for the 
     benefit or subsidy under the terms of the plan as in effect 
     immediately before such date.''.
       (2) Amendment of erisa.--Section 204(g) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is 
     amended by adding at the end the following new paragraph:
       ``(5)(A) For purposes of paragraph (1), a plan amendment 
     adopted by a large defined benefit plan shall be treated as 
     reducing accrued benefits of a participant if, under the 
     terms of the plan after the adoption of the amendment, the 
     accrued benefit of the participant may at any time be less 
     than the sum of--
       ``(i) the participant's accrued benefit for years of 
     service before the effective date of the amendment, 
     determined under the terms of the plan as in effect 
     immediately before the effective date, plus
       ``(ii) the participant's accrued benefit determined under 
     the formula applicable to

[[Page 6838]]

     benefit accruals under the current plan as applied to years 
     of service after such effective date.
       ``(B) For purposes of this paragraph, the term `large 
     defined benefit plan' means any defined benefit plan which 
     had 100 or more participants who had accrued a benefit 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.
       ``(C) For purposes of this paragraph, an accrued benefit 
     shall include any early retirement benefit or retirement-type 
     subsidy (within the meaning of paragraph (2)(A)), but only 
     with respect to a participant who satisfies (either before or 
     after the effective date of the amendment) the conditions for 
     the benefit or subsidy under the terms of the plan as in 
     effect immediately before such date.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to plan amendments taking effect after December 
     31, 1998.

  Mr. THOMAS (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 California?
  There was no objection.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Vermont (Mr. Sanders) is recognized for 5 minutes in support of his 
motion to recommit.
  Mr. SANDERS. Mr. Speaker, this issue affects the lives and well-being 
of millions of American workers, and I hope the Members would pay 
attention to this debate.
  This motion to recommit is cosponsored by the gentleman from New York 
(Mr. Hinchey), the gentleman from Ohio (Mr. Kucinich), and the 
gentleman from Minnesota (Mr. Gutknecht), so it has a tripartisan 
element.
  Mr. Speaker, in the last several years, major corporation after major 
corporation has cut back the pension benefits that they promised their 
workers. IBM, for example, which has a huge pension surplus, which pays 
its CEO $175 million over a 2-year period, said to its workers last 
year, yes, we made a promise to you, but we are going to renege on that 
promise and, in some cases, cut back the benefits that you expected by 
30 or 40 or 50 percent.
  That is wrong, and we have to deal with it. Unfortunately, the 
underlying legislation here does not in any meaningful way deal with 
this issue. The proponents of the bill say, we do deal with it, we do 
deal with it. But what we are really talking about is that we deal with 
it through disclosure.
  I guess it is a good thing to know in advance if you are going to get 
the death penalty. It helps. But more importantly, it would help if 
this legislation did, as my amendment does, give workers a choice. If a 
company is going to convert from defined benefits to cash balance, 
workers should have a choice, should not be forced to accept major 
cutbacks in pensions that were promised to them.
  If Members are concerned about what happened at IBM, what happened at 
other major corporations in America, let us stand up for those workers 
and say, we support your right to have a choice.
  Support the motion to recommit.
  Mr. Speaker, I yield to the gentleman from Minnesota (Mr. Gutknecht).
  Mr. GUTKNECHT. Mr. Speaker, I know that we all have a lot of other 
issues going on and a lot of people are not paying attention, but this 
is a very important point, because last year, about a year and a half 
ago, an awful lot of employees that worked for a great company that has 
been a great employer by the name of IBM, they woke up one morning and 
all of a sudden their pension benefits were cut by as much as 50 
percent. The gentleman from Vermont (Mr. Sanders) is exactly right.
  This is a good bill. The underlying bill, the benefits, everything we 
do here is good, with one glaring exception: we do not define what the 
term ``vested'' means. I want Members to all think about that, what 
does ``vested'' mean? It means it is ours, it cannot be taken away. 
That is not what the law in the United States says today. Those pension 
benefits can be taken away.
  We have an opportunity in this bill to resolve that issue. If we do 
not do it today, then shame on us. What happened to the IBMers we may 
not be able to change, but remember this, Mr. Speaker, if it could 
happen to good people working at IBM a year ago, it can happen to an 
awful lot of people working in our districts tomorrow.

                              {time}  1515

  The time is now to make this change. Give those people that choice. 
Let us vote for the motion to recommit.
  Mr. SANDERS. Mr. Speaker, I yield to the gentleman from New York 
State (Mr. Hinchey), who has been active on this issue.
  Mr. HINCHEY. Mr. Speaker, I thank my friend, the gentleman from 
Vermont, for yielding to me.
  Colleagues, this is a very important issue. It is important because 
it affects our constituents; it affects their retirement and their 
security and that of their families. Across this country some companies 
have changed their pension program from a defined benefit plan to a 
cash balance plan, thereby robbing their pension systems of enormous 
amounts of money, billions of dollars, and reducing the pensions 
programs of virtually every employee. It particularly adversely affects 
those employees who are getting near retirement age. My colleagues' 
constituents are affected by this.
  We are not going to deal with this issue outside of this bill. We are 
not going to return to the issue of pensions anytime during this 
Congress. If we do not do it now, it is not going to get done; and the 
problem that exists will continue to exist and people will continue to 
get hurt.
  Please join us in this simple motion to recommit. Let us just correct 
this one single deficiency in this bill, improve it, and make it affect 
our constituents in a positive way. Vote for the motion to recommit.
  Mr. SANDERS. Mr. Speaker, let me conclude by saying that the 
proponents of this bill will tell us that they have dealt with this 
issue. They have not dealt with this issue. Disclosure is fine, but 
disclosure will not help millions of workers who have already seen 
their pensions cut and many more who will see their pensions cut. 
Please vote ``yes'' on recommit.
  The SPEAKER pro tempore (Mr. Quinn). The gentleman's time has 
expired. Is the gentleman from California (Mr. Thomas) opposed to the 
motion to recommit?
  Mr. THOMAS. I am, Mr. Speaker.
  The SPEAKER pro tempore. The gentleman from California is recognized 
for 5 minutes.
  Mr. THOMAS. Mr. Speaker, the authors of the underlying bill said that 
they addressed the issue, not that they had dealt with it. This motion 
to recommit is 22 pages of very specific directed information that I 
will address in a moment.
  We have had an excellent discussion about needful changes in the area 
of pensions and IRAs. I would hope it is enough for my colleagues to 
know that the gentleman from Ohio (Mr. Portman) and the gentleman from 
Maryland (Mr. Cardin) are in opposition to this motion to recommit. 
This is not the way to deal with pension legislation.
  Twenty-two specific pages. For example, in the materials explaining 
the bill it says, ``The fact that cash balance plan conversions violate 
current pension age discrimination laws is clear.'' If it is clear, why 
on page 12, beginning on line 6, does it say, ``Directive. The 
Secretary of the Treasury shall apply section 411 without regard to the 
portion of the preamble. Such preamble is and has been since its 
adoption without the force of law.'' If it is clear, why do my 
colleagues direct the Treasury to a particular conclusion about that 
section?
  It also involves the ERISA area, which is the jurisdiction of the 
committee of the gentleman from Ohio.
  Mr. Speaker, I yield to the gentleman from Ohio (Mr. Boehner).
  Mr. BOEHNER. Mr. Speaker, the motion to recommit deals with the issue 
of cash balance pension plans, which are a form of defined benefit 
pension plans that most of my colleagues on the Democrat side want. We 
have had this huge decline in defined benefit

[[Page 6839]]

plans and a move toward defined contribution plans. And as a way to 
save defined benefit plans, they came up with this idea of a cash 
balance conversion.
  These are very, very good for younger workers. And I might also add 
that over 500 of these conversions have taken place. In almost every 
instance, the employer has in fact made all employees whole in the 
process. There were some mistakes early on, but they have been 
corrected. The gentleman from New Jersey (Mr. Andrews) and I, during 
the last administration, worked with the Secretary of Labor, worked 
with the White House, and came to an agreement on this disclosure model 
contained in this bill.
  We should be very careful about the specific language in this motion 
to recommit that allows for choice, so that in the case of a cash 
balance conversion an employee could choose one or the other. This 
would require an employer to offer two separate plans. And they will do 
this: they will have no plan, or there will be no conversion and then 
no defined benefit plan.
  It is a very bad and dangerous idea, and we should reject this.
  Mr. THOMAS. Mr. Speaker, it is my pleasure to yield 30 seconds to the 
gentleman from North Dakota (Mr. Pomeroy) in opposition to the motion 
to recommit.
  Mr. POMEROY. Mr. Speaker, I thank the gentleman for yielding to me.
  Colleagues, the bill contains language on disclosure for cash balance 
conversions advanced by the White House in consultation with Congress 
last year. The motion should be defeated, because although it talks 
about mandating choice between defined benefit and cash balance, it 
says nothing about changing the pension plan all together for a defined 
contribution plan or, worse, scrapping it all together. Those are much 
more serious options than moving from traditional defined balance to 
cash balance.
  Therefore, although well intended, this motion does not work. It 
should be defeated.
  Mr. THOMAS. Mr. Speaker, I thank the gentleman.
  It is also true that members of the Committee on Ways and Means are 
very concerned about this, including the gentleman from Massachusetts 
(Mr. Neal), who indicated that it is not the appropriate way to deal 
with this issue, through a motion to recommit; but that we would be 
pleased to look at it in committee.
  As we continue through the 22 pages of this bill in terms of the 
specific directives, my colleagues might also be interested to know 
that if they vote in favor of the motion to recommit, on page 16 they 
would be in favor of the imposition of a tax. The tax is an excise tax. 
The amount of the tax imposed, and I am quoting, by subsection A, shall 
be 50 percent of the amount of the excess pension assets in such plan.
  Now, we are more than willing to talk about reasonable adjustments 
where we find fault, but that is a bit Draconian. And I would only ask 
my colleagues to look on page 22 of this motion to recommit and look at 
the effective date: ``The amendments made by this subsection shall 
apply to plan amendments taking effect after December 31, 1998.''
  I would ask my colleagues, as this bill was constructed in a 
bipartisan way, let us reject this motion to recommit in a bipartisan 
way.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. 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. SANDERS. 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 final passage.
  The vote was taken by electronic device, and there were--yeas 153, 
nays 276, not voting 2, as follows:

                             [Roll No. 95]

                               YEAS--153

     Abercrombie
     Ackerman
     Allen
     Baca
     Baldacci
     Baldwin
     Barcia
     Barrett
     Becerra
     Bentsen
     Berkley
     Berman
     Blagojevich
     Blumenauer
     Bonior
     Boucher
     Brown (FL)
     Brown (OH)
     Capps
     Capuano
     Carson (IN)
     Carson (OK)
     Clay
     Clayton
     Clyburn
     Conyers
     Costello
     Coyne
     Cummings
     Davis (IL)
     DeFazio
     DeGette
     Delahunt
     DeLauro
     Deutsch
     Dicks
     Dingell
     Doggett
     Doyle
     Edwards
     Engel
     Eshoo
     Evans
     Farr
     Fattah
     Filner
     Frank
     Frost
     Gephardt
     Green (TX)
     Gutierrez
     Gutknecht
     Hall (OH)
     Hastings (FL)
     Hilliard
     Hinchey
     Holden
     Holt
     Honda
     Hooley
     Inslee
     Jackson (IL)
     Jackson-Lee (TX)
     Jefferson
     Johnson, E. B.
     Jones (OH)
     Kanjorski
     Kaptur
     Kennedy (RI)
     Kildee
     Kilpatrick
     Kind (WI)
     Kleczka
     Kucinich
     LaFalce
     Langevin
     Lantos
     Larsen (WA)
     Lee
     Levin
     Lewis (GA)
     Lofgren
     Lowey
     Luther
     Maloney (CT)
     Maloney (NY)
     Markey
     Mascara
     Matsui
     McCollum
     McDermott
     McGovern
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Millender-McDonald
     Miller, George
     Mink
     Mollohan
     Murtha
     Nadler
     Napolitano
     Oberstar
     Obey
     Olver
     Ortiz
     Owens
     Pallone
     Pascrell
     Pastor
     Payne
     Pelosi
     Peterson (MN)
     Phelps
     Rahall
     Rangel
     Reyes
     Rivers
     Rodriguez
     Rothman
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Sawyer
     Schakowsky
     Scott
     Serrano
     Skelton
     Slaughter
     Solis
     Spratt
     Stark
     Strickland
     Stupak
     Thompson (CA)
     Thompson (MS)
     Thurman
     Tierney
     Towns
     Udall (CO)
     Udall (NM)
     Velazquez
     Visclosky
     Waters
     Watt (NC)
     Waxman
     Weiner
     Wexler
     Woolsey

                               NAYS--276

     Aderholt
     Akin
     Andrews
     Armey
     Bachus
     Baird
     Baker
     Ballenger
     Barr
     Bartlett
     Barton
     Bass
     Bereuter
     Berry
     Biggert
     Bilirakis
     Bishop
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bono
     Borski
     Boswell
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Cardin
     Castle
     Chabot
     Chambliss
     Clement
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Cox
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeLay
     DeMint
     Diaz-Balart
     Dooley
     Doolittle
     Dreier
     Duncan
     Dunn
     Ehlers
     Ehrlich
     Emerson
     English
     Etheridge
     Everett
     Ferguson
     Flake
     Fletcher
     Foley
     Ford
     Fossella
     Frelinghuysen
     Gallegly
     Ganske
     Gekas
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (WI)
     Greenwood
     Grucci
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Isakson
     Israel
     Issa
     Istook
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, Sam
     Jones (NC)
     Keller
     Kelly
     Kennedy (MN)
     Kerns
     King (NY)
     Kingston
     Kirk
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Largent
     Larson (CT)
     Latham
     LaTourette
     Leach
     Lewis (CA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lucas (KY)
     Lucas (OK)
     Manzullo
     Matheson
     McCarthy (MO)
     McCarthy (NY)
     McCrery
     McHugh
     McInnis
     McIntyre
     McKeon
     Mica
     Miller (FL)
     Miller, Gary
     Moore
     Moran (KS)
     Moran (VA)
     Morella
     Myrick
     Neal
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Osborne
     Ose
     Otter
     Oxley
     Paul
     Pence
     Peterson (PA)
     Petri
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Portman
     Price (NC)
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Ramstad
     Regula
     Rehberg
     Reynolds
     Riley
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Roukema
     Ryan (WI)
     Ryun (KS)
     Sanchez
     Sandlin
     Saxton
     Scarborough
     Schaffer
     Schiff
     Schrock
     Sensenbrenner
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Simmons
     Simpson
     Skeen
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Souder
     Spence
     Stearns
     Stenholm
     Stump
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thornberry

[[Page 6840]]


     Thune
     Tiahrt
     Tiberi
     Toomey
     Traficant
     Turner
     Upton
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watts (OK)
     Weldon (FL)
     Weldon (PA)
     Weller
     Whitfield
     Wicker
     Wilson
     Wolf
     Wu
     Wynn
     Young (AK)
     Young (FL)
       

                             NOT VOTING--2

     Moakley
     Royce
       

                              {time}  1546

  Mr. Gilman changed his vote from ``yea'' to ``nay.''
  So the motion to recommit was rejected.
  The result of the vote was announced as above recorded.
  The SPEAKER pro tempore (Mr. Quinn). 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.
  Mr. THOMAS. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. This will be a 5-minute vote.
  The vote was taken by electronic device, and there were--yeas 407, 
nays 24, not voting 1, as follows:

                             [Roll No. 96]

                               YEAS--407

     Abercrombie
     Ackerman
     Aderholt
     Akin
     Allen
     Andrews
     Armey
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barr
     Barrett
     Bartlett
     Barton
     Bass
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilirakis
     Bishop
     Blagojevich
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Brown (SC)
     Bryant
     Burr
     Burton
     Buyer
     Callahan
     Calvert
     Camp
     Cannon
     Cantor
     Capito
     Capps
     Capuano
     Cardin
     Carson (IN)
     Carson (OK)
     Castle
     Chabot
     Chambliss
     Clay
     Clayton
     Clement
     Clyburn
     Coble
     Collins
     Combest
     Condit
     Cooksey
     Costello
     Cox
     Coyne
     Cramer
     Crane
     Crenshaw
     Crowley
     Cubin
     Culberson
     Cummings
     Cunningham
     Davis (CA)
     Davis (FL)
     Davis (IL)
     Davis, Jo Ann
     Davis, Tom
     Deal
     DeFazio
     DeGette
     Delahunt
     DeLauro
     DeLay
     DeMint
     Deutsch
     Diaz-Balart
     Dicks
     Dingell
     Doggett
     Dooley
     Doolittle
     Doyle
     Dreier
     Duncan
     Dunn
     Edwards
     Ehlers
     Ehrlich
     Emerson
     Engel
     English
     Eshoo
     Etheridge
     Evans
     Everett
     Farr
     Fattah
     Ferguson
     Flake
     Fletcher
     Foley
     Ford
     Fossella
     Frelinghuysen
     Frost
     Gallegly
     Ganske
     Gekas
     Gephardt
     Gibbons
     Gilchrest
     Gillmor
     Gilman
     Gonzalez
     Goode
     Goodlatte
     Gordon
     Goss
     Graham
     Granger
     Graves
     Green (TX)
     Green (WI)
     Greenwood
     Grucci
     Gutierrez
     Hall (OH)
     Hall (TX)
     Hansen
     Harman
     Hart
     Hastert
     Hastings (FL)
     Hastings (WA)
     Hayes
     Hayworth
     Hefley
     Herger
     Hill
     Hilleary
     Hilliard
     Hinojosa
     Hobson
     Hoeffel
     Hoekstra
     Holden
     Holt
     Honda
     Hooley
     Horn
     Hostettler
     Houghton
     Hoyer
     Hulshof
     Hunter
     Hutchinson
     Hyde
     Inslee
     Isakson
     Israel
     Issa
     Istook
     Jackson-Lee (TX)
     Jefferson
     Jenkins
     John
     Johnson (CT)
     Johnson (IL)
     Johnson, E. B.
     Johnson, Sam
     Jones (NC)
     Jones (OH)
     Kanjorski
     Kaptur
     Keller
     Kelly
     Kennedy (MN)
     Kennedy (RI)
     Kerns
     Kildee
     Kilpatrick
     Kind (WI)
     King (NY)
     Kingston
     Kirk
     Kleczka
     Knollenberg
     Kolbe
     LaHood
     Lampson
     Langevin
     Lantos
     Largent
     Larsen (WA)
     Larson (CT)
     Latham
     LaTourette
     Leach
     Levin
     Lewis (CA)
     Lewis (GA)
     Lewis (KY)
     Linder
     Lipinski
     LoBiondo
     Lofgren
     Lowey
     Lucas (KY)
     Lucas (OK)
     Luther
     Maloney (CT)
     Maloney (NY)
     Manzullo
     Markey
     Mascara
     Matheson
     McCarthy (MO)
     McCarthy (NY)
     McCollum
     McCrery
     McGovern
     McHugh
     McInnis
     McIntyre
     McKeon
     McKinney
     McNulty
     Meehan
     Meek (FL)
     Meeks (NY)
     Menendez
     Mica
     Millender-McDonald
     Miller (FL)
     Miller, Gary
     Miller, George
     Mink
     Mollohan
     Moore
     Moran (KS)
     Moran (VA)
     Morella
     Murtha
     Myrick
     Nadler
     Napolitano
     Nethercutt
     Ney
     Northup
     Norwood
     Nussle
     Ortiz
     Osborne
     Ose
     Otter
     Oxley
     Pallone
     Pascrell
     Pastor
     Paul
     Pelosi
     Pence
     Peterson (MN)
     Peterson (PA)
     Petri
     Phelps
     Pickering
     Pitts
     Platts
     Pombo
     Pomeroy
     Portman
     Price (NC)
     Pryce (OH)
     Putnam
     Quinn
     Radanovich
     Rahall
     Ramstad
     Regula
     Rehberg
     Reyes
     Reynolds
     Riley
     Rivers
     Rodriguez
     Roemer
     Rogers (KY)
     Rogers (MI)
     Rohrabacher
     Ros-Lehtinen
     Ross
     Rothman
     Roukema
     Royce
     Ryan (WI)
     Ryun (KS)
     Sanchez
     Sandlin
     Sawyer
     Saxton
     Scarborough
     Schaffer
     Schakowsky
     Schiff
     Schrock
     Scott
     Sensenbrenner
     Serrano
     Sessions
     Shadegg
     Shaw
     Shays
     Sherman
     Sherwood
     Shimkus
     Shows
     Simmons
     Simpson
     Skeen
     Skelton
     Slaughter
     Smith (MI)
     Smith (NJ)
     Smith (TX)
     Smith (WA)
     Snyder
     Solis
     Souder
     Spence
     Spratt
     Stearns
     Stenholm
     Strickland
     Stump
     Stupak
     Sununu
     Sweeney
     Tancredo
     Tanner
     Tauscher
     Tauzin
     Taylor (MS)
     Taylor (NC)
     Terry
     Thomas
     Thompson (CA)
     Thompson (MS)
     Thornberry
     Thune
     Thurman
     Tiahrt
     Tiberi
     Tierney
     Toomey
     Towns
     Traficant
     Turner
     Udall (CO)
     Udall (NM)
     Upton
     Velazquez
     Visclosky
     Vitter
     Walden
     Walsh
     Wamp
     Watkins
     Watt (NC)
     Watts (OK)
     Waxman
     Weiner
     Weldon (FL)
     Weldon (PA)
     Weller
     Wexler
     Whitfield
     Wicker
     Wilson
     Wolf
     Woolsey
     Wu
     Wynn
     Young (AK)
     Young (FL)

                                NAYS--24

     Conyers
     Filner
     Frank
     Gutknecht
     Hinchey
     Jackson (IL)
     Kucinich
     LaFalce
     Lee
     Matsui
     McDermott
     Neal
     Oberstar
     Obey
     Olver
     Owens
     Payne
     Rangel
     Roybal-Allard
     Rush
     Sabo
     Sanders
     Stark
     Waters

                             NOT VOTING--1

       
     Moakley
       

                              {time}  1602

  Mrs. MEEK of Florida changed her vote from ``yea'' to ``nay.''
  So the bill was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.

                          ____________________