I 

114TH CONGRESS 

1ST SESSION H. R. 4067 

To amend the Internal Revenue Code of 1986 to encourage retirement savings 

by modifying requirements with respect to employer-established IRAs, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 18, 2015 

Mr. KIND (for himself and Mr. REICHERT) introduced the following bill; which 

was referred to the Committee on Ways and Means, and in addition to 

the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to encourage 

retirement savings by modifying requirements with respect to employer-established IRAs, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Small Businesses Add Value for Employees Act of 2015’’ 

6 or the ‘‘SAVE Act of 2015’’. 


tkelley on DSK3SPTVN1PROD with BILLS
2 

•HR 4067 IH

1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Elimination of restriction on SIMPLE IRA rollovers. 

Sec. 3. Allowing mid-year SIMPLE IRA plan termination. 

Sec. 4. Elimination of higher penalty on early SIMPLE IRA distributions. 

Sec. 5. Increase in contributions allowed for SIMPLE IRA. 

Sec. 6. SIMPLE 401(k) parity for additional nonelective employer contributions. 

Sec. 7. Automatic deferral IRAs. 

Sec. 8. Modification of automatic enrollment safe harbor. 

Sec. 9. Secure deferral arrangements. 

Sec. 10. Credit for employers with respect to modified safe harbor requirements. 

Sec. 11. Modification of regulations. 

Sec. 12. Limited transfer of unused balance in flexible spending arrangement. 

Sec. 13. Prior years compensation taken into account in determining maximum 

retirement savings deduction. 

Sec. 14. Expanding small employer pension plan startup cost credit. 

Sec. 15. Financial education. 

Sec. 16. Small employer plans. 

Sec. 17. Modification of ERISA rules relating to multiple employer defined contribution plans. 

Sec. 18. Clarification of treatment of individual retirement plans with payroll 

deduction. 

Sec. 19. Disclosure regarding lifetime income. 

Sec. 20. Lifetime income safe harbor. 

3 SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA 

4 ROLLOVERS. 

5 (a) IN GENERAL.—Section 408(d)(3) of the Internal 

6 Revenue Code of 1986 is amended by striking subpara7 graph (G). 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall apply to distributions in taxable years 

10 beginning after the date of the enactment of this Act. 


tkelley on DSK3SPTVN1PROD with BILLS
3 

•HR 4067 IH

1 SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMI2 NATION. 

3 (a) IN GENERAL.—Section 408(p) of the Internal 

4 Revenue Code of 1986 is amended by adding at the end 

5 the following new paragraph: 

6 ‘‘(11) SPECIAL RULES RELATING TO MID-YEAR

7 TERMINATION.— 

8 ‘‘(A) IN GENERAL.—An employer may 

9 elect to terminate (in such form and manner as 

10 the Secretary may provide) the qualified salary 

11 reduction arrangement of the employer at any 

12 time during the year. 

13 ‘‘(B) PRORATION AND APPLICATION OF

14 QUALIFIED PLAN LIMITATION.—In the case of a 

15 year during which an employer terminates a 

16 qualified salary reduction arrangement before 

17 the end of such year— 

18 ‘‘(i) the applicable dollar amount de19 termined under paragraph (2)(E) for such 

20 year and the applicable dollar amount de21 termined under section 414(v)(2)(B)(ii) for 

22 such year shall both be prorated to the 

23 date of such termination, 

24 ‘‘(ii) for purposes of determining the 

25 compensation of an employee for such ar26 rangement for such year, the year of such 


tkelley on DSK3SPTVN1PROD with BILLS
4 

•HR 4067 IH

1 termination shall be treated as ending on 

2 the date of such termination, and 

3 ‘‘(iii) subparagraph (D) of paragraph 

4 (2) shall not apply with respect to a quali5 fied plan maintained in such year only 

6 after the date of such termination. 

7 ‘‘(C) MATCHING CONTRIBUTION.—Termi8 nation of an arrangement under subparagraph 

9 (A) shall not be construed to modify the re10 quirement of subparagraph (A)(iii) (with re11 spect to any elective employer contributions) or 

12 (B) (with respect to nonelective contributions) 

13 of paragraph (2) made by the employer on be14 half of an employee during the portion of such 

15 year the qualified salary reduction arrangement 

16 is in effect.’’. 

17 (b) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to years beginning after the date 

19 of the enactment of this Act. 

20 SEC. 4. ELIMINATION OF HIGHER PENALTY ON EARLY SIM21 PLE IRA DISTRIBUTIONS. 

22 (a) IN GENERAL.—Section 72(t) of the Internal Rev23 enue Code of 1986 is amended by striking paragraph (6). 


tkelley on DSK3SPTVN1PROD with BILLS
5 

•HR 4067 IH

1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to distributions in taxable years 

3 beginning after the date of the enactment of this Act. 

4 SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIM5 PLE IRA. 

6 (a) ADDITIONAL NONELECTIVE EMPLOYER CON7 TRIBUTIONS ALLOWED.— 

8 (1) IN GENERAL.—Section 408(p)(2)(A) of the 

9 Internal Revenue Code of 1986 is amended by strik10 ing ‘‘and’’ at the end of clause (iii), by redesignating 

11 clause (iv) as clause (v), and by inserting after 

12 clause (iii) the following new clause: 

13 ‘‘(iv) the employer may make, in addi14 tion to any other contribution under this 

15 paragraph, nonelective contributions which 

16 meet the requirements of subparagraph 

17 (F), and’’. 

18 (2) REQUIREMENTS RELATING TO ADDITIONAL

19 NONELECTIVE CONTRIBUTIONS.—Section 408(p)(2) 

20 of such Code is amended by adding at the end the 

21 following new subparagraph: 

22 ‘‘(F) REQUIREMENTS RELATING TO ADDI23 TIONAL NONELECTIVE CONTRIBUTIONS UNDER

24 SUBPARAGRAPH (A)(iv).— 


tkelley on DSK3SPTVN1PROD with BILLS
6 

•HR 4067 IH

1 ‘‘(i) IN GENERAL.—Nonelective con2 tributions meet the requirements of this 

3 subparagraph if— 

4 ‘‘(I) such contributions do not ex5 ceed more than 10 percent of com6 pensation (subject to the limitation 

7 described in subparagraph (B)(ii)) for 

8 each employee who is eligible to par9 ticipate in the arrangement and who 

10 has at least $5,000 of compensation 

11 from the employer for the year, and 

12 ‘‘(II) such contributions are 

13 made either as a uniform percentage 

14 of compensation or a uniform dollar 

15 amount for all participants. 

16 ‘‘(ii) PERMITTED DISPARITY RULES

17 NOT APPLICABLE.—Section 401(l) shall 

18 not apply for purposes of determining 

19 whether the requirements of clause (i) are 

20 met.’’. 

21 (3) CONFORMING AMENDMENT.—Section 

22 408(p)(2)(A)(v) of such Code, as redesignated by 

23 this section, is amended by striking ‘‘clause (i) or 

24 (iii)’’ and inserting ‘‘clause (i), (iii), or (iv)’’. 


tkelley on DSK3SPTVN1PROD with BILLS
7 

•HR 4067 IH

1 (b) INCREASE IN ELECTIVE CONTRIBUTION LIMITA2 TION.—Section 408(p)(2)(E) is amended to read as fol3 lows: 

4 ‘‘(E) APPLICABLE DOLLAR AMOUNT.—For 

5 purposes of subparagraph (A)(ii), the applicable 

6 dollar amount shall be the applicable dollar 

7 amount in effect under section 402(g)(1).’’. 

8 (c) SIMPLE IRA SUBJECT TO DEFINED CONTRIBU9 TION PLAN LIMITATION.—Section 408(p) of such Code, 

10 as amended by section 3, is amended by adding at the 

11 end the following new paragraph: 

12 ‘‘(12) SUBJECT TO DEFINED CONTRIBUTION

13 PLAN LIMITATION.—An arrangement shall not be 

14 treated as a qualified salary reduction arrangement 

15 for any year if contributions with respect to any em16 ployee for the year exceed the limitation of para17 graph (1) of section 415(c) (relating to limitation for 

18 defined contribution plans).’’. 

19 (d) EFFECTIVE DATE.—The amendments made by 

20 this section shall apply to contributions for taxable years 

21 beginning after December 31, 2015. 


tkelley on DSK3SPTVN1PROD with BILLS
8 

•HR 4067 IH

1 SEC. 6. SIMPLE 401(k) PARITY FOR ADDITIONAL NONELEC2 TIVE EMPLOYER CONTRIBUTIONS. 

3 (a) IN GENERAL.—Section 401(k)(11)(B) of such 

4 Code is amended by adding at the end the following new 

5 clause: 

6 ‘‘(iv) SPECIAL RULE FOR ADDITIONAL

7 NONELECTIVE EMPLOYER CONTRIBU8 TIONS.—An arrangement shall not be 

9 treated as failing to meet the requirements 

10 of this subparagraph merely because under 

11 such arrangement the employer makes, in 

12 addition to any other contribution under 

13 this subparagraph, nonelective contribu14 tions of not more than 10 percent of com15 pensation for each employee who is eligible 

16 to participate in the arrangement and who 

17 has at least $5,000 of compensation from 

18 the employer for the year.’’. 

19 (b) EFFECTIVE DATE.—The amendment made by 

20 this section shall apply to plan years beginning after De21 cember 31, 2015. 

22 SEC. 7. AUTOMATIC DEFERRAL IRAS. 

23 (a) IN GENERAL.—Subpart A of part I of subchapter 

24 D of chapter 1 of the Internal Revenue Code of 1986 is 

25 amended by inserting after section 408A the following new 

26 section: 


tkelley on DSK3SPTVN1PROD with BILLS
9 

•HR 4067 IH

1 ‘‘SEC. 408B. AUTOMATIC DEFERRAL IRAS. 

2 ‘‘(a) IN GENERAL.—An automatic deferral IRA shall 

3 be treated for purposes of this title in the same manner 

4 as an individual retirement plan. An automatic deferral 

5 IRA may also be treated as a Roth IRA for purposes of 

6 this title if it meets the requirements of section 408A. 

7 ‘‘(b) AUTOMATIC DEFERRAL IRA.—For purposes of 

8 this section, the term ‘automatic deferral IRA’ means an 

9 individual retirement plan (as defined in section 

10 7701(a)(37)) with respect to which contributions are made 

11 under an arrangement which satisfies the requirements of 

12 paragraphs (1) through (4) of subsection (c). 

13 ‘‘(c) AUTOMATIC DEFERRAL IRA ARRANGEMENTS.— 

14 ‘‘(1) ENROLLMENT.— 

15 ‘‘(A) IN GENERAL.—The requirements of 

16 this paragraph are met if each employee eligible 

17 to participate in the arrangement is treated as 

18 having elected to have the employer make pay19 ments as elective contributions to an automatic 

20 deferral IRA on behalf of such employee (which 

21 would have otherwise been made to the em22 ployee directly in cash) in an amount equal to 

23 so much of a qualified percentage of compensa24 tion of such employee as does not exceed the 

25 deductible amount for such year (within the 

26 meaning of section 219(b)). 


tkelley on DSK3SPTVN1PROD with BILLS
10 

•HR 4067 IH

1 ‘‘(B) ELIGIBILITY.—For purposes of sub2 paragraph (A), an employee is eligible to par3 ticipate if such employee has at least $5,000 of 

4 compensation from the employer for the pre5 ceding year. 

6 ‘‘(C) ELECTION OUT.—The election treat7 ed as having been made under subparagraph 

8 (A) shall cease to apply with respect to any em9 ployee who makes an affirmative election— 

10 ‘‘(i) to not have such elective contribu11 tions made, or 

12 ‘‘(ii) not later than the close of the 

13 30-day period beginning on the date of the 

14 first contribution with respect to such em15 ployee, to make elective contributions at a 

16 level specified in such affirmative election. 

17 ‘‘(D) QUALIFIED PERCENTAGE.—For pur18 poses of this paragraph, the term ‘qualified per19 centage’ means, with respect to any employee, 

20 any percentage determined under the arrange21 ment if such percentage is applied uniformly, 

22 does not exceed 15 percent, and is at least— 

23 ‘‘(i) 3 percent during the period end24 ing on the last day of the first plan year 

25 which begins after the date on which the 


tkelley on DSK3SPTVN1PROD with BILLS
11 

•HR 4067 IH

1 first elective contribution described in sub2 paragraph (A) is made with respect to 

3 such employee, and 

4 ‘‘(ii) during any subsequent plan year, 

5 a percentage equal to— 

6 ‘‘(I) 3 percent, plus 

7 ‘‘(II) 1 percent multiplied by the 

8 number of plan years (but not more 

9 than 12) beginning after the plan year 

10 described in clause (i). 

11 ‘‘(2) NOTICE.— 

12 ‘‘(A) IN GENERAL.—The requirements of 

13 this paragraph are met if, within a reasonable 

14 period before the first day an employee is eligi15 ble to participate in the arrangement, the em16 ployee receives written notice of the employee’s 

17 rights and obligations under the arrangement 

18 which— 

19 ‘‘(i) is sufficiently accurate and com20 prehensive to apprise the employee of such 

21 rights, and 

22 ‘‘(ii) is written in a manner calculated 

23 to be understood by the average employee 

24 to whom the arrangement applies. 


tkelley on DSK3SPTVN1PROD with BILLS
12 

•HR 4067 IH

1 ‘‘(B) TIMING AND CONTENT.—A notice 

2 shall not be treated as meeting the require3 ments of subparagraph (A) with respect to an 

4 employee unless— 

5 ‘‘(i) the notice explains the employee’s 

6 right to elect not to have elective contribu7 tions made on the employee’s behalf (or to 

8 elect to have such contributions made at a 

9 different percentage), 

10 ‘‘(ii) the notice explains how contribu11 tions made under the arrangement will be 

12 invested in the absence of any investment 

13 election by the employee, and 

14 ‘‘(iii) the employee has a reasonable 

15 period of time after receipt of the notice 

16 described in clauses (i) and (ii) and before 

17 the first elective contribution is made to 

18 make either such election. 

19 ‘‘(3) DEFAULT INVESTMENT ARRANGEMENT.— 

20 The requirements of this paragraph are met if— 

21 ‘‘(A) in the absence of an investment elec22 tion by the employee with respect to the em23 ployee’s interest in the trust, such interest is in24 vested as provided in regulations prescribed 

25 pursuant to subparagraph (A) of section 


tkelley on DSK3SPTVN1PROD with BILLS
13 

•HR 4067 IH

1 404(c)(5) of the Employee Retirement Income 

2 Security Act of 1974, and 

3 ‘‘(B) the employer provides each employee 

4 who has an interest in the trust, notice which 

5 meets the requirements of subparagraph (B) of 

6 such section. 

7 ‘‘(4) ADMINISTRATIVE REQUIREMENTS.—The 

8 requirements of this paragraph are met if— 

9 ‘‘(A) an employer must make— 

10 ‘‘(i) the elective contributions under 

11 paragraph (1)(A) not later than the close 

12 of the 30-day period following the last day 

13 of the month with respect to which the 

14 contributions are to be made, and 

15 ‘‘(ii) a payment of interest at the 

16 overpayment rate (as determined under 

17 section 6621(a)) on any such elective con18 tribution made after the end of the period 

19 specified in clause (i), 

20 ‘‘(B) an employee may elect to terminate 

21 participation in the arrangement at any time 

22 during the year, except that if the employee so 

23 terminates, the arrangement may provide that 

24 the employee may not elect to resume participa25 tion until the beginning of the next year, and 


tkelley on DSK3SPTVN1PROD with BILLS
14 

•HR 4067 IH

1 ‘‘(C) each employee eligible to participate 

2 may elect, during the 30-day period before the 

3 beginning of any year, or to modify the amount 

4 subject to such arrangement, for such year.’’. 

5 (b) FAILURE TO MAKE TIMELY CONTRIBUTIONS.— 

6 Chapter 43 of such Code is amended by adding at the 

7 end the following: 

8 ‘‘SEC. 4980J. FAILURE TO MAKE TIMELY CONTRIBUTIONS 

9 UNDER AUTOMATIC DEFERRAL IRAS. 

10 ‘‘(a) INITIAL TAX.—If at any time during any taxable 

11 year an employer maintains an automatic deferral IRA 

12 which is part of a plan to which section 408B applies, 

13 there is hereby imposed on the employer for the taxable 

14 year a tax equal to 10 percent of the aggregate required 

15 contributions to such automatic deferral IRA for all plan 

16 years that are not paid by the date specified in section 

17 408B(c)(4)(A)(i) and that remain unpaid as of the end 

18 of any plan year ending with or within the taxable year. 

19 ‘‘(b) ADDITIONAL TAX.—If a tax is imposed under 

20 subsection (a) on any unpaid required contribution and 

21 such amount remains unpaid as of the close of the taxable 

22 period, there is hereby imposed a tax equal to 100 percent 

23 of the unpaid required contribution to the extent not so 

24 paid or corrected. 

25 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.— 


tkelley on DSK3SPTVN1PROD with BILLS
15 

•HR 4067 IH

1 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

2 DISCOVERED EXERCISING REASONABLE DILI3 GENCE.—No tax shall be imposed by subsection (a) 

4 on any failure during any period for which it is es5 tablished to the satisfaction of the Secretary that the 

6 employer did not know, and exercising reasonable 

7 diligence would not have known, that such failure 

8 existed. 

9 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR10 RECTED WITHIN 30 DAYS.—No tax shall be imposed 

11 by subsection (a) on any failure if— 

12 ‘‘(A) such failure was due to reasonable 

13 cause and not to willful neglect, and 

14 ‘‘(B) such failure is corrected during the 

15 30-day period beginning on the 1st date the 

16 employer knew, or exercising reasonable dili17 gence would have known, that such failure ex18 isted. 

19 ‘‘(3) WAIVER BY SECRETARY.—In the case of a 

20 failure which is due to reasonable cause and not to 

21 willful neglect, the Secretary may waive part or all 

22 of the tax imposed by subsection (a) to the extent 

23 that the payment of such tax would be excessive rel24 ative to the failure involved.’’. 


tkelley on DSK3SPTVN1PROD with BILLS
16 

•HR 4067 IH

1 (c) PREEMPTION OF CONFLICTING STATE LAWS.— 

2 Any law of a State shall be superseded if it would directly 

3 or indirectly prohibit or restrict an employer from creating 

4 or maintaining an automatic deferral IRA (as defined in 

5 section 408B of the Internal Revenue Service of 1986). 

6 (d) CLERICAL AMENDMENT.— 

7 (1) The table of sections for subpart A of part 

8 I of subchapter D of chapter 1 of the Internal Rev9 enue Code of 1986 is amended by inserting after the 

10 item relating to 408A the following new item: 

‘‘Sec. 408B. Automatic deferral IRAs.’’. 

11 (2) The table of sections for chapter 43 of such 

12 Code is amended by adding at the end the following 

13 new item: 

‘‘Sec. 4980J. Failure to make timely contributions under automatic deferral 

IRAs.’’. 

14 (e) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2015. 

17 SEC. 8. MODIFICATION OF AUTOMATIC ENROLLMENT SAFE 

18 HARBOR. 

19 (a) IN GENERAL.— 

20 (1) REMOVAL OF 10 PERCENT CAP.—Section 

21 401(k)(13)(C)(iii) of the Internal Revenue Code of 

22 1986 is amended by striking ‘‘, does not exceed 10 

23 percent, and is at least’’ and inserting ‘‘and is’’. 


tkelley on DSK3SPTVN1PROD with BILLS
17 

•HR 4067 IH

1 (2) CONFORMING AMENDMENTS.— 

2 (A) Section 401(k)(13)(C)(iii)(I) of such 

3 Code is amended by striking ‘‘3 percent’’ and 

4 inserting ‘‘at least 3 percent, but not greater 

5 than 10 percent,’’. 

6 (B) Section 401(k)(13)(C)(iii)(II) of such 

7 Code is amended by striking ‘‘4 percent’’ and 

8 inserting ‘‘at least 4 percent, but not greater 

9 than 15 percent,’’. 

10 (C) Section 401(k)(13)(C)(iii)(III) of such 

11 Code is amended by striking ‘‘5 percent’’ and 

12 inserting ‘‘at least 5 percent’’. 

13 (D) Section 401(k)(13)(C)(iii)(IV) of such 

14 Code is amended by striking ‘‘6 percent’’ and 

15 inserting ‘‘at least 6 percent’’. 

16 (b) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to plan years beginning after the 

18 date of enactment of this Act. 

19 SEC. 9. SECURE DEFERRAL ARRANGEMENTS. 

20 (a) IN GENERAL.—Section 401(k) of the Internal 

21 Revenue Code of 1986 is amended by adding at the end 

22 the following new paragraph: 

23 ‘‘(14) ALTERNATIVE METHOD FOR SECURE DE24 FERRAL ARRANGEMENTS TO MEET NONDISCRIMINA25 TION REQUIREMENTS.— 


tkelley on DSK3SPTVN1PROD with BILLS
18 

•HR 4067 IH

1 ‘‘(A) IN GENERAL.—A secure deferral ar2 rangement shall be treated as meeting the re3 quirements of paragraph (3)(A)(ii). 

4 ‘‘(B) SECURE DEFERRAL ARRANGE5 MENT.—For purposes of this paragraph, the 

6 term ‘secure deferral arrangement’ means any 

7 cash or deferred arrangement which meets the 

8 requirements of subparagraphs (C), (D), and 

9 (E) of paragraph (13), except as modified by 

10 this paragraph. 

11 ‘‘(C) QUALIFIED PERCENTAGE.—For pur12 poses of this paragraph, with respect to any 

13 employee, the term ‘qualified percentage’ 

14 means, in lieu of the meaning given such term 

15 in paragraph (13)(C)(iii), any percentage deter16 mined under the arrangement if such percent17 age is applied uniformly and is— 

18 ‘‘(i) at least 6 percent, but not greater 

19 than 10 percent, during the period ending 

20 on the last day of the first plan year which 

21 begins after the date on which the first 

22 elective contribution described in para23 graph (13)(C)(i) is made with respect to 

24 such employee, 


tkelley on DSK3SPTVN1PROD with BILLS
19 

•HR 4067 IH

1 ‘‘(ii) at least 8 percent during the 

2 first plan year following the plan year de3 scribed in clause (i), and 

4 ‘‘(iii) at least 10 percent during any 

5 subsequent plan year. 

6 ‘‘(D) MATCHING CONTRIBUTIONS.— 

7 ‘‘(i) IN GENERAL.—For purposes of 

8 this paragraph, an arrangement shall be 

9 treated as having met the requirements of 

10 paragraph (13)(D)(i) if and only if the em11 ployer makes matching contributions on 

12 behalf of each employee who is not a highly 

13 compensated employee in an amount equal 

14 to the sum of— 

15 ‘‘(I) 100 percent of the elective 

16 contributions of the employee to the 

17 extent that such contributions do not 

18 exceed 1 percent of compensation, 

19 ‘‘(II) 50 percent of so much of 

20 such contributions as exceed 1 percent 

21 but do not exceed 6 percent of com22 pensation, plus 

23 ‘‘(III) 25 percent of so much of 

24 such contributions as exceed 6 percent 


tkelley on DSK3SPTVN1PROD with BILLS
20 

•HR 4067 IH

1 but do not exceed 10 percent of com2 pensation. 

3 ‘‘(ii) APPLICATION OF RULES FOR

4 MATCHING CONTRIBUTIONS.—The rules of 

5 clause (ii) of paragraph (12)(B) and 

6 clauses (iii) and (iv) of paragraph (13)(D) 

7 shall apply for purposes of clause (i) but 

8 the rule of clause (iii) of paragraph 

9 (12)(B) shall not apply for such purposes. 

10 The rate of matching contribution for each 

11 incremental deferral must be at least as 

12 high as the rate specified in clause (i), and 

13 may be higher, so long as such rate does 

14 not increase as an employee’s rate of elec15 tive contributions increases.’’. 

16 (b) MATCHING CONTRIBUTIONS AND EMPLOYEE

17 CONTRIBUTIONS.—Section 401(m) of the Internal Rev18 enue Code of 1986 is amended by redesignating paragraph 

19 (13) as paragraph (14) and by inserting after paragraph 

20 (12) the following new paragraph: 

21 ‘‘(13) ALTERNATIVE METHOD FOR SECURE DE22 FERRAL ARRANGEMENTS.—A defined contribution 

23 plan shall be treated as meeting the requirements of 

24 paragraph (2) with respect to matching contribu25 tions and employee contributions if the plan— 


tkelley on DSK3SPTVN1PROD with BILLS
21 

•HR 4067 IH

1 ‘‘(A) is a secure deferral arrangement (as 

2 defined in subsection (k)(14)), 

3 ‘‘(B) meets the requirements of clauses (ii) 

4 and (iii) of paragraph (11)(B), and 

5 ‘‘(C) provides that matching contributions 

6 on behalf of any employee may not be made 

7 with respect to an employee’s contributions or 

8 elective deferrals in excess of 10 percent of the 

9 employee’s compensation.’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to plan years beginning after De12 cember 31, 2015. 

13 SEC. 10. CREDIT FOR EMPLOYERS WITH RESPECT TO MODI14 FIED SAFE HARBOR REQUIREMENTS. 

15 (a) IN GENERAL.—Subpart D of part IV of sub16 chapter A of chapter 1 of the Internal Revenue Code of 

17 1986 is amended by adding at the end the following new 

18 section: 

19 ‘‘SEC. 45S. CREDIT FOR SMALL EMPLOYERS WITH RESPECT 

20 TO MODIFIED SAFE HARBOR REQUIREMENTS 

21 FOR AUTOMATIC CONTRIBUTION ARRANGE22 MENTS. 

23 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

24 in the case of a small employer, the safe harbor adoption 

25 credit determined under this section for any taxable year 


tkelley on DSK3SPTVN1PROD with BILLS
22 

•HR 4067 IH

1 is the amount equal to the total of the employer’s match2 ing contributions under section 401(k)(14)(D) during the 

3 taxable year on behalf of employees who are not highly 

4 compensated employees, subject to the limitations of sub5 section (b). 

6 ‘‘(b) LIMITATIONS.— 

7 ‘‘(1) LIMITATION WITH RESPECT TO COM8 PENSATION.—The credit determined under sub9 section (a) with respect to contributions made on be10 half of an employee who is not a highly compensated 

11 employee shall not exceed 2 percent of the com12 pensation of such employee for the taxable year. 

13 ‘‘(2) LIMITATION WITH RESPECT TO YEARS OF

14 PARTICIPATION.—Credit shall be determined under 

15 subsection (a) with respect to contributions made on 

16 behalf of an employee who is not a highly com17 pensated employee only during the first 5 years such 

18 employee participates in the qualified automatic con19 tribution arrangement. 

20 ‘‘(c) DEFINITIONS.— 

21 ‘‘(1) IN GENERAL.—Any term used in this sec22 tion which is also used in section 401(k)(14) shall 

23 have the same meaning as when used in such sec24 tion. 


tkelley on DSK3SPTVN1PROD with BILLS
23 

•HR 4067 IH

1 ‘‘(2) SMALL EMPLOYER.—The term ‘small em2 ployer’ means an eligible employer (as defined in 

3 section 408(p)(2)(C)(i)). 

4 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 

5 shall be allowable under this title for any contribution with 

6 respect to which a credit is allowed under this section.’’. 

7 (b) CREDIT TO BE PART OF GENERAL BUSINESS

8 CREDIT.—Section 38(b) of the Internal Revenue Code of 

9 1986 is amended— 

10 (1) by striking ‘‘plus’’ at the end of paragraph 

11 (35), 

12 (2) by striking the period at the end of para13 graph (36) and inserting ‘‘, plus’’, and 

14 (3) by adding at the end the following new 

15 paragraph: 

16 ‘‘(37) the safe harbor adoption credit deter17 mined under section 45S.’’. 

18 (c) CLERICAL AMENDMENT.—The table of sections 

19 for subpart D of part IV of subchapter A of chapter 1 

20 of the Internal Revenue Code of 1986 is amended by add21 ing after the item relating to section 45R the following 

22 new item: 

‘‘Sec. 45S. Credit for small employers with respect to modified safe harbor requirements for automatic contribution arrangements.’’. 


tkelley on DSK3SPTVN1PROD with BILLS
24 

•HR 4067 IH

1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years that include any 

3 portion of a plan year beginning after December 31, 2015. 

4 SEC. 11. MODIFICATION OF REGULATIONS. 

5 The Secretary of the Treasury shall promulgate regu6 lations or other guidance that— 

7 (1) simplify and clarify the rules regarding the 

8 timing of participant notices required under section 

9 401(k)(13)(E) of the Internal Revenue Code of 

10 1986, with specific application to— 

11 (A) plans that allow employees to be eligi12 ble for participation immediately upon begin13 ning employment, and 

14 (B) employers with multiple payroll and 

15 administrative systems, and 

16 (2) simplify and clarify the automatic escalation 

17 rules under sections 401(k)(13)(C)(iii) and 

18 401(k)(14)(C) of the Internal Revenue Code of 1986 

19 in the context of employers with multiple payroll and 

20 administrative systems. 

21 Such regulations or guidance shall address the particular 

22 case of employees within the same plan who are subject 

23 to different notice timing and different percentage require24 ments, and provide assistance for plan sponsors in man25 aging such cases. 


tkelley on DSK3SPTVN1PROD with BILLS
25 

•HR 4067 IH

1 SEC. 12. LIMITED TRANSFER OF UNUSED BALANCE IN 

2 FLEXIBLE SPENDING ARRANGEMENT. 

3 (a) IN GENERAL.—Section 125 of the Internal Rev4 enue Code of 1986 is amended by redesignating sub5 sections (k) and (l) as subsections (l) and (m), respec6 tively, and by inserting after subsection (h) the following 

7 new subsection: 

8 ‘‘(k) SPECIAL RULE FOR UNUSED BENEFITS IN

9 FLEXIBLE SPENDING ARRANGEMENTS.— 

10 ‘‘(1) IN GENERAL.—For purposes of this title, 

11 a plan or other arrangement shall not fail to be 

12 treated as a cafeteria plan or flexible spending ar13 rangement merely because such arrangement pro14 vides for qualified retirement distributions. 

15 ‘‘(2) QUALIFIED RETIREMENT DISTRIBUTION.— 

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 section, the term ‘qualified retirement distribu18 tion’ means any distribution to an individual of 

19 all or a portion of the employee’s account under 

20 such arrangement, but only to the extent— 

21 ‘‘(i) the amount does not exceed the 

22 lesser of— 

23 ‘‘(I) $250, or 

24 ‘‘(II) the unused benefits with re25 spect to the arrangement, and 


tkelley on DSK3SPTVN1PROD with BILLS
26 

•HR 4067 IH

1 ‘‘(ii) the amount received is paid in 

2 the form of a direct trustee-to-trustee 

3 transfer to a qualified retirement plan (as 

4 defined in section 4974(c)), or an eligible 

5 deferred compensation plan (as defined in 

6 section 457(b)) of an eligible employer de7 scribed in section 457(e)(1)(A), maintained 

8 by the same employer as the employer 

9 maintaining the cafeteria plan or flexible 

10 spending arrangement of the individual. 

11 ‘‘(B) UNUSED BENEFITS.—For purposes 

12 of this paragraph, the term ‘unused benefits’ 

13 means, with respect to an employee, the excess 

14 of— 

15 ‘‘(i) the maximum amount of reim16 bursement allowable to the employee dur17 ing a plan year under a flexible spending 

18 arrangement, over 

19 ‘‘(ii) the actual amount of reimburse20 ment during such year under such ar21 rangement. 

22 ‘‘(C) SPECIAL RULES FOR TREATMENT OF

23 CONTRIBUTIONS TO RETIREMENT PLANS.—For 

24 purposes of this title, qualified retirement dis25 tributions— 


tkelley on DSK3SPTVN1PROD with BILLS
27 

•HR 4067 IH

1 ‘‘(i) shall be treated as elective defer2 rals (as defined in section 402(g)(3)) 

3 under an annuity contract described in sec4 tion 403(b), 

5 ‘‘(ii) shall be treated as elective defer6 rals (as so defined) in the case of contribu7 tions to a qualified cash or deferred ar8 rangement (as defined in section 401(k)) 

9 under a plan which is described in section 

10 401(a) which includes a trust which is ex11 empt from tax under section 501(a), 

12 ‘‘(iii) shall be treated as deferred com13 pensation in the case of contributions to an 

14 eligible deferred compensation plan (as de15 fined in section 457(b)) maintained by an 

16 employer described in section 457(e)(1)(A), 

17 and 

18 ‘‘(iv) shall be treated in the manner 

19 designated for purposes of section 408 or 

20 408A in the case of contributions to an in21 dividual retirement plan.’’. 

22 (b) EFFECTIVE DATE.—The amendments made by 

23 this section shall apply to plan years ending after the date 

24 of the enactment of this Act. 


tkelley on DSK3SPTVN1PROD with BILLS
28 

•HR 4067 IH

1 SEC. 13. PRIOR YEARS COMPENSATION TAKEN INTO AC2 COUNT IN DETERMINING MAXIMUM RETIRE3 MENT SAVINGS DEDUCTION. 

4 (a) IN GENERAL.—Section 219(b)(1)(B) of the Inter5 nal Revenue Code of 1986 is amended by inserting ‘‘or 

6 the preceding taxable year’’ after ‘‘such taxable year’’. 

7 (b) EFFECTIVE DATE.—The amendment made by 

8 this section shall apply to taxable years beginning after 

9 the date of the enactment of this Act. 

10 SEC. 14. EXPANDING SMALL EMPLOYER PENSION PLAN 

11 STARTUP COST CREDIT. 

12 (a) IN GENERAL.— 

13 (1) INCLUDING STARTUP COSTS FOR EM14 PLOYER-ESTABLISHED IRAS.—Section 45E(d)(2) of 

15 the Internal Revenue Code of 1986 is amended by 

16 striking ‘‘means a qualified employer plan’’ and all 

17 that follows and inserting: ‘‘means— 

18 ‘‘(A) a qualified employer plan within the 

19 meaning of section 4972(d), and 

20 ‘‘(B) a plan of which an automatic deferral 

21 IRA described in section 408B is a part.’’. 

22 (2) ADDITIONAL CREDIT AMOUNT.— 

23 (A) IN GENERAL.—Section 45E(a) of such 

24 Code is amended by striking ‘‘50 percent of’’ 

25 and all that follows and inserting ‘‘the sum of— 


tkelley on DSK3SPTVN1PROD with BILLS
29 

•HR 4067 IH

1 ‘‘(1) the applicable percentage of the qualified 

2 startup costs paid or incurred by the taxpayer dur3 ing the taxable year, plus 

4 ‘‘(2) $25 multiplied by the number of employees 

5 of the employer who participate in any eligible em6 ployer plan of the employer for the first time in such 

7 taxable year.’’. 

8 (B) APPLICABLE PERCENTAGE.—Section 

9 45E(d) of such Code is amended by adding at 

10 the end the following new paragraph: 

11 ‘‘(4) APPLICABLE PERCENTAGE.—The applica12 ble percentage is— 

13 ‘‘(A) in the case of a plan described in sub14 section (d)(2)(A), 75 percent, or 

15 ‘‘(B) in the case of a plan described in 

16 subsection (d)(2)(B), 50 percent.’’. 

17 (C) CONFORMING AMENDMENT.—Section 

18 45E(c)(2) of such Code is amended— 

19 (i) by striking ‘‘qualified employer 

20 plan’’ in each place it appears and insert21 ing ‘‘eligible employer plan’’, and 

22 (ii) by striking ‘‘QUALIFIED’’ in the 

23 heading thereof and inserting ‘‘ELIGIBLE’’. 

24 (3) INCREASED LIMITATION.—Section 

25 45E(b)(1) of such Code is amended by striking 


tkelley on DSK3SPTVN1PROD with BILLS
30 

•HR 4067 IH

1 ‘‘$500’’ and inserting ‘‘$750 ($2,000 in the case of 

2 qualified startup costs attributable to a plan de3 scribed in subsection (d)(2)(A))’’. 

4 (b) EFFECTIVE DATE.—The amendment made by 

5 this section shall apply to costs paid or incurred in taxable 

6 years beginning after the date of the enactment of this 

7 Act. 

8 SEC. 15. FINANCIAL EDUCATION. 

9 (a) RETIREMENT PLAN EDUCATION FOR SMALL

10 BUSINESSES.—Not later than 6 months after the date of 

11 the enactment of this Act— 

12 (1) the Department of the Treasury Office of 

13 Financial Education, in consultation with the De14 partment of Labor, shall develop and implement an 

15 outreach plan to educate small businesses on the 

16 types of retirement plans available and the benefits 

17 and requirements of such plans, and 

18 (2) the Secretary of the Treasury and the Sec19 retary of Labor shall develop recommendations for 

20 small businesses in order to improve retirement out21 comes. Such recommendations shall take into ac22 count established behavioral trends of employee in23 vestment and the effect of default design features 

24 such as auto escalation, expansion of auto rollovers, 


tkelley on DSK3SPTVN1PROD with BILLS
31 

•HR 4067 IH

1 auto diversification for near retirees, and automatic 

2 forms of distribution. 

3 (b) FINANCIAL LITERACY.— 

4 (1) IN GENERAL.—Not later than 1 year after 

5 the date of the enactment of this Act, the Secretary 

6 of the Treasury, in consultation with the Secretary 

7 of Education, shall develop sample age-appropriate 

8 curricula to be made available for financial literacy 

9 education in elementary and secondary schools. 

10 (2) CONTENT OF CURRICULA.—Such curricula 

11 shall include the following: 

12 (A) How to balance a checkbook, read a 

13 credit card statement, and calculate interest 

14 rates. 

15 (B) What a pay stub is and why Federal 

16 and State income taxes and Social Security and 

17 Medicare taxes are withheld from wages. 

18 (C) The differences between various types 

19 of bank accounts. 

20 (D) The significance of a credit score and 

21 how to read credit reports. 

22 (E) The marketing techniques frequently 

23 used by individuals and businesses to attract 

24 patrons. 


tkelley on DSK3SPTVN1PROD with BILLS
32 

•HR 4067 IH

1 (F) The importance of saving for college 

2 and retirement, including the various methods 

3 for saving such as traditional pensions, 401(k)s, 

4 and IRAs. 

5 SEC. 16. SMALL EMPLOYER PLANS. 

6 (a) IN GENERAL.—Section 401(k)(11) of the Inter7 nal Revenue Code of 1986 is amended by adding at the 

8 end the following new subparagraph: 

9 ‘‘(E) DEFERRAL ONLY SMALL EMPLOYER

10 PLAN.— 

11 ‘‘(i) IN GENERAL.—In the case of a 

12 plan described in clause (ii)— 

13 ‘‘(I) the amount described in sub14 paragraph (B)(i)(I) shall be $10,000, 

15 in lieu of the amount in effect under 

16 section 408(p)(2)(A)(ii), 

17 ‘‘(II) such $10,000 amount shall, 

18 in the case years beginning after De19 cember 31, 2016, be adjusted as de20 scribed in section 408(p)(2)(E)(ii) ex21 cept that the base period taken into 

22 account shall be the calendar quarter 

23 beginning July 1, 2015, 


tkelley on DSK3SPTVN1PROD with BILLS
33 

•HR 4067 IH

1 ‘‘(III) subclause (II) of subpara2 graph (B)(i) and clause (ii) of sub3 paragraph (B) shall not apply, and 

4 ‘‘(IV) section 414(v) shall not 

5 apply. 

6 ‘‘(ii) PLAN DESCRIBED.—A plan is de7 scribed in this clause if the plan satisfies 

8 the following requirements: 

9 ‘‘(I) Such plan satisfies the re10 quirements of this paragraph, as 

11 modified by clause (i). 

12 ‘‘(II) The plan includes a quali13 fied automatic contribution arrange14 ment, as defined in paragraph (13), 

15 except that subparagraph (D) of para16 graph (13) shall not apply and the 

17 qualified percentage shall be deter18 mined by reference to subclauses (I), 

19 (II), (III), and (IV) of paragraph 

20 (13)(C)(iii). 

21 ‘‘(III) The plan does not permit 

22 any participant or beneficiary to re23 ceive or maintain a loan from the 

24 plan. 


tkelley on DSK3SPTVN1PROD with BILLS
34 

•HR 4067 IH

1 ‘‘(IV) The plan does not permit 

2 hardship distributions described in 

3 paragraph (2)(B)(i)(IV) except to the 

4 extent any such distribution is 

5 deemed, under regulations prescribed 

6 by the Secretary, to be on account of 

7 an immediate and heavy financial 

8 need of the employee and necessary to 

9 satisfy an immediate and heavy finan10 cial need of the employee. 

11 ‘‘(V) The plan is maintained pur12 suant to a model plan document pub13 lished by the Secretary.’’. 

14 (b) SIMPLIFICATION.— 

15 (1) MODEL PLAN.—Within one year of the date 

16 of the enactment of this Act, the Secretary of the 

17 Treasury shall publish a model plan that may be 

18 used to satisfy the requirement of section 

19 401(k)(11)(E)(ii)(V) of the Internal Revenue Code 

20 of 1986. 

21 (2) PROTECTION AGAINST LOSS.—Within 120 

22 days of the date of the enactment of this Act, the 

23 Secretary of Labor shall amend Department of 

24 Labor Regulation section 2550.404c–5(e)(4)(iv)(B) 

25 so that, in the case of a plan described in section 


tkelley on DSK3SPTVN1PROD with BILLS
35 

•HR 4067 IH

1 401(k)(11)(E) of such Code ‘‘four years’’ shall be 

2 substituted for ‘‘120 days’’. 

3 (3) CLARIFYING DUTIES AND REDUCING BUR4 DENS FOR MULTIPLE EMPLOYER PLANS.—Within 

5 one year of the date of the enactment of this Act, 

6 the Secretary of Labor shall— 

7 (A) publish rules clarifying the extent to 

8 which the fiduciary duties, if any, of a partici9 pating employer fiduciary with respect to a plan 

10 described in section 413(c) of such Code are 

11 limited to— 

12 (i) the selection and monitoring of the 

13 named fiduciary, and 

14 (ii) the investment and management 

15 of the portion of the plan’s assets attrib16 utable to employees of the employer to the 

17 extent not otherwise delegated to another 

18 fiduciary, and 

19 (B) prescribe interim final regulations pro20 viding simplified means by which plans de21 scribed in section 413(c) of such Code may sat22 isfy the requirements of sections 102, 103, and 

23 105 of the Employee Retirement Income Secu24 rity Act of 1974. 


tkelley on DSK3SPTVN1PROD with BILLS
36 

•HR 4067 IH

1 For purposes of this paragraph, the term ‘‘partici2 pating employer fiduciary’’ means the participating 

3 employer, any employee of such participating em4 ployer that serves as fiduciary, any committee of 

5 such employees, and any other person whose fidu6 ciaries duties with respect to the plan relate solely 

7 to the participating employer and not to the oper8 ation of the plan with respect to all participating 

9 employers. 

10 (4) ELIMINATION OF DISINCENTIVE TO POOL11 ING.—Not later than one year after the date of the 

12 enactment of this Act, the Secretary of the Treasury 

13 shall prescribe final regulations under which a plan 

14 described in section 413(c) of such Code may be 

15 treated as satisfying the qualification requirements 

16 of section 401(a) of such Code despite the violation 

17 of such requirements with respect to one or more 

18 participating employers without regard to whether 

19 such violation continues. Solely for this purpose, a 

20 plan shall be treated as violating the qualification re21 quirements of section 401(a) of such Code with re22 spect to a participating employer if such employer 

23 has failed to provide the plan sponsor with the infor24 mation needed to comply with such requirements 

25 and such failure has continued over a period of time 


tkelley on DSK3SPTVN1PROD with BILLS
37 

•HR 4067 IH

1 that clearly demonstrates a lack of commitment to 

2 compliance. Such rules may require that the portion 

3 of the plan attributable to such participating em4 ployers be spun off to plans maintained by such em5 ployers. 

6 (c) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—Except as provided in para8 graph (2), the amendments made by this section 

9 shall apply to years beginning after December 31, 

10 2015. 

11 (2) EXCEPTION.—Subsection (b) shall apply as 

12 of the date of the enactment of this Act. 

13 SEC. 17. MODIFICATION OF ERISA RULES RELATING TO 

14 MULTIPLE EMPLOYER DEFINED CONTRIBU15 TION PLANS. 

16 (a) IN GENERAL.— 

17 (1) REQUIREMENT OF COMMON INTEREST.— 

18 Section 3(2) of the Employee Retirement Income Se19 curity Act of 1974 is amended by adding at the end 

20 the following: 

21 ‘‘(C)(i) A qualified multiple employer plan shall 

22 not fail to be treated as an employee pension benefit 

23 plan or pension plan solely because the employers 

24 maintaining the plan share no common interest. 


tkelley on DSK3SPTVN1PROD with BILLS
38 

•HR 4067 IH

1 ‘‘(ii) For purposes of this subparagraph, the 

2 term ‘qualified multiple employer plan’ means a plan 

3 described in section 413(c) of the Internal Revenue 

4 Code of 1986 which— 

5 ‘‘(I) is an individual account plan with re6 spect to which the requirements of clauses (iii), 

7 (iv), and (v) are met, and 

8 ‘‘(II) includes in its annual report required 

9 to be filed under section 104(a) the name and 

10 identifying information of each employer main11 taining the plan. 

12 ‘‘(iii) The requirements of this clause are met 

13 if, under the plan, each employer maintaining the 

14 plan retains fiduciary responsibility for— 

15 ‘‘(I) the selection and monitoring of the 

16 named fiduciary, and 

17 ‘‘(II) the investment and management of 

18 the portion of the plan’s assets attributable to 

19 employees of the employer to the extent not 

20 otherwise delegated to another fiduciary. 

21 ‘‘(iv) The requirements of this clause are met if, 

22 under the plan, an employer maintaining the plan is 

23 not subject to unreasonable restrictions, fees, or pen24 alties by reason of ceasing to maintain, or otherwise 

25 transferring assets from, the plan. 


tkelley on DSK3SPTVN1PROD with BILLS
39 

•HR 4067 IH

1 ‘‘(v) The requirements of this clause are met if 

2 each employer maintaining the plan is an eligible 

3 employer as defined in section 408(p)(2)(C)(i) of the 

4 Internal Revenue Code of 1986, applied— 

5 ‘‘(I) by substituting ‘500’ for ‘100’ in sub6 clause (I) thereof, 

7 ‘‘(II) by substituting ‘5’ for ‘2’ each place 

8 it appears in subclause (II) thereof, and 

9 ‘‘(III) without regard to the last sentence 

10 of subclause (II) thereof.’’. 

11 (2) SIMPLIFIED REPORTING FOR SMALL MUL12 TIPLE EMPLOYER PLANS.—Section 104(a) of such 

13 Act (29 U.S.C. 1024(a)) is amended by adding at 

14 the end the following: 

15 ‘‘(7)(A) In the case of any eligible small multiple em16 ployer plan, the Secretary may by regulation waive the re17 quirement under section 103(a)(3) to engage an inde18 pendent qualified public accountant in cases where the 

19 Secretary determines it appropriate. 

20 ‘‘(B) For purposes of this paragraph, the term ‘eligi21 ble small multiple employer plan’ means, with respect to 

22 any plan year— 

23 ‘‘(i) a qualified multiple employer plan, as de24 fined in section 3(2)(C)(ii), or 


tkelley on DSK3SPTVN1PROD with BILLS
40 

•HR 4067 IH

1 ‘‘(ii) any other plan described in section 413(c) 

2 of the Internal Revenue Code of 1986 that satisfies 

3 the requirements of clause (v) of section 3(2)(C).’’. 

4 (b) CONFORMING AMENDMENT.—Section 3(2)(A) of 

5 such Act is amended by striking ‘‘Except as provided in 

6 subparagraph (B)’’ and inserting ‘‘Except as provided in 

7 subparagraphs (B) and (C)’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to years beginning after December 

10 31, 2015. 

11 SEC. 18. CLARIFICATION OF TREATMENT OF INDIVIDUAL 

12 RETIREMENT PLANS WITH PAYROLL DEDUC13 TION. 

14 (a) IN GENERAL.—Section 3(2) of the Employee Re15 tirement Income Security Act of 1974 (29 U.S.C. 

16 1002(2)), as amended by this Act, is amended by adding 

17 at the end the following new subparagraph: 

18 ‘‘(E) Neither an individual retirement plan (as de19 fined in section 7701(a)(37) of the Internal Revenue Code 

20 of 1986) nor an automatic deferral IRA arrangement (as 

21 described in section 408B of such Code) maintained in 

22 connection with any such individual retirement plan shall 

23 be considered a pension plan merely because an employer 

24 establishes a payroll deduction program for the purpose 


tkelley on DSK3SPTVN1PROD with BILLS
41 

•HR 4067 IH

1 of enabling employees to make voluntary contributions to 

2 such account or annuity.’’. 

3 (b) EFFECTIVE DATE.—The amendments made by 

4 this section shall take effect on the date of the enactment 

5 of this Act. 

6 SEC. 19. DISCLOSURE REGARDING LIFETIME INCOME. 

7 (a) IN GENERAL.—Section 105(a)(2)(B) of the Em8 ployee Retirement Income Security Act of 1974 (29 

9 U.S.C. 1025(a)(2)) is amended— 

10 (1) in clause (i), by striking ‘‘and’’ at the end; 

11 (2) in clause (ii), by striking ‘‘diversification.’’ 

12 and inserting ‘‘diversification, and’’; and 

13 (3) by inserting at the end the following: 

14 ‘‘(iii) the lifetime income disclosure 

15 described in subparagraph (D)(i). 

16 In the case of pension benefit statements de17 scribed in clause (i) of paragraph (1)(A), a life18 time income disclosure under clause (iii) of this 

19 subparagraph shall only be required to be in20 cluded in one pension benefit statement during 

21 any one 12-month period.’’. 

22 (b) LIFETIME INCOME.—Section 105(a)(2) of such 

23 Act (29 U.S.C. 1025(a)) is amended by adding at the end 

24 the following new subparagraph: 

25 ‘‘(D) LIFETIME INCOME DISCLOSURE.— 


tkelley on DSK3SPTVN1PROD with BILLS
42 

•HR 4067 IH

1 ‘‘(i) IN GENERAL.— 

2 ‘‘(I) DISCLOSURE.—A lifetime in3 come disclosure shall set forth the life4 time income stream equivalent of the 

5 total benefits accrued with respect to 

6 the participant or beneficiary. 

7 ‘‘(II) LIFETIME INCOME STREAM

8 EQUIVALENT OF THE TOTAL BENE9 FITS ACCRUED.—For purposes of this 

10 subparagraph, the term ‘lifetime in11 come stream equivalent of the total 

12 benefits accrued’ means the amount of 

13 monthly payments the participant or 

14 beneficiary would receive if the total 

15 accrued benefits of such participant or 

16 beneficiary were used to provide life17 time income streams described in sub18 clause (III), based on assumptions 

19 specified in rules prescribed by the 

20 Secretary. 

21 ‘‘(III) LIFETIME INCOME

22 STREAMS.—The lifetime income 

23 streams described in this subclause 

24 are a qualified joint and survivor an25 nuity (as defined in section 205(d)), 


tkelley on DSK3SPTVN1PROD with BILLS
43 

•HR 4067 IH

1 based on assumptions specified in 

2 rules prescribed by the Secretary, in3 cluding the assumption that the par4 ticipant or beneficiary has a spouse of 

5 equal age, and a single life annuity. 

6 Such lifetime income streams may 

7 have a term certain or other features 

8 to the extent permitted under rules 

9 prescribed by the Secretary. 

10 ‘‘(ii) MODEL DISCLOSURE.—Not later 

11 than 1 year after the date of the enact12 ment of the Lifetime Income Disclosure 

13 Act, the Secretary shall issue a model life14 time income disclosure, written in a man15 ner so as to be understood by the average 

16 plan participant, that— 

17 ‘‘(I) explains that the lifetime in18 come stream equivalent is only pro19 vided as an illustration; 

20 ‘‘(II) explains that the actual 

21 payments under the lifetime income 

22 stream described in clause (i)(III) 

23 that may be purchased with the total 

24 benefits accrued will depend on nu25 merous factors and may vary substanVerDate Sep 11 2014 20:50 Nov 23, 2015 Jkt 059200 PO 00000 Frm 00043 Fmt 6652 Sfmt 6201 E:\BILLS\H4067.IH H4067

tkelley on DSK3SPTVN1PROD with BILLS
44 

•HR 4067 IH

1 tially from the lifetime income stream 

2 equivalent in the disclosures; 

3 ‘‘(III) explains the assumptions 

4 upon which the lifetime income stream 

5 equivalent was determined; and 

6 ‘‘(IV) provides such other similar 

7 explanations as the Secretary con8 siders appropriate. 

9 ‘‘(iii) ASSUMPTIONS AND RULES.— 

10 Not later than 1 year after the date of the 

11 enactment of the Lifetime Income Disclo12 sure Act, the Secretary shall— 

13 ‘‘(I) prescribe assumptions that 

14 administrators of individual account 

15 plans may use in converting total ac16 crued benefits into lifetime income 

17 stream equivalents for purposes of 

18 this subparagraph; and 

19 ‘‘(II) issue interim final rules 

20 under clause (i). 

21 In prescribing assumptions under sub22 clause (I), the Secretary may prescribe a 

23 single set of specific assumptions (in which 

24 case the Secretary may issue tables or fac25 tors that facilitate such conversions), or 


tkelley on DSK3SPTVN1PROD with BILLS
45 

•HR 4067 IH

1 ranges of permissible assumptions. To the 

2 extent that an accrued benefit is or may be 

3 invested in a lifetime income stream de4 scribed in clause (i)(III), the assumptions 

5 prescribed under subclause (I) shall, to the 

6 extent appropriate, permit administrators 

7 of individual account plans to use the 

8 amounts payable under such lifetime in9 come stream as a lifetime income stream 

10 equivalent. 

11 ‘‘(iv) LIMITATION ON LIABILITY.—No 

12 plan fiduciary, plan sponsor, or other per13 son shall have any liability under this title 

14 solely by reason of the provision of lifetime 

15 income stream equivalents which are de16 rived in accordance with the assumptions 

17 and rules described in clause (iii) and 

18 which include the explanations contained in 

19 the model lifetime income disclosure de20 scribed in clause (ii). This clause shall 

21 apply without regard to whether the provi22 sion of such lifetime income stream equiva23 lent is required by subparagraph (B)(iii). 

24 ‘‘(v) EFFECTIVE DATE.—The require25 ment in subparagraph (B)(iii) shall apply 


tkelley on DSK3SPTVN1PROD with BILLS
46 

•HR 4067 IH

1 to pension benefit statements furnished 

2 more than 12 months after the latest of 

3 the issuance by the Secretary of— 

4 ‘‘(I) interim final rules under 

5 clause (i); 

6 ‘‘(II) the model disclosure under 

7 clause (ii); or 

8 ‘‘(III) the assumptions under 

9 clause (iii).’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall take effect on the date of the enactment 

12 of this Act. 

13 SEC. 20. LIFETIME INCOME SAFE HARBOR. 

14 Section 404 of the Employee Retirement Income Se15 curity Act of 1974 (29 U.S.C. 1104) is amended by adding 

16 at the end the following: 

17 ‘‘(e) SAFE HARBOR FOR ANNUITY SELECTION.— 

18 ‘‘(1) IN GENERAL.—With respect to the selec19 tion of an insurer and a guaranteed retirement in20 come contract, the requirements of subsection 

21 (a)(1)(B) will be deemed to be satisfied if a fidu22 ciary— 

23 ‘‘(A) engages in an objective, thorough and 

24 analytical search for the purpose of identifying 


tkelley on DSK3SPTVN1PROD with BILLS
47 

•HR 4067 IH

1 insurers from which to purchase guaranteed re2 tirement income contracts; 

3 ‘‘(B) with respect to each insurer identified 

4 by the fiduciary under subparagraph (A)— 

5 ‘‘(i) considers the financial capability 

6 of such insurer to satisfy its obligations 

7 under the guaranteed retirement income 

8 contract; and 

9 ‘‘(ii) considers the cost (including fees 

10 and commissions) of the guaranteed retire11 ment income contract offered by the in12 surer in relation to the benefits and prod13 uct features of the contract and adminis14 trative services to be provided under such 

15 contract; and 

16 ‘‘(C) on the basis of the foregoing, con17 cludes that— 

18 ‘‘(i) at the time of the selection, the 

19 insurer is financially capable of satisfying 

20 its obligations under the guaranteed retire21 ment income contract; and 

22 ‘‘(ii) the cost (including fees and com23 missions) of the selected guaranteed retire24 ment income contract is reasonable in rela25 tion to the benefits and product features of 


tkelley on DSK3SPTVN1PROD with BILLS
48 

•HR 4067 IH

1 the contract and the administrative serv2 ices to be provided under such contract. 

3 ‘‘(2) FINANCIAL CAPABILITY OF THE IN4 SURER.—For purposes of this section, a fiduciary 

5 will be deemed to satisfy the requirements of para6 graphs (1)(B)(i) and (1)(C)(i) if— 

7 ‘‘(A) the fiduciary obtains written rep8 resentations from the insurer that— 

9 ‘‘(i) the insurer is licensed to offer 

10 guaranteed retirement income contracts; 

11 ‘‘(ii) the insurer, at the time of selec12 tion and for each of the immediately pre13 ceding seven years— 

14 ‘‘(I) operates under a certificate 

15 of authority from the Insurance Com16 missioner of its domiciliary State that 

17 has not been revoked or suspended; 

18 ‘‘(II) has filed audited financial 

19 statements in accordance with the 

20 laws of its domiciliary State under ap21 plicable statutory accounting prin22 ciples; 

23 ‘‘(III) maintains (and has main24 tained) reserves that satisfies all the 


tkelley on DSK3SPTVN1PROD with BILLS
49 

•HR 4067 IH

1 statutory requirements of all States 

2 where the insurer does business; and 

3 ‘‘(IV) is not operating under an 

4 order of supervision, rehabilitation, or 

5 liquidation; and 

6 ‘‘(iii) the insurer undergoes, at least 

7 every five years, a financial examination 

8 (within the meaning of the law of its domi9 ciliary State) by the Insurance Commis10 sioner of the domiciliary State (or rep11 resentative, designee, or other party ap12 proved thereby); 

13 ‘‘(B) if, following the issuance of the rep14 resentations described in clauses (i) through 

15 (iii) of subparagraph (A), there is any change 

16 that would preclude the insurer from making 

17 the same representations at the time of 

18 issuance of the guaranteed retirement income 

19 contract, the insurer shall notify the fiduciary, 

20 in advance of the issuance of any guaranteed 

21 retirement income contract, that the fiduciary 

22 can no longer rely on one or more of the rep23 resentations; and 

24 ‘‘(C) the fiduciary has not received the no25 tification described in subparagraph (B) and 


tkelley on DSK3SPTVN1PROD with BILLS
50 

•HR 4067 IH

1 has no other facts that would cause it to ques2 tion the representations described in clauses (i) 

3 through (iii) of subparagraph (A). 

4 ‘‘(3) Nothing herein shall be construed to re5 quire a fiduciary to select the lowest cost contract. 

6 Accordingly, a fiduciary may consider the value, in7 cluding features and benefits of the contract and at8 tributes of the insurer in conjunction with the con9 tract’s cost. Attributes of the insurer that may be 

10 considered may include, without limitation, the 

11 issuer’s financial strength. 

12 ‘‘(4) TIME OF SELECTION.— 

13 ‘‘(A) For purposes of paragraph (1), the 

14 ‘time of selection’ may be either— 

15 ‘‘(i) the time that the insurer and con16 tract are selected for distribution of bene17 fits to a specific participant or beneficiary; 

18 or 

19 ‘‘(ii) the time that the insurer and 

20 contract are selected to provide benefits at 

21 future dates to participants or bene22 ficiaries, provided that the selecting fidu23 ciary periodically reviews the continuing 

24 appropriateness of the conclusion described 

25 in paragraph (1)(C), taking into account 


tkelley on DSK3SPTVN1PROD with BILLS
51 

•HR 4067 IH

1 the considerations described in paragraph 

2 (1). 

3 For purposes of this paragraph, a fiduciary is 

4 not required to review the appropriateness of 

5 this conclusion following the purchase of any 

6 contract(s) for specific participants or bene7 ficiaries. 

8 ‘‘(B) For purposes of paragraph (4)(A)(ii), 

9 a fiduciary will be deemed to have conducted a 

10 periodic review of the financial capability of the 

11 insurer if the fiduciary obtains the written rep12 resentations described in clauses (i) through 

13 (iii) of paragraph (2)(A) on an annual basis, 

14 unless, in the interim, the fiduciary has received 

15 the notice described in paragraph (2)(B) or oth16 erwise becomes aware of facts that would cause 

17 it to question the such representations. 

18 ‘‘(5) LIMITED LIABILITY.—A fiduciary that is 

19 deemed to satisfy the requirements of this section 

20 shall not be liable following the distribution of any 

21 benefit or the investment by or on behalf of a partic22 ipant or beneficiary pursuant to the selected guaran23 teed retirement income contract for any losses that 

24 may result to the participant or beneficiary due to 


tkelley on DSK3SPTVN1PROD with BILLS
52 

•HR 4067 IH

1 an insurer’s inability to satisfy its financial obliga2 tions under the terms of such contract. 

3 ‘‘(6) DEFINITIONS.—For purposes of this sec4 tion— 

5 ‘‘(A) INSURER.—The term ‘insurer’ means 

6 an insurance company, insurance service or in7 surance organization qualified to do business in 

8 a State; and includes affiliates of such compa9 nies to the extent the affiliate is licensed to 

10 offer guaranteed retirement income contracts. 

11 ‘‘(B) GUARANTEED RETIREMENT INCOME

12 CONTRACT.—The term ‘guaranteed retirement 

13 income contract’ means an annuity contract for 

14 a fixed term or a contract (or provision or fea15 ture thereof) designed to provide a participant 

16 guaranteed benefits annually (or more fre17 quently) for at least the remainder of the life of 

18 the participant or joint lives of the participant 

19 or the participant’s designated beneficiary as 

20 part of an individual account plan. This section 

21 sets forth an optional means by which a plan fi22 duciary will be considered to satisfy the respon23 sibilities set forth in section 404(a)(1)(B) with 

24 respect to the selection of insurers and guaran25 teed retirement income contracts. This section 


tkelley on DSK3SPTVN1PROD with BILLS
53 

•HR 4067 IH

1 does not establish minimum requirements or 

2 the exclusive means for satisfying these respon3 sibilities.’’. 

Æ 


tkelley on DSK3SPTVN1PROD with BILLS