I 

112TH CONGRESS 

2D SESSION H. R. 4050 

To simplify and enhance qualified retirement plans, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 16, 2012 

Mr. NEAL 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 simplify and enhance qualified retirement plans, 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; REFERENCE; TABLE OF CON4 TENTS. 

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

6 ‘‘Retirement Plan Simplification and Enhancement Act of 

7 2012’’. 

8 (b) AMENDMENT OF 1986 CODE.—Except as other9 wise expressly provided, whenever in this Act an amendVerDate Mar 15 2010 05:36 Feb 17, 2012 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4050.IH H4050

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1 ment or repeal is expressed in terms of an amendment 

2 to, or repeal of, a section or other provision, the reference 

3 shall be considered to be made to a section or other provi4 sion of the Internal Revenue Code of 1986. 

5 (c) TABLE OF CONTENTS.—The table of contents of 

6 this Act is as follows: 

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

TITLE I—EXPANDING COVERAGE AND INCREASING RETIREMENT 

SAVINGS 

Sec. 101. Modification of Automatic Enrollment Safe Harbor. 

Sec. 102. Qualified cash or deferred arrangements must allow long-term employees working more than 500 but less than 1,000 hours per 

year to participate. 

Sec. 103. Separate application of top heavy rules to defined contribution plans 

covering part-time employees. 

TITLE II—ENCOURAGING SMALL BUSINESSES TO ENTER AND 

REMAIN IN THE EMPLOYER RETIREMENT PLAN SYSTEM 

Sec. 201. Enhancement of credit for small employer pension plan startup costs. 

Sec. 202. Eliminating barriers to use of multiple employer plans. 

TITLE III—PRESERVATION OF INCOME 

Sec. 301. Study of application of spousal consent rules to defined contribution 

plans. 

Sec. 302. Administration of joint and survivor annuity requirements. 

Sec. 303. Availability of distribution options. 

Sec. 304. Rollover of insurance contracts to IRAs. 

Sec. 305. Portability of lifetime income options. 

TITLE IV—SIMPLIFICATION AND CLARIFICATION OF QUALIFIED 

RETIREMENT PLAN RULES 

Sec. 401. Exception from required distributions where aggregate retirement 

savings do not exceed $100,000. 

Sec. 402. Alternative methods for electronic disclosure. 

Sec. 403. Expansion of Employee Plans Compliance Resolution System. 

Sec. 404. Use of forfeitures to fund safe harbor contributions. 

Sec. 405. Substantial cessation of operations. 

Sec. 406. Church plan clarification. 

Sec. 407. Protecting older, longer service participants. 

Sec. 408. Review and report to the Congress relating to reporting and disclosure requirements. 

Sec. 409. Consolidation of defined contribution plan notices. 


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1 TITLE I—EXPANDING COVERAGE 

2 AND INCREASING RETIRE3 MENT SAVINGS 

4 SEC. 101. MODIFICATION OF AUTOMATIC ENROLLMENT 

5 SAFE HARBOR. 

6 (a) IN GENERAL.— 

7 (1) REMOVAL OF 10 PERCENT CAP.—Clause 

8 (iii) of section 401(k)(13)(C) is amended by striking 

9 ‘‘, does not exceed 10 percent, and is at least’’ and 

10 inserting ‘‘and is’’. 

11 (2) CONFORMING AMENDMENTS.— 

12 (A) Subclause (I) of section 

13 401(k)(13)(C)(iii) is amended by striking ‘‘3 

14 percent’’ and inserting ‘‘at least 3 percent, but 

15 not greater than 10 percent,’’. 

16 (B) Subclause (II) of section 

17 401(k)(13)(C)(iii) is amended by striking ‘‘4 

18 percent’’ and inserting ‘‘at least 4 percent’’. 

19 (C) Subclause (III) of section 

20 401(k)(13)(C)(iii) is amended by striking ‘‘5 

21 percent’’ and inserting ‘‘at least 5 percent’’. 

22 (D) Subclause (IV) of section 

23 401(k)(13)(C)(iii) is amended by striking ‘‘6 

24 percent’’ and inserting ‘‘at least 6 percent’’. 


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1 (b) REGULATIONS.—Subparagraph (C) of section 

2 401(k)(13) is amended by adding at the end thereof the 

3 following new clause: 

4 ‘‘(v) REGULATIONS.— 

5 ‘‘(I) IN GENERAL.—The Sec6 retary may prescribe regulations that 

7 increase the percentages referenced in 

8 subclauses (I)–(IV) of clause (iii), ex9 cept that no percentage may be in10 creased by more than 8 percentage 

11 points and each such percentage may 

12 be increased by the same or different 

13 amounts or not increased. In deter14 mining whether and how to exercise 

15 this authority, the Secretary may con16 sider all relevant factors, including— 

17 ‘‘(aa) the extent to which 

18 such increases would directly re19 sult in more retirement savings 

20 by participants in arrangements 

21 described in this paragraph, re22 sulting in higher level of retire23 ment income for participants, 

24 ‘‘(bb) the extent to which 

25 such increases would result in 


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1 more retirement savings by rea2 son of communicating to employ3 ers and employees the importance 

4 of saving more than the percent5 ages referenced in such sub6 clauses (without regard to this 

7 clause), 

8 ‘‘(cc) the extent to which in9 creases that are too large could 

10 result in fewer employers adopt11 ing arrangements described in 

12 this paragraph for any reason, 

13 including the possible increase in 

14 employer cost due to increased 

15 matching contributions, 

16 ‘‘(dd) the extent to which in17 creases that are too large could 

18 result in more employees making 

19 elections described in clause 

20 (ii)(I), and 

21 ‘‘(ee) the extent to which 

22 any such increases would in23 crease administrative burdens 

24 and complexity, and how the in25 creases can be structured to minVerDate Mar 15 2010 05:36 Feb 17, 2012 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4050.IH H4050

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1 imize such burdens and com2 plexity. 

3 ‘‘(II) CLARIFICATIONS.—Any 

4 such regulation shall clarify that— 

5 ‘‘(aa) the percentages ref6 erenced in subclauses (I) through 

7 (IV) of clause (iii) are minimums, 

8 ‘‘(bb) with respect to an ar9 rangement, one or more of such 

10 percentages may be set at higher 

11 levels, except as provided in 

12 clause (iii)(I), and 

13 ‘‘(cc) there need not be a 

14 uniform disparity between such 

15 higher levels and the levels ref16 erenced in subclauses (I)–(IV) of 

17 clause (iii).’’. 

18 (c) EFFECTIVE DATES.— 

19 (1) SUBSECTION (a).—The amendments made 

20 by subsection (a) shall apply to plan years beginning 

21 after the date of the enactment of this Act. 

22 (2) SUBSECTION (b).—Any regulations pre23 scribed pursuant to the amendment made by sub24 section (b) shall apply to arrangements first estab25 lished for plan years beginning at least six months 


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1 after publication of such regulations, or for such 

2 later plan years determined under such regulations. 

3 SEC. 102. QUALIFIED CASH OR DEFERRED ARRANGEMENTS 

4 MUST ALLOW LONG-TERM EMPLOYEES 

5 WORKING MORE THAN 500 BUT LESS THAN 

6 1,000 HOURS PER YEAR TO PARTICIPATE. 

7 (a) PARTICIPATION REQUIREMENT.— 

8 (1) IN GENERAL.—Subparagraph (D) of section 

9 401(k)(2) (defining qualified cash or deferred ar10 rangement) is amended to read as follows: 

11 ‘‘(D) which does not require, as a condi12 tion of participation in the arrangement, that 

13 an employee complete a period of service with 

14 the employer (or employers) maintaining the 

15 plan extending beyond the close of the earlier 

16 of— 

17 ‘‘(i) the period permitted under sec18 tion 410(a)(1) (determined without regard 

19 to subparagraph (B)(i) thereof), or 

20 ‘‘(ii) subject to the provisions of para21 graph (14), the first period of 3 consecu22 tive 12-month periods during each of which 

23 the employee has at least 500 hours of 

24 service.’’. 


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1 (2) SPECIAL RULES.—Section 401(k) (relating 

2 to cash or deferred arrangements), as amended by 

3 section 902 of the Pension Protection Act of 2006, 

4 is amended by adding at the end the following new 

5 paragraph: 

6 ‘‘(14) SPECIAL RULES FOR PARTICIPATION RE7 QUIREMENT FOR LONG-TERM, PART-TIME WORK8 ERS.—For purposes of paragraph (2)(D)(ii)— 

9 ‘‘(A) AGE REQUIREMENT MUST BE MET.— 

10 Paragraph (2)(D)(ii) shall not apply to an em11 ployee unless the employee has met the require12 ment of section 410(a)(1)(A)(i) by the close of 

13 the last of the 12-month periods described in 

14 such paragraph. 

15 ‘‘(B) NONDISCRIMINATION AND TOP16 HEAVY RULES NOT TO APPLY.— 

17 ‘‘(i) NONDISCRIMINATION RULES.—In 

18 the case of employees who are eligible to 

19 participate in the arrangement solely by 

20 reason of paragraph (2)(D)(ii)— 

21 ‘‘(I) notwithstanding subsection 

22 (a)(4), an employer shall not be re23 quired to make nonelective or match24 ing contributions on behalf of such 

25 employees even if such contributions 


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1 are made on behalf of other employees 

2 eligible to participate in the arrange3 ment, and 

4 ‘‘(II) an employer may elect to 

5 exclude such employees from the ap6 plication of subsection (a)(4), para7 graph (3), subsection (m)(2), and sec8 tion 410(b). 

9 ‘‘(ii) TOP-HEAVY RULES.—An em10 ployer may elect to exclude all employees 

11 who are eligible to participate in a plan 

12 maintained by the employer solely by rea13 son of paragraph (2)(D)(ii) from the appli14 cation of the vesting and benefit require15 ments under subsections (b) and (c) of sec16 tion 416. 

17 ‘‘(iii) VESTING.—For purposes of de18 termining whether an employee described 

19 in clause (i) has a nonforfeitable right to 

20 employer contributions (other than con21 tributions described in paragraph 

22 (3)(D)(i)) under the arrangement, each 

23 12-month period for which the employee 

24 has at least 500 hours of service shall be 

25 treated as a year of service. 


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1 ‘‘(iv) EMPLOYEES WHO BECOME

2 FULL-TIME EMPLOYEES.—This subpara3 graph shall cease to apply to any employee 

4 as of the first plan year beginning after 

5 the plan year in which the employee meets 

6 the requirements of section 

7 410(a)(1)(A)(ii) without regard to para8 graph (2)(D)(ii). 

9 ‘‘(C) EXCEPTION FOR EMPLOYEES UNDER

10 COLLECTIVELY BARGAINED PLANS, ETC.—Para11 graph (2)(D)(ii) shall not apply to employees 

12 described in section 410(b)(3). 

13 ‘‘(D) SPECIAL RULES.— 

14 ‘‘(i) TIME OF PARTICIPATION.—The 

15 rules of section 410(a)(4) shall apply to an 

16 employee eligible to participate in an ar17 rangement solely by reason of paragraph 

18 (2)(D)(ii). 

19 ‘‘(ii) 12-MONTH PERIODS.—12-month 

20 periods shall be determined in the same 

21 manner as under the last sentence of sec22 tion 410(a)(3)(A).’’. 

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

24 this section shall apply to plan years beginning after De25 cember 31, 2012, except that, for purposes of section 


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1 401(k)(2)(D)(ii) of the Internal Revenue Code of 1986 (as 

2 added by such amendments), 12-month periods beginning 

3 before January 1, 2013, shall not be taken into account. 

4 SEC. 103. SEPARATE APPLICATION OF TOP HEAVY RULES 

5 TO DEFINED CONTRIBUTION PLANS COV6 ERING PART-TIME EMPLOYEES. 

7 (a) IN GENERAL.—Paragraph (2) of section 416(c) 

8 is amended by adding at the end the following: 

9 ‘‘(C) SEPARATE APPLICATION TO EMPLOY10 EES NOT MEETING AGE AND SERVICE REQUIRE11 MENTS.—If employees not meeting the age or 

12 service requirements of section 410(a)(1) (with13 out regard to subparagraph (B) thereof) are 

14 covered under a plan of the employer which 

15 meets the requirements of paragraphs (A) and 

16 (B) separately with respect to such employees, 

17 such employees may be excluded from consider18 ation in determining whether any plan of the 

19 employer meets the requirements of subpara20 graphs (A) and (B).’’. 

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

22 subsection (a) shall apply to plan years beginning after 

23 the date of the enactment of this Act. 


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1 TITLE II—ENCOURAGING SMALL 

2 BUSINESSES TO ENTER AND 

3 REMAIN IN THE EMPLOYER 

4 RETIREMENT PLAN SYSTEM 

5 SEC. 201. ENHANCEMENT OF CREDIT FOR SMALL EM6 PLOYER PENSION PLAN STARTUP COSTS. 

7 (a) IN GENERAL.—Section 45E(b)(1) is amended by 

8 striking ‘‘$500’’ and inserting ‘‘$1,500’’. 

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

10 subsection (a) shall apply to taxable years beginning after 

11 December 31, 2012. 

12 SEC. 202. ELIMINATING BARRIERS TO USE OF MULTIPLE 

13 EMPLOYER PLANS. 

14 By December 31, 2012, the Secretaries of the Treas15 ury and Labor shall— 

16 (1) prescribe administrative guidance estab17 lishing conditions under which an employer partici18 pating in a plan described in section 413(c) of the 

19 Internal Revenue Code of 1986 shall not have any 

20 liability under title I of the Employee Retirement In21 come Security Act of 1974 with respect to the acts 

22 or omissions of one or more other participating em23 ployers, which regulations may require that the por24 tion of the plan attributable to such participating 


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1 employers be spun off to plans maintained by such 

2 employers, 

3 (2) prescribe administrative guidance estab4 lishing conditions under which a plan described in 

5 section 413(c) of such Code may be treated as satis6 fying the qualification requirements of sections 

7 401(a) and 413(c) of such Code despite the violation 

8 of such requirements by one or more participating 

9 employers, including requiring, if appropriate, that 

10 the portion of the plan attributable to such partici11 pating employers be spun off to plans maintained by 

12 such employers, and 

13 (3) prescribe administrative guidance providing 

14 simplified means by which plans described in section 

15 413(c) of such Code may satisfy the requirements of 

16 section 103 of the Employee Retirement Income Se17 curity Act of 1974. 

18 TITLE III—PRESERVATION OF 

19 INCOME 

20 SEC. 301. STUDY OF APPLICATION OF SPOUSAL CONSENT 

21 RULES TO DEFINED CONTRIBUTION PLANS. 

22 (a) STUDY.—The Government Accountability Office 

23 shall conduct a study of the feasibility and desirability of 

24 extending the application of the requirements of section 

25 205 of the Employee Retirement Income Security Act of 


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1 1974 and sections 401(a)(11) and 417 of the Internal 

2 Revenue Code of 1986 (relating to spousal consent re3 quirements) to defined contribution plans to which such 

4 requirements do not apply. Such study shall include con5 sideration of any modifications of such requirements that 

6 are necessary to apply such requirements to such plans. 

7 (b) REPORT.—Not later than 1 year after the date 

8 of the enactment of this Act, the Government Account9 ability Office shall report the results of the study, together 

10 with any recommendations for legislative changes, to the 

11 Committees on Finance and Health, Education, Labor, 

12 and Pensions of the Senate and the Committees on Ways 

13 and Means and Education and the Workforce of the 

14 House of Representatives. 

15 SEC. 302. ADMINISTRATION OF JOINT AND SURVIVOR AN16 NUITY REQUIREMENTS. 

17 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

18 INCOME SECURITY ACT OF 1974.— 

19 (1) IN GENERAL.—Section 402(c) of the Em20 ployee Retirement Income Security Act of 1974 (29 

21 U.S.C. 1102(c)) is amended— 

22 (A) in paragraph (2) by striking ‘‘or’’ at 

23 the end, 

24 (B) in paragraph (3) by striking the period 

25 at the end and inserting ‘‘; or’’, and 


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1 (C) by adding at the end the following new 

2 paragraph: 

3 ‘‘(4) that a named fiduciary, or a fiduciary des4 ignated by a named fiduciary pursuant to a plan 

5 procedure described in section 405(e), may appoint 

6 an annuity administrator or administrators with re7 sponsibility for administration of an individual ac8 count plan in accordance with the requirements of 

9 section 205 and payment of any annuity required 

10 thereunder.’’. 

11 (2) Section 405 of such Act (29 U.S.C. 1105) 

12 is amended by adding at the end the following new 

13 subsection: 

14 ‘‘(e) ANNUITY ADMINISTRATOR.—If an annuity ad15 ministrator or administrators have been appointed under 

16 section 402(c)(4) and such entity acknowledges in writing 

17 that they are the annuity administrator, then neither the 

18 named fiduciary nor any appointing fiduciary shall be lia19 ble for any act or omission of the annuity administrator 

20 except to the extent that— 

21 ‘‘(1) the fiduciary violated section 404(a)(1)— 

22 ‘‘(A) with respect to such allocation or des23 ignation, or 

24 ‘‘(B) in continuing the allocation or des25 ignation, 


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1 ‘‘(2) the fiduciary would otherwise be liable in 

2 accordance with subsection (a), or 

3 ‘‘(3) the fiduciary is neither an insurance com4 pany nor approved to be an annuity administrator 

5 by the Secretary.’’. 

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

7 subsection (a) shall apply as of the date of enactment of 

8 this Act. 

9 SEC. 303. AVAILABILITY OF DISTRIBUTION OPTIONS. 

10 (a) LIFETIME INCOME INVESTMENTS.—By the date 

11 that is one year after the date of enactment of this Act, 

12 the Secretary of the Treasury shall issue final regulations 

13 under which it is clarified that any specified age or service 

14 condition (or combination of age and service conditions) 

15 with respect to a lifetime income investment (as defined 

16 in section 401(a)(38)(B)(ii)) under a defined contribution 

17 plan shall be disregarded in determining whether such life18 time income investment is currently available to an em19 ployee for purposes of Treasury Regulation section 

20 1.401(a)(4)–4(b) (or any successor provision). 

21 (b) ENFORCEMENT.—As of the date of enactment of 

22 this Act, the Secretary of the Treasury shall administer 

23 and enforce the law in accordance with subsection (a) with 

24 respect to plan years beginning before, on, or after the 

25 date of enactment of this Act. 


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1 (c) EFFECTIVE DATE.—This section shall take effect 

2 as of the date of enactment of this Act. 

3 SEC. 304. ROLLOVER OF INSURANCE CONTRACTS TO IRAS. 

4 (a) IN GENERAL.—Section 408(a)(3) is amended by 

5 inserting ‘‘other than insurance contracts that were rolled 

6 over to an IRA from a qualified retirement plan described 

7 in clause (iii), (iv), or (vi) of section 402(c)(8)(b) provided 

8 that such contracts provide only incidental death benefits 

9 taking into account both the IRA and the qualified retire10 ment plan’’ after ‘‘contract’’. 

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

12 subsection (a) shall apply to years beginning after Decem13 ber 31, 2012. 

14 SEC. 305. PORTABILITY OF LIFETIME INCOME OPTIONS. 

15 (a) IN GENERAL.—Subsection (a) of section 401 of 

16 the Internal Revenue Code of 1986 is amended by adding 

17 at the end thereof the following new paragraph: 

18 ‘‘(38) PORTABILITY OF LIFETIME INCOME.— 

19 ‘‘(A) IN GENERAL.—A trust forming part 

20 of a defined contribution plan shall not be 

21 treated as failing to constitute a qualified trust 

22 under this section solely by reason of allowing— 

23 ‘‘(i) qualified distributions of a life24 time income investment, or 


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1 ‘‘(ii) distributions of a lifetime income 

2 investment in the form of a qualified plan 

3 distribution annuity contract, 

4 on or after the date that is 90 days prior to the 

5 date on which such lifetime income investment 

6 is no longer authorized to be held as an invest7 ment option under the plan except as may oth8 erwise be provided by regulations. 

9 ‘‘(B) DEFINITIONS.—For purposes of this 

10 subsection— 

11 ‘‘(i) the term ‘qualified distribution’ 

12 means a direct trustee-to-trustee transfer 

13 to an eligible retirement plan (as defined 

14 in section 402(c)(8)(B)), as described in 

15 section 401(a)(31)(A), 

16 ‘‘(ii) the term ‘lifetime income invest17 ment’ means an investment option that is 

18 designed to provide an employee with elec19 tion rights— 

20 ‘‘(I) that are not uniformly avail21 able with respect to other investment 

22 options under the plan, and 

23 ‘‘(II) that are to a lifetime in24 come feature available through a con25 tract or other arrangement offered 


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1 under the plan or under another eligi2 ble retirement plan (as defined in sec3 tion 402(c)(8)(B)) through a direct 

4 trustee-to-trustee transfer to such 

5 other eligible retirement plan under 

6 section 401(a)(31)(A), 

7 ‘‘(iii) the term ‘lifetime income fea8 ture’ means— 

9 ‘‘(I) a feature that guarantees a 

10 minimum level of income annually (or 

11 more frequently) for at least the re12 mainder of the life of the employee or 

13 the joint lives of the employee and the 

14 employee’s designated beneficiary, or 

15 ‘‘(II) an annuity payable on be16 half of the employee under which pay17 ments are made in substantially equal 

18 periodic payments (not less frequently 

19 than annually) over the life of the em20 ployee or the joint lives of the em21 ployee and the employee’s designated 

22 beneficiary, taking into account the 

23 rules of clause (iii) of section 

24 401(a)(9)(I), and 


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1 ‘‘(iv) the term ‘qualified plan distribu2 tion annuity contract’ means an annuity 

3 contract purchased for a participant and 

4 distributed to the participant by a plan de5 scribed in subparagraph (B) of section 

6 402(c)(8) (without regard to clauses (i) 

7 and (ii) thereof).’’. 

8 (b) CASH OR DEFERRED ARRANGEMENT.—Clause (i) 

9 of section 401(k)(2)(B) of such Code is amended by strik10 ing ‘‘or’’ at the end of subclause (IV), by striking ‘‘and’’ 

11 at the end of subclause (V) and inserting ‘‘or’’, and by 

12 adding at the end of clause (i) the following: 

13 ‘‘(VI) with respect to amounts in14 vested in a lifetime income investment 

15 (as defined in section 

16 401(a)(38)(B)(ii)), the date that is 90 

17 days prior to the date that such life18 time income investment may no longer 

19 be held as an investment option under 

20 the plan, provided that any distribu21 tion under this subclause must be in 

22 the form of a qualified distribution (as 

23 defined in section 401(a)(38)(B)(i)) 

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1 ity contract (as defined in section 

2 401(a)(38)(B)(iv)).’’. 

3 (c) SECTION 403(b) PLANS.— 

4 (1) ANNUITY CONTRACTS.—Paragraph (11) of 

5 section 403 of such Code is amended by striking 

6 ‘‘or’’ at the end of subparagraph (B), by striking the 

7 period at the end of subparagraph (C), and by in8 serting ‘‘, or’’, and by adding at the end of para9 graph (11) the following: 

10 ‘‘(D) with respect to amounts invested in a 

11 lifetime income investment (as defined in sec12 tion 401(a)(38)(B)(ii)), the date that is 90 days 

13 prior to the date that such lifetime income in14 vestment may no longer be held as an invest15 ment option under the plan, provided that any 

16 distribution under this subparagraph must be 

17 in the form of a qualified distribution (as de18 fined in section 401(a)(38)(B)(i)) or a qualified 

19 plan distribution annuity contract (as defined in 

20 section 401(a)(38)(B)(iv)).’’. 

21 (2) CUSTODIAL ACCOUNTS.—Clause (ii) of sec22 tion 403(b)(7)(A) of such Code is amended to read 

23 as follows: 

24 ‘‘(ii) under the custodial account, no 

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1 able to any distributee (unless such 

2 amount is a distribution to which section 

3 72(t)(2)(G) applies) before— 

4 ‘‘(I) the employee dies, 

5 ‘‘(II) the employee attains age 

591 6 ⁄2, 

7 ‘‘(III) the employee has a sever8 ance from employment, 

9 ‘‘(IV) the employee becomes dis10 abled (within the meaning of section 

11 72(m)(7)), 

12 ‘‘(V) in the case of contributions 

13 made pursuant to a salary reduction 

14 agreement (within the meaning of sec15 tion 3121(a)(5)(D)), the employee en16 counters financial hardship, or 

17 ‘‘(VI) with respect to amounts in18 vested in a lifetime income investment 

19 (as defined in section 

20 401(a)(38)(B)(ii)), the date that is 90 

21 days prior to the date that such life22 time income investment may no longer 

23 be held as an investment option under 

24 the plan, provided that any distribu25 tion under this subparagraph must be 


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1 in the form of a qualified distribution 

2 (as defined in section 

3 401(a)(38)(B)(i)) or a qualified plan 

4 distribution annuity contract (as de5 fined in section 401(a)(38)(B)(iv)).’’. 

6 (d) ELIGIBLE DEFERRED COMPENSATION PLANS.— 

7 Subparagraph (A) of section 457(d)(1) of such Code is 

8 amended by striking ‘‘or’’ at the end of clause (ii), by in9 serting ‘‘or’’ at the end of clause (iii), and by adding at 

10 the end of subparagraph (A) the following: 

11 ‘‘(iv) with respect to amounts invested 

12 in a lifetime income investment (as defined 

13 in section 401(a)(38)(B)(ii)), the date that 

14 is 90 days prior to the date that such life15 time income investment may no longer be 

16 held as an investment option under the 

17 plan, provided that any distribution under 

18 this subparagraph must be in the form of 

19 a qualified distribution (as defined in sec20 tion 401(a)(38)(B)(i)) or a qualified plan 

21 distribution annuity contract (as defined in 

22 section 401(a)(38)(B)(iv)).’’. 

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

24 this section shall apply to plan years beginning after De25 cember 31, 2012. 


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1 TITLE IV—SIMPLIFICATION AND 

2 CLARIFICATION OF QUALI3 FIED RETIREMENT PLAN 

4 RULES 

5 SEC. 401. EXCEPTION FROM REQUIRED DISTRIBUTIONS 

6 WHERE AGGREGATE RETIREMENT SAVINGS 

7 DO NOT EXCEED $100,000. 

8 (a) IN GENERAL.—Section 401(a)(9) (relating to re9 quired distributions) is amended by adding at the end the 

10 following new subparagraph: 

11 ‘‘(J) EXCEPTION FROM REQUIRED MIN12 IMUM DISTRIBUTIONS DURING LIFE OF EM13 PLOYEE OR BENEFICIARY WHERE ASSETS DO

14 NOT EXCEED $100,000.— 

15 ‘‘(i) IN GENERAL.—If, as of a meas16 urement date, the aggregate balance to the 

17 credit of an employee under all applicable 

18 eligible retirement plans does not exceed 

19 $100,000, then the requirements of sub20 paragraph (A) shall not apply to the em21 ployee during any succeeding calendar 

22 year. In addition, if, as of a measurement 

23 date, the aggregate balance to the credit of 

24 an employee under all applicable eligible 

25 retirement plans does not exceed $100,000, 


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1 then the requirements of subparagraph (B) 

2 shall not apply during any succeeding cal3 endar year to the employee’s designated 

4 beneficiary with respect to the designated 

5 beneficiary’s interest in the balance to the 

6 credit of the deceased employee. 

7 ‘‘(ii) APPLICABLE ELIGIBLE RETIRE8 MENT PLAN.—For purposes of this sub9 paragraph, the term ‘applicable eligible re10 tirement plan’ means an eligible retirement 

11 plan (as defined in section 402(c)(8)(B)) 

12 and any other plan, contract, or arrange13 ment to which the requirements of section 

14 401(a)(9) apply. 

15 ‘‘(iii) SPECIAL RULE FOR BENEFITS

16 PAID AS A LIFE ANNUITY FROM DEFINED

17 BENEFIT PLAN.—In determining the ag18 gregate balance under clause (i), there 

19 shall not be taken into account the value of 

20 any benefits under a defined benefit plan 

21 that, on the measurement date, are being 

22 paid as a life annuity. 

23 ‘‘(iv) MEASUREMENT DATE.— 

24 ‘‘(I) INITIAL MEASUREMENT

25 DATES.—The initial measurement 


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1 date for an individual is the last day 

2 of the calendar year preceding the 

3 earlier of— 

4 ‘‘(aa) the calendar year in 

5 which the employee attains age 

701 6 ⁄2, or 

7 ‘‘(bb) the calendar year in 

8 which the employee dies. 

9 ‘‘(II) SUBSEQUENT MEASURE10 MENT DATES.—If, in a calendar year, 

11 an individual who is exempted from 

12 the requirements of this paragraph 

13 pursuant to clause (i) receives con14 tributions, rollovers, or transfers of 

15 amounts, or accrues additional bene16 fits under a defined benefit plan, that 

17 were not previously taken into account 

18 in applying this subparagraph, then 

19 the last day of that calendar year 

20 shall be a new measurement date and 

21 a new determination shall be made as 

22 to whether clause (i) applies. 

23 ‘‘(v) DETERMINING VALUE OF DE24 FINED BENEFIT PLAN BENEFITS.—The 

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1 termined in accordance with the applicable 

2 interest rate and applicable mortality rate 

3 assumptions under section 417(e), except 

4 that the value shall be equal to the amount 

5 of the single sum payment payable to the 

6 extent available under the plan. 

7 ‘‘(vi) PHASE-IN OF MINIMUM DIS8 TRIBUTION REQUIREMENTS.—For an indi9 vidual whose aggregate balance exceeds the 

10 exemption level in clause (i) by less than 

11 $10,000, required minimum distribution 

12 requirements will phase in based on the 

13 ratio of— 

14 ‘‘(I) the amount by which the ag15 gregate balance exceeds the exemption 

16 level, to 

17 ‘‘(II) $10,000. 

18 ‘‘(vii) COST OF LIVING ADJUST19 MENTS.—The Secretary shall adjust annu20 ally the $100,000 amount specified in 

21 clause (i) for increases in the cost-of-living 

22 at the same time and in the same manner 

23 as adjustments under section 415(d); ex24 cept that the base period shall be the cal25 endar quarter beginning July 1, 2012, and 


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1 any increase which is not a multiple of 

2 $5,000 shall be rounded to the next lowest 

3 multiple of $5,000.’’. 

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

5 this section shall apply to initial measurement dates occur6 ring on or after December 31, 2012. 

7 SEC. 402. ALTERNATIVE METHODS FOR ELECTRONIC DIS8 CLOSURE. 

9 (a) AMENDMENT TO EMPLOYEE RETIREMENT IN10 COME SECURITY ACT OF 1974.—Part 1 of subtitle B of 

11 title I of the Employee Retirement Income Security Act 

12 of 1974 is amended by adding at the end thereof the fol13 lowing new section: 

14 ‘‘SEC. 112. ELECTRONIC COMMUNICATION OF PENSION 

15 PLAN INFORMATION. 

16 ‘‘(a) IN GENERAL.—In the case of any documents or 

17 materials that are required under this title to be furnished 

18 to a plan participant, beneficiary, or other individual with 

19 respect to a pension plan, such documents or materials 

20 shall be furnished in accordance with subsection (b) or (c). 

21 This section shall apply to documents or materials that 

22 are required to be furnished by operation of law or on indi23 vidual request and to documents or materials described 

24 in paragraphs (2), (3), (4), and (5) of subsection (b). For 

25 purposes of this section— 


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1 ‘‘(1) the term ‘documents or materials’ shall in2 clude, without limitation, reports, statements, no3 tices, notifications, and other information, and 

4 ‘‘(2) the term ‘recipient’ shall mean all plan 

5 participants, beneficiaries, and any other persons en6 titled to documents under this title or regulations 

7 issued thereunder (including, but not limited to, ‘al8 ternate payees’ within the meaning of section 

9 206(d)(3) and ‘qualified beneficiaries’ within the 

10 meaning of section 607(3)). 

11 ‘‘(b) WEBSITES.—Any documents or materials de12 scribed in subsection (a) may be furnished to a recipient 

13 by posting it on one or more websites if— 

14 ‘‘(1) ACCESS.—Access to such documents or 

15 materials is available to such recipient on such 

16 website or websites on either a timely or continuous 

17 basis, as appropriate. 

18 ‘‘(2) NOTIFICATION OF AVAILABILITY.—Such 

19 recipient has been furnished notification of the avail20 ability of such documents or materials on such 

21 website or websites and how such documents or ma22 terials can be accessed. 

23 ‘‘(3) FREE PAPER COPY.—Such recipient has 

24 been apprised of his ability to request and obtain, 


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1 free of charge, a paper copy of such documents or 

2 materials. 

3 ‘‘(4) TIMING AND FORM OF NOTIFICATIONS.— 

4 The notifications described in paragraphs (2) and 

5 (3) are— 

6 ‘‘(A) written in a manner calculated to be 

7 understood by the average plan participant, 

8 ‘‘(B) except in the case of notifications de9 scribed in paragraph (5), furnished in advance 

10 of the date that the document or materials are 

11 required to be provided, and annually there12 after, and 

13 ‘‘(C) furnished in a manner permitted 

14 under subsection (c). 

15 ‘‘(5) ADDITIONAL NOTIFICATIONS.— 

16 ‘‘(A) In the case of documents or materials 

17 described in subparagraph (B), the notifications 

18 described in paragraphs (2) and (3) must be 

19 provided within a reasonable period prior to the 

20 applicable date described in subparagraph 

21 (B)(ii). 

22 ‘‘(B) Documents or materials are described 

23 in this subparagraph if they are described in 

24 subsection (a) and— 


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1 ‘‘(i) such documents or materials re2 late to an event or other occurrence that 

3 was not scheduled at the time of any prior 

4 notification, 

5 ‘‘(ii) the documents or materials relate 

6 to a date by which such recipient should be 

7 aware of such event or occurrence, and 

8 ‘‘(iii) the recipient would not have had 

9 any reason to know that such date exists 

10 and applies to him without the notification. 

11 Documents or materials to which this require12 ment applies include, without limitation, notifi13 cations regarding a blackout period (as defined 

14 in section 101(i)(7)) and notifications regarding 

15 a change in the address of the website. 

16 ‘‘(6) DEFINITION OF WEBSITE.—For purposes 

17 of this section, the term ‘website’ shall include any 

18 electronic application, site, or other accessible means 

19 of storing and displaying data or information. 

20 ‘‘(c) PAPER OR ELECTRONIC COMMUNICATION.— 

21 ‘‘(1) USE OF PAPER OR ELECTRONIC COMMU22 NICATION.—Any documents or materials described 

23 in subsection (a) may be furnished to a recipient in 

24 the following manner described in subparagraph (A), 

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1 mined by the entity furnishing the documents or ma2 terials: 

3 ‘‘(A) Such documents or materials may be 

4 furnished through the use of paper. 

5 ‘‘(B) Such documents or materials may be 

6 furnished electronically to a recipient who— 

7 ‘‘(i) has the ability to effectively ac8 cess documents furnished in electronic 

9 form at any location where the participant 

10 is reasonably expected to perform his or 

11 her duties as an employee, and 

12 ‘‘(ii) with respect to whom access to 

13 the employer’s or plan sponsor’s electronic 

14 information is an integral part of those du15 ties. 

16 ‘‘(C) Such documents or materials may be 

17 furnished electronically to a recipient who has 

18 affirmatively consented, in electronic or nonelec19 tronic form, to receiving documents or materials 

20 through electronic media and has not with21 drawn such consent. 

22 ‘‘(D) Such documents or materials may be 

23 furnished electronically to a recipient who has 

24 the effective ability to access the electronic me25 dium used and who has received notification 


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1 through the use of paper of his ability to re2 quest and obtain, free of charge, a paper copy 

3 of such documents or materials. 

4 ‘‘(E) Such documents or materials may be 

5 furnished in any additional manner permitted 

6 by the Secretary or the Secretary of the Treas7 ury, as applicable. 

8 ‘‘(2) PROTECTIONS FOR RECIPIENTS.—Elec9 tronic communications described in paragraph (1) 

10 (B), (C), or (D) shall only be permitted with respect 

11 to a plan if appropriate and necessary measures 

12 have been taken that are reasonably calculated to 

13 ensure that the system for furnishing documents or 

14 materials— 

15 ‘‘(A) has safeguards to maximize the likeli16 hood of actual receipt of transmitted informa17 tion, 

18 ‘‘(B) protects the confidentiality of a re19 cipient’s personal information, 

20 ‘‘(C) is designed so that the electronically 

21 delivered documents or materials are prepared 

22 and furnished in a manner that is consistent 

23 with the style, format, and content require24 ments applicable to the documents or materials, 


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1 ‘‘(D) if necessary, apprises each recipient 

2 of the significance of the documents or mate3 rials, 

4 ‘‘(E) apprises each recipient of the ability 

5 to request and obtain a paper version of the 

6 electronically furnished documents or materials, 

7 and provides such paper version on request, and 

8 ‘‘(F) to the extent required by identical 

9 regulations prescribed by the Secretary and the 

10 Secretary of the Treasury, facilitates the ability 

11 of a recipient who is an employee to make the 

12 request described in subparagraph (E) with re13 spect to documents or materials that are re14 quired to be furnished to such recipient after 

15 his termination of employment. 

16 ‘‘(3) NOTIFICATIONS REGARDING CONSENT.— 

17 Electronic communications described in paragraph 

18 (1)(C) shall only be permitted with respect to a plan 

19 if recipients are provided with timely notifications 

20 with respect to— 

21 ‘‘(A) the effect of the consent, 

22 ‘‘(B) hardware and software requirements, 

23 and 

24 ‘‘(C) changes in the hardware and software 

25 requirements.’’. 


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1 (b) AMENDMENT TO INTERNAL REVENUE CODE OF

2 1986.—Section 414 of the Internal Revenue Code of 1986 

3 is amended by adding at the end thereof the following new 

4 subsection: 

5 ‘‘(y) ELECTRONIC COMMUNICATION OF RETIREMENT

6 PLAN INFORMATION.— 

7 ‘‘(1) IN GENERAL.—In the case of any docu8 ments or materials that are required under this title 

9 to be furnished to a plan participant, beneficiary, or 

10 other individual with respect to a plan subject to 

11 this subchapter or to section 457, such documents or 

12 materials shall be furnished in accordance with para13 graph (2) or (3). This subsection shall apply to doc14 uments or materials that are required to be fur15 nished by operation of law or on individual request 

16 and to documents or materials described in subpara17 graphs (B), (C), (D), and (E) of paragraph (2). For 

18 purposes of this subsection— 

19 ‘‘(A) the term ‘documents or materials’ 

20 shall include, without limitation, reports, state21 ments, notices, notifications, and other informa22 tion, and 

23 ‘‘(B) the term ‘recipient’ shall mean all 

24 plan participants, beneficiaries, and any other 

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1 chapter or section 457 or regulations issued 

2 thereunder (including, but not limited to, ‘alter3 nate payees’ within the meaning of subsection 

4 (p)(8) and ‘qualified beneficiaries’ within the 

5 meaning of section 4980B(g)(1)). 

6 ‘‘(2) WEBSITES.—Any documents or materials 

7 described in subsection (a) may be furnished to a re8 cipient by posting it on one or more websites if— 

9 ‘‘(A) ACCESS.—Access to such documents 

10 or materials is available to such recipient on 

11 such website or websites on either a timely or 

12 continuous basis, as appropriate. 

13 ‘‘(B) NOTIFICATION OF AVAILABILITY.— 

14 Such recipient has been furnished notification 

15 of the availability of such documents or mate16 rials on such website or websites and how such 

17 documents or materials can be accessed. 

18 ‘‘(C) FREE PAPER COPY.—Such recipient 

19 has been apprised of his ability to request and 

20 obtain, free of charge, a paper copy of such 

21 documents or materials. 

22 ‘‘(D) TIMING AND FORM OF NOTIFICA23 TIONS.—The notifications described in subpara24 graphs (B) and (C) are— 


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1 ‘‘(i) written in a manner calculated to 

2 be understood by the average plan partici3 pant, 

4 ‘‘(ii) except in the case of notifications 

5 described in subparagraph (E), furnished 

6 in advance of the date that the document 

7 or materials are required to be provided, 

8 and annually thereafter, and 

9 ‘‘(iii) furnished in a manner permitted 

10 under paragraph (3). 

11 ‘‘(E) ADDITIONAL NOTIFICATIONS.— 

12 ‘‘(i) In the case of documents or ma13 terials described in clause (ii), the notifica14 tions described in subparagraphs (B) and 

15 (C) must be provided within a reasonable 

16 period prior to the applicable date de17 scribed in clause (ii)(II). 

18 ‘‘(ii) Documents or materials are de19 scribed in this subparagraph if they are de20 scribed in subsection (a) and— 

21 ‘‘(I) such documents or materials 

22 relate to an event or other occurrence 

23 that was not scheduled at the time of 

24 any prior notification, 


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1 ‘‘(II) the documents or materials 

2 relate to a date by which such recipi3 ent should be aware of such event or 

4 occurrence, and 

5 ‘‘(III) the recipient would not 

6 have had any reason to know that 

7 such date exists and applies to him 

8 without the notification. 

9 Documents or materials to which this re10 quirement applies include, without limita11 tion, notifications regarding a change in 

12 the address of the website. 

13 ‘‘(F) DEFINITION OF WEBSITE.—For pur14 poses of this subsection, the term ‘website’ shall 

15 include any electronic application, site, or other 

16 accessible means of storing and displaying data 

17 or information. 

18 ‘‘(3) PAPER OR ELECTRONIC COMMUNICA19 TION.— 

20 ‘‘(A) USE OF PAPER OR ELECTRONIC COM21 MUNICATION.—Any documents or materials de22 scribed in paragraph (1) may be furnished to a 

23 recipient in the following manner described in 

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1 graph, as determined by the entity furnishing 

2 the documents or materials: 

3 ‘‘(i) Such documents or materials may 

4 be furnished through the use of paper. 

5 ‘‘(ii) Such documents or materials 

6 may be furnished electronically to a recipi7 ent who— 

8 ‘‘(I) has the ability to effectively 

9 access documents furnished in elec10 tronic form at any location where the 

11 participant is reasonably expected to 

12 perform his or her duties as an em13 ployee, and 

14 ‘‘(II) with respect to whom ac15 cess to the employer’s or plan spon16 sor’s electronic information is an inte17 gral part of those duties. 

18 ‘‘(iii) Such documents or materials 

19 may be furnished electronically to a recipi20 ent who has affirmatively consented, in 

21 electronic or nonelectronic form, to receiv22 ing documents or materials through elec23 tronic media and has not withdrawn such 

24 consent. 


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1 ‘‘(iv) Such documents or materials 

2 may be furnished electronically to a recipi3 ent who has the effective ability to access 

4 the electronic medium used and who has 

5 received notification through the use of 

6 paper of his ability to request and obtain, 

7 free of charge, a paper copy of such docu8 ments or materials. 

9 ‘‘(v) Such documents or materials 

10 may be furnished in any additional manner 

11 permitted by the Secretary or the Sec12 retary of the Treasury, as applicable. 

13 ‘‘(B) PROTECTIONS FOR RECIPIENTS.— 

14 Electronic communications described in sub15 paragraph (A) (ii), (iii), or (iv) shall only be 

16 permitted with respect to a plan if appropriate 

17 and necessary measures have been taken that 

18 are reasonably calculated to ensure that the 

19 system for furnishing documents or materials— 

20 ‘‘(i) has safeguards to maximize the 

21 likelihood of actual receipt of transmitted 

22 information, 

23 ‘‘(ii) protects the confidentiality of a 

24 recipient’s personal information, 


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1 ‘‘(iii) is designed so that the electroni2 cally delivered documents or materials are 

3 prepared and furnished in a manner that 

4 is consistent with the style, format, and 

5 content requirements applicable to the doc6 uments or materials, 

7 ‘‘(iv) if necessary, apprises each re8 cipient of the significance of the documents 

9 or materials, 

10 ‘‘(v) apprises each recipient of the 

11 ability to request and obtain a paper 

12 version of the electronically furnished doc13 uments or materials, and provides such 

14 paper version on request, and 

15 ‘‘(vi) to the extent required by iden16 tical regulations prescribed by the Sec17 retary and the Secretary of Labor, facili18 tates the ability of a recipient who is an 

19 employee to make the request described in 

20 clause (v) with respect to documents or 

21 materials that are required to be furnished 

22 to such recipient after his termination of 

23 employment. 

24 ‘‘(C) NOTIFICATIONS REGARDING CON25 SENT.—Electronic communications described in 


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1 subparagraph (A)(iii) shall only be permitted 

2 with respect to a plan if recipients are provided 

3 with timely notifications with respect to— 

4 ‘‘(i) the effect of the consent, 

5 ‘‘(ii) hardware and software require6 ments, and 

7 ‘‘(iii) changes in the hardware and 

8 software requirements.’’. 

9 (c) ASSURING COORDINATION.—The Secretary of the 

10 Treasury and the Secretary of Labor shall ensure, through 

11 the execution of an interagency memorandum of under12 standing among such Secretaries, that— 

13 (1) regulations, rulings, and interpretations 

14 issued by such Secretaries relating to the same mat15 ter over which such Secretaries have responsibility 

16 under section 112 of Employee Retirement Income 

17 Security Act of 1974 and 414(y) of the Internal 

18 Revenue Code of 1986 are administered so as to 

19 have the same effect at all times; and 

20 (2) coordination of policies relating to enforcing 

21 the same requirements through such Secretaries in 

22 order to have a coordinated enforcement strategy 

23 that avoids duplication of enforcement efforts and 

24 assigns priorities in enforcement. 


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

2 this section shall apply as of the date of enactment of this 

3 Act. 

4 SEC. 403. EXPANSION OF EMPLOYEE PLANS COMPLIANCE 

5 RESOLUTION SYSTEM. 

6 (a) IN GENERAL.—Not later than one year after the 

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

8 Treasury shall modify the Employee Plans Compliance 

9 Resolution System (as described in Revenue Procedure 

10 2008–50) to achieve the results specified in the succeeding 

11 subsections of this section and to further facilitate correc12 tions and compliance in such other means as the Secretary 

13 deems appropriate. 

14 (b) LOAN ERROR.— 

15 (1) In the case of plan loan errors for which 

16 corrections are specified under the voluntary compli17 ance program, self-correction shall be made available 

18 by methods applicable to such loans through the vol19 untary compliance program. 

20 (2) The Secretary of Labor shall treat any loan 

21 error corrected pursuant to paragraph (1) as meet22 ing the requirements of the Voluntary Fiduciary 

23 Correction Program of the Department of Labor. 

24 (c) 403(b) AND 457(b) PLAN CORRECTION.—The 

25 Secretary of the Treasury shall update the Employee 


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1 Plans Compliance Resolution System to provide the same 

2 type of comprehensive correction program that is available 

3 under such system to retirement plans qualified under sec4 tion 401(a) of the Internal Revenue Code of 1986 to— 

5 (1) plans maintained pursuant to section 

6 403(b) of such Code, and 

7 (2) plans maintained pursuant to section 

8 457(b) of such Code by an employer described in 

9 section 457(e)(1)(A) of such Code. 

10 (d) EPCRS FOR IRAS.—The Secretary of the Treas11 ury shall expand the Employee Plans Compliance Resolu12 tion System to allow custodians of individual retirement 

13 plans to address inadvertent errors for which the owner 

14 of an individual retirement plan was not at fault, including 

15 (but not limited to)— 

16 (1) waivers of the excise tax that would other17 wise apply under section 4974 of the Internal Rev18 enue Code of 1986, 

19 (2) under the self-correction component of the 

20 Employee Plans Compliance Resolution System, 

21 waivers of the 60-day deadline for a rollover where 

22 the deadline is missed for reasons beyond the rea23 sonable control of the account owner, and 

24 (3) rules permitting a nonspouse beneficiary to 

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1 ment plan described in section 408(d)(3)(C) of the 

2 Internal Revenue Code of 1986 in a case where, due 

3 to an inadvertent error by a service provider, the 

4 beneficiary had reason to believe that the distribu5 tion could be rolled over without inclusion in income 

6 of any part of the distributed amount. 

7 (e) REQUIRED MINIMUM DISTRIBUTION CORREC8 TIONS.—The Secretary of the Treasury shall expand the 

9 Employee Plans Compliance Resolution System to allow 

10 plans to which such system applies and custodians of indi11 vidual retirement plans to self-correct, without an excise 

12 tax, any inadvertent errors pursuant to which a distribu13 tion is made no more than 180 days after it was required 

14 to be made. 

15 (f) AUTOMATIC FEATURE ERROR CORRECTION.—In 

16 order to promote the adoption of automatic enrollment 

17 and automatic escalation, the Secretary of the Treasury 

18 shall modify the Employee Plans Compliance Resolution 

19 System to establish specific correction methods for errors 

20 in implementing automatic enrollment and automatic es21 calation features. 

22 SEC. 404. USE OF FORFEITURES TO FUND SAFE HARBOR 

23 CONTRIBUTIONS. 

24 (a) IN GENERAL.—Section 401(k) is amended by 

25 adding at the end the following new paragraph: 


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1 ‘‘(14) A matching contribution or nonelective 

2 contribution described in paragraph (3)(D)(ii), sub3 paragraph (B) or (C) of paragraph (12), or para4 graph (13)(D) shall not fail to satisfy the definition 

5 under such paragraph merely because the contribu6 tion is funded in whole or in part by forfeitures.’’. 

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

8 subsection (a) shall apply to forfeitures allocated in ac9 cordance with section 401(k)(14) of the Internal Revenue 

10 Code of 1986 (as amended by subsection (a)) before, on 

11 or after the date of enactment of this Act. 

12 SEC. 405. SUBSTANTIAL CESSATION OF OPERATIONS. 

13 (a) IN GENERAL.—Subsection (e) of section 4062 of 

14 the Employee Retirement Income Security Act of 1974 is 

15 amended by striking ‘‘If an employer’’ and inserting ‘‘(1) 

16 IN GENERAL.—If an employer’’, and by adding at the end 

17 thereof the following new paragraph: 

18 ‘‘(2) SUBSTANTIAL CESSATION OF OPER19 ATIONS.—An employer shall not be treated as hav20 ing a cessation described in paragraph (1) unless— 

21 ‘‘(A) all operations at a facility in a loca22 tion are ceased and— 

23 ‘‘(i) such cessation is reasonably ex24 pected to be permanent, 


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1 ‘‘(ii) no portion of such operations is 

2 moved to another facility at a different lo3 cation, 

4 ‘‘(iii) no portion of such operations is 

5 assumed or otherwise transferred to an6 other employer, and 

7 ‘‘(iv) no other operations are reason8 ably expected to be maintained at such fa9 cility, and 

10 ‘‘(B) as a result of the cessation described 

11 in subparagraph (A), more than 20 percent of 

12 the employees of the employer have a termi13 nation of employment that is reasonably ex14 pected to be permanent. For purposes of this 

15 subparagraph, employees of the employer shall 

16 include all employees treated as employed by a 

17 single employer under sections 210(c) and 

18 (d).’’. 

19 (b) DIRECTION TO THE CORPORATION.—The Pen20 sion Benefit Guaranty Corporation shall not take any en21 forcement, administrative, or other actions pursuant to 

22 section 4062(e) of such Act that are inconsistent with sub23 paragraph (A) of section 4062(e)(2) of such Act, as 

24 amended, without regard to whether such actions relate 


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1 to a cessation or other event that occurs before or after 

2 the date of enactment of this Act. 

3 (c) EFFECTIVE DATE.—Subsection (b) and the 

4 amendment made by subsection (a) shall apply as of the 

5 date of enactment of this Act. 

6 SEC. 406. CHURCH PLAN CLARIFICATION. 

7 (a) APPLICATION OF CONTROLLED GROUP RULES TO

8 CHURCH PLANS.— 

9 (1) IN GENERAL.—Section 414(c) is amended— 

10 (A) by striking ‘‘For purposes’’ and insert11 ing the following: 

12 ‘‘(1) IN GENERAL.—For purposes’’, and 

13 (B) by adding at the end the following new 

14 paragraph: 

15 ‘‘(2) CHURCH PLANS.— 

16 ‘‘(A) GENERAL RULE.—Except as provided 

17 in subparagraphs (B) and (C) below, for pur18 poses of this subsection and subsection (m), an 

19 organization that is otherwise eligible to partici20 pate in a church plan as defined in subsection 

21 (e) shall not be aggregated with another such 

22 organization and treated as a single employer 

23 with such other organization unless— 

24 ‘‘(i) one such organization provides di25 rectly or indirectly at least 80 percent of 


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1 the operating funds for the other organiza2 tion during the preceding tax year of the 

3 recipient organization, and 

4 ‘‘(ii) there is a degree of common 

5 management or supervision between the or6 ganizations. 

7 For purposes of this subparagraph, a degree of 

8 common management or supervision exists only 

9 if the organization providing the operating 

10 funds is directly involved in the day-to-day op11 erations of the other organization. 

12 ‘‘(B) NONQUALIFIED CHURCH-CON13 TROLLED ORGANIZATIONS.—Notwithstanding 

14 the provisions of subparagraph (A), for pur15 poses of this subsection and subsection (m), an 

16 organization that is a nonqualified church-con17 trolled organization shall be aggregated with 

18 one or more other nonqualified church-con19 trolled organizations, or with an organization 

20 that is not exempt from tax under section 501, 

21 and treated as a single employer with such 

22 other organizations, if at least 80 percent of the 

23 directors or trustees of such organizations are 

24 either representatives of, or directly or indi25 rectly controlled by, the first organization. For 


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1 purposes of this subparagraph, a ‘nonqualified 

2 church controlled organization’ shall mean a 

3 church-controlled organization described in sec4 tion 501(c)(3) that is not a qualified church5 controlled organization described in section 

6 3121(w)(3)(B). 

7 ‘‘(C) PERMISSIVE AGGREGATION AMONG

8 CHURCH-RELATED ORGANIZATIONS.—Organiza9 tions described in subparagraph (A) may elect 

10 to be treated as under common control for pur11 poses of this subsection. Such election shall be 

12 made by the church or convention or association 

13 of churches with which such organizations are 

14 associated within the meaning of section 

15 414(e)(3)(D), or by an organization determined 

16 by such church or convention or association of 

17 churches to be the appropriate organization for 

18 making such election. 

19 ‘‘(D) PERMISSIVE DISAGGREGATION OF

20 CHURCH-RELATED ORGANIZATIONS.—For pur21 poses of subparagraph (A) above, in the case of 

22 a church plan (as defined in section 414(e)), 

23 any employer may permissively disaggregate 

24 those entities that are not churches (as defined 

25 in section 403(b)(12)(B)) separately from those 


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1 entities that are churches, even if such entities 

2 maintain separate church plans. 

3 ‘‘(E) ANTI-ABUSE RULE.—For purposes of 

4 subparagraphs (A) and (B), the anti-abuse rule 

5 in Treasury Regulation section 1.414(c)–5(f) 

6 shall apply.’’. 

7 (2) EFFECTIVE DATE.—The amendments made 

8 by this subsection shall apply to taxable years begin9 ning before, on, or after the date of the enactment 

10 of this Act. 

11 (b) APPLICATION OF CONTRIBUTION AND FUNDING

12 LIMITATIONS TO 403(b) GRANDFATHERED DEFINED

13 BENEFIT PLANS.— 

14 (1) IN GENERAL.—Section 251(e)(5) of the Tax 

15 Equity and Fiscal Responsibility Act of 1982 (Public 

16 Law 97–248), is amended— 

17 (A) by striking ‘‘403(b)(2)’’ and inserting 

18 ‘‘403(b)’’, and 

19 (B) by inserting before the period at the 

20 end the following: ‘‘, and shall be subject to the 

21 applicable limitations of section 415(b) of such 

22 Code as if it were a defined benefit plan under 

23 section 401(a) of such Code and not the limita24 tions of section 415(c) of such Code (relating to 

25 limitation for defined contribution plans).’’. 


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1 (2) EFFECTIVE DATE.—The amendments made 

2 by this subsection shall apply as if included in the 

3 enactment of the Tax Equity and Fiscal Responsi4 bility Act of 1982. 

5 (c) AUTOMATIC ENROLLMENT BY CHURCH PLANS.— 

6 (1) IN GENERAL.—This subsection shall super7 sede any law of a State which would directly or indi8 rectly prohibit or restrict the inclusion in any church 

9 plan (as defined in this subsection) of an automatic 

10 contribution arrangement. 

11 (2) DEFINITION OF AUTOMATIC CONTRIBUTION

12 ARRANGEMENT.—For purposes of this subsection, 

13 the term ‘‘automatic contribution arrangement’’ 

14 means an arrangement— 

15 (A) under which a participant may elect to 

16 have the plan sponsor make payments as con17 tributions under the plan on behalf of the par18 ticipant, or to the participant directly in cash, 

19 and 

20 (B) under which a participant is treated as 

21 having elected to have the plan sponsor make 

22 such contributions in an amount equal to a uni23 form percentage of compensation provided 

24 under the plan until the participant specifically 

25 elects not to have such contributions made (or 


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1 specifically elects to have such contributions 

2 made at a different percentage). 

3 (3) NOTICE REQUIREMENTS.— 

4 (A) The plan administrator of an auto5 matic contribution arrangement shall, within a 

6 reasonable period before such plan year, provide 

7 to each participant to whom the arrangement 

8 applies for such plan year notice of the partici9 pant’s rights and obligations under the arrange10 ment which— 

11 (i) is sufficiently accurate and com12 prehensive to apprise the participant of 

13 such rights and obligations, and 

14 (ii) is written in a manner calculated 

15 to be understood by the average partici16 pant to whom the arrangement applies. 

17 (B) A notice shall not be treated as meet18 ing the requirements of subparagraph (A) with 

19 respect to a participant unless— 

20 (i) the notice includes an explanation 

21 of the participant’s right under the ar22 rangement not to have elective contribu23 tions made on the participant’s behalf (or 

24 to elect to have such contributions made at 

25 a different percentage), 


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1 (ii) the participant has a reasonable 

2 period of time, after receipt of the notice 

3 described in clause (i) and before the first 

4 elective contribution is made, to make such 

5 election, and 

6 (iii) the notice explains how contribu7 tions made under the arrangement will be 

8 invested in the absence of any investment 

9 election by the participant. 

10 (4) EFFECTIVE DATE.—This subsection shall 

11 take effect on the date of the enactment of this Act. 

12 (d) ALLOW CERTAIN PLAN TRANSFERS AND MERG13 ERS.— 

14 (1) IN GENERAL.—Section 414 is amended by 

15 adding at the end the following new subsection: 

16 ‘‘(z) CERTAIN PLAN TRANSFERS AND MERGERS.— 

17 ‘‘(1) IN GENERAL.—Under rules prescribed by 

18 the Secretary, except as provided in paragraph (2), 

19 no amount shall be includible in gross income by 

20 reason of— 

21 ‘‘(A) a transfer of all or a portion of the 

22 account balance of a participant or beneficiary, 

23 whether or not vested, from a plan described in 

24 section 401(a) or an annuity contract described 

25 in section 403(b), which is a church plan deVerDate Mar 15 2010 05:36 Feb 17, 2012 Jkt 019200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6201 E:\BILLS\H4050.IH H4050

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1 scribed in section 414(e) to an annuity contract 

2 described in section 403(b), if such plan and 

3 annuity contract are both maintained by the 

4 same church or convention or association of 

5 churches, 

6 ‘‘(B) a transfer of all or a portion of the 

7 account balance of a participant or beneficiary, 

8 whether or not vested, from an annuity contract 

9 described in section 403(b) to a plan described 

10 in section 401(a) or an annuity contract de11 scribed in section 403(b), which is a church 

12 plan described in section 414(e), if such plan 

13 and annuity contract are both maintained by 

14 the same church or convention or association of 

15 churches, or 

16 ‘‘(C) a merger of a plan described in sec17 tion 401(a), or an annuity contract described in 

18 section 403(b), which is a church plan described 

19 in section 414(e) with an annuity contract de20 scribed in section 403(b), if such plan and an21 nuity contract are both maintained by the same 

22 church or convention or association of churches. 

23 ‘‘(2) LIMITATION.—Paragraph (1) shall not 

24 apply to a transfer or merger unless the partici25 pant’s or beneficiary’s benefit immediately after the 


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1 transfer or merger is equal to or greater than the 

2 participant’s or beneficiary’s benefit immediately be3 fore the transfer or merger. 

4 ‘‘(3) QUALIFICATION.—A plan or annuity con5 tract shall not fail to be considered to be described 

6 in sections 401(a) or 403(b) merely because such 

7 plan or account engages in a transfer or merger de8 scribed in this subsection. 

9 ‘‘(4) DEFINITIONS.—For purposes of this sub10 section: 

11 ‘‘(A) CHURCH.—The term ‘church’ in12 cludes an organization described in subpara13 graph (A) or (B)(ii) of subsection (e)(3). 

14 ‘‘(B) ANNUITY CONTRACT.—The term ‘an15 nuity contract’ includes a custodial account de16 scribed in section 403(b)(7) and a retirement 

17 income account described in section 

18 403(b)(9).’’. 

19 (2) EFFECTIVE DATE.—The amendment made 

20 by this subsection shall apply to transfers or merg21 ers occurring after the date of the enactment of this 

22 Act. 

23 (e) INVESTMENTS BY CHURCH PLANS IN COLLEC24 TIVE TRUSTS.— 

25 (1) IN GENERAL.—In the case of— 


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1 (A) a church plan (as defined in section 

2 414(e) of the Internal Revenue Code 1986), in3 cluding a plan described in section 401(a) of 

4 such Code and a retirement income account de5 scribed in section 403(b)(9) of such Code, and 

6 (B) an organization described in section 

7 414(e)(3)(A) of such Code the principal pur8 pose or function of which is the administration 

9 of such a plan or account, 

10 the assets of such plan, account, or organization (in11 cluding any assets otherwise permitted to be com12 mingled for investment purposes with the assets of 

13 such a plan, account, or organization) may be in14 vested in a group trust otherwise described in Inter15 nal Revenue Service Revenue Ruling 81–100 (as 

16 modified by Internal Revenue Service Revenue Rul17 ings 2004–67 and 2011–1), or any subsequent rev18 enue ruling that supersedes or modifies such revenue 

19 ruling, without adversely affecting the tax status of 

20 the group trust, such plan, account, or organization, 

21 or any other plan or trust that invests in the group 

22 trust. 

23 (2) EFFECTIVE DATE.—This subsection shall 

24 apply to investments made after the date of the en25 actment of this Act. 


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1 SEC. 407. PROTECTING OLDER, LONGER SERVICE PARTICI2 PANTS. 

3 (a) IN GENERAL.—Paragraph (4) of section 401(a) 

4 of the Internal Revenue Code of 1986 is amended to read 

5 as follows: 

6 ‘‘(4) NONDISCRIMINATION.— 

7 ‘‘(A) IN GENERAL.—A trust shall not con8 stitute a qualified trust under this section un9 less the contributions or benefits provided under 

10 the plan do not discriminate in favor of highly 

11 compensated employees (within the meaning of 

12 section 414(q)). For purposes of this para13 graph, there shall be excluded from consider14 ation employees described in section 410(b)(3) 

15 (A) and (C). 

16 ‘‘(B) PROTECTION OF OLDER, LONGER

17 SERVICE PARTICIPANTS IN DEFINED BENEFIT

18 PLANS.— 

19 ‘‘(i)(I) A plan described in subclause 

20 (ii) shall not fail to satisfy this paragraph 

21 by reason of— 

22 ‘‘(aa) the composition of the 

23 closed class of participants described 

24 in subclause (II), or 

25 ‘‘(bb) the benefits, rights, or fea26 tures provided to such closed class. 


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1 ‘‘(II) A plan is described in this sub2 clause if— 

3 ‘‘(aa) the plan provides benefits, 

4 rights, or features to a closed class of 

5 participants, 

6 ‘‘(bb) such closed class and such 

7 benefits, rights, and features satisfy 

8 the requirements of subparagraph (A) 

9 as of the date that the class was 

10 closed, and 

11 ‘‘(cc) after the date as of which 

12 the class was closed, any plan amend13 ments that modify the closed class or 

14 of the benefits, rights, and features 

15 provided to such closed class satisfy 

16 subparagraph (A). 

17 ‘‘(ii)(I) A defined contribution plan 

18 described in subclause (II) shall not fail to 

19 satisfy this paragraph by reason of— 

20 ‘‘(aa) the composition of the 

21 closed class of participants described 

22 in subclause (II), or 

23 ‘‘(bb) the allocations, benefits, 

24 rights, or features provided to such 

25 closed class. 


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1 ‘‘(II) A defined contribution plan is 

2 described in this subclause if— 

3 ‘‘(aa) the plan provides make4 whole contributions to a closed class 

5 of participants whose defined benefit 

6 plan accruals have been reduced or 

7 eliminated, 

8 ‘‘(bb) the benefits, rights, and 

9 features provided to such closed class 

10 satisfy the requirements of subpara11 graph (A) as of the date that the class 

12 of participants was closed, taking into 

13 account only such closed class, 

14 ‘‘(cc) such closed class of partici15 pants satisfies section 410(b)(2)(A)(i) 

16 as of the date that the class of partici17 pants was closed, and 

18 ‘‘(dd) after the date as of which 

19 the class was closed, any plan amend20 ments that modify the closed class or 

21 the allocations, benefits, rights, and 

22 features provided to such closed class 

23 satisfy section 401(a)(4). 

24 ‘‘(C) MAKE-WHOLE CONTRIBUTIONS.—For 

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1 whole contributions’ means allocations for each 

2 employee in the class that are reasonably cal3 culated, in a consistent manner, to replace some 

4 or all of the retirement benefits that the em5 ployee would have received under the defined 

6 benefit plan and any other plan or arrangement 

7 if the employee had continued to benefit at the 

8 same level under such defined benefit plan and 

9 such other plan or arrangement. 

10 ‘‘(D) RULES.—The Secretary may pre11 scribe rules designed to prevent abuse of the 

12 plan designs otherwise permitted by reason of 

13 subparagraph (B). Such rules shall be directed 

14 towards abuses under which the defined benefit 

15 plan was established within a specified period 

16 prior to the date that— 

17 ‘‘(i) the class of participants described 

18 in paragraphs (1) and (2)(A) is closed, or 

19 ‘‘(ii) the defined benefit plan accruals 

20 have been reduced or eliminated, in the 

21 case of the make-whole contributions de22 scribed in paragraph (2).’’. 

23 (b) PARTICIPATION REQUIREMENTS.—Paragraph 

24 (26) of section 401(a) of the Internal Revenue Code of 


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1 1986 is amended by adding at the end the following new 

2 subparagraph: 

3 ‘‘(I) PROTECTED PARTICIPANTS.—A plan 

4 described in this subparagraph shall be deemed 

5 to satisfy the requirements of subparagraph 

6 (A). A plan is described in this paragraph if— 

7 ‘‘(i) the plan is amended to— 

8 ‘‘(I) cease all benefit accruals, or 

9 ‘‘(II) provide future benefit ac10 cruals only to a closed class of partici11 pants, and 

12 ‘‘(ii) the plan satisfies subparagraph 

13 (A) (without regard to this subparagraph) 

14 as of the effective date of the amendment. 

15 The Secretary may prescribe such rules as are 

16 necessary or appropriate to fulfill the purposes 

17 of this subparagraph, including prevention of 

18 abuse of this subparagraph in the case of plans 

19 established within a specific period prior to the 

20 effective date of the amendment.’’. 

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

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

23 of this Act, without regard to whether any plan modifica24 tions referenced in such amendments are adopted or effec25 tive before, on, or after such date of enactment. 


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1 SEC. 408. REVIEW AND REPORT TO THE CONGRESS RELAT2 ING TO REPORTING AND DISCLOSURE RE3 QUIREMENTS. 

4 (a) STUDY.—As soon as practicable after the date of 

5 the enactment of this Act, the Secretary of Labor, the Sec6 retary of the Treasury, and the Pension Benefit Guaranty 

7 Corporation shall review the reporting and disclosure re8 quirements of— 

9 (1) title I of the Employee Retirement Income 

10 Security Act of 1974 applicable to pension plans (as 

11 defined in section 3(2) of such Act), and 

12 (2) the Internal Revenue Code of 1986 applica13 ble to qualified retirement plans (as defined in sec14 tion 4974(c) of such Code without regard to para15 graphs (4) and (5) thereof). 

16 (b) REPORT.—Not later than 18 months after the 

17 date of the enactment of this Act, the Secretary of Labor, 

18 the Secretary of the Treasury, and the Pension Benefit 

19 Guaranty Corporation, jointly, shall make such rec20 ommendations as may be appropriate to the appropriate 

21 committees of the Congress to consolidate, simplify, stand22 ardize, and improve the applicable reporting and disclo23 sure requirements so as to simplify reporting for plans ref24 erenced to in subsection (a) and ensure that needed under25 standable information is provided to participants and 

26 beneficiaries of such plans. 


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1 SEC. 409. CONSOLIDATION OF DEFINED CONTRIBUTION 

2 PLAN NOTICES. 

3 (a) IN GENERAL.— 

4 (1) Not later than 18 months after the date of 

5 the enactment of this Act, the Secretary of Labor 

6 and the Secretary of the Treasury shall adopt final 

7 regulations providing that a plan may, but is not re8 quired to, consolidate two or more of the notices re9 quired under sections 404(c)(5)(B) and 514(e)(3) of 

10 the Employee Retirement Income Security Act of 

11 1974 (29 U.S.C. 1144(e)(3)), sections 

12 401(k)(12)(D), 401(k)(13)(E), and 414(w)(4) of the 

13 Internal Revenue Code of 1986, and section 

14 2550.404a–5 of title 29, Code of Federal Regula15 tions (29 C.F.R. 2550.404a–5) into a single notice 

16 or, to the extent provided by such regulations, con17 solidate such notices with the summary plan descrip18 tion or summary of material modifications described 

19 in section 104(b) of the Employee Retirement In20 come Security Act of 1974 (29 U.S.C. 1024(b)), so 

21 long as the combined notice, summary plan descrip22 tion or summary of material modifications includes 

23 the required content, clearly identifies the issues ad24 dressed therein, and is provided at the time and with 

25 the frequency required for each such notice. 


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1 (2) The Secretary of Labor and the Secretary 

2 of the Treasury may include in such regulations 

3 rules to ensure that, to the extent such notices are 

4 consolidated with the summary plan description or 

5 summary of material modifications, the presentation, 

6 placement, or prominence of the information in such 

7 notices shall not have the effect of failing to inform 

8 participants and beneficiaries regarding the informa9 tion in such notices. 

10 (b) PROVISION OF ANNUAL NOTICES WITHOUT RE11 GARD TO PLAN YEAR.— 

12 (1) Clause (i) of section 404(c)(5)(B) of the 

13 Employee Retirement Income Security Act of 1974 

14 (29 U.S.C. 1104(c)(5)(B)) is amended— 

15 (A) in subclause (I) by striking ‘‘within a 

16 reasonable period of time before each plan 

17 year,’’ and inserting ‘‘within a reasonable pe18 riod before the arrangement described in sub19 paragraph (A) applies to such participant or 

20 beneficiary, and thereafter at least once within 

21 any 12-month period (without regard to the 

22 plan year) during which such arrangement ap23 plies,’’, and 

24 (B) in subclause (II) by striking ‘‘and be25 fore the beginning of the plan year’’. 


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1 (2) Subparagraph (A) of section 514(e)(3) of 

2 the Employee Retirement Income Security Act of 

3 1974 (29 U.S.C. 1144(e)(3)(A)) is amended by 

4 striking ‘‘, within a reasonable period before such 

5 plan year, provide to each participant to whom the 

6 arrangement applies for such plan year’’ and insert7 ing ‘‘, within a reasonable period before the arrange8 ment applies to a participant or beneficiary, and 

9 thereafter at least once within any 12-month period 

10 (without regard to the plan year) during which such 

11 arrangement applies, provide’’. 

12 (3) Clause (i) of section 401(k)(13)(E) of the 

13 Internal Revenue Code of 1986 is amended by strik14 ing ‘‘, within a reasonable period before each plan 

15 year, each employee eligible to participate in the ar16 rangement for such year receives’’ and inserting 

17 ‘‘each employee eligible to participate in the arrange18 ment receives, within a reasonable period before the 

19 employee becomes eligible, and thereafter within a 

20 reasonable period before each plan year during 

21 which such arrangement applies,’’. 

22 (4) Subparagraph (D) of section 401(k)(12) of 

23 the Internal Revenue Code of 1986 is amended by 

24 striking ‘‘, within a reasonable period before any 

25 year, given written notice’’ and inserting ‘‘given 


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1 written notice, within a reasonable period before the 

2 employee becomes eligible, and thereafter within a 

3 reasonable period before each plan year during 

4 which such arrangement applies,’’. 

5 (5) Subparagraph (A) of section 414(w)(4) of 

6 the Internal Revenue Code of 1986 is amended by 

7 striking ‘‘, within a reasonable period before each 

8 plan year, give to each employee to whom an ar9 rangement described in paragraph (3) applies for 

10 such plan year’’ and inserting ‘‘, within a reasonable 

11 period before an arrangement described in para12 graph (3) applies to an employee, and thereafter at 

13 least once within any 12-month period (without re14 gard to the plan year) during which such arrange15 ment applies, give to each such employee’’. 

Æ 


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