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[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4050 Introduced in House (IH)]

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.

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

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

    (a) Short Title.--This Act may be cited as the ``Retirement Plan 
Simplification and Enhancement Act of 2012''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; 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.

     TITLE I--EXPANDING COVERAGE AND INCREASING RETIREMENT SAVINGS

SEC. 101. MODIFICATION OF AUTOMATIC ENROLLMENT SAFE HARBOR.

    (a) In General.--
            (1) Removal of 10 percent cap.--Clause (iii) of section 
        401(k)(13)(C) is amended by striking ``, does not exceed 10 
        percent, and is at least'' and inserting ``and is''.
            (2) Conforming amendments.--
                    (A) Subclause (I) of section 401(k)(13)(C)(iii) is 
                amended by striking ``3 percent'' and inserting ``at 
                least 3 percent, but not greater than 10 percent,''.
                    (B) Subclause (II) of section 401(k)(13)(C)(iii) is 
                amended by striking ``4 percent'' and inserting ``at 
                least 4 percent''.
                    (C) Subclause (III) of section 401(k)(13)(C)(iii) 
                is amended by striking ``5 percent'' and inserting ``at 
                least 5 percent''.
                    (D) Subclause (IV) of section 401(k)(13)(C)(iii) is 
                amended by striking ``6 percent'' and inserting ``at 
                least 6 percent''.
    (b) Regulations.--Subparagraph (C) of section 401(k)(13) is amended 
by adding at the end thereof the following new clause:
                            ``(v) Regulations.--
                                    ``(I) In general.--The Secretary 
                                may prescribe regulations that increase 
                                the percentages referenced in 
                                subclauses (I)-(IV) of clause (iii), 
                                except that no percentage may be 
                                increased by more than 8 percentage 
                                points and each such percentage may be 
                                increased by the same or different 
                                amounts or not increased. In 
                                determining whether and how to exercise 
                                this authority, the Secretary may 
                                consider all relevant factors, 
                                including--
                                            ``(aa) the extent to which 
                                        such increases would directly 
                                        result in more retirement 
                                        savings by participants in 
                                        arrangements described in this 
                                        paragraph, resulting in higher 
                                        level of retirement income for 
                                        participants,
                                            ``(bb) the extent to which 
                                        such increases would result in 
                                        more retirement savings by 
                                        reason of communicating to 
                                        employers and employees the 
                                        importance of saving more than 
                                        the percentages referenced in 
                                        such subclauses (without regard 
                                        to this clause),
                                            ``(cc) the extent to which 
                                        increases that are too large 
                                        could result in fewer employers 
                                        adopting arrangements described 
                                        in this paragraph for any 
                                        reason, including the possible 
                                        increase in employer cost due 
                                        to increased matching 
                                        contributions,
                                            ``(dd) the extent to which 
                                        increases that are too large 
                                        could result in more employees 
                                        making elections described in 
                                        clause (ii)(I), and
                                            ``(ee) the extent to which 
                                        any such increases would 
                                        increase administrative burdens 
                                        and complexity, and how the 
                                        increases can be structured to 
                                        minimize such burdens and 
                                        complexity.
                                    ``(II) Clarifications.--Any such 
                                regulation shall clarify that--
                                            ``(aa) the percentages 
                                        referenced in subclauses (I) 
                                        through (IV) of clause (iii) 
                                        are minimums,
                                            ``(bb) with respect to an 
                                        arrangement, one or more of 
                                        such percentages may be set at 
                                        higher levels, except as 
                                        provided in clause (iii)(I), 
                                        and
                                            ``(cc) there need not be a 
                                        uniform disparity between such 
                                        higher levels and the levels 
                                        referenced in subclauses (I)-
                                        (IV) of clause (iii).''.
    (c) Effective Dates.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to plan years beginning after the date of the 
        enactment of this Act.
            (2) Subsection (b).--Any regulations prescribed pursuant to 
        the amendment made by subsection (b) shall apply to 
        arrangements first established for plan years beginning at 
        least six months after publication of such regulations, or for 
        such later plan years determined under such regulations.

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.

    (a) Participation Requirement.--
            (1) In general.--Subparagraph (D) of section 401(k)(2) 
        (defining qualified cash or deferred arrangement) is amended to 
        read as follows:
                    ``(D) which does not require, as a condition of 
                participation in the arrangement, that an employee 
                complete a period of service with the employer (or 
                employers) maintaining the plan extending beyond the 
                close of the earlier of--
                            ``(i) the period permitted under section 
                        410(a)(1) (determined without regard to 
                        subparagraph (B)(i) thereof), or
                            ``(ii) subject to the provisions of 
                        paragraph (14), the first period of 3 
                        consecutive 12-month periods during each of 
                        which the employee has at least 500 hours of 
                        service.''.
            (2) Special rules.--Section 401(k) (relating to cash or 
        deferred arrangements), as amended by section 902 of the 
        Pension Protection Act of 2006, is amended by adding at the end 
        the following new paragraph:
            ``(14) Special rules for participation requirement for 
        long-term, part-time workers.--For purposes of paragraph 
        (2)(D)(ii)--
                    ``(A) Age requirement must be met.--Paragraph 
                (2)(D)(ii) shall not apply to an employee unless the 
                employee has met the requirement of section 
                410(a)(1)(A)(i) by the close of the last of the 12-
                month periods described in such paragraph.
                    ``(B) Nondiscrimination and top-heavy rules not to 
                apply.--
                            ``(i) Nondiscrimination rules.--In the case 
                        of employees who are eligible to participate in 
                        the arrangement solely by reason of paragraph 
                        (2)(D)(ii)--
                                    ``(I) notwithstanding subsection 
                                (a)(4), an employer shall not be 
                                required to make nonelective or 
                                matching contributions on behalf of 
                                such employees even if such 
                                contributions are made on behalf of 
                                other employees eligible to participate 
                                in the arrangement, and
                                    ``(II) an employer may elect to 
                                exclude such employees from the 
                                application of subsection (a)(4), 
                                paragraph (3), subsection (m)(2), and 
                                section 410(b).
                            ``(ii) Top-heavy rules.--An employer may 
                        elect to exclude all employees who are eligible 
                        to participate in a plan maintained by the 
                        employer solely by reason of paragraph 
                        (2)(D)(ii) from the application of the vesting 
                        and benefit requirements under subsections (b) 
                        and (c) of section 416.
                            ``(iii) Vesting.--For purposes of 
                        determining whether an employee described in 
                        clause (i) has a nonforfeitable right to 
                        employer contributions (other than 
                        contributions described in paragraph (3)(D)(i)) 
                        under the arrangement, each 12-month period for 
                        which the employee has at least 500 hours of 
                        service shall be treated as a year of service.
                            ``(iv) Employees who become full-time 
                        employees.--This subparagraph shall cease to 
                        apply to any employee as of the first plan year 
                        beginning after the plan year in which the 
                        employee meets the requirements of section 
                        410(a)(1)(A)(ii) without regard to paragraph 
                        (2)(D)(ii).
                    ``(C) Exception for employees under collectively 
                bargained plans, etc.--Paragraph (2)(D)(ii) shall not 
                apply to employees described in section 410(b)(3).
                    ``(D) Special rules.--
                            ``(i) Time of participation.--The rules of 
                        section 410(a)(4) shall apply to an employee 
                        eligible to participate in an arrangement 
                        solely by reason of paragraph (2)(D)(ii).
                            ``(ii) 12-month periods.--12-month periods 
                        shall be determined in the same manner as under 
                        the last sentence of section 410(a)(3)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2012, except that, for 
purposes of section 401(k)(2)(D)(ii) of the Internal Revenue Code of 
1986 (as added by such amendments), 12-month periods beginning before 
January 1, 2013, shall not be taken into account.

SEC. 103. SEPARATE APPLICATION OF TOP HEAVY RULES TO DEFINED 
              CONTRIBUTION PLANS COVERING PART-TIME EMPLOYEES.

    (a) In General.--Paragraph (2) of section 416(c) is amended by 
adding at the end the following:
                    ``(C) Separate application to employees not meeting 
                age and service requirements.--If employees not meeting 
                the age or service requirements of section 410(a)(1) 
                (without regard to subparagraph (B) thereof) are 
                covered under a plan of the employer which meets the 
                requirements of paragraphs (A) and (B) separately with 
                respect to such employees, such employees may be 
                excluded from consideration in determining whether any 
                plan of the employer meets the requirements of 
                subparagraphs (A) and (B).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to plan years beginning after the date of the enactment of this 
Act.

   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.

    (a) In General.--Section 45E(b)(1) is amended by striking ``$500'' 
and inserting ``$1,500''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2012.

SEC. 202. ELIMINATING BARRIERS TO USE OF MULTIPLE EMPLOYER PLANS.

    By December 31, 2012, the Secretaries of the Treasury and Labor 
shall--
            (1) prescribe administrative guidance establishing 
        conditions under which an employer participating in a plan 
        described in section 413(c) of the Internal Revenue Code of 
        1986 shall not have any liability under title I of the Employee 
        Retirement Income Security Act of 1974 with respect to the acts 
        or omissions of one or more other participating employers, 
        which regulations may require that the portion of the plan 
        attributable to such participating employers be spun off to 
        plans maintained by such employers,
            (2) prescribe administrative guidance establishing 
        conditions under which a plan described in section 413(c) of 
        such Code may be treated as satisfying the qualification 
        requirements of sections 401(a) and 413(c) of such Code despite 
        the violation of such requirements by one or more participating 
        employers, including requiring, if appropriate, that the 
        portion of the plan attributable to such participating 
        employers be spun off to plans maintained by such employers, 
        and
            (3) prescribe administrative guidance providing simplified 
        means by which plans described in section 413(c) of such Code 
        may satisfy the requirements of section 103 of the Employee 
        Retirement Income Security Act of 1974.

                   TITLE III--PRESERVATION OF INCOME

SEC. 301. STUDY OF APPLICATION OF SPOUSAL CONSENT RULES TO DEFINED 
              CONTRIBUTION PLANS.

    (a) Study.--The Government Accountability Office shall conduct a 
study of the feasibility and desirability of extending the application 
of the requirements of section 205 of the Employee Retirement Income 
Security Act of 1974 and sections 401(a)(11) and 417 of the Internal 
Revenue Code of 1986 (relating to spousal consent requirements) to 
defined contribution plans to which such requirements do not apply. 
Such study shall include consideration of any modifications of such 
requirements that are necessary to apply such requirements to such 
plans.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the Government Accountability Office shall report the 
results of the study, together with any recommendations for legislative 
changes, to the Committees on Finance and Health, Education, Labor, and 
Pensions of the Senate and the Committees on Ways and Means and 
Education and the Workforce of the House of Representatives.

SEC. 302. ADMINISTRATION OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS.

    (a) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) In general.--Section 402(c) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1102(c)) is amended--
                    (A) in paragraph (2) by striking ``or'' at the end,
                    (B) in paragraph (3) by striking the period at the 
                end and inserting ``; or'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(4) that a named fiduciary, or a fiduciary designated by 
        a named fiduciary pursuant to a plan procedure described in 
        section 405(e), may appoint an annuity administrator or 
        administrators with responsibility for administration of an 
        individual account plan in accordance with the requirements of 
        section 205 and payment of any annuity required thereunder.''.
            (2) Section 405 of such Act (29 U.S.C. 1105) is amended by 
        adding at the end the following new subsection:
    ``(e) Annuity Administrator.--If an annuity administrator or 
administrators have been appointed under section 402(c)(4) and such 
entity acknowledges in writing that they are the annuity administrator, 
then neither the named fiduciary nor any appointing fiduciary shall be 
liable for any act or omission of the annuity administrator except to 
the extent that--
            ``(1) the fiduciary violated section 404(a)(1)--
                    ``(A) with respect to such allocation or 
                designation, or
                    ``(B) in continuing the allocation or designation,
            ``(2) the fiduciary would otherwise be liable in accordance 
        with subsection (a), or
            ``(3) the fiduciary is neither an insurance company nor 
        approved to be an annuity administrator by the Secretary.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply as of the date of enactment of this Act.

SEC. 303. AVAILABILITY OF DISTRIBUTION OPTIONS.

    (a) Lifetime Income Investments.--By the date that is one year 
after the date of enactment of this Act, the Secretary of the Treasury 
shall issue final regulations under which it is clarified that any 
specified age or service condition (or combination of age and service 
conditions) with respect to a lifetime income investment (as defined in 
section 401(a)(38)(B)(ii)) under a defined contribution plan shall be 
disregarded in determining whether such lifetime income investment is 
currently available to an employee for purposes of Treasury Regulation 
section 1.401(a)(4)-4(b) (or any successor provision).
    (b) Enforcement.--As of the date of enactment of this Act, the 
Secretary of the Treasury shall administer and enforce the law in 
accordance with subsection (a) with respect to plan years beginning 
before, on, or after the date of enactment of this Act.
    (c) Effective Date.--This section shall take effect as of the date 
of enactment of this Act.

SEC. 304. ROLLOVER OF INSURANCE CONTRACTS TO IRAS.

    (a) In General.--Section 408(a)(3) is amended by inserting ``other 
than insurance contracts that were rolled over to an IRA from a 
qualified retirement plan described in clause (iii), (iv), or (vi) of 
section 402(c)(8)(b) provided that such contracts provide only 
incidental death benefits taking into account both the IRA and the 
qualified retirement plan'' after ``contract''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 2012.

SEC. 305. PORTABILITY OF LIFETIME INCOME OPTIONS.

    (a) In General.--Subsection (a) of section 401 of the Internal 
Revenue Code of 1986 is amended by adding at the end thereof the 
following new paragraph:
            ``(38) Portability of lifetime income.--
                    ``(A) In general.--A trust forming part of a 
                defined contribution plan shall not be treated as 
                failing to constitute a qualified trust under this 
                section solely by reason of allowing--
                            ``(i) qualified distributions of a lifetime 
                        income investment, or
                            ``(ii) distributions of a lifetime income 
                        investment in the form of a qualified plan 
                        distribution annuity contract,
                on or after the date that is 90 days prior to the date 
                on which such lifetime income investment is no longer 
                authorized to be held as an investment option under the 
                plan except as may otherwise be provided by 
                regulations.
                    ``(B) Definitions.--For purposes of this 
                subsection--
                            ``(i) the term `qualified distribution' 
                        means a direct trustee-to-trustee transfer to 
                        an eligible retirement plan (as defined in 
                        section 402(c)(8)(B)), as described in section 
                        401(a)(31)(A),
                            ``(ii) the term `lifetime income 
                        investment' means an investment option that is 
                        designed to provide an employee with election 
                        rights--
                                    ``(I) that are not uniformly 
                                available with respect to other 
                                investment options under the plan, and
                                    ``(II) that are to a lifetime 
                                income feature available through a 
                                contract or other arrangement offered 
                                under the plan or under another 
                                eligible retirement plan (as defined in 
                                section 402(c)(8)(B)) through a direct 
                                trustee-to-trustee transfer to such 
                                other eligible retirement plan under 
                                section 401(a)(31)(A),
                            ``(iii) the term `lifetime income feature' 
                        means--
                                    ``(I) a feature that guarantees a 
                                minimum level of income annually (or 
                                more frequently) for at least the 
                                remainder of the life of the employee 
                                or the joint lives of the employee and 
                                the employee's designated beneficiary, 
                                or
                                    ``(II) an annuity payable on behalf 
                                of the employee under which payments 
                                are made in substantially equal 
                                periodic payments (not less frequently 
                                than annually) over the life of the 
                                employee or the joint lives of the 
                                employee and the employee's designated 
                                beneficiary, taking into account the 
                                rules of clause (iii) of section 
                                401(a)(9)(I), and
                            ``(iv) the term `qualified plan 
                        distribution annuity contract' means an annuity 
                        contract purchased for a participant and 
                        distributed to the participant by a plan 
                        described in subparagraph (B) of section 
                        402(c)(8) (without regard to clauses (i) and 
                        (ii) thereof).''.
    (b) Cash or Deferred Arrangement.--Clause (i) of section 
401(k)(2)(B) of such Code is amended by striking ``or'' at the end of 
subclause (IV), by striking ``and'' at the end of subclause (V) and 
inserting ``or'', and by adding at the end of clause (i) the following:
                                    ``(VI) with respect to amounts 
                                invested in a lifetime income 
                                investment (as defined in section 
                                401(a)(38)(B)(ii)), the date that is 90 
                                days prior to the date that such 
                                lifetime income investment may no 
                                longer be held as an investment option 
                                under the plan, provided that any 
                                distribution under this subclause must 
                                be in the form of a qualified 
                                distribution (as defined in section 
                                401(a)(38)(B)(i)) or a qualified plan 
                                distribution annuity contract (as 
                                defined in section 
                                401(a)(38)(B)(iv)).''.
    (c) Section 403(b) Plans.--
            (1) Annuity contracts.--Paragraph (11) of section 403 of 
        such Code is amended by striking ``or'' at the end of 
        subparagraph (B), by striking the period at the end of 
        subparagraph (C), and by inserting ``, or'', and by adding at 
        the end of paragraph (11) the following:
                    ``(D) with respect to amounts invested in a 
                lifetime income investment (as defined in section 
                401(a)(38)(B)(ii)), the date that is 90 days prior to 
                the date that such lifetime income investment may no 
                longer be held as an investment option under the plan, 
                provided that any distribution under this subparagraph 
                must be in the form of a qualified distribution (as 
                defined in section 401(a)(38)(B)(i)) or a qualified 
                plan distribution annuity contract (as defined in 
                section 401(a)(38)(B)(iv)).''.
            (2) Custodial accounts.--Clause (ii) of section 
        403(b)(7)(A) of such Code is amended to read as follows:
                            ``(ii) under the custodial account, no such 
                        amounts may be paid or made available to any 
                        distributee (unless such amount is a 
                        distribution to which section 72(t)(2)(G) 
                        applies) before--
                                    ``(I) the employee dies,
                                    ``(II) the employee attains age 
                                59\1/2\,
                                    ``(III) the employee has a 
                                severance from employment,
                                    ``(IV) the employee becomes 
                                disabled (within the meaning of section 
                                72(m)(7)),
                                    ``(V) in the case of contributions 
                                made pursuant to a salary reduction 
                                agreement (within the meaning of 
                                section 3121(a)(5)(D)), the employee 
                                encounters financial hardship, or
                                    ``(VI) with respect to amounts 
                                invested in a lifetime income 
                                investment (as defined in section 
                                401(a)(38)(B)(ii)), the date that is 90 
                                days prior to the date that such 
                                lifetime income investment may no 
                                longer be held as an investment option 
                                under the plan, provided that any 
                                distribution under this subparagraph 
                                must be in the form of a qualified 
                                distribution (as defined in section 
                                401(a)(38)(B)(i)) or a qualified plan 
                                distribution annuity contract (as 
                                defined in section 
                                401(a)(38)(B)(iv)).''.
    (d) Eligible Deferred Compensation Plans.--Subparagraph (A) of 
section 457(d)(1) of such Code is amended by striking ``or'' at the end 
of clause (ii), by inserting ``or'' at the end of clause (iii), and by 
adding at the end of subparagraph (A) the following:
                            ``(iv) with respect to amounts invested in 
                        a lifetime income investment (as defined in 
                        section 401(a)(38)(B)(ii)), the date that is 90 
                        days prior to the date that such lifetime 
                        income investment may no longer be held as an 
                        investment option under the plan, provided that 
                        any distribution under this subparagraph must 
                        be in the form of a qualified distribution (as 
                        defined in section 401(a)(38)(B)(i)) or a 
                        qualified plan distribution annuity contract 
                        (as defined in section 401(a)(38)(B)(iv)).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2012.

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.

    (a) In General.--Section 401(a)(9) (relating to required 
distributions) is amended by adding at the end the following new 
subparagraph:
                    ``(J) Exception from required minimum distributions 
                during life of employee or beneficiary where assets do 
                not exceed $100,000.--
                            ``(i) In general.--If, as of a measurement 
                        date, the aggregate balance to the credit of an 
                        employee under all applicable eligible 
                        retirement plans does not exceed $100,000, then 
                        the requirements of subparagraph (A) shall not 
                        apply to the employee during any succeeding 
                        calendar year. In addition, if, as of a 
                        measurement date, the aggregate balance to the 
                        credit of an employee under all applicable 
                        eligible retirement plans does not exceed 
                        $100,000, then the requirements of subparagraph 
                        (B) shall not apply during any succeeding 
                        calendar year to the employee's designated 
                        beneficiary with respect to the designated 
                        beneficiary's interest in the balance to the 
                        credit of the deceased employee.
                            ``(ii) Applicable eligible retirement 
                        plan.--For purposes of this subparagraph, the 
                        term `applicable eligible retirement plan' 
                        means an eligible retirement plan (as defined 
                        in section 402(c)(8)(B)) and any other plan, 
                        contract, or arrangement to which the 
                        requirements of section 401(a)(9) apply.
                            ``(iii) Special rule for benefits paid as a 
                        life annuity from defined benefit plan.--In 
                        determining the aggregate balance under clause 
                        (i), there shall not be taken into account the 
                        value of any benefits under a defined benefit 
                        plan that, on the measurement date, are being 
                        paid as a life annuity.
                            ``(iv) Measurement date.--
                                    ``(I) Initial measurement dates.--
                                The initial measurement date for an 
                                individual is the last day of the 
                                calendar year preceding the earlier 
                                of--
                                            ``(aa) the calendar year in 
                                        which the employee attains age 
                                        70\1/2\, or
                                            ``(bb) the calendar year in 
                                        which the employee dies.
                                    ``(II) Subsequent measurement 
                                dates.--If, in a calendar year, an 
                                individual who is exempted from the 
                                requirements of this paragraph pursuant 
                                to clause (i) receives contributions, 
                                rollovers, or transfers of amounts, or 
                                accrues additional benefits under a 
                                defined benefit plan, that were not 
                                previously taken into account in 
                                applying this subparagraph, then the 
                                last day of that calendar year shall be 
                                a new measurement date and a new 
                                determination shall be made as to 
                                whether clause (i) applies.
                            ``(v) Determining value of defined benefit 
                        plan benefits.--The value of defined benefit 
                        plan benefits is determined in accordance with 
                        the applicable interest rate and applicable 
                        mortality rate assumptions under section 
                        417(e), except that the value shall be equal to 
                        the amount of the single sum payment payable to 
                        the extent available under the plan.
                            ``(vi) Phase-in of minimum distribution 
                        requirements.--For an individual whose 
                        aggregate balance exceeds the exemption level 
                        in clause (i) by less than $10,000, required 
                        minimum distribution requirements will phase in 
                        based on the ratio of--
                                    ``(I) the amount by which the 
                                aggregate balance exceeds the exemption 
                                level, to
                                    ``(II) $10,000.
                            ``(vii) Cost of living adjustments.--The 
                        Secretary shall adjust annually the $100,000 
                        amount specified in clause (i) for increases in 
                        the cost-of-living at the same time and in the 
                        same manner as adjustments under section 
                        415(d); except that the base period shall be 
                        the calendar quarter beginning July 1, 2012, 
                        and any increase which is not a multiple of 
                        $5,000 shall be rounded to the next lowest 
                        multiple of $5,000.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to initial measurement dates occurring on or after December 31, 2012.

SEC. 402. ALTERNATIVE METHODS FOR ELECTRONIC DISCLOSURE.

    (a) Amendment to Employee Retirement Income Security Act of 1974.--
Part 1 of subtitle B of title I of the Employee Retirement Income 
Security Act of 1974 is amended by adding at the end thereof the 
following new section:

``SEC. 112. ELECTRONIC COMMUNICATION OF PENSION PLAN INFORMATION.

    ``(a) In General.--In the case of any documents or materials that 
are required under this title to be furnished to a plan participant, 
beneficiary, or other individual with respect to a pension plan, such 
documents or materials shall be furnished in accordance with subsection 
(b) or (c). This section shall apply to documents or materials that are 
required to be furnished by operation of law or on individual request 
and to documents or materials described in paragraphs (2), (3), (4), 
and (5) of subsection (b). For purposes of this section--
            ``(1) the term `documents or materials' shall include, 
        without limitation, reports, statements, notices, 
        notifications, and other information, and
            ``(2) the term `recipient' shall mean all plan 
        participants, beneficiaries, and any other persons entitled to 
        documents under this title or regulations issued thereunder 
        (including, but not limited to, `alternate payees' within the 
        meaning of section 206(d)(3) and `qualified beneficiaries' 
        within the meaning of section 607(3)).
    ``(b) Websites.--Any documents or materials described in subsection 
(a) may be furnished to a recipient by posting it on one or more 
websites if--
            ``(1) Access.--Access to such documents or materials is 
        available to such recipient on such website or websites on 
        either a timely or continuous basis, as appropriate.
            ``(2) Notification of availability.--Such recipient has 
        been furnished notification of the availability of such 
        documents or materials on such website or websites and how such 
        documents or materials can be accessed.
            ``(3) Free paper copy.--Such recipient has been apprised of 
        his ability to request and obtain, free of charge, a paper copy 
        of such documents or materials.
            ``(4) Timing and form of notifications.--The notifications 
        described in paragraphs (2) and (3) are--
                    ``(A) written in a manner calculated to be 
                understood by the average plan participant,
                    ``(B) except in the case of notifications described 
                in paragraph (5), furnished in advance of the date that 
                the document or materials are required to be provided, 
                and annually thereafter, and
                    ``(C) furnished in a manner permitted under 
                subsection (c).
            ``(5) Additional notifications.--
                    ``(A) In the case of documents or materials 
                described in subparagraph (B), the notifications 
                described in paragraphs (2) and (3) must be provided 
                within a reasonable period prior to the applicable date 
                described in subparagraph (B)(ii).
                    ``(B) Documents or materials are described in this 
                subparagraph if they are described in subsection (a) 
                and--
                            ``(i) such documents or materials relate to 
                        an event or other occurrence that was not 
                        scheduled at the time of any prior 
                        notification,
                            ``(ii) the documents or materials relate to 
                        a date by which such recipient should be aware 
                        of such event or occurrence, and
                            ``(iii) the recipient would not have had 
                        any reason to know that such date exists and 
                        applies to him without the notification.
                Documents or materials to which this requirement 
                applies include, without limitation, notifications 
                regarding a blackout period (as defined in section 
                101(i)(7)) and notifications regarding a change in the 
                address of the website.
            ``(6) Definition of website.--For purposes of this section, 
        the term `website' shall include any electronic application, 
        site, or other accessible means of storing and displaying data 
        or information.
    ``(c) Paper or Electronic Communication.--
            ``(1) Use of paper or electronic communication.--Any 
        documents or materials described in subsection (a) may be 
        furnished to a recipient in the following manner described in 
        subparagraph (A), (B), (C), (D), or (E) of this paragraph, as 
        determined by the entity furnishing the documents or materials:
                    ``(A) Such documents or materials may be furnished 
                through the use of paper.
                    ``(B) Such documents or materials may be furnished 
                electronically to a recipient who--
                            ``(i) has the ability to effectively access 
                        documents furnished in electronic form at any 
                        location where the participant is reasonably 
                        expected to perform his or her duties as an 
                        employee, and
                            ``(ii) with respect to whom access to the 
                        employer's or plan sponsor's electronic 
                        information is an integral part of those 
                        duties.
                    ``(C) Such documents or materials may be furnished 
                electronically to a recipient who has affirmatively 
                consented, in electronic or nonelectronic form, to 
                receiving documents or materials through electronic 
                media and has not withdrawn such consent.
                    ``(D) Such documents or materials may be furnished 
                electronically to a recipient who has the effective 
                ability to access the electronic medium used and who 
                has received notification through the use of paper of 
                his ability to request and obtain, free of charge, a 
                paper copy of such documents or materials.
                    ``(E) Such documents or materials may be furnished 
                in any additional manner permitted by the Secretary or 
                the Secretary of the Treasury, as applicable.
            ``(2) Protections for recipients.--Electronic 
        communications described in paragraph (1) (B), (C), or (D) 
        shall only be permitted with respect to a plan if appropriate 
        and necessary measures have been taken that are reasonably 
        calculated to ensure that the system for furnishing documents 
        or materials--
                    ``(A) has safeguards to maximize the likelihood of 
                actual receipt of transmitted information,
                    ``(B) protects the confidentiality of a recipient's 
                personal information,
                    ``(C) is designed so that the electronically 
                delivered documents or materials are prepared and 
                furnished in a manner that is consistent with the 
                style, format, and content requirements applicable to 
                the documents or materials,
                    ``(D) if necessary, apprises each recipient of the 
                significance of the documents or materials,
                    ``(E) apprises each recipient of the ability to 
                request and obtain a paper version of the 
                electronically furnished documents or materials, and 
                provides such paper version on request, and
                    ``(F) to the extent required by identical 
                regulations prescribed by the Secretary and the 
                Secretary of the Treasury, facilitates the ability of a 
                recipient who is an employee to make the request 
                described in subparagraph (E) with respect to documents 
                or materials that are required to be furnished to such 
                recipient after his termination of employment.
            ``(3) Notifications regarding consent.--Electronic 
        communications described in paragraph (1)(C) shall only be 
        permitted with respect to a plan if recipients are provided 
        with timely notifications with respect to--
                    ``(A) the effect of the consent,
                    ``(B) hardware and software requirements, and
                    ``(C) changes in the hardware and software 
                requirements.''.
    (b) Amendment to Internal Revenue Code of 1986.--Section 414 of the 
Internal Revenue Code of 1986 is amended by adding at the end thereof 
the following new subsection:
    ``(y) Electronic Communication of Retirement Plan Information.--
            ``(1) In general.--In the case of any documents or 
        materials that are required under this title to be furnished to 
        a plan participant, beneficiary, or other individual with 
        respect to a plan subject to this subchapter or to section 457, 
        such documents or materials shall be furnished in accordance 
        with paragraph (2) or (3). This subsection shall apply to 
        documents or materials that are required to be furnished by 
        operation of law or on individual request and to documents or 
        materials described in subparagraphs (B), (C), (D), and (E) of 
        paragraph (2). For purposes of this subsection--
                    ``(A) the term `documents or materials' shall 
                include, without limitation, reports, statements, 
                notices, notifications, and other information, and
                    ``(B) the term `recipient' shall mean all plan 
                participants, beneficiaries, and any other persons 
                entitled to documents under this subchapter or section 
                457 or regulations issued thereunder (including, but 
                not limited to, `alternate payees' within the meaning 
                of subsection (p)(8) and `qualified beneficiaries' 
                within the meaning of section 4980B(g)(1)).
            ``(2) Websites.--Any documents or materials described in 
        subsection (a) may be furnished to a recipient by posting it on 
        one or more websites if--
                    ``(A) Access.--Access to such documents or 
                materials is available to such recipient on such 
                website or websites on either a timely or continuous 
                basis, as appropriate.
                    ``(B) Notification of availability.--Such recipient 
                has been furnished notification of the availability of 
                such documents or materials on such website or websites 
                and how such documents or materials can be accessed.
                    ``(C) Free paper copy.--Such recipient has been 
                apprised of his ability to request and obtain, free of 
                charge, a paper copy of such documents or materials.
                    ``(D) Timing and form of notifications.--The 
                notifications described in subparagraphs (B) and (C) 
                are--
                            ``(i) written in a manner calculated to be 
                        understood by the average plan participant,
                            ``(ii) except in the case of notifications 
                        described in subparagraph (E), furnished in 
                        advance of the date that the document or 
                        materials are required to be provided, and 
                        annually thereafter, and
                            ``(iii) furnished in a manner permitted 
                        under paragraph (3).
                    ``(E) Additional notifications.--
                            ``(i) In the case of documents or materials 
                        described in clause (ii), the notifications 
                        described in subparagraphs (B) and (C) must be 
                        provided within a reasonable period prior to 
                        the applicable date described in clause 
                        (ii)(II).
                            ``(ii) Documents or materials are described 
                        in this subparagraph if they are described in 
                        subsection (a) and--
                                    ``(I) such documents or materials 
                                relate to an event or other occurrence 
                                that was not scheduled at the time of 
                                any prior notification,
                                    ``(II) the documents or materials 
                                relate to a date by which such 
                                recipient should be aware of such event 
                                or occurrence, and
                                    ``(III) the recipient would not 
                                have had any reason to know that such 
                                date exists and applies to him without 
                                the notification.
                        Documents or materials to which this 
                        requirement applies include, without 
                        limitation, notifications regarding a change in 
                        the address of the website.
                    ``(F) Definition of website.--For purposes of this 
                subsection, the term `website' shall include any 
                electronic application, site, or other accessible means 
                of storing and displaying data or information.
            ``(3) Paper or electronic communication.--
                    ``(A) Use of paper or electronic communication.--
                Any documents or materials described in paragraph (1) 
                may be furnished to a recipient in the following manner 
                described in clause (i), (ii), (iii), (iv), or (v) of 
                this paragraph, as determined by the entity furnishing 
                the documents or materials:
                            ``(i) Such documents or materials may be 
                        furnished through the use of paper.
                            ``(ii) Such documents or materials may be 
                        furnished electronically to a recipient who--
                                    ``(I) has the ability to 
                                effectively access documents furnished 
                                in electronic form at any location 
                                where the participant is reasonably 
                                expected to perform his or her duties 
                                as an employee, and
                                    ``(II) with respect to whom access 
                                to the employer's or plan sponsor's 
                                electronic information is an integral 
                                part of those duties.
                            ``(iii) Such documents or materials may be 
                        furnished electronically to a recipient who has 
                        affirmatively consented, in electronic or 
                        nonelectronic form, to receiving documents or 
                        materials through electronic media and has not 
                        withdrawn such consent.
                            ``(iv) Such documents or materials may be 
                        furnished electronically to a recipient who has 
                        the effective ability to access the electronic 
                        medium used and who has received notification 
                        through the use of paper of his ability to 
                        request and obtain, free of charge, a paper 
                        copy of such documents or materials.
                            ``(v) Such documents or materials may be 
                        furnished in any additional manner permitted by 
                        the Secretary or the Secretary of the Treasury, 
                        as applicable.
                    ``(B) Protections for recipients.--Electronic 
                communications described in subparagraph (A) (ii), 
                (iii), or (iv) shall only be permitted with respect to 
                a plan if appropriate and necessary measures have been 
                taken that are reasonably calculated to ensure that the 
                system for furnishing documents or materials--
                            ``(i) has safeguards to maximize the 
                        likelihood of actual receipt of transmitted 
                        information,
                            ``(ii) protects the confidentiality of a 
                        recipient's personal information,
                            ``(iii) is designed so that the 
                        electronically delivered documents or materials 
                        are prepared and furnished in a manner that is 
                        consistent with the style, format, and content 
                        requirements applicable to the documents or 
                        materials,
                            ``(iv) if necessary, apprises each 
                        recipient of the significance of the documents 
                        or materials,
                            ``(v) apprises each recipient of the 
                        ability to request and obtain a paper version 
                        of the electronically furnished documents or 
                        materials, and provides such paper version on 
                        request, and
                            ``(vi) to the extent required by identical 
                        regulations prescribed by the Secretary and the 
                        Secretary of Labor, facilitates the ability of 
                        a recipient who is an employee to make the 
                        request described in clause (v) with respect to 
                        documents or materials that are required to be 
                        furnished to such recipient after his 
                        termination of employment.
                    ``(C) Notifications regarding consent.--Electronic 
                communications described in subparagraph (A)(iii) shall 
                only be permitted with respect to a plan if recipients 
                are provided with timely notifications with respect 
                to--
                            ``(i) the effect of the consent,
                            ``(ii) hardware and software requirements, 
                        and
                            ``(iii) changes in the hardware and 
                        software requirements.''.
    (c) Assuring Coordination.--The Secretary of the Treasury and the 
Secretary of Labor shall ensure, through the execution of an 
interagency memorandum of understanding among such Secretaries, that--
            (1) regulations, rulings, and interpretations issued by 
        such Secretaries relating to the same matter over which such 
        Secretaries have responsibility under section 112 of Employee 
        Retirement Income Security Act of 1974 and 414(y) of the 
        Internal Revenue Code of 1986 are administered so as to have 
        the same effect at all times; and
            (2) coordination of policies relating to enforcing the same 
        requirements through such Secretaries in order to have a 
        coordinated enforcement strategy that avoids duplication of 
        enforcement efforts and assigns priorities in enforcement.
    (d) Effective Date.--The amendments made by this section shall 
apply as of the date of enactment of this Act.

SEC. 403. EXPANSION OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

    (a) In General.--Not later than one year after the date of the 
enactment of this Act, the Secretary of the Treasury shall modify the 
Employee Plans Compliance Resolution System (as described in Revenue 
Procedure 2008-50) to achieve the results specified in the succeeding 
subsections of this section and to further facilitate corrections and 
compliance in such other means as the Secretary deems appropriate.
    (b) Loan Error.--
            (1) In the case of plan loan errors for which corrections 
        are specified under the voluntary compliance program, self-
        correction shall be made available by methods applicable to 
        such loans through the voluntary compliance program.
            (2) The Secretary of Labor shall treat any loan error 
        corrected pursuant to paragraph (1) as meeting the requirements 
        of the Voluntary Fiduciary Correction Program of the Department 
        of Labor.
    (c) 403(b) and 457(b) Plan Correction.--The Secretary of the 
Treasury shall update the Employee Plans Compliance Resolution System 
to provide the same type of comprehensive correction program that is 
available under such system to retirement plans qualified under section 
401(a) of the Internal Revenue Code of 1986 to--
            (1) plans maintained pursuant to section 403(b) of such 
        Code, and
            (2) plans maintained pursuant to section 457(b) of such 
        Code by an employer described in section 457(e)(1)(A) of such 
        Code.
    (d) EPCRS for IRAs.--The Secretary of the Treasury shall expand the 
Employee Plans Compliance Resolution System to allow custodians of 
individual retirement plans to address inadvertent errors for which the 
owner of an individual retirement plan was not at fault, including (but 
not limited to)--
            (1) waivers of the excise tax that would otherwise apply 
        under section 4974 of the Internal Revenue Code of 1986,
            (2) under the self-correction component of the Employee 
        Plans Compliance Resolution System, waivers of the 60-day 
        deadline for a rollover where the deadline is missed for 
        reasons beyond the reasonable control of the account owner, and
            (3) rules permitting a nonspouse beneficiary to return 
        distributions to an inherited individual retirement plan 
        described in section 408(d)(3)(C) of the Internal Revenue Code 
        of 1986 in a case where, due to an inadvertent error by a 
        service provider, the beneficiary had reason to believe that 
        the distribution could be rolled over without inclusion in 
        income of any part of the distributed amount.
    (e) Required Minimum Distribution Corrections.--The Secretary of 
the Treasury shall expand the Employee Plans Compliance Resolution 
System to allow plans to which such system applies and custodians of 
individual retirement plans to self-correct, without an excise tax, any 
inadvertent errors pursuant to which a distribution is made no more 
than 180 days after it was required to be made.
    (f) Automatic Feature Error Correction.--In order to promote the 
adoption of automatic enrollment and automatic escalation, the 
Secretary of the Treasury shall modify the Employee Plans Compliance 
Resolution System to establish specific correction methods for errors 
in implementing automatic enrollment and automatic escalation features.

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

    (a) In General.--Section 401(k) is amended by adding at the end the 
following new paragraph:
            ``(14) A matching contribution or nonelective contribution 
        described in paragraph (3)(D)(ii), subparagraph (B) or (C) of 
        paragraph (12), or paragraph (13)(D) shall not fail to satisfy 
        the definition under such paragraph merely because the 
        contribution is funded in whole or in part by forfeitures.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to forfeitures allocated in accordance with section 401(k)(14) of 
the Internal Revenue Code of 1986 (as amended by subsection (a)) 
before, on or after the date of enactment of this Act.

SEC. 405. SUBSTANTIAL CESSATION OF OPERATIONS.

    (a) In General.--Subsection (e) of section 4062 of the Employee 
Retirement Income Security Act of 1974 is amended by striking ``If an 
employer'' and inserting ``(1) In general.--If an employer'', and by 
adding at the end thereof the following new paragraph:
            ``(2) Substantial cessation of operations.--An employer 
        shall not be treated as having a cessation described in 
        paragraph (1) unless--
                    ``(A) all operations at a facility in a location 
                are ceased and--
                            ``(i) such cessation is reasonably expected 
                        to be permanent,
                            ``(ii) no portion of such operations is 
                        moved to another facility at a different 
                        location,
                            ``(iii) no portion of such operations is 
                        assumed or otherwise transferred to another 
                        employer, and
                            ``(iv) no other operations are reasonably 
                        expected to be maintained at such facility, and
                    ``(B) as a result of the cessation described in 
                subparagraph (A), more than 20 percent of the employees 
                of the employer have a termination of employment that 
                is reasonably expected to be permanent. For purposes of 
                this subparagraph, employees of the employer shall 
                include all employees treated as employed by a single 
                employer under sections 210(c) and (d).''.
    (b) Direction to the Corporation.--The Pension Benefit Guaranty 
Corporation shall not take any enforcement, administrative, or other 
actions pursuant to section 4062(e) of such Act that are inconsistent 
with subparagraph (A) of section 4062(e)(2) of such Act, as amended, 
without regard to whether such actions relate to a cessation or other 
event that occurs before or after the date of enactment of this Act.
    (c) Effective Date.--Subsection (b) and the amendment made by 
subsection (a) shall apply as of the date of enactment of this Act.

SEC. 406. CHURCH PLAN CLARIFICATION.

    (a) Application of Controlled Group Rules to Church Plans.--
            (1) In general.--Section 414(c) is amended--
                    (A) by striking ``For purposes'' and inserting the 
                following:
            ``(1) In general.--For purposes'', and
                    (B) by adding at the end the following new 
                paragraph:
            ``(2) Church plans.--
                    ``(A) General rule.--Except as provided in 
                subparagraphs (B) and (C) below, for purposes of this 
                subsection and subsection (m), an organization that is 
                otherwise eligible to participate in a church plan as 
                defined in subsection (e) shall not be aggregated with 
                another such organization and treated as a single 
                employer with such other organization unless--
                            ``(i) one such organization provides 
                        directly or indirectly at least 80 percent of 
                        the operating funds for the other organization 
                        during the preceding tax year of the recipient 
                        organization, and
                            ``(ii) there is a degree of common 
                        management or supervision between the 
                        organizations.
                For purposes of this subparagraph, a degree of common 
                management or supervision exists only if the 
                organization providing the operating funds is directly 
                involved in the day-to-day operations of the other 
                organization.
                    ``(B) Nonqualified church-controlled 
                organizations.--Notwithstanding the provisions of 
                subparagraph (A), for purposes of this subsection and 
                subsection (m), an organization that is a nonqualified 
                church-controlled organization shall be aggregated with 
                one or more other nonqualified church-controlled 
                organizations, or with an organization that is not 
                exempt from tax under section 501, and treated as a 
                single employer with such other organizations, if at 
                least 80 percent of the directors or trustees of such 
                organizations are either representatives of, or 
                directly or indirectly controlled by, the first 
                organization. For purposes of this subparagraph, a 
                `nonqualified church controlled organization' shall 
                mean a church-controlled organization described in 
                section 501(c)(3) that is not a qualified church-
                controlled organization described in section 
                3121(w)(3)(B).
                    ``(C) Permissive aggregation among church-related 
                organizations.--Organizations described in subparagraph 
                (A) may elect to be treated as under common control for 
                purposes of this subsection. Such election shall be 
                made by the church or convention or association of 
                churches with which such organizations are associated 
                within the meaning of section 414(e)(3)(D), or by an 
                organization determined by such church or convention or 
                association of churches to be the appropriate 
                organization for making such election.
                    ``(D) Permissive disaggregation of church-related 
                organizations.--For purposes of subparagraph (A) above, 
                in the case of a church plan (as defined in section 
                414(e)), any employer may permissively disaggregate 
                those entities that are not churches (as defined in 
                section 403(b)(12)(B)) separately from those entities 
                that are churches, even if such entities maintain 
                separate church plans.
                    ``(E) Anti-abuse rule.--For purposes of 
                subparagraphs (A) and (B), the anti-abuse rule in 
                Treasury Regulation section 1.414(c)-5(f) shall 
                apply.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to taxable years beginning before, on, or after the 
        date of the enactment of this Act.
    (b) Application of Contribution and Funding Limitations to 403(b) 
Grandfathered Defined Benefit Plans.--
            (1) In general.--Section 251(e)(5) of the Tax Equity and 
        Fiscal Responsibility Act of 1982 (Public Law 97-248), is 
        amended--
                    (A) by striking ``403(b)(2)'' and inserting 
                ``403(b)'', and
                    (B) by inserting before the period at the end the 
                following: ``, and shall be subject to the applicable 
                limitations of section 415(b) of such Code as if it 
                were a defined benefit plan under section 401(a) of 
                such Code and not the limitations of section 415(c) of 
                such Code (relating to limitation for defined 
                contribution plans).''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply as if included in the enactment of the Tax Equity 
        and Fiscal Responsibility Act of 1982.
    (c) Automatic Enrollment by Church Plans.--
            (1) In general.--This subsection shall supersede any law of 
        a State which would directly or indirectly prohibit or restrict 
        the inclusion in any church plan (as defined in this 
        subsection) of an automatic contribution arrangement.
            (2) Definition of automatic contribution arrangement.--For 
        purposes of this subsection, the term ``automatic contribution 
        arrangement'' means an arrangement--
                    (A) under which a participant may elect to have the 
                plan sponsor make payments as contributions under the 
                plan on behalf of the participant, or to the 
                participant directly in cash, and
                    (B) under which a participant is treated as having 
                elected to have the plan sponsor make such 
                contributions in an amount equal to a uniform 
                percentage of compensation provided under the plan 
                until the participant specifically elects not to have 
                such contributions made (or specifically elects to have 
                such contributions made at a different percentage).
            (3) Notice requirements.--
                    (A) The plan administrator of an automatic 
                contribution arrangement shall, within a reasonable 
                period before such plan year, provide to each 
                participant to whom the arrangement applies for such 
                plan year notice of the participant's rights and 
                obligations under the arrangement which--
                            (i) is sufficiently accurate and 
                        comprehensive to apprise the participant of 
                        such rights and obligations, and
                            (ii) is written in a manner calculated to 
                        be understood by the average participant to 
                        whom the arrangement applies.
                    (B) A notice shall not be treated as meeting the 
                requirements of subparagraph (A) with respect to a 
                participant unless--
                            (i) the notice includes an explanation of 
                        the participant's right under the arrangement 
                        not to have elective contributions made on the 
                        participant's behalf (or to elect to have such 
                        contributions made at a different percentage),
                            (ii) the participant has a reasonable 
                        period of time, after receipt of the notice 
                        described in clause (i) and before the first 
                        elective contribution is made, to make such 
                        election, and
                            (iii) the notice explains how contributions 
                        made under the arrangement will be invested in 
                        the absence of any investment election by the 
                        participant.
            (4) Effective date.--This subsection shall take effect on 
        the date of the enactment of this Act.
    (d) Allow Certain Plan Transfers and Mergers.--
            (1) In general.--Section 414 is amended by adding at the 
        end the following new subsection:
    ``(z) Certain Plan Transfers and Mergers.--
            ``(1) In general.--Under rules prescribed by the Secretary, 
        except as provided in paragraph (2), no amount shall be 
        includible in gross income by reason of--
                    ``(A) a transfer of all or a portion of the account 
                balance of a participant or beneficiary, whether or not 
                vested, from a plan described in section 401(a) or an 
                annuity contract described in section 403(b), which is 
                a church plan described in section 414(e) to an annuity 
                contract described in section 403(b), if such plan and 
                annuity contract are both maintained by the same church 
                or convention or association of churches,
                    ``(B) a transfer of all or a portion of the account 
                balance of a participant or beneficiary, whether or not 
                vested, from an annuity contract described in section 
                403(b) to a plan described in section 401(a) or an 
                annuity contract described in section 403(b), which is 
                a church plan described in section 414(e), if such plan 
                and annuity contract are both maintained by the same 
                church or convention or association of churches, or
                    ``(C) a merger of a plan described in section 
                401(a), or an annuity contract described in section 
                403(b), which is a church plan described in section 
                414(e) with an annuity contract described in section 
                403(b), if such plan and annuity contract are both 
                maintained by the same church or convention or 
                association of churches.
            ``(2) Limitation.--Paragraph (1) shall not apply to a 
        transfer or merger unless the participant's or beneficiary's 
        benefit immediately after the transfer or merger is equal to or 
        greater than the participant's or beneficiary's benefit 
        immediately before the transfer or merger.
            ``(3) Qualification.--A plan or annuity contract shall not 
        fail to be considered to be described in sections 401(a) or 
        403(b) merely because such plan or account engages in a 
        transfer or merger described in this subsection.
            ``(4) Definitions.--For purposes of this subsection:
                    ``(A) Church.--The term `church' includes an 
                organization described in subparagraph (A) or (B)(ii) 
                of subsection (e)(3).
                    ``(B) Annuity contract.--The term `annuity 
                contract' includes a custodial account described in 
                section 403(b)(7) and a retirement income account 
                described in section 403(b)(9).''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to transfers or mergers occurring after the date of 
        the enactment of this Act.
    (e) Investments by Church Plans in Collective Trusts.--
            (1) In general.--In the case of--
                    (A) a church plan (as defined in section 414(e) of 
                the Internal Revenue Code 1986), including a plan 
                described in section 401(a) of such Code and a 
                retirement income account described in section 
                403(b)(9) of such Code, and
                    (B) an organization described in section 
                414(e)(3)(A) of such Code the principal purpose or 
                function of which is the administration of such a plan 
                or account,
        the assets of such plan, account, or organization (including 
        any assets otherwise permitted to be commingled for investment 
        purposes with the assets of such a plan, account, or 
        organization) may be invested in a group trust otherwise 
        described in Internal Revenue Service Revenue Ruling 81-100 (as 
        modified by Internal Revenue Service Revenue Rulings 2004-67 
        and 2011-1), or any subsequent revenue ruling that supersedes 
        or modifies such revenue ruling, without adversely affecting 
        the tax status of the group trust, such plan, account, or 
        organization, or any other plan or trust that invests in the 
        group trust.
            (2) Effective date.--This subsection shall apply to 
        investments made after the date of the enactment of this Act.

SEC. 407. PROTECTING OLDER, LONGER SERVICE PARTICIPANTS.

    (a) In General.--Paragraph (4) of section 401(a) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(4) Nondiscrimination.--
                    ``(A) In general.--A trust shall not constitute a 
                qualified trust under this section unless the 
                contributions or benefits provided under the plan do 
                not discriminate in favor of highly compensated 
                employees (within the meaning of section 414(q)). For 
                purposes of this paragraph, there shall be excluded 
                from consideration employees described in section 
                410(b)(3) (A) and (C).
                    ``(B) Protection of older, longer service 
                participants in defined benefit plans.--
                            ``(i)(I) A plan described in subclause (ii) 
                        shall not fail to satisfy this paragraph by 
                        reason of--
                                    ``(aa) the composition of the 
                                closed class of participants described 
                                in subclause (II), or
                                    ``(bb) the benefits, rights, or 
                                features provided to such closed class.
                            ``(II) A plan is described in this 
                        subclause if--
                                    ``(aa) the plan provides benefits, 
                                rights, or features to a closed class 
                                of participants,
                                    ``(bb) such closed class and such 
                                benefits, rights, and features satisfy 
                                the requirements of subparagraph (A) as 
                                of the date that the class was closed, 
                                and
                                    ``(cc) after the date as of which 
                                the class was closed, any plan 
                                amendments that modify the closed class 
                                or of the benefits, rights, and 
                                features provided to such closed class 
                                satisfy subparagraph (A).
                            ``(ii)(I) A defined contribution plan 
                        described in subclause (II) shall not fail to 
                        satisfy this paragraph by reason of--
                                    ``(aa) the composition of the 
                                closed class of participants described 
                                in subclause (II), or
                                    ``(bb) the allocations, benefits, 
                                rights, or features provided to such 
                                closed class.
                            ``(II) A defined contribution plan is 
                        described in this subclause if--
                                    ``(aa) the plan provides make-whole 
                                contributions to a closed class of 
                                participants whose defined benefit plan 
                                accruals have been reduced or 
                                eliminated,
                                    ``(bb) the benefits, rights, and 
                                features provided to such closed class 
                                satisfy the requirements of 
                                subparagraph (A) as of the date that 
                                the class of participants was closed, 
                                taking into account only such closed 
                                class,
                                    ``(cc) such closed class of 
                                participants satisfies section 
                                410(b)(2)(A)(i) as of the date that the 
                                class of participants was closed, and
                                    ``(dd) after the date as of which 
                                the class was closed, any plan 
                                amendments that modify the closed class 
                                or the allocations, benefits, rights, 
                                and features provided to such closed 
                                class satisfy section 401(a)(4).
                    ``(C) Make-whole contributions.--For purposes of 
                this paragraph, the term `make-whole contributions' 
                means allocations for each employee in the class that 
                are reasonably calculated, in a consistent manner, to 
                replace some or all of the retirement benefits that the 
                employee would have received under the defined benefit 
                plan and any other plan or arrangement if the employee 
                had continued to benefit at the same level under such 
                defined benefit plan and such other plan or 
                arrangement.
                    ``(D) Rules.--The Secretary may prescribe rules 
                designed to prevent abuse of the plan designs otherwise 
                permitted by reason of subparagraph (B). Such rules 
                shall be directed towards abuses under which the 
                defined benefit plan was established within a specified 
                period prior to the date that--
                            ``(i) the class of participants described 
                        in paragraphs (1) and (2)(A) is closed, or
                            ``(ii) the defined benefit plan accruals 
                        have been reduced or eliminated, in the case of 
                        the make-whole contributions described in 
                        paragraph (2).''.
    (b) Participation Requirements.--Paragraph (26) of section 401(a) 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph:
                    ``(I) Protected participants.--A plan described in 
                this subparagraph shall be deemed to satisfy the 
                requirements of subparagraph (A). A plan is described 
                in this paragraph if--
                            ``(i) the plan is amended to--
                                    ``(I) cease all benefit accruals, 
                                or
                                    ``(II) provide future benefit 
                                accruals only to a closed class of 
                                participants, and
                            ``(ii) the plan satisfies subparagraph (A) 
                        (without regard to this subparagraph) as of the 
                        effective date of the amendment.
                The Secretary may prescribe such rules as are necessary 
                or appropriate to fulfill the purposes of this 
                subparagraph, including prevention of abuse of this 
                subparagraph in the case of plans established within a 
                specific period prior to the effective date of the 
                amendment.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act, without regard to 
whether any plan modifications referenced in such amendments are 
adopted or effective before, on, or after such date of enactment.

SEC. 408. REVIEW AND REPORT TO THE CONGRESS RELATING TO REPORTING AND 
              DISCLOSURE REQUIREMENTS.

    (a) Study.--As soon as practicable after the date of the enactment 
of this Act, the Secretary of Labor, the Secretary of the Treasury, and 
the Pension Benefit Guaranty Corporation shall review the reporting and 
disclosure requirements of--
            (1) title I of the Employee Retirement Income Security Act 
        of 1974 applicable to pension plans (as defined in section 3(2) 
        of such Act), and
            (2) the Internal Revenue Code of 1986 applicable to 
        qualified retirement plans (as defined in section 4974(c) of 
        such Code without regard to paragraphs (4) and (5) thereof).
    (b) Report.--Not later than 18 months after the date of the 
enactment of this Act, the Secretary of Labor, the Secretary of the 
Treasury, and the Pension Benefit Guaranty Corporation, jointly, shall 
make such recommendations as may be appropriate to the appropriate 
committees of the Congress to consolidate, simplify, standardize, and 
improve the applicable reporting and disclosure requirements so as to 
simplify reporting for plans referenced to in subsection (a) and ensure 
that needed understandable information is provided to participants and 
beneficiaries of such plans.

SEC. 409. CONSOLIDATION OF DEFINED CONTRIBUTION PLAN NOTICES.

    (a) In General.--
            (1) Not later than 18 months after the date of the 
        enactment of this Act, the Secretary of Labor and the Secretary 
        of the Treasury shall adopt final regulations providing that a 
        plan may, but is not required to, consolidate two or more of 
        the notices required under sections 404(c)(5)(B) and 514(e)(3) 
        of the Employee Retirement Income Security Act of 1974 (29 
        U.S.C. 1144(e)(3)), sections 401(k)(12)(D), 401(k)(13)(E), and 
        414(w)(4) of the Internal Revenue Code of 1986, and section 
        2550.404a-5 of title 29, Code of Federal Regulations (29 C.F.R. 
        2550.404a-5) into a single notice or, to the extent provided by 
        such regulations, consolidate such notices with the summary 
        plan description or summary of material modifications described 
        in section 104(b) of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1024(b)), so long as the combined 
        notice, summary plan description or summary of material 
        modifications includes the required content, clearly identifies 
        the issues addressed therein, and is provided at the time and 
        with the frequency required for each such notice.
            (2) The Secretary of Labor and the Secretary of the 
        Treasury may include in such regulations rules to ensure that, 
        to the extent such notices are consolidated with the summary 
        plan description or summary of material modifications, the 
        presentation, placement, or prominence of the information in 
        such notices shall not have the effect of failing to inform 
        participants and beneficiaries regarding the information in 
        such notices.
    (b) Provision of Annual Notices Without Regard to Plan Year.--
            (1) Clause (i) of section 404(c)(5)(B) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1104(c)(5)(B)) is amended--
                    (A) in subclause (I) by striking ``within a 
                reasonable period of time before each plan year,'' and 
                inserting ``within a reasonable period before the 
                arrangement described in subparagraph (A) applies to 
                such participant or beneficiary, and thereafter at 
                least once within any 12-month period (without regard 
                to the plan year) during which such arrangement 
                applies,'', and
                    (B) in subclause (II) by striking ``and before the 
                beginning of the plan year''.
            (2) Subparagraph (A) of section 514(e)(3) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1144(e)(3)(A)) is amended by striking ``, within a reasonable 
        period before such plan year, provide to each participant to 
        whom the arrangement applies for such plan year'' and inserting 
        ``, within a reasonable period before the arrangement applies 
        to a participant or beneficiary, and thereafter at least once 
        within any 12-month period (without regard to the plan year) 
        during which such arrangement applies, provide''.
            (3) Clause (i) of section 401(k)(13)(E) of the Internal 
        Revenue Code of 1986 is amended by striking ``, within a 
        reasonable period before each plan year, each employee eligible 
        to participate in the arrangement for such year receives'' and 
        inserting ``each employee eligible to participate in the 
        arrangement receives, within a reasonable period before the 
        employee becomes eligible, and thereafter within a reasonable 
        period before each plan year during which such arrangement 
        applies,''.
            (4) Subparagraph (D) of section 401(k)(12) of the Internal 
        Revenue Code of 1986 is amended by striking ``, within a 
        reasonable period before any year, given written notice'' and 
        inserting ``given written notice, within a reasonable period 
        before the employee becomes eligible, and thereafter within a 
        reasonable period before each plan year during which such 
        arrangement applies,''.
            (5) Subparagraph (A) of section 414(w)(4) of the Internal 
        Revenue Code of 1986 is amended by striking ``, within a 
        reasonable period before each plan year, give to each employee 
        to whom an arrangement described in paragraph (3) applies for 
        such plan year'' and inserting ``, within a reasonable period 
        before an arrangement described in paragraph (3) applies to an 
        employee, and thereafter at least once within any 12-month 
        period (without regard to the plan year) during which such 
        arrangement applies, give to each such employee''.
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