I

104TH CONGRESS

1ST SESSION H. R. 2037

To amend the Internal Revenue Code of 1986 to simplify the pension laws,

and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JULY 13, 1995

Mr. PORTMAN (for himself and Mr. CARDIN) introduced the following bill;

which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to simplify

the pension laws, and for other purposes.

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

3 SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE;

4 TABLE OF CONTENTS.

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

6 ‘‘Pension Simplification Act of 1995’’.

7 (b) AMENDMENT OF 1986 CODE.—Except as other8 wise expressly provided, whenever in this Act an amend9 ment or repeal is expressed in terms of an amendment

10 to, or repeal of, a section or other provision, the reference
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1 shall be considered to be made to a section or other provi2 sion of the Internal Revenue Code of 1986.

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

4 this Act is as follows:

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

TITLE I—SIMPLIFICATION OF NONDISCRIMINATION PROVISIONS

Sec. 101. Definition of highly compensated employees; repeal of family aggregation.

Sec. 102. Definition of compensation for section 415 purposes.

Sec. 103. Modification of additional participation requirements.

Sec. 104. Nondiscrimination rules for qualified cash or deferred arrangements

and matching contributions.

TITLE II—SIMPLIFIED DISTRIBUTION RULES

Sec. 201. Repeal of 5-year income averaging for lump-sum distributions.

Sec. 202. Repeal of $5,000 exclusion of employees’ death benefits.

Sec. 203. Simplified method for taxing annuity distributions under certain employer plans.

Sec. 204. Required distributions.

TITLE III—TARGETED ACCESS TO PENSION PLANS FOR SMALL

EMPLOYERS

Sec. 301. Credit for pension plan start-up costs of small employers.

Sec. 302. Modifications of simplified employee pensions.

Sec. 303. Exemption from top-heavy plan requirements.

Sec. 304. Tax-exempt organizations eligible under section 401(k).

Sec. 305. Regulatory treatment of small employers.

TITLE IV—PAPERWORK REDUCTION

Sec. 401. Repeal of combined section 415 limit.

Sec. 402. Duties of sponsors of certain prototype plans.

TITLE V—MISCELLANEOUS SIMPLIFICATION

Sec. 501. Treatment of leased employees.

Sec. 502. Plans covering self-employed individuals.

Sec. 503. Elimination of special vesting rule for multiemployer plans.

Sec. 504. Full-funding limitation of multiemployer plans.

Sec. 505. Alternative full-funding limitation.

Sec. 506. Affiliated employers.

Sec. 507. Treatment of governmental plans under section 415.

Sec. 508. Treatment of deferred compensation plans of State and local governments and tax-exempt organizations.

Sec. 509. Contributions on behalf of disabled employees.

Sec. 510. Distributions under rural cooperative plans.

Sec. 511. Special rules for plans covering pilots.

Sec. 512. Tenured faculty.

Sec. 513. Uniform retirement age.
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Sec. 514. Uniform penalty provisions to apply to certain pension reporting requirements.

Sec. 515. National Commission on Private Pension Plans.

Sec. 516. Date for adoption of plan amendments.

1 TITLE I—SIMPLIFICATION OF

2 NONDISCRIMINATION PROVI3 SIONS

4 SEC. 101. DEFINITION OF HIGHLY COMPENSATED EMPLOY5 EES; REPEAL OF FAMILY AGGREGATION.

6 (a) IN GENERAL.—Paragraph (1) of section 414(q)

7 (defining highly compensated employee) is amended to

8 read as follows:

9 ‘‘(1) IN GENERAL.—The term ‘highly com10 pensated employee’ means any employee who—

11 ‘‘(A) was a 5-percent owner at any time

12 during the year or the preceding year,

13 ‘‘(B) had compensation for the preceding

14 year from the employer in excess of $80,000, or

15 ‘‘(C) was the most highly compensated of16 ficer of the employer for the preceding year.

17 The Secretary shall adjust the $80,000 amount

18 under subparagraph (B) at the same time and in the

19 same manner as under section 415(d), except that

20 the base period shall be the calendar quarter begin21 ning October 1, 1995.’’
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1 (b) SPECIAL RULE WHERE NO EMPLOYEE HAS

2 COMPENSATION OVER SPECIFIED AMOUNT.—Paragraph

3 (2) of section 414(q) is amended to read as follows:

4 ‘‘(2) SPECIAL RULE IF NO EMPLOYEE HAS COM5 PENSATION OVER SPECIFIED AMOUNT.—

6 ‘‘(A) IN GENERAL.—Except as provided in

7 subparagraph (B), if a defined benefit plan or

8 a defined contribution plan meets the require9 ments of sections 401(a)(4) and 410(b) with re10 spect to the availability of contributions, bene11 fits, and other plan features, then for all other

12 purposes, subparagraphs (A) and (C) of para13 graph (1) shall not apply to such plan.

14 ‘‘(B) EXCEPTION.—Subparagraph (A)

15 shall not apply to a plan to the extent provided

16 in regulations that are prescribed by the Sec17 retary to prevent the evasion of the purposes of

18 this paragraph.’’

19 (c) REPEAL OF FAMILY AGGREGATION RULES.—

20 (1) IN GENERAL.—Paragraph (6) of section

21 414(q) is hereby repealed.

22 (2) COMPENSATION LIMIT.—Paragraph (17)(A)

23 of section 401(a) is amended by striking the last

24 sentence.
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1 (3) DEDUCTION.—Subsection (l) of section 404

2 is amended by striking the last sentence.

3 (d) CONFORMING AMENDMENTS.—

4 (1) Paragraphs (4), (5), (8), and (12) of section

5 414(q) are hereby repealed.

6 (2)(A) Section 414(r) is amended by adding at

7 the end the following new paragraph:

8 ‘‘(9) EXCLUDED EMPLOYEES.—For purposes of

9 this subsection, the following employees shall be ex10 cluded:

11 ‘‘(A) Employees who have not completed 6

12 months of service.

13 ‘‘(B) Employees who normally work less

than 171 14 ⁄2 hours per week.

15 ‘‘(C) Employees who normally work not

16 more than 6 months during any year.

17 ‘‘(D) Employees who have not attained the

18 age of 21.

19 ‘‘(E) Except to the extent provided in reg20 ulations, employees who are included in a unit

21 of employees covered by an agreement which

22 the Secretary of Labor finds to be a collective

23 bargaining agreement between employee rep24 resentatives and the employer.
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1 Except as provided by the Secretary, the employer

2 may elect to apply subparagraph (A), (B), (C), or

3 (D) by substituting a shorter period of service,

4 smaller number of hours or months, or lower age for

5 the period of service, number of hours or months, or

6 age (as the case may be) specified in such subpara7 graph.’’

8 (B) Subparagraph (A) of section 414(r)(2) is

9 amended by striking ‘‘subsection (q)(8)’’ and insert10 ing ‘‘paragraph (9)’’.

11 (3) Section 1114(c)(4) of the Tax Reform Act

12 of 1986 is amended by adding at the end the follow13 ing new sentence: ‘‘Any reference in this paragraph

14 to section 414(q) shall be treated as a reference to

15 such section as in effect before the Pension Sim16 plification Act of 1995.’’

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

18 this section shall apply to years beginning after Decem19 ber 31, 1995, except that in determining whether an em20 ployee is a highly compensated employee for years begin21 ning in 1996, such amendments shall be treated as having

22 been in effect for years beginning in 1995.
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1 SEC. 102. DEFINITION OF COMPENSATION FOR SECTION 415

2 PURPOSES.

3 (a) GENERAL RULE.—Section 415(c)(3) (defining

4 participant’s compensation) is amended by adding at the

5 end the following new subparagraph:

6 ‘‘(D) CERTAIN DEFERRALS INCLUDED.—

7 The term ‘participant’s compensation’ shall in8 clude—

9 ‘‘(i) any elective deferral (as defined

10 in section 402(g)(3)), and

11 ‘‘(ii) any amount which is contributed

12 by the employer of the election of the em13 ployee and which is not includible in the

14 gross income of the employee under section

15 125 or 457.’’

16 (b) CONFORMING AMENDMENTS.—

17 (1) Section 414(q)(7) is amended to read as fol18 lows:

19 ‘‘(7) COMPENSATION.—For purposes of this

20 subsection, the term ‘compensation’ has the meaning

21 given such term by section 415(c)(3).’’

22 (2) Section 414(s)(2) is amended by inserting

23 ‘‘not’’ after ‘‘elect’’ in the text and heading thereof.

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

25 this section shall apply to years beginning after December

26 31, 1995.
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1 SEC. 103. MODIFICATION OF ADDITIONAL PARTICIPATION

2 REQUIREMENTS.

3 (a) GENERAL RULE.—Section 401(a)(26)(A) (relat4 ing to additional participation requirements) is amended

5 to read as follows:

6 ‘‘(A) IN GENERAL.—In the case of a trust

7 which is a part of a defined benefit plan, such trust

8 shall not constitute a qualified trust under this sub9 section unless on each day of the plan year such

10 trust benefits at least the lesser of—

11 ‘‘(i) 50 employees of the employer, or

12 ‘‘(ii) the greater of—

13 ‘‘(I) 40 percent of all employees of the

14 employer, or

15 ‘‘(II) 2 employees (or if there is only

16 1 employee, such employee).’’

17 (b) SEPARATE LINE OF BUSINESS TEST.—Section

18 401(a)(26)(G) (relating to separate line of business) is

19 amended by striking ‘‘paragraph (7)’’ and inserting ‘‘para20 graph (2)(A) or (7)’’.

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

22 this section shall apply to years beginning after Decem23 ber 31, 1995.
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1 SEC. 104. NONDISCRIMINATION RULES FOR QUALIFIED

2 CASH OR DEFERRED ARRANGEMENTS AND

3 MATCHING CONTRIBUTIONS.

4 (a) ALTERNATIVE METHODS OF SATISFYING SEC5 TION 401(k) NONDISCRIMINATION TESTS.—Section

6 401(k) (relating to cash or deferred arrangements) is

7 amended by adding at the end the following new para8 graph:

9 ‘‘(11) ALTERNATIVE METHODS OF MEETING

10 NONDISCRIMINATION REQUIREMENTS.—

11 ‘‘(A) IN GENERAL.—A cash or deferred ar12 rangement shall be treated as meeting the re13 quirements of paragraph (3)(A)(ii) if such ar14 rangement—

15 ‘‘(i) meets the contribution require16 ments of subparagraph (B) or (C), and

17 ‘‘(ii) meets the notice requirements of

18 subparagraph (D).

19 ‘‘(B) MATCHING CONTRIBUTIONS.—

20 ‘‘(i) IN GENERAL.—The requirements

21 of this subparagraph are met if, under the

22 arrangement, the employer makes match23 ing contributions on behalf of each em24 ployee who is not a highly compensated

25 employee in an amount equal to—
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1 ‘‘(I) 100 percent of the elective

2 contributions of the employee to the

3 extent such elective contributions do

4 not exceed 3 percent of the employee’s

5 compensation, and

6 ‘‘(II) 50 percent of the elective

7 contributions of the employee to the

8 extent that such elective contributions

9 exceed 3 percent but do not exceed 5

10 percent of the employee’s compensa11 tion.

12 ‘‘(ii) RATE FOR HIGHLY COM13 PENSATED EMPLOYEES.—The require14 ments of this subparagraph are not met if,

15 under the arrangement, the matching con16 tribution with respect to any elective con17 tribution of a highly compensated employee

18 at any level of compensation is greater

19 than that with respect to an employee who

20 is not a highly compensated employee.

21 ‘‘(iii) ALTERNATIVE PLAN DESIGNS.—

22 If the matching contribution with respect

23 to any elective contribution at any specific

24 level of compensation is not equal to the

25 percentage required under clause (i), an
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1 arrangement shall not be treated as

2 failing to meet the requirements of

3 clause (i) if—

4 ‘‘(I) the level of an employer’s

5 matching contribution does not in6 crease as an employee’s elective con7 tributions increase, and

8 ‘‘(II) the aggregate amount of

9 matching contributions with respect to

10 elective contributions not in excess of

11 such level of compensation is at least

12 equal to the amount of matching con13 tributions which would be made if

14 matching contributions were made on

15 the basis of the percentages described

16 in clause (i).

17 ‘‘(C) NONELECTIVE CONTRIBUTIONS.—

18 The requirements of this subparagraph are met

19 if, under the arrangement, the employer is re20 quired, without regard to whether the employee

21 makes an elective contribution or employee con22 tribution, to make a contribution to a defined

23 contribution plan on behalf of each employee

24 who is not a highly compensated employee and

25 who is eligible to participate in the arrangement
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1 in an amount equal to at least 3 percent of the

2 employee’s compensation.

3 ‘‘(D) NOTICE REQUIREMENT.—An ar4 rangement meets the requirements of this para5 graph if, under the arrangement, each employee

6 eligible to participate is, within a reasonable pe7 riod before any year, given written notice of the

8 employee’s rights and obligations under the ar9 rangement which—

10 ‘‘(i) is sufficiently accurate and com11 prehensive to appraise the employee of

12 such rights and obligations, and

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

14 to be understood by the average employee

15 eligible to participate.

16 ‘‘(E) OTHER REQUIREMENTS.—

17 ‘‘(i) WITHDRAWAL AND VESTING RE18 STRICTIONS.—An arrangement shall not be

19 treated as meeting the requirements of

20 subparagraph (B) or (C) unless the re21 quirements of subparagraphs (B) and (C)

22 of paragraph (2) are met with respect to

23 all employer contributions (including

24 matching contributions).
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1 ‘‘(ii) SOCIAL SECURITY AND SIMILAR

2 CONTRIBUTIONS NOT TAKEN INTO AC3 COUNT.—An arrangement shall not be

4 treated as meeting the requirements of

5 subparagraph (B) or (C) unless such re6 quirements are met without regard to sub7 section (l), and, for purposes of subsection

8 (l), employer contributions under subpara9 graph (B) or (C) shall not be taken into

10 account.

11 ‘‘(F) OTHER PLANS.—An arrangement

12 shall be treated as meeting the requirements

13 under subparagraph (A)(i) if any other plan

14 maintained by the employer meets such require15 ments with respect to employees eligible under

16 the arrangement.’’

17 (b) ALTERNATIVE METHODS OF SATISFYING SEC18 TION 401(m) NONDISCRIMINATION TESTS.—Section

19 401(m) (relating to nondiscrimination test for matching

20 contributions and employee contributions) is amended by

21 redesignating paragraph (10) as paragraph (11) and by

22 adding after paragraph (9) the following new paragraph:

23 ‘‘(10) ALTERNATIVE METHOD OF SATISFYING

24 TESTS.—
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1 ‘‘(A) IN GENERAL.—A defined contribution

2 plan shall be treated as meeting the require3 ments of paragraph (2) with respect to match4 ing contributions if the plan—

5 ‘‘(i) meets the contribution require6 ments of subparagraph (B) or (C) of sub7 section (k)(11),

8 ‘‘(ii) meets the notice requirements of

9 subsection (k)(11)(D), and

10 ‘‘(iii) meets the requirements of sub11 paragraph (B).

12 ‘‘(B) LIMITATION ON MATCHING CON13 TRIBUTIONS.—The requirements of this sub14 paragraph are met if—

15 ‘‘(i) matching contributions on behalf

16 of any employee may not be made with

17 respect to an employee’s contributions or

18 elective deferrals in excess of 6 percent of

19 the employee’s compensation,

20 ‘‘(ii) the level of an employer’s match21 ing contribution does not increase as an

22 employee’s contributions or elective defer23 rals increase, and

24 ‘‘(iii) the matching contribution with

25 respect to any highly compensated em-
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1 ployee at a specific level of compensation is

2 not greater than that with respect to an

3 employee who is not a highly compensated

4 employee.’’

5 (c) YEAR FOR COMPUTING NONHIGHLY COM6 PENSATED EMPLOYEE PERCENTAGE.—

7 (1) CASH OR DEFERRED ARRANGEMENTS.—

8 Clause (ii) of section 401(k)(3)(A) is amended—

9 (A) by striking ‘‘such year’’ and inserting

10 ‘‘the plan year’’, and

11 (B) by striking ‘‘for such plan year’’ and

12 inserting ‘‘the preceding plan year’’.

13 (2) MATCHING AND EMPLOYEE CONTRIBU14 TIONS.—Section 401(m)(2)(A) is amended—

15 (A) by inserting ‘‘for such plan year’’ after

16 ‘‘highly compensated employee’’, and

17 (B) by inserting ‘‘for the preceding plan

18 year’’ after ‘‘eligible employees’’ each place it

19 appears in clause (i) and clause (ii).

20 (d) SPECIAL RULE FOR DETERMINING AVERAGE DE21 FERRAL PERCENTAGE FOR FIRST PLAN YEAR, ETC.—

22 (1) Paragraph (3) of section 401(k) is amended

23 by adding at the end the following new subpara24 graph:
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1 ‘‘(E) For purposes of this paragraph, in

2 the case of the first plan year of any plan, the

3 amount taken into account as the actual defer4 ral percentage of nonhighly compensated em5 ployees for the preceding plan year shall be—

6 ‘‘(i) 3 percent, or

7 ‘‘(ii) if the employer makes an election

8 under this subclause, the actual deferral

9 percentage of nonhighly compensated em10 ployees determined for such first plan

11 year.’’

12 (2) Paragraph (3) of section 401(m) is amend13 ed by adding at the end thereof the following:

14 ‘‘Rules similar to the rules of subsection (k)(3)(E)

15 shall apply for purposes of this subsection.’’

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

17 this section shall apply to years beginning after December

18 31, 1995.

19 TITLE II—SIMPLIFIED

20 DISTRIBUTION RULES

21 SEC. 201. REPEAL OF 5-YEAR INCOME AVERAGING FOR

22 LUMP-SUM DISTRIBUTIONS.

23 (a) IN GENERAL.—Subsection (d) of section 402 (re24 lating to taxability of beneficiary of employees’ trust) is

25 amended to read as follows:
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1 ‘‘(d) TAXABILITY OF BENEFICIARY OF CERTAIN

2 FOREIGN SITUS TRUSTS.—For purposes of subsections

3 (a), (b), and (c), a stock bonus, pension, or profit-sharing

4 trust which would qualify for exemption from tax under

5 section 501(a) except for the fact that it is a trust created

6 or organized outside the United States shall be treated

7 as if it were a trust exempt from tax under section

8 501(a).’’

9 (b) CONFORMING AMENDMENTS.—

10 (1) Subparagraph (D) of section 402(e)(4) (re11 lating to other rules applicable to exempt trusts) is

12 amended to read as follows:

13 ‘‘(D) LUMP-SUM DISTRIBUTION.—For pur14 poses of this paragraph—

15 ‘‘(i) IN GENERAL.—The term ‘lump

16 sum distribution’ means the distribution or

17 payment within one taxable year of the re18 cipient of the balance to the credit of an

19 employee which becomes payable to the re20 cipient—

21 ‘‘(I) on account of the employee’s

22 death,

23 ‘‘(II) after the employee attains

age 591 24 ⁄2,
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1 ‘‘(III) on account of the employ2 ee’s separation from service, or

3 ‘‘(IV) after the employee has be4 come disabled (within the meaning of

5 section 72(m)(7)),

6 from a trust which forms a part of a plan

7 described in section 401(a) and which is

8 exempt from tax under section 501 or from

9 a plan described in section 403(a).

10 Subclause (III) of this clause shall be ap11 plied only with respect to an individual

12 who is an employee without regard to sec13 tion 401(c)(1), and subclause (IV) shall be

14 applied only with respect to an employee

15 within the meaning of section 401(c)(1).

16 For purposes of this clause, a distribution

17 to two or more trusts shall be treated as

18 a distribution to one recipient. For pur19 poses of this paragraph, the balance to the

20 credit of the employee does not include the

21 accumulated deductible employee contribu22 tions under the plan (within the meaning

23 of section 72(o)(5)).

24 ‘‘(ii) AGGREGATION OF CERTAIN

25 TRUSTS AND PLANS.—For purposes of de-
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1 termining the balance to the credit of an

2 employee under clause (i)—

3 ‘‘(I) all trusts which are part of

4 a plan shall be treated as a single

5 trust, all pension plans maintained by

6 the employer shall be treated as a sin7 gle plan, all profit-sharing plans main8 tained by the employer shall be treat9 ed as a single plan, and all stock

10 bonus plans maintained by the em11 ployer shall be treated as a single

12 plan, and

13 ‘‘(II) trusts which are not quali14 fied trusts under section 401(a) and

15 annuity contracts which do not satisfy

16 the requirements of section 404(a)(2)

17 shall not be taken into account.

18 ‘‘(iii) COMMUNITY PROPERTY LAWS.—

19 The provisions of this paragraph shall be

20 applied without regard to community prop21 erty laws.

22 ‘‘(iv) AMOUNTS SUBJECT TO PEN23 ALTY.—This paragraph shall not apply to

24 amounts described in subparagraph (A) of
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1 section 72(m)(5) to the extent that section

2 72(m)(5) applies to such amounts.

3 ‘‘(v) BALANCE TO CREDIT OF EM4 PLOYEE NOT TO INCLUDE AMOUNTS PAY5 ABLE UNDER QUALIFIED DOMESTIC RELA6 TIONS ORDER.—For purposes of this para7 graph, the balance to the credit of an em8 ployee shall not include any amount pay9 able to an alternate payee under a quali10 fied domestic relations order (within the

11 meaning of section 414(p)).

12 ‘‘(vi) TRANSFERS TO COST-OF-LIVING

13 ARRANGEMENT NOT TREATED AS DIS14 TRIBUTION.—For purposes of this para15 graph, the balance to the credit of an em16 ployee under a defined contribution plan

17 shall not include any amount transferred

18 from such defined contribution plan to a

19 qualified cost-of-living arrangement (within

20 the meaning of section 415(k)(2)) under a

21 defined benefit plan.

22 ‘‘(vii) LUMP-SUM DISTRIBUTIONS OF

23 ALTERNATE PAYEES.—If any distribution

24 or payment of the balance to the credit of

25 an employee would be treated as a lump-
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1 sum distribution, then, for purposes of this

2 paragraph, the payment under a qualified

3 domestic relations order (within the mean4 ing of section 414(p)) of the balance to the

5 credit of an alternate payee who is the

6 spouse or former spouse of the employee

7 shall be treated as a lump-sum distribu8 tion. For purposes of this clause, the bal9 ance to the credit of the alternate payee

10 shall not include any amount payable to

11 the employee.’’

12 (2) Section 402(c) (relating to rules applicable

13 to rollovers from exempt trusts) is amended by strik14 ing paragraph (10).

15 (3) Paragraph (1) of section 55(c) (defining

16 regular tax) is amended by striking ‘‘shall not in17 clude any tax imposed by section 402(d) and’’.

18 (4) Paragraph (8) of section 62(a) (relating to

19 certain portion of lump-sum distributions from pen20 sion plans taxed under section 402(d)) is hereby re21 pealed.

22 (5) Section 401(a)(28)(B) (relating to coordina23 tion with distribution rules) is amended by striking

24 clause (v).
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1 (6) Subparagraph (B)(ii) of section 401(k)(10)

2 (relating to distributions that must be lump-sum dis3 tributions) is amended to read as follows:

4 ‘‘(ii) LUMP-SUM DISTRIBUTION.—For pur5 poses of this subparagraph, the term ‘lump-sum

6 distribution’ means any distribution of the bal7 ance to the credit of an employee immediately

8 before the distribution.’’

9 (7) Section 406(c) (relating to termination of

10 status as deemed employee not to be treated as sep11 aration from service for purposes of limitation of

12 tax) is hereby repealed.

13 (8) Section 407(c) (relating to termination of

14 status as deemed employee not to be treated as sep15 aration from service for purposes of limitation of

16 tax) is hereby repealed.

17 (9) Section 691(c) (relating to deduction for es18 tate tax) is amended by striking paragraph (5).

19 (10) Paragraph (1) of section 871(b) (relating

20 to imposition of tax) is amended by striking ‘‘section

21 1, 55, or 402(d)(1)’’ and inserting ‘‘section 1 or

22 55’’.

23 (11) Subsection (b) of section 877 (relating to

24 alternative tax) is amended by striking ‘‘section 1,

25 55, or 402(d)(1)’’ and inserting ‘‘section 1 or 55’’.
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1 (12) Section 4980A(c)(4) is amended—

2 (A) by striking ‘‘to which an election under

3 section 402(d)(4)(B) applies’’ and inserting

4 ‘‘(as defined in section 402(e)(4)(D)) with re5 spect to which the individual elects to have this

6 paragraph apply’’,

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

8 flush sentence:

9 ‘‘An individual may elect to have this paragraph

10 apply to only one lump-sum distribution.’’, and

11 (C) by striking the heading and inserting:

12 ‘‘(4) SPECIAL ONE-TIME ELECTION.—’’.

13 (13) Section 402(e) is amended by striking

14 paragraph (5).

15 (c) EFFECTIVE DATES.—

16 (1) IN GENERAL.—The amendments made by

17 this section shall apply to taxable years beginning

18 after December 31, 1995.

19 (2) RETENTION OF CERTAIN TRANSITION

20 RULES.—Notwithstanding any other provision of

21 this section, the amendments made by this section

22 shall not apply to any distribution for which the tax23 payer elects the benefits of section 1122 (h)(3) or

24 (h)(5) of the Tax Reform Act of 1986. For purposes

25 of the preceding sentence, the rules of sections
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1 402(c)(10) and 402(d) of the Internal Revenue Code

2 of 1986 (as in effect before the amendments made

3 by this Act) shall apply.

4 SEC. 202. REPEAL OF $5,000 EXCLUSION OF EMPLOYEES’

5 DEATH BENEFITS.

6 (a) IN GENERAL.—Subsection (b) of section 101 is

7 hereby repealed.

8 (b) CONFORMING AMENDMENT.—Subsection (c) of

9 section 101 is amended by striking ‘‘subsection (a) or (b)’’

10 and inserting ‘‘subsection (a)’’.

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

12 this section shall apply to taxable years beginning after

13 December 31, 1995.

14 SEC. 203. SIMPLIFIED METHOD FOR TAXING ANNUITY DIS15 TRIBUTIONS UNDER CERTAIN EMPLOYER

16 PLANS.

17 (a) GENERAL RULE.—Subsection (d) of section 72

18 (relating to annuities; certain proceeds of endowment and

19 life insurance contracts) is amended to read as follows:

20 ‘‘(d) SPECIAL RULES FOR QUALIFIED EMPLOYER

21 RETIREMENT PLANS.—

22 ‘‘(1) SIMPLIFIED METHOD OF TAXING ANNUITY

23 PAYMENTS.—
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1 ‘‘(A) IN GENERAL.—In the case of any

2 amount received as an annuity under a quali3 fied employer retirement plan—

4 ‘‘(i) subsection (b) shall not apply,

5 and

6 ‘‘(ii) the investment in the contract

7 shall be recovered as provided in this para8 graph.

9 ‘‘(B) METHOD OF RECOVERING INVEST10 MENT IN CONTRACT.—

11 ‘‘(i) IN GENERAL.—Gross income

12 shall not include so much of any monthly

13 annuity payment under a qualified em14 ployer retirement plan as does not exceed

15 the amount obtained by dividing—

16 ‘‘(I) the investment in the con17 tract (as of the annuity starting date),

18 by

19 ‘‘(II) the number of anticipated

20 payments determined under the table

21 contained in clause (iii) (or, in the

22 case of a contract to which subsection

23 (c)(3)(B) applies, the number of

24 monthly annuity payments under such

25 contract).
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1 ‘‘(ii) CERTAIN RULES MADE APPLICA2 BLE.—Rules similar to the rules of para3 graphs (2) and (3) of subsection (b) shall

4 apply for purposes of this paragraph.

5 ‘‘(iii) NUMBER OF ANTICIPATED PAY6 MENTS.—

‘‘If the age of the

primary annuitant on The number

the annuity starting of anticipated

date is: payments is:

Not more than 55 .............................. 300

More than 55 but not more than 60 260

More than 60 but not more than 65 240

More than 65 but not more than 70 170

More than 70 ..................................... 120

7 ‘‘(C) ADJUSTMENT FOR REFUND FEATURE

8 NOT APPLICABLE.—For purposes of this para9 graph, investment in the contract shall be de10 termined under subsection (c)(1) without re11 gard to subsection (c)(2).

12 ‘‘(D) SPECIAL RULE WHERE LUMP SUM

13 PAID IN CONNECTION WITH COMMENCEMENT

14 OF ANNUITY PAYMENTS.—If, in connection with

15 the commencement of annuity payments under

16 any qualified employer retirement plan, the tax17 payer receives a lump sum payment—

18 ‘‘(i) such payment shall be taxable

19 under subsection (e) as if received before

20 the annuity starting date, and
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1 ‘‘(ii) the investment in the contract

2 for purposes of this paragraph shall be de3 termined as if such payment had been so

4 received.

5 ‘‘(E) EXCEPTION.—This paragraph shall

6 not apply in any case where the primary annu7 itant has attained age 75 on the annuity start8 ing date unless there are fewer than 5 years of

9 guaranteed payments under the annuity.

10 ‘‘(F) ADJUSTMENT WHERE ANNUITY PAY11 MENTS NOT ON MONTHLY BASIS.—In any case

12 where the annuity payments are not made on a

13 monthly basis, appropriate adjustments in the

14 application of this paragraph shall be made to

15 take into account the period on the basis of

16 which such payments are made.

17 ‘‘(G) QUALIFIED EMPLOYER RETIREMENT

18 PLAN.—For purposes of this paragraph, the

19 term ‘qualified employer retirement plan’ means

20 any plan or contract described in paragraph

21 (1), (2), or (3) of section 4974(c).

22 ‘‘(2) TREATMENT OF EMPLOYEE CONTRIBU23 TIONS UNDER DEFINED CONTRIBUTION PLANS.—

24 For purposes of this section, employee contributions

25 (and any income allocable thereto) under a defined
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1 contribution plan may be treated as a separate con2 tract.’’

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

4 this section shall apply in cases where the annuity starting

5 date is after December 31, 1995.

6 SEC. 204. REQUIRED DISTRIBUTIONS.

7 (a) IN GENERAL.—Section 401(a)(9)(C) (defining re8 quired beginning date) is amended to read as follows:

9 ‘‘(C) REQUIRED BEGINNING DATE.—For

10 purposes of this paragraph—

11 ‘‘(i) IN GENERAL.—The term ‘re12 quired beginning date’ means April 1 of

13 the calendar year following the later of—

14 ‘‘(I) the calendar year in which

the employee attains age 701 15 ⁄2, or

16 ‘‘(II) the calendar year in which

17 the employee retires.

18 ‘‘(ii) EXCEPTION.—Subclause (II) of

19 clause (i) shall not apply—

20 ‘‘(I) except as provided in section

21 409(d), in the case of an employee

22 who is a 5-percent owner (as defined

23 in section 416) with respect to the

24 plan year ending in the calendar year
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1 in which the employee attains age

701 2 ⁄2, or

3 ‘‘(II) for purposes of section 408

4 (a)(6) or (b)(3).

5 ‘‘(iii) ACTUARIAL ADJUSTMENT.—In

6 the case of an employee to whom clause

7 (i)(II) applies who retires in a calendar

8 year after the calendar year in which the

employee attains age 701 9 ⁄2, the employee’s

10 accrued benefit shall be actuarially in11 creased to take into account the period

after age 701 12 ⁄2 in which the employee was

13 not receiving any benefits under the plan.

14 ‘‘(iv) EXCEPTION FOR GOVERN15 MENTAL AND CHURCH PLANS.—Clauses

16 (ii) and (iii) shall not apply in the case of

17 a governmental plan or church plan. For

18 purposes of this clause, the term ‘church

19 plan’ means a plan maintained by a church

20 for church employees, and the term

21 ‘church’ means any church (as defined in

22 section 3121(w)(3)(A)) or qualified church23 controlled organization (as defined in sec24 tion 3121(w)(3)(B)).’’
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1 (b) EFFECTIVE DATE.—The amendment made by

2 subsection (a) shall apply to years beginning after Decem3 ber 31, 1995.

4 TITLE III—TARGETED ACCESS

5 TO PENSION PLANS FOR

6 SMALL EMPLOYERS

7 SEC. 301. CREDIT FOR PENSION PLAN START-UP COSTS OF

8 SMALL EMPLOYERS.

9 (a) ALLOWANCE OF CREDIT.—Section 38(b) (defin10 ing current year business credit) is amended by striking

11 ‘‘plus’’ at the end of paragraph (10), by striking the period

12 at the end of paragraph (11) and inserting ‘‘, plus’’, and

13 by adding at the end the following new paragraph:

14 ‘‘(12) the small employer pension plan start-up

15 cost credit.’’

16 (b) SMALL EMPLOYER PENSION PLAN START-UP

17 COST CREDIT.—Subpart D of part IV of subchapter A

18 of chapter 1 (relating to business related credits) is

19 amended by adding at the end the following new section:

20 ‘‘SEC. 45C. SMALL EMPLOYER PENSION PLAN START-UP

21 COST CREDIT.

22 ‘‘(a) AMOUNT OF CREDIT.—For purposes of section

23 38—

24 ‘‘(1) IN GENERAL.—The small employer pen25 sion plan start-up cost credit for any taxable year is
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1 an amount equal to the qualified start-up costs of an

2 eligible employer in establishing a qualified pension

3 plan.

4 ‘‘(2) AGGREGATE LIMITATION.—The amount of

5 the credit under paragraph (1) for any taxable year

6 shall not exceed $1,000, reduced by the aggregate

7 amount determined under this section for all preced8 ing taxable years of the taxpayer.

9 ‘‘(b) QUALIFIED START-UP COSTS; QUALIFIED PEN10 SION PLAN.—For purposes of this section—

11 ‘‘(1) QUALIFIED START-UP COSTS.—The term

12 ‘qualified start-up costs’ means any ordinary and

13 necessary expenses of an eligible employer which—

14 ‘‘(A) are paid or incurred in connection

15 with the establishment of a qualified pension

16 plan, and

17 ‘‘(B) are of a nonrecurring nature.

18 ‘‘(2) QUALIFIED PENSION PLAN.—The term

19 ‘qualified pension plan’ means—

20 ‘‘(A) a plan described in section 401(a)

21 which includes a trust exempt from tax under

22 section 501(a), or

23 ‘‘(B) a simplified employee pension (as de24 fined in section 408(k)).
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1 ‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this

2 section—

3 ‘‘(1) IN GENERAL.—The term ‘eligible em4 ployer’ means an employer which—

5 ‘‘(A) had an average daily number of em6 ployees during the preceding taxable year not in

7 excess of 50, and

8 ‘‘(B) did not make any contributions on

9 behalf of any employee to a qualified pension

10 plan during the 2 taxable years immediately

11 preceding the taxable year.

12 ‘‘(2) PROFESSIONAL SERVICE EMPLOYERS EX13 CLUDED.—Such term shall not include an employer

14 substantially all of the activities of which involve the

15 performance of services in the fields of health, law,

16 engineering, architecture, accounting, actuarial

17 science, performing arts, or consulting.

18 ‘‘(d) SPECIAL RULES.—For purposes of this sec19 tion—

20 ‘‘(1) AGGREGATION RULES.—All persons treat21 ed as a single employer under subsection (a) or (b)

22 of section 52 or subsection (n) or (o) of section 414

23 shall be treated as one person.

24 ‘‘(2) DISALLOWANCE OF DEDUCTION.—No de25 duction shall be allowable under this chapter for any
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1 qualified start-up costs for which a credit is allow2 able under subsection (a).’’

3 (c) CONFORMING AMENDMENTS.—

4 (1) Section 39(d) is amended by adding at the

5 end the following new paragraph:

6 ‘‘(7) NO CARRYBACK OF PENSION CREDIT.—No

7 portion of the unused business credit for any taxable

8 year which is attributable to the small employer pen9 sion plan start-up cost credit determined under sec10 tion 45C may be carried back to a taxable year end11 ing before the date of the enactment of section

12 45C.’’

13 (2) The table of sections for subpart D of part

14 IV of subchapter A of chapter 1 is amended by add15 ing at the end the following new item:

‘‘Sec. 45C. Small employer pension plan start-up cost credit.’’

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

17 this section shall apply to costs incurred after the date

18 of the enactment of this Act in taxable years ending after

19 such date.

20 SEC. 302. MODIFICATIONS OF SIMPLIFIED EMPLOYEE PEN21 SIONS.

22 (a) INCREASE IN NUMBER OF ALLOWABLE PARTICI23 PANTS FOR SALARY REDUCTION ARRANGEMENTS.—Sec24 tion 408(k)(6)(B) is amended by striking ‘‘25’’ each place
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1 it appears in the text and heading thereof and inserting

2 ‘‘100’’.

3 (b) REPEAL OF PARTICIPATION REQUIREMENT.—

4 (1) IN GENERAL.—Section 408(k)(6)(A) is

5 amended by striking clause (ii) and by redesignating

6 clauses (iii) and (iv) as clauses (ii) and (iii), respec7 tively.

8 (2) CONFORMING AMENDMENTS.—Clause (ii) of

9 section 408(k)(6)(C) and clause (ii) of section

10 408(k)(6)(F) are each amended by striking ‘‘sub11 paragraph (A)(iii)’’ and inserting ‘‘subparagraph

12 (A)(ii)’’.

13 (c) ALTERNATIVE TEST.—Clause (ii) of section

14 408(k)(6)(A), as redesignated by subsection (b)(1), is

15 amended by adding at the end the following new flush sen16 tence:

17 ‘‘The requirements of the preceding sen18 tence are met if the employer makes con19 tributions to the simplified employee pen20 sion meeting the requirements of sections

21 401(k)(11) (B) or (C), 401(k)(11)(D), and

22 401(m)(10)(B).’’

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

24 this section shall apply to years beginning after December

25 31, 1995.
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1 SEC. 303. EXEMPTION FROM TOP-HEAVY PLAN REQUIRE2 MENTS.

3 (a) EXEMPTION FROM TOP-HEAVY PLAN REQUIRE4 MENTS.—Section 416(g) (defining top-heavy plans) is

5 amended by adding at the end the following new para6 graph:

7 ‘‘(3) EXEMPTION FOR CERTAIN PLANS.—A plan

8 shall not be treated as a top-heavy plan if, for such

9 plan year, the employer has no highly compensated

10 employees (as defined in section 414(q)) by reason

11 of section 414(q)(2).’’

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

13 this section shall apply to years beginning after December

14 31, 1995.

15 SEC. 304. TAX-EXEMPT ORGANIZATIONS ELIGIBLE UNDER

16 SECTION 401(k).

17 (a) GENERAL RULE.—Clause (ii) of section

18 401(k)(4)(B) is amended to read as follows:

19 ‘‘(ii) any organization described in

20 section 501(c)(3) which is exempt from tax

21 under section 501(a).’’

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

23 this section shall apply to plan years beginning after De24 cember 31, 1995, but shall not apply to any cash or de25 ferred arrangement to which clause (i) of section

26 1116(f)(2)(B) of the Tax Reform Act of 1986 applies.
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1 SEC. 305. REGULATORY TREATMENT OF SMALL EMPLOY2 ERS.

3 (a) IN GENERAL.—Section 7805(f) (relating to re4 view of impact of regulations on small business) is amend5 ed by adding at the end the following new subparagraph:

6 ‘‘(4) SPECIAL RULE FOR PENSION REGULA7 TIONS.—

8 ‘‘(A) IN GENERAL.—Any regulation pro9 posed to be issued by the Secretary which re10 lates to qualified pension plans shall not take

11 effect unless the Secretary includes provisions

12 to address any special needs of the small em13 ployers.

14 ‘‘(B) QUALIFIED PENSION PLAN.—For

15 purposes of this paragraph, the term ‘qualified

16 pension plan’ means—

17 ‘‘(i) any plan which includes a trust

18 described in section 401(a) which is ex19 empt from tax under section 501(a), or

20 ‘‘(ii) any simplified employee pension

21 (as defined in section 408(k)).’’

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

23 this section shall apply to regulations issued after the date

24 of the enactment of this Act.
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1 TITLE IV—PAPERWORK

2 REDUCTION

3 SEC. 401. REPEAL OF COMBINED SECTION 415 LIMIT.

4 (a) IN GENERAL.—Section 415(e) (relating to limita5 tion in case of defined benefit plan and defined contribu6 tion plan for same employee) is hereby repealed.

7 (b) CONFORMING AMENDMENTS.—

8 (1) Subparagraph (B) of section 415(b)(5) is

9 amended by striking ‘‘and subsection (e)’’.

10 (2) Section 415(f)(1) is amended by striking

11 ‘‘, (c), and (e)’’ and inserting ‘‘and (c)’’.

12 (3) Section 415(g) is amended by striking ‘‘sub13 sections (e) and (f)’’ and inserting ‘‘subsection (f)’’.

14 (4) Section 415(k)(2)(A) is amended—

15 (A) by striking clause (i) and inserting:

16 ‘‘(i) any contribution made directly by

17 an employee under such arrangement shall

18 not be treated as an annual addition for

19 purposes of subsection (c), and’’, and

20 (B) by striking ‘‘subsections (c) and (e)’’

21 in clause (ii) and inserting ‘‘subsection (c)’’.

22 (5) Section 416(h) is hereby repealed.

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

24 this section shall apply to years beginning after December

25 31, 1995.
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1 SEC. 402. DUTIES OF SPONSORS OF CERTAIN PROTOTYPE

2 PLANS.

3 (a) IN GENERAL.—The Secretary of the Treasury

4 may, as a condition of sponsorship, prescribe rules defin5 ing the duties and responsibilities of sponsors of master

6 and prototype plans, regional prototype plans, and other

7 Internal Revenue Service preapproved plans.

8 (b) DUTIES RELATING TO PLAN AMENDMENT, NOTI9 FICATION OF ADOPTERS, AND PLAN ADMINISTRATION.—

10 The duties and responsibilities referred to in subsection

11 (a) may include—

12 (1) the maintenance of lists of persons adopting

13 the sponsor’s plans, including the updating of such

14 lists not less frequently than annually,

15 (2) the furnishing of notices at least annually

16 to such persons and to the Secretary or the Sec17 retary’s delegate, in such form and at such time as

18 the Secretary shall prescribe,

19 (3) duties relating to administrative services to

20 such persons in the operation of their plans, and

21 (4) other duties that the Secretary considers

22 necessary to ensure that—

23 (A) the master and prototype, regional

24 prototype, and other preapproved plans of

25 adopting employers are timely amended to meet

26 the requirements of the Internal Revenue Code
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1 of 1986 or of any rule or regulation of the Sec2 retary, and

3 (B) adopting employers receive timely noti4 fication of amendments and other actions taken

5 by sponsors with respect to their plans.

6 TITLE V—MISCELLANEOUS

7 SIMPLIFICATION

8 SEC. 501. TREATMENT OF LEASED EMPLOYEES.

9 (a) GENERAL RULE.—Subparagraph (C) of section

10 414(n)(2) (defining leased employee) is amended to read

11 as follows:

12 ‘‘(C) such services are performed under

13 significant direction or control by the recipi14 ent.’’

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

16 subsection (a) shall apply to years beginning after Decem17 ber 31, 1995, but shall not apply to any relationship deter18 mined under an Internal Revenue Service ruling issued be19 fore the date of the enactment of this Act pursuant to

20 section 414(n)(2)(C) of the Internal Revenue Code of

21 1986 (as in effect on the day before such date) not to

22 involve a leased employee.

23 SEC. 502. PLANS COVERING SELF-EMPLOYED INDIVIDUALS.

24 (a) AGGREGATION RULES.—Section 401(d) (relating

25 to additional requirements for qualification of trusts and
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1 plans benefiting owner-employees) is amended to read as

2 follows:

3 ‘‘(d) CONTRIBUTION LIMIT ON OWNER-EMPLOY4 EES.—A trust forming part of a pension or profit-sharing

5 plan which provides contributions or benefits for employ6 ees some or all of whom are owner-employees shall con7 stitute a qualified trust under this section only if, in addi8 tion to meeting the requirements of subsection (a), the

9 plan provides that contributions on behalf of any owner10 employee may be made only with respect to the earned

11 income of such owner-employee which is derived from the

12 trade or business with respect to which such plan is estab13 lished.’’

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

15 this section shall apply to years beginning after December

16 31, 1995.

17 SEC. 503. ELIMINATION OF SPECIAL VESTING RULE FOR

18 MULTIEMPLOYER PLANS.

19 (a) IN GENERAL.—Paragraph (2) of section 411(a)

20 (relating to minimum vesting standards) is amended—

21 (1) by striking ‘‘subparagraph (A), (B), or (C)’’

22 and inserting ‘‘subparagraph (A) or (B)’’; and

23 (2) by striking subparagraph (C).
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to plan years beginning on or after

3 the earlier of—

4 (1) the later of—

5 (A) January 1, 1996, or

6 (B) the date on which the last of the col7 lective bargaining agreements pursuant to

8 which the plan is maintained terminates (deter9 mined without regard to any extension thereof

10 after the date of the enactment of this Act), or

11 (2) January 1, 1998.

12 Such amendments shall not apply to any individual who

13 does not have more than 1 hour of service under the plan

14 on or after the 1st day of the 1st plan year to which such

15 amendments apply.

16 SEC. 504. FULL-FUNDING LIMITATION OF MULTIEMPLOYER

17 PLANS.

18 (a) FULL-FUNDING LIMITATION.—Section

19 412(c)(7)(C) (relating to full-funding limitation) is

20 amended—

21 (1) by inserting ‘‘or in the case of a multiem22 ployer plan,’’ after ‘‘paragraph (6)(B),’’, and

23 (2) by inserting ‘‘AND MULTIEMPLOYER PLANS’’

24 after ‘‘PARAGRAPH (6)(B)’’ in the heading thereof.

25 (b) VALUATION.—Section 412(c)(9) is amended—
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1 (1) by inserting ‘‘(3 years in the case of a mul2 tiemployer plan)’’ after ‘‘year’’, and

3 (2) by striking ‘‘ANNUAL VALUATION’’ in the

4 heading and inserting ‘‘VALUATION’’.

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

6 this section shall apply to years beginning after December

7 31, 1995.

8 SEC. 505. ALTERNATIVE FULL-FUNDING LIMITATION.

9 (a) IN GENERAL.—Subsection (c) of section 412 (re10 lating to minimum funding standards) is amended by re11 designating paragraphs (8) through (12) as paragraphs

12 (9) through (13), respectively, and by adding after para13 graph (7) the following new paragraph:

14 ‘‘(8) ALTERNATIVE FULL-FUNDING LIMITA15 TION.—

16 ‘‘(A) GENERAL RULE.—An employer may

17 elect the full-funding limitation under this para18 graph with respect to any defined benefit plan

19 of the employer in lieu of the full-funding limi20 tation determined under paragraph (7) if the

21 requirements of subparagraphs (C) and (D) are

22 met.

23 ‘‘(B) ALTERNATIVE FULL-FUNDING LIMI24 TATION.—The full-funding limitation under this

25 paragraph is the full-funding limitation deter-
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1 mined under paragraph (7) without regard to

2 subparagraph (A)(i)(I) thereof.

3 ‘‘(C) REQUIREMENTS RELATING TO PLAN

4 ELIGIBILITY.—

5 ‘‘(i) IN GENERAL.—The requirements

6 of this subparagraph are met with respect

7 to a defined benefit plan if—

8 ‘‘(I) as of the 1st day of the elec9 tion period, the average accrued liabil10 ity of participants accruing benefits

11 under the plan for the 5 immediately

12 preceding plan years is at least 80

13 percent of the plan’s total accrued li14 ability,

15 ‘‘(II) the plan is not a top-heavy

16 plan (as defined in section 416(g)) for

17 the 1st plan year of the election pe18 riod or either of the 2 preceding plan

19 years, and

20 ‘‘(III) each defined benefit plan

21 of the employer (and each defined

22 benefit plan of each employer who is

23 a member of any controlled group

24 which includes such employer) meets
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1 the requirements of subclauses (I) and

2 (II).

3 ‘‘(ii) FAILURE TO CONTINUE TO MEET

4 REQUIREMENTS.—

5 ‘‘(I) If any plan fails to meet the

6 requirement of clause (i)(I) for any

7 plan year during an election period,

8 the benefits of the election under this

9 paragraph shall be phased out under

10 regulations prescribed by the Sec11 retary.

12 ‘‘(II) If any plan fails to meet

13 the requirement of clause (i)(II) for

14 any plan year during an election pe15 riod, such plan shall be treated as not

16 meeting the requirements of clause (i)

17 for the remainder of the election pe18 riod.

19 If there is a failure described in subclause

20 (I) or (II) with respect to any plan, such

21 plan (and each plan described in clause

22 (i)(III) with respect to such plan) shall be

23 treated as not meeting the requirements of

24 clause (i) for any of the 10 plan years be25 ginning after the election period.
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1 ‘‘(D) REQUIREMENTS RELATING TO ELEC2 TION.—The requirements of this subparagraph

3 are met with respect to an election if—

4 ‘‘(i) FILING DATE.—Notice of such

5 election is filed with the Secretary (in such

6 form and manner and containing such in7 formation as the Secretary may provide)

8 by January 1 of any calendar year, and is

9 effective as of the 1st day of the election

10 period beginning on or after January 1 of

11 the following calendar year.

12 ‘‘(ii) CONSISTENT ELECTION.—Such

13 an election is made for all defined benefit

14 plans maintained by the employer or by

15 any member of a controlled group which

16 includes the employer.

17 ‘‘(E) TERM OF ELECTION.—Any election

18 made under this paragraph shall apply for the

19 election period.

20 ‘‘(F) OTHER CONSEQUENCES OF ELEC21 TION.—

22 ‘‘(i) NO FUNDING WAIVERS.—In the

23 case of a plan with respect to which an

24 election is made under this paragraph, no

25 waiver may be granted under subsection
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1 (d) for any plan year beginning after the

2 date the election was made and ending at

3 the close of the election period with respect

4 thereto.

5 ‘‘(ii) FAILURE TO MAKE SUCCESSIVE

6 ELECTIONS.—If an election is made under

7 this paragraph with respect to any plan

8 and such an election does not apply for

9 each successive plan year of such plan,

10 such plan shall be treated as not meeting

11 the requirements of subparagraph (C) for

12 the period of 10 plan years beginning after

13 the close of the last election period for

14 such plan.

15 ‘‘(G) DEFINITIONS.—For purposes of this

16 paragraph—

17 ‘‘(i) ELECTION PERIOD.—The term

18 ‘election period’ means the period of 5 con19 secutive plan years beginning with the 1st

20 plan year for which the election is made.

21 ‘‘(ii) CONTROLLED GROUP.—The term

22 ‘controlled group’ means all persons who

23 are treated as a single employer under sub24 section (b), (c), (m), or (o) of section

25 414.’’
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1 (b) ALTERATION OF DISCRETIONARY REGULATORY

2 AUTHORITY.—Subparagraph (D) of section 412(c)(7) is

3 amended by striking ‘‘provide—’’ and all that follows

4 through ‘‘(iii) for’’ and inserting ‘‘provide for’’.

5 (c) EFFECTIVE DATES.—

6 (1) IN GENERAL.—The amendments made by

7 this section shall take effect on January 1, 1997.

8 (2) TRANSITION PERIOD.—In the case of a plan

9 with respect to which a transition period election is

10 made under section 412(c)(8)(D)(ii) of the Internal

11 Revenue Code of 1986 (as added by this section),

12 the amendments made by this section shall take ef13 fect on July 1, 1996.

14 SEC. 506. AFFILIATED EMPLOYERS.

15 (a) IN GENERAL.—For purposes of Treasury Regula16 tions section 1.501(c)(9)–2(a)(1), a group of employers

17 shall be deemed to be affiliated if they are substantially

18 all section 501(c)(12) organizations which perform serv19 ices (or with respect to which their members perform serv20 ices) which are the same or are directly related to each

21 other.

22 (b) SECTION 501(c)(12) ORGANIZATION.—For pur23 poses of this section, the term ‘‘section 501(c)(12) organi24 zation’’ means—
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1 (1) any organization described in section

2 501(c)(12) of the Internal Revenue Code of 1986,

3 (2) any organization providing a service which

4 is the same as a service which is (or could be) pro5 vided by an organization described in paragraph (1),

6 (3) any organization described in paragraph (4)

7 or (6) of section 501(c) of such Code, but only if at

8 least 80 percent of the members of the organization

9 are organizations described in paragraph (1) or (2),

10 and

11 (4) any organization which is a national asso12 ciation of organizations described in paragraph (1),

13 (2), or (3).

14 An organization described in paragraph (2) (but not in

15 paragraph (1)) shall not be treated as a section 501(c)(12)

16 organization with respect to a voluntary employees’ bene17 ficiary association unless a substantial number of employ18 ers maintaining such association are described in para19 graph (1).

20 (c) EFFECTIVE DATE.—The provisions of this section

21 shall apply to years beginning after December 31, 1995.
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1 SEC. 507. TREATMENT OF GOVERNMENTAL PLANS UNDER

2 SECTION 415.

3 (a) COMPENSATION LIMIT.—Subsection (b) of sec4 tion 415 is amended by adding immediately after para5 graph (10) the following new paragraph:

6 ‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN7 MENTAL PLANS.—In the case of a governmental

8 plan (as defined in section 414(d)), subparagraph

9 (B) of paragraph (1) shall not apply.’’

10 (b) TREATMENT OF CERTAIN EXCESS BENEFIT

11 PLANS.—

12 (1) IN GENERAL.—Section 415 is amended by

13 adding at the end the following new subsection:

14 ‘‘(m) TREATMENT OF QUALIFIED GOVERNMENTAL

15 EXCESS BENEFIT ARRANGEMENTS.—

16 ‘‘(1) GOVERNMENTAL PLAN NOT AFFECTED.—

17 In determining whether a governmental plan (as de18 fined in section 414(d)) meets the requirements of

19 this section, benefits provided under a qualified gov20 ernmental excess benefit arrangement shall not be

21 taken into account. Income accruing to a govern22 mental plan (or to a trust that is maintained solely

23 for the purpose of providing benefits under a quali24 fied governmental excess benefit arrangement) in re25 spect of a qualified governmental excess benefit ar26 rangement shall constitute income derived from the
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1 exercise of an essential governmental function upon

2 which such governmental plan (or trust) shall be ex3 empt from tax under section 115.

4 ‘‘(2) TAXATION OF PARTICIPANT.—For pur5 poses of this chapter—

6 ‘‘(A) the taxable year or years for which

7 amounts in respect of a qualified governmental

8 excess benefit arrangement are includible in

9 gross income by a participant, and

10 ‘‘(B) the treatment of such amounts when

11 so includible by the participant,

12 shall be determined as if such qualified govern13 mental excess benefit arrangement were treated as a

14 plan for the deferral of compensation which is main15 tained by a corporation not exempt from tax under

16 this chapter and which does not meet the require17 ments for qualification under section 401.

18 ‘‘(3) QUALIFIED GOVERNMENTAL EXCESS BEN19 EFIT ARRANGEMENT.—For purposes of this sub20 section, the term ‘qualified governmental excess ben21 efit arrangement’ means a portion of a governmental

22 plan if—

23 ‘‘(A) such portion is maintained solely for

24 the purpose of providing to participants in the

25 plan that part of the participant’s annual bene-
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1 fit otherwise payable under the terms of the

2 plan that exceeds the limitations on benefits im3 posed by this section,

4 ‘‘(B) under such portion no election is pro5 vided at any time to the participant (directly or

6 indirectly) to defer compensation, and

7 ‘‘(C) benefits described in subparagraph

8 (A) are not paid from a trust forming a part

9 of such governmental plan unless such trust is

10 maintained solely for the purpose of providing

11 such benefits.’’

12 (2) COORDINATION WITH SECTION 457.—Sub13 section (e) of section 457 is amended by adding at

14 the end the following new paragraph:

15 ‘‘(14) TREATMENT OF QUALIFIED GOVERN16 MENTAL EXCESS BENEFIT ARRANGEMENTS.—Sub17 sections (b)(2) and (c)(1) shall not apply to any

18 qualified governmental excess benefit arrangement

19 (as defined in section 415(m)(3)), and benefits pro20 vided under such an arrangement shall not be taken

21 into account in determining whether any other plan

22 is an eligible deferred compensation plan.’’

23 (3) CONFORMING AMENDMENT.—Paragraph (2)

24 of section 457(f) is amended by striking the word

25 ‘‘and’’ at the end of subparagraph (C), by striking
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1 the period after subparagraph (D) and inserting ‘‘,

2 and’’, and by adding at the end the following new

3 subparagraph:

4 ‘‘(E) a qualified governmental excess bene5 fit arrangement described in section 415(m).’’

6 (c) EXEMPTION FOR SURVIVOR AND DISABILITY

7 BENEFITS.—Paragraph (2) of section 415(b) is amended

8 by adding at the end the following new subparagraph:

9 ‘‘(I) EXEMPTION FOR SURVIVOR AND DIS10 ABILITY BENEFITS PROVIDED UNDER GOVERN11 MENTAL PLANS.—Subparagraph (B) of para12 graph (1), subparagraph (C) of this paragraph,

13 and paragraph (5) shall not apply to—

14 ‘‘(i) income received from a govern15 mental plan (as defined in section 414(d))

16 as a pension, annuity, or similar allowance

17 as the result of the recipient becoming dis18 abled by reason of personal injuries or

19 sickness, or

20 ‘‘(ii) amounts received from a govern21 mental plan by the beneficiaries, survivors,

22 or the estate of an employee as the result

23 of the death of the employee.’’

24 (d) REVOCATION OF GRANDFATHER ELECTION.—
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1 (1) IN GENERAL.—Subparagraph (C) of section

2 415(b)(10) is amended by adding at the end the fol3 lowing new clause:

4 ‘‘(ii) REVOCATION OF ELECTION.—An

5 election under clause (i) may be revoked

6 not later than the last day of the third

7 plan year beginning after the date of the

8 enactment of this clause. The revocation

9 shall apply to all plan years to which the

10 election applied and to all subsequent plan

11 years. Any amount paid by a plan in a tax12 able year ending after the revocation shall

13 be includible in income in such taxable

14 year under the rules of this chapter in ef15 fect for such taxable year, except that, for

16 purposes of applying the limitations im17 posed by this section, any portion of such

18 amount which is attributable to any tax19 able year during which the election was in

20 effect shall be treated as received in such

21 taxable year.’’

22 (2) CONFORMING AMENDMENT.—Subparagraph

23 (C) of section 415(b)(10) is amended by striking

24 ‘‘This’’ and inserting:

25 ‘‘(i) IN GENERAL.—This’’.
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1 (e) EFFECTIVE DATE.—

2 (1) IN GENERAL.—The amendments made by

3 subsections (a), (b), (c), and (d) shall apply to tax4 able years beginning on or after the date of the en5 actment of this Act. The amendments made by sub6 section (e) shall apply with respect to revocations

7 adopted after the date of the enactment of this Act.

8 (2) TREATMENT FOR YEARS BEGINNING BE9 FORE DATE OF ENACTMENT.—A governmental plan

10 (as defined in section 414(d) of the Internal Reve11 nue Code of 1986) shall be treated as satisfying the

12 requirements of section 415 of such Code for all tax13 able years beginning before the date of the enact14 ment of this Act.

15 SEC. 508. TREATMENT OF DEFERRED COMPENSATION

16 PLANS OF STATE AND LOCAL GOVERNMENTS

17 AND TAX-EXEMPT ORGANIZATIONS.

18 (a) SPECIAL RULES FOR PLAN DISTRIBUTIONS.—

19 Paragraph (9) of section 457(e) (relating to other defini20 tions and special rules) is amended to read as follows:

21 ‘‘(9) BENEFITS NOT TREATED AS MADE AVAIL22 ABLE BY REASON OF CERTAIN ELECTIONS, ETC.—

23 ‘‘(A) TOTAL AMOUNT PAYABLE IS $3,500

24 OR LESS.—The total amount payable to a par25 ticipant under the plan shall not be treated as
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1 made available merely because the participant

2 may elect to receive such amount (or the plan

3 may distribute such amount without the partici4 pant’s consent) if—

5 ‘‘(i) such amount does not exceed

6 $3,500, and

7 ‘‘(ii) such amount may be distributed

8 only if—

9 ‘‘(I) no amount has been deferred

10 under the plan with respect to such

11 participant during the 2-year period

12 ending on the date of the distribution,

13 and

14 ‘‘(II) there has been no prior dis15 tribution under the plan to such par16 ticipant to which this subparagraph

17 applied.

18 A plan shall not be treated as failing to

19 meet the distribution requirements of sub20 section (d) by reason of a distribution to which

21 this subparagraph applies.

22 ‘‘(B) ELECTION TO DEFER COMMENCE23 MENT OF DISTRIBUTIONS.—The total amount

24 payable to a participant under the plan shall

25 not be treated as made available merely because
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1 the participant may elect to defer commence2 ment of distributions under the plan if—

3 ‘‘(i) such election is made after

4 amounts may be available under the plan

5 in accordance with subsection (d)(1)(A)

6 and before commencement of such dis7 tributions, and

8 ‘‘(ii) the participant may make only 1

9 such election.’’

10 (b) COST-OF-LIVING ADJUSTMENT OF MAXIMUM DE11 FERRAL AMOUNT.—Subsection (e) of section 457, as

12 amended by section 507(c)(2), is amended by adding at

13 the end the following new paragraph:

14 ‘‘(15) COST-OF-LIVING ADJUSTMENT OF MAXI15 MUM DEFERRAL AMOUNT.—The Secretary shall ad16 just the $7,500 amount specified in subsections

17 (b)(2) and (c)(1) at the same time and in the same

18 manner as under section 415(d), except that the

19 base period shall be the calendar quarter beginning

20 October 1, 1994.’’

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

22 this section shall apply to taxable years beginning after

23 the date of the enactment of this Act.
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1 SEC. 509. CONTRIBUTIONS ON BEHALF OF DISABLED EM2 PLOYEES.

3 (a) ALL DISABLED PARTICIPANTS RECEIVING CON4 TRIBUTIONS.—Section 415(c)(3)(C) is amended by adding

5 at the end the following: ‘‘If a defined contribution plan

6 provides for the continuation of contributions on behalf

7 of all participants described in clause (i) for a fixed or

8 determinable period, this subparagraph shall be applied

9 without regard to clauses (ii) and (iii).’’

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

11 this section shall apply to years beginning after December

12 31, 1995.

13 SEC. 510. DISTRIBUTIONS UNDER RURAL COOPERATIVE

14 PLANS.

15 (a) DISTRIBUTIONS FOR HARDSHIP OR AFTER A

16 CERTAIN AGE.—Section 401(k)(7) is amended by adding

17 at the end the following new subparagraph:

18 ‘‘(C) SPECIAL RULE FOR CERTAIN DIS19 TRIBUTIONS.—A rural cooperative plan which

20 includes a qualified cash or deferred arrange21 ment shall not be treated as violating the re22 quirements of section 401(a) or of paragraph

23 (2) merely by reason of a hardship distribution

24 or a distribution to a participant after attainment of age 591 25 ⁄2. For purposes of this section,

26 the term ‘hardship distribution’ means a dis-
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1 tribution described in paragraph (2)(B)(i)(IV)

2 (without regard to the limit of its application to

3 profit-sharing or stock bonus plans).’’

4 (b) DEFINITION OF RURAL COOPERATIVE PLANS.—

5 (1) PUBLIC UTILITY DISTRICTS.—Clause (i) of

6 section 401(k)(7)(B) (defining rural cooperative) is

7 amended to read as follows:

8 ‘‘(i) any organization which—

9 ‘‘(I) is engaged primarily in pro10 viding electric service on a mutual or

11 cooperative basis, or

12 ‘‘(II) is engaged primarily in pro13 viding electric service to the public in

14 its area of service and which is ex15 empt from tax under this subtitle or

16 which is a State or local government

17 (or an agency or instrumentality

18 thereof), other than a municipality (or

19 an agency or instrumentality there20 of).’’

21 (2) RELATED ORGANIZATIONS.—Subparagraph

22 (B) of section 401(k)(7), as amended by paragraph

23 (1), is amended by striking clause (iv) and inserting

24 the following new clauses:
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1 ‘‘(iv) an organization which is a na2 tional association of organizations de3 scribed in any other clause of this subpara4 graph, or

5 ‘‘(v) any other organization which pro6 vides services which are related to the ac7 tivities of an organization described in

8 clause (i), (ii), (iii), or (iv), but only in the

9 case of a plan with respect to which sub10 stantially all of the organizations maintain11 ing it are described in clause (i), (ii), (iii),

12 or (iv).’’

13 (c) EFFECTIVE DATES.—

14 (1) DISTRIBUTIONS.—The amendments made

15 by subsection (a) shall apply to distributions after

16 the date of the enactment of this Act.

17 (2) RURAL COOPERATIVE.—The amendments

18 made by subsection (b) shall apply to plan years be19 ginning after December 31, 1984.

20 SEC. 511. SPECIAL RULES FOR PLANS COVERING PILOTS.

21 (a) GENERAL RULE.—

22 (1) Subparagraph (B) of section 410(b)(3) is

23 amended to read as follows:

24 ‘‘(B) in the case of a plan established or

25 maintained by one or more employers to provide
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1 contributions or benefits for air pilots employed

2 by one or more common carriers engaged in

3 interstate or foreign commerce or air pilots em4 ployed by carriers transporting mail for or

5 under contract with the United States Govern6 ment, all employees who are not air pilots.’’

7 (2) Paragraph (3) of section 410(b) is amended

8 by striking the last sentence and inserting the fol9 lowing new sentence: ‘‘Subparagraph (B) shall not

10 apply in the case of a plan which provides contribu11 tions or benefits for employees who are not air pilots

12 or for air pilots whose principal duties are not cus13 tomarily performed aboard aircraft in flight.’’

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

15 subsection (a) shall apply to years beginning after Decem16 ber 31, 1995.

17 SEC. 512. TENURED FACULTY.

18 (a) IN GENERAL.—Section 457(e)(11) is amended by

19 inserting ‘‘eligible faculty voluntary retirement incentive

20 pay,’’ after ‘‘disability pay,’’.

21 (b) DEFINITION.—Section 457(e), as amended by

22 sections 507(c)(2) and 508(b), is amended by adding at

23 the end the following new paragraph:

24 ‘‘(16) DEFINITION OF ELIGIBLE FACULTY VOL25 UNTARY RETIREMENT INCENTIVE PAY.—For pur-
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1 poses of this section, the term ‘eligible faculty vol2 untary retirement incentive pay’ means payments

3 under a plan established for employees serving under

4 contracts of unlimited tenure (or similar arrange5 ments providing for unlimited tenure) at an institu6 tion of higher education (as defined in section

7 1201(a) of the Higher Education Act of 1965 (20

8 U.S.C. 1141(a))) which—

9 ‘‘(A) provides—

10 ‘‘(i) payment to employees electing to

11 retire during a specified period of time of

12 limited duration, or

13 ‘‘(ii) payment to employees who elect

14 to retire prior to normal retirement age,

15 ‘‘(B) provides that the total amount of

16 payments to an employee does not exceed the

17 equivalent of twice the employee’s annual com18 pensation (within the meaning of section

19 415(c)(3)) during the year immediately preced20 ing the employee’s termination of service, and

21 ‘‘(C) provides that all payments to an em22 ployee must be completed within 5 years after

23 the employee’s termination of service.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to years beginning after December

3 31, 1995.

4 SEC. 513. UNIFORM RETIREMENT AGE.

5 (a) DISCRIMINATION TESTING.—Paragraph (5) of

6 section 401(a) (relating to special rules relating to non7 discrimination requirements) is amended by adding at the

8 end the following new subparagraph:

9 ‘‘(F) SOCIAL SECURITY RETIREMENT

10 AGE.—For purposes of testing for discrimina11 tion under paragraph (4)—

12 ‘‘(i) the social security retirement age

13 (as defined in section 415(b)(8)) shall be

14 treated as a uniform retirement age, and

15 ‘‘(ii) subsidized early retirement bene16 fits and joint and survivor annuities shall

17 not be treated as being unavailable to em18 ployees on the same terms merely because

19 such benefits or annuities are based in

20 whole or in part on an employee’s social

21 security retirement age (as so defined).’’

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

23 this section shall apply to years beginning after December

24 31, 1995.
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1 SEC. 514. UNIFORM PENALTY PROVISIONS TO APPLY TO

2 CERTAIN PENSION REPORTING REQUIRE3 MENTS.

4 (a) IN GENERAL.—

5 (1) Paragraph (1) of section 6724(d) is amend6 ed by striking ‘‘and’’ at the end of subparagraph

7 (A), by striking the period at the end of subpara8 graph (B) and inserting ‘‘, and’’, and by inserting

9 after subparagraph (B) the following new subpara10 graph:

11 ‘‘(C) any statement of the amount of pay12 ments to another person required to be made to

13 the Secretary under—

14 ‘‘(i) section 408(i) (relating to reports

15 with respect to individual retirement ac16 counts or annuities), or

17 ‘‘(ii) section 6047(d) (relating to re18 ports by employers, plan administrators,

19 etc.).’’

20 (2) Paragraph (2) of section 6724(d) is amend21 ed by striking ‘‘or’’ at the end of subparagraph (S),

22 by striking the period at the end of subparagraph

23 (T) and inserting a comma, and by inserting after

24 subparagraph (T) the following new

25 subparagraphs:
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1 ‘‘(U) section 408(i) (relating to reports

2 with respect to individual retirement plans) to

3 any person other than the Secretary with re4 spect to the amount of payments made to such

5 person, or

6 ‘‘(V) section 6047(d) (relating to reports

7 by plan administrators) to any person other

8 than the Secretary with respect to the amount

9 of payments made to such person.’’

10 (b) MODIFICATION OF REPORTABLE DESIGNATED

11 DISTRIBUTIONS.—

12 (1) SECTION 408.—Subsection (i) of section 408

13 (relating to individual retirement account reports) is

14 amended by inserting ‘‘aggregating $10 or more in

15 any calendar year’’ after ‘‘distributions’’.

16 (2) SECTION 6047.—Paragraph (1) of section

17 6047(d) (relating to reports by employers, plan ad18 ministrators, etc.) is amended by adding at the end

19 thereof the following new sentence: ‘‘No return or

20 report may be required under the preceding sentence

21 with respect to distributions to any person during

22 any year unless such distributions aggregate $10 or

23 more.’’

24 (c) QUALIFYING ROLLOVER DISTRIBUTIONS.—Sec25 tion 6652(i) is amended—
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1 (1) by striking ‘‘the $10’’ and inserting

2 ‘‘$100’’, and

3 (2) by striking ‘‘$5,000’’ and inserting

4 ‘‘$50,000’’.

5 (d) CONFORMING AMENDMENTS.—

6 (1) Paragraph (1) of section 6047(f) is amend7 ed to read as follows:

8 ‘‘(1) For provisions relating to penalties for failures

9 to file returns and reports required under this section, see

10 sections 6652(e), 6721, and 6722.’’

11 (2) Subsection (e) of section 6652 is amended

12 by adding at the end the following new sentence:

13 ‘‘This subsection shall not apply to any return or

14 statement which is an information return described

15 in section 6724(d)(1)(C)(ii) or a payee statement de16 scribed in section 6724(d)(2)(V).’’

17 (3) Subsection (a) of section 6693 is amended

18 by adding at the end the following new sentence:

19 ‘‘This subsection shall not apply to any report which

20 is an information return described in section

21 6724(d)(1)(C)(i) or a payee statement described in

22 section 6724(d)(2)(U).’’

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

24 this section shall apply to returns, reports, and other
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1 statements the due date for which (determined without re2 gard to extensions) is after December 31, 1995.

3 SEC. 515. NATIONAL COMMISSION ON PRIVATE PENSION

4 PLANS.

5 (a) IN GENERAL.—Chapter 77 is amended by adding

6 at the end the following new section:

7 ‘‘SEC. 7524. NATIONAL COMMISSION ON PRIVATE PENSION

8 PLANS.

9 ‘‘(a) ESTABLISHMENT.—There is hereby established

10 a commission to be known as the National Commission

11 on Private Pension Plans (in this section referred to as

12 the ‘Commission’).

13 ‘‘(b) MEMBERSHIP.—

14 ‘‘(1) The Commission shall consist of—

15 ‘‘(A) 6 members to be appointed by the

16 President;

17 ‘‘(B) 6 members to be appointed by the

18 Speaker of the House of Representatives; and

19 ‘‘(C) 6 members to be appointed by the

20 Majority Leader of the Senate.

21 ‘‘(2) The appointments made pursuant to sub22 paragraphs (B) and (C) of paragraph (1) shall be

23 made in consultation with the chairmen of the com24 mittees of the House of Representatives and the
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1 Senate, respectively, having jurisdiction over relevant

2 Federal pension programs.

3 ‘‘(c) DUTIES AND FUNCTIONS OF COMMISSION; PUB4 LIC HEARINGS IN DIFFERENT GEOGRAPHICAL AREAS;

5 BROAD SPECTRUM OF WITNESSES AND TESTIMONY.—

6 ‘‘(1) It shall be the duty and function of the

7 Commission to conduct the studies and issue the re8 port required by subsection (d).

9 ‘‘(2) The Commission (and any committees that

10 it may form) may conduct public hearings in order

11 to receive the views of a broad spectrum of the pub12 lic on the status of the Nation’s private retirement

13 system.

14 ‘‘(d) REPORT TO THE PRESIDENT AND CONGRESS;

15 RECOMMENDATIONS.—The Commission shall submit to

16 the President, to the Majority Leader and the Minority

17 Leader of the Senate, and to the Majority Leader and the

18 Minority Leader of the House of Representatives a report

19 no later than September 1, 1996, reviewing existing Fed20 eral incentives and programs that encourage and protect

21 private retirement savings. The final report shall also set

22 forth recommendations where appropriate for increasing

23 the level and security of private retirement savings.

24 ‘‘(e) TIME OF APPOINTMENT OF MEMBERS; VACAN25 CIES; ELECTION OF CHAIRMAN; QUORUM; CALLING OF
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1 MEETINGS; NUMBER OF MEETINGS; VOTING; COMPENSA2 TION AND EXPENSES.—

3 ‘‘(1)(A) Members of the Commission shall be

4 appointed for terms ending on September 1, 1996.

5 ‘‘(B) A vacancy in the Commission shall not af6 fect its powers, but shall be filled in the same man7 ner as the vacant position was first filled.

8 ‘‘(2) The Commission shall elect 1 of its mem9 bers to serve as Chairman of the Commission.

10 ‘‘(3) A majority of the members of the Commis11 sion shall constitute a quorum for the transaction of

12 business.

13 ‘‘(4) The Commission shall meet at the call of

14 the Chairman.

15 ‘‘(5) Decisions of the Commission shall be ac16 cording to the vote of a simple majority of those

17 present and voting at a properly called meeting.

18 ‘‘(6) Members of the Commission shall serve

19 without compensation, but shall be reimbursed for

20 travel, subsistence, and other necessary expenses in21 curred in the performance of their duties as mem22 bers of the Commission.

23 ‘‘(f) EXECUTIVE DIRECTOR AND ADDITIONAL PER24 SONNEL; APPOINTMENT AND COMPENSATION; CONSULT25 ANTS.—
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1 ‘‘(1) The Commission shall appoint an Execu2 tive Director of the Commission. In addition to the

3 Executive Director, the Commission may appoint

4 and fix the compensation of such personnel as it

5 deems advisable. Such appointments and compensa6 tion may be made without regard to the provisions

7 of title 5, United States Code, that govern appoint8 ments in the competitive service, and the provisions

9 of chapter 51 and subchapter III of chapter 53 of

10 such title that relate to classifications and the Gen11 eral Schedule pay rates.

12 ‘‘(2) The Commission may procure such tem13 porary and intermittent services of consultants

14 under section 3109(b) of title 5, United States Code,

15 as the Commission determines to be necessary to

16 carry out the duties of the Commission.

17 ‘‘(g) TIME AND PLACE OF HEARINGS AND NATURE

18 OF TESTIMONY AUTHORIZED.—In carrying out its duties,

19 the Commission, or any duly organized committee thereof,

20 is authorized to hold such hearings, sit and act at such

21 times and places, and take such testimony, with respect

22 to matters for which it has a responsibility under this sec23 tion, as the Commission or committee may deem advisable.

24 ‘‘(h) DATA AND INFORMATION FROM OTHER AGEN25 CIES AND DEPARTMENTS.—
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1 ‘‘(1) The Commission may secure directly from

2 any department or agency of the United States such

3 data and information as may be necessary to carry

4 out its responsibilities.

5 ‘‘(2) Upon request of the Commission, any such

6 department or agency shall furnish any such data or

7 information.

8 ‘‘(i) SUPPORT SERVICES BY GENERAL SERVICES AD9 MINISTRATION.—The General Services Administration

10 shall provide to the Commission, on a reimbursable basis,

11 such administrative support services as the Commission

12 may request.

13 ‘‘(j) AUTHORIZATION OF APPROPRIATIONS.—There

14 are authorized to be appropriated for each of fiscal years

15 1995 and 1996, such sums as may be necessary to carry

16 out this section.

17 ‘‘(k) DONATIONS ACCEPTED AND DEPOSITED IN

18 TREASURY IN SEPARATE FUND; EXPENDITURES.—

19 ‘‘(1) The Commission is authorized to accept

20 donations of money, property, or personal services.

21 Funds received from donations shall be deposited in

22 the Treasury in a separate fund created for this pur23 pose. Funds appropriated for the Commission and

24 donated funds may be expended for such purposes

25 as official reception and representation expenses,
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1 public surveys, public service announcements, prepa2 ration of special papers, analyses, and documen3 taries, and for such other purposes as determined by

4 the Commission to be in furtherance of its mission

5 to review national issues affecting private pension

6 plans.

7 ‘‘(2) Expenditures of appropriated and donated

8 funds shall be subject to such rules and regulations

9 as may be adopted by the Commission and shall not

10 be subject to Federal procurement requirements.

11 ‘‘(l) PUBLIC SURVEYS.—The Commission is author12 ized to conduct such public surveys as it deems necessary

13 in support of its review of national issues affecting private

14 pension plans and, in conducting such surveys, the Com15 mission shall not be deemed to be an ‘‘agency’’ for the

16 purpose of section 3502 of title 44, United States Code.’’

17 (b) CONFORMING AMENDMENT.—The table of sec18 tions for chapter 77 is amended by adding at the end the

19 following new item:

‘‘Sec. 7524. National Commission on Private Pension Plans.’’

20 SEC. 516. DATE FOR ADOPTION OF PLAN AMENDMENTS.

21 If any amendment made by this Act requires an

22 amendment to any plan, such plan amendment shall not

23 be required to be made before the first day of the first

24 plan year beginning on or after January 1, 1997, if—
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1 (1) during the period after such amendment

2 takes effect and before such first plan year, the plan

3 is operated in accordance with the requirements of

4 such amendment, and

5 (2) such plan amendment applies retroactively

6 to such period.

7 In the case of a governmental plan (as defined in section

8 414(d) of the Internal Revenue Code of 1986), this section

9 shall be applied by substituting ‘‘1999’’ for ‘‘1997’’.

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