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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1102 Reported in Senate (RS)]

                                                       Calendar No. 802
106th CONGRESS
  2d Session
                                H. R. 1102

                          [Report No. 106-411]

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 20, 2000

                                Received

                             July 27, 2000

                          Read the first time

                           September 5, 2000

 Read the second time and placed on the calendar; ordered referred to 
                        the Committee on Finance

                           September 13, 2000

 Reported by Mr. Roth, with an amendment and an amendment to the title
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]

_______________________________________________________________________

                                 AN ACT

 
         To provide for pension reform, and for other purposes.

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

<DELETED>SECTION 1. SHORT TITLE; REFERENCES; TABLE OF 
              CONTENTS.</DELETED>

<DELETED>    (a) Short Title.--This Act may be cited as the 
``Comprehensive Retirement Security and Pension Reform Act of 
2000''.</DELETED>
<DELETED>    (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.</DELETED>
<DELETED>    (c) Table of Contents.--The table of contents of this Act 
is as follows:</DELETED>

<DELETED>Sec. 1. Short title; references; table of contents.
       <DELETED>TITLE I--INDIVIDUAL RETIREMENT ACCOUNT PROVISIONS

<DELETED>Sec. 101. Modification of IRA contribution limits.
                 <DELETED>TITLE II--EXPANDING COVERAGE

<DELETED>Sec. 201. Increase in benefit and contribution limits.
<DELETED>Sec. 202. Plan loans for subchapter S owners, partners, and 
                            sole proprietors.
<DELETED>Sec. 203. Modification of top-heavy rules.
<DELETED>Sec. 204. Elective deferrals not taken into account for 
                            purposes of deduction limits.
<DELETED>Sec. 205. Repeal of coordination requirements for deferred 
                            compensation plans of State and local 
                            governments and tax-exempt organizations.
<DELETED>Sec. 206. Elimination of user fee for requests to IRS 
                            regarding pension plans.
<DELETED>Sec. 207. Deduction limits.
<DELETED>Sec. 208. Option to treat elective deferrals as after-tax 
                            contributions.
            <DELETED>TITLE III--ENHANCING FAIRNESS FOR WOMEN

<DELETED>Sec. 301. Catch-up contributions for individuals age 50 or 
                            over.
<DELETED>Sec. 302. Equitable treatment for contributions of employees 
                            to defined contribution plans.
<DELETED>Sec. 303. Faster vesting of certain employer matching 
                            contributions.
<DELETED>Sec. 304. Simplify and update the minimum distribution rules.
<DELETED>Sec. 305. Clarification of tax treatment of division of 
                            section 457 plan benefits upon divorce.
<DELETED>Sec. 306. Modification of safe harbor relief for hardship 
                            withdrawals from cash or deferred 
                            arrangements.
       <DELETED>TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS

<DELETED>Sec. 401. Rollovers allowed among various types of plans.
<DELETED>Sec. 402. Rollovers of IRAs into workplace retirement plans.
<DELETED>Sec. 403. Rollovers of after-tax contributions.
<DELETED>Sec. 404. Hardship exception to 60-day rule.
<DELETED>Sec. 405. Treatment of forms of distribution.
<DELETED>Sec. 406. Rationalization of restrictions on distributions.
<DELETED>Sec. 407. Purchase of service credit in governmental defined 
                            benefit plans.
<DELETED>Sec. 408. Employers may disregard rollovers for purposes of 
                            cash-out amounts.
<DELETED>Sec. 409. Minimum distribution and inclusion requirements for 
                            section 457 plans.
    <DELETED>TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

<DELETED>Sec. 501. Repeal of 150 percent of current liability funding 
                            limit.
<DELETED>Sec. 502. Maximum contribution deduction rules modified and 
                            applied to all defined benefit plans.
<DELETED>Sec. 503. Excise tax relief for sound pension funding.
<DELETED>Sec. 504. Excise tax on failure to provide notice by defined 
                            benefit plans significantly reducing future 
                            benefit accruals.
<DELETED>Sec. 505. Treatment of multiemployer plans under section 415.
<DELETED>Sec. 506. Prohibited allocations of stock in S corporation 
                            ESOP.
             <DELETED>TITLE VI--REDUCING REGULATORY BURDENS

<DELETED>Sec. 601. Modification of timing of plan valuations.
<DELETED>Sec. 602. ESOP dividends may be reinvested without loss of 
                            dividend deduction.
<DELETED>Sec. 603. Repeal of transition rule relating to certain highly 
                            compensated employees.
<DELETED>Sec. 604. Employees of tax-exempt entities.
<DELETED>Sec. 605. Clarification of treatment of employer-provided 
                            retirement advice.
<DELETED>Sec. 606. Reporting simplification.
<DELETED>Sec. 607. Improvement of employee plans compliance resolution 
                            system.
<DELETED>Sec. 608. Repeal of the multiple use test.
<DELETED>Sec. 609. Flexibility in nondiscrimination, coverage, and line 
                            of business rules.
<DELETED>Sec. 610. Extension to all governmental plans of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
<DELETED>Sec. 611. Notice and consent period regarding distributions.
                  <DELETED>TITLE VII--PLAN AMENDMENTS

<DELETED>Sec. 701. Provisions relating to plan amendments.

       <DELETED>TITLE I--INDIVIDUAL RETIREMENT ACCOUNTS</DELETED>

<DELETED>SEC. 101. MODIFICATION OF IRA CONTRIBUTION LIMITS.</DELETED>

<DELETED>    (a) Increase in Contribution Limit.--</DELETED>
        <DELETED>    (1) In general.--Paragraph (1)(A) of section 
        219(b) (relating to maximum amount of deduction) is amended by 
        striking ``$2,000'' and inserting ``the deductible 
        amount''.</DELETED>
        <DELETED>    (2) Deductible amount.--Section 219(b) is amended 
        by adding at the end the following new paragraph:</DELETED>
        <DELETED>    ``(5) Deductible amount.--For purposes of 
        paragraph (1)(A)--</DELETED>
                <DELETED>    ``(A) In general.--The deductible amount 
                shall be determined in accordance with the following 
                table:</DELETED>

                <DELETED>``For taxable years</DELETED>
                                                         The deductible
                <DELETED>  beginning in:</DELETED>
                                                           amount is:  
                <DELETED>    2001..........................     $3,000 
                <DELETED>    2002..........................     $4,000 
                <DELETED>    2003 and thereafter...........     $5,000.
                <DELETED>    ``(B) Catch-up contributions for 
                individuals 50 or older.--In the case of an individual 
                who has attained the age of 50 before the close of the 
                taxable year, the deductible amount for taxable years 
                beginning in 2001 or 2002 shall be $5,000.</DELETED>
                <DELETED>    ``(C) Cost-of-living adjustment.--
                </DELETED>
                        <DELETED>    ``(i) In general.--In the case of 
                        any taxable year beginning in a calendar year 
                        after 2003, the $5,000 amount under 
                        subparagraph (A) shall be increased by an 
                        amount equal to--</DELETED>
                                <DELETED>    ``(I) such dollar amount, 
                                multiplied by</DELETED>
                                <DELETED>    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2002' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.</DELETED>
                        <DELETED>    ``(ii) Rounding rules.--If any 
                        amount after adjustment under clause (i) is not 
                        a multiple of $500, such amount shall be 
                        rounded to the next lower multiple of 
                        $500.''.</DELETED>
<DELETED>    (b) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Section 408(a)(1) is amended by striking ``in 
        excess of $2,000 on behalf of any individual'' and inserting 
        ``on behalf of any individual in excess of the amount in effect 
        for such taxable year under section 219(b)(1)(A)''.</DELETED>
        <DELETED>    (2) Section 408(b)(2)(B) is amended by striking 
        ``$2,000'' and inserting ``the dollar amount in effect under 
        section 219(b)(1)(A)''.</DELETED>
        <DELETED>    (3) Section 408(b) is amended by striking 
        ``$2,000'' in the matter following paragraph (4) and inserting 
        ``the dollar amount in effect under section 
        219(b)(1)(A)''.</DELETED>
        <DELETED>    (4) Section 408(j) is amended by striking 
        ``$2,000''.</DELETED>
        <DELETED>    (5) Section 408(p)(8) is amended by striking 
        ``$2,000'' and inserting ``the dollar amount in effect under 
        section 219(b)(1)(A)''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 
2000.</DELETED>

            <DELETED>TITLE II--EXPANDING COVERAGE</DELETED>

<DELETED>SEC. 201. INCREASE IN BENEFIT AND CONTRIBUTION 
              LIMITS.</DELETED>

<DELETED>    (a) Defined Benefit Plans.--</DELETED>
        <DELETED>    (1) Dollar limit.--</DELETED>
                <DELETED>    (A) Subparagraph (A) of section 415(b)(1) 
                (relating to limitation for defined benefit plans) is 
                amended by striking ``$90,000'' and inserting 
                ``$160,000''.</DELETED>
                <DELETED>    (B) Subparagraphs (C) and (D) of section 
                415(b)(2) are each amended by striking ``$90,000'' each 
                place it appears in the headings and the text and 
                inserting ``$160,000''.</DELETED>
                <DELETED>    (C) Paragraph (7) of section 415(b) 
                (relating to benefits under certain collectively 
                bargained plans) is amended by striking ``the greater 
                of $68,212 or one-half the amount otherwise applicable 
                for such year under paragraph (1)(A) for `$90,000''' 
                and inserting ``one-half the amount otherwise 
                applicable for such year under paragraph (1)(A) for 
                `$160,000'''.</DELETED>
        <DELETED>    (2) Limit reduced when benefit begins before age 
        62.--Subparagraph (C) of section 415(b)(2) is amended by 
        striking ``the social security retirement age'' each place it 
        appears in the heading and text and inserting ``age 
        62''.</DELETED>
        <DELETED>    (3) Limit increased when benefit begins after age 
        65.--Subparagraph (D) of section 415(b)(2) is amended by 
        striking ``the social security retirement age'' each place it 
        appears in the heading and text and inserting ``age 
        65''.</DELETED>
        <DELETED>    (4) Cost-of-living adjustments.--Subsection (d) of 
        section 415 (related to cost-of-living adjustments) is 
        amended--</DELETED>
                <DELETED>    (A) by striking ``$90,000'' in paragraph 
                (1)(A) and inserting ``$160,000''; and</DELETED>
                <DELETED>    (B) in paragraph (3)(A)--</DELETED>
                        <DELETED>    (i) by striking ``$90,000'' in the 
                        heading and inserting ``$160,000''; 
                        and</DELETED>
                        <DELETED>    (ii) by striking ``October 1, 
                        1986'' and inserting ``July 1, 
                        2000''.</DELETED>
        <DELETED>    (5) Conforming amendment.--Section 415(b)(2) is 
        amended by striking subparagraph (F).</DELETED>
<DELETED>    (b) Defined Contribution Plans.--</DELETED>
        <DELETED>    (1) Dollar limit.--Subparagraph (A) of section 
        415(c)(1) (relating to limitation for defined contribution 
        plans) is amended by striking ``$30,000'' and inserting 
        ``$40,000''.</DELETED>
        <DELETED>    (2) Cost-of-living adjustments.--Subsection (d) of 
        section 415 (related to cost-of-living adjustments) is 
        amended--</DELETED>
                <DELETED>    (A) by striking ``$30,000'' in paragraph 
                (1)(C) and inserting ``$40,000''; and</DELETED>
                <DELETED>    (B) in paragraph (3)(D)--</DELETED>
                        <DELETED>    (i) by striking ``$30,000'' in the 
                        heading and inserting ``$40,000''; 
                        and</DELETED>
                        <DELETED>    (ii) by striking ``October 1, 
                        1993'' and inserting ``July 1, 
                        2000''.</DELETED>
<DELETED>    (c) Qualified Trusts.--</DELETED>
        <DELETED>    (1) Compensation limit.--Sections 401(a)(17), 
        404(l), 408(k), and 505(b)(7) are each amended by striking 
        ``$150,000'' each place it appears and inserting 
        ``$200,000''.</DELETED>
        <DELETED>    (2) Base period and rounding of cost-of-living 
        adjustment.--Subparagraph (B) of section 401(a)(17) is 
        amended--</DELETED>
                <DELETED>    (A) by striking ``October 1, 1993'' and 
                inserting ``July 1, 2000''; and</DELETED>
                <DELETED>    (B) by striking ``$10,000'' both places it 
                appears and inserting ``$5,000''.</DELETED>
<DELETED>    (d) Elective Deferrals.--</DELETED>
        <DELETED>    (1) In general.--Paragraph (1) of section 402(g) 
        (relating to limitation on exclusion for elective deferrals) is 
        amended to read as follows:</DELETED>
        <DELETED>    ``(1) In general.--</DELETED>
                <DELETED>    ``(A) Limitation.--Notwithstanding 
                subsections (e)(3) and (h)(1)(B), the elective 
                deferrals of any individual for any taxable year shall 
                be included in such individual's gross income to the 
                extent the amount of such deferrals for the taxable 
                year exceeds the applicable dollar amount.</DELETED>
                <DELETED>    ``(B) Applicable dollar amount.--For 
                purposes of subparagraph (A), the applicable dollar 
                amount shall be the amount determined in accordance 
                with the following table:</DELETED>

                <DELETED>``For taxable years</DELETED>
                                                         The applicable
                <DELETED>  beginning in</DELETED>
                                                         dollar amount:
                <DELETED>  calendar year:</DELETED>
                <DELETED>    2001..........................    $11,000 
                <DELETED>    2002..........................    $12,000 
                <DELETED>    2003..........................    $13,000 
                <DELETED>    2004..........................    $14,000 
                <DELETED>    2005 or thereafter............ $15,000.''.
        <DELETED>    (2) Cost-of-living adjustment.--Paragraph (5) of 
        section 402(g) is amended to read as follows:</DELETED>
        <DELETED>    ``(5) Cost-of-living adjustment.--In the case of 
        taxable years beginning after December 31, 2005, the Secretary 
        shall adjust the $15,000 amount under paragraph (1)(B) at the 
        same time and in the same manner as under section 415(d), 
        except that the base period shall be the calendar quarter 
        beginning July 1, 2004, and any increase under this paragraph 
        which is not a multiple of $500 shall be rounded to the next 
        lowest multiple of $500.''.</DELETED>
        <DELETED>    (3) Conforming amendments.--</DELETED>
                <DELETED>    (A) Section 402(g) (relating to limitation 
                on exclusion for elective deferrals), as amended by 
                paragraphs (1) and (2), is further amended by striking 
                paragraph (4) and redesignating paragraphs (5), (6), 
                (7), (8), and (9) as paragraphs (4), (5), (6), (7), and 
                (8), respectively.</DELETED>
                <DELETED>    (B) Paragraph (2) of section 457(c) is 
                amended by striking ``402(g)(8)(A)(iii)'' and inserting 
                ``402(g)(7)(A)(iii)''.</DELETED>
                <DELETED>    (C) Clause (iii) of section 501(c)(18)(D) 
                is amended by striking ``(other than paragraph (4) 
                thereof)''.</DELETED>
<DELETED>    (e) Deferred Compensation Plans of State and Local 
Governments and Tax-Exempt Organizations.--</DELETED>
        <DELETED>    (1) In general.--Section 457 (relating to deferred 
        compensation plans of State and local governments and tax-
        exempt organizations) is amended--</DELETED>
                <DELETED>    (A) in subsections (b)(2)(A) and (c)(1) by 
                striking ``$7,500'' each place it appears and inserting 
                ``the applicable dollar amount''; and</DELETED>
                <DELETED>    (B) in subsection (b)(3)(A) by striking 
                ``$15,000'' and inserting ``twice the dollar amount in 
                effect under subsection (b)(2)(A)''.</DELETED>
        <DELETED>    (2) Applicable dollar amount; cost-of-living 
        adjustment.--Paragraph (15) of section 457(e) is amended to 
        read as follows:</DELETED>
        <DELETED>    ``(15) Applicable dollar amount.--</DELETED>
                <DELETED>    ``(A) In general.--The applicable dollar 
                amount shall be the amount determined in accordance 
                with the following table:</DELETED>

                <DELETED>``For taxable years</DELETED>
                                                         The applicable
                <DELETED>  beginning in</DELETED>
                                                         dollar amount:
                <DELETED>  calendar year:</DELETED>
                <DELETED>    2001..........................    $11,000 
                <DELETED>    2002..........................    $12,000 
                <DELETED>    2003..........................    $13,000 
                <DELETED>    2004..........................    $14,000 
                <DELETED>    2005 or thereafter............    $15,000.
                <DELETED>    ``(B) Cost-of-living adjustments.--In the 
                case of taxable years beginning after December 31, 
                2005, the Secretary shall adjust the $15,000 amount 
                specified in the table in subparagraph (A) at the same 
                time and in the same manner as under section 415(d), 
                except that the base period shall be the calendar 
                quarter beginning July 1, 2004, and any increase under 
                this paragraph which is not a multiple of $500 shall be 
                rounded to the next lowest multiple of 
                $500.''.</DELETED>
<DELETED>    (f) Simple Retirement Accounts.--</DELETED>
        <DELETED>    (1) Limitation.--Clause (ii) of section 
        408(p)(2)(A) (relating to general rule for qualified salary 
        reduction arrangement) is amended by striking ``$6,000'' and 
        inserting ``the applicable dollar amount''.</DELETED>
        <DELETED>    (2) Applicable dollar amount.--Subparagraph (E) of 
        408(p)(2) is amended to read as follows:</DELETED>
                <DELETED>    ``(E) Applicable dollar amount; cost-of-
                living adjustment.--</DELETED>
                        <DELETED>    ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the applicable dollar 
                        amount shall be the amount determined in 
                        accordance with the following table:</DELETED>

                <DELETED>``For taxable years</DELETED>
                                                         The applicable
                <DELETED>  beginning in</DELETED>
                                                         dollar amount:
                <DELETED>  calendar year:</DELETED>
                        <DELETED>    2001..................     $7,000 
                        <DELETED>    2002..................     $8,000 
                        <DELETED>    2003..................     $9,000 
                        <DELETED>    2004 or thereafter....    $10,000.
                        <DELETED>    ``(ii) Cost-of-living 
                        adjustment.--In the case of a year beginning 
                        after December 31, 2004, the Secretary shall 
                        adjust the $10,000 amount under clause (i) at 
                        the same time and in the same manner as under 
                        section 415(d), except that the base period 
                        taken into account shall be the calendar 
                        quarter beginning July 1, 2003, and any 
                        increase under this subparagraph which is not a 
                        multiple of $500 shall be rounded to the next 
                        lower multiple of $500.''.</DELETED>
        <DELETED>    (3) Conforming amendments.--</DELETED>
                <DELETED>    (A) Clause (I) of section 401(k)(11)(B)(i) 
                is amended by striking ``$6,000'' and inserting ``the 
                amount in effect under section 
                408(p)(2)(A)(ii)''.</DELETED>
                <DELETED>    (B) Section 401(k)(11) is amended by 
                striking subparagraph (E).</DELETED>
<DELETED>    (g) Rounding Rule Relating to Defined Benefit Plans and 
Defined Contribution Plans.--Paragraph (4) of section 415(d) is amended 
to read as follows:</DELETED>
        <DELETED>    ``(4) Rounding.--</DELETED>
                <DELETED>    ``(A) $160,000 amount.--Any increase under 
                subparagraph (A) of paragraph (1) which is not a 
                multiple of $5,000 shall be rounded to the next lowest 
                multiple of $5,000.</DELETED>
                <DELETED>    ``(B) $40,000 amount.--Any increase under 
                subparagraph (C) of paragraph (1) which is not a 
                multiple of $1,000 shall be rounded to the next lowest 
                multiple of $1,000.''.</DELETED>
<DELETED>    (h) Effective Date.--The amendments made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 202. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND 
              SOLE PROPRIETORS.</DELETED>

<DELETED>    (a) In General.--Subparagraph (B) of section 4975(f)(6) 
(relating to exemptions not to apply to certain transactions) is 
amended by adding at the end the following new clause:</DELETED>
                        <DELETED>    ``(iii) Loan exception.--For 
                        purposes of subparagraph (A)(i), the term 
                        `owner-employee' shall only include a person 
                        described in subclause (II) or (III) of clause 
                        (i).''.</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by this section 
shall apply to loans made after December 31, 2000.</DELETED>

<DELETED>SEC. 203. MODIFICATION OF TOP-HEAVY RULES.</DELETED>

<DELETED>    (a) Simplification of Definition of Key Employee.--
</DELETED>
        <DELETED>    (1) In general.--Section 416(i)(1)(A) (defining 
        key employee) is amended--</DELETED>
                <DELETED>    (A) by striking ``or any of the 4 
                preceding plan years'' in the matter preceding clause 
                (i);</DELETED>
                <DELETED>    (B) by striking clause (i) and inserting 
                the following:</DELETED>
                        <DELETED>    ``(i) an officer of the employer 
                        having an annual compensation greater than 
                        $150,000,'';</DELETED>
                <DELETED>    (C) by striking clause (ii) and 
                redesignating clauses (iii) and (iv) as clauses (ii) 
                and (iii), respectively; and</DELETED>
                <DELETED>    (D) by striking the second sentence in the 
                matter following clause (iii), as redesignated by 
                subparagraph (C).</DELETED>
        <DELETED>    (2) Conforming amendment.--Section 
        416(i)(1)(B)(iii) is amended by striking ``and subparagraph 
        (A)(ii)''.</DELETED>
<DELETED>    (b) Matching Contributions Taken Into Account for Minimum 
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined 
contribution plans) is amended by adding at the end the following: 
``Employer matching contributions (as defined in section 401(m)(4)(A)) 
shall be taken into account for purposes of this 
subparagraph.''.</DELETED>
<DELETED>    (c) Distributions During Last Year Before Determination 
Date Taken Into Account.--</DELETED>
        <DELETED>    (1) In general.--Paragraph (3) of section 416(g) 
        is amended to read as follows:</DELETED>
        <DELETED>    ``(3) Distributions during last year before 
        determination date taken into account.--</DELETED>
                <DELETED>    ``(A) In general.--For purposes of 
                determining--</DELETED>
                        <DELETED>    ``(i) the present value of the 
                        cumulative accrued benefit for any employee, 
                        or</DELETED>
                        <DELETED>    ``(ii) the amount of the account 
                        of any employee,</DELETED>
                <DELETED>such present value or amount shall be 
                increased by the aggregate distributions made with 
                respect to such employee under the plan during the 1-
                year period ending on the determination date. The 
                preceding sentence shall also apply to distributions 
                under a terminated plan which if it had not been 
                terminated would have been required to be included in 
                an aggregation group.</DELETED>
                <DELETED>    ``(B) 5-year period in case of in-service 
                distribution.--In the case of any distribution made for 
                a reason other than separation from service, death, or 
                disability, subparagraph (A) shall be applied by 
                substituting `5-year period' for `1-year 
                period'.''.</DELETED>
        <DELETED>    (2) Benefits not taken into account.--Subparagraph 
        (E) of section 416(g)(4) is amended--</DELETED>
                <DELETED>    (A) by striking ``last 5 years'' in the 
                heading and inserting ``last year before determination 
                date''; and</DELETED>
                <DELETED>    (B) by striking ``5-year period'' and 
                inserting ``1-year period''.</DELETED>
<DELETED>    (d) Definition of Top-Heavy Plans.--Paragraph (4) of 
section 416(g) (relating to other special rules for top-heavy plans) is 
amended by adding at the end the following new subparagraph:</DELETED>
                <DELETED>    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--The term `top-heavy plan' shall not 
                include a plan which consists solely of--</DELETED>
                        <DELETED>    ``(i) a cash or deferred 
                        arrangement which meets the requirements of 
                        section 401(k)(12), and</DELETED>
                        <DELETED>    ``(ii) matching contributions with 
                        respect to which the requirements of section 
                        401(m)(11) are met.</DELETED>
                <DELETED>If, but for this subparagraph, a plan would be 
                treated as a top-heavy plan because it is a member of 
                an aggregation group which is a top-heavy group, 
                contributions under the plan may be taken into account 
                in determining whether any other plan in the group 
                meets the requirements of subsection 
                (c)(2).''.</DELETED>
<DELETED>    (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit 
plans) is amended--</DELETED>
                <DELETED>    (A) by striking ``clause (ii)'' in clause 
                (i) and inserting ``clause (ii) or (iii)''; 
                and</DELETED>
                <DELETED>    (B) by adding at the end the 
                following:</DELETED>
                        <DELETED>    ``(iii) Exception for frozen 
                        plan.--For purposes of determining an 
                        employee's years of service with the employer, 
                        any service with the employer shall be 
                        disregarded to the extent that such service 
                        occurs during a plan year when the plan 
                        benefits (within the meaning of section 410(b)) 
                        no employee or former employee.''.</DELETED>
<DELETED>    (f) Elimination of Family Attribution.--Section 
416(i)(1)(B) (defining 5-percent owner) is amended by adding at the end 
the following new clause:</DELETED>
                        <DELETED>    ``(iv) Family attribution 
                        disregarded.--Solely for purposes of applying 
                        this paragraph (and not for purposes of any 
                        provision of this title which incorporates by 
                        reference the definition of a key employee or 
                        5-percent owner under this paragraph), section 
                        318 shall be applied without regard to 
                        subsection (a)(1) thereof in determining 
                        whether any person is a 5-percent 
                        owner.''.</DELETED>
<DELETED>    (g) Effective Date.--The amendments made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 204. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR 
              PURPOSES OF DEDUCTION LIMITS.</DELETED>

<DELETED>    (a) In General.--Section 404 (relating to deduction for 
contributions of an employer to an employees' trust or annuity plan and 
compensation under a deferred payment plan) is amended by adding at the 
end the following new subsection:</DELETED>
<DELETED>    ``(n) Elective Deferrals Not Taken Into Account for 
Purposes of Deduction Limits.--Elective deferrals (as defined in 
section 402(g)(3)) shall not be subject to any limitation contained in 
paragraph (3), (7), or (9) of subsection (a), and such elective 
deferrals shall not be taken into account in applying any such 
limitation to any other contributions.''.</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 205. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED 
              COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND 
              TAX-EXEMPT ORGANIZATIONS.</DELETED>

<DELETED>    (a) In General.--Subsection (c) of section 457 (relating 
to deferred compensation plans of State and local governments and tax-
exempt organizations), as amended by section 201, is amended to read as 
follows:</DELETED>
<DELETED>    ``(c) Limitation.--The maximum amount of the compensation 
of any one individual which may be deferred under subsection (a) during 
any taxable year shall not exceed the amount in effect under subsection 
(b)(2)(A) (as modified by any adjustment provided under subsection 
(b)(3)).''.</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by subsection (a) 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 206. ELIMINATION OF USER FEE FOR REQUESTS TO IRS 
              REGARDING PENSION PLANS.</DELETED>

<DELETED>    (a) Elimination of Certain User Fees.--The Secretary of 
the Treasury or the Secretary's delegate shall not require payment of 
user fees under the program established under section 7527 of the 
Internal Revenue Code of 1986 for requests to the Internal Revenue 
Service for determination letters with respect to the qualified status 
of a pension benefit plan maintained solely by one or more eligible 
employers or any trust which is part of the plan. The preceding 
sentence shall not apply to any request--</DELETED>
        <DELETED>    (1) made after the fifth plan year the pension 
        benefit plan is in existence; or</DELETED>
        <DELETED>    (2) made by the sponsor of any prototype or 
        similar plan which the sponsor intends to market to 
        participating employers.</DELETED>
<DELETED>    (b) Pension Benefit Plan.--For purposes of this section, 
the term ``pension benefit plan'' means a pension, profit-sharing, 
stock bonus, annuity, or employee stock ownership plan.</DELETED>
<DELETED>    (c) Eligible Employer.--For purposes of this section, the 
term ``eligible employer'' has the same meaning given such term in 
section 408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The 
determination of whether an employer is an eligible employer under this 
section shall be made as of the date of the request described in 
subsection (a).</DELETED>
<DELETED>    (d) Effective Date.--The provisions of this section shall 
apply with respect to requests made after December 31, 2000.</DELETED>

<DELETED>SEC. 207. DEDUCTION LIMITS.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Stock bonus and profit sharing trusts.--
        Subclause (I) of section 404(a)(3)(A)(i) (relating to stock 
        bonus and profit sharing trusts) is amended by striking ``15 
        percent'' and inserting ``20 percent''.</DELETED>
        <DELETED>    (2) Compensation.--Section 404(a) (relating to 
        general rule) is amended by adding at the end the 
        following:</DELETED>
        <DELETED>    ``(12) Definition of compensation.--For purposes 
        of paragraphs (3), (7), (8), and (9), the term `compensation 
        otherwise paid or accrued during the taxable year' shall 
        include amounts treated as `participant's compensation' under 
        subparagraph (C) or (D) of section 415(c)(3).''.</DELETED>
<DELETED>    (b) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Subparagraph (B) of section 404(a)(3) is 
        amended by striking the last sentence thereof.</DELETED>
        <DELETED>    (2) Subparagraph (C) of section 404(h)(1) is 
        amended by striking ``15 percent'' each place it appears and 
        inserting ``20 percent''.</DELETED>
        <DELETED>    (3) Clause (i) of section 4972(c)(6)(B) is amended 
        by striking ``(within the meaning of section 404(a))'' and 
        inserting ``(within the meaning of section 404(a) and as 
        adjusted under section 404(a)(12))''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 208. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX 
              CONTRIBUTIONS.</DELETED>

<DELETED>    (a) In General.--Subpart A of part I of subchapter D of 
chapter 1 (relating to deferred compensation, etc.) is amended by 
inserting after section 402 the following new section:</DELETED>

<DELETED>``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS PLUS 
              CONTRIBUTIONS.</DELETED>

<DELETED>    ``(a) General Rule.--If an applicable retirement plan 
includes a qualified plus contribution program--</DELETED>
        <DELETED>    ``(1) any designated plus contribution made by an 
        employee pursuant to the program shall be treated as an 
        elective deferral for purposes of this chapter, except that 
        such contribution shall not be excludable from gross income, 
        and</DELETED>
        <DELETED>    ``(2) such plan (and any arrangement which is part 
        of such plan) shall not be treated as failing to meet any 
        requirement of this chapter solely by reason of including such 
        program.</DELETED>
<DELETED>    ``(b) Qualified Plus Contribution Program.--For purposes 
of this section--</DELETED>
        <DELETED>    ``(1) In general.--The term `qualified plus 
        contribution program' means a program under which an employee 
        may elect to make designated plus contributions in lieu of all 
        or a portion of elective deferrals the employee is otherwise 
        eligible to make under the applicable retirement 
        plan.</DELETED>
        <DELETED>    ``(2) Separate accounting required.--A program 
        shall not be treated as a qualified plus contribution program 
        unless the applicable retirement plan--</DELETED>
                <DELETED>    ``(A) establishes separate accounts 
                (`designated plus accounts') for the designated plus 
                contributions of each employee and any earnings 
                properly allocable to the contributions, and</DELETED>
                <DELETED>    ``(B) maintains separate recordkeeping 
                with respect to each account.</DELETED>
<DELETED>    ``(c) Definitions and Rules Relating to Designated Plus 
Contributions.--For purposes of this section--</DELETED>
        <DELETED>    ``(1) Designated plus contribution.--The term 
        `designated plus contribution' means any elective deferral 
        which--</DELETED>
                <DELETED>    ``(A) is excludable from gross income of 
                an employee without regard to this section, 
                and</DELETED>
                <DELETED>    ``(B) the employee designates (at such 
                time and in such manner as the Secretary may prescribe) 
                as not being so excludable.</DELETED>
        <DELETED>    ``(2) Designation limits.--The amount of elective 
        deferrals which an employee may designate under paragraph (1) 
        shall not exceed the excess (if any) of--</DELETED>
                <DELETED>    ``(A) the maximum amount of elective 
                deferrals excludable from gross income of the employee 
                for the taxable year (without regard to this section), 
                over</DELETED>
                <DELETED>    ``(B) the aggregate amount of elective 
                deferrals of the employee for the taxable year which 
                the employee does not designate under paragraph 
                (1).</DELETED>
        <DELETED>    ``(3) Rollover contributions.--</DELETED>
                <DELETED>    ``(A) In general.--A rollover contribution 
                of any payment or distribution from a designated plus 
                account which is otherwise allowable under this chapter 
                may be made only if the contribution is to--</DELETED>
                        <DELETED>    ``(i) another designated plus 
                        account of the individual from whose account 
                        the payment or distribution was made, 
                        or</DELETED>
                        <DELETED>    ``(ii) a Roth IRA of such 
                        individual.</DELETED>
                <DELETED>    ``(B) Coordination with limit.--Any 
                rollover contribution to a designated plus account 
                under subparagraph (A) shall not be taken into account 
                for purposes of paragraph (1).</DELETED>
<DELETED>    ``(d) Distribution Rules.--For purposes of this title--
</DELETED>
        <DELETED>    ``(1) Exclusion.--Any qualified distribution from 
        a designated plus account shall not be includible in gross 
        income.</DELETED>
        <DELETED>    ``(2) Qualified distribution.--For purposes of 
        this subsection--</DELETED>
                <DELETED>    ``(A) In general.--The term `qualified 
                distribution' has the meaning given such term by 
                section 408A(d)(2)(A) (without regard to clause (iv) 
                thereof).</DELETED>
                <DELETED>    ``(B) Distributions within nonexclusion 
                period.--A payment or distribution from a designated 
                plus account shall not be treated as a qualified 
                distribution if such payment or distribution is made 
                within the 5-taxable-year period beginning with the 
                earlier of--</DELETED>
                        <DELETED>    ``(i) the first taxable year for 
                        which the individual made a designated plus 
                        contribution to any designated plus account 
                        established for such individual under the same 
                        applicable retirement plan, or</DELETED>
                        <DELETED>    ``(ii) if a rollover contribution 
                        was made to such designated plus account from a 
                        designated plus account previously established 
                        for such individual under another applicable 
                        retirement plan, the first taxable year for 
                        which the individual made a designated plus 
                        contribution to such previously established 
                        account.</DELETED>
                <DELETED>    ``(C) Distributions of excess deferrals 
                and earnings.--The term `qualified distribution' shall 
                not include any distribution of any excess deferral 
                under section 402(g)(2) and any income on the excess 
                deferral.</DELETED>
        <DELETED>    ``(3) Aggregation rules.--Section 72 shall be 
        applied separately with respect to distributions and payments 
        from a designated plus account and other distributions and 
        payments from the plan.</DELETED>
<DELETED>    ``(e) Other Definitions.--For purposes of this section--
</DELETED>
        <DELETED>    ``(1) Applicable retirement plan.--The term 
        `applicable retirement plan' means--</DELETED>
                <DELETED>    ``(A) an employees' trust described in 
                section 401(a) which is exempt from tax under section 
                501(a), and</DELETED>
                <DELETED>    ``(B) a plan under which amounts are 
                contributed by an individual's employer for an annuity 
                contract described in section 403(b).</DELETED>
        <DELETED>    ``(2) Elective deferral.--The term `elective 
        deferral' means any elective deferral described in subparagraph 
        (A) or (C) of section 402(g)(3).''.</DELETED>
<DELETED>    (b) Excess Deferrals.--Section 402(g) (relating to 
limitation on exclusion for elective deferrals) is amended--</DELETED>
        <DELETED>    (1) by adding at the end of paragraph (1) the 
        following new sentence: ``The preceding sentence shall not 
        apply to so much of such excess as does not exceed the 
        designated plus contributions of the individual for the taxable 
        year.''; and</DELETED>
        <DELETED>    (2) by inserting ``(or would be included but for 
        the last sentence thereof)'' after ``paragraph (1)'' in 
        paragraph (2)(A).</DELETED>
<DELETED>    (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is 
amended by adding at the end the following:</DELETED>
                <DELETED>``If any portion of an eligible rollover 
                distribution is attributable to payments or 
                distributions from a designated plus account (as 
                defined in section 402A), an eligible retirement plan 
                with respect to such portion shall include only another 
                designated plus account and a Roth IRA.''.</DELETED>
<DELETED>    (d) Reporting Requirements.--</DELETED>
        <DELETED>    (1) W-2 information.--Section 6051(a)(8) is 
        amended by inserting ``, including the amount of designated 
        plus contributions (as defined in section 402A)'' before the 
        comma at the end.</DELETED>
        <DELETED>    (2) Information.--Section 6047 is amended by 
        redesignating subsection (f) as subsection (g) and by inserting 
        after subsection (e) the following new subsection:</DELETED>
<DELETED>    ``(f) Designated Plus Contributions.--The Secretary shall 
require the plan administrator of each applicable retirement plan (as 
defined in section 402A) to make such returns and reports regarding 
designated plus contributions (as so defined) to the Secretary, 
participants and beneficiaries of the plan, and such other persons as 
the Secretary may prescribe.''.</DELETED>
<DELETED>    (e) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Section 408A(e) is amended by adding after the 
        first sentence the following new sentence: ``Such term includes 
        a rollover contribution described in section 
        402A(c)(3)(A).''.</DELETED>
        <DELETED>    (2) The table of sections for subpart A of part I 
        of subchapter D of chapter 1 is amended by inserting after the 
        item relating to section 402 the following new item:</DELETED>

                              <DELETED>``Sec. 402A. Optional treatment 
                                        of elective deferrals as plus 
                                        contributions.''.
<DELETED>    (f) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 
2000.</DELETED>

       <DELETED>TITLE III--ENHANCING FAIRNESS FOR WOMEN</DELETED>

<DELETED>SEC. 301. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR 
              OVER.</DELETED>

<DELETED>    (a) In General.--Section 414 (relating to definitions and 
special rules) is amended by adding at the end the following new 
subsection:</DELETED>
<DELETED>    ``(v) Catch-up Contributions for Individuals Age 50 or 
Over.--</DELETED>
        <DELETED>    ``(1) In general.--An applicable employer plan 
        shall not be treated as failing to meet any requirement of this 
        title solely because the plan permits an eligible participant 
        to make additional elective deferrals in any plan 
        year.</DELETED>
        <DELETED>    ``(2) Limitation on amount of additional 
        deferrals.--A plan shall not permit additional elective 
        deferrals under paragraph (1) for any year in an amount greater 
        than the lesser of--</DELETED>
                <DELETED>    ``(A) $5,000, or</DELETED>
                <DELETED>    ``(B) the excess (if any) of--</DELETED>
                        <DELETED>    ``(i) the participant's 
                        compensation for the year, over</DELETED>
                        <DELETED>    ``(ii) any other elective 
                        deferrals of the participant for such year 
                        which are made without regard to this 
                        subsection.</DELETED>
        <DELETED>    ``(3) Treatment of contributions.--In the case of 
        any contribution to a plan under paragraph (1), such 
        contribution shall not, with respect to the year in which the 
        contribution is made--</DELETED>
                <DELETED>    ``(A) be subject to any otherwise 
                applicable limitation contained in section 402(g), 
                402(h)(2), 404(a), 404(h), 408(p)(2)(A)(ii), 415, or 
                457, or</DELETED>
                <DELETED>    ``(B) be taken into account in applying 
                such limitations to other contributions or benefits 
                under such plan or any other such plan.</DELETED>
        <DELETED>    ``(4) Eligible participant.--For purposes of this 
        subsection, the term `eligible participant' means, with respect 
        to any plan year, a participant in a plan--</DELETED>
                <DELETED>    ``(A) who has attained the age of 50 
                before the close of the plan year, and</DELETED>
                <DELETED>    ``(B) with respect to whom no other 
                elective deferrals may (without regard to this 
                subsection) be made to the plan for the plan year by 
                reason of the application of any limitation or other 
                restriction described in paragraph (3) or comparable 
                limitation contained in the terms of the 
                plan.</DELETED>
        <DELETED>    ``(5) Other definitions and rules.--For purposes 
        of this subsection--</DELETED>
                <DELETED>    ``(A) Applicable employer plan.--The term 
                `applicable employer plan' means--</DELETED>
                        <DELETED>    ``(i) an employees' trust 
                        described in section 401(a) which is exempt 
                        from tax under section 501(a),</DELETED>
                        <DELETED>    ``(ii) a plan under which amounts 
                        are contributed by an individual's employer for 
                        an annuity contract described in section 
                        403(b),</DELETED>
                        <DELETED>    ``(iii) an eligible deferred 
                        compensation plan under section 457 of an 
                        eligible employer as defined in section 
                        457(e)(1)(A), and</DELETED>
                        <DELETED>    ``(iv) an arrangement meeting the 
                        requirements of section 408 (k) or 
                        (p).</DELETED>
                <DELETED>    ``(B) Elective deferral.--The term 
                `elective deferral' has the meaning given such term by 
                subsection (u)(2)(C).</DELETED>
                <DELETED>    ``(C) Exception for section 457 plans.--
                This subsection shall not apply to an applicable 
                employer plan described in subparagraph (A)(iii) for 
                any year to which section 457(b)(3) applies.</DELETED>
                <DELETED>    ``(D) Cost-of-living adjustment.--For 
                years beginning after December 31, 2005, the Secretary 
                shall adjust annually the $5,000 amount in subparagraph 
                (A) for increases in the cost-of-living at the same 
                time and in the same manner as adjustments under 
                section 415(d); except that the base period shall be 
                the calendar quarter beginning July 1, 2004, and any 
                increase which is not a multiple of $500 shall be 
                rounded to the next lowest multiple of 
                $500.''.</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by this section 
shall apply to contributions in taxable years beginning after December 
31, 2000.</DELETED>

<DELETED>SEC. 302. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES 
              TO DEFINED CONTRIBUTION PLANS.</DELETED>

<DELETED>    (a) Equitable Treatment.--</DELETED>
        <DELETED>    (1) In general.--Subparagraph (B) of section 
        415(c)(1) (relating to limitation for defined contribution 
        plans) is amended by striking ``25 percent'' and inserting 
        ``100 percent''.</DELETED>
        <DELETED>    (2) Application to section 403(b).--Section 403(b) 
        is amended--</DELETED>
                <DELETED>    (A) by striking ``the exclusion allowance 
                for such taxable year'' in paragraph (1) and inserting 
                ``the applicable limit under section 415'';</DELETED>
                <DELETED>    (B) by striking paragraph (2); 
                and</DELETED>
                <DELETED>    (C) by inserting ``or any amount received 
                by a former employee after the fifth taxable year 
                following the taxable year in which such employee was 
                terminated'' before the period at the end of the second 
                sentence of paragraph (3).</DELETED>
        <DELETED>    (3) Conforming amendments.--</DELETED>
                <DELETED>    (A) Subsection (f) of section 72 is 
                amended by striking ``section 403(b)(2)(D)(iii))'' and 
                inserting ``section 403(b)(2)(D)(iii), as in effect 
                before the enactment of the Comprehensive Retirement 
                Security and Pension Reform Act of 2000)''.</DELETED>
                <DELETED>    (B) Section 404(a)(10)(B) is amended by 
                striking ``, the exclusion allowance under section 
                403(b)(2),''.</DELETED>
                <DELETED>    (C) Section 415(a)(2) is amended by 
                striking ``, and the amount of the contribution for 
                such portion shall reduce the exclusion allowance as 
                provided in section 403(b)(2)''.</DELETED>
                <DELETED>    (D) Section 415(c)(3) is amended by adding 
                at the end the following new subparagraph:</DELETED>
                <DELETED>    ``(E) Annuity contracts.--In the case of 
                an annuity contract described in section 403(b), the 
                term `participant's compensation' means the 
                participant's includible compensation determined under 
                section 403(b)(3).''.</DELETED>
                <DELETED>    (E) Section 415(c) is amended by striking 
                paragraph (4).</DELETED>
                <DELETED>    (F) Section 415(c)(7) is amended to read 
                as follows:</DELETED>
        <DELETED>    ``(7) Certain contributions by church plans not 
        treated as exceeding limit.--</DELETED>
                <DELETED>    ``(A) In general.--Notwithstanding any 
                other provision of this subsection, at the election of 
                a participant who is an employee of a church or a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.</DELETED>
                <DELETED>    ``(B) $40,000 aggregate limitation.--The 
                total amount of additions with respect to any 
                participant which may be taken into account for 
                purposes of this subparagraph for all years may not 
                exceed $40,000.</DELETED>
                <DELETED>    ``(C) Annual addition.--For purposes of 
                this paragraph, the term `annual addition' has the 
                meaning given such term by paragraph (2).''.</DELETED>
                <DELETED>    (G) Subparagraph (B) of section 402(g)(7) 
                (as redesignated by section 211) is amended by 
                inserting before the period at the end the following: 
                ``(as in effect before the enactment of the 
                Comprehensive Retirement Security and Pension Reform 
                Act of 2000)''.</DELETED>
        <DELETED>    (3) Effective date.--The amendments made by this 
        subsection shall apply to years beginning after December 31, 
        2000.</DELETED>
<DELETED>    (b) Special Rules for Sections 403(b) and 408.--</DELETED>
        <DELETED>    (1) In general.--Subsection (k) of section 415 is 
        amended by adding at the end the following new 
        paragraph:</DELETED>
        <DELETED>    ``(4) Special rules for sections 403(b) and 408.--
        For purposes of this section, any annuity contract described in 
        section 403(b) for the benefit of a participant shall be 
        treated as a defined contribution plan maintained by each 
        employer with respect to which the participant has the control 
        required under subsection (b) or (c) of section 414 (as 
        modified by subsection (h)). For purposes of this section, any 
        contribution by an employer to a simplified employee pension 
        plan for an individual for a taxable year shall be treated as 
        an employer contribution to a defined contribution plan for 
        such individual for such year.''.</DELETED>
        <DELETED>    (2) Effective date.--</DELETED>
                <DELETED>    (A) In general.--The amendment made by 
                paragraph (1) shall apply to limitation years beginning 
                after December 31, 1999.</DELETED>
                <DELETED>    (B) Exclusion allowance.--Effective for 
                limitation years beginning in 2000, in the case of any 
                annuity contract described in section 403(b) of the 
                Internal Revenue Code of 1986, the amount of the 
                contribution disqualified by reason of section 415(g) 
                of such Code shall reduce the exclusion allowance as 
                provided in section 403(b)(2) of such Code.</DELETED>
        <DELETED>    (3) Modification of 403(b) exclusion allowance to 
        conform to 415 modification.--The Secretary of the Treasury 
        shall modify the regulations regarding the exclusion allowance 
        under section 403(b)(2) of the Internal Revenue Code of 1986 to 
        render void the requirement that contributions to a defined 
        benefit pension plan be treated as previously excluded amounts 
        for purposes of the exclusion allowance. For taxable years 
        beginning after December 31, 1999, such regulations shall be 
        applied as if such requirement were void.</DELETED>
<DELETED>    (c) Deferred Compensation Plans of State and Local 
Governments and Tax-Exempt Organizations.--</DELETED>
        <DELETED>    (1) In general.--Subparagraph (B) of section 
        457(b)(2) (relating to salary limitation on eligible deferred 
        compensation plans) is amended by striking 
        ``33</DELETED>\<DELETED>1/3</DELETED>\ <DELETED>percent'' and 
        inserting ``100 percent''.</DELETED>
        <DELETED>    (2) Effective date.--The amendment made by this 
        subsection shall apply to years beginning after December 31, 
        2000.</DELETED>

<DELETED>SEC. 303. FASTER VESTING OF CERTAIN EMPLOYER MATCHING 
              CONTRIBUTIONS.</DELETED>

<DELETED>    (a) In General.--Section 411(a) (relating to minimum 
vesting standards) is amended--</DELETED>
        <DELETED>    (1) in paragraph (2), by striking ``A plan'' and 
        inserting ``Except as provided in paragraph (12), a plan''; 
        and</DELETED>
        <DELETED>    (2) by adding at the end the following:</DELETED>
        <DELETED>    ``(12) Faster vesting for matching 
        contributions.--In the case of matching contributions (as 
        defined in section 401(m)(4)(A)), paragraph (2) shall be 
        applied--</DELETED>
                <DELETED>    ``(A) by substituting `3 years' for `5 
                years' in subparagraph (A), and</DELETED>
                <DELETED>    ``(B) by substituting the following table 
                for the table contained in subparagraph (B):</DELETED>

                <DELETED>  </DELETED>
                                                     The nonforfeitable
                <DELETED>``Years of service:</DELETED>
                                                       percentage is:  
                <DELETED>    2.............................        20  
                <DELETED>    3.............................        40  
                <DELETED>    4.............................        60  
                <DELETED>    5.............................        80  
                <DELETED>    6.............................     100.''.
<DELETED>    (b) Effective Dates.--</DELETED>
        <DELETED>    (1) In general.--Except as provided in paragraph 
        (2), the amendments made by this section shall apply to 
        contributions for plan years beginning after December 31, 
        2000.</DELETED>
        <DELETED>    (2) Collective bargaining agreements.--In the case 
        of a plan maintained pursuant to one or more collective 
        bargaining agreements between employee representatives and one 
        or more employers ratified by the date of the enactment of this 
        Act, the amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
        </DELETED>
                <DELETED>    (A) the later of--</DELETED>
                        <DELETED>    (i) the date on which the last of 
                        such collective bargaining agreements 
                        terminates (determined without regard to any 
                        extension thereof on or after such date of the 
                        enactment); or</DELETED>
                        <DELETED>    (ii) January 1, 2001; or</DELETED>
                <DELETED>    (B) January 1, 2005.</DELETED>
        <DELETED>    (3) Service required.--With respect to any plan, 
        the amendments made by this section shall not apply to any 
        employee before the date that such employee has 1 hour of 
        service under such plan in any plan year to which the 
        amendments made by this section apply.</DELETED>

<DELETED>SEC. 304. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION 
              RULES.</DELETED>

<DELETED>    (a) Simplification and Finalization of Minimum 
Distribution Requirements.--</DELETED>
        <DELETED>    (1) In general.--The Secretary of the Treasury 
        shall--</DELETED>
                <DELETED>    (A) simplify and finalize the regulations 
                relating to minimum distribution requirements under 
                sections 401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), 
                and 457(d)(2) of the Internal Revenue Code of 1986; 
                and</DELETED>
                <DELETED>    (B) modify such regulations to--</DELETED>
                        <DELETED>    (i) reflect current life 
                        expectancy; and</DELETED>
                        <DELETED>    (ii) revise the required 
                        distribution methods so that, under reasonable 
                        assumptions, the amount of the required minimum 
                        distribution does not decrease over a 
                        participant's life expectancy.</DELETED>
        <DELETED>    (2) Fresh start.--Notwithstanding subparagraph (D) 
        of section 401(a)(9) of such Code, during the first year that 
        regulations are in effect under this subsection, required 
        distributions for future years may be redetermined to reflect 
        changes under such regulations. Such redetermination shall 
        include the opportunity to choose a new designated beneficiary 
        and to elect a new method of calculating life 
        expectancy.</DELETED>
        <DELETED>    (3) Effective date for regulations.--Regulations 
        referred to in paragraph (1) shall be effective for years 
        beginning after December 31, 2000, and shall apply in such 
        years without regard to whether an individual had previously 
        begun receiving minimum distributions.</DELETED>
<DELETED>    (b) Repeal of Rule Where Distributions Had Begun Before 
Death Occurs.--</DELETED>
        <DELETED>    (1) In general.--Subparagraph (B) of section 
        401(a)(9) is amended by striking clause (i) and redesignating 
        clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), 
        respectively.</DELETED>
        <DELETED>    (2) Conforming changes.--</DELETED>
                <DELETED>    (A) Clause (i) of section 401(a)(9)(B) (as 
                so redesignated) is amended--</DELETED>
                        <DELETED>    (i) by striking ``for other 
                        cases'' in the heading; and</DELETED>
                        <DELETED>    (ii) by striking ``the 
                        distribution of the employee's interest has 
                        begun in accordance with subparagraph (A)(ii)'' 
                        and inserting ``his entire interest has been 
                        distributed to him''.</DELETED>
                <DELETED>    (B) Clause (ii) of section 401(a)(9)(B) 
                (as so redesignated) is amended by striking ``clause 
                (ii)'' and inserting ``clause (i)''.</DELETED>
                <DELETED>    (C) Clause (iii) of section 401(a)(9)(B) 
                (as so redesignated) is amended--</DELETED>
                        <DELETED>    (i) by striking ``clause 
                        (iii)(I)'' and inserting ``clause 
                        (ii)(I)'';</DELETED>
                        <DELETED>    (ii) by striking ``clause 
                        (iii)(III)'' in subclause (I) and inserting 
                        ``clause (ii)(III)'';</DELETED>
                        <DELETED>    (iii) by striking ``the date on 
                        which the employee would have attained age 
                        70</DELETED>\<DELETED>1/
                        2</DELETED>\<DELETED>,'' in subclause (I) and 
                        inserting ``April 1 of the calendar year 
                        following the calendar year in which the spouse 
                        attains 70</DELETED>\<DELETED>1/
                        2</DELETED>\<DELETED>,''; and</DELETED>
                        <DELETED>    (iv) by striking ``the 
                        distributions to such spouse begin,'' in 
                        subclause (II) and inserting ``his entire 
                        interest has been distributed to 
                        him,''.</DELETED>
        <DELETED>    (3) Effective date.--The amendments made by this 
        subsection shall apply to years beginning after December 31, 
        2000.</DELETED>
<DELETED>    (c) Reduction in Excise Tax.--</DELETED>
        <DELETED>    (1) In general.--Subsection (a) of section 4974 is 
        amended by striking ``50 percent'' and inserting ``10 
        percent''.</DELETED>
        <DELETED>    (2) Effective date.--The amendment made by this 
        subsection shall apply to years beginning after December 31, 
        2000.</DELETED>

<DELETED>SEC. 305. CLARIFICATION OF TAX TREATMENT OF DIVISION OF 
              SECTION 457 PLAN BENEFITS UPON DIVORCE.</DELETED>

<DELETED>    (a) In General.--Section 414(p)(11) (relating to 
application of rules to governmental and church plans) is amended--
</DELETED>
        <DELETED>    (1) by inserting ``or an eligible deferred 
        compensation plan (within the meaning of section 457(b))'' 
        after ``subsection (e))''; and</DELETED>
        <DELETED>    (2) in the heading, by striking ``governmental and 
        church plans'' and inserting ``certain other plans''.</DELETED>
<DELETED>    (b) Waiver of Certain Distribution Requirements.--
Paragraph (10) of section 414(p) is amended by striking ``and section 
409(d)'' and inserting ``section 409(d), and section 
457(d)''.</DELETED>
<DELETED>    (c) Tax Treatment of Payments From a Section 457 Plan.--
Subsection (p) of section 414 is amended by redesignating paragraph 
(12) as paragraph (13) and inserting after paragraph (11) the following 
new paragraph:</DELETED>
        <DELETED>    ``(12) Tax treatment of payments from a section 
        457 plan.--If a distribution or payment from an eligible 
        deferred compensation plan described in section 457(b) is made 
        pursuant to a qualified domestic relations order, rules similar 
        to the rules of section 402(e)(1)(A) shall apply to such 
        distribution or payment.''.</DELETED>
<DELETED>    (d) Effective Date.--The amendments made by this section 
shall apply to transfers, distributions, and payments made after 
December 31, 2000.</DELETED>

<DELETED>SEC. 306. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP 
              WITHDRAWALS FROM CASH OR DEFERRED ARRANGEMENTS.</DELETED>

<DELETED>    (a) In General.--The Secretary of the Treasury shall 
revise the regulations relating to hardship distributions under section 
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide 
that the period an employee is prohibited from making elective and 
employee contributions in order for a distribution to be deemed 
necessary to satisfy financial need shall be equal to 6 
months.</DELETED>
<DELETED>    (b) Effective Date.--The revised regulations under 
subsection (a) shall apply to years beginning after December 31, 
2000.</DELETED>

  <DELETED>TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS</DELETED>

<DELETED>SEC. 401. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF 
              PLANS.</DELETED>

<DELETED>    (a) Rollovers From and to Section 457 Plans.--</DELETED>
        <DELETED>    (1) Rollovers from section 457 plans.--</DELETED>
                <DELETED>    (A) In general.--Section 457(e) (relating 
                to other definitions and special rules) is amended by 
                adding at the end the following:</DELETED>
        <DELETED>    ``(16) Rollover amounts.--</DELETED>
                <DELETED>    ``(A) General rule.--In the case of an 
                eligible deferred compensation plan established and 
                maintained by an employer described in subsection 
                (e)(1)(A), if--</DELETED>
                        <DELETED>    ``(i) any portion of the balance 
                        to the credit of an employee in such plan is 
                        paid to such employee in an eligible rollover 
                        distribution (within the meaning of section 
                        402(c)(4) without regard to subparagraph (C) 
                        thereof),</DELETED>
                        <DELETED>    ``(ii) the employee transfers any 
                        portion of the property such employee receives 
                        in such distribution to an eligible retirement 
                        plan described in section 402(c)(8)(B), 
                        and</DELETED>
                        <DELETED>    ``(iii) in the case of a 
                        distribution of property other than money, the 
                        amount so transferred consists of the property 
                        distributed,</DELETED>
                <DELETED>then such distribution (to the extent so 
                transferred) shall not be includible in gross income 
                for the taxable year in which paid.</DELETED>
                <DELETED>    ``(B) Certain rules made applicable.--The 
                rules of paragraphs (2) through (7) (other than 
                paragraph (4)(C)) and (9) of section 402(c) and section 
                402(f) shall apply for purposes of subparagraph 
                (A).</DELETED>
                <DELETED>    ``(C) Reporting.--Rollovers under this 
                paragraph shall be reported to the Secretary in the 
                same manner as rollovers from qualified retirement 
                plans (as defined in section 4974(c)).''.</DELETED>
                <DELETED>    (B) Deferral limit determined without 
                regard to rollover amounts.--Section 457(b)(2) 
                (defining eligible deferred compensation plan) is 
                amended by inserting ``(other than rollover amounts)'' 
                after ``taxable year''.</DELETED>
                <DELETED>    (C) Direct rollover.--Paragraph (1) of 
                section 457(d) is amended by striking ``and'' at the 
                end of subparagraph (A), by striking the period at the 
                end of subparagraph (B) and inserting ``, and'', and by 
                inserting after subparagraph (B) the 
                following:</DELETED>
                <DELETED>    ``(C) in the case of a plan maintained by 
                an employer described in subsection (e)(1)(A), the plan 
                meets requirements similar to the requirements of 
                section 401(a)(31).</DELETED>
        <DELETED>Any amount transferred in a direct trustee-to-trustee 
        transfer in accordance with section 401(a)(31) shall not be 
        includible in gross income for the taxable year of 
        transfer.''.</DELETED>
                <DELETED>    (D) Withholding.--</DELETED>
                        <DELETED>    (i) Paragraph (12) of section 
                        3401(a) is amended by adding at the end the 
                        following:</DELETED>
                <DELETED>    ``(E) under or to an eligible deferred 
                compensation plan which, at the time of such payment, 
                is a plan described in section 457(b) maintained by an 
                employer described in section 457(e)(1)(A); 
                or''.</DELETED>
                        <DELETED>    (ii) Paragraph (3) of section 
                        3405(c) is amended to read as 
                        follows:</DELETED>
        <DELETED>    ``(3) Eligible rollover distribution.--For 
        purposes of this subsection, the term `eligible rollover 
        distribution' has the meaning given such term by section 
        402(f)(2)(A).''.</DELETED>
                        <DELETED>    (iii) Liability for withholding.--
                        Subparagraph (B) of section 3405(d)(2) is 
                        amended by striking ``or'' at the end of clause 
                        (ii), by striking the period at the end of 
                        clause (iii) and inserting ``, or'', and by 
                        adding at the end the following:</DELETED>
                        <DELETED>    ``(iv) section 
                        457(b).''.</DELETED>
        <DELETED>    (2) Rollovers to section 457 plans.--</DELETED>
                <DELETED>    (A) In general.--Section 402(c)(8)(B) 
                (defining eligible retirement plan) is amended by 
                striking ``and'' at the end of clause (iii), by 
                striking the period at the end of clause (iv) and 
                inserting ``, and'', and by inserting after clause (iv) 
                the following new clause:</DELETED>
                        <DELETED>    ``(v) an eligible deferred 
                        compensation plan described in section 457(b) 
                        of an employer described in section 
                        457(e)(1)(A).''.</DELETED>
                <DELETED>    (B) Separate accounting.--Section 402(c) 
                is amended by adding at the end the following new 
                paragraph:</DELETED>
        <DELETED>    ``(11) Separate accounting.--Unless a plan 
        described in clause (v) of paragraph (8)(B) agrees to 
        separately account for amounts rolled into such plan from 
        eligible retirement plans not described in such clause, the 
        plan described in such clause may not accept transfers or 
        rollovers from such retirement plans.''.</DELETED>
                <DELETED>    (C) 10 percent additional tax.--Subsection 
                (t) of section 72 (relating to 10-percent additional 
                tax on early distributions from qualified retirement 
                plans) is amended by adding at the end the following 
                new paragraph:</DELETED>
        <DELETED>    ``(9) Special rule for rollovers to section 457 
        plans.--For purposes of this subsection, a distribution from an 
        eligible deferred compensation plan (as defined in section 
        457(b)) of an employer described in section 457(e)(1)(A) shall 
        be treated as a distribution from a qualified retirement plan 
        described in 4974(c)(1) to the extent that such distribution is 
        attributable to an amount transferred to an eligible deferred 
        compensation plan from a qualified retirement plan (as defined 
        in section 4974(c)).''.</DELETED>
<DELETED>    (b) Allowance of Rollovers From and to 403(b) Plans.--
</DELETED>
        <DELETED>    (1) Rollovers from section 403(b) plans.--Section 
        403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
        striking ``such distribution'' and all that follows and 
        inserting ``such distribution to an eligible retirement plan 
        described in section 402(c)(8)(B), and''.</DELETED>
        <DELETED>    (2) Rollovers to section 403(b) plans.--Section 
        402(c)(8)(B) (defining eligible retirement plan), as amended by 
        subsection (a), is amended by striking ``and'' at the end of 
        clause (iv), by striking the period at the end of clause (v) 
        and inserting ``, and'', and by inserting after clause (v) the 
        following new clause:</DELETED>
                        <DELETED>    ``(vi) an annuity contract 
                        described in section 403(b).''.</DELETED>
<DELETED>    (c) Expanded Explanation to Recipients of Rollover 
Distributions.--Paragraph (1) of section 402(f) (relating to written 
explanation to recipients of distributions eligible for rollover 
treatment) is amended by striking ``and'' at the end of subparagraph 
(C), by striking the period at the end of subparagraph (D) and 
inserting ``, and'', and by adding at the end the following new 
subparagraph:</DELETED>
                <DELETED>    ``(E) of the provisions under which 
                distributions from the eligible retirement plan 
                receiving the distribution may be subject to 
                restrictions and tax consequences which are different 
                from those applicable to distributions from the plan 
                making such distribution.''.</DELETED>
<DELETED>    (d) Spousal Rollovers.--Section 402(c)(9) (relating to 
rollover where spouse receives distribution after death of employee) is 
amended by striking ``; except that'' and all that follows up to the 
end period.</DELETED>
<DELETED>    (e) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
        457(e)(16)''.</DELETED>
        <DELETED>    (2) Section 219(d)(2) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 
        457(e)(16)''.</DELETED>
        <DELETED>    (3) Section 401(a)(31)(B) is amended by striking 
        ``and 403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
        457(e)(16)''.</DELETED>
        <DELETED>    (4) Subparagraph (A) of section 402(f)(2) is 
        amended by striking ``or paragraph (4) of section 403(a)'' and 
        inserting ``, paragraph (4) of section 403(a), subparagraph (A) 
        of section 403(b)(8), or subparagraph (A) of section 
        457(e)(16)''.</DELETED>
        <DELETED>    (5) Paragraph (1) of section 402(f) is amended by 
        striking ``from an eligible retirement plan''.</DELETED>
        <DELETED>    (6) Subparagraphs (A) and (B) of section 402(f)(1) 
        are amended by striking ``another eligible retirement plan'' 
        and inserting ``an eligible retirement plan''.</DELETED>
        <DELETED>    (7) Subparagraph (B) of section 403(b)(8) is 
        amended to read as follows:</DELETED>
                <DELETED>    ``(B) Certain rules made applicable.--The 
                rules of paragraphs (2) through (7) and (9) of section 
                402(c) and section 402(f) shall apply for purposes of 
                subparagraph (A), except that section 402(f) shall be 
                applied to the payor in lieu of the plan 
                administrator.''.</DELETED>
        <DELETED>    (8) Section 408(a)(1) is amended by striking ``or 
        403(b)(8),'' and inserting ``403(b)(8), or 
        457(e)(16)''.</DELETED>
        <DELETED>    (9) Subparagraphs (A) and (B) of section 415(b)(2) 
        are each amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), 408(d)(3), and 457(e)(16)''.</DELETED>
        <DELETED>    (10) Section 415(c)(2) is amended by striking 
        ``and 408(d)(3)'' and inserting ``408(d)(3), and 
        457(e)(16)''.</DELETED>
        <DELETED>    (11) Section 4973(b)(1)(A) is amended by striking 
        ``or 408(d)(3)'' and inserting ``408(d)(3), or 
        457(e)(16)''.</DELETED>
<DELETED>    (f) Effective Date; Special Rule.--</DELETED>
        <DELETED>    (1) Effective date.--The amendments made by this 
        section shall apply to distributions after December 31, 
        2000.</DELETED>
        <DELETED>    (2) Special rule.--Notwithstanding any other 
        provision of law, subsections (h)(3) and (h)(5) of section 1122 
        of the Tax Reform Act of 1986 shall not apply to any 
        distribution from an eligible retirement plan (as defined in 
        clause (iii) or (iv) of section 402(c)(8)(B) of the Internal 
        Revenue Code of 1986) on behalf of an individual if there was a 
        rollover to such plan on behalf of such individual which is 
        permitted solely by reason of any amendment made by this 
        section.</DELETED>

<DELETED>SEC. 402. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT 
              PLANS.</DELETED>

<DELETED>    (a) In General.--Subparagraph (A) of section 408(d)(3) 
(relating to rollover amounts) is amended by adding ``or'' at the end 
of clause (i), by striking clauses (ii) and (iii), and by adding at the 
end the following:</DELETED>
                        <DELETED>    ``(ii) the entire amount received 
                        (including money and any other property) is 
                        paid into an eligible retirement plan for the 
                        benefit of such individual not later than the 
                        60th day after the date on which the payment or 
                        distribution is received, except that the 
                        maximum amount which may be paid into such plan 
                        may not exceed the portion of the amount 
                        received which is includible in gross income 
                        (determined without regard to this 
                        paragraph).</DELETED>
                <DELETED>For purposes of clause (ii), the term 
                `eligible retirement plan' means an eligible retirement 
                plan described in clause (iii), (iv), (v), or (vi) of 
                section 402(c)(8)(B).''.</DELETED>
<DELETED>    (b) Conforming Amendments.--</DELETED>
        <DELETED>    (1) Paragraph (1) of section 403(b) is amended by 
        striking ``section 408(d)(3)(A)(iii)'' and inserting ``section 
        408(d)(3)(A)(ii)''.</DELETED>
        <DELETED>    (2) Clause (i) of section 408(d)(3)(D) is amended 
        by striking ``(i), (ii), or (iii)'' and inserting ``(i) or 
        (ii)''.</DELETED>
        <DELETED>    (3) Subparagraph (G) of section 408(d)(3) is 
        amended to read as follows:</DELETED>
                <DELETED>    ``(G) Simple retirement accounts.--In the 
                case of any payment or distribution out of a simple 
                retirement account (as defined in subsection (p)) to 
                which section 72(t)(6) applies, this paragraph shall 
                not apply unless such payment or distribution is paid 
                into another simple retirement account.''.</DELETED>
<DELETED>    (c) Effective Date; Special Rule.--</DELETED>
        <DELETED>    (1) Effective date.--The amendments made by this 
        section shall apply to distributions after December 31, 
        2000.</DELETED>
        <DELETED>    (2) Special rule.--Notwithstanding any other 
        provision of law, subsections (h)(3) and (h)(5) of section 1122 
        of the Tax Reform Act of 1986 shall not apply to any 
        distribution from an eligible retirement plan (as defined in 
        clause (iii) or (iv) of section 402(c)(8)(B) of the Internal 
        Revenue Code of 1986) on behalf of an individual if there was a 
        rollover to such plan on behalf of such individual which is 
        permitted solely by reason of the amendments made by this 
        section.</DELETED>

<DELETED>SEC. 403. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.</DELETED>

<DELETED>    (a) Rollovers From Exempt Trusts.--Paragraph (2) of 
section 402(c) (relating to maximum amount which may be rolled over) is 
amended by adding at the end the following: ``The preceding sentence 
shall not apply to such distribution to the extent--</DELETED>
                <DELETED>    ``(A) such portion is transferred in a 
                direct trustee-to-trustee transfer to a qualified trust 
                which is part of a plan which is a defined contribution 
                plan and which agrees to separately account for amounts 
                so transferred, including separately accounting for the 
                portion of such distribution which is includible in 
                gross income and the portion of such distribution which 
                is not so includible, or</DELETED>
                <DELETED>    ``(B) such portion is transferred to an 
                eligible retirement plan described in clause (i) or 
                (ii) of paragraph (8)(B).''.</DELETED>
<DELETED>    (b) Optional Direct Transfer of Eligible Rollover 
Distributions.--Subparagraph (B) of section 401(a)(31) (relating to 
limitation) is amended by adding at the end the following: ``The 
preceding sentence shall not apply to such distribution if the plan to 
which such distribution is transferred--</DELETED>
                        <DELETED>    ``(i) agrees to separately account 
                        for amounts so transferred, including 
                        separately accounting for the portion of such 
                        distribution which is includible in gross 
                        income and the portion of such distribution 
                        which is not so includible, or</DELETED>
                        <DELETED>    ``(ii) is an eligible retirement 
                        plan described in clause (i) or (ii) of section 
                        402(c)(8)(B).''.</DELETED>
<DELETED>    (c) Rules for Applying Section 72 to IRAs.--Paragraph (3) 
of section 408(d) (relating to special rules for applying section 72) 
is amended by inserting at the end the following:</DELETED>
                <DELETED>    ``(H) Application of section 72.--
                </DELETED>
                        <DELETED>    ``(i) In general.--If--</DELETED>
                                <DELETED>    ``(I) a distribution is 
                                made from an individual retirement 
                                plan, and</DELETED>
                                <DELETED>    ``(II) a rollover 
                                contribution is made to an eligible 
                                retirement plan described in section 
                                402(c)(8)(B)(iii), (iv), (v), or (vi) 
                                with respect to all or part of such 
                                distribution,</DELETED>
                        <DELETED>then, notwithstanding paragraph (2), 
                        the rules of clause (ii) shall apply for 
                        purposes of applying section 72.</DELETED>
                        <DELETED>    ``(ii) Applicable rules.--In the 
                        case of a distribution described in clause 
                        (i)--</DELETED>
                                <DELETED>    ``(I) section 72 shall be 
                                applied separately to such 
                                distribution,</DELETED>
                                <DELETED>    ``(II) notwithstanding the 
                                pro rata allocation of income on, and 
                                investment in, the contract to 
                                distributions under section 72, the 
                                portion of such distribution rolled 
                                over to an eligible retirement plan 
                                described in clause (i) shall be 
                                treated as from income on the contract 
                                (to the extent of the aggregate income 
                                on the contract from all individual 
                                retirement plans of the distributee), 
                                and</DELETED>
                                <DELETED>    ``(III) appropriate 
                                adjustments shall be made in applying 
                                section 72 to other distributions in 
                                such taxable year and subsequent 
                                taxable years.''.</DELETED>
<DELETED>    (d) Effective Date.--The amendments made by this section 
shall apply to distributions made after December 31, 2000.</DELETED>

<DELETED>SEC. 404. HARDSHIP EXCEPTION TO 60-DAY RULE.</DELETED>

<DELETED>    (a) Exempt Trusts.--Paragraph (3) of section 402(c) 
(relating to transfer must be made within 60 days of receipt) is 
amended to read as follows:</DELETED>
        <DELETED>    ``(3) Transfer must be made within 60 days of 
        receipt.--</DELETED>
                <DELETED>    ``(A) In general.--Except as provided in 
                subparagraph (B), paragraph (1) shall not apply to any 
                transfer of a distribution made after the 60th day 
                following the day on which the distributee received the 
                property distributed.</DELETED>
                <DELETED>    ``(B) Hardship exception.--The Secretary 
                may waive the 60-day requirement under subparagraph (A) 
                where the failure to waive such requirement would be 
                against equity or good conscience, including casualty, 
                disaster, or other events beyond the reasonable control 
                of the individual subject to such 
                requirement.''.</DELETED>
<DELETED>    (b) IRAs.--Paragraph (3) of section 408(d) (relating to 
rollover contributions), as amended by section 403, is amended by 
adding after subparagraph (H) the following new subparagraph:</DELETED>
                <DELETED>    ``(I) Waiver of 60-day requirement.--The 
                Secretary may waive the 60-day requirement under 
                subparagraphs (A) and (D) where the failure to waive 
                such requirement would be against equity or good 
                conscience, including casualty, disaster, or other 
                events beyond the reasonable control of the individual 
                subject to such requirement.''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to distributions after December 31, 2000.</DELETED>

<DELETED>SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.</DELETED>

<DELETED>    (a) Plan Transfers.--</DELETED>
        <DELETED>    (1) In general.--Paragraph (6) of section 411(d) 
        (relating to accrued benefit not to be decreased by amendment) 
        is amended by adding at the end the following:</DELETED>
                <DELETED>    ``(D) Plan transfers.--</DELETED>
                        <DELETED>    ``(i) In general.--A defined 
                        contribution plan (in this subparagraph 
                        referred to as the `transferee plan') shall not 
                        be treated as failing to meet the requirements 
                        of this subsection merely because the 
                        transferee plan does not provide some or all of 
                        the forms of distribution previously available 
                        under another defined contribution plan (in 
                        this subparagraph referred to as the 
                        `transferor plan') to the extent that--
                        </DELETED>
                                <DELETED>    ``(I) the forms of 
                                distribution previously available under 
                                the transferor plan applied to the 
                                account of a participant or beneficiary 
                                under the transferor plan that was 
                                transferred from the transferor plan to 
                                the transferee plan pursuant to a 
                                direct transfer rather than pursuant to 
                                a distribution from the transferor 
                                plan,</DELETED>
                                <DELETED>    ``(II) the terms of both 
                                the transferor plan and the transferee 
                                plan authorize the transfer described 
                                in subclause (I),</DELETED>
                                <DELETED>    ``(III) the transfer 
                                described in subclause (I) was made 
                                pursuant to a voluntary election by the 
                                participant or beneficiary whose 
                                account was transferred to the 
                                transferee plan,</DELETED>
                                <DELETED>    ``(IV) the election 
                                described in subclause (III) was made 
                                after the participant or beneficiary 
                                received a notice describing the 
                                consequences of making the 
                                election,</DELETED>
                                <DELETED>    ``(V) if the transferor 
                                plan provides for an annuity as the 
                                normal form of distribution under the 
                                plan in accordance with section 417, 
                                the transfer is made with the consent 
                                of the participant's spouse (if any), 
                                and such consent meets requirements 
                                similar to the requirements imposed by 
                                section 417(a)(2), and</DELETED>
                                <DELETED>    ``(VI) the transferee plan 
                                allows the participant or beneficiary 
                                described in subclause (III) to receive 
                                any distribution to which the 
                                participant or beneficiary is entitled 
                                under the transferee plan in the form 
                                of a single sum distribution.</DELETED>
                        <DELETED>    ``(ii) Exception.--Clause (i) 
                        shall apply to plan mergers and other 
                        transactions having the effect of a direct 
                        transfer, including consolidations of benefits 
                        attributable to different employers within a 
                        multiple employer plan.</DELETED>
                <DELETED>    ``(E) Elimination of form of 
                distribution.--Except to the extent provided in 
                regulations, a defined contribution plan shall not be 
                treated as failing to meet the requirements of this 
                section merely because of the elimination of a form of 
                distribution previously available thereunder. This 
                subparagraph shall not apply to the elimination of a 
                form of distribution with respect to any participant 
                unless--</DELETED>
                        <DELETED>    ``(i) a single sum payment is 
                        available to such participant at the same time 
                        or times as the form of distribution being 
                        eliminated, and</DELETED>
                        <DELETED>    ``(ii) such single sum payment is 
                        based on the same or greater portion of the 
                        participant's account as the form of 
                        distribution being eliminated.''.</DELETED>
        <DELETED>    (2) Effective date.--The amendment made by this 
        subsection shall apply to years beginning after December 31, 
        2000.</DELETED>
<DELETED>    (b) Regulations.--</DELETED>
        <DELETED>    (1) In general.--The last sentence of paragraph 
        (6)(B) of section 411(d) (relating to accrued benefit not to be 
        decreased by amendment) is amended to read as follows: ``The 
        Secretary shall by regulations provide that this subparagraph 
        shall not apply to any plan amendment that does not adversely 
        affect the rights of participants in a material 
        manner.''.</DELETED>
        <DELETED>    (2) Secretary directed.--Not later than December 
        31, 2001, the Secretary of the Treasury is directed to issue 
        final regulations under section 411(d)(6) of the Internal 
        Revenue Code of 1986, including the regulations required by the 
        amendments made by this subsection. Such regulations shall 
        apply to plan years beginning after December 31, 2001, or such 
        earlier date as is specified by the Secretary of the 
        Treasury.</DELETED>

<DELETED>SEC. 406. RATIONALIZATION OF RESTRICTIONS ON 
              DISTRIBUTIONS.</DELETED>

<DELETED>    (a) Modification of Same Desk Exception.--</DELETED>
        <DELETED>    (1) Section 401(k).--</DELETED>
                <DELETED>    (A) Section 401(k)(2)(B)(i)(I) (relating 
                to qualified cash or deferred arrangements) is amended 
                by striking ``separation from service'' and inserting 
                ``severance from employment''.</DELETED>
                <DELETED>    (B) Subparagraph (A) of section 401(k)(10) 
                (relating to distributions upon termination of plan or 
                disposition of assets or subsidiary) is amended to read 
                as follows:</DELETED>
                <DELETED>    ``(A) In general.--An event described in 
                this subparagraph is the termination of the plan 
                without establishment or maintenance of another defined 
                contribution plan (other than an employee stock 
                ownership plan as defined in section 
                4975(e)(7)).''.</DELETED>
                <DELETED>    (C) Section 401(k)(10) is amended--
                </DELETED>
                        <DELETED>    (i) in subparagraph (B)--
                        </DELETED>
                                <DELETED>    (I) by striking ``An 
                                event'' in clause (i) and inserting ``A 
                                termination''; and</DELETED>
                                <DELETED>    (II) by striking ``the 
                                event'' in clause (i) and inserting 
                                ``the termination'';</DELETED>
                        <DELETED>    (ii) by striking subparagraph (C); 
                        and</DELETED>
                        <DELETED>    (iii) by striking ``or disposition 
                        of assets or subsidiary'' in the 
                        heading.</DELETED>
        <DELETED>    (2) Section 403(b).--</DELETED>
                <DELETED>    (A) Paragraphs (7)(A)(ii) and (11)(A) of 
                section 403(b) are each amended by striking ``separates 
                from service'' and inserting ``has a severance from 
                employment''.</DELETED>
                <DELETED>    (B) The heading for paragraph (11) of 
                section 403(b) is amended by striking ``separation from 
                service'' and inserting ``severance from 
                employment''.</DELETED>
        <DELETED>    (3) Section 457.--Clause (ii) of section 
        457(d)(1)(A) is amended by striking ``is separated from 
        service'' and inserting ``has a severance from 
        employment''.</DELETED>
<DELETED>    (b) Effective Date.--The amendments made by this section 
shall apply to distributions after December 31, 2000.</DELETED>

<DELETED>SEC. 407. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED 
              BENEFIT PLANS.</DELETED>

<DELETED>    (a) 403(b) Plans.--Subsection (b) of section 403 is 
amended by adding at the end the following new paragraph:</DELETED>
        <DELETED>    ``(13) Trustee-to-trustee transfers to purchase 
        permissive service credit.--No amount shall be includible in 
        gross income by reason of a direct trustee-to-trustee transfer 
        to a defined benefit governmental plan (as defined in section 
        414(d)) if such transfer is--</DELETED>
                <DELETED>    ``(A) for the purchase of permissive 
                service credit (as defined in section 415(n)(3)(A)) 
                under such plan, or</DELETED>
                <DELETED>    ``(B) a repayment to which section 415 
                does not apply by reason of subsection (k)(3) 
                thereof.''.</DELETED>
<DELETED>    (b) 457 Plans.--Subsection (e) of section 457 is amended 
by adding after paragraph (16) the following new paragraph:</DELETED>
        <DELETED>    ``(17) Trustee-to-trustee transfers to purchase 
        permissive service credit.--No amount shall be includible in 
        gross income by reason of a direct trustee-to-trustee transfer 
        to a defined benefit governmental plan (as defined in section 
        414(d)) if such transfer is--</DELETED>
                <DELETED>    ``(A) for the purchase of permissive 
                service credit (as defined in section 415(n)(3)(A)) 
                under such plan, or</DELETED>
                <DELETED>    ``(B) a repayment to which section 415 
                does not apply by reason of subsection (k)(3) 
                thereof.''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to trustee-to-trustee transfers after December 31, 
2000.</DELETED>

<DELETED>SEC. 408. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF 
              CASH-OUT AMOUNTS.</DELETED>

<DELETED>    (a) Qualified Plans.--Section 411(a)(11) (relating to 
restrictions on certain mandatory distributions) is amended by adding 
at the end the following:</DELETED>
                <DELETED>    ``(D) Special rule for rollover 
                contributions.--A plan shall not fail to meet the 
                requirements of this paragraph if, under the terms of 
                the plan, the present value of the nonforfeitable 
                accrued benefit is determined without regard to that 
                portion of such benefit which is attributable to 
                rollover contributions (and earnings allocable 
                thereto). For purposes of this subparagraph, the term 
                `rollover contributions' means any rollover 
                contribution under sections 402(c), 403(a)(4), 
                403(b)(8), 408(d)(3)(A)(ii), and 
                457(e)(16).''.</DELETED>
<DELETED>    (b) Eligible Deferred Compensation Plans.--Clause (i) of 
section 457(e)(9)(A) is amended by striking ``such amount'' and 
inserting ``the portion of such amount which is not attributable to 
rollover contributions (as defined in section 
411(a)(11)(D))''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to distributions after December 31, 2000.</DELETED>

<DELETED>SEC. 409. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR 
              SECTION 457 PLANS.</DELETED>

<DELETED>    (a) Minimum Distribution Requirements.--Paragraph (2) of 
section 457(d) (relating to distribution requirements) is amended to 
read as follows:</DELETED>
        <DELETED>    ``(2) Minimum distribution requirements.--A plan 
        meets the minimum distribution requirements of this paragraph 
        if such plan meets the requirements of section 
        401(a)(9).''.</DELETED>
<DELETED>    (b) Inclusion in Gross Income.--</DELETED>
        <DELETED>    (1) Year of inclusion.--Subsection (a) of section 
        457 (relating to year of inclusion in gross income) is amended 
        to read as follows:</DELETED>
<DELETED>    ``(a) Year of inclusion in gross income.--</DELETED>
        <DELETED>    ``(1) In general.--Any amount of compensation 
        deferred under an eligible deferred compensation plan, and any 
        income attributable to the amounts so deferred, shall be 
        includible in gross income only for the taxable year in which 
        such compensation or other income--</DELETED>
                <DELETED>    ``(A) is paid to the participant or other 
                beneficiary, in the case of a plan of an eligible 
                employer described in subsection (e)(1)(A), 
                and</DELETED>
                <DELETED>    ``(B) is paid or otherwise made available 
                to the participant or other beneficiary, in the case of 
                a plan of an eligible employer described in subsection 
                (e)(1)(B).</DELETED>
        <DELETED>    ``(2) Special rule for rollover amounts.--To the 
        extent provided in section 72(t)(9), section 72(t) shall apply 
        to any amount includible in gross income under this 
        subsection.''.</DELETED>
        <DELETED>    (2) Conforming amendments.--</DELETED>
                <DELETED>    (A) So much of paragraph (9) of section 
                457(e) as precedes subparagraph (A) is amended to read 
                as follows:</DELETED>
        <DELETED>    ``(9) Benefits of tax exempt organization plans 
        not treated as made available by reason of certain elections, 
        etc.--In the case of an eligible deferred compensation plan of 
        an employer described in subsection (e)(1)(B)--''.</DELETED>
                <DELETED>    (B) Section 457(d) is amended by adding at 
                the end the following new paragraph:</DELETED>
        <DELETED>    ``(3) Special rule for government plan.--An 
        eligible deferred compensation plan of an employer described in 
        subsection (e)(1)(A) shall not be treated as failing to meet 
        the requirements of this subsection solely by reason of making 
        a distribution described in subsection (e)(9)(A).''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to distributions after December 31, 2000.</DELETED>

         <DELETED>TITLE V--STRENGTHENING PENSION SECURITY AND 
                         ENFORCEMENT</DELETED>

<DELETED>SEC. 501. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING 
              LIMIT.</DELETED>

<DELETED>    (a) In General.--Section 412(c)(7) (relating to full-
funding limitation) is amended--</DELETED>
        <DELETED>    (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage''; and</DELETED>
        <DELETED>    (2) by amending subparagraph (F) to read as 
        follows:</DELETED>
                <DELETED>    ``(F) Applicable percentage.--For purposes 
                of subparagraph (A)(i)(I), the applicable percentage 
                shall be determined in accordance with the following 
                table:</DELETED>

                <DELETED>``In the case of any plan 
                    year</DELETED>
                                                         The applicable
                <DELETED>  beginning in--</DELETED>
                                                        percentage is--
                <DELETED>    2001..........................       160  
                <DELETED>    2002..........................       165  
                <DELETED>    2003..........................     170.''.
<DELETED>    (b) Effective Date.--The amendments made by this section 
shall apply to plan years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 502. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND 
              APPLIED TO ALL DEFINED BENEFIT PLANS.</DELETED>

<DELETED>    (a) In General.--Subparagraph (D) of section 404(a)(1) 
(relating to special rule in case of certain plans) is amended to read 
as follows:</DELETED>
                <DELETED>    ``(D) Special rule in case of certain 
                plans.--</DELETED>
                        <DELETED>    ``(i) In general.--In the case of 
                        any defined benefit plan, except as provided in 
                        regulations, the maximum amount deductible 
                        under the limitations of this paragraph shall 
                        not be less than the unfunded termination 
                        liability (determined as if the proposed 
                        termination date referred to in section 
                        4041(b)(2)(A)(i)(II) of the Employee Retirement 
                        Income Security Act of 1974 were the last day 
                        of the plan year).</DELETED>
                        <DELETED>    ``(ii) Plans with less than 100 
                        participants.--For purposes of this 
                        subparagraph, in the case of a plan which has 
                        less than 100 participants for the plan year, 
                        termination liability shall not include the 
                        liability attributable to benefit increases for 
                        highly compensated employees (as defined in 
                        section 414(q)) resulting from a plan amendment 
                        which is made or becomes effective, whichever 
                        is later, within the last 2 years before the 
                        termination date.</DELETED>
                        <DELETED>    ``(iii) Rule for determining 
                        number of participants.--For purposes of 
                        determining whether a plan has more than 100 
                        participants, all defined benefit plans 
                        maintained by the same employer (or any member 
                        of such employer's controlled group (within the 
                        meaning of section 412(l)(8)(C))) shall be 
                        treated as one plan, but only employees of such 
                        member or employer shall be taken into 
                        account.</DELETED>
                        <DELETED>    ``(iv) Plans established and 
                        maintain by professional service employers.--
                        Clause (i) shall not apply to a plan described 
                        in section 4021(b)(13) of the Employee 
                        Retirement Income Security Act of 
                        1974.''.</DELETED>
<DELETED>    (b) Conforming Amendment.--Paragraph (6) of section 
4972(c) is amended to read as follows:</DELETED>
        <DELETED>    ``(6) Exceptions.--In determining the amount of 
        nondeductible contributions for any taxable year, there shall 
        not be taken into account so much of the contributions to one 
        or more defined contribution plans which are not deductible 
        when contributed solely because of section 404(a)(7) as does 
        not exceed the greater of--</DELETED>
                <DELETED>    ``(A) the amount of contributions not in 
                excess of 6 percent of compensation (within the meaning 
                of section 404(a)) paid or accrued (during the taxable 
                year for which the contributions were made) to 
                beneficiaries under the plans, or</DELETED>
                <DELETED>    ``(B) the sum of--</DELETED>
                        <DELETED>    ``(i) the amount of contributions 
                        described in section 401(m)(4)(A), 
                        plus</DELETED>
                        <DELETED>    ``(ii) the amount of contributions 
                        described in section 402(g)(3)(A).</DELETED>
        <DELETED>For purposes of this paragraph, the deductible limits 
        under section 404(a)(7) shall first be applied to amounts 
        contributed to a defined benefit plan and then to amounts 
        described in subparagraph (B).''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to plan years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 503. EXCISE TAX RELIEF FOR SOUND PENSION 
              FUNDING.</DELETED>

<DELETED>    (a) In General.--Subsection (c) of section 4972 (relating 
to nondeductible contributions) is amended by adding at the end the 
following new paragraph:</DELETED>
        <DELETED>    ``(7) Defined benefit plan exception.--In 
        determining the amount of nondeductible contributions for any 
        taxable year, an employer may elect for such year not to take 
        into account any contributions to a defined benefit plan except 
        to the extent that such contributions exceed the full-funding 
        limitation (as defined in section 412(c)(7), determined without 
        regard to subparagraph (A)(i)(I) thereof). For purposes of this 
        paragraph, the deductible limits under section 404(a)(7) shall 
        first be applied to amounts contributed to defined contribution 
        plans and then to amounts described in this paragraph. If an 
        employer makes an election under this paragraph for a taxable 
        year, paragraph (6) shall not apply to such employer for such 
        taxable year.''.</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

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

<DELETED>    (a) In General.--Chapter 43 (relating to qualified 
pension, etc., plans) is amended by adding at the end the following new 
section:</DELETED>

<DELETED>``SEC. 4980F. FAILURE OF APPLICABLE PLANS REDUCING BENEFIT 
              ACCRUALS TO SATISFY NOTICE REQUIREMENTS.</DELETED>

<DELETED>    ``(a) Imposition of Tax.--There is hereby imposed a tax on 
the failure of any applicable pension plan to meet the requirements of 
subsection (e) with respect to any applicable individual.</DELETED>
<DELETED>    ``(b) Amount of Tax.--</DELETED>
        <DELETED>    ``(1) In general.--The amount of the tax imposed 
        by subsection (a) on any failure with respect to any applicable 
        individual shall be $100 for each day in the noncompliance 
        period with respect to such failure.</DELETED>
        <DELETED>    ``(2) Noncompliance period.--For purposes of this 
        section, the term `noncompliance period' means, with respect to 
        any failure, the period beginning on the date the failure first 
        occurs and ending on the date the failure is 
        corrected.</DELETED>
<DELETED>    ``(c) Limitations on Amount of Tax.--</DELETED>
        <DELETED>    ``(1) Overall limitation for unintentional 
        failures.--In the case of failures that are due to reasonable 
        cause and not to willful neglect, the tax imposed by subsection 
        (a) for failures during the taxable year of the employer (or, 
        in the case of a multiemployer plan, the taxable year of the 
        trust forming part of the plan) shall not exceed $500,000. For 
        purposes of the preceding sentence, all multiemployer plans of 
        which the same trust forms a part shall be treated as one plan. 
        For purposes of this paragraph, if not all persons who are 
        treated as a single employer for purposes of this section have 
        the same taxable year, the taxable years taken into account 
        shall be determined under principles similar to the principles 
        of section 1561.</DELETED>
        <DELETED>    ``(2) Waiver by secretary.--In the case of a 
        failure which is due to reasonable cause and not to willful 
        neglect, the Secretary may waive part or all of the tax imposed 
        by subsection (a) to the extent that the payment of such tax 
        would be excessive relative to the failure involved.</DELETED>
<DELETED>    ``(d) Liability for Tax.--The following shall be liable 
for the tax imposed by subsection (a):</DELETED>
        <DELETED>    ``(1) In the case of a plan other than a 
        multiemployer plan, the employer.</DELETED>
        <DELETED>    ``(2) In the case of a multiemployer plan, the 
        plan.</DELETED>
<DELETED>    ``(e) Notice Requirements for Plans Significantly Reducing 
Benefit Accruals.--</DELETED>
        <DELETED>    ``(1) In general.--If an applicable pension plan 
        is amended to provide for a significant reduction in the rate 
        of future benefit accrual, the plan administrator shall provide 
        written notice to each applicable individual (and to each 
        employee organization representing applicable 
        individuals).</DELETED>
        <DELETED>    ``(2) Notice.--The notice required by paragraph 
        (1) shall be written in a manner calculated to be understood by 
        the average plan participant and shall provide sufficient 
        information (as determined in accordance with regulations 
        prescribed by the Secretary) to allow applicable individuals to 
        understand the effect of the plan amendment.</DELETED>
        <DELETED>    ``(3) Timing of notice.--Except as provided in 
        regulations, the notice required by paragraph (1) shall be 
        provided within a reasonable time before the effective date of 
        the plan amendment.</DELETED>
        <DELETED>    ``(4) Designees.--Any notice under paragraph (1) 
        may be provided to a person designated, in writing, by the 
        person to which it would otherwise be provided.</DELETED>
        <DELETED>    ``(5) Notice before adoption of amendment.--A plan 
        shall not be treated as failing to meet the requirements of 
        paragraph (1) merely because notice is provided before the 
        adoption of the plan amendment if no material modification of 
        the amendment occurs before the amendment is adopted.</DELETED>
<DELETED>    ``(f) Applicable Individual; Applicable Pension Plan.--For 
purposes of this section--</DELETED>
        <DELETED>    ``(1) Applicable individual.--The term `applicable 
        individual' means, with respect to any plan amendment--
        </DELETED>
                <DELETED>    ``(A) any participant in the plan, 
                and</DELETED>
                <DELETED>    ``(B) any beneficiary who is an alternate 
                payee (within the meaning of section 414(p)(8)) under 
                an applicable qualified domestic relations order 
                (within the meaning of section 414(p)(1)(A)),</DELETED>
        <DELETED>who may reasonably be expected to be affected by such 
        plan amendment.</DELETED>
        <DELETED>    ``(2) Applicable pension plan.--The term 
        `applicable pension plan' means--</DELETED>
                <DELETED>    ``(A) any defined benefit plan, 
                or</DELETED>
                <DELETED>    ``(B) an individual account plan which is 
                subject to the funding standards of section 
                412,</DELETED>
        <DELETED>which had 100 or more participants who had accrued a 
        benefit, or with respect to whom contributions were made, under 
        the plan (whether or not vested) as of the last day of the plan 
        year preceding the plan year in which the plan amendment 
        becomes effective. Such term shall not include a governmental 
        plan (within the meaning of section 414(d)) or a church plan 
        (within the meaning of section 414(e)) with respect to which 
        the election provided by section 410(d) has not been 
        made.''.</DELETED>
<DELETED>    (b) Clerical Amendment.--The table of sections for chapter 
43 is amended by adding at the end the following new item:</DELETED>

                              <DELETED> ``Sec. 4980F. Failure of 
                                        applicable plans reducing 
                                        benefit accruals to satisfy 
                                        notice requirements.''.
<DELETED>    (c) Effective Dates.--</DELETED>
        <DELETED>    (1) In general.--The amendments made by this 
        section shall apply to plan amendments taking effect on or 
        after the date of the enactment of this Act.</DELETED>
        <DELETED>    (2) Transition.--Until such time as the Secretary 
        of the Treasury issues regulations under sections 4980F(e)(2) 
        and (3) of the Internal Revenue Code of 1986 (as added by the 
        amendments made by this section), a plan shall be treated as 
        meeting the requirements of such sections if it makes a good 
        faith effort to comply with such requirements.</DELETED>
        <DELETED>    (3) Special rule.--The period for providing any 
        notice required by the amendments made by this section shall 
        not end before the date which is 3 months after the date of the 
        enactment of this Act.</DELETED>
<DELETED>    (d) Study.--The Secretary of the Treasury shall prepare a 
report on the effects of conversions of traditional defined benefit 
plans to cash balance or hybrid formula plans. Such study shall examine 
the effect of such conversions on longer service participants, 
including the incidence and effects of ``wear away'' provisions under 
which participants earn no additional benefits for a period of time 
after the conversion. As soon as practicable, but not later than 60 
days after the date of the enactment of this Act, the Secretary shall 
submit such report, together with recommendations thereon, to the 
Committee on Ways and Means of the House of Representatives and the 
Committee on Finance of the Senate.</DELETED>

<DELETED>SEC. 505. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 
              415.</DELETED>

<DELETED>    (a) Compensation Limit.--Paragraph (11) of section 415(b) 
(relating to limitation for defined benefit plans) is amended to read 
as follows:</DELETED>
        <DELETED>    ``(11) Special limitation rule for governmental 
        and multiemployer plans.--In the case of a governmental plan 
        (as defined in section 414(d)) or a multiemployer plan (as 
        defined in section 414(f)), subparagraph (B) of paragraph (1) 
        shall not apply.''.</DELETED>
<DELETED>    (b) Combining and Aggregation of Plans.--</DELETED>
        <DELETED>    (1) Combining of plans.--Subsection (f) of section 
        415 (relating to combining of plans) is amended by adding at 
        the end the following:</DELETED>
        <DELETED>    ``(3) Exception for multiemployer plans.--
        Notwithstanding paragraph (1) and subsection (g), a 
        multiemployer plan (as defined in section 414(f)) shall not be 
        combined or aggregated with any other plan maintained by an 
        employer for purposes of applying the limitations established 
        in this section, except that such plan shall be combined or 
        aggregated with another plan which is not such a multiemployer 
        plan solely for purposes of determining whether such other plan 
        meets the requirements of subsections (b)(1)(A) and 
        (c).''.</DELETED>
        <DELETED>    (2) Conforming amendment for aggregation of 
        plans.--Subsection (g) of section 415 (relating to aggregation 
        of plans) is amended by striking ``The Secretary'' and 
        inserting ``Except as provided in subsection (f)(3), the 
        Secretary''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 506. PROHIBITED ALLOCATIONS OF STOCK IN S CORPORATION 
              ESOP.</DELETED>

<DELETED>    (a) In General.--Section 409 (relating to qualifications 
for tax credit employee stock ownership plans) is amended by 
redesignating subsection (p) as subsection (q) and by inserting after 
subsection (o) the following new subsection:</DELETED>
<DELETED>    ``(p) Prohibited Allocations of Securities in an S 
Corporation.--</DELETED>
        <DELETED>    ``(1) In general.--An employee stock ownership 
        plan holding employer securities consisting of stock in an S 
        corporation shall provide that no portion of the assets of the 
        plan attributable to (or allocable in lieu of) such employer 
        securities may, during a nonallocation year, accrue (or be 
        allocated directly or indirectly under any plan of the employer 
        meeting the requirements of section 401(a)) for the benefit of 
        any disqualified person.</DELETED>
        <DELETED>    ``(2) Failure to meet requirements.--</DELETED>
                <DELETED>    ``(A) In general.--If a plan fails to meet 
                the requirements of paragraph (1), the plan shall be 
                treated as having distributed to any disqualified 
                person the amount allocated to the account of such 
                person in violation of paragraph (1) at the time of 
                such allocation.</DELETED>
                <DELETED>    ``(B) Cross reference.--</DELETED>

                              <DELETED>  ``For excise tax relating to 
violations of paragraph (1) and ownership of synthetic equity, see 
section 4979A.
        <DELETED>    ``(3) Nonallocation year.--For purposes of this 
        subsection--</DELETED>
                <DELETED>    ``(A) In general.--The term `nonallocation 
                year' means any plan year of an employee stock 
                ownership plan if, at any time during such plan year--
                </DELETED>
                        <DELETED>    ``(i) such plan holds employer 
                        securities consisting of stock in an S 
                        corporation, and</DELETED>
                        <DELETED>    ``(ii) disqualified persons own at 
                        least 50 percent of the number of shares of 
                        stock in the S corporation.</DELETED>
                <DELETED>    ``(B) Attribution rules.--For purposes of 
                subparagraph (A)--</DELETED>
                        <DELETED>    ``(i) In general.--The rules of 
                        section 318(a) shall apply for purposes of 
                        determining ownership, except that--</DELETED>
                                <DELETED>    ``(I) in applying 
                                paragraph (1) thereof, the members of 
                                an individual's family shall include 
                                members of the family described in 
                                paragraph (4)(D), and</DELETED>
                                <DELETED>    ``(II) paragraph (4) 
                                thereof shall not apply.</DELETED>
                        <DELETED>    ``(ii) Deemed-owned shares.--
                        Notwithstanding the employee trust exception in 
                        section 318(a)(2)(B)(i), individual shall be 
                        treated as owning deemed-owned shares of the 
                        individual.</DELETED>
                <DELETED>Solely for purposes of applying paragraph (5), 
                this subparagraph shall be applied after the 
                attribution rules of paragraph (5) have been 
                applied.</DELETED>
        <DELETED>    ``(4) Disqualified person.--For purposes of this 
        subsection--</DELETED>
                <DELETED>    ``(A) In general.--The term `disqualified 
                person' means any person if--</DELETED>
                        <DELETED>    ``(i) the aggregate number of 
                        deemed-owned shares of such person and the 
                        members of such person's family is at least 20 
                        percent of the number of deemed-owned shares of 
                        stock in the S corporation, or</DELETED>
                        <DELETED>    ``(ii) in the case of a person not 
                        described in clause (i), the number of deemed-
                        owned shares of such person is at least 10 
                        percent of the number of deemed-owned shares of 
                        stock in such corporation.</DELETED>
                <DELETED>    ``(B) Treatment of family members.--In the 
                case of a disqualified person described in subparagraph 
                (A)(i), any member of such person's family with deemed-
                owned shares shall be treated as a disqualified person 
                if not otherwise treated as a disqualified person under 
                subparagraph (A).</DELETED>
                <DELETED>    ``(C) Deemed-owned shares.--</DELETED>
                        <DELETED>    ``(i) In general.--The term 
                        `deemed-owned shares' means, with respect to 
                        any person--</DELETED>
                                <DELETED>    ``(I) the stock in the S 
                                corporation constituting employer 
                                securities of an employee stock 
                                ownership plan which is allocated to 
                                such person under the plan, 
                                and</DELETED>
                                <DELETED>    ``(II) such person's share 
                                of the stock in such corporation which 
                                is held by such plan but which is not 
                                allocated under the plan to 
                                participants.</DELETED>
                        <DELETED>    ``(ii) Person's share of 
                        unallocated stock.--For purposes of clause 
                        (i)(II), a person's share of unallocated S 
                        corporation stock held by such plan is the 
                        amount of the unallocated stock which would be 
                        allocated to such person if the unallocated 
                        stock were allocated to all participants in the 
                        same proportions as the most recent stock 
                        allocation under the plan.</DELETED>
                <DELETED>    ``(D) Member of family.--For purposes of 
                this paragraph, the term `member of the family' means, 
                with respect to any individual--</DELETED>
                        <DELETED>    ``(i) the spouse of the 
                        individual,</DELETED>
                        <DELETED>    ``(ii) an ancestor or lineal 
                        descendant of the individual or the 
                        individual's spouse,</DELETED>
                        <DELETED>    ``(iii) a brother or sister of the 
                        individual or the individual's spouse and any 
                        lineal descendant of the brother or sister, 
                        and</DELETED>
                        <DELETED>    ``(iv) the spouse of any 
                        individual described in clause (ii) or 
                        (iii).</DELETED>
                <DELETED>A spouse of an individual who is legally 
                separated from such individual under a decree of 
                divorce or separate maintenance shall not be treated as 
                such individual's spouse for purposes of this 
                subparagraph.</DELETED>
        <DELETED>    ``(5) Treatment of synthetic equity.--For purposes 
        of paragraphs (3) and (4), in the case of a person who owns 
        synthetic equity in the S corporation, except to the extent 
        provided in regulations, the shares of stock in such 
        corporation on which such synthetic equity is based shall be 
        treated as outstanding stock in such corporation and deemed-
        owned shares of such person if such treatment of synthetic 
        equity of 1 or more such persons results in--</DELETED>
                <DELETED>    ``(A) the treatment of any person as a 
                disqualified person, or</DELETED>
                <DELETED>    ``(B) the treatment of any year as a 
                nonallocation year.</DELETED>
        <DELETED>For purposes of this paragraph, synthetic equity shall 
        be treated as owned by a person in the same manner as stock is 
        treated as owned by a person under the rules of paragraphs (2) 
        and (3) of section 318(a). If, without regard to this 
        paragraph, a person is treated as a disqualified person or a 
        year is treated as a nonallocation year, this paragraph shall 
        not be construed to result in the person or year not being so 
        treated.</DELETED>
        <DELETED>    ``(6) Definitions.--For purposes of this 
        subsection--</DELETED>
                <DELETED>    ``(A) Employee stock ownership plan.--The 
                term `employee stock ownership plan' has the meaning 
                given such term by section 4975(e)(7).</DELETED>
                <DELETED>    ``(B) Employer securities.--The term 
                `employer security' has the meaning given such term by 
                section 409(l).</DELETED>
                <DELETED>    ``(C) Synthetic equity.--The term 
                `synthetic equity' means any stock option, warrant, 
                restricted stock, deferred issuance stock right, or 
                similar interest or right that gives the holder the 
                right to acquire or receive stock of the S corporation 
                in the future. Except to the extent provided in 
                regulations, synthetic equity also includes a stock 
                appreciation right, phantom stock unit, or similar 
                right to a future cash payment based on the value of 
                such stock or appreciation in such value.</DELETED>
        <DELETED>    ``(7) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to carry out the purposes 
        of this subsection.''.</DELETED>
<DELETED>    (b) Coordination With Section 4975(e)(7).--The last 
sentence of section 4975(e)(7) (defining employee stock ownership plan) 
is amended by inserting ``, section 409(p),'' after 
``409(n)''.</DELETED>
<DELETED>    (c) Excise Tax.--</DELETED>
        <DELETED>    (1) Application of tax.--Subsection (a) of section 
        4979A (relating to tax on certain prohibited allocations of 
        employer securities) is amended--</DELETED>
                <DELETED>    (A) by striking ``or'' at the end of 
                paragraph (1), and</DELETED>
                <DELETED>    (B) by striking all that follows paragraph 
                (2) and inserting the following:</DELETED>
        <DELETED>    ``(3) there is any allocation of employer 
        securities which violates the provisions of section 409(p), or 
        a nonallocation year described in subsection (e)(2)(C) with 
        respect to an employee stock ownership plan, or</DELETED>
        <DELETED>    ``(4) any synthetic equity is owned by a 
        disqualified person in any nonallocation year,</DELETED>
<DELETED>there is hereby imposed a tax on such allocation or ownership 
equal to 50 percent of the amount involved.''.</DELETED>
        <DELETED>    (2) Liability.--Section 4979A(c) (defining 
        liability for tax) is amended to read as follows:</DELETED>
<DELETED>    ``(c) Liability for Tax.--The tax imposed by this section 
shall be paid--</DELETED>
        <DELETED>    ``(1) in the case of an allocation referred to in 
        paragraph (1) or (2) of subsection (a), by--</DELETED>
                <DELETED>    ``(A) the employer sponsoring such plan, 
                or</DELETED>
                <DELETED>    ``(B) the eligible worker-owned 
                cooperative,</DELETED>
        <DELETED>which made the written statement described in section 
        664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may be), 
        and</DELETED>
        <DELETED>    ``(2) in the case of an allocation or ownership 
        referred to in paragraph (3) or (4) of subsection (a), by the S 
        corporation the stock in which was so allocated or 
        owned.''.</DELETED>
        <DELETED>    (3) Definitions.--Section 4979A(e) (relating to 
        definitions) is amended to read as follows:</DELETED>
<DELETED>    ``(e) Definitions and Special Rules.--For purposes of this 
section--</DELETED>
        <DELETED>    ``(1) Definitions.--Except as provided in 
        paragraph (2), terms used in this section have the same 
        respective meanings as when used in sections 409 and 
        4978.</DELETED>
        <DELETED>    ``(2) Special rules relating to tax imposed by 
        reason of paragraph (3) or (4) of subsection (a).--</DELETED>
                <DELETED>    ``(A) Prohibited allocations.--The amount 
                involved with respect to any tax imposed by reason of 
                subsection (a)(3) is the amount allocated to the 
                account of any person in violation of section 
                409(p)(1).</DELETED>
                <DELETED>    ``(B) Synthetic equity.--The amount 
                involved with respect to any tax imposed by reason of 
                subsection (a)(4) is the value of the shares on which 
                the synthetic equity is based.</DELETED>
                <DELETED>    ``(C) Special rule during first 
                nonallocation year.--For purposes of subparagraph (A), 
                the amount involved for the first nonallocation year of 
                any employee stock ownership plan shall be determined 
                by taking into account the total value of all the 
                deemed-owned shares of all disqualified persons with 
                respect to such plan.</DELETED>
                <DELETED>    ``(D) Statute of limitations.--The 
                statutory period for the assessment of any tax imposed 
                by this section by reason of paragraph (3) or (4) of 
                subsection (a) shall not expire before the date which 
                is 3 years from the later of--</DELETED>
                        <DELETED>    ``(i) the allocation or ownership 
                        referred to in such paragraph giving rise to 
                        such tax, or</DELETED>
                        <DELETED>    ``(ii) the date on which the 
                        Secretary is notified of such allocation or 
                        ownership.''.</DELETED>
<DELETED>    (d) Effective Dates.--</DELETED>
        <DELETED>    (1) In general.--The amendments made by this 
        section shall apply to plan years beginning after December 31, 
        2001.</DELETED>
        <DELETED>    (2) Exception for certain plans.--In the case of 
        any--</DELETED>
                <DELETED>    (A) employee stock ownership plan 
                established after July 11, 2000, or</DELETED>
                <DELETED>    (B) employee stock ownership plan 
                established on or before such date if employer 
                securities held by the plan consist of stock in a 
                corporation with respect to which an election under 
                section 1362(a) of the Internal Revenue Code of 1986 is 
                not in effect on such date,</DELETED>
        <DELETED>the amendments made by this section shall apply to 
        plan years ending after July 11, 2000.</DELETED>

        <DELETED>TITLE VI--REDUCING REGULATORY BURDENS</DELETED>

<DELETED>SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.</DELETED>

<DELETED>    (a) In General.--Paragraph (9) of section 412(c)(9) 
(relating to annual valuation) is amended to read as follows:</DELETED>
        <DELETED>    ``(9) Annual valuation.--</DELETED>
                <DELETED>    ``(A) In general.--For purposes of this 
                section, a determination of experience gains and losses 
                and a valuation of the plan's liability shall be made 
                not less frequently than once every year, except that 
                such determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary.</DELETED>
                <DELETED>    ``(B) Valuation date.--</DELETED>
                        <DELETED>    ``(i) Current year.--Except as 
                        provided in clause (ii), the valuation referred 
                        to in subparagraph (A) shall be made as of a 
                        date within the plan year to which the 
                        valuation refers or within one month prior to 
                        the beginning of such year.</DELETED>
                        <DELETED>    ``(ii) Election to use prior year 
                        valuation.--The valuation referred to in 
                        subparagraph (A) may be made as of a date 
                        within the plan year prior to the year to which 
                        the valuation refers if--</DELETED>
                                <DELETED>    ``(I) an election is in 
                                effect under this clause with respect 
                                to the plan, and</DELETED>
                                <DELETED>    ``(II) as of such date, 
                                the value of the assets of the plan are 
                                not less than 125 percent of the plan's 
                                current liability (as defined in 
                                paragraph (7)(B)).</DELETED>
                        <DELETED>    ``(iii) Adjustments.--Information 
                        under clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in 
                        participants.</DELETED>
                        <DELETED>    ``(iv) Election.--An election 
                        under clause (ii), once made, shall be 
                        irrevocable without the consent of the 
                        Secretary.''.</DELETED>
<DELETED>    (b) Effective Date.--The amendments made by this section 
shall apply to plan years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 602. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF 
              DIVIDEND DEDUCTION.</DELETED>

<DELETED>    (a) In General.--Section 404(k)(2)(A) (defining applicable 
dividends) is amended by striking ``or'' at the end of clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (ii) the following new clause:</DELETED>
                        <DELETED>    ``(iii) is, at the election of 
                        such participants or their beneficiaries--
                        </DELETED>
                                <DELETED>    ``(I) payable as provided 
                                in clause (i) or (ii), or</DELETED>
                                <DELETED>    ``(II) paid to the plan 
                                and reinvested in qualifying employer 
                                securities, or''.</DELETED>
<DELETED>    (b) Effective Date.--The amendments made by this section 
shall apply to taxable years beginning after December 31, 
2000.</DELETED>

<DELETED>SEC. 603. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY 
              COMPENSATED EMPLOYEES.</DELETED>

<DELETED>    (a) In General.--Paragraph (4) of section 1114(c) of the 
Tax Reform Act of 1986 is hereby repealed.</DELETED>
<DELETED>    (b) Effective Date.--The repeal made by subsection (a) 
shall apply to plan years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 604. EMPLOYEES OF TAX-EXEMPT ENTITIES.</DELETED>

<DELETED>    (a) In General.--The Secretary of the Treasury shall 
modify Treasury Regulations section 1.410(b)-6(g) to provide that 
employees of an organization described in section 403(b)(1)(A)(i) of 
the Internal Revenue Code of 1986 who are eligible to make 
contributions under section 403(b) of such Code pursuant to a salary 
reduction agreement may be treated as excludable with respect to a plan 
under section 401(k) or (m) of such Code that is provided under the 
same general arrangement as a plan under such section 401(k), if--
</DELETED>
        <DELETED>    (1) no employee of an organization described in 
        section 403(b)(1)(A)(i) of such Code is eligible to participate 
        in such section 401(k) plan or section 401(m) plan; 
        and</DELETED>
        <DELETED>    (2) 95 percent of the employees who are not 
        employees of an organization described in section 
        403(b)(1)(A)(i) of such Code are eligible to participate in 
        such plan under such section 401(k) or (m).</DELETED>
<DELETED>    (b) Effective Date.--The modification required by 
subsection (a) shall apply as of the same date set forth in section 
1426(b) of the Small Business Job Protection Act of 1996.</DELETED>

<DELETED>SEC. 605. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED 
              RETIREMENT ADVICE.</DELETED>

<DELETED>    (a) In General.--Subsection (a) of section 132 (relating 
to exclusion from gross income) is amended by striking ``or'' at the 
end of paragraph (5), by striking the period at the end of paragraph 
(6) and inserting ``, or'', and by adding at the end the following new 
paragraph:</DELETED>
        <DELETED>    ``(7) qualified retirement planning 
        services.''.</DELETED>
<DELETED>    (b) Qualified Retirement Planning Services Defined.--
Section 132 is amended by redesignating subsection (m) as subsection 
(n) and by inserting after subsection (l) the following:</DELETED>
<DELETED>    ``(m) Qualified Retirement Planning Services.--</DELETED>
        <DELETED>    ``(1) In general.--For purposes of this section, 
        the term `qualified retirement planning services' means any 
        retirement planning service provided to an employee and his 
        spouse by an employer maintaining a qualified employer 
        plan.</DELETED>
        <DELETED>    ``(2) Nondiscrimination rule.--Subsection (a)(7) 
        shall apply in the case of highly compensated employees only if 
        such services are available on substantially the same terms to 
        each member of the group of employees normally provided 
        education and information regarding the employer's qualified 
        employer plan.</DELETED>
        <DELETED>    ``(3) Qualified employer plan.--For purposes of 
        this subsection, the term `qualified employer plan' means a 
        plan, contract, pension, or account described in section 
        219(g)(5).''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 606. REPORTING SIMPLIFICATION.</DELETED>

<DELETED>    (a) Simplified Annual Filing Requirement for Owners and 
Their Spouses.--</DELETED>
        <DELETED>    (1) In general.--The Secretary of the Treasury 
        shall modify the requirements for filing annual returns with 
        respect to one-participant retirement plans to ensure that such 
        plans with assets of $250,000 or less as of the close of the 
        plan year need not file a return for that year.</DELETED>
        <DELETED>    (2) One-participant retirement plan defined.--For 
        purposes of this subsection, the term ``one-participant 
        retirement plan'' means a retirement plan that--</DELETED>
                <DELETED>    (A) on the first day of the plan year--
                </DELETED>
                        <DELETED>    (i) covered only the employer (and 
                        the employer's spouse) and the employer owned 
                        the entire business (whether or not 
                        incorporated); or</DELETED>
                        <DELETED>    (ii) covered only one or more 
                        partners (and their spouses) in a business 
                        partnership (including partners in an S or C 
                        corporation);</DELETED>
                <DELETED>    (B) meets the minimum coverage 
                requirements of section 410(b) of the Internal Revenue 
                Code of 1986 without being combined with any other plan 
                of the business that covers the employees of the 
                business;</DELETED>
                <DELETED>    (C) does not provide benefits to anyone 
                except the employer (and the employer's spouse) or the 
                partners (and their spouses);</DELETED>
                <DELETED>    (D) does not cover a business that is a 
                member of an affiliated service group, a controlled 
                group of corporations, or a group of businesses under 
                common control; and</DELETED>
                <DELETED>    (E) does not cover a business that leases 
                employees.</DELETED>
        <DELETED>    (3) Other definitions.--Terms used in paragraph 
        (2) which are also used in section 414 of the Internal Revenue 
        Code of 1986 shall have the respective meanings given such 
        terms by such section.</DELETED>
<DELETED>    (b) Simplified Annual Filing Requirement for Plans With 
Fewer Than 25 Employees.--In the case of a retirement plan which covers 
less than 25 employees on the first day of the plan year and meets the 
requirements described in subparagraphs (B), (D), and (E) of subsection 
(a)(2), the Secretary of the Treasury shall provide for the filing of a 
simplified annual return that is substantially similar to the annual 
return required to be filed by a one-participant retirement 
plan.</DELETED>
<DELETED>    (c) Effective Date.--The provisions of this section shall 
take effect on January 1, 2001.</DELETED>

<DELETED>SEC. 607. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION 
              SYSTEM.</DELETED>

<DELETED>    The Secretary of the Treasury shall continue to update and 
improve the Employee Plans Compliance Resolution System (or any 
successor program) giving special attention to--</DELETED>
        <DELETED>    (1) increasing the awareness and knowledge of 
        small employers concerning the availability and use of the 
        program;</DELETED>
        <DELETED>    (2) taking into account special concerns and 
        circumstances that small employers face with respect to 
        compliance and correction of compliance failures;</DELETED>
        <DELETED>    (3) extending the duration of the self-correction 
        period under the Administrative Policy Regarding Self-
        Correction for significant compliance failures;</DELETED>
        <DELETED>    (4) expanding the availability to correct 
        insignificant compliance failures under the Administrative 
        Policy Regarding Self-Correction during audit; and</DELETED>
        <DELETED>    (5) assuring that any tax, penalty, or sanction 
        that is imposed by reason of a compliance failure is not 
        excessive and bears a reasonable relationship to the nature, 
        extent, and severity of the failure.</DELETED>

<DELETED>SEC. 608. REPEAL OF THE MULTIPLE USE TEST.</DELETED>

<DELETED>    (a) In General.--Paragraph (9) of section 401(m) is 
amended to read as follows:</DELETED>
        <DELETED>    ``(9) Regulations.--The Secretary shall prescribe 
        such regulations as may be necessary to carry out the purposes 
        of this subsection and subsection (k), including regulations 
        permitting appropriate aggregation of plans and 
        contributions.''.</DELETED>
<DELETED>    (b) Effective Date.--The amendment made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 609. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND LINE 
              OF BUSINESS RULES.</DELETED>

<DELETED>    (a) Nondiscrimination.--</DELETED>
        <DELETED>    (1) In general.--The Secretary of the Treasury 
        shall, by regulation, provide that a plan shall be deemed to 
        satisfy the requirements of section 401(a)(4) of the Internal 
        Revenue Code of 1986 if such plan satisfies the facts and 
        circumstances test under section 401(a)(4) of such Code, as in 
        effect before January 1, 1994, but only if--</DELETED>
                <DELETED>    (A) the plan satisfies conditions 
                prescribed by the Secretary to appropriately limit the 
                availability of such test; and</DELETED>
                <DELETED>    (B) the plan is submitted to the Secretary 
                for a determination of whether it satisfies such 
                test.</DELETED>
        <DELETED>Subparagraph (B) shall only apply to the extent 
        provided by the Secretary.</DELETED>
        <DELETED>    (2) Effective dates.--</DELETED>
                <DELETED>    (A) Regulations.--The regulation required 
                by paragraph (1) shall apply to years beginning after 
                December 31, 2000.</DELETED>
                <DELETED>    (B) Conditions of availability.--Any 
                condition of availability prescribed by the Secretary 
                under paragraph (1)(A) shall not apply before the first 
                year beginning not less than 120 days after the date on 
                which such condition is prescribed.</DELETED>
<DELETED>    (b) Coverage Test.--</DELETED>
        <DELETED>    (1) In general.--Section 410(b)(1) (relating to 
        minimum coverage requirements) is amended by adding at the end 
        the following:</DELETED>
                <DELETED>    ``(D) In the case that the plan fails to 
                meet the requirements of subparagraphs (A), (B) and 
                (C), the plan--</DELETED>
                        <DELETED>    ``(i) satisfies subparagraph (B), 
                        as in effect immediately before the enactment 
                        of the Tax Reform Act of 1986,</DELETED>
                        <DELETED>    ``(ii) is submitted to the 
                        Secretary for a determination of whether it 
                        satisfies the requirement described in clause 
                        (i), and</DELETED>
                        <DELETED>    ``(iii) satisfies conditions 
                        prescribed by the Secretary by regulation that 
                        appropriately limit the availability of this 
                        subparagraph.</DELETED>
                <DELETED>Clause (ii) shall apply only to the extent 
                provided by the Secretary.''.</DELETED>
        <DELETED>    (2) Effective dates.--</DELETED>
                <DELETED>    (A) In general.--The amendment made by 
                paragraph (1) shall apply to years beginning after 
                December 31, 2000.</DELETED>
                <DELETED>    (B) Conditions of availability.--Any 
                condition of availability prescribed by the Secretary 
                under regulations prescribed by the Secretary under 
                section 410(b)(1)(D) of the Internal Revenue Code of 
                1986 shall not apply before the first year beginning 
                not less than 120 days after the date on which such 
                condition is prescribed.</DELETED>
<DELETED>    (c) Line of Business Rules.--The Secretary of the Treasury 
shall, on or before December 31, 2000, modify the existing regulations 
issued under section 414(r) of the Internal Revenue Code of 1986 in 
order to expand (to the extent that the Secretary determines 
appropriate) the ability of a pension plan to demonstrate compliance 
with the line of business requirements based upon the facts and 
circumstances surrounding the design and operation of the plan, even 
though the plan is unable to satisfy the mechanical tests currently 
used to determine compliance.</DELETED>

<DELETED>SEC. 610. EXTENSION TO ALL GOVERNMENTAL PLANS OF MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.</DELETED>

<DELETED>    (a) In General.--</DELETED>
        <DELETED>    (1) Subparagraph (G) of section 401(a)(5) and 
        subparagraph (H) of section 401(a)(26) are each amended by 
        striking ``section 414(d))'' and all that follows and inserting 
        ``section 414(d)).''.</DELETED>
        <DELETED>    (2) Subparagraph (G) of section 401(k)(3) and 
        paragraph (2) of section 1505(d) of the Taxpayer Relief Act of 
        1997 are each amended by striking ``maintained by a State or 
        local government or political subdivision thereof (or agency or 
        instrumentality thereof)''.</DELETED>
<DELETED>    (b) Conforming Amendments.--</DELETED>
        <DELETED>    (1) The heading for subparagraph (G) of section 
        401(a)(5) is amended to read as follows: ``Governmental 
        plans''.</DELETED>
        <DELETED>    (2) The heading for subparagraph (H) of section 
        401(a)(26) is amended to read as follows: ``Exception for 
        governmental plans''.</DELETED>
        <DELETED>    (3) Subparagraph (G) of section 401(k)(3) is 
        amended by inserting ``Governmental plans.--'' after 
        ``(G)''.</DELETED>
<DELETED>    (c) Effective Date.--The amendments made by this section 
shall apply to years beginning after December 31, 2000.</DELETED>

<DELETED>SEC. 611. NOTICE AND CONSENT PERIOD REGARDING 
              DISTRIBUTIONS.</DELETED>

<DELETED>    (a) Expansion of Period.--</DELETED>
        <DELETED>    (1) In general.--Subparagraph (A) of section 
        417(a)(6) is amended by striking ``90-day'' and inserting 
        ``180-day''.</DELETED>
        <DELETED>    (2) Modification of regulations.--The Secretary of 
        the Treasury shall modify the regulations under sections 
        402(f), 411(a)(11), and 417 of the Internal Revenue Code of 
        1986 to substitute ``180 days'' for ``90 days'' each place it 
        appears in Treasury Regulations sections 1.402(f)-1, 1.411(a)-
        11(c), and 1.417(e)-1(b).</DELETED>
        <DELETED>    (3) Effective date.--The amendment made by 
        paragraph (1) and the modifications required by paragraph (2) 
        shall apply to years beginning after December 31, 
        2000.</DELETED>
<DELETED>    (b) Consent Regulation Inapplicable to Certain 
Distributions.--</DELETED>
        <DELETED>    (1) In general.--The Secretary of the Treasury 
        shall modify the regulations under section 411(a)(11) of the 
        Internal Revenue Code of 1986 to provide that the description 
        of a participant's right, if any, to defer receipt of a 
        distribution shall also describe the consequences of failing to 
        defer such receipt.</DELETED>
        <DELETED>    (2) Effective date.--The modifications required by 
        paragraph (1) shall apply to years beginning after December 31, 
        2000.</DELETED>

             <DELETED>TITLE VII--PLAN AMENDMENTS</DELETED>

<DELETED>SEC. 701. PROVISIONS RELATING TO PLAN AMENDMENTS.</DELETED>

<DELETED>    (a) In General.--If this section applies to any plan or 
contract amendment--</DELETED>
        <DELETED>    (1) such plan or contract shall be treated as 
        being operated in accordance with the terms of the plan during 
        the period described in subsection (b)(2)(A); and</DELETED>
        <DELETED>    (2) such plan shall not fail to meet the 
        requirements of section 411(d)(6) of the Internal Revenue Code 
        of 1986 by reason of such amendment.</DELETED>
<DELETED>    (b) Amendments to Which Section Applies.--</DELETED>
        <DELETED>    (1) In general.--This section shall apply to any 
        amendment to any plan or annuity contract which is made--
        </DELETED>
                <DELETED>    (A) pursuant to any amendment made by this 
                Act, or pursuant to any regulation issued under this 
                Act, and</DELETED>
                <DELETED>    (B) on or before the last day of the first 
                plan year beginning on or after January 1, 
                2003.</DELETED>
        <DELETED>In the case of a governmental plan (as defined in 
        section 414(d) of the Internal Revenue Code of 1986), this 
        paragraph shall be applied by substituting ``2005'' for 
        ``2003''.</DELETED>
        <DELETED>    (2) Conditions.--This section shall not apply to 
        any amendment unless--</DELETED>
                <DELETED>    (A) during the period--</DELETED>
                        <DELETED>    (i) beginning on the date the 
                        legislative or regulatory amendment described 
                        in paragraph (1)(A) takes effect (or in the 
                        case of a plan or contract amendment not 
                        required by such legislative or regulatory 
                        amendment, the effective date specified by the 
                        plan); and</DELETED>
                        <DELETED>    (ii) ending on the date described 
                        in paragraph (1)(B) (or, if earlier, the date 
                        the plan or contract amendment is 
                        adopted),</DELETED>
                <DELETED>the plan or contract is operated as if such 
                plan or contract amendment were in effect; 
                and</DELETED>
                <DELETED>    (B) such plan or contract amendment 
                applies retroactively for such period.</DELETED>

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

    (a) Short Title.--This Act may be cited as the ``Retirement 
Security and Savings Act of 2000''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

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

                TITLE I--INDIVIDUAL RETIREMENT ACCOUNTS

Sec. 101. Modification of IRA contribution limits.
Sec. 102. Deemed IRAs under employer plans.
Sec. 103. Tax-free distributions from individual retirement accounts 
                            for charitable purposes.
Sec. 104. Modification of AGI limits for Roth IRAs.

                      TITLE II--EXPANDING COVERAGE

Sec. 201. Increase in benefit and contribution limits.
Sec. 202. Plan loans for subchapter S owners, partners, and sole 
                            proprietors.
Sec. 203. Modification of top-heavy rules.
Sec. 204. Elective deferrals not taken into account for purposes of 
                            deduction limits.
Sec. 205. Repeal of coordination requirements for deferred compensation 
                            plans of State and local governments and 
                            tax-exempt organizations.
Sec. 206. Deduction limits.
Sec. 207. Option to treat elective deferrals as after-tax Roth 
                            contributions.
Sec. 208. Nonrefundable credit to certain individuals for elective 
                            deferrals and IRA contributions.
Sec. 209. Credit for qualified pension plan contributions of small 
                            employers.
Sec. 210. Credit for pension plan startup costs of small employers.

                TITLE III--ENHANCING FAIRNESS FOR WOMEN

Sec. 301. Catch-up contributions for individuals age 50 or over.
Sec. 302. Equitable treatment for contributions of employees to defined 
                            contribution plans.
Sec. 303. Faster vesting of certain employer matching contributions.
Sec. 304. Simplify and update the minimum distribution rules.
Sec. 305. Clarification of tax treatment of division of section 457 
                            plan benefits upon divorce.
Sec. 306. Provisions relating to hardship distributions.
Sec. 307. Waiver of tax on nondeductible contributions for domestic or 
                            similar workers.

           TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS

Sec. 401. Rollovers allowed among various types of plans.
Sec. 402. Rollovers of IRAs into workplace retirement plans.
Sec. 403. Rollovers of after-tax contributions.
Sec. 404. Hardship exception to 60-day rule.
Sec. 405. Treatment of forms of distribution.
Sec. 406. Rationalization of restrictions on distributions.
Sec. 407. Purchase of service credit in governmental defined benefit 
                            plans.
Sec. 408. Employers may disregard rollovers for purposes of cash-out 
                            amounts.
Sec. 409. Minimum distribution and inclusion requirements for section 
                            457 plans.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

                     Subtitle A--General Provisions

Sec. 501. Repeal of 155 percent of current liability funding limit.
Sec. 502. Maximum contribution deduction rules modified and applied to 
                            all defined benefit plans.
Sec. 503. Excise tax relief for sound pension funding.
Sec. 504. Treatment of multiemployer plans under section 415.
Sec. 505. Protection of investment of employee contributions to 401(k) 
                            plans.
Sec. 506. Periodic pension benefits statements.
Sec. 507. Prohibited allocations of stock in S corporation ESOP.

   Subtitle B--Treatment of Plan Amendments Reducing Future Benefit 
                                Accruals

Sec. 521. Notice required for pension plan amendments having the effect 
                            of significantly reducing future benefit 
                            accruals.
Sec. 522. Protection of participants during conversions to cash balance 
                            or other hybrid defined benefit plans.
Sec. 523. Effective dates.

                 TITLE VI--REDUCING REGULATORY BURDENS

Sec. 601. Modification of timing of plan valuations.
Sec. 602. ESOP dividends may be reinvested without loss of dividend 
                            deduction.
Sec. 603. Repeal of transition rule relating to certain highly 
                            compensated employees.
Sec. 604. Employees of tax-exempt entities.
Sec. 605. Clarification of treatment of employer-provided retirement 
                            advice.
Sec. 606. Reporting simplification.
Sec. 607. Improvement of employee plans compliance resolution system.
Sec. 608. Repeal of the multiple use test.
Sec. 609. Flexibility in nondiscrimination, coverage, and line of 
                            business rules.
Sec. 610. Extension to all governmental plans of moratorium on 
                            application of certain nondiscrimination 
                            rules applicable to State and local plans.
Sec. 611. Notice and consent period regarding distributions.
Sec. 612. Annual report dissemination.
Sec. 613. Technical corrections to SAVER Act.
Sec. 614. Studies.

                       TITLE VII--PLAN AMENDMENTS

Sec. 701. Provisions relating to plan amendments.

                TITLE VIII--COMPLIANCE WITH BUDGET ACT.

Sec. 801. Compliance with Budget Act.

                TITLE I--INDIVIDUAL RETIREMENT ACCOUNTS

SEC. 101. MODIFICATION OF IRA CONTRIBUTION LIMITS.

    (a) Increase in Contribution Limit.--
            (1) In general.--Paragraph (1)(A) of section 219(b) 
        (relating to maximum amount of deduction) is amended by 
        striking ``$2,000'' and inserting ``the deductible amount''.
            (2) Deductible amount.--Section 219(b) is amended by adding 
        at the end the following new paragraph:
            ``(5) Deductible amount.--For purposes of paragraph 
        (1)(A)--
                    ``(A) In general.--The deductible amount shall be 
                determined in accordance with the following table:

                ``For taxable years
                                                         The deductible
                  beginning in:
                                                           amount is:  
                    2001...................................     $3,000 
                    2002...................................     $4,000 
                    2003 and thereafter....................     $5,000.
                    ``(B) Catch-up contributions for individuals 50 or 
                older.--In the case of an individual who has attained 
                the age of 50 before the close of the taxable year, the 
                deductible amount for such taxable year shall be an 
                amount equal to 150 percent of such amount determined 
                without regard to this subparagraph.
                    ``(C) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of any 
                        taxable year beginning in a calendar year after 
                        2003, the $5,000 amount under subparagraph (A) 
                        shall be increased by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for the calendar year in which 
                                the taxable year begins, determined by 
                                substituting `calendar year 2002' for 
                                `calendar year 1992' in subparagraph 
                                (B) thereof.
                            ``(ii) Rounding rules.--If any amount after 
                        adjustment under clause (i) is not a multiple 
                        of $500, such amount shall be rounded to the 
                        next lower multiple of $500.''.
    (b) Increase in AGI Limits for Active Participants.--
            (1) Joint returns.--The table in clause (i) of section 
        219(g)(3)(B) (relating to applicable dollar amount) is amended 
        to read as follows:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $56,000 
                    2002...................................    $60,000 
                    2003...................................    $64,000 
                    2004...................................    $68,000 
                    2005...................................    $72,000 
                    2006...................................    $76,000 
                    2007 or thereafter..................... $80,000.''.
            (2) Other taxpayers.--Section 219(g)(3)(B) (relating to 
        applicable dollar amount) is amended by striking clauses (ii) 
        and (iii) and inserting the following:
                            ``(ii) In the case of any other taxpayer:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $36,000 
                    2002...................................    $40,000 
                    2003...................................    $44,000 
                    2004...................................    $48,000 
                    2005 or thereafter..................... $50,000.''.
    (c) Conforming Amendments.--
            (1) Section 408(a)(1) is amended by striking ``in excess of 
        $2,000 on behalf of any individual'' and inserting ``on behalf 
        of any individual in excess of the amount in effect for such 
        taxable year under section 219(b)(1)(A)''.
            (2) Section 408(b)(2)(B) is amended by striking ``$2,000'' 
        and inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
            (3) Section 408(b) is amended by striking ``$2,000'' in the 
        matter following paragraph (4) and inserting ``the dollar 
        amount in effect under section 219(b)(1)(A)''.
            (4) Section 408(j) is amended by striking ``$2,000''.
            (5) Section 408(p)(8) is amended by striking ``$2,000'' and 
        inserting ``the dollar amount in effect under section 
        219(b)(1)(A)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 102. DEEMED IRAS UNDER EMPLOYER PLANS.

    (a) In General.--Section 408 (relating to individual retirement 
accounts) is amended by redesignating subsection (q) as subsection (r) 
and by inserting after subsection (p) the following new subsection:
    ``(q) Deemed IRAs Under Qualified Employer Plans.--
            ``(1) General rule.--If--
                    ``(A) a qualified employer plan elects to allow 
                employees to make voluntary employee contributions to a 
                separate account or annuity established under the plan, 
                and
                    ``(B) under the terms of the qualified employer 
                plan, such account or annuity meets the applicable 
                requirements of this section or section 408A for an 
                individual retirement account or annuity,
        then such account or annuity shall be treated for purposes of 
        this title in the same manner as an individual retirement plan 
        and not as a qualified employer plan (and contributions to such 
        account or annuity as contributions to an individual retirement 
        plan and not to the qualified employer plan). For purposes of 
        subparagraph (B), the requirements of subsection (a)(5) shall 
        not apply.
            ``(2) Special rules for qualified employer plans.--For 
        purposes of this title, a qualified employer plan shall not 
        fail to meet any requirement of this title solely by reason of 
        establishing and maintaining a program described in paragraph 
        (1).
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Qualified employer plan.--The term `qualified 
                employer plan' has the meaning given such term by 
                section 72(p)(4); except such term shall only include 
                an eligible deferred compensation plan (as defined in 
                section 457(b)) which is maintained by an eligible 
                employer described in section 457(e)(1)(A).
                    ``(B) Voluntary employee contribution.--The term 
                `voluntary employee contribution' means any 
                contribution (other than a mandatory contribution 
                within the meaning of section 411(c)(2)(C))--
                            ``(i) which is made by an individual as an 
                        employee under a qualified employer plan which 
                        allows employees to elect to make contributions 
                        described in paragraph (1), and
                            ``(ii) with respect to which the individual 
                        has designated the contribution as a 
                        contribution to which this subsection 
                        applies.''.
    (b) Amendment of ERISA.--
            (1) In general.--Section 4 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1003) is amended by 
        adding at the end the following new subsection:
    ``(c) If a pension plan allows an employee to elect to make 
voluntary employee contributions to accounts and annuities as provided 
in section 408(q) of the Internal Revenue Code of 1986, such accounts 
and annuities (and contributions thereto) shall not be treated as part 
of such plan (or as a separate pension plan) for purposes of any 
provision of this title other than section 403(c), 404, or 405 
(relating to exclusive benefit, and fiduciary and co-fiduciary 
responsibilities).''.
            (2) Conforming amendment.--Section 4(a) of such Act (29 
        U.S.C. 1003(a)) is amended by inserting ``or (c)'' after 
        ``subsection (b)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2001.

SEC. 103. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT ACCOUNTS 
              FOR CHARITABLE PURPOSES.

    (a) In General.--Subsection (d) of section 408 (relating to 
individual retirement accounts) is amended by adding at the end the 
following new paragraph:
            ``(8) Distributions for charitable purposes.--
                    ``(A) In general.--In the case of a qualified 
                charitable distribution from an individual retirement 
                account to an organization described in section 170(c), 
                no amount shall be includible in the gross income of 
                the account holder or beneficiary.
                    ``(B) Special rules relating to charitable 
                remainder trusts, pooled income funds, and charitable 
                gift annuities.--
                            ``(i) In general.--In the case of a 
                        qualified charitable distribution from an 
                        individual retirement account--
                                    ``(I) to a charitable remainder 
                                annuity trust or a charitable remainder 
                                unitrust (as such terms are defined in 
                                section 664(d)),
                                    ``(II) to a pooled income fund (as 
                                defined in section 642(c)(5)), or
                                    ``(III) for the issuance of a 
                                charitable gift annuity (as defined in 
                                section 501(m)(5)),
                        no amount shall be includible in gross income 
                        of the account holder or beneficiary. The 
                        preceding sentence shall apply only if no 
                        person holds any interest in the amounts in the 
                        trust, fund, or annuity attributable to such 
                        distribution other than one or more of the 
                        following: the individual for whose benefit 
                        such account is maintained, the spouse of such 
                        individual, or any organization described in 
                        section 170(c).
                            ``(ii) Determination of inclusion of 
                        amounts distributed.--In determining the amount 
                        includible in the gross income of the 
                        distributee of a distribution from a trust 
                        described in clause (i)(I) or an annuity (as 
                        described in clause (i)(III)), the portion of 
                        any qualified charitable distribution to such 
                        trust or for such annuity which would (but for 
                        this subparagraph) have been includible in 
                        gross income--
                                    ``(I) in the case of any such 
                                trust, shall be treated as income 
                                described in section 664(b)(1), or
                                    ``(II) in the case of any such 
                                annuity, shall not be treated as an 
                                investment in the contract.
                            ``(iii) No inclusion for distribution to 
                        pooled income fund.--No amount shall be 
                        includible in the gross income of a pooled 
                        income fund (as so defined) by reason of a 
                        qualified charitable distribution to such fund.
                    ``(C) Qualified charitable distribution.--For 
                purposes of this paragraph, the term `qualified 
                charitable distribution' means any distribution from an 
                individual retirement account--
                            ``(i) which is made on or after the date 
                        that the individual for whose benefit the 
                        account is maintained has attained age 70\1/2\, 
                        and
                            ``(ii) which is a charitable contribution 
                        (as defined in section 170(c)) made directly 
                        from the account to--
                                    ``(I) an organization described in 
                                section 170(c), or
                                    ``(II) a trust, fund, or annuity 
                                described in subparagraph (B).
                    ``(D) Denial of deduction.--The amount allowable as 
                a deduction to the taxpayer for the taxable year under 
                section 170 for qualified charitable distributions 
                shall be reduced (but not below zero) by the sum of the 
                amounts of the qualified charitable distributions 
                during such year which (but for this paragraph) would 
                have been includible in the gross income of the 
                taxpayer for such year.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to taxable years beginning after December 31, 2000.

SEC. 104. MODIFICATION OF AGI LIMITS FOR ROTH IRAS.

    (a) Increase in AGI Limit for Roth IRA Contributions.--
            (1) In general.--Section 408A(c)(3)(C)(ii) (relating to 
        limits based on modified adjusted gross income) is amended to 
        read as follows:
                            ``(ii) the applicable dollar amount is--
                                    ``(I) in the case of a taxpayer 
                                filing a joint return, $190,000, and
                                    ``(II) in the case of any other 
                                taxpayer, $95,000.''.
            (2) Phaseout amount.--Clause (ii) of section 408A(c)(3)(A) 
        is amended to read as follows:
                            ``(ii) $15,000 ($30,000 in the case of a 
                        joint return).''
    (b) Increase in AGI Limit for Roth IRA Conversions.--Section 
408A(c)(3)(B) (relating to rollover from IRA) is amended by striking 
``relates'' and all that follows and inserting ``relates, the 
taxpayer's adjusted gross income exceeds $100,000 ($200,000 in the case 
of a joint return).''.
    (c) Conforming Amendment.--Section 408A(c)(3) is amended by 
striking subparagraph (D).
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

                      TITLE II--EXPANDING COVERAGE

SEC. 201. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.

    (a) Defined Benefit Plans.--
            (1) Dollar limit.--
                    (A) Subparagraph (A) of section 415(b)(1) (relating 
                to limitation for defined benefit plans) is amended by 
                striking ``$90,000'' and inserting ``$160,000''.
                    (B) Subparagraphs (C) and (D) of section 415(b)(2) 
                are each amended by striking ``$90,000'' each place it 
                appears in the headings and the text and inserting 
                ``$160,000''.
                    (C) Paragraph (7) of section 415(b) (relating to 
                benefits under certain collectively bargained plans) is 
                amended by striking ``the greater of $68,212 or one-
                half the amount otherwise applicable for such year 
                under paragraph (1)(A) for `$90,000''' and inserting 
                ``one-half the amount otherwise applicable for such 
                year under paragraph (1)(A) for `$160,000'''.
            (2) Limit reduced when benefit begins before age 62.--
        Subparagraph (C) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 62'' and by striking 
        the second sentence.
            (3) Limit increased when benefit begins after age 65.--
        Subparagraph (D) of section 415(b)(2) is amended by striking 
        ``the social security retirement age'' each place it appears in 
        the heading and text and inserting ``age 65''.
            (4) Cost-of-living adjustments.--Subsection (d) of section 
        415 (related to cost-of-living adjustments) is amended--
                    (A) by striking ``$90,000'' in paragraph (1)(A) and 
                inserting ``$160,000''; and
                    (B) in paragraph (3)(A)--
                            (i) by striking ``$90,000'' in the heading 
                        and inserting ``$160,000''; and
                            (ii) by striking ``October 1, 1986'' and 
                        inserting ``July 1, 2000''.
            (5) Conforming amendments.--
                    (A) Section 415(b)(2) is amended by striking 
                subparagraph (F).
                    (B) Section 415(b)(9) is amended to read as 
                follows:
                    ``(9) Special rule for commercial airline pilots.--
                In the case of any participant who is a commercial 
                airline pilot, if, as of the time of the participant's 
                retirement, regulations prescribed by the Federal 
                Aviation Administration require an individual to 
                separate from service as a commercial airline pilot 
                after attaining any age occurring on or after age 60 
                and before age 62, paragraph (2)(C) (after application 
                of clause (i)) shall be applied by substituting such 
                age for age 62.''.
                    (C) Section 415(b)(10)(C)(i) is amended by striking 
                ``applied without regard to paragraph (2)(F)''.
    (b) Qualified Trusts.--
            (1) Compensation limit.--Sections 401(a)(17), 404(l), 
        408(k), and 505(b)(7) are each amended by striking ``$150,000'' 
        each place it appears and inserting ``$200,000''.
            (2) Base period and rounding of cost-of-living 
        adjustment.--Subparagraph (B) of section 401(a)(17) is 
        amended--
                    (A) by striking ``October 1, 1993'' and inserting 
                ``July 1, 2000''; and
                    (B) by striking ``$10,000'' both places it appears 
                and inserting ``$5,000''.
    (c) Elective Deferrals.--
            (1) In general.--Paragraph (1) of section 402(g) (relating 
        to limitation on exclusion for elective deferrals) is amended 
        to read as follows:
            ``(1) In general.--
                    ``(A) Limitation.--Notwithstanding subsections 
                (e)(3) and (h)(1)(B), the elective deferrals of any 
                individual for any taxable year shall be included in 
                such individual's gross income to the extent the amount 
                of such deferrals for the taxable year exceeds the 
                applicable dollar amount.
                    ``(B) Applicable dollar amount.--For purposes of 
                subparagraph (A), the applicable dollar amount shall be 
                the amount determined in accordance with the following 
                table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $11,000 
                    2002...................................    $12,000 
                    2003...................................    $13,000 
                    2004...................................    $14,000 
                    2005 or thereafter..................... $15,000.''.
            (2) Cost-of-living adjustment.--Paragraph (5) of section 
        402(g) is amended to read as follows:
            ``(5) Cost-of-living adjustment.--In the case of taxable 
        years beginning after December 31, 2005, the Secretary shall 
        adjust the $15,000 amount under paragraph (1)(B) at the same 
        time and in the same manner as under section 415(d), except 
        that the base period shall be the calendar quarter beginning 
        July 1, 2004, and any increase under this paragraph which is 
        not a multiple of $500 shall be rounded to the next lowest 
        multiple of $500.''.
            (3) Conforming amendments.--
                    (A) Section 402(g) (relating to limitation on 
                exclusion for elective deferrals), as amended by 
                paragraphs (1) and (2), is further amended by striking 
                paragraph (4) and redesignating paragraphs (5), (6), 
                (7), (8), and (9) as paragraphs (4), (5), (6), (7), and 
                (8), respectively.
                    (B) Paragraph (2) of section 457(c) is amended by 
                striking ``402(g)(8)(A)(iii)'' and inserting 
                ``402(g)(7)(A)(iii)''.
                    (C) Clause (iii) of section 501(c)(18)(D) is 
                amended by striking ``(other than paragraph (4) 
                thereof)''.
    (d) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Section 457 (relating to deferred 
        compensation plans of State and local governments and tax-
        exempt organizations) is amended--
                    (A) in subsections (b)(2)(A) and (c)(1) by striking 
                ``$7,500'' each place it appears and inserting ``the 
                applicable dollar amount''; and
                    (B) in subsection (b)(3)(A) by striking ``$15,000'' 
                and inserting ``twice the dollar amount in effect under 
                subsection (b)(2)(A)''.
            (2) Applicable dollar amount; cost-of-living adjustment.--
        Paragraph (15) of section 457(e) is amended to read as follows:
            ``(15) Applicable dollar amount.--
                    ``(A) In general.--The applicable dollar amount 
                shall be the amount determined in accordance with the 
                following table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                    2001...................................    $11,000 
                    2002...................................    $12,000 
                    2003...................................    $13,000 
                    2004...................................    $14,000 
                    2005 or thereafter.....................    $15,000.
                    ``(B) Cost-of-living adjustments.--In the case of 
                taxable years beginning after December 31, 2005, the 
                Secretary shall adjust the $15,000 amount under 
                subparagraph (A) at the same time and in the same 
                manner as under section 415(d), except that the base 
                period shall be the calendar quarter beginning July 1, 
                2004, and any increase under this paragraph which is 
                not a multiple of $500 shall be rounded to the next 
                lowest multiple of $500.''.
    (e) Simple Retirement Accounts.--
            (1) Limitation.--Clause (ii) of section 408(p)(2)(A) 
        (relating to general rule for qualified salary reduction 
        arrangement) is amended by striking ``$6,000'' and inserting 
        ``the applicable dollar amount''.
            (2) Applicable dollar amount.--Subparagraph (E) of 
        408(p)(2) is amended to read as follows:
                    ``(E) Applicable dollar amount; cost-of-living 
                adjustment.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A)(ii), the applicable dollar 
                        amount shall be the amount determined in 
                        accordance with the following table:

                ``For taxable years
                                                         The applicable
                  beginning in
                                                         dollar amount:
                  calendar year:
                            2001...........................     $7,000 
                            2002...........................     $8,000 
                            2003...........................     $9,000 
                            2004 or thereafter.............    $10,000.
                            ``(ii) Cost-of-living adjustment.--In the 
                        case of a year beginning after December 31, 
                        2004, the Secretary shall adjust the $10,000 
                        amount under clause (i) at the same time and in 
                        the same manner as under section 415(d), except 
                        that the base period taken into account shall 
                        be the calendar quarter beginning July 1, 2003, 
                        and any increase under this subparagraph which 
                        is not a multiple of $500 shall be rounded to 
                        the next lower multiple of $500.''.
            (3) Conforming amendments.--
                    (A) Subclause (I) of section 401(k)(11)(B)(i) is 
                amended by striking ``$6,000'' and inserting ``the 
                amount in effect under section 408(p)(2)(A)(ii)''.
                    (B) Section 401(k)(11) is amended by striking 
                subparagraph (E).
    (f) Rounding Rule Relating to Defined Benefit Plans and Defined 
Contribution Plans.--Paragraph (4) of section 415(d) is amended to read 
as follows:
            ``(4) Rounding.--
                    ``(A) $160,000 amount.--Any increase under 
                subparagraph (A) of paragraph (1) which is not a 
                multiple of $5,000 shall be rounded to the next lowest 
                multiple of $5,000.
                    ``(B) $30,000 amount.--Any increase under 
                subparagraph (C) of paragraph (1) which is not a 
                multiple of $1,000 shall be rounded to the next lowest 
                multiple of $1,000.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

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

    (a) In General.--Subparagraph (B) of section 4975(f)(6) (relating 
to exemptions not to apply to certain transactions) is amended by 
adding at the end the following new clause:
                            ``(iii) Loan exception.--For purposes of 
                        subparagraph (A)(i), the term `owner-employee' 
                        shall only include a person described in 
                        subclause (II) or (III) of clause (i).''.
    (b) Amendment to ERISA.--Section 408(d)(2) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) is 
amended by adding at the end the following new subparagraph:
    ``(C) For purposes of paragraph (1)(A), the term `owner-employee' 
shall only include a person described in clause (ii) or (iii) of 
subparagraph (A).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 203. MODIFICATION OF TOP-HEAVY RULES.

    (a) Simplification of Definition of Key Employee.--
            (1) In general.--Section 416(i)(1)(A) (defining key 
        employee) is amended--
                    (A) by striking ``plan year or any of the 4 
                preceding plan years'' and inserting ``preceding plan 
                year'' in the matter preceding clause (i);
                    (B) by striking clause (i) and inserting the 
                following:
                            ``(i) an officer of the employer having an 
                        annual compensation greater than the amount in 
                        effect under section 414(q)(1)(B)(i) for such 
                        plan year,'';
                    (C) by striking clause (ii) and redesignating 
                clauses (iii) and (iv) as clauses (ii) and (iii), 
                respectively;
                    (D) by striking the second sentence in the matter 
                following clause (iii), as redesignated by subparagraph 
                (C); and
                    (E) by adding at the end the following: ``For 
                purposes of this subparagraph, in the case of an 
                employee who is not employed during the preceding plan 
                year or is employed for a portion of such year, such 
                employee shall be treated as a key employee if it can 
                be reasonably anticipated that such employee will be 
                described in 1 of the preceding clauses for the current 
                plan year.''.
            (2) Conforming amendment.--Section 416(i)(1)(B)(iii) is 
        amended by striking ``and subparagraph (A)(ii)''.
    (b) Matching Contributions Taken Into Account for Minimum 
Contribution Requirements.--Section 416(c)(2)(A) (relating to defined 
contribution plans) is amended by adding at the end the following: 
``Employer matching contributions (as defined in section 401(m)(4)(A)) 
shall be taken into account for purposes of this subparagraph.''.
    (c) Distributions During Last Year Before Determination Date Taken 
Into Account.--
            (1) In general.--Paragraph (3) of section 416(g) is amended 
        to read as follows:
            ``(3) Distributions during last year before determination 
        date taken into account.--
                    ``(A) In general.--For purposes of determining--
                            ``(i) the present value of the cumulative 
                        accrued benefit for any employee, or
                            ``(ii) the amount of the account of any 
                        employee,
                such present value or amount shall be increased by the 
                aggregate distributions made with respect to such 
                employee under the plan during the 1-year period ending 
                on the determination date. The preceding sentence shall 
                also apply to distributions under a terminated plan 
                which if it had not been terminated would have been 
                required to be included in an aggregation group.
                    ``(B) 5-year period in case of in-service 
                distribution.--In the case of any distribution made for 
                a reason other than separation from service, death, or 
                disability, subparagraph (A) shall be applied by 
                substituting `5-year period' for `1-year period'.''.
            (2) Benefits not taken into account.--Subparagraph (E) of 
        section 416(g)(4) is amended--
                    (A) by striking ``last 5 years'' in the heading and 
                inserting ``last year before determination date''; and
                    (B) by striking ``5-year period'' and inserting 
                ``1-year period''.
    (d) Definition of Top-Heavy Plans.--Paragraph (4) of section 416(g) 
(relating to other special rules for top-heavy plans) is amended by 
adding at the end the following new subparagraph:
                    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--The term `top-heavy plan' shall not 
                include a plan which consists solely of--
                            ``(i) a cash or deferred arrangement which 
                        meets the requirements of section 401(k)(12), 
                        and
                            ``(ii) matching contributions with respect 
                        to which the requirements of section 401(m)(11) 
                        are met.
                If, but for this subparagraph, a plan would be treated 
                as a top-heavy plan because it is a member of an 
                aggregation group which is a top-heavy group, 
                contributions under the plan may be taken into account 
                in determining whether any other plan in the group 
                meets the requirements of subsection (c)(2).''.
    (e) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined benefit 
plans) is amended--
                    (A) by striking ``clause (ii)'' in clause (i) and 
                inserting ``clause (ii) or (iii)''; and
                    (B) by adding at the end the following:
                            ``(iii) Exception for frozen plan.--For 
                        purposes of determining an employee's years of 
                        service with the employer, any service with the 
                        employer shall be disregarded to the extent 
                        that such service occurs during a plan year 
                        when the plan benefits (within the meaning of 
                        section 410(b)) no key employee or former key 
                        employee.''.
    (f) Elimination of Family Attribution.--Section 416(i)(1)(B) 
(defining 5-percent owner) is amended by adding at the end the 
following new clause:
                            ``(iv) Family attribution disregarded.--
                        Solely for purposes of applying this paragraph 
                        (and not for purposes of any provision of this 
                        title which incorporates by reference the 
                        definition of a key employee or 5-percent owner 
                        under this paragraph), section 318 shall be 
                        applied without regard to subsection (a)(1) 
                        thereof in determining whether any person is a 
                        5-percent owner.''.
    (g) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 204. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF 
              DEDUCTION LIMITS.

    (a) In General.--Section 404 (relating to deduction for 
contributions of an employer to an employees' trust or annuity plan and 
compensation under a deferred payment plan) is amended by adding at the 
end the following new subsection:
    ``(n) Elective Deferrals Not Taken Into Account for Purposes of 
Deduction Limits.--Elective deferrals (as defined in section 402(g)(3)) 
shall not be subject to any limitation contained in paragraph (3), (7), 
or (9) of subsection (a), and such elective deferrals shall not be 
taken into account in applying any such limitation to any other 
contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 205. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED COMPENSATION 
              PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT 
              ORGANIZATIONS.

    (a) In General.--Subsection (c) of section 457 (relating to 
deferred compensation plans of State and local governments and tax-
exempt organizations), as amended by section 201, is amended to read as 
follows:
    ``(c) Limitation.--The maximum amount of the compensation of any 
one individual which may be deferred under subsection (a) during any 
taxable year shall not exceed the amount in effect under subsection 
(b)(2)(A) (as modified by any adjustment provided under subsection 
(b)(3)).''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to years beginning after December 31, 2000.

SEC. 206. DEDUCTION LIMITS.

    (a) Increase in Percentage.--
            (1) Stock bonus and profit sharing trusts.--
                    (A) In general.--Subclause (I) of section 
                404(a)(3)(A)(i) (relating to stock bonus and profit 
                sharing trusts) is amended by striking ``15 percent'' 
                and inserting ``25 percent''.
                    (B) Conforming amendment.--Subparagraph (C) of 
                section 404(h)(1) is amended by striking ``15 percent'' 
                each place it appears and inserting ``25 percent''.
            (2) Defined contribution plans.--
                    (A) In general.--Clause (v) of section 404(a)(3)(A) 
                (relating to stock bonus and profit sharing trusts) is 
                amended to read as follows:
                            ``(v) Defined contribution plans subject to 
                        the funding standards.--Except as provided by 
                        the Secretary, a defined contribution plan 
                        which is subject to the funding standards of 
                        section 412 shall be treated in the same manner 
                        as a stock bonus or profit-sharing plan for 
                        purposes of this subparagraph.''
                    (B) Conforming amendments.--
                            (i) Section 404(h)(2) is amended by 
                        striking ``stock bonus or profit-sharing 
                        trust'' and inserting ``trust subject to 
                        subsection (a)(3)(A)''.
                            (ii) The heading of section 404(h)(2) is 
                        amended by striking ``stock bonus and profit-
                        sharing trust'' and inserting ``certain 
                        trusts''.
    (b) Compensation.--
            (1) In general.--Section 404(a) (relating to general rule) 
        is amended by adding at the end the following:
            ``(12) Definition of compensation.--For purposes of 
        paragraphs (3), (7), (8), and (9), the term `compensation 
        otherwise paid or accrued during the taxable year' shall 
        include amounts treated as `participant's compensation' under 
        subparagraph (C) or (D) of section 415(c)(3).''.
            (2) Conforming amendments.--
                    (A) Subparagraph (B) of section 404(a)(3) is 
                amended by striking the last sentence thereof.
                    (B) Clause (i) of section 4972(c)(6)(B) is amended 
                by striking ``(within the meaning of section 404(a))'' 
                and inserting ``(within the meaning of section 404(a) 
                and as adjusted under section 404(a)(12))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 207. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX ROTH 
              CONTRIBUTIONS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
(relating to deferred compensation, etc.) is amended by inserting after 
section 402 the following new section:

``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS ROTH 
              CONTRIBUTIONS.

    ``(a) General Rule.--If an applicable retirement plan includes a 
qualified Roth contribution program--
            ``(1) any designated Roth contribution made by an employee 
        pursuant to the program shall be treated as an elective 
        deferral for purposes of this chapter, except that such 
        contribution shall not be excludable from gross income, and
            ``(2) such plan (and any arrangement which is part of such 
        plan) shall not be treated as failing to meet any requirement 
        of this chapter solely by reason of including such program.
    ``(b) Qualified Roth Contribution Program.--For purposes of this 
section--
            ``(1) In general.--The term `qualified Roth contribution 
        program' means a program under which an employee may elect to 
        make designated Roth contributions in lieu of all or a portion 
        of elective deferrals the employee is otherwise eligible to 
        make under the applicable retirement plan.
            ``(2) Separate accounting required.--A program shall not be 
        treated as a qualified Roth contribution program unless the 
        applicable retirement plan--
                    ``(A) establishes separate accounts (`designated 
                Roth accounts') for the designated Roth contributions 
                of each employee and any earnings properly allocable to 
                the contributions, and
                    ``(B) maintains separate recordkeeping with respect 
                to each account.
    ``(c) Definitions and Rules Relating to Designated Roth 
Contributions.--For purposes of this section--
            ``(1) Designated Roth contribution.--The term `designated 
        Roth contribution' means any elective deferral which--
                    ``(A) is excludable from gross income of an 
                employee without regard to this section, and
                    ``(B) the employee designates (at such time and in 
                such manner as the Secretary may prescribe) as not 
                being so excludable.
            ``(2) Designation limits.--The amount of elective deferrals 
        which an employee may designate under paragraph (1) shall not 
        exceed the excess (if any) of--
                    ``(A) the maximum amount of elective deferrals 
                excludable from gross income of the employee for the 
                taxable year (without regard to this section), over
                    ``(B) the aggregate amount of elective deferrals of 
                the employee for the taxable year which the employee 
                does not designate under paragraph (1).
            ``(3) Rollover contributions.--
                    ``(A) In general.--A rollover contribution of any 
                payment or distribution from a designated Roth account 
                which is otherwise allowable under this chapter may be 
                made only if the contribution is to--
                            ``(i) another designated Roth account of 
                        the individual from whose account the payment 
                        or distribution was made, or
                            ``(ii) a Roth IRA of such individual.
                    ``(B) Coordination with limit.--Any rollover 
                contribution to a designated Roth account under 
                subparagraph (A) shall not be taken into account for 
                purposes of paragraph (1).
    ``(d) Distribution Rules.--For purposes of this title--
            ``(1) Exclusion.--Any qualified distribution from a 
        designated Roth account shall not be includible in gross 
        income.
            ``(2) Qualified distribution.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `qualified 
                distribution' has the meaning given such term by 
                section 408A(d)(2)(A) (without regard to clause (iv) 
                thereof).
                    ``(B) Distributions within nonexclusion period.--A 
                payment or distribution from a designated Roth account 
                shall not be treated as a qualified distribution if 
                such payment or distribution is made within the 5-
                taxable-year period beginning with the earlier of--
                            ``(i) the first taxable year for which the 
                        individual made a designated Roth contribution 
                        to any designated Roth account established for 
                        such individual under the same applicable 
                        retirement plan, or
                            ``(ii) if a rollover contribution was made 
                        to such designated Roth account from a 
                        designated Roth account previously established 
                        for such individual under another applicable 
                        retirement plan, the first taxable year for 
                        which the individual made a designated Roth 
                        contribution to such previously established 
                        account.
                    ``(C) Distributions of excess deferrals and 
                contributions and earnings thereon.--The term 
                `qualified distribution' shall not include any 
                distribution of any excess deferral under section 
                402(g)(2) or any excess contribution under section 
                401(k)(8), and any income on the excess deferral or 
                contribution.
            ``(3) Aggregation rules.--Section 72 shall be applied 
        separately with respect to distributions and payments from a 
        designated Roth account and other distributions and payments 
        from the plan.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Applicable retirement plan.--The term `applicable 
        retirement plan' means--
                    ``(A) an employees' trust described in section 
                401(a) which is exempt from tax under section 501(a), 
                and
                    ``(B) a plan under which amounts are contributed by 
                an individual's employer for an annuity contract 
                described in section 403(b).
            ``(2) Elective deferral.--The term `elective deferral' 
        means any elective deferral described in subparagraph (A) or 
        (C) of section 402(g)(3).''.
    (b) Excess Deferrals.--Section 402(g) (relating to limitation on 
exclusion for elective deferrals) is amended--
            (1) by adding at the end of paragraph (1)(A) (as added by 
        section 201(c)(1)) the following new sentence: ``The preceding 
        sentence shall not apply to so much of such excess as does not 
        exceed the designated Roth contributions of the individual for 
        the taxable year.''; and
            (2) by inserting ``(or would be included but for the last 
        sentence thereof)'' after ``paragraph (1)'' in paragraph 
        (2)(A).
    (c) Rollovers.--Subparagraph (B) of section 402(c)(8) is amended by 
adding at the end the following:
                ``If any portion of an eligible rollover distribution 
                is attributable to payments or distributions from a 
                designated Roth account (as defined in section 402A), 
                an eligible retirement plan with respect to such 
                portion shall include only another designated Roth 
                account and a Roth IRA.''.
    (d) Reporting Requirements.--
            (1) W-2 information.--Section 6051(a)(8) is amended by 
        inserting ``, including the amount of designated Roth 
        contributions (as defined in section 402A)'' before the comma 
        at the end.
            (2) Information.--Section 6047 is amended by redesignating 
        subsection (f) as subsection (g) and by inserting after 
        subsection (e) the following new subsection:
    ``(f) Designated Roth Contributions.--The Secretary shall require 
the plan administrator of each applicable retirement plan (as defined 
in section 402A) to make such returns and reports regarding designated 
Roth contributions (as defined in section 402A) to the Secretary, 
participants and beneficiaries of the plan, and such other persons as 
the Secretary may prescribe.''.
    (e) Conforming Amendments.--
            (1) Section 408A(e) is amended by adding after the first 
        sentence the following new sentence: ``Such term includes a 
        rollover contribution described in section 402A(c)(3)(A).''.
            (2) The table of sections for subpart A of part I of 
        subchapter D of chapter 1 is amended by inserting after the 
        item relating to section 402 the following new item:

                              ``Sec. 402A. Optional treatment of 
                                        elective deferrals as Roth 
                                        contributions.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 208. NONREFUNDABLE CREDIT TO CERTAIN INDIVIDUALS FOR ELECTIVE 
              DEFERRALS AND IRA CONTRIBUTIONS.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
(relating to nonrefundable personal credits) is amended by inserting 
after section 25A the following new section:

``SEC. 25B. ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY CERTAIN 
              INDIVIDUALS.

    ``(a) Allowance of Credit.--In the case of an eligible individual, 
there shall be allowed as a credit against the tax imposed by this 
subtitle for the taxable year an amount equal to the applicable 
percentage of so much of the qualified retirement savings contributions 
of the eligible individual for the taxable year as do not exceed 
$2,000.
    ``(b) Applicable Percentage.--For purposes of this section, the 
applicable percentage is the percentage determined in accordance with 
the following table:

------------------------------------------------------------------------
                    Adjusted Gross Income
-------------------------------------------------------------
    Joint return           Head of a        All other cases   Applicable
---------------------      household     -------------------- percentage
                     --------------------
   Over     Not over    Over    Not over    Over    Not over
------------------------------------------------------------------------
$0         $20,000    $0        $15,000   $0        $10,000          50
 20,000     25,000     15,000    18,750    10,000    12,500          30
 25,000     30,000     18,750    22,500    12,500    15,000          25
 30,000     35,000     22,500    26,250    15,000    17,500          20
 35,000     40,000     26,250    30,000    17,500    20,000          15
 40,000     45,000     30,000    33,750    20,000    22,500          10
 45,000     50,000     33,750    37,500    22,500    25,000           5
 50,000    .........   37,500   ........   25,000   ........          0
------------------------------------------------------------------------

    ``(c) Eligible Individual.--For purposes of this section--
            ``(1) In general.--The term `eligible individual' means any 
        individual if such individual has attained the age of 18 as of 
        the close of the taxable year.
            ``(2) Dependents and full-time students not eligible.--The 
        term `eligible individual' shall not include--
                    ``(A) any individual with respect to whom a 
                deduction under section 151 is allowed to another 
                taxpayer for a taxable year beginning in the calendar 
                year in which such individual's taxable year begins, 
                and
                    ``(B) any individual who is a student (as defined 
                in section 151(c)(4)).
    ``(d) Qualified Retirement Savings Contributions.--For purposes of 
this section--
            ``(1) In general.--The term `qualified retirement savings 
        contributions' means, with respect to any taxable year, the sum 
        of--
                    ``(A) the amount of the qualified retirement 
                contributions (as defined in section 219(e)) made by 
                the eligible individual,
                    ``(B) the amount of--
                            ``(i) any elective deferrals (as defined in 
                        section 402(g)(3)) of such individual, and
                            ``(ii) any elective deferral of 
                        compensation by such individual under an 
                        eligible deferred compensation plan (as defined 
                        in section 457(b)) of an eligible employer 
                        described in section 457(e)(1)(A), and
                    ``(C) the amount of voluntary employee 
                contributions by such individual to any qualified 
                retirement plan (as defined in section 4974(c)).
            ``(2) Reduction for certain distributions.--
                    ``(A) In general.--The qualified retirement savings 
                contributions determined under paragraph (1) shall be 
                reduced (but not below zero) by the sum of--
                            ``(i) any distribution from a qualified 
                        retirement plan (as defined in section 
                        4974(c)), or from an eligible deferred 
                        compensation plan (as defined in section 
                        457(b)), received by the individual during the 
                        testing period which is includible in gross 
                        income, and
                            ``(ii) any distribution from a Roth IRA 
                        received by the individual during the testing 
                        period which is not a qualified rollover 
                        contribution (as defined in section 408A(e)) to 
                        a Roth IRA.
                    ``(B) Testing period.--For purposes of subparagraph 
                (A), the testing period, with respect to a taxable 
                year, is the period which includes--
                            ``(i) such taxable year,
                            ``(ii) the 2 preceding taxable years, and
                            ``(iii) the period after such taxable year 
                        and before the due date (including extensions) 
                        for filing the return of tax for such taxable 
                        year.
                    ``(C) Excepted distributions.--There shall not be 
                taken into account under subparagraph (A)--
                            ``(i) any distribution referred to in 
                        section 72(p), 401(k)(8), 401(m)(6), 402(g)(2), 
                        404(k), or 408(d)(4), and
                            ``(ii) any distribution to which section 
                        408A(d)(3) applies.
                    ``(D) Treatment of distributions received by spouse 
                of individual.--For purposes of determining 
                distributions received by an individual under 
                subparagraph (A) for any taxable year, any distribution 
                received by the spouse of such individual shall be 
                treated as received by such individual if such 
                individual and spouse file a joint return for such 
                taxable year and for the taxable year during which the 
                spouse receives the distribution.
    ``(e) Adjusted Gross Income.--For purposes of this section, 
adjusted gross income shall be determined without regard to sections 
911, 931, and 933.
    ``(f) Investment in the Contract.--Notwithstanding any other 
provision of law, a qualified retirement savings contribution shall not 
fail to be included in determining the investment in the contract for 
purposes of section 72 by reason of the credit under this section.''
    (b) Credit Allowed Against Regular Tax and Alternative Minimum 
Tax.--
            (1) In general.--Subsection (a) of section 26 is amended by 
        inserting ``(other than the credit allowed by section 25B)'' 
        after ``credits allowed by this subpart''.
            (2) Conforming amendment.--Section 25B, as added by 
        subsection (a), is amended by inserting after subsection (f) 
        the following new subsection:
    ``(g) Limitation Based on Amount of Tax.--The aggregate credit 
allowed by this section for the taxable year shall not exceed the sum 
of--
            ``(1) the taxpayer's regular tax liability for the taxable 
        year reduced by the sum of the credits allowed by sections 21, 
        22, 23, 24, 25, and 25A, plus
            ``(2) the tax imposed by section 55 for such taxable 
        year.''
    (c) Annual Report.--The Comptroller General of the United States 
shall submit a report annually to the Committee on Ways and Means of 
the House of Representatives and the Committee on Finance of the Senate 
regarding the number of taxpayers receiving the credit allowed under 
section 25B of the Internal Revenue Code of 1986, as added by 
subsection (a).
    (d) Conforming Amendment.--The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 25A the following new item:

                              ``Sec. 25B. Elective deferrals and IRA 
                                        contributions by certain 
                                        individuals.''

    (e) Effective Dates.--
            (1) In general.--The amendments made by subsections (a) and 
        (d) shall apply to taxable years beginning after December 31, 
        2000, and before January 1, 2006.
            (2) Alternative minimum tax.--The amendments made by 
        subsection (b) shall apply to taxable years beginning after 
        December 31, 2001, and before January 1, 2006.

SEC. 209. CREDIT FOR QUALIFIED PENSION PLAN CONTRIBUTIONS OF SMALL 
              EMPLOYERS.

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

``SEC. 45D. SMALL EMPLOYER PENSION PLAN CONTRIBUTIONS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer pension plan contribution credit 
determined under this section for any taxable year is an amount equal 
to 50 percent of the amount which would (but for subsection (f)(1)) be 
allowed as a deduction under section 404 for such taxable year for 
qualified employer contributions made to any qualified retirement plan 
on behalf of any employee who is not a highly compensated employee.
    ``(b) Credit Limited to 3 Years.--The credit allowable by this 
section shall be allowed only with respect to the period of 3 taxable 
years beginning with the first taxable year for which a credit is 
allowable with respect to a plan under this section.
    ``(c) Qualified Employer Contribution.--For purposes of this 
section--
            ``(1) Defined contribution plans.--In the case of a defined 
        contribution plan, the term `qualified employer contribution' 
        means the amount of nonelective and matching contributions to 
        the plan made by the employer on behalf of any employee who is 
        not a highly compensated employee to the extent such amount 
        does not exceed 3 percent of such employee's compensation from 
        the employer for the year.
            ``(2) Defined benefit plans.--In the case of a defined 
        benefit plan, the term `qualified employer contribution' means 
        the amount of employer contributions to the plan made on behalf 
        of any employee who is not a highly compensated employee to the 
        extent that the accrued benefit of such employee derived from 
        employer contributions for the year does not exceed the 
        equivalent (as determined under regulations prescribed by the 
        Secretary and without regard to contributions and benefits 
        under the Social Security Act) of 3 percent of such employee's 
        compensation from the employer for the year.
    ``(d) Qualified Retirement Plan.--
            ``(1) In general.--The term `qualified retirement plan' 
        means any plan described in section 401(a) which includes a 
        trust exempt from tax under section 501(a) if the plan meets--
                    ``(A) the contribution requirements of paragraph 
                (2),
                    ``(B) the vesting requirements of paragraph (3), 
                and
                    ``(C) the distributions requirements of paragraph 
                (4).
            ``(2) Contribution requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if, under the plan--
                            ``(i) the employer is required to make 
                        nonelective contributions of at least 1 percent 
                        of compensation (or the equivalent thereof in 
                        the case of a defined benefit plan) for each 
                        employee who is not a highly compensated 
                        employee who is eligible to participate in the 
                        plan, and
                            ``(ii) allocations of nonelective employer 
                        contributions are either in equal dollar 
                        amounts for all employees covered by the plan 
                        or bear a uniform relationship to the total 
                        compensation, or the basic or regular rate of 
                        compensation, of the employees covered by the 
                        plan.
                    ``(B) Compensation limitation.--The compensation 
                taken into account under subparagraph (A) for any year 
                shall not exceed the limitation in effect for such year 
                under section 401(a)(17).
            ``(3) Vesting requirements.--The requirements of this 
        paragraph are met if the plan satisfies the requirements of 
        subparagraph (A) or (B).
                    ``(A) 3-year vesting.--A plan satisfies the 
                requirements of this subparagraph if an employee who 
                has completed at least 3 years of service has a 
                nonforfeitable right to 100 percent of the employee's 
                accrued benefit derived from employer contributions.
                    ``(B) 5-year graded vesting.--A plan satisfies the 
                requirements of this subparagraph if an employee has a 
                nonforfeitable right to a percentage of the employee's 
                accrued benefit derived from employer contributions 
                determined under the following table:

                                                     The nonforfeitable
``Years of service:                                      percentage is:
    1.............................................                  20 
    2.............................................                  40 
    3.............................................                  60 
    4.............................................                  80 
    5.............................................                 100.
            ``(4) Distribution requirements.--In the case of a profit-
        sharing or stock bonus plan, the requirements of this paragraph 
        are met if, under the plan, qualified employer contributions 
        are distributable only as provided in section 401(k)(2)(B).
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Eligible employer.--
                    ``(A) In general.--The term `eligible employer' 
                means, with respect to any year, an employer which has 
                no more than 50 employees who received at least $5,000 
                of compensation from the employer for the preceding 
                year.
                    ``(B) Requirement for new qualified employer 
                plans.--Such term shall not include an employer if, 
                during the 3-taxable year period immediately preceding 
                the 1st taxable year for which the credit under this 
                section is otherwise allowable for a qualified employer 
                plan of the employer, the employer or any member of any 
                controlled group including the employer (or any 
                predecessor of either) established or maintained a 
                qualified employer plan with respect to which 
                contributions were made, or benefits were accrued, for 
                substantially the same employees as are in the 
                qualified employer plan.
            ``(2) Highly compensated employee.--The term `highly 
        compensated employee' has the meaning given such term by 
        section 414(q) (determined without regard to section 
        414(q)(1)(B)(ii)).
    ``(f) Special Rules.--
            ``(1) Disallowance of deduction.--No deduction shall be 
        allowed for that portion of the qualified employer 
        contributions paid or incurred for the taxable year which is 
        equal to the credit determined under subsection (a).
            ``(2) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.
            ``(3) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
        subsection (n) or (o) of section 414, shall be treated as one 
        person. All eligible employer plans shall be treated as 1 
        eligible employer plan.
    ``(g) Recapture of Credit on Forfeited Contributions.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        any accrued benefit which is forfeitable by reason of 
        subsection (d)(3) is forfeited, the employer's tax imposed by 
        this chapter for the taxable year in which the forfeiture 
        occurs shall be increased by 35 percent of the employer 
        contributions from which such benefit is derived to the extent 
        such contributions were taken into account in determining the 
        credit under this section.
            ``(2) Reallocated contributions.--Paragraph (1) shall not 
        apply to any contribution which is reallocated by the employer 
        under the plan to employees who are not highly compensated 
        employees.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) (defining current year business credit) is amended by striking 
``plus'' at the end of paragraph (11), by striking the period at the 
end of paragraph (12) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(13) in the case of an eligible employer (as defined in 
        section 45D(e)), the small employer pension plan contribution 
        credit determined under section 45D(a).''
    (c) Conforming Amendments.--
            (1) Section 39(d) is amended by adding at the end the 
        following new paragraph:
            ``(9) No carryback of small employer pension plan 
        contribution credit before january 1, 2001.--No portion of the 
        unused business credit for any taxable year which is 
        attributable to the small employer pension plan contribution 
        credit determined under section 45D may be carried back to a 
        taxable year beginning before January 1, 2001.''
            (2) Subsection (c) of section 196 is amended by striking 
        ``and'' at the end of paragraph (7), by striking the period at 
        the end of paragraph (8) and inserting ``, and'', and by adding 
        at the end the following new paragraph:
            ``(9) the small employer pension plan contribution credit 
        determined under section 45D(a).''
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 is amended by adding at the end the 
        following new item:

                              ``Sec. 45D. Small employer pension plan 
                                        contributions.''
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions paid or incurred in taxable years beginning 
after December 31, 2000.

SEC. 210. CREDIT FOR PENSION PLAN STARTUP COSTS OF SMALL EMPLOYERS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
(relating to business related credits), as amended by section 209, is 
amended by adding at the end the following new section:

``SEC. 45E. SMALL EMPLOYER PENSION PLAN STARTUP COSTS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer pension plan startup cost credit 
determined under this section for any taxable year is an amount equal 
to 50 percent of the qualified startup costs paid or incurred by the 
taxpayer during the taxable year.
    ``(b) Dollar Limitation.--The amount of the credit determined under 
this section for any taxable year shall not exceed--
            ``(1) $500 for the first credit year and each of the 2 
        taxable years immediately following the first credit year, and
            ``(2) zero for any other taxable year.
    ``(c) Eligible Employer.--For purposes of this section--
            ``(1) In general.--The term `eligible employer' has the 
        meaning given such term by section 408(p)(2)(C)(i).
            ``(2) Requirement for new qualified employer plans.--Such 
        term shall not include an employer if, during the 3-taxable 
        year period immediately preceding the 1st taxable year for 
        which the credit under this section is otherwise allowable for 
        a qualified employer plan of the employer, the employer or any 
        member of any controlled group including the employer (or any 
        predecessor of either) established or maintained a qualified 
        employer plan with respect to which contributions were made, or 
        benefits were accrued, for substantially the same employees as 
        are in the qualified employer plan.
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Qualified startup costs.--
                    ``(A) In general.--The term `qualified startup 
                costs' means any ordinary and necessary expenses of an 
                eligible employer which are paid or incurred in 
                connection with--
                            ``(i) the establishment or administration 
                        of an eligible employer plan, or
                            ``(ii) the retirement-related education of 
                        employees with respect to such plan.
                    ``(B) Plan must have at least 1 participant.--Such 
                term shall not include any expense in connection with a 
                plan that does not have at least 1 employee eligible to 
                participate who is not a highly compensated employee.
            ``(2) Eligible employer plan.--The term `eligible employer 
        plan' means a qualified employer plan within the meaning of 
        section 4972(d).
            ``(3) First credit year.--The term `first credit year' 
        means--
                    ``(A) the taxable year which includes the date that 
                the eligible employer plan to which such costs relate 
                becomes effective, or
                    ``(B) at the election of the eligible employer, the 
                taxable year preceding the taxable year referred to in 
                subparagraph (A).
    ``(e) Special Rules.--For purposes of this section--
            ``(1) Aggregation rules.--All persons treated as a single 
        employer under subsection (a) or (b) of section 52, or 
        subsection (n) or (o) of section 414, shall be treated as one 
        person. All eligible employer plans shall be treated as 1 
        eligible employer plan.
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowed for that portion of the qualified startup costs paid or 
        incurred for the taxable year which is equal to the credit 
        determined under subsection (a).
            ``(3) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.''
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) (defining current year business credit), as amended by section 
209, is amended by striking ``plus'' at the end of paragraph (12), by 
striking the period at the end of paragraph (13) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(14) in the case of an eligible employer (as defined in 
        section 45D(c)), the small employer pension plan startup cost 
        credit determined under section 45E(a).''
    (c) Conforming Amendments.--
            (1) Section 39(d), as amended by section 209(c), is amended 
        by adding at the end the following new paragraph:
            ``(10) No carryback of small employer pension plan startup 
        cost credit before january 1, 2001.--No portion of the unused 
        business credit for any taxable year which is attributable to 
        the small employer pension plan startup cost credit determined 
        under section 45E may be carried back to a taxable year 
        beginning before January 1, 2001.''
            (2) Subsection (c) of section 196, as amended by section 
        209(c), is amended by striking ``and'' at the end of paragraph 
        (8), by striking the period at the end of paragraph (9) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(10) the small employer pension plan startup cost credit 
        determined under section 45E(a).''
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1, as amended by section 209(c), is 
        amended by adding at the end the following new item:

                              ``Sec. 45E. Small employer pension plan 
                                        startup costs.''
    (d) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years beginning after 
December 31, 2000, with respect to qualified employer plans established 
after such date.

                TITLE III--ENHANCING FAIRNESS FOR WOMEN

SEC. 301. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER.

    (a) In General.--Section 414 (relating to definitions and special 
rules) is amended by adding at the end the following new subsection:
    ``(v) Catchup Contributions for Individuals Age 50 or Over.--
            ``(1) In general.--An applicable employer plan shall not be 
        treated as failing to meet any requirement of this title solely 
        because the plan permits an eligible participant to make 
        additional elective deferrals in any plan year.
            ``(2) Limitation on amount of additional deferrals.--
                    ``(A) In general.--A plan shall not permit 
                additional elective deferrals under paragraph (1) for 
                any year in an amount greater than the lesser of--
                            ``(i) the applicable percentage of the 
                        applicable dollar amount for such elective 
                        deferrals for such year, or
                            ``(ii) the excess (if any) of--
                                    ``(I) the participant's 
                                compensation (as defined in section 
                                415(c)(3)) for the year, over
                                    ``(II) any other elective deferrals 
                                of the participant for such year which 
                                are made without regard to this 
                                subsection.
                    ``(B) Applicable percentage.--For purposes of this 
                paragraph, the applicable percentage shall be 
                determined in accordance with the following table:

``For taxable years                                      The applicable
beginning in:                                            percentage is:
    2001..........................................          10 percent 
    2002..........................................          20 percent 
    2003..........................................          30 percent 
    2004..........................................          40 percent 
    2005 and thereafter...........................          50 percent.

            ``(3) Treatment of contributions.--In the case of any 
        contribution to a plan under paragraph (1)--
                    ``(A) such contribution shall not, with respect to 
                the year in which the contribution is made--
                            ``(i) be subject to any otherwise 
                        applicable limitation contained in section 
                        402(g), 402(h), 403(b), 404(a), 404(h), 408(k), 
                        408(p), 415, or 457, or
                            ``(ii) be taken into account in applying 
                        such limitations to other contributions or 
                        benefits under such plan or any other such 
                        plan, and
                    ``(B) such plan shall not be treated as failing to 
                meet the requirements of section 401(a)(4), 401(a)(26), 
                401(k)(3), 401(k)(11), 401(k)(12), 401(m), 403(b)(12), 
                408(k), 408(p), 408B, 410(b), or 416 by reason of the 
                making of (or the right to make) such contribution.
            ``(4) Eligible participant.--For purposes of this 
        subsection, the term `eligible participant' means, with respect 
        to any plan year, a participant in a plan--
                    ``(A) who has attained the age of 50 before the 
                close of the plan year, and
                    ``(B) with respect to whom no other elective 
                deferrals may (without regard to this subsection) be 
                made to the plan for the plan year by reason of the 
                application of any limitation or other restriction 
                described in paragraph (3) or contained in the terms of 
                the plan.
            ``(5) Other definitions and rules.--For purposes of this 
        subsection--
                    ``(A) Applicable dollar amount.--The term 
                `applicable dollar amount' means, with respect to any 
                year, the amount in effect under section 402(g)(1)(B), 
                408(p)(2)(E)(i), or 457(e)(15)(A), whichever is 
                applicable to an applicable employer plan, for such 
                year.
                    ``(B) Applicable employer plan.--The term 
                `applicable employer plan' means--
                            ``(i) an employees' trust described in 
                        section 401(a) which is exempt from tax under 
                        section 501(a),
                            ``(ii) a plan under which amounts are 
                        contributed by an individual's employer for an 
                        annuity contract described in section 403(b),
                            ``(iii) an eligible deferred compensation 
                        plan under section 457 of an eligible employer 
                        described in section 457(e)(1)(A), and
                            ``(iv) an arrangement meeting the 
                        requirements of section 408 (k) or (p).
                    ``(C) Elective deferral.--The term `elective 
                deferral' has the meaning given such term by subsection 
                (u)(2)(C).
                    ``(D) Exception for section 457 plans.--This 
                subsection shall not apply to an applicable employer 
                plan described in subparagraph (B)(iii) for any year to 
                which section 457(b)(3) applies.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to contributions in taxable years beginning after December 31, 2000.

SEC. 302. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED 
              CONTRIBUTION PLANS.

    (a) Equitable Treatment.--
            (1) In general.--Subparagraph (B) of section 415(c)(1) 
        (relating to limitation for defined contribution plans) is 
        amended by striking ``25 percent'' and inserting ``100 
        percent''.
            (2) Application to section 403(b).--Section 403(b) is 
        amended--
                    (A) by striking ``the exclusion allowance for such 
                taxable year'' in paragraph (1) and inserting ``the 
                applicable limit under section 415'';
                    (B) by striking paragraph (2); and
                    (C) by inserting ``or any amount received by a 
                former employee after the fifth taxable year following 
                the taxable year in which such employee was 
                terminated'' before the period at the end of the second 
                sentence of paragraph (3).
            (3) Conforming amendments.--
                    (A) Subsection (f) of section 72 is amended by 
                striking ``section 403(b)(2)(D)(iii))'' and inserting 
                ``section 403(b)(2)(D)(iii), as in effect before the 
                enactment of the Retirement Security and Savings Act of 
                2000)''.
                    (B) Section 404(a)(10)(B) is amended by striking 
                ``, the exclusion allowance under section 403(b)(2),''.
                    (C) Section 415(a)(2) is amended by striking ``, 
                and the amount of the contribution for such portion 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2)''.
                    (D) Section 415(c)(3) is amended by adding at the 
                end the following new subparagraph:
                    ``(E) Annuity contracts.--In the case of an annuity 
                contract described in section 403(b), the term 
                `participant's compensation' means the participant's 
                includible compensation determined under section 
                403(b)(3).''.
                    (E) Section 415(c) is amended by striking paragraph 
                (4).
                    (F) Section 415(c)(7) is amended to read as 
                follows:
            ``(7) Certain contributions by church plans not treated as 
        exceeding limit.--
                    ``(A) In general.--Notwithstanding any other 
                provision of this subsection, at the election of a 
                participant who is an employee of a church or a 
                convention or association of churches, including an 
                organization described in section 414(e)(3)(B)(ii), 
                contributions and other additions for an annuity 
                contract or retirement income account described in 
                section 403(b) with respect to such participant, when 
                expressed as an annual addition to such participant's 
                account, shall be treated as not exceeding the 
                limitation of paragraph (1) if such annual addition is 
                not in excess of $10,000.
                    ``(B) $40,000 aggregate limitation.--The total 
                amount of additions with respect to any participant 
                which may be taken into account for purposes of this 
                subparagraph for all years may not exceed $40,000.
                    ``(C) Annual addition.--For purposes of this 
                paragraph, the term `annual addition' has the meaning 
                given such term by paragraph (2).''.
                    (G) Subparagraph (B) of section 402(g)(7) (as 
                redesignated by section 211) is amended by inserting 
                before the period at the end the following: ``(as in 
                effect before the enactment of the Retirement Security 
                and Savings Act of 2000)''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Special Rules for Sections 403(b) and 408.--
            (1) In general.--Subsection (k) of section 415 is amended 
        by adding at the end the following new paragraph:
            ``(4) Special rules for sections 403(b) and 408.--For 
        purposes of this section, any annuity contract described in 
        section 403(b) for the benefit of a participant shall be 
        treated as a defined contribution plan maintained by each 
        employer with respect to which the participant has the control 
        required under subsection (b) or (c) of section 414 (as 
        modified by subsection (h)). For purposes of this section, any 
        contribution by an employer to a simplified employee pension 
        plan for an individual for a taxable year shall be treated as 
        an employer contribution to a defined contribution plan for 
        such individual for such year.''.
            (2) Effective date.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to limitation years beginning after 
                December 31, 1999.
                    (B) Exclusion allowance.--Effective for limitation 
                years beginning in 2000, in the case of any annuity 
                contract described in section 403(b) of the Internal 
                Revenue Code of 1986, the amount of the contribution 
                disqualified by reason of section 415(g) of such Code 
                shall reduce the exclusion allowance as provided in 
                section 403(b)(2) of such Code.
            (3) Modification of 403(b) exclusion allowance to conform 
        to 415 modification.--The Secretary of the Treasury shall 
        modify the regulations regarding the exclusion allowance under 
        section 403(b)(2) of the Internal Revenue Code of 1986 to 
        render void the requirement that contributions to a defined 
        benefit pension plan be treated as previously excluded amounts 
        for purposes of the exclusion allowance. For taxable years 
        beginning after December 31, 1999, such regulations shall be 
        applied as if such requirement were void.
    (c) Deferred Compensation Plans of State and Local Governments and 
Tax-Exempt Organizations.--
            (1) In general.--Subparagraph (B) of section 457(b)(2) 
        (relating to salary limitation on eligible deferred 
        compensation plans) is amended by striking ``33\1/3\ percent'' 
        and inserting ``100 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 2000.

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

    (a) In General.--Section 411(a) (relating to minimum vesting 
standards) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (12), a plan''; and
            (2) by adding at the end the following:
            ``(12) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A)), paragraph (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

                  
                                                     The nonforfeitable
                ``Years of service:
                                                       percentage is:  
                    2......................................        20  
                    3......................................        40  
                    4......................................        60  
                    5......................................        80  
                    6......................................     100.''.
    (b) Amendments to ERISA.--Section 203(a) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--
            (1) in paragraph (2), by striking ``A plan'' and inserting 
        ``Except as provided in paragraph (4), a plan'', and
            (2) by adding at the end the following:
            ``(4) Faster vesting for matching contributions.--In the 
        case of matching contributions (as defined in section 
        401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph 
        (2) shall be applied--
                    ``(A) by substituting `3 years' for `5 years' in 
                subparagraph (A), and
                    ``(B) by substituting the following table for the 
                table contained in subparagraph (B):

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

    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to contributions 
        for plan years beginning after December 31, 2000.
            (2) Collective bargaining agreements.--In the case of a 
        plan maintained pursuant to one or more collective bargaining 
        agreements between employee representatives and one or more 
        employers ratified by the date of the enactment of this Act, 
        the amendments made by this section shall not apply to 
        contributions on behalf of employees covered by any such 
        agreement for plan years beginning before the earlier of--
                    (A) the later of--
                            (i) the date on which the last of such 
                        collective bargaining agreements terminates 
                        (determined without regard to any extension 
                        thereof on or after such date of the 
                        enactment); or
                            (ii) January 1, 2001; or
                    (B) January 1, 2005.
            (3) Service required.--With respect to any plan, the 
        amendments made by this section shall not apply to any employee 
        before the date that such employee has 1 hour of service under 
        such plan in any plan year to which the amendments made by this 
        section apply.

SEC. 304. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION RULES.

    (a) Simplification and Finalization of Minimum Distribution 
Requirements.--
            (1) In general.--The Secretary of the Treasury shall--
                    (A) simplify and finalize the regulations relating 
                to minimum distribution requirements under sections 
                401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 
                457(d)(2) of the Internal Revenue Code of 1986; and
                    (B) modify such regulations to--
                            (i) reflect current life expectancy; and
                            (ii) revise the required distribution 
                        methods so that, under reasonable assumptions, 
                        the amount of the required minimum distribution 
                        does not decrease over a participant's life 
                        expectancy.
            (2) Fresh start.--Notwithstanding subparagraph (D) of 
        section 401(a)(9) of such Code, during the first year that 
        regulations are in effect under this subsection, required 
        distributions for future years may be redetermined to reflect 
        changes under such regulations. Such redetermination shall 
        include the opportunity to choose a new designated beneficiary 
        and to elect a new method of calculating life expectancy.
            (3) Date for regulations.--Not later than December 31, 
        2001, the Secretary shall issue final regulations described in 
        paragraph (1) and such regulations shall apply without regard 
        to whether an individual had previously begun receiving minimum 
        distributions.
    (b) Repeal of Rule Where Distributions Had Begun Before Death 
Occurs.--
            (1) In general.--Subparagraph (B) of section 401(a)(9) is 
        amended by striking clause (i) and redesignating clauses (ii), 
        (iii), and (iv) as clauses (i), (ii), and (iii), respectively.
            (2) Conforming changes.--
                    (A) Clause (i) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``for other cases'' in the 
                        heading; and
                            (ii) by striking ``the distribution of the 
                        employee's interest has begun in accordance 
                        with subparagraph (A)(ii)'' and inserting ``his 
                        entire interest has been distributed to him''.
                    (B) Clause (ii) of section 401(a)(9)(B) (as so 
                redesignated) is amended by striking ``clause (ii)'' 
                and inserting ``clause (i)''.
                    (C) Clause (iii) of section 401(a)(9)(B) (as so 
                redesignated) is amended--
                            (i) by striking ``clause (iii)(I)'' and 
                        inserting ``clause (ii)(I)'';
                            (ii) by striking ``clause (iii)(III)'' in 
                        subclause (I) and inserting ``clause 
                        (ii)(III)'';
                            (iii) by striking ``the date on which the 
                        employee would have attained age 70\1/2\,'' in 
                        subclause (I) and inserting ``April 1 of the 
                        calendar year following the calendar year in 
                        which the spouse attains 70\1/2\,''; and
                            (iv) by striking ``the distributions to 
                        such spouse begin,'' in subclause (II) and 
                        inserting ``his entire interest has been 
                        distributed to him,''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (c) Reduction in Excise Tax.--
            (1) In general.--Subsection (a) of section 4974 is amended 
        by striking ``50 percent'' and inserting ``10 percent''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to years beginning after December 31, 2000.

SEC. 305. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SECTION 457 
              PLAN BENEFITS UPON DIVORCE.

    (a) In General.--Section 414(p)(11) (relating to application of 
rules to governmental and church plans) is amended--
            (1) by inserting ``or an eligible deferred compensation 
        plan (within the meaning of section 457(b))'' after 
        ``subsection (e))''; and
            (2) in the heading, by striking ``governmental and church 
        plans'' and inserting ``certain other plans''.
    (b) Waiver of Certain Distribution Requirements.--Paragraph (10) of 
section 414(p) is amended by striking ``and section 409(d)'' and 
inserting ``section 409(d), and section 457(d)''.
    (c) Tax Treatment of Payments From a Section 457 Plan.--Subsection 
(p) of section 414 is amended by redesignating paragraph (12) as 
paragraph (13) and inserting after paragraph (11) the following new 
paragraph:
            ``(12) Tax treatment of payments from a section 457 plan.--
        If a distribution or payment from an eligible deferred 
        compensation plan described in section 457(b) is made pursuant 
        to a qualified domestic relations order, rules similar to the 
        rules of section 402(e)(1)(A) shall apply to such distribution 
        or payment.''.
    (d) Effective Date.--
            (1) In general.--The amendment made by subsection (c) shall 
        apply to distributions and payments made after December 31, 
        2000.
            (2) Amendments relating to assignments in divorce, etc., 
        proceedings.--The amendments made by subsections (a) and (b) 
        shall take effect on January 1, 2001, except that in the case 
        of a domestic relations order entered before such date, the 
        plan administrator--
                    (A) shall treat such order as a qualified domestic 
                relations order if such administrator is paying 
                benefits pursuant to such order on such date, and
                    (B) may treat any other such order entered before 
                such date as a qualified domestic relations order even 
                if such order does not meet the requirements of such 
                amendments.

SEC. 306. PROVISIONS RELATING TO HARDSHIP DISTRIBUTIONS.

    (a) Safe Harbor Relief.--
            (1) In general.--The Secretary of the Treasury shall revise 
        the regulations relating to hardship distributions under 
        section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 
        1986 to provide that the period an employee is prohibited from 
        making elective and employee contributions in order for a 
        distribution to be deemed necessary to satisfy financial need 
        shall be equal to 6 months.
            (2) Effective date.--The revised regulations under this 
        subsection shall apply to years beginning after December 31, 
        2000.
    (b) Hardship Distributions Not Treated as Eligible Rollover 
Distributions.--
            (1) Modification of definition of eligible rollover.--
        Section 402(c)(4)(C) (relating to eligible rollover 
        distribution) is amended by striking ``described in section 
        401(k)(2)(B)(i)(IV)'' and inserting ``under the terms of the 
        plan''.
    (2) Effective date.--
            (1) In general.--The amendment made by this subsection 
        shall apply to distributions made after December 31, 2000.
            (2) Transition regulations.--The Secretary of the Treasury 
        may promulgate regulations to provide transitional guidance 
        with respect to the amendments made by this subsection in order 
        to allow sufficient time for plans to implement such 
        amendments.

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

    (a) In General.--Section 4972(c)(6) (relating to exceptions to 
nondeductible contributions), as amended by section 502, is amended by 
striking ``and'' at the end of subparagraph (A), by striking the period 
and inserting ``, and'' at the end of subparagraph (B), and by 
inserting after subparagraph (B) the following new subparagraph:
                    ``(C) so much of the contributions to a simple 
                retirement account (within the meaning of section 
                408(p)) or a simple plan (within the meaning of section 
                401(k)(11)) which are not deductible when contributed 
                solely because such contributions are not made in 
                connection with a trade or business of the employer.''
    (b) Exclusion of Certain Contributions.--Section 4972(c)(6) is 
amended by adding at the end the following new sentence: ``Subparagraph 
(C) shall not apply to contributions made on behalf of the employer or 
a member of the employer's family.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

           TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS

SEC. 401. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.

    (a) Rollovers From and to Section 457 Plans.--
            (1) Rollovers from section 457 plans.--
                    (A) In general.--Section 457(e) (relating to other 
                definitions and special rules) is amended by adding at 
                the end the following:
            ``(16) Rollover amounts.--
                    ``(A) General rule.--In the case of an eligible 
                deferred compensation plan established and maintained 
                by an employer described in subsection (e)(1)(A), if--
                            ``(i) any portion of the balance to the 
                        credit of an employee in such plan is paid to 
                        such employee in an eligible rollover 
                        distribution (within the meaning of section 
                        402(c)(4) without regard to subparagraph (C) 
                        thereof),
                            ``(ii) the employee transfers any portion 
                        of the property such employee receives in such 
                        distribution to an eligible retirement plan 
                        described in section 402(c)(8)(B), and
                            ``(iii) in the case of a distribution of 
                        property other than money, the amount so 
                        transferred consists of the property 
                        distributed,
                then such distribution (to the extent so transferred) 
                shall not be includible in gross income for the taxable 
                year in which paid.
                    ``(B) Certain rules made applicable.--The rules of 
                paragraphs (2) through (7) and (9) of section 402(c) 
                and section 402(f) shall apply for purposes of 
                subparagraph (A).
                    ``(C) Reporting.--Rollovers under this paragraph 
                shall be reported to the Secretary in the same manner 
                as rollovers from qualified retirement plans (as 
                defined in section 4974(c)).''.
                    (B) Deferral limit determined without regard to 
                rollover amounts.--Section 457(b)(2) (defining eligible 
                deferred compensation plan) is amended by inserting 
                ``(other than rollover amounts)'' after ``taxable 
                year''.
                    (C) Direct rollover.--Paragraph (1) of section 
                457(d) is amended by striking ``and'' at the end of 
                subparagraph (A), by striking the period at the end of 
                subparagraph (B) and inserting ``, and'', and by 
                inserting after subparagraph (B) the following:
                    ``(C) in the case of a plan maintained by an 
                employer described in subsection (e)(1)(A), the plan 
                meets requirements similar to the requirements of 
                section 401(a)(31).
        Any amount transferred in a direct trustee-to-trustee transfer 
        in accordance with section 401(a)(31) shall not be includible 
        in gross income for the taxable year of transfer.''.
                    (D) Withholding.--
                            (i) Paragraph (12) of section 3401(a) is 
                        amended by adding at the end the following:
                    ``(E) under or to an eligible deferred compensation 
                plan which, at the time of such payment, is a plan 
                described in section 457(b) maintained by an employer 
                described in section 457(e)(1)(A), or''.
                            (ii) Paragraph (3) of section 3405(c) is 
                        amended to read as follows:
            ``(3) Eligible rollover distribution.--For purposes of this 
        subsection, the term `eligible rollover distribution' has the 
        meaning given such term by section 402(f)(2)(A).''.
                            (iii) Liability for withholding.--
                        Subparagraph (B) of section 3405(d)(2) is 
                        amended by striking ``or'' at the end of clause 
                        (ii), by striking the period at the end of 
                        clause (iii) and inserting ``, or'', and by 
                        adding at the end the following:
                            ``(iv) section 457(b).''.
            (2) Rollovers to section 457 plans.--
                    (A) In general.--Section 402(c)(8)(B) (defining 
                eligible retirement plan) is amended by striking 
                ``and'' at the end of clause (iii), by striking the 
                period at the end of clause (iv) and inserting ``, 
                and'', and by inserting after clause (iv) the following 
                new clause:
                            ``(v) an eligible deferred compensation 
                        plan described in section 457(b) of an employer 
                        described in section 457(e)(1)(A).''.
                    (B) Separate accounting.--Section 402(c) is amended 
                by adding at the end the following new paragraph:
            ``(11) Separate accounting.--Unless a plan described in 
        clause (v) of paragraph (8)(B) agrees to separately account for 
        amounts rolled into such plan from eligible retirement plans 
        not described in such clause, the plan described in such clause 
        may not accept transfers or rollovers from such retirement 
        plans.''.
                    (C) 10 percent additional tax.--Subsection (t) of 
                section 72 (relating to 10-percent additional tax on 
                early distributions from qualified retirement plans) is 
                amended by adding at the end the following new 
                paragraph:
            ``(9) Special rule for rollovers to section 457 plans.--For 
        purposes of this subsection, a distribution from an eligible 
        deferred compensation plan (as defined in section 457(b)) of an 
        employer described in section 457(e)(1)(A) shall be treated as 
        a distribution from a qualified retirement plan described in 
        4974(c)(1) to the extent that such distribution is attributable 
        to an amount transferred to an eligible deferred compensation 
        plan from a qualified retirement plan (as defined in section 
        4974(c)).''.
    (b) Allowance of Rollovers From and to 403(b) Plans.--
            (1) Rollovers from section 403(b) plans.--Section 
        403(b)(8)(A)(ii) (relating to rollover amounts) is amended by 
        striking ``such distribution'' and all that follows and 
        inserting ``such distribution to an eligible retirement plan 
        described in section 402(c)(8)(B), and''.
            (2) Rollovers to section 403(b) plans.--Section 
        402(c)(8)(B) (defining eligible retirement plan), as amended by 
        subsection (a), is amended by striking ``and'' at the end of 
        clause (iv), by striking the period at the end of clause (v) 
        and inserting ``, and'', and by inserting after clause (v) the 
        following new clause:
                            ``(vi) an annuity contract described in 
                        section 403(b).''.
    (c) Expanded Explanation to Recipients of Rollover Distributions.--
Paragraph (1) of section 402(f) (relating to written explanation to 
recipients of distributions eligible for rollover treatment) is amended 
by striking ``and'' at the end of subparagraph (C), by striking the 
period at the end of subparagraph (D) and inserting ``, and'', and by 
adding at the end the following new subparagraph:
                    ``(E) of the provisions under which distributions 
                from the eligible retirement plan receiving the 
                distribution may be subject to restrictions and tax 
                consequences which are different from those applicable 
                to distributions from the plan making such 
                distribution.''.
    (d) Spousal Rollovers.--Section 402(c)(9) (relating to rollover 
where spouse receives distribution after death of employee) is amended 
by striking ``; except that'' and all that follows up to the end 
period.
    (e) Conforming Amendments.--
            (1) Section 72(o)(4) is amended by striking ``and 
        408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and 
        457(e)(16)''.
            (2) Section 219(d)(2) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
            (3) Section 401(a)(31)(B) is amended by striking ``and 
        403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and 
        457(e)(16)''.
            (4) Subparagraph (A) of section 402(f)(2) is amended by 
        striking ``or paragraph (4) of section 403(a)'' and inserting 
        ``, paragraph (4) of section 403(a), subparagraph (A) of 
        section 403(b)(8), or subparagraph (A) of section 457(e)(16)''.
            (5) Paragraph (1) of section 402(f) is amended by striking 
        ``from an eligible retirement plan''.
            (6) Subparagraphs (A) and (B) of section 402(f)(1) are 
        amended by striking ``another eligible retirement plan'' and 
        inserting ``an eligible retirement plan''.
            (7) Subparagraph (B) of section 403(b)(8) is amended to 
        read as follows:
                    ``(B) Certain rules made applicable.--The rules of 
                paragraphs (2) through (7) and (9) of section 402(c) 
                and section 402(f) shall apply for purposes of 
                subparagraph (A), except that section 402(f) shall be 
                applied to the payor in lieu of the plan 
                administrator.''.
            (8) Section 408(a)(1) is amended by striking ``or 
        403(b)(8),'' and inserting ``403(b)(8), or 457(e)(16)''.
            (9) Subparagraphs (A) and (B) of section 415(b)(2) are each 
        amended by striking ``and 408(d)(3)'' and inserting 
        ``403(b)(8), 408(d)(3), and 457(e)(16)''.
            (10) Section 415(c)(2) is amended by striking ``and 
        408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
            (11) Section 4973(b)(1)(A) is amended by striking ``or 
        408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
    (f) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 2001.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986 shall not apply to any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of any amendment made by this section.

SEC. 402. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.

    (a) In General.--Subparagraph (A) of section 408(d)(3) (relating to 
rollover amounts) is amended by adding ``or'' at the end of clause (i), 
by striking clauses (ii) and (iii), and by adding at the end the 
following:
                            ``(ii) the entire amount received 
                        (including money and any other property) is 
                        paid into an eligible retirement plan for the 
                        benefit of such individual not later than the 
                        60th day after the date on which the payment or 
                        distribution is received, except that the 
                        maximum amount which may be paid into such plan 
                        may not exceed the portion of the amount 
                        received which is includible in gross income 
                        (determined without regard to this paragraph).
                For purposes of clause (ii), the term `eligible 
                retirement plan' means an eligible retirement plan 
                described in clause (iii), (iv), (v), or (vi) of 
                section 402(c)(8)(B).''.
    (b) Conforming Amendments.--
            (1) Paragraph (1) of section 403(b) is amended by striking 
        ``section 408(d)(3)(A)(iii)'' and inserting ``section 
        408(d)(3)(A)(ii)''.
            (2) Clause (i) of section 408(d)(3)(D) is amended by 
        striking ``(i), (ii), or (iii)'' and inserting ``(i) or (ii)''.
            (3) Subparagraph (G) of section 408(d)(3) is amended to 
        read as follows:
                    ``(G) Simple retirement accounts.--In the case of 
                any payment or distribution out of a simple retirement 
                account (as defined in subsection (p)) to which section 
                72(t)(6) applies, this paragraph shall not apply unless 
                such payment or distribution is paid into another 
                simple retirement account.''.
    (c) Effective Date; Special Rule.--
            (1) Effective date.--The amendments made by this section 
        shall apply to distributions after December 31, 2001.
            (2) Special rule.--Notwithstanding any other provision of 
        law, subsections (h)(3) and (h)(5) of section 1122 of the Tax 
        Reform Act of 1986 shall not apply to any distribution from an 
        eligible retirement plan (as defined in clause (iii) or (iv) of 
        section 402(c)(8)(B) of the Internal Revenue Code of 1986) on 
        behalf of an individual if there was a rollover to such plan on 
        behalf of such individual which is permitted solely by reason 
        of the amendments made by this section.

SEC. 403. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

    (a) Rollovers From Exempt Trusts.--Paragraph (2) of section 402(c) 
(relating to maximum amount which may be rolled over) is amended by 
adding at the end the following: ``The preceding sentence shall not 
apply to such distribution to the extent--
                    ``(A) such portion is transferred in a direct 
                trustee-to-trustee transfer to a qualified trust which 
                is part of a plan which is a defined contribution plan 
                and which agrees to separately account for amounts so 
                transferred, including separately accounting for the 
                portion of such distribution which is includible in 
                gross income and the portion of such distribution which 
                is not so includible, or
                    ``(B) such portion is transferred to an eligible 
                retirement plan described in clause (i) or (ii) of 
                paragraph (8)(B).''.
    (b) Optional Direct Transfer of Eligible Rollover Distributions.--
Subparagraph (B) of section 401(a)(31) (relating to limitation) is 
amended by adding at the end the following: ``The preceding sentence 
shall not apply to such distribution if the plan to which such 
distribution is transferred--
                            ``(i) agrees to separately account for 
                        amounts so transferred, including separately 
                        accounting for the portion of such distribution 
                        which is includible in gross income and the 
                        portion of such distribution which is not so 
                        includible, or
                            ``(ii) is an eligible retirement plan 
                        described in clause (i) or (ii) of section 
                        402(c)(8)(B).''.
    (c) Rules for Applying Section 72 to IRAs.--Paragraph (3) of 
section 408(d) (relating to special rules for applying section 72) is 
amended by inserting at the end the following:
                    ``(H) Application of section 72.--
                            ``(i) In general.--If--
                                    ``(I) a distribution is made from 
                                an individual retirement plan, and
                                    ``(II) a rollover contribution is 
                                made to an eligible retirement plan 
                                described in section 402(c)(8)(B)(iii), 
                                (iv), (v), or (vi) with respect to all 
                                or part of such distribution,
                        then, notwithstanding paragraph (2), the rules 
                        of clause (ii) shall apply for purposes of 
                        applying section 72.
                            ``(ii) Applicable rules.--In the case of a 
                        distribution described in clause (i)--
                                    ``(I) section 72 shall be applied 
                                separately to such distribution,
                                    ``(II) notwithstanding the pro rata 
                                allocation of income on, and investment 
                                in, the contract to distributions under 
                                section 72, the portion of such 
                                distribution rolled over to an eligible 
                                retirement plan described in clause (i) 
                                shall be treated as from income on the 
                                contract (to the extent of the 
                                aggregate income on the contract from 
                                all individual retirement plans of the 
                                distributee), and
                                    ``(III) appropriate adjustments 
                                shall be made in applying section 72 to 
                                other distributions in such taxable 
                                year and subsequent taxable years.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions made after December 31, 2001.

SEC. 404. HARDSHIP EXCEPTION TO 60-DAY RULE.

    (a) Exempt Trusts.--Paragraph (3) of section 402(c) (relating to 
transfer must be made within 60 days of receipt) is amended to read as 
follows:
            ``(3) Transfer must be made within 60 days of receipt.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), paragraph (1) shall not apply to any 
                transfer of a distribution made after the 60th day 
                following the day on which the distributee received the 
                property distributed.
                    ``(B) Hardship exception.--The Secretary may waive 
                the 60-day requirement under subparagraph (A) where the 
                failure to waive such requirement would be against 
                equity or good conscience, including casualty, 
                disaster, or other events beyond the reasonable control 
                of the individual subject to such requirement.''.
    (b) IRAs.--Paragraph (3) of section 408(d) (relating to rollover 
contributions), as amended by section 403, is amended by adding after 
subparagraph (H) the following new subparagraph:
                    ``(I) Waiver of 60-day requirement.--The Secretary 
                may waive the 60-day requirement under subparagraphs 
                (A) and (D) where the failure to waive such requirement 
                would be against equity or good conscience, including 
                casualty, disaster, or other events beyond the 
                reasonable control of the individual subject to such 
                requirement.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.

    (a) Plan Transfers.--
            (1) Amendment of internal revenue code.--Paragraph (6) of 
        section 411(d) (relating to accrued benefit not to be decreased 
        by amendment), as amended by section 522(a)(1), is amended by 
        adding at the end the following:
                    ``(E) Plan transfers.--
                            ``(i) In general.--A defined contribution 
                        plan (in this subparagraph referred to as the 
                        `transferee plan') shall not be treated as 
                        failing to meet the requirements of this 
                        subsection merely because the transferee plan 
                        does not provide some or all of the forms of 
                        distribution previously available under another 
                        defined contribution plan (in this subparagraph 
                        referred to as the `transferor plan') to the 
                        extent that--
                                    ``(I) the forms of distribution 
                                previously available under the 
                                transferor plan applied to the account 
                                of a participant or beneficiary under 
                                the transferor plan that was 
                                transferred from the transferor plan to 
                                the transferee plan pursuant to a 
                                direct transfer rather than pursuant to 
                                a distribution from the transferor 
                                plan,
                                    ``(II) the terms of both the 
                                transferor plan and the transferee plan 
                                authorize the transfer described in 
                                subclause (I),
                                    ``(III) the transfer described in 
                                subclause (I) was made pursuant to a 
                                voluntary election by the participant 
                                or beneficiary whose account was 
                                transferred to the transferee plan,
                                    ``(IV) the election described in 
                                subclause (III) was made after the 
                                participant or beneficiary received a 
                                notice describing the consequences of 
                                making the election, and
                                    ``(V) the transferee plan allows 
                                the participant or beneficiary 
                                described in subclause (III) to receive 
                                any distribution to which the 
                                participant or beneficiary is entitled 
                                under the transferee plan in the form 
                                of a single sum distribution.
                            ``(ii) Special rule for mergers, etc.--
                        Clause (i) shall apply to plan mergers and 
                        other transactions having the effect of a 
                        direct transfer, including consolidations of 
                        benefits attributable to different employers 
                        within a multiple employer plan.''.
            (2) Amendment to erisa.--Section 204(g) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)), as 
        amended by section 522(b)(1), is amended by adding at the end 
        the following:
    ``(5)(A) A defined contribution plan (in this subparagraph referred 
to as the `transferee plan') shall not be treated as failing to meet 
the requirements of this subsection merely because the transferee plan 
does not provide some or all of the forms of distribution previously 
available under another defined contribution plan (in this subparagraph 
referred to as the `transferor plan') to the extent that--
            ``(i) the forms of distribution previously available under 
        the transferor plan applied to the account of a participant or 
        beneficiary under the transferor plan that was transferred from 
        the transferor plan to the transferee plan pursuant to a direct 
        transfer rather than pursuant to a distribution from the 
        transferor plan;
            ``(ii) the terms of both the transferor plan and the 
        transferee plan authorize the transfer described in clause (i);
            ``(iii) the transfer described in clause (i) was made 
        pursuant to a voluntary election by the participant or 
        beneficiary whose account was transferred to the transferee 
        plan;
            ``(iv) the election described in clause (iii) was made 
        after the participant or beneficiary received a notice 
        describing the consequences of making the election; and
            ``(v) the transferee plan allows the participant or 
        beneficiary described in clause (iii) to receive any 
        distribution to which the participant or beneficiary is 
        entitled under the transferee plan in the form of a single sum 
        distribution.
    ``(B) Subparagraph (A) shall apply to plan mergers and other 
transactions having the effect of a direct transfer, including 
consolidations of benefits attributable to different employers within a 
multiple employer plan.''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.
    (b) Regulations.--
            (1) Amendment to internal revenue code.--The last sentence 
        of paragraph (6)(B) of section 411(d) (relating to accrued 
        benefit not to be decreased by amendment) is amended to read as 
        follows: ``The Secretary shall by regulations provide that this 
        subparagraph shall not apply to any plan amendment which 
        reduces or eliminates benefits or subsidies which create 
        significant burdens or complexities for the plan and plan 
        participants, unless such amendment adversely affects the 
        rights of any participant in a more than de minimis manner.''.
            (2) Amendment to erisa.--The last sentence of section 
        204(g)(2) of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows: 
        ``The Secretary of the Treasury shall by regulations provide 
        that this paragraph shall not apply to any plan amendment which 
        reduces or eliminates benefits or subsidies which create 
        significant burdens or complexities for the plan and plan 
        participants, unless such amendment adversely affects the 
        rights of any participant in a more than de minimis manner.''.
            (2) Secretary directed.--Except as provided in section 
        522(d), not later than December 31, 2001, the Secretary of the 
        Treasury is directed to issue regulations under section 
        411(d)(6) of the Internal Revenue Code of 1986 and section 
        204(g) of the Employee Retirement Income Security Act of 1974, 
        including the regulations required by the amendment made by 
        this subsection. Such regulations shall apply to plan years 
        beginning after December 31, 2001, or such earlier date as is 
        specified by the Secretary of the Treasury.

SEC. 406. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.

    (a) Modification of Same Desk Exception.--
            (1) Section 401(k).--
                    (A) Section 401(k)(2)(B)(i)(I) (relating to 
                qualified cash or deferred arrangements) is amended by 
                striking ``separation from service'' and inserting 
                ``severance from employment''.
                    (B) Subparagraph (A) of section 401(k)(10) 
                (relating to distributions upon termination of plan or 
                disposition of assets or subsidiary) is amended to read 
                as follows:
                    ``(A) In general.--An event described in this 
                subparagraph is the termination of the plan without 
                establishment or maintenance of another defined 
                contribution plan (other than an employee stock 
                ownership plan as defined in section 4975(e)(7)).''.
                    (C) Section 401(k)(10) is amended--
                            (i) in subparagraph (B)--
                                    (I) by striking ``An event'' in 
                                clause (i) and inserting ``A 
                                termination''; and
                                    (II) by striking ``the event'' in 
                                clause (i) and inserting ``the 
                                termination'';
                            (ii) by striking subparagraph (C); and
                            (iii) by striking ``or disposition of 
                        assets or subsidiary'' in the heading.
            (2) Section 403(b).--
                    (A) Paragraphs (7)(A)(ii) and (11)(A) of section 
                403(b) are each amended by striking ``separates from 
                service'' and inserting ``has a severance from 
                employment''.
                    (B) The heading for paragraph (11) of section 
                403(b) is amended by striking ``separation from 
                service'' and inserting ``severance from employment''.
            (3) Section 457.--Clause (ii) of section 457(d)(1)(A) is 
        amended by striking ``is separated from service'' and inserting 
        ``has a severance from employment''.
    (b) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 407. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED BENEFIT 
              PLANS.

    (a) 403(b) Plans.--Subsection (b) of section 403 is amended by 
adding at the end the following new paragraph:
            ``(13) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
    (b) 457 Plans.--Subsection (e) of section 457 is amended by adding 
after paragraph (16) the following new paragraph:
            ``(17) Trustee-to-trustee transfers to purchase permissive 
        service credit.--No amount shall be includible in gross income 
        by reason of a direct trustee-to-trustee transfer to a defined 
        benefit governmental plan (as defined in section 414(d)) if 
        such transfer is--
                    ``(A) for the purchase of permissive service credit 
                (as defined in section 415(n)(3)(A)) under such plan, 
                or
                    ``(B) a repayment to which section 415 does not 
                apply by reason of subsection (k)(3) thereof.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to trustee-to-trustee transfers after December 31, 2000.

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

    (a) Qualified Plans.--Section 411(a)(11) (relating to restrictions 
on certain mandatory distributions) is amended by adding at the end the 
following:
                    ``(D) Special rule for rollover contributions.--A 
                plan shall not fail to meet the requirements of this 
                paragraph if, under the terms of the plan, the present 
                value of the nonforfeitable accrued benefit is 
                determined without regard to that portion of such 
                benefit which is attributable to rollover contributions 
                (and earnings allocable thereto). For purposes of this 
                subparagraph, the term `rollover contributions' means 
                any rollover contribution under sections 402(c), 
                403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 
                457(e)(16).''.
    (b) Eligible Deferred Compensation Plans.--Clause (i) of section 
457(e)(9)(A) is amended by striking ``such amount'' and inserting ``the 
portion of such amount which is not attributable to rollover 
contributions (as defined in section 411(a)(11)(D))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions after December 31, 2000.

SEC. 409. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR SECTION 
              457 PLANS.

    (a) Minimum Distribution Requirements.--Paragraph (2) of section 
457(d) (relating to distribution requirements) is amended to read as 
follows:
            ``(2) Minimum distribution requirements.--A plan meets the 
        minimum distribution requirements of this paragraph if such 
        plan meets the requirements of section 401(a)(9).''.
    (b) Inclusion in Gross Income.--
            (1) Year of inclusion.--Subsection (a) of section 457 
        (relating to year of inclusion in gross income) is amended to 
        read as follows:
    ``(a) Year of inclusion in gross income.--
            ``(1) In general.--Any amount of compensation deferred 
        under an eligible deferred compensation plan, and any income 
        attributable to the amounts so deferred, shall be includible in 
        gross income only for the taxable year in which such 
        compensation or other income--
                    ``(A) is paid to the participant or other 
                beneficiary, in the case of a plan of an eligible 
                employer described in subsection (e)(1)(A), and
                    ``(B) is paid or otherwise made available to the 
                participant or other beneficiary, in the case of a plan 
                of an eligible employer described in subsection 
                (e)(1)(B).
            ``(2) Special rule for rollover amounts.--To the extent 
        provided in section 72(t)(9), section 72(t) shall apply to any 
        amount includible in gross income under this subsection.''.
            (2) Conforming amendments.--
                    (A) So much of paragraph (9) of section 457(e) as 
                precedes subparagraph (A) is amended to read as 
                follows:
            ``(9) Benefits of tax exempt organization plans not treated 
        as made available by reason of certain elections, etc.--In the 
        case of an eligible deferred compensation plan of an employer 
        described in subsection (e)(1)(B)--''.
                    (B) Section 457(d) is amended by adding at the end 
                the following new paragraph:
            ``(3) Special rule for government plan.--An eligible 
        deferred compensation plan of an employer described in 
        subsection (e)(1)(A) shall not be treated as failing to meet 
        the requirements of this subsection solely by reason of making 
        a distribution described in subsection (e)(9)(A).''.
    (c) Modification of Transition Rules for Existing 457 Plans.--
            (1) In general.--Section 1107(c)(3)(B) of the Tax Reform 
        Act of 1986 is amended by striking ``or'' at the end of clause 
        (i), by striking the period at the end of clause (ii) and 
        inserting ``, or'' and by inserting after clause (ii) the 
        following new clause:
                            ``(iii) are deferred pursuant to an 
                        agreement with an individual covered by an 
                        agreement described in clause (ii), to the 
                        extent the annual amount under such agreement 
                        with the individual does not exceed--
                                    ``(I) the amount described in 
                                clause (ii)(II), multiplied by
                                    ``(II) the cumulative increase in 
                                the Consumer Price Index (as published 
                                by the Bureau of Labor Statistics of 
                                the Department of Labor).''.
            (2) Conforming amendment.--The fourth sentence of section 
        1107(c)(3)(B) of the Tax Reform Act of 1986 is amended by 
        striking ``This subparagraph'' and inserting ``Clauses (i) and 
        (ii) of this subparagraph''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply to taxable years ending after the date of the 
        enactment of this Act with respect to increases in the Consumer 
        Price Index after September 30, 1993.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall apply to distributions after December 31, 2000.

        TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT

                     Subtitle A--General Provisions

SEC. 501. REPEAL OF 155 PERCENT OF CURRENT LIABILITY FUNDING LIMIT.

    (a) Amendments to Internal Revenue Code.--Section 412(c)(7) 
(relating to full-funding limitation) is amended--
            (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage''; and
            (2) by amending subparagraph (F) to read as follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                    2001...................................       160  
                    2002...................................       165  
                    2003...................................     170.''.
    (b) Amendments to ERISA.--Section 302(c)(7) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is 
amended--
            (1) by striking ``the applicable percentage'' in 
        subparagraph (A)(i)(I) and inserting ``in the case of plan 
        years beginning before January 1, 2004, the applicable 
        percentage'', and
            (2) by amending subparagraph (F) to read as follows:
                    ``(F) Applicable percentage.--For purposes of 
                subparagraph (A)(i)(I), the applicable percentage shall 
                be determined in accordance with the following table:

                ``In the case of any plan year
                                                         The applicable
                  beginning in--
                                                        percentage is--
                    2001...................................        160 
                    2002...................................        165 
                    2003...................................     170.''.

    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 502. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND APPLIED TO 
              ALL DEFINED BENEFIT PLANS.

    (a) In General.--Subparagraph (D) of section 404(a)(1) (relating to 
special rule in case of certain plans) is amended to read as follows:
                    ``(D) Special rule in case of certain plans.--
                            ``(i) In general.--In the case of any 
                        defined benefit plan, except as provided in 
                        regulations, the maximum amount deductible 
                        under the limitations of this paragraph shall 
                        not be less than the unfunded termination 
                        liability (determined as if the proposed 
                        termination date referred to in section 
                        4041(b)(2)(A)(i)(II) of the Employee Retirement 
                        Income Security Act of 1974 were the last day 
                        of the plan year).
                            ``(ii) Plans with less than 100 
                        participants.--For purposes of this 
                        subparagraph, in the case of a plan which has 
                        less than 100 participants for the plan year, 
                        termination liability shall not include the 
                        liability attributable to benefit increases for 
                        highly compensated employees (as defined in 
                        section 414(q)) resulting from a plan amendment 
                        which is made or becomes effective, whichever 
                        is later, within the last 2 years before the 
                        termination date.
                            ``(iii) Rule for determining number of 
                        participants.--For purposes of determining 
                        whether a plan has more than 100 participants, 
                        all defined benefit plans maintained by the 
                        same employer (or any member of such employer's 
                        controlled group (within the meaning of section 
                        412(l)(8)(C))) shall be treated as one plan, 
                        but only employees of such member or employer 
                        shall be taken into account.
                            ``(iv) Plans established and maintain by 
                        professional service employers.--Clause (i) 
                        shall not apply to a plan described in section 
                        4021(b)(13) of the Employee Retirement Income 
                        Security Act of 1974.''.
    (b) Conforming Amendment.--Paragraph (6) of section 4972(c) is 
amended to read as follows:
            ``(6) Exceptions.--In determining the amount of 
        nondeductible contributions for any taxable year, there shall 
        not be taken into account so much of the contributions to one 
        or more defined contribution plans which are not deductible 
        when contributed solely because of section 404(a)(7) as does 
        not exceed the greater of--
                    ``(A) the amount of contributions not in excess of 
                6 percent of compensation (within the meaning of 
                section 404(a)) paid or accrued (during the taxable 
                year for which the contributions were made) to 
                beneficiaries under the plans, or
                    ``(B) the sum of--
                            ``(i) the amount of contributions described 
                        in section 401(m)(4)(A), plus
                            ``(ii) the amount of contributions 
                        described in section 402(g)(3)(A).
        For purposes of this paragraph, the deductible limits under 
        section 404(a)(7) shall first be applied to amounts contributed 
        to a defined benefit plan and then to amounts described in 
        subparagraph (B).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 503. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.

    (a) In General.--Subsection (c) of section 4972 (relating to 
nondeductible contributions) is amended by adding at the end the 
following new paragraph:
            ``(7) Defined benefit plan exception.--In determining the 
        amount of nondeductible contributions for any taxable year, an 
        employer may elect for such year not to take into account any 
        contributions to a defined benefit plan except to the extent 
        that such contributions exceed the full-funding limitation (as 
        defined in section 412(c)(7), determined without regard to 
        subparagraph (A)(i)(I) thereof). For purposes of this 
        paragraph, the deductible limits under section 404(a)(7) shall 
        first be applied to amounts contributed to defined contribution 
        plans and then to amounts described in this paragraph. If an 
        employer makes an election under this paragraph for a taxable 
        year, paragraph (6) shall not apply to such employer for such 
        taxable year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 504. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.

    (a) Compensation Limit.--
            (1) In general.--Paragraph (11) of section 415(b) (relating 
        to limitation for defined benefit plans) is amended to read as 
        follows:
            ``(11) Special limitation rule for governmental and 
        multiemployer plans.--In the case of a governmental plan (as 
        defined in section 414(d)) or a multiemployer plan (as defined 
        in section 414(f)), subparagraph (B) of paragraph (1) shall not 
        apply.''.
            (2) Conforming amendment.--Section 415(b)(7) (relating to 
        benefits under certain collectively bargained plans) is amended 
        by inserting ``(other than a multiemployer plan)'' after 
        ``defined benefit plan'' in the matter preceding subparagraph 
        (A).
    (b) Combining and Aggregation of Plans.--
            (1) Combining of plans.--Subsection (f) of section 415 
        (relating to combining of plans) is amended by adding at the 
        end the following:
            ``(3) Exception for multiemployer plans.--Notwithstanding 
        paragraph (1) and subsection (g), a multiemployer plan (as 
        defined in section 414(f)) shall not be combined or aggregated 
        with any other plan maintained by an employer for purposes of 
        applying subsection (b)(1)(B) to such plan or any other such 
        plan.''.
            (2) Conforming amendment for aggregation of plans.--
        Subsection (g) of section 415 (relating to aggregation of 
        plans) is amended by striking ``The Secretary'' and inserting 
        ``Except as provided in subsection (f)(3), the Secretary''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 505. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS TO 401(K) 
              PLANS.

    (a) In General.--Section 1524(b) of the Taxpayer Relief Act of 1997 
is amended to read as follows:
    ``(b) Effective Date.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to elective 
        deferrals for plan years beginning after December 31, 1998.
            ``(2) Nonapplication to previously acquired property.--The 
        amendments made by this section shall not apply to any elective 
        deferral which is invested in assets consisting of qualifying 
        employer securities, qualifying employer real property, or 
        both, if such assets were acquired before January 1, 1999.''.
    (b) Effective Date.--The amendment made by this section shall apply 
as if included in the provision of the Taxpayer Relief Act of 1997 to 
which it relates.

SEC. 506. PERIODIC PENSION BENEFITS STATEMENTS.

    (a) In General.--Section 105(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1025 (a)) is amended to read as 
follows:
    ``(a)(1) Except as provided in paragraph (2)--
            ``(A) the administrator of an individual account plan shall 
        furnish a pension benefit statement--
                    ``(i) to a plan participant at least once annually, 
                and
                    ``(ii) to a plan beneficiary upon written request, 
                and
            ``(B) the administrator of a defined benefit plan shall 
        furnish a pension benefit statement--
                    ``(i) at least once every 3 years to each 
                participant with a nonforfeitable accrued benefit who 
                is employed by the employer maintaining the plan at the 
                time the statement is furnished to participants, and
                    ``(ii) to a participant or beneficiary of the plan 
                upon written request.
    ``(2) Notwithstanding paragraph (1), the administrator of a plan to 
which more than 1 unaffiliated employer is required to contribute shall 
only be required to furnish a pension benefit statement under paragraph 
(1) upon the written request of a participant or beneficiary of the 
plan.
    ``(3) A pension benefit statement under paragraph (1)--
            ``(A) shall indicate, on the basis of the latest available 
        information--
                    ``(i) the total benefits accrued, and
                    ``(ii) the nonforfeitable pension benefits, if any, 
                which have accrued, or the earliest date on which 
                benefits will become nonforfeitable,
            ``(B) shall be written in a manner calculated to be 
        understood by the average plan participant, and
            ``(C) may be provided in written, electronic, telephonic, 
        or other appropriate form.
    ``(4) In the case of a defined benefit plan, the requirements of 
paragraph (1)(B)(i) shall be treated as met with respect to a 
participant if the administrator provides the participant at least once 
each year with notice of the availability of the pension benefit 
statement and the ways in which the participant may obtain such 
statement. Such notice shall be provided in written, electronic, 
telephonic, or other appropriate form, and may be included with other 
communications to the participant if done in a manner reasonably 
designed to attract the attention of the participant.''.
    (b) Conforming Amendments.--
            (1) Section 105 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1025) is amended by striking subsection 
        (d).
            (2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is 
        amended to read as follows:
    ``(b) In no case shall a participant or beneficiary of a plan be 
entitled to more than one statement described in subsection (a)(1)(A) 
or (a)(1)(B)(ii), whichever is applicable, in any 12-month period.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 507. PROHIBITED ALLOCATIONS OF STOCK IN S CORPORATION ESOP.

    (a) In General.--Section 409 (relating to qualifications for tax 
credit employee stock ownership plans) is amended by redesignating 
subsection (p) as subsection (q) and by inserting after subsection (o) 
the following new subsection:
    ``(p) Prohibited Allocations of Securities in an S Corporation.--
            ``(1) In general.--An employee stock ownership plan holding 
        employer securities consisting of stock in an S corporation 
        shall provide that no portion of the assets of the plan 
        attributable to (or allocable in lieu of) such employer 
        securities may, during a nonallocation year, accrue (or be 
        allocated directly or indirectly under any plan of the employer 
        meeting the requirements of section 401(a)) for the benefit of 
        any disqualified person.
            ``(2) Failure to meet requirements.--
                    ``(A) In general.--If a plan fails to meet the 
                requirements of paragraph (1), the plan shall be 
                treated as having distributed to any disqualified 
                person the amount allocated to the account of such 
                person in violation of paragraph (1) at the time of 
                such allocation.
                    ``(B) Cross reference.--

                                ``For excise tax relating to violations 
of paragraph (1) and ownership of synthetic equity, see section 4979A.
            ``(3) Nonallocation year.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `nonallocation year' 
                means any plan year of an employee stock ownership plan 
                if, at any time during such plan year--
                            ``(i) such plan holds employer securities 
                        consisting of stock in an S corporation, and
                            ``(ii) disqualified persons own at least 50 
                        percent of the number of shares of stock in the 
                        S corporation.
                    ``(B) Attribution rules.--For purposes of 
                subparagraph (A)--
                            ``(i) In general.--The rules of section 
                        318(a) shall apply for purposes of determining 
                        ownership, except that--
                                    ``(I) in applying paragraph (1) 
                                thereof, the members of an individual's 
                                family shall include members of the 
                                family described in paragraph (4)(D), 
                                and
                                    ``(II) paragraph (4) thereof shall 
                                not apply.
                            ``(ii) Deemed-owned shares.--
                        Notwithstanding the employee trust exception in 
                        section 318(a)(2)(B)(i), individual shall be 
                        treated as owning deemed-owned shares of the 
                        individual.
                Solely for purposes of applying paragraph (5), this 
                subparagraph shall be applied after the attribution 
                rules of paragraph (5) have been applied.
            ``(4) Disqualified person.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `disqualified person' 
                means any person if--
                            ``(i) the aggregate number of deemed-owned 
                        shares of such person and the members of such 
                        person's family is at least 20 percent of the 
                        number of deemed-owned shares of stock in the S 
                        corporation, or
                            ``(ii) in the case of a person not 
                        described in clause (i), the number of deemed-
                        owned shares of such person is at least 10 
                        percent of the number of deemed-owned shares of 
                        stock in such corporation.
                    ``(B) Treatment of family members.--In the case of 
                a disqualified person described in subparagraph (A)(i), 
                any member of such person's family with deemed-owned 
                shares shall be treated as a disqualified person if not 
                otherwise treated as a disqualified person under 
                subparagraph (A).
                    ``(C) Deemed-owned shares.--
                            ``(i) In general.--The term `deemed-owned 
                        shares' means, with respect to any person--
                                    ``(I) the stock in the S 
                                corporation constituting employer 
                                securities of an employee stock 
                                ownership plan which is allocated to 
                                such person under the plan, and
                                    ``(II) such person's share of the 
                                stock in such corporation which is held 
                                by such plan but which is not allocated 
                                under the plan to participants.
                            ``(ii) Person's share of unallocated 
                        stock.--For purposes of clause (i)(II), a 
                        person's share of unallocated S corporation 
                        stock held by such plan is the amount of the 
                        unallocated stock which would be allocated to 
                        such person if the unallocated stock were 
                        allocated to all participants in the same 
                        proportions as the most recent stock allocation 
                        under the plan.
                    ``(D) Member of family.--For purposes of this 
                paragraph, the term `member of the family' means, with 
                respect to any individual--
                            ``(i) the spouse of the individual,
                            ``(ii) an ancestor or lineal descendant of 
                        the individual or the individual's spouse,
                            ``(iii) a brother or sister of the 
                        individual or the individual's spouse and any 
                        lineal descendant of the brother or sister, and
                            ``(iv) the spouse of any individual 
                        described in clause (ii) or (iii).
                A spouse of an individual who is legally separated from 
                such individual under a decree of divorce or separate 
                maintenance shall not be treated as such individual's 
                spouse for purposes of this subparagraph.
            ``(5) Treatment of synthetic equity.--For purposes of 
        paragraphs (3) and (4), in the case of a person who owns 
        synthetic equity in the S corporation, except to the extent 
        provided in regulations, the shares of stock in such 
        corporation on which such synthetic equity is based shall be 
        treated as outstanding stock in such corporation and deemed-
        owned shares of such person if such treatment of synthetic 
        equity of 1 or more such persons results in--
                    ``(A) the treatment of any person as a disqualified 
                person, or
                    ``(B) the treatment of any year as a nonallocation 
                year.
        For purposes of this paragraph, synthetic equity shall be 
        treated as owned by a person in the same manner as stock is 
        treated as owned by a person under the rules of paragraphs (2) 
        and (3) of section 318(a). If, without regard to this 
        paragraph, a person is treated as a disqualified person or a 
        year is treated as a nonallocation year, this paragraph shall 
        not be construed to result in the person or year not being so 
        treated.
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Employee stock ownership plan.--The term 
                `employee stock ownership plan' has the meaning given 
                such term by section 4975(e)(7).
                    ``(B) Employer securities.--The term `employer 
                security' has the meaning given such term by section 
                409(l).
                    ``(C) Synthetic equity.--The term `synthetic 
                equity' means any stock option, warrant, restricted 
                stock, deferred issuance stock right, or similar 
                interest or right that gives the holder the right to 
                acquire or receive stock of the S corporation in the 
                future. Except to the extent provided in regulations, 
                synthetic equity also includes a stock appreciation 
                right, phantom stock unit, or similar right to a future 
                cash payment based on the value of such stock or 
                appreciation in such value.
            ``(7) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection.''.
    (b) Coordination With Section 4975(e)(7).--The last sentence of 
section 4975(e)(7) (defining employee stock ownership plan) is amended 
by inserting ``, section 409(p),'' after ``409(n)''.
    (c) Excise Tax.--
            (1) Application of tax.--Subsection (a) of section 4979A 
        (relating to tax on certain prohibited allocations of employer 
        securities) is amended--
                    (A) by striking ``or'' at the end of paragraph (1), 
                and
                    (B) by striking all that follows paragraph (2) and 
                inserting the following:
            ``(3) there is any allocation of employer securities which 
        violates the provisions of section 409(p), or a nonallocation 
        year described in subsection (e)(2)(C) with respect to an 
        employee stock ownership plan, or
            ``(4) any synthetic equity is owned by a disqualified 
        person in any nonallocation year,
there is hereby imposed a tax on such allocation or ownership equal to 
50 percent of the amount involved.''.
            (2) Liability.--Section 4979A(c) (defining liability for 
        tax) is amended to read as follows:
    ``(c) Liability for Tax.--The tax imposed by this section shall be 
paid--
            ``(1) in the case of an allocation referred to in paragraph 
        (1) or (2) of subsection (a), by--
                    ``(A) the employer sponsoring such plan, or
                    ``(B) the eligible worker-owned cooperative,
        which made the written statement described in section 
        664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may be), 
        and
            ``(2) in the case of an allocation or ownership referred to 
        in paragraph (3) or (4) of subsection (a), by the S corporation 
        the stock in which was so allocated or owned.''.
            (3) Definitions.--Section 4979A(e) (relating to 
        definitions) is amended to read as follows:
    ``(e) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Definitions.--Except as provided in paragraph (2), 
        terms used in this section have the same respective meanings as 
        when used in sections 409 and 4978.
            ``(2) Special rules relating to tax imposed by reason of 
        paragraph (3) or (4) of subsection (a).--
                    ``(A) Prohibited allocations.--The amount involved 
                with respect to any tax imposed by reason of subsection 
                (a)(3) is the amount allocated to the account of any 
                person in violation of section 409(p)(1).
                    ``(B) Synthetic equity.--The amount involved with 
                respect to any tax imposed by reason of subsection 
                (a)(4) is the value of the shares on which the 
                synthetic equity is based.
                    ``(C) Special rule during first nonallocation 
                year.--For purposes of subparagraph (A), the amount 
                involved for the first nonallocation year of any 
                employee stock ownership plan shall be determined by 
                taking into account the total value of all the deemed-
                owned shares of all disqualified persons with respect 
                to such plan.
                    ``(D) Statute of limitations.--The statutory period 
                for the assessment of any tax imposed by this section 
                by reason of paragraph (3) or (4) of subsection (a) 
                shall not expire before the date which is 3 years from 
                the later of--
                            ``(i) the allocation or ownership referred 
                        to in such paragraph giving rise to such tax, 
                        or
                            ``(ii) the date on which the Secretary is 
                        notified of such allocation or ownership.''.
    (d) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2001.
            (2) Exception for certain plans.--In the case of any--
                    (A) employee stock ownership plan established after 
                July 11, 2000, or
                    (B) employee stock ownership plan established on or 
                before such date if employer securities held by the 
                plan consist of stock in a corporation with respect to 
                which an election under section 1362(a) of the Internal 
                Revenue Code of 1986 is not in effect on such date,
        the amendments made by this section shall apply to plan years 
        ending after July 11, 2000.

   Subtitle B--Treatment of Plan Amendments Reducing Future Benefit 
                                Accruals

SEC. 521. NOTICE REQUIRED FOR PENSION PLAN AMENDMENTS HAVING THE EFFECT 
              OF SIGNIFICANTLY REDUCING FUTURE BENEFIT ACCRUALS.

    (a) Excise Tax.--
            (1) In general.--Chapter 43 of subtitle D (relating to 
        qualified pension, etc., plans) is amended by adding at the end 
        the following new section:

``SEC. 4980F. FAILURE TO PROVIDE NOTICE OF PENSION PLAN AMENDMENTS 
              REDUCING BENEFIT ACCRUALS.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of an applicable pension plan to meet the requirements of 
subsection (e) with respect to any applicable individual.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) on any failure with respect to any applicable 
        individual shall be $100 for each day in the noncompliance 
        period with respect to such failure.
            ``(2) Noncompliance period.--For purposes of this section, 
        the term `noncompliance period' means, with respect to any 
        failure, the period beginning on the date the failure first 
        occurs and ending on the date the notice to which the failure 
        relates is provided or the failure is otherwise corrected.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply where failure not discovered and 
        reasonable diligence exercised.--No tax shall be imposed by 
        subsection (a) on any failure during any period for which it is 
        established to the satisfaction of the Secretary that any 
        person subject to liability for the tax under subsection (d) 
        did not know that the failure existed and exercised reasonable 
        diligence to meet the requirements of subsection (e).
            ``(2) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) any person subject to liability for the tax 
                under subsection (d) exercised reasonable diligence to 
                meet the requirements of subsection (e), and
                    ``(B) such person provides the notice described in 
                subsection (e) during the 30-day period beginning on 
                the first date such person knew, or exercising 
                reasonable diligence would have known, that such 
                failure existed.
            ``(3) Overall limitation for unintentional failures.--
                    ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) exercised 
                reasonable diligence to meet the requirements of 
                subsection (e), the tax imposed by subsection (a) for 
                failures during the taxable year of the employer (or, 
                in the case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall not exceed 
                $500,000. For purposes of the preceding sentence, all 
                multiemployer plans of which the same trust forms a 
                part shall be treated as 1 plan.
                    ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this paragraph, if 
                all persons who are treated as a single employer for 
                purposes of this section do not have the same taxable 
                year, the taxable years taken into account shall be 
                determined under principles similar to the principles 
                of section 1561.
            ``(4) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive or otherwise inequitable relative to the failure 
        involved.
    ``(d) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
    ``(e) Notice Requirements for Plan Amendments Significantly 
Reducing Benefit Accruals.--
            ``(1) In general.--If the sponsor of an applicable pension 
        plan adopts an amendment which has the effect of significantly 
        reducing the rate of future benefit accrual of 1 or more 
        participants, the plan administrator shall, not later than the 
        45th day before the effective date of the amendment, provide 
        written notice to each applicable individual (and to each 
        employee organization representing applicable individuals) 
        which--
                    ``(A) sets forth a summary of the plan amendment 
                and the effective date of the amendment,
                    ``(B) includes a statement that the plan amendment 
                is expected to significantly reduce the rate of future 
                benefit accrual,
                    ``(C) includes a description of the classes of 
                employees reasonably expected to be affected by the 
                reduction in the rate of future benefit accrual,
                    ``(D) sets forth examples illustrating how the plan 
                will change benefits for such classes of employees,
                    ``(E) if paragraph (2) applies to the plan 
                amendment, includes a notice that the plan 
                administrator will provide a benefit estimation tool 
                kit described in paragraph (2)(B) to each applicable 
                individual no later than the date required under 
                paragraph (2)(A), and
                    ``(F) includes a notice of each applicable 
                individual's right under Federal law to receive, and of 
                the procedures for requesting, an annual benefit 
                statement.
            ``(2) Requirement to provide benefit estimation tool kit.--
                    ``(A) In general.--If a plan amendment results in 
                the conversion of an applicable pension plan to a cash 
                balance plan (within the meaning of section 
                411(d)(6)(D)(iv)), the plan administrator shall, not 
                later than the 15th day before the effective date of 
                the amendment, provide a benefit estimation tool kit 
                described in subparagraph (B) to each applicable 
                individual. If such plan amendment occurs within 12 
                months of an event described in section 410(b)(6)(C), 
                the plan administrator shall in no event be required to 
                provide the benefit estimation tool kit to applicable 
                individuals affected by the event before the date which 
                is 24 months after such event.
                    ``(B) Benefit estimation tool kit.--The benefit 
                estimation tool kit described in this subparagraph 
                shall include the following information:
                            ``(i) Sufficient information to enable an 
                        applicable individual to estimate the 
                        individual's projected benefits under the terms 
                        of the plan in effect both before and after the 
                        adoption of the amendment.
                            ``(ii) The formulas and actuarial 
                        assumptions necessary to estimate under both 
                        such plan terms a single life annuity at 
                        appropriate ages, and, when available, a lump 
                        sum distribution.
                            ``(iii) The interest rate used to compute a 
                        lump sum distribution and information as to 
                        whether the value of any early retirement 
                        benefit or retirement-type subsidy (within the 
                        meaning of section 411(d)(6)(B)(i)) is included 
                        in the lump sum distribution.
            ``(3) Notice to designee.--Any notice under paragraph (1) 
        or (2) may be provided to a person designated, in writing, by 
        the person to which it would otherwise be provided.
    ``(f) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable individual.--
                    ``(A) In general.--The term `applicable individual' 
                means, with respect to any plan amendment--
                            ``(i) each participant in the plan, and
                            ``(ii) any beneficiary who is an alternate 
                        payee (within the meaning of section 414(p)(8)) 
                        under an applicable qualified domestic 
                        relations order (within the meaning of section 
                        414(p)(1)(A)),
                whose rate of future benefit accrual under the plan may 
                reasonably be expected to be significantly reduced by 
                such plan amendment.
                    ``(B) Exception for participants with less than 1 
                year of participation.--Such term shall not include a 
                participant who has less than 1 year of participation 
                (within the meaning of section 411(b)(4)) under the 
                plan as of the effective date of the plan amendment.
            ``(2) Applicable pension plan.--The term `applicable 
        pension plan' means--
                    ``(A) a defined benefit plan, or
                    ``(B) an individual account plan which is subject 
                to the funding standards of section 412.
        Such term shall not include a governmental plan (within the 
        meaning of section 414(d)), a church plan (within the meaning 
        of section 414(e)) with respect to which an election under 
        section 410(d) has not been made, or any other plan to which 
        section 204(h) of the Employee Retirement Income Security Act 
        of 1974 does not apply.
            ``(3) Early retirement.--A plan amendment which eliminates 
        or significantly reduces any early retirement benefit or 
        retirement-type subsidy (within the meaning of section 
        411(d)(6)(B)(i)) shall be treated as having the effect of 
        significantly reducing the rate of future benefit accrual.
    ``(g) New Technologies.--The Secretary may by regulations allow any 
notice under paragraph (1) or (2) of subsection (e) to be provided by 
using new technologies.''
            (2) Conforming amendment.--The table of sections for 
        chapter 43 of subtitle D is amended by adding at the end the 
        following new item:

                              ``Sec. 4980F. Failure to provide notice 
                                        of pension plan amendments 
                                        reducing benefit accruals.''
    (b) Amendment to ERISA.--Section 204(h) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054(h)) is amended to read as 
follows:
    ``(h)(1) If an applicable pension plan is amended so as to provide 
a significant reduction in the rate of future benefit accrual of 1 or 
more participants, the plan administrator shall, not later than the 
45th day before the effective date of the amendment, provide written 
notice to each applicable individual (and to each employee organization 
representing applicable individuals) which--
            ``(A) sets forth a summary of the plan amendment and the 
        effective date of the amendment,
            ``(B) includes a statement that the plan amendment is 
        expected to significantly reduce the rate of future benefit 
        accrual,
            ``(C) includes a description of the classes of employees 
        reasonably expected to be affected by the reduction in the rate 
        of future benefit accrual,
            ``(D) sets forth examples illustrating how the plan will 
        change benefits for such classes of employees,
            ``(E) if paragraph (2) applies to the plan amendment, 
        includes a notice that the plan administrator will provide a 
        benefit estimation tool kit described in paragraph (2)(B) to 
        each applicable individual no later than the date required 
        under paragraph (2)(A), and
            ``(F) includes a notice of each applicable individual's 
        right under Federal law to receive, and of the procedures for 
        requesting, an annual benefit statement.
    ``(2)(A) If a plan amendment results in the conversion of an 
applicable pension plan to a cash balance plan (within the meaning of 
section 204(g)(4)(D)), the plan administrator shall, not later than the 
15th day before the effective date of the amendment, provide a benefit 
estimation tool kit described in subparagraph (B) to each applicable 
individual. If such plan amendment occurs within 12 months of an event 
described in section 410(b)(6)(C) of the Internal Revenue Code of 1986, 
the plan administrator shall in no event be required to provide the 
benefit estimation tool kit to applicable individuals affected by the 
event before the date which is 24 months after such event.
    ``(B) The benefit estimation tool kit described in this 
subparagraph shall include the following information:
            ``(i) Sufficient information to enable an applicable 
        individual to estimate the individual's projected benefits 
        under the terms of the plan in effect both before and after the 
        adoption of the amendment.
            ``(ii) The formulas and actuarial assumptions necessary to 
        estimate under both such plan terms a single life annuity at 
        appropriate ages, and, when available, a lump sum distribution.
            ``(iii) The interest rate used to compute a lump sum 
        distribution and information as to whether the value of any 
        early retirement benefit or retirement-type subsidy (within the 
        meaning of subsection (g)(2)(A)) is included in the lump sum 
        distribution.
    ``(3) Any notice under paragraph (1) or (2) may be provided to a 
person designated, in writing, by the person to which it would 
otherwise be provided.
    ``(4)(A) In the case of any egregious failure to meet any 
requirement of this subsection with respect to any plan amendment, the 
provisions of the applicable pension plan shall be applied as if such 
plan amendment entitled all applicable individuals to the greater of--
            ``(i) the benefits to which they would have been entitled 
        without regard to such amendment, or
            ``(ii) the benefits under the plan with regard to such 
        amendment.
    ``(B) For purposes of subparagraph (A), there is an egregious 
failure to meet the requirements of this subsection if such failure is 
within the control of the plan sponsor and is--
            ``(i) an intentional failure (including any failure to 
        promptly provide the required notice or information after the 
        plan administrator discovers an unintentional failure to meet 
        the requirements of this subsection),
            ``(ii) a failure to provide most of the individuals with 
        most of the information they are entitled to receive under this 
        subsection, or
            ``(iii) a failure which is determined to be egregious under 
        regulations prescribed by the Secretary of the Treasury.
    ``(C) For excise tax on failure to meet requirements, see section 
4980F of the Internal Revenue Code of 1986.
    ``(5)(A) For purposes of this subsection, the term `applicable 
individual' means, with respect to any plan amendment--
            ``(i) each participant in the plan, and
            ``(ii) any beneficiary who is an alternate payee (within 
        the meaning of section 206(d)(3)(K)) under an applicable 
        qualified domestic relations order (within the meaning of 
        section 206(d)(3)(B)),
whose rate of future benefit accrual under the plan may reasonably be 
expected to be significantly reduced by such plan amendment.
    ``(B) Such term shall not include a participant who has less than 1 
year of participation (within the meaning of subsection (b)(4)) under 
the plan as of the effective date of the plan amendment.
    ``(6) For purposes of this subsection, the term `applicable pension 
plan' means--
            ``(A) a defined benefit plan, or
            ``(B) an individual account plan which is subject to the 
        funding standards of section 302.
    ``(7) For purposes of this subsection, a plan amendment which 
eliminates or significantly reduces any early retirement benefit or 
retirement-type subsidy (within the meaning of section 204(g)(2)(A)) 
shall be treated as having the effect of significantly reducing the 
rate of future benefit accrual.
    ``(8) The Secretary of the Treasury may by regulations allow any 
notice under this subsection to be provided by using new 
technologies.''

SEC. 522. PROTECTION OF PARTICIPANTS DURING CONVERSIONS TO CASH BALANCE 
              OR OTHER HYBRID DEFINED BENEFIT PLANS.

    (a) Amendments to Internal Revenue Code.--
            (1) In general.--Section 411(d)(6) (relating to accrued 
        benefit may not be decreased by amendment) is amended by adding 
        at the end the following new subparagraph:
                    ``(D) Treatment of conversions to cash balance or 
                other hybrid plans.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), an applicable plan amendment 
                        shall be treated as reducing the accrued 
                        benefit of a participant if, under the terms of 
                        the plan as in effect after the amendment, the 
                        accrued benefit of the participant may at any 
                        time be less than the sum of--
                                    ``(I) the participant's accrued 
                                benefit for years of service before the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect before the amendment and 
                                by not taking into account any early 
                                retirement benefit or retirement-type 
                                subsidy (within the meaning of 
                                subparagraph (B)(i)), plus
                                    ``(II) the participant's accrued 
                                benefit for years of service after the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect after the amendment.
                            ``(ii) Initial account balance.--If an 
                        applicable plan amendment provides that the 
                        accrued benefit initially credited to a 
                        participant's accumulation account (or its 
                        equivalent) on the effective date of the 
                        amendment is not less than the amount 
                        determined under section 417(e)(3)(C) as of 
                        such date, the plan shall not be treated as 
                        failing to meet the requirements of clause 
                        (i)(I) at any time after such date merely 
                        because of fluctuations in interest rates.
                            ``(iii) Applicable plan amendment.--For 
                        purposes of this subparagraph--
                                    ``(I) In general.--The term 
                                `applicable plan amendment' means an 
                                amendment to a defined benefit plan 
                                which has the effect of converting the 
                                plan to a cash balance plan.
                                    ``(II) Exception for certain plan 
                                amendments.--A plan amendment shall not 
                                be treated as an applicable plan 
                                amendment with respect to any 
                                participant who is eligible to continue 
                                to accrue benefits in the same manner 
                                as under the terms of the plan in 
                                effect before the amendment.
                                    ``(III) Special rule for 
                                coordinated benefits.--If the benefits 
                                of 2 or more defined benefit plans 
                                established or maintained by an 
                                employer are coordinated in such a 
                                manner as to have the effect of the 
                                adoption of an amendment described in 
                                subclause (I), the sponsor of the 
                                defined benefit plan or plans providing 
                                for such coordination shall be treated 
                                as having adopted such a plan amendment 
                                as of the date such coordination 
                                begins.
                                    ``(IV) Multiple amendments.--The 
                                Secretary shall issue regulations to 
                                prevent the avoidance of the purposes 
                                of this subparagraph through the use of 
                                2 or more plan amendments rather than a 
                                single amendment.
                            ``(iv) Cash balance plan.--For purposes of 
                        this subparagraph--
                                    ``(I) In general.--The term `cash 
                                balance plan' means a defined benefit 
                                plan under which the accrued benefit is 
                                determined as an amount other than an 
                                annual benefit commencing at normal 
                                retirement age.
                                    ``(II) Regulations to include 
                                similar or other hybrid plans.--The 
                                Secretary shall issue regulations which 
                                provide that a defined benefit plan (or 
                                any portion of such a plan) which has 
                                an effect similar to a plan described 
                                in subclause (I) shall be treated as a 
                                cash balance plan. Such regulations may 
                                provide that if a plan sponsor 
                                represents in communications to 
                                participants and beneficiaries that a 
                                plan amendment results in a plan being 
                                described in the preceding sentence, 
                                such plan shall be treated as a cash 
                                balance plan.
                            ``(v) Coordination with accrual and 
                        nondiscrimination rules.--If a plan amendment 
                        is not treated as an applicable plan amendment 
                        with respect to any participant because such 
                        participant is eligible to continue to accrue 
                        benefits in the same manner as under the terms 
                        of the plan in effect before the amendment, the 
                        Secretary shall prescribe regulations under 
                        which--
                                    ``(I) the plan shall be treated as 
                                meeting the requirements of 
                                subparagraph (A), (B), or (C) of 
                                section 411(b)(1) if such requirements 
                                are met separately with respect to each 
                                benefit accrual formula under the terms 
                                of the plan, and
                                    ``(II) the plan shall, subject to 
                                such terms and conditions as may be 
                                provided in such regulations, not be 
                                treated as failing to meet the 
                                requirements of section 401(a)(4) 
                                merely because only participants as of 
                                the effective date of the amendment are 
                                so eligible, except that this subclause 
                                shall only apply if the plan met the 
                                requirements of section 401(a)(4) under 
                                the terms of the plan as in effect 
                                before the amendment.''
            (2) Assumptions used in computing present value of accrued 
        benefit.--
                    (A) Benefits accrued before cash balance 
                conversion.--Section 417(e)(3) (relating to 
                determination of present value) is amended--
                            (i) by inserting ``or (C)'' after 
                        ``subparagraph (B)'' in subparagraph (A)(i), 
                        and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(C) Special rule for conversions to cash balance 
                plans.--For purposes of determining the amount 
                initially credited to the participant's accumulation 
                account (or its equivalent) under section 
                411(d)(6)(D)(ii) after adoption of an applicable plan 
                amendment (as defined in section 411(d)(6)(D)(iii)), 
                the present value of the accrued benefit of any 
                participant described in section 411(d)(6)(D)(i)(I) for 
                years of service before the effective date of the 
                amendment shall not be less than the greater of--
                            ``(i) the present value determined by using 
                        the applicable mortality table and the 
                        applicable interest rate under subparagraph (A) 
                        which are in effect under the plan on such 
                        effective date, or
                            ``(ii) the amount of the lump sum 
                        distribution payable as of such effective date, 
                        determined as if the individual were entitled 
                        to the distribution and under the terms of the 
                        plan as in effect immediately before such 
                        effective date, but not taking into account any 
                        early retirement benefit or retirement-type 
                        subsidy (within the meaning of section 
                        411(d)(6)(B)(i)).''
                    (B) Present value determination for cash balance 
                plans.--Section 417(e)(3), as amended by subparagraph 
                (A), is amended--
                            (i) by striking ``or (C)'' in subparagraph 
                        (A)(i) and inserting ``, (C), or (D)'', and
                            (ii) by adding at the end the following new 
                        subparagraph:
                    ``(D) Present value of accrued benefit under cash 
                balance plan.--Except as provided in regulations, in 
                the case of a cash balance plan (as defined in section 
                411(d)(6)(D)(iv)), the present value of the accrued 
                benefit of any participant shall, for purposes of 
                paragraphs (1) and (2), be equal to the balance in the 
                participant's accumulation account (or its equivalent) 
                as of the time the present value determination is being 
                made. This subparagraph shall not apply to any portion 
                of the accrued benefit described in section 
                411(d)(6)(D)(i)(I) except to the extent the plan meets 
                the requirements of section 411(d)(6)(D)(ii) with 
                respect to such portion.''
    (b) Amendments to ERISA.--
            (1) In general.--Section 204(g) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1054(g)) is amended by 
        adding at the end the following new paragraph:
    ``(4)(A) For purposes of paragraph (1), an applicable plan 
amendment shall be treated as reducing the accrued benefit of a 
participant if, under the terms of the plan as in effect after the 
amendment, the accrued benefit of the participant may at any time be 
less than the sum of--
            ``(i) the participant's accrued benefit for years of 
        service before the effective date of the amendment, determined 
        under the terms of the plan as in effect before the amendment 
        and by not taking into account any early retirement benefit or 
        retirement-type subsidy (within the meaning of paragraph 
        (2)(A)), plus
            ``(ii) the participant's accrued benefit for years of 
        service after the effective date of the amendment, determined 
        under the terms of the plan as in effect after the amendment.
    ``(B) If an applicable plan amendment provides that the accrued 
benefit initially credited to a participant's accumulation account (or 
its equivalent) on the effective date of the amendment is not less than 
the amount determined under section 205(g)(3)(C) as of such date, the 
plan shall not be treated as failing to meet the requirements of 
subparagraph (A)(i) at any time after such date merely because of 
fluctuations in interest rates.
    ``(C) For purposes of this paragraph--
            ``(i) The term `applicable plan amendment' means an 
        amendment to a defined benefit plan which has the effect of 
        converting the plan to a cash balance plan.
            ``(ii) A plan amendment shall not be treated as an 
        applicable plan amendment with respect to any participant who 
        is eligible to continue to accrue benefits in the same manner 
        as under the terms of the plan in effect before the amendment.
            ``(iii) If the benefits of 2 or more defined benefit plans 
        established or maintained by an employer are coordinated in 
        such a manner as to have the effect of the adoption of an 
        amendment described in clause (i), the sponsor of the defined 
        benefit plan or plans providing for such coordination shall be 
        treated as having adopted such a plan amendment as of the date 
        such coordination begins.
            ``(iv) The Secretary of the Treasury shall issue 
        regulations to prevent the avoidance of the purposes of this 
        paragraph through the use of 2 or more plan amendments rather 
        than a single amendment.
    ``(D) For purposes of this paragraph--
            ``(i) The term `cash balance plan' means a defined benefit 
        plan under which the accrued benefit is determined as an amount 
        other than an annual benefit commencing at normal retirement 
        age.
            ``(ii) The Secretary of the Treasury shall issue 
        regulations which provide that a defined benefit plan (or any 
        portion of such a plan) which has an effect similar to a plan 
        described in clause (i) shall be treated as a cash balance 
        plan. Such regulations may provide that if a plan sponsor 
        represents in communications to participants and beneficiaries 
        that a plan amendment results in a plan being described in the 
        preceding sentence, such plan shall be treated as a cash 
        balance plan.
    ``(E) If a plan amendment is not treated as an applicable plan 
amendment with respect to any participant because such participant is 
eligible to continue to accrue benefits in the same manner as under the 
terms of the plan in effect before the amendment, the Secretary shall 
prescribe regulations under which the plan shall be treated as meeting 
the requirements of subparagraph (A), (B), or (C) of section 204(b)(1) 
if such requirements are met separately with respect to each benefit 
accrual formula under the terms of the plan.''
            (2) Assumptions used in computing present value of accrued 
        benefit.--
                    (A) Benefits accrued before cash balance 
                conversion.--Section 205(g)(3) of such Act (29 U.S.C. 
                1055(g)(3)) is amended--
                            (i) by inserting ``or (C)'' after 
                        ``subparagraph (B)'' in subparagraph (A)(i), 
                        and
                            (ii) by adding at the end the following new 
                        subparagraph:
    ``(C) For purposes of determining the amount initially credited to 
the participant's accumulation account (or its equivalent) under 
section 204(g)(4)(B) after adoption of an applicable plan amendment (as 
defined in section 204(g)(4)(C)), the present value of the accrued 
benefit of any participant described in section 204(g)(4)(A)(i) for 
years of service before the effective date of the amendment shall not 
be less than the greater of--
            ``(i) the present value determined by using the applicable 
        mortality table and the applicable interest rate under 
        paragraph (1) which are in effect under the plan on such 
        effective date, or
            ``(ii) the amount of the lump sum distribution payable as 
        of such effective date, determined as if the individual were 
        entitled to the distribution and under the terms of the plan as 
        in effect immediately before such effective date, but not 
        taking into account any early retirement benefit or retirement-
        type subsidy (within the meaning of section 204(g)(2)(A)).''
                    (B) Interest rate assumption for cash balance 
                plans.--Section 205(g)(3) of such Act (29 U.S.C. 
                1055(g)(3)), as amended by subparagraph (A), is 
                amended--
                            (i) by striking ``or (C)'' in subparagraph 
                        (A)(i) and inserting ``, (C), or (D)'', and
                            (ii) by adding at the end the following new 
                        subparagraph:
    ``(D) Except as provided in regulations prescribed by the Secretary 
of the Treasury, in the case of a cash balance plan (as defined in 
section 204(g)(4)(D)), the present value of the accrued benefit of any 
participant shall, for purposes of paragraphs (1) and (2), be equal to 
the balance in the participant's accumulation account (or its 
equivalent) as of the time the present value determination is being 
made. This subparagraph shall not apply to any portion of the accrued 
benefit described in section 204(g)(4)(A)(i) except to the extent the 
plan meets the requirements of section 204(g)(4)(B) with respect to 
such portion.''
    (c) No Inference.--Nothing in the amendments made by this section 
shall be construed to infer the proper treatment of cash balance plans 
or conversions to cash balance plans under the laws in effect before 
such amendments or under laws not affected by such amendments.
    (d) Regulations Relating to Early Retirement Subsidies.--The 
Secretary of the Treasury or his delegate shall, not later than 1 year 
after the date of the enactment of this Act, issue the regulations 
relating to early retirement benefits or retirement-type subsidies 
described in section 411(d)(6)(B)(i) of the Internal Revenue Code of 
1986 and section 204(g)(2)(A) of the Employee Retirement Income 
Security Act of 1974.

SEC. 523. EFFECTIVE DATES.

    (a) In General.--The amendments made by this subtitle shall apply 
to plan amendments taking effect on or after the date of the enactment 
of this Act.
    (b) Special Rule for Collectively Bargained Plans.--In the case of 
a plan maintained pursuant to 1 or more collective bargaining 
agreements between employee representatives and 1 or more employers 
ratified by the date of the enactment of this Act, the amendments made 
by this subtitle shall not apply to plan amendments taking effect 
before the earlier of--
            (1) the later of--
                    (A) the date on which the last of such collective 
                bargaining agreements terminates (determined without 
                regard to any extension thereof on or after such date 
                of enactment), or
                    (B) January 1, 2001, or
            (2) January 1, 2003.
    (c) Special Notice Rules.--
            (1) In general.--The period for providing any notice 
        required by the amendments made by section 521 shall not end 
        before the date which is 3 months after the date of the 
        enactment of this Act.
            (2) Reasonable notice.--The amendments made by section 521 
        shall not apply to any plan amendment taking effect on or after 
        the date of enactment of this Act if, before September 5, 2000, 
        notice was provided to participants and beneficiaries adversely 
        affected by the plan amendment (or their representatives) which 
        was reasonably expected to notify them of the nature and 
        effective date of the plan amendment.

                 TITLE VI--REDUCING REGULATORY BURDENS

SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.

    (a) In General.--Paragraph (9) of section 412(c)(9) (relating to 
annual valuation) is amended to read as follows:
            ``(9) Annual valuation.--
                    ``(A) In general.--For purposes of this section, a 
                determination of experience gains and losses and a 
                valuation of the plan's liability shall be made not 
                less frequently than once every year, except that such 
                determination shall be made more frequently to the 
                extent required in particular cases under regulations 
                prescribed by the Secretary.
                    ``(B) Valuation date.--
                            ``(i) Current year.--Except as provided in 
                        clause (ii), the valuation referred to in 
                        subparagraph (A) shall be made as of a date 
                        within the plan year to which the valuation 
                        refers or within one month prior to the 
                        beginning of such year.
                            ``(ii) Election to use prior year 
                        valuation.--The valuation referred to in 
                        subparagraph (A) may be made as of a date 
                        within the plan year prior to the year to which 
                        the valuation refers if--
                                    ``(I) an election is in effect 
                                under this clause with respect to the 
                                plan, and
                                    ``(II) as of such date, the value 
                                of the assets of the plan are not less 
                                than 125 percent of the plan's current 
                                liability (as defined in paragraph 
                                (7)(B)).
                            ``(iii) Adjustments.--Information under 
                        clause (ii) shall, in accordance with 
                        regulations, be actuarially adjusted to reflect 
                        significant differences in participants.
                            ``(iv) Election.--An election under clause 
                        (ii), once made, shall be irrevocable without 
                        the consent of the Secretary.''.
    (b) Amendments to ERISA.--Paragraph (9) of section 302(c) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is 
amended--
            (1) by inserting ``(A)'' after ``(9)'', and
            (2) by adding at the end the following:
    ``(B)(i) Except as provided in clause (ii), if, for any plan year--
            ``(I) an election is in effect under this subparagraph with 
        respect to a plan, and
            ``(II) the assets of the plan are not less than 125 percent 
        of the plan's current liability (as defined in paragraph 
        (7)(B)), determined as of the valuation date for the preceding 
        plan year,
then this section shall be applied using the information available as 
of such valuation date.
    ``(ii)(I) Clause (i) shall not apply for more than 2 consecutive 
plan years and valuation shall be under subparagraph (A) with respect 
to any plan year to which clause (i) does not apply by reason of this 
subclause.
    ``(II) Clause (i) shall not apply to the extent that more frequent 
valuations are required under the regulations under subparagraph (A).
    ``(iii) Information under clause (i) shall, in accordance with 
regulations, be actuarially adjusted to reflect significant differences 
in participants.
    ``(iv) An election under this subparagraph, once made, shall be 
irrevocable without the consent of the Secretary of the Treasury.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2000.

SEC. 602. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF DIVIDEND 
              DEDUCTION.

    (a) In General.--Section 404(k)(2)(A) (defining applicable 
dividends) is amended by striking ``or'' at the end of clause (ii), by 
redesignating clause (iii) as clause (iv), and by inserting after 
clause (ii) the following new clause:
                            ``(iii) is, at the election of such 
                        participants or their beneficiaries--
                                    ``(I) payable as provided in clause 
                                (i) or (ii), or
                                    ``(II) paid to the plan and 
                                reinvested in qualifying employer 
                                securities, or''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 603. REPEAL OF TRANSITION RULE RELATING TO CERTAIN HIGHLY 
              COMPENSATED EMPLOYEES.

    (a) In General.--Paragraph (4) of section 1114(c) of the Tax Reform 
Act of 1986 is hereby repealed.
    (b) Effective Date.--The repeal made by subsection (a) shall apply 
to plan years beginning after December 31, 2000.

SEC. 604. EMPLOYEES OF TAX-EXEMPT ENTITIES.

    (a) In General.--The Secretary of the Treasury shall modify 
Treasury Regulations section 1.410(b)-6(g) to provide that employees of 
an organization described in section 403(b)(1)(A)(i) of the Internal 
Revenue Code of 1986 who are eligible to make contributions under 
section 403(b) of such Code pursuant to a salary reduction agreement 
may be treated as excludable with respect to a plan under section 
401(k) or (m) of such Code that is provided under the same general 
arrangement as a plan under such section 401(k), if--
            (1) no employee of an organization described in section 
        403(b)(1)(A)(i) of such Code is eligible to participate in such 
        section 401(k) plan or section 401(m) plan; and
            (2) 95 percent of the employees who are not employees of an 
        organization described in section 403(b)(1)(A)(i) of such Code 
        are eligible to participate in such plan under such section 
        401(k) or (m).
    (b) Effective Date.--The modification required by subsection (a) 
shall apply as of the same date set forth in section 1426(b) of the 
Small Business Job Protection Act of 1996.

SEC. 605. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED RETIREMENT 
              ADVICE.

    (a) In General.--Subsection (a) of section 132 (relating to 
exclusion from gross income) is amended by striking ``or'' at the end 
of paragraph (5), by striking the period at the end of paragraph (6) 
and inserting ``, or'', and by adding at the end the following new 
paragraph:
            ``(7) qualified retirement planning services.''.
    (b) Qualified Retirement Planning Services Defined.--Section 132 is 
amended by redesignating subsection (m) as subsection (n) and by 
inserting after subsection (l) the following:
    ``(m) Qualified Retirement Planning Services.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified retirement planning services' means any retirement 
        planning advice or information provided to an employee and his 
        spouse by an employer maintaining a qualified employer plan.
            ``(2) Nondiscrimination rule.--Subsection (a)(7) shall 
        apply in the case of highly compensated employees only if such 
        services are available on substantially the same terms to each 
        member of the group of employees normally provided education 
        and information regarding the employer's qualified employer 
        plan.
            ``(3) Qualified employer plan.--For purposes of this 
        subsection, the term `qualified employer plan' means a plan, 
        contract, pension, or account described in section 
        219(g)(5).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 606. REPORTING SIMPLIFICATION.

    (a) Simplified Annual Filing Requirement for Owners and Their 
Spouses.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the requirements for filing annual returns with respect to one-
        participant retirement plans to ensure that such plans with 
        assets of $250,000 or less as of the close of the plan year 
        need not file a return for that year.
            (2) One-participant retirement plan defined.--For purposes 
        of this subsection, the term ``one-participant retirement 
        plan'' means a retirement plan that--
                    (A) on the first day of the plan year--
                            (i) covered only the employer (and the 
                        employer's spouse) and the employer owned the 
                        entire business (whether or not incorporated); 
                        or
                            (ii) covered only one or more partners (and 
                        their spouses) in a business partnership 
                        (including partners in an S or C corporation);
                    (B) meets the minimum coverage requirements of 
                section 410(b) of the Internal Revenue Code of 1986 
                without being combined with any other plan of the 
                business that covers the employees of the business;
                    (C) does not provide benefits to anyone except the 
                employer (and the employer's spouse) or the partners 
                (and their spouses);
                    (D) does not cover a business that is a member of 
                an affiliated service group, a controlled group of 
                corporations, or a group of businesses under common 
                control; and
                    (E) does not cover a business that leases 
                employees.
            (3) Other definitions.--Terms used in paragraph (2) which 
        are also used in section 414 of the Internal Revenue Code of 
        1986 shall have the respective meanings given such terms by 
        such section.
    (b) Effective Date.--The provisions of this section shall take 
effect on January 1, 2001.

SEC. 607. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION SYSTEM.

    The Secretary of the Treasury shall continue to update and improve 
the Employee Plans Compliance Resolution System (or any successor 
program) giving special attention to--
            (1) increasing the awareness and knowledge of small 
        employers concerning the availability and use of the program;
            (2) taking into account special concerns and circumstances 
        that small employers face with respect to compliance and 
        correction of compliance failures;
            (3) extending the duration of the self-correction period 
        under the Administrative Policy Regarding Self-Correction for 
        significant compliance failures;
            (4) expanding the availability to correct insignificant 
        compliance failures under the Administrative Policy Regarding 
        Self-Correction during audit; and
            (5) assuring that any tax, penalty, or sanction that is 
        imposed by reason of a compliance failure is not excessive and 
        bears a reasonable relationship to the nature, extent, and 
        severity of the failure.

SEC. 608. REPEAL OF THE MULTIPLE USE TEST.

    (a) In General.--Paragraph (9) of section 401(m) is amended to read 
as follows:
            ``(9) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection and subsection (k), including regulations 
        permitting appropriate aggregation of plans and 
        contributions.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to years beginning after December 31, 2000.

SEC. 609. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND LINE OF 
              BUSINESS RULES.

    (a) Nondiscrimination.--
            (1) In general.--The Secretary of the Treasury shall, by 
        regulation, provide that a plan shall be deemed to satisfy the 
        requirements of section 401(a)(4) of the Internal Revenue Code 
        of 1986 if such plan satisfies the facts and circumstances test 
        under section 401(a)(4) of such Code, as in effect before 
        January 1, 1994, but only if--
                    (A) the plan satisfies conditions prescribed by the 
                Secretary to appropriately limit the availability of 
                such test; and
                    (B) the plan is submitted to the Secretary for a 
                determination of whether it satisfies such test.
        Subparagraph (B) shall only apply to the extent provided by the 
        Secretary.
            (2) Effective dates.--
                    (A) Regulations.--The regulation required by 
                paragraph (1) shall apply to years beginning after 
                December 31, 2001.
                    (B) Conditions of availability.--Any condition of 
                availability prescribed by the Secretary under 
                paragraph (1)(A) shall not apply before the first year 
                beginning not less than 120 days after the date on 
                which such condition is prescribed.
    (b) Coverage Test.--
            (1) In general.--Section 410(b)(1) (relating to minimum 
        coverage requirements) is amended by adding at the end the 
        following:
                    ``(D) In the case that the plan fails to meet the 
                requirements of subparagraphs (A), (B) and (C), the 
                plan--
                            ``(i) satisfies subparagraph (B), as in 
                        effect immediately before the enactment of the 
                        Tax Reform Act of 1986,
                            ``(ii) is submitted to the Secretary for a 
                        determination of whether it satisfies the 
                        requirement described in clause (i), and
                            ``(iii) satisfies conditions prescribed by 
                        the Secretary by regulation that appropriately 
                        limit the availability of this subparagraph.
                Clause (ii) shall apply only to the extent provided by 
                the Secretary.''.
            (2) Effective dates.--
                    (A) In general.--The amendment made by paragraph 
                (1) shall apply to years beginning after December 31, 
                2001.
                    (B) Conditions of availability.--Any condition of 
                availability prescribed by the Secretary under 
                regulations prescribed by the Secretary under section 
                410(b)(1)(D) of the Internal Revenue Code of 1986 shall 
                not apply before the first year beginning not less than 
                120 days after the date on which such condition is 
                prescribed.
    (c) Line of Business Rules.--The Secretary of the Treasury shall, 
on or before December 31, 2001, modify the existing regulations issued 
under section 414(r) of the Internal Revenue Code of 1986 in order to 
expand (to the extent that the Secretary determines appropriate) the 
ability of a pension plan to demonstrate compliance with the line of 
business requirements based upon the facts and circumstances 
surrounding the design and operation of the plan, even though the plan 
is unable to satisfy the mechanical tests currently used to determine 
compliance.

SEC. 610. EXTENSION TO ALL GOVERNMENTAL PLANS OF MORATORIUM ON 
              APPLICATION OF CERTAIN NONDISCRIMINATION RULES APPLICABLE 
              TO STATE AND LOCAL PLANS.

    (a) In General.--
            (1) Subparagraph (G) of section 401(a)(5) and subparagraph 
        (H) of section 401(a)(26) are each amended by striking 
        ``section 414(d))'' and all that follows and inserting 
        ``section 414(d)).''.
            (2) Subparagraph (G) of section 401(k)(3) and paragraph (2) 
        of section 1505(d) of the Taxpayer Relief Act of 1997 are each 
        amended by striking ``maintained by a State or local government 
        or political subdivision thereof (or agency or instrumentality 
        thereof)''.
    (b) Conforming Amendments.--
            (1) The heading for subparagraph (G) of section 401(a)(5) 
        is amended to read as follows: ``Governmental plans''.
            (2) The heading for subparagraph (H) of section 401(a)(26) 
        is amended to read as follows: ``Exception for governmental 
        plans''.
            (3) Subparagraph (G) of section 401(k)(3) is amended by 
        inserting ``Governmental plans.--'' after ``(G)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2000.

SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.

    (a) Expansion of Period.--
            (1) In general.--Subparagraph (A) of section 417(a)(6) is 
        amended by striking ``90-day'' and inserting ``180-day''.
            (2) Modification of regulations.--The Secretary of the 
        Treasury shall modify the regulations under sections 402(f), 
        411(a)(11), and 417 of the Internal Revenue Code of 1986 to 
        substitute ``180 days'' for ``90 days'' each place it appears 
        in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c), 
        and 1.417(e)-1(b).
            (3) Effective date.--The amendment made by paragraph (1) 
        and the modifications required by paragraph (2) shall apply to 
        years beginning after December 31, 2000.
    (b) Consent Regulation Inapplicable to Certain Distributions.--
            (1) In general.--The Secretary of the Treasury shall modify 
        the regulations under section 411(a)(11) of the Internal 
        Revenue Code of 1986 to provide that the description of a 
        participant's right, if any, to defer receipt of a distribution 
        shall also describe the consequences of failing to defer such 
        receipt.
            (2) Effective date.--The modifications required by 
        paragraph (1) shall apply to years beginning after December 31, 
        2000.
    (c) Disclosure of Optional Forms of Benefits.--
            (1) Amendment of internal revenue code.--Section 417(a)(3) 
        (relating to plan to provide written explanation) is amended by 
        adding at the end the following:
                    ``(C) Explanation of optional forms of benefits.--
                            ``(i) In general.--If--
                                    ``(I) a plan provides optional 
                                forms of benefits, and
                                    ``(II) the present values of such 
                                forms of benefits are not actuarially 
                                equivalent as of the annuity starting 
                                date,
                        then each written explanation required to be 
                        provided under subparagraph (A) shall include 
                        the information described in clause (ii).
                            ``(ii) Information.--A plan to which this 
                        subparagraph applies shall include sufficient 
                        information (as determined in accordance with 
                        regulations prescribed by the Secretary) to 
                        allow the participant to understand the 
                        differences in the present values of the 
                        optional forms of benefits provided by the plan 
                        and the effect the participant's election as to 
                        the form of benefit will have on the value of 
                        the benefits available under the plan. Any such 
                        information shall be provided in a manner 
                        calculated to be reasonably understood by the 
                        average plan participant.''
            (2) Amendment of erisa.--Section 205(c)(3) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)(3)) 
        is amended by adding at the end the following:
    ``(C)(i) If--
            ``(I) a plan provides optional forms of benefits, and
            ``(II) the present values of such forms of benefits are not 
        actuarially equivalent as of the annuity starting date,
then such plan shall include the information described in clause (ii) 
with each written explanation required to be provided under 
subparagraph (A).
    ``(ii) A plan to which this subparagraph applies shall include 
sufficient information (as determined in accordance with regulations 
prescribed by the Secretary of the Treasury) to allow the participant 
to understand the differences in the present values of the optional 
forms of benefits provided by the plan and the effect the participant's 
election as to the form of benefit will have on the value of the 
benefits available under the plan. Any such information shall be 
provided in a manner calculated to be reasonably understood by the 
average plan participant.''
            (3) Effective date.--The amendments made by this subsection 
        shall apply to years beginning after December 31, 2000.

SEC. 612. ANNUAL REPORT DISSEMINATION.

    (a) In General.--Section 104(b)(3) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is amended by 
striking ``shall furnish'' and inserting ``shall make available for 
examination (and, upon request, shall furnish)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to reports for years beginning after December 31, 1999.

SEC. 613. TECHNICAL CORRECTIONS TO SAVER ACT.

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

SEC. 614. STUDIES.

    (a) Report on Pension Coverage.--Not later than 5 years after the 
date of the enactment of this Act, the Secretary of the Treasury shall 
submit a report to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate a report on 
the effect of the provisions of the Retirement Security and Savings Act 
of 2000 on pension coverage, including--
            (1) any expansion of coverage for low- and middle-income 
        workers;
            (2) levels of pension benefits;
            (3) quality of pension coverage;
            (4) worker's access to and participation in plans; and
            (5) retirement security.
    (b) Study of Pre-retirement Use of Benefits.--
            (1) In general.--The Secretary of the Treasury shall 
        conduct a study of--
                    (A) current tax provisions allowing individuals to 
                access individual retirement plans and qualified 
                retirement plan benefits of such individual prior to 
                retirement, including an analysis of--
                            (i) the extent of use of such current 
                        provisions by individuals; and
                            (ii) the extent to which such provisions 
                        undermine the goal of accumulating adequate 
                        resources for retirement; and
                    (B) the types of investment decisions made by 
                individual retirement plan beneficiaries and 
                participants in self-directed qualified retirement 
                plans, including an analysis of--
                            (i) current restrictions on investments; 
                        and
                            (ii) the extent to which additional 
                        restrictions on investments would facilitate 
                        the accumulation of adequate income for 
                        retirement.
            (2) Report.--Not later than January 1, 2002, the Secretary 
        of the Treasury shall submit a report to the Committee on Ways 
        and Means of the House of Representatives and the Committee on 
        Finance of the Senate containing the results of the study 
        conducted under paragraph (1) and any recommendations.

                       TITLE VII--PLAN AMENDMENTS

SEC. 701. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment, such plan or contract shall be treated as being operated in 
accordance with the terms of the plan during the period described in 
subsection (b)(2)(A).
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this Act, or 
                pursuant to any regulation issued under this Act, and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2003.
        In the case of a governmental plan (as defined in section 
        414(d) of the Internal Revenue Code of 1986), this paragraph 
        shall be applied by substituting ``2005'' for ``2003''.
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan); and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (or, if earlier, the date the 
                        plan or contract amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect; and
                    (B) such plan or contract amendment applies 
                retroactively for such period.

                TITLE VIII--COMPLIANCE WITH BUDGET ACT.

SEC. 801. COMPLIANCE WITH BUDGET ACT.

    The amendments made by this Act shall not apply to any taxable year 
beginning after December 31, 2004.
            Amend the title so as to read: ``An Act to provide for 
        reconciliation pursuant to section 104(2) of the concurrent 
        resolution on the budget for fiscal year 2001.''.
                                                       Calendar No. 802

106th CONGRESS

  2d Session

                               H. R. 1102

                          [Report No. 106-411]

_______________________________________________________________________

                                 AN ACT

         To provide for pension reform, and for other purposes.

_______________________________________________________________________

                           September 13, 2000

        Reported with an amendment and an amendment to the title
```