II 

113TH CONGRESS 

1ST SESSION S. 1270 

To amend the Internal Revenue Code of 1986 to provide for reform of 

public and private pension plans, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 9, 2013 

Mr. HATCH introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for reform of public and private pension plans, and for 

other purposes. 

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

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

4 TABLE OF CONTENTS. 

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

6 ‘‘Secure Annuities for Employee Retirement Act of 2013’’ 

7 or the ‘‘SAFE Retirement Act of 2013’’. 

8 (b) AMENDMENT OF 1986 CODE.—Except as other9 wise expressly provided, whenever in this Act an amend10 ment or repeal is expressed in terms of an amendment 


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

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986. 

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

5 as follows: 

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

TITLE I—PUBLIC PENSION REFORM 

Sec. 101. Annuity accumulation retirement plans of employees of State and 

local governments. 

Sec. 102. Study of Federal pension systems. 

TITLE II—PRIVATE PENSION REFORM 

Subtitle A—Enhanced Pension Plan Coverage 

Sec. 201. Starter 401(k) plans for employers with no retirement plan. 

Sec. 202. Increase in credit limitation for small employer pension plan startup 

costs. 

Sec. 203. Employers allowed to replace simple retirement accounts with safe 

harbor 401(k) plans during a year. 

Sec. 204. Modification of automatic enrollment safe harbor. 

Sec. 205. Plan adopted by filing due date for year may be treated as in effect 

as of close of year. 

Sec. 206. Rules relating to election of safe harbor 401(k) status. 

Sec. 207. Modifications of rules relating to multiple employer defined contribution plans. 

Subtitle B—Pension Plan and Retirement Savings Simplification 

Sec. 211. Modifications of deadlines for adopting pension plan amendments. 

Sec. 212. Termination of application of top-heavy plan rules. 

Sec. 213. Amendments to safe harbor 401(k) plans during plan year. 

Sec. 214. Modification of rules relating to hardship withdrawals from cash or 

deferred arrangements. 

Sec. 215. Individual may roll over insurance contract into individual retirement 

account. 

Sec. 216. Forfeitures allocated to participant’s account may be treated as employer matching or nonelective contributions. 

Sec. 217. Time for providing explanation of qualified preretirement survivor annuity. 

Sec. 218. Modifications of additional participation requirements for defined 

benefit plans. 

Sec. 219. Treatment of custodial accounts on termination of section 403(b) 

plans. 

Sec. 220. Secure deferral arrangements. 

Sec. 221. Portability of lifetime income options. 

Sec. 222. Consolidation of defined contribution plan notices. 

Sec. 223. Performance benchmarks for asset allocation funds. 


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Subtitle C—Longevity Reforms 

Sec. 231. Modification of required minimum distribution rules where portion of 

benefit of defined contribution plan is annuitized. 

Sec. 232. Updating of mortality tables for minimum required distributions. 

Sec. 233. Minimum required distributions may be rolled over into Roth IRAs. 

Sec. 234. Transfer of minimum survivor annuity requirements from plan sponsors to annuity providers. 

Sec. 235. Expansion of Employee Plans Compliance Resolution System. 

Subtitle D—Modifications to the Employee Retirement Income Security Act 

of 1974 

Sec. 241. Electronic communication of pension plan information. 

Sec. 242. Modification of deadlines for summary plan description updates. 

Sec. 243. Modification of small plan simplified reporting requirements. 

Sec. 244. Fiduciary requirement regarding selection of annuity provider and 

annuity contract. 

TITLE III—INDIVIDUAL RETIREMENT INVESTMENT ADVICE 

REFORM 

Sec. 301. Transfer to Secretary of the Treasury of authorities regarding individual retirement plans. 

1 TITLE I—PUBLIC PENSION 

2 REFORM 

3 SEC. 101. ANNUITY ACCUMULATION RETIREMENT PLANS 

4 OF EMPLOYEES OF STATE AND LOCAL GOV5 ERNMENTS. 

6 (a) IN GENERAL.—Part I of subchapter D of chapter 

7 1 is amended by inserting after subpart E the following 

8 new subpart: 

9 ‘‘Subpart F—Annuity Accumulation Retirement 

10 Plans for State and Local Government Employees. 

‘‘Sec. 420A. Annuity accumulation retirement plans. 

11 ‘‘SEC. 420A. ANNUITY ACCUMULATION RETIREMENT PLANS. 

12 ‘‘(a) ANNUITY ACCUMULATION RETIREMENT

13 PLANS.—For purposes of this subpart— 


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1 ‘‘(1) IN GENERAL.—The term ‘annuity accumu2 lation retirement plan’ means a State or local gov3 ernmental retirement plan— 

4 ‘‘(A) which provides for the purchase, not 

5 less frequently than annually, of a qualified in6 dividual deferred fixed income annuity contract 

7 for each participant which provides benefits 

8 based solely on the contributions by an em9 ployer to an annuity provider and the actuarial 

10 assumptions specified in the annuity contract, 

11 and 

12 ‘‘(B) which provides that— 

13 ‘‘(i) no contributions may be made 

14 under the plan other than contributions 

15 described in subsection (c), 

16 ‘‘(ii) contributions pursuant to the 

17 plan on behalf of any eligible employee for 

18 any plan year, whether made annually or 

19 more frequently, are required to be paid 

20 not later than 90 days after the close of 

21 the plan year to an annuity provider to 

22 purchase a qualified individual deferred 

23 fixed income annuity contract for the em24 ployee, and 


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1 ‘‘(iii) no benefits are provided by the 

2 employer under the plan other than the 

3 purchase of qualified individual deferred 

4 fixed income annuity contracts for eligible 

5 employees. 

6 Subject to the provisions of subsection (d)(3), noth7 ing in subparagraph (B)(iii) shall prohibit an em8 ployer from establishing or maintaining a defined 

9 contribution plan or defined benefit plan or pro10 viding any form of employee welfare benefit sepa11 rately from the plan. 

12 ‘‘(2) PLAN STRUCTURE.—A plan will not be 

13 treated as an annuity accumulation retirement plan 

14 unless— 

15 ‘‘(A) benefits under the plan are limited to 

16 a monthly payment for the life of the partici17 pant, commencing at the applicable age under 

18 subsection (b)(1)(B), as provided under the 

19 qualified individual deferred fixed income annu20 ity contract purchased with the employer con21 tributions described in subsection (c) and issued 

22 to the participant, and 

23 ‘‘(B) the plan does not accumulate assets 

24 in trust or otherwise, and the employer has no 

25 ownership interest in any qualified individual 


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1 deferred fixed income annuity contract issued to 

2 a participant. 

3 ‘‘(3) REQUIREMENTS FOR ANNUITY CONTRACT

4 PURCHASING PROCESS.— 

5 ‘‘(A) IN GENERAL.—A plan will not be 

6 treated as an annuity accumulation retirement 

7 plan unless the plan provides that individual de8 ferred fixed income annuity contracts will be 

9 purchased through a process by which, with re10 spect to each purchase under paragraph (1)(A), 

11 the plan administrator— 

12 ‘‘(i) obtains competitive bids pursuant 

13 to a formal, public procurement process 

14 authorized under State law which requires 

15 institutional pricing on a group contract 

16 basis from multiple annuity providers 

17 verified by the applicable State insurance 

18 regulator as properly licensed to meet the 

19 specifications in the procurement request, 

20 ‘‘(ii) allocates its purchases of indi21 vidual deferred fixed income annuity con22 tracts among the providers selected under 

23 clause (i), with the largest allocation (not 

24 to exceed 75 percent of the aggregate pur25 chase amount of all such contracts) purVerDate Mar 15 2010 00:07 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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1 chased from the annuity provider submit2 ting the superior bid, 

3 ‘‘(iii) ensures, to the maximum extent 

4 possible, that each employee’s entire inter5 est under an individual deferred fixed in6 come annuity contract would be fully guar7 anteed by a State guaranty association 

8 under applicable State law, regulations, 

9 and industry standards in effect as of the 

10 date of issuance of the contract, and 

11 ‘‘(iv) ensures, to the maximum extent 

12 possible, that each employee’s entire inter13 est under all contracts provided under the 

14 plan by any single annuity provider (and 

15 any related parties, within the meaning of 

16 such term as applied by the State guaranty 

17 association) does not exceed the maximum 

18 amount which would be covered by a State 

19 guaranty association described in clause 

20 (iii) in case of the insolvency of the pro21 vider. 

22 ‘‘(B) PROHIBITION ON PROVIDING BEN23 EFIT IN EXCHANGE FOR SELECTION.—An an24 nuity provider shall not be treated as meeting 

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1 graph (A)(i) if such provider, or any related 

2 party to (within the meaning of such term as 

3 applied by the State guaranty association) or 

4 agent of such provider, on their own or on an5 other’s behalf, provides anything of value to any 

6 employee of a State or local government entity, 

7 or agency or instrumentality thereof, or to a 

8 plan administrator, in connection with the bid9 ding process or the annuity purchase process 

10 described in subparagraph (A). 

11 ‘‘(C) COMPLIANCE SAFE HARBOR.—A plan 

12 shall be deemed to meet the requirements of 

13 subparagraph (A) if the plan administrator ob14 tains a determination in writing from the Office 

15 of Domestic Finance, Department of the Treas16 ury, that such plan meets such requirements. 

17 Authority to issue such a determination shall 

18 not be delegated to any entity outside of the Of19 fice of Domestic Finance. 

20 ‘‘(4) GENERAL EXEMPTION FROM PENSION

21 PLAN REQUIREMENTS.—Notwithstanding any other 

22 provision of this subchapter— 

23 ‘‘(A) except as provided in this section, no 

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1 ment plan shall apply to an annuity accumula2 tion retirement plan, and 

3 ‘‘(B) for purposes of this title other than 

4 any such requirements, an annuity accumula5 tion retirement plan shall be treated as a de6 fined benefit plan which meets the requirements 

7 of section 401(a). 

8 ‘‘(b) QUALIFIED INDIVIDUAL DEFERRED FIXED IN9 COME ANNUITY CONTRACT.—For purposes of this sub10 part, the term ‘qualified individual deferred fixed income 

11 annuity contract’ means, with respect to an employee for 

12 any plan year, an individual annuity contract issued by 

13 an annuity provider— 

14 ‘‘(1) under the terms of which— 

15 ‘‘(A) the monthly annuity payments during 

16 the period described in subparagraph (B) are in 

17 equal installments and are fixed at the time of 

18 purchase, and 

19 ‘‘(B) except as provided in subsection (e), 

20 the entire interest of the employee in the con21 tract will be distributed in the form of monthly 

22 annuity payments under a single life annuity, 

23 beginning on the later of— 

24 ‘‘(i) the date the employee attains 

25 age— 


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1 ‘‘(I) 57, in the case of a public 

2 safety employee, and 

3 ‘‘(II) 67, in the case of any other 

4 employee, or 

5 ‘‘(ii) in the case of a contract pur6 chased after the date the employee attains 

7 such age, the 1st day of the 1st calendar 

8 year beginning after the calendar year in 

9 which such contract was purchased, 

10 ‘‘(2) the purchase price of which is equal to the 

11 contributions described in subsection (c) with respect 

12 to the employee for the plan year in which it is pur13 chased, 

14 ‘‘(3) under which the employee’s rights are non15 forfeitable, 

16 ‘‘(4) under which no loan may be made with re17 spect to any portion of any interest in the contract, 

18 and 

19 ‘‘(5) except as provided in subsection (e), no 

20 portion of any interest in the contract may be as21 signed, alienated, or pledged as collateral. 

22 ‘‘(c) CONTRIBUTION REQUIREMENTS AND LIMITA23 TIONS.—For purposes of subsection (a)(1)(B)— 

24 ‘‘(1) IN GENERAL.—The plan must provide that 

25 the only contributions which may be made pursuant 


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1 to the plan for any plan year are nonelective con2 tributions (within the meaning of section 

3 401(k)(11)(B)(ii)) made by the employer for the 

4 purchase of qualified individual deferred fixed in5 come annuity contracts which are— 

6 ‘‘(A) made on behalf of each eligible em7 ployee for the plan year, and 

8 ‘‘(B) equal to a percentage of the employ9 ee’s compensation which (except as provided in 

10 this paragraph) is determined not later than 

11 the start of the plan year. 

12 An employer shall not be treated as failing to meet 

13 the requirements of this paragraph merely because 

14 the plan allows the employer to elect to reduce the 

15 percentage under subparagraph (B), or not to make 

16 any contributions pursuant to the plan, for any pe17 riod for all employees, and the employer so elects not 

18 later than the start of the plan year. 

19 ‘‘(2) LIMITS BASED ON COMPENSATION.— 

20 ‘‘(A) IN GENERAL.—The compensation (as 

21 determined for purposes of section 415(c)) 

22 taken into account under paragraph (1)(B) 

23 with respect to an employee for any year shall 

24 not exceed the limitation in effect for such year 

25 under section 401(a)(17). 


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1 ‘‘(B) PERCENTAGE LIMITATION.— 

2 ‘‘(i) IN GENERAL.—The percentage 

3 under paragraph (1)(B) for any period 

4 shall not exceed— 

5 ‘‘(I) 30 percent in the case of a 

6 public safety employee, or 

7 ‘‘(II) 20 percent in the case of 

8 any other employee. 

9 ‘‘(ii) ELECTION OF HIGHER PERCENT10 AGE FOR EMPLOYEES 50 OR OLDER.—A 

11 plan may elect for any plan year to provide 

12 a higher percentage under paragraph 

13 (1)(B) than that specified under clause (i) 

14 for all employees who have attained age 50 

15 before the beginning of a plan year, except 

16 that such percentage may not exceed— 

17 ‘‘(I) 35 percent in the case of a 

18 public safety employee who has at19 tained such age, or 

20 ‘‘(II) 25 percent in the case of 

21 any other employee who has attained 

22 such age. 

23 ‘‘(C) AGGREGATION RULE.—All plans of 

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1 poses of section 415 shall be treated as a single 

2 plan for purposes of this paragraph. 

3 ‘‘(d) TAX TREATMENT OF ANNUITY ACCUMULATION

4 RETIREMENT PLANS.— 

5 ‘‘(1) TAXATION OF ELIGIBLE EMPLOYEE.—The 

6 amount actually paid to a distributee under a quali7 fied individual deferred fixed income annuity con8 tract shall be taxable to the distributee under section 

9 72. 

10 ‘‘(2) TREATMENT OF EMPLOYER CONTRIBU11 TIONS.—Contributions made by an employer for the 

12 purchase of a qualified individual deferred fixed in13 come annuity contract under an annuity accumula14 tion retirement plan shall be excluded from the gross 

15 income of the employee. 

16 ‘‘(3) INCLUSION IN INCOME OF EXCESS CON17 TRIBUTIONS OR CONTRIBUTIONS FOR PARTICIPANTS

18 IN ANOTHER DEFINED BENEFIT PLAN OF AN EM19 PLOYER.— 

20 ‘‘(A) EXCESS CONTRIBUTIONS.—Except as 

21 provided in subparagraph (B), if— 

22 ‘‘(i) contributions are made for any 

23 plan year by an employer on behalf of an 

24 employee in excess of the limit determined 

25 after application of subsection (c)(2), the 


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1 employee shall include in gross income an 

2 amount equal to such excess, or 

3 ‘‘(ii) an employee for whom such con4 tributions are made for any plan year ac5 crues benefits (for any period of service for 

6 which such contributions were made) 

7 under any other defined benefit plan of the 

8 employer which is not an annuity accumu9 lation retirement plan, the employee shall 

10 include in gross income an amount equal 

11 to such contributions. 

12 ‘‘(B) EXCEPTION FOR PREMIUMS RE13 FUNDED.—Subparagraph (A) shall not apply 

14 with respect to contributions on behalf of an 

15 employee for any plan year if, not later than 6 

16 months after the last day of the plan year, the 

17 contributions described in subparagraph (A) 

18 used to purchase a qualified individual deferred 

19 fixed income annuity contract for the employee 

20 are refunded to the employer. 

21 ‘‘(C) TAXABLE YEAR OF INCLUSION.—Any 

22 amount under subparagraph (A) shall be in23 cludible in gross income of the employee for the 

24 taxable year which includes the date which is 6 

25 months after the last day of the plan year. 


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1 ‘‘(D) INVESTMENT IN THE CONTRACT.— 

2 Any amount included in gross income shall not 

3 be treated as investment in the contract for 

4 purposes of section 72. 

5 ‘‘(e) CERTAIN JUDGMENTS AND SETTLEMENTS.— 

6 Paragraphs (1)(B) and (5) of subsection (b) shall not 

7 apply to any offset of an employee’s benefits payable under 

8 an annuity contract— 

9 ‘‘(1) pursuant to— 

10 ‘‘(A) the enforcement of a levy under sec11 tion 6331 or the collection by the United States 

12 of a judgment resulting from an unpaid tax as13 sessment, or 

14 ‘‘(B) the enforcement of a fine imposed as 

15 part of a criminal sentence under subchapter C 

16 of chapter 227 of title 18, United States Code, 

17 or an order of restitution made pursuant to 

18 such title, or 

19 ‘‘(2) to the extent required under any State tax, 

20 criminal, or domestic relations law. 

21 ‘‘(f) DEFINITIONS.— 

22 ‘‘(1) STATE OR LOCAL GOVERNMENTAL RETIRE23 MENT PLAN.—For purposes of this section, the term 

24 ‘State or local governmental retirement plan’ means 

25 a governmental plan providing for the deferral of 


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1 compensation which is established and maintained 

2 for its employees by a State, a political subdivision 

3 of a State, or an agency or instrumentality of a 

4 State or a political subdivision of a State. 

5 ‘‘(2) GENERAL DEFINITIONS.—For purposes of 

6 this subchapter— 

7 ‘‘(A) ELIGIBLE EMPLOYEE.—The term ‘eli8 gible employee’ means, with respect to any 

9 State or local governmental retirement plan, 

10 any officer or employee (other than a con11 tractor) eligible to participate in the plan. 

12 ‘‘(B) ANNUITY PROVIDER.—The term ‘an13 nuity provider’ means any company which is li14 censed to do business as a life insurance com15 pany under the laws of the State in which a 

16 qualified individual deferred fixed income annu17 ity contract to which this subchapter applies is 

18 to be issued. 

19 ‘‘(C) PUBLIC SAFETY EMPLOYEE.—The 

20 term ‘public safety employee’ means any em21 ployee of a State or political subdivision of a 

22 State who provides police protection, fire23 fighting services, or emergency medical services 

24 for any area within the jurisdiction of such 

25 State or political subdivision.’’. 


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1 (b) LIMITATION ON 403(a) ANNUITY PLANS OF

2 STATE AND LOCAL GOVERNMENTS.— 

3 (1) IN GENERAL.—Subsection (a) of section 

4 403 is amended by adding at the end the following 

5 new paragraph: 

6 ‘‘(6) EXCLUSION OF CERTAIN STATE AND

7 LOCAL GOVERNMENTAL PLANS.—This subsection 

8 shall not apply in the case of annuity contracts pur9 chased under a State or local governmental retire10 ment plan (as defined in section 420A(f)) which was 

11 established after July 8, 2013.’’. 

12 (2) EFFECTIVE DATE.—The amendment made 

13 by this subsection shall apply to plans established 

14 after July 8, 2013. 

15 (c) FICA EXEMPTION.—Paragraph (5) of section 

16 3121(a) is amended by striking ‘‘or’’ at the end of sub17 paragraph (H), by striking the semicolon at the end of 

18 subparagraph (I) and inserting ‘‘, or’’, and by adding at 

19 the end the following new subparagraph: 

20 ‘‘(J) under an annuity accumulation retire21 ment plan for the purchase of annuity contracts 

22 under section 420A;’’. 

23 (d) INCLUSION OF AMOUNT FOR THE PURCHASE OF

24 ANNUITY CONTRACTS ON W–2.—Subsection (a) of section 

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1 graph (13), by striking the period at the end of paragraph 

2 (14)(B) and inserting ‘‘, and’’, and by inserting after 

3 paragraph (14) the following new paragraph: 

4 ‘‘(15) the total amount contributed under an 

5 annuity accumulation retirement plan for the pur6 chase of annuity contracts under section 420A.’’. 

7 (e) CLERICAL AMENDMENT.—The table of subparts 

8 for part I of subchapter D of chapter 1 is amended by 

9 inserting after the item relating to subpart E the following 

10 new item: 

‘‘SUBPART F—ANNUITY ACCUMULATION RETIREMENT PLANS FOR STATE AND

LOCAL GOVERNMENT EMPLOYEES’’. 

11 (f) EFFECTIVE DATE.—Except as provided in sub12 section (b), the amendments made by this section shall 

13 apply to years beginning after December 31, 2014. 

14 SEC. 102. STUDY OF FEDERAL PENSION SYSTEMS. 

15 (a) STUDY.—The Comptroller General of the United 

16 States shall conduct a study of pension systems estab17 lished by law for employees of the Government of the 

18 United States, including an analysis of— 

19 (1) the benefits provided under such systems, 

20 particularly in comparison to those offered to private 

21 employees, and 

22 (2) whether such systems are adequately fund23 ed. 


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1 (b) REPORT.—The Comptroller General of the 

2 United States shall, not later than 1 year after the date 

3 of enactment of this Act, report to Congress the results 

4 of the study conducted under subsection (a), including any 

5 recommendations for legislative or administrative changes 

6 to the pension systems considered in the study. 

7 TITLE II—PRIVATE PENSION 

8 REFORM 

9 Subtitle A—Enhanced Pension 

10 Plan Coverage 

11 SEC. 201. STARTER 401(k) PLANS FOR EMPLOYERS WITH NO 

12 RETIREMENT PLAN. 

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

14 adding at the end the following new paragraph: 

15 ‘‘(14) STARTER 401(k) DEFERRAL-ONLY PLANS

16 FOR EMPLOYERS WITH NO RETIREMENT PLAN.— 

17 ‘‘(A) IN GENERAL.—A starter 401(k) de18 ferral-only arrangement maintained by an eligi19 ble employer shall be treated as meeting the re20 quirements of paragraph (3)(A)(ii). 

21 ‘‘(B) STARTER 401(k) DEFERRAL-ONLY

22 ARRANGEMENT.—For purposes of this para23 graph, the term ‘starter 401(k) deferral-only 

24 arrangement’ means any cash or deferred ar25 rangement which meets— 


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1 ‘‘(i) the automatic deferral require2 ments of subparagraph (C), 

3 ‘‘(ii) the contribution limitations of 

4 subparagraph (D), and 

5 ‘‘(iii) the requirements of subpara6 graph (E) of paragraph (13). 

7 ‘‘(C) AUTOMATIC DEFERRAL.— 

8 ‘‘(i) IN GENERAL.—The requirements 

9 of this subparagraph are met if, under the 

10 arrangement, each employee eligible to 

11 participate in the arrangement is treated 

12 as having elected to have the employer 

13 make elective contributions in an amount 

14 equal to a qualified percentage of com15 pensation. 

16 ‘‘(ii) ELECTION OUT.—The election 

17 treated as having been made under clause 

18 (i) shall cease to apply with respect to any 

19 employee if such employee makes an af20 firmative election— 

21 ‘‘(I) to not have such contribu22 tions made, or 

23 ‘‘(II) to make elective contribu24 tions at a level specified in such af25 firmative election. 


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1 ‘‘(iii) QUALIFIED PERCENTAGE.—For 

2 purposes of this subparagraph, the term 

3 ‘qualified percentage’ means, with respect 

4 to any employee, any percentage deter5 mined under the arrangement if such per6 centage is applied uniformly and is not less 

7 than 3 or more than 15 percent. 

8 ‘‘(D) CONTRIBUTION LIMITATIONS.— 

9 ‘‘(i) IN GENERAL.—The requirements 

10 of this subparagraph are met if, under the 

11 arrangement— 

12 ‘‘(I) the only contributions which 

13 may be made are elective contribu14 tions of employees described in sub15 paragraph (C), and 

16 ‘‘(II) the aggregate amount of 

17 such elective contributions which may 

18 be made with respect to any employee 

19 for any calendar year shall not exceed 

20 $8,000. 

21 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.— 

22 In the case of any calendar year beginning 

23 after December 31, 2014, the $8,000 

24 amount under clause (i) shall be adjusted 

25 in the same manner as under section 


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1 402(g)(4), except that ‘2013’ shall be sub2 stituted for ‘2005’. 

3 ‘‘(iii) CROSS REFERENCE.—For catch4 up contributions for individuals age 50 or 

5 over, see section 414(v)(2)(B)(ii). 

6 ‘‘(E) ELIGIBLE EMPLOYER.—For purposes 

7 of this paragraph— 

8 ‘‘(i) IN GENERAL.—The term ‘eligible 

9 employer’ means any employer which, dur10 ing the first plan year of the cash or de11 ferred arrangement described in subpara12 graph (B), does not maintain any other 

13 qualified plan. An employer treated as an 

14 eligible employer under the preceding sen15 tence shall be treated as an eligible em16 ployer with respect to the arrangement for 

17 any subsequent plan year without regard 

18 to whether it maintains another qualified 

19 plan. 

20 ‘‘(ii) QUALIFIED PLAN.—The term 

21 ‘qualified plan’ means a plan, contract, 

22 pension, account, or trust described in sub23 paragraph (A) or (B) of paragraph (5) of 

24 section 219(g) (determined without regard 


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1 to the last sentence of such paragraph 

2 (5)).’’. 

3 (b) CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS

4 AGE 50 AND OVER.— 

5 (1) Section 414(v)(2)(B) is amended by insert6 ing ‘‘, 401(k)(14),’’ after ‘‘401(k)(11)’’ each place it 

7 appears. 

8 (2) Section 414(v)(3)(B) is amended by insert9 ing ‘‘401(k)(14),’’ after ‘‘401(k)(11),’’. 

10 (c) SIMPLIFIED REPORTING.—Section 104(a)(2)(A) 

11 of the Employee Retirement Income Security Act of 1974 

12 (29 U.S.C. 1024(a)(2)) is amended by inserting ‘‘or for 

13 any pension plan which is a starter 401(k) deferral-only 

14 arrangement described in section 401(k)(14)(B) of the In15 ternal Revenue Code of 1986’’ before the period at the 

16 end. 

17 (d) STARTER PLANS NOT TREATED AS TOP-HEAVY

18 PLANS.—Clause (i) of section 416(g)(4)(H) is amended 

19 by striking ‘‘or 401(k)(13)’’ and inserting ‘‘401(k)(13), or 

20 401(k)(14)’’. 

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

22 this section shall apply to plan years beginning after De23 cember 31, 2013. 


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•S 1270 IS

1 SEC. 202. INCREASE IN CREDIT LIMITATION FOR SMALL 

2 EMPLOYER PENSION PLAN STARTUP COSTS. 

3 (a) IN GENERAL.—Paragraph (1) of section 45E(b) 

4 is amended to read as follows: 

5 ‘‘(1) for the first credit year and each of the 2 

6 taxable years immediately following the first credit 

7 year, the greater of— 

8 ‘‘(A) $500, or 

9 ‘‘(B) the lesser of— 

10 ‘‘(i) $250 for each employee of the eli11 gible employer who is not a highly com12 pensated employee (as defined in section 

13 415(q)) and who is eligible to participate 

14 in the eligible employer plan maintained by 

15 the eligible employer, or 

16 ‘‘(ii) $5,000, and’’. 

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

18 this section shall apply to taxable years beginning after 

19 December 31, 2013. 

20 SEC. 203. EMPLOYERS ALLOWED TO REPLACE SIMPLE RE21 TIREMENT ACCOUNTS WITH SAFE HARBOR 

22 401(k) PLANS DURING A YEAR. 

23 (a) IN GENERAL.—Section 408(p) is amended by 

24 adding at the end the following new paragraph: 


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•S 1270 IS

1 ‘‘(11) REPLACEMENT OF SIMPLE RETIREMENT

2 ACCOUNTS WITH SAFE HARBOR PLANS DURING PLAN

3 YEAR.— 

4 ‘‘(A) IN GENERAL.—Subject to the re5 quirements of this paragraph, an employer may 

6 elect (in such form and manner as the Sec7 retary may prescribe) at any time during a year 

8 to terminate the qualified salary reduction ar9 rangement under paragraph (2), but only if the 

10 employer establishes and maintains (as of the 

11 day after the termination date) a safe harbor 

12 plan to replace the terminated arrangement. 

13 ‘‘(B) COMBINED LIMITS ON CONTRIBU14 TIONS.—The terminated arrangement and safe 

15 harbor plan shall both be treated as violating 

16 the requirements of paragraph (2)(A)(ii) or sec17 tion 401(a)(30) (whichever is applicable) if the 

18 aggregate elective contributions of the employee 

19 under the terminated arrangement during its 

20 last plan year and under the safe harbor plan 

21 during its transition year exceed the sum of— 

22 ‘‘(i) the applicable dollar amount for 

23 such arrangement (determined on a full24 year basis) with respect to the employee 

25 for such last plan year multiplied by a 


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•S 1270 IS

1 fraction equal to the number of days in 

2 such plan year divided by 365, and 

3 ‘‘(ii) the applicable dollar amount (as 

4 so determined) for such safe harbor plan 

5 on such elective contributions during the 

6 transition year multiplied by a fraction 

7 equal to the number of days in such transi8 tion year divided by 365. 

9 ‘‘(C) APPLICABLE DOLLAR AMOUNT.—The 

10 applicable dollar amount is the amount deter11 mined under paragraph (2)(A)(ii) (after the ap12 plication of section 414(v)) or section 

13 402(g)(1), whichever is applicable. 

14 ‘‘(D) TRANSITION YEAR.—For purposes of 

15 this paragraph, the transition year is the period 

16 beginning after the termination date and ending 

17 on the last day of the calendar year during 

18 which the termination occurs. 

19 ‘‘(E) SAFE HARBOR PLAN.—For purposes 

20 of this paragraph, the term ‘safe harbor plan’ 

21 means a qualified cash or deferred arrangement 

22 which meets the requirements of paragraph 

23 (11), (12), or (13) of section 401(k).’’. 


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•S 1270 IS

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

2 this section shall apply to plan years beginning after De3 cember 31, 2013. 

4 SEC. 204. MODIFICATION OF AUTOMATIC ENROLLMENT 

5 SAFE HARBOR. 

6 (a) REMOVAL OF 10 PERCENT CAP AFTER 1ST PLAN

7 YEAR.— 

8 (1) IN GENERAL.—Clause (iii) of section 

9 401(k)(13)(C) is amended by striking ‘‘, does not 

10 exceed 10 percent, and is at least’’ and inserting 

11 ‘‘and is’’. 

12 (2) CONFORMING AMENDMENTS.— 

13 (A) Subclause (I) of section 

14 401(k)(13)(C)(iii) is amended by striking ‘‘3 

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

16 not greater than 10 percent,’’. 

17 (B) Subclause (II) of section 

18 401(k)(13)(C)(iii) is amended by striking ‘‘4 

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

20 (C) Subclause (III) of section 

21 401(k)(13)(C)(iii) is amended by striking ‘‘5 

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

23 (D) Subclause (IV) of section 

24 401(k)(13)(C)(iii) is amended by striking ‘‘6 

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


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•S 1270 IS

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

2 this section shall apply to plan years beginning after the 

3 date of enactment of this Act. 

4 SEC. 205. PLAN ADOPTED BY FILING DUE DATE FOR YEAR 

5 MAY BE TREATED AS IN EFFECT AS OF CLOSE 

6 OF YEAR. 

7 (a) IN GENERAL.—Section 401(b), as amended by 

8 section 211 of this Act, is amended by adding at the end 

9 the following: 

10 ‘‘(4) ADOPTION OF PLAN.—If an employer 

11 adopts a stock bonus, pension, profit-sharing, or an12 nuity plan after the close of a taxable year but be13 fore the time prescribed by law for filing the return 

14 of the employer for the taxable year (including ex15 tensions thereof), the employer may elect to treat 

16 the plan as having been adopted as of the last day 

17 of the taxable year.’’. 

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

19 this section shall apply to plans adopted for taxable years 

20 beginning after December 31, 2013. 

21 SEC. 206. RULES RELATING TO ELECTION OF SAFE HARBOR 

22 401(k) STATUS. 

23 (a) LIMITATION OF ANNUAL SAFE HARBOR NOTICE

24 TO MATCHING CONTRIBUTION PLANS.— 


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•S 1270 IS

1 (1) IN GENERAL.—Subparagraph (A) of section 

2 401(k)(12) is amended by striking ‘‘if such arrange3 ment’’ and all that follows and inserting ‘‘if such ar4 rangement— 

5 ‘‘(i) meets the contribution require6 ments of subparagraph (B) and the notice 

7 requirements of subparagraph (D), or 

8 ‘‘(ii) meets the contribution require9 ments of subparagraph (C).’’. 

10 (2) AUTOMATIC CONTRIBUTION ARRANGE11 MENTS.—Subparagraph (B) of section 401(k)(13) is 

12 amended by striking ‘‘means’’ and all that follows 

13 and inserting ‘‘means a cash or deferred arrange14 ment— 

15 ‘‘(A) which is described in subparagraph 

16 (D)(i)(I) and meets the applicable requirements 

17 of subparagraphs (C) through (E), or 

18 ‘‘(B) which is described in subparagraph 

19 (D)(i)(II) and meets the applicable require20 ments of subparagraphs (C) and (D).’’. 

21 (b) NONELECTIVE CONTRIBUTIONS.—Section 

22 401(k)(12) is amended by redesignating subparagraph (F) 

23 as subparagraph (G), and by inserting after subparagraph 

24 (E) the following new subparagraph: 


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•S 1270 IS

1 ‘‘(F) TIMING OF PLAN AMENDMENT FOR

2 EMPLOYER MAKING NONELECTIVE CONTRIBU3 TIONS.— 

4 ‘‘(i) IN GENERAL.—Except as pro5 vided in clause (ii), a plan may be amend6 ed after the beginning of a plan year to 

7 provide that the requirements of subpara8 graph (C) shall apply to the arrangement 

9 for the plan year, but only if the amend10 ment is adopted— 

11 ‘‘(I) at any time before the 30th 

12 day before the close of the plan year, 

13 or 

14 ‘‘(II) if the requirements of 

15 clause (iii) are met, at any time before 

16 the last day under paragraph (8)(A) 

17 for distributing excess contributions 

18 for the plan year. 

19 ‘‘(ii) EXCEPTION WHERE PLAN PRO20 VIDED FOR MATCHING CONTRIBUTIONS.— 

21 Clause (i) shall not apply to any plan year 

22 if the plan provided at any time during the 

23 plan year that the requirements of sub24 paragraph (B) applied to the plan year. 


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•S 1270 IS

1 ‘‘(iii) 4-PERCENT CONTRIBUTION RE2 QUIREMENT.—Clause (i)(II) shall not 

3 apply to an arrangement unless the 

4 amount of the contributions described in 

5 subparagraph (C) which the employer is 

6 required to make under the arrangement 

7 for the plan year with respect to any em8 ployee is an amount equal to at least 4 

9 percent of the employee’s compensation.’’. 

10 (c) AUTOMATIC CONTRIBUTION ARRANGEMENTS.— 

11 Section 401(k)(13) is amended by adding at the end the 

12 following : 

13 ‘‘(F) TIMING OF PLAN AMENDMENT FOR

14 EMPLOYER MAKING NONELECTIVE CONTRIBU15 TIONS.— 

16 ‘‘(i) IN GENERAL.—Except as pro17 vided in clause (ii), a plan may be amend18 ed after the beginning of a plan year to 

19 provide that the requirements of subpara20 graph (D)(i)(II) shall apply to the arrange21 ment for the plan year, but only if the 

22 amendment is adopted— 

23 ‘‘(I) at any time before the 30th 

24 day before the close of the plan year, 

25 or 


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•S 1270 IS

1 ‘‘(II) if the requirements of 

2 clause (iii) are met, at any time before 

3 the last day under paragraph (8)(A) 

4 for distributing excess contributions 

5 for the plan year. 

6 ‘‘(ii) EXCEPTION WHERE PLAN PRO7 VIDED FOR MATCHING CONTRIBUTIONS.— 

8 Clause (i) shall not apply to any plan year 

9 if the plan provided at any time during the 

10 plan year that the requirements of sub11 paragraph (D)(i)(I) applied to the plan 

12 year. 

13 ‘‘(iii) 4-PERCENT CONTRIBUTION RE14 QUIREMENT.—Clause (i)(II) shall not 

15 apply to an arrangement unless the 

16 amount of the contributions described in 

17 subparagraph (D)(i)(II) which the em18 ployer is required to make under the ar19 rangement for the plan year with respect 

20 to any employee is an amount equal to at 

21 least 4 percent of the employee’s com22 pensation.’’. 

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

24 this section shall apply to plan years beginning after De25 cember 31, 2013. 


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•S 1270 IS

1 SEC. 207. MODIFICATIONS OF RULES RELATING TO MUL2 TIPLE EMPLOYER DEFINED CONTRIBUTION 

3 PLANS. 

4 (a) QUALIFICATION REQUIREMENTS.—Section 413 is 

5 amended by adding at the end the following: 

6 ‘‘(d) APPLICATION OF QUALIFICATION REQUIRE7 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH

8 DESIGNATED PLAN PROVIDERS.— 

9 ‘‘(1) IN GENERAL.—If a plan to which sub10 section (c) applies is sponsored by employers that 

11 have a common interest other than having adopted 

12 the plan, or has a designated plan provider, then, ex13 cept as provided in paragraph (3), the failure of the 

14 portion of the plan covering the employees of an em15 ployer maintaining the plan to satisfy any applicable 

16 qualification requirement under section 401(a) will 

17 not affect the qualification of any portion of the plan 

18 covering employees of any employer who has satis19 fied all such requirements. 

20 ‘‘(2) DESIGNATED PLAN PROVIDER.—For pur21 poses of this subsection— 

22 ‘‘(A) IN GENERAL.—The term ‘designated 

23 plan provider’ means the person designated 

24 under the terms of the plan as the person re25 sponsible to perform all administrative duties 

26 which are reasonably necessary to ensure that 


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•S 1270 IS

1 the plan, and each participating employer, 

2 meets the requirements described in paragraph 

3 (1), including conducting proper testing of such 

4 plan and employers. 

5 ‘‘(B) REGISTRATION, ETC. REQUIRE6 MENTS.—A person shall not be treated as a 

7 designated plan provider with respect to any 

8 plan unless— 

9 ‘‘(i) the person registers with the Sec10 retary and provides such identifying infor11 mation as the Secretary may require, and 

12 ‘‘(ii) the person consents to audits by 

13 the Secretary at such times as the Sec14 retary determines appropriate to ensure 

15 the person is performing the duties de16 scribed in subparagraph (A). 

17 ‘‘(3) FAILURE BY PROVIDER TO PERFORM DU18 TIES.—If the designated plan provider of a plan 

19 does not perform the duties described in paragraph 

20 (2)(A) with respect to any plan year so as to reason21 ably ensure the plan meets the requirements de22 scribed in paragraph (1)— 

23 ‘‘(A) paragraph (1) shall not apply to the 

24 plan for the plan year, and 


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•S 1270 IS

1 ‘‘(B) the determination as to whether the 

2 plan, or any participating employer, meets such 

3 requirements shall be made in the same manner 

4 as made with respect to a plan without a des5 ignated plan provider. 

6 ‘‘(4) GUIDANCE.—The Secretary shall issue 

7 such guidance as the Secretary determines appro8 priate to carry out this subsection, including guid9 ance to— 

10 ‘‘(A) identify the administrative duties re11 quired to be performed under paragraph (2)(A), 

12 and 

13 ‘‘(B) require, if appropriate, that the por14 tion of the plan attributable to participating 

15 employers not meeting the requirements de16 scribed in paragraph (1) be spun off to plans 

17 maintained by such employers.’’. 

18 (b) MODIFICATION OF ERISA REQUIREMENTS.— 

19 (1) REQUIREMENT OF COMMON INTEREST.— 

20 Section 3(2) of the Employee Retirement Income Se21 curity Act of 1974 is amended by adding at the end 

22 the following: 

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

24 not fail to be treated as an employee pension benefit 


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•S 1270 IS

1 plan or pension plan solely because the employers 

2 sponsoring the plan share no common interest. 

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

4 term ‘qualified multiple employer plan’ means a plan 

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

6 Code of 1986 which— 

7 ‘‘(I) is an individual account plan with re8 spect to which the requirements of clauses (iii) 

9 and (iv) are met, and 

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

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

12 identifying information of each participating 

13 employer and each person designated as a des14 ignated plan provider under section 413 of the 

15 Internal Revenue Code of 1986. 

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

17 if, under the plan, each participating employer re18 tains fiduciary responsibility for— 

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

20 person designated as the designated plan pro21 vider and the named fiduciary if different from 

22 such provider, and 

23 ‘‘(II) the investment and management of 

24 the portion of the plan’s assets attributable to 


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•S 1270 IS

1 employees of the employer to the extent not 

2 otherwise delegated to another fiduciary. 

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

4 under the plan, a participating employer is not sub5 ject to unreasonable restrictions, fees, or penalties 

6 by reason of ceasing participation in, or otherwise 

7 transferring assets from, the plan.’’. 

8 (2) SIMPLIFIED REPORTING FOR SMALL MUL9 TIPLE EMPLOYER PLANS.—Section 104(a) of such 

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

11 the end the following: 

12 ‘‘(7)(A) In the case of any eligible small multiple em13 ployer plan, the Secretary may by regulation— 

14 ‘‘(i) prescribe simplified summary plan descrip15 tions, annual reports, and pension benefit state16 ments for purposes of section 102, 103, or 105, re17 spectively, and 

18 ‘‘(ii) waive the requirement under section 

19 103(a)(3) to engage an independent qualified public 

20 accountant in cases where the Secretary determines 

21 it appropriate. 

22 ‘‘(B) For purposes of this paragraph, the term ‘eligi23 ble small multiple employer plan’ means, with respect to 

24 any plan year, a qualified multiple employer plan (as deVerDate Mar 15 2010 22:20 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00037 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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•S 1270 IS

1 fined in section 3(2)(C)) which, for the preceding plan 

2 year— 

3 ‘‘(i) did not have more than 2,500 participants, 

4 and 

5 ‘‘(ii) did not have any employer sponsoring the 

6 plan which had more than 500 employees as partici7 pants.’’. 

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

9 this section shall apply to years beginning after December 

10 31, 2013. 

11 Subtitle B—Pension Plan and 

12 Retirement Savings Simplification 

13 SEC. 211. MODIFICATIONS OF DEADLINES FOR ADOPTING 

14 PENSION PLAN AMENDMENTS. 

15 (a) REQUIRED AMENDMENTS.—Section 401(b) is 

16 amended— 

17 (1) by striking all that precedes ‘‘stock bonus, 

18 pension, profit-sharing’’ and inserting: 

19 ‘‘(b) RETROACTIVE AMENDMENTS TO, AND ADOP20 TION OF, A PLAN.— 

21 ‘‘(1) RETROACTIVE CHANGES TO AMENDMENTS

22 CAUSING PLAN TO FAIL.—A’’, and 

23 (2) by adding at the end the following: 


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•S 1270 IS

1 ‘‘(2) COORDINATION OF TIMING OF PENSION

2 PLAN AMENDMENT ADOPTION, AND REMEDIAL PLAN

3 REVIEW, REQUIREMENTS.— 

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

5 subparagraph (B), in the case of any required 

6 amendment to a stock bonus, pension, profit7 sharing, or annuity plan— 

8 ‘‘(i) the plan shall be treated as being 

9 operated in accordance with the terms of 

10 the plan during the remedial period, and 

11 ‘‘(ii) except as provided by the Sec12 retary, such plan shall not fail to meet the 

13 requirements of section 411(d)(6) of the 

14 Internal Revenue Code of 1986 and section 

15 204(g) of the Employee Retirement In16 come Security Act of 1974 by reason of 

17 such amendment. 

18 ‘‘(B) CONDITIONS.—Subparagraph (A) 

19 shall not apply to any required amendment to 

20 a plan unless— 

21 ‘‘(i) the required amendment is adopt22 ed before the end of the remedial period, 

23 ‘‘(ii) the plan is operated as if the re24 quired amendment were in effect during 

25 the remedial period, and 


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•S 1270 IS

1 ‘‘(iii) the required amendment applies 

2 retroactively for the remedial period. 

3 ‘‘(C) REQUIRED AMENDMENT.—For pur4 poses of this paragraph, the term ‘required 

5 amendment’ means any amendment to a plan 

6 which is required by (or integral to meeting the 

7 requirements of) any Federal law or any regula8 tion issued by the Secretary or the Secretary of 

9 Labor. 

10 ‘‘(D) REMEDIAL PERIOD.—For purposes of 

11 this paragraph— 

12 ‘‘(i) REMEDIAL PERIOD.—The term 

13 ‘remedial period’ means, with respect to 

14 any required amendment to a plan, the pe15 riod— 

16 ‘‘(I) beginning on the date the 

17 amendment is required under the law 

18 or regulation described in subpara19 graph (C) to take effect, and 

20 ‘‘(II) ending on the last day in 

21 the remedial plan review period with 

22 respect to the plan in which the date 

23 determined under subclause (I) occurs 

24 (or, if earlier, the date the plan 

25 amendment is adopted). 


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•S 1270 IS

1 ‘‘(ii) REMEDIAL PLAN REVIEW PE2 RIOD.—The term ‘remedial plan review pe3 riod’ means, with respect to any plan, the 

4 period established by the Secretary under 

5 the authority of section 401(b) as the reg6 ular cycle of review by the Secretary for 

7 determining whether the plan continues to 

8 meet the requirements of this title for 

9 treatment as a qualified plan under section 

10 401(a).’’. 

11 (b) RETROACTIVE APPLICATION OF DISCRETIONARY

12 AMENDMENTS.—Section 401(b), as amended by sub13 section (a), is amended by adding at the end the following: 

14 ‘‘(3) DISCRETIONARY AMENDMENTS.—In the 

15 case of an amendment to which paragraphs (1) and 

16 (2) do not otherwise apply, the provisions of para17 graph (1) shall apply to such amendment if it is to 

18 take effect during a plan year and is adopted by the 

19 last day prescribed by law (including extensions) for 

20 filing the return of tax for the taxable year of the 

21 employer within which such plan year ends.’’. 

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

23 this section shall apply with respect to amendments taking 

24 effect with respect to plan years beginning after December 

25 31, 2013. 


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•S 1270 IS

1 SEC. 212. TERMINATION OF APPLICATION OF TOP-HEAVY 

2 PLAN RULES. 

3 (a) IN GENERAL.—Section 416 is amended by adding 

4 at the end the following: 

5 ‘‘(j) TERMINATION.— 

6 ‘‘(1) IN GENERAL.—This section shall not apply 

7 to any plan year beginning after December 31, 

8 2013. 

9 ‘‘(2) VESTING RULES APPLICABLE TO PRE10 VIOUSLY ACCRUED BENEFITS.—If a plan was a top11 heavy plan for any plan year beginning before Janu12 ary 1, 2014, then, notwithstanding paragraph (1), 

13 the vesting rules applicable to the plan under sub14 section (b) for the plan year shall continue to apply 

15 to any accrued benefit derived during the plan 

16 year.’’. 

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

18 this section shall apply to plan years beginning after De19 cember 31, 2013. 

20 SEC. 213. AMENDMENTS TO SAFE HARBOR 401(k) PLANS 

21 DURING PLAN YEAR. 

22 (a) IN GENERAL.—Section 401(k)(12), as amended 

23 by section 206 of this Act, is amended by redesignating 

24 subparagraph (G) as subparagraph (H) and by inserting 

25 after subparagraph (F) the following: 


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•S 1270 IS

1 ‘‘(G) AMENDMENTS TO SAFE HARBOR

2 PLANS DURING PLAN YEAR.— 

3 ‘‘(i) IN GENERAL.—Except as pro4 vided in clause (ii), an amendment to an 

5 arrangement to which this paragraph or 

6 paragraph (13) applies may take effect 

7 during a plan year if it is adopted before 

8 the close of the plan year. 

9 ‘‘(ii) NO REDUCTION IN MATCHING

10 CONTRIBUTIONS.—Clause (i) shall not 

11 apply to any amendment which reduces the 

12 amount of the matching contributions an 

13 employer is required to make under the ar14 rangement as in effect before the amend15 ment.’’. 

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

17 this section shall apply to plan years beginning after De18 cember 31, 2013. 

19 SEC. 214. MODIFICATION OF RULES RELATING TO HARD20 SHIP WITHDRAWALS FROM CASH OR DE21 FERRED ARRANGEMENTS. 

22 (a) IN GENERAL.—Section 401(k), as amended by 

23 section 201 of this Act, is amended by adding at the end 

24 the following: 


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•S 1270 IS

1 ‘‘(15) SPECIAL RULES RELATING TO HARDSHIP

2 WITHDRAWALS.—For purposes of paragraph 

3 (2)(B)(i)(IV)— 

4 ‘‘(A) AMOUNTS WHICH MAY BE WITH5 DRAWN.—The following amounts may be dis6 tributed upon hardship of the employee: 

7 ‘‘(i) Contributions to a profit-sharing 

8 or stock bonus plan to which section 

9 402(e)(3) applies. 

10 ‘‘(ii) Qualified nonelective contribu11 tions (as defined in subsection (m)(4)(C)). 

12 ‘‘(iii) Qualified matching contributions 

13 described in paragraph (3)(D)(ii)(I). 

14 ‘‘(iv) Earnings on any contributions 

15 described in clause (i), (ii), or (iii). 

16 ‘‘(B) NO REQUIREMENT TO TAKE AVAIL17 ABLE LOAN.—A distribution shall not be treat18 ed as failing to be made upon the hardship of 

19 an employee solely because the employee does 

20 not take any available loan under the plan. 

21 ‘‘(C) PARTICIPATION IN ARRANGEMENT

22 NOT CONDITIONED ON WHETHER HARDSHIP

23 DISTRIBUTION MADE.—In determining whether 

24 a distribution is made upon the hardship of an 

25 employee, the Secretary shall not take into acVerDate Mar 15 2010 00:07 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00044 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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•S 1270 IS

1 count whether or not an employee makes elec2 tive or employee contributions under the ar3 rangement for any period after the distribu4 tion.’’. 

5 (b) CONFORMING AMENDMENT.—Subclause (IV) of 

6 section 401(k)(2)(B)(i) is amended to read as follows: 

7 ‘‘(IV) subject to the provisions of 

8 paragraph (15), upon hardship of the 

9 employee, or’’. 

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

11 this section shall apply to distributions made after Decem12 ber 31, 2013. 

13 SEC. 215. INDIVIDUAL MAY ROLL OVER INSURANCE CON14 TRACT INTO INDIVIDUAL RETIREMENT AC15 COUNT. 

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

17 adding at the end the following new flush sentence: 

18 ‘‘A trust shall not be treated as failing to meet the require19 ments of paragraph (3) merely because it holds a life in20 surance contract which was transferred to the trust in a 

21 rollover contribution described in paragraph (1).’’. 

22 (b) CONFORMING AMENDMENTS.—Section 72(m)(3) 

23 is amended— 

24 (1) in subparagraph (A), by striking ‘‘or’’ at 

25 the end of clause (i), by striking the period at the 


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•S 1270 IS

1 end of clause (ii) and inserting ‘‘, or’’, and by add2 ing at the end the following: 

3 ‘‘(iii) held by a trust described in sec4 tion 408(a) after being contributed to the 

5 trust in a rollover contribution described in 

6 section 408(a)(1).’’, and 

7 (2) in subparagraph (B), by striking ‘‘subpara8 graph (A)(ii)’’ each place it appears and inserting 

9 ‘‘clauses (ii) or (iii) of subparagraph (A)’’. 

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

11 this section shall apply to rollover contributions after De12 cember 31, 2013. 

13 SEC. 216. FORFEITURES ALLOCATED TO PARTICIPANT’S AC14 COUNT MAY BE TREATED AS EMPLOYER 

15 MATCHING OR NONELECTIVE CONTRIBU16 TIONS. 

17 (a) IN GENERAL.—Section 401(k)(12), as amended 

18 by sections 206 and 213 of this Act, is amended by redes19 ignating subparagraph (H) as subparagraph (I), and by 

20 inserting after subparagraph (G) the following: 

21 ‘‘(H) TREATMENT OF FORFEITURES ALLO22 CATED TO EMPLOYEE’S ACCOUNT.—For pur23 poses of this paragraph and paragraph (13), an 

24 employer may treat a forfeiture allocated to an 

25 employee’s account for any plan year as a 


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•S 1270 IS

1 matching or nonelective contribution made by 

2 the employer which is taken into account in de3 termining whether the contribution require4 ments of this paragraph or paragraph (13), 

5 whichever is applicable, are met.’’. 

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

7 this section shall apply to plan years beginning after De8 cember 31, 2013. 

9 SEC. 217. TIME FOR PROVIDING EXPLANATION OF QUALI10 FIED PRERETIREMENT SURVIVOR ANNUITY. 

11 (a) AMENDMENT TO INTERNAL REVENUE CODE OF

12 1986.—Subparagraph (B) of section 417(a)(3) is amend13 ed to read as follows: 

14 ‘‘(B) EXPLANATION OF QUALIFIED PRE15 RETIREMENT SURVIVOR ANNUITY.—Each plan 

16 shall provide to each participant, within a rea17 sonable time after the individual becomes a par18 ticipant (and consistent with such regulations 

19 as the Secretary may prescribe), a written ex20 planation with respect to the qualified preretire21 ment survivor annuity comparable to the expla22 nation required under subparagraph (A). A 

23 plan shall be treated as meeting the require24 ments of this subparagraph if the explanation is 

25 included with each summary plan description 


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•S 1270 IS

1 required to be provided to the participant under 

2 section 102 of the Employee Retirement Income 

3 Security Act of 1974 (29 U.S.C. 1022).’’. 

4 (b) AMENDMENT TO EMPLOYEE RETIREMENT IN5 COME SECURITY ACT OF 1974.—Subparagraph (B) of 

6 section 205(c)(3) of the Employee Retirement Income Se7 curity Act of 1974 is amended to read as follows: 

8 ‘‘(B) Each plan shall provide to each par9 ticipant, within a reasonable time after the indi10 vidual becomes a participant (and consistent 

11 with such regulations as the Secretary of the 

12 Treasury may prescribe), a written explanation 

13 with respect to the qualified preretirement sur14 vivor annuity comparable to the explanation re15 quired under subparagraph (A). A plan shall be 

16 treated as meeting the requirements of this sub17 paragraph if the explanation is included with 

18 each summary plan description required to be 

19 provided to the participant under section 102.’’. 

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

21 this section shall apply to— 

22 (1) individuals who become participants after 

23 December 31, 2013, and 

24 (2) individuals who became participants before 

25 such date but to whom the written explanation 


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1 under section 417(a)(3)(B) of the Internal Revenue 

2 Code of 1986 and section 205(c)(3)(B) of the Em3 ployee Retirement Income Security Act of 1974 (as 

4 in effect before such amendments) was not required 

5 to be provided before January 1, 2014. 

6 In the case of any individual described in paragraph (2), 

7 a plan shall be treated as meeting the requirements of 

8 such sections 417(a)(3)(B) and 205(c)(3)(B) (as in effect 

9 after such amendments) if the written explanation is pro10 vided within a reasonable period after December 31, 2013. 

11 SEC. 218. MODIFICATIONS OF ADDITIONAL PARTICIPATION 

12 REQUIREMENTS FOR DEFINED BENEFIT 

13 PLANS. 

14 (a) IN GENERAL.—Section 401(a)(26) is amended by 

15 redesignating subparagraph (H) as subparagraph (J) and 

16 by inserting after subparagraph (G) the following: 

17 ‘‘(H) REQUIREMENTS MAY BE SATISFIED

18 THROUGH MINIMUM CONTRIBUTIONS TO DE19 FINED CONTRIBUTION PLAN.— 

20 ‘‘(i) IN GENERAL.—This paragraph 

21 shall not apply to a defined benefit plan of 

22 an employer for any plan year if— 

23 ‘‘(I) the defined benefit plan is 

24 aggregated with a defined contribu25 tion plan of the employer for purposes 


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1 of subsection (a)(4) and section 

2 410(b), 

3 ‘‘(II) the defined benefit plan and 

4 the defined contribution plan, when so 

5 aggregated, meet the requirements of 

6 subsection (a)(4) and section 410(b), 

7 and 

8 ‘‘(III) the contribution require9 ments of clause (ii) are met with re10 spect to the defined contribution plan. 

11 ‘‘(ii) CONTRIBUTION REQUIRE12 MENTS.—The requirements of this clause 

13 are met with respect to a defined contribu14 tion plan if, under the plan, the employer 

15 is required to make nonelective contribu16 tions for the applicable plan year of at 

17 least 7.5 percent of compensation for a 

18 number of employees at least equal to the 

19 number of employees which the defined 

20 benefit plan would have been required to 

21 benefit under this paragraph without re22 gard to this subparagraph. No highly com23 pensated employees (within the meaning of 

24 section 414(q)) may be taken into account 


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1 in determining whether the requirements 

2 of this clause are met. 

3 ‘‘(iii) APPLICABLE PLAN YEAR.—For 

4 purposes of clause (ii), the term ‘applicable 

5 plan year’ means the plan year of the de6 fined contribution plan which ends with or 

7 within the plan year of the defined benefit 

8 plan to which clause (i) applies. 

9 ‘‘(I) SPECIAL RULES FOR FROZEN

10 PLANS.— 

11 ‘‘(i) AGGREGATION PERMITTED TO

12 SATISFY REQUIREMENTS.— 

13 ‘‘(I) IN GENERAL.—Except as 

14 provided in subclauses (II) and (III), 

15 if a plan is a frozen defined benefit 

16 plan for any plan year, an employer 

17 may aggregate the plan with any 

18 other defined benefit plan or defined 

19 contribution plan of the employer for 

20 purposes of determining whether the 

21 requirements of this paragraph are 

22 met with respect to the frozen defined 

23 benefit plan. 

24 ‘‘(II) AGGREGATION FOR OTHER

25 PURPOSES.—An employer may not 


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•S 1270 IS

1 apply subclause (I) unless the em2 ployer also aggregates the plans for 

3 purposes of subsection (a)(4) and sec4 tion 410(b). 

5 ‘‘(III) BENEFITS OF HIGHLY

6 COMPENSATED EMPLOYEES DIS7 REGARDED.—In the case of any other 

8 plan aggregated with a frozen defined 

9 benefit plan under subclause (I), ac10 crued benefits of highly compensated 

11 employees shall not be taken into ac12 count in applying subclause (I). 

13 ‘‘(ii) REQUIREMENTS NOT TO APPLY

14 IN CERTAIN CASES.— 

15 ‘‘(I) IN GENERAL.—Except as 

16 provided in subclause (II), this para17 graph shall apply to a frozen defined 

18 benefit plan of an employer for any 

19 plan year only if the employer main20 tains any other defined benefit plan 

21 during the 6-year period beginning 

22 with the first day of the plan year. 

23 ‘‘(II) RETROACTIVE APPLICA24 TION.—Clause (i) shall not apply un25 less the frozen defined benefit plan 


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1 provides that if the employer estab2 lishes or maintains any other defined 

3 benefit plan during the 6-year period 

4 under subclause (I), each employee 

5 (other than a highly compensated em6 ployee) shall retroactively accrue bene7 fits under the frozen defined benefit 

8 plan for each year of service the em9 ployee would have had under the plan 

10 during such period (determined as if 

11 the employee were one of the employ12 ees required to benefit under the plan 

13 under this paragraph). 

14 ‘‘(iii) FROZEN DEFINED BENEFIT

15 PLAN.—For purposes of this subpara16 graph, the term ‘frozen defined benefit 

17 plan’ means a defined benefit plan which 

18 has in effect an amendment that provides 

19 that the plan may not accept any new par20 ticipants after the effective date of the 

21 amendment. 

22 ‘‘(iv) HIGHLY COMPENSATED EM23 PLOYEE.—The term ‘highly compensated 

24 employee’ has the meaning given such term 

25 by section 414(q).’’. 


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

2 this section applies to plan years beginning after Decem3 ber 31, 2013. 

4 SEC. 219. TREATMENT OF CUSTODIAL ACCOUNTS ON TER5 MINATION OF SECTION 403(b) PLANS. 

6 (a) IN GENERAL.—Section 403(b)(7) is amended by 

7 adding at the end the following: 

8 ‘‘(D) TREATMENT OF CUSTODIAL AC9 COUNT UPON PLAN TERMINATION.— 

10 ‘‘(i) IN GENERAL.—If— 

11 ‘‘(I) an employer terminates the 

12 plan under which amounts are con13 tributed to a custodial account under 

14 subparagraph (A), and 

15 ‘‘(II) the person holding the as16 sets of the account has demonstrated 

17 to the satisfaction of the Secretary 

18 under section 408(a)(2) that the per19 son is qualified to be a trustee of an 

20 individual retirement plan, 

21 then, as of the date of the termination, the 

22 custodial account shall be deemed to be an 

23 individual retirement plan for purposes of 

24 this title. 


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1 ‘‘(ii) TREATMENT AS ROTH IRA.—Any 

2 custodial account treated as an individual 

3 retirement plan under clause (i) shall be 

4 treated as a Roth IRA only if the custodial 

5 account was a designated Roth account.’’. 

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

7 this section shall apply to plan terminations occurring 

8 after December 31, 2013. 

9 SEC. 220. SECURE DEFERRAL ARRANGEMENTS. 

10 (a) IN GENERAL.—Subsection (k) of section 401, as 

11 amended by this Act, is amended by adding at the end 

12 the following new paragraph: 

13 ‘‘(16) ALTERNATIVE METHOD FOR SECURE DE14 FERRAL ARRANGEMENTS TO MEET NONDISCRIMINA15 TION REQUIREMENTS.— 

16 ‘‘(A) IN GENERAL.—A secure deferral ar17 rangement shall be treated as meeting the re18 quirements of paragraph (3)(A)(ii). 

19 ‘‘(B) SECURE DEFERRAL ARRANGE20 MENT.—For purposes of this paragraph, the 

21 term ‘secure deferral arrangement’ means any 

22 cash or deferred arrangement which meets the 

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

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

25 this paragraph. 


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1 ‘‘(C) QUALIFIED PERCENTAGE.—For pur2 poses of this paragraph, with respect to any 

3 employee, the term ‘qualified percentage’ 

4 means, in lieu of the meaning given such term 

5 in paragraph (13)(C)(iii), any percentage deter6 mined under the arrangement if such percent7 age is applied uniformly and is— 

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

9 than 10 percent, during the period ending 

10 on the last day of the first plan year which 

11 begins after the date on which the first 

12 elective contribution described in para13 graph (13)(C)(i) is made with respect to 

14 such employee, 

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

16 first plan year following the plan year de17 scribed in clause (i), and 

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

19 subsequent plan year. 

20 ‘‘(D) MATCHING CONTRIBUTIONS.— 

21 ‘‘(i) IN GENERAL.—For purposes of 

22 this paragraph, an arrangement shall be 

23 treated as having met the requirements of 

24 paragraph (13)(D)(i) if and only if the em25 ployer makes matching contributions on 


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1 behalf of each employee who is not a highly 

2 compensated employee in an amount equal 

3 to the sum of 50 percent of the elective 

4 contributions of the employee to the extent 

5 that such contributions do not exceed 2 

6 percent of compensation plus 30 percent of 

7 so much of such contributions as exceed 2 

8 percent but do not exceed 10 percent of 

9 compensation. 

10 ‘‘(ii) APPLICATION OF RULES FOR

11 MATCHING CONTRIBUTIONS.—The rules of 

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

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

14 shall apply for purposes of clause (i) but 

15 the rule of clause (iii) of paragraph 

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

17 The rate of matching contribution for each 

18 incremental deferral must be at least as 

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

20 may be higher, so long as such rate does 

21 not increase as an employee’s rate of elec22 tive contributions increases.’’. 

23 (b) MATCHING CONTRIBUTIONS AND EMPLOYEE

24 CONTRIBUTIONS.—Subsection (m) of section 401 is 

25 amended by redesignating paragraph (13) as paragraph 


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•S 1270 IS

1 (14) and by adding after paragraph (12) the following new 

2 paragraph: 

3 ‘‘(13) ALTERNATIVE METHOD FOR SECURE DE4 FERRAL ARRANGEMENTS.—A defined contribution 

5 plan shall be treated as meeting the requirements of 

6 paragraph (2) with respect to matching contribu7 tions and employee contributions if the plan— 

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

9 defined in subsection (k)(16)), 

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

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

12 ‘‘(C) provides that matching contributions 

13 on behalf of any employee may not be made 

14 with respect to an employee’s contributions or 

15 elective deferrals in excess of 10 percent of the 

16 employee’s compensation.’’. 

17 (c) TAX CREDIT.— 

18 (1) IN GENERAL.—Subpart (D) of part IV of 

19 subchapter A of Chapter 1 of subtitle A is amended 

20 by adding at the end thereof the following new sec21 tion: 

22 ‘‘SEC. 45S. SECURE DEFERRAL ARRANGEMENTS. 

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

24 the case of an eligible employer maintaining a qualified 

25 employer plan (as defined in clauses (i) and (ii) of section 


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•S 1270 IS

1 4972(d)(1)(A)), the secure deferral arrangement credit 

2 determined under this section for any taxable year is an 

3 amount equal to 10 percent of all matching and nonelec4 tive contributions under a secure deferral arrangement (as 

5 defined in section 401(k)(16)) made during the plan year 

6 ending with or within the taxable year of the eligible em7 ployer by or on behalf of employees other than highly com8 pensated employees (as defined in section 414(q)). 

9 ‘‘(b) DOLLAR LIMITATION.—The amount of the cred10 it determined under this section for any taxable year shall 

11 not exceed— 

12 ‘‘(1) $10,000 for the first credit year and each 

13 of the 2 taxable years immediately following the first 

14 credit year, and 

15 ‘‘(2) zero for any other taxable year. 

16 ‘‘(c) FIRST CREDIT YEAR.—The term ‘first credit 

17 year’ means— 

18 ‘‘(1) the taxable year of the eligible employer 

19 with which or within which ends the first plan year 

20 during which the secure deferral arrangement was in 

21 effect for the entire year, or 

22 ‘‘(2) at the election of the eligible employer, the 

23 taxable year preceding the taxable year referred to 

24 in paragraph (1). 

25 ‘‘(d) DEFINITION AND SPECIAL RULES.— 


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•S 1270 IS

1 ‘‘(1) ELIGIBLE EMPLOYER.—The term ‘eligible 

2 employer’ has the meaning given such term by sec3 tion 408(p)(2)(C)(i). 

4 ‘‘(2) AGGREGATION.—All persons treated as a 

5 single employer under subsection (a) or (b) of sec6 tion 52, or subsection (m) or (o) of section 414, 

7 shall be treated as one person. All qualified employer 

8 plans of an eligible employer shall be treated as 1 

9 qualified employer plan. 

10 ‘‘(3) DISALLOWANCE OF DEDUCTION.—No de11 duction shall be allowed for that portion of the con12 tribution for the taxable year which is equal to the 

13 credit determined under subsection (a). 

14 ‘‘(4) ELECTION NOT TO CLAIM CREDIT.—This 

15 section shall not apply to a taxpayer for any taxable 

16 year if such taxpayer elects to have this section not 

17 apply for such taxable year. Any such taxable year 

18 shall not be taken into account under subsection 

19 (b).’’. 

20 (2) CONFORMING AMENDMENTS.— 

21 (A) GENERAL BUSINESS CREDIT.—Sub22 section (b) of section 38 is amended by striking 

23 ‘‘plus’’ at the end of paragraph (35), by strik24 ing the period at the end of paragraph (36) and 


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•S 1270 IS

1 inserting ‘‘, plus’’, and by adding at the end the 

2 following: 

3 ‘‘(37) the secure deferral arrangement credit 

4 determined under section 45S.’’. 

5 (B) CREDIT CROSS-REFERENCES.— 

6 (i) Subsection (k) of section 401, as 

7 amended by subsection (a), is amended by 

8 adding at the end the following new para9 graph: 

10 ‘‘(17) SECURE DEFERRAL ARRANGEMENT

11 CREDIT.—For a general business credit with respect 

12 to secure deferral arrangements, see section 45S.’’. 

13 (ii) Subsection (m) of section 401, as 

14 amended by subsection (b), is amended by 

15 redesignating paragraph (14) as paragraph 

16 (15) and by inserting after paragraph (13) 

17 the following new paragraph: 

18 ‘‘(14) SECURE DEFERRAL ARRANGEMENT

19 CREDIT.—For a general business credit with respect 

20 to secure deferral arrangements, see section 45S.’’. 

21 (d) FACILITATING QUALIFIED AUTOMATIC CON22 TRIBUTION ARRANGEMENTS AND SECURE DEFERRAL AR23 RANGEMENTS.—By no later than the date that is twelve 

24 months after the date of enactment of this Act, the Sec25 retary of the Treasury shall prescribe rules that facilitate 


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•S 1270 IS

1 the administration of qualified automatic contribution ar2 rangements (as defined in section 401(k)(13) of the Inter3 nal Revenue Code of 1986) and secure deferral arrange4 ments (as defined in section 401(k)(16) of such Code). 

5 Such rules shall— 

6 (1) clarify, simplify, and provide safe harbors 

7 with respect to the application of the notice require8 ments described in section 401(k)(13)(E) of such 

9 Code, especially in cases where— 

10 (A) employees become eligible under such 

11 arrangements upon becoming employed or 

12 shortly thereafter, or 

13 (B) the employer has employees subject to 

14 different payroll and administrative systems, 

15 and 

16 (2) clarify, simplify, and provide safe harbors 

17 with respect to the timing of the increases in the 

18 qualified percentage described in subclauses (II), 

19 (III), and (IV) of section 401(k)(13)(C)(iii) of such 

20 Code and in clauses (ii) and (iii) of section 

21 401(k)(16)(C) of such Code, especially in cases 

22 where the employer has employees subject to dif23 ferent payroll and administrative systems. 

24 (e) EFFECTIVE DATES.— 


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•S 1270 IS

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

2 subsections (a) and (b) shall apply to plan years be3 ginning after December 31, 2013. 

4 (2) TAX CREDIT.—The amendments made by 

5 subsection (c) shall apply to taxable years beginning 

6 after December 31, 2013. 

7 SEC. 221. PORTABILITY OF LIFETIME INCOME OPTIONS. 

8 (a) IN GENERAL.—Subsection (a) of section 401 is 

9 amended by inserting after paragraph (37) the following 

10 new paragraph: 

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

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

13 of a defined contribution plan shall not be 

14 treated as failing to constitute a qualified trust 

15 under this section solely by reason of allowing— 

16 ‘‘(i) qualified distributions of a life17 time income investment, or 

18 ‘‘(ii) distributions of a lifetime income 

19 investment in the form of a qualified plan 

20 distribution annuity contract, 

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

22 date on which such lifetime income investment 

23 is no longer authorized to be held as an invest24 ment option under the plan except as may oth25 erwise be provided by regulations. 


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•S 1270 IS

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

2 subsection— 

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

4 means a direct trustee-to-trustee transfer 

5 to an eligible retirement plan (as defined 

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

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

8 ‘‘(ii) the term ‘lifetime income invest9 ment’ means an investment option that is 

10 designed to provide an employee with elec11 tion rights— 

12 ‘‘(I) that are not uniformly avail13 able with respect to other investment 

14 options under the plan, and 

15 ‘‘(II) that are to a lifetime in16 come feature available through a con17 tract or other arrangement offered 

18 under the plan or under another eligi19 ble retirement plan (as defined in sec20 tion 402(c)(8)(B)) through a direct 

21 trustee-to-trustee transfer to such 

22 other eligible retirement plan under 

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

24 ‘‘(iii) the term ‘lifetime income fea25 ture’ means— 


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•S 1270 IS

1 ‘‘(I) a feature that guarantees a 

2 minimum level of income annually (or 

3 more frequently) for at least the re4 mainder of the life of the employee or 

5 the joint lives of the employee and the 

6 employee’s designated beneficiary, or 

7 ‘‘(II) an annuity payable on be8 half of the employee under which pay9 ments are made in substantially equal 

10 periodic payments (not less frequently 

11 than annually) over the life of the em12 ployee or the joint lives of the em13 ployee and the employee’s designated 

14 beneficiary, taking into account the 

15 rules of clause (iii) of section 

16 401(a)(9)(I), and 

17 ‘‘(iv) the term ‘qualified plan distribu18 tion annuity contract’ means an annuity 

19 contract purchased for a participant and 

20 distributed to the participant by a plan de21 scribed in subparagraph (B) of section 

22 402(c)(8) (without regard to clauses (i) 

23 and (ii) thereof).’’. 

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

25 of section 401(k)(2)(B) is amended by striking ‘‘or’’ at 


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•S 1270 IS

1 the end of subclause (IV), by striking ‘‘and’’ at the end 

2 of subclause (V) and inserting ‘‘or’’, and by adding at the 

3 end of clause (i) the following: 

4 ‘‘(VI) with respect to amounts in5 vested in a lifetime income investment 

6 (as defined in section 

7 401(a)(38)(B)(ii)), the date that is 90 

8 days prior to the date that such life9 time income investment may no longer 

10 be held as an investment option under 

11 the plan, provided that any distribu12 tion under this subclause must be in 

13 the form of a qualified distribution (as 

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

15 or a qualified plan distribution annu16 ity contract (as defined in section 

17 401(a)(38)(B)(iv)), and’’. 

18 (c) SECTION 403(b) PLANS.— 

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

20 section 403(b) is amended by striking ‘‘or’’ at the 

21 end of subparagraph (B), by striking the period at 

22 the end of subparagraph (C), and by inserting ‘‘, 

23 or’’, and by adding at the end the following: 

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

25 lifetime income investment (as defined in secVerDate Mar 15 2010 00:07 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00066 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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•S 1270 IS

1 tion 401(a)(38)(B)(ii)), the date that is 90 days 

2 prior to the date that such lifetime income in3 vestment may no longer be held as an invest4 ment option under the plan, provided that any 

5 distribution under this subparagraph must be 

6 in the form of a qualified distribution (as de7 fined in section 401(a)(38)(B)(i)) or a qualified 

8 plan distribution annuity contract (as defined in 

9 section 401(a)(38)(B)(iv)).’’. 

10 (2) CUSTODIAL ACCOUNTS.—Clause (ii) of sec11 tion 403(b)(7)(A) is amended to read as follows: 

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

13 such amounts may be paid or made avail14 able to any distributee (unless such 

15 amount is a distribution to which section 

16 72(t)(2)(G) applies) before— 

17 ‘‘(I) the employee dies, 

18 ‘‘(II) the employee attains age 

591 19 ⁄2, 

20 ‘‘(III) the employee has a sever21 ance from employment, 

22 ‘‘(IV) the employee becomes dis23 abled (within the meaning of section 

24 72(m)(7)), 


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•S 1270 IS

1 ‘‘(V) in the case of contributions 

2 made pursuant to a salary reduction 

3 agreement (within the meaning of sec4 tion 3121(a)(5)(D)), the employee en5 counters financial hardship, or 

6 ‘‘(VI) with respect to amounts in7 vested in a lifetime income investment 

8 (as defined in section 

9 401(a)(38)(B)(ii)), the date that is 90 

10 days prior to the date that such life11 time income investment may no longer 

12 be held as an investment option under 

13 the plan, provided that any distribu14 tion under this subparagraph must be 

15 in the form of a qualified distribution 

16 (as defined in section 

17 401(a)(38)(B)(i)) or a qualified plan 

18 distribution annuity contract (as de19 fined in section 401(a)(38)(B)(iv)).’’. 

20 (d) ELIGIBLE DEFERRED COMPENSATION PLANS.— 

21 Subparagraph (A) of section 457(d)(1) is amended by 

22 striking ‘‘or’’ at the end of clause (ii), by inserting ‘‘or’’ 

23 at the end of clause (iii), and by adding after clause (iii) 

24 the following: 


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•S 1270 IS

1 ‘‘(iv) in the case of a plan maintained 

2 by an employer described in subsection 

3 (e)(1)(A), with respect to amounts invested 

4 in a lifetime income investment (as defined 

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

6 is 90 days prior to the date that such life7 time income investment may no longer be 

8 held as an investment option under the 

9 plan, provided that any distribution under 

10 this subparagraph must be in the form of 

11 a qualified distribution (as defined in sec12 tion 401(a)(38)(B)(i)) or a qualified plan 

13 distribution annuity contract (as defined in 

14 section 401(a)(38)(B)(iv)),’’. 

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

16 this section shall apply to plan years beginning after De17 cember 31, 2013. 

18 SEC. 222. CONSOLIDATION OF DEFINED CONTRIBUTION 

19 PLAN NOTICES. 

20 (a) IN GENERAL.— 

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

22 the enactment of this Act, the Secretary of Labor 

23 and the Secretary of the Treasury shall adopt final 

24 regulations providing that a plan may, but is not re25 quired to, consolidate two or more of the notices reVerDate Mar 15 2010 00:07 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00069 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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•S 1270 IS

1 quired under sections 404(c)(5)(B) and 514(e)(3) of 

2 the Employee Retirement Income Security Act of 

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

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

5 Internal Revenue Code of 1986, and section 

6 2550.404a–5 of title 29, Code of Federal Regula7 tions (29 C.F.R. 2550.404a–5) into a single notice 

8 or, to the extent provided by such regulations, con9 solidate such notices with the summary plan descrip10 tion or summary of material modifications described 

11 in section 104(b) of the Employee Retirement In12 come Security Act of 1974 (29 U.S.C. 1024(b)), so 

13 long as the combined notice, summary plan descrip14 tion or summary of material modifications includes 

15 the required content, clearly identifies the issues ad16 dressed therein, and is provided at the time and with 

17 the frequency required for each such notice. 

18 (2) The Secretary of Labor and the Secretary 

19 of the Treasury may include in such regulations 

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

21 consolidated with the summary plan description or 

22 summary of material modifications, the presentation, 

23 placement, or prominence of the information in such 

24 notices shall not have the effect of failing to inform 


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•S 1270 IS

1 participants and beneficiaries regarding the informa2 tion in such notices. 

3 (b) PROVISION OF ANNUAL NOTICES WITHOUT RE4 GARD TO PLAN YEAR.— 

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

6 Employee Retirement Income Security Act of 1974 

7 (29 U.S.C. 1104(c)(5)(B)) is amended— 

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

9 reasonable period of time before each plan 

10 year,’’ and inserting ‘‘within a reasonable pe11 riod before the arrangement described in sub12 paragraph (A) applies to such participant or 

13 beneficiary, and thereafter at least once within 

14 any 12-month period (without regard to the 

15 plan year) during which such arrangement ap16 plies,’’, and 

17 (B) in subclause (II) by striking ‘‘and be18 fore the beginning of the plan year’’. 

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

20 the Employee Retirement Income Security Act of 

21 1974 (29 U.S.C. 1144(e)(3)(A)) is amended by 

22 striking ‘‘, within a reasonable period before such 

23 plan year, provide to each participant to whom the 

24 arrangement applies for such plan year’’ and insert25 ing ‘‘, within a reasonable period before the arrangeVerDate Mar 15 2010 00:07 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00071 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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1 ment applies to a participant or beneficiary, and 

2 thereafter at least once within any 12-month period 

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

4 arrangement applies, provide’’. 

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

6 Internal Revenue Code of 1986 is amended by strik7 ing ‘‘, within a reasonable period before each plan 

8 year, each employee eligible to participate in the ar9 rangement for such year receives’’ and inserting 

10 ‘‘each employee eligible to participate in the arrange11 ment receives, within a reasonable period before the 

12 employee becomes eligible, and thereafter within a 

13 reasonable period before each plan year during 

14 which such arrangement applies,’’. 

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

16 the Internal Revenue Code of 1986 is amended by 

17 striking ‘‘, within a reasonable period before any 

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

19 written notice, within a reasonable period before the 

20 employee becomes eligible, and thereafter within a 

21 reasonable period before each plan year during 

22 which such arrangement applies,’’. 

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

24 the Internal Revenue Code of 1986 is amended by 

25 striking ‘‘, within a reasonable period before each 


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1 plan year, give to each employee to whom an ar2 rangement described in paragraph (3) applies for 

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

4 period before an arrangement described in para5 graph (3) applies to an employee, and thereafter at 

6 least once within any 12-month period (without re7 gard to the plan year) during which such arrange8 ment applies, give to each such employee’’. 

9 SEC. 223. PERFORMANCE BENCHMARKS FOR ASSET ALLO10 CATION FUNDS. 

11 Not later than six months after the date of enactment 

12 of this Act, the Secretary of Labor shall modify the regula13 tions under section 404 of the Employee Retirement In14 come Security Act of 1974 to provide that, in the case 

15 of a designated investment alternative that contains a mix 

16 of asset classes, a plan administrator may, but is not re17 quired to, use a benchmark that is a blend of different 

18 broad-based securities market indices if— 

19 (1) the blend is reasonably representative of the 

20 asset class holdings of the designated investment al21 ternative; 

22 (2) for purposes of determining the blend’s re23 turns for 1-, 5-, and 10-calendar year periods (or for 

24 the life of the alternative, if shorter), the blend is 

25 modified at least once per year to reflect changes in 


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1 the asset class holdings of the designated investment 

2 alternative; and 

3 (3) each securities market index that is used for 

4 an associated asset class would separately satisfy the 

5 requirements of such regulations for such asset 

6 class. 

7 Subtitle C—Longevity Reforms 

8 SEC. 231. MODIFICATION OF REQUIRED MINIMUM DIS9 TRIBUTION RULES WHERE PORTION OF BEN10 EFIT OF DEFINED CONTRIBUTION PLAN IS 

11 ANNUITIZED. 

12 (a) IN GENERAL.—Section 401(a)(9) is amended by 

13 redesignating subparagraph (F) as subparagraph (G) and 

14 by inserting after subparagraph (E) the following: 

15 ‘‘(F) EXEMPTION FOR CERTAIN

16 ANNUITIZED AMOUNTS.—This paragraph shall 

17 not apply to the portion of an employee’s entire 

18 interest under a defined contribution plan which 

19 is invested in a qualified deferred annuity in ac20 cordance with the requirements of subsection 

21 (o).’’. 

22 (b) INVESTMENT IN QUALIFIED ANNUITY.—Section 

23 401 is amended by redesignating subsection (o) as sub24 section (p) and by inserting after subsection (n) the fol25 lowing: 


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1 ‘‘(o) RULES AND DEFINITIONS RELATING TO IN2 VESTMENTS IN QUALIFIED DEFERRED ANNUITIES.— 

3 ‘‘(1) IN GENERAL.—Subparagraph (F) of sub4 section (a)(9) shall apply to the portion of an em5 ployee’s entire interest under the plan invested in a 

6 qualified deferred annuity only if— 

7 ‘‘(A) the annuity contract is purchased on 

8 or before the required beginning date, and 

9 ‘‘(B) the investment in the contract does 

10 not exceed 25 percent of the employee’s entire 

11 interest under the plan as of the close of the 

12 calendar year preceding the calendar year in 

13 which the purchase occurs. 

14 ‘‘(2) EXCEPTION APPLIES ONLY TO 1 ANNU15 ITY.—Subparagraph (F) of subsection (a)(9) shall 

16 apply only with respect to 1 qualified deferred annu17 ity purchased with a portion of an employee’s inter18 est in any plan. 

19 ‘‘(3) QUALIFIED DEFERRED ANNUITY.—For 

20 purposes of subsection (a)(9)(F) and this subsection, 

21 the term ‘qualified deferred annuity’ means an an22 nuity contract— 

23 ‘‘(A) which is a commercial annuity (as de24 fined in section 3405(e)(6)) which provides ben25 efits in the form of either— 


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1 ‘‘(i) a single annuity for the life of the 

2 employee under which the annuity pay3 ments are substantially equal periodic pay4 ments made not less frequently than annu5 ally, or 

6 ‘‘(ii) a qualified joint and survivor an7 nuity (as defined in section 417(b)) which 

8 is the actuarial equivalent of an annuity 

9 under clause (i), and 

10 ‘‘(B) under which payments are deferred 

11 but must commence no later than the date on 

12 which the employee attains the age of 85. 

13 ‘‘(4) EMPLOYEE DYING BEFORE DISTRIBUTIONS

14 BEGIN.—If— 

15 ‘‘(A) an employee dies before the distribu16 tion of the employee’s interest has begun in ac17 cordance with subsection (a)(9)(A)(ii) and be18 fore the employee has invested in a qualified de19 ferred annuity in accordance with this sub20 section, and 

21 ‘‘(B) the designated beneficiary is the sur22 viving spouse of the employee, 

23 the surviving spouse may invest any portion of the 

24 entire interest in a qualified deferred annuity in ac25 cordance with this subsection in the same manner as 


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1 the employee but the required beginning date shall 

2 not be earlier than, and the deferral period of the 

3 annuity shall be based on, the dates the employee 

would have attained the age of 701 4 ⁄2 or 85, respec5 tively. 

6 ‘‘(5) SPECIAL RULE FOR IRAS AND 403(b)S.— 

7 In the case of individual retirement plans and annu8 ity contracts to which the requirements of subsection 

9 (a)(9) apply by reason of subsections (a)(6) and 

10 (b)(3) of section 408 and section 403(b)(10), the 

11 employee may elect to treat all such plans and ac12 counts with the same required beginning date as 1 

13 plan for purposes of applying this subsection.’’. 

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

15 this section shall apply to investments in annuity contracts 

16 after December 31, 2013. 

17 SEC. 232. UPDATING OF MORTALITY TABLES FOR MINIMUM 

18 REQUIRED DISTRIBUTIONS. 

19 Section 401(a)(9), as amended by section 231, is 

20 amended by redesignating subparagraph (G) as subpara21 graph (H) and by inserting after subparagraph (F) the 

22 following: 

23 ‘‘(G) MORTALITY TABLES.— 

24 ‘‘(i) INITIAL UPDATE.—Not later than 

25 1 year after the date of the enactment of 


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1 this subparagraph, the Secretary shall ei2 ther update, or provide new tables to re3 place, the mortality tables used as of such 

4 date for purposes of this paragraph. 

5 ‘‘(ii) PERIODIC REVISION.—The Sec6 retary shall (at least every 5 years) make 

7 revisions in, or provide new tables to re8 place, any table in effect under this sub9 paragraph to reflect the actual experience 

10 of pension plans and projected trends in 

11 such experience. 

12 ‘‘(iii) EFFECTIVE DATE.—Any table 

13 prescribed under this subparagraph shall 

14 apply to plan years beginning after the 

15 date which is 1 year after publication of 

16 the final table.’’. 

17 SEC. 233. MINIMUM REQUIRED DISTRIBUTIONS MAY BE 

18 ROLLED OVER INTO ROTH IRAS. 

19 (a) IN GENERAL.—Section 408A(e) is amended by 

20 adding at the end the following: 

21 ‘‘(3) ROLLOVER OF MINIMUM REQUIRED DIS22 TRIBUTIONS ALLOWED.—Section 408(d)(3)(E) shall 

23 not apply in determining whether a rollover con24 tribution is a qualified rollover distribution under 

25 paragraph (1).’’. 


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

2 this section shall apply to distributions for taxable years 

3 beginning after December 31, 2013. 

4 SEC. 234. TRANSFER OF MINIMUM SURVIVOR ANNUITY RE5 QUIREMENTS FROM PLAN SPONSORS TO AN6 NUITY PROVIDERS. 

7 (a) AMENDMENT OF 1986 CODE.—Section 417 is 

8 amended by adding at the end the following: 

9 ‘‘(h) TRANSFER OF MINIMUM SURVIVOR ANNUITY

10 REQUIREMENTS FROM PLAN SPONSORS TO ANNUITY

11 PROVIDERS.— 

12 ‘‘(1) IN GENERAL.—If a defined contribution 

13 plan to which the requirements of section 401(a)(11) 

14 and this section apply has a designated annuity pro15 vider, then, except as provided in paragraph (3), the 

16 designated annuity provider (and not any plan spon17 sor or administrator) shall be liable for any failure 

18 to meet any such requirement. 

19 ‘‘(2) DESIGNATED ANNUITY PROVIDER.—For 

20 purposes of this subsection, the term ‘designated an21 nuity provider’ means a person licensed under the 

22 laws of any State to issue annuity contracts which 

23 has entered into a contract with the plan sponsor or 

24 other person who is a fiduciary with respect to the 

25 plan to— 


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1 ‘‘(A) provide annuity contracts to partici2 pants and beneficiaries under the plan, and 

3 ‘‘(B) meet all requirements under this sec4 tion and section 401(a)(11) with respect to the 

5 providing of such annuities, including providing 

6 such annuities in the proper form, providing 

7 any notice or written explanations during any 

8 applicable notice period, and providing the op9 portunity for participants and their spouses or 

10 beneficiaries to make appropriate elections dur11 ing any applicable election period. 

12 ‘‘(3) REQUIREMENT FOR PRUDENT SOLICITA13 TION AND RETENTION OF PROVIDER.—This sub14 section shall apply to a plan with a designated annu15 ity provider only if the plan sponsor or other person 

16 who is a fiduciary with respect to the plan met all 

17 requirements for the prudent selection and periodic 

18 review of the annuity provider with respect to whom 

19 a contract described in paragraph (2) was entered 

20 into. 

21 ‘‘(4) AUTHORITY TO CHARGE FEES TO PARTICI22 PANTS.—A plan shall not be treated as failing to 

23 meet the requirements of this subsection merely be24 cause plan assets are used to pay for reasonable exVerDate Mar 15 2010 00:07 Jul 10, 2013 Jkt 029200 PO 00000 Frm 00080 Fmt 6652 Sfmt 6201 E:\BILLS\S1270.IS S1270

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1 penses of the designated annuity provider in meeting 

2 the requirements described in paragraph (2)(B). 

3 ‘‘(5) ELECTRONIC NOTIFICATION.—The Sec4 retary shall, to the maximum extent practicable, en5 sure that notices and explanations provided by the 

6 designated annuity provider are provided in elec7 tronic form.’’. 

8 (b) AMENDMENT OF ERISA.—Section 205 of the 

9 Employee Retirement Income Security Act of 1974 (29 

10 U.S.C. 1055) is amended by adding at the end the fol11 lowing: 

12 ‘‘(m) TRANSFER OF MINIMUM SURVIVOR ANNUITY

13 REQUIREMENTS FROM PLAN SPONSORS TO ANNUITY

14 PROVIDERS.— 

15 ‘‘(1) IN GENERAL.—If an individual account 

16 plan to which the requirements of this section apply 

17 has a designated annuity provider, then, except as 

18 provided in paragraph (3), the designated annuity 

19 provider (and not any plan sponsor or adminis20 trator) shall be liable for any failure to meet any 

21 such requirement. 

22 ‘‘(2) DESIGNATED ANNUITY PROVIDER.—For 

23 purposes of this subsection, the term ‘designated an24 nuity provider’ means a person licensed under the 

25 laws of any State to issue annuity contracts which 


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1 has entered into a contract with the plan sponsor or 

2 other person who is a fiduciary with respect to the 

3 plan to— 

4 ‘‘(A) provide annuity contracts to partici5 pants and beneficiaries under the plan, and 

6 ‘‘(B) meet all requirements under this sec7 tion and section 401(a)(11) of the Internal Rev8 enue Code of 1986 with respect to the providing 

9 of such annuities, including providing such an10 nuities in the proper form, providing any notice 

11 or written explanations during any applicable 

12 notice period, and providing the opportunity for 

13 participants and their spouses or beneficiaries 

14 to make appropriate elections during any appli15 cable election period. 

16 ‘‘(3) REQUIREMENT FOR PRUDENT SOLICITA17 TION AND RETENTION OF PROVIDER.—This sub18 section shall apply to a plan with a designated annu19 ity provider only if the plan sponsor or other person 

20 who is a fiduciary with respect to the plan met all 

21 requirements for the prudent selection and periodic 

22 review of the annuity provider with respect to whom 

23 a contract described in paragraph (2) was entered 

24 into. 


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1 ‘‘(4) AUTHORITY TO CHARGE FEES TO PARTICI2 PANTS.—A plan shall not be treated as failing to 

3 meet the requirements of this subsection merely be4 cause plan assets are used to pay for reasonable ex5 penses of the designated annuity provider in meeting 

6 the requirements described in paragraph (2)(B). 

7 ‘‘(5) ELECTRONIC NOTIFICATION.—The Sec8 retary of the Treasury shall, to the maximum extent 

9 practicable, ensure that notices and explanations 

10 provided by the designated annuity provider are pro11 vided in electronic form.’’. 

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

13 this section shall apply to plan years beginning after De14 cember 31, 2013. 

15 SEC. 235. EXPANSION OF EMPLOYEE PLANS COMPLIANCE 

16 RESOLUTION SYSTEM. 

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

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

19 Treasury shall modify the Employee Plans Compliance 

20 Resolution System (as described in Revenue Procedure 

21 2013–12) to achieve the results specified in the succeeding 

22 subsections of this section and to further facilitate correc23 tions and compliance in such other means as the Secretary 

24 deems appropriate. 

25 (b) LOAN ERROR.— 


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

2 corrections are specified under the voluntary compli3 ance program, self-correction shall be made available 

4 by methods applicable to such loans through the vol5 untary compliance program. 

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

7 error corrected pursuant to paragraph (1) as meet8 ing the requirements of the Voluntary Fiduciary 

9 Correction Program of the Department of Labor. 

10 (c) 457(b) PLAN CORRECTION.—The Secretary of 

11 the Treasury shall update the Employee Plans Compliance 

12 Resolution System to provide the same type of comprehen13 sive correction program that is available under such sys14 tem to retirement plans qualified under section 401(a) of 

15 the Internal Revenue Code of 1986 to plans maintained 

16 pursuant to section 457(b) of such Code by an employer 

17 described in section 457(e)(1)(A) of such Code. 

18 (d) EPCRS FOR IRAS.—The Secretary of the Treas19 ury shall expand the Employee Plans Compliance Resolu20 tion System to allow custodians of individual retirement 

21 plans to address inadvertent errors for which the owner 

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

23 (but not limited to)— 


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1 (1) waivers of the excise tax that would other2 wise apply under section 4974 of the Internal Rev3 enue Code of 1986, 

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

5 Employee Plans Compliance Resolution System, 

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

7 the deadline is missed for reasons beyond the rea8 sonable control of the account owner, and 

9 (3) rules permitting a nonspouse beneficiary to 

10 return distributions to an inherited individual retire11 ment plan described in section 408(d)(3)(C) of the 

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

13 to an inadvertent error by a service provider, the 

14 beneficiary had reason to believe that the distribu15 tion could be rolled over without inclusion in income 

16 of any part of the distributed amount. 

17 (e) REQUIRED MINIMUM DISTRIBUTION CORREC18 TIONS.—The Secretary of the Treasury shall expand the 

19 Employee Plans Compliance Resolution System to allow 

20 plans to which such system applies and custodians of indi21 vidual retirement plans to self-correct, without an excise 

22 tax, any inadvertent errors pursuant to which a distribu23 tion is made no more than 180 days after it was required 

24 to be made. 


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1 (f) AUTOMATIC FEATURE ERROR CORRECTION.—In 

2 order to promote the adoption of automatic enrollment 

3 and automatic escalation, the Secretary of the Treasury 

4 shall modify the Employee Plans Compliance Resolution 

5 System to establish specific correction methods for errors 

6 in implementing automatic enrollment and automatic es7 calation features. 

8 Subtitle D—Modifications to the 

9 Employee Retirement Income 

10 Security Act of 1974 

11 SEC. 241. ELECTRONIC COMMUNICATION OF PENSION 

12 PLAN INFORMATION. 

13 (a) AMENDMENT TO EMPLOYEE RETIREMENT IN14 COME SECURITY ACT OF 1974.—Part 1 of subtitle B of 

15 title 1 of the Employee Retirement Income Security Act 

16 of 1974 (29 U.S.C. 1021 et seq.) is amended by adding 

17 at the end the following new section: 

18 ‘‘SEC. 112. ELECTRONIC COMMUNICATION OF PENSION 

19 PLAN INFORMATION. 

20 ‘‘Any document that is required or permitted under 

21 this title to be furnished to a plan participant, beneficiary, 

22 or other individual with respect to a pension plan may be 

23 furnished in electronic form if— 

24 ‘‘(1) the system for furnishing such a docu25 ment— 


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1 ‘‘(A) is designed to result in access to the 

2 document by the participant, beneficiary, or 

3 other specified individual through electronic 

4 means, including— 

5 ‘‘(i) the direct delivery of material to 

6 an electronic address of such participant, 

7 beneficiary, or individual, 

8 ‘‘(ii) the posting of material to a 

9 website or other internet or electronic10 based information repository to which ac11 cess has been granted to such participant, 

12 beneficiary, or individual, but only if prop13 er notice of the posting has been provided 

14 (which may include notice furnished by 

15 other electronic means if the content of the 

16 notice conveys the need to take action to 

17 access the posted material), and 

18 ‘‘(iii) other electronic means reason19 ably calculated to ensure actual receipt of 

20 the material by such participant, bene21 ficiary, or individual, and 

22 ‘‘(B) protects the confidentiality of per23 sonal information relating to such participant’s, 

24 beneficiary’s, or individual’s accounts and bene25 fits; 


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1 ‘‘(2) the participant or beneficiary has not 

2 elected to receive a paper version of such document; 

3 ‘‘(3) notice is provided to each participant or 

4 beneficiary, in electronic or non-electronic form, be5 fore a document is furnished electronically, that ap6 prises the individual of the right to elect to receive 

7 a paper version of such document; and 

8 ‘‘(4) the electronically furnished document— 

9 ‘‘(A) is prepared and furnished in a man10 ner that is consistent with the style, format, 

11 and content requirements applicable to the par12 ticular document; and 

13 ‘‘(B) includes a notice that apprises the in14 dividual of the significance of the document 

15 when it is not otherwise reasonably evident as 

16 transmitted. 

17 For purposes of this section, the term ‘document’ includes 

18 reports, statements, notices, notifications, and other infor19 mation.’’. 

20 (b) AMENDMENT TO INTERNAL REVENUE CODE OF

21 1986.—Section 414 of the Internal Revenue Code of 1986 

22 is amended by adding at the end the following new sub23 section: 

24 ‘‘(y) ELECTRONIC COMMUNICATION OF PENSION

25 PLAN INFORMATION.—Any document that is required or 


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1 permitted under this title to be furnished to a plan partici2 pant, beneficiary, or other individual with respect to a pen3 sion plan may be furnished in electronic form if— 

4 ‘‘(1) the system for furnishing such a docu5 ment— 

6 ‘‘(A) is designed to result in access to the 

7 document by the participant, beneficiary, or 

8 other specified individual through electronic 

9 means, including— 

10 ‘‘(i) the direct delivery of material to 

11 an electronic address of such participant, 

12 beneficiary, or individual, 

13 ‘‘(ii) the posting of material to a 

14 website or other internet or electronic15 based information repository to which ac16 cess has been granted to such participant, 

17 beneficiary, or individual, but only if prop18 er notice of the posting has been provided 

19 (which may include notice furnished by 

20 other electronic means if the content of the 

21 notice conveys the need to take action to 

22 access the posted material), and 

23 ‘‘(iii) other electronic means reason24 ably calculated to ensure actual receipt of 


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1 the material by such participant, bene2 ficiary, or individual, and 

3 ‘‘(B) protects the confidentiality of per4 sonal information relating to such participant’s, 

5 beneficiary’s, or individual’s accounts and bene6 fits; 

7 ‘‘(2) the participant or beneficiary has not 

8 elected to receive a paper version of such document; 

9 ‘‘(3) notice is provided to each participant or 

10 beneficiary, in electronic or non-electronic form, be11 fore a document is furnished electronically, that ap12 prises the individual of the right to elect to receive 

13 a paper version of such document; and 

14 ‘‘(4) the electronically furnished document— 

15 ‘‘(A) is prepared and furnished in a man16 ner that is consistent with the style, format, 

17 and content requirements applicable to the par18 ticular document; and 

19 ‘‘(B) includes a notice that apprises the in20 dividual of the significance of the document 

21 when it is not otherwise reasonably evident as 

22 transmitted. 

23 For purposes of this subsection, the term ‘document’ in24 cludes reports, statements, notices, notifications, and 

25 other information.’’. 


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

2 this section shall apply with respect to documents fur3 nished with respect to plan years beginning after Decem4 ber 31, 2013. 

5 SEC. 242. MODIFICATION OF DEADLINES FOR SUMMARY 

6 PLAN DESCRIPTION UPDATES. 

7 (a) IN GENERAL.—Paragraph (1) of section 104(b) 

8 of the Employee Retirement Income Security Act of 1974 

9 (29 U.S.C. 1024(b)(1)) is amended to read as follows: 

10 ‘‘(1)(A) The administrator shall furnish to each par11 ticipant, and each beneficiary receiving benefits under the 

12 plan, a copy of the summary plan description, and all 

13 modifications and changes referred to in section 102(a)— 

14 ‘‘(i) within 90 days after becoming a partici15 pant, or in the case of a beneficiary, within 90 days 

16 after first receiving benefits, or 

17 ‘‘(ii) if later, within 120 days after the plan be18 comes subject to this part. 

19 ‘‘(B)(i) Except as provided in clause (ii), the adminis20 trator shall furnish to each participant, and each bene21 ficiary receiving benefits under the plan, every fifth year 

22 after the plan becomes subject to this part an updated 

23 summary plan description described in section 102 which 

24 integrates all plan amendments made within such five-year 

25 period, except that in a case where no amendments have 


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1 been made to a plan during such five-year period, this sen2 tence shall not apply. Notwithstanding the foregoing, the 

3 administrator shall furnish to each participant, and to 

4 each beneficiary receiving benefits under the plan, the 

5 summary plan description described in section 102 every 

6 tenth year after the plan becomes subject to this part. 

7 ‘‘(ii) In the case of a pension plan, the administrator 

8 shall furnish to each participant, and each beneficiary re9 ceiving benefits under the plan, 210 days after the end 

10 of each remedial plan review period, an updated summary 

11 plan description described in section 102 which integrates 

12 all plan amendments made during such period, except that 

13 if no amendments have been made to a plan during such 

14 period, an updated summary plan description shall be fur15 nished not later than 210 days after the end of the subse16 quent remedial plan review period (without regard to 

17 whether plan amendments were made during such subse18 quent period). 

19 ‘‘(C)(i) If there is a modification or change described 

20 in section 102(a) (other than a material reduction in cov21 ered services or benefits provided in the case of a group 

22 health plan (as defined in section 733(a)(1))), a summary 

23 description of such modification or change shall be fur24 nished not later than 210 days after the end of the plan 

25 year in which the change is adopted to each participant, 


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1 and to each beneficiary who is receiving benefits under the 

2 plan. 

3 ‘‘(ii) For purposes of clause (i), any amendment to 

4 a pension plan adopted during a remedial plan review pe5 riod shall be treated as adopted in the plan year in which 

6 the amendment took effect. 

7 ‘‘(D) If there is a modification or change described 

8 in section 102(a) that is a material reduction in covered 

9 services or benefits provided under a group health plan 

10 (as defined in section 733(a)(1)), a summary description 

11 of such modification or change shall be furnished to par12 ticipants and beneficiaries not later than 60 days after the 

13 date of the adoption of the modification or change. In the 

14 alternative, the plan sponsors may provide such descrip15 tion at regular intervals of not more than 90 days. 

16 ‘‘(E) In this paragraph, the term ‘remedial plan re17 view period’ means, with respect to any pension plan, the 

18 period established by the Secretary of the Treasury under 

19 the authority of subsection (b) of section 401 of the Inter20 nal Revenue Code of 1986 as the regular cycle of review 

21 by the Secretary of the Treasury for determining whether 

22 the pension plan continues to meet the requirements of 

23 such Code for treatment as a qualified plan under sub24 section (a) of such section 401.’’. 


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

2 this section shall apply with respect to summary plan de3 scriptions furnished under section 104(b) of the Employee 

4 Retirement Income Security Act of 1974 (29 U.S.C. 

5 1024(b)), and modifications or changes described in sec6 tion 102(a) of such Act (29 U.S.C. 1022(a)), with respect 

7 to plan years beginning after December 31, 2013. 

8 SEC. 243. MODIFICATION OF SMALL PLAN SIMPLIFIED RE9 PORTING REQUIREMENTS. 

10 (a) IN GENERAL.—Section 104(a)(2) of the Em11 ployee Retirement Income Security Act of 1974, as 

12 amended by section 201(c) of this Act, is amended by 

13 striking ‘‘100 participants’’ and inserting ‘‘100 partici14 pants who have an accrued benefit under the plan’’. 

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

16 this section shall apply to plan years beginning after De17 cember 31, 2013. 

18 SEC. 244. FIDUCIARY REQUIREMENT REGARDING SELEC19 TION OF ANNUITY PROVIDER AND ANNUITY 

20 CONTRACT. 

21 (a) IN GENERAL.—Section 404 of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1104) 

23 is amended by adding at the end the following: 

24 ‘‘(e) ABILITY OF ANNUITY PROVIDERS TO MAKE

25 PAYMENTS.—In the case of the selection of an annuity 


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1 provider and annuity contract in connection with the pay2 ment of benefits under a defined contribution plan, the 

3 fiduciary requirement under subsection (a)(1)(B) is 

4 deemed satisfied with respect to determining the ability 

5 of the annuity provider to make all payments due under 

6 the contract to the extent that such payments are guaran7 teed by a State guaranty association under applicable 

8 State law in effect as of the date of issuance of the con9 tract.’’. 

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

11 subsection (a) shall apply to annuity contracts purchased 

12 after the date of enactment of this Act. 

13 TITLE III—INDIVIDUAL RETIRE14 MENT INVESTMENT ADVICE 

15 REFORM 

16 SEC. 301. TRANSFER TO SECRETARY OF THE TREASURY OF 

17 AUTHORITIES REGARDING INDIVIDUAL RE18 TIREMENT PLANS. 

19 (a) IN GENERAL.—Section 102 of Reorganization 

20 Plan No. 4 of 1978 (ratified and affirmed as law by Public 

21 Law 98–532 (98 Stat. 2705)) is amended— 

22 (1) in subsection (a)— 

23 (A) by striking ‘‘and’’ at the end of clause 

24 (ii), 


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1 (B) by striking ‘‘and’’ at the end of clause 

2 (iii), and 

3 (C) by inserting ‘‘(iv) regulations, rulings, 

4 opinions, and exemptions relating to individual 

5 retirement accounts described in section 408(a) 

6 of the Code and individual retirement annuities 

7 described in section 408(b) of the Code, includ8 ing simplified employee pensions under section 

9 408(k) of the Code and simple retirement ac10 counts under section 408(p) of the Code; and 

11 (v) regulations described in section 103(b) of 

12 this Plan; and’’ at the end of clause (iii) (as 

13 amended by subparagraph (B)), and 

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

15 flush sentence: 

16 ‘‘The Secretary of the Treasury shall consult with the Se17 curities and Exchange Commission in prescribing regula18 tions, rulings, opinions, and exemptions under subsection 

19 (a)(iv) that provide guidance of general application as to 

20 the professional standards of care (whether involving fidu21 ciary, suitability, or other standards) owed by brokers and 

22 investment advisors to owners and account holders of ac23 counts and annuities described in such subsection.’’. 

24 (b) JOINT AUTHORITY.—Section 103 of such Plan is 

25 amended— 


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1 (1) by striking ‘‘In the case of’’ and inserting: 

2 ‘‘(a) In the case of’’; and 

3 (2) by adding at the end: 

4 ‘‘(b)(1) The Secretary of the Treasury and the Sec5 retary of Labor shall have joint authority to issue regula6 tions described in this subsection, and any such regula7 tions shall be issued jointly by such Secretaries. 

8 ‘‘(2) A regulation is described in this subsection if 

9 (i) the regulation is not described in clause (i), (ii), (iii), 

10 or (iv) of section 102(a) of this Plan and (ii) defines or 

11 interprets a term or requirement that is included in sec12 tion 4975 of the Code or section 406 of ERISA. The de13 termination of whether any regulation is described in this 

14 subsection shall be made without regard to whether any 

15 such term or requirement is also used or defined in any 

16 other provision of the Code or ERISA.’’. 

17 (c) EFFECTIVE DATE.— 

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

19 this section shall apply to regulations, rulings, opin20 ions, and exemptions which have not been finalized 

21 as of July 8, 2013. 

22 (2) TRANSITION.—Any final regulation, ruling, 

23 opinion, or exemption described in section 102(a)(iv) 

24 or 103(b) of Reorganization Plan No. 4 of 1978 (as 

25 added by the amendments made by this section) 


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1 which was issued by the Secretary of Labor before 

2 July 9, 2013, shall apply until such time as such 

3 regulation, ruling, opinion, or exemption is revoked 

4 or modified pursuant to such amendments. 

Æ 


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