II 

113TH CONGRESS 

2D SESSION S. 1970 

To amend the Internal Revenue Code of 1986 to modify safe harbor requirements applicable to automatic contribution arrangements, and for other 

purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 29, 2014 

Ms. COLLINS (for herself and Mr. NELSON) 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 modify 

safe harbor requirements applicable to automatic contribution arrangements, 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. 

4 This Act may be cited as the ‘‘Retirement Security 

5 Act of 2014’’. 

6 SEC. 2. ELIMINATION OF DISINCENTIVE TO POOLING FOR 

7 MULTIPLE EMPLOYER PLANS. 

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

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


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1 Treasury shall prescribe final regulations under which a 

2 plan described in section 413(c) of the Internal Revenue 

3 Code of 1986 may be treated as satisfying the qualifica4 tion requirements of section 401(a) of such Code despite 

5 the violation of such requirements with respect to one or 

6 more participating employers. Such rules may require that 

7 the portion of the plan attributable to such participating 

8 employers be spun off to plans maintained by such em9 ployers. 

10 SEC. 3. MODIFICATION OF ERISA RULES RELATING TO 

11 MULTIPLE EMPLOYER DEFINED CONTRIBU12 TION PLANS. 

13 (a) IN GENERAL.— 

14 (1) REQUIREMENT OF COMMON INTEREST.— 

15 Section 3(2) of the Employee Retirement Income Se16 curity Act of 1974 is amended by adding at the end 

17 the following: 

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

19 not fail to be treated as an employee pension benefit 

20 plan or pension plan solely because the employers 

21 sponsoring the plan share no common interest. 

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

23 term ‘qualified multiple employer plan’ means a plan 

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

25 Code of 1986 which— 


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1 ‘‘(I) is an individual account plan with re2 spect to which the requirements of clauses (iii), 

3 (iv), and (v) are met, and 

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

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

6 identifying information of each participating 

7 employer. 

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

9 if, under the plan, each participating employer re10 tains fiduciary responsibility for— 

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

12 named fiduciary, and 

13 ‘‘(II) the investment and management of 

14 the portion of the plan’s assets attributable to 

15 employees of the employer to the extent not 

16 otherwise delegated to another fiduciary. 

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

18 under the plan, a participating employer is not sub19 ject to unreasonable restrictions, fees, or penalties 

20 by reason of ceasing participation in, or otherwise 

21 transferring assets from, the plan. 

22 ‘‘(v) The requirements of this clause are met if 

23 each participating employer in the plan is an eligible 

24 employer as defined in section 408(p)(2)(C)(i) of the 

25 Internal Revenue Code of 1986, applied— 


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1 ‘‘(I) by substituting ‘500’ for ‘100’ in sub2 clause (I) thereof, 

3 ‘‘(II) by substituting ‘5’ for ‘2’ each place 

4 it appears in subclause (II) thereof, and 

5 ‘‘(III) without regard to the last sentence 

6 of subclause (II) thereof.’’. 

7 (2) SIMPLIFIED REPORTING FOR SMALL MUL8 TIPLE EMPLOYER PLANS.—Section 104(a) of such 

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

10 the end the following: 

11 ‘‘(7)(A) In the case of any eligible small multiple em12 ployer plan, the Secretary may by regulation— 

13 ‘‘(i) prescribe simplified summary plan descrip14 tions, annual reports, and pension benefit state15 ments for purposes of section 102, 103, or 105, re16 spectively, and 

17 ‘‘(ii) waive the requirement under section 

18 103(a)(3) to engage an independent qualified public 

19 accountant in cases where the Secretary determines 

20 it appropriate. 

21 ‘‘(B) For purposes of this paragraph, the term ‘eligi22 ble small multiple employer plan’ means, with respect to 

23 any plan year— 

24 ‘‘(i) a qualified multiple employer plan, as de25 fined in section 3(2)(C)(ii), or 


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1 ‘‘(ii) any other plan described in section 413(c) 

2 of the Internal Revenue Code of 1986 that satisfies 

3 the requirements of clause (v) of section 3(2)(C).’’. 

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

5 this section shall apply to years beginning after December 

6 31, 2014. 

7 SEC. 4. SECURE DEFERRAL ARRANGEMENTS. 

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

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new paragraph: 

11 ‘‘(14) ALTERNATIVE METHOD FOR SECURE DE12 FERRAL ARRANGEMENTS TO MEET NONDISCRIMINA13 TION REQUIREMENTS.— 

14 ‘‘(A) IN GENERAL.—A secure deferral ar15 rangement shall be treated as meeting the re16 quirements of paragraph (3)(A)(ii). 

17 ‘‘(B) SECURE DEFERRAL ARRANGE18 MENT.—For purposes of this paragraph, the 

19 term ‘secure deferral arrangement’ means any 

20 cash or deferred arrangement which meets the 

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

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

23 this paragraph. 

24 ‘‘(C) QUALIFIED PERCENTAGE.—For pur25 poses of this paragraph, with respect to any 


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1 employee, the term ‘qualified percentage’ 

2 means, in lieu of the meaning given such term 

3 in paragraph (13)(C)(iii), any percentage deter4 mined under the arrangement if such percent5 age is applied uniformly and is— 

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

7 than 10 percent, during the period ending 

8 on the last day of the first plan year which 

9 begins after the date on which the first 

10 elective contribution described in para11 graph (13)(C)(i) is made with respect to 

12 such employee, 

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

14 first plan year following the plan year de15 scribed in clause (i), and 

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

17 subsequent plan year. 

18 ‘‘(D) MATCHING CONTRIBUTIONS.— 

19 ‘‘(i) IN GENERAL.—For purposes of 

20 this paragraph, an arrangement shall be 

21 treated as having met the requirements of 

22 paragraph (13)(D)(i) if and only if the em23 ployer makes matching contributions on 

24 behalf of each employee who is not a highly 


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1 compensated employee in an amount equal 

2 to the sum of— 

3 ‘‘(I) 100 percent of the elective 

4 contributions of the employee to the 

5 extent that such contributions do not 

6 exceed 1 percent of compensation, 

7 ‘‘(II) 50 percent of so much of 

8 such contributions as exceed 1 percent 

9 but do not exceed 6 percent of com10 pensation, plus 

11 ‘‘(III) 25 percent of so much of 

12 such contributions as exceed 6 percent 

13 but do not exceed 10 percent of com14 pensation. 

15 ‘‘(ii) APPLICATION OF RULES FOR

16 MATCHING CONTRIBUTIONS.—The rules of 

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

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

19 shall apply for purposes of clause (i) but 

20 the rule of clause (iii) of paragraph 

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

22 The rate of matching contribution for each 

23 incremental deferral must be at least as 

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

25 may be higher, so long as such rate does 


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1 not increase as an employee’s rate of elec2 tive contributions increases.’’. 

3 (b) MATCHING CONTRIBUTIONS AND EMPLOYEE

4 CONTRIBUTIONS.—Subsection (m) of section 401 of the 

5 Internal Revenue Code of 1986 is amended by redesig6 nating paragraph (13) as paragraph (14) and by inserting 

7 after paragraph (12) the following new paragraph: 

8 ‘‘(13) ALTERNATIVE METHOD FOR SECURE DE9 FERRAL ARRANGEMENTS.—A defined contribution 

10 plan shall be treated as meeting the requirements of 

11 paragraph (2) with respect to matching contribu12 tions and employee contributions if the plan— 

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

14 defined in subsection (k)(14)), 

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

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

17 ‘‘(C) provides that matching contributions 

18 on behalf of any employee may not be made 

19 with respect to an employee’s contributions or 

20 elective deferrals in excess of 10 percent of the 

21 employee’s compensation.’’. 

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

23 this section shall apply to plan years beginning after De24 cember 31, 2014. 


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1 SEC. 5. CREDIT FOR EMPLOYERS WITH RESPECT TO MODI2 FIED SAFE HARBOR REQUIREMENTS. 

3 (a) IN GENERAL.—Subpart D of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of 

5 1986 is amended by adding at the end the following new 

6 section: 

7 ‘‘SEC. 45S. CREDIT FOR SMALL EMPLOYERS WITH RESPECT 

8 TO MODIFIED SAFE HARBOR REQUIREMENTS 

9 FOR AUTOMATIC CONTRIBUTION ARRANGE10 MENTS. 

11 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

12 in the case of a small employer, the safe harbor adoption 

13 credit determined under this section for any taxable year 

14 is the amount equal to the total of the employer’s match15 ing contributions under section 401(k)(14)(D) during the 

16 taxable year on behalf of employees who are not highly 

17 compensated employees, subject to the limitations of sub18 section (b). 

19 ‘‘(b) LIMITATIONS.— 

20 ‘‘(1) LIMITATION WITH RESPECT TO COM21 PENSATION.—The credit determined under sub22 section (a) with respect to contributions made on be23 half of an employee who is not a highly compensated 

24 employee shall not exceed 2 percent of the com25 pensation of such employee for the taxable year. 


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1 ‘‘(2) LIMITATION WITH RESPECT TO YEARS OF

2 PARTICIPATION.—Credit shall be determined under 

3 subsection (a) with respect to contributions made on 

4 behalf of an employee who is not a highly com5 pensated employee only during the first 5 years such 

6 employee participates in the qualified automatic con7 tribution arrangement. 

8 ‘‘(c) DEFINITIONS.— 

9 ‘‘(1) IN GENERAL.—Any term used in this sec10 tion which is also used in section 401(k)(14) shall 

11 have the same meaning as when used in such sec12 tion. 

13 ‘‘(2) SMALL EMPLOYER.—The term ‘small em14 ployer’ means an eligible employer (as defined in 

15 section 408(p)(2)(C)(i)). 

16 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 

17 shall be allowable under this title for any contribution with 

18 respect to which a credit is allowed under this section.’’. 

19 (b) CREDIT TO BE PART OF GENERAL BUSINESS

20 CREDIT.—Subsection (b) of section 38 of the Internal 

21 Revenue Code of 1986 is amended— 

22 (1) by striking ‘‘plus’’ at the end of paragraph 

23 (35), 

24 (2) by striking the period at the end of para25 graph (36) and inserting ‘‘, plus’’, and 


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

2 paragraph: 

3 ‘‘(37) the safe harbor adoption credit deter4 mined under section 45S.’’. 

5 (c) CLERICAL AMENDMENT.—The table of sections 

6 for subpart D of part IV of subchapter A of chapter 1 

7 of the Internal Revenue Code of 1986 is amended by add8 ing after the item relating to section 45R the following 

9 new item: 

‘‘Sec. 45S. Credit for small employers with respect to modified safe harbor requirements for automatic contribution arrangements.’’. 

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

11 this section shall apply to taxable years that include any 

12 portion of a plan year beginning after December 31, 2014. 

13 SEC. 6. MODIFICATION OF REGULATIONS. 

14 The Secretary of the Treasury shall promulgate regu15 lations or other guidance that— 

16 (1) simplify and clarify the rules regarding the 

17 timing of participant notices required under section 

18 401(k)(13)(E) of the Internal Revenue Code of 

19 1986, with specific application to— 

20 (A) plans that allow employees to be eligi21 ble for participation immediately upon begin22 ning employment, and 

23 (B) employers with multiple payroll and 

24 administrative systems, and 


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1 (2) simplify and clarify the automatic escalation 

2 rules under sections 401(k)(13)(C)(iii) and 

3 401(k)(14)(C) of the Internal Revenue Code of 1986 

4 in the context of employers with multiple payroll and 

5 administrative systems. 

6 Such regulations or guidance shall address the particular 

7 case of employees within the same plan who are subject 

8 to different notice timing and different percentage require9 ments, and provide assistance for plan sponsors in man10 aging such cases. 

11 SEC. 7. OPPORTUNITY TO CLAIM THE SAVER’S CREDIT ON 

12 FORM 1040EZ. 

13 The Secretary of the Treasury shall modify the forms 

14 for the return of tax of individuals in order to allow indi15 viduals claiming the credit under section 25B of the Inter16 nal Revenue Code of 1986 to file (and claim such credit 

17 on) Form 1040EZ. 

Æ 


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