I 

115TH CONGRESS 

1ST SESSION H. R. 4637 

To amend the Internal Revenue Code of 1986 to encourage retirement savings 

by modifying requirements with respect to employer-established IRAs, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 13, 2017 

Mr. KIND (for himself and Mr. REICHERT) introduced the following bill; which 

was referred to the Committee on Ways and Means, and in addition to 

the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such 

provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to encourage 

retirement savings by modifying requirements with respect to employer-established IRAs, 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; TABLE OF CONTENTS. 

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

5 ‘‘Small businesses Add Value for Employees Act of 2017’’ 

6 or the ‘‘SAVE Act of 2017’’. 


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1 (b) TABLE OF CONTENTS.—The table of contents for 

2 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Elimination of restriction on SIMPLE IRA rollovers. 

Sec. 3. Allowing mid-year SIMPLE IRA plan termination. 

Sec. 4. Elimination of higher penalty on early SIMPLE IRA distributions. 

Sec. 5. Increase in contributions allowed for SIMPLE IRA. 

Sec. 6. SIMPLE 401(k) parity for additional nonelective employer contributions. 

Sec. 7. Automatic deferral IRAs. 

Sec. 8. Modification of automatic enrollment safe harbor. 

Sec. 9. Secure deferral arrangements. 

Sec. 10. Credit for employers with respect to modified safe harbor requirements. 

Sec. 11. Modification of regulations. 

Sec. 12. Limited transfer of unused balance in flexible spending arrangement. 

Sec. 13. Prior years compensation taken into account in determining maximum 

retirement savings deduction. 

Sec. 14. Expanding small employer pension plan startup cost credit. 

Sec. 15. Financial education. 

Sec. 16. Small employer plans. 

Sec. 17. Modification of ERISA rules relating to multiple employer defined contribution plans. 

Sec. 18. Clarification of treatment of individual retirement plans with payroll 

deduction. 

Sec. 19. Disclosure regarding lifetime income. 

Sec. 20. Lifetime income safe harbor. 

3 SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA 

4 ROLLOVERS. 

5 (a) IN GENERAL.—Section 408(d)(3) of the Internal 

6 Revenue Code of 1986 is amended by striking subpara7 graph (G). 

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

9 this section shall apply to distributions in taxable years 

10 beginning after the date of the enactment of this Act. 


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1 SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMI2 NATION. 

3 (a) IN GENERAL.—Section 408(p) of the Internal 

4 Revenue Code of 1986 is amended by adding at the end 

5 the following new paragraph: 

6 ‘‘(11) SPECIAL RULES RELATING TO MID-YEAR

7 TERMINATION.— 

8 ‘‘(A) IN GENERAL.—An employer may 

9 elect to terminate (in such form and manner as 

10 the Secretary may provide) the qualified salary 

11 reduction arrangement of the employer at any 

12 time during the year. 

13 ‘‘(B) PRORATION AND APPLICATION OF

14 QUALIFIED PLAN LIMITATION.—In the case of a 

15 year during which an employer terminates a 

16 qualified salary reduction arrangement before 

17 the end of such year— 

18 ‘‘(i) the applicable dollar amount de19 termined under paragraph (2)(E) for such 

20 year and the applicable dollar amount de21 termined under section 414(v)(2)(B)(ii) for 

22 such year shall both be prorated to the 

23 date of such termination, 

24 ‘‘(ii) for purposes of determining the 

25 compensation of an employee for such ar26 rangement for such year, the year of such 


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1 termination shall be treated as ending on 

2 the date of such termination, and 

3 ‘‘(iii) subparagraph (D) of paragraph 

4 (2) shall not apply with respect to a quali5 fied plan maintained in such year only 

6 after the date of such termination. 

7 ‘‘(C) MATCHING CONTRIBUTION.—Termi8 nation of an arrangement under subparagraph 

9 (A) shall not be construed to modify the re10 quirement of subparagraph (A)(iii) (with re11 spect to any elective employer contributions) or 

12 (B) (with respect to nonelective contributions) 

13 of paragraph (2) made by the employer on be14 half of an employee during the portion of such 

15 year the qualified salary reduction arrangement 

16 is in effect.’’. 

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

18 this section shall apply to years beginning after the date 

19 of the enactment of this Act. 

20 SEC. 4. ELIMINATION OF HIGHER PENALTY ON EARLY SIM21 PLE IRA DISTRIBUTIONS. 

22 (a) IN GENERAL.—Section 72(t) of the Internal Rev23 enue Code of 1986 is amended by striking paragraph (6). 


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

2 this section shall apply to distributions in taxable years 

3 beginning after the date of the enactment of this Act. 

4 SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIM5 PLE IRA. 

6 (a) ADDITIONAL NONELECTIVE EMPLOYER CON7 TRIBUTIONS ALLOWED.— 

8 (1) IN GENERAL.—Section 408(p)(2)(A) of the 

9 Internal Revenue Code of 1986 is amended by strik10 ing ‘‘and’’ at the end of clause (iii), by redesignating 

11 clause (iv) as clause (v), and by inserting after 

12 clause (iii) the following new clause: 

13 ‘‘(iv) the employer may make, in addi14 tion to any other contribution under this 

15 paragraph, nonelective contributions which 

16 meet the requirements of subparagraph 

17 (F), and’’. 

18 (2) REQUIREMENTS RELATING TO ADDITIONAL

19 NONELECTIVE CONTRIBUTIONS.—Section 408(p)(2) 

20 of such Code is amended by adding at the end the 

21 following new subparagraph: 

22 ‘‘(F) REQUIREMENTS RELATING TO ADDI23 TIONAL NONELECTIVE CONTRIBUTIONS UNDER

24 SUBPARAGRAPH (A)(iv).— 


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1 ‘‘(i) IN GENERAL.—Nonelective con2 tributions meet the requirements of this 

3 subparagraph if— 

4 ‘‘(I) such contributions do not ex5 ceed more than 10 percent of com6 pensation (subject to the limitation 

7 described in subparagraph (B)(ii)) for 

8 each employee who is eligible to par9 ticipate in the arrangement and who 

10 has at least $5,000 of compensation 

11 from the employer for the year, and 

12 ‘‘(II) such contributions are 

13 made either as a uniform percentage 

14 of compensation or a uniform dollar 

15 amount for all participants. 

16 ‘‘(ii) PERMITTED DISPARITY RULES

17 NOT APPLICABLE.—Section 401(l) shall 

18 not apply for purposes of determining 

19 whether the requirements of clause (i) are 

20 met.’’. 

21 (3) CONFORMING AMENDMENT.—Section 

22 408(p)(2)(A)(v) of such Code, as redesignated by 

23 this section, is amended by striking ‘‘clause (i) or 

24 (iii)’’ and inserting ‘‘clause (i), (iii), or (iv)’’. 


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1 (b) INCREASE IN ELECTIVE CONTRIBUTION LIMITA2 TION.—Section 408(p)(2)(E) is amended to read as fol3 lows: 

4 ‘‘(E) APPLICABLE DOLLAR AMOUNT.—For 

5 purposes of subparagraph (A)(ii), the applicable 

6 dollar amount shall be the applicable dollar 

7 amount in effect under section 402(g)(1).’’. 

8 (c) SIMPLE IRA SUBJECT TO DEFINED CONTRIBU9 TION PLAN LIMITATION.—Section 408(p) of such Code, 

10 as amended by section 3, is amended by adding at the 

11 end the following new paragraph: 

12 ‘‘(12) SUBJECT TO DEFINED CONTRIBUTION

13 PLAN LIMITATION.—An arrangement shall not be 

14 treated as a qualified salary reduction arrangement 

15 for any year if contributions with respect to any em16 ployee for the year exceed the limitation of para17 graph (1) of section 415(c) (relating to limitation for 

18 defined contribution plans).’’. 

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

20 this section shall apply to contributions for taxable years 

21 beginning after December 31, 2017. 


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1 SEC. 6. SIMPLE 401(k) PARITY FOR ADDITIONAL NONELEC2 TIVE EMPLOYER CONTRIBUTIONS. 

3 (a) IN GENERAL.—Section 401(k)(11)(B) of such 

4 Code is amended by adding at the end the following new 

5 clause: 

6 ‘‘(iv) SPECIAL RULE FOR ADDITIONAL

7 NONELECTIVE EMPLOYER CONTRIBU8 TIONS.—An arrangement shall not be 

9 treated as failing to meet the requirements 

10 of this subparagraph merely because under 

11 such arrangement the employer makes, in 

12 addition to any other contribution under 

13 this subparagraph, nonelective contribu14 tions of not more than 10 percent of com15 pensation for each employee who is eligible 

16 to participate in the arrangement and who 

17 has at least $5,000 of compensation from 

18 the employer for the year.’’. 

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

20 this section shall apply to plan years beginning after De21 cember 31, 2017. 

22 SEC. 7. AUTOMATIC DEFERRAL IRAS. 

23 (a) IN GENERAL.—Subpart A of part I of subchapter 

24 D of chapter 1 of the Internal Revenue Code of 1986 is 

25 amended by inserting after section 408A the following new 

26 section: 


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1 ‘‘SEC. 408B. AUTOMATIC DEFERRAL IRAS. 

2 ‘‘(a) IN GENERAL.—An automatic deferral IRA shall 

3 be treated for purposes of this title in the same manner 

4 as an individual retirement plan. An automatic deferral 

5 IRA may also be treated as a Roth IRA for purposes of 

6 this title if it meets the requirements of section 408A. 

7 ‘‘(b) AUTOMATIC DEFERRAL IRA.—For purposes of 

8 this section, the term ‘automatic deferral IRA’ means an 

9 individual retirement plan (as defined in section 

10 7701(a)(37)) with respect to which contributions are made 

11 under an arrangement which satisfies the requirements of 

12 paragraphs (1) through (4) of subsection (c). 

13 ‘‘(c) AUTOMATIC DEFERRAL IRA ARRANGEMENTS.— 

14 ‘‘(1) ENROLLMENT.— 

15 ‘‘(A) IN GENERAL.—The requirements of 

16 this paragraph are met if each employee eligible 

17 to participate in the arrangement is treated as 

18 having elected to have the employer make pay19 ments as elective contributions to an automatic 

20 deferral IRA on behalf of such employee (which 

21 would have otherwise been made to the em22 ployee directly in cash) in an amount equal to 

23 so much of a qualified percentage of compensa24 tion of such employee as does not exceed the 

25 deductible amount for such year (within the 

26 meaning of section 219(b)). 


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1 ‘‘(B) ELIGIBILITY.—For purposes of sub2 paragraph (A), an employee is eligible to par3 ticipate if such employee has at least $5,000 of 

4 compensation from the employer for the pre5 ceding year. 

6 ‘‘(C) ELECTION OUT.—The election treat7 ed as having been made under subparagraph 

8 (A) shall cease to apply with respect to any em9 ployee who makes an affirmative election— 

10 ‘‘(i) to not have such elective contribu11 tions made, or 

12 ‘‘(ii) not later than the close of the 

13 30-day period beginning on the date of the 

14 first contribution with respect to such em15 ployee, to make elective contributions at a 

16 level specified in such affirmative election. 

17 ‘‘(D) QUALIFIED PERCENTAGE.—For pur18 poses of this paragraph, the term ‘qualified per19 centage’ means, with respect to any employee, 

20 any percentage determined under the arrange21 ment if such percentage is applied uniformly, 

22 does not exceed 15 percent, and is at least— 

23 ‘‘(i) 3 percent during the period end24 ing on the last day of the first plan year 

25 which begins after the date on which the 


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1 first elective contribution described in sub2 paragraph (A) is made with respect to 

3 such employee, and 

4 ‘‘(ii) during any subsequent plan year, 

5 a percentage equal to— 

6 ‘‘(I) 3 percent, plus 

7 ‘‘(II) 1 percent multiplied by the 

8 number of plan years (but not more 

9 than 12) beginning after the plan year 

10 described in clause (i). 

11 ‘‘(2) NOTICE.— 

12 ‘‘(A) IN GENERAL.—The requirements of 

13 this paragraph are met if, within a reasonable 

14 period before the first day an employee is eligi15 ble to participate in the arrangement, the em16 ployee receives written notice of the employee’s 

17 rights and obligations under the arrangement 

18 which— 

19 ‘‘(i) is sufficiently accurate and com20 prehensive to apprise the employee of such 

21 rights, and 

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

23 to be understood by the average employee 

24 to whom the arrangement applies. 


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1 ‘‘(B) TIMING AND CONTENT.—A notice 

2 shall not be treated as meeting the require3 ments of subparagraph (A) with respect to an 

4 employee unless— 

5 ‘‘(i) the notice explains the employee’s 

6 right to elect not to have elective contribu7 tions made on the employee’s behalf (or to 

8 elect to have such contributions made at a 

9 different percentage), 

10 ‘‘(ii) the notice explains how contribu11 tions made under the arrangement will be 

12 invested in the absence of any investment 

13 election by the employee, and 

14 ‘‘(iii) the employee has a reasonable 

15 period of time after receipt of the notice 

16 described in clauses (i) and (ii) and before 

17 the first elective contribution is made to 

18 make either such election. 

19 ‘‘(3) DEFAULT INVESTMENT ARRANGEMENT.— 

20 The requirements of this paragraph are met if— 

21 ‘‘(A) in the absence of an investment elec22 tion by the employee with respect to the em23 ployee’s interest in the trust, such interest is in24 vested as provided in regulations prescribed 

25 pursuant to subparagraph (A) of section 


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1 404(c)(5) of the Employee Retirement Income 

2 Security Act of 1974, and 

3 ‘‘(B) the employer provides each employee 

4 who has an interest in the trust, notice which 

5 meets the requirements of subparagraph (B) of 

6 such section. 

7 ‘‘(4) ADMINISTRATIVE REQUIREMENTS.—The 

8 requirements of this paragraph are met if— 

9 ‘‘(A) an employer must make— 

10 ‘‘(i) the elective contributions under 

11 paragraph (1)(A) not later than the close 

12 of the 30-day period following the last day 

13 of the month with respect to which the 

14 contributions are to be made, and 

15 ‘‘(ii) a payment of interest at the 

16 overpayment rate (as determined under 

17 section 6621(a)) on any such elective con18 tribution made after the end of the period 

19 specified in clause (i), 

20 ‘‘(B) an employee may elect to terminate 

21 participation in the arrangement at any time 

22 during the year, except that if the employee so 

23 terminates, the arrangement may provide that 

24 the employee may not elect to resume participa25 tion until the beginning of the next year, and 


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1 ‘‘(C) each employee eligible to participate 

2 may elect, during the 30-day period before the 

3 beginning of any year, or to modify the amount 

4 subject to such arrangement, for such year.’’. 

5 (b) FAILURE TO MAKE TIMELY CONTRIBUTIONS.— 

6 Chapter 43 of such Code is amended by adding at the 

7 end the following: 

8 ‘‘SEC. 4980J. FAILURE TO MAKE TIMELY CONTRIBUTIONS 

9 UNDER AUTOMATIC DEFERRAL IRAS. 

10 ‘‘(a) INITIAL TAX.—If at any time during any taxable 

11 year an employer maintains an automatic deferral IRA 

12 which is part of a plan to which section 408B applies, 

13 there is hereby imposed on the employer for the taxable 

14 year a tax equal to 10 percent of the aggregate required 

15 contributions to such automatic deferral IRA for all plan 

16 years that are not paid by the date specified in section 

17 408B(c)(4)(A)(i) and that remain unpaid as of the end 

18 of any plan year ending with or within the taxable year. 

19 ‘‘(b) ADDITIONAL TAX.—If a tax is imposed under 

20 subsection (a) on any unpaid required contribution and 

21 such amount remains unpaid as of the close of the taxable 

22 period, there is hereby imposed a tax equal to 100 percent 

23 of the unpaid required contribution to the extent not so 

24 paid or corrected. 

25 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.— 


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1 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

2 DISCOVERED EXERCISING REASONABLE DILI3 GENCE.—No tax shall be imposed by subsection (a) 

4 on any failure during any period for which it is es5 tablished to the satisfaction of the Secretary that the 

6 employer did not know, and exercising reasonable 

7 diligence would not have known, that such failure 

8 existed. 

9 ‘‘(2) TAX NOT TO APPLY TO FAILURES COR10 RECTED WITHIN 30 DAYS.—No tax shall be imposed 

11 by subsection (a) on any failure if— 

12 ‘‘(A) such failure was due to reasonable 

13 cause and not to willful neglect, and 

14 ‘‘(B) such failure is corrected during the 

15 30-day period beginning on the 1st date the 

16 employer knew, or exercising reasonable dili17 gence would have known, that such failure ex18 isted. 

19 ‘‘(3) WAIVER BY SECRETARY.—In the case of a 

20 failure which is due to reasonable cause and not to 

21 willful neglect, the Secretary may waive part or all 

22 of the tax imposed by subsection (a) to the extent 

23 that the payment of such tax would be excessive rel24 ative to the failure involved.’’. 


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1 (c) PREEMPTION OF CONFLICTING STATE LAWS.— 

2 Any law of a State shall be superseded if it would directly 

3 or indirectly prohibit or restrict an employer from creating 

4 or maintaining an automatic deferral IRA (as defined in 

5 section 408B of the Internal Revenue Code of 1986). 

6 (d) CLERICAL AMENDMENT.— 

7 (1) The table of sections for subpart A of part 

8 I of subchapter D of chapter 1 of the Internal Rev9 enue Code of 1986 is amended by inserting after the 

10 item relating to 408A the following new item: 

‘‘Sec. 408B. Automatic deferral IRAs.’’. 

11 (2) The table of sections for chapter 43 of such 

12 Code is amended by adding at the end the following 

13 new item: 

‘‘Sec. 4980J. Failure to make timely contributions under automatic deferral 

IRAs.’’. 

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

15 this section shall apply to taxable years beginning after 

16 December 31, 2017. 

17 SEC. 8. MODIFICATION OF AUTOMATIC ENROLLMENT SAFE 

18 HARBOR. 

19 (a) IN GENERAL.— 

20 (1) REMOVAL OF 10 PERCENT CAP.—Section 

21 401(k)(13)(C)(iii) of the Internal Revenue Code of 

22 1986 is amended by striking ‘‘, does not exceed 10 

23 percent, and is at least’’ and inserting ‘‘and is’’. 


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1 (2) CONFORMING AMENDMENTS.— 

2 (A) Section 401(k)(13)(C)(iii)(I) of such 

3 Code is amended by striking ‘‘3 percent’’ and 

4 inserting ‘‘at least 3 percent, but not greater 

5 than 10 percent,’’. 

6 (B) Section 401(k)(13)(C)(iii)(II) of such 

7 Code is amended by striking ‘‘4 percent’’ and 

8 inserting ‘‘at least 4 percent, but not greater 

9 than 15 percent,’’. 

10 (C) Section 401(k)(13)(C)(iii)(III) of such 

11 Code is amended by striking ‘‘5 percent’’ and 

12 inserting ‘‘at least 5 percent’’. 

13 (D) Section 401(k)(13)(C)(iii)(IV) of such 

14 Code is amended by striking ‘‘6 percent’’ and 

15 inserting ‘‘at least 6 percent’’. 

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

17 this section shall apply to plan years beginning after the 

18 date of enactment of this Act. 

19 SEC. 9. SECURE DEFERRAL ARRANGEMENTS. 

20 (a) IN GENERAL.—Section 401(k) of the Internal 

21 Revenue Code of 1986 is amended by adding at the end 

22 the following new paragraph: 

23 ‘‘(14) ALTERNATIVE METHOD FOR SECURE DE24 FERRAL ARRANGEMENTS TO MEET NONDISCRIMINA25 TION REQUIREMENTS.— 


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1 ‘‘(A) IN GENERAL.—A secure deferral ar2 rangement shall be treated as meeting the re3 quirements of paragraph (3)(A)(ii). 

4 ‘‘(B) SECURE DEFERRAL ARRANGE5 MENT.—For purposes of this paragraph, the 

6 term ‘secure deferral arrangement’ means any 

7 cash or deferred arrangement which meets the 

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

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

10 this paragraph. 

11 ‘‘(C) QUALIFIED PERCENTAGE.—For pur12 poses of this paragraph, with respect to any 

13 employee, the term ‘qualified percentage’ 

14 means, in lieu of the meaning given such term 

15 in paragraph (13)(C)(iii), any percentage deter16 mined under the arrangement if such percent17 age is applied uniformly and is— 

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

19 than 10 percent, during the period ending 

20 on the last day of the first plan year which 

21 begins after the date on which the first 

22 elective contribution described in para23 graph (13)(C)(i) is made with respect to 

24 such employee, 


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

2 first plan year following the plan year de3 scribed in clause (i), and 

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

5 subsequent plan year. 

6 ‘‘(D) MATCHING CONTRIBUTIONS.— 

7 ‘‘(i) IN GENERAL.—For purposes of 

8 this paragraph, an arrangement shall be 

9 treated as having met the requirements of 

10 paragraph (13)(D)(i) if and only if the em11 ployer makes matching contributions on 

12 behalf of each employee who is not a highly 

13 compensated employee in an amount equal 

14 to the sum of— 

15 ‘‘(I) 100 percent of the elective 

16 contributions of the employee to the 

17 extent that such contributions do not 

18 exceed 1 percent of compensation, 

19 ‘‘(II) 50 percent of so much of 

20 such contributions as exceed 1 percent 

21 but do not exceed 6 percent of com22 pensation, plus 

23 ‘‘(III) 25 percent of so much of 

24 such contributions as exceed 6 percent 


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1 but do not exceed 10 percent of com2 pensation. 

3 ‘‘(ii) APPLICATION OF RULES FOR

4 MATCHING CONTRIBUTIONS.—The rules of 

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

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

7 shall apply for purposes of clause (i) but 

8 the rule of clause (iii) of paragraph 

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

10 The rate of matching contribution for each 

11 incremental deferral must be at least as 

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

13 may be higher, so long as such rate does 

14 not increase as an employee’s rate of elec15 tive contributions increases.’’. 

16 (b) MATCHING CONTRIBUTIONS AND EMPLOYEE

17 CONTRIBUTIONS.—Section 401(m) of the Internal Rev18 enue Code of 1986 is amended by redesignating paragraph 

19 (13) as paragraph (14) and by inserting after paragraph 

20 (12) the following new paragraph: 

21 ‘‘(13) ALTERNATIVE METHOD FOR SECURE DE22 FERRAL ARRANGEMENTS.—A defined contribution 

23 plan shall be treated as meeting the requirements of 

24 paragraph (2) with respect to matching contribu25 tions and employee contributions if the plan— 


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

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

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

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

5 ‘‘(C) provides that matching contributions 

6 on behalf of any employee may not be made 

7 with respect to an employee’s contributions or 

8 elective deferrals in excess of 10 percent of the 

9 employee’s compensation.’’. 

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

11 this section shall apply to plan years beginning after De12 cember 31, 2017. 

13 SEC. 10. CREDIT FOR EMPLOYERS WITH RESPECT TO MODI14 FIED SAFE HARBOR REQUIREMENTS. 

15 (a) IN GENERAL.—Subpart D of part IV of sub16 chapter A of chapter 1 of the Internal Revenue Code of 

17 1986 is amended by adding at the end the following new 

18 section: 

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

20 TO MODIFIED SAFE HARBOR REQUIREMENTS 

21 FOR AUTOMATIC CONTRIBUTION ARRANGE22 MENTS. 

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

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

25 credit determined under this section for any taxable year 


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1 is the amount equal to the total of the employer’s match2 ing contributions under section 401(k)(14)(D) during the 

3 taxable year on behalf of employees who are not highly 

4 compensated employees, subject to the limitations of sub5 section (b). 

6 ‘‘(b) LIMITATIONS.— 

7 ‘‘(1) LIMITATION WITH RESPECT TO COM8 PENSATION.—The credit determined under sub9 section (a) with respect to contributions made on be10 half of an employee who is not a highly compensated 

11 employee shall not exceed 2 percent of the com12 pensation of such employee for the taxable year. 

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

14 PARTICIPATION.—Credit shall be determined under 

15 subsection (a) with respect to contributions made on 

16 behalf of an employee who is not a highly com17 pensated employee only during the first 5 years such 

18 employee participates in the qualified automatic con19 tribution arrangement. 

20 ‘‘(c) DEFINITIONS.— 

21 ‘‘(1) IN GENERAL.—Any term used in this sec22 tion which is also used in section 401(k)(14) shall 

23 have the same meaning as when used in such sec24 tion. 


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1 ‘‘(2) SMALL EMPLOYER.—The term ‘small em2 ployer’ means an eligible employer (as defined in 

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

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

5 shall be allowable under this title for any contribution with 

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

7 (b) CREDIT TO BE PART OF GENERAL BUSINESS

8 CREDIT.—Section 38(b) of the Internal Revenue Code of 

9 1986 is amended— 

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

11 (35); 

12 (2) by striking the period at the end of para13 graph (36) and inserting ‘‘, plus’’; and 

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

15 paragraph: 

16 ‘‘(37) the safe harbor adoption credit deter17 mined under section 45S.’’. 

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

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

20 of the Internal Revenue Code of 1986 is amended by add21 ing after the item relating to section 45R the following 

22 new item: 

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


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

2 this section shall apply to taxable years that include any 

3 portion of a plan year beginning after December 31, 2017. 

4 SEC. 11. MODIFICATION OF REGULATIONS. 

5 The Secretary of the Treasury shall promulgate regu6 lations or other guidance that— 

7 (1) simplify and clarify the rules regarding the 

8 timing of participant notices required under section 

9 401(k)(13)(E) of the Internal Revenue Code of 

10 1986, with specific application to— 

11 (A) plans that allow employees to be eligi12 ble for participation immediately upon begin13 ning employment; and 

14 (B) employers with multiple payroll and 

15 administrative systems; and 

16 (2) simplify and clarify the automatic escalation 

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

18 401(k)(14)(C) of the Internal Revenue Code of 1986 

19 in the context of employers with multiple payroll and 

20 administrative systems. 

21 Such regulations or guidance shall address the particular 

22 case of employees within the same plan who are subject 

23 to different notice timing and different percentage require24 ments, and provide assistance for plan sponsors in man25 aging such cases. 


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1 SEC. 12. LIMITED TRANSFER OF UNUSED BALANCE IN 

2 FLEXIBLE SPENDING ARRANGEMENT. 

3 (a) IN GENERAL.—Section 125 of the Internal Rev4 enue Code of 1986 is amended by redesignating sub5 sections (k) and (l) as subsections (l) and (m), respec6 tively, and by inserting after subsection (h) the following 

7 new subsection: 

8 ‘‘(k) SPECIAL RULE FOR UNUSED BENEFITS IN

9 FLEXIBLE SPENDING ARRANGEMENTS.— 

10 ‘‘(1) IN GENERAL.—For purposes of this title, 

11 a plan or other arrangement shall not fail to be 

12 treated as a cafeteria plan or flexible spending ar13 rangement merely because such arrangement pro14 vides for qualified retirement distributions. 

15 ‘‘(2) QUALIFIED RETIREMENT DISTRIBUTION.— 

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 section, the term ‘qualified retirement distribu18 tion’ means any distribution to an individual of 

19 all or a portion of the employee’s account under 

20 such arrangement, but only to the extent— 

21 ‘‘(i) the amount does not exceed the 

22 lesser of— 

23 ‘‘(I) $250, or 

24 ‘‘(II) the unused benefits with re25 spect to the arrangement, and 


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1 ‘‘(ii) the amount received is paid in 

2 the form of a direct trustee-to-trustee 

3 transfer to a qualified retirement plan (as 

4 defined in section 4974(c)), or an eligible 

5 deferred compensation plan (as defined in 

6 section 457(b)) of an eligible employer de7 scribed in section 457(e)(1)(A), maintained 

8 by the same employer as the employer 

9 maintaining the cafeteria plan or flexible 

10 spending arrangement of the individual. 

11 ‘‘(B) UNUSED BENEFITS.—For purposes 

12 of this paragraph, the term ‘unused benefits’ 

13 means, with respect to an employee, the excess 

14 of— 

15 ‘‘(i) the maximum amount of reim16 bursement allowable to the employee dur17 ing a plan year under a flexible spending 

18 arrangement, over 

19 ‘‘(ii) the actual amount of reimburse20 ment during such year under such ar21 rangement. 

22 ‘‘(C) SPECIAL RULES FOR TREATMENT OF

23 CONTRIBUTIONS TO RETIREMENT PLANS.—For 

24 purposes of this title, qualified retirement dis25 tributions— 


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1 ‘‘(i) shall be treated as elective defer2 rals (as defined in section 402(g)(3)) 

3 under an annuity contract described in sec4 tion 403(b), 

5 ‘‘(ii) shall be treated as elective defer6 rals (as so defined) in the case of contribu7 tions to a qualified cash or deferred ar8 rangement (as defined in section 401(k)) 

9 under a plan which is described in section 

10 401(a) which includes a trust which is ex11 empt from tax under section 501(a), 

12 ‘‘(iii) shall be treated as deferred com13 pensation in the case of contributions to an 

14 eligible deferred compensation plan (as de15 fined in section 457(b)) maintained by an 

16 employer described in section 457(e)(1)(A), 

17 and 

18 ‘‘(iv) shall be treated in the manner 

19 designated for purposes of section 408 or 

20 408A in the case of contributions to an in21 dividual retirement plan.’’. 

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

23 this section shall apply to plan years ending after the date 

24 of the enactment of this Act. 


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1 SEC. 13. PRIOR YEARS COMPENSATION TAKEN INTO AC2 COUNT IN DETERMINING MAXIMUM RETIRE3 MENT SAVINGS DEDUCTION. 

4 (a) IN GENERAL.—Section 219(b)(1)(B) of the Inter5 nal Revenue Code of 1986 is amended by inserting ‘‘or 

6 the preceding taxable year’’ after ‘‘such taxable year’’. 

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

8 this section shall apply to taxable years beginning after 

9 the date of the enactment of this Act. 

10 SEC. 14. EXPANDING SMALL EMPLOYER PENSION PLAN 

11 STARTUP COST CREDIT. 

12 (a) IN GENERAL.— 

13 (1) INCLUDING STARTUP COSTS FOR EM14 PLOYER-ESTABLISHED IRAS.—Section 45E(d)(2) of 

15 the Internal Revenue Code of 1986 is amended by 

16 striking ‘‘means a qualified employer plan’’ and all 

17 that follows and inserting: ‘‘means— 

18 ‘‘(A) a qualified employer plan within the 

19 meaning of section 4972(d), and 

20 ‘‘(B) a plan of which an automatic deferral 

21 IRA described in section 408B is a part.’’. 

22 (2) ADDITIONAL CREDIT AMOUNT.— 

23 (A) IN GENERAL.—Section 45E(a) of such 

24 Code is amended by striking ‘‘50 percent of’’ 

25 and all that follows and inserting ‘‘the sum of— 


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1 ‘‘(1) the applicable percentage of the qualified 

2 startup costs paid or incurred by the taxpayer dur3 ing the taxable year, plus 

4 ‘‘(2) $25 multiplied by the number of employees 

5 of the employer who participate in any eligible em6 ployer plan of the employer for the first time in such 

7 taxable year.’’. 

8 (B) APPLICABLE PERCENTAGE.—Section 

9 45E(d) of such Code is amended by adding at 

10 the end the following new paragraph: 

11 ‘‘(4) APPLICABLE PERCENTAGE.—The applica12 ble percentage is— 

13 ‘‘(A) in the case of a plan described in sub14 section (d)(2)(A), 75 percent, or 

15 ‘‘(B) in the case of a plan described in 

16 subsection (d)(2)(B), 50 percent.’’. 

17 (C) CONFORMING AMENDMENT.—Section 

18 45E(c)(2) of such Code is amended— 

19 (i) by striking ‘‘qualified employer 

20 plan’’ in each place it appears and insert21 ing ‘‘eligible employer plan’’; and 

22 (ii) by striking ‘‘QUALIFIED’’ in the 

23 heading thereof and inserting ‘‘ELIGIBLE’’. 

24 (3) INCREASED LIMITATION.—Section 

25 45E(b)(1) of such Code is amended by striking 


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1 ‘‘$500’’ and inserting ‘‘$750 ($2,000 in the case of 

2 qualified startup costs attributable to a plan de3 scribed in subsection (d)(2)(A))’’. 

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

5 this section shall apply to costs paid or incurred in taxable 

6 years beginning after the date of the enactment of this 

7 Act. 

8 SEC. 15. FINANCIAL EDUCATION. 

9 (a) RETIREMENT PLAN EDUCATION FOR SMALL

10 BUSINESSES.—Not later than 6 months after the date of 

11 the enactment of this Act— 

12 (1) the Department of the Treasury Office of 

13 Financial Education, in consultation with the De14 partment of Labor, shall develop and implement an 

15 outreach plan to educate small businesses on the 

16 types of retirement plans available and the benefits 

17 and requirements of such plans; and 

18 (2) the Secretary of the Treasury and the Sec19 retary of Labor shall develop recommendations for 

20 small businesses in order to improve retirement out21 comes. Such recommendations shall take into ac22 count established behavioral trends of employee in23 vestment and the effect of default design features 

24 such as auto escalation, expansion of auto rollovers, 


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1 auto diversification for near retirees, and automatic 

2 forms of distribution. 

3 (b) FINANCIAL LITERACY.— 

4 (1) IN GENERAL.—Not later than 1 year after 

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

6 of the Treasury, in consultation with the Secretary 

7 of Education, shall develop sample age-appropriate 

8 curricula to be made available for financial literacy 

9 education in elementary and secondary schools. 

10 (2) CONTENT OF CURRICULA.—Such curricula 

11 shall include the following: 

12 (A) How to balance a checkbook, read a 

13 credit card statement, and calculate interest 

14 rates. 

15 (B) What a pay stub is and why Federal 

16 and State income taxes and Social Security and 

17 Medicare taxes are withheld from wages. 

18 (C) The differences between various types 

19 of bank accounts. 

20 (D) The significance of a credit score and 

21 how to read credit reports. 

22 (E) The marketing techniques frequently 

23 used by individuals and businesses to attract 

24 patrons. 


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1 (F) The importance of saving for college 

2 and retirement, including the various methods 

3 for saving such as traditional pensions, 401(k)s, 

4 and IRAs. 

5 SEC. 16. SMALL EMPLOYER PLANS. 

6 (a) IN GENERAL.—Section 401(k)(11) of the Inter7 nal Revenue Code of 1986 is amended by adding at the 

8 end the following new subparagraph: 

9 ‘‘(E) DEFERRAL ONLY SMALL EMPLOYER

10 PLAN.— 

11 ‘‘(i) IN GENERAL.—In the case of a 

12 plan described in clause (ii)— 

13 ‘‘(I) the amount described in sub14 paragraph (B)(i)(I) shall be $10,000, 

15 in lieu of the amount in effect under 

16 section 408(p)(2)(A)(ii), 

17 ‘‘(II) such $10,000 amount shall, 

18 in the case years beginning after De19 cember 31, 2018, be adjusted as de20 scribed in section 408(p)(2)(E)(ii) ex21 cept that the base period taken into 

22 account shall be the calendar quarter 

23 beginning July 1, 2017, 


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1 ‘‘(III) subclause (II) of subpara2 graph (B)(i) and clause (ii) of sub3 paragraph (B) shall not apply, and 

4 ‘‘(IV) section 414(v) shall not 

5 apply. 

6 ‘‘(ii) PLAN DESCRIBED.—A plan is de7 scribed in this clause if the plan satisfies 

8 the following requirements: 

9 ‘‘(I) Such plan satisfies the re10 quirements of this paragraph, as 

11 modified by clause (i). 

12 ‘‘(II) The plan includes a quali13 fied automatic contribution arrange14 ment, as defined in paragraph (13), 

15 except that subparagraph (D) of para16 graph (13) shall not apply and the 

17 qualified percentage shall be deter18 mined by reference to subclauses (I), 

19 (II), (III), and (IV) of paragraph 

20 (13)(C)(iii). 

21 ‘‘(III) The plan does not permit 

22 any participant or beneficiary to re23 ceive or maintain a loan from the 

24 plan. 


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1 ‘‘(IV) The plan does not permit 

2 hardship distributions described in 

3 paragraph (2)(B)(i)(IV) except to the 

4 extent any such distribution is 

5 deemed, under regulations prescribed 

6 by the Secretary, to be on account of 

7 an immediate and heavy financial 

8 need of the employee and necessary to 

9 satisfy an immediate and heavy finan10 cial need of the employee. 

11 ‘‘(V) The plan is maintained pur12 suant to a model plan document pub13 lished by the Secretary.’’. 

14 (b) SIMPLIFICATION.— 

15 (1) MODEL PLAN.—Within one year after the 

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

17 the Treasury shall publish a model plan that may be 

18 used to satisfy the requirement of section 

19 401(k)(11)(E)(ii)(V) of the Internal Revenue Code 

20 of 1986. 

21 (2) PROTECTION AGAINST LOSS.—Within 120 

22 days after the date of the enactment of this Act, the 

23 Secretary of Labor shall amend Department of 

24 Labor Regulation section 2550.404c–5(e)(4)(iv)(B) 

25 so that, in the case of a plan described in section 


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1 401(k)(11)(E) of such Code, ‘‘four years’’ shall be 

2 substituted for ‘‘120 days’’. 

3 (3) CLARIFYING DUTIES AND REDUCING BUR4 DENS FOR MULTIPLE EMPLOYER PLANS.—Within 

5 one year after the date of the enactment of this Act, 

6 the Secretary of Labor shall— 

7 (A) publish rules clarifying the extent to 

8 which the fiduciary duties, if any, of a partici9 pating employer fiduciary with respect to a plan 

10 that consists of individual retirement accounts 

11 described in section 413(c) of employees covered 

12 by the plan fail to take such Code are limited 

13 to— 

14 (i) the selection and monitoring of 

15 such employers for the named fiduciary; 

16 and 

17 (ii) the investment and management 

18 of the portion of employers failing to take 

19 the plan’s assets of the plan attributable to 

20 employees of the employer will be trans21 ferred to a plan maintained only by the ex22 tent not otherwise delegated to another fi23 duciary; and 

24 (B) prescribe interim final regulations pro25 viding simplified means by which plans deVerDate Sep 11 2014 03:34 Dec 15, 2017 Jkt 079200 PO 00000 Frm 00035 Fmt 6652 Sfmt 6201 E:\BILLS\H4637.IH H4637

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1 scribed in section 413(c) of such Code may sat2 isfy the requirements of sections 102, 103, and 

3 105 of the Employee Retirement Income Secu4 rity Act of 1974. 

5 For purposes of this paragraph, the term ‘‘partici6 pating employer fiduciary’’ means the participating 

7 employer, any employee of such participating em8 ployer that serves as fiduciary, any committee of 

9 such employees, and any other person whose fidu10 ciaries duties with respect to the plan relate solely 

11 to the participating employer and not to the oper12 ation of the plan with respect to all participating 

13 employers. 

14 (4) ELIMINATION OF DISINCENTIVE TO POOL15 ING.—Not later than one year after the date of the 

16 enactment of this Act, the Secretary of the Treasury 

17 shall prescribe final regulations under which a plan 

18 or to allow a plan to meet requirements described in 

19 section 413(c) of such Code may be treated as satis20 fying the qualification requirements of section 

21 401(a) of such Code despite the violation of such re22 quirements with respect to one or more participating 

23 employers without regard to whether such violation 

24 continues. Solely for this purpose, a plan shall be 

25 treated as violating the qualification requirements of 


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•HR 4637 IH

1 section 401(a) of such Code with respect to a par2 ticipating employer if such employer has failed to 

3 provide the plan sponsor with the information need4 ed to comply with such requirements and such fail5 ure has continued over a period of time that clearly 

6 demonstrates a lack of commitment to compliance. 

7 Such rules may require that the portion of the plan 

8 attributable to such participating employers be spun 

9 off to plans maintained by such employers. 

10 (c) EFFECTIVE DATE.— 

11 (1) IN GENERAL.—Except as provided in para12 graph (2), the amendments made by this section 

13 shall apply to years beginning after December 31, 

14 2017. 

15 (2) EXCEPTION.—Subsection (b) shall apply as 

16 of the date of the enactment of this Act. 

17 SEC. 17. MODIFICATION OF ERISA RULES RELATING TO 

18 MULTIPLE EMPLOYER DEFINED CONTRIBU19 TION PLANS. 

20 (a) IN GENERAL.— 

21 (1) REQUIREMENT OF COMMON INTEREST.— 

22 Section 3(2) of the Employee Retirement Income Se23 curity Act of 1974 (29 U.S.C. 1002(2)) is amended 

24 by adding at the end the following: 


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

2 not fail to be treated as an employee pension benefit 

3 plan or pension plan solely because the employers 

4 maintaining the plan share no common interest. 

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

6 term ‘qualified multiple employer plan’ means a plan 

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

8 Code of 1986 which— 

9 ‘‘(I) is an individual account plan with re10 spect to which the requirements of clauses (iii), 

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

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

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

14 identifying information of each employer main15 taining the plan. 

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

17 if, under the plan, each employer maintaining the 

18 plan retains fiduciary responsibility for— 

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

20 named fiduciary, and 

21 ‘‘(II) the investment and management of 

22 the portion of the plan’s assets attributable to 

23 the employees of the employer to the extent not 

24 otherwise delegated to another fiduciary. 


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

2 under the plan, an employer maintaining the plan is 

3 not subject to unreasonable restrictions, fees, or pen4 alties by reason of ceasing to maintain, or otherwise 

5 transferring assets from, the plan. 

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

7 each employer maintaining the plan is an eligible 

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

9 Internal Revenue Code of 1986, applied— 

10 ‘‘(I) by substituting ‘500’ for ‘100’ in sub11 clause (I) thereof, 

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

13 it appears in subclause (II) thereof, and 

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

15 of subclause (II) thereof.’’. 

16 (2) SIMPLIFIED REPORTING FOR SMALL MUL17 TIPLE EMPLOYER PLANS.—Section 104(a) of such 

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

19 the end the following: 

20 ‘‘(7)(A) In the case of any eligible small multiple em21 ployer plan, the Secretary may by regulation waive the re22 quirement under section 103(a)(3) to engage an inde23 pendent qualified public accountant in cases where the 

24 Secretary determines it appropriate. 


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1 ‘‘(B) For purposes of this paragraph, the term ‘eligi2 ble small multiple employer plan’ means, with respect to 

3 any plan year— 

4 ‘‘(i) a qualified multiple employer plan, as de5 fined in section 3(2)(C)(ii), or 

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

7 of the Internal Revenue Code of 1986 that satisfies 

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

9 (b) CONFORMING AMENDMENT.—Section 3(2)(A) of 

10 such Act (29 U.S.C. 1002(2)(A)) is amended by striking 

11 ‘‘Except as provided in subparagraph (B)’’ and inserting 

12 ‘‘Except as provided in subparagraphs (B) and (C)’’. 

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

14 this section shall apply to years beginning after December 

15 31, 2017. 

16 SEC. 18. CLARIFICATION OF TREATMENT OF INDIVIDUAL 

17 RETIREMENT PLANS WITH PAYROLL DEDUC18 TION. 

19 (a) IN GENERAL.—Section 3(2) of the Employee Re20 tirement Income Security Act of 1974 (29 U.S.C. 

21 1002(2)), as amended by this Act, is amended by adding 

22 at the end the following new subparagraph: 

23 ‘‘(E) Neither an individual retirement plan (as de24 fined in section 7701(a)(37) of the Internal Revenue Code 

25 of 1986) nor an automatic deferral IRA arrangement (as 


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1 described in section 408B of such Code) maintained in 

2 connection with any such individual retirement plan shall 

3 be considered a single employee pension benefit plan mere4 ly because an employer establishes a payroll deduction pro5 gram for the purpose of enabling employees to make vol6 untary contributions to such account or annuity.’’. 

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

8 this section shall take effect on the date of the enactment 

9 of this Act. 

10 SEC. 19. DISCLOSURE REGARDING LIFETIME INCOME. 

11 (a) IN GENERAL.—Section 105(a)(2)(B) of the Em12 ployee Retirement Income Security Act of 1974 (29 

13 U.S.C. 1025(a)(2)) is amended— 

14 (1) in clause (i), by striking ‘‘and’’ at the end; 

15 (2) in clause (ii), by striking ‘‘diversification.’’ 

16 and inserting ‘‘diversification, and’’; and 

17 (3) by inserting at the end the following: 

18 ‘‘(iii) the lifetime income disclosure 

19 described in subparagraph (D)(i). 

20 In the case of pension benefit statements de21 scribed in clause (i) of paragraph (1)(A), a life22 time income disclosure under clause (iii) of this 

23 subparagraph shall only be required to be in24 cluded in one pension benefit statement during 

25 any one 12-month period.’’. 


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1 (b) LIFETIME INCOME.—Section 105(a)(2) of such 

2 Act (29 U.S.C. 1025(a)) is amended by adding at the end 

3 the following new subparagraph: 

4 ‘‘(D) LIFETIME INCOME DISCLOSURE.— 

5 ‘‘(i) IN GENERAL.— 

6 ‘‘(I) DISCLOSURE.—A lifetime in7 come disclosure shall set forth the life8 time income stream equivalent of the 

9 total benefits accrued with respect to 

10 the participant or beneficiary. 

11 ‘‘(II) LIFETIME INCOME STREAM

12 EQUIVALENT OF THE TOTAL BENE13 FITS ACCRUED.—For purposes of this 

14 subparagraph, the term ‘lifetime in15 come stream equivalent of the total 

16 benefits accrued’ means the amount of 

17 monthly payments the participant or 

18 beneficiary would receive if the total 

19 accrued benefits of such participant or 

20 beneficiary were used to provide life21 time income streams described in sub22 clause (III), based on assumptions 

23 specified in rules prescribed by the 

24 Secretary. 


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1 ‘‘(III) LIFETIME INCOME

2 STREAMS.—The lifetime income 

3 streams described in this subclause 

4 are a qualified joint and survivor an5 nuity (as defined in section 205(d)), 

6 based on assumptions specified in 

7 rules prescribed by the Secretary, in8 cluding the assumption that the par9 ticipant or beneficiary has a spouse of 

10 equal age, and a single life annuity. 

11 Such lifetime income streams may 

12 have a term certain or other features 

13 to the extent permitted under rules 

14 prescribed by the Secretary. 

15 ‘‘(ii) MODEL DISCLOSURE.—Not later 

16 than 1 year after the date of the enact17 ment of the Lifetime Income Disclosure 

18 Act, the Secretary shall issue a model life19 time income disclosure, written in a man20 ner so as to be understood by the average 

21 plan participant, that— 

22 ‘‘(I) explains that the lifetime in23 come stream equivalent is only pro24 vided as an illustration; 


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1 ‘‘(II) explains that the actual 

2 payments under the lifetime income 

3 stream described in clause (i)(III) 

4 that may be purchased with the total 

5 benefits accrued will depend on nu6 merous factors and may vary substan7 tially from the lifetime income stream 

8 equivalent in the disclosures; 

9 ‘‘(III) explains the assumptions 

10 upon which the lifetime income stream 

11 equivalent was determined; and 

12 ‘‘(IV) provides such other similar 

13 explanations as the Secretary con14 siders appropriate. 

15 ‘‘(iii) ASSUMPTIONS AND RULES.— 

16 Not later than 1 year after the date of the 

17 enactment of the Lifetime Income Disclo18 sure Act, the Secretary shall— 

19 ‘‘(I) prescribe assumptions that 

20 administrators of individual account 

21 plans may use in converting total ac22 crued benefits into lifetime income 

23 stream equivalents for purposes of 

24 this subparagraph; and 


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1 ‘‘(II) issue interim final rules 

2 under clause (i). 

3 In prescribing assumptions under sub4 clause (I), the Secretary may prescribe a 

5 single set of specific assumptions (in which 

6 case the Secretary may issue tables or fac7 tors that facilitate such conversions), or 

8 ranges of permissible assumptions. To the 

9 extent that an accrued benefit is or may be 

10 invested in a lifetime income stream de11 scribed in clause (i)(III), the assumptions 

12 prescribed under subclause (I) shall, to the 

13 extent appropriate, permit administrators 

14 of individual account plans to use the 

15 amounts payable under such lifetime in16 come stream as a lifetime income stream 

17 equivalent. 

18 ‘‘(iv) LIMITATION ON LIABILITY.—No 

19 plan fiduciary, plan sponsor, or other per20 son shall have any liability under this title 

21 solely by reason of the provision of lifetime 

22 income stream equivalents which are de23 rived in accordance with the assumptions 

24 and rules described in clause (iii) and 

25 which include the explanations contained in 


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1 the model lifetime income disclosure de2 scribed in clause (ii). This clause shall 

3 apply without regard to whether the provi4 sion of such lifetime income stream equiva5 lent is required by subparagraph (B)(iii). 

6 ‘‘(v) EFFECTIVE DATE.—The require7 ment in subparagraph (B)(iii) shall apply 

8 to pension benefit statements furnished 

9 more than 12 months after the latest of 

10 the issuance by the Secretary of— 

11 ‘‘(I) interim final rules under 

12 clause (i); 

13 ‘‘(II) the model disclosure under 

14 clause (ii); or 

15 ‘‘(III) the assumptions under 

16 clause (iii).’’. 

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

18 this section shall take effect on the date of the enactment 

19 of this Act. 

20 SEC. 20. LIFETIME INCOME SAFE HARBOR. 

21 Section 404 of the Employee Retirement Income Se22 curity Act of 1974 (29 U.S.C. 1104) is amended by adding 

23 at the end the following: 

24 ‘‘(e) SAFE HARBOR FOR ANNUITY SELECTION.— 


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1 ‘‘(1) IN GENERAL.—With respect to the selec2 tion of an insurer and a guaranteed retirement in3 come contract, the requirements of subsection 

4 (a)(1)(B) will be deemed to be satisfied if a fidu5 ciary— 

6 ‘‘(A) engages in an objective, thorough, 

7 and analytical search for the purpose of identi8 fying insurers from which to purchase such con9 tracts; 

10 ‘‘(B) with respect to each insurer identified 

11 under subparagraph (A)— 

12 ‘‘(i) considers the financial capability 

13 of such insurer to satisfy its obligations 

14 under the guaranteed retirement income 

15 contract; and 

16 ‘‘(ii) considers the cost (including fees 

17 and commissions) of the guaranteed retire18 ment income contract offered by the in19 surer in relation to the benefits and prod20 uct features of the contract and adminis21 trative services to be provided under such 

22 contract; and 

23 ‘‘(C) on the basis of such consideration, 

24 concludes that— 


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•HR 4637 IH

1 ‘‘(i) at the time of the selection, the 

2 insurer is financially capable of satisfying 

3 its obligations under the guaranteed retire4 ment income contract; and 

5 ‘‘(ii) the relative cost of the selected 

6 guaranteed retirement income contract as 

7 described in subparagraph (B)(ii) is rea8 sonable. 

9 ‘‘(2) FINANCIAL CAPABILITY OF THE IN10 SURER.—A fiduciary will be deemed to satisfy the 

11 requirements of paragraphs (1)(B)(i) and (1)(C)(i) 

12 if— 

13 ‘‘(A) the fiduciary obtains written rep14 resentations from the insurer that— 

15 ‘‘(i) the insurer is licensed to offer 

16 guaranteed retirement income contracts; 

17 ‘‘(ii) the insurer, at the time of selec18 tion and for each of the immediately pre19 ceding 7 plan years— 

20 ‘‘(I) operates under a certificate 

21 of authority from the insurance com22 missioner of its domiciliary State 

23 which has not been revoked or sus24 pended; 


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1 ‘‘(II) has filed audited financial 

2 statements in accordance with the 

3 laws of its domiciliary State under ap4 plicable statutory accounting prin5 ciples; 

6 ‘‘(III) maintains (and has main7 tained) reserves which satisfies all the 

8 statutory requirements of all States 

9 where the insurer does business; and 

10 ‘‘(IV) is not operating under an 

11 order of supervision, rehabilitation, or 

12 liquidation; 

13 ‘‘(iii) the insurer undergoes, at least 

14 every 5 years, a financial examination 

15 (within the meaning of the law of its domi16 ciliary State) by the insurance commis17 sioner of the domiciliary State (or rep18 resentative, designee, or other party ap19 proved by such commissioner); and 

20 ‘‘(iv) the insurer will notify the fidu21 ciary of any change in circumstances oc22 curring after the provision of the represen23 tations in clauses (i), (ii), and (iii) which 

24 would preclude the insurer from making 

25 such representations at the time of 


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1 issuance of the guaranteed retirement in2 come contract, the insurer shall notify the 

3 fiduciary, in advance of the issuance of any 

4 guaranteed retirement income contract; 

5 and 

6 ‘‘(B) after receiving such representations 

7 and as of the time of selection, the fiduciary 

8 has not received any notice described in sub9 paragraph (A)(iv) and is in possession of no 

10 other information which would cause the fidu11 ciary to question the representations provided. 

12 ‘‘(3) NO REQUIREMENT TO SELECT LOWEST

13 COST.—Nothing in this subsection shall be construed 

14 to require a fiduciary to select the lowest cost con15 tract. A fiduciary may consider the value of a con16 tract, including features and benefits of the contract 

17 and attributes of the insurer (including, without lim18 itation, the issuer’s financial strength) in conjunc19 tion with the cost of the contract. 

20 ‘‘(4) TIME OF SELECTION.— 

21 ‘‘(A) IN GENERAL.—For purposes of this 

22 subsection, the ‘time of selection’ is— 

23 ‘‘(i) the time that the insurer and the 

24 contract are selected for distribution of 


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1 benefits to a specific participant or bene2 ficiary; or 

3 ‘‘(ii) if the fiduciary periodically re4 views the continuing appropriateness of the 

5 conclusion described in paragraph (1)(C) 

6 with respect to a selected insurer, taking 

7 into account the considerations described 

8 in such paragraph, the time that the in9 surer and the contract are selected to pro10 vide benefits at future dates to participants 

11 or beneficiaries under the plan. 

12 Nothing in the preceding sentence shall be con13 strued to require the fiduciary to review the ap14 propriateness of a selection after the purchase 

15 of a contract for a participant or beneficiary. 

16 ‘‘(B) PERIODIC REVIEW.—A fiduciary will 

17 be deemed to have conducted the periodic re18 view described in subparagraph (A)(ii) if the fi19 duciary obtains the written representations de20 scribed in clauses (i), (ii), and (iii) of paragraph 

21 (2)(A) from the insurer on an annual basis, un22 less the fiduciary receives any notice described 

23 in paragraph (2)(A)(iv) or otherwise becomes 

24 aware of facts that would cause the fiduciary to 

25 question such representations. 


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1 ‘‘(5) LIMITED LIABILITY.—A fiduciary which 

2 satisfies the requirements of this subsection shall not 

3 be liable following the distribution of any benefit or 

4 the investment by or on behalf of a participant or 

5 beneficiary pursuant to the selected guaranteed re6 tirement income contract for any losses that may re7 sult to the participant or beneficiary due to an in8 surer’s inability to satisfy its financial obligations 

9 under the terms of such contract. 

10 ‘‘(6) DEFINITIONS.—For purposes of this sub11 section— 

12 ‘‘(A) INSURER.—The term ‘insurer’ means 

13 an insurance company, insurance service, or in14 surance organization, including affiliates of 

15 such companies. 

16 ‘‘(B) GUARANTEED RETIREMENT INCOME

17 CONTRACT.—The term ‘guaranteed retirement 

18 income contract’ means an annuity contract for 

19 a fixed term or a contract (or provision or fea20 ture thereof) which provides guaranteed bene21 fits annually (or more frequently) for at least 

22 the remainder of the life of the participant or 

23 the joint lives of the participant and the particiVerDate Sep 11 2014 03:34 Dec 15, 2017 Jkt 079200 PO 00000 Frm 00052 Fmt 6652 Sfmt 6201 E:\BILLS\H4637.IH H4637

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1 pant’s designated beneficiary as part of an indi2 vidual account plan.’’. 

Æ 


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