II

104TH CONGRESS

2D SESSION S. 2047

To amend the Internal Revenue Code of 1986 to modify the application

of the pension nondiscrimination rules to governmental plans.

IN THE SENATE OF THE UNITED STATES

AUGUST 2, 1996

Mr. HATCH (for himself, Mr. CONRAD, Mr. PRESSLER, Mr. PRYOR, Mr. NICKLES, and Mr. BAUCUS) 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

the application of the pension nondiscrimination rules

to governmental plans.

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

3 SECTION 1. MODIFICATIONS TO NONDISCRIMINATION AND

4 MINIMUM PARTICIPATION RULES WITH RE5 SPECT TO GOVERNMENTAL PLANS.

6 (a) GENERAL NONDISCRIMINATION AND PARTICIPA7 TION RULES.—

8 (1) NONDISCRIMINATION REQUIREMENTS.—

9 Paragraph (5) of section 401(a) of the Internal Rev-
2

•S 2047 IS

1 enue Code of 1986 (relating to qualified pension,

2 profit-sharing, and stock bonus plans) is amended by

3 adding at the end the following new subparagraph:

4 ‘‘(F) GOVERNMENTAL PLANS.—Para5 graphs (3) and (4) shall not apply to a govern6 mental plan (within the meaning of section

7 414(d)).’’

8 (2) ADDITIONAL PARTICIPATION REQUIRE9 MENTS.—Subparagraph (H) of section 401(a)(26) of

10 such Code is amended to read as follows:

11 ‘‘(H) EXCEPTION FOR GOVERNMENTAL

12 PLANS.—This paragraph shall not apply to a

13 governmental plan (within the meaning of sec14 tion 414(d)).’’

15 (3) MINIMUM PARTICIPATION STANDARDS.—

16 Paragraph (2) of section 410(c) of such Code is

17 amended to read as follows:

18 ‘‘(2) A plan described in paragraph (1) shall be

19 treated as meeting the requirements of this section

20 for purposes of section 401(a), except that in the

21 case of a plan described in subparagraph (B), (C),

22 or (D) of paragraph (1), this paragraph shall only

23 apply if such plan meets the requirements of section

24 401(a)(3) (as in effect on September 1, 1974).’’
3

•S 2047 IS

1 (b) PARTICIPATION STANDARDS FOR QUALIFIED

2 CASH OR DEFERRED ARRANGEMENTS.—Paragraph (3) of

3 section 401(k) of the Internal Revenue Code of 1986 is

4 amended by adding at the end the following new subpara5 graph:

6 ‘‘(E)(i) The requirements of subparagraph

7 (A)(i) and (C) shall not apply to a govern8 mental plan (within the meaning of section

9 414(d)).

10 ‘‘(ii) The requirements of subsection

11 (m)(2) (without regard to subsection (a)(4))

12 shall apply to any matching contribution of a

13 governmental plan (as so defined).’’

14 (c) NONDISCRIMINATION RULES FOR SECTION

15 403(b) PLANS.—Paragraph (12) of section 403(b) of the

16 Internal Revenue Code of 1986 is amended by adding at

17 the end the following new subparagraph:

18 ‘‘(C) GOVERNMENTAL PLANS.—For pur19 poses of paragraph (1)(D), the requirements of

20 subparagraph (A)(i) shall not apply to a gov21 ernmental plan (within the meaning of section

22 414(d)).’’

23 (d) EFFECTIVE DATE.—
4

•S 2047 IS

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

2 this section shall apply to taxable years beginning on

3 or after the date of enactment of this Act.

4 (2) TREATMENT FOR YEARS BEGINNING BE5 FORE DATE OF ENACTMENT.—A governmental plan

6 (within the meaning of section 414(d) of the Inter7 nal Revenue Code of 1986) shall be treated as satis8 fying the requirements of sections 401(a)(3),

9 401(a)(4), 401(a)(26), 401(k), 401(m), 403

10 (b)(1)(D) and (b)(12), and 410 of such Code for all

11 taxable years beginning before the date of enactment

12 of this Act.

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