I 

112TH CONGRESS 

1ST SESSION H. R. 1534 

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 

APRIL 14, 2011 

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 2011’’ 

6 or the ‘‘SAVE Act of 2011’’. 

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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. 401(k) automatic deferral percentage parity. 

Sec. 9. Limited transfer of unused balance in flexible spending arrangement. 

Sec. 10. Prior years compensation taken into account in determining maximum 

retirement savings deduction. 

Sec. 11. Expanding small employer pension plan startup cost credit. 

Sec. 12. Financial education. 

Sec. 13. Multiple small employer plan. 

Sec. 14. Clarification of treatment of multiple employer defined contribution 

plans. 

Sec. 15. Clarification of treatment of individual retirement plans with payroll 

deduction. 

Sec. 16. Disclosure regarding lifetime income. 

3 SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA 

4 ROLLOVERS. 

5 (a) IN GENERAL.—Paragraph (3) of section 408(d) 

6 of the Internal Revenue Code of 1986 (relating to rollover 

7 contribution) is amended by striking subparagraph (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. 

11 SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMI12 NATION. 

13 (a) IN GENERAL.—Subsection (p) of section 408 of 

14 the Internal Revenue Code of 1986 is amended by adding 

15 at the end the following new paragraph: 

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

2 TERMINATION.— 

3 ‘‘(A) IN GENERAL.—An employer may 

4 elect to terminate (in such form and manner as 

5 the Secretary may provide) the qualified salary 

6 reduction arrangement of the employer at any 

7 time during the year. 

8 ‘‘(B) PRORATION AND APPLICATION OF

9 QUALIFIED PLAN LIMITATION.—In the case of a 

10 year during which an employer terminates a 

11 qualified salary reduction arrangement before 

12 the end of such year— 

13 ‘‘(i) the applicable dollar amount in 

14 effect for such year shall be prorated to 

15 the date of such termination, 

16 ‘‘(ii) for purposes of determining the 

17 compensation of an employee for such ar18 rangement for such year, the year of such 

19 termination shall be treated as ending on 

20 the date of such termination, and 

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

22 (2) shall not apply with respect to a quali23 fied plan maintained in such year only 

24 after the date of such termination.’’. 

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

2 this section shall apply to years beginning after the date 

3 of the enactment of this Act. 

4 SEC. 4. ELIMINATION OF HIGHER PENALTY ON EARLY SIM5 PLE IRA DISTRIBUTIONS. 

6 (a) IN GENERAL.—Subsection (t) of section 72 of the 

7 Internal Revenue Code of 1986 (relating to 10-percent ad8 ditional tax on early distributions from qualified retire9 ment plans) is amended by striking paragraph (6). 

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

11 this section shall apply to distributions in taxable years 

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

13 SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIM14 PLE IRA. 

15 (a) ADDITIONAL NONELECTIVE EMPLOYER CON16 TRIBUTIONS ALLOWED.— 

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

18 408(p)(2) of the Internal Revenue Code of 1986 (re19 lating to qualified salary reduction arrangement) is 

20 amended by striking ‘‘and’’ at the end of clause (iii), 

21 by redesignating clause (iv) as clause (v), and by in22 serting after clause (iii) the following new clause: 

23 ‘‘(iv) the employer may make, in addi24 tion to any other contribution under this 

25 paragraph, nonelective contributions of not 

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1 more than 10 percent of compensation 

2 (subject to the limitation described in sub3 paragraph (B)(ii)) for each employee who 

4 is eligible to participate in the arrangement 

5 and who has at least $5,000 of compensa6 tion from the employer for the year, and’’. 

7 (2) CONFORMING AMENDMENT.—Clause (v) of 

8 section 408(p)(2)(A) of such Code, as redesignated 

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

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

11 (b) INCREASE IN ELECTIVE CONTRIBUTION LIMITA12 TION.—Subparagraph (E) of section 408(p)(2) is amend13 ed to read as follows: 

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

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

16 dollar amount shall be the applicable dollar 

17 amount in effect under subparagraph (B) of 

18 section 402(g)(1).’’. 

19 (c) SIMPLE IRA SUBJECT TO DEFINED CONTRIBU20 TION PLAN LIMITATION.—Subsection (p) of section 408 

21 of such Code is amended by adding at the end the fol22 lowing new paragraph: 

23 ‘‘(11) SUBJECT TO DEFINED CONTRIBUTION

24 PLAN LIMITATION.—An arrangement shall not be 

25 treated as a qualified salary reduction arrangement 

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1 for any year if contributions with respect to any em2 ployee for the year exceed the limitation of para3 graph (1) of section 415(c) (relating to limitation for 

4 defined contribution plans).’’. 

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

6 this section shall apply to contributions for taxable years 

7 beginning after December 31, 2011. 

8 SEC. 6. SIMPLE 401(k) PARITY FOR ADDITIONAL NONELEC9 TIVE EMPLOYER CONTRIBUTIONS. 

10 (a) IN GENERAL.—Subparagraph (B) of section 

11 401(k)(11) of such Code (relating to contribution require12 ments) is amended by adding at the end the following new 

13 clause: 

14 ‘‘(iv) SPECIAL RULE FOR ADDITIONAL

15 NONELECTIVE EMPLOYER CONTRIBU16 TIONS.—An arrangement shall not be 

17 treated as failing to meet the requirements 

18 of this subparagraph merely because under 

19 such arrangement the employer makes, in 

20 addition to any other contribution under 

21 this subparagraph, nonelective contribu22 tions of not more than 10 percent of com23 pensation for each employee who is eligible 

24 to participate in the arrangement and who 

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1 has at least $5,000 of compensation from 

2 the employer for the year.’’. 

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

4 this section shall apply to plan years beginning after De5 cember 31, 2011. 

6 SEC. 7. AUTOMATIC DEFERRAL IRAS. 

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

8 D of chapter 1 of the Internal Revenue Code of 1986 (re9 lating to pension, profit-sharing, stock bonus plans, etc.) 

10 is amended by inserting after section 408A the following 

11 new section: 

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

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

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

15 as an individual retirement plan. An automatic deferral 

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

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

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

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

20 individual retirement plan (as defined in section 

21 7701(a)(37)) with respect to which contributions are made 

22 under an arrangement which satisfies the requirements of 

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

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

25 ‘‘(1) ENROLLMENT.— 

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

2 this paragraph are met if each employee eligible 

3 to participate in the arrangement is treated as 

4 having elected to have the employer make pay5 ments as elective contributions to an automatic 

6 deferral IRA on behalf of such employee (which 

7 would have otherwise been made to the em8 ployee directly in cash) in an amount equal to 

9 so much of a qualified percentage of compensa10 tion of such employee as does not exceed the 

11 deductible amount for such year (within the 

12 meaning of section 219(b)). 

13 ‘‘(B) ELIGIBILITY.—An employee is eligi14 ble to participate if such employee is described 

15 in paragraph (2) of section 408(k), except that 

16 for purposes of determining whether an em17 ployee is described in such paragraph, subpara18 graph (C) thereof shall be applied by sub19 stituting ‘$5,000’ for ‘$450’. 

20 ‘‘(C) ELECTION OUT.—The election treat21 ed as having been made under subparagraph 

22 (A) shall cease to apply with respect to any em23 ployee who makes an affirmative election— 

24 ‘‘(i) to not have such elective contribu25 tions made, or 

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

2 30-day period beginning on the date of the 

3 first contribution with respect to such em4 ployee, to make elective contributions at a 

5 level specified in such affirmative election. 

6 ‘‘(D) QUALIFIED PERCENTAGE.—For pur7 poses of this paragraph, the term ‘qualified per8 centage’ means, with respect to any employee, 

9 any percentage determined under the trust 

10 agreement if such percentage is applied uni11 formly, does not exceed 15 percent, and is at 

12 least— 

13 ‘‘(i) 3 percent during the period end14 ing on the last day of the first plan year 

15 which begins after the date on which the 

16 first elective contribution described in sub17 paragraph (A) is made with respect to 

18 such employee, and 

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

20 a percentage equal to— 

21 ‘‘(I) 3 percent, plus 

22 ‘‘(II) 1 percent multiplied by the 

23 number of plan years (but not more 

24 than 12) beginning after the plan year 

25 described in clause (i). 

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1 ‘‘(2) NOTICE.— 

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

3 this paragraph are met if, within a reasonable 

4 period before the first day an employee is eligi5 ble to participate in the arrangement, the em6 ployee receives written notice of the employee’s 

7 rights and obligations under the arrangement 

8 which— 

9 ‘‘(i) is sufficiently accurate and com10 prehensive to apprise the employee of such 

11 rights, and 

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

13 to be understood by the average employee 

14 to whom the arrangement applies. 

15 ‘‘(B) TIMING AND CONTENT.—A notice 

16 shall not be treated as meeting the require17 ments of subparagraph (A) with respect to an 

18 employee unless— 

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

20 right to elect not to have elective contribu21 tions made on the employee’s behalf (or to 

22 elect to have such contributions made at a 

23 different percentage), 

24 ‘‘(ii) the notice explains how contribu25 tions made under the arrangement will be 

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1 invested in the absence of any investment 

2 election by the employee, and 

3 ‘‘(iii) the employee has a reasonable 

4 period of time after receipt of the notice 

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

6 the first elective contribution is made to 

7 make either such election. 

8 ‘‘(3) DEFAULT INVESTMENT ARRANGEMENT.— 

9 The requirements of this paragraph are met if— 

10 ‘‘(A) in the absence of an investment elec11 tion by the employee with respect to the em12 ployee’s interest in the trust, such interest is in13 vested as provided in regulations prescribed 

14 pursuant to subparagraph (A) of section 

15 404(c)(5) of the Employee Retirement Income 

16 Security Act of 1974, and 

17 ‘‘(B) the employer provides each employee 

18 who has an interest in the trust, notice which 

19 meets the requirements of subparagraph (B) of 

20 such section. 

21 ‘‘(4) ADMINISTRATIVE REQUIREMENTS.—The 

22 requirements of this paragraph are met if— 

23 ‘‘(A) an employer must make the elective 

24 employer contributions under paragraph (1)(A) 

25 not later than the close of the 30-day period 

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1 following the last day of the month with respect 

2 to which the contributions are to be made, 

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

4 participation in the arrangement at any time 

5 during the year, except that if the employee so 

6 terminates, the arrangement may provide that 

7 the employee may elect to resume participation 

8 until the beginning of the next year, and 

9 ‘‘(C) each employee eligible to participate 

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

11 beginning of any year, or to modify the amount 

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

13 (b) PREEMPTION OF CONFLICTING STATE LAWS.— 

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

15 or indirectly prohibit or restrict an employer from creating 

16 or organizing an automatic deferral IRA (as defined in 

17 section 408B of the Internal Revenue Service of 1986). 

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

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

20 the Internal Revenue Code of 1986 is amended by insert21 ing after the item relating to 408A the following new item: 

‘‘408B. Automatic deferral IRAs.’’. 

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

23 this section shall apply to taxable years beginning after 

24 December 31, 2011. 

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1 SEC. 8. 401(k) AUTOMATIC DEFERRAL PERCENTAGE PAR2 ITY. 

3 (a) IN GENERAL.—Clause (iii) of section 

4 401(k)(13)(C) of the Internal Revenue Code of 1986 is 

5 amended by striking ‘‘10 percent’’ and inserting ‘‘15 per6 cent’’. 

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

8 this section shall apply to plan years beginning after De9 cember 31, 2011. 

10 SEC. 9. LIMITED TRANSFER OF UNUSED BALANCE IN 

11 FLEXIBLE SPENDING ARRANGEMENT. 

12 (a) IN GENERAL.—Section 125 of the Internal Rev13 enue Code of 1986 is amended by redesignating sub14 sections (i) and (j) as subsections (j) and (k), respectively, 

15 and by inserting after subsection (h) the following new 

16 subsection: 

17 ‘‘(i) SPECIAL RULE FOR UNUSED BENEFITS IN

18 FLEXIBLE SPENDING ARRANGEMENTS.— 

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

20 a plan or other arrangement shall not fail to be 

21 treated as a cafeteria plan or flexible spending ar22 rangement merely because such arrangement pro23 vides for qualified retirement distributions. 

24 ‘‘(2) QUALIFIED RETIREMENT DISTRIBUTION.— 

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

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1 tion’ means any distribution to an individual of 

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

3 such arrangement, but only to the extent— 

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

5 lesser of— 

6 ‘‘(I) $250, or 

7 ‘‘(II) the unused benefits with re8 spect to the arrangement, and 

9 ‘‘(ii) the amount received is paid into 

10 a qualified retirement plan (as defined in 

11 section 4974(c)), or an eligible deferred 

12 compensation plan (as defined in section 

13 457(b)) of an eligible employer described in 

14 section 457(e)(1)(A), of the individual not 

15 later than the 60th day after the day on 

16 which the individual receives the payment 

17 or distribution. 

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

19 of this paragraph, the term ‘unused benefits’ 

20 means, with respect to an employee, the excess 

21 of— 

22 ‘‘(i) the maximum amount of reim23 bursement allowable to the employee dur24 ing a plan year under a flexible spending 

25 arrangement, over 

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1 ‘‘(ii) the actual amount of reimburse2 ment during such year under such ar3 rangement. 

4 ‘‘(C) SPECIAL RULES FOR TREATMENT OF

5 CONTRIBUTIONS TO RETIREMENT PLANS.—For 

6 purposes of this title, qualified retirement dis7 tributions— 

8 ‘‘(i) shall be treated as elective defer9 rals (as defined in section 402(g)(3)) in 

10 the case of contributions to a qualified 

11 cash or deferred arrangement (as defined 

12 in section 401(k)) or to an annuity con13 tract described in section 403(b), 

14 ‘‘(ii) shall be treated as employer con15 tributions to which the employee has a 

16 nonforfeitable right in the case of a plan 

17 which is described in section 401(a) which 

18 includes a trust exempt from tax under 

19 section 501(a), 

20 ‘‘(iii) shall be treated as deferred com21 pensation in the case of contributions to an 

22 eligible deferred compensation plan (as de23 fined in section 457(b)), and 

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

25 designated for purposes of section 408 or 

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1 408A in the case of contributions to an in2 dividual retirement plan.’’. 

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

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

5 of the enactment of this Act. 

6 SEC. 10. PRIOR YEARS COMPENSATION TAKEN INTO AC7 COUNT IN DETERMINING MAXIMUM RETIRE8 MENT SAVINGS DEDUCTION. 

9 (a) IN GENERAL.—Subparagraph (B) of section 

10 219(b)(1) of the Internal Revenue Code of 1986 is amend11 ed by striking ‘‘for such taxable year’’ and inserting ‘‘for 

12 the preceding taxable year’’. 

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

14 this section shall apply to taxable years beginning after 

15 the date of the enactment of this Act. 

16 SEC. 11. EXPANDING SMALL EMPLOYER PENSION PLAN 

17 STARTUP COST CREDIT. 

18 (a) IN GENERAL.— 

19 (1) INCLUDING STARTUP COSTS FOR EM20 PLOYER-ESTABLISHED IRAS.—Paragraph (2) of sec21 tion 45E(d) of the Internal Revenue Code of 1986 

22 (defining eligible employer plan) is amended by 

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

24 that follows and inserting: ‘‘means— 

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

2 meaning of section 4972(d), or 

3 ‘‘(B) a plan of which a trust described in 

4 section 408(c) is a part.’’. 

5 (2) ADDITIONAL CREDIT AMOUNT.— 

6 (A) IN GENERAL.—Subsection (a) of sec7 tion 45E of such Code is amended by striking 

8 ‘‘50 percent of’’ and all that follows and insert9 ing ‘‘the sum of— 

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

11 startup costs paid or incurred by the taxpayer dur12 ing the taxable year, plus 

13 ‘‘(2) $25 multiplied by the number of employees 

14 of the employer who participate in any eligible em15 ployer plan of the employer for the first time in such 

16 taxable year.’’. 

17 (B) APPLICABLE PERCENTAGE.—Sub18 section (d) of section 45E of such Code is 

19 amended by adding at the end the following 

20 new paragraph: 

21 ‘‘(4) APPLICABLE PERCENTAGE.—The applica22 ble percentage is— 

23 ‘‘(A) in the case of a plan described in sub24 section (d)(2)(A), 75 percent, or 

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

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

3 (C) CONFORMING AMENDMENT.—Para4 graph (2) of section 45E(c) of such Code (de5 fining eligible employer) is amended— 

6 (i) by striking ‘‘qualified employer 

7 plan’’ in each place it appears and insert8 ing ‘‘eligible employer plan’’, and 

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

10 heading thereof and inserting ‘‘ELIGIBLE’’. 

11 (3) INCREASED LIMITATION.—Paragraph (1) of 

12 section 45E(b) of such Code is amended by striking 

13 ‘‘$500’’ and inserting ‘‘$750 ($2,000 in the case of 

14 qualified startup costs attributable to a plan de15 scribed in subsection (d)(2)(A))’’. 

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

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

18 years beginning after the date of the enactment of this 

19 Act. 

20 SEC. 12. FINANCIAL EDUCATION. 

21 (a) RETIREMENT PLAN EDUCATION FOR SMALL

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

23 the enactment of this Act— 

24 (1) the Department of the Treasury Office of 

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1 partment of Labor, shall develop and implement an 

2 outreach plan to educate small businesses on the 

3 types of retirement plans available and the benefits 

4 and requirements of such plans, and 

5 (2) the Secretary of the Treasury and the Sec6 retary of Labor shall develop recommendations for 

7 small businesses in order to improve retirement out8 comes. Such recommendations shall take into ac9 count established behavioral trends of employee in10 vestment and the effect of default design features 

11 such as auto escalation, expansion of auto rollovers, 

12 auto diversification for near retirees, and automatic 

13 forms of distribution. 

14 (b) FINANCIAL LITERACY.— 

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

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

17 of the Treasury, in consultation with the Secretary 

18 of Education, shall develop sample age-appropriate 

19 curricula to be made available for financial literacy 

20 education in elementary and secondary schools. 

21 (2) CONTENT OF CURRICULA.—Such curricula 

22 shall include the following: 

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

24 credit card statement, and calculate interest 

25 rates. 

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

2 and State income taxes and Social Security and 

3 Medicare taxes are withheld from wages. 

4 (C) The differences between various types 

5 of bank accounts. 

6 (D) The significance of a credit score and 

7 how to read credit reports. 

8 (E) The marketing techniques frequently 

9 used by individuals and businesses to attract 

10 patrons. 

11 (F) The importance of saving for college 

12 and retirement, including the various methods 

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

14 and IRAs. 

15 SEC. 13. MULTIPLE SMALL EMPLOYER PLAN. 

16 (a) IN GENERAL.—Paragraph (11) of section 401(k) 

17 of the Internal Revenue Code of 1986 is amended by add18 ing the following at the end thereof: 

19 ‘‘(E) MULTIPLE SMALL EMPLOYER

20 PLAN.— 

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

22 plan described in clause (ii)— 

23 ‘‘(I) the amount described in sub24 paragraph (B)(i)(I) shall be $10,000, 

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1 in lieu of the amount in effect under 

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

3 ‘‘(II) such $10,000 amount shall 

4 be adjusted as described in section 

5 408(p)(2)(E)(ii) except that the base 

6 period taken into account shall be the 

7 calendar quarter beginning July 1, 

8 2011, 

9 ‘‘(III) subclause (II) of subpara10 graph (B)(i) and clause (ii) of sub11 paragraph (B) shall not apply, and 

12 ‘‘(IV) section 414(v) shall not 

13 apply. 

14 ‘‘(ii) PLAN DESCRIBED.—A plan is de15 scribed in this clause if the plan satisfies 

16 the following requirements: 

17 ‘‘(I) Such plan satisfies the re18 quirements of this paragraph, as 

19 modified by clause (i). 

20 ‘‘(II) The plan is described in 

21 section 413(c). 

22 ‘‘(III) The plan includes a quali23 fied automatic contribution arrange24 ment, as defined in paragraph (13), 

25 except that subparagraph (D) of paramstockstill on DSKH9S0YB1PROD with BILLS

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1 graph (13) shall not apply and the 

2 qualified percentage shall be deter3 mined by reference to subclauses (I), 

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

5 (13)(C)(iii). 

6 ‘‘(IV) The plan does not permit 

7 any participant or beneficiary to re8 ceive or maintain a loan from the 

9 plan. 

10 ‘‘(V) The plan does not permit 

11 hardship distributions described in 

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

13 extent any such distribution is 

14 deemed, under regulations prescribed 

15 by the Secretary, to be on account of 

16 an immediate and heavy financial 

17 need of the employee and necessary to 

18 satisfy an immediate and heavy finan19 cial need of the employee. 

20 ‘‘(VI) The plan is maintained 

21 pursuant to a model plan document 

22 published by the Secretary.’’. 

23 (b) SIMPLIFICATION.— 

24 (1) MODEL PLAN.—Within one year of the date 

25 of the enactment of this Act, the Secretary of the 

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1 Treasury shall publish a model plan that may be 

2 used to satisfy the requirement of subclause (VI) of 

3 section 401(k)(11)(E)(ii) of the Internal Revenue 

4 Code of 1986. 

5 (2) PROTECTION AGAINST LOSS.—Within 120 

6 days of the date of the enactment of this Act, the 

7 Secretary of Labor shall amend Department of 

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

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

10 401(k)(11)(E) of such Code ‘‘four years’’ shall be 

11 substituted for ‘‘120 days’’. 

12 (3) CLARIFYING DUTIES AND REDUCING BUR13 DENS.—Within one year of the date of the enact14 ment of this Act, the Secretary of Labor shall— 

15 (A) publish rules clarifying the extent to 

16 which the fiduciary duties of a participating 

17 employer and of a named fiduciary with respect 

18 to a plan described in section 401(k)(11)(E) of 

19 such Code are limited to prudently selecting 

20 and monitoring the provider of such plan and 

21 the services, fees, and investment options avail22 able from such provider, and 

23 (B) prescribe interim final regulations pro24 viding simplified means by which plans de25 scribed in section 401(k)(11)(E) of such Code 

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1 may satisfy the requirements of sections 102, 

2 103, and 105 of the Employee Retirement In3 come Security Act of 1974. 

4 (4) ELIMINATION OF DISINCENTIVE TO POOL5 ING.—Not later than one year after the date of the 

6 enactment of this Act, the Secretary of the Treasury 

7 shall prescribe final regulations under which a plan 

8 described in section 413(c) of such Code may be 

9 treated as satisfying the qualification requirements 

10 of section 401(a) of such Code despite the violation 

11 of such requirements with respect to one or more 

12 participating employers. Such rules may require that 

13 the portion of the plan attributable to such partici14 pating employers be spun off to plans maintained by 

15 such employers. 

16 (c) EFFECTIVE DATE.— 

17 (1) IN GENERAL.—Except as provided in para18 graph (2), the amendments made by this section 

19 shall apply to years beginning after December 31, 

20 2011. 

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

22 of the date of the enactment of this Act. 

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1 SEC. 14. CLARIFICATION OF TREATMENT OF MULTIPLE EM2 PLOYER DEFINED CONTRIBUTION PLANS. 

3 (a) IN GENERAL.—Section 3(2) of the Employee Re4 tirement Income Security Act of 1974 (29 U.S.C. 

5 1002(2)) is amended by adding at the end thereof the fol6 lowing new subparagraph: 

7 ‘‘(C) A plan, fund, or program shall not fail to be 

8 treated as an employee pension benefit plan solely by rea9 son of the plan, fund, or program being established or 

10 maintained by two or more employers whose only relation11 ship is participation in the same plan, fund, or program. 

12 This subparagraph shall only apply to a plan, fund, or 

13 program that provides for an individual account for each 

14 participant and for benefits based solely upon the amount 

15 contributed to the participant’s account, and any income, 

16 expenses, gains and losses, and any forfeitures of accounts 

17 of other participants which may be allocated to such par18 ticipant’s account.’’. 

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

20 such Act is amended by striking ‘‘Except as provided in 

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

22 subparagraphs (B) and (C)’’. 

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

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

25 this Act. 

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1 SEC. 15. CLARIFICATION OF TREATMENT OF INDIVIDUAL 

2 RETIREMENT PLANS WITH PAYROLL DEDUC3 TION. 

4 (a) IN GENERAL.—Section 3(2) of the Employee Re5 tirement Income Security Act of 1974 (29 U.S.C. 

6 1002(2)), as amended by this Act, is amended by adding 

7 at the end the following new subparagraph: 

8 ‘‘(D) An individual retirement plan (as defined in sec9 tion 7701(a)(37) of the Internal Revenue Code of 1986) 

10 shall not be considered a pension plan merely because an 

11 employer establishes a payroll deduction program for the 

12 purpose of enabling employees to make voluntary con13 tributions to such account or annuity.’’. 

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

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

16 of this Act. 

17 SEC. 16. DISCLOSURE REGARDING LIFETIME INCOME. 

18 (a) IN GENERAL.—Subparagraph (B) of section 

19 105(a)(2) of the Employee Retirement Income Security 

20 Act of 1974 (29 U.S.C. 1025(a)(2)) is amended— 

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

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

23 and inserting ‘‘diversification, and’’; and 

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

25 ‘‘(iii) the lifetime income disclosure 

26 described in subparagraph (D)(i). 

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1 In the case of pension benefit statements de2 scribed in clause (i) of paragraph (1)(A), a life3 time income disclosure under clause (iii) of this 

4 subparagraph shall only be required to be in5 cluded in one pension benefit statement during 

6 any one 12-month period.’’. 

7 (b) LIFETIME INCOME.—Paragraph (2) of section 

8 105(a) of such Act (29 U.S.C. 1025(a)) is amended by 

9 adding at the end the following new subparagraph: 

10 ‘‘(D) LIFETIME INCOME DISCLOSURE.— 

11 ‘‘(i) IN GENERAL.— 

12 ‘‘(I) DISCLOSURE.—A lifetime in13 come disclosure shall set forth the life14 time income stream equivalent of the 

15 total benefits accrued with respect to 

16 the participant or beneficiary. 

17 ‘‘(II) LIFETIME INCOME STREAM

18 EQUIVALENT OF THE TOTAL BENE19 FITS ACCRUED.—For purposes of this 

20 subparagraph, the term ‘lifetime in21 come stream equivalent of the total 

22 benefits accrued’ means the amount of 

23 monthly payments the participant or 

24 beneficiary would receive if the total 

25 accrued benefits of such participant or 

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1 beneficiary were used to provide life2 time income streams described in sub3 clause (III), based on assumptions 

4 specified in rules prescribed by the 

5 Secretary. 

6 ‘‘(III) LIFETIME INCOME

7 STREAMS.—The lifetime income 

8 streams described in this subclause 

9 are a qualified joint and survivor an10 nuity (as defined in section 205(d)), 

11 based on assumptions specified in 

12 rules prescribed by the Secretary, in13 cluding the assumption that the par14 ticipant or beneficiary has a spouse of 

15 equal age, and a single life annuity. 

16 Such lifetime income streams may 

17 have a term certain or other features 

18 to the extent permitted under rules 

19 prescribed by the Secretary. 

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

21 than 1 year after the date of the enact22 ment of the Lifetime Income Disclosure 

23 Act, the Secretary shall issue a model life24 time income disclosure, written in a manmstockstill on DSKH9S0YB1PROD with BILLS

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1 ner so as to be understood by the average 

2 plan participant, that— 

3 ‘‘(I) explains that the lifetime in4 come stream equivalent is only pro5 vided as an illustration; 

6 ‘‘(II) explains that the actual 

7 payments under the lifetime income 

8 stream described in clause (i)(III) 

9 that may be purchased with the total 

10 benefits accrued will depend on nu11 merous factors and may vary substan12 tially from the lifetime income stream 

13 equivalent in the disclosures; 

14 ‘‘(III) explains the assumptions 

15 upon which the lifetime income stream 

16 equivalent was determined; and 

17 ‘‘(IV) provides such other similar 

18 explanations as the Secretary con19 siders appropriate. 

20 ‘‘(iii) ASSUMPTIONS AND RULES.— 

21 Not later than 1 year after the date of the 

22 enactment of the Lifetime Income Disclo23 sure Act, the Secretary shall— 

24 ‘‘(I) prescribe assumptions that 

25 administrators of individual account 

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1 plans may use in converting total ac2 crued benefits into lifetime income 

3 stream equivalents for purposes of 

4 this subparagraph; and 

5 ‘‘(II) issue interim final rules 

6 under clause (i). 

7 In prescribing assumptions under sub8 clause (I), the Secretary may prescribe a 

9 single set of specific assumptions (in which 

10 case the Secretary may issue tables or fac11 tors that facilitate such conversions), or 

12 ranges of permissible assumptions. To the 

13 extent that an accrued benefit is or may be 

14 invested in a lifetime income stream de15 scribed in clause (i)(III), the assumptions 

16 prescribed under subclause (I) shall, to the 

17 extent appropriate, permit administrators 

18 of individual account plans to use the 

19 amounts payable under such lifetime in20 come stream as a lifetime income stream 

21 equivalent. 

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

23 plan fiduciary, plan sponsor, or other per24 son shall have any liability under this title 

25 solely by reason of the provision of lifetime 

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1 income stream equivalents which are de2 rived in accordance with the assumptions 

3 and rules described in clause (iii) and 

4 which include the explanations contained in 

5 the model lifetime income disclosure de6 scribed in clause (ii). This clause shall 

7 apply without regard to whether the provi8 sion of such lifetime income stream equiva9 lent is required by subparagraph (B)(iii). 

10 ‘‘(v) EFFECTIVE DATE.—The require11 ment in subparagraph (B)(iii) shall apply 

12 to pension benefit statements furnished 

13 more than 12 months after the latest of 

14 the issuance by the Secretary of— 

15 ‘‘(I) interim final rules under 

16 clause (i); 

17 ‘‘(II) the model disclosure under 

18 clause (ii); or 

19 ‘‘(III) the assumptions under 

20 clause (iii).’’. 

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

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

23 of this Act. 

Æ 

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