II

106TH CONGRESS

1ST SESSION S. 8

To increase the Federal minimum wage, to repeal the marriage tax penalty,

to provide more effective remedies to victims of discrimination in the

payment of wages on the basis of sex, to provide for pension reform,

and to prohibit any changes to the pay-as-you-go rule in the Senate

until Congress saves Social Security first.

IN THE SENATE OF THE UNITED STATES

JANUARY 19, 1999

Mr. DASCHLE (for himself, Mr. ROCKEFELLER, Mr. BREAUX, Mrs. FEINSTEIN, Mrs. MURRAY, Mrs. BOXER, Mr. DURBIN, Mr. WELLSTONE, Mr.

KERRY, Mr. MOYNIHAN, and Mr. LAUTENBERG) introduced the following

bill; which was read twice and referred to the Committee on Finance

A BILL

To increase the Federal minimum wage, to repeal the marriage tax penalty, to provide more effective remedies

to victims of discrimination in the payment of wages

on the basis of sex, to provide for pension reform, and

to prohibit any changes to the pay-as-you-go rule in

the Senate until Congress saves Social Security first.

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 ‘‘Income Security Enhancement Act of 1999’’.
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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.

TITLE I—FAIR MINIMUM WAGE

Sec. 101. Short title.

Sec. 102. Minimum wage increase.

Sec. 103. Applicability of minimum wage to the Commonwealth of the Northern

Mariana Islands.

TITLE II—MARRIAGE TAX PENALTY RELIEF

Sec. 201. Short title.

Sec. 202. Deduction for two-earner married couples.

TITLE III—PAYCHECK FAIRNESS

Sec. 301. Short title.

Sec. 302. Findings.

Sec. 303. Enhanced enforcement of equal pay requirements.

Sec. 304. Training.

Sec. 305. Research, education, and outreach.

Sec. 306. Technical assistance and employer recognition program.

Sec. 307. Establishment of the national award for pay equity in the workplace.

Sec. 308. Sense of the Senate regarding increased information on pay disparities.

Sec. 309. Authorization of appropriations.

TITLE IV—PENSION REFORM

Sec. 401. Short title.

Subtitle A—Pension Access and Coverage

Sec. 410. Amendment of 1986 Code.

CHAPTER 1—IMPROVED ACCESS TO INDIVIDUAL RETIREMENT SAVINGS

Sec. 411. Credit for pension plan startup costs of small employers.

Sec. 412. Exclusion for payroll deduction contributions to IRAs.

Sec. 413. Nonrefundable tax credit for contributions to individual retirement

plans.

Sec. 414. Distributions from certain plans may be used without penalty during

periods of unemployment.

CHAPTER 2—SECURE MONEY ANNUITY OR RETIREMENT (SMART) TRUSTS

Sec. 415. Secure money annuity or retirement (SMART) trusts.

CHAPTER 3—IMPROVED FAIRNESS IN RETIREMENT PLAN BENEFITS

Sec. 421. Amendments to SIMPLE retirement accounts.

Sec. 422. Nondiscrimination rules for qualified cash or deferred arrangements

and matching contributions.

Sec. 423. Definition of highly compensated employees.

Sec. 424. Treatment of multiemployer plans under section 415.
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Sec. 425. Exemption of mirror plans from section 457 limits.

Sec. 426. Immediate participation in the thrift savings plan for Federal employees.

Sec. 427. Full funding limitation for multiemployer plans.

Sec. 428. Elimination of partial termination rules for multiemployer plans.

Sec. 429. Repeal of 150 percent of current liability funding limit.

Subtitle B—Security

Sec. 430. Amendment of ERISA.

CHAPTER 1—GENERAL PROVISIONS

Sec. 431. Periodic pension benefits statements.

Sec. 432. Requirement of annual, detailed investment reports applied to certain

401(k) plans.

Sec. 433. Information required to be provided to investment managers of

401(k) plans.

Sec. 434. Study on investments in collectibles.

Sec. 435. Qualified employer plans prohibited from making loans through credit

cards and other intermediaries.

Sec. 436. Multiemployer plan benefits guaranteed.

Sec. 437. Prohibited transactions.

Sec. 438. Substantial owner benefits.

Sec. 439. Reversion report.

CHAPTER 2—ERISA ENFORCEMENT

Sec. 441. Civil penalties for breach of fiduciary responsibilities made discretionary, etc.

Sec. 442. Reporting and enforcement requirements for employee benefit plans.

Sec. 443. Additional requirements for qualified public accountants.

Sec. 444. Inspector general study.

CHAPTER 3—INCREASE IN EXCISE TAX ON EMPLOYER REVERSIONS

Sec. 445. Increase in excise tax.

Subtitle C—Portability

Sec. 451. Faster vesting of employer matching contributions.

Sec. 452. Rationalization of the restrictions on distributions from 401(k) plans.

Sec. 453. Treatment of transfers between defined contribution plans.

Sec. 454. Missing participants.

Sec. 455. Allowance of rollovers from and to 403(b) plans.

Sec. 456. Rollover contributions from deferred compensation plans of State and

local governments.

Sec. 457. Extension of 60-day rollover period in the case of Presidentially declared disasters and service in combat zone.

Sec. 458. Purchase of service credit in governmental defined benefit plans.

Subtitle D—Comprehensive Women’s Pension Protection

CHAPTER 1—PENSION REFORM

Sec. 461. Pension right to know proposals.

Sec. 462. Women’s pension toll-free phone number.

Sec. 463. Modification of government pension offset.
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Sec. 464. Periods of family and medical leave treated as hours of service for

pension participation and vesting.

Sec. 465. Pension integration rules.

Sec. 466. Division of pension benefits upon divorce.

Sec. 467. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee.

Sec. 468. Effective dates.

CHAPTER 2—PROTECTION OF RIGHTS OF FORMER SPOUSES TO PENSION

BENEFITS UNDER CERTAIN GOVERNMENT AND GOVERNMENT-SPONSORED

RETIREMENT PROGRAMS

Sec. 471. Extension of tier II railroad retirement benefits to surviving former

spouses pursuant to divorce agreements.

Sec. 472. Survivor annuities for widows, widowers, and former spouses of Federal employees who die before attaining age for deferred annuity under civil service retirement system.

Sec. 473. Payment of lump-sum benefits to former spouses of Federal employees.

CHAPTER 3—MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY

REQUIREMENTS

Sec. 475. Modifications of joint and survivor annuity requirements.

Sec. 476. Spousal consent required for distributions from defined contribution

plans.

Subtitle E—Date for Adoption of Plan Amendments

Sec. 481. Date for adoption of plan amendments.

TITLE V—SAVE SOCIAL SECURITY FIRST

Sec. 501. Save Social Security first point of order.

1 TITLE I—FAIR MINIMUM WAGE

2 SEC. 101. SHORT TITLE.

3 This title may be cited as the ‘‘Fair Minimum Wage

4 Act of 1999’’.

5 SEC. 102. MINIMUM WAGE INCREASE.

6 (a) WAGE.—Paragraph (1) of section 6(a) of the Fair

7 Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) is

8 amended to read as follows:

9 ‘‘(1) except as otherwise provided in this sec10 tion, not less than—
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1 ‘‘(A) $5.65 an hour during the year begin2 ning on September 1, 1999; and

3 ‘‘(B) $6.15 an hour beginning on Septem4 ber 1, 2000;’’.

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

6 subsection (a) shall take effect on September 1, 1999.

7 SEC. 103. APPLICABILITY OF MINIMUM WAGE TO THE COM8 MONWEALTH OF THE NORTHERN MARIANA

9 ISLANDS.

10 The provisions of section 6 of the Fair Labor Stand11 ards Act of 1938 (29 U.S.C. 206) shall apply to the Com12 monwealth of the Northern Mariana Islands.

13 TITLE II—MARRIAGE TAX

14 PENALTY RELIEF

15 SEC. 201. SHORT TITLE.

16 This title may be cited as the ‘‘Marriage Tax Penalty

17 Relief Act of 1999’’.

18 SEC. 202. DEDUCTION FOR TWO-EARNER MARRIED COU19 PLES.

20 (a) IN GENERAL.—Part VII of subchapter B of chap21 ter 1 of the Internal Revenue Code of 1986 (relating to

22 additional itemized deductions for individuals) is amended

23 by redesignating section 222 as section 223 and by insert24 ing after section 221 the following:
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1 ‘‘SEC. 222. DEDUCTION FOR MARRIED COUPLES TO ELIMI2 NATE THE MARRIAGE PENALTY.

3 ‘‘(a) IN GENERAL.—In the case of a joint return

4 under section 6013 for the taxable year, there shall be al5 lowed as a deduction an amount equal to the applicable

6 percentage of the qualified earned income of the spouse

7 with the lower qualified earned income for the taxable

8 year.

9 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of

10 this section—

11 ‘‘(1) IN GENERAL.—The term ‘applicable per12 centage’ means 20 percent, reduced by 1 percentage

13 point for each $1,000 (or fraction thereof) by which

14 the taxpayer’s modified adjusted gross income for

15 the taxable year exceeds $50,000.

16 ‘‘(2) TRANSITION RULE FOR 1999 AND 2000.—In

17 the case of taxable years beginning in 1999 and

18 2000, paragraph (1) shall be applied by substituting

19 ‘10 percent’ for ‘20 percent’ and ‘.5 percentage

20 point’ for ‘1 percentage point’.

21 ‘‘(3) MODIFIED ADJUSTED GROSS INCOME.—

22 For purposes of this subsection, the term ‘modified

23 adjusted gross income’ means adjusted gross income

24 determined—

25 ‘‘(A) after application of sections 86, 219,

26 and 469, and
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1 ‘‘(B) without regard to sections 135, 137,

2 and 911 or the deduction allowable under this

3 section.

4 ‘‘(4) COST-OF-LIVING ADJUSTMENT.—In the

5 case of any taxable year beginning in a calendar

6 year after 2002, the $50,000 amount under para7 graph (1) shall be increased by an amount equal to

8 such dollar amount multiplied by the cost-of-living

9 adjustment determined under section 1(f)(3) for the

10 calendar year in which the taxable year begins, ex11 cept that subparagraph (B) thereof shall be applied

12 by substituting ‘calendar year 2002’ for ‘calendar

13 year 1992’. If any amount as adjusted under this

14 paragraph is not a multiple of $5,000, such amount

15 shall be rounded to the next lowest multiple of

16 $5,000.

17 ‘‘(c) QUALIFIED EARNED INCOME DEFINED.—

18 ‘‘(1) IN GENERAL.—For purposes of this sec19 tion, the term ‘qualified earned income’ means an

20 amount equal to the excess of—

21 ‘‘(A) the earned income of the spouse for

22 the taxable year, over

23 ‘‘(B) an amount equal to the sum of the

24 deductions described in paragraphs (1), (2),

25 (7), and (15) of section 62 to the extent such
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1 deductions are properly allocable to or charge2 able against earned income described in sub3 paragraph (A).

4 The amount of qualified earned income shall be de5 termined without regard to any community property

6 laws.’’

7 ‘‘(2) EARNED INCOME.—For purposes of para8 graph (1), the term ‘earned income’ means income

9 which is earned income within the meaning of sec10 tion 911(d)(2) or 401(c)(2)(C), except that—

11 ‘‘(A) such term shall not include any

12 amount—

13 ‘‘(i) not includible in gross income,

14 ‘‘(ii) received as a pension or annuity,

15 ‘‘(iii) paid or distributed out of an in16 dividual retirement plan (within the mean17 ing of section 7701(a)(37)),

18 ‘‘(iv) received as deferred compensa19 tion, or

20 ‘‘(v) received for services performed

21 by an individual in the employ of his

22 spouse (within the meaning of section

23 3121(b)(3)(A)), and

24 ‘‘(B) section 911(d)(2)(B) shall be applied

25 without regard to the phrase ‘not in excess of
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1 30 percent of his share of net profits of such

2 trade or business’.’’

3 (b) DEDUCTION TO BE ABOVE-THE-LINE.—Section

4 62(a) of the Internal Revenue Code of 1986 (defining ad5 justed gross income) is amended by adding after para6 graph (17) the following:

7 ‘‘(18) DEDUCTION FOR TWO-EARNER MARRIED

8 COUPLES.—The deduction allowed by section 222.’’

9 (c) EARNED INCOME CREDIT PHASEOUT TO RE10 FLECT DEDUCTION.—Section 32(c)(2) of the Internal

11 Revenue Code of 1986 (defining earned income) is amend12 ed by adding at the end the following:

13 ‘‘(C) MARRIAGE PENALTY REDUCTION.—

14 Solely for purposes of applying subsection

15 (a)(2)(B), earned income for any taxable year

16 shall be reduced by an amount equal to the

17 amount of the deduction allowed to the tax18 payer for such taxable year under section 222.’’

19 (d) CLERICAL AMENDMENT.—The table of sections

20 for part VII of subchapter B of chapter 1 of the Internal

21 Revenue Code of 1986 is amended by striking the item

22 relating to section 222 and inserting the following:

‘‘Sec. 222. Deduction for married couples to eliminate the marriage penalty.

‘‘Sec. 223. Cross reference.’’
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1 (e) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to taxable years beginning after

3 December 31, 1998.

4 TITLE III—PAYCHECK FAIRNESS

5 SEC. 301. SHORT TITLE.

6 This title may be cited as the ‘‘Paycheck Fairness

7 Act’’.

8 SEC. 302. FINDINGS.

9 Congress makes the following findings:

10 (1) Women have entered the workforce in

11 record numbers.

12 (2) Even in the 1990s, women earn signifi13 cantly lower pay than men for work on jobs that re14 quire equal skill, effort, and responsibility and that

15 are performed under similar working conditions.

16 These pay disparities exist in both the private and

17 governmental sectors. In many instances, the pay

18 disparities can only be due to continued intentional

19 discrimination or the lingering effects of past dis20 crimination.

21 (3) The existence of such pay disparities—

22 (A) depresses the wages of working fami23 lies who rely on the wages of all members of the

24 family to make ends meet;
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1 (B) prevents the optimum utilization of

2 available labor resources;

3 (C) has been spread and perpetuated,

4 through commerce and the channels and instru5 mentalities of commerce, among the workers of

6 the several States;

7 (D) burdens commerce and the free flow of

8 goods in commerce;

9 (E) constitutes an unfair method of com10 petition in commerce;

11 (F) leads to labor disputes burdening and

12 obstructing commerce and the free flow of

13 goods in commerce;

14 (G) interferes with the orderly and fair

15 marketing of goods in commerce; and

16 (H) in many instances, may deprive work17 ers of equal protection on the basis of sex in

18 violation of the fifth and 14th amendments of

19 the United States Constitution.

20 (4)(A) Artificial barriers to the elimination of

21 discrimination in the payment of wages on the basis

22 of sex continue to exist more than 3 decades after

23 the enactment of the Fair Labor Standards Act of

24 1938 (29 U.S.C. 201 et seq.) and the Civil Rights

25 Act of 1964 (42 U.S.C. 2000a et seq.).
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1 (B) Elimination of such barriers would have

2 positive effects, including—

3 (i) providing a solution to problems in the

4 economy created by unfair pay disparities;

5 (ii) substantially reducing the number of

6 working women earning unfairly low wages,

7 thereby reducing the dependence on public as8 sistance; and

9 (iii) promoting stable families by enabling

10 all family members to earn a fair rate of pay;

11 (iv) remedying the effects of past discrimi12 nation on the basis of sex and ensuring that in

13 the future workers are afforded equal protection

14 on the basis of sex; and

15 (v) in the private sector, ensuring equal

16 protection pursuant to Congress’ power to en17 force the fifth and 14th amendments of the

18 United States Constitution.

19 (5) With increased information about the provi20 sions added by the Equal Pay Act of 1963 and gen21 eralized wage data, along with more effective rem22 edies, women will be better able to recognize and en23 force their rights to equal pay for work on jobs that

24 require equal skill, effort, and responsibility and that

25 are performed under similar working conditions.
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1 (6) Certain employers have already made great

2 strides in eradicating unfair pay disparities in the

3 workplace and their achievements should be recog4 nized.

5 SEC. 303. ENHANCED ENFORCEMENT OF EQUAL PAY RE6 QUIREMENTS.

7 (a) NONRETALIATION PROVISION.—Section 15(a)(3)

8 of the Fair Labor Standards Act of 1938 (29 U.S.C.

9 215(a)(3)) is amended—

10 (1) by striking ‘‘or has’’ each place it appears

11 and inserting ‘‘has’’; and

12 (2) by inserting before the semicolon the follow13 ing: ‘‘, or has inquired about, discussed, or otherwise

14 disclosed the wages of the employee or another em15 ployee’’.

16 (b) ENHANCED PENALTIES.—Section 16(b) of the

17 Fair Labor Standards Act of 1938 (29 U.S.C. 216(b)) is

18 amended—

19 (1) by inserting after the first sentence the fol20 lowing: ‘‘Any employer who violates section 6(d)

21 shall additionally be liable for such compensatory or

22 punitive damages as may be appropriate, except that

23 the United States shall not be liable for punitive

24 damages.’’;
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1 (2) in the sentence beginning ‘‘An action to’’,

2 by striking ‘‘either of the preceding sentences’’ and

3 inserting ‘‘any of the preceding sentences of this

4 subsection’’;

5 (3) in the sentence beginning ‘‘No employees

6 shall’’, by striking ‘‘No employees’’ and inserting

7 ‘‘Except with respect to class actions brought to en8 force section 6(d), no employee’’;

9 (4) by inserting after the sentence referred to

10 in paragraph (3), the following: ‘‘Notwithstanding

11 any other provision of Federal law, any action

12 brought to enforce section 6(d) may be maintained

13 as a class action as provided by the Federal Rules

14 of Civil Procedure.’’; and

15 (5) in the sentence beginning ‘‘The court in’’—

16 (A) by striking ‘‘in such action’’ and in17 serting ‘‘in any action brought to recover the li18 ability prescribed in any of the preceding sen19 tences of this subsection’’; and

20 (B) by inserting before the period the fol21 lowing: ‘‘, including expert fees’’.

22 (c) ACTION BY SECRETARY.—Section 16(c) of the

23 Fair Labor Standards Act of 1938 (29 U.S.C. 216(c)) is

24 amended—

25 (1) in the first sentence—
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1 (A) by inserting ‘‘or, in the case of a viola2 tion of section 6(d), additional compensatory or

3 punitive damages,’’ before ‘‘and the agree4 ment’’; and

5 (B) by inserting before the period the fol6 lowing: ‘‘, or such compensatory or punitive

7 damages, as appropriate’’;

8 (2) in the second sentence, by inserting before

9 the period the following: ‘‘and, in the case of a viola10 tion of section 6(d), additional compensatory or pu11 nitive damages’’;

12 (3) in the third sentence, by striking ‘‘the first

13 sentence’’ and inserting ‘‘the first or second sen14 tence’’; and

15 (4) in the last sentence, by inserting after ‘‘in

16 the complaint’’ the following: ‘‘or becomes a party

17 plaintiff in a class action brought to enforce section

18 6(d)’’.

19 SEC. 304. TRAINING.

20 The Equal Employment Opportunity Commission

21 and the Office of Federal Contract Compliance Programs,

22 subject to the availability of funds appropriated under sec23 tion 309, shall provide training to Commission employees

24 and affected individuals and entities on matters involving

25 discrimination in the payment of wages.
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1 SEC. 305. RESEARCH, EDUCATION, AND OUTREACH.

2 The Secretary of Labor shall conduct studies and

3 provide information to employers, labor organizations, and

4 the general public concerning the means available to elimi5 nate pay disparities between men and women, including—

6 (1) conducting and promoting research to de7 velop the means to correct expeditiously the condi8 tions leading to the pay disparities;

9 (2) publishing and otherwise making available

10 to employers, labor organizations, professional asso11 ciations, educational institutions, the media, and the

12 general public the findings resulting from studies

13 and other materials, relating to eliminating the pay

14 disparities;

15 (3) sponsoring and assisting State and commu16 nity informational and educational programs;

17 (4) providing information to employers, labor

18 organizations, professional associations, and other

19 interested persons on the means of eliminating the

20 pay disparities;

21 (5) recognizing and promoting the achievements

22 of employers, labor organizations, and professional

23 associations that have worked to eliminate the pay

24 disparities; and
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1 (6) convening a national summit to discuss, and

2 consider approaches for rectifying, the pay dispari3 ties.

4 SEC. 306. TECHNICAL ASSISTANCE AND EMPLOYER REC5 OGNITION PROGRAM.

6 (a) GUIDELINES.—

7 (1) IN GENERAL.—The Secretary of Labor shall

8 develop guidelines to enable employers to evaluate

9 job categories based on objective criteria such as

10 educational requirements, skill requirements, inde11 pendence, working conditions, and responsibility, in12 cluding decisionmaking responsibility and de facto

13 supervisory responsibility.

14 (2) USE.—The guidelines developed under

15 paragraph (1) shall be designed to enable employers

16 voluntarily to compare wages paid for different jobs

17 to determine if the pay scales involved adequately

18 and fairly reflect the educational requirements, skill

19 requirements, independence, working conditions, and

20 responsibility for each such job with the goal of

21 eliminating unfair pay disparities between occupa22 tions traditionally dominated by men or women.

23 (3) PUBLICATION.—The guidelines shall be de24 veloped under paragraph (1) and published in the
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1 Federal Register not later than 180 days after the

2 date of enactment of this Act.

3 (b) EMPLOYER RECOGNITION.—

4 (1) PURPOSE.—It is the purpose of this sub5 section to emphasize the importance of, encourage

6 the improvement of, and recognize the excellence of

7 employer efforts to pay wages to women that reflect

8 the real value of the contributions of such women to

9 the workplace.

10 (2) IN GENERAL.—To carry out the purpose of

11 this subsection, the Secretary of Labor shall estab12 lish a program under which the Secretary shall pro13 vide for the recognition of employers who, pursuant

14 to a voluntary job evaluation conducted by the em15 ployer, adjust their wage scales (such adjustments

16 shall not include the lowering of wages paid to men)

17 using the guidelines developed under subsection (a)

18 to ensure that women are paid fairly in comparison

19 to men.

20 (3) TECHNICAL ASSISTANCE.—The Secretary of

21 Labor may provide technical assistance to assist an

22 employer in carrying out an evaluation under para23 graph (2).
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1 (c) REGULATIONS.—The Secretary of Labor shall

2 promulgate such rules and regulations as may be nec3 essary to carry out this section.

4 SEC. 307. ESTABLISHMENT OF THE NATIONAL AWARD FOR

5 PAY EQUITY IN THE WORKPLACE.

6 (a) IN GENERAL.—There is established the Robert

7 Reich National Award for Pay Equity in the Workplace,

8 which shall be evidenced by a medal bearing the inscrip9 tion ‘‘Robert Reich National Award for Pay Equity in the

10 Workplace’’. The medal shall be of such design and mate11 rials, and bear such additional inscriptions, as the Sec12 retary of Labor may prescribe.

13 (b) CRITERIA FOR QUALIFICATION.—To qualify to

14 receive an award under this section a business shall—

15 (1) submit a written application to the Sec16 retary of Labor, at such time, in such manner, and

17 containing such information as the Secretary may

18 require, including at a minimum information that

19 demonstrates that the business has made substantial

20 effort to eliminate pay disparities between men and

21 women, and deserves special recognition as a con22 sequence; and

23 (2) meet such additional requirements and

24 specifications as the Secretary of Labor determines

25 to be appropriate.
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1 (c) MAKING AND PRESENTATION OF AWARD.—

2 (1) AWARD.—After receiving recommendations

3 from the Secretary of Labor, the President or the

4 designated representative of the President shall an5 nually present the award described in subsection (a)

6 to businesses that meet the qualifications described

7 in subsection (b).

8 (2) PRESENTATION.—The President or the des9 ignated representative of the President shall present

10 the award under this section with such ceremonies

11 as the President or the designated representative of

12 the President may determine to be appropriate.

13 (d) BUSINESS.—In this section, the term ‘‘business’’

14 includes—

15 (1)(A) a corporation, including a nonprofit cor16 poration;

17 (B) a partnership;

18 (C) a professional association;

19 (D) a labor organization; and

20 (E) a business entity similar to an entity de21 scribed in any of subparagraphs (A) through (D);

22 (2) an entity carrying out an education referral

23 program, a training program, such as an apprentice24 ship or management training program, or a similar

25 program; and
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1 (3) an entity carrying out a joint program,

2 formed by a combination of any entities described in

3 paragraph (1) or (2).

4 SEC. 308. SENSE OF THE SENATE REGARDING INCREASED

5 INFORMATION ON PAY DISPARITIES.

6 It is the sense of the Senate that the President should

7 take appropriate steps to increase the amount of informa8 tion available with respect to wage disparities. In so doing,

9 the President, or the designees of the President, should

10 consider ways of collecting this data that—

11 (1) maximize the utility of the information for

12 both the government and the public; while

13 (2) protecting individuals’ privacy and minimiz14 ing the burdens on reporting entities.

15 SEC. 309. AUTHORIZATION OF APPROPRIATIONS.

16 There are authorized to be appropriated such sums

17 as may be necessary to carry out this title.

18 TITLE IV—PENSION REFORM

19 SECTION 401. SHORT TITLE.

20 This title may be cited as the ‘‘Retirement Accessibil21 ity, Security, and Portability Act of 1999’’.
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1 Subtitle A—Pension Access and

2 Coverage

3 SEC. 410. AMENDMENT OF 1986 CODE.

4 Except as otherwise expressly provided, whenever in

5 this subtitle an amendment or repeal is expressed in terms

6 of an amendment to, or repeal of, a section or other provi7 sion, the reference shall be considered to be made to a

8 section or other provision of the Internal Revenue Code

9 of 1986.

10 CHAPTER 1—IMPROVED ACCESS TO

11 INDIVIDUAL RETIREMENT SAVINGS

12 SEC. 411. CREDIT FOR PENSION PLAN STARTUP COSTS OF

13 SMALL EMPLOYERS.

14 (a) IN GENERAL.—Subpart D of part IV of sub15 chapter A of chapter 1 (relating to business related cred16 its) is amended by adding at the end the following new

17 section:

18 ‘‘SEC. 45D. SMALL EMPLOYER PENSION PLAN STARTUP

19 COSTS.

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

21 in the case of an eligible employer, the small employer pen22 sion plan startup cost credit determined under this section

23 for any taxable year is an amount equal to 50 percent

24 of the qualified startup costs paid or incurred by the tax25 payer during the taxable year.
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1 ‘‘(b) DOLLAR LIMITATION.—The amount of the cred2 it determined under this section for any taxable year shall

3 not exceed—

4 ‘‘(1) $1,000 for the first credit year,

5 ‘‘(2) $500 for each of the 2 taxable years imme6 diately following the first credit year, and

7 ‘‘(3) zero for any other taxable year.

8 ‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this

9 section—

10 ‘‘(1) IN GENERAL.—The term ‘eligible em11 ployer’ has the meaning given such term by section

12 408(p)(2)(C)(i).

13 ‘‘(2) EMPLOYERS MAINTAINING QUALIFIED

14 PLANS DURING 1998 NOT ELIGIBLE.—Such term

15 shall not include an employer if such employer (or

16 any predecessor employer) maintained a qualified

17 plan (as defined in section 408(p)(2)(D)(ii)) with re18 spect to which contributions were made, or benefits

19 were accrued, for service in 1998. If only individuals

20 other than employees described in subparagraph (A)

21 or (B) of section 410(b)(3) are eligible to participate

22 in the qualified employer plan referred to in sub23 section (d)(1), then the preceding sentence shall be

24 applied without regard to any qualified plan in
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1 which only employees so described are eligible to

2 participate.

3 ‘‘(d) OTHER DEFINITIONS.—For purposes of this

4 section—

5 ‘‘(1) QUALIFIED STARTUP COSTS.—

6 ‘‘(A) IN GENERAL.—The term ‘qualified

7 startup costs’ means any ordinary and nec8 essary expenses of an eligible employer which

9 are paid or incurred in connection with—

10 ‘‘(i) the establishment or administra11 tion of an eligible employer plan, or

12 ‘‘(ii) the retirement-related education

13 of employees with respect to such plan.

14 ‘‘(B) PLAN MUST HAVE AT LEAST 2 PAR15 TICIPANTS.—Such term shall not include any

16 expense in connection with a plan that does not

17 have at least 2 individuals who are eligible to

18 participate.

19 ‘‘(C) PLAN MUST BE ESTABLISHED BE20 FORE JANUARY 1, 2002.—Such term shall not

21 include any expense in connection with a plan

22 established after December 31, 2001.

23 ‘‘(2) ELIGIBLE EMPLOYER PLAN.—The term

24 ‘eligible employer plan’ means a qualified employer

25 plan within the meaning of section 4972(d), or a
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1 qualified payroll deduction arrangement within the

2 meaning of section 408(q)(1) (whether or not an

3 election is made under section 408(q)(2)). A quali4 fied payroll deduction arrangement shall be treated

5 as an eligible employer plan only if all employees of

6 the employer who—

7 ‘‘(A) have been employed for 90 days, and

8 ‘‘(B) are not described in subparagraph

9 (A) or (C) of section 410(b)(3),

10 are eligible to make the election under section

11 408(q)(1)(A).

12 ‘‘(3) FIRST CREDIT YEAR.—The term ‘first

13 credit year’ means—

14 ‘‘(A) the taxable year which includes the

15 date that the eligible employer plan to which

16 such costs relate becomes effective, or

17 ‘‘(B) at the election of the eligible employer, the

18 taxable year preceding the taxable year referred to

19 in subparagraph (A).

20 ‘‘(e) SPECIAL RULES.—For purposes of this

21 section—

22 ‘‘(1) AGGREGATION RULES.—All persons treat23 ed as a single employer under subsection (a) or (b)

24 of section 52, or subsection (n) or (o) of section 414,
26

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1 shall be treated as one person. All eligible employer

2 plans shall be treated as 1 eligible employer plan.

3 ‘‘(2) DISALLOWANCE OF DEDUCTION.—No de4 duction shall be allowed for that portion of the quali5 fied startup costs paid or incurred for the taxable

6 year which is equal to the credit determined under

7 subsection (a).

8 ‘‘(3) ELECTION NOT TO CLAIM CREDIT.—This

9 section shall not apply to a taxpayer for any taxable

10 year if such taxpayer elects to have this section not

11 apply for such taxable year.’’

12 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI13 NESS CREDIT.—Section 38(b) (defining current year busi14 ness credit) is amended by striking ‘‘plus’’ at the end of

15 paragraph (11), by striking the period at the end of para16 graph (12) and inserting ‘‘, plus’’, and by adding at the

17 end the following new paragraph:

18 ‘‘(13) in the case of an eligible employer (as de19 fined in section 45D(c)), the small employer pension

20 plan startup cost credit determined under section

21 45D(a).’’

22 (c) CONFORMING AMENDMENTS.—

23 (1) Section 39(d) is amended by adding at the

24 end the following new paragraph:
27

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1 ‘‘(9) NO CARRYBACK OF SMALL EMPLOYER

2 PENSION PLAN STARTUP COST CREDIT BEFORE EF3 FECTIVE DATE.—No portion of the unused business

4 credit for any taxable year which is attributable to

5 the small employer pension plan startup cost credit

6 determined under section 45D may be carried back

7 to a taxable year ending on or before the date of

8 the enactment of section 45D.’’

9 (2) Subsection (c) of section 196 is amended by

10 striking ‘‘and’’ at the end of paragraph (7), by strik11 ing the period at the end of paragraph (8) and in12 serting ‘‘, and’’, and by adding at the end the follow13 ing new paragraph:

14 ‘‘(9) the small employer pension plan startup

15 cost credit determined under section 45D(a).’’

16 (3) The table of sections for subpart D of part

17 IV of subchapter A of chapter 1 is amended by add18 ing at the end the following new item:

‘‘Sec. 45D. Small employer pension plan startup costs.’’

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

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

21 years ending after the date of the enactment of this title.

22 SEC. 412. EXCLUSION FOR PAYROLL DEDUCTION CON23 TRIBUTIONS TO IRAS.

24 (a) IN GENERAL.—Section 408 (relating to individual

25 retirement accounts) is amended by redesignating sub-
28

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1 section (q) as subsection (r) and by inserting after sub2 section (p) the following new subsection:

3 ‘‘(q) QUALIFIED PAYROLL DEDUCTION ARRANGE4 MENT FOR IRA CONTRIBUTIONS.—

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

6 the term ‘qualified payroll deduction arrangement’

7 means a written arrangement of an employer under

8 which—

9 ‘‘(A) an employee eligible to participate in

10 the arrangement may elect to have the employer

11 make payments—

12 ‘‘(i) to the employee directly in cash,

13 or

14 ‘‘(ii) as elective employer contributions

15 to an individual retirement plan (as de16 fined in section 7701(a)(37)), other than

17 an individual retirement plan described in

18 section 408(k), 408(p), or 408A(b), on be19 half of the employee for the taxable year in

20 which the payments otherwise would have

21 been made to the employee directly in

22 cash,

23 ‘‘(B) the amount which the employee may

24 elect under subparagraph (A) for any year may

25 not exceed a total of $2,000,
29

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1 ‘‘(C) no other contributions may be made

2 other than contributions described in subpara3 graph (A),

4 ‘‘(D) the employee’s rights to any contribu5 tions made to an individual retirement plan are

6 nonforfeitable (for this purpose, rules similar to

7 the rules of subsection (k)(4) shall apply), and

8 ‘‘(E) the employer makes the elective em9 ployer contributions under subparagraph (A)

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

11 following the last day of the month with respect

12 to which the contributions are to be made.

13 ‘‘(2) ELECTION NOT TO HAVE SUBSECTION

14 APPLY.—An employer that maintains an arrange15 ment otherwise described in paragraph (1) may elect

16 to have contributions treated as though they were

17 not made under such an arrangement. If an em18 ployer does not make an election described in the

19 preceding sentence, an employee may elect, before

20 any contributions are made for the calendar year, to

21 have contributions on behalf of the employee treated

22 as though they were not made under an arrange23 ment described in paragraph (1). An employer shall

24 be deemed to have made an election under this para25 graph for a year if the employer maintained a quali-
30

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1 fied plan with respect to which contributions were

2 made or benefits were accrued for such year. For

3 purposes of the preceding sentence, the term ‘quali4 fied plan’ means a plan, contract, pension, or trust

5 described in subparagraph (A) or (B) of section

6 219(g)(5).’’.

7 (b) TAX TREATMENT OF EMPLOYER CONTRIBUTIONS

8 MADE UNDER A QUALIFIED PAYROLL DEDUCTION AR9 RANGEMENT.—

10 (1) COORDINATION WITH DEDUCTION UNDER

11 SECTION 219.—

12 (A) Section 219(b) (relating to maximum

13 amount of deduction) is amended by adding at

14 the end the following new paragraph:

15 ‘‘(5) SPECIAL RULE FOR CONTRIBUTIONS

16 UNDER A QUALIFIED PAYROLL DEDUCTION AR17 RANGEMENT.—This section shall not apply with re18 spect to any amount contributed under a qualified

19 payroll deduction arrangement described in section

20 408(q)(1) (for which an election has not been made

21 under section 408(q)(2)).’’.

22 (B) Section 219(g)(1) (relating to the limi23 tation on deduction for active participants) is

24 amended to read as follows:
31

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1 ‘‘(1) IN GENERAL.—If (for any part of any plan

2 year ending with or within a taxable year) an indi3 vidual is an active participant, each of the dollar

4 limitations contained in subsections (b)(1)(A) and

5 (c)(1)(A) for such taxable year shall be reduced (but

6 not below zero) by the sum of—

7 ‘‘(A) the amount determined under para8 graph (2), and

9 ‘‘(B) the amount contributed for the tax10 able year under a qualified payroll deduction ar11 rangement described in section 408(q)(1) (for

12 which an election has not been made under sec13 tion 408(q)(2)).’’.

14 (2) DEDUCTIBILITY OF EMPLOYER CONTRIBU15 TIONS.—Section 404 (relating to deductions for con16 tributions of an employer to pension, etc., plans) is

17 amended by adding at the end the following new

18 subsection:

19 ‘‘(n) SPECIAL RULES FOR CONTRIBUTIONS UNDER

20 A QUALIFIED PAYROLL DEDUCTION ARRANGEMENT.—

21 Rules similar to the rules of subsection (m) shall apply

22 to employer contributions made under a qualified payroll

23 deduction arrangement described in section 408(q)(1) (for

24 which an election has not been made under section

25 408(q)(2)).’’.
32

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1 (3) CONTRIBUTIONS AND DISTRIBUTIONS.—

2 Section 402 (relating to taxability of beneficiary of

3 employees’ trust) is amended by adding at the end

4 the following new subsection:

5 ‘‘(l) TREATMENT OF CONTRIBUTIONS AND DIS6 TRIBUTIONS UNDER A QUALIFIED PAYROLL DEDUCTION

7 ARRANGEMENT.—Rules similar to the rules of paragraphs

8 (1) and (3) of subsection (h) shall apply to contributions

9 and distributions made with respect to an individual re10 tirement plan under a qualified payroll deduction arrange11 ment described in section 408(q)(1) (for which an election

12 has not been made under section 408(q)(2)), except that

13 contributions made by an employer on behalf of an em14 ployee for a taxable year shall be excluded from income

15 only to the extent such contributions would have been de16 ductible for such taxable year under section 219, if such

17 section applied, without regard to section 219(g)(1)(B).

18 Contributions that are not excluded from income under

19 the preceding sentence shall be treated as designated non20 deductible contributions under section 408(o).’’.

21 (c) EXEMPTION FROM WITHHOLDING.—Subsection

22 (a) of section 3401 (defining wages) is amended by strik23 ing ‘‘or’’ at the end of paragraph (20), by striking the

24 period at the end of paragraph (21) and inserting ‘‘; or’’,
33

•S 8 IS

1 and by inserting after paragraph (21) the following new

2 paragraph:

3 ‘‘(22) for any payment made for the benefit of

4 the employee to an individual retirement plan if the

5 amount of such payment was deducted and withheld

6 under section 408(q).’’.

7 (d) EXCLUSION SHOWN ON W–2.—Subsection (a) of

8 section 6051 (relating to receipts for employees) is amend9 ed by striking ‘‘and’’ at the end of paragraph (10), by

10 striking the period at the end of paragraph (11) and in11 serting ‘‘, and’’, and by inserting after paragraph (11) the

12 following new paragraph:

13 ‘‘(12) the total amount deducted and withheld

14 pursuant to section 408(q).’’.

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

16 this section shall apply to remuneration paid after Decem17 ber 31, 1999.

18 SEC. 413. NONREFUNDABLE TAX CREDIT FOR CONTRIBU19 TIONS TO INDIVIDUAL RETIREMENT PLANS.

20 (a) IN GENERAL.—Subpart A of part IV of sub21 chapter A of chapter 1 (relating to nonrefundable personal

22 credits) is amended by inserting after section 25A the fol23 lowing new section:
34

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1 ‘‘SEC. 25B. RETIREMENT SAVINGS.

2 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al3 lowed as a credit against the tax imposed by this chapter

4 so much of the qualified retirement contributions of the

5 taxpayer for the taxable year as does not exceed the appli6 cable amount of the adjusted gross income of the taxpayer

7 for such year.

8 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub9 section (a), the applicable amount is determined in accord10 ance with the following table:

‘‘If adjusted gross income is: The applicable amount is:

Not over $15,000 .......................... $450.

Over $15,000 but not over

$20,000.

$400.

Over $20,000 but not over

$25,000.

$350.

Over $25,000 but not over

$30,000.

$300.

Over $30,000 ................................. $0.

11 ‘‘(c) SECTION NOT TO APPLY TO CERTAIN CON12 TRIBUTIONS.—This section shall not apply with respect

13 to—

14 ‘‘(1) an employer contribution to a simplified

15 employee pension,

16 ‘‘(2) any amount contributed to a simple retire17 ment account established under section 408(p),

18 ‘‘(3) any amount contributed to a Roth IRA,

19 and

20 ‘‘(4) any designated nondeductible contribution

21 (as defined in section 408(o)(2)(C)).
35

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1 ‘‘(d) OTHER LIMITATIONS AND RESTRICTIONS.—

2 ‘‘(1) BENEFICIARY MUST BE UNDER AGE

701 3 ⁄2.—No credit shall be allowed under this section

4 with respect to any qualified retirement contribution

5 for the benefit of an individual if such individual has

attained age 701 6 ⁄2 before the close of such individ7 ual’s taxable year for which the contribution was

8 made.

9 ‘‘(2) RECONTRIBUTED AMOUNTS.—No credit

10 shall be allowed under this section with respect to a

11 rollover contribution described in section 402(c),

12 403(a)(4), 403(b)(8), or 408(d)(3).

13 ‘‘(3) AMOUNTS CONTRIBUTED UNDER ENDOW14 MENT CONTRACT.—In the case of an endowment

15 contract described in section 408(b), no credit shall

16 be allowed under this section for that portion of the

17 amounts paid under the contract for the taxable

18 year which is properly allocable, under regulations

19 prescribed by the Secretary, to the cost of life insur20 ance.

21 ‘‘(4) DENIAL OF CREDIT FOR AMOUNT CON22 TRIBUTED TO INHERITED ANNUITIES OR AC23 COUNTS.—No credit shall be allowed under this sec24 tion with respect to any amount paid to an inherited

25 individual retirement account or individual retire-
36

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1 ment annuity (within the meaning of section

2 408(d)(3)(C)(ii)).

3 ‘‘(5) NO DOUBLE BENEFIT.—No credit shall be

4 allowed under this section for any taxable year with

5 respect to the amount of any qualified retirement

6 contribution for the benefit of an individual if such

7 individual takes a deduction with respect to such

8 amount under section 219 for such taxable year.

9 ‘‘(e) QUALIFIED RETIREMENT CONTRIBUTION.—For

10 purposes of this section, the term ‘qualified retirement

11 contribution’ means—

12 ‘‘(1) any amount paid in cash for the taxable

13 year by or on behalf of an individual to an individual

14 retirement plan for such individual’s benefit, and

15 ‘‘(2) any amount contributed on behalf of any

16 individual to a plan described in section 501(c)(18).

17 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—

18 ‘‘(1) COMPENSATION.—For purposes of this

19 section, the term ‘compensation’ has the meaning

20 given in section 219(f)(1).

21 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE22 TURN.—If the taxpayer is married at the close of

23 the taxable year, the credit shall be allowed under

24 subsection (a) only if the taxpayer and the tax-
37

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1 payer’s spouse file a joint return for the taxable

2 year.

3 ‘‘(3) TIME WHEN CONTRIBUTIONS DEEMED

4 MADE.—For purposes of this section, a taxpayer

5 shall be deemed to have made a contribution to an

6 individual retirement plan on the last day of the pre7 ceding taxable year if the contribution is made on

8 account of such taxable year and is made not later

9 than the time prescribed by law for filing the return

10 for such taxable year (not including extensions

11 thereof).

12 ‘‘(4) EMPLOYER PAYMENTS.—For purposes of

13 this title, any amount paid by an employer to an in14 dividual retirement plan shall be treated as payment

15 of compensation to the employee (other than a self16 employed individual who is an employee within the

17 meaning of section 401(c)(1)) includible in his gross

18 income in the taxable year for which the amount was

19 contributed, whether or not a credit for such pay20 ment is allowable under this section to the em21 ployee.’’

22 (b) CONFORMING AMENDMENTS.—

23 (1) Section 86(f) is amended by redesignating

24 paragraphs (2), (3), and (4) as paragraphs (3), (4),
38

•S 8 IS

1 and (5), respectively, and by inserting after para2 graph (1) the following new paragraph:

3 ‘‘(2) section 25B(f)(1) (defining compensa4 tion),’’.

5 (2) Clause (i) of section 501(c)(18)(D) is

6 amended by inserting ‘‘which may be taken into ac7 count in computing the credit allowable under sec8 tion 25B or’’ before ‘‘with respect’’.

9 (3) Section 6047(c) is amended by inserting

10 ‘‘section 25B or’’ before ‘‘section 219’’.

11 (4) Section 6652(g) is amended by inserting

12 ‘‘CREDITABLE’’ before ‘‘DEDUCTIBLE’’ in the head13 ing thereof.

14 (5) The table of sections for subpart A of part

15 IV of subchapter A of chapter 1 is amended by in16 serting after the item relating to section 25A the fol17 lowing new item:

‘‘Sec. 25B. Retirement savings.’’

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

19 this section apply to taxable years beginning after Decem20 ber 31, 1999.

21 SEC. 414. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE

22 USED WITHOUT PENALTY DURING PERIODS

23 OF UNEMPLOYMENT.

24 (a) IN GENERAL.—Paragraph (2) of section 72(t)

25 (relating to exceptions to 10-percent additional tax on
39

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1 early distributions from qualified retirement plans) is

2 amended by adding at the end the following new subpara3 graph:

4 ‘‘(G) ADDITIONAL DISTRIBUTIONS TO UN5 EMPLOYED INDIVIDUALS.—

6 ‘‘(i) IN GENERAL.—Distributions from

7 an individual retirement plan, or from

8 amounts attributable to employer contribu9 tions made pursuant to elective deferrals

10 described in subparagraph (A) or (C) of

11 section 402(g)(3) or section

12 501(c)(18)(D)(iii), to an individual after

13 separation from employment if—

14 ‘‘(I) such individual has received

15 unemployment compensation for 12

16 consecutive weeks under any Federal

17 or State unemployment compensation

18 law by reason of such separation, and

19 ‘‘(II) such distributions are made

20 during the 1-year period beginning on

21 the date of such separation.

22 ‘‘(ii) DISTRIBUTIONS AFTER REEM23 PLOYMENT.—Clause (i) shall not apply to

24 any distribution made after the individual

25 has been employed for at least 60 days
40

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1 after the separation from employment to

2 which clause (i) applies.

3 ‘‘(iii) COORDINATION WITH SUBPARA4 GRAPH (D).—Distributions during the 1-

5 year period described in clause (i)(II) shall

6 not be taken into account in applying the

7 limitation under subparagraph

8 (D)(i)(III).’’

9 (b) CONFORMING AMENDMENTS.—

10 (1) Section 401(k)(2)(B)(i) is amended by

11 striking ‘‘or’’ at the end of subclause (III), by strik12 ing ‘‘and’’ at the end of subclause (IV) and inserting

13 ‘‘or’’, and by inserting after subclause (IV) the fol14 lowing new subclause:

15 ‘‘(V) the date on which a period

16 referred to in section 72(t)(2)(G) be17 gins, and’’.

18 (2) Section 403(b)(11) is amended by striking

19 ‘‘or’’ at the end of subparagraph (A), by striking the

20 period at the end of subparagraph (B) and inserting

21 ‘‘, or’’, and by inserting after subparagraph (B) the

22 following new subparagraph:

23 ‘‘(C) for distributions to which section

24 72(t)(2)(G) applies.’’
41

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

2 this section shall apply to distributions after the date of

3 the enactment of this title.

4 CHAPTER 2—SECURE MONEY ANNUITY OR

5 RETIREMENT (SMART) TRUSTS

6 SEC. 415. SECURE MONEY ANNUITY OR RETIREMENT

7 (SMART) TRUSTS.

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

9 D of chapter 1 is amended by inserting after section 408A

10 the following new section:

11 ‘‘SEC. 408B. SMART PLANS.

12 ‘‘(a) EMPLOYER ELIGIBILITY.—

13 ‘‘(1) IN GENERAL.—An employer may establish

14 and maintain a SMART annuity or a SMART trust

15 for any year only if—

16 ‘‘(A) the employer is an eligible employer

17 (as defined in section 408(p)(2)(C)), and

18 ‘‘(B) the employer does not maintain (and

19 no predecessor of the employer maintains) a

20 qualified plan (other than a permissible plan)

21 with respect to which contributions were made,

22 or benefits were accrued, for service in any year

23 in the period beginning with the year such an24 nuity or trust became effective and ending with
42

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1 the year for which the determination is being

2 made.

3 The period described in subparagraph (B) shall in4 clude the period of 5 years before the year such

5 trust or annuity became effective with respect to

6 qualified plans which are defined benefit plans or

7 money purchase pension plans.

8 ‘‘(2) DEFINITIONS.—For purposes of paragraph

9 (1)—

10 ‘‘(A) QUALIFIED PLAN.—The term ‘quali11 fied plan’ has the meaning given such term by

12 section 408(p)(2)(D)(ii).

13 ‘‘(B) PERMISSIBLE PLAN.—The term ‘per14 missible plan’ means—

15 ‘‘(i) a SIMPLE plan described in sec16 tion 408(p),

17 ‘‘(ii) a SIMPLE 401(k) plan de18 scribed in section 401(k)(11),

19 ‘‘(iii) an eligible deferred compensa20 tion plan described in section 457(b),

21 ‘‘(iv) a collectively bargained plan but

22 only if the employees eligible to participate

23 in such plan are not also entitled to a ben24 efit described in subsection (b)(5) or

25 (c)(5), or
43

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1 ‘‘(v) a plan under which there may be

2 made only—

3 ‘‘(I) elective deferrals described

4 in section 402(g)(3), and

5 ‘‘(II) employer matching con6 tributions not in excess of the

7 amounts described in subclauses (I)

8 and (II) of section 401(k)(12)(B)(i).

9 ‘‘(b) SMART ANNUITY.—

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

11 the term ‘SMART annuity’ means an individual re12 tirement annuity (as defined in section 408(b) with13 out regard to paragraph (2) thereof and without re14 gard to the limitation on aggregate annual pre15 miums contained in the flush language of section

16 408(b)) if—

17 ‘‘(A) such annuity meets the requirements

18 of paragraphs (2) through (8), and

19 ‘‘(B) the only contributions to such annu20 ity are employer contributions.

21 Nothing in this section shall be construed as pre22 venting an employer from using a group annuity

23 contract which is divisible into individual retirement

24 annuities for purposes of providing SMART annu25 ities.
44

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1 ‘‘(2) PARTICIPATION REQUIREMENTS.—

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

3 this paragraph are met for any year only if all

4 employees of the employer who—

5 ‘‘(i) received at least $5,000 in com6 pensation from the employer during any 2

7 consecutive preceding years, and

8 ‘‘(ii) received at least $5,000 in com9 pensation during the year,

10 are entitled to the benefit described in para11 graph (5) for such year.

12 ‘‘(B) EXCLUDABLE EMPLOYEES.—An em13 ployer may elect to exclude from the require14 ments under subparagraph (A) employees de15 scribed in subparagraph (A) or (C) of section

16 410(b)(3).

17 ‘‘(3) VESTING.—The requirements of this para18 graph are met if the employee’s rights to any bene19 fits under the annuity are nonforfeitable.

20 ‘‘(4) BENEFIT FORM.—The requirements of

21 this paragraph are met if the only form of benefit

22 is—

23 ‘‘(A) a benefit payable annually in the

24 form of a single life annuity with monthly pay-
45

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1 ments (with no ancillary benefits) beginning at

2 age 65, or

3 ‘‘(B) any other form of benefit which is the

4 actuarial equivalent (based on the assumptions

5 specified in the SMART annuity) of the benefit

6 described in subparagraph (A).

7 ‘‘(5) AMOUNT OF ANNUAL ACCRUED BENE8 FIT.—

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

10 this paragraph are met for any plan year if the

11 accrued benefit of each participant derived from

12 employer contributions for such year, when ex13 pressed as a benefit described in paragraph

14 (4)(A), equals the applicable percentage of the

15 participant’s compensation for such year.

16 ‘‘(B) APPLICABLE PERCENTAGE.—For

17 purposes of this paragraph—

18 ‘‘(i) IN GENERAL.—The term ‘applica19 ble percentage’ means 2 percent.

20 ‘‘(ii) ELECTION OF DIFFERENT PER21 CENTAGE.—An employer may elect to

22 apply an applicable percentage of 1 percent

23 for any year for all employees eligible to

24 participate in the plan for such year, if the

25 employer notifies the employees of such
46

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1 percentage within a reasonable period be2 fore the beginning of such year. An em3 ployer may also elect to apply an applicable

4 percentage of 3 percent for any of the first

5 5 years that the plan is effective for all

6 employees eligible to participate in the plan

7 for such year, if the employer so notifies

8 the employees.

9 ‘‘(C) COMPENSATION LIMIT.—

10 ‘‘(i) IN GENERAL.—The compensation

11 taken into account under this paragraph

12 for any year shall not exceed $100,000.

13 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

14 The Secretary shall adjust annually the

15 $100,000 amount in clause (i) for in16 creases in the cost-of-living at the same

17 time and in the same manner as adjust18 ments under section 415(d); except that

19 the base period shall be the calendar quar20 ter beginning October 1, 2000, and any in21 crease which is not a multiple of $5,000

22 shall be rounded to the next lowest mul23 tiple of $5,000.

24 ‘‘(6) FUNDING.—
47

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

2 this paragraph are met only if the employer is

3 required to contribute to the annuity for each

4 plan year the amount necessary to purchase a

5 SMART annuity in the amount of the benefit

6 accrued for such year for each participant enti7 tled to such benefit. Such contribution must be

made no later than 81 8 ⁄2 months after the end

9 of the plan year.

10 ‘‘(B) PENALTY FOR FAILURE TO MAKE RE11 QUIRED CONTRIBUTION.—The taxes imposed by

12 section 4971 shall apply to a failure to make

13 the contribution required by this paragraph in

14 the same manner as if the amount of the failure

15 were an accumulated funding deficiency to

16 which such section applies.

17 ‘‘(7) LIMITATION ON DISTRIBUTIONS.—

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

19 this paragraph are met only if distributions

20 may be paid only when the employee attains

21 age 65, separates from service, dies, or becomes

22 disabled (within the meaning of section

23 72(m)(7)).

24 ‘‘(B) LIMITATION ON DISTRIBUTIONS ON

25 SEPARATION FROM SERVICE OF EMPLOYEES
48

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1 WHO HAVE NOT ATTAINED AGE 65.—Subpara2 graph (A) shall apply to a distribution on sepa3 ration of service of an employee who has not at4 tained age 65 only if—

5 ‘‘(i) the aggregate cash value of an

6 employee’s SMART annuities does not ex7 ceed the dollar limit in effect under section

8 411(a)(11)(A), or

9 ‘‘(ii) the distribution is a direct trust10 ee-to-trustee transfer of the entire balance

11 to the credit of the employee to a SMART

12 trust described in subsection (c), a

13 SMART rollover plan, or a SMART annu14 ity for the benefit of such employee.

15 ‘‘(8) JOINT AND SURVIVOR ANNUITY RULES AP16 PLICABLE.—The requirements of this paragraph are

17 met only if the annuity satisfies section 401(a)(11).

18 ‘‘(9) DEFINITIONS AND SPECIAL RULE.—

19 ‘‘(A) DEFINITIONS.—The definitions in

20 section 408(p)(6) shall apply for purposes of

21 this subsection.

22 ‘‘(B) USE OF DESIGNATED FINANCIAL IN23 STITUTIONS.—A rule similar to the rule of sec24 tion 408(p)(7) (without regard to the last sen-
49

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1 tence thereof) shall apply for purposes of this

2 subsection.

3 ‘‘(C) SMART ROLLOVER PLAN.—For pur4 poses of this section, the term ‘SMART rollover

5 plan’ means an individual retirement plan for

6 the benefit of the employee to which a rollover

7 was made from a SMART Annuity, SMART

8 trust, or another SMART Rollover plan.

9 ‘‘(c) SMART TRUST.—

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

11 the term ‘SMART trust’ means a trust forming part

12 of a defined benefit plan if—

13 ‘‘(A) such trust meets the requirements of

14 section 401(a) as modified by subsection (d),

15 ‘‘(B) such plan meets the requirements of

16 paragraphs (2) through (8), and

17 ‘‘(C) the only contributions to such trust

18 are employer contributions.

19 ‘‘(2) PARTICIPATION REQUIREMENTS.—A plan

20 meets the requirements of this paragraph for any

21 year only if the requirements of subsection (b)(2)

22 are met for such year.

23 ‘‘(3) VESTING.—A plan meets the requirements

24 of this paragraph for any year only if the require25 ments of subsection (b)(3) are met for such year.
50

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1 ‘‘(4) BENEFIT FORM.—

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

3 subparagraph (B), a plan meets the require4 ments of this paragraph only if the trustee dis5 tributes a SMART annuity that satisfies sub6 section (b)(4) where the annual benefit de7 scribed in subsection (b)(4)(A) is no less than

8 the accrued benefit determined under para9 graph (5).

10 ‘‘(B) DIRECT TRANSFERS TO INDIVIDUAL

11 RETIREMENT PLAN OR SMART ANNUITY.—A

12 plan shall not fail to meet the requirements of

13 this paragraph by reason of permitting, as an

14 optional form of benefit, the distribution of the

15 entire balance to the credit of the employee. If

16 the employee is under age 65, such distribution

17 must be in the form of a direct trustee-to-trust18 ee transfer to a SMART annuity, another

19 SMART trust, or a SMART rollover plan (or,

20 in the case of a distribution that does not ex21 ceed the dollar limit in effect under section

22 411(a)(11)(A), any other individual retirement

23 plan).

24 ‘‘(5) AMOUNT OF ANNUAL ACCRUED BENE25 FIT.—A plan meets the requirements of this para-
51

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1 graph for any year only if the requirements of sub2 section (b)(5) are met for such year.

3 ‘‘(6) FUNDING.—

4 ‘‘(A) IN GENERAL.—A plan meets the re5 quirements of this paragraph for any year only

6 if—

7 ‘‘(i) the requirements of subparagraph

8 (A) of subsection (b)(6) are met for such

9 year,

10 ‘‘(ii) in the case of a plan which has

11 an unfunded annuity amount with respect

12 to the account of any participant, the plan

13 requires that the employer make an addi14 tional contribution to such plan (at the

15 time the annuity contract to which such

16 amount relates is purchased) equal to the

17 unfunded annuity amount, and

18 ‘‘(iii) in the case of a plan which has

19 an unfunded prior year liability as of the

20 close of such plan year, the plan requires

21 that the employer make an additional con22 tribution to such plan for such year equal

23 to the amount of such unfunded prior year

liability no later than 81 24 ⁄2 months following

25 the end of the plan year.
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1 ‘‘(B) UNFUNDED ANNUITY AMOUNT.—For

2 purposes of this paragraph, the term ‘unfunded

3 annuity amount’ means, with respect to the ac4 count of any participant for whom an annuity

5 is being purchased, the excess (if any) of—

6 ‘‘(i) the amount necessary to purchase

7 an annuity contract which meets the re8 quirements of subsection (b)(4) in the

9 amount of the participant’s accrued benefit

10 determined under paragraph (5), over

11 ‘‘(ii) the balance in such account at

12 the time such contract is purchased.

13 ‘‘(C) UNFUNDED PRIOR YEAR LIABIL14 ITY.—For purposes of this paragraph, the term

15 ‘unfunded prior year liability’ means, with re16 spect to any plan year, the excess (if any) of—

17 ‘‘(i) the aggregate of the present value

18 under the plan as of the close of the prior

19 plan year, over

20 ‘‘(ii) the value of the plan’s assets de21 termined under section 412(c)(2) as of the

22 close of the plan year (determined without

23 regard to any contributions for such plan

24 year).
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1 Such present value shall be determined using

2 the assumptions specified in subparagraph (D).

3 ‘‘(D) ACTUARIAL ASSUMPTIONS.—In deter4 mining the amount required to be contributed

5 under subparagraph (A)—

6 ‘‘(i) the assumed interest rate shall be

7 5 percent per year,

8 ‘‘(ii) the assumed mortality shall be

9 determined under the applicable mortality

10 table (as defined in section 417(e)(3), as

11 modified by the Secretary so that it does

12 not include any assumption for preretire13 ment mortality), and

14 ‘‘(iii) the assumed retirement age

15 shall be 65.

16 ‘‘(E) CHANGES IN MORTALITY TABLE.—If

17 the applicable mortality table under section

18 417(e)(3) for any plan year is not the same as

19 such table for the prior plan year, the Secretary

20 shall prescribe regulations which phase in the

21 effect of the changes over a reasonable period

22 of plan years determined by the Secretary.

23 ‘‘(F) PENALTY FOR FAILURE TO MAKE RE24 QUIRED CONTRIBUTION.—The taxes imposed by

25 section 4971 shall apply to a failure to make
54

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1 the contribution required by this paragraph in

2 the same manner as if the amount of the failure

3 were an accumulated funding deficiency to

4 which such section applies.

5 ‘‘(7) SEPARATE ACCOUNTS FOR PARTICI6 PANTS.—A plan meets the requirements of this

7 paragraph for any year only if the plan provides—

8 ‘‘(A) for an individual account for each

9 participant, and

10 ‘‘(B) for benefits based solely on—

11 ‘‘(i) the amount contributed to the

12 participant’s account,

13 ‘‘(ii) any income, expenses, gains and

14 losses, and any forfeitures of accounts of

15 other participants which may be allocated

16 to such participant’s account, and

17 ‘‘(iii) the amount of any unfunded an18 nuity amount with respect to the partici19 pant.

20 ‘‘(8) TRUST MAY NOT HOLD SECURITIES WHICH

21 ARE NOT READILY TRADABLE.—A plan meets the

22 requirements of this paragraph only if the plan pro23 hibits the trust from holding directly or indirectly se24 curities which are not readily tradable on an estab25 lished securities market. Nothing in this paragraph
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1 shall prohibit the trust from holding insurance com2 pany products regulated by State law.

3 ‘‘(9) DEFINITIONS.—The definitions applicable

4 under subsection (b)(8) shall apply for purposes of

5 this subsection.

6 ‘‘(d) SPECIAL RULES FOR SMART ANNUITIES AND

7 TRUSTS.—For purposes of section 401(a), a SMART an8 nuity and a SMART trust shall be treated as meeting the

9 requirements of the following provisions:

10 ‘‘(1) Section 401(a)(4) (relating to non11 discrimination rules).

12 ‘‘(2) Section 401(a)(26) (relating to minimum

13 participation).

14 ‘‘(3) Section 410 (relating to minimum partici15 pation and coverage requirements).

16 ‘‘(4) Section 411(b) (relating to accrued benefit

17 requirements).

18 ‘‘(5) Section 416 (relating to special rules for

19 top-heavy plans).’’

20 (b) DEDUCTION RULES.—

21 (1) IN GENERAL.—Section 404, as amended by

22 section 412(b)(2), is amended by adding at the end

23 the following new subsection:

24 ‘‘(o) SPECIAL RULES FOR SMART ANNUITIES AND

25 TRUSTS.—
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1 ‘‘(1) IN GENERAL.—Employer contributions to

2 a SMART annuity shall be treated as if they are

3 made to a plan described in paragraph (1) of sub4 section (a).

5 ‘‘(2) DEDUCTIBLE LIMIT.—For purposes of sec6 tion 404(a)(1)(A)(i), the amount necessary to satisfy

7 the minimum funding requirement of section 408B

8 (b)(6) or (c)(6) shall be treated as the amount nec9 essary to satisfy the minimum funding requirement

10 of section 412.’’

11 (2) COORDINATION WITH DEDUCTION UNDER

12 SECTION 219.—

13 (A) Section 219(b), as amended by section

14 412(b)(1), is amended by adding at the end the

15 following new paragraph:

16 ‘‘(6) SPECIAL RULE FOR SMART ANNUITIES.—

17 This section shall not apply with respect to any

18 amount contributed to a SMART annuity estab19 lished under section 408B(b).’’

20 (B) Section 219(g)(5)(A) (defining active

21 participant) is amended by striking ‘‘or’’ at the

22 end of clause (v) and by adding at the end the

23 following new clause:
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1 ‘‘(vii) any SMART trust or SMART

2 annuity (within the meaning of section

3 408B), or’’.

4 (c) CONTRIBUTIONS AND DISTRIBUTIONS.—

5 (1) Section 402, as amended by section

6 412(b)(3), is amended by adding at the end the fol7 lowing new subsection:

8 ‘‘(m) TREATMENT OF SMART ANNUITIES.—Rules

9 similar to the rules of paragraphs (1) and (3) of sub10 section (h) shall apply to contributions and distributions

11 with respect to SMART annuities under section 408B.’’

12 (2) Section 408(d)(3) is amended by adding at

13 the end the following new subparagraph:

14 ‘‘(H) SMART ANNUITIES.—This para15 graph shall not apply to any amount paid or

16 distributed out of a SMART annuity (as de17 fined in section 408B) unless it is paid in a

18 trustee-to-trustee transfer into a SMART roll19 over plan.’’

20 (3)(A) Section 412(h) is amended by striking

21 ‘‘or’’ at the end of paragraph (5), by striking the pe22 riod at the end of paragraph (6) and inserting ‘‘,

23 or’’, and by inserting after paragraph (6) the follow24 ing new paragraph:
58

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1 ‘‘(7) any plan providing for the purchase of any

2 SMART annuity or any SMART plan.’’

3 (B) Section 301(a) of Employee Retirement In4 come Security Act of 1974 (29 U.S.C. 1081) is

5 amended by striking ‘‘or’’ at the end of paragraph

6 (9), by striking the period at the end of paragraph

7 (10) and inserting ‘‘; or’’, and by adding at the end

8 the following new paragraph:

9 ‘‘(11) any plan providing for the purchase of

10 any SMART annuity or any SMART plan (as such

11 terms are defined in section 408B of such Code).’’

12 (4) Section 415(b) is amended by adding at the

13 end the following new paragraph:

14 ‘‘(12) TREATMENT OF SMART ANNUITIES AND

15 TRUSTS.—A SMART annuity and a SMART trust

16 shall be treated as meeting the requirements of this

17 section, but distributions from such an annuity or

18 trust shall be taken into account in determining

19 whether any other plan satisfies the requirements of

20 this section.’’

21 (d) INCREASED PENALTY ON EARLY WITHDRAW22 ALS.—Section 72(t) (relating to additional tax on early

23 distributions) is amended by adding at the end the follow24 ing new paragraph:
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1 ‘‘(9) SPECIAL RULES FOR SMART ANNUITIES

2 AND TRUSTS.—In the case of any amount received

3 from a SMART annuity, a SMART trust, or a

4 SMART rollover plan (within the meaning of section

5 408B), paragraph (1) shall be applied by substitut6 ing ‘20 percent’ for ‘10 percent’ and paragraph (2)

7 shall be applied by substituting ‘age 65’ for ‘age

591 8 ⁄2’.’’

9 (e) SIMPLIFIED EMPLOYER REPORTS.—

10 (1) SMART ANNUITIES.—Section 408(l) (relat11 ing to simplified employer reports) is amended by

12 adding at the end the following new paragraph:

13 ‘‘(3) SMART ANNUITIES.—

14 ‘‘(A) SIMPLIFIED REPORT.—The employer

15 maintaining any SMART annuity (within the

16 meaning of section 408B) shall file a simplified

17 annual return with the Secretary containing

18 only the information described in subparagraph

19 (B).

20 ‘‘(B) CONTENTS.—The return required by

21 subparagraph (A) shall set forth—

22 ‘‘(i) the name and address of the em23 ployer,

24 ‘‘(ii) the date the plan was adopted,
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1 ‘‘(iii) the number of employees of the

2 employer,

3 ‘‘(iv) the number of such employees

4 who are eligible to participate in the plan,

5 ‘‘(v) the total amount contributed by

6 the employer to each such annuity for such

7 year and the minimum amount required

8 under section 408B to be so contributed,

9 ‘‘(vi) the percentage elected under sec10 tion 408B(b)(5)(B),

11 ‘‘(vii) the name of the issuer,

12 ‘‘(viii) the employer identification

13 number,

14 ‘‘(ix) the name of the plan, and

15 ‘‘(x) the date of the contribution.

16 ‘‘(C) REPORTING BY ISSUER OF SMART AN17 NUITY.—

18 ‘‘(i) IN GENERAL.—The issuer of each

19 SMART annuity shall provide to the owner

20 of the annuity for each year a statement

21 setting forth as of the close of such year—

22 ‘‘(I) the benefits guaranteed at

23 age 65 under the annuity, and

24 ‘‘(II) the cash surrender value of

25 the annuity.
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1 ‘‘(ii) SUMMARY DESCRIPTION.—The

2 issuer of any SMART annuity shall pro3 vide to the employer maintaining the annu4 ity for each year a description containing

5 the following information:

6 ‘‘(I) The name and address of

7 the employer and the issuer.

8 ‘‘(II) The requirements for eligi9 bility for participation.

10 ‘‘(III) The benefits provided with

11 respect to the annuity.

12 ‘‘(IV) The procedures for, and ef13 fects of, withdrawals (including roll14 overs) from the annuity.

15 ‘‘(D) TIME AND MANNER OF REPORT16 ING.—Any return, report, or statement required

17 under this paragraph shall be made in such

18 form and at such time as the Secretary shall

19 prescribe.’’

20 (2) SMART TRUSTS.—Section 6059 (relating

21 to actuarial reports) is amended by redesignating

22 subsections (c) and (d) as subsections (d) and (e),

23 respectively, and by inserting after subsection (b)

24 the following new subsection:
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1 ‘‘(c) SMART TRUSTS.—In the case of a SMART

2 trust (within the meaning of section 408B), the Secretary

3 shall require a simplified actuarial report which

4 contains—

5 ‘‘(1) information similar to the information re6 quired in section 408(l)(3)(B),

7 ‘‘(2) the fair market value of the assets of the

8 trust,

9 ‘‘(3) the amounts distributed directly to partici10 pants,

11 ‘‘(4) the amounts transferred to SMART roll12 over plans, and

13 ‘‘(5) the present value of the annual accrued

14 benefits under the plan to which the trust relates.’’

15 (f) CONFORMING AMENDMENTS.—

16 (1) Section 280G(b)(6) is amended by striking

17 ‘‘or’’ at the end of subparagraph (C), by striking the

18 period at the end of subparagraph (D) and inserting

19 ‘‘, or’’ and by adding after subparagraph (D) the

20 following new subparagraph:

21 ‘‘(E) a SMART annuity described in sec22 tion 408B.’’

23 (2) Subsections (b), (c), (m)(4)(B), and

24 (n)(3)(B) of section 414 are each amended by in25 serting ‘‘408B,’’ after ‘‘408(p),’’.
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1 (3) Section 4972(d)(1)(A) is amended by strik2 ing ‘‘and’’ at the end of clause (iii), by striking the

3 period at the end of clause (iv) and inserting ‘‘,

4 and’’, and by adding after clause (iv) the following

5 new clause:

6 ‘‘(v) any SMART annuity (within the

7 meaning of section 408B).’’

8 (g) REPORTING REQUIREMENTS UNDER ERISA.—

9 Section 101 of the Employee Retirement Income Security

10 Act of 1974 (29 U.S.C. 1021) is amended by redesignat11 ing subsection (h) (relating to simple retirement accounts)

12 as subsection (i) and the second subsection (h) (relating

13 to cross references) as subsection (j) and by inserting after

14 subsection (g) the following new subsection:

15 ‘‘(h) SMART ANNUITIES.—

16 ‘‘(1) NO EMPLOYER REPORTS.—Except as pro17 vided in this subsection, no report shall be required

18 under this section by an employer maintaining a

19 SMART annuity under section 408B(b) of the Inter20 nal Revenue Code of 1986.

21 ‘‘(2) SUMMARY DESCRIPTION.—The issuer of

22 any SMART annuity shall provide to the employer

23 maintaining the annuity for each year a description

24 containing the following information:
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1 ‘‘(A) The name and address of the em2 ployer and the issuer.

3 ‘‘(B) The requirements for eligibility for

4 participation.

5 ‘‘(C) The benefits provided with respect to

6 the annuity.

7 ‘‘(D) The procedures for, and effects of,

8 withdrawals (including rollovers) from the an9 nuity.’’

10 ‘‘(3) EMPLOYEE NOTIFICATION.—The employer

11 shall provide each employee eligible to participate in

12 the SMART annuity with the description described

13 in paragraph (2) at the same time as the notifica14 tion required under section 408B(b)(5)(B) of the In15 ternal Revenue Code of 1986.’’

16 (h) $5 PER PARTICIPANT PBGC PREMIUM.—Sub17 paragraph (A) of section 4006(a)(3) of the Employee Re18 tirement Income Security Act of 1974 (29 U.S.C. 1306)

19 is amended—

20 (1) by inserting ‘‘not described in clause (iv)’’

21 after ‘‘in the case of a single-employer plan’’ in

22 clause (i),

23 (2) by striking the period at the end of clause

24 (iii) and inserting ‘‘; and’’, and
65

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1 (3) by inserting after clause (iii) the following

2 new clause:

3 ‘‘(iv) in the case of a single-employer plan de4 scribed in section 408B(c) of the Internal Revenue

5 Code of 1986, an amount equal to $5 for each par6 ticipant.’’.

7 (i) CLERICAL AMENDMENT.—The table of sections

8 for subpart A of part I of subchapter D of chapter 1 is

9 amended by inserting after the item relating to section

10 408A the following new item:

‘‘Sec. 408B. SMART plans.’’

11 (j) EFFECTIVE DATE.—The amendments made by

12 this section shall apply to years beginning after December

13 31, 1999.

14 CHAPTER 3—IMPROVED FAIRNESS IN

15 RETIREMENT PLAN BENEFITS

16 SEC. 421. AMENDMENTS TO SIMPLE RETIREMENT AC17 COUNTS.

18 (a) MINIMUM CONTRIBUTION REQUIREMENT.—

19 (1) IN GENERAL.—Paragraph (2) of section

20 408(p) (defining qualified salary reduction arrange21 ment) is amended—

22 (A) by striking clauses (iii) and (iv) of sub23 paragraph (A) and inserting the following new

24 clauses:
66

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1 ‘‘(iii) the employer is required to make

2 a matching contribution to the simple re3 tirement account for any year in an

4 amount equal to—

5 ‘‘(I) so much of the amount the

6 employee elects under clause (i)(I) as

7 does not exceed 3 percent of com8 pensation for the year, and

9 ‘‘(II) a uniform percentage

10 (which is at least 50 percent but not

11 more than 100 percent) of the amount

12 the employee elects under clause (i)(I)

13 to the extent that such amount ex14 ceeds 3 percent but does not exceed 5

15 percent of the employee’s compensa16 tion,

17 ‘‘(iv) the employer is required to make

18 nonelective contributions of 1 percent of

19 compensation for each employee eligible to

20 participate in the arrangement who has at

21 least $5,000 of compensation from the em22 ployer for the year, and

23 ‘‘(v) no contributions may be made

24 other than contributions described in

25 clause (i), (iii), or (iv).’’, and
67

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1 (B) by striking subparagraph (B) and in2 serting the following new subparagraph:

3 ‘‘(B) CONTRIBUTION RULES.—

4 ‘‘(i) EMPLOYER MAY ELECT 3-PER5 CENT NONELECTIVE CONTRIBUTION.—An

6 employer shall be treated as meeting the

7 requirements of clauses (iii) and (iv) of

8 subparagraph (A) for any year if, in lieu of

9 the contributions described in such clauses,

10 the employer elects to make nonelective

11 contributions of 3 percent of compensation

12 for each employee who is eligible to partici13 pate in the arrangement and who has at

14 least $5,000 of compensation from the em15 ployer for the year. If an employer makes

16 an election under this clause for any year,

17 the employer shall notify employees of such

18 election within a reasonable period of time

19 before the 60-day period for such year

20 under paragraph (5)(C).

21 ‘‘(ii) DISCRETIONARY CONTRIBU22 TIONS.—A plan shall not be treated as fail23 ing to meet the requirements of subpara24 graph (A)(v) merely because, pursuant to

25 the terms of the plan, an employer makes
68

•S 8 IS

1 nonelective contributions under subpara2 graph (A)(iv) or clause (i) of this subpara3 graph in excess of 1 percent or 3 percent

4 of compensation, respectively, but only if

5 all such contributions bear a uniform rela6 tionship to the compensation of each eligi7 ble employee and do not exceed 5 percent

8 of compensation for any eligible employee.

9 ‘‘(iii) COMPENSATION LIMITATION.—

10 The compensation taken into account

11 under this paragraph for any year shall

12 not exceed the limitation in effect for such

13 year under section 401(a)(17).’’

14 (2) MATCHING CONTRIBUTIONS.—Subpara15 graph (B) of section 401(k)(11) (relating to adop16 tion of simple plan to meet nondiscrimination tests)

17 is amended—

18 (A) by striking subclauses (II) and (III) of

19 clause (i) and inserting the following new sub20 clauses:

21 ‘‘(II) the employer is required to

22 make a matching contribution to the

23 trust for any year in an amount equal

24 to—
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1 ‘‘(aa) so much of the

2 amount the employee elects

3 under subclause (I) as does not

4 exceed 3 percent of compensation

5 for the year, and

6 ‘‘(bb) a uniform percentage

7 (which is at least 50 percent but

8 not more than 100 percent) of

9 the amount the employee elects

10 under subclause (I) to the extent

11 that such amount exceeds 3 per12 cent but does not exceed 5 per13 cent of the employee’s compensa14 tion,

15 ‘‘(III) the employer is required to

16 make nonelective contributions of 1

17 percent of compensation for each em18 ployee eligible to participate in the ar19 rangement who has at least $5,000 of

20 compensation from the employer for

21 the year, and

22 ‘‘(IV) no other contributions may

23 be made other than contributions de24 scribed in subclause (I), (II), or

25 (III).’’, and
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1 (B) by striking clause (ii) and inserting the

2 following new clause:

3 ‘‘(ii) CONTRIBUTION RULES.—

4 ‘‘(I) EMPLOYER MAY ELECT 3-

5 PERCENT NONELECTIVE CONTRIBU6 TION.—An employer shall be treated

7 as meeting the requirements of sub8 clauses (II) and (III) of clause (i) for

9 any year if, in lieu of the contribu10 tions described in such subclauses, the

11 employer elects to make nonelective

12 contributions of 3 percent of com13 pensation for each employee who is el14 igible to participate in the arrange15 ment and who has at least $5,000 of

16 compensation from the employer for

17 the year. If an employer makes an

18 election under this subclause for any

19 year, the employer shall notify em20 ployees of such election within a rea21 sonable period of time before the 60th

22 day before the beginning of such year.

23 ‘‘(II) DISCRETIONARY CONTRIBU24 TIONS.—A plan shall not be treated

25 as failing to meet the requirements of
71

•S 8 IS

1 clause (i)(IV) merely because, pursu2 ant to the terms of the plan, an em3 ployer makes nonelective contributions

4 under clause (i)(III) or subclause (I)

5 of this clause in excess of 1 percent or

6 3 percent of compensation, respec7 tively, but only if all such contribu8 tions bear a uniform relationship to

9 the compensation of each eligible em10 ployee and do not exceed 5 percent of

11 compensation for any eligible em12 ployee.’’

13 (b) OPTION TO SUSPEND CONTRIBUTIONS.—Section

14 408(p) (relating to simple retirement accounts) is amend15 ed by adding at the end the following new paragraph:

16 ‘‘(11) SUSPENSION OF PLAN.—Except as pro17 vided by the Secretary, a plan shall not be treated

18 as failing to meet the requirements of this sub19 section if, under the plan, the employer may suspend

20 all elective, matching, and nonelective contributions

21 under the plan after notifying employees eligible to

22 participate in the arrangement of such suspension in

23 writing at least 30 days in advance. Such suspension

24 shall apply to contributions with respect to com25 pensation earned after the effective date of the sus-
72

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1 pension. Only 1 suspension under this paragraph

2 may take effect during any year.’’

3 (c) CONFORMING AMENDMENTS.—Section

4 408(p)(2)(C) is amended—

5 (1) by striking clause (ii),

6 (2) by striking ‘‘DEFINITIONS’’ in the heading

7 and inserting ‘‘ELIGIBLE EMPLOYER’’,

8 (3) by striking ‘‘(i) ELIGIBLE EMPLOYER.—’’,

9 and

10 (4) by redesignating subclauses (I) and (II) as

11 clauses (i) and (ii), respectively.

12 (d) EFFECTIVE DATE.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section

15 shall apply to taxable years beginning after Decem16 ber 31, 1999.

17 (2) DELAYED EFFECTIVE DATE FOR PLANS ES18 TABLISHED IN 1998 OR 1999.—In the case of plans

19 established in 1998 or 1999 under section 408(p) of

20 the Internal Revenue Code of 1986, the amendments

21 made by this section shall apply to taxable years be22 ginning after December 31, 2003.
73

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1 SEC. 422. NONDISCRIMINATION RULES FOR QUALIFIED

2 CASH OR DEFERRED ARRANGEMENTS AND

3 MATCHING CONTRIBUTIONS.

4 (a) ALTERNATIVE METHODS OF SATISFYING SEC5 TION 401(k) NONDISCRIMINATION TESTS.—Subpara6 graph (B) of section 401(k)(12) (relating to alternative

7 methods of meeting nondiscrimination requirements) is

8 amended to read as follows:

9 ‘‘(B) NONELECTIVE AND MATCHING CON10 TRIBUTIONS.—

11 ‘‘(i) IN GENERAL.—The requirements

12 of this subparagraph are met if the re13 quirements of clauses (ii) and (iii) are met.

14 ‘‘(ii) NONELECTIVE CONTRIBU15 TIONS.—The requirements of this clause

16 are met if, under the arrangement, the em17 ployer is required, without regard to

18 whether the employee makes an elective

19 contribution or employee contribution, to

20 make a contribution to a defined contribu21 tion plan on behalf of each employee who

22 is not a highly compensated employee and

23 who is eligible to participate in the ar24 rangement in an amount equal to at least

25 1 percent of the employee’s compensation.
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1 ‘‘(iii) MATCHING CONTRIBUTIONS.—

2 The requirements of this clause are met if,

3 under the arrangement, the employer

4 makes matching contributions on behalf of

5 each employee who is not a highly com6 pensated employee in an amount equal

7 to—

8 ‘‘(I) 100 percent of the elective

9 contributions of the employee to the

10 extent such elective contributions do

11 not exceed 3 percent of the employee’s

12 compensation, and

13 ‘‘(II) 50 percent of the elective

14 contributions of the employee to the

15 extent that such elective contributions

16 exceed 3 percent but do not exceed 5

17 percent of the employee’s compensa18 tion.

19 ‘‘(iv) RATE FOR HIGHLY COM20 PENSATED EMPLOYEES.—The require21 ments of clause (iii) are not met if, under

22 the arrangement, the rate of matching con23 tribution with respect to any rate of elec24 tive contribution of a highly compensated

25 employee is greater than that with respect
75

•S 8 IS

1 to an employee who is not a highly com2 pensated employee. For purposes of this

3 clause, to the extent provided in regula4 tions, the last sentences of paragraph

5 (3)(A) and subsection (m)(2)(B) shall not

6 apply.

7 ‘‘(v) ALTERNATIVE PLAN DESIGNS.—

8 If the rate of matching contribution with

9 respect to any rate of elective contribution

10 is not equal to the percentage required

11 under clause (iii), an arrangement shall

12 not be treated as failing to meet the re13 quirements of clause (iii) if—

14 ‘‘(I) the rate of an employer’s

15 matching contribution does not in16 crease as an employee’s rate of elec17 tive contribution increase, and

18 ‘‘(II) the aggregate amount of

19 matching contributions at such rate of

20 elective contribution is at least equal

21 to the aggregate amount of matching

22 contributions which would be made if

23 matching contributions were made on

24 the basis of the percentages described

25 in clause (iii).’’
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1 (b) CONTRIBUTIONS PART OF QUALIFIED CASH OR

2 DEFERRED ARRANGEMENT.—Subparagraph (E)(ii) of

3 section 401(k)(12) is amended to read as follows:

4 ‘‘(ii) SOCIAL SECURITY AND SIMILAR

5 CONTRIBUTIONS NOT TAKEN INTO AC6 COUNT.—Except as provided in regula7 tions, an arrangement shall not be treated

8 as meeting the requirements of subpara9 graph (B) or (C) unless such requirements

10 are met without regard to subsection (l),

11 and, for purposes of subsection (l), and de12 termining whether contributions provided

13 under a plan satisfy subsection (a)(4) on

14 the basis of equivalent benefits, employer

15 contributions under subparagraph (B) or

16 (C) shall not be taken into account.’’

17 (c) ALTERNATIVE METHODS OF SATISFYING SEC18 TION 401(m) NONDISCRIMINATION TESTS.—Section

19 401(m)(11) (relating to alternative method of satisfying

20 tests) is amended—

21 (1) by striking ‘‘subparagraph (B)’’ in subpara22 graph (A)(iii) and inserting ‘‘subparagraphs (B) and

23 (C)’’,

24 (2) by adding at the end of subparagraph (B)

25 the following new flush sentence:
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1 ‘‘To the extent provided in regulations, the last

2 sentences of paragraph (2)(B) and subsection

3 (k)(3)(A) shall not apply for purposes of clause

4 (iii).’’, and

5 (3) by adding at the end the following new sub6 paragraph:

7 ‘‘(C) TEST MUST BE MET SEPARATELY.—

8 If this paragraph applies to any matching con9 tributions, such contributions shall not be taken

10 into account in determining whether employee

11 contributions satisfy the requirements of this

12 subsection.’’

13 (d) SPECIAL RULE FOR DETERMINING AVERAGE DE14 FERRAL PERCENTAGE FOR FIRST PLAN YEAR, ETC.—

15 Subparagraph (E) of section 401(k)(3) is amended to read

16 as follows:

17 ‘‘(E) For purposes of this paragraph, in

18 the case of the first plan year of any plan, the

19 amount taken into account as the actual defer20 ral percentage of nonhighly compensated em21 ployees for the preceding plan year shall be—

22 ‘‘(i) 3 percent, or

23 ‘‘(ii) the actual deferral percentage of

24 nonhighly compensated employees deter-
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1 mined for such first plan year in the case

2 of—

3 ‘‘(I) an employer who elects to

4 have this clause apply, or

5 ‘‘(II) except to the extent pro6 vided by the Secretary, a successor

7 plan.’’

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

9 this section shall apply to years beginning after December

10 31, 1999.

11 SEC. 423. DEFINITION OF HIGHLY COMPENSATED EMPLOY12 EES.

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

14 414(q)(1) (defining highly compensated employee) is

15 amended to read as follows:

16 ‘‘(B) for the preceding year had compensa17 tion from the employer in excess of $80,000.’’

18 (b) CONFORMING AMENDMENTS.—

19 (1)(A) Subsection (q) of section 414 is amended

20 by striking paragraphs (3), (5), and (7) and by re21 designating paragraphs (4), (6), (8), and (9) as

22 paragraphs (3) through (6), respectively.

23 (B) Sections 129(d)(8)(B), 401(a)(5)(D)(ii),

24 408(k)(2)(C), and 416(i)(1)(D) are each amended
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1 by striking ‘‘section 414(q)(4)’’ and inserting ‘‘sec2 tion 414(q)(3)’’.

3 (C) Section 416(i)(1)(A) is amended by striking

4 ‘‘section 414(q)(5)’’ and inserting ‘‘section

5 414(r)(9)’’.

6 (2)(A) Section 414(r) is amended by adding at

7 the end the following new paragraph:

8 ‘‘(9) EXCLUDED EMPLOYEES.—For purposes of

9 paragraph (2)(A), the following employees shall be

10 excluded:

11 ‘‘(A) Employees who have not completed 6

12 months of service.

13 ‘‘(B) Employees who normally work less

than 171 14 ⁄2 hours per week.

15 ‘‘(C) Employees who normally work during

16 not more than 6 months during any year.

17 ‘‘(D) Employees who have not attained the

18 age of 21.

19 ‘‘(E) Except to the extent provided in reg20 ulations, employees who are included in a unit

21 of employees covered by an agreement which

22 the Secretary of Labor finds to be a collective

23 bargaining agreement between employee rep24 resentatives and the employer.’’
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1 (B) Subparagraph (A) of section 414(r)(2) is

2 amended by striking ‘‘subsection (q)(5)’’ and insert3 ing ‘‘paragraph (9)’’.

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

5 this section shall apply to years beginning after December

6 31, 1999.

7 SEC. 424. TREATMENT OF MULTIEMPLOYER PLANS UNDER

8 SECTION 415.

9 (a) COMPENSATION LIMIT.—Paragraph (11) of sec10 tion 415(b) (relating to limitation for defined benefit

11 plans) is amended to read as follows:

12 ‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN13 MENTAL AND MULTIEMPLOYER PLANS.—In the case

14 of a governmental plan (as defined in section

15 414(d)) or a multiemployer plan (as defined in sec16 tion 414(f)), subparagraph (B) of paragraph (1)

17 shall not apply.’’

18 (b) EXEMPTION FOR SURVIVOR AND DISABILITY

19 BENEFITS.—Subparagraph (I) of section 415(b)(2) (relat20 ing to limitation for defined benefit plans) is amended—

21 (1) by inserting ‘‘or a multiemployer plan (as

22 defined in section 414(f))’’ after ‘‘section 414(d))’’

23 in clause (i),

24 (2) by inserting ‘‘or multiemployer plan’’ after

25 ‘‘governmental plan’’ in clause (ii), and
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1 (3) by inserting ‘‘AND MULTIEMPLOYER’’ after

2 ‘‘GOVERNMENTAL’’ in the heading.

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

4 this section shall apply to years beginning after December

5 31, 1999.

6 SEC. 425. EXEMPTION OF MIRROR PLANS FROM SECTION

7 457 LIMITS.

8 (a) IN GENERAL.—Subsection (e) of section 457 (re9 lating to deferred compensation plans of State and local

10 governments and tax-exempt organizations) is amended by

11 adding at the end the following new paragraph:

12 ‘‘(16) EXEMPTION FOR MIRROR PLANS.—

13 ‘‘(A) IN GENERAL.—Amounts of com14 pensation deferred under a mirror plan shall

15 not be taken into account in applying this sec16 tion to amounts of compensation deferred under

17 any other deferred compensation plan.

18 ‘‘(B) MIRROR PLAN.—The term ‘mirror

19 plan’ means a plan, program, or arrangement

20 maintained solely for the purpose of providing

21 retirement benefits for employees in excess of

22 the limitations imposed by section 401(a)(17)

23 or section 415, or both.’’
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1 (b) EFFECTIVE DATE.—The amendment made by

2 this section shall apply to taxable years beginning after

3 December 31, 1999.

4 SEC. 426. IMMEDIATE PARTICIPATION IN THE THRIFT SAV5 INGS PLAN FOR FEDERAL EMPLOYEES.

6 (a) ELIMINATION OF CERTAIN WAITING PERIODS

7 FOR PURPOSES OF EMPLOYEE CONTRIBUTIONS.—Para8 graph (4) of section 8432(b) of title 5, United States

9 Code, is amended to read as follows:

10 ‘‘(4) The Executive Director shall prescribe such reg11 ulations as may be necessary to carry out the following:

12 ‘‘(A) Notwithstanding subparagraph (A) of

13 paragraph (2), an employee or Member described in

14 such subparagraph shall be afforded a reasonable

15 opportunity to first make an election under this sub16 section beginning on the date of commencing service

17 or, if that is not administratively feasible, beginning

18 on the earliest date thereafter that such an election

19 becomes administratively feasible, as determined by

20 the Executive Director.

21 ‘‘(B) An employee or Member described in sub22 paragraph (B) of paragraph (2) shall be afforded a

23 reasonable opportunity to first make an election

24 under this subsection (based on the appointment or

25 election described in such subparagraph) beginning
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1 on the date of commencing service pursuant to such

2 appointment or election or, if that is not administra3 tively feasible, beginning on the earliest date there4 after that such an election becomes administratively

5 feasible, as determined by the Executive Director.

6 ‘‘(C) Notwithstanding the preceding provisions

7 of this paragraph, contributions under paragraphs

8 (1) and (2) of subsection (c) shall not be payable

9 with respect to any pay period before the earliest

10 pay period for which such contributions would other11 wise be allowable under this subsection if this para12 graph had not been enacted.

13 ‘‘(D) Sections 8351(a)(2), 8440a(a)(2),

14 8440b(a)(2), 8440c(a)(2), and 8440d(a)(2) shall be

15 applied in a manner consistent with the purposes of

16 subparagraphs (A) and (B), to the extent those sub17 paragraphs can be applied with respect thereto.

18 ‘‘(E) Nothing in this paragraph shall affect

19 paragraph (3).’’

20 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

21 (1) Section 8432(a) of title 5, United States

22 Code, is amended—

23 (A) in the first sentence by striking

24 ‘‘(b)(1)’’ and inserting ‘‘(b)’’; and
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1 (B) by amending the second sentence to

2 read as follows: ‘‘Contributions under this sub3 section pursuant to such an election shall, with

4 respect to each pay period for which such elec5 tion remains in effect, be made in accordance

6 with a program of regular contributions pro7 vided in regulations prescribed by the Executive

8 Director.’’

9 (2) Section 8432(b)(1)(B) of such title is

10 amended by inserting ‘‘(or any election allowable by

11 virtue of paragraph (4))’’ after ‘‘subparagraph (A)’’.

12 (3) Section 8432(b)(3) of such title is amended

13 by striking ‘‘Notwithstanding paragraph (2)(A), an’’

14 and inserting ‘‘An’’.

15 (4) Section 8432(i)(1)(B)(ii) of such title is

16 amended by striking ‘‘either elected to terminate in17 dividual contributions to the Thrift Savings Fund

18 within 2 months before commencing military service

19 or’’.

20 (5) Section 8439(a)(1) of such title is amended

21 by inserting ‘‘who makes contributions or’’ after ‘‘for

22 each individual’’ and by striking ‘‘section

23 8432(c)(1)’’ and inserting ‘‘section 8432’’.

24 (6) Section 8439(c)(2) of such title is amended

25 by adding at the end the following: ‘‘Nothing in this
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1 paragraph shall be considered to limit the dissemina2 tion of information only to the times required under

3 the preceding sentence.’’

4 (7) Sections 8440a(a)(2) and 8440d(a)(2) of

5 such title are amended by striking all after ‘‘subject

6 to’’ and inserting ‘‘subject to this chapter.’’

7 (c) EFFECTIVE DATE.—This section shall take effect

8 6 months after the date of the enactment of this title or

9 such earlier date as the Executive Director may by regula10 tion prescribe.

11 SEC. 427. FULL FUNDING LIMITATION FOR MULTIEM12 PLOYER PLANS.

13 (a) AMENDMENTS TO CODE.—

14 (1) FULL FUNDING LIMITATION.—Section

15 412(c)(7)(C) (relating to full funding limitation) is

16 amended—

17 (A) by inserting ‘‘or in the case of a multi18 employer plan,’’ after ‘‘paragraph (6)(B),’’, and

19 (B) by inserting ‘‘AND MULTIEMPLOYER

20 PLANS’’ after ‘‘PARAGRAPH (6)(B)’’ in the head21 ing thereof.

22 (2) VALUATION.—Section 412(c)(9) (relating to

23 annual valuation) is amended—

24 (A) by inserting ‘‘(3 years in the case of a

25 multiemployer plan)’’ after ‘‘year’’, and
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1 (B) by striking ‘‘ANNUAL VALUATION’’ in

2 the heading and inserting ‘‘VALUATION’’.

3 (b) AMENDMENTS TO ERISA.—

4 (1) FULL FUNDING LIMITATION.—Section

5 302(c)(7)(C) of the Employee Retirement Income

6 Security Act of 1974 (29 U.S.C. 1082(c)(7)(C)) is

7 amended—

8 (A) by inserting ‘‘or in the case of a multi9 employer plan,’’ after ‘‘paragraph (6)(B),’’, and

10 (B) by inserting ‘‘AND MULTIEMPLOYER

11 PLANS’’ after ‘‘PARAGRAPH (6)(B)’’ in the head12 ing thereof.

13 (2) VALUATION.—Section 302(c)(9) of such Act

14 (29 U.S.C. 1082(c)(9)) is amended—

15 (A) by inserting ‘‘(3 years in the case of a

16 multiemployer plan)’’ after ‘‘year’’, and

17 (B) by striking ‘‘ANNUAL VALUATION’’ in

18 the heading and inserting ‘‘VALUATION’’.

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

20 this section shall apply to plan years beginning after De21 cember 31, 1999.

22 SEC. 428. ELIMINATION OF PARTIAL TERMINATION RULES

23 FOR MULTIEMPLOYER PLANS.

24 (a) PARTIAL TERMINATION RULES FOR MULTIEM25 PLOYER PLANS.—Section 411(d)(3) (relating to termi-
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1 nation or partial termination; discontinuance of contribu2 tions) is amended by adding at the end the following new

3 sentence: ‘‘This paragraph shall not apply in the case of

4 a partial termination of a multiemployer plan.’’

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

6 this section shall apply to partial terminations beginning

7 after December 31, 1999.

8 SEC. 429. REPEAL OF 150 PERCENT OF CURRENT LIABILITY

9 FUNDING LIMIT.

10 (a) IN GENERAL.—

11 (1) CODE AMENDMENT.—Section 412(c)(7) (re12 lating to full-funding limitation) is amended by

13 amending subparagraph (F) to read as follows:

14 ‘‘(F) APPLICABLE PERCENTAGE.—For

15 purposes of subparagraph (A)(i)(I), the applica16 ble percentage is determined according to the

17 following table:

‘‘In the case of any plan year

beginning in—

The applicable percentage is—

1999 ......................................................................................... 155

2000 ......................................................................................... 160

2001 ......................................................................................... 165

2002 ......................................................................................... 170

2003 and succeeding years ...................................................... 0.’’

18 (2) ERISA AMENDMENT.—Subparagraph (F)

19 of section 302(c)(7) of the Employee Retirement In20 come Security Act of 1974 (29 U.S.C. 1082(c)(7))

21 is amended to read as follows:
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1 ‘‘(F) APPLICABLE PERCENTAGE.—For purposes

2 of subparagraph (A)(i)(I), the applicable percentage

3 shall be determined in accordance with the following

4 table:

‘‘In the case of any plan year

beginning in—

The applicable percentage is—

1999 ......................................................................................... 155

2000 ......................................................................................... 160

2001 ......................................................................................... 165

2002 ......................................................................................... 170

2003 and succeeding years ...................................................... 0.’’

5 (3) EFFECTIVE DATE.—The amendments made

6 by this subsection shall apply to any unamortized

7 bases with respect to plan years beginning before,

8 on, or after December 31, 1999.

9 Subtitle B—Security

10 SEC. 430. AMENDMENT OF ERISA.

11 Except as otherwise expressly provided, whenever in

12 this subtitle an amendment or repeal is expressed in terms

13 of an amendment to, or repeal of, a section or other provi14 sion, the reference shall be considered to be made to a

15 section or other provision of the Employee Retirement In16 come Security Act of 1974.

17 CHAPTER 1—GENERAL PROVISIONS

18 SEC. 431. PERIODIC PENSION BENEFITS STATEMENTS.

19 (a) IN GENERAL.—Subsection (a) of section 105 (29

20 U.S.C. 1025) is amended—

21 (1) by striking ‘‘shall furnish to any plan par22 ticipant or beneficiary who so requests in writing,’’
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1 and inserting ‘‘shall furnish at least once every 3

2 years, in the case of a participant in a defined bene3 fit plan who has attained age 35, and annually, in

4 the case of a defined contribution plan, to each plan

5 participant, and shall furnish to any plan participant

6 or beneficiary who so requests,’’, and

7 (2) by adding at the end the following flush

8 sentence:

9 ‘‘Information furnished under the preceding sentence to

10 a participant in a defined benefit plan (other than at the

11 request of the participant) may be based on reasonable

12 estimates determined under regulations prescribed by the

13 Secretary.’’

14 (b) RULE FOR MULTIEMPLOYER PLANS.—Subsection

15 (d) of section 105 (29 U.S.C. 1025) is amended to read

16 as follows:

17 ‘‘(d) Each administrator of a plan to which more than

18 1 unaffiliated employer is required to contribute shall fur19 nish to any plan participant or beneficiary who so requests

20 in writing, a statement described in subsection (a).’’

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

22 this section shall apply to plan years beginning after the

23 later of—

24 (1) the date of issuance by the Secretary of

25 Labor of regulations providing guidance for simplify-
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1 ing defined benefit plan calculations with respect to

2 the information required under section 105 of the

3 Employee Retirement Income Security Act of 1974

4 (29 U.S.C. 1025), or

5 (2) December 31, 1999.

6 SEC. 432. REQUIREMENT OF ANNUAL, DETAILED INVEST7 MENT REPORTS APPLIED TO CERTAIN 401(k)

8 PLANS.

9 (a) IN GENERAL.—Section 104(b)(3) (29 U.S.C.

10 1024(b)(3)) is amended—

11 (1) by inserting ‘‘(A)’’ after ‘‘(3)’’; and

12 (2) by adding at the end the following new sub13 paragraph:

14 ‘‘(B)(i) If, for any plan year, a plan includes a

15 qualified cash or deferred arrangement (as defined

16 in section 401(k)(2) of the Internal Revenue Code of

17 1986) and such plan covers less than 100 partici18 pants, the administrator shall furnish (within 60

19 days after the end of such plan year) to each partici20 pant and to each beneficiary receiving benefits under

21 the plan an annual investment report detailing such

22 information as the Secretary by regulation shall re23 quire.

24 ‘‘(ii) Clause (i) shall not apply with respect to

25 any participant described in section 404(c).’’
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1 (b) REGULATIONS.—

2 (1) IN GENERAL.—The Secretary of Labor, in

3 prescribing regulations required under section

4 104(b)(3)(B)(i) of the Employee Retirement Income

5 Security Act of 1974 (29 U.S.C. 1023(b)(3)(B)(i)),

6 as added by subsection (a), shall consider including

7 in the information required in an annual investment

8 report the following:

9 (A) Total plan assets and liabilities as of

10 the beginning and ending of the plan year.

11 (B) Plan income and expenses and con12 tributions made and benefits paid for the plan

13 year.

14 (C) Any transaction between the plan and

15 the employer, any fiduciary, or any 10-percent

16 owner during the plan year, including the acqui17 sition of any employer security or employer real

18 property.

19 (D) Any noncash contributions made to or

20 purchases of nonpublicly traded securities made

21 by the plan during the plan year without an ap22 praisal by an independent third party.

23 (2) ELECTRONIC TRANSFER.—The Secretary of

24 Labor in prescribing such regulations shall also

25 make provision for the electronic transfer of the re-
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1 quired annual investment report by a plan adminis2 trator to plan participants and beneficiaries.

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

4 subsection (a) shall apply to plan years beginning after

5 the date of the enactment of this title.

6 SEC. 433. INFORMATION REQUIRED TO BE PROVIDED TO

7 INVESTMENT MANAGERS OF 401(k) PLANS.

8 (a) IN GENERAL.—Section 105 (29 U.S.C. 1025) is

9 amended by adding at the end the following new sub10 section:

11 ‘‘(e) If—

12 ‘‘(1) the administrator of an individual account

13 plan described in section 401(k) of the Internal Rev14 enue Code of 1986 provides for investment of the

15 plan assets by means of a contractual arrangement

16 with another party, and

17 ‘‘(2) such other party is not required under

18 such arrangement to separately account for benefits

19 accrued with respect to each participant and bene20 ficiary under this plan,

21 such administrator shall be treated as failing to meet the

22 requirements of subsection (a) unless, under such contrac23 tual arrangement, such administrator provides to such

24 other party such information as is necessary to enable
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1 such party to separately account at any time for benefits

2 accrued with respect to each participant and beneficiary.’’

3 (b) CIVIL PENALTY FOR VIOLATIONS.—Paragraph

4 (1) of section 502(c) (29 U.S.C. 1132(c)(1)) is amended

5 by striking ‘‘or section 101(e)(1)’’ and inserting ‘‘, section

6 101(e)(1), or section 105(e)’’.

7 SEC. 434. STUDY ON INVESTMENTS IN COLLECTIBLES.

8 (a) STUDY.—The Secretary of Labor, in consultation

9 with the Secretary of the Treasury, shall study the extent

10 to which pension plans invest in collectibles and whether

11 such investments present a risk to the pension security

12 of the participants and beneficiaries of such plans.

13 (b) REPORT.—Not later than 12 months after the

14 date of the enactment of this title, the Secretary of Labor

15 shall submit a report to the Congress containing the find16 ings of the study described in subsection (a) and any rec17 ommendations for legislative action.

18 SEC. 435. QUALIFIED EMPLOYER PLANS PROHIBITED FROM

19 MAKING LOANS THROUGH CREDIT CARDS

20 AND OTHER INTERMEDIARIES.

21 (a) IN GENERAL.—Subsection (a) of section 401 of

22 the Internal Revenue Code of 1986 is amended by adding

23 after paragraph (34) the following new paragraph:

24 ‘‘(35) PROHIBITION OF LOANS THROUGH CRED25 IT CARDS AND OTHER INTERMEDIARIES.—A trust
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1 shall not constitute a qualified trust under this sec2 tion if the plan makes any loan to any beneficiary

3 under the plan through the use of any credit card

4 or any other intermediary.’’

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

6 subsection (a) shall apply to plan years beginning after

7 the date of the enactment of this title.

8 SEC. 436. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.

9 (a) IN GENERAL.—Section 4022A(c) (29 U.S.C.

10 1322a(c)) is amended—

11 (1) by striking ‘‘$5’’ each place it appears in

12 paragraph (1) and inserting ‘‘$11’’,

13 (2) by striking ‘‘$15’’ in paragraph (1) and in14 serting ‘‘$33’’, and

15 (3) by striking paragraphs (2), (5), and (6) and

16 by redesignating paragraphs (3) and (4) as para17 graphs (2) and (3), respectively.

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

19 this section shall apply to any multiemployer plan that has

20 not received financial assistance (within the meaning of

21 section 4261 of the Employee Retirement Income Security

22 Act of 1974) within the 1-year period ending on the date

23 of the enactment of this title.
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1 SEC. 437. PROHIBITED TRANSACTIONS.

2 (a) IN GENERAL.—Section 502(i) (29 U.S.C.

3 1132(i)) is amended by striking ‘‘5 percent’’ and inserting

4 ‘‘15 percent’’.

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

6 this section shall apply to prohibited transactions occur7 ring after the date of the enactment of this title.

8 SEC. 438. SUBSTANTIAL OWNER BENEFITS.

9 (a) MODIFICATION OF PHASE-IN OF GUARANTEE.—

10 Subparagraphs (B) and (C) of section 4022(b)(5) (29

11 U.S.C. 1322(b)(5)) are amended to read as follows:

12 ‘‘(B) For purposes of this title, the term ‘majority

13 owner’ has the same meaning as substantial owner under

14 subparagraph (A), except that subparagraph (A) shall be

15 applied by substituting ‘50 percent or more’ for ‘more

16 than 10 percent’ each place it appears.

17 ‘‘(C) In the case of a participant who is a majority

18 owner, the amount of benefits guaranteed under this sec19 tion shall not exceed the product of—

20 ‘‘(i) a fraction (not to exceed 1) the numerator

21 of which is the number of years from the later of the

22 effective date or the adoption date of the plan to the

23 termination date, and the denominator of which is

24 30, and
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1 ‘‘(ii) the amount of the majority owner’s month2 ly benefits guaranteed under subsection (a) (as lim3 ited by paragraph (3) of this subsection).’’

4 (b) MODIFICATION OF ALLOCATION OF ASSETS.—

5 (1) Section 4044(a)(4)(B) (29 U.S.C.

6 1344(a)(4)(B)) is amended by striking ‘‘section

7 4022(b)(5)’’ and inserting ‘‘section 4022(b)(5)(C)’’.

8 (2) Section 4044(b) (29 U.S.C. 1344(b)) is

9 amended—

10 (A) by striking ‘‘(5)’’ in paragraph (2) and

11 inserting ‘‘(4), (5),’’, and

12 (B) by redesignating paragraphs (3)

13 through (6) as paragraphs (4) through (7), re14 spectively, and by inserting after paragraph (2)

15 the following new paragraph:

16 ‘‘(3) If assets available for allocation under

17 paragraph (4) of subsection (a) are insufficient to

18 satisfy in full the benefits of all individuals who are

19 described in that paragraph, the assets shall be allo20 cated first to benefits described in subparagraph (A)

21 of that paragraph. Any remaining assets shall then

22 be allocated to subparagraph (B). If assets allocated

23 to subparagraph (B) are insufficient to satisfy in full

24 the benefits in that subparagraph, the assets shall

25 be allocated pro rata among individuals on the basis
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1 of the present value (as of the termination date) of

2 their respective benefits described in that subpara3 graph.’’

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

5 this section shall apply to plan terminations—

6 (1) under section 4041(c) of the Employee Re7 tirement Income Security Act of 1974 (29 U.S.C.

8 1341(c)) with respect to which notices of intent to

9 terminate are provided under section 4041(a)(2) of

10 such Act (29 U.S.C. 1341(a)(2)) on or after the

11 date of the enactment of this title, or

12 (2) under section 4042 of such Act (29 U.S.C.

13 1342) with respect to which proceedings are insti14 tuted by the corporation on or after such date.

15 SEC. 439. REVERSION REPORT.

16 (a) IN GENERAL.—Section 4008 (29 U.S.C. 1308)

17 is amended by adding at the end the following new sub18 section:

19 ‘‘(b) REVERSION REPORT.—As soon as practicable

20 after the close of each fiscal year, the Secretary of Labor

21 (acting in the Secretary’s capacity as chairman of the cor22 poration’s board) shall transmit to the President and the

23 Congress a report providing information on plans from

24 which residual assets were distributed to employers pursu25 ant to section 4044(d).’’
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1 (b) CONFORMING AMENDMENT.—Section 4008 (29

2 U.S.C. 1308) is amended by striking ‘‘SEC. 4008.’’ and

3 inserting ‘‘SEC. 4008. (a) ANNUAL REPORT.—’’.

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

5 this section shall apply to fiscal years beginning after Sep6 tember 30, 1999.

7 CHAPTER 2—ERISA ENFORCEMENT

8 SEC. 441. CIVIL PENALTIES FOR BREACH OF FIDUCIARY

9 RESPONSIBILITIES MADE DISCRETIONARY,

10 ETC.

11 (a) IMPOSITION AND AMOUNT OF PENALTY MADE

12 DISCRETIONARY.—Section 502(l)(1) (29 U.S.C. 1132(l))

13 is amended—

14 (1) by striking ‘‘shall’’ and inserting ‘‘may’’,

15 and

16 (2) by striking ‘‘equal to’’ and inserting ‘‘not

17 greater than’’.

18 (b) APPLICABLE RECOVERY AMOUNT.—Section

19 502(l)(2) (29 U.S.C. 1132(l)(2)) is amended to read as

20 follows:

21 ‘‘(2) For purposes of paragraph (1), the term ‘appli22 cable recovery amount’ means any amount which is recov23 ered from (or on behalf of) any fiduciary or other person

24 with respect to a breach or violation described in para25 graph (1) on or after the 30th day following receipt by
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1 such fiduciary or other person of written notice from the

2 Secretary of the violation, whether paid voluntarily or by

3 order of a court in a judicial proceeding instituted by the

4 Secretary under paragraph (2) or (5) of subsection (a).

5 The Secretary may, in the Secretary’s sole discretion, ex6 tend the 30-day period described in the preceding sen7 tence.’’.

8 (c) OTHER RULES.—Section 502(l) is amended by

9 adding at the end the following new paragraphs:

10 ‘‘(5) A person shall be jointly and severally liable for

11 the penalty described in paragraph (1) to the same extent

12 that such person is jointly and severally liable for the ap13 plicable recovery amount on which the penalty is based.

14 ‘‘(6) No penalty shall be assessed under this sub15 section unless the person against whom the penalty is as16 sessed is given notice and opportunity for a hearing with

17 respect to the violation and applicable recovery amount.’’

18 (d) EFFECTIVE DATES.—

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

20 this section shall apply to any breach of fiduciary re21 sponsibility or other violation of part 4 of title I of

22 the Employee Retirement Income Security Act of

23 1974 occurring on or after the date of the enact24 ment of this title.
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1 (2) TRANSITION RULE.—In applying the

2 amendment made by subsection (b), a breach or

3 other violation occurring before the date of the en4 actment of this title which continues after the 180th

5 day after such date (and which may be discontinued

6 at any time during its existence) shall be treated as

7 having occurred on the day after such date of enact8 ment.

9 SEC. 442. REPORTING AND ENFORCEMENT REQUIREMENTS

10 FOR EMPLOYEE BENEFIT PLANS.

11 (a) IN GENERAL.—Part 1 of subtitle B of title I (29

12 U.S.C. 1021 et seq.) is amended—

13 (1) by redesignating section 111 as section 112,

14 and

15 (2) inserting after section 110 the following

16 new section:

17 ‘‘DIRECT REPORTING OF CERTAIN EVENTS

18 ‘‘SEC. 111. (a) REQUIRED NOTIFICATIONS.—

19 ‘‘(1) NOTIFICATIONS BY PLAN ADMINIS20 TRATOR.—Within 5 business days after an adminis21 trator of an employee benefit plan determines that

22 there is evidence (or after the administrator is noti23 fied under paragraph (2)) that an irregularity may

24 have occurred with respect to the plan, the adminis25 trator shall—
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1 ‘‘(A) notify the Secretary of the irregular2 ity in writing; and

3 ‘‘(B) furnish a copy of such notification to

4 the accountant who is currently engaged under

5 section 103(a)(3)(A).

6 ‘‘(2) NOTIFICATIONS BY ACCOUNTANT.—

7 ‘‘(A) IN GENERAL.—Within 5 business

8 days after an accountant engaged by the ad9 ministrator of an employee benefit plan under

10 section 103(a)(3)(A) determines in connection

11 with such engagement that there is evidence

12 that an irregularity may have occurred with re13 spect to the plan, the accountant shall—

14 ‘‘(i) notify the plan administrator of

15 the irregularity in writing, or

16 ‘‘(ii) if the accountant determines that

17 there is evidence that the irregularity may

18 have involved an individual who is the plan

19 administrator or who is a senior official of

20 the plan administrator, notify the Sec21 retary of the irregularity in writing.

22 ‘‘(B) NOTIFICATION UPON FAILURE OF

23 PLAN ADMINISTRATOR TO NOTIFY.—If an ac24 countant who has provided notification to the

25 plan administrator pursuant to subparagraph
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1 (A)(i) does not receive a copy of the administra2 tor’s notification to the Secretary required in

3 paragraph (1) within the 5-business day period

4 specified therein, the accountant shall furnish

5 to the Secretary a copy of the accountant’s no6 tification made to the plan administrator on the

7 next business day following such period.

8 ‘‘(3) IRREGULARITY DEFINED.—

9 ‘‘(A) For purposes of this subsection, the

10 term ‘irregularity’ means—

11 ‘‘(i) a theft, embezzlement, or a viola12 tion of section 664 of title 18, United

13 States Code (relating to theft or embezzle14 ment from an employee benefit plan);

15 ‘‘(ii) an extortion or a violation of sec16 tion 1951 of title 18, United States Code

17 (relating to interference with commerce by

18 threats or violence);

19 ‘‘(iii) a bribery, a kickback, or a viola20 tion of section 1954 of title 18, United

21 States Code (relating to offer, acceptance,

22 or solicitation to influence operations of an

23 employee benefit plan);

24 ‘‘(iv) a violation of section 1027 of

25 title 18, United States Code (relating to
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1 false statements and concealment of facts

2 in relation to employee benefit plan

3 records); or

4 ‘‘(v) a violation of section 411, 501, or

5 511 of this title (relating to criminal viola6 tions).

7 ‘‘(B) The term ‘irregularity’ does not in8 clude any act or omission described in this

9 paragraph involving less than $1,000 unless

10 there is reason to believe that the act or omis11 sion may bear on the integrity of plan manage12 ment.

13 ‘‘(b) NOTIFICATION UPON TERMINATION OF EN14 GAGEMENT OF ACCOUNTANT.—

15 ‘‘(1) NOTIFICATION BY PLAN ADMINIS16 TRATOR.—Within 5 business days after the termi17 nation of an engagement of an accountant under

18 section 103(a)(3)(A) with respect to an employee

19 benefit plan, the administrator of such plan shall—

20 ‘‘(A) notify the Secretary in writing of

21 such termination, giving the reasons for such

22 termination, and

23 ‘‘(B) furnish the accountant whose engage24 ment was terminated with a copy of the notifi25 cation sent to the Secretary.
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1 ‘‘(2) NOTIFICATION BY ACCOUNTANT.—If the

2 accountant referred to in paragraph (1)(B) has not

3 received a copy of the administrator’s notification to

4 the Secretary as required under paragraph (1)(B),

5 or if the accountant disagrees with the reasons given

6 in the notification of termination of the engagement

7 for auditing services, the accountant shall notify the

8 Secretary in writing of the termination, giving the

9 reasons for the termination, within 10 business days

10 after the termination of the engagement.

11 ‘‘(c) DETERMINATION OF PERIODS REQUIRED FOR

12 NOTIFICATION.—In determining whether a notification re13 quired under this section with respect to any act or omis14 sion has been made within the required number of busi15 ness days—

16 ‘‘(1) the day on which such act or omission be17 gins shall not be included; and

18 ‘‘(2) Saturdays, Sundays, and legal holidays

19 shall not be included.

20 For purposes of this subsection, the term ‘legal holiday’

21 means any Federal legal holiday and any other day ap22 pointed as a holiday by the State in which the person re23 sponsible for making the notification principally conducts

24 business.
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1 ‘‘(d) IMMUNITY FOR GOOD FAITH NOTIFICATION.—

2 No accountant or plan administrator shall be liable to any

3 person for any finding, conclusion, or statement made in

4 any notification made pursuant to subsection (a)(2) or

5 (b)(2), or pursuant to any regulations issued under those

6 subsections, if the finding, conclusion, or statement is

7 made in good faith.’’

8 (b) CIVIL PENALTY.—

9 (1) IN GENERAL.—Section 502(c) (29 U.S.C.

10 1132(c)) is amended by inserting after paragraph

11 (6) the following new paragraph:

12 ‘‘(8)(A) The Secretary may assess a civil penalty of

13 up to $50,000 against any administrator who fails to pro14 vide the Secretary with any notification as required under

15 section 111.

16 ‘‘(B) The Secretary may assess a civil penalty of up

17 to $50,000 against any accountant who knowingly and

18 willfully fails to provide the Secretary with any notification

19 as required under section 111.’’

20 (2) CONFORMING AMENDMENT.—Section

21 502(a)(6) (29 U.S.C. 1132(a)(6)) is amended by

22 striking ‘‘or (6)’’ and inserting ‘‘(6), or (8)’’.

23 (c) CLERICAL AMENDMENTS.—

24 (1) Section 514(d) (29 U.S.C. 114(d)) is

25 amended by striking ‘‘111’’ and inserting ‘‘112’’.
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1 (2) The table of contents in section 1 is amend2 ed by striking the item relating to section 111 and

3 inserting the following new items:

‘‘Sec. 111. Direct reporting of certain events.

‘‘Sec. 112. Repeal and effective date.’’

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

5 this section shall apply with respect to any irregularity or

6 termination of engagement described in the amendments

7 only if the 5-day period described in the amendments in

8 connection with the irregularity or termination commences

9 at least 90 days after the date of the enactment of this

10 title.

11 SEC. 443. ADDITIONAL REQUIREMENTS FOR QUALIFIED

12 PUBLIC ACCOUNTANTS.

13 (a) IN GENERAL.—Section 103(a)(3)(D) (29 U.S.C.

14 1023(a)(3)(D)) is amended—

15 (1) by inserting ‘‘(i)’’ after ‘‘(D)’’;

16 (2) by inserting ‘‘, with respect to any engage17 ment of an accountant under subparagraph (A)’’

18 after ‘‘means’’;

19 (3) by redesignating clauses (i), (ii), and (iii) as

20 subclauses (I), (II), and (III), respectively;

21 (4) by striking the period at the end of sub22 clause (III) (as so redesignated) and inserting a

23 comma;
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1 (5) by adding after and below subclause (III)

2 (as so redesignated), the following: ‘‘but only if such

3 person meets the requirements of clauses (ii) and

4 (iii), with respect to such engagement.’’; and

5 (6) by adding at the end the following new

6 clauses:

7 ‘‘(ii) A person meets the requirements of

8 this clause with respect to an engagement of

9 the person as an accountant under subpara10 graph (A) if the person—

11 ‘‘(I) has in operation an appropriate

12 internal quality control system;

13 ‘‘(II) has undergone a qualified exter14 nal quality control review of the person’s

15 accounting and auditing practices, includ16 ing such practices relevant to employee

17 benefit plans (if any), during the 3-year

18 period immediately preceding such engage19 ment; and

20 ‘‘(III) has completed, within the 2 cal21 endar years immediately preceding such

22 engagement, such continuing education or

23 training as the Secretary in regulations de24 termines is necessary to maintain profes-
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1 sional proficiency in connection with em2 ployee benefit plans.

3 ‘‘(iii) A person meets the requirements of

4 this clause with respect to an engagement of

5 the person as an accountant under subpara6 graph (A) if the person meets such additional

7 requirements and qualifications of regulations

8 which the Secretary deems necessary to ensure

9 the quality of plan audits.

10 ‘‘(iv) For purposes of clause (ii)(II), an ex11 ternal quality control review shall be treated as

12 qualified with respect to a person referred to in

13 clause (ii) if—

14 ‘‘(I) such review is performed in ac15 cordance with the requirements of external

16 quality control review programs of recog17 nized auditing standard setting bodies, as

18 determined in regulations of the Secretary,

19 and

20 ‘‘(II) in the case of any such person

21 who has, during the peer review period,

22 conducted 1 or more previous audits of

23 employee benefit plans, such review in24 cludes the review of an appropriate number

25 (determined as provided in such regula-
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1 tions, but in no case less than 1) of plan

2 audits in relation to the scale of the per3 son’s auditing practice.

4 (b) EFFECTIVE DATES.—

5 (1) IN GENERAL.—Except as provided in para6 graph (2), the amendments made by this section

7 apply with respect to plan years beginning on or

8 after the date which is 3 years after the date of the

9 enactment of this title.

10 (2) RESTRICTIONS ON CONDUCTING EXAMINA11 TIONS.—Clause (iii) of section 103(a)(1)(D) of the

12 Employee Retirement Income Security Act of 1974

13 (as added by subsection (a)(6)) takes effect on the

14 date of enactment of this title.

15 (3) REGULATIONS.—The Secretary shall issue

16 regulations under this section no later than Decem17 ber 31, 2000.

18 SEC. 444. INSPECTOR GENERAL STUDY.

19 (a) STUDY.—The Inspector General of the Depart20 ment of Labor shall conduct a study on the need for regu21 latory standards and procedures to authorize the Sec22 retary, in appropriate cases, to prohibit persons from serv23 ing as qualified accountants for purposes of section 103

24 of the Employee Retirement Income Security Act of 1974

25 (29 U.S.C. 1023).
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1 (b) MATTERS TO BE STUDIED.—In conducting the

2 study under this section, the Inspector General shall ad3 dress whether standards and procedures to prohibit per4 sons from serving as qualified public accountants are like5 ly to improve the quality of employee benefit plan audits,

6 and the potential for increased costs to plans. If the In7 spector General concludes that regulations incorporating

8 standards and procedures would be appropriate, the study

9 shall include recommended standards and procedures.

10 (c) REPORT.—Not later than 1 year after the date

11 of the enactment of this title, the Inspector General shall

12 submit a report on the results of the study conducted pur13 suant to this section to each house of Congress and the

14 Secretary of Labor.

15 CHAPTER 3—INCREASE IN EXCISE TAX ON

16 EMPLOYER REVERSIONS

17 SEC. 445. INCREASE IN EXCISE TAX.

18 (a) IN GENERAL.—Section 4980 of the Internal Rev19 enue Code of 1986 (relating to tax on reversion of quali20 fied plan assets to employer) is amended—

21 (1) in subsection (a), by striking ‘‘20 percent’’

22 and inserting ‘‘35 percent’’; and

23 (2) in subsection (d)(1), by striking ‘‘substitut24 ing ‘50 percent’ for ‘20 percent’ with respect to any

25 employer reversion’’ and inserting ‘‘substituting ‘65
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1 percent’ for ‘35 percent’ with respect to any em2 ployer reversion’’.

3 (b) EFFECTIVE DATE.—

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the amendment made by this section shall

6 apply to reversions occurring after December 31,

7 1999.

8 (2) EXCEPTION.—The amendment made by this

9 section shall not apply to any reversion after Decem10 ber 31, 1999, if—

11 (A) in the case of plans subject to title IV

12 of the Employee Retirement Income Security

13 Act of 1974, a notice of intent to terminate

14 under such title was provided to participants

15 (or if no participants, to the Pension Benefit

16 Guaranty Corporation) before June 25, 1999,

17 (B) in the case of plans subject to title I

18 (and not to title IV) of such Act, a notice of in19 tent to reduce future accruals under section

20 204(h) of such Act was provided to participants

21 in connection with the termination before June

22 25, 1999,

23 (C) in the case of plans not subject to title

24 I or IV of such Act, a request for a determina25 tion letter with respect to the termination was
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1 filed with the Secretary of the Treasury or the

2 Secretary’s delegate before June 25, 1999, or

3 (D) in the case of plans not subject to title

4 I or IV of such Act and having only 1 partici5 pant, a resolution terminating the plan was

6 adopted by the employer before June 25, 1999.

7 Subtitle C—Portability

8 SEC. 451. FASTER VESTING OF EMPLOYER MATCHING CON9 TRIBUTIONS.

10 (a) AMENDMENTS TO 1986 CODE.—Section 411(a)

11 (relating to minimum vesting standards) is amended—

12 (1) in paragraph (2), by striking ‘‘A plan’’ and

13 inserting ‘‘Except as provided in paragraph (12), a

14 plan’’, and

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

16 ‘‘(12) FASTER VESTING FOR MATCHING CON17 TRIBUTIONS.—In the case of matching contributions

18 (as defined in section 401(m)(4)(A)), paragraph (2)

19 shall be applied—

20 ‘‘(A) by substituting ‘3 years’ for ‘5 years’

21 in subparagraph (A), and

22 ‘‘(B) by substituting the following table for

23 the table contained in subparagraph (B):

The nonforfeitable

‘‘Years of service: percentage is:

2 ............................................................................................... 20

3 ............................................................................................... 40

4 ............................................................................................... 60
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The nonforfeitable

‘‘Years of service: percentage is:

5 ............................................................................................... 80

6 ............................................................................................... 100.’’

1 (b) AMENDMENTS TO ERISA.—Section 203(a) of the

2 Employee Retirement Income Security Act of 1974 (29

3 U.S.C. 1053(a)) is amended—

4 (1) in paragraph (2), by striking ‘‘A plan’’ and

5 inserting ‘‘Except as provided in paragraph (4), a

6 plan’’, and

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

8 ‘‘(4) FASTER VESTING FOR MATCHING CON9 TRIBUTIONS.—In the case of matching contributions

10 (as defined in section 401(m)(4)(A) of the Internal

11 Revenue Code of 1986), paragraph (2) shall be

12 applied—

13 ‘‘(A) by substituting ‘3 years’ for ‘5 years’

14 in subparagraph (A), and

15 ‘‘(B) by substituting the following table for

16 the table contained in subparagraph (B):

The nonforfeitable

‘‘Years of service: percentage is:

2 ............................................................................................... 20

3 ............................................................................................... 40

4 ............................................................................................... 60

5 ............................................................................................... 80

6 ............................................................................................... 100.’’

17 (c) EFFECTIVE DATES.—

18 (1) IN GENERAL.—Except as provided in para19 graph (2), the amendments made by this section
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1 shall apply to contributions for plan years beginning

2 after December 31, 1999.

3 (2) COLLECTIVE BARGAINING AGREEMENTS.—

4 In the case of a plan maintained pursuant to 1 or

5 more collective bargaining agreements between em6 ployee representatives and 1 or more employers rati7 fied by the date of enactment of this title, the

8 amendments made by this section shall not apply to

9 contributions on behalf of employees covered by any

10 such agreement for plan years beginning before the

11 earlier of—

12 (A) the later of—

13 (i) the date on which the last of such

14 collective bargaining agreements termi15 nates (determined without regard to any

16 extension thereof on or after such date of

17 enactment), or

18 (ii) January 1, 2000, or

19 (B) January 1, 2004.

20 (3) SERVICE REQUIRED.—With respect to any

21 plan, the amendments made by this section shall not

22 apply to any employee before the date that such em23 ployee has 1 hour of service under such plan in any

24 plan year to which the amendments made by this

25 section apply.
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1 SEC. 452. RATIONALIZATION OF THE RESTRICTIONS ON

2 DISTRIBUTIONS FROM 401(k) PLANS.

3 (a) IN GENERAL.—Section 401(k)(2)(B)(i)(I) of the

4 Internal Revenue Code of 1986 (relating to qualified cash

5 or deferred arrangements) is amended by striking ‘‘sepa6 ration from service’’ and inserting ‘‘severance from em7 ployment’’.

8 (b) BUSINESS SALE REQUIREMENTS DELETED.—

9 (1) IN GENERAL.—Section 401(k)(2)(B)(i)(II)

10 of the Internal Revenue Code of 1986 (relating to

11 qualified cash or deferred arrangements) is amended

12 by striking ‘‘an event’’ and inserting ‘‘a plan termi13 nation’’.

14 (2) CONFORMING AMENDMENTS.—Section

15 401(k)(10) of such Code is amended—

16 (A) by striking subparagraph (A) and in17 serting the following:

18 ‘‘(A) IN GENERAL.—A plan termination is

19 described in this paragraph if the termination

20 of the plan is without establishment or mainte21 nance of another defined contribution plan

22 (other than an employee stock ownership plan

23 as defined in section 4975(e)(7)).’’,

24 (B) in subparagraph (B)—

25 (i) by striking ‘‘An event’’ and insert26 ing ‘‘A termination’’, and
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1 (ii) by striking ‘‘the event’’ and insert2 ing ‘‘the termination’’,

3 (C) by striking subparagraph (C), and

4 (D) by striking ‘‘OR DISPOSITION OF AS5 SETS OR SUBSIDIARY’’ in the heading.

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

7 this section shall apply to distributions after December 31,

8 1999.

9 SEC. 453. TREATMENT OF TRANSFERS BETWEEN DEFINED

10 CONTRIBUTION PLANS.

11 (a) IN GENERAL.—Section 411(d)(6) of the Internal

12 Revenue Code of 1986 (relating to accrued benefit not to

13 be decreased by amendment) is amended by adding at the

14 end the following new subparagraph:

15 ‘‘(D) PLAN TRANSFERS.—A defined con16 tribution plan (in this subparagraph referred to

17 as the ‘transferee plan’) shall not be treated as

18 failing to meet the requirements of this para19 graph merely because the transferee plan does

20 not provide some or all of the forms of distribu21 tion previously available under another defined

22 contribution plan (in this subparagraph referred

23 to as the ‘transferor plan’) to the extent that—

24 ‘‘(i) the forms of distribution pre25 viously available under the transferor plan
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1 applied to the account of a participant or

2 beneficiary under the transferor plan that

3 was transferred from the transferor plan to

4 the transferee plan pursuant to a direct

5 transfer rather than pursuant to a dis6 tribution from the transferor plan,

7 ‘‘(ii) the terms of both the transferor

8 plan and the transferee plan authorize the

9 transfer described in clause (i),

10 ‘‘(iii) the transfer described in clause

11 (i) was made pursuant to a voluntary elec12 tion by the participant or beneficiary

13 whose account was transferred to the

14 transferee plan,

15 ‘‘(iv) the election described in clause

16 (iii) was made after the participant or ben17 eficiary received a notice describing the

18 consequences of making the election,

19 ‘‘(v) if the transferor plan provides for

20 an annuity as the normal form of distribu21 tion under the plan in accordance with sec22 tion 417, the transfer is made with the

23 consent of the participant’s spouse (if

24 any), and such consent meets requirements
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1 similar to the requirements imposed by

2 section 417(a)(2), and

3 ‘‘(vi) the transferee plan allows the

4 participant or beneficiary described in

5 clause (iii) to receive any distribution to

6 which the participant or beneficiary is enti7 tled under transferee plan in the form of

8 a single sum distribution.’’

9 (b) CONFORMING AMENDMENT.—Section 204(g) of

10 the Employee Retirement Income Security Act of 1974

11 (29 U.S.C. 1054(g)) is amended by adding at the end the

12 following new paragraph:

13 ‘‘(4) A defined contribution plan (in this paragraph

14 referred to as the ‘transferee plan’) shall not be treated

15 as failing to meet the requirements of this subsection

16 merely because the transferee plan does not provide some

17 or all of the forms of distribution previously available

18 under another defined contribution plan (in this para19 graph referred to as the ‘transferor plan’) to the extent

20 that—

21 ‘‘(A) the forms of distribution previously avail22 able under the transferor plan applied to the account

23 of a participant or beneficiary under the transferor

24 plan that was transferred from the transferor plan

25 to the transferee plan pursuant to a direct transfer
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1 rather than pursuant to a distribution from the

2 transferor plan,

3 ‘‘(B) the terms of both the transferor plan and

4 the transferee plan authorize the transfer described

5 in subparagraph (A),

6 ‘‘(C) the transfer described in subparagraph

7 (A) was made pursuant to a voluntary election by

8 the participant or beneficiary whose account was

9 transferred to the transferee plan,

10 ‘‘(D) the election described in subparagraph (C)

11 was made after the participant or beneficiary re12 ceived a notice describing the consequences of mak13 ing the election,

14 ‘‘(E) if the transferor plan provides for an an15 nuity as the normal form of distribution under the

16 plan in accordance with section 205, the transfer is

17 made with the consent of the participant’s spouse (if

18 any), and such consent meets requirements similar

19 to the requirements imposed by section 205(c)(2),

20 and

21 ‘‘(F) the transferee plan allows the participant

22 or beneficiary described in subparagraph (C) to re23 ceive any distribution to which the participant or

24 beneficiary is entitled under transferee plan in the

25 form of a single sum distribution.’’
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1 (b) EFFECTIVE DATE.—The amendments made by

2 this section shall apply to transfers after December 31,

3 1999.

4 SEC. 454. MISSING PARTICIPANTS.

5 (a) IN GENERAL.—Section 4050 of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C. 1350)

7 is amended by redesignating subsection (c) as subsection

8 (e) and by inserting after subsection (b) the following new

9 subsections:

10 ‘‘(c) MULTIEMPLOYER PLANS.—The corporation

11 shall prescribe rules similar to the rules in subsection (a)

12 for multiemployer plans covered by this title that termi13 nate under section 4041A.

14 ‘‘(d) PLANS NOT OTHERWISE SUBJECT TO TITLE.—

15 ‘‘(1) TRANSFER TO CORPORATION.—The plan

16 administrator of a plan described in paragraph (4)

17 may elect to transfer a missing participant’s benefits

18 to the corporation upon termination of the plan.

19 ‘‘(2) INFORMATION TO THE CORPORATION.—To

20 the extent provided in regulations, the plan adminis21 trator of a plan described in paragraph (4) shall,

22 upon termination of the plan, provide the corpora23 tion information with respect to benefits of a miss24 ing participant if the plan transfers such benefits—

25 ‘‘(A) to the corporation, or
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1 ‘‘(B) to an entity other than the corpora2 tion or a plan described in paragraph (4)(B)(ii).

3 ‘‘(3) PAYMENT BY THE CORPORATION.—If ben4 efits of a missing participant were transferred to the

5 corporation under paragraph (1), the corporation

6 shall, upon location of the participant or beneficiary,

7 pay to the participant or beneficiary the amount

8 transferred (or the appropriate survivor benefit)

9 either—

10 ‘‘(A) in a single sum (plus interest), or

11 ‘‘(B) in such other form as is specified in

12 regulations of the corporation.

13 ‘‘(4) PLANS DESCRIBED.—A plan is described

14 in this paragraph if—

15 ‘‘(A) the plan is a pension plan (within the

16 meaning of section 3(2))—

17 ‘‘(i) to which the provisions of this

18 section do not apply (without regard to

19 this subsection), and

20 ‘‘(ii) which is not a plan described in

21 paragraphs (2) through (11) of section

22 4021(b), and

23 ‘‘(B) at the time the assets are to be dis24 tributed upon termination, the plan—

25 ‘‘(i) has missing participants, and
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1 ‘‘(ii) has not provided for the transfer

2 of assets to pay the benefits of all missing

3 participants to another pension plan (with4 in the meaning of section 3(2)).

5 ‘‘(5) CERTAIN PROVISIONS NOT TO APPLY.—

6 Subsections (a)(1) and (a)(3) shall not apply to a

7 plan described in paragraph (4).’’

8 (b) CONFORMING AMENDMENTS.—

9 (1) Section 206(f) of the Employee Retirement

10 Income Security Act of 1974 (29 U.S.C. 1056(f)) is

11 amended—

12 (A) by striking ‘‘title IV’’ and inserting

13 ‘‘section 4050’’, and

14 (B) by striking ‘‘the plan shall provide

15 that,’’.

16 (2) Section 401(a)(34) of the Internal Revenue

17 Code of 1986 (relating to benefits of missing partici18 pants on plan termination) is amended by striking

19 ‘‘title IV’’ and inserting ‘‘section 4050’’.

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

21 this section shall apply to distributions made after final

22 regulations implementing subsections (c) and (d) of sec23 tion 4050 of the Employee Retirement Income Security

24 Act of 1974 (as added by subsection (a)), respectively, are

25 prescribed.
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1 SEC. 455. ALLOWANCE OF ROLLOVERS FROM AND TO 403(b)

2 PLANS.

3 (a) ROLLOVERS FROM SECTION 403(b) PLANS.—

4 Section 403(b)(8)(A)(ii) of the Internal Revenue Code of

5 1986 (relating to rollover amounts) is amended by striking

6 ‘‘such distribution’’ and all that follows and inserting

7 ‘‘such distribution to an eligible retirement plan described

8 in section 402(c)(8)(B), and’’.

9 (b) ROLLOVERS TO SECTION 403(b) PLANS.—Sec10 tion 402(c)(8)(B) of such Code (defining eligible retire11 ment plan) is amended by striking ‘‘and’’ at the end of

12 clause (ii), by striking the period at the end of clause (iv)

13 and inserting ‘‘, and’’, and by adding at the end the follow14 ing:

15 ‘‘(v) an annuity contract described in

16 section 403(b).’’

17 (c) CONFORMING AMENDMENTS.—

18 (1) Section 72(o)(4) of such Code is amended

19 by striking ‘‘and 408(d)(3)’’ and inserting

20 ‘‘403(b)(8), and 408(d)(3)’’.

21 (2) Section 401(a)(31)(B) of such Code is

22 amended by striking ‘‘and 403(a)(4)’’ and inserting

23 ‘‘, 403(a)(4), and 403(b)(8)’’.

24 (3) Subparagraph (B) of section 403(b)(8) of

25 such Code is amended by inserting ‘‘and (9)’’ after

26 ‘‘through (7)’’.
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1 (4) Subparagraphs (A) and (B) of section

2 415(b)(2) of such Code are each amended by strik3 ing ‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8), and

4 408(d)(3)’’.

5 (d) EFFECTIVE DATE; SPECIAL RULE.—

6 (1) EFFECTIVE DATE.—The amendments made

7 by this section shall apply to distributions after De8 cember 31, 1999.

9 (2) SPECIAL RULE.—Notwithstanding any other

10 provision of law, subsections (h)(3) and (h)(5) of

11 section 1122 of the Tax Reform Act of 1986 shall

12 not apply to any distribution from an eligible retire13 ment plan on behalf of an individual if there was a

14 rollover to such plan on behalf of such individual

15 which is permitted solely by reason of any amend16 ment made by this section.

17 SEC. 456. ROLLOVER CONTRIBUTIONS FROM DEFERRED

18 COMPENSATION PLANS OF STATE AND

19 LOCAL GOVERNMENTS.

20 (a) ROLLOVERS FROM SECTION 457 PLANS.—

21 (1) IN GENERAL.—Section 457(e) of the Inter22 nal Revenue Code of 1986 (relating to other defini23 tions and special rules) is amended by adding at the

24 end the following:

25 ‘‘(16) ROLLOVER AMOUNTS.—
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1 ‘‘(A) GENERAL RULE.—In the case of an

2 eligible deferred compensation plan of an eligi3 ble employer described in paragraph (1)(A),

4 if—

5 ‘‘(i) any portion of the balance to the

6 credit of an employee in such plan is paid

7 to such employee in a rollover distribution

8 (other than a distribution described in sub9 section (d)(1)(A)(iii) or in subparagraph

10 (A) or (B) of section 402(c)(4)),

11 ‘‘(ii) the employee transfers any por12 tion of the property such employee receives

13 in such distribution to an individual retire14 ment plan (as defined in section

15 7701(a)(37), and

16 ‘‘(iii) in the case of a distribution of

17 property other than money, the amount so

18 transferred consists of the property distrib19 uted,

20 then such distribution (to the extent so trans21 ferred) shall not be includible in gross income

22 for the taxable year in which paid.

23 ‘‘(B) CERTAIN RULES MADE APPLICA24 BLE.—Rules similar to the rules of section

25 401(a)(31), paragraphs (2), (3), (5), (6), (7),
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1 and (9) of section 402(c), and section 402(f)

2 shall apply for purposes of subparagraph (A).’’

3 (2) DISTRIBUTION REQUIREMENTS.—Section

4 457(d)(1)(A) of such Code (relating to distribution

5 requirements) is amended by inserting ‘‘except as

6 provided in subsection (e)(16),’’ after ‘‘(A)’’.

7 (3) CONFORMING AMENDMENTS.—

8 (A) Section 72(o)(4) of such Code is

9 amended—

10 (i) by striking ‘‘and 408(d)(3)’’ and

11 inserting ‘‘408(d)(3), and 457(e)(16)’’,

12 (ii) by inserting ‘‘or excludable’’ after

13 ‘‘deductible’’ each place it appears, and

14 (iii) in the heading by inserting ‘‘OR

15 EXCLUDABLE’’ after ‘‘DEDUCTIBLE’’.

16 (B) Section 219(d)(2) of such Code is

17 amended by striking ‘‘or 408(d)(3)’’ and insert18 ing ‘‘408(d)(3), or 457(e)(16)’’.

19 (C) Section 401(a)(31)(B) of such Code is

20 amended by striking ‘‘and 403(b)(8)’’ and in21 serting ‘‘, 403(b)(8), and 457(e)(16)’’.

22 (D) Paragraph (4) of section 402(c) of

23 such Code is amended by inserting ‘‘or in an el24 igible deferred compensation plan (as defined in

25 section 457(b)) of an eligible employer de-
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1 scribed in section 457(e)(1)(A)’’ after ‘‘qualified

2 trust’’.

3 (E) Section 408(a)(1) of such Code is

4 amended by striking ‘‘or 403(b)(8)’’ and insert5 ing ‘‘, 403(b)(8), or 457(e)(16)’’.

6 (F) Section 408(d)(3)(A)(ii) of such Code

7 is amended by striking ‘‘or’’ after ‘‘501(a)’’ and

8 inserting a comma, and by inserting ‘‘, or from

9 an eligible deferred compensation plan described

10 in section 457(b)’’ after ‘‘contribution)’’.

11 (G) Subparagraphs (A) and (B) of section

12 415(b)(2) of such Code are each amended by

13 striking ‘‘and 408(d)(3)’’ and inserting

14 ‘‘408(d)(3), and 457(e)(16)’’.

15 (H) Section 4973(b)(1)(A) of such Code is

16 amended by striking ‘‘or 408(d)(3)’’ and insert17 ing ‘‘408(d)(3), or 457(e)(16)’’.

18 (d) EFFECTIVE DATE; SPECIAL RULE.—

19 (1) EFFECTIVE DATE.—The amendments made

20 by this section shall apply to distributions after De21 cember 31, 1999.

22 (2) SPECIAL RULE.—Notwithstanding any other

23 provision of law, subsections (h)(3) and (h)(5) of

24 section 1122 of the Tax Reform Act of 1986 shall

25 not apply to any distribution from an individual re-
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1 tirement plan on behalf of an individual if there was

2 a rollover to such plan on behalf of such individual

3 which is permitted solely by reason of any amend4 ment made by this section.

5 SEC. 457. EXTENSION OF 60-DAY ROLLOVER PERIOD IN THE

6 CASE OF PRESIDENTIALLY DECLARED DISAS7 TERS AND SERVICE IN COMBAT ZONE.

8 (a) IN GENERAL.—Paragraph (1) of section 7508(a)

9 of the Internal Revenue Code of 1986 (relating to time

10 postponed for performing certain acts) is amended by

11 striking ‘‘and’’ at the end of subparagraph (J), by redesig12 nating subparagraph (K) as subparagraph (L), and by in13 serting after subparagraph (J) the following new subpara14 graph:

15 ‘‘(K) Rollover of any distribution within

16 the 60-day period specified in section 402(c)(3)

17 or 408(d)(3)(A); and’’.

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

19 this section shall apply to distributions made after Decem20 ber 31, 1999.

21 SEC. 458. PURCHASE OF SERVICE CREDIT IN GOVERN22 MENTAL DEFINED BENEFIT PLANS.

23 (a) 403(b) PLANS.—Subsection (b) of section 403 of

24 the Internal Revenue Code of 1986 is amended by adding

25 at the end the following new paragraph:
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1 ‘‘(13) TRUSTEE-TO-TRUSTEE TRANSFERS TO

2 PURCHASE PERMISSIVE SERVICE CREDIT.—No

3 amount shall be includible in gross income by reason

4 of a direct trustee-to-trustee transfer to a defined

5 benefit governmental plan (as defined in section

6 414(d)) if such transfer is—

7 ‘‘(A) for the purchase of permissive service

8 credit (as defined in section 415(n)(3)(A))

9 under such plan, or

10 ‘‘(B) a repayment to which section 415

11 does not apply by reason of subsection (k)(3)

12 thereof.’’

13 (b) 457 PLANS.—

14 (1) Subsection (e) of section 457 of such Code,

15 as amended by section 456, is amended by adding

16 at the end the following new paragraph:

17 ‘‘(17) TRUSTEE-TO-TRUSTEE TRANSFERS TO

18 PURCHASE PERMISSIVE SERVICE CREDIT.—No

19 amount shall be includible in gross income by reason

20 of a direct trustee-to-trustee transfer to a defined

21 benefit governmental plan (as defined in section

22 414(d)) if such transfer is—

23 ‘‘(A) for the purchase of permissive service

24 credit (as defined in section 415(n)(3)(A))

25 under such plan, or
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1 ‘‘(B) a repayment to which section 415

2 does not apply by reason of subsection (k)(3)

3 thereof.’’

4 (2) Section 457(b)(2) of such Code is amended

5 by inserting ‘‘(other than amounts received in a

6 transfer referred to in subsection (e)(17))’’ after

7 ‘‘taxable year’’.

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

9 this section shall apply to trustee-to-trustee transfers after

10 December 31, 1999.

11 Subtitle D—Comprehensive

12 Women’s Pension Protection

13 CHAPTER 1—PENSION REFORM

14 SEC. 461. PENSION RIGHT TO KNOW PROPOSALS.

15 (a) SPOUSE’S RIGHT TO KNOW DISTRIBUTION IN16 FORMATION.—

17 (1) AMENDMENT OF INTERNAL REVENUE

18 CODE.—Paragraph (3) of section 417(a) of the In19 ternal Revenue Code of 1986 (relating to definitions

20 and special rules for purposes of minimum survivor

21 annuity requirements) is amended by adding at the

22 end the following new subparagraph:

23 ‘‘(C) EXPLANATION TO SPOUSE.—At the

24 time a plan provides a participant with a writ25 ten explanation under subparagraph (A) or (B),
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1 such plan shall provide a copy of such expla2 nation to such participant’s spouse. If the last

3 known address of the spouse is the same as the

4 last known address of the participant, the re5 quirement of the preceding sentence shall be

6 treated as met if the copy referred to in the

7 preceding sentence is included in a single mail8 ing made to such address and addressed to both

9 such participant and spouse.’’

10 (2) AMENDMENT OF ERISA.—Paragraph (3) of

11 section 205(c) of Employee Retirement Income Se12 curity Act of 1974 is amended by adding at the end

13 the following new subparagraph:

14 ‘‘(C) EXPLANATION TO SPOUSE.—At the

15 time a plan provides a participant with a writ16 ten explanation under subparagraph (A) or (B),

17 such plan shall provide a copy of such expla18 nation to such participant’s spouse. If the last

19 known address of the spouse is the same as the

20 last known address of the participant, the re21 quirement of the preceding sentence shall be

22 treated as met if the copy referred to in the

23 preceding sentence is included in a single mail24 ing made to such address and addressed to both

25 such participant and spouse.’’
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1 (b) EMPLOYEE’S RIGHT TO KNOW OF OPPORTUNITY

2 FOR ELECTIVE CONTRIBUTIONS UNDER 401(k) PLANS.—

3 Subparagraph (D) of section 401(k)(12) of the Internal

4 Revenue Code of 1986 (relating to notice requirements)

5 is amended—

6 (1) by striking ‘‘, within a reasonable period be7 fore any year,’’ and inserting ‘‘before the 60th day

8 before the beginning of any year’’, and

9 (2) by adding at the end the following new

10 flush sentence:

11 ‘‘The requirements of paragraph (11)(B)(iii)

12 shall apply for purposes of this subparagraph.’’

13 SEC. 462. WOMEN’S PENSION TOLL-FREE PHONE NUMBER.

14 (a) IN GENERAL.—The Secretary of Labor shall con15 tract with an independent organization to create a wom16 en’s pension toll-free telephone number and contact to

17 serve as—

18 (1) a resource for women on pension questions

19 and issues;

20 (2) a source for referrals to appropriate agen21 cies; and

22 (3) a source for printed information.

23 (b) AUTHORIZATION OF APPROPRIATIONS.—There

24 are authorized to be appropriated $1,000,000 for each of
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1 the fiscal years 2000, 2001, 2002, and 2003 to carry out

2 subsection (a).

3 SEC. 463. MODIFICATION OF GOVERNMENT PENSION OFF4 SET.

5 (a) WIFE’S INSURANCE BENEFITS.—Section

6 202(b)(4)(A) of the Social Security Act (42 U.S.C.

7 402(b)(4)(A)) is amended—

8 (1) by inserting ‘‘the amount (if any) by which

9 the sum of such benefit (before reduction under this

10 paragraph) and’’ after ‘‘two-thirds of ’’; and

11 (2) by inserting ‘‘exceeds the amount described

12 in subsection (z) for such month,’’ before ‘‘if ’’.

13 (b) HUSBAND’S INSURANCE BENEFITS.—Section

14 202(c)(2)(A) of such Act (42 U.S.C. 402(c)(2)(A)) is

15 amended—

16 (1) by inserting ‘‘the amount (if any) by which

17 the sum of such benefit (before reduction under this

18 paragraph) and’’ after ‘‘two-thirds of ’’; and

19 (2) by inserting ‘‘exceeds the amount described

20 in subsection (z) for such month,’’ before ‘‘if ’’.

21 (c) WIDOW’S INSURANCE BENEFITS.—Section

22 202(e)(7)(A) of such Act (42 U.S.C. 402(e)(7)(A)) is

23 amended—
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1 (1) by inserting ‘‘the amount (if any) by which

2 the sum of such benefit (before reduction under this

3 paragraph) and’’ after ‘‘two-thirds of ’’; and

4 (2) by inserting ‘‘exceeds the amount described

5 in subsection (z) for such month,’’ before ‘‘if ’’.

6 (d) WIDOWER’S INSURANCE BENEFITS.—Section

7 202(f)(2)(A) of such Act (42 U.S.C. 402(f)(2)(A)) is

8 amended—

9 (1) by inserting ‘‘the amount (if any) by which

10 the sum of such benefit (before reduction under this

11 paragraph) and’’ after ‘‘two-thirds of ’’; and

12 (2) by inserting ‘‘exceeds the amount described

13 in subsection (z) for such month,’’ before ‘‘if ’’.

14 (e) MOTHER’S AND FATHER’S INSURANCE BENE15 FITS.—Section 202(g)(4)(A) of such Act (42 U.S.C.

16 402(g)(4)(A)) is amended—

17 (1) by inserting ‘‘the amount (if any) by which

18 the sum of such benefit (before reduction under this

19 paragraph) and’’ after ‘‘two-thirds of ’’; and

20 (2) by inserting ‘‘exceeds the amount described

21 in subsection (z) for such month,’’ before ‘‘if ’’.

22 (f) AMOUNT DESCRIBED.—Section 202 of such Act

23 (42 U.S.C. 402) is amended by adding at the end the fol24 lowing:
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1 ‘‘(z) The amount described in this subsection is, for

2 months in each 12-month period beginning in December

3 of 1999, and each succeeding calendar year, the greater

4 of—

5 ‘‘(1) $1200; or

6 ‘‘(2) the amount applicable for months in the

7 preceding 12-month period, increased by the cost-of8 living adjustment for such period determined for an

9 annuity under section 8340 of title 5, United States

10 Code (without regard to any other provision of

11 law).’’

12 (g) LIMITATIONS ON REDUCTIONS IN BENEFITS.—

13 Section 202 of such Act (42 U.S.C. 402), as amended by

14 subsection (f), is amended by adding at the end the follow15 ing:

16 ‘‘(aa) For any month after December 1999, in no

17 event shall an individual receive a reduction in a benefit

18 under subsection (b)(4)(A), (c)(2)(A), (e)(7)(A), (f)(2)(A),

19 or (g)(4)(A) for the month that is more than the reduction

20 in such benefit that would have applied for such month

21 under such subsections as in effect on December 1, 1999.’’

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

23 this section shall apply with respect to monthly insurance

24 benefits payable under title II of the Social Security Act

25 for months after December 1999.
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1 SEC. 464. PERIODS OF FAMILY AND MEDICAL LEAVE

2 TREATED AS HOURS OF SERVICE FOR PEN3 SION PARTICIPATION AND VESTING.

4 (a) AMENDMENTS OF INTERNAL REVENUE CODE.—

5 (1) PARTICIPATION.—

6 (A) IN GENERAL.—Paragraph (3) of sec7 tion 410(a) of the Internal Revenue Code of

8 1986 (relating to minimum participation stand9 ards) is amended by adding at the end the fol10 lowing new subparagraph:

11 ‘‘(E) FAMILY AND MEDICAL LEAVE TREAT12 ED AS SERVICE.—

13 ‘‘(i) IN GENERAL.—For purposes of

14 this subsection, in the case of an individual

15 who is absent from work on leave required

16 to be given to such individual under the

17 Family and Medical Leave Act of 1993,

18 the plan shall treat as hours of service—

19 ‘‘(I) the hours of service which

20 otherwise would normally have been

21 credited to such individual but for

22 such absence, or

23 ‘‘(II) in any case in which the

24 plan is unable to determine the hours

25 described in subclause (I), 8 hours of

26 service per day of absence.
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1 ‘‘(ii) YEAR TO WHICH HOURS ARE

2 CREDITED.—The hours described in clause

3 (i) shall be treated as hours of service as

4 provided in this subparagraph—

5 ‘‘(I) only in the year in which the

6 absence from work begins, if a partici7 pant would have a year of service sole8 ly because the period of absence is

9 treated as hours of service as provided

10 in clause (i); or

11 ‘‘(II) in any other case, in the

12 immediately following year.’’

13 (B) COORDINATION WITH TREATMENT OF

14 MATERNITY AND PATERNITY ABSENCES UNDER

15 BREAK IN SERVICE RULES.—Subparagraph (E)

16 of section 411(a)(6) of such Code is amended—

17 (i) by inserting ‘‘NOT UNDER FAMILY

18 AND MEDICAL LEAVE ACT OF 1993’’ after

19 ‘‘ABSENCES’’ in the heading, and

20 (ii) by adding at the end of clause (i)

21 the following new sentence: ‘‘The preceding

22 sentence shall apply to an absence from

23 work only if no part of such absence is re24 quired to be given under the Family and

25 Medical Leave Act of 1993.’’
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1 (2) VESTING.—

2 (A) IN GENERAL.—Paragraph (5) of sec3 tion 411(a) of such Code (relating to minimum

4 vesting standards) is amended by adding at the

5 end the following new subparagraph:

6 ‘‘(E) FAMILY AND MEDICAL LEAVE TREAT7 ED AS SERVICE.—

8 ‘‘(i) IN GENERAL.—For purposes of

9 this subsection, in the case of an individual

10 who is absent from work on leave required

11 to be given to such individual under the

12 Family and Medical Leave Act of 1993,

13 the plan shall treat as hours of service—

14 ‘‘(I) the hours of service which

15 otherwise would normally have been

16 credited to such individual but for

17 such absence, or

18 ‘‘(II) in any case in which the

19 plan is unable to determine the hours

20 described in subclause (I), 8 hours of

21 service per day of absence.

22 ‘‘(ii) YEAR TO WHICH HOURS ARE

23 CREDITED.—The hours described in clause

24 (i) shall be treated as hours of service as

25 provided in this subparagraph—
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1 ‘‘(I) only in the year in which the

2 absence from work begins, if a partici3 pant would have a year of service sole4 ly because the period of absence is

5 treated as hours of service as provided

6 in clause (i); or

7 ‘‘(II) in any other case, in the

8 immediately following year.’’

9 (B) COORDINATION WITH TREATMENT OF

10 MATERNITY AND PATERNITY ABSENCES UNDER

11 BREAK IN SERVICE RULES.—Subparagraph (E)

12 of section 411(a)(6) of such Code is amended—

13 (i) by inserting ‘‘NOT UNDER FAMILY

14 AND MEDICAL LEAVE ACT OF 1993’’ after

15 ‘‘ABSENCES’’ in the heading, and

16 (ii) by adding at the end of clause (i)

17 the following new sentence: ‘‘The preceding

18 sentence shall apply to an absence from

19 work only if no part of such absence is re20 quired to be given under the Family and

21 Medical Leave Act of 1993.’’

22 (b) AMENDMENTS OF ERISA.—

23 (1) PARTICIPATION.—

24 (A) IN GENERAL.—Paragraph (3) of sec25 tion 202(a) of the Employee Retirement Income
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1 Security Act of 1974 (relating to minimum par2 ticipation standards) is amended by adding at

3 the end the following new subparagraph:

4 ‘‘(E)(i) For purposes of this subsection, in the case

5 of an individual who is absent from work on leave required

6 to be given to such individual under the Family and Medi7 cal Leave Act of 1993, the plan shall treat as hours of

8 service—

9 ‘‘(I) the hours of service which otherwise would

10 normally have been credited to such individual but

11 for such absence, or

12 ‘‘(II) in any case in which the plan is unable to

13 determine the hours described in subclause (I), 8

14 hours of service per day of absence.

15 ‘‘(ii) The hours described in clause (i) shall be treated

16 as hours of service as provided in this subparagraph—

17 ‘‘(I) only in the year in which the absence from

18 work begins, if a participant would have a year of

19 service solely because the period of absence is treat20 ed as hours of service as provided in clause (i); or

21 ‘‘(II) in any other case, in the immediately fol22 lowing year.’’

23 (B) COORDINATION WITH TREATMENT OF

24 MATERNITY AND PATERNITY ABSENCES UNDER

25 BREAK IN SERVICE RULES.—Subparagraph (A)
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1 of section 202(b)(5) of such Act is amended by

2 adding at the end of clause (i) the following

3 new sentence: ‘‘The preceding sentence shall

4 apply to an absence from work only if no part

5 of such absence is required to be given under

6 the Family and Medical Leave Act of 1993.’’

7 (2) VESTING.—

8 (A) IN GENERAL.—Paragraph (2) of sec9 tion 203(b) of such Act (relating to minimum

10 vesting standards) is amended by adding at the

11 end the following new subparagraph:

12 ‘‘(E)(i) For purposes of this subsection, in the case

13 of an individual who is absent from work on leave required

14 to be given to such individual under the Family and Medi15 cal Leave Act of 1993, the plan shall treat as hours of

16 service—

17 ‘‘(I) the hours of service which otherwise would

18 normally have been credited to such individual but

19 for such absence, or

20 ‘‘(II) in any case in which the plan is unable to

21 determine the hours described in subclause (I), 8

22 hours of service per day of absence.

23 ‘‘(ii) The hours described in clause (i) shall be treated

24 as hours of service as provided in this subparagraph—
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1 ‘‘(I) only in the year in which the absence from

2 work begins, if a participant would have a year of

3 service solely because the period of absence is treat4 ed as hours of service as provided in clause (i); or

5 ‘‘(II) in any other case, in the immediately fol6 lowing year.’’

7 (B) COORDINATION WITH TREATMENT OF

8 MATERNITY AND PATERNITY ABSENCES UNDER

9 BREAK IN SERVICE RULES.—Clause (i) of sec10 tion 203(b)(3)(E) of such Act is amended by

11 adding at the end of clause (i) the following

12 new sentence: ‘‘The preceding sentence shall

13 apply to an absence from work only if no part

14 of such absence is required to be given under

15 the Family and Medical Leave Act of 1993.’’

16 SEC. 465. PENSION INTEGRATION RULES.

17 (a) APPLICABILITY OF NEW INTEGRATION RULES

18 EXTENDED TO ALL EXISTING ACCRUED BENEFITS.—

19 Notwithstanding subsection (c)(1) of section 1111 of the

20 Tax Reform Act of 1986 (relating to effective date of ap21 plication of nondiscrimination rules to integrated plans)

22 (100 Stat. 2440), effective for plan years beginning after

23 the date of the enactment of this title, the amendments

24 made by subsection (a) of such section 1111 shall also
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1 apply to benefits attributable to plan years beginning on

2 or before December 31, 1988.

3 (b) INTEGRATION DISALLOWED FOR SIMPLIFIED

4 EMPLOYEE PENSIONS.—

5 (1) IN GENERAL.—Subparagraph (D) of section

6 408(k)(3) of the Internal Revenue Code of 1986 (re7 lating to permitted disparity under rules limiting

8 discrimination under simplified employee pensions)

9 is repealed.

10 (2) CONFORMING AMENDMENT.—Subparagraph

11 (C) of such section 408(k)(3) is amended by striking

12 ‘‘and except as provided in subparagraph (D),’’.

13 (3) EFFECTIVE DATE.—The amendments made

14 by this subsection shall apply with respect to taxable

15 years beginning on or after January 1, 1999.

16 (c) EVENTUAL REPEAL OF INTEGRATION RULES.—

17 Effective for plan years beginning on or after January 1,

18 2005—

19 (1) subparagraphs (C) and (D) of section

20 401(a)(5) of the Internal Revenue Code of 1986 (re21 lating to pension integration exceptions under non22 discrimination requirements for qualification) are re23 pealed, and subparagraph (E) of such section

24 401(a)(5) is redesignated as subparagraph (C); and
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1 (2) subsection (l) of section 401 of such Code

2 (relating to nondiscriminatory coordination of de3 fined contribution plans with OASDI) is repealed.

4 SEC. 466. DIVISION OF PENSION BENEFITS UPON DIVORCE.

5 (a) AMENDMENTS TO THE INTERNAL REVENUE

6 CODE OF 1986.—Section 414(p) of the Internal Revenue

7 Code of 1986 (relating to qualified domestic relations

8 order defined) is amended by redesignating paragraph

9 (12) as paragraph (13) and by adding at the end the fol10 lowing new paragraph:

11 ‘‘(12) SPECIAL RULES AND PROCEDURES FOR

12 DOMESTIC RELATIONS ORDERS NOT SPECIFYING DI13 VISION OF PENSION BENEFITS.—

14 ‘‘(A) IN GENERAL.—If—

15 ‘‘(i) a domestic relations order (in16 cluding an annulment or other order of

17 marital dissolution) relates to provision of

18 marital property with respect to a mar19 riage of at least 5 years duration between

20 the participant and the former spouse,

21 ‘‘(ii)(I) such order (and any prior

22 order) does not specifically provide that

23 pension benefits were considered by the

24 parties and no division is intended, and
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1 ‘‘(II) such order is not a qualified do2 mestic relations order without regard to

3 this paragraph and there is no other prior

4 qualified domestic relations order issued in

5 connection with the dissolution of the mar6 riage to which such order relates, and

7 ‘‘(iii) the former spouse notifies a plan

8 within the period prescribed under sub9 paragraph (C) that the former spouse is

10 entitled to benefits under the plan in ac11 cordance with the provisions of this para12 graph,

13 then such domestic relations order shall be

14 treated as a qualified domestic relations order

15 for purposes of this subsection and section

16 401(a)(13).

17 ‘‘(B) AMOUNT OF BENEFIT.—

18 ‘‘(i) IN GENERAL.—Any domestic rela19 tions order treated as a qualified domestic

20 relations order under subparagraph (A)

21 shall be treated as specifying that the

22 former spouse is entitled to the applicable

23 percentage of the marital share of the par24 ticipant’s accrued benefit.
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1 ‘‘(ii) MARITAL SHARE.—For purposes

2 of clause (i), the marital share of a partici3 pant’s accrued benefit is an amount equal

4 to the product of—

5 ‘‘(I) such benefit as of the date

6 of the first payment under the plan

7 (to the extent such accrued benefit is

8 vested at the date of the divorce or

9 any later date), and

10 ‘‘(II) a fraction the numerator of

11 which is the period of participation by

12 the participant under the plan start13 ing with the date of marriage and

14 ending with the date of divorce, and

15 the denominator of which is the total

16 period of participation by the partici17 pant under the plan.

18 ‘‘(iii) APPLICABLE PERCENTAGE.—

19 For purposes of this subparagraph, the ap20 plicable percentage is—

21 ‘‘(I) except as provided in sub22 clause (II), 50 percent, and

23 ‘‘(II) in the case of a participant

24 who fails to provide the plan with no25 tice of a domestic relations order
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1 within the time prescribed under sub2 paragraph (C), 67 percent.

3 ‘‘(C) NOTICE REQUIREMENTS.—

4 ‘‘(i) NOTICE BY EMPLOYEE.—Each

5 employee who is a participant in a pension

6 plan shall, within 60 days after the dis7 solution of the marriage of the employee—

8 ‘‘(I) notify the plan administrator

9 of the plan of such dissolution, and

10 ‘‘(II) provide to the plan adminis11 trator a copy of the domestic relations

12 order (including an annulment or

13 other order of marital dissolution)

14 providing for such dissolution and the

15 last known address of the employee’s

16 former spouse.

17 ‘‘(ii) NOTICE BY PLAN ADMINIS18 TRATOR.—Each plan administrator receiv19 ing notice under clause (i) shall promptly

20 notify the former spouse of a participant of

21 such spouse’s rights under this paragraph,

22 including the time period within which

23 such spouse is required to notify the plan

24 of the spouse’s intention to claim rights

25 under this paragraph.
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1 ‘‘(iii) NOTICE BY FORMER SPOUSE.—

2 A former spouse may notify the plan ad3 ministrator of such spouse’s intent to claim

4 rights under this paragraph at any time

5 before the last day of the 1-year period fol6 lowing receipt of notice under clause (ii).

7 ‘‘(iv) COORDINATION WITH PLAN PRO8 CEDURES.—The determination under para9 graph (6)(A)(ii) with respect to a domestic

10 relations order to which this paragraph ap11 plies shall be made within a reasonable pe12 riod of time after the plan administrator

13 receives the notice described in clause (iii).

14 ‘‘(D) INTERPRETATION AS QUALIFIED DO15 MESTIC RELATIONS ORDER.—Each plan shall

16 establish reasonable rules for determining how

17 any such deemed domestic relations order is to

18 be interpreted under the plan so as to con19 stitute a qualified domestic relations order that

20 satisfies paragraphs (2) through (4) (and a

21 copy of such rules shall be provided to such

22 former spouse promptly after delivery of the di23 vorce decree). Such rules—

24 ‘‘(i) may delay the effect of such an

25 order until the earlier of the date the par-
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1 ticipant is fully vested or has terminated

2 employment,

3 ‘‘(ii) may allow the former spouse to

4 be paid out immediately,

5 ‘‘(iii) shall permit the former spouse

6 to be paid not later than the earliest retire7 ment age under the plan or the partici8 pant’s death,

9 ‘‘(iv) may require the submitter of the

10 divorce decree to present a marriage cer11 tificate or other evidence of the marriage

12 date to assist in benefit calculations, and

13 ‘‘(v) may conform to the rules applica14 ble to qualified domestic relations orders

15 regarding form or type of benefit.’’

16 (b) AMENDMENTS TO THE EMPLOYEE RETIREMENT

17 INCOME SECURITY ACT OF 1974.—Section 206(d)(3) of

18 the Employee Retirement Income Security Act of 1974

19 (29 U.S.C. 1056(d)(3)) is amended by redesignating sub20 paragraph (N) as subparagraph (O) and by inserting after

21 subparagraph (M) the following new subparagraph:

22 ‘‘(N) SPECIAL RULES AND PROCEDURES

23 FOR DOMESTIC RELATIONS ORDERS NOT SPECI24 FYING DIVISION OF PENSION BENEFITS.—

25 ‘‘(i) IN GENERAL.—If—
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1 ‘‘(I) a domestic relations order

2 (including an annulment or other

3 order of marital dissolution) relates to

4 provision of marital property with re5 spect to a marriage of at least 5 years

6 duration between the participant and

7 the former spouse,

8 ‘‘(II)(aa) such order (and any

9 prior order) does not specifically pro10 vide that pension benefits were consid11 ered by the parties and no division is

12 intended, or

13 ‘‘(bb) such order is a qualified

14 domestic relations order without re15 gard to this subparagraph or there is

16 no other prior qualified domestic rela17 tions order issued in connection with

18 the dissolution of the marriage to

19 which such order relates, and

20 ‘‘(III) the former spouse notifies

21 a plan within the period prescribed

22 under clause (iii) that the former

23 spouse is entitled to benefits under

24 the plan in accordance with the provi25 sions of this subparagraph,
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1 then such domestic relations order shall be

2 treated as a qualified domestic relations

3 order for purposes of this paragraph.

4 ‘‘(ii) AMOUNT OF BENEFIT.—

5 ‘‘(I) IN GENERAL.—Any domestic

6 relations order treated as a qualified

7 domestic relations order under clause

8 (i) shall be treated as specifying that

9 the former spouse is entitled to the

10 applicable percentage of the marital

11 share of the participant’s accrued ben12 efit.

13 ‘‘(II) MARITAL SHARE.—For

14 purposes of subclause (I), the marital

15 share of a participant’s accrued bene16 fit is an amount equal to the product

17 of—

18 ‘‘(aa) such benefit as of the

19 date of the first payment under

20 the plan (to the extent such ac21 crued benefit is vested at the

22 date of the divorce or any later

23 date), and

24 ‘‘(bb) the numerator of

25 which is the period of participa-
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1 tion by the participant under the

2 plan starting with the date of

3 marriage and ending with the

4 date of divorce, and the denomi5 nator of which is the total period

6 of participation by the partici7 pant under the plan.

8 ‘‘(III) APPLICABLE PERCENT9 AGE.—For purposes of this clause, the

10 applicable percentage is—

11 ‘‘(aa) except as provided in

12 item (bb), 50 percent, and

13 ‘‘(bb) in the case of a partic14 ipant who fails to provide the

15 plan with notice of a domestic re16 lations order within the time pre17 scribed under clause (iii), 67 per18 cent.

19 ‘‘(iii) NOTICE REQUIREMENTS.—

20 ‘‘(I) NOTICE BY EMPLOYEE.—

21 Each employee who is a participant in

22 a pension plan shall, within 60 days

23 after the dissolution of the marriage

24 of the employee—
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1 ‘‘(aa) notify the plan admin2 istrator of the plan of such dis3 solution, and

4 ‘‘(bb) provide to the plan ad5 ministrator a copy of the domes6 tic relations order (including an

7 annulment or other order of mar8 ital dissolution) providing for

9 such dissolution and the last

10 known address of the employee’s

11 former spouse.

12 ‘‘(II) NOTICE BY PLAN ADMINIS13 TRATOR.—Each plan administrator

14 receiving notice under subclause (I)

15 shall promptly notify the former

16 spouse of a participant of such

17 spouse’s rights under this subpara18 graph, including the time period with19 in which such spouse is required to

20 notify the plan of the spouse’s inten21 tion to claim rights under this sub22 paragraph.

23 ‘‘(III) NOTICE BY FORMER

24 SPOUSE.—A former spouse may notify

25 the plan administrator of such
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1 spouse’s intent to claim rights under

2 this subparagraph at any time before

3 the last day of the 1-year period fol4 lowing receipt of notice under sub5 clause (II).

6 ‘‘(IV) COORDINATION WITH PLAN

7 PROCEDURES.—The determination

8 under subparagraph (G)(i)(II) with

9 respect to a domestic relations order

10 to which this subparagraph applies

11 shall be made within a reasonable pe12 riod of time after the plan adminis13 trator receives the notice described in

14 subclause (III).

15 ‘‘(iv) INTERPRETATION AS QUALIFIED

16 DOMESTIC RELATIONS ORDER.—Each plan

17 shall establish reasonable rules for deter18 mining how any such deemed domestic re19 lations order is to be interpreted under the

20 plan so as to constitute a qualified domes21 tic relations order that satisfies subpara22 graphs (C) through (E) (and a copy of

23 such rules shall be provided to such former

24 spouse promptly after delivery of the di25 vorce decree). Such rules—
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1 ‘‘(I) may delay the effect of such

2 an order until the earlier of the date

3 the participant is fully vested or has

4 terminated employment,

5 ‘‘(II) may allow the former

6 spouse to be paid out immediately,

7 ‘‘(III) shall permit the former

8 spouse to be paid not later than the

9 earliest retirement age under the plan

10 or the participant’s death,

11 ‘‘(IV) may require the submitter

12 of the divorce decree to present a

13 marriage certificate or other evidence

14 of the marriage date to assist in bene15 fit calculations, and

16 ‘‘(V) may conform to the rules

17 applicable to qualified domestic rela18 tions orders regarding form or type of

19 benefit.’’

20 SEC. 467. ENTITLEMENT OF DIVORCED SPOUSES TO RAIL21 ROAD RETIREMENT ANNUITIES INDEPEND22 ENT OF ACTUAL ENTITLEMENT OF EM23 PLOYEE.

24 Section 2 of the Railroad Retirement Act of 1974 (45

25 U.S.C. 231a) is amended—
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1 (1) in subsection (c)(4)(i), by striking ‘‘(A) is

2 entitled to an annuity under subsection (a)(1) and

3 (B)’’; and

4 (2) in subsection (e)(5), by striking ‘‘or di5 vorced wife’’ the second place it appears.

6 SEC. 468. EFFECTIVE DATES.

7 (a) IN GENERAL.—Except as provided in subsection

8 (b), the amendments made by this chapter, other than sec9 tions 463 and 465, shall apply with respect to plan years

10 beginning on or after January 1, 2000, and the amend11 ments made by section 466 shall apply only with respect

12 to divorces becoming final in such plan years.

13 (b) SPECIAL RULE FOR COLLECTIVELY BARGAINED

14 PLANS.—In the case of a plan maintained pursuant to 1

15 or more collective bargaining agreements between em16 ployee representatives and 1 or more employers ratified

17 on or before the date of the enactment of this title, sub18 section (a) shall be applied to benefits pursuant to, and

19 individuals covered by, any such agreement by substituting

20 for ‘‘January 1, 2000’’ the date of the commencement of

21 the first plan year beginning on or after the earlier of—

22 (1) the later of—

23 (A) January 1, 2001, or

24 (B) the date on which the last of such col25 lective bargaining agreements terminates (de-
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1 termined without regard to any extension there2 of after the date of the enactment of this title),

3 or

4 (2) January 1, 2002.

5 CHAPTER 2—PROTECTION OF RIGHTS OF

6 FORMER SPOUSES TO PENSION BENE7 FITS UNDER CERTAIN GOVERNMENT

8 AND GOVERNMENT-SPONSORED RE9 TIREMENT PROGRAMS

10 SEC. 471. EXTENSION OF TIER II RAILROAD RETIREMENT

11 BENEFITS TO SURVIVING FORMER SPOUSES

12 PURSUANT TO DIVORCE AGREEMENTS.

13 (a) IN GENERAL.—Section 5 of the Railroad Retire14 ment Act of 1974 (45 U.S.C. 231d) is amended by adding

15 at the end the following new subsection:

16 ‘‘(d) Notwithstanding any other provision of law, the

17 payment of any portion of an annuity computed under sec18 tion 3(b) to a surviving former spouse in accordance with

19 a court decree of divorce, annulment, or legal separation

20 or the terms of any court-approved property settlement

21 incident to any such court decree shall not be terminated

22 upon the death of the individual who performed the service

23 with respect to which such annuity is so computed unless

24 such termination is otherwise required by the terms of

25 such court decree.’’
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1 (b) EFFECTIVE DATE.—The amendment made by

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

3 of this title.

4 SEC. 472. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS,

5 AND FORMER SPOUSES OF FEDERAL EM6 PLOYEES WHO DIE BEFORE ATTAINING AGE

7 FOR DEFERRED ANNUITY UNDER CIVIL

8 SERVICE RETIREMENT SYSTEM.

9 (a) BENEFITS FOR WIDOW OR WIDOWER.—Section

10 8341(f) of title 5, United States Code, is amended—

11 (1) in the matter preceding paragraph (1) by—

12 (A) by inserting ‘‘a former employee sepa13 rated from the service with title to deferred an14 nuity from the Fund dies before having estab15 lished a valid claim for annuity and is survived

16 by a spouse, or if’’ before ‘‘a Member’’; and

17 (B) by inserting ‘‘of such former employee

18 or Member’’ after ‘‘the surviving spouse’’;

19 (2) in paragraph (1)—

20 (A) by inserting ‘‘former employee or’’ be21 fore ‘‘Member commencing’’; and

22 (B) by inserting ‘‘former employee or’’ be23 fore ‘‘Member dies’’; and

24 (3) in the undesignated sentence following para25 graph (2)—
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1 (A) in the matter preceding subparagraph

2 (A) by inserting ‘‘former employee or’’ before

3 ‘‘Member’’; and

4 (B) in subparagraph (B) by inserting

5 ‘‘former employee or’’ before ‘‘Member’’.

6 (b) BENEFITS FOR FORMER SPOUSE.—Section

7 8341(h) of title 5, United States Code, is amended—

8 (1) in paragraph (1) by adding after the first

9 sentence ‘‘Subject to paragraphs (2) through (5) of

10 this subsection, a former spouse of a former em11 ployee who dies after having separated from the

12 service with title to a deferred annuity under section

13 8338(a) but before having established a valid claim

14 for annuity is entitled to a survivor annuity under

15 this subsection, if and to the extent expressly pro16 vided for in an election under section 8339(j)(3) of

17 this title, or in the terms of any decree of divorce

18 or annulment or any court order or court-approved

19 property settlement agreement incident to such de20 cree.’’; and

21 (2) in paragraph (2)—

22 (A) in subparagraph (A)(ii) by striking ‘‘or

23 annuitant,’’ and inserting ‘‘annuitant, or former

24 employee’’; and
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1 (B) in subparagraph (B)(iii) by inserting

2 ‘‘former employee or’’ before ‘‘Member’’.

3 (c) PROTECTION OF SURVIVOR BENEFIT RIGHTS.—

4 Section 8339(j)(3) of title 5, United States Code, is

5 amended by inserting at the end the following: ‘‘The Office

6 shall provide by regulation for the application of this sub7 section to the widow, widower, or surviving former spouse

8 of a former employee who dies after having separated from

9 the service with title to a deferred annuity under section

10 8338(a) but before having established a valid claim for

11 annuity.’’

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

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

14 of this title and shall apply only in the case of a former

15 employee who dies on or after such date.

16 SEC. 473. PAYMENT OF LUMP-SUM BENEFITS TO FORMER

17 SPOUSES OF FEDERAL EMPLOYEES.

18 (a) CIVIL SERVICE RETIREMENT SYSTEM.—Chapter

19 83 of title 5, United States Code, is amended—

20 (1) in section 8342(c), by striking ‘‘Lump-sum’’

21 and inserting ‘‘Except as provided in section

22 8345(j), lump-sum’’;

23 (2) in section 8345(j) by adding at the end of

24 paragraph (1) the following: ‘‘Except for purposes of

25 subparagraph (B), the first sentence of this para-
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1 graph shall be deemed to be amended by inserting

2 after ‘that individual’ the following: ‘, and any lump3 sum benefits authorized by section 8342 (d) through

4 (f) which would otherwise be paid to any person or

5 persons under section 8342(c),’ ’’; and

6 (3) by adding at the end the following:

7 ‘‘(4) Any payment under this subsection to a person

8 bars recovery by any other person.’’

9 (b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.—

10 Chapter 84 of title 5, United States Code, is amended—

11 (1) in section 8424(d), by striking ‘‘Lump-sum’’

12 and inserting ‘‘Except as provided in section

13 8467(a), lump-sum’’; and

14 (2) in section 8467—

15 (A) in subsection (a), by adding at the end

16 the following: ‘‘Except for purposes of para17 graph (2), the first sentence of this subsection

18 shall be deemed to be amended by inserting

19 after ‘that individual’ the following: ‘, and any

20 lump-sum benefits authorized by section 8424

21 (e) through (g) which would otherwise be paid

22 to any individual or individuals under section

23 8424(d),’ ’’; and

24 (B) by adding at the end the following:
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1 ‘‘(d) Any payment under this section to a person bars

2 recovery by any other person.’’

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

4 this section shall apply with respect to any amount payable

5 by reason of any death occurring on or after the date of

6 the enactment of this title.

7 CHAPTER 3—MODIFICATIONS OF JOINT

8 AND SURVIVOR ANNUITY REQUIREMENTS

9 SEC. 475. MODIFICATIONS OF JOINT AND SURVIVOR ANNU10 ITY REQUIREMENTS.

11 (a) AMENDMENTS TO ERISA.—

12 (1) AMOUNT OF ANNUITY.—

13 (A) IN GENERAL.—Paragraph (1) of sec14 tion 205(a) of the Employee Retirement Income

15 Security Act of 1974 (29 U.S.C. 1055(a)) is

16 amended by inserting ‘‘or, at the election of the

17 participant, shall be provided in the form of a

qualified joint and 2 18 ⁄3 survivor annuity’’ after

19 ‘‘survivor annuity,’’.

20 (B) DEFINITION.—Subsection (d) of sec21 tion 205 of such Act (29 U.S.C. 1055) is

22 amended—

23 (i) by redesignating paragraphs (1)

24 and (2) as subparagraphs (A) and (B), re25 spectively,
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1 (ii) by inserting ‘‘(1)’’ after ‘‘(d)’’,

2 and

3 (iii) by adding at the end the follow4 ing new paragraph:

5 ‘‘(2) For purposes of this section, the term ‘‘qualified

joint and 2 6 ⁄3 survivor annuity’’ means a joint and survivor

7 annuity under which the survivor annuity for the life of

the surviving spouse is equal to at least 2 8 ⁄3 of the amount

9 of the annuity which is payable during the joint lives of

10 the participant and spouse.’’

11 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

12 of section 205(c)(3)(A) of such Act (29 U.S.C.

13 1055(c)(3)(A)) is amended to read as follows:

14 ‘‘(i) the terms and conditions of each qualified

joint and survivor annuity and qualified joint and 2 15 ⁄3

16 survivor annuity offered, accompanied by an illustra17 tion of the benefits under each such annuity for the

18 particular participant and spouse and an acknowl19 edgement form to be signed by the participant and

20 the spouse that they have read and considered the

21 illustration before any form of retirement benefit is

22 chosen,’’.

23 (b) AMENDMENTS TO INTERNAL REVENUE CODE.—

24 (1) AMOUNT OF ANNUITY.—
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1 (A) IN GENERAL.—Clause (i) of section

2 401(a)(11)(A) of the Internal Revenue Code of

3 1986 (relating to requirement of joint and sur4 vivor annuity and preretirement survivor annu5 ity) is amended by inserting ‘‘or, at the election

6 of the participant, shall be provided in the form

of a qualified joint and 2 7 ⁄3 survivor annuity’’

8 after ‘‘survivor annuity,’’.

9 (B) DEFINITION.—Section 417 of such

10 Code (relating to definitions and special rules

11 for purposes of minimum survivor annuity re12 quirements), as amended by section 476, is

13 amended by redesignating subsection (f) as sub14 section (g) and by inserting after subsection (e)

15 the following new subsection:

‘‘(f) DEFINITION OF QUALIFIED JOINT AND 2 16 ⁄3 SUR17 VIVOR ANNUITY.—For purposes of this section and section

401(a)(11), the term ‘‘qualified joint and 2 18 ⁄3 survivor an19 nuity’’ means a joint and survivor annuity under which

20 the survivor annuity for the life of the surviving spouse

is equal to at least 2 21 ⁄3 of the amount of the annuity which

22 is payable during the joint lives of the participant and

23 spouse.’’

24 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

25 of section 417(a)(3)(A) of such Code (relating to ex-
165

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1 planation of joint and survivor annuity) is amended

2 to read as follows:

3 ‘‘(i) the terms and conditions of each

4 qualified joint and survivor annuity and

qualified joint and 2 5 ⁄3 survivor annuity of6 fered, accompanied by an illustration of

7 the benefits under each such annuity for

8 the particular participant and spouse and

9 an acknowledgement form to be signed by

10 the participant and the spouse that they

11 have read and considered the illustration

12 before any form of retirement benefit is

13 chosen,’’.

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

15 this section shall apply to plan years beginning on or after

16 January 1, 2000.

17 SEC. 476. SPOUSAL CONSENT REQUIRED FOR DISTRIBU18 TIONS FROM DEFINED CONTRIBUTION

19 PLANS.

20 (a) AMENDMENTS TO INTERNAL REVENUE CODE OF

21 1986.—

22 (1) IN GENERAL.—Section 401(a)(11) of the

23 Internal Revenue Code of 1986 (relating to require24 ment of joint and survivor annuity and preretire25 ment survivor annuity) is amended by striking sub-
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1 paragraphs (B), (C), and (D), by redesignating sub2 paragraphs (E) and (F) as subparagraphs (C) and

3 (D), respectively, and by inserting after subpara4 graph (A) the following new subparagraph:

5 ‘‘(B) PLANS TO WHICH PARAGRAPH AP6 PLIES.—This paragraph shall apply to any de7 fined benefit plan and to any defined contribu8 tion plan.’’

9 (2) EXCEPTION FOR HARDSHIP DISTRIBU10 TIONS.—Section 417(f) of such Code is amended by

11 adding at the end the following new paragraph:

12 ‘‘(8) HARDSHIP DISTRIBUTIONS.—The require13 ments of section 401(a)(11) and this section shall

14 not apply to a hardship distribution under section

15 401(k)(2)(B)(i)(IV).’’

16 (3) SPECIAL RULE FOR CASH-OUTS.—Section

17 417(e) of such Code is amended by adding at the

18 end the following new paragraph:

19 ‘‘(4) SPECIAL RULE FOR DEFINED CONTRIBU20 TION PLANS.—

21 ‘‘(A) IN GENERAL.—In the case of a de22 fined contribution plan, notwithstanding para23 graph (2), if the present value of the qualified

24 joint and survivor annuity does not exceed

25 $10,000, the plan may immediately distribute
167

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1 50 percent of the present value of such annuity

2 to each spouse.

3 ‘‘(B) EXCEPTION.—The plan may distrib4 ute a different percentage of the present value

5 of an annuity to each spouse if a court order

6 or contractual agreement provides for such dif7 ferent percentage.’’

8 (b) AMENDMENTS TO ERISA.—

9 (1) IN GENERAL.—Section 205(b) of the Em10 ployee Retirement Income Security Act of 1974 (29

11 U.S.C. 1055(b)) is amended to read as follows:

12 ‘‘(b)(1) This section shall apply to any defined benefit

13 plan and to any individual account plan.

14 ‘‘(2) This section shall not apply to a plan which the

15 Secretary of the Treasury or his delegate has determined

16 is a plan described in section 404(c) of the Internal Reve17 nue Code of 1986 (or a continuation thereof) in which par18 ticipation is substantially limited to individuals who, be19 fore January 1, 1976, ceased employment covered by the

20 plan.’’

21 (2) HARDSHIP DISTRIBUTION.—Section 205 of

22 such Act (29 U.S.C. 1055) is amended by adding at

23 the end the following new subsection:
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1 ‘‘(m) This section shall not apply to a hardship dis2 tribution under section 401(k)(2)(B)(i)(IV) of the Internal

3 Revenue Code of 1986.’’

4 (3) SPECIAL RULE FOR CASH-OUTS.—Section

5 205(g) of such Act (29 U.S.C. 1055(g)) is amended

6 by adding at the end the following new paragraph:

7 ‘‘(4) SPECIAL RULE FOR DEFINED CONTRIBU8 TION PLANS.—

9 ‘‘(A) IN GENERAL.—In the case of an indi10 vidual account plan, notwithstanding paragraph

11 (2), if the present value of the qualified joint

12 and survivor annuity or the qualified preretire13 ment survivor annuity exceeds $10,000, the

14 plan may immediately distribute 50 percent of

15 the present value of such annuity to each

16 spouse.

17 ‘‘(B) EXCEPTION.—The plan may distrib18 ute a different percentage of the present value

19 of an annuity to each spouse if a court order

20 or contractual agreement provides for such dif21 ferent percentage.’’

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

23 this section shall apply to plan years beginning after De24 cember 31, 2000.
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1 Subtitle E—Date For Adoption of

2 Plan Amendments

3 SEC. 481. DATE FOR ADOPTION OF PLAN AMENDMENTS.

4 (a) IN GENERAL.—Except as otherwise provided in

5 this title, if any amendment made by this title requires

6 an amendment to any plan, such plan amendment shall

7 not be required to be made before the last day of the first

8 plan year beginning on or after January 1, 2000, if—

9 (1) during the period after such amendment

10 takes effect and before the last day of such first

11 plan year, the plan is operated in accordance with

12 the requirements of such amendment, and

13 (2) such plan amendment applies retroactively

14 to such period.

15 A plan shall not be treated as failing to provide definitely

16 determinable benefits or contributions, or to be operated

17 in accordance with the provisions of the plan, merely be18 cause it operates in accordance with this subsection.

19 (b) GOVERNMENTAL PLANS.—In the case of a gov20 ernmental plan (as defined in section 414(d) of the Inter21 nal Revenue Code of 1986), subsection (a) shall be applied

22 by substituting for ‘‘January 1, 2000’’ the later of—

23 (1) January 1, 2001, or

24 (2) the date which is 90 days after the opening

25 of the first legislative session beginning after Janu-
170

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1 ary 1, 2000, of the governing body with authority to

2 amend the plan, but only if such governing body

3 does not meet continuously.

4 (c) SPECIAL RULE FOR COLLECTIVELY BARGAINED

5 PLANS.—Notwithstanding any other provision of this title,

6 in the case of a plan maintained pursuant to 1 or more

7 collective bargaining agreements between employee rep8 resentatives and 1 or more employers ratified on or before

9 the date of the enactment of this title, any amendment

10 made by this title which requires an amendment to such

11 plan shall not be required to be made before the last day

12 of the first plan year beginning on or after the earlier of—

13 (1) the later of—

14 (A) January 1, 2000, or

15 (B) the date on which the last of such col16 lective bargaining agreements terminates (de17 termined without regard to any extension there18 of after the date of the enactment of this title),

19 or

20 (2) January 1, 2001.
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1 TITLE V—SAVE SOCIAL

2 SECURITY FIRST

3 SEC. 501. SAVE SOCIAL SECURITY FIRST POINT OF ORDER.

4 (a) PURPOSE.—The purpose of this section is to pro5 hibit any changes to the pay-as-you-go rule in the Senate

6 until Congress saves Social Security first.

7 (b) DEFINITION.—In this section, the term ‘‘Social

8 Security Trust Funds’’ means the Old Age and Survivors

9 Insurance Trust Fund and the Disability Insurance Trust

10 Fund, established under section 201 of the Social Security

11 Act.

12 (c) POINT OF ORDER.—

13 (1) IN GENERAL.—It shall not be in order in

14 the Senate to consider any bill, resolution, joint reso15 lution, concurrent resolution, motion, amendment, or

16 conference report that would repeal, amend, waive,

17 suspend, sunset, override, or negate section 202 of

18 House Concurrent Resolution 67 (104th Congress)

19 until Congress first enacts legislation that—

20 (A) ensures the long-term fiscal solvency of

21 the Social Security Trust Funds; and

22 (B) includes a certification that the legisla23 tion complies with subparagraph (A), which

24 shall terminate the applicability of the point of

25 order established by this section.
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1 (2) WAIVER.—This section may be waived or

2 suspended in the Senate only by the affirmative vote

3 of three-fifths of the Members, duly chosen and

4 sworn.

5 (3) APPEAL.—Appeals in the Senate from the

6 decisions of the Chair relating to any provision of

7 this section shall be limited to one hour of debate,

8 to be equally divided between, and controlled by, the

9 appellant and the manager of the legislation. An af10 firmative vote of three-fifths of the Members of the

11 Senate, duly chosen and sworn, shall be required in

12 the Senate to sustain an appeal of the ruling of the

13 Chair on a point of order raised under this section.

Æ