I 

116TH CONGRESS 

1ST SESSION H. R. 1874 

To amend the Internal Revenue Code of 1986 to require that qualified 

cash or deferred arrangements allow certain long-term employees to participate. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 26, 2019 

Mrs. MURPHY introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to require 

that qualified cash or deferred arrangements allow certain long-term employees to participate. 

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

3 SECTION 1. QUALIFIED CASH OR DEFERRED ARRANGE4 MENTS MUST ALLOW LONG-TERM EMPLOY5 EES WORKING MORE THAN 500 BUT LESS 

6 THAN 1,000 HOURS PER YEAR TO PARTICI7 PATE. 

8 (a) PARTICIPATION REQUIREMENT.— 


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1 (1) IN GENERAL.—Section 401(k)(2)(D) of the 

2 Internal Revenue Code of 1986 is amended to read 

3 as follows: 

4 ‘‘(D) which does not require, as a condi5 tion of participation in the arrangement, that 

6 an employee complete a period of service with 

7 the employer (or employers) maintaining the 

8 plan extending beyond the close of the earlier 

9 of— 

10 ‘‘(i) the period permitted under sec11 tion 410(a)(1) (determined without regard 

12 to subparagraph (B)(i) thereof), or 

13 ‘‘(ii) subject to the provisions of para14 graph (15), the first period of 3 consecu15 tive 12-month periods during each of which 

16 the employee has at least 500 hours of 

17 service.’’. 

18 (2) SPECIAL RULES.—Section 401(k) of such 

19 Code is amended by adding at the end the following 

20 new paragraph: 

21 ‘‘(15) SPECIAL RULES FOR PARTICIPATION RE22 QUIREMENT FOR LONG-TERM, PART-TIME WORK23 ERS.—For purposes of paragraph (2)(D)(ii)— 

24 ‘‘(A) AGE REQUIREMENT MUST BE MET.— 

25 Paragraph (2)(D)(ii) shall not apply to an emVerDate Sep 11 2014 00:46 Apr 06, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1874.IH H1874

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1 ployee unless the employee has met the require2 ment of section 410(a)(1)(A)(i) by the close of 

3 the last of the 12-month periods described in 

4 such paragraph. 

5 ‘‘(B) NONDISCRIMINATION AND TOP6 HEAVY RULES NOT TO APPLY.— 

7 ‘‘(i) NONDISCRIMINATION RULES.—In 

8 the case of employees who are eligible to 

9 participate in the arrangement solely by 

10 reason of paragraph (2)(D)(ii)— 

11 ‘‘(I) notwithstanding subsection 

12 (a)(4), an employer shall not be re13 quired to make nonelective or match14 ing contributions on behalf of such 

15 employees even if such contributions 

16 are made on behalf of other employees 

17 eligible to participate in the arrange18 ment, and 

19 ‘‘(II) an employer may elect to 

20 exclude such employees from the ap21 plication of subsection (a)(4), para22 graph (3), subsection (m)(2), and sec23 tion 410(b). 

24 ‘‘(ii) TOP-HEAVY RULES.—An em25 ployer may elect to exclude all employees 


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1 who are eligible to participate in a plan 

2 maintained by the employer solely by rea3 son of paragraph (2)(D)(ii) from the appli4 cation of the vesting and benefit require5 ments under subsections (b) and (c) of sec6 tion 416. 

7 ‘‘(iii) VESTING.—For purposes of de8 termining whether an employee described 

9 in clause (i) has a nonforfeitable right to 

10 employer contributions (other than con11 tributions described in paragraph 

12 (3)(D)(i)) under the arrangement, each 

13 12-month period for which the employee 

14 has at least 500 hours of service shall be 

15 treated as a year of service. 

16 ‘‘(iv) EMPLOYEES WHO BECOME

17 FULL-TIME EMPLOYEES.—This subpara18 graph shall cease to apply to any employee 

19 as of the first plan year beginning after 

20 the plan year in which the employee meets 

21 the requirements of section 

22 410(a)(1)(A)(ii) without regard to para23 graph (2)(D)(ii). 

24 ‘‘(C) EXCEPTION FOR EMPLOYEES UNDER

25 COLLECTIVELY BARGAINED PLANS, ETC.—ParaVerDate Sep 11 2014 00:46 Apr 06, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1874.IH H1874

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1 graph (2)(D)(ii) shall not apply to employees 

2 described in section 410(b)(3). 

3 ‘‘(D) SPECIAL RULES.— 

4 ‘‘(i) TIME OF PARTICIPATION.—The 

5 rules of section 410(a)(4) shall apply to an 

6 employee eligible to participate in an ar7 rangement solely by reason of paragraph 

8 (2)(D)(ii). 

9 ‘‘(ii) 12-MONTH PERIODS.—12-month 

10 periods shall be determined in the same 

11 manner as under the last sentence of sec12 tion 410(a)(3)(A).’’. 

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

14 this section shall apply to plan years beginning after De15 cember 31, 2020, except that, for purposes of section 

16 401(k)(2)(D)(ii) of the Internal Revenue Code of 1986 (as 

17 added by such amendments), 12-month periods beginning 

18 before January 1, 2021, shall not be taken into account. 

Æ 


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