I

106TH CONGRESS

1ST SESSION H. R. 1590

To provide retirement security for all Americans.

IN THE HOUSE OF REPRESENTATIVES

APRIL 28, 1999

Mr. GEJDENSON (for himself, Mr. GEPHARDT, Mr. BONIOR, Mr. RANGEL, Mr.

CLAY, Mr. ANDREWS, Mr. NEAL of Massachusetts, Mr. POMEROY, Mr.

FROST, Mr. MENENDEZ, Ms. DELAURO, Mr. KENNEDY of Rhode Island,

Mr. NADLER, Mr. CROWLEY, Mr. BRADY of Pennsylvania, Ms. NORTON,

Mrs. CAPPS, Mr. BROWN of Ohio, Mr. GREEN of Texas, Mr. VENTO, Mr.

BALDACCI, Mr. FILNER, Mr. MCGOVERN, Ms. PELOSI, Mr. DIXON, Mr.

DEFAZIO, Mr. UNDERWOOD, Mr. PALLONE, Mr. SHOWS, Mr. OBERSTAR,

Mrs. MINK of Hawaii, Mr. FALEOMAVAEGA, Ms. SCHAKOWSKY, Mr. KILDEE, Mr. OLVER, Mr. STRICKLAND, Ms. LOFGREN, Mr. GEORGE MILLER

of California, Mr. KLECZKA, Mr. JEFFERSON, Mr. LAFALCE, Mr.

SANDLIN, Mr. FORD, Mr. LEWIS of Georgia, Mr. INSLEE, Mr. HILLIARD,

Mr. MCNULTY, Ms. KILPATRICK, Mr. FRANK of Massachusetts, Ms.

KAPTUR, Mr. WEINER, Mr. MOORE, Mr. PRICE of North Carolina, Mr.

HINCHEY, Mr. DELAHUNT, Ms. BERKLEY, Mrs. MEEK of Florida, Mr.

WYNN, Mr. RAHALL, Mr. BOUCHER, Mr. CUMMINGS, Mr. GUTIERREZ,

Mr. DOYLE, Mr. KUCINICH, Mr. MOAKLEY, Mr. WISE, Mr. CLYBURN,

Mr. ACKERMAN, Ms. BROWN of Florida, Ms. LEE, Mrs. MALONEY of

New York, Mr. BERMAN, Ms. STABENOW, Mr. TIERNEY, Mr. MALONEY

of Connecticut, Mr. WAXMAN, Ms. MILLENDER-MCDONALD, Ms. EDDIE

BERNICE JOHNSON of Texas, Mr. LAMPSON, Mr. MARTINEZ, Mr. GONZALEZ, Mr. WEXLER, Ms. JACKSON-LEE of Texas, Mr. DINGELL, Mrs.

LOWEY, Mr. CAPUANO, Mr. ALLEN, Mr. STARK, Ms. WOOLSEY, Mr.

EVANS, Mrs. THURMAN, Mr. MARKEY, Mr. SABO, Ms. WATERS, Mr.

HASTINGS of Florida, Mr. BLAGOJEVICH, Mr. ENGEL, Ms. ROYBAL-ALLARD, and Mrs. NAPOLITANO) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the

Committees on Education and the Workforce, Government Reform, and

Transportation and Infrastructure, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned
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A BILL

To provide retirement security for all Americans.

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.

4 This Act may be cited as the ‘‘Retirement Security

5 Act of 1999’’.

6 SEC. 2. TABLE OF CONTENTS.

7 The table of contents for this Act is as follows:

Sec. 1. Short title.

Sec. 2. Table of contents.

TITLE I—PENSION ACCESS AND COVERAGE

Sec. 100. Amendment of 1986 Code.

Subtitle A—Improved Access to Individual Retirement Savings

Sec. 101. Credit for pension plan startup costs of small employers.

Sec. 102. Exclusion for payroll deduction contributions to IRAs.

Sec. 103. Nonrefundable tax credit for contributions to individual retirement

plans.

Sec. 104. Distributions from certain plans may be used without penalty during

periods of unemployment.

Subtitle B—Secure Money Annuity or Retirement (SMART) Trusts

Sec. 111. Secure money annuity or retirement (SMART) trusts.

Subtitle C—Improved Fairness in Retirement Plan Benefits

Sec. 121. Amendments to SIMPLE retirement accounts.

Sec. 122. Nondiscrimination rules for qualified cash or deferred arrangements

and matching contributions.

Sec. 123. Definition of highly compensated employees.

Sec. 124. Treatment of multiemployer plans under section 415.

Sec. 125. Exemption of mirror plans from section 457 limits.

Sec. 126. Immediate participation in the thrift savings plan for Federal employees.

Sec. 127. Full funding limitation for multiemployer plans.

Sec. 128. Elimination of partial termination rules for multiemployer plans.

Sec. 129. Repeal of 150 percent of current liability funding limit.

TITLE II—SECURITY

Sec. 200. Amendment of ERISA.
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Subtitle A—General Provisions

Sec. 201. Periodic pension benefits statements.

Sec. 202. Requirement of annual, detailed investment reports applied to certain

401(k) plans.

Sec. 203. Information required to be provided to investment managers of

401(k) plans.

Sec. 204. Study on investments in collectibles.

Sec. 205. Qualified employer plans prohibited from making loans through credit

cards and other intermediaries.

Sec. 206. Multiemployer plan benefits guaranteed.

Sec. 207. Prohibited transactions.

Sec. 208. Substantial owner benefits.

Sec. 209. Reversion report.

Subtitle B—ERISA Enforcement

Sec. 211. Civil penalties for breach of fiduciary responsibilities made discretionary, etc.

Sec. 212. Reporting and enforcement requirements for employee benefit plans.

Sec. 213. Additional requirements for qualified public accountants.

Sec. 214. Inspector General study.

Subtitle C—Increase in Excise Tax on Employer Reversions

Sec. 221. Increase in excise tax.

TITLE III—PORTABILITY

Sec. 301. Faster vesting of employer matching contributions.

Sec. 302. Rationalization of the restrictions on distributions from 401(k) plans.

Sec. 303. Treatment of transfers between defined contribution plans.

Sec. 304. Missing participants.

Sec. 305. Allowance of rollovers from and to 403(b) plans.

Sec. 306. Rollover contributions from deferred compensation plans of State and

local governments.

Sec. 307. Extension of 60-day rollover period in the case of Presidentially declared disasters and service in combat zone.

Sec. 308. Purchase of service credit in governmental defined benefit plans.

TITLE IV—COMPREHENSIVE WOMEN’S PENSION PROTECTION

Subtitle A—Pension Reform

Sec. 401. Pension right to know proposals.

Sec. 402. Women’s pension toll-free phone number.

Sec. 403. Modification of government pension offset.

Sec. 404. Family leave provisions.

Sec. 405. Pension integration rules.

Sec. 406. Division of pension benefits upon divorce.

Sec. 407. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee.

Sec. 408. Effective dates.

Subtitle B—Protection of Rights of Former Spouses to Pension Benefits

Under Certain Government and Government-Sponsored Retirement Programs
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Sec. 411. Extension of tier II railroad retirement benefits to surviving former

spouses pursuant to divorce agreements.

Sec. 412. 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. 413. Payment of lump-sum benefits to former spouses of Federal employees.

Subtitle C—Modifications of Joint and Survivor Annuity Requirements

Sec. 421. Modifications of joint and survivor annuity requirements.

Sec. 422. Spousal consent required for distributions from defined contribution

plans.

TITLE V—DATE FOR ADOPTION OF PLAN AMENDMENTS

Sec. 501. Date for adoption of plan amendments.

1 TITLE I—PENSION ACCESS AND

2 COVERAGE

3 SEC. 100. AMENDMENT OF 1986 CODE.

4 Except as otherwise expressly provided, whenever in

5 this title 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 Subtitle A—Improved Access to

11 Individual Retirement Savings

12 SEC. 101. 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:
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1 ‘‘SEC. 45D. SMALL EMPLOYER PENSION PLAN STARTUP

2 COSTS.

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

4 in the case of an eligible employer, the small employer pen5 sion plan startup cost credit determined under this section

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

7 of the qualified startup costs paid or incurred by the tax8 payer during the taxable year.

9 ‘‘(b) DOLLAR LIMITATION.—The amount of the cred10 it determined under this section for any taxable year shall

11 not exceed—

12 ‘‘(1) $1,000 for the first credit year,

13 ‘‘(2) $500 for each of the 2 taxable years imme14 diately following the first credit year, and

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

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

17 section—

18 ‘‘(1) IN GENERAL.—The term ‘eligible em19 ployer’ has the meaning given such term by section

20 408(p)(2)(C)(i).

21 ‘‘(2) EMPLOYERS MAINTAINING QUALIFIED

22 PLANS DURING 1997 NOT ELIGIBLE.—Such term

23 shall not include an employer if such employer (or

24 any predecessor employer) maintained a qualified

25 plan (as defined in section 408(p)(2)(D)(ii)) with re26 spect to which contributions were made, or benefits
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1 were accrued, for service in 1997. If only individuals

2 other than employees described in subparagraph (A)

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

4 in the qualified employer plan referred to in sub5 section (d)(1), then the preceding sentence shall be

6 applied without regard to any qualified plan in

7 which only employees so described are eligible to

8 participate.

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

10 section—

11 ‘‘(1) QUALIFIED STARTUP COSTS.—

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

13 startup costs’ means any ordinary and nec14 essary expenses of an eligible employer which

15 are paid or incurred in connection with—

16 ‘‘(i) the establishment or administra17 tion of an eligible employer plan, or

18 ‘‘(ii) the retirement-related education

19 of employees with respect to such plan.

20 ‘‘(B) PLAN MUST HAVE AT LEAST 2 PAR21 TICIPANTS.—Such term shall not include any

22 expense in connection with a plan that does not

23 have at least 2 individuals who are eligible to

24 participate.
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1 ‘‘(C) PLAN MUST BE ESTABLISHED BE2 FORE JANUARY 1, 2002.—Such term shall not

3 include any expense in connection with a plan

4 established after December 31, 2001.

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

6 ‘eligible employer plan’ means a qualified employer

7 plan within the meaning of section 4972(d), or a

8 qualified payroll deduction arrangement within the

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

10 election is made under section 408(q)(2)). A quali11 fied payroll deduction arrangement shall be treated

12 as an eligible employer plan only if all employees of

13 the employer who—

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

15 ‘‘(B) are not described in subparagraph

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

17 are eligible to make the election under section

18 408(q)(1)(A).

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

20 credit year’ means—

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

22 date that the eligible employer plan to which

23 such costs relate becomes effective, or
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1 ‘‘(B) at the election of the eligible em2 ployer, the taxable year preceding the taxable

3 year referred to in subparagraph (A).

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

5 section—

6 ‘‘(1) AGGREGATION RULES.—All persons treat7 ed as a single employer under subsection (a) or (b)

8 of section 52, or subsection (n) or (o) of section 414,

9 shall be treated as one person. All eligible employer

10 plans shall be treated as 1 eligible employer plan.

11 ‘‘(2) DISALLOWANCE OF DEDUCTION.—No de12 duction shall be allowed for that portion of the quali13 fied startup costs paid or incurred for the taxable

14 year which is equal to the credit determined under

15 subsection (a).

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

17 section shall not apply to a taxpayer for any taxable

18 year if such taxpayer elects to have this section not

19 apply for such taxable year.’’

20 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI21 NESS CREDIT.—Section 38(b) (defining current year busi22 ness credit) is amended by striking ‘‘plus’’ at the end of

23 paragraph (11), by striking the period at the end of para24 graph (12) and inserting ‘‘, plus’’, and by adding at the

25 end the following new paragraph:
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1 ‘‘(13) in the case of an eligible employer (as de2 fined in section 45D(c)), the small employer pension

3 plan startup cost credit determined under section

4 45D(a).’’

5 (c) CONFORMING AMENDMENTS.—

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

7 end the following new paragraph:

8 ‘‘(8) NO CARRYBACK OF SMALL EMPLOYER

9 PENSION PLAN STARTUP COST CREDIT BEFORE EF10 FECTIVE DATE.—No portion of the unused business

11 credit for any taxable year which is attributable to

12 the small employer pension plan startup cost credit

13 determined under section 45D may be carried back

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

15 the enactment of section 45D.’’

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

17 striking ‘‘and’’ at the end of paragraph (7), by strik18 ing the period at the end of paragraph (8) and in19 serting ‘‘, and’’, and by adding at the end the fol20 lowing new paragraph:

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

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

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

24 IV of subchapter A of chapter 1 is amended by add25 ing at the end the following new item:

‘‘Sec. 45D. Small employer pension plan startup costs.’’
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1 (d) EFFECTIVE DATE.—The amendments made by

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

3 years ending after the date of the enactment of this Act.

4 SEC. 102. EXCLUSION FOR PAYROLL DEDUCTION CON5 TRIBUTIONS TO IRAS.

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

7 retirement accounts) is amended by redesignating sub8 section (q) as subsection (r) and by inserting after sub9 section (p) the following new subsection:

10 ‘‘(q) QUALIFIED PAYROLL DEDUCTION ARRANGE11 MENT FOR IRA CONTRIBUTIONS.—

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

13 the term ‘qualified payroll deduction arrangement’

14 means a written arrangement of an employer under

15 which—

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

17 the arrangement may elect to have the employer

18 make payments—

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

20 or

21 ‘‘(ii) as elective employer contributions

22 to an individual retirement plan (as de23 fined in section 7701(a)(37)), other than

24 an individual retirement plan described in

25 section 408(k), 408(p), or 408A(b), on be-
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1 half of the employee for the taxable year in

2 which the payments otherwise would have

3 been made to the employee directly in

4 cash,

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

6 elect under subparagraph (A) for any year may

7 not exceed a total of $2,000,

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

9 other than contributions described in subpara10 graph (A),

11 ‘‘(D) the employee’s rights to any contribu12 tions made to an individual retirement plan are

13 nonforfeitable (for this purpose, rules similar to

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

15 ‘‘(E) the employer makes the elective em16 ployer contributions under subparagraph (A)

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

18 following the last day of the month with respect

19 to which the contributions are to be made.

20 ‘‘(2) ELECTION NOT TO HAVE SUBSECTION

21 APPLY.—An employer that maintains an arrange22 ment otherwise described in paragraph (1) may elect

23 to have contributions treated as though they were

24 not made under such an arrangement. If an em25 ployer does not make an election described in the
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1 preceding sentence, an employee may elect, before

2 any contributions are made for the calendar year, to

3 have contributions on behalf of the employee treated

4 as though they were not made under an arrange5 ment described in paragraph (1). An employer shall

6 be deemed to have made an election under this para7 graph for a year if the employer maintained a quali8 fied plan with respect to which contributions were

9 made or benefits were accrued for such year. For

10 purposes of the preceding sentence, the term ‘quali11 fied plan’ means a plan, contract, pension, or trust

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

13 219(g)(5).’’.

14 (b) TAX TREATMENT OF EMPLOYER CONTRIBUTIONS

15 MADE UNDER A QUALIFIED PAYROLL DEDUCTION AR16 RANGEMENT.—

17 (1) COORDINATION WITH DEDUCTION UNDER

18 SECTION 219.—

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

20 amount of deduction) is amended by adding at

21 the end the following new paragraph:

22 ‘‘(5) SPECIAL RULE FOR CONTRIBUTIONS

23 UNDER A QUALIFIED PAYROLL DEDUCTION AR24 RANGEMENT.—This section shall not apply with re25 spect to any amount contributed under a qualified
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1 payroll deduction arrangement described in section

2 408(q)(1) (for which an election has not been made

3 under section 408(q)(2)).’’.

4 (B) Section 219(g)(1) (relating to the limi5 tation on deduction for active participants) is

6 amended to read as follows:

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

8 year ending with or within a taxable year) an indi9 vidual is an active participant, each of the dollar

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

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

12 not below zero) by the sum of—

13 ‘‘(A) the amount determined under para14 graph (2), and

15 ‘‘(B) the amount contributed for the tax16 able year under a qualified payroll deduction ar17 rangement described in section 408(q)(1) (for

18 which an election has not been made under sec19 tion 408(q)(2)).’’.

20 (2) DEDUCTIBILITY OF EMPLOYER CONTRIBU21 TIONS.—Section 404 (relating to deductions for con22 tributions of an employer to pension, etc., plans) is

23 amended by adding at the end the following new

24 subsection:
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1 ‘‘(n) SPECIAL RULES FOR CONTRIBUTIONS UNDER

2 A QUALIFIED PAYROLL DEDUCTION ARRANGEMENT.—

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

4 to employer contributions made under a qualified payroll

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

6 which an election has not been made under section

7 408(q)(2)).’’.

8 (3) CONTRIBUTIONS AND DISTRIBUTIONS.—

9 Section 402 (relating to taxability of beneficiary of

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

11 the following new subsection:

12 ‘‘(l) TREATMENT OF CONTRIBUTIONS AND DIS13 TRIBUTIONS UNDER A QUALIFIED PAYROLL DEDUCTION

14 ARRANGEMENT.—Rules similar to the rules of paragraphs

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

16 and distributions made with respect to an individual re17 tirement plan under a qualified payroll deduction arrange18 ment described in section 408(q)(1) (for which an election

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

20 contributions made by an employer on behalf of an em21 ployee for a taxable year shall be excluded from income

22 only to the extent such contributions would have been de23 ductible for such taxable year under section 219, if such

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

25 Contributions that are not excluded from income under
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1 the preceding sentence shall be treated as designated non2 deductible contributions under section 408(o).’’.

3 (c) EXEMPTION FROM WITHHOLDING.—Subsection

4 (a) of section 3401 (defining wages) is amended by strik5 ing ‘‘or’’ at the end of paragraph (20), by striking the

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

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

8 paragraph:

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

10 the employee to an individual retirement plan if the

11 amount of such payment was deducted and withheld

12 under section 408(q).’’.

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

14 section 6051 (relating to receipts for employees) is amend15 ed by striking ‘‘and’’ at the end of paragraph (10), by

16 striking the period at the end of paragraph (11) and in17 serting ‘‘, and’’, and by inserting after paragraph (11) the

18 following new paragraph:

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

20 pursuant to section 408(q).’’.

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

22 this section shall apply to remuneration paid after Decem23 ber 31, 1999.
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1 SEC. 103. NONREFUNDABLE TAX CREDIT FOR CONTRIBU2 TIONS TO INDIVIDUAL RETIREMENT PLANS.

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 (relating to nonrefundable personal

5 credits) is amended by inserting after section 25A the fol6 lowing new section:

7 ‘‘SEC. 25B. RETIREMENT SAVINGS.

8 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al9 lowed as a credit against the tax imposed by this chapter

10 so much of the qualified retirement contributions of the

11 taxpayer for the taxable year as does not exceed the appli12 cable amount of the adjusted gross income of the taxpayer

13 for such year.

14 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub15 section (a), the applicable amount is determined in accord16 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.

17 ‘‘(c) SECTION NOT TO APPLY TO CERTAIN CON18 TRIBUTIONS.—This section shall not apply with respect

19 to—

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

21 employee pension,
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1 ‘‘(2) any amount contributed to a simple retire2 ment account established under section 408(p),

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

4 and

5 ‘‘(4) any designated nondeductible contribution

6 (as defined in section 408(o)(2)(C)).

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

8 ‘‘(1) BENEFICIARY MUST BE UNDER AGE

701 9 ⁄2.—No credit shall be allowed under this section

10 with respect to any qualified retirement contribution

11 for the benefit of an individual if such individual has

attained age 701 12 ⁄2 before the close of such individ13 ual’s taxable year for which the contribution was

14 made.

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

16 shall be allowed under this section with respect to a

17 rollover contribution described in section 402(c),

18 403(a)(4), 403(b)(8), or 408(d)(3).

19 ‘‘(3) AMOUNTS CONTRIBUTED UNDER ENDOW20 MENT CONTRACT.—In the case of an endowment

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

22 be allowed under this section for that portion of the

23 amounts paid under the contract for the taxable

24 year which is properly allocable, under regulations
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1 prescribed by the Secretary, to the cost of life insur2 ance.

3 ‘‘(4) DENIAL OF CREDIT FOR AMOUNT CON4 TRIBUTED TO INHERITED ANNUITIES OR AC5 COUNTS.—No credit shall be allowed under this sec6 tion with respect to any amount paid to an inherited

7 individual retirement account or individual retire8 ment annuity (within the meaning of section

9 408(d)(3)(C)(ii)).

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

11 allowed under this section for any taxable year with

12 respect to the amount of any qualified retirement

13 contribution for the benefit of an individual if such

14 individual takes a deduction with respect to such

15 amount under section 219 for such taxable year.

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

17 purposes of this section, the term ‘qualified retirement

18 contribution’ means—

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

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

21 retirement plan for such individual’s benefit, and

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

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

24 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.—
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1 ‘‘(1) COMPENSATION.—For purposes of this

2 section, the term ‘compensation’ has the meaning

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

4 ‘‘(2) MARRIED COUPLES MUST FILE JOINT RE5 TURN.—If the taxpayer is married at the close of

6 the taxable year, the credit shall be allowed under

7 subsection (a) only if the taxpayer and the tax8 payer’s spouse file a joint return for the taxable

9 year.

10 ‘‘(3) TIME WHEN CONTRIBUTIONS DEEMED

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

12 shall be deemed to have made a contribution to an

13 individual retirement plan on the last day of the pre14 ceding taxable year if the contribution is made on

15 account of such taxable year and is made not later

16 than the time prescribed by law for filing the return

17 for such taxable year (not including extensions

18 thereof).

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

20 this title, any amount paid by an employer to an in21 dividual retirement plan shall be treated as payment

22 of compensation to the employee (other than a self23 employed individual who is an employee within the

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

25 income in the taxable year for which the amount was
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1 contributed, whether or not a credit for such pay2 ment is allowable under this section to the em3 ployee.’’

4 (b) CONFORMING AMENDMENTS.—

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

6 paragraphs (2), (3), and (4) as paragraphs (3), (4),

7 and (5), respectively, and by inserting after para8 graph (1) the following new paragraph:

9 ‘‘(2) section 25B(f)(1) (defining compensa10 tion),’’.

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

12 amended by inserting ‘‘which may be taken into ac13 count in computing the credit allowable under sec14 tion 25B or’’ before ‘‘with respect’’.

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

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

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

18 ‘‘CREDITABLE’’ before ‘‘DEDUCTIBLE’’ in the head19 ing thereof.

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

21 IV of subchapter A of chapter 1 is amended by in22 serting after the item relating to section 25A the fol23 lowing new item:

‘‘Sec. 25B. Retirement savings.’’
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section apply to taxable years beginning after Decem3 ber 31, 1999.

4 SEC. 104. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE

5 USED WITHOUT PENALTY DURING PERIODS

6 OF UNEMPLOYMENT.

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

8 (relating to exceptions to 10-percent additional tax on

9 early distributions from qualified retirement plans) is

10 amended by adding at the end the following new subpara11 graph:

12 ‘‘(G) ADDITIONAL DISTRIBUTIONS TO UN13 EMPLOYED INDIVIDUALS.—

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

15 an individual retirement plan, or from

16 amounts attributable to employer contribu17 tions made pursuant to elective deferrals

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

19 section 402(g)(3) or section

20 501(c)(18)(D)(iii), to an individual after

21 separation from employment if—

22 ‘‘(I) such individual has received

23 unemployment compensation for 12

24 consecutive weeks under any Federal
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1 or State unemployment compensation

2 law by reason of such separation, and

3 ‘‘(II) such distributions are made

4 during the 1-year period beginning on

5 the date of such separation.

6 ‘‘(ii) DISTRIBUTIONS AFTER REEM7 PLOYMENT.—Clause (i) shall not apply to

8 any distribution made after the individual

9 has been employed for at least 60 days

10 after the separation from employment to

11 which clause (i) applies.

12 ‘‘(iii) COORDINATION WITH SUBPARA13 GRAPH (D).—Distributions during the 1-

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

15 not be taken into account in applying the

16 limitation under subparagraph

17 (D)(i)(III).’’

18 (b) CONFORMING AMENDMENTS.—

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

20 striking ‘‘or’’ at the end of subclause (III), by strik21 ing ‘‘and’’ at the end of subclause (IV) and inserting

22 ‘‘or’’, and by inserting after subclause (IV) the fol23 lowing new subclause:
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1 ‘‘(V) the date on which a period

2 referred to in section 72(t)(2)(G) be3 gins, and’’.

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

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

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

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

8 following new subparagraph:

9 ‘‘(C) for distributions to which section

10 72(t)(2)(G) applies.’’

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

12 this section shall apply to distributions after the date of

13 the enactment of this Act.

14 Subtitle B—Secure Money Annuity

15 or Retirement (SMART) Trusts

16 SEC. 111. SECURE MONEY ANNUITY OR RETIREMENT

17 (SMART) TRUSTS.

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

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

20 the following new section:

21 ‘‘SEC. 408B. SMART PLANS.

22 ‘‘(a) EMPLOYER ELIGIBILITY.—

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

24 and maintain a SMART annuity or a SMART trust

25 for any year only if—
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1 ‘‘(A) the employer is an eligible employer

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

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

4 no predecessor of the employer maintains) a

5 qualified plan (other than a permissible plan)

6 with respect to which contributions were made,

7 or benefits were accrued, for service in any year

8 in the period beginning with the year such an9 nuity or trust became effective and ending with

10 the year for which the determination is being

11 made.

12 The period described in subparagraph (B) shall in13 clude the period of 5 years before the year such

14 trust or annuity became effective with respect to

15 qualified plans which are defined benefit plans or

16 money purchase pension plans.

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

18 (1)—

19 ‘‘(A) QUALIFIED PLAN.—The term ‘quali20 fied plan’ has the meaning given such term by

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

22 ‘‘(B) PERMISSIBLE PLAN.—The term ‘per23 missible plan’ means—

24 ‘‘(i) a SIMPLE plan described in sec25 tion 408(p),
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1 ‘‘(ii) a SIMPLE 401(k) plan de2 scribed in section 401(k)(11),

3 ‘‘(iii) an eligible deferred compensa4 tion plan described in section 457(b),

5 ‘‘(iv) a collectively bargained plan but

6 only if the employees eligible to participate

7 in such plan are not also entitled to a ben8 efit described in subsection (b)(5) or

9 (c)(5), or

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

11 made only—

12 ‘‘(I) elective deferrals described

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

14 ‘‘(II) employer matching con15 tributions not in excess of the

16 amounts described in subclauses (I)

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

18 ‘‘(b) SMART ANNUITY.—

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

20 the term ‘SMART annuity’ means an individual re21 tirement annuity (as defined in section 408(b) with22 out regard to paragraph (2) thereof and without re23 gard to the limitation on aggregate annual pre24 miums contained in the flush language of section

25 408(b)) if—
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1 ‘‘(A) such annuity meets the requirements

2 of paragraphs (2) through (7), and

3 ‘‘(B) the only contributions to such annu4 ity are employer contributions.

5 Nothing in this section shall be construed as pre6 venting an employer from using a group annuity

7 contract which is divisible into individual retirement

8 annuities for purposes of providing SMART annu9 ities.

10 ‘‘(2) PARTICIPATION REQUIREMENTS.—

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

12 this paragraph are met for any year only if all

13 employees of the employer who—

14 ‘‘(i) received at least $5,000 in com15 pensation from the employer during any 2

16 consecutive preceding years, and

17 ‘‘(ii) received at least $5,000 in com18 pensation during the year,

19 are entitled to the benefit described in para20 graph (5) for such year.

21 ‘‘(B) EXCLUDABLE EMPLOYEES.—An em22 ployer may elect to exclude from the require23 ments under subparagraph (A) employees de24 scribed in subparagraph (A) or (C) of section

25 410(b)(3).
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1 ‘‘(3) VESTING.—The requirements of this para2 graph are met if the employee’s rights to any bene3 fits under the annuity are nonforfeitable.

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

5 this paragraph are met if the only form of benefit

6 is—

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

8 form of a single life annuity with monthly pay9 ments (with no ancillary benefits) beginning at

10 age 65, or

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

12 actuarial equivalent (based on the assumptions

13 specified in the SMART annuity) of the benefit

14 described in subparagraph (A).

15 ‘‘(5) AMOUNT OF ANNUAL ACCRUED BEN16 EFIT.—

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

18 this paragraph are met for any plan year if the

19 accrued benefit of each participant derived from

20 employer contributions for such year, when ex21 pressed as a benefit described in paragraph

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

23 participant’s compensation for such year.

24 ‘‘(B) APPLICABLE PERCENTAGE.—For

25 purposes of this paragraph—
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1 ‘‘(i) IN GENERAL.—The term ‘applica2 ble percentage’ means 2 percent.

3 ‘‘(ii) ELECTION OF HIGHER PERCENT4 AGE.—An employer may elect to apply an

5 applicable percentage of 1 percent for any

6 year for all employees eligible to partici7 pate in the plan for such year, if the em8 ployer notifies the employees of such per9 centage within a reasonable period before

10 the beginning of such year. An employer

11 may also elect to apply an applicable per12 centage of 3 percent for any of the first 5

13 years that the plan is effective for all em14 ployees eligible to participate in the plan

15 for such year, if the employer so notifies

16 the employees.

17 ‘‘(C) COMPENSATION LIMIT.—

18 ‘‘(i) IN GENERAL.—The compensation

19 taken into account under this paragraph

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

21 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

22 The Secretary shall adjust annually the

23 $100,000 amount in clause (i) for in24 creases in the cost-of-living at the same

25 time and in the same manner as adjust-
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1 ments under section 415(d); except that

2 the base period shall be the calendar quar3 ter beginning October 1, 1999, and any in4 crease which is not a multiple of $5,000

5 shall be rounded to the next lowest mul6 tiple of $5,000.

7 ‘‘(6) FUNDING.—

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

9 this paragraph are met only if the employer is

10 required to contribute to the annuity for each

11 plan year the amount necessary to purchase a

12 SMART annuity in the amount of the benefit

13 accrued for such year for each participant enti14 tled to such benefit. Such contribution must be

made no later than 81 15 ⁄2 months after the end

16 of the plan year.

17 ‘‘(B) PENALTY FOR FAILURE TO MAKE RE18 QUIRED CONTRIBUTION.—The taxes imposed by

19 section 4971 shall apply to a failure to make

20 the contribution required by this paragraph in

21 the same manner as if the amount of the failure

22 were an accumulated funding deficiency to

23 which such section applies.

24 ‘‘(7) LIMITATION ON DISTRIBUTIONS.—
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1 ‘‘(A) IN GENERAL.—The requirements of

2 this paragraph are met only if distributions

3 may be paid only when the employee attains

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

5 disabled (within the meaning of section

6 72(m)(7)).

7 ‘‘(B) LIMITATION ON DISTRIBUTIONS ON

8 SEPARATION FROM SERVICE OF EMPLOYEES

9 WHO HAVE NOT ATTAINED AGE 65.—Subpara10 graph (A) shall apply to a distribution on sepa11 ration of service of an employee who has not

12 attained age 65 only if—

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

14 employee’s SMART annuity does not ex15 ceed the dollar limit in effect under section

16 411(a)(11)(A), or

17 ‘‘(ii) the distribution is a direct trust18 ee-to-trustee transfer of the entire balance

19 to the credit of the employee to a SMART

20 trust described in subsection (c), a

21 SMART rollover plan, or a SMART annu22 ity for the benefit of such employee.

23 ‘‘(8) JOINT AND SURVIVOR ANNUITY RULES AP24 PLICABLE.—The requirements of this paragraph are

25 met only if the annuity satisfies section 401(a)(11).
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1 ‘‘(9) DEFINITIONS AND SPECIAL RULE.—

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

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

4 this subsection.

5 ‘‘(B) USE OF DESIGNATED FINANCIAL IN6 STITUTIONS.—A rule similar to the rule of sec7 tion 408(p)(7) (without regard to the last sen8 tence thereof) shall apply for purposes of this

9 subsection.

10 ‘‘(C) SMART ROLLOVER PLAN.—For pur11 poses of this section, the term ‘SMART rollover

12 plan’ means an individual retirement plan for

13 the benefit of the employee to which a rollover

14 was made from a SMART Annuity, SMART

15 trust, or another SMART Rollover plan.

16 ‘‘(c) SMART TRUST.—

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

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

19 of a defined benefit plan if—

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

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

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

23 paragraphs (2) through (8), and

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

25 are employer contributions.
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1 ‘‘(2) PARTICIPATION REQUIREMENTS.—A plan

2 meets the requirements of this paragraph for any

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

4 are met for such year.

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

6 of this paragraph for any year only if the require7 ments of subsection (b)(3) are met for such year.

8 ‘‘(4) BENEFIT FORM.—

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

10 subparagraph (B), a plan meets the require11 ments of this paragraph only if the trustee dis12 tributes a SMART annuity that satisfies sub13 section (b)(4) where the annual benefit de14 scribed in subsection (b)(4)(A) is no less than

15 the accrued benefit determined under para16 graph (5).

17 ‘‘(B) DIRECT TRANSFERS TO INDIVIDUAL

18 RETIREMENT PLAN OR SMART ANNUITY.—A

19 plan shall not fail to meet the requirements of

20 this paragraph by reason of permitting, as an

21 optional form of benefit, the distribution of the

22 entire balance to the credit of the employee. If

23 the employee is under age 65, such distribution

24 must be in the form of a direct trustee-to-trust25 ee transfer to a SMART annuity, another
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1 SMART trust, or a SMART rollover plan (or,

2 in the case of a distribution that does not ex3 ceed the dollar limit in effect under section

4 411(a)(11)(A), any other individual retirement

5 plan).

6 ‘‘(5) AMOUNT OF ANNUAL ACCRUED BEN7 EFIT.—A plan meets the requirements of this para8 graph for any year only if the requirements of sub9 section (b)(5) are met for such year.

10 ‘‘(6) FUNDING.—

11 ‘‘(A) IN GENERAL.—A plan meets the re12 quirements of this paragraph for any year only

13 if—

14 ‘‘(i) the requirements of subparagraph

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

16 year,

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

18 an unfunded annuity amount with respect

19 to the account of any participant, the plan

20 requires that the employer make an addi21 tional contribution to such plan (at the

22 time the annuity contract to which such

23 amount relates is purchased) equal to the

24 unfunded annuity amount, and
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1 ‘‘(iii) in the case of a plan which has

2 an unfunded prior year liability with re3 spect to the account of any participant as

4 of the close of such plan year, the plan re5 quires that the employer make an addi6 tional contribution to such plan for such

7 year equal to the amount of such unfunded

prior year liability no later than 81 8 ⁄2

9 months following the end of the plan year.

10 ‘‘(B) UNFUNDED ANNUITY AMOUNT.—For

11 purposes of this paragraph, the term ‘unfunded

12 annuity amount’ means, with respect to the ac13 count of any participant for whom an annuity

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

15 ‘‘(i) the amount necessary to purchase

16 an annuity contract which meets the re17 quirements of subsection (b)(4) in the

18 amount of the participant’s accrued benefit

19 determined under paragraph (5), over

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

21 the time such contract is purchased.

22 ‘‘(C) UNFUNDED PRIOR YEAR LIABIL23 ITY.—For purposes of this paragraph, the term

24 ‘unfunded prior year liability’ means, with re25 spect to any plan year, the excess (if any) of—
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1 ‘‘(i) the aggregate present value of the

2 participants’ accrued benefits under the

3 plan as of the close of the prior plan year,

4 over

5 ‘‘(ii) the value of the plan’s assets de6 termined under section 412(c)(2) as of the

7 close of the plan year (determined without

8 regard to any contributions for such plan

9 year).

10 Such present value shall be determined using

11 the assumptions specified in subparagraph (D).

12 ‘‘(D) ACTUARIAL ASSUMPTIONS.—In deter13 mining the amount required to be contributed

14 under subparagraph (A)—

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

16 5 percent per year,

17 ‘‘(ii) the assumed mortality shall be

18 determined under the applicable mortality

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

20 modified by the Secretary so that it does

21 not include any assumption for preretire22 ment mortality), and

23 ‘‘(iii) the assumed retirement age

24 shall be 65.
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1 ‘‘(E) CHANGES IN MORTALITY TABLE.—If

2 the applicable mortality table under section

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

4 such table for the prior plan year, the Secretary

5 shall prescribe regulations which phase in the

6 effect of the changes over a reasonable period

7 of plan years determined by the Secretary.

8 ‘‘(F) PENALTY FOR FAILURE TO MAKE RE9 QUIRED CONTRIBUTION.—The taxes imposed by

10 section 4971 shall apply to a failure to make

11 the contribution required by this paragraph in

12 the same manner as if the amount of the failure

13 were an accumulated funding deficiency to

14 which such section applies.

15 ‘‘(7) SEPARATE ACCOUNTS FOR PARTICI16 PANTS.—A plan meets the requirements of this

17 paragraph for any year only if the plan provides—

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

19 participant, and

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

21 ‘‘(i) the amount contributed to the

22 participant’s account,

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

24 losses, and any forfeitures of accounts of
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1 other participants which may be allocated

2 to such participant’s account, and

3 ‘‘(iii) the amount of any unfunded an4 nuity amount with respect to the partici5 pant.

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

7 ARE NOT READILY TRADABLE.—A plan meets the

8 requirements of this paragraph only if the plan pro9 hibits the trust from holding directly or indirectly se10 curities which are not readily tradable on an estab11 lished securities market. Nothing in this paragraph

12 shall prohibit the trust from holding insurance com13 pany products regulated by State law.

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

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

16 this subsection.

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

18 TRUSTS.—For purposes of section 401(a), a SMART an19 nuity and a SMART trust shall be treated as meeting the

20 requirements of the following provisions:

21 ‘‘(1) Section 401(a)(4) (relating to non22 discrimination rules).

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

24 participation).
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1 ‘‘(3) Section 410 (relating to minimum partici2 pation and coverage requirements).

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

4 requirements).

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

6 top-heavy plans).’’

7 (b) DEDUCTION RULES.—

8 (1) IN GENERAL.—Section 404 is further

9 amended by adding at the end the following new

10 subsection:

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

12 TRUSTS.—

13 ‘‘(1) IN GENERAL.—Employer contributions to

14 a SMART annuity shall be treated as if they are

15 made to a plan described in paragraph (1) of sub16 section (a).

17 ‘‘(2) DEDUCTIBLE LIMIT.—For purposes of sec18 tion 404(a)(1)(A)(i), the amount necessary to satisfy

19 the minimum funding requirement of section

20 408B(b)(6) or (c)(6) shall be treated as the amount

21 necessary to satisfy the minimum funding require22 ment of section 412.’’

23 (2) COORDINATION WITH DEDUCTION UNDER

24 SECTION 219.—
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1 (A) Section 219(b) is amended by adding

2 at the end the following new paragraph:

3 ‘‘(5) SPECIAL RULE FOR SMART ANNUITIES.—

4 This section shall not apply with respect to any

5 amount contributed to a SMART annuity estab6 lished under section 408B(b).’’

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

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

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

10 following new clause:

11 ‘‘(vii) any SMART annuity (within

12 the meaning of section 408B), or’’.

13 (c) CONTRIBUTIONS AND DISTRIBUTIONS.—

14 (1) Section 402 is further amended by adding

15 at the end the following new subsection:

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

17 similar to the rules of paragraphs (1) and (3) of sub18 section (h) shall apply to contributions and distributions

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

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

21 the end the following new subparagraph:

22 ‘‘(H) SMART ANNUITIES.—This para23 graph shall not apply to any amount paid or

24 distributed out of a SMART annuity (as de25 fined in section 408B) unless it is paid in a
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1 trustee-to-trustee transfer into a SMART roll2 over plan.’’

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

4 ‘‘or’’ at the end of paragraph (5), by striking the pe5 riod at the end of paragraph (6) and inserting ‘‘,

6 or’’, and by inserting after paragraph (6) the fol7 lowing new paragraph:

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

9 SMART annuity or any SMART plan.’’

10 (B) Section 301(a) of Employee Retirement In11 come Security Act of 1974 (29 U.S.C. 1081) is

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

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

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

15 the following new paragraph:

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

17 any SMART annuity or any SMART plan (as such

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

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

20 end the following new paragraph:

21 ‘‘(12) TREATMENT OF SMART ANNUITIES AND

22 TRUSTS.—A SMART annuity and a SMART trust

23 shall be treated as meeting the requirements of this

24 section, but distributions from such an annuity or

25 trust shall be taken into account in determining
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1 whether any other plan satisfies the requirements of

2 this section.’’

3 (d) INCREASED PENALTY ON EARLY WITH4 DRAWALS.—Section 72(t) (relating to additional tax on

5 early distributions) is amended by adding at the end the

6 following new paragraph:

7 ‘‘(9) SPECIAL RULES FOR SMART ANNUITIES

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

9 from a SMART annuity, a SMART trust, or a

10 SMART rollover plan (within the meaning of section

11 408B), paragraph (1) shall be applied by sub12 stituting ‘20 percent’ for ‘10 percent’ and paragraph

13 (2) shall be applied by substituting ‘age 65’ for ‘age

591 14 ⁄2’.’’

15 (e) SIMPLIFIED EMPLOYER REPORTS.—

16 (1) SMART ANNUITIES.—Section 408(l) (relat17 ing to simplified employer reports) is amended by

18 adding at the end the following new paragraph:

19 ‘‘(3) SMART ANNUITIES.—

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

21 maintaining any SMART annuity (within the

22 meaning of section 408B) shall file a simplified

23 annual return with the Secretary containing

24 only the information described in subparagraph

25 (B).
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1 ‘‘(B) CONTENTS.—The return required by

2 subparagraph (A) shall set forth—

3 ‘‘(i) the name and address of the em4 ployer,

5 ‘‘(ii) the date the plan was adopted,

6 ‘‘(iii) the number of employees of the

7 employer,

8 ‘‘(iv) the number of such employees

9 who are eligible to participate in the plan,

10 ‘‘(v) the total amount contributed by

11 the employer to each such annuity for such

12 year and the minimum amount required

13 under section 408B to be so contributed,

14 ‘‘(vi) the percentage elected under sec15 tion 408B(b)(5)(B),

16 ‘‘(vii) the name of the issuer,

17 ‘‘(viii) the employer identification

18 number,

19 ‘‘(ix) the name of the plan, and

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

21 ‘‘(C) REPORTING BY ISSUER OF SMART AN22 NUITY.—

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

24 SMART annuity shall provide to the owner
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1 of the annuity for each year a statement

2 setting forth as of the close of such year—

3 ‘‘(I) the benefits guaranteed at

4 age 65 under the annuity, and

5 ‘‘(II) the cash surrender value of

6 the annuity.

7 ‘‘(ii) SUMMARY DESCRIPTION.—The

8 issuer of any SMART annuity shall pro9 vide to the employer maintaining the annu10 ity for each year a description containing

11 the following information:

12 ‘‘(I) The name and address of

13 the employer and the issuer.

14 ‘‘(II) The requirements for eligi15 bility for participation.

16 ‘‘(III) The benefits provided with

17 respect to the annuity.

18 ‘‘(IV) The procedures for, and ef19 fects of, withdrawals (including roll20 overs) from the annuity.

21 ‘‘(D) TIME AND MANNER OF REPORT22 ING.—Any return, report, or statement required

23 under this paragraph shall be made in such

24 form and at such time as the Secretary shall

25 prescribe.’’
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1 (2) SMART TRUSTS.—Section 6059 (relating

2 to actuarial reports) is amended by redesignating

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

4 respectively, and by inserting after subsection (b)

5 the following new subsection:

6 ‘‘(c) SMART TRUSTS.—In the case of a SMART

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

8 shall require a simplified actuarial report which

9 contains—

10 ‘‘(1) information similar to the information re11 quired in section 408(l)(3)(B),

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

13 trust,

14 ‘‘(3) the amounts distributed directly to partici15 pants,

16 ‘‘(4) the amounts transferred to SMART roll17 over plans, and

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

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

20 (f) CONFORMING AMENDMENTS.—

21 (1) Subparagraph (A) of section 219(g)(5) is

22 amended by striking ‘‘or’’ at the end of clause (v)

23 and by inserting after clause (vi) the following new

24 clause:
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1 ‘‘(vii) any SMART trust or SMART

2 annuity (within the meaning of section

3 408B), or’’.

4 (2) Section 280G(b)(6) is amended by striking

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

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

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

8 following new subparagraph:

9 ‘‘(E) a SMART annuity described in sec10 tion 408B.’’

11 (3) Subsections (b), (c), (m)(4)(B), and

12 (n)(3)(B) of section 414 are each amended by in13 serting ‘‘408B,’’ after ‘‘408(p),’’.

14 (4) Section 4972(d)(1)(A) is amended by strik15 ing ‘‘and’’ at the end of clause (iii), by striking the

16 period at the end of clause (iv) and inserting

17 ‘‘, and’’, and by adding after clause (iv) the fol18 lowing new clause:

19 ‘‘(v) any SMART annuity (within the

20 meaning of section 408B).’’

21 (g) REPORTING REQUIREMENTS UNDER ERISA.—

22 Section 101 of the Employee Retirement Income Security

23 Act of 1974 (29 U.S.C. 1021) is amended by redesig24 nating subsection (h) as subsection (i) and by inserting

25 after subsection (g) the following new subsection:
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1 ‘‘(h) SMART ANNUITIES.—

2 ‘‘(1) NO EMPLOYER REPORTS.—Except as pro3 vided in this subsection, no report shall be required

4 under this section by an employer maintaining a

5 SMART annuity under section 408B(b) of the Inter6 nal Revenue Code of 1986.

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

8 any SMART annuity shall provide to the employer

9 maintaining the annuity for each year a description

10 containing the following information:

11 ‘‘(A) The name and address of the em12 ployer and the issuer.

13 ‘‘(B) The requirements for eligibility for

14 participation.

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

16 the annuity.

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

18 withdrawals (including rollovers) from the an19 nuity.

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

21 shall provide each employee eligible to participate in

22 the SMART annuity with the description described

23 in paragraph (2) at the same time as the notifica24 tion required under section 408B(b)(5)(B) of the In25 ternal Revenue Code of 1986.’’
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1 (h) $5 PER PARTICIPANT PBGC PREMIUM.—Sub2 paragraph (A) of section 4006(a)(3) of the Employee Re3 tirement Income Security Act of 1974 (29 U.S.C. 1306)

4 is amended—

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

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

7 clause (i),

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

9 (iii) and inserting ‘‘; and’’, and

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

11 new clause:

12 ‘‘(iv) in the case of a single-employer plan de13 scribed in section 408B(c) of the Internal Revenue

14 Code of 1986, an amount equal to $5 for each par15 ticipant.’’.

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

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

18 amended by inserting after the item relating to section

19 408A the following new item:

‘‘Sec. 408B. SMART plans.’’

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

21 this section shall apply to years beginning after December

22 31, 1999.
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1 Subtitle C—Improved Fairness in

2 Retirement Plan Benefits

3 SEC. 121. AMENDMENTS TO SIMPLE RETIREMENT AC4 COUNTS.

5 (a) MINIMUM CONTRIBUTION REQUIREMENT.—

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

7 408(p) (defining qualified salary reduction arrange8 ment) is amended—

9 (A) by striking clauses (iii) and (iv) of sub10 paragraph (A) and inserting the following new

11 clauses:

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

13 a matching contribution to the simple re14 tirement account for any year in an

15 amount equal to—

16 ‘‘(I) so much of the amount the

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

18 does not exceed 3 percent of com19 pensation for the year, and

20 ‘‘(II) a uniform percentage

21 (which is at least 50 percent but not

22 more than 100 percent) of the amount

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

24 to the extent that such amount ex25 ceeds 3 percent but does not exceed 5
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1 percent of the employee’s compensa2 tion,

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

4 nonelective contributions of 1 percent of

5 compensation for each employee eligible to

6 participate in the arrangement who has at

7 least $5,000 of compensation from the em8 ployer for the year, and

9 ‘‘(v) no contributions may be made

10 other than contributions described in

11 clause (i), (iii), or (iv).’’, and

12 (B) by striking subparagraph (B) and in13 serting the following new subparagraph:

14 ‘‘(B) CONTRIBUTION RULES.—

15 ‘‘(i) EMPLOYER MAY ELECT 3-PER16 CENT NONELECTIVE CONTRIBUTION.—An

17 employer shall be treated as meeting the

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

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

20 the contributions described in such clauses,

21 the employer elects to make nonelective

22 contributions of 3 percent of compensation

23 for each employee who is eligible to partici24 pate in the arrangement and who has at

25 least $5,000 of compensation from the em-
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1 ployer for the year. If an employer makes

2 an election under this clause for any year,

3 the employer shall notify employees of such

4 election within a reasonable period of time

5 before the 60-day period for such year

6 under paragraph (5)(C).

7 ‘‘(ii) DISCRETIONARY CONTRIBU8 TIONS.—A plan shall not be treated as fail9 ing to meet the requirements of subpara10 graph (A)(v) merely because, pursuant to

11 the terms of the plan, an employer makes

12 nonelective contributions under subpara13 graph (A)(iv) or clause (i) of this subpara14 graph in excess of 1 percent or 3 percent

15 of compensation, respectively, but only if

16 all such contributions bear a uniform rela17 tionship to the compensation of each eligi18 ble employee and do not exceed 5 percent

19 of compensation for any eligible employee.

20 ‘‘(iii) COMPENSATION LIMITATION.—

21 The compensation taken into account

22 under this paragraph for any year shall

23 not exceed the limitation in effect for such

24 year under section 401(a)(17).’’
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1 (2) MATCHING CONTRIBUTIONS.—Subpara2 graph (B) of section 401(k)(11) (relating to adop3 tion of simple plan to meet nondiscrimination tests)

4 is amended—

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

6 clause (i) and inserting the following new sub7 clauses:

8 ‘‘(II) the employer is required to

9 make a matching contribution to the

10 trust for any year in an amount equal

11 to—

12 ‘‘(aa) so much of the

13 amount the employee elects

14 under subclause (I) as does not

15 exceed 3 percent of compensation

16 for the year, and

17 ‘‘(bb) a uniform percentage

18 (which is at least 50 percent but

19 not more than 100 percent) of

20 the amount the employee elects

21 under subclause (I) to the extent

22 that such amount exceeds 3 per23 cent but does not exceed 5 per24 cent of the employee’s compensa25 tion,
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1 ‘‘(III) the employer is required to

2 make nonelective contributions of 1

3 percent of compensation for each em4 ployee eligible to participate in the ar5 rangement who has at least $5,000 of

6 compensation from the employer for

7 the year, and

8 ‘‘(IV) no other contributions may

9 be made other than contributions de10 scribed in subclause (I), (II), or

11 (III).’’, and

12 (B) by striking clause (ii) and inserting the

13 following new clause:

14 ‘‘(ii) CONTRIBUTION RULES.—

15 ‘‘(I) EMPLOYER MAY ELECT 3-

16 PERCENT NONELECTIVE CONTRIBU17 TION.—An employer shall be treated

18 as meeting the requirements of sub19 clauses (II) and (III) of clause (i) for

20 any year if, in lieu of the contribu21 tions described in such subclauses, the

22 employer elects to make nonelective

23 contributions of 3 percent of com24 pensation for each employee who is el25 igible to participate in the arrange-
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1 ment and who has at least $5,000 of

2 compensation from the employer for

3 the year. If an employer makes an

4 election under this subclause for any

5 year, the employer shall notify em6 ployees of such election within a rea7 sonable period of time before the 60th

8 day before the beginning of such year.

9 ‘‘(II) DISCRETIONARY CONTRIBU10 TIONS.—A plan shall not be treated

11 as failing to meet the requirements of

12 clause (i)(IV) merely because, pursu13 ant to the terms of the plan, an em14 ployer makes nonelective contributions

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

16 of this clause in excess of 1 percent or

17 3 percent of compensation, respec18 tively, but only if all such contribu19 tions bear a uniform relationship to

20 the compensation of each eligible em21 ployee and do not exceed 5 percent of

22 compensation for any eligible em23 ployee.’’
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1 (b) OPTION TO SUSPEND CONTRIBUTIONS.—Section

2 408(p) (relating to simple retirement accounts) is amend3 ed by adding at the end the following new paragraph:

4 ‘‘(10) SUSPENSION OF PLAN.—Except as pro5 vided by the Secretary, a plan shall not be treated

6 as failing to meet the requirements of this sub7 section if, under the plan, the employer may suspend

8 all elective, matching, and nonelective contributions

9 under the plan after notifying employees eligible to

10 participate in the arrangement of such suspension in

11 writing at least 30 days in advance. Such suspension

12 shall apply to contributions with respect to com13 pensation earned after the effective date of the sus14 pension. Only 1 suspension under this paragraph

15 may take effect during any year.’’

16 (c) CONFORMING AMENDMENTS.—Section

17 408(p)(2)(C) is amended—

18 (1) by striking clause (ii),

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

20 and inserting ‘‘ELIGIBLE EMPLOYER’’,

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

22 and

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

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

25 (d) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section

3 shall apply to taxable years beginning after Decem4 ber 31, 1999.

5 (2) DELAYED EFFECTIVE DATE FOR PLANS ES6 TABLISHED IN 1998 OR 1999.—In the case of plans

7 established in 1998 or 1999 under section 408(p)

8 of the Internal Revenue Code of 1986, the amend9 ments made by this section shall apply to taxable

10 years beginning after December 31, 2003.

11 SEC. 122. NONDISCRIMINATION RULES FOR QUALIFIED

12 CASH OR DEFERRED ARRANGEMENTS AND

13 MATCHING CONTRIBUTIONS.

14 (a) ALTERNATIVE METHODS OF SATISFYING SEC15 TION 401(k) NONDISCRIMINATION TESTS.—Subpara16 graph (B) of section 401(k)(12) (relating to alternative

17 methods of meeting nondiscrimination requirements) is

18 amended to read as follows:

19 ‘‘(B) NONELECTIVE AND MATCHING CON20 TRIBUTIONS.—

21 ‘‘(i) IN GENERAL.—The requirements

22 of this subparagraph are met if the re23 quirements of clauses (ii) and (iii) are met.

24 ‘‘(ii) NONELECTIVE CONTRIBU25 TIONS.—The requirements of this clause
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1 are met if, under the arrangement, the em2 ployer is required, without regard to

3 whether the employee makes an elective

4 contribution or employee contribution, to

5 make a contribution to a defined contribu6 tion plan on behalf of each employee who

7 is not a highly compensated employee and

8 who is eligible to participate in the ar9 rangement in an amount equal to at least

10 1 percent of the employee’s compensation.

11 ‘‘(iii) MATCHING CONTRIBUTIONS.—

12 The requirements of this clause are met if,

13 under the arrangement, the employer

14 makes matching contributions on behalf of

15 each employee who is not a highly com16 pensated employee in an amount equal

17 to—

18 ‘‘(I) 100 percent of the elective

19 contributions of the employee to the

20 extent such elective contributions do

21 not exceed 3 percent of the employee’s

22 compensation, and

23 ‘‘(II) 50 percent of the elective

24 contributions of the employee to the

25 extent that such elective contributions
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1 exceed 3 percent but do not exceed 5

2 percent of the employee’s compensa3 tion.

4 ‘‘(iv) RATE FOR HIGHLY COM5 PENSATED EMPLOYEES.—The require6 ments of clause (iii) are not met if, under

7 the arrangement, the rate of matching con8 tribution with respect to any rate of elec9 tive contribution of a highly compensated

10 employee is greater than that with respect

11 to an employee who is not a highly com12 pensated employee. For purposes of this

13 clause, to the extent provided in regula14 tions, the last sentences of paragraph

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

16 apply.

17 ‘‘(v) ALTERNATIVE PLAN DESIGNS.—

18 If the rate of matching contribution with

19 respect to any rate of elective contribution

20 is not equal to the percentage required

21 under clause (iii), an arrangement shall

22 not be treated as failing to meet the re23 quirements of clause (iii) if—

24 ‘‘(I) the rate of an employer’s

25 matching contribution does not in-
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1 crease as an employee’s rate of elec2 tive contribution increase, and

3 ‘‘(II) the aggregate amount of

4 matching contributions at such rate of

5 elective contribution is at least equal

6 to the aggregate amount of matching

7 contributions which would be made if

8 matching contributions were made on

9 the basis of the percentages described

10 in clause (iii).’’

11 (b) CONTRIBUTIONS PART OF QUALIFIED CASH OR

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

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

14 ‘‘(ii) SOCIAL SECURITY AND SIMILAR

15 CONTRIBUTIONS NOT TAKEN INTO AC16 COUNT.—Except as provided in regula17 tions, an arrangement shall not be treated

18 as meeting the requirements of subpara19 graph (B) or (C) unless such requirements

20 are met without regard to subsection (l),

21 and, for purposes of subsection (l), and de22 termining whether contributions provided

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

24 the basis of equivalent benefits, employer
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1 contributions under subparagraph (B) or

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

3 (c) ALTERNATIVE METHODS OF SATISFYING SEC4 TION 401(m) NONDISCRIMINATION TESTS.—Section

5 401(m)(11) (relating to alternative method of satisfying

6 tests) is amended—

7 (1) by striking ‘‘subparagraph (B)’’ in subpara8 graph (A)(iii) and inserting ‘‘subparagraphs (B) and

9 (C)’’,

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

11 the following new flush sentence:

12 ‘‘To the extent provided in regulations, the last

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

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

15 (iii).’’, and

16 (3) by adding at the end the following new sub17 paragraph:

18 ‘‘(C) TEST MUST BE MET SEPARATELY.—

19 If this paragraph applies to any matching con20 tributions, such contributions shall not be taken

21 into account in determining whether employee

22 contributions satisfy the requirements of this

23 subsection.’’

24 (d) SPECIAL RULE FOR DETERMINING AVERAGE DE25 FERRAL PERCENTAGE FOR FIRST PLAN YEAR, ETC.—
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1 Subparagraph (E) of section 401(k)(3) is amended to read

2 as follows:

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

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

5 amount taken into account as the actual defer6 ral percentage of nonhighly compensated em7 ployees for the preceding plan year shall be—

8 ‘‘(i) 3 percent, or

9 ‘‘(ii) the actual deferral percentage of

10 nonhighly compensated employees deter11 mined for such first plan year in the case

12 of—

13 ‘‘(I) an employer who elects to

14 have this clause apply, or

15 ‘‘(II) except to the extent pro16 vided by the Secretary, a successor

17 plan.’’

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

19 this section shall apply to years beginning after December

20 31, 1999.

21 SEC. 123. DEFINITION OF HIGHLY COMPENSATED EMPLOY22 EES.

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

24 414(q)(1) (defining highly compensated employee) is

25 amended to read as follows:
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1 ‘‘(B) for the preceding year had compensa2 tion from the employer in excess of $80,000.’’

3 (b) CONFORMING AMENDMENTS.—

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

5 by striking paragraphs (3), (5), and (7) and by re6 designating paragraphs (4), (6), (8), and (9) as

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

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

9 408(k)(2)(C), and 416(i)(1)(D) are each amended

10 by striking ‘‘section 414(q)(4)’’ and inserting ‘‘sec11 tion 414(q)(3)’’.

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

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

14 414(r)(9)’’.

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

16 the end the following new paragraph:

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

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

19 excluded:

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

21 months of service.

22 ‘‘(B) Employees who normally work less

than 171 23 ⁄2 hours per week.

24 ‘‘(C) Employees who normally work during

25 not more than 6 months during any year.
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1 ‘‘(D) Employees who have not attained the

2 age of 21.

3 ‘‘(E) Except to the extent provided in reg4 ulations, employees who are included in a unit

5 of employees covered by an agreement which

6 the Secretary of Labor finds to be a collective

7 bargaining agreement between employee rep8 resentatives and the employer.’’

9 (B) Subparagraph (A) of section 414(r)(2) is

10 amended by striking ‘‘subsection (q)(5)’’ and insert11 ing ‘‘paragraph (9)’’.

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

13 this section shall apply to years beginning after December

14 31, 1999.

15 SEC. 124. TREATMENT OF MULTIEMPLOYER PLANS UNDER

16 SECTION 415.

17 (a) COMPENSATION LIMIT.—Paragraph (11) of sec18 tion 415(b) (relating to limitation for defined benefit

19 plans) is amended to read as follows:

20 ‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN21 MENTAL AND MULTIEMPLOYER PLANS.—In the case

22 of a governmental plan (as defined in section

23 414(d)) or a multiemployer plan (as defined in sec24 tion 414(f)), subparagraph (B) of paragraph (1)

25 shall not apply.’’
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1 (b) EXEMPTION FOR SURVIVOR AND DISABILITY

2 BENEFITS.—Subparagraph (I) of section 415(b)(2) (relat3 ing to limitation for defined benefit plans) is amended—

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

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

6 in clause (i),

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

8 ‘‘governmental plan’’ in clause (ii), and

9 (3) by inserting ‘‘AND MULTIEMPLOYER’’ after

10 ‘‘GOVERNMENTAL’’ in the heading.

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

12 this section shall apply to years beginning after December

13 31, 1999.

14 SEC. 125. EXEMPTION OF MIRROR PLANS FROM SECTION

15 457 LIMITS.

16 (a) IN GENERAL.—Subsection (e) of section 457 (re17 lating to deferred compensation plans of State and local

18 governments and tax-exempt organizations) is amended by

19 adding at the end the following new paragraph:

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

21 ‘‘(A) IN GENERAL.—Amounts of com22 pensation deferred under a mirror plan shall

23 not be taken into account in applying this sec24 tion to amounts of compensation deferred under

25 any other deferred compensation plan.
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1 ‘‘(B) MIRROR PLAN.—The term ‘mirror

2 plan’ means a plan, program, or arrangement

3 maintained solely for the purpose of providing

4 retirement benefits for employees in excess of

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

6 or section 415, or both.’’

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

8 this section shall apply to taxable years beginning after

9 December 31, 1999.

10 SEC. 126. IMMEDIATE PARTICIPATION IN THE THRIFT SAV11 INGS PLAN FOR FEDERAL EMPLOYEES.

12 (a) ELIMINATION OF CERTAIN WAITING PERIODS

13 FOR PURPOSES OF EMPLOYEE CONTRIBUTIONS.—Para14 graph (4) of section 8432(b) of title 5, United States

15 Code, is amended to read as follows:

16 ‘‘(4) The Executive Director shall prescribe such reg17 ulations as may be necessary to carry out the following:

18 ‘‘(A) Notwithstanding subparagraph (A) of

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

20 such subparagraph shall be afforded a reasonable

21 opportunity to first make an election under this sub22 section beginning on the date of commencing service

23 or, if that is not administratively feasible, beginning

24 on the earliest date thereafter that such an election
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1 becomes administratively feasible, as determined by

2 the Executive Director.

3 ‘‘(B) An employee or Member described in sub4 paragraph (B) of paragraph (2) shall be afforded a

5 reasonable opportunity to first make an election

6 under this subsection (based on the appointment or

7 election described in such subparagraph) beginning

8 on the date of commencing service pursuant to such

9 appointment or election or, if that is not administra10 tively feasible, beginning on the earliest date there11 after that such an election becomes administratively

12 feasible, as determined by the Executive Director.

13 ‘‘(C) Notwithstanding the preceding provisions

14 of this paragraph, contributions under paragraphs

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

16 with respect to any pay period before the earliest

17 pay period for which such contributions would other18 wise be allowable under this subsection if this para19 graph had not been enacted.

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

21 8440b(a)(2), 8440c(a)(2), and 8440d(a)(2) shall be

22 applied in a manner consistent with the purposes of

23 subparagraphs (A) and (B), to the extent those sub24 paragraphs can be applied with respect thereto.
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1 ‘‘(E) Nothing in this paragraph shall affect

2 paragraph (3).’’

3 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

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

5 Code, is amended—

6 (A) in the first sentence by striking

7 ‘‘(b)(1)’’ and inserting ‘‘(b)’’; and

8 (B) by amending the second sentence to

9 read as follows: ‘‘Contributions under this sub10 section pursuant to such an election shall, with

11 respect to each pay period for which such elec12 tion remains in effect, be made in accordance

13 with a program of regular contributions pro14 vided in regulations prescribed by the Executive

15 Director.’’

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

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

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

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

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

21 and inserting ‘‘An’’.

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

23 amended by striking ‘‘either elected to terminate in24 dividual contributions to the Thrift Savings Fund
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1 within 2 months before commencing military service

2 or’’.

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

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

5 each individual’’ and by striking ‘‘section

6 8432(c)(1)’’ and inserting ‘‘section 8432’’.

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

8 by adding at the end the following: ‘‘Nothing in this

9 paragraph shall be considered to limit the dissemina10 tion of information only to the times required under

11 the preceding sentence.’’

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

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

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

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

16 6 months after the date of the enactment of this Act or

17 such earlier date as the Executive Director may by regula18 tion prescribe.

19 SEC. 127. FULL FUNDING LIMITATION FOR MULTIEM20 PLOYER PLANS.

21 (a) AMENDMENTS TO CODE.—

22 (1) FULL FUNDING LIMITATION.—Section

23 412(c)(7)(C) (relating to full funding limitation) is

24 amended—
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1 (A) by inserting ‘‘or in the case of a multi2 employer plan,’’ after ‘‘paragraph (6)(B),’’, and

3 (B) by inserting ‘‘AND MULTIEMPLOYER

4 PLANS’’ after ‘‘PARAGRAPH (6)(B)’’ in the head5 ing thereof.

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

7 annual valuation) is amended—

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

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

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

11 the heading and inserting ‘‘VALUATION’’.

12 (b) AMENDMENTS TO ERISA.—

13 (1) FULL FUNDING LIMITATION.—Section

14 302(c)(7)(C) of the Employee Retirement Income

15 Security Act of 1974 (29 U.S.C. 1082(c)(7)(C)) 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 302(c)(9) of such Act

23 (29 U.S.C. 1082(c)(9)) 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 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall apply to plan years beginning after De5 cember 31, 1999.

6 SEC. 128. ELIMINATION OF PARTIAL TERMINATION RULES

7 FOR MULTIEMPLOYER PLANS.

8 (a) PARTIAL TERMINATION RULES FOR MULTIEM9 PLOYER PLANS.—Section 411(d)(3) (relating to termi10 nation or partial termination; discontinuance of contribu11 tions) is amended by adding at the end the following new

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

13 a partial termination of a multiemployer plan.’’

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

15 this section shall apply to partial terminations beginning

16 after December 31, 1999.

17 SEC. 129. REPEAL OF 150 PERCENT OF CURRENT LIABILITY

18 FUNDING LIMIT.

19 (a) IN GENERAL.—Section 412(c)(7) (relating to

20 full-funding limitation) is amended—

21 (1) by striking ‘‘150 percent’’ in subparagraph

22 (A)(i)(I) and inserting ‘‘the applicable percentage’’,

23 and

24 (2) by adding at the end the following new sub25 paragraph:
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1 ‘‘(F) APPLICABLE PERCENTAGE.—For

2 purposes of subparagraph (A)(i)(I), the applica3 ble percentage is determined according to the

4 following table:

‘‘In the case of any plan year

beginning in—

The applicable percentage is—

1998 ......................................................................................... 155

1999 ......................................................................................... 160

2000 ......................................................................................... 165

2001 ......................................................................................... 170

2002 and succeeding years ...................................................... 0.’’

5 (b) SPECIAL AMORTIZATION RULE.—

6 (1) IN GENERAL.—Section 412(c)(7), as

7 amended by subsection (a), is amended by adding at

8 the end the following new subparagraph:

9 ‘‘(G) SPECIAL AMORTIZATION RULE.—Con10 tributions that would be required to be made

11 under the plan but for the provisions of sub12 paragraph (A)(i)(I) shall be amortized over a

13 20-year period.’’

14 (2) CONFORMING AMENDMENT.—Section

15 412(c)(7)(D) is amended by adding ‘‘and’’ at the

16 end of clause (i), by striking ‘‘, and’’ at the end of

17 clause (ii) and inserting a period, and by striking

18 clause (iii).

19 (3) EFFECTIVE DATE.—The amendments made

20 by this subsection shall apply to any unamortized

21 bases with respect to plan years beginning before,

22 on, or after December 31, 1999.
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1 TITLE II—SECURITY

2 SEC. 200. AMENDMENT OF ERISA.

3 Except as otherwise expressly provided, whenever in

4 this title an amendment or repeal is expressed in terms

5 of an amendment to, or repeal of, a section or other provi6 sion, the reference shall be considered to be made to a

7 section or other provision of the Employee Retirement In8 come Security Act of 1974.

9 Subtitle A—General Provisions

10 SEC. 201. PERIODIC PENSION BENEFITS STATEMENTS.

11 (a) IN GENERAL.—Subsection (a) of section 105 (29

12 U.S.C. 1025) is amended—

13 (1) by striking ‘‘shall furnish to any plan par14 ticipant or beneficiary who so requests in writing,’’

15 and inserting ‘‘shall furnish at least once every 3

16 years, in the case of a participant in a defined ben17 efit plan who has attained age 35, and annually, in

18 the case of a defined contribution plan, to each plan

19 participant, and shall furnish to any plan participant

20 or beneficiary who so requests,’’, and

21 (2) by adding at the end the following flush

22 sentence:

23 ‘‘Information furnished under the preceding sentence to

24 a participant in a defined benefit plan (other than at the

25 request of the participant) may be based on reasonable
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1 estimates determined under regulations prescribed by the

2 Secretary.’’

3 (b) RULE FOR MULTIEMPLOYER PLANS.—Subsection

4 (d) of section 105 (29 U.S.C. 1025) is amended to read

5 as follows:

6 ‘‘(d) Each administrator of a plan to which more than

7 1 unaffiliated employer is required to contribute shall fur8 nish to any plan participant or beneficiary who so requests

9 in writing, a statement described in subsection (a).’’

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

11 this section shall apply to plan years beginning after the

12 later of—

13 (1) the date of issuance by the Secretary of

14 Labor of regulations providing guidance for simpli15 fying defined benefit plan calculations with respect

16 to the information required under section 105 of the

17 Employee Retirement Income Security Act of 1974

18 (29 U.S.C. 1025), or

19 (2) December 31, 1999.

20 SEC. 202. REQUIREMENT OF ANNUAL, DETAILED INVEST21 MENT REPORTS APPLIED TO CERTAIN 401(k)

22 PLANS.

23 (a) IN GENERAL.—Section 104(b)(3) (29 U.S.C.

24 1024(b)(3)) is amended—

25 (1) by inserting ‘‘(A)’’ after ‘‘(3)’’; and
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1 (2) by adding at the end the following new sub2 paragraph:

3 ‘‘(B)(i) If, for any plan year, a plan includes a

4 qualified cash or deferred arrangement (as defined

5 in section 401(k)(2) of the Internal Revenue Code of

6 1986) and such plan covers less than 100 partici7 pants, the administrator shall furnish (within 60

8 days after the end of such plan year) to each partici9 pant and to each beneficiary receiving benefits under

10 the plan an annual investment report detailing such

11 information as the Secretary by regulation shall re12 quire.

13 ‘‘(ii) Clause (i) shall not apply with respect to

14 any participant described in section 404(c).’’

15 (b) REGULATIONS.—

16 (1) IN GENERAL.—The Secretary of Labor, in

17 prescribing regulations required under section

18 104(b)(3)(B)(i) of the Employee Retirement Income

19 Security Act of 1974 (29 U.S.C. 1023(b)(3)(B)(i)),

20 as added by subsection (a), shall consider including

21 in the information required in an annual investment

22 report the following:

23 (A) Total plan assets and liabilities as of

24 the beginning and ending of the plan year.
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1 (B) Plan income and expenses and con2 tributions made and benefits paid for the plan

3 year.

4 (C) Any transaction between the plan and

5 the employer, any fiduciary, or any 10-percent

6 owner during the plan year, including the acqui7 sition of any employer security or employer real

8 property.

9 (D) Any noncash contributions made to or

10 purchases of nonpublicly traded securities made

11 by the plan during the plan year without an ap12 praisal by an independent third party.

13 (2) ELECTRONIC TRANSFER.—The Secretary of

14 Labor in prescribing such regulations shall also

15 make provision for the electronic transfer of the re16 quired annual investment report by a plan adminis17 trator to plan participants and beneficiaries.

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

19 subsection (a) shall apply to plan years beginning after

20 the date of the enactment of this Act.

21 SEC. 203. INFORMATION REQUIRED TO BE PROVIDED TO

22 INVESTMENT MANAGERS OF 401(k) PLANS.

23 (a) IN GENERAL.—Section 105 (29 U.S.C. 1025) is

24 amended by adding at the end the following new sub25 section:
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1 ‘‘(e) If—

2 ‘‘(1) the administrator of an individual account

3 plan described in section 401(k) of the Internal Rev4 enue Code of 1986 provides for investment of the

5 plan assets by means of a contractual arrangement

6 with another party, and

7 ‘‘(2) such other party is not required under

8 such arrangement to separately account for benefits

9 accrued with respect to each participant and bene10 ficiary under this plan,

11 such administrator shall be treated as failing to meet the

12 requirements of subsection (a) unless, under such contrac13 tual arrangement, such administrator provides to such

14 other party such information as is necessary to enable

15 such party to separately account at any time for benefits

16 accrued with respect to each participant and beneficiary.’’

17 (b) CIVIL PENALTY FOR VIOLATIONS.—Paragraph

18 (1) of section 502(c) (29 U.S.C. 1132(c)(1)) is amended

19 by striking ‘‘or section 101(e)(1)’’ and inserting ‘‘, section

20 101(e)(1), or section 105(e)’’.

21 SEC. 204. STUDY ON INVESTMENTS IN COLLECTIBLES.

22 (a) STUDY.—The Secretary of Labor, in consultation

23 with the Secretary of the Treasury, shall study the extent

24 to which pension plans invest in collectibles and whether
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1 such investments present a risk to the pension security

2 of the participants and beneficiaries of such plans.

3 (b) REPORT.—Not later than 12 months after the

4 date of the enactment of this Act, the Secretary of Labor

5 shall submit a report to the Congress containing the find6 ings of the study described in subsection (a) and any rec7 ommendations for legislative action.

8 SEC. 205. QUALIFIED EMPLOYER PLANS PROHIBITED FROM

9 MAKING LOANS THROUGH CREDIT CARDS

10 AND OTHER INTERMEDIARIES.

11 (a) IN GENERAL.—Subsection (a) of section 401 of

12 the Internal Revenue Code of 1986 is amended by adding

13 after paragraph (34) the following new paragraph:

14 ‘‘(35) PROHIBITION OF LOANS THROUGH CRED15 IT CARDS AND OTHER INTERMEDIARIES.—A trust

16 shall not constitute a qualified trust under this sec17 tion if the plan makes any loan to any beneficiary

18 under the plan through the use of any credit card

19 or any other intermediary.’’

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

21 subsection (a) shall apply to plan years beginning after

22 the date of the enactment of this Act.

23 SEC. 206. MULTIEMPLOYER PLAN BENEFITS GUARANTEED.

24 (a) IN GENERAL.—Section 4022A(c) (29 U.S.C.

25 1322a(c)) is amended—
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1 (1) by striking ‘‘$5’’ each place it appears in

2 paragraph (1) and inserting ‘‘$11’’,

3 (2) by striking ‘‘$15’’ in paragraph (1) and in4 serting ‘‘$33’’, and

5 (3) by striking paragraphs (2), (5), and (6) and

6 by redesignating paragraphs (3) and (4) as para7 graphs (2) and (3), respectively.

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

9 this section shall apply to any multiemployer plan that has

10 not received financial assistance (within the meaning of

11 section 4261 of the Employee Retirement Income Security

12 Act of 1974) within the 1-year period ending on the date

13 of the enactment of this Act.

14 SEC. 207. PROHIBITED TRANSACTIONS.

15 (a) IN GENERAL.—Section 502(i) (29 U.S.C.

16 1132(i)) is amended by striking ‘‘5 percent’’ and inserting

17 ‘‘15 percent’’.

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

19 this section shall apply to prohibited transactions occur20 ring after the date of the enactment of this Act.

21 SEC. 208. SUBSTANTIAL OWNER BENEFITS.

22 (a) MODIFICATION OF PHASE-IN OF GUARANTEE.—

23 Subparagraphs (B) and (C) of section 4022(b)(5) (29

24 U.S.C. 1322(b)(5)) are amended to read as follows:
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1 ‘‘(B) For purposes of this title, the term ‘majority

2 owner’ has the same meaning as substantial owner under

3 subparagraph (A), except that subparagraph (A) shall be

4 applied by substituting ‘50 percent or more’ for ‘more

5 than 10 percent’ each place it appears.

6 ‘‘(C) In the case of a participant who is a majority

7 owner, the amount of benefits guaranteed under this sec8 tion shall not exceed the product of—

9 ‘‘(i) a fraction (not to exceed 1) the numerator

10 of which is the number of years from the later of the

11 effective date or the adoption date of the plan to the

12 termination date, and the denominator of which is

13 30, and

14 ‘‘(ii) the amount of the majority owner’s month15 ly benefits guaranteed under subsection (a) (as lim16 ited by paragraph (3) of this subsection).’’

17 (b) MODIFICATION OF ALLOCATION OF ASSETS.—

18 (1) Section 4044(a)(4)(B) (29 U.S.C.

19 1344(a)(4)(B)) is amended by striking ‘‘section

20 4022(b)(5)’’ and inserting ‘‘section 4022(b)(5)(C)’’.

21 (2) Section 4044(b) (29 U.S.C. 1344(b)) is

22 amended—

23 (A) by striking ‘‘(5)’’ in paragraph (2) and

24 inserting ‘‘(4), (5),’’, and
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1 (B) by redesignating paragraphs (3)

2 through (6) as paragraphs (4) through (7), re3 spectively, and by inserting after paragraph (2)

4 the following new paragraph:

5 ‘‘(3) If assets available for allocation under

6 paragraph (4) of subsection (a) are insufficient to

7 satisfy in full the benefits of all individuals who are

8 described in that paragraph, the assets shall be allo9 cated first to benefits described in subparagraph (A)

10 of that paragraph. Any remaining assets shall then

11 be allocated to subparagraph (B). If assets allocated

12 to subparagraph (B) are insufficient to satisfy in full

13 the benefits in that subparagraph, the assets shall

14 be allocated pro rata among individuals on the basis

15 of the present value (as of the termination date) of

16 their respective benefits described in that subpara17 graph.’’

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

19 this section shall apply to plan terminations—

20 (1) under section 4041(c) of the Employee Re21 tirement Income Security Act of 1974 (29 U.S.C.

22 1341(c)) with respect to which notices of intent to

23 terminate are provided under section 4041(a)(2) of

24 such Act (29 U.S.C. 1341(a)(2)) on or after the

25 date of the enactment of this Act, or
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1 (2) under section 4042 of such Act (29 U.S.C.

2 1342) with respect to which proceedings are insti3 tuted by the corporation on or after such date.

4 SEC. 209. REVERSION REPORT.

5 (a) IN GENERAL.—Section 4008 (29 U.S.C. 1308)

6 is amended by adding at the end the following new sub7 section:

8 ‘‘(b) REVERSION REPORT.—As soon as practicable

9 after the close of each fiscal year, the Secretary of Labor

10 (acting in the Secretary’s capacity as chairman of the cor11 poration’s board) shall transmit to the President and the

12 Congress a report providing information on plans from

13 which residual assets were distributed to employers pursu14 ant to section 4044(d).’’

15 (b) CONFORMING AMENDMENT.—Section 4008 (29

16 U.S.C. 1308) is amended by striking ‘‘SEC. 4008.’’ and

17 inserting ‘‘SEC. 4008. (a) ANNUAL REPORT.—’’.

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

19 this section shall apply to fiscal years beginning after Sep20 tember 30, 1999.
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1 Subtitle B—ERISA Enforcement

2 SEC. 211. CIVIL PENALTIES FOR BREACH OF FIDUCIARY

3 RESPONSIBILITIES MADE DISCRETIONARY,

4 ETC.

5 (a) IMPOSITION AND AMOUNT OF PENALTY MADE

6 DISCRETIONARY.—Section 502(l)(1) (29 U.S.C. 1132(l))

7 is amended—

8 (1) by striking ‘‘shall’’ and inserting ‘‘may’’,

9 and

10 (2) by striking ‘‘equal to’’ and inserting ‘‘not

11 greater than’’.

12 (b) APPLICABLE RECOVERY AMOUNT.—Section

13 502(l)(2) (29 U.S.C. 1132(l)(2)) is amended to read as

14 follows:

15 ‘‘(2) For purposes of paragraph (1), the term ‘appli16 cable recovery amount’ means any amount which is recov17 ered from (or on behalf of) any fiduciary or other person

18 with respect to a breach or violation described in para19 graph (1) on or after the 30th day following receipt by

20 such fiduciary or other person of written notice from the

21 Secretary of the violation, whether paid voluntarily or by

22 order of a court in a judicial proceeding instituted by the

23 Secretary under paragraph (2) or (5) of subsection (a).

24 The Secretary may, in the Secretary’s sole discretion, ex-
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1 tend the 30-day period described in the preceding sen2 tence.’’.

3 (c) OTHER RULES.—Section 502(l) is amended by

4 adding at the end the following new paragraphs:

5 ‘‘(5) A person shall be jointly and severally liable for

6 the penalty described in paragraph (1) to the same extent

7 that such person is jointly and severally liable for the ap8 plicable recovery amount on which the penalty is based.

9 ‘‘(6) No penalty shall be assessed under this sub10 section unless the person against whom the penalty is as11 sessed is given notice and opportunity for a hearing with

12 respect to the violation and applicable recovery amount.’’

13 (d) EFFECTIVE DATES.—

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

15 this section shall apply to any breach of fiduciary re16 sponsibility or other violation of part 4 of title I of

17 the Employee Retirement Income Security Act of

18 1974 occurring on or after the date of the enact19 ment of this Act.

20 (2) TRANSITION RULE.—In applying the

21 amendment made by subsection (b), a breach or

22 other violation occurring before the date of the en23 actment of this Act which continues after the 180th

24 day after such date (and which may be discontinued

25 at any time during its existence) shall be treated as
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1 having occurred on the day after such date of enact2 ment.

3 SEC. 212. REPORTING AND ENFORCEMENT REQUIREMENTS

4 FOR EMPLOYEE BENEFIT PLANS.

5 (a) IN GENERAL.—Part 1 of subtitle B of title I (29

6 U.S.C. 1021 et seq.) is amended—

7 (1) by redesignating section 111 as section 112,

8 and

9 (2) inserting after section 110 the following

10 new section:

11 ‘‘DIRECT REPORTING OF CERTAIN EVENTS

12 ‘‘SEC. 111. (a) REQUIRED NOTIFICATIONS.—

13 ‘‘(1) NOTIFICATIONS BY PLAN ADMINIS14 TRATOR.—Within 5 business days after an adminis15 trator of an employee benefit plan determines that

16 there is evidence (or after the administrator is noti17 fied under paragraph (2)) that an irregularity may

18 have occurred with respect to the plan, the adminis19 trator shall—

20 ‘‘(A) notify the Secretary of the irregu21 larity in writing; and

22 ‘‘(B) furnish a copy of such notification to

23 the accountant who is currently engaged under

24 section 103(a)(3)(A).

25 ‘‘(2) NOTIFICATIONS BY ACCOUNTANT.—
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1 ‘‘(A) IN GENERAL.—Within 5 business

2 days after an accountant engaged by the ad3 ministrator of an employee benefit plan under

4 section 103(a)(3)(A) determines in connection

5 with such engagement that there is evidence

6 that an irregularity may have occurred with re7 spect to the plan, the accountant shall—

8 ‘‘(i) notify the plan administrator of

9 the irregularity in writing, or

10 ‘‘(ii) if the accountant determines that

11 there is evidence that the irregularity may

12 have involved an individual who is the plan

13 administrator or who is a senior official of

14 the plan administrator, notify the Sec15 retary of the irregularity in writing.

16 ‘‘(B) NOTIFICATION UPON FAILURE OF

17 PLAN ADMINISTRATOR TO NOTIFY.—If an ac18 countant who has provided notification to the

19 plan administrator pursuant to subparagraph

20 (A)(i) does not receive a copy of the administra21 tor’s notification to the Secretary required in

22 paragraph (1) within the 5-business day period

23 specified therein, the accountant shall furnish

24 to the Secretary a copy of the accountant’s no-
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1 tification made to the plan administrator on the

2 next business day following such period.

3 ‘‘(3) IRREGULARITY DEFINED.—

4 ‘‘(A) For purposes of this subsection, the

5 term ‘irregularity’ means—

6 ‘‘(i) a theft, embezzlement, or a viola7 tion of section 664 of title 18, United

8 States Code (relating to theft or embezzle9 ment from an employee benefit plan);

10 ‘‘(ii) an extortion or a violation of sec11 tion 1951 of title 18, United States Code

12 (relating to interference with commerce by

13 threats or violence);

14 ‘‘(iii) a bribery, a kickback, or a viola15 tion of section 1954 of title 18, United

16 States Code (relating to offer, acceptance,

17 or solicitation to influence operations of an

18 employee benefit plan);

19 ‘‘(iv) a violation of section 1027 of

20 title 18, United States Code (relating to

21 false statements and concealment of facts

22 in relation to employee benefit plan

23 records); or
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1 ‘‘(v) a violation of section 411, 501, or

2 511 of this title (relating to criminal viola3 tions).

4 ‘‘(B) The term ‘irregularity’ does not in5 clude any act or omission described in this

6 paragraph involving less than $1,000 unless

7 there is reason to believe that the act or omis8 sion may bear on the integrity of plan manage9 ment.

10 ‘‘(b) NOTIFICATION UPON TERMINATION OF EN11 GAGEMENT OF ACCOUNTANT.—

12 ‘‘(1) NOTIFICATION BY PLAN ADMINIS13 TRATOR.—Within 5 business days after the termi14 nation of an engagement of an accountant under

15 section 103(a)(3)(A) with respect to an employee

16 benefit plan, the administrator of such plan shall—

17 ‘‘(A) notify the Secretary in writing of

18 such termination, giving the reasons for such

19 termination, and

20 ‘‘(B) furnish the accountant whose engage21 ment was terminated with a copy of the notifi22 cation sent to the Secretary.

23 ‘‘(2) NOTIFICATION BY ACCOUNTANT.—If the

24 accountant referred to in paragraph (1)(B) has not

25 received a copy of the administrator’s notification to
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1 the Secretary as required under paragraph (1)(B),

2 or if the accountant disagrees with the reasons given

3 in the notification of termination of the engagement

4 for auditing services, the accountant shall notify the

5 Secretary in writing of the termination, giving the

6 reasons for the termination, within 10 business days

7 after the termination of the engagement.

8 ‘‘(c) DETERMINATION OF PERIODS REQUIRED FOR

9 NOTIFICATION.—In determining whether a notification re10 quired under this section with respect to any act or omis11 sion has been made within the required number of busi12 ness days—

13 ‘‘(1) the day on which such act or omission be14 gins shall not be included; and

15 ‘‘(2) Saturdays, Sundays, and legal holidays

16 shall not be included.

17 For purposes of this subsection, the term ‘legal holiday’

18 means any Federal legal holiday and any other day ap19 pointed as a holiday by the State in which the person re20 sponsible for making the notification principally conducts

21 business.

22 ‘‘(d) IMMUNITY FOR GOOD FAITH NOTIFICATION.—

23 No accountant or plan administrator shall be liable to any

24 person for any finding, conclusion, or statement made in

25 any notification made pursuant to subsection (a)(2) or
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1 (b)(2), or pursuant to any regulations issued under those

2 subsections, if the finding, conclusion, or statement is

3 made in good faith.’’

4 (b) CIVIL PENALTY.—

5 (1) IN GENERAL.—Section 502(c) (29 U.S.C.

6 1132(c)) is amended by inserting after paragraph

7 (6) the following new paragraph:

8 ‘‘(8)(A) The Secretary may assess a civil penalty of

9 up to $50,000 against any administrator who fails to pro10 vide the Secretary with any notification as required under

11 section 111.

12 ‘‘(B) The Secretary may assess a civil penalty of up

13 to $50,000 against any accountant who knowingly and

14 willfully fails to provide the Secretary with any notification

15 as required under section 111.’’

16 (2) CONFORMING AMENDMENT.—Section

17 502(a)(6) (29 U.S.C. 1132(a)(6)) is amended by

18 striking ‘‘or (6)’’ and inserting ‘‘(6), or (8)’’.

19 (c) CLERICAL AMENDMENTS.—

20 (1) Section 514(d) (29 U.S.C. 114(d)) is

21 amended by striking ‘‘111’’ and inserting ‘‘112’’.

22 (2) The table of contents in section 1 is amend23 ed by striking the item relating to section 111 and

24 inserting the following new items:

‘‘Sec. 111. Direct reporting of certain events.

‘‘Sec. 112. Repeal and effective date.’’
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1 (d) EFFECTIVE DATE.—The amendments made by

2 this section shall apply with respect to any irregularity or

3 termination of engagement described in the amendments

4 only if the 5-day period described in the amendments in

5 connection with the irregularity or termination commences

6 at least 90 days after the date of the enactment of this

7 Act.

8 SEC. 213. ADDITIONAL REQUIREMENTS FOR QUALIFIED

9 PUBLIC ACCOUNTANTS.

10 (a) IN GENERAL.—Section 103(a)(3)(D) (29 U.S.C.

11 1023(a)(3)(D)) is amended—

12 (1) by inserting ‘‘(i)’’ after ‘‘(D)’’;

13 (2) by inserting ‘‘, with respect to any engage14 ment of an accountant under subparagraph (A)’’

15 after ‘‘means’’;

16 (3) by redesignating clauses (i), (ii), and (iii) as

17 subclauses (I), (II), and (III), respectively;

18 (4) by striking the period at the end of sub19 clause (III) (as so redesignated) and inserting a

20 comma;

21 (5) by adding after and below subclause (III)

22 (as so redesignated), the following: ‘‘but only if such

23 person meets the requirements of clauses (ii) and

24 (iii), with respect to such engagement.’’; and
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1 (6) by adding at the end the following new

2 clauses:

3 ‘‘(ii) 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—

7 ‘‘(I) has in operation an appropriate

8 internal quality control system;

9 ‘‘(II) has undergone a qualified exter10 nal quality control review of the person’s

11 accounting and auditing practices, includ12 ing such practices relevant to employee

13 benefit plans (if any), during the 3-year

14 period immediately preceding such engage15 ment; and

16 ‘‘(III) has completed, within the 2 cal17 endar years immediately preceding such

18 engagement, such continuing education or

19 training as the Secretary in regulations de20 termines is necessary to maintain profes21 sional proficiency in connection with em22 ployee benefit plans.

23 ‘‘(iii) A person meets the requirements of

24 this clause with respect to an engagement of

25 the person as an accountant under subpara-
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1 graph (A) if the person meets such additional

2 requirements and qualifications of regulations

3 which the Secretary deems necessary to ensure

4 the quality of plan audits.

5 ‘‘(iv) For purposes of clause (ii)(II), an ex6 ternal quality control review shall be treated as

7 qualified with respect to a person referred to in

8 clause (ii) if—

9 ‘‘(I) such review is performed in ac10 cordance with the requirements of external

11 quality control review programs of recog12 nized auditing standard setting bodies, as

13 determined in regulations of the Secretary,

14 and

15 ‘‘(II) in the case of any such person

16 who has, during the peer review period,

17 conducted 1 or more previous audits of

18 employee benefit plans, such review in19 cludes the review of an appropriate number

20 (determined as provided in such regula21 tions, but in no case less than 1) of plan

22 audits in relation to the scale of the per23 son’s auditing practice.’’

24 (b) EFFECTIVE DATES.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendments made by this section

3 apply with respect to plan years beginning on or

4 after the date which is 3 years after the date of the

5 enactment of this Act.

6 (2) RESTRICTIONS ON CONDUCTING EXAMINA7 TIONS.—Clause (iii) of section 103(a)(1)(D) of the

8 Employee Retirement Income Security Act of 1974

9 (as added by subsection (a)(6)) takes effect on the

10 date of enactment of this Act.

11 (3) REGULATIONS.—The Secretary shall issue

12 regulations under this section no later than Decem13 ber 31, 2000.

14 SEC. 214. INSPECTOR GENERAL STUDY.

15 (a) STUDY.—The Inspector General of the Depart16 ment of Labor shall conduct a study on the need for regu17 latory standards and procedures to authorize the Sec18 retary, in appropriate cases, to prohibit persons from serv19 ing as qualified accountants for purposes of section 103

20 of the Employee Retirement Income Security Act of 1974

21 (29 U.S.C. 1023).

22 (b) MATTERS TO BE STUDIED.—In conducting the

23 study under this section, the Inspector General shall ad24 dress whether standards and procedures to prohibit per25 sons from serving as qualified public accountants are like-
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1 ly to improve the quality of employee benefit plan audits,

2 and the potential for increased costs to plans. If the In3 spector General concludes that regulations incorporating

4 standards and procedures would be appropriate, the study

5 shall include recommended standards and procedures.

6 (c) REPORT.—Not later than 1 year after the date

7 of the enactment of this Act, the Inspector General shall

8 submit a report on the results of the study conducted pur9 suant to this section to each house of Congress and the

10 Secretary of Labor.

11 Subtitle C—Increase in Excise Tax

12 on Employer Reversions

13 SEC. 221. INCREASE IN EXCISE TAX.

14 (a) IN GENERAL.—Section 4980 of the Internal Rev15 enue Code of 1986 (relating to tax on reversion of quali16 fied plan assets to employer) is amended—

17 (1) in subsection (a), by striking ‘‘20 percent’’

18 and inserting ‘‘35 percent’’; and

19 (2) in subsection (d)(1), by striking ‘‘sub20 stituting ‘50 percent’ for ‘20 percent’ with respect to

21 any employer reversion’’ and inserting ‘‘substituting

22 ‘65 percent’ for ‘35 percent’ with respect to any em23 ployer reversion’’.

24 (b) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), the amendment made by this section shall

3 apply to reversions occurring after December 31,

4 1999.

5 (2) EXCEPTION.—The amendment made by this

6 section shall not apply to any reversion after Decem7 ber 31, 1999, if—

8 (A) in the case of plans subject to title IV

9 of the Employee Retirement Income Security

10 Act of 1974, a notice of intent to terminate

11 under such title was provided to participants

12 (or if no participants, to the Pension Benefit

13 Guaranty Corporation) before June 25, 1999,

14 (B) in the case of plans subject to title I

15 (and not to title IV) of such Act, a notice of in16 tent to reduce future accruals under section

17 204(h) of such Act was provided to participants

18 in connection with the termination before June

19 25, 1999,

20 (C) in the case of plans not subject to title

21 I or IV of such Act, a request for a determina22 tion letter with respect to the termination was

23 filed with the Secretary of the Treasury or the

24 Secretary’s delegate before June 25, 1999, or
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1 (D) in the case of plans not subject to title

2 I or IV of such Act and having only 1 partici3 pant, a resolution terminating the plan was

4 adopted by the employer before June 25, 1999.

5 TITLE III—PORTABILITY

6 SEC. 301. FASTER VESTING OF EMPLOYER MATCHING CON7 TRIBUTIONS.

8 (a) AMENDMENT OF INTERNAL REVENUE CODE.—

9 Paragraph (2) of section 411(a) of the Internal Revenue

10 Code of 1986 (relating to employer contributions) is

11 amended—

12 (1) by inserting ‘‘, and, if applicable, (C)’’ after

13 ‘‘or (B)’’, and

14 (2) by adding at the end the following new sub15 paragraph:

16 ‘‘(C) MATCHING CONTRIBUTIONS.—In the

17 case of a plan that includes an accrued benefit

18 derived from matching contributions (as defined

19 in section 401(m)(4)(A)), the plan satisfies the

20 requirements of this subparagraph if—

21 ‘‘(i) an employee who has completed

22 at least 3 years of service has a nonforfeit23 able right to 100 percent of the employee’s

24 accrued benefit derived from such match25 ing contributions, or
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1 ‘‘(ii) an employee has a nonforfeitable

2 right to a percentage of the employee’s ac3 crued benefit derived from employer

4 matching contributions (as so defined) de5 termined under the following table:

The nonforfeitable

‘‘Years of service: percentage is:

2 ............................................................................................... 20

3 ............................................................................................... 40

4 ............................................................................................... 60

5 ............................................................................................... 80

6 ............................................................................................... 100.’’

6 (b) AMENDMENT OF ERISA.—Paragraph (2) of sec7 tion 203(a) of the Employee Retirement Income Security

8 Act of 1974 (29 U.S.C. 1053(a)) is amended—

9 (1) by inserting ‘‘, and, if applicable, (C)’’ after

10 ‘‘or (B)’’, and

11 (2) by adding at the end the following new sub12 paragraph:

13 ‘‘(C) MATCHING CONTRIBUTIONS.—In the

14 case of a plan that includes an accrued benefit

15 derived from matching contributions (as defined

16 in section 401(m)(4)(A) of the Internal Rev17 enue Code of 1986), the plan satisfies the re18 quirements of this subparagraph if—

19 ‘‘(i) an employee who has completed

20 at least 3 years of service has a nonforfeit21 able right to 100 percent of the employee’s
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1 accrued benefit derived from such match2 ing contributions, or

3 ‘‘(ii) an employee has a nonforfeitable

4 right to a percentage of the employee’s ac5 crued benefit derived from employer

6 matching contributions (as so defined) de7 termined under the following table:

The nonforfeitable

‘‘Years of service: percentage is:

2 ............................................................................................... 20

3 ............................................................................................... 40

4 ............................................................................................... 60

5 ............................................................................................... 80

6 ............................................................................................... 100.’’

8 (c) EFFECTIVE DATE.—

9 (1) IN GENERAL.—Except as provided in para10 graphs (2) and (3), the amendments made by this

11 section shall apply to plan years beginning after De12 cember 31, 1999.

13 (2) APPLICATION TO CURRENT EMPLOYEES.—

14 The amendments made by this section shall not

15 apply to any employee who does not have at least 1

16 hour of service in any plan year beginning after De17 cember 31, 1999.

18 (3) COLLECTIVE BARGAINING AGREEMENTS.—

19 In the case of a plan maintained pursuant to 1 or

20 more collective bargaining agreements between em21 ployee representatives and 1 or more employers rati22 fied by the date of the enactment of this Act, the
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1 amendments made by this section shall not apply to

2 employees covered by any such agreement in plan

3 years beginning before the earlier of—

4 (A) the later of—

5 (i) the date on which the last of such

6 collective bargaining agreements termi7 nates (determined without regard to any

8 extension thereof on or after such date of

9 enactment), or

10 (ii) January 1, 2000, or

11 (B) January 1, 2004.

12 SEC. 302. RATIONALIZATION OF THE RESTRICTIONS ON

13 DISTRIBUTIONS FROM 401(k) PLANS.

14 (a) IN GENERAL.—Section 401(k)(2)(B)(i)(I) of the

15 Internal Revenue Code of 1986 (relating to qualified cash

16 or deferred arrangements) is amended by striking ‘‘sepa17 ration from service’’ and inserting ‘‘severance from em18 ployment’’.

19 (b) BUSINESS SALE REQUIREMENTS DELETED.—

20 (1) IN GENERAL.—Section 401(k)(2)(B)(i)(II)

21 of the Internal Revenue Code of 1986 (relating to

22 qualified cash or deferred arrangements) is amended

23 by striking ‘‘an event’’ and inserting ‘‘a plan termi24 nation’’.
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1 (2) CONFORMING AMENDMENTS.—Section

2 401(k)(10) of such Code is amended—

3 (A) by striking subparagraph (A) and in4 serting the following:

5 ‘‘(A) IN GENERAL.—A plan termination is

6 described in this paragraph if the termination

7 of the plan is without establishment or mainte8 nance of another defined contribution plan

9 (other than an employee stock ownership plan

10 as defined in section 4975(e)(7)).’’,

11 (B) by striking subparagraph (C), and

12 (C) by striking ‘‘OR DISPOSITION OF AS13 SETS OR SUBSIDIARY’’ in the heading.

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

15 this section shall apply to distributions after December 31,

16 1999.

17 SEC. 303. TREATMENT OF TRANSFERS BETWEEN DEFINED

18 CONTRIBUTION PLANS.

19 (a) IN GENERAL.—Section 411(d)(6) of the Internal

20 Revenue Code of 1986 (relating to accrued benefit not to

21 be decreased by amendment) is amended by adding at the

22 end the following new subparagraph:

23 ‘‘(D) PLAN TRANSFERS.—A defined con24 tribution plan (in this subparagraph referred to

25 as the ‘transferee plan’) shall not be treated as
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1 failing to meet the requirements of this para2 graph merely because the transferee plan does

3 not provide some or all of the forms of distribu4 tion previously available under another defined

5 contribution plan (in this subparagraph referred

6 to as the ‘transferor plan’) to the extent that—

7 ‘‘(i) the forms of distribution pre8 viously available under the transferor plan

9 applied to the account of a participant or

10 beneficiary under the transferor plan that

11 was transferred from the transferor plan to

12 the transferee plan pursuant to a direct

13 transfer rather than pursuant to a dis14 tribution from the transferor plan,

15 ‘‘(ii) the terms of both the transferor

16 plan and the transferee plan authorize the

17 transfer described in clause (i),

18 ‘‘(iii) the transfer described in clause

19 (i) was made pursuant to a voluntary elec20 tion by the participant or beneficiary

21 whose account was transferred to the

22 transferee plan,

23 ‘‘(iv) the election described in clause

24 (iii) was made after the participant or ben-
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1 eficiary received a notice describing the

2 consequences of making the election,

3 ‘‘(v) if the transferor plan provides for

4 an annuity as the normal form of distribu5 tion under the plan in accordance with sec6 tion 417, the transfer is made with the

7 consent of the participant’s spouse (if

8 any), and such consent meets requirements

9 similar to the requirements imposed by

10 section 417(a)(2), and

11 ‘‘(vi) the transferee plan allows the

12 participant or beneficiary described in

13 clause (iii) to receive any distribution to

14 which the participant or beneficiary is enti15 tled under transferee plan in the form of

16 a single sum distribution.’’

17 (b) CONFORMING AMENDMENT.—Section 204(g) of

18 the Employee Retirement Income Security Act of 1974

19 (29 U.S.C. 1054(g)) is amended by adding at the end the

20 following new paragraph:

21 ‘‘(4) A defined contribution plan (in this paragraph

22 referred to as the ‘transferee plan’) shall not be treated

23 as failing to meet the requirements of this subsection

24 merely because the transferee plan does not provide some

25 or all of the forms of distribution previously available
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1 under another defined contribution plan (in this para2 graph referred to as the ‘transferor plan’) to the extent

3 that—

4 ‘‘(A) the forms of distribution previously avail5 able under the transferor plan applied to the account

6 of a participant or beneficiary under the transferor

7 plan that was transferred from the transferor plan

8 to the transferee plan pursuant to a direct transfer

9 rather than pursuant to a distribution from the

10 transferor plan,

11 ‘‘(B) the terms of both the transferor plan and

12 the transferee plan authorize the transfer described

13 in subparagraph (A),

14 ‘‘(C) the transfer described in subparagraph

15 (A) was made pursuant to a voluntary election by

16 the participant or beneficiary whose account was

17 transferred to the transferee plan,

18 ‘‘(D) the election described in subparagraph (C)

19 was made after the participant or beneficiary re20 ceived a notice describing the consequences of mak21 ing the election,

22 ‘‘(E) if the transferor plan provides for an an23 nuity as the normal form of distribution under the

24 plan in accordance with section 205, the transfer is

25 made with the consent of the participant’s spouse (if
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1 any), and such consent meets requirements similar

2 to the requirements imposed by section 205(c)(2),

3 and

4 ‘‘(F) the transferee plan allows the participant

5 or beneficiary described in subparagraph (C) to re6 ceive any distribution to which the participant or

7 beneficiary is entitled under transferee plan in the

8 form of a single sum distribution.’’

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

10 this section shall apply to transfers after December 31,

11 1999.

12 SEC. 304. MISSING PARTICIPANTS.

13 (a) IN GENERAL.—Section 4050 of the Employee Re14 tirement Income Security Act of 1974 (29 U.S.C. 1350)

15 is amended by redesignating subsection (c) as subsection

16 (e) and by inserting after subsection (b) the following new

17 subsections:

18 ‘‘(c) MULTIEMPLOYER PLANS.—The corporation

19 shall prescribe rules similar to the rules in subsection (a)

20 for multiemployer plans covered by this title that termi21 nate under section 4041A.

22 ‘‘(d) PLANS NOT OTHERWISE SUBJECT TO TITLE.—

23 ‘‘(1) TRANSFER TO CORPORATION.—The plan

24 administrator of a plan described in paragraph (4)
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1 may elect to transfer a missing participant’s benefits

2 to the corporation upon termination of the plan.

3 ‘‘(2) INFORMATION TO THE CORPORATION.—To

4 the extent provided in regulations, the plan adminis5 trator of a plan described in paragraph (4) shall,

6 upon termination of the plan, provide the corpora7 tion information with respect to benefits of a miss8 ing participant if the plan transfers such benefits—

9 ‘‘(A) to the corporation, or

10 ‘‘(B) to an entity other than the corpora11 tion or a plan described in paragraph (4)(B)(ii).

12 ‘‘(3) PAYMENT BY THE CORPORATION.—If ben13 efits of a missing participant were transferred to the

14 corporation under paragraph (1), the corporation

15 shall, upon location of the participant or beneficiary,

16 pay to the participant or beneficiary the amount

17 transferred (or the appropriate survivor benefit)

18 either—

19 ‘‘(A) in a single sum (plus interest), or

20 ‘‘(B) in such other form as is specified in

21 regulations of the corporation.

22 ‘‘(4) PLANS DESCRIBED.—A plan is described

23 in this paragraph if—

24 ‘‘(A) the plan is a pension plan (within the

25 meaning of section 3(2))—
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1 ‘‘(i) to which the provisions of this

2 section do not apply (without regard to

3 this subsection), and

4 ‘‘(ii) which is not a plan described in

5 paragraphs (2) through (11) of section

6 4021(b), and

7 ‘‘(B) at the time the assets are to be dis8 tributed upon termination, the plan—

9 ‘‘(i) has missing participants, and

10 ‘‘(ii) has not provided for the transfer

11 of assets to pay the benefits of all missing

12 participants to another pension plan (with13 in the meaning of section 3(2)).

14 ‘‘(5) CERTAIN PROVISIONS NOT TO APPLY.—

15 Subsections (a)(1) and (a)(3) shall not apply to a

16 plan described in paragraph (4).’’

17 (b) CONFORMING AMENDMENTS.—

18 (1) Section 206(f) of the Employee Retirement

19 Income Security Act of 1974 (29 U.S.C. 1056(f)) is

20 amended—

21 (A) by striking ‘‘title IV’’ and inserting

22 ‘‘section 4050’’, and

23 (B) by striking ‘‘the plan shall provide

24 that,’’.
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1 (2) Section 401(a)(34) of the Internal Revenue

2 Code of 1986 (relating to benefits of missing partici3 pants on plan termination) is amended by striking

4 ‘‘title IV’’ and inserting ‘‘section 4050’’.

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

6 this section shall apply to distributions made after final

7 regulations implementing subsections (c) and (d) of sec8 tion 4050 of the Employee Retirement Income Security

9 Act of 1974 (as added by subsection (a)), respectively, are

10 prescribed.

11 SEC. 305. ALLOWANCE OF ROLLOVERS FROM AND TO 403(b)

12 PLANS.

13 (a) ROLLOVERS FROM SECTION 403(b) PLANS.—

14 Section 403(b)(8)(A)(ii) of the Internal Revenue Code of

15 1986 (relating to rollover amounts) is amended by striking

16 ‘‘such distribution’’ and all that follows and inserting

17 ‘‘such distribution to an eligible retirement plan described

18 in section 402(c)(8)(B), and’’.

19 (b) ROLLOVERS TO SECTION 403(b) PLANS.—Sec20 tion 402(c)(8)(B) of such Code (defining eligible retire21 ment plan) is amended by striking ‘‘and’’ at the end of

22 clause (ii), by striking the period at the end of clause (iv)

23 and inserting ‘‘, and’’, and by adding at the end the fol24 lowing:
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1 ‘‘(v) an annuity contract described in

2 section 403(b).’’

3 (c) CONFORMING AMENDMENTS.—

4 (1) Section 72(o)(4) of such Code is amended

5 by striking ‘‘and 408(d)(3)’’ and inserting

6 ‘‘403(b)(8), and 408(d)(3)’’.

7 (2) Section 401(a)(31)(B) of such Code is

8 amended by striking ‘‘and 403(a)(4)’’ and inserting

9 ‘‘, 403(a)(4), and 403(b)(8)’’.

10 (3) Subparagraph (B) of section 403(b)(8) of

11 such Code is amended by inserting ‘‘and (9)’’ after

12 ‘‘through (7)’’.

13 (4) Subparagraphs (A) and (B) of section

14 415(b)(2) of such Code are each amended by strik15 ing ‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8), and

16 408(d)(3)’’.

17 (d) EFFECTIVE DATE; SPECIAL RULE.—

18 (1) EFFECTIVE DATE.—The amendments made

19 by this section shall apply to distributions after De20 cember 31, 1999.

21 (2) SPECIAL RULE.—Notwithstanding any other

22 provision of law, subsections (h)(3) and (h)(5) of

23 section 1122 of the Tax Reform Act of 1986 shall

24 not apply to any distribution from an eligible retire25 ment plan on behalf of an individual if there was a
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1 rollover to such plan on behalf of such individual

2 which is permitted solely by reason of any amend3 ment made by this section.

4 SEC. 306. ROLLOVER CONTRIBUTIONS FROM DEFERRED

5 COMPENSATION PLANS OF STATE AND

6 LOCAL GOVERNMENTS.

7 (a) ROLLOVERS FROM SECTION 457 PLANS.—

8 (1) IN GENERAL.—Section 457(e) of the Inter9 nal Revenue Code of 1986 (relating to other defini10 tions and special rules) is amended by adding at the

11 end the following:

12 ‘‘(16) ROLLOVER AMOUNTS.—

13 ‘‘(A) GENERAL RULE.—In the case of an

14 eligible deferred compensation plan of an eligi15 ble employer described in paragraph (1)(A),

16 if—

17 ‘‘(i) any portion of the balance to the

18 credit of an employee in such plan is paid

19 to such employee in a rollover distribution

20 (other than a distribution described in sub21 section (d)(1)(A)(iii) or in subparagraph

22 (A) or (B) of section 402(c)(4)),

23 ‘‘(ii) the employee transfers any por24 tion of the property such employee receives

25 in such distribution to an individual retire-
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1 ment plan (as defined in section

2 7701(a)(37), and

3 ‘‘(iii) in the case of a distribution of

4 property other than money, the amount so

5 transferred consists of the property distrib6 uted,

7 then such distribution (to the extent so trans8 ferred) shall not be includible in gross income

9 for the taxable year in which paid.

10 ‘‘(B) CERTAIN RULES MADE APPLICA11 BLE.—Rules similar to the rules of section

12 401(a)(31), paragraphs (2), (3), (5), (6), (7),

13 and (9) of section 402(c), and section 402(f)

14 shall apply for purposes of subparagraph (A).’’

15 (2) DISTRIBUTION REQUIREMENTS.—Section

16 457(d)(1)(A) of such Code (relating to distribution

17 requirements) is amended by inserting ‘‘except as

18 provided in subsection (e)(16),’’ after ‘‘(A)’’.

19 (3) CONFORMING AMENDMENTS.—

20 (A) Section 72(o)(4) of such Code is

21 amended—

22 (i) by striking ‘‘and 408(d)(3)’’ and

23 inserting ‘‘408(d)(3), and 457(e)(16)’’,

24 (ii) by inserting ‘‘or excludable’’ after

25 ‘‘deductible’’ each place it appears, and
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1 (iii) in the heading by inserting ‘‘OR

2 EXCLUDABLE’’ after ‘‘DEDUCTIBLE’’.

3 (B) Section 219(d)(2) of such Code is

4 amended by striking ‘‘or 408(d)(3)’’ and insert5 ing ‘‘408(d)(3), or 457(e)(16)’’.

6 (C) Section 401(a)(31)(B) of such Code is

7 amended by striking ‘‘and 403(b)(8)’’ and in8 serting ‘‘, 403(b)(8), and 457(e)(16)’’.

9 (D) Paragraph (4) of section 402(c) of

10 such Code is amended by inserting ‘‘or in an el11 igible deferred compensation plan (as defined in

12 section 457(b)) of an eligible employer de13 scribed in section 457(e)(1)(A)’’ after ‘‘qualified

14 trust’’.

15 (E) Section 408(a)(1) of such Code is

16 amended by striking ‘‘or 403(b)(8)’’ and insert17 ing ‘‘, 403(b)(8), or 457(e)(16)’’.

18 (F) Section 408(d)(3)(A)(ii) of such Code

19 is amended by striking ‘‘or’’ after ‘‘501(a)’’ and

20 inserting a comma, and by inserting ‘‘, or from

21 an eligible deferred compensation plan described

22 in section 457(b)’’ after ‘‘contribution)’’.

23 (G) Subparagraphs (A) and (B) of section

24 415(b)(2) of such Code are each amended by
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1 striking ‘‘and 408(d)(3)’’ and inserting

2 ‘‘408(d)(3), and 457(e)(16)’’.

3 (H) Section 4973(b)(1)(A) of such Code is

4 amended by striking ‘‘or 408(d)(3)’’ and insert5 ing ‘‘408(d)(3), or 457(e)(16)’’.

6 (d) EFFECTIVE DATE; SPECIAL RULE.—

7 (1) EFFECTIVE DATE.—The amendments made

8 by this section shall apply to distributions after De9 cember 31, 1999.

10 (2) SPECIAL RULE.—Notwithstanding any other

11 provision of law, subsections (h)(3) and (h)(5) of

12 section 1122 of the Tax Reform Act of 1986 shall

13 not apply to any distribution from an individual re14 tirement plan on behalf of an individual if there was

15 a rollover to such plan on behalf of such individual

16 which is permitted solely by reason of any amend17 ment made by this section.

18 SEC. 307. EXTENSION OF 60-DAY ROLLOVER PERIOD IN THE

19 CASE OF PRESIDENTIALLY DECLARED DISAS20 TERS AND SERVICE IN COMBAT ZONE.

21 (a) IN GENERAL.—Paragraph (1) of section 7508(a)

22 of the Internal Revenue Code of 1986 (relating to time

23 postponed for performing certain acts) is amended by

24 striking ‘‘and’’ at the end of subparagraph (J), by redesig25 nating subparagraph (K) as subparagraph (L), and by in-
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1 serting after subparagraph (J) the following new subpara2 graph:

3 ‘‘(K) Rollover of any distribution within

4 the 60-day period specified in section 402(c)(3)

5 or 408(d)(3)(A); and’’.

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

7 this section shall apply to distributions made after Decem8 ber 31, 1999.

9 SEC. 308. PURCHASE OF SERVICE CREDIT IN GOVERN10 MENTAL DEFINED BENEFIT PLANS.

11 (a) 403(b) PLANS.—Subsection (b) of section 403 of

12 the Internal Revenue Code of 1986 is amended by adding

13 at the end the following new paragraph:

14 ‘‘(13) TRUSTEE-TO-TRUSTEE TRANSFERS TO

15 PURCHASE PERMISSIVE SERVICE CREDIT.—No

16 amount shall be includible in gross income by reason

17 of a direct trustee-to-trustee transfer to a defined

18 benefit governmental plan (as defined in section

19 414(d)) if such transfer is—

20 ‘‘(A) for the purchase of permissive service

21 credit (as defined in section 415(n)(3)(A))

22 under such plan, or

23 ‘‘(B) a repayment to which section 415

24 does not apply by reason of subsection (k)(3)

25 thereof.’’
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1 (b) 457 PLANS.—Subsection (e) of section 457 of

2 such Code, as amended by section 306, is amended by add3 ing at the end the following new paragraph:

4 ‘‘(17) TRUSTEE-TO-TRUSTEE TRANSFERS TO

5 PURCHASE PERMISSIVE SERVICE CREDIT.—No

6 amount shall be includible in gross income by reason

7 of a direct trustee-to-trustee transfer to a defined

8 benefit governmental plan (as defined in section

9 414(d)) if such transfer is—

10 ‘‘(A) for the purchase of permissive service

11 credit (as defined in section 415(n)(3)(A))

12 under such plan, or

13 ‘‘(B) a repayment to which section 415

14 does not apply by reason of subsection (k)(3)

15 thereof.’’

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

17 this section shall apply to trustee-to-trustee transfers after

18 December 31, 1999.

19 TITLE IV—COMPREHENSIVE

20 WOMEN’S PENSION PROTECTION

21 Subtitle A—Pension Reform

22 SEC. 401. PENSION RIGHT TO KNOW PROPOSALS.

23 (a) SPOUSE’S RIGHT TO KNOW DISTRIBUTION IN24 FORMATION.—
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1 (1) AMENDMENT OF INTERNAL REVENUE

2 CODE.—Paragraph (3) of section 417(a) of the In3 ternal Revenue Code of 1986 (relating to definitions

4 and special rules for purposes of minimum survivor

5 annuity requirements) is amended by adding at the

6 end the following new subparagraph:

7 ‘‘(C) EXPLANATION TO SPOUSE.—At the

8 time a plan provides a participant with a writ9 ten explanation under subparagraph (A) or (B),

10 such plan shall provide a copy of such expla11 nation to such participant’s spouse. If the last

12 known address of the spouse is the same as the

13 last known address of the participant, the re14 quirement of the preceding sentence shall be

15 treated as met if the copy referred to in the

16 preceding sentence is included in a single mail17 ing made to such address and addressed to both

18 such participant and spouse.’’

19 (2) AMENDMENT OF ERISA.—Paragraph (3) of

20 section 205(c) of Employee Retirement Income Se21 curity Act of 1974 is amended by adding at the end

22 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 (b) EMPLOYEE’S RIGHT TO KNOW OF OPPORTUNITY

11 FOR ELECTIVE CONTRIBUTIONS UNDER 401(k) PLANS.—

12 Subparagraph (D) of section 401(k)(12) of the Internal

13 Revenue Code of 1986 (relating to notice requirements)

14 is amended—

15 (1) by striking ‘‘, within a reasonable period be16 fore any year,’’ and inserting ‘‘before the 60th day

17 before the beginning of any year’’, and

18 (2) by adding at the end the following new

19 flush sentence:

20 ‘‘The requirements of paragraph (11)(B)(iii)

21 shall apply for purposes of this subparagraph.’’

22 SEC. 402. WOMEN’S PENSION TOLL-FREE PHONE NUMBER.

23 (a) IN GENERAL.—The Secretary of Labor shall con24 tract with an independent organization to create a wom-
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1 en’s pension toll-free telephone number and contact to

2 serve as—

3 (1) a resource for women on pension questions

4 and issues;

5 (2) a source for referrals to appropriate agen6 cies; and

7 (3) a source for printed information.

8 (b) AUTHORIZATION OF APPROPRIATIONS.—There

9 are authorized to be appropriated $1,000,000 for each of

10 the fiscal years 2000, 2001, 2002, and 2003 to carry out

11 subsection (a).

12 SEC. 403. MODIFICATION OF GOVERNMENT PENSION OFF13 SET.

14 (a) WIFE’S INSURANCE BENEFITS.—Section

15 202(b)(4)(A) of the Social Security Act (42 U.S.C.

16 402(b)(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 (b) HUSBAND’S INSURANCE BENEFITS.—Section

23 202(c)(2)(A) of such Act (42 U.S.C. 402(c)(2)(A)) is

24 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 (c) WIDOW’S INSURANCE BENEFITS.—Section

7 202(e)(7)(A) of such Act (42 U.S.C. 402(e)(7)(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 (d) WIDOWER’S INSURANCE BENEFITS.—Section

15 202(f)(2)(A) of such Act (42 U.S.C. 402(f)(2)(A)) is

16 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 (e) MOTHER’S AND FATHER’S INSURANCE BENE23 FITS.—Section 202(g)(4)(A) of such Act (42 U.S.C.

24 402(g)(4)(A)) is 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 (f) AMOUNT DESCRIBED.—Section 202 of such Act

7 (42 U.S.C. 402) is amended by adding at the end the fol8 lowing:

9 ‘‘(z) The amount described in this subsection is, for

10 months in each 12-month period beginning in December

11 of 1999, and each succeeding calendar year, the greater

12 of—

13 ‘‘(1) $1,200; or

14 ‘‘(2) the amount applicable for months in the

15 preceding 12-month period, increased by the cost-of16 living adjustment for such period determined for an

17 annuity under section 8340 of title 5, United States

18 Code (without regard to any other provision of

19 law).’’

20 (g) LIMITATIONS ON REDUCTIONS IN BENEFITS.—

21 Section 202 of such Act (42 U.S.C. 402), as amended by

22 subsection (f), is amended by adding at the end the fol23 lowing:

24 ‘‘(aa) For any month after December 1999, in no

25 event shall an individual receive a reduction in a benefit
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1 under subsection (b)(4)(A), (c)(2)(A), (e)(7)(A), (f)(2)(A),

2 or (g)(4)(A) for the month that is more than the reduction

3 in such benefit that would have applied for such month

4 under such subsections as in effect on December 1, 1999.’’

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

6 this section shall apply with respect to monthly insurance

7 benefits payable under title II of the Social Security Act

8 for months after December 1999.

9 SEC. 404. PERIODS OF FAMILY AND MEDICAL LEAVE

10 TREATED AS HOURS OF SERVICE FOR PEN11 SION PARTICIPATION AND VESTING.

12 (a) AMENDMENTS OF INTERNAL REVENUE CODE.—

13 (1) PARTICIPATION.—

14 (A) IN GENERAL.—Paragraph (3) of sec15 tion 410(a) (relating to minimum participation

16 standards) is amended by adding at the end the

17 following new subparagraph:

18 ‘‘(E) FAMILY AND MEDICAL LEAVE TREAT19 ED AS SERVICE.—

20 ‘‘(i) IN GENERAL.—For purposes of

21 this subsection, in the case of an individual

22 who is absent from work on leave required

23 to be given to such individual under the

24 Family and Medical Leave Act of 1993,

25 the plan shall treat as hours of service—
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1 ‘‘(I) the hours of service which

2 otherwise would normally have been

3 credited to such individual but for

4 such absence, or

5 ‘‘(II) in any case in which the

6 plan is unable to determine the hours

7 described in subclause (I), 8 hours of

8 service per day of absence.

9 ‘‘(ii) YEAR TO WHICH HOURS ARE

10 CREDITED.—The hours described in clause

11 (i) shall be treated as hours of service as

12 provided in this subparagraph—

13 ‘‘(I) only in the year in which the

14 absence from work begins, if section

15 411(a)(5)(E)(ii)(I) requires hours to

16 be credited to the year in which the

17 absence from work begins, or

18 ‘‘(II) in any other case, in the

19 immediately following year.’’

20 (B) COORDINATION WITH TREATMENT OF

21 MATERNITY AND PATERNITY ABSENCES UNDER

22 BREAK IN SERVICE RULES.—Subparagraph (E)

23 of section 410(a)(5) is amended—
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1 (i) by inserting ‘‘NOT UNDER FAMILY

2 AND MEDICAL LEAVE ACT OF 1993’’ after

3 ‘‘ABSENCES’’ in the heading, and

4 (ii) by adding at the end of clause (i)

5 the following new sentence: ‘‘The preceding

6 sentence shall apply to an absence from

7 work only if no part of such absence is re8 quired to be given under the Family and

9 Medical Leave Act of 1993.’’

10 (2) VESTING.—

11 (A) IN GENERAL.—Paragraph (5) of sec12 tion 411(a) (relating to minimum vesting stand13 ards) is amended by adding at the end the fol14 lowing new subparagraph:

15 ‘‘(E) FAMILY AND MEDICAL LEAVE TREAT16 ED AS SERVICE.—

17 ‘‘(i) IN GENERAL.—For purposes of

18 this subsection, in the case of an individual

19 who is absent from work on leave required

20 to be given to such individual under the

21 Family and Medical Leave Act of 1993,

22 the plan shall treat as hours of service—

23 ‘‘(I) the hours of service which

24 otherwise would normally have been
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1 credited to such individual but for

2 such absence, or

3 ‘‘(II) in any case in which the

4 plan is unable to determine the hours

5 described in subclause (I), 8 hours of

6 service per day of absence.

7 ‘‘(ii) YEAR TO WHICH HOURS ARE

8 CREDITED.—The hours described in clause

9 (i) shall be treated as hours of service as

10 provided in this subparagraph—

11 ‘‘(I) only in the year in which the

12 absence from work begins, if the par13 ticipant’s rights in his accrued benefit

14 derived from employer contributions

15 are to any extent not nonforfeitable

16 and the participant would have a year

17 of service solely because the period of

18 absence is treated as hours of service

19 as provided in clause (i); or

20 ‘‘(II) in any other case, in the

21 immediately following year.’’

22 (B) COORDINATION WITH TREATMENT OF

23 MATERNITY AND PATERNITY ABSENCES UNDER

24 BREAK IN SERVICE RULES.—Subparagraph (E)

25 of section 411(a)(6) is amended—
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1 (i) by inserting ‘‘NOT UNDER FAMILY

2 AND MEDICAL LEAVE ACT OF 1993’’ after

3 ‘‘ABSENCES’’ in the heading, and

4 (ii) by adding at the end of clause (i)

5 the following new sentence: ‘‘The preceding

6 sentence shall apply to an absence from

7 work only if no part of such absence is re8 quired to be given under the Family and

9 Medical Leave Act of 1993.’’

10 (b) AMENDMENTS OF ERISA.—

11 (1) PARTICIPATION.—

12 (A) IN GENERAL.—Paragraph (3) of sec13 tion 202(a) of the Employee Retirement Income

14 Security Act of 1974 (relating to minimum par15 ticipation standards) is amended by adding at

16 the end the following new subparagraph:

17 ‘‘(E)(i) For purposes of this subsection, in the case

18 of an individual who is absent from work on leave required

19 to be given to such individual under the Family and Med20 ical Leave Act of 1993, the plan shall treat as hours of

21 service—

22 ‘‘(I) the hours of service which otherwise would

23 normally have been credited to such individual but

24 for such absence, or
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1 ‘‘(II) in any case in which the plan is unable to

2 determine the hours described in subclause (I), 8

3 hours of service per day of absence.

4 ‘‘(ii) The hours described in clause (i) shall be treated

5 as hours of service as provided in this subparagraph—

6 ‘‘(I) only in the year in which the absence from

7 work begins, if section 203(b)(2)(E)(ii)(I) requires

8 hours to be credited to the year in which the absence

9 from work begins, or

10 ‘‘(II) in any other case, in the immediately fol11 lowing year.’’

12 (B) COORDINATION WITH TREATMENT OF

13 MATERNITY AND PATERNITY ABSENCES UNDER

14 BREAK IN SERVICE RULES.—Subparagraph (A)

15 of section 202(b)(5) of such Act is amended by

16 adding at the end of clause (i) the following

17 new sentence: ‘‘The preceding sentence shall

18 apply to an absence from work only if no part

19 of such absence is required to be given under

20 the Family and Medical Leave Act of 1993.’’

21 (2) VESTING.—

22 (A) IN GENERAL.—Paragraph (2) of sec23 tion 203(b) of such Act (relating to minimum

24 vesting standards) is amended by adding at the

25 end the following new subparagraph:
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1 ‘‘(E)(i) For purposes of this subsection, in the case

2 of an individual who is absent from work on leave required

3 to be given to such individual under the Family and Med4 ical Leave Act of 1993, the plan shall treat as hours of

5 service—

6 ‘‘(I) the hours of service which otherwise would

7 normally have been credited to such individual but

8 for such absence, or

9 ‘‘(II) in any case in which the plan is unable to

10 determine the hours described in subclause (I), 8

11 hours of service per day of absence.

12 ‘‘(ii) The hours described in clause (i) shall be treated

13 as hours of service as provided in this subparagraph—

14 ‘‘(I) only in the year in which the absence from

15 work begins, if the participant’s rights in his ac16 crued benefit derived from employer contributions

17 are to any extent not nonforfeitable and the partici18 pant would have a year of service solely because the

19 period of absence is treated as hours of service as

20 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.—Clause (i) of sec-
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1 tion 203(b)(3)(E) 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 (c) EFFECTIVE DATE.—

8 (1) IN GENERAL.—Except as provided in para9 graph (2), the amendments made by this section

10 shall apply to plan years beginning after December

11 31, 1999.

12 (2) APPLICATION TO CURRENT EMPLOYEES.—

13 The amendments made by this section shall not

14 apply to any employee who does not have at least 1

15 hour of service in any plan year beginning after De16 cember 31, 1999.

17 SEC. 405. PENSION INTEGRATION RULES.

18 (a) APPLICABILITY OF NEW INTEGRATION RULES

19 EXTENDED TO ALL EXISTING ACCRUED BENEFITS.—

20 Notwithstanding subsection (c)(1) of section 1111 of the

21 Tax Reform Act of 1986 (relating to effective date of ap22 plication of nondiscrimination rules to integrated plans)

23 (100 Stat. 2440), effective for plan years beginning after

24 the date of the enactment of this Act, the amendments

25 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 2004—

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. 406. 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 ben16 efit 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 ben15 efit 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. 407. ENTITLEMENT OF DIVORCED SPOUSES TO RAIL21 ROAD RETIREMENT ANNUITIES INDE22 PENDENT 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. 408. EFFECTIVE DATES.

7 (a) IN GENERAL.—Except as provided in subsection

8 (b), the amendments made by this subtitle, other than sec9 tions 403 and 405, shall apply with respect to plan years

10 beginning on or after January 1, 2000, and the amend11 ments made by section 406 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 Act, 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 Act),

3 or

4 (2) January 1, 2002.

5 Subtitle B—Protection of Rights of

6 Former Spouses to Pension Ben7 efits Under Certain Government

8 and Government-Sponsored Re9 tirement Programs

10 SEC. 411. 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 Act.

4 SEC. 412. 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 Act and shall apply only in the case of a former

15 employee who dies on or after such date.

16 SEC. 413. 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

21 8424(e) through (g) which would otherwise be

22 paid to any individual or individuals under sec23 tion 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 Act.

7 Subtitle C—Modifications of Joint

8 and Survivor Annuity Require9 ments

10 SEC. 421. MODIFICATIONS OF JOINT AND SURVIVOR ANNU11 ITY REQUIREMENTS.

12 (a) AMENDMENTS TO ERISA.—

13 (1) AMOUNT OF ANNUITY.—

14 (A) IN GENERAL.—Paragraph (1) of sec15 tion 205(a) of the Employee Retirement Income

16 Security Act of 1974 (29 U.S.C. 1055(a)) is

17 amended by inserting ‘‘or, at the election of the

18 participant, shall be provided in the form of a

qualified joint and 2 19 ⁄3 survivor annuity’’ after

20 ‘‘survivor annuity,’’.

21 (B) DEFINITION.—Subsection (d) of sec22 tion 205 of such Act (29 U.S.C. 1055) is

23 amended—
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1 (i) by redesignating paragraphs (1)

2 and (2) as subparagraphs (A) and (B), re3 spectively,

4 (ii) by inserting ‘‘(1)’’ after ‘‘(d)’’,

5 and

6 (iii) by adding at the end the fol7 lowing new paragraph:

8 ‘‘(2) For purposes of this section, the term ‘‘qualified

joint and 2 9 ⁄3 survivor annuity’’ means a joint and survivor

10 annuity under which the survivor annuity for the life of

the surviving spouse is equal to at least 2 11 ⁄3 of the amount

12 of the annuity which is payable during the joint lives of

13 the participant and spouse.’’

14 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

15 of section 205(c)(3)(A) of such Act (29 U.S.C.

16 1055(c)(3)(A)) is amended to read as follows:

17 ‘‘(i) the terms and conditions of each qualified

joint and survivor annuity and qualified joint and 2 18 ⁄3

19 survivor annuity offered, accompanied by an illustra20 tion of the benefits under each such annuity for the

21 particular participant and spouse and an acknowl22 edgement form to be signed by the participant and

23 the spouse that they have read and considered the

24 illustration before any form of retirement benefit is

25 chosen,’’.
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1 (b) AMENDMENTS TO INTERNAL REVENUE CODE.—

2 (1) AMOUNT OF ANNUITY.—

3 (A) IN GENERAL.—Clause (i) of section

4 401(a)(11)(A) of the Internal Revenue Code of

5 1986 (relating to requirement of joint and sur6 vivor annuity and preretirement survivor annu7 ity) is amended by inserting ‘‘or, at the election

8 of the participant, shall be provided in the form

of a qualified joint and 2 9 ⁄3 survivor annuity’’

10 after ‘‘survivor annuity,’’.

11 (B) DEFINITION.—Section 417 of such

12 Code (relating to definitions and special rules

13 for purposes of minimum survivor annuity re14 quirements), as amended by section 422, is

15 amended by redesignating subsection (f) as sub16 section (g) and by inserting after subsection (e)

17 the following new subsection:

‘‘(f) DEFINITION OF QUALIFIED JOINT AND 2 18 ⁄3 SUR19 VIVOR ANNUITY.—For purposes of this section and section

401(a)(11), the term ‘qualified joint and 2 20 ⁄3 survivor annu21 ity’ means a joint and survivor annuity under which the

22 survivor annuity for the life of the surviving spouse is

equal to at least 2 23 ⁄3 of the amount of the annuity which

24 is payable during the joint lives of the participant and

25 spouse.’’
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1 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

2 of section 417(a)(3)(A) of such Code (relating to ex3 planation of joint and survivor annuity) is amended

4 to read as follows:

5 ‘‘(i) the terms and conditions of each

6 qualified joint and survivor annuity and

qualified joint and 2 7 ⁄3 survivor annuity of8 fered, accompanied by an illustration of

9 the benefits under each such annuity for

10 the particular participant and spouse and

11 an acknowledgement form to be signed by

12 the participant and the spouse that they

13 have read and considered the illustration

14 before any form of retirement benefit is

15 chosen,’’.

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

17 this section shall apply to plan years beginning on or after

18 January 1, 2000.

19 SEC. 422. SPOUSAL CONSENT REQUIRED FOR DISTRIBU20 TIONS FROM DEFINED CONTRIBUTION

21 PLANS.

22 (a) AMENDMENTS TO INTERNAL REVENUE CODE OF

23 1986.—

24 (1) IN GENERAL.—Section 401(a)(11) of the

25 Internal Revenue Code of 1986 (relating to require-
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1 ment of joint and survivor annuity and preretire2 ment survivor annuity) is amended by striking sub3 paragraphs (B), (C), and (D), by redesignating sub4 paragraphs (E) and (F) as subparagraphs (C) and

5 (D), respectively, and by inserting after subpara6 graph (A) the following new subparagraph:

7 ‘‘(B) PLANS TO WHICH PARAGRAPH AP8 PLIES.—This paragraph shall apply to any de9 fined benefit plan and to any defined contribu10 tion plan.’’

11 (2) EXCEPTION FOR HARDSHIP DISTRIBU12 TIONS.—Section 417(f) of such Code is amended by

13 adding at the end the following new paragraph:

14 ‘‘(8) HARDSHIP DISTRIBUTIONS.—The require15 ments of section 401(a)(11) and this section shall

16 not apply to a hardship distribution under section

17 401(k)(2)(B)(i)(IV).’’

18 (3) SPECIAL RULE FOR CASH-OUTS.—Section

19 417(e) of such Code is amended by adding at the

20 end the following new paragraph:

21 ‘‘(4) SPECIAL RULE FOR DEFINED CONTRIBU22 TION PLANS.—

23 ‘‘(A) IN GENERAL.—In the case of a de24 fined contribution plan, notwithstanding para25 graph (2), if the present value of the qualified
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1 joint and survivor annuity does not exceed

2 $10,000, the plan may immediately distribute

3 50 percent of the present value of such annuity

4 to each spouse.

5 ‘‘(B) EXCEPTION.—The plan may dis6 tribute a different percentage of the present

7 value of an annuity to each spouse if a court

8 order or contractual agreement provides for

9 such different percentage.’’

10 (b) AMENDMENTS TO ERISA.—

11 (1) IN GENERAL.—Section 205(b) of the Em12 ployee Retirement Income Security Act of 1974 (29

13 U.S.C. 1055(b)) is amended to read as follows:

14 ‘‘(b)(1) This section shall apply to any defined benefit

15 plan and to any individual account plan.

16 ‘‘(2) This section shall not apply to a plan which the

17 Secretary of the Treasury or his delegate has determined

18 is a plan described in section 404(c) of the Internal Rev19 enue Code of 1986 (or a continuation thereof) in which

20 participation is substantially limited to individuals who,

21 before January 1, 1976, ceased employment covered by

22 the plan.’’

23 (2) HARDSHIP DISTRIBUTION.—Section 205 of

24 such Act (29 U.S.C. 1055) is amended by adding at

25 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 dis18 tribute a different percentage of the present

19 value of an annuity to each spouse if a court

20 order or contractual agreement provides for

21 such different 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 TITLE V—DATE FOR ADOPTION

2 OF PLAN AMENDMENTS

3 SEC. 501. DATE FOR ADOPTION OF PLAN AMENDMENTS.

4 (a) IN GENERAL.—Except as otherwise provided in

5 this Act, if any amendment made by this Act requires an

6 amendment to any plan, such plan amendment shall not

7 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-
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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 Act,

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 Act, any amendment

10 made by this Act 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 Act),

19 or

20 (2) January 1, 2001.

Æ