I 

113TH CONGRESS 

2D SESSION H. R. 4376 

To amend the Internal Revenue Code of 1986 to modify safe harbor requirements applicable to automatic contribution arrangements, and for other 

purposes. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 2, 2014 

Mr. BRALEY of Iowa introduced the following bill; which was referred to the 

Committee on Ways and Means, and in addition to the Committee on 

Education and the Workforce, for a period to be subsequently determined 

by the Speaker, in each case for consideration of such provisions as fall 

within the jurisdiction of the committee concerned 

A BILL 

To amend the Internal Revenue Code of 1986 to modify 

safe harbor requirements applicable to automatic contribution arrangements, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

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

5 Act of 2014’’. 


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1 SEC. 2. ELIMINATION OF DISINCENTIVE TO POOLING FOR 

2 MULTIPLE EMPLOYER PLANS. 

3 (a) IN GENERAL.—Not later than one year after the 

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

5 Treasury shall prescribe final regulations under which a 

6 plan described in section 413(c) of the Internal Revenue 

7 Code of 1986 may be treated as satisfying the qualifica8 tion requirements of section 401(a) of such Code despite 

9 the violation of such requirements with respect to one or 

10 more participating employers. Such rules may require that 

11 the portion of the plan attributable to such participating 

12 employers be spun off to plans maintained by such em13 ployers. 

14 SEC. 3. MODIFICATION OF ERISA RULES RELATING TO 

15 MULTIPLE EMPLOYER DEFINED CONTRIBU16 TION PLANS. 

17 (a) IN GENERAL.— 

18 (1) REQUIREMENT OF COMMON INTEREST.— 

19 Section 3(2) of the Employee Retirement Income Se20 curity Act of 1974 is amended by adding at the end 

21 the following: 

22 ‘‘(C)(i) A qualified multiple employer plan shall 

23 not fail to be treated as an employee pension benefit 

24 plan or pension plan solely because the employers 

25 sponsoring the plan share no common interest. 


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1 ‘‘(ii) For purposes of this subparagraph, the 

2 term ‘qualified multiple employer plan’ means a plan 

3 described in section 413(c) of the Internal Revenue 

4 Code of 1986 which— 

5 ‘‘(I) is an individual account plan with re6 spect to which the requirements of clauses (iii), 

7 (iv), and (v) are met, and 

8 ‘‘(II) includes in its annual report required 

9 to be filed under section 104(a) the name and 

10 identifying information of each participating 

11 employer. 

12 ‘‘(iii) The requirements of this clause are met 

13 if, under the plan, each participating employer re14 tains fiduciary responsibility for— 

15 ‘‘(I) the selection and monitoring of the 

16 named fiduciary, and 

17 ‘‘(II) the investment and management of 

18 the portion of the plan’s assets attributable to 

19 employees of the employer to the extent not 

20 otherwise delegated to another fiduciary. 

21 ‘‘(iv) The requirements of this clause are met if, 

22 under the plan, a participating employer is not sub23 ject to unreasonable restrictions, fees, or penalties 

24 by reason of ceasing participation in, or otherwise 

25 transferring assets from, the plan. 


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1 ‘‘(v) The requirements of this clause are met if 

2 each participating employer in the plan is an eligible 

3 employer as defined in section 408(p)(2)(C)(i) of the 

4 Internal Revenue Code of 1986, applied— 

5 ‘‘(I) by substituting ‘500’ for ‘100’ in sub6 clause (I) thereof, 

7 ‘‘(II) by substituting ‘5’ for ‘2’ each place 

8 it appears in subclause (II) thereof, and 

9 ‘‘(III) without regard to the last sentence 

10 of subclause (II) thereof.’’. 

11 (2) SIMPLIFIED REPORTING FOR SMALL MUL12 TIPLE EMPLOYER PLANS.—Section 104(a) of such 

13 Act (29 U.S.C. 1024(a)) is amended by adding at 

14 the end the following: 

15 ‘‘(7)(A) In the case of any eligible small multiple em16 ployer plan, the Secretary may by regulation— 

17 ‘‘(i) prescribe simplified summary plan descrip18 tions, annual reports, and pension benefit state19 ments for purposes of section 102, 103, or 105, re20 spectively, and 

21 ‘‘(ii) waive the requirement under section 

22 103(a)(3) to engage an independent qualified public 

23 accountant in cases where the Secretary determines 

24 it appropriate. 


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1 ‘‘(B) For purposes of this paragraph, the term ‘eligi2 ble small multiple employer plan’ means, with respect to 

3 any plan year— 

4 ‘‘(i) a qualified multiple employer plan, as de5 fined in section 3(2)(C)(ii), or 

6 ‘‘(ii) any other plan described in section 413(c) 

7 of the Internal Revenue Code of 1986 that satisfies 

8 the requirements of clause (v) of section 3(2)(C).’’. 

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

10 this section shall apply to years beginning after December 

11 31, 2014. 

12 SEC. 4. SECURE DEFERRAL ARRANGEMENTS. 

13 (a) IN GENERAL.—Subsection (k) of section 401 of 

14 the Internal Revenue Code of 1986 is amended by adding 

15 at the end the following new paragraph: 

16 ‘‘(14) ALTERNATIVE METHOD FOR SECURE DE17 FERRAL ARRANGEMENTS TO MEET NONDISCRIMINA18 TION REQUIREMENTS.— 

19 ‘‘(A) IN GENERAL.—A secure deferral ar20 rangement shall be treated as meeting the re21 quirements of paragraph (3)(A)(ii). 

22 ‘‘(B) SECURE DEFERRAL ARRANGE23 MENT.—For purposes of this paragraph, the 

24 term ‘secure deferral arrangement’ means any 

25 cash or deferred arrangement which meets the 


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1 requirements of subparagraphs (C), (D), and 

2 (E) of paragraph (13), except as modified by 

3 this paragraph. 

4 ‘‘(C) QUALIFIED PERCENTAGE.—For pur5 poses of this paragraph, with respect to any 

6 employee, the term ‘qualified percentage’ 

7 means, in lieu of the meaning given such term 

8 in paragraph (13)(C)(iii), any percentage deter9 mined under the arrangement if such percent10 age is applied uniformly and is— 

11 ‘‘(i) at least 6 percent, but not greater 

12 than 10 percent, during the period ending 

13 on the last day of the first plan year which 

14 begins after the date on which the first 

15 elective contribution described in para16 graph (13)(C)(i) is made with respect to 

17 such employee, 

18 ‘‘(ii) at least 8 percent during the 

19 first plan year following the plan year de20 scribed in clause (i), and 

21 ‘‘(iii) at least 10 percent during any 

22 subsequent plan year. 

23 ‘‘(D) MATCHING CONTRIBUTIONS.— 

24 ‘‘(i) IN GENERAL.—For purposes of 

25 this paragraph, an arrangement shall be 


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1 treated as having met the requirements of 

2 paragraph (13)(D)(i) if and only if the em3 ployer makes matching contributions on 

4 behalf of each employee who is not a highly 

5 compensated employee in an amount equal 

6 to the sum of— 

7 ‘‘(I) 100 percent of the elective 

8 contributions of the employee to the 

9 extent that such contributions do not 

10 exceed 1 percent of compensation, 

11 ‘‘(II) 50 percent of so much of 

12 such contributions as exceed 1 percent 

13 but do not exceed 6 percent of com14 pensation, plus 

15 ‘‘(III) 25 percent of so much of 

16 such contributions as exceed 6 percent 

17 but do not exceed 10 percent of com18 pensation. 

19 ‘‘(ii) APPLICATION OF RULES FOR

20 MATCHING CONTRIBUTIONS.—The rules of 

21 clause (ii) of paragraph (12)(B) and 

22 clauses (iii) and (iv) of paragraph (13)(D) 

23 shall apply for purposes of clause (i) but 

24 the rule of clause (iii) of paragraph 

25 (12)(B) shall not apply for such purposes. 


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1 The rate of matching contribution for each 

2 incremental deferral must be at least as 

3 high as the rate specified in clause (i), and 

4 may be higher, so long as such rate does 

5 not increase as an employee’s rate of elec6 tive contributions increases.’’. 

7 (b) MATCHING CONTRIBUTIONS AND EMPLOYEE

8 CONTRIBUTIONS.—Subsection (m) of section 401 of the 

9 Internal Revenue Code of 1986 is amended by redesig10 nating paragraph (13) as paragraph (14) and by inserting 

11 after paragraph (12) the following new paragraph: 

12 ‘‘(13) ALTERNATIVE METHOD FOR SECURE DE13 FERRAL ARRANGEMENTS.—A defined contribution 

14 plan shall be treated as meeting the requirements of 

15 paragraph (2) with respect to matching contribu16 tions and employee contributions if the plan— 

17 ‘‘(A) is a secure deferral arrangement (as 

18 defined in subsection (k)(14)), 

19 ‘‘(B) meets the requirements of clauses (ii) 

20 and (iii) of paragraph (11)(B), and 

21 ‘‘(C) provides that matching contributions 

22 on behalf of any employee may not be made 

23 with respect to an employee’s contributions or 

24 elective deferrals in excess of 10 percent of the 

25 employee’s compensation.’’. 


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

2 this section shall apply to plan years beginning after De3 cember 31, 2014. 

4 SEC. 5. CREDIT FOR EMPLOYERS WITH RESPECT TO MODI5 FIED SAFE HARBOR REQUIREMENTS. 

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 of the Internal Revenue Code of 

8 1986 is amended by adding at the end the following new 

9 section: 

10 ‘‘SEC. 45S. CREDIT FOR SMALL EMPLOYERS WITH RESPECT 

11 TO MODIFIED SAFE HARBOR REQUIREMENTS 

12 FOR AUTOMATIC CONTRIBUTION ARRANGE13 MENTS. 

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

15 in the case of a small employer, the safe harbor adoption 

16 credit determined under this section for any taxable year 

17 is the amount equal to the total of the employer’s match18 ing contributions under section 401(k)(14)(D) during the 

19 taxable year on behalf of employees who are not highly 

20 compensated employees, subject to the limitations of sub21 section (b). 

22 ‘‘(b) LIMITATIONS.— 

23 ‘‘(1) LIMITATION WITH RESPECT TO COM24 PENSATION.—The credit determined under sub25 section (a) with respect to contributions made on beVerDate Mar 15 2010 00:58 Apr 05, 2014 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4376.IH H4376

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1 half of an employee who is not a highly compensated 

2 employee shall not exceed 2 percent of the com3 pensation of such employee for the taxable year. 

4 ‘‘(2) LIMITATION WITH RESPECT TO YEARS OF

5 PARTICIPATION.—Credit shall be determined under 

6 subsection (a) with respect to contributions made on 

7 behalf of an employee who is not a highly com8 pensated employee only during the first 5 years such 

9 employee participates in the qualified automatic con10 tribution arrangement. 

11 ‘‘(c) DEFINITIONS.— 

12 ‘‘(1) IN GENERAL.—Any term used in this sec13 tion which is also used in section 401(k)(14) shall 

14 have the same meaning as when used in such sec15 tion. 

16 ‘‘(2) SMALL EMPLOYER.—The term ‘small em17 ployer’ means an eligible employer (as defined in 

18 section 408(p)(2)(C)(i)). 

19 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—No deduction 

20 shall be allowable under this title for any contribution with 

21 respect to which a credit is allowed under this section.’’. 

22 (b) CREDIT TO BE PART OF GENERAL BUSINESS

23 CREDIT.—Subsection (b) of section 38 of the Internal 

24 Revenue Code of 1986 is amended— 


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1 (1) by striking ‘‘plus’’ at the end of paragraph 

2 (35), 

3 (2) by striking the period at the end of para4 graph (36) and inserting ‘‘, plus’’, and 

5 (3) by adding at the end the following new 

6 paragraph: 

7 ‘‘(37) the safe harbor adoption credit deter8 mined under section 45S.’’. 

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

10 for subpart D of part IV of subchapter A of chapter 1 

11 of the Internal Revenue Code of 1986 is amended by add12 ing after the item relating to section 45R the following 

13 new item: 

‘‘Sec. 45S. Credit for small employers with respect to modified safe harbor requirements for automatic contribution arrangements.’’. 

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

15 this section shall apply to taxable years that include any 

16 portion of a plan year beginning after December 31, 2014. 

17 SEC. 6. MODIFICATION OF REGULATIONS. 

18 The Secretary of the Treasury shall promulgate regu19 lations or other guidance that— 

20 (1) simplify and clarify the rules regarding the 

21 timing of participant notices required under section 

22 401(k)(13)(E) of the Internal Revenue Code of 

23 1986, with specific application to— 


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1 (A) plans that allow employees to be eligi2 ble for participation immediately upon begin3 ning employment, and 

4 (B) employers with multiple payroll and 

5 administrative systems, and 

6 (2) simplify and clarify the automatic escalation 

7 rules under sections 401(k)(13)(C)(iii) and 

8 401(k)(14)(C) of the Internal Revenue Code of 1986 

9 in the context of employers with multiple payroll and 

10 administrative systems. 

11 Such regulations or guidance shall address the particular 

12 case of employees within the same plan who are subject 

13 to different notice timing and different percentage require14 ments, and provide assistance for plan sponsors in man15 aging such cases. 

16 SEC. 7. OPPORTUNITY TO CLAIM THE SAVER’S CREDIT ON 

17 FORM 1040EZ. 

18 The Secretary of the Treasury shall modify the forms 

19 for the return of tax of individuals in order to allow indi20 viduals claiming the credit under section 25B of the Inter21 nal Revenue Code of 1986 to file (and claim such credit 

22 on) Form 1040EZ. 

Æ 


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