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[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4742 Introduced in House (IH)]

111th CONGRESS
  2d Session
                                H. R. 4742

  To amend the Internal Revenue Code of 1986 to encourage retirement 
savings by modifying requirements with respect to employer-established 
                     IRAs, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             March 3, 2010

Mr. Kind (for himself and Mr. Reichert) introduced the following bill; 
which was referred to the Committee on Ways and Means, and in addition 
      to the Committee on Education and Labor, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL

 
  To amend the Internal Revenue Code of 1986 to encourage retirement 
savings by modifying requirements with respect to employer-established 
                     IRAs, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Small Businesses 
Add Value for Employees Act of 2009'' or the ``SAVE Act of 2009''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Elimination of restriction on SIMPLE IRA rollovers.
Sec. 3. Allowing mid-year SIMPLE IRA plan termination.
Sec. 4. Elimination of higher penalty on early SIMPLE IRA 
                            distributions.
Sec. 5. Increase in contributions allowed for SIMPLE IRA.
Sec. 6. SIMPLE 401(k) parity for additional nonelective employer 
                            contributions.
Sec. 7. Automatic deferral IRAs.
Sec. 8. 401(k) automatic deferral percentage parity.
Sec. 9. Limited transfer of unused balance in flexible spending 
                            arrangement.
Sec. 10. Prior years compensation taken into account in determining 
                            maximum retirement savings deduction.
Sec. 11. Expanding small employer pension plan startup cost credit.
Sec. 12. Financial education.
Sec. 13. Multiple small employer plan.
Sec. 14. Amendments to Employee Retirement Income Security Act of 1974.

SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA ROLLOVERS.

    (a) In General.--Paragraph (3) of section 408(d) of the Internal 
Revenue Code of 1986 (relating to rollover contribution) is amended by 
striking subparagraph (G).
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions in taxable years beginning after the date of the 
enactment of this Act.

SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMINATION.

    (a) In General.--Subsection (p) of section 408 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(11) Special rules relating to mid-year termination.--
                    ``(A) In general.--An employer may elect to 
                terminate (in such form and manner as the Secretary may 
                provide) the qualified salary reduction arrangement of 
                the employer at any time during the year.
                    ``(B) Proration and application of qualified plan 
                limitation.--In the case of a year during which an 
                employer terminates a qualified salary reduction 
                arrangement before the end of such year--
                            ``(i) the applicable dollar amount in 
                        effect for such year shall be prorated to the 
                        date of such termination,
                            ``(ii) for purposes of determining the 
                        compensation of an employee for such 
                        arrangement for such year, the year of such 
                        termination shall be treated as ending on the 
                        date of such termination, and
                            ``(iii) subparagraph (D) of paragraph (2) 
                        shall not apply with respect to a qualified 
                        plan maintained in such year only after the 
                        date of such termination.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to years beginning after the date of the enactment of this Act.

SEC. 4. ELIMINATION OF HIGHER PENALTY ON EARLY SIMPLE IRA 
              DISTRIBUTIONS.

    (a) In General.--Subsection (t) of section 72 of the Internal 
Revenue Code of 1986 (relating to 10-percent additional tax on early 
distributions from qualified retirement plans) is amended by striking 
paragraph (6).
    (b) Effective Date.--The amendment made by this section shall apply 
to distributions in taxable years beginning after the date of the 
enactment of this Act.

SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIMPLE IRA.

    (a) Additional Nonelective Employer Contributions Allowed.--
            (1) In general.--Subparagraph (A) of section 408(p)(2) of 
        the Internal Revenue Code of 1986 (relating to qualified salary 
        reduction arrangement) is amended by striking ``and'' at the 
        end of clause (iii), by redesignating clause (iv) as clause 
        (v), and by inserting after clause (iii) the following new 
        clause:
                            ``(iv) the employer may make, in addition 
                        to any other contribution under this paragraph, 
                        nonelective contributions of not more than 10 
                        percent of compensation (subject to the 
                        limitation described in subparagraph (B)(ii)) 
                        for each employee who is eligible to 
                        participate in the arrangement and who has at 
                        least $5,000 of compensation from the employer 
                        for the year, and''.
            (2) Conforming amendment.--Clause (v) of section 
        408(p)(2)(A) of such Code, as redesignated by this section, is 
        amended by striking ``clause (i) or (iii)'' and inserting 
        ``clause (i), (iii), or (iv)''.
    (b) Increase in Elective Contribution Limitation.--Subparagraph (E) 
of section 408(p)(2) is amended to read as follows:
                    ``(E) Applicable dollar amount.--For purposes of 
                subparagraph (A)(ii), the applicable dollar amount 
                shall be the applicable dollar amount in effect under 
                subparagraph (B) of section 402(g)(1).''.
    (c) SIMPLE IRA Subject to Defined Contribution Plan Limitation.--
Subsection (p) of section 408 of such Code is amended by adding at the 
end the following new paragraph:
            ``(11) Subject to defined contribution plan limitation.--An 
        arrangement shall not be treated as a qualified salary 
        reduction arrangement for any year if contributions with 
        respect to any employee for the year exceed the limitation of 
        paragraph (1) of section 415(c) (relating to limitation for 
        defined contribution plans).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions for taxable years beginning after December 31, 
2007.

SEC. 6. SIMPLE 401(K) PARITY FOR ADDITIONAL NONELECTIVE EMPLOYER 
              CONTRIBUTIONS.

    (a) In General.--Subparagraph (B) of section 401(k)(11) of such 
Code (relating to contribution requirements) is amended by adding at 
the end the following new clause:
                            ``(iv) Special rule for additional 
                        nonelective employer contributions.--An 
                        arrangement shall not be treated as failing to 
                        meet the requirements of this subparagraph 
                        merely because under such arrangement the 
                        employer makes, in addition to any other 
                        contribution under this subparagraph, 
                        nonelective contributions of not more than 10 
                        percent of compensation for each employee who 
                        is eligible to participate in the arrangement 
                        and who has at least $5,000 of compensation 
                        from the employer for the year.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2007.

SEC. 7. AUTOMATIC DEFERRAL IRAS.

    (a) In General.--Subpart A of part I of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 (relating to pension, profit-
sharing, stock bonus plans, etc.) is amended by inserting after section 
408A the following new section:

``SEC. 408B. AUTOMATIC DEFERRAL IRAS.

    ``(a) In General.--An automatic deferral IRA shall be treated for 
purposes of this title in the same manner as an individual retirement 
plan. An automatic deferral IRA may also be treated as a Roth IRA for 
purposes of this title if it meets the requirements of section 408A.
    ``(b) Automatic Deferral IRA.--For purposes of this section, the 
term `automatic deferral IRA' means an individual retirement plan (as 
defined in section 7701(a)(37)) with respect to which contributions are 
made under an arrangement which satisfies the requirements of 
paragraphs (1) through (4) of subsection (c).
    ``(c) Automatic Deferral IRA Arrangements.--
            ``(1) Enrollment.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if each employee eligible to 
                participate in the arrangement is treated as having 
                elected to have the employer make payments as elective 
                contributions to an automatic deferral IRA on behalf of 
                such employee (which would have otherwise been made to 
                the employee directly in cash) in an amount equal to so 
                much of a qualified percentage of compensation of such 
                employee as does not exceed the deductible amount for 
                such year (within the meaning of section 219(b)).
                    ``(B) Eligibility.--An employee is eligible to 
                participate if such employee is described in paragraph 
                (2) of section 408(k), except that for purposes of 
                determining whether an employee is described in such 
                paragraph, subparagraph (C) thereof shall be applied by 
                substituting `$5,000' for `$450'.
                    ``(C) Election out.--The election treated as having 
                been made under subparagraph (A) shall cease to apply 
                with respect to any employee who makes an affirmative 
                election--
                            ``(i) to not have such elective 
                        contributions made, or
                            ``(ii) not later than the close of the 30-
                        day period beginning on the date of the first 
                        contribution with respect to such employee, to 
                        make elective contributions at a level 
                        specified in such affirmative election.
                    ``(D) Qualified percentage.--For purposes of this 
                paragraph, the term `qualified percentage' means, with 
                respect to any employee, any percentage determined 
                under the trust agreement if such percentage is applied 
                uniformly, does not exceed 15 percent, and is at 
                least--
                            ``(i) 3 percent during the period ending on 
                        the last day of the first plan year which 
                        begins after the date on which the first 
                        elective contribution described in subparagraph 
                        (A) is made with respect to such employee, and
                            ``(ii) during any subsequent plan year, a 
                        percentage equal to--
                                    ``(I) 3 percent, plus
                                    ``(II) 1 percent multiplied by the 
                                number of plan years (but not more than 
                                12) beginning after the plan year 
                                described in clause (i).
            ``(2) Notice.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if, within a reasonable period before 
                the first day an employee is eligible to participate in 
                the arrangement, the employee receives written notice 
                of the employee's rights and obligations under the 
                arrangement which--
                            ``(i) is sufficiently accurate and 
                        comprehensive to apprise the employee of such 
                        rights, and
                            ``(ii) is written in a manner calculated to 
                        be understood by the average employee to whom 
                        the arrangement applies.
                    ``(B) Timing and content.--A notice shall not be 
                treated as meeting the requirements of subparagraph (A) 
                with respect to an employee unless--
                            ``(i) the notice explains the employee's 
                        right to elect not to have elective 
                        contributions made on the employee's behalf (or 
                        to elect to have such contributions made at a 
                        different percentage),
                            ``(ii) the notice explains how 
                        contributions made under the arrangement will 
                        be invested in the absence of any investment 
                        election by the employee, and
                            ``(iii) the employee has a reasonable 
                        period of time after receipt of the notice 
                        described in clauses (i) and (ii) and before 
                        the first elective contribution is made to make 
                        either such election.
            ``(3) Default investment arrangement.--The requirements of 
        this paragraph are met if--
                    ``(A) in the absence of an investment election by 
                the employee with respect to the employee's interest in 
                the trust, such interest is invested as provided in 
                regulations prescribed pursuant to subparagraph (A) of 
                section 404(c)(5) of the Employee Retirement Income 
                Security Act of 1974, and
                    ``(B) the employer provides each employee who has 
                an interest in the trust, notice which meets the 
                requirements of subparagraph (B) of such section.
            ``(4) Administrative requirements.--The requirements of 
        this paragraph are met if--
                    ``(A) an employer must make the elective employer 
                contributions under paragraph (1)(A) not later than the 
                close of the 30-day period following the last day of 
                the month with respect to which the contributions are 
                to be made,
                    ``(B) an employee may elect to terminate 
                participation in the arrangement at any time during the 
                year, except that if the employee so terminates, the 
                arrangement may provide that the employee may elect to 
                resume participation until the beginning of the next 
                year, and
                    ``(C) each employee eligible to participate may 
                elect, during the 30-day period before the beginning of 
                any year, or to modify the amount subject to such 
                arrangement, for such year.''.
    (b) Preemption of Conflicting State Laws.--Any law of a State shall 
be superseded if it would directly or indirectly prohibit or restrict 
an employer from creating or organizing an automatic deferral IRA (as 
defined in section 408B of the Internal Revenue Service of 1986).
    (c) Clerical Amendment.--The table of sections for subpart A of 
part I of subchapter D of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to 408A the 
following new item:

``408B. Automatic deferral IRAs.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 8. 401(K) AUTOMATIC DEFERRAL PERCENTAGE PARITY.

    (a) In General.--Clause (iii) of section 401(k)(13)(C) of the 
Internal Revenue Code of 1986 is amended by striking ``10 percent'' and 
inserting ``15 percent''.
    (b) Effective Date.--The amendment made by this section shall apply 
to plan years beginning after December 31, 2009.

SEC. 9. LIMITED TRANSFER OF UNUSED BALANCE IN FLEXIBLE SPENDING 
              ARRANGEMENT.

    (a) In General.--Section 125 of the Internal Revenue Code of 1986 
is amended by redesignating subsections (i) and (j) as subsections (j) 
and (k), respectively, and by inserting after subsection (h) the 
following new subsection:
    ``(i) Special Rule for Unused Benefits in Flexible Spending 
Arrangements.--
            ``(1) In general.--For purposes of this title, a plan or 
        other arrangement shall not fail to be treated as a cafeteria 
        plan or flexible spending arrangement merely because such 
        arrangement provides for qualified retirement distributions.
            ``(2) Qualified retirement distribution.--
                    ``(A) In general.--For purposes of this section, 
                the term `qualified retirement distribution' means any 
                distribution to an individual of all or a portion of 
                the employee's account under such arrangement, but only 
                to the extent--
                            ``(i) the amount does not exceed the lesser 
                        of--
                                    ``(I) $250, or
                                    ``(II) the unused benefits with 
                                respect to the arrangement, and
                            ``(ii) the amount received is paid into a 
                        qualified retirement plan (as defined in 
                        section 4974(c)), or an eligible deferred 
                        compensation plan (as defined in section 
                        457(b)) of an eligible employer described in 
                        section 457(e)(1)(A), of the individual not 
                        later than the 60th day after the day on which 
                        the individual receives the payment or 
                        distribution.
                    ``(B) Unused benefits.--For purposes of this 
                paragraph, the term `unused benefits' means, with 
                respect to an employee, the excess of--
                            ``(i) the maximum amount of reimbursement 
                        allowable to the employee during a plan year 
                        under a flexible spending arrangement, over
                            ``(ii) the actual amount of reimbursement 
                        during such year under such arrangement.
                    ``(C) Special rules for treatment of contributions 
                to retirement plans.--For purposes of this title, 
                qualified retirement distributions--
                            ``(i) shall be treated as elective 
                        deferrals (as defined in section 402(g)(3)) in 
                        the case of contributions to a qualified cash 
                        or deferred arrangement (as defined in section 
                        401(k)) or to an annuity contract described in 
                        section 403(b),
                            ``(ii) shall be treated as employer 
                        contributions to which the employee has a 
                        nonforfeitable right in the case of a plan 
                        which is described in section 401(a) which 
                        includes a trust exempt from tax under section 
                        501(a),
                            ``(iii) shall be treated as deferred 
                        compensation in the case of contributions to an 
                        eligible deferred compensation plan (as defined 
                        in section 457(b)), and
                            ``(iv) shall be treated in the manner 
                        designated for purposes of section 408 or 408A 
                        in the case of contributions to an individual 
                        retirement plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years ending after the date of the enactment of this Act.

SEC. 10. PRIOR YEARS COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING 
              MAXIMUM RETIREMENT SAVINGS DEDUCTION.

    (a) In General.--Subparagraph (B) of section 219(b)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``for such taxable 
year'' and inserting ``for the preceding taxable year''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after the date of the enactment of this Act.

SEC. 11. EXPANDING SMALL EMPLOYER PENSION PLAN STARTUP COST CREDIT.

    (a) In General.--
            (1) Including startup costs for employer-established 
        iras.--Paragraph (2) of section 45E(d) of the Internal Revenue 
        Code of 1986 (defining eligible employer plan) is amended by 
        striking ``means a qualified employer plan'' and all that 
        follows and inserting: ``means--
                    ``(A) a qualified employer plan within the meaning 
                of section 4972(d), or
                    ``(B) a plan of which a trust described in section 
                408(c) is a part.''.
            (2) Additional credit amount.--
                    (A) In general.--Subsection (a) of section 45E of 
                such Code is amended by striking ``50 percent of'' and 
                all that follows and inserting ``the sum of--
            ``(1) the applicable percentage of the qualified startup 
        costs paid or incurred by the taxpayer during the taxable year, 
        plus
            ``(2) $25 multiplied by the number of employees of the 
        employer who participate in any eligible employer plan of the 
        employer for the first time in such taxable year.''.
                    (B) Applicable percentage.--Subsection (d) of 
                section 45E of such Code is amended by adding at the 
                end the following new paragraph:
            ``(4) Applicable percentage.--The applicable percentage 
        is--
                    ``(A) in the case of a plan described in subsection 
                (d)(2)(A), 75 percent, or
                    ``(B) in the case of a plan described in subsection 
                (d)(2)(B), 50 percent.''.
                    (C) Conforming amendment.--Paragraph (2) of section 
                45E(c) of such Code (defining eligible employer) is 
                amended--
                            (i) by striking ``qualified employer plan'' 
                        in each place it appears and inserting 
                        ``eligible employer plan'', and
                            (ii) by striking ``qualified'' in the 
                        heading thereof and inserting ``eligible''.
            (3) Increased limitation.--Paragraph (1) of section 45E(b) 
        of such Code is amended by striking ``$500'' and inserting 
        ``$750 ($2,000 in the case of qualified startup costs 
        attributable to a plan described in subsection (d)(2)(A)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to costs paid or incurred in taxable years beginning after the date of 
the enactment of this Act.

SEC. 12. FINANCIAL EDUCATION.

    (a) Retirement Plan Education for Small Businesses.--Not later than 
6 months after the date of the enactment of this Act--
            (1) the Department of the Treasury Office of Financial 
        Education, in consultation with the Department of Labor, shall 
        develop and implement an outreach plan to educate small 
        businesses on the types of retirement plans available and the 
        benefits and requirements of such plans, and
            (2) the Secretary of the Treasury and the Secretary of 
        Labor shall develop recommendations for small businesses in 
        order to improve retirement outcomes. Such recommendations 
        shall take into account established behavioral trends of 
        employee investment and the effect of default design features 
        such as auto escalation, expansion of auto rollovers, auto 
        diversification for near retirees, and automatic forms of 
        distribution.
    (b) Financial Literacy.--
            (1) In general.--Not later than 1 year after the date of 
        the enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Secretary of Education, shall develop 
        sample age-appropriate curricula to be made available for 
        financial literacy education in elementary and secondary 
        schools.
            (2) Content of curricula.--Such curricula shall include the 
        following:
                    (A) How to balance a checkbook, read a credit card 
                statement, and calculate interest rates.
                    (B) What a pay stub is and why Federal and State 
                income taxes and Social Security and Medicare taxes are 
                withheld from wages.
                    (C) The differences between various types of bank 
                accounts.
                    (D) The significance of a credit score and how to 
                read credit reports.
                    (E) The marketing techniques frequently used by 
                individuals and businesses to attract patrons.
                    (F) The importance of saving for college and 
                retirement, including the various methods for saving 
                such as traditional pensions, 401(k)s, and IRAs.

SEC. 13. MULTIPLE SMALL EMPLOYER PLAN.

    (a) In General.--Paragraph (11) of section 401(k) of the Internal 
Revenue Code of 1986 is amended by adding the following at the end 
thereof:
                    ``(E) Multiple small employer plan.--
                            ``(i) In general.--In the case of a plan 
                        described in clause (ii)--
                                    ``(I) the amount described in 
                                subparagraph (B)(i)(I) shall be 
                                $10,000, in lieu of the amount in 
                                effect under section 408(p)(2)(A)(ii),
                                    ``(II) such $10,000 amount shall be 
                                adjusted as described in section 
                                408(p)(2)(E)(ii) except that the base 
                                period taken into account shall be the 
                                calendar quarter beginning July 1, 
                                2010,
                                    ``(III) subclause (II) of 
                                subparagraph (B)(i) and clause (ii) of 
                                subparagraph (B) shall not apply, and
                                    ``(IV) section 414(v) shall not 
                                apply.
                            ``(ii) Plan described.--A plan is described 
                        in this clause if the plan satisfies the 
                        following requirements:
                                    ``(I) Such plan satisfies the 
                                requirements of this paragraph, as 
                                modified by clause (i).
                                    ``(II) The plan is described in 
                                section 413(c).
                                    ``(III) The plan includes a 
                                qualified automatic contribution 
                                arrangement, as defined in paragraph 
                                (13), except that subparagraph (D) of 
                                paragraph (13) shall not apply and the 
                                qualified percentage shall be 
                                determined by reference to subclauses 
                                (I), (II), (III), and (IV) of paragraph 
                                (13)(C)(iii).
                                    ``(IV) The plan does not permit any 
                                participant or beneficiary to receive 
                                or maintain a loan from the plan.
                                    ``(V) The plan does not permit 
                                hardship distributions described in 
                                paragraph (2)(B)(i)(IV) except to the 
                                extent any such distribution is deemed, 
                                under regulations prescribed by the 
                                Secretary, to be on account of an 
                                immediate and heavy financial need of 
                                the employee and necessary to satisfy 
                                an immediate and heavy financial need 
                                of the employee.
                                    ``(VI) The plan is maintained 
                                pursuant to a model plan document 
                                published by the Secretary.''.
    (b) Simplification.--
            (1) Model plan.--Within one year of the date of the 
        enactment of this Act, the Secretary of the Treasury shall 
        publish a model plan that may be used to satisfy the 
        requirement of subclause (VI) of section 401(k)(11)(E)(ii) of 
        the Internal Revenue Code of 1986.
            (2) Protection against loss.--Within 120 days of the date 
        of the enactment of this Act, the Secretary of Labor shall 
        amend Department of Labor Regulation section 2550.404c-
        5(e)(4)(iv)(B) so that, in the case of a plan described in 
        section 401(k)(11)(E) of such Code ``four years'' shall be 
        substituted for ``120 days''.
            (3) Clarifying duties and reducing burdens.--Within one 
        year of the date of the enactment of this Act, the Secretary of 
        Labor shall--
                    (A) publish rules clarifying the extent to which 
                the fiduciary duties of a participating employer and of 
                a named fiduciary with respect to a plan described in 
                section 401(k)(11)(E) of such Code are limited to 
                prudently selecting and monitoring the provider of such 
                plan and the services, fees, and investment options 
                available from such provider, and
                    (B) prescribe interim final regulations providing 
                simplified means by which plans described in section 
                401(k)(11)(E) of such Code may satisfy the requirements 
                of sections 102, 103, and 105 of the Employee 
                Retirement Income Security Act of 1974.
            (4) Elimination of disincentive to pooling.--Not later than 
        one year after the date of enactment of this Act, the Secretary 
        of the Treasury shall prescribe final regulations under which a 
        plan described in section 413(c) of such Code may be treated as 
        satisfying the qualification requirements of section 401(a) of 
        such Code despite the violation of such requirements with 
        respect to one or more participating employers. Such rules may 
        require that the portion of the plan attributable to such 
        participating employers be spun off to plans maintained by such 
        employers.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to years beginning 
        after December 31, 2010.
            (2) Exception.--Subsection (b) shall apply as of the date 
        of the enactment of this Act.

SEC. 14. AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.

    (a) In General.--Section 3(2) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(2)) is amended by adding at the 
end the following new subparagraph:
    ``(C) An individual retirement plan (as defined in section 
7701(a)(37) of the Internal Revenue Code of 1986) shall not be 
considered a pension plan merely because an employer establishes a 
payroll deduction program for the purpose of enabling employees to make 
voluntary contributions to such account or annuity.''.
    (b) Disclosure Regarding Lifetime Income.--
            (1) In general.--Subparagraph (B) of section 105(a)(2) of 
        such Act (29 U.S.C. 1025(a)(2)) is amended--
                    (A) in clause (i), by striking ``and'' at the end;
                    (B) in clause (ii), by striking 
                ``diversification.'' and inserting ``diversification, 
                and''; and
                    (C) by inserting at the end the following:
                            ``(iii) the lifetime income disclosure 
                        described in subparagraph (D)(i).
                In the case of pension benefit statements described in 
                clause (i) of paragraph (1)(A), a lifetime income 
                disclosure under clause (iii) of this subparagraph 
                shall only be required to be included in one pension 
                benefit statement in each calendar year.''.
            (2) Lifetime income.--Paragraph (2) of section 105(a) of 
        such Act (29 U.S.C. 1025(a)) is amended by adding at the end 
        the following new subparagraph:
                    ``(D) Lifetime income disclosure.--
                            ``(i) In general.--
                                    ``(I) Disclosure.--A lifetime 
                                income disclosure shall set forth the 
                                annuity equivalent of the total 
                                benefits accrued with respect to the 
                                participant or beneficiary.
                                    ``(II) Annuity equivalent of the 
                                total benefits accrued.--For purposes 
                                of this subparagraph, the `annuity 
                                equivalent of the total benefits 
                                accrued' means the amount of monthly 
                                payments the participant or beneficiary 
                                would receive at the plan's normal 
                                retirement age if the total accrued 
                                benefits of such participant or 
                                beneficiary were used on the date of 
                                the lifetime income disclosure to 
                                purchase the life annuities described 
                                in subclause (III), with payments under 
                                such annuities commencing at the plan's 
                                normal retirement age.
                                    ``(III) Life annuities.--The life 
                                annuities described in this subclause 
                                are a qualified joint and survivor 
                                annuity (as defined in section 205(d)), 
                                based on assumptions specified in rules 
                                prescribed by the Secretary, including 
                                the assumption that the participant or 
                                beneficiary has a spouse of equal age, 
                                and a single life annuity. Such 
                                annuities may have a term certain or 
                                other features to the extent permitted 
                                under rules prescribed by the 
                                Secretary.
                            ``(ii) Model disclosure.--Not later than 1 
                        year after the date of the enactment of the 
                        Lifetime Income Disclosure Act, the Secretary 
                        shall issue a model lifetime income disclosure, 
                        written in a manner so as to be understood by 
                        the average plan participant, that--
                                    ``(I) explains that the annuity 
                                equivalent is only provided as an 
                                illustration;
                                    ``(II) explains that the actual 
                                annuity payments that may be purchased 
                                with the total benefits accrued will 
                                depend on numerous factors and may vary 
                                substantially from the annuity 
                                equivalent in the disclosures;
                                    ``(III) explains the assumptions 
                                upon which the annuity equivalent was 
                                determined; and
                                    ``(IV) provides such other similar 
                                explanations as the Secretary considers 
                                appropriate.
                            ``(iii) Assumptions and rules.--Not later 
                        than 1 year after the date of the enactment of 
                        the Lifetime Income Disclosure Act, the 
                        Secretary shall--
                                    ``(I) prescribe assumptions that 
                                administrators of individual account 
                                plans may use in converting total 
                                accrued benefits into annuity 
                                equivalents for purposes of this 
                                subparagraph; and
                                    ``(II) issue interim final rules 
                                under clause (i).
                        In prescribing assumptions under subclause (I), 
                        the Secretary may prescribe a single set of 
                        specific assumptions (in which case the 
                        Secretary may issue tables or factors that 
                        facilitate such conversions), or ranges of 
                        permissible assumptions. To the extent that an 
                        accrued benefit is or may be invested in an 
                        annuity contract, the assumptions prescribed 
                        under subclause (I) shall, to the extent 
                        appropriate, permit administrators of 
                        individual account plans to use the amounts 
                        payable under such contract as an annuity 
                        equivalent.
                            ``(iv) Limitation on liability.--No plan 
                        fiduciary, plan sponsor, or other person shall 
                        have any liability under this title solely by 
                        reason of the provision of annuity equivalents 
                        which are derived in accordance with the 
                        assumptions and rules described in clause (iii) 
                        and which include the explanations contained in 
                        the model lifetime income disclosure described 
                        in clause (ii). This clause shall apply without 
                        regard to whether the provision of such annuity 
                        equivalent is required by subparagraph 
                        (B)(iii).
                            ``(v) Effective date.--The requirement in 
                        subparagraph (B)(iii) shall apply to pension 
                        benefit statements furnished more than 12 
                        months after the latest of the issuance by the 
                        Secretary of--
                                    ``(I) interim final rules under 
                                clause (i);
                                    ``(II) the model disclosure under 
                                clause (ii); or
                                    ``(III) the assumptions under 
                                clause (iii).''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
                                 <all>
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