II

106TH CONGRESS

2D SESSION S. 2671

To amend the Internal Revenue Code of 1986 to promote pension

opportunities for women, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 6, 2000

Mr. ASHCROFT introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to promote

pension opportunities for women, 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; AMENDMENT OF 1986 CODE;

4 TABLE OF CONTENTS.

5 (a) SHORT TITLE.—This Act may be cited as the

6 ‘‘Pension Opportunities for Women’s Equality in Retire7 ment Act’’.

8 (b) AMENDMENT OF 1986 CODE.—Except as other9 wise expressly provided, whenever in this Act an amend10 ment or repeal is expressed in terms of an amendment
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1 to, or repeal of, a section or other provision, the reference

2 shall be considered to be made to a section or other provi3 sion of the Internal Revenue Code of 1986.

4 (c) TABLE OF CONTENTS.—The table of contents of

5 this Act is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

Sec. 2. Findings.

TITLE I—EXPANDING COVERAGE

Sec. 101. Increase in benefit and contribution limits.

Sec. 102. Elective deferrals not taken into account for purposes of deduction

limits.

Sec. 103. Deduction limits.

Sec. 104. Option to treat elective deferrals as after-tax contributions.

Sec. 105. Modification of deduction limits for IRA contributions.

TITLE II—ENHANCING FAIRNESS FOR WOMEN

Sec. 201. Catchup contributions for individuals age 50 or over.

Sec. 202. Equitable treatment for contributions of employees to defined contribution plans.

Sec. 203. Faster vesting of certain employer matching contributions.

Sec. 204. Clarification of tax treatment of division of section 457 plan benefits

upon divorce.

TITLE III—INCREASING PORTABILITY FOR PARTICIPANTS

Sec. 301. Rollovers allowed among various types of plans.

Sec. 302. Rollovers of IRAs into workplace retirement plans.

Sec. 303. Rollovers of after-tax contributions.

Sec. 304. Hardship exception to 60-day rule.

6 SEC. 2. FINDINGS.

7 Congress finds the following:

8 (1) Two-thirds of women over 65 have no pen9 sion other than social security.

10 (2) The median income from assets is only

11 $860 a year for women age 65 and over.
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1 (3) Older women are twice as likely as elderly

2 men to be living near or below the Federal poverty

3 threshold.

4 (4) The median job tenure for women is 3.8

5 years, well below the 5 years most pension plans re6 quire for vesting.

7 (5) The poverty rates for widows, divorced

8 women, and never married women are significantly

9 higher than the rate for all elderly women.

10 (6) Fifty-nine percent of women have not fig11 ured out how much they need to save for retirement.

12 (7) Given the difficulties women, especially un13 married women, face in their retirement years, Con14 gress should work to ensure that retirement security

15 law provides for higher contribution limits for work16 ing women, easier catch-up to make up for years

17 women missed in the labor force, and increased port18 ability of pensions.

19 TITLE I—EXPANDING COVERAGE

20 SEC. 101. INCREASE IN BENEFIT AND CONTRIBUTION LIM21 ITS.

22 (a) DEFINED BENEFIT PLANS.—

23 (1) DOLLAR LIMIT.—

24 (A) Subparagraph (A) of section 415(b)(1)

25 (relating to limitation for defined benefit plans)
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1 is amended by striking ‘‘$90,000’’ and inserting

2 ‘‘$160,000’’.

3 (B) Subparagraphs (C) and (D) of section

4 415(b)(2) are each amended by striking

5 ‘‘$90,000’’ each place it appears in the head6 ings and the text and inserting ‘‘$160,000’’.

7 (C) Paragraph (7) of section 415(b) (relat8 ing to benefits under certain collectively bar9 gained plans) is amended by striking ‘‘the

10 greater of $68,212 or one-half the amount oth11 erwise applicable for such year under paragraph

12 (1)(A) for ‘$90,000’ ’’ and inserting ‘‘one-half

13 the amount otherwise applicable for such year

14 under paragraph (1)(A) for ‘$160,000’ ’’.

15 (2) LIMIT REDUCED WHEN BENEFIT BEGINS

16 BEFORE AGE 62.—Subparagraph (C) of section

17 415(b)(2) is amended by striking ‘‘the social security

18 retirement age’’ each place it appears in the heading

19 and text and inserting ‘‘age 62’’.

20 (3) LIMIT INCREASED WHEN BENEFIT BEGINS

21 AFTER AGE 65.—Subparagraph (D) of section

22 415(b)(2) is amended by striking ‘‘the social security

23 retirement age’’ each place it appears in the heading

24 and text and inserting ‘‘age 65’’.
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1 (4) COST-OF-LIVING ADJUSTMENTS.—Sub2 section (d) of section 415 (related to cost-of-living

3 adjustments) is amended—

4 (A) by striking ‘‘$90,000’’ in paragraph

5 (1)(A) and inserting ‘‘$160,000’’, and

6 (B) in paragraph (3)(A)—

7 (i) by striking ‘‘$90,000’’ in the head8 ing and inserting ‘‘$160,000’’, and

9 (ii) by striking ‘‘October 1, 1986’’ and

10 inserting ‘‘July 1, 2000’’.

11 (5) CONFORMING AMENDMENT.—Section

12 415(b)(2) is amended by striking subparagraph (F).

13 (b) DEFINED CONTRIBUTION PLANS.—

14 (1) DOLLAR LIMIT.—Subparagraph (A) of sec15 tion 415(c)(1) (relating to limitation for defined con16 tribution plans) is amended by striking ‘‘$30,000’’

17 and inserting ‘‘$40,000’’.

18 (2) COST-OF-LIVING ADJUSTMENTS.—Sub19 section (d) of section 415 (related to cost-of-living

20 adjustments) is amended—

21 (A) by striking ‘‘$30,000’’ in paragraph

22 (1)(C) and inserting ‘‘$40,000’’, and

23 (B) in paragraph (3)(D)—

24 (i) by striking ‘‘$30,000’’ in the head25 ing and inserting ‘‘$40,000’’, and
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1 (ii) by striking ‘‘October 1, 1993’’ and

2 inserting ‘‘July 1, 2000’’.

3 (c) QUALIFIED TRUSTS.—

4 (1) COMPENSATION LIMIT.—Sections

5 401(a)(17), 404(l), 408(k), and 505(b)(7) are each

6 amended by striking ‘‘$150,000’’ each place it ap7 pears and inserting ‘‘$200,000’’.

8 (2) BASE PERIOD AND ROUNDING OF COST-OF9 LIVING ADJUSTMENT.—Subparagraph (B) of section

10 401(a)(17) is amended—

11 (A) by striking ‘‘October 1, 1993’’ and in12 serting ‘‘July 1, 2000’’, and

13 (B) by striking ‘‘$10,000’’ both places it

14 appears and inserting ‘‘$5,000’’.

15 (d) ELECTIVE DEFERRALS.—

16 (1) IN GENERAL.—Paragraph (1) of section

17 402(g) (relating to limitation on exclusion for elec18 tive deferrals) is amended to read as follows:

19 ‘‘(1) IN GENERAL.—

20 ‘‘(A) LIMITATION.—Notwithstanding sub21 sections (e)(3) and (h)(1)(B), the elective defer22 rals of any individual for any taxable year shall

23 be included in such individual’s gross income to

24 the extent the amount of such deferrals for the
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1 taxable year exceeds the applicable dollar

2 amount.

3 ‘‘(B) APPLICABLE DOLLAR AMOUNT.—For

4 purposes of subparagraph (A), the applicable

5 dollar amount shall be the amount determined

6 in accordance with the following table:

‘‘For taxable years The applicable

beginning in dollar amount:

calendar year:

2001 ............................................................................. $11,000

2002 ............................................................................. $12,000

2003 ............................................................................. $13,000

2004 ............................................................................. $14,000

2005 or thereafter ........................................................ $15,000.’’.

7 (2) COST-OF-LIVING ADJUSTMENT.—Paragraph

8 (5) of section 402(g) is amended to read as follows:

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

10 case of taxable years beginning after December 31,

11 2005, the Secretary shall adjust the $15,000

12 amount under paragraph (1)(B) at the same time

13 and in the same manner as under section 415(d),

14 except that the base period shall be the calendar

15 quarter beginning July 1, 2004, and any increase

16 under this paragraph which is not a multiple of

17 $500 shall be rounded to the next lowest multiple of

18 $500.’’.

19 (3) CONFORMING AMENDMENTS.—

20 (A) Section 402(g) (relating to limitation

21 on exclusion for elective deferrals), as amended
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1 by paragraphs (1) and (2), is further amended

2 by striking paragraph (4) and redesignating

3 paragraphs (5), (6), (7), (8), and (9) as para4 graphs (4), (5), (6), (7), and (8), respectively.

5 (B) Paragraph (2) of section 457(c) is

6 amended by striking ‘‘402(g)(8)(A)(iii)’’ and in7 serting ‘‘402(g)(7)(A)(iii)’’.

8 (C) Clause (iii) of section 501(c)(18)(D) is

9 amended by striking ‘‘(other than paragraph

10 (4) thereof)’’.

11 (e) DEFERRED COMPENSATION PLANS OF STATE

12 AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANI13 ZATIONS.—

14 (1) IN GENERAL.—Section 457 (relating to de15 ferred compensation plans of State and local govern16 ments and tax-exempt organizations) is amended—

17 (A) in subsections (b)(2)(A) and (c)(1) by

18 striking ‘‘$7,500’’ each place it appears and in19 serting ‘‘the applicable dollar amount’’, and

20 (B) in subsection (b)(3)(A) by striking

21 ‘‘$15,000’’ and inserting ‘‘twice the dollar

22 amount in effect under subsection (b)(2)(A)’’.

23 (2) APPLICABLE DOLLAR AMOUNT; COST-OF24 LIVING ADJUSTMENT.—Paragraph (15) of section

25 457(e) is amended to read as follows:
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1 ‘‘(15) APPLICABLE DOLLAR AMOUNT.—

2 ‘‘(A) IN GENERAL.—The applicable dollar

3 amount shall be the amount determined in ac4 cordance with the following table:

‘‘For taxable years The applicable

beginning in dollar amount:

calendar year:

2001 ............................................................................. $11,000

2002 ............................................................................. $12,000

2003 ............................................................................. $13,000

2004 ............................................................................. $14,000

2005 or thereafter ........................................................ $15,000.

5 ‘‘(B) COST-OF-LIVING ADJUSTMENTS.—In

6 the case of taxable years beginning after De7 cember 31, 2005, the Secretary shall adjust the

8 $15,000 amount specified in the table in sub9 paragraph (A) at the same time and in the

10 same manner as under section 415(d), except

11 that the base period shall be the calendar quar12 ter beginning July 1, 2004, and any increase

13 under this paragraph which is not a multiple of

14 $500 shall be rounded to the next lowest mul15 tiple of $500.’’.

16 (f ) SIMPLE RETIREMENT ACCOUNTS.—

17 (1) LIMITATION.—Clause (ii) of section

18 408(p)(2)(A) (relating to general rule for qualified

19 salary reduction arrangement) is amended by strik20 ing ‘‘$6,000’’ and inserting ‘‘the applicable dollar

21 amount’’.
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1 (2) APPLICABLE DOLLAR AMOUNT.—Subpara2 graph (E) of 408(p)(2) is amended to read as fol3 lows:

4 ‘‘(E) APPLICABLE DOLLAR AMOUNT; COST5 OF-LIVING ADJUSTMENT.—

6 ‘‘(i) IN GENERAL.—For purposes of

7 subparagraph (A)(ii), the applicable dollar

8 amount shall be the amount determined in

9 accordance with the following table:

‘‘For taxable years The applicable

beginning in dollar amount:

calendar year:

2001 .................................................................. $7,000

2002 .................................................................. $8,000

2003 .................................................................. $9,000

2004 or thereafter ............................................ $10,000.

10 ‘‘(ii) COST-OF-LIVING ADJUSTMENT.—

11 In the case of a year beginning after De12 cember 31, 2004, the Secretary shall ad13 just the $10,000 amount under clause (i)

14 at the same time and in the same manner

15 as under section 415(d), except that the

16 base period taken into account shall be the

17 calendar quarter beginning July 1, 2003,

18 and any increase under this subparagraph

19 which is not a multiple of $500 shall be

20 rounded to the next lower multiple of

21 $500.’’.

22 (3) CONFORMING AMENDMENTS.—
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1 (A) Clause (I) of section 401(k)(11)(B)(i)

2 is amended by striking ‘‘$6,000’’ and inserting

3 ‘‘the amount in effect under section

4 408(p)(2)(A)(ii)’’.

5 (B) Section 401(k)(11) is amended by

6 striking subparagraph (E).

7 (g) ROUNDING RULE RELATING TO DEFINED BEN8 EFIT PLANS AND DEFINED CONTRIBUTION PLANS.—

9 Paragraph (4) of section 415(d) is amended to read as

10 follows:

11 ‘‘(4) ROUNDING.—

12 ‘‘(A) $160,000 AMOUNT.—Any increase

13 under subparagraph (A) of paragraph (1) which

14 is not a multiple of $5,000 shall be rounded to

15 the next lowest multiple of $5,000.

16 ‘‘(B) $40,000 AMOUNT.—Any increase

17 under subparagraph (C) of paragraph (1) which

18 is not a multiple of $1,000 shall be rounded to

19 the next lowest multiple of $1,000.’’.

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

21 this section shall apply to years beginning after December

22 31, 2000.
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1 SEC. 102. ELECTIVE DEFERRALS NOT TAKEN INTO AC2 COUNT FOR PURPOSES OF DEDUCTION LIM3 ITS.

4 (a) IN GENERAL.—Section 404 (relating to deduction

5 for contributions of an employer to an employees’ trust

6 or annuity plan and compensation under a deferred pay7 ment plan) is amended by adding at the end the following

8 new subsection:

9 ‘‘(n) ELECTIVE DEFERRALS NOT TAKEN INTO AC10 COUNT FOR PURPOSES OF DEDUCTION LIMITS.—Elective

11 deferrals (as defined in section 402(g)(3)) shall not be

12 subject to any limitation contained in paragraph (3), (7),

13 or (9) of subsection (a), and such elective deferrals shall

14 not be taken into account in applying any such limitation

15 to any other contributions.’’.

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

17 this section shall apply to years beginning after December

18 31, 2000.

19 SEC. 103. DEDUCTION LIMITS.

20 (a) IN GENERAL.—Section 404(a) (relating to gen21 eral rule) is amended by adding at the end the following:

22 ‘‘(12) DEFINITION OF COMPENSATION.—For

23 purposes of paragraphs (3), (7), (8), and (9), the

24 term ‘compensation’ shall include amounts treated

25 as participant’s compensation under subparagraph

26 (C) or (D) of section 415(c)(3).’’.
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1 (b) CONFORMING AMENDMENT.—Subparagraph (B)

2 of section 404(a)(3) is amended by striking the last sen3 tence thereof.

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

5 this section shall apply to years beginning after December

6 31, 2000.

7 SEC. 104. OPTION TO TREAT ELECTIVE DEFERRALS AS

8 AFTER-TAX CONTRIBUTIONS.

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

10 D of chapter 1 (relating to deferred compensation, etc.)

11 is amended by inserting after section 402 the following

12 new section:

13 ‘‘SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFER14 RALS AS PLUS CONTRIBUTIONS.

15 ‘‘(a) GENERAL RULE.—If an applicable retirement

16 plan includes a qualified plus contribution program—

17 ‘‘(1) any designated plus contribution made by

18 an employee pursuant to the program shall be treat19 ed as an elective deferral for purposes of this chap20 ter, except that such contribution shall not be ex21 cludable from gross income, and

22 ‘‘(2) such plan (and any arrangement which is

23 part of such plan) shall not be treated as failing to

24 meet any requirement of this chapter solely by rea25 son of including such program.
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1 ‘‘(b) QUALIFIED PLUS CONTRIBUTION PROGRAM.—

2 For purposes of this section—

3 ‘‘(1) IN GENERAL.—The term ‘qualified plus

4 contribution program’ means a program under which

5 an employee may elect to make designated plus con6 tributions in lieu of all or a portion of elective defer7 rals the employee is otherwise eligible to make under

8 the applicable retirement plan.

9 ‘‘(2) SEPARATE ACCOUNTING REQUIRED.—A

10 program shall not be treated as a qualified plus con11 tribution program unless the applicable retirement

12 plan—

13 ‘‘(A) establishes separate accounts (‘des14 ignated plus accounts’) for the designated plus

15 contributions of each employee and any earn16 ings properly allocable to the contributions, and

17 ‘‘(B) maintains separate recordkeeping

18 with respect to each account.

19 ‘‘(c) DEFINITIONS AND RULES RELATING TO DES20 IGNATED PLUS CONTRIBUTIONS.—For purposes of this

21 section—

22 ‘‘(1) DESIGNATED PLUS CONTRIBUTION.—The

23 term ‘designated plus contribution’ means any elec24 tive deferral which—
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1 ‘‘(A) is excludable from gross income of an

2 employee without regard to this section, and

3 ‘‘(B) the employee designates (at such time

4 and in such manner as the Secretary may pre5 scribe) as not being so excludable.

6 ‘‘(2) DESIGNATION LIMITS.—The amount of

7 elective deferrals which an employee may designate

8 under paragraph (1) shall not exceed the excess (if

9 any) of—

10 ‘‘(A) the maximum amount of elective de11 ferrals excludable from gross income of the em12 ployee for the taxable year (without regard to

13 this section), over

14 ‘‘(B) the aggregate amount of elective de15 ferrals of the employee for the taxable year

16 which the employee does not designate under

17 paragraph (1).

18 ‘‘(3) ROLLOVER CONTRIBUTIONS.—

19 ‘‘(A) IN GENERAL.—A rollover contribu20 tion of any payment or distribution from a des21 ignated plus account which is otherwise allow22 able under this chapter may be made only if the

23 contribution is to—
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1 ‘‘(i) another designated plus account

2 of the individual from whose account the

3 payment or distribution was made, or

4 ‘‘(ii) a Roth IRA of such individual.

5 ‘‘(B) COORDINATION WITH LIMIT.—Any

6 rollover contribution to a designated plus ac7 count under subparagraph (A) shall not be

8 taken into account for purposes of paragraph

9 (1).

10 ‘‘(d) DISTRIBUTION RULES.—For purposes of this

11 title—

12 ‘‘(1) EXCLUSION.—Any qualified distribution

13 from a designated plus account shall not be includ14 ible in gross income.

15 ‘‘(2) QUALIFIED DISTRIBUTION.—For purposes

16 of this subsection—

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

18 distribution’ has the meaning given such term

19 by section 408A(d)(2)(A) (without regard to

20 clause (iv) thereof).

21 ‘‘(B) DISTRIBUTIONS WITHIN NONEXCLU22 SION PERIOD.—A payment or distribution from

23 a designated plus account shall not be treated

24 as a qualified distribution if such payment or
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1 distribution is made within the 5-taxable-year

2 period beginning with the earlier of—

3 ‘‘(i) the first taxable year for which

4 the individual made a designated plus con5 tribution to any designated plus account

6 established for such individual under the

7 same applicable retirement plan, or

8 ‘‘(ii) if a rollover contribution was

9 made to such designated plus account from

10 a designated plus account previously estab11 lished for such individual under another

12 applicable retirement plan, the first taxable

13 year for which the individual made a des14 ignated plus contribution to such pre15 viously established account.

16 ‘‘(C) DISTRIBUTIONS OF EXCESS DEFER17 RALS AND EARNINGS.—The term ‘qualified dis18 tribution’ shall not include any distribution of

19 any excess deferral under section 402(g)(2) and

20 any income on the excess deferral.

21 ‘‘(3) AGGREGATION RULES.—Section 72 shall

22 be applied separately with respect to distributions

23 and payments from a designated plus account and

24 other distributions and payments from the plan.
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1 ‘‘(e) OTHER DEFINITIONS.—For purposes of this

2 section—

3 ‘‘(1) APPLICABLE RETIREMENT PLAN.—The

4 term ‘applicable retirement plan’ means—

5 ‘‘(A) an employees’ trust described in sec6 tion 401(a) which is exempt from tax under

7 section 501(a), and

8 ‘‘(B) a plan under which amounts are con9 tributed by an individual’s employer for an an10 nuity contract described in section 403(b).

11 ‘‘(2) ELECTIVE DEFERRAL.—The term ‘elective

12 deferral’ means any elective deferral described in

13 subparagraph (A) or (C) of section 402(g)(3).’’.

14 (b) EXCESS DEFERRALS.—Section 402(g) (relating

15 to limitation on exclusion for elective deferrals) is

16 amended—

17 (1) by adding at the end of paragraph (1) the

18 following new sentence: ‘‘The preceding sentence

19 shall not apply to so much of such excess as does

20 not exceed the designated plus contributions of the

21 individual for the taxable year.’’, and

22 (2) by inserting ‘‘(or would be included but for

23 the last sentence thereof)’’ after ‘‘paragraph (1)’’ in

24 paragraph (2)(A).
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1 (c) ROLLOVERS.—Subparagraph (B) of section

2 402(c)(8) is amended by adding at the end the following:

3 ‘‘If any portion of an eligible rollover distribu4 tion is attributable to payments or distributions

5 from a designated plus account (as defined in

6 section 402A), an eligible retirement plan with

7 respect to such portion shall include only an8 other designated plus account and a Roth

9 IRA.’’.

10 (d) REPORTING REQUIREMENTS.—

11 (1) W–2 INFORMATION.—Section 6051(a)(8) is

12 amended by inserting ‘‘, including the amount of

13 designated plus contributions (as defined in section

14 402A)’’ before the comma at the end.

15 (2) INFORMATION.—Section 6047 is amended

16 by redesignating subsection (f ) as subsection (g)

17 and by inserting after subsection (e) the following

18 new subsection:

19 ‘‘(f ) DESIGNATED PLUS CONTRIBUTIONS.—The Sec20 retary shall require the plan administrator of each applica21 ble retirement plan (as defined in section 402A) to make

22 such returns and reports regarding designated plus con23 tributions (as so defined) to the Secretary, participants

24 and beneficiaries of the plan, and such other persons as

25 the Secretary may prescribe.’’.
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1 (e) CONFORMING AMENDMENTS.—

2 (1) Section 408A(e) is amended by adding after

3 the first sentence the following new sentence: ‘‘Such

4 term includes a rollover contribution described in

5 section 402A(c)(3)(A).’’.

6 (2) The table of sections for subpart A of part

7 I of subchapter D of chapter 1 is amended by insert8 ing after the item relating to section 402 the fol9 lowing new item:

‘‘Sec. 402A. Optional treatment of elective deferrals as plus contributions.’’.

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

11 this section shall apply to taxable years beginning after

12 December 31, 2000.

13 SEC. 105. MODIFICATION OF DEDUCTION LIMITS FOR IRA

14 CONTRIBUTIONS.

15 (a) INCREASE IN CONTRIBUTION LIMIT.—

16 (1) IN GENERAL.—Paragraph (1)(A) of section

17 219(b) (relating to maximum amount of deduction)

18 is amended by striking ‘‘$2,000’’ and inserting ‘‘the

19 deductible amount’’.

20 (2) DEDUCTIBLE AMOUNT.—Section 219(b) is

21 amended by adding at the end the following new

22 paragraph:

23 ‘‘(5) DEDUCTIBLE AMOUNT.—For purposes of

24 paragraph (1)(A)—
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1 ‘‘(A) IN GENERAL.—The deductible

2 amount shall be determined in accordance with

3 the following table:

‘‘For taxable years The deductible

beginning in: amount is:

2001, 2002, and 2003 ............................................................. $3,000

2004 and 2005 ......................................................................... $4,000

2006 and thereafter ................................................................. $5,000.

4 ‘‘(B) COST-OF-LIVING ADJUSTMENT.—

5 ‘‘(i) IN GENERAL.—In the case of any

6 taxable year beginning in a calendar year

7 after 2006, the $5,000 amount under sub8 paragraph (A) shall be increased by an

9 amount equal to—

10 ‘‘(I) such dollar amount, multi11 plied by

12 ‘‘(II) the cost-of-living adjust13 ment determined under section

14 1(f )(3) for the calendar year in which

15 the taxable year begins, determined by

16 substituting ‘calendar year 2005’ for

17 ‘calendar year 1992’ in subparagraph

18 (B) thereof.

19 ‘‘(ii) ROUNDING RULES.—If any

20 amount after adjustment under clause (i)

21 is not a multiple of $100, such amount

22 shall be rounded to the next lower multiple

23 of $100.’’.
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1 (b) CONFORMING AMENDMENTS.—

2 (1) Section 408(a)(1) is amended by striking

3 ‘‘in excess of $2,000 on behalf of any individual’’

4 and inserting ‘‘on behalf of any individual in excess

5 of the amount in effect for such taxable year under

6 section 219(b)(1)(A)’’.

7 (2) Section 408(b)(2)(B) is amended by strik8 ing ‘‘$2,000’’ and inserting ‘‘the dollar amount in

9 effect under section 219(b)(1)(A)’’.

10 (3) Section 408(b) is amended by striking

11 ‘‘$2,000’’ in the matter following paragraph (4) and

12 inserting ‘‘the dollar amount in effect under section

13 219(b)(1)(A)’’.

14 (4) Section 408( j) is amended by striking

15 ‘‘$2,000’’.

16 (5) Section 408(p)(8) is amended by striking

17 ‘‘$2,000’’ and inserting ‘‘the dollar amount in effect

18 under section 219(b)(1)(A)’’.

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

20 this section shall apply to taxable years beginning after

21 December 31, 2000.
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1 TITLE II—ENHANCING FAIRNESS

2 FOR WOMEN

3 SEC. 201. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS

4 AGE 50 OR OVER.

5 (a) IN GENERAL.—Section 414 (relating to defini6 tions and special rules) is amended by adding at the end

7 the following new subsection:

8 ‘‘(v) CATCHUP CONTRIBUTIONS FOR INDIVIDUALS

9 AGE 50 OR OVER.—

10 ‘‘(1) IN GENERAL.—An applicable employer

11 plan shall not be treated as failing to meet any re12 quirement of this title solely because the plan per13 mits an eligible participant to make additional elec14 tive deferrals in any plan year.

15 ‘‘(2) LIMITATION ON AMOUNT OF ADDITIONAL

16 DEFERRALS.—

17 ‘‘(A) IN GENERAL.—A plan shall not per18 mit additional elective deferrals under para19 graph (1) for any year in an amount greater

20 than the lesser of—

21 ‘‘(i) the applicable percentage of the

22 applicable dollar amount for such elective

23 deferrals for such year, or

24 ‘‘(ii) the excess (if any) of—
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1 ‘‘(I) the participant’s compensa2 tion for the year, over

3 ‘‘(II) any other elective deferrals

4 of the participant for such year which

5 are made without regard to this sub6 section.

7 ‘‘(B) APPLICABLE PERCENTAGE.—For

8 purposes of this paragraph, the applicable per9 centage shall be determined in accordance with

10 the following table:

‘‘For taxable years The applicable

beginning in: percentage is:

2001 ......................................................................................... 10 percent

2002 ......................................................................................... 20 percent

2003 ......................................................................................... 30 percent

2004 ......................................................................................... 40 percent

2005 and thereafter ................................................................. 50 percent.

11 ‘‘(3) TREATMENT OF CONTRIBUTIONS.—In the

12 case of any contribution to a plan under paragraph

13 (1)—

14 ‘‘(A) such contribution shall not, with re15 spect to the year in which the contribution is

16 made—

17 ‘‘(i) be subject to any otherwise appli18 cable limitation contained in section

19 402(g), 402(h), 403(b), 404(a), 404(h),

20 408, 415, or 457, or

21 ‘‘(ii) be taken into account in applying

22 such limitations to other contributions or
25

•S 2671 IS

1 benefits under such plan or any other such

2 plan, and

3 ‘‘(B) such plan shall not be treated as fail4 ing to meet the requirements of section

5 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11),

6 401(k)(12), 401(m), 403(b)(12), 408(k),

7 408(p), 408B, 410(b), or 416 by reason of the

8 making of (or the right to make) such contribu9 tion.

10 ‘‘(4) ELIGIBLE PARTICIPANT.—For purposes of

11 this subsection, the term ‘eligible participant’ means,

12 with respect to any plan year, a participant in a

13 plan—

14 ‘‘(A) who has attained the age of 50 before

15 the close of the plan year, and

16 ‘‘(B) with respect to whom no other elec17 tive deferrals may (without regard to this sub18 section) be made to the plan for the plan year

19 by reason of the application of any limitation or

20 other restriction described in paragraph (3) or

21 contained in the terms of the plan.

22 ‘‘(5) OTHER DEFINITIONS AND RULES.—For

23 purposes of this subsection—

24 ‘‘(A) APPLICABLE DOLLAR AMOUNT.—The

25 term ‘applicable dollar amount’ means, with re-
26

•S 2671 IS

1 spect to any year, the amount in effect under

2 section 402(g)(1)(B), 408(p)(2)(E)(i), or

3 457(e)(15)(A), whichever is applicable to an ap4 plicable employer plan, for such year.

5 ‘‘(B) APPLICABLE EMPLOYER PLAN.—The

6 term ‘applicable employer plan’ means—

7 ‘‘(i) an employees’ trust described in

8 section 401(a) which is exempt from tax

9 under section 501(a),

10 ‘‘(ii) a plan under which amounts are

11 contributed by an individual’s employer for

12 an annuity contract described in section

13 403(b),

14 ‘‘(iii) an eligible deferred compensa15 tion plan under section 457 of an eligible

16 employer as defined in section

17 457(e)(1)(A), and

18 ‘‘(iv) an arrangement meeting the re19 quirements of section 408 (k) or (p).

20 ‘‘(C) ELECTIVE DEFERRAL.—The term

21 ‘elective deferral’ has the meaning given such

22 term by subsection (u)(2)(C).

23 ‘‘(D) EXCEPTION FOR SECTION 457

24 PLANS.—This subsection shall not apply to an

25 applicable employer plan described in subpara-
27

•S 2671 IS

1 graph (B)(iii) for any year to which section

2 457(b)(3) applies.’’.

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

4 this section shall apply to contributions in taxable years

5 beginning after December 31, 2000.

6 SEC. 202. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF

7 EMPLOYEES TO DEFINED CONTRIBUTION

8 PLANS.

9 (a) EQUITABLE TREATMENT.—

10 (1) IN GENERAL.—Subparagraph (B) of section

11 415(c)(1) (relating to limitation for defined con12 tribution plans) is amended by striking ‘‘25 percent’’

13 and inserting ‘‘100 percent’’.

14 (2) APPLICATION TO SECTION 403(b).—Section

15 403(b) is amended—

16 (A) by striking ‘‘the exclusion allowance

17 for such taxable year’’ in paragraph (1) and in18 serting ‘‘the applicable limit under section

19 415’’,

20 (B) by striking paragraph (2), and

21 (C) by inserting ‘‘or any amount received

22 by a former employee after the 5th taxable year

23 following the taxable year in which such em24 ployee was terminated’’ before the period at the

25 end of the second sentence of paragraph (3).
28

•S 2671 IS

1 (3) CONFORMING AMENDMENTS.—

2 (A) Subsection (f ) of section 72 is amend3 ed by striking ‘‘section 403(b)(2)(D)(iii))’’ and

4 inserting ‘‘section 403(b)(2)(D)(iii), as in effect

5 before the enactment of the Pension Opportuni6 ties for Women’s Equality in Retirement Act)’’.

7 (B) Section 404(a)(10)(B) is amended by

8 striking ‘‘, the exclusion allowance under sec9 tion 403(b)(2),’’.

10 (C) Section 415(a)(2) is amended by strik11 ing ‘‘, and the amount of the contribution for

12 such portion shall reduce the exclusion allow13 ance as provided in section 403(b)(2)’’.

14 (D) Section 415(c)(3) is amended by add15 ing at the end the following new subparagraph:

16 ‘‘(E) ANNUITY CONTRACTS.—In the case

17 of an annuity contract described in section

18 403(b), the term ‘participant’s compensation’

19 means the participant’s includible compensation

20 determined under section 403(b)(3).’’.

21 (E) Section 415(c) is amended by striking

22 paragraph (4).

23 (F) Section 415(c)(7) is amended to read

24 as follows:
29

•S 2671 IS

1 ‘‘(7) CERTAIN CONTRIBUTIONS BY CHURCH

2 PLANS NOT TREATED AS EXCEEDING LIMIT.—

3 ‘‘(A) IN GENERAL.—Notwithstanding any

4 other provision of this subsection, at the elec5 tion of a participant who is an employee of a

6 church or a convention or association of church7 es, including an organization described in sec8 tion 414(e)(3)(B)(ii), contributions and other

9 additions for an annuity contract or retirement

10 income account described in section 403(b) with

11 respect to such participant, when expressed as

12 an annual addition to such participant’s ac13 count, shall be treated as not exceeding the lim14 itation of paragraph (1) if such annual addition

15 is not in excess of $10,000.

16 ‘‘(B) $40,000 AGGREGATE LIMITATION.—

17 The total amount of additions with respect to

18 any participant which may be taken into ac19 count for purposes of this subparagraph for all

20 years may not exceed $40,000.

21 ‘‘(C) ANNUAL ADDITION.—For purposes of

22 this paragraph, the term ‘annual addition’ has

23 the meaning given such term by paragraph

24 (2).’’.
30

•S 2671 IS

1 (G) Subparagraph (B) of section 402(g)(7)

2 (as redesignated by section 1201) is amended

3 by inserting before the period at the end the

4 following: ‘‘(as in effect before the enactment of

5 the Pension Opportunities for Women’s Equal6 ity in Retirement Act)’’.

7 (3) EFFECTIVE DATE.—The amendments made

8 by this subsection shall apply to years beginning

9 after December 31, 2000.

10 (b) SPECIAL RULES FOR SECTIONS 403(b) AND

11 408.—

12 (1) IN GENERAL.—Subsection (k) of section

13 415 is amended by adding at the end the following

14 new paragraph:

15 ‘‘(4) SPECIAL RULES FOR SECTIONS 403(b) AND

16 408.—For purposes of this section, any annuity con17 tract described in section 403(b) for the benefit of

18 a participant shall be treated as a defined contribu19 tion plan maintained by each employer with respect

20 to which the participant has the control required

21 under subsection (b) or (c) of section 414 (as modi22 fied by subsection (h)). For purposes of this section,

23 any contribution by an employer to a simplified em24 ployee pension plan for an individual for a taxable

25 year shall be treated as an employer contribution to
31

•S 2671 IS

1 a defined contribution plan for such individual for

2 such year.’’.

3 (2) EFFECTIVE DATE.—

4 (A) IN GENERAL.—The amendment made

5 by paragraph (1) shall apply to limitation years

6 beginning after December 31, 2000.

7 (B) EXCLUSION ALLOWANCE.—Effective

8 for limitation years beginning in 2001, in the

9 case of any annuity contract described in sec10 tion 403(b) of the Internal Revenue Code of

11 1986, the amount of the contribution disquali12 fied by reason of section 415(g) of such Code

13 shall reduce the exclusion allowance as provided

14 in section 403(b)(2) of such Code.

15 (3) MODIFICATION OF 403(b) EXCLUSION AL16 LOWANCE TO CONFORM TO 415 MODIFICATION.—The

17 Secretary of the Treasury shall modify the regula18 tions regarding the exclusion allowance under section

19 403(b)(2) of the Internal Revenue Code of 1986 to

20 render void the requirement that contributions to a

21 defined benefit pension plan be treated as previously

22 excluded amounts for purposes of the exclusion al23 lowance. For taxable years beginning after Decem24 ber 31, 2000, such regulations shall be applied as if

25 such requirement were void.
32

•S 2671 IS

1 (c) DEFERRED COMPENSATION PLANS OF STATE

2 AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANI3 ZATIONS.—

4 (1) IN GENERAL.—Subparagraph (B) of section

5 457(b)(2) (relating to salary limitation on eligible

6 deferred compensation plans) is amended by striking

‘‘331 7 ⁄3 percent’’ and inserting ‘‘100 percent’’.

8 (2) EFFECTIVE DATE.—The amendment made

9 by this subsection shall apply to years beginning

10 after December 31, 2000.

11 SEC. 203. FASTER VESTING OF CERTAIN EMPLOYER

12 MATCHING CONTRIBUTIONS.

13 (a) AMENDMENTS TO 1986 CODE.—Section 411(a)

14 (relating to minimum vesting standards) is amended—

15 (1) in paragraph (2), by striking ‘‘A plan’’ and

16 inserting ‘‘Except as provided in paragraph (12), a

17 plan’’, and

18 (2) by adding at the end the following:

19 ‘‘(12) FASTER VESTING FOR MATCHING CON20 TRIBUTIONS.—In the case of matching contributions

21 (as defined in section 401(m)(4)(A)), paragraph (2)

22 shall be applied—

23 ‘‘(A) by substituting ‘3 years’ for ‘5 years’

24 in subparagraph (A), and
33

•S 2671 IS

1 ‘‘(B) by substituting the following table for

2 the table contained in subparagraph (B):

The nonforfeitable

‘‘Years of service: percentage is:

2 ............................................................................................... 20

3 ............................................................................................... 40

4 ............................................................................................... 60

5 ............................................................................................... 80

6 ............................................................................................... 100.’’.

3 (b) AMENDMENTS TO ERISA.—Section 203(a) of the

4 Employee Retirement Income Security Act of 1974 (29

5 U.S.C. 1053(a)) is amended—

6 (1) in paragraph (2), by striking ‘‘A plan’’ and

7 inserting ‘‘Except as provided in paragraph (4), a

8 plan’’, and

9 (2) by adding at the end the following:

10 ‘‘(4) FASTER VESTING FOR MATCHING CON11 TRIBUTIONS.—In the case of matching contributions

12 (as defined in section 401(m)(4)(A) of the Internal

13 Revenue Code of 1986), paragraph (2) shall be

14 applied—

15 ‘‘(A) by substituting ‘3 years’ for ‘5 years’

16 in subparagraph (A), and

17 ‘‘(B) by substituting the following table for

18 the table contained in subparagraph (B):

The nonforfeitable

‘‘Years of service: percentage is:

2 ............................................................................................... 20

3 ............................................................................................... 40

4 ............................................................................................... 60

5 ............................................................................................... 80

6 ............................................................................................... 100.’’.
34

•S 2671 IS

1 (c) EFFECTIVE DATES.—

2 (1) IN GENERAL.—Except as provided in para3 graph (2), the amendments made by this section

4 shall apply to contributions for plan years beginning

5 after December 31, 2000.

6 (2) COLLECTIVE BARGAINING AGREEMENTS.—

7 In the case of a plan maintained pursuant to one or

8 more collective bargaining agreements between em9 ployee representatives and one or more employers

10 ratified by the date of the enactment of this Act, the

11 amendments made by this section shall not apply to

12 contributions on behalf of employees covered by any

13 such agreement for plan years beginning before the

14 earlier of—

15 (A) the later of—

16 (i) the date on which the last of such

17 collective bargaining agreements termi18 nates (determined without regard to any

19 extension thereof on or after such date of

20 the enactment), or

21 (ii) January 1, 2001, or

22 (B) January 1, 2005.

23 (3) SERVICE REQUIRED.—With respect to any

24 plan, the amendments made by this section shall not

25 apply to any employee before the date that such em-
35

•S 2671 IS

1 ployee has 1 hour of service under such plan in any

2 plan year to which the amendments made by this

3 section apply.

4 SEC. 204. CLARIFICATION OF TAX TREATMENT OF DIVISION

5 OF SECTION 457 PLAN BENEFITS UPON DI6 VORCE.

7 (a) IN GENERAL.—Section 414(p)(11) (relating to

8 application of rules to governmental and church plans) is

9 amended—

10 (1) by inserting ‘‘or an eligible deferred com11 pensation plan (within the meaning of section

12 457(b))’’ after ‘‘subsection (e))’’, and

13 (2) in the heading, by striking ‘‘GOVERN14 MENTAL AND CHURCH PLANS’’ and inserting ‘‘CER15 TAIN OTHER PLANS’’.

16 (b) WAIVER OF CERTAIN DISTRIBUTION REQUIRE17 MENTS.—Paragraph (10) of section 414(p) is amended by

18 striking ‘‘and section 409(d)’’ and inserting ‘‘section

19 409(d), and section 457(d)’’.

20 (c) TAX TREATMENT OF PAYMENTS FROM A SEC21 TION 457 PLAN.—Subsection (p) of section 414 is amend22 ed by redesignating paragraph (12) as paragraph (13) and

23 inserting after paragraph (11) the following new para24 graph:
36

•S 2671 IS

1 ‘‘(12) TAX TREATMENT OF PAYMENTS FROM A

2 SECTION 457 PLAN.—If a distribution or payment

3 from an eligible deferred compensation plan de4 scribed in section 457(b) is made pursuant to a

5 qualified domestic relations order, rules similar to

6 the rules of section 402(e)(1)(A) shall apply to such

7 distribution or payment.’’.

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

9 this section shall apply to transfers, distributions, and

10 payments made after December 31, 2000.

11 TITLE III—INCREASING PORT12 ABILITY FOR PARTICIPANTS

13 SEC. 301. ROLLOVERS ALLOWED AMONG VARIOUS TYPES

14 OF PLANS.

15 (a) ROLLOVERS FROM AND TO SECTION 457

16 PLANS.—

17 (1) ROLLOVERS FROM SECTION 457 PLANS.—

18 (A) IN GENERAL.—Section 457(e) (relat19 ing to other definitions and special rules) is

20 amended by adding at the end the following:

21 ‘‘(16) ROLLOVER AMOUNTS.—

22 ‘‘(A) GENERAL RULE.—In the case of an

23 eligible deferred compensation plan established

24 and maintained by an employer described in

25 subsection (e)(1)(A), if—
37

•S 2671 IS

1 ‘‘(i) any portion of the balance to the

2 credit of an employee in such plan is paid

3 to such employee in an eligible rollover dis4 tribution (within the meaning of section

5 402(c)(4) without regard to subparagraph

6 (C) thereof),

7 ‘‘(ii) the employee transfers any por8 tion of the property such employee receives

9 in such distribution to an eligible retire10 ment plan described in section

11 402(c)(8)(B), and

12 ‘‘(iii) in the case of a distribution of

13 property other than money, the amount so

14 transferred consists of the property distrib15 uted,

16 then such distribution (to the extent so trans17 ferred) shall not be includible in gross income

18 for the taxable year in which paid.

19 ‘‘(B) CERTAIN RULES MADE APPLICA20 BLE.—The rules of paragraphs (2) through (7)

21 (other than paragraph (4)(C)) and (9) of sec22 tion 402(c) and section 402(f ) shall apply for

23 purposes of subparagraph (A).

24 ‘‘(C) REPORTING.—Rollovers under this

25 paragraph shall be reported to the Secretary in
38

•S 2671 IS

1 the same manner as rollovers from qualified re2 tirement plans (as defined in section

3 4974(c)).’’.

4 (B) DEFERRAL LIMIT DETERMINED WITH5 OUT REGARD TO ROLLOVER AMOUNTS.—Section

6 457(b)(2) (defining eligible deferred compensa7 tion plan) is amended by inserting ‘‘(other than

8 rollover amounts)’’ after ‘‘taxable year’’.

9 (C) DIRECT ROLLOVER.—Paragraph (1) of

10 section 457(d) is amended by striking ‘‘and’’ at

11 the end of subparagraph (A), by striking the

12 period at the end of subparagraph (B) and in13 serting ‘‘, and’’, and by inserting after subpara14 graph (B) the following:

15 ‘‘(C) in the case of a plan maintained by

16 an employer described in subsection (e)(1)(A),

17 the plan meets requirements similar to the re18 quirements of section 401(a)(31).

19 Any amount transferred in a direct trustee-to-trust20 ee transfer in accordance with section 401(a)(31)

21 shall not be includible in gross income for the tax22 able year of transfer.’’.

23 (D) WITHHOLDING.—
39

•S 2671 IS

1 (i) Paragraph (12) of section 3401(a)

2 is amended by adding at the end the fol3 lowing:

4 ‘‘(E) under or to an eligible deferred com5 pensation plan which, at the time of such pay6 ment, is a plan described in section 457(b)

7 maintained by an employer described in section

8 457(e)(1)(A); or’’.

9 (ii) Paragraph (3) of section 3405(c)

10 is amended to read as follows:

11 ‘‘(3) ELIGIBLE ROLLOVER DISTRIBUTION.—For

12 purposes of this subsection, the term ‘eligible roll13 over distribution’ has the meaning given such term

14 by section 402(f )(2)(A).’’.

15 (iii) LIABILITY FOR WITHHOLDING.—

16 Subparagraph (B) of section 3405(d)(2) is

17 amended by striking ‘‘or’’ at the end of

18 clause (ii), by striking the period at the

19 end of clause (iii) and inserting ‘‘, or’’, and

20 by adding at the end the following:

21 ‘‘(iv) section 457(b).’’.

22 (2) ROLLOVERS TO SECTION 457 PLANS.—

23 (A) IN GENERAL.—Section 402(c)(8)(B)

24 (defining eligible retirement plan) is amended

25 by striking ‘‘and’’ at the end of clause (iii), by
40

•S 2671 IS

1 striking the period at the end of clause (iv) and

2 inserting ‘‘, and’’, and by inserting after clause

3 (iv) the following new clause:

4 ‘‘(v) an eligible deferred compensation

5 plan described in section 457(b) of an em6 ployer described in section 457(e)(1)(A).’’.

7 (B) SEPARATE ACCOUNTING.—Section

8 402(c) is amended by adding at the end the fol9 lowing new paragraph:

10 ‘‘(11) SEPARATE ACCOUNTING.—Unless a plan

11 described in clause (v) of paragraph (8)(B) agrees to

12 separately account for amounts rolled into such plan

13 from eligible retirement plans not described in such

14 clause, the plan described in such clause may not ac15 cept transfers or rollovers from such retirement

16 plans.’’.

17 (C) 10 PERCENT ADDITIONAL TAX.—Sub18 section (t) of section 72 (relating to 10-percent

19 additional tax on early distributions from quali20 fied retirement plans) is amended by adding at

21 the end the following new paragraph:

22 ‘‘(9) SPECIAL RULE FOR ROLLOVERS TO SEC23 TION 457 PLANS.—For purposes of this subsection,

24 a distribution from an eligible deferred compensation

25 plan (as defined in section 457(b)) of an employer
41

•S 2671 IS

1 described in section 457(e)(1)(A) shall be treated as

2 a distribution from a qualified retirement plan de3 scribed in 4974(c)(1) to the extent that such dis4 tribution is attributable to an amount transferred to

5 an eligible deferred compensation plan from a quali6 fied retirement plan (as defined in section

7 4974(c)).’’.

8 (b) ALLOWANCE OF ROLLOVERS FROM AND TO 403

9 (b) PLANS.—

10 (1) ROLLOVERS FROM SECTION 403 (b)

11 PLANS.—Section 403(b)(8)(A)(ii) (relating to roll12 over amounts) is amended by striking ‘‘such dis13 tribution’’ and all that follows and inserting ‘‘such

14 distribution to an eligible retirement plan described

15 in section 402(c)(8)(B), and’’.

16 (2) ROLLOVERS TO SECTION 403 (b) PLANS.—

17 Section 402(c)(8)(B) (defining eligible retirement

18 plan), as amended by subsection (a), is amended by

19 striking ‘‘and’’ at the end of clause (iv), by striking

20 the period at the end of clause (v) and inserting ‘‘,

21 and’’, and by inserting after clause (v) the following

22 new clause:

23 ‘‘(vi) an annuity contract described in

24 section 403(b).’’.
42

•S 2671 IS

1 (c) EXPANDED EXPLANATION TO RECIPIENTS OF

2 ROLLOVER DISTRIBUTIONS.—Paragraph (1) of section

3 402(f ) (relating to written explanation to recipients of dis4 tributions eligible for rollover treatment) is amended by

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

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

7 ‘‘, and’’, and by adding at the end the following new sub8 paragraph:

9 ‘‘(E) of the provisions under which dis10 tributions from the eligible retirement plan re11 ceiving the distribution may be subject to re12 strictions and tax consequences which are dif13 ferent from those applicable to distributions

14 from the plan making such distribution.’’.

15 (d) SPOUSAL ROLLOVERS.—Section 402(c)(9) (relat16 ing to rollover where spouse receives distribution after

17 death of employee) is amended by striking ‘‘; except that’’

18 and all that follows up to the end period.

19 (e) CONFORMING AMENDMENTS.—

20 (1) Section 72(o)(4) is amended by striking

21 ‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8),

22 408(d)(3), and 457(e)(16)’’.

23 (2) Section 219(d)(2) is amended by striking

24 ‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3), or

25 457(e)(16)’’.
43

•S 2671 IS

1 (3) Section 401(a)(31)(B) is amended by strik2 ing ‘‘and 403(a)(4)’’ and inserting ‘‘, 403(a)(4),

3 403(b)(8), and 457(e)(16)’’.

4 (4) Subparagraph (A) of section 402(f )(2) is

5 amended by striking ‘‘or paragraph (4) of section

6 403(a)’’ and inserting ‘‘, paragraph (4) of section

7 403(a), subparagraph (A) of section 403(b)(8), or

8 subparagraph (A) of section 457(e)(16)’’.

9 (5) Paragraph (1) of section 402(f ) is amended

10 by striking ‘‘from an eligible retirement plan’’.

11 (6) Subparagraphs (A) and (B) of section

12 402(f )(1) are amended by striking ‘‘another eligible

13 retirement plan’’ and inserting ‘‘an eligible retire14 ment plan’’.

15 (7) Subparagraph (B) of section 403(b)(8) is

16 amended to read as follows:

17 ‘‘(B) CERTAIN RULES MADE APPLICA18 BLE.—The rules of paragraphs (2) through (7)

19 and (9) of section 402(c) and section 402(f )

20 shall apply for purposes of subparagraph (A),

21 except that section 402(f ) shall be applied to

22 the payor in lieu of the plan administrator.’’.

23 (8) Section 408(a)(1) is amended by striking

24 ‘‘or 403(b)(8)’’ and inserting ‘‘, 403(b)(8), or

25 457(e)(16)’’.
44

•S 2671 IS

1 (9) Subparagraphs (A) and (B) of section

2 415(b)(2) are each amended by striking ‘‘and

3 408(d)(3)’’ and inserting ‘‘403(b)(8), 408(d)(3), and

4 457(e)(16)’’.

5 (10) Section 415(c)(2) is amended by striking

6 ‘‘and 408(d)(3)’’ and inserting ‘‘408(d)(3), and

7 457(e)(16)’’.

8 (11) Section 4973(b)(1)(A) is amended by

9 striking ‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3), or

10 457(e)(16)’’.

11 (f ) EFFECTIVE DATE; SPECIAL RULE.—

12 (1) EFFECTIVE DATE.—The amendments made

13 by this section shall apply to distributions after De14 cember 31, 2000.

15 (2) SPECIAL RULE.—Notwithstanding any other

16 provision of law, subsections (h)(3) and (h)(5) of

17 section 1122 of the Tax Reform Act of 1986 shall

18 not apply to any distribution from an eligible retire19 ment plan (as defined in clause (iii) or (iv) of section

20 402(c)(8)(B) of the Internal Revenue Code of 1986)

21 on behalf of an individual if there was a rollover to

22 such plan on behalf of such individual which is per23 mitted solely by reason of any amendment made by

24 this section.
45

•S 2671 IS

1 SEC. 302. ROLLOVERS OF IRAS INTO WORKPLACE RETIRE2 MENT PLANS.

3 (a) IN GENERAL.—Subparagraph (A) of section

4 408(d)(3) (relating to rollover amounts) is amended by

5 adding ‘‘or’’ at the end of clause (i), by striking clauses

6 (ii) and (iii), and by adding at the end the following:

7 ‘‘(ii) the entire amount received (in8 cluding money and any other property) is

9 paid into an eligible retirement plan for

10 the benefit of such individual not later

11 than the 60th day after the date on which

12 the payment or distribution is received, ex13 cept that the maximum amount which may

14 be paid into such plan may not exceed the

15 portion of the amount received which is in16 cludible in gross income (determined with17 out regard to this paragraph).

18 For purposes of clause (ii), the term ‘eligible re19 tirement plan’ means an eligible retirement plan

20 described in clause (iii), (iv), (v), or (vi) of sec21 tion 402(c)(8)(B).’’.

22 (b) CONFORMING AMENDMENTS.—

23 (1) Paragraph (1) of section 403(b) is amended

24 by striking ‘‘section 408(d)(3)(A)(iii)’’ and inserting

25 ‘‘section 408(d)(3)(A)(ii)’’.
46

•S 2671 IS

1 (2) Clause (i) of section 408(d)(3)(D) is amend2 ed by striking ‘‘(i), (ii), or (iii)’’ and inserting ‘‘(i)

3 or (ii)’’.

4 (3) Subparagraph (G) of section 408(d)(3) is

5 amended to read as follows:

6 ‘‘(G) SIMPLE RETIREMENT ACCOUNTS.—In

7 the case of any payment or distribution out of

8 a simple retirement account (as defined in sub9 section (p)) to which section 72(t)(6) applies,

10 this paragraph shall not apply unless such pay11 ment or distribution is paid into another simple

12 retirement account.’’.

13 (c) EFFECTIVE DATE; SPECIAL RULE.—

14 (1) EFFECTIVE DATE.—The amendments made

15 by this section shall apply to distributions after De16 cember 31, 2000.

17 (2) SPECIAL RULE.—Notwithstanding any other

18 provision of law, subsections (h)(3) and (h)(5) of

19 section 1122 of the Tax Reform Act of 1986 shall

20 not apply to any distribution from an eligible retire21 ment plan (as defined in clause (iii) or (iv) of section

22 402(c)(8)(B) of the Internal Revenue Code of 1986)

23 on behalf of an individual if there was a rollover to

24 such plan on behalf of such individual which is per-
47

•S 2671 IS

1 mitted solely by reason of the amendments made by

2 this section.

3 SEC. 303. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.

4 (a) ROLLOVERS FROM EXEMPT TRUSTS.—Para5 graph (2) of section 402(c) (relating to maximum amount

6 which may be rolled over) is amended by adding at the

7 end the following: ‘‘The preceding sentence shall not apply

8 to such distribution to the extent—

9 ‘‘(A) such portion is transferred in a direct

10 trustee-to-trustee transfer to a qualified trust

11 which is part of a plan which is a defined con12 tribution plan and which agrees to separately

13 account for amounts so transferred, including

14 separately accounting for the portion of such

15 distribution which is includible in gross income

16 and the portion of such distribution which is

17 not so includible, or

18 ‘‘(B) such portion is transferred to an eli19 gible retirement plan described in clause (i) or

20 (ii) of paragraph (8)(B).’’.

21 (b) OPTIONAL DIRECT TRANSFER OF ELIGIBLE

22 ROLLOVER DISTRIBUTIONS.—Subparagraph (B) of sec23 tion 401(a)(31) (relating to limitation) is amended by add24 ing at the end the following: ‘‘The preceding sentence shall
48

•S 2671 IS

1 not apply to such distribution if the plan to which such

2 distribution is transferred—

3 ‘‘(i) agrees to separately account for

4 amounts so transferred, including sepa5 rately accounting for the portion of such

6 distribution which is includible in gross in7 come and the portion of such distribution

8 which is not so includible, or

9 ‘‘(ii) is an eligible retirement plan de10 scribed in clause (i) or (ii) of section

11 402(c)(8)(B).’’.

12 (c) RULES FOR APPLYING SECTION 72 TO IRAS.—

13 Paragraph (3) of section 408(d) (relating to special rules

14 for applying section 72) is amended by inserting at the

15 end the following:

16 ‘‘(H) APPLICATION OF SECTION 72.—

17 ‘‘(i) IN GENERAL.—If—

18 ‘‘(I) a distribution is made from

19 an individual retirement plan, and

20 ‘‘(II) a rollover contribution is

21 made to an eligible retirement plan

22 described in section 402(c)(8)(B)(iii),

23 (iv), (v), or (vi) with respect to all or

24 part of such distribution,
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•S 2671 IS

1 then, notwithstanding paragraph (2), the

2 rules of clause (ii) shall apply for purposes

3 of applying section 72.

4 ‘‘(ii) APPLICABLE RULES.—In the

5 case of a distribution described in clause

6 (i)—

7 ‘‘(I) section 72 shall be applied

8 separately to such distribution,

9 ‘‘(II) notwithstanding the pro

10 rata allocation of income on, and in11 vestment in, the contract to distribu12 tions under section 72, the portion of

13 such distribution rolled over to an eli14 gible retirement plan described in

15 clause (i) shall be treated as from in16 come on the contract (to the extent of

17 the aggregate income on the contract

18 from all individual retirement plans of

19 the distributee), and

20 ‘‘(III) appropriate adjustments

21 shall be made in applying section 72

22 to other distributions in such taxable

23 year and subsequent taxable years.’’.
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•S 2671 IS

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

2 this section shall apply to distributions made after Decem3 ber 31, 2000.

4 SEC. 304. HARDSHIP EXCEPTION TO 60-DAY RULE.

5 (a) EXEMPT TRUSTS.—Paragraph (3) of section

6 402(c) (relating to transfer must be made within 60 days

7 of receipt) is amended to read as follows:

8 ‘‘(3) TRANSFER MUST BE MADE WITHIN 60

9 DAYS OF RECEIPT.—

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

11 subparagraph (B), paragraph (1) shall not

12 apply to any transfer of a distribution made

13 after the 60th day following the day on which

14 the distributee received the property distrib15 uted.

16 ‘‘(B) HARDSHIP EXCEPTION.—The Sec17 retary may waive the 60-day requirement under

18 subparagraph (A) where the failure to waive

19 such requirement would be against equity or

20 good conscience, including casualty, disaster, or

21 other events beyond the reasonable control of

22 the individual subject to such requirement.’’.

23 (b) IRAS.—Paragraph (3) of section 408(d) (relating

24 to rollover contributions), as amended by section 303, is
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•S 2671 IS

1 amended by adding after subparagraph (H) the following

2 new subparagraph:

3 ‘‘(I) WAIVER OF 60-DAY REQUIREMENT.—

4 The Secretary may waive the 60-day require5 ment under subparagraphs (A) and (D) where

6 the failure to waive such requirement would be

7 against equity or good conscience, including

8 casualty, disaster, or other events beyond the

9 reasonable control of the individual subject to

10 such requirement.’’.

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

12 this section shall apply to distributions after December 31,

13 2000.

Æ