I 

113TH CONGRESS 

2D SESSION H. R. 5381 

To amend the nondiscrimination provisions of the Internal Revenue Code 

of 1986 to protect older, longer service participants. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 31, 2014 

Mr. TIBERI (for himself and Mr. NEAL) introduced the following bill; which 

was referred to the Committee on Ways and Means 

A BILL 

To amend the nondiscrimination provisions of the Internal 

Revenue Code of 1986 to protect older, longer service 

participants. 

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

3 SECTION 1. PROTECTING OLDER, LONGER SERVICE PAR4 TICIPANTS. 

5 (a) IN GENERAL.—Paragraph (4) of section 401(a) 

6 of the Internal Revenue Code of 1986 is amended to read 

7 as follows: 

8 ‘‘(4) NONDISCRIMINATION.— 

9 ‘‘(A) IN GENERAL.—A trust shall not con10 stitute a qualified trust under this section unVerDate Mar 15 2010 22:21 Aug 15, 2014 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5381.IH H5381

tkelley on DSK3SPTVN1PROD with BILLS
2 

•HR 5381 IH

1 less the contributions or benefits provided under 

2 the plan do not discriminate in favor of highly 

3 compensated employees (within the meaning of 

4 section 414(q)). For purposes of this para5 graph, there shall be excluded from consider6 ation employees described in section 410(b)(3) 

7 (A) and (C). 

8 ‘‘(B) PROTECTION OF OLDER, LONGER

9 SERVICE PARTICIPANTS.— 

10 ‘‘(i)(I) A defined benefit plan de11 scribed in subclause (II) shall not fail to 

12 satisfy this paragraph with respect to plan 

13 benefits, rights, or features by reason of— 

14 ‘‘(aa) the composition of the 

15 closed class of participants described 

16 in subclause (II), or 

17 ‘‘(bb) the benefits, rights, or fea18 tures provided to such closed class. 

19 ‘‘(II) A plan is described in this sub20 clause if— 

21 ‘‘(aa) the plan provides benefits, 

22 rights, or features to a closed class of 

23 participants, 

24 ‘‘(bb) such closed class and such 

25 benefits, rights, and features satisfy 


tkelley on DSK3SPTVN1PROD with BILLS
3 

•HR 5381 IH

1 the requirements of subparagraph (A) 

2 (without regard to this clause) as of 

3 the date that the class was closed, and 

4 ‘‘(cc) after the date as of which 

5 the class was closed, any plan amend6 ments that modify the closed class or 

7 the benefits, rights, and features pro8 vided to such closed class satisfy sub9 paragraph (A) (without regard to this 

10 clause). 

11 If a plan amendment causes a plan to 

12 cease to be described in this subclause (II) 

13 by reason of subclause (II)(cc), the plan is 

14 nevertheless described in this subclause 

15 (II) if such plan satisfies this subclause 

16 (II) (without regard to subclause (II)(cc)) 

17 as of the effective date of such amend18 ment. In such cases, subclause (II)(bb) 

19 and (cc) shall subsequently be applied by 

20 reference to the effective date of the plan 

21 amendment, rather than by reference to 

22 the original date that the class was closed. 

23 ‘‘(ii)(I) A defined contribution plan 

24 described in subclause (II) shall be per25 mitted to be tested on a benefits basis. 


tkelley on DSK3SPTVN1PROD with BILLS
4 

•HR 5381 IH

1 ‘‘(II) A defined contribution plan is 

2 described in this subclause if— 

3 ‘‘(aa) the plan provides make4 whole contributions to a closed class 

5 of participants whose defined benefit 

6 plan accruals have been reduced or 

7 eliminated, 

8 ‘‘(bb) such closed class of partici9 pants satisfies section 410(b)(2)(A)(i) 

10 as of the date that the class of partici11 pants was closed, and 

12 ‘‘(cc) after the date as of which 

13 the class was closed, any plan amend14 ments that modify the closed class or 

15 the allocations, benefits, rights, and 

16 features provided to such closed class 

17 satisfy subparagraph (A) (without re18 gard to this clause). 

19 If a plan amendment causes a plan to 

20 cease to be described in this subclause (II) 

21 by reason of subclause (II)(cc), the plan is 

22 nevertheless described in this subclause 

23 (II) if such plan satisfies this subclause 

24 (II) (without regard to subclause (II)(cc)) 

25 as of the effective date of such amendVerDate Mar 15 2010 22:21 Aug 15, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H5381.IH H5381

tkelley on DSK3SPTVN1PROD with BILLS
5 

•HR 5381 IH

1 ment. In such cases, subclause (II)(bb) 

2 and (cc) shall subsequently be applied by 

3 reference to the effective date of the plan 

4 amendment, rather than by reference to 

5 the original date that the class was closed. 

6 ‘‘(III) In addition to other testing 

7 methodologies otherwise applicable, for 

8 purposes of determining compliance with 

9 this paragraph and with section 410(b) of 

10 the portion of one or more defined con11 tribution plans described in subclause (II) 

12 that provide make-whole contributions, 

13 such portion of such plans may be aggre14 gated and tested on a benefits basis with 

15 the portion of one or more defined con16 tribution plans that— 

17 ‘‘(aa) provides matching con18 tributions (as defined in subsection 

19 (m)(4)(A)), or 

20 ‘‘(bb) consists of an employee 

21 stock ownership plan within the mean22 ing of section 4975(e)(7) or a tax 

23 credit employee stock ownership plan 

24 within the meaning of section 409(a). 


tkelley on DSK3SPTVN1PROD with BILLS
6 

•HR 5381 IH

1 For such purposes, matching contributions 

2 shall be treated in the same manner as em3 ployer contributions that are made without 

4 regard to whether an employee makes an 

5 elective contribution or employee contribu6 tion, including for purposes of applying the 

7 rules of subsection (l). 

8 ‘‘(C) DEFINITIONS.—For purposes of this 

9 paragraph— 

10 ‘‘(i) MAKE-WHOLE CONTRIBUTIONS.— 

11 The term ‘make-whole contributions’ 

12 means allocations for each employee in the 

13 class that are reasonably calculated, in a 

14 consistent manner, to replace some or all 

15 of the retirement benefits that the em16 ployee would have received under the de17 fined benefit plan and any other plan or 

18 arrangement if the employee had continued 

19 to benefit at the same level under such de20 fined benefit plan and such other plan or 

21 arrangement. 

22 ‘‘(ii) REFERENCES TO CLOSED CLASS

23 OF PARTICIPANTS.—References to a closed 

24 class of participants and similar references 

25 to a closed class shall include arrangeVerDate Mar 15 2010 22:21 Aug 15, 2014 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5381.IH H5381

tkelley on DSK3SPTVN1PROD with BILLS
7 

•HR 5381 IH

1 ments under which one or more classes of 

2 participants are closed. 

3 ‘‘(D) PROTECTING GRANDFATHERED PAR4 TICIPANTS IN DEFINED BENEFIT PLANS.— 

5 ‘‘(i) One or more defined benefit plans 

6 described in clause (ii) shall be permitted 

7 to be tested on a benefits basis with one or 

8 more defined contribution plans. 

9 ‘‘(ii) A defined benefit plan is de10 scribed in this clause if— 

11 ‘‘(I) the plan provides benefits to 

12 a closed class of participants, 

13 ‘‘(II) the plan and such benefits 

14 satisfy the requirements of subpara15 graph (A) (without regard to this sub16 paragraph) as of the date the class 

17 was closed, and 

18 ‘‘(III) after the date as of which 

19 the class was closed, any plan amend20 ments that modify the closed class or 

21 the benefits provided to such closed 

22 class satisfy subparagraph (A) (with23 out regard to this subparagraph). 

24 If a plan amendment causes a plan to 

25 cease to be described in this clause (ii) by 


tkelley on DSK3SPTVN1PROD with BILLS
8 

•HR 5381 IH

1 reason of subclause (III), the plan is never2 theless described in this clause (ii) if such 

3 plan satisfies this clause (ii) (without re4 gard to subclause (III)) as of the effective 

5 date of such amendment. In such cases, 

6 subclauses (II) and (III) shall subsequently 

7 be applied by reference to the effective 

8 date of the plan amendment, rather than 

9 by reference to the original date that the 

10 class was closed. 

11 ‘‘(iii) In addition to other testing 

12 methodologies otherwise applicable, for 

13 purposes of determining compliance with 

14 this paragraph and with section 410(b) of 

15 one or more defined benefit plans described 

16 in clause (ii), such plans may be aggre17 gated and tested on a benefits basis with 

18 the portion of one or more defined con19 tribution plans that— 

20 ‘‘(I) provides matching contribu21 tions (as defined in subsection 

22 (m)(4)(A)), or 

23 ‘‘(II) consists of an employee 

24 stock ownership plan within the mean25 ing of section 4975(e)(7) or a tax 


tkelley on DSK3SPTVN1PROD with BILLS
9 

•HR 5381 IH

1 credit employee stock ownership plan 

2 within the meaning of section 409(a). 

3 For such purposes, matching contributions 

4 shall be treated in the same manner as em5 ployer contributions that are made without 

6 regard to whether an employee makes an 

7 elective contribution or employee contribu8 tion, including for purposes of applying the 

9 rules of subsection (l). 

10 ‘‘(E) RULES.—The Secretary may pre11 scribe rules designed to prevent abuse of the 

12 plan designs otherwise permitted by reason of 

13 subparagraphs (B) and (D). Such rules shall be 

14 directed towards abuses under which the de15 fined benefit plan was established within a spec16 ified period prior to the date that— 

17 ‘‘(i) the class of participants described 

18 in subparagraphs (B)(i)(II)(aa), 

19 (B)(ii)(II)(aa), and (D)(ii)(I) is closed, or 

20 ‘‘(ii) the defined benefit plan accruals 

21 have been reduced or eliminated, in the 

22 case of the make-whole contributions de23 scribed in subparagraph (C). 

24 ‘‘(F) TRANSITION RULES.—Within one 

25 year after the date of enactment of the RetireVerDate Mar 15 2010 22:21 Aug 15, 2014 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5381.IH H5381

tkelley on DSK3SPTVN1PROD with BILLS
10 

•HR 5381 IH

1 ment Plan Simplification and Enhancement Act 

2 of 2013, the Secretary shall prescribe rules that 

3 facilitate the use of the provisions of subpara4 graphs (B) and (D) without regard to— 

5 ‘‘(i) whether the closing of the class of 

6 participants referred to in such subpara7 graphs occurred before or after such date 

8 of enactment, or 

9 ‘‘(ii) plan amendments that were 

10 adopted or effective before such date of en11 actment and that would not have been nec12 essary if subparagraphs (B) and (D) had 

13 been in effect.’’. 

14 (b) PARTICIPATION REQUIREMENTS.—Paragraph 

15 (26) of section 401(a) of the Internal Revenue Code of 

16 1986 is amended by adding at the end the following new 

17 subparagraph: 

18 ‘‘(I) PROTECTED PARTICIPANTS.—A plan 

19 described in this subparagraph shall be deemed 

20 to satisfy the requirements of subparagraph 

21 (A). A plan is described in this paragraph if— 

22 ‘‘(i) the plan is amended to— 

23 ‘‘(I) cease all benefit accruals, or 


tkelley on DSK3SPTVN1PROD with BILLS
11 

•HR 5381 IH

1 ‘‘(II) provide future benefit ac2 cruals only to a closed class of partici3 pants, and 

4 ‘‘(ii) the plan satisfies subparagraph 

5 (A) (without regard to this subparagraph) 

6 as of the effective date of the amendment. 

7 The Secretary may prescribe such rules as are 

8 necessary or appropriate to fulfill the purposes 

9 of this subparagraph, including prevention of 

10 abuse of this subparagraph in the case of plans 

11 established within a specific period prior to the 

12 effective date of the amendment.’’. 

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

14 this section shall take effect on the date of the enactment 

15 of this Act, without regard to whether any plan modifica16 tions referenced in such amendments are adopted or effec17 tive before, on, or after such date of enactment. 

Æ 


tkelley on DSK3SPTVN1PROD with BILLS