II 

113TH CONGRESS 

2D SESSION S. 2855 

To amend the nondiscrimination provisions of the Internal Revenue Code 

of 1986 to protect older, longer service participants. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 18, 2014 

Mr. CARDIN (for himself and Mr. PORTMAN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

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. SHORT TITLE. 

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

5 Preservation Act of 2014’’. 

6 SEC. 2. PROTECTING OLDER, LONGER SERVICE PARTICI7 PANTS. 

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

9 the Internal Revenue Code of 1986 is amended— 


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1 (1) by striking the semicolon at the end of 

2 paragraph (2) and inserting ‘‘; and’’, 

3 (2) by striking ‘‘; and’’ at the end of paragraph 

4 (3) and inserting a period, and 

5 (3) by striking paragraph (4) and inserting the 

6 following: 

7 ‘‘(4) NONDISCRIMINATION.— 

8 ‘‘(A) IN GENERAL.—A trust shall not con9 stitute a qualified trust under this section un10 less the contributions or benefits provided under 

11 the plan do not discriminate in favor of highly 

12 compensated employees (within the meaning of 

13 section 414(q)). For purposes of this para14 graph, there shall be excluded from consider15 ation employees described in section 410(b)(3) 

16 (A) and (C). 

17 ‘‘(B) PROTECTION OF OLDER, LONGER

18 SERVICE PARTICIPANTS.— 

19 ‘‘(i) A defined benefit plan that pro20 vides benefits, rights, or features to a 

21 closed class of participants shall not fail to 

22 satisfy the requirements of this paragraph 

23 by reason of the composition of such closed 

24 class or the benefits, rights, or features 

25 provided to such closed class, if— 


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1 ‘‘(I) such closed class and such 

2 benefits, rights, and features satisfied 

3 the requirements of subparagraph (A) 

4 (without regard to this clause) as of 

5 the date that the class was closed, and 

6 ‘‘(II) after the date as of which 

7 the class was closed, any plan amend8 ments that modify the closed class or 

9 the benefits, rights, and features pro10 vided to such closed class satisfy sub11 paragraph (A) (without regard to this 

12 clause). 

13 If a plan amendment is adopted that does 

14 not meet the requirements of subclause 

15 (II), the plan shall be treated as meeting 

16 the requirements of this paragraph if such 

17 plan satisfied such requirements (without 

18 regard to subclause (II)) as of the effective 

19 date of such amendment. In such cases, 

20 subclauses (I) and (II) shall subsequently 

21 be applied by reference to the effective 

22 date of the plan amendment, rather than 

23 by reference to the date that the class was 

24 closed. 


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1 ‘‘(ii) A defined contribution plan shall 

2 be permitted to be tested on a benefits 

3 basis if— 

4 ‘‘(I) the plan provides make5 whole contributions to a closed class 

6 of participants whose defined benefit 

7 plan accruals have been reduced or 

8 eliminated, 

9 ‘‘(II) such closed class of partici10 pants satisfied section 410(b)(2)(A)(i) 

11 as of the date that the class of partici12 pants was closed, and 

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

14 the class was closed, any plan amend15 ments that modify the closed class or 

16 the allocations, benefits, rights, and 

17 features provided to such closed class 

18 satisfy subparagraph (A) (without re19 gard to this clause). 

20 If a plan amendment is adopted that does 

21 not meet the requirements of subclause 

22 (III), the plan shall be treated as meeting 

23 the requirements of this paragraph if such 

24 plan satisfied such requirements (without 

25 regard to subclause (III)) as of the effecVerDate Sep 11 2014 00:25 Sep 26, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2855.IS S2855

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1 tive date of such amendment. In such 

2 cases, subclauses (II) and (III) shall subse3 quently be applied by reference to the ef4 fective date of the plan amendment, rather 

5 than by reference to the date that the class 

6 was closed. 

7 ‘‘(iii) In addition to other testing 

8 methodologies otherwise applicable, for 

9 purposes of determining compliance with 

10 this paragraph and with section 410(b) of 

11 the portion of one or more defined con12 tribution plans described in clause (ii) that 

13 provide make-whole contributions, such 

14 portion of such plans may be aggregated 

15 and tested on a benefits basis with the por16 tion of one or more defined contribution 

17 plans that— 

18 ‘‘(I) provides matching contribu19 tions (as defined in subsection 

20 (m)(4)(A)), or 

21 ‘‘(II) consists of an employee 

22 stock ownership plan within the mean23 ing of section 4975(e)(7) or a tax 

24 credit employee stock ownership plan 

25 within the meaning of section 409(a). 


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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 no change had been made 

19 to such defined benefit plan and such other 

20 plan or arrangement. 

21 ‘‘(ii) REFERENCES TO CLOSED CLASS

22 OF PARTICIPANTS.—References to a closed 

23 class of participants and similar references 

24 to a closed class shall include arrangeVerDate Sep 11 2014 00:25 Sep 26, 2014 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S2855.IS S2855

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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) A defined benefit shall be per6 mitted to be tested on a benefits basis with 

7 one or more defined contribution plans if— 

8 ‘‘(I) the plan provides benefits to 

9 a closed class of participants, 

10 ‘‘(II) the plan and such benefits 

11 satisfy the requirements of subpara12 graph (A) (without regard to this sub13 paragraph) as of the date the class 

14 was closed, and 

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

16 the class was closed, any plan amend17 ments that modify the closed class or 

18 the benefits provided to such closed 

19 class satisfy subparagraph (A) (with20 out regard to this subparagraph). 

21 If a plan amendment is adopted that does 

22 not meet the requirements of subclause 

23 (III), the plan shall be treated as meeting 

24 the requirements of this paragraph if such 

25 plan satisfied such requirements (without 


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1 regard to subclause (III)) as of the effec2 tive date of such amendment. In such 

3 cases, subclauses (II) and (III) shall subse4 quently be applied by reference to the ef5 fective date of the plan amendment, rather 

6 than by reference to the date that the class 

7 was closed. 

8 ‘‘(ii) In addition to other testing 

9 methodologies otherwise applicable, for 

10 purposes of determining compliance with 

11 this paragraph and with section 410(b) of 

12 one or more defined benefit plans that 

13 meet the requirements of subclauses (I), 

14 (II), and (III) of clause (i), such plans may 

15 be aggregated and tested on a benefits 

16 basis with the portion of one or more de17 fined contribution plans that— 

18 ‘‘(I) provides matching contribu19 tions (as defined in subsection 

20 (m)(4)(A)), or 

21 ‘‘(II) consists of an employee 

22 stock ownership plan within the mean23 ing of section 4975(e)(7) or a tax 

24 credit employee stock ownership plan 

25 within the meaning of section 409(a). 


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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 ‘‘(E) RULES.—The Secretary may pre9 scribe rules to prevent abuse of the plan designs 

10 otherwise permitted by reason of subparagraphs 

11 (B) and (D). Such rules shall be directed to12 ward abuses under which the defined benefit 

13 plan was established within a specified period 

14 prior to the date that— 

15 ‘‘(i) the closed class of participants re16 ferred to in subparagraph (B)(i), (B)(ii), 

17 or (D)(i) is closed, or 

18 ‘‘(ii) the defined benefit plan accruals 

19 have been reduced or eliminated, in the 

20 case of the make-whole contributions de21 scribed in subparagraph (C). 

22 ‘‘(F) TRANSITION RULES.—Within 1 year 

23 after the date of enactment of the Retirement 

24 Security Preservation Act of 2014, the Sec25 retary shall prescribe rules that facilitate the 


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1 use of the provisions of subparagraphs (B) and 

2 (D) without regard to— 

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

4 participants referred to in such subpara5 graphs occurred before or after such date 

6 of enactment, or 

7 ‘‘(ii) plan amendments that were 

8 adopted or effective before such date of en9 actment and that would not have been nec10 essary if subparagraphs (B) and (D) had 

11 been in effect.’’. 

12 (b) PARTICIPATION REQUIREMENTS.—Paragraph 

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

14 1986 is amended by adding at the end the following new 

15 subparagraph: 

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

17 shall be deemed to satisfy the requirements of 

18 subparagraph (A) if— 

19 ‘‘(i) the plan is amended— 

20 ‘‘(I) to cease all benefit accruals, 

21 or 

22 ‘‘(II) to provide future benefit ac23 cruals only to a closed class of partici24 pants, and 


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1 ‘‘(ii) the plan satisfies subparagraph 

2 (A) (without regard to this subparagraph) 

3 as of the effective date of the amendment. 

4 The Secretary may prescribe such rules as are 

5 necessary or appropriate to fulfill the purposes 

6 of this subparagraph, including prevention of 

7 abuse of this subparagraph in the case of plans 

8 established within a specified period prior to the 

9 effective date of the amendment.’’. 

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

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

12 of this Act, without regard to whether any plan modifica13 tions referenced in such amendments are adopted or effec14 tive before, on, or after such date of enactment. 

Æ 


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