II 

116TH CONGRESS 

1ST SESSION S. 1020 

To provide for an additional nondiscrimination safe harbor for automatic 

contribution arrangements. 

IN THE SENATE OF THE UNITED STATES 

APRIL 3, 2019 

Mr. YOUNG (for himself, Mr. BOOKER, Mr. COTTON, and Mr. JONES) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To provide for an additional nondiscrimination safe harbor 

for automatic contribution arrangements. 

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 Flexibility Act of 2019’’. 


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1 SEC. 2. ADDITIONAL NONDISCRIMINATION SAFE HARBOR 

2 FOR AUTOMATIC CONTRIBUTION ARRANGE3 MENTS. 

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

5 the Internal Revenue Code of 1986 is amended by adding 

6 at the end the following new paragraph: 

7 ‘‘(15) SPECIAL NONELECTIVE AND MATCHING

8 CONTRIBUTION RULES FOR SMALL EMPLOYERS.— 

9 ‘‘(A) IN GENERAL.—In the case of a cash 

10 or deferred arrangement maintained by an eligi11 ble employer (as defined in section 

12 408(p)(2)(C)(i)), for purposes of paragraph 

13 (13), the arrangement shall be treated as meet14 ing the requirements of subparagraph (D) 

15 thereof if under the arrangement, the total elec16 tive deferrals (as defined in section 

17 402(g)(3)(A)) with respect to any employee do 

18 not exceed an amount equal to the applicable 

19 percentage of the limitation otherwise applicable 

20 under section 402(g). 

21 ‘‘(B) APPLICABLE PERCENTAGE.—For 

22 purposes of subparagraph (A), the applicable 

23 percentage with respect to an arrangement is— 

24 ‘‘(i) 40 percent in the case of an ar25 rangement which does not meet the reVerDate Sep 11 2014 22:11 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1020.IS S1020

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1 quirements of paragraph (13)(D) and is 

2 not described in clause (ii) or (iii), 

3 ‘‘(ii) 60 percent in the case of an ar4 rangement which is not described in clause 

5 (iii) and which would meet the require6 ments of paragraph (13)(D) if— 

7 ‘‘(I) ‘equal to at least’ were sub8 stituted for ‘equal to’ in clause (i)(I) 

9 thereof, 

10 ‘‘(II) ‘2 percent of compensation, 

11 and such matching contributions meet 

12 the requirement of subsection 

13 (m)(11)(B)’ were substituted for ‘6 

14 percent of compensation’ in clause 

15 (i)(I) thereof, and 

16 ‘‘(III) ‘1 percent’ were sub17 stituted for ‘3 percent’ in clause 

18 (i)(II) thereof, and 

19 ‘‘(iii) 80 percent in the case of an ar20 rangement which would meet the require21 ments of paragraph (13)(D) if— 

22 ‘‘(I) ‘equal to at least’ were sub23 stituted for ‘equal to’ in clause (i)(I) 

24 thereof, 


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1 ‘‘(II) ‘4 percent of compensation, 

2 and such matching contributions meet 

3 the requirement of subsection 

4 (m)(11)(B)’ were substituted for ‘6 

5 percent of compensation’ in clause 

6 (i)(I) thereof, and 

7 ‘‘(III) ‘2 percent’ were sub8 stituted for ‘3 percent’ in clause 

9 (i)(II) thereof. 

10 ‘‘(C) REPORTING.—This paragraph shall 

11 apply to an arrangement only if the plan in12 cludes with the reports required under sections 

13 6057 and 6058— 

14 ‘‘(i) the number of employees eligible 

15 to participate in the arrangement, and 

16 ‘‘(ii) the number of participants for 

17 the plan year.’’. 

18 (b) MODIFICATION OF EXISTING AUTOMATIC CON19 TRIBUTION SAFE HARBOR.— 

20 (1) QUALIFIED PERCENTAGE.— 

21 (A) IN GENERAL.—Clause (iii) of section 

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

23 1986 is amended by striking ‘‘10 percent’’ and 

24 inserting ‘‘15 percent’’. 

25 (B) CONFORMING AMENDMENTS.— 


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1 (i) Subclause (I) of section 

2 401(k)(13)(C)(iii) of the Internal Revenue 

3 Code of 1986 is amended— 

4 (I) by striking ‘‘3 percent’’ and 

5 inserting ‘‘3 percent, but not greater 

6 than 10 percent,’’, and 

7 (II) by adding ‘‘and’’ at the end. 

8 (ii) Subclause (II) of section 

9 401(k)(13)(C)(iii) of such Code is amended 

10 to read as follows: 

11 ‘‘(II) during any subsequent plan 

12 year, the lesser of 1 percentage point 

13 higher than the percentage in effect 

14 for the preceding plan year or 8 per15 cent.’’. 

16 (iii) Section 401(k)(13)(C)(iii) of such 

17 Code is amended by striking subclauses 

18 (III) and (IV). 

19 (2) AUTOMATIC RE-ELECTION.—Subparagraph 

20 (C) of section 401(k)(13) of such Code is amended 

21 by striking clause (iv) and by adding at the end the 

22 following new clause: 

23 ‘‘(iv) AUTOMATIC RE-ELECTION RE24 QUIRED.—The requirements of this sub25 paragraph shall be treated as met only if, 


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1 under the arrangement, every 3 years each 

2 employee— 

3 ‘‘(I) who is eligible to participate 

4 in the arrangement, and 

5 ‘‘(II) who is not participating, or 

6 is contributing less than 3 percent of 

7 compensation, at the time of deter8 mination, 

9 is treated as having made the election de10 scribed in clause (i) unless the employee 

11 makes a new election under clause (ii).’’. 

12 (c) EFFECTIVE DATE.— 

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section 

15 shall apply to plan years beginning after December 

16 31, 2019. 

17 (2) IMMEDIATE AUTOMATIC DEFERRAL FOR

18 CURRENT EMPLOYEES NOT REQUIRED.—In the case 

19 of an employer who adopts a qualified automatic 

20 contribution arrangement (as defined in section 

21 401(k)(13)(B) of the Internal Revenue Code of 

22 1986) after December 31, 2019, solely for the first 

23 and second plan years for which the arrangement is 

24 in effect, clauses (i) and (iv) of section 

25 401(k)(13)(C) of the Internal Revenue Code of 1986 


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1 (as amended by this section) may be applied without 

2 taking into account any employee who— 

3 (A) is eligible to participate in the arrange4 ment (or a predecessor arrangement) imme5 diately before the date the arrangement goes 

6 into effect, and 

7 (B) has an election in effect on such date 

8 either to participate in the arrangement or to 

9 not participate in the arrangement. 

Æ 


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