II 

Calendar No. 670 

114TH CONGRESS 

2D SESSION S. 3471 

[Report No. 114–375] 

To amend the Internal Revenue Code of 1986 to encourage retirement 

savings, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 16, 2016 

Mr. HATCH, from the Committee on Finance, reported the following original 

bill; which was read twice and placed on the calendar 

A BILL 

To amend the Internal Revenue Code of 1986 to encourage 

retirement savings, 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, ETC. 

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

5 ‘‘Retirement Enhancement and Savings Act of 2016’’. 

6 (b) TABLE OF CONTENTS.—The table of contents of 

7 this Act is as follows: 

Sec. 1. Short title, etc. 

mstockstill on DSK3G9T082PROD with BILLS

2 

•S 3471 PCS

TITLE I—EXPANDING AND PRESERVING RETIREMENT SAVINGS 

Sec. 101. Multiple employer plans. 

Sec. 102. Pooled employer and multiple employer plan reporting. 

Sec. 103. Removal of 10 percent cap from automatic enrollment safe harbor 

after 1st plan year. 

Sec. 104. Rules relating to election of safe harbor 401(k) status. 

Sec. 105. Increase in credit limitation for small employer pension plan startup 

costs. 

Sec. 106. Small employer automatic enrollment credit. 

Sec. 107. Certain taxable non-tuition fellowship and stipend payments treated 

as compensation for IRA purposes. 

Sec. 108. Repeal of maximum age for traditional IRA contributions. 

Sec. 109. Expansion of IRA ownership of S corporation bank stock. 

Sec. 110. Extended rollover period for plan loan offset amounts. 

Sec. 111. Modification of rules relating to hardship withdrawals from cash or 

deferred arrangements. 

Sec. 112. Qualified employer plans prohibited from making loans through credit 

cards and other similar arrangements. 

Sec. 113. Portability of lifetime income options. 

Sec. 114. Treatment of custodial accounts on termination of section 403(b) 

plans. 

Sec. 115. Clarification of retirement income account rules relating to churchcontrolled organizations. 

TITLE II—ADMINISTRATIVE IMPROVEMENTS 

Sec. 201. Plan adopted by filing due date for year may be treated as in effect 

as of close of year. 

Sec. 202. Combined annual report for group of plans. 

Sec. 203. Disclosure regarding lifetime income. 

Sec. 204. Fiduciary safe harbor for selection of lifetime income provider. 

Sec. 205. Modification of nondiscrimination rules to protect older, longer service participants. 

Sec. 206. Modification of PBGC premiums for CSEC plans. 

TITLE III—BENEFITS RELATING TO UNITED STATES TAX COURT 

Sec. 301. Thrift Savings Plan contributions for judges in the Federal Employees Retirement System. 

Sec. 302. Change in vesting period for survivor annuities and waiver of vesting 

period in the event of assassination. 

Sec. 303. Coordination of retirement and survivor annuity with the Federal 

Employees Retirement System. 

Sec. 304. Limit on teaching compensation of retired judges. 

Sec. 305. General provisions relating to magistrate judges of the Tax Court. 

Sec. 306. Life insurance for magistrate judges of the tax court age 65 or older. 

Sec. 307. Retirement and annuity program. 

Sec. 308. Provisions for recall. 

TITLE IV—OTHER BENEFITS 

Sec. 401. Benefits provided to volunteer firefighters and emergency medical responders. 

Sec. 402. Treatment of qualified equity grants. 

TITLE V—REVENUE PROVISIONS 

mstockstill on DSK3G9T082PROD with BILLS

3 

•S 3471 PCS

Sec. 501. Modifications of required distribution rules for pension plans. 

Sec. 502. Increase in penalty for failure to file. 

Sec. 503. Increased penalties for failure to file retirement plan returns. 

Sec. 504. Modification of user fee requirements for installment agreements. 

Sec. 505. Increase information sharing to administer excise taxes. 

Sec. 506. Repeal of technical termination for partnerships. 

Sec. 507. Pension variable rate premium payment acceleration. 

1 TITLE I—EXPANDING AND PRE2 SERVING RETIREMENT SAV3 INGS 

4 SEC. 101. MULTIPLE EMPLOYER PLANS. 

5 (a) QUALIFICATION REQUIREMENTS.— 

6 (1) IN GENERAL.—Section 413 of the Internal 

7 Revenue Code of 1986 is amended by adding at the 

8 end the following new subsection: 

9 ‘‘(e) APPLICATION OF QUALIFICATION REQUIRE10 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH

11 POOLED PLAN PROVIDERS.— 

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (2), if a defined contribution plan to which 

14 subsection (c) applies— 

15 ‘‘(A) is sponsored by employers all of 

16 which have both a common interest other than 

17 having adopted the plan and control of the 

18 plan, or 

19 ‘‘(B) in the case of a plan not described in 

20 subparagraph (A), has a pooled plan provider, 

21 then the plan shall not be treated as failing to meet 

22 the requirements under this title applicable to a plan 

mstockstill on DSK3G9T082PROD with BILLS

4 

•S 3471 PCS

1 described in section 401(a) or to a plan that consists 

2 of individual retirement accounts described in sec3 tion 408 (including by reason of subsection (c) 

4 thereof), whichever is applicable, merely because one 

5 or more employers of employees covered by the plan 

6 fail to take such actions as are required of such em7 ployers for the plan to meet such requirements. 

8 ‘‘(2) LIMITATIONS.— 

9 ‘‘(A) IN GENERAL.—Paragraph (1) shall 

10 not apply to any plan unless the terms of the 

11 plan provide that in cases of employers failing 

12 to take the actions described in paragraph 

13 (1)— 

14 ‘‘(i) the assets of the plan attributable 

15 to employees of the employer will be trans16 ferred to a plan maintained only by the 

17 employer (or its successor), to an eligible 

18 retirement plan as defined in section 

19 402(c)(8)(B) for each individual whose ac20 count is transferred, or to any other ar21 rangement that the Secretary determines is 

22 appropriate, unless the Secretary deter23 mines it is in the best interests of such em24 ployees to retain the assets in the plan, 

25 and 

mstockstill on DSK3G9T082PROD with BILLS

5 

•S 3471 PCS

1 ‘‘(ii) the employer described in clause 

2 (i) (and not the plan with respect to which 

3 the failure occurred or any other partici4 pating employer in such plan) shall, except 

5 to the extent provided by the Secretary, be 

6 liable for any liabilities with respect to 

7 such plan attributable to employees of the 

8 employer. 

9 ‘‘(B) FAILURES BY POOLED PLAN PRO10 VIDERS.—If the pooled plan provider of a plan 

11 described in paragraph (1)(B) does not perform 

12 substantially all of the administrative duties 

13 which are required of the provider under para14 graph (3)(A)(i) for any plan year, the Sec15 retary, in the Secretary’s own discretion, may 

16 provide that the determination as to whether 

17 the plan meets the requirements under this title 

18 applicable to a plan described in section 401(a) 

19 or to a plan that consists of individual retire20 ment accounts described in section 408 (includ21 ing by reason of subsection (c) thereof), which22 ever is applicable, shall be made in the same 

23 manner as would be made without regard to 

24 paragraph (1). 

mstockstill on DSK3G9T082PROD with BILLS

6 

•S 3471 PCS

1 ‘‘(3) POOLED PLAN PROVIDER.—For purposes 

2 of this subsection— 

3 ‘‘(A) IN GENERAL.—The term ‘pooled plan 

4 provider’ means, with respect to any plan, a 

5 person who— 

6 ‘‘(i) is designated by the terms of the 

7 plan as a named fiduciary (as defined in 

8 section 402(a)(2) of the Employee Retire9 ment Income Security Act of 1974), as the 

10 plan administrator, and as the person re11 sponsible to perform all administrative du12 ties (including conducting proper testing 

13 with respect to the plan and employees of 

14 each participating employer) which are 

15 reasonably necessary to ensure that— 

16 ‘‘(I) the plan meets any require17 ment applicable under the Employee 

18 Retirement Income Security Act of 

19 1974 or this title to a plan described 

20 in section 401(a) or to a plan that 

21 consists of individual retirement ac22 counts described in section 408 (in23 cluding by reason of subsection (c) 

24 thereof), whichever is applicable, and 

mstockstill on DSK3G9T082PROD with BILLS

7 

•S 3471 PCS

1 ‘‘(II) each participating employer 

2 takes such actions as the Secretary or 

3 such person determines are necessary 

4 for the plan to meet the requirements 

5 described in subclause (I), including 

6 providing to such person any disclo7 sures or other information which the 

8 Secretary may require or which such 

9 person otherwise determines is nec10 essary to administer the plan or to 

11 allow the plan to meet such require12 ments, 

13 ‘‘(ii) registers as a pooled plan pro14 vider with the Secretary, and provides such 

15 other information to the Secretary as the 

16 Secretary may require, before beginning 

17 operations as a pooled plan provider, 

18 ‘‘(iii) acknowledges in writing that 

19 such person is a named fiduciary (within 

20 the meaning of section 402(a)(2) of the 

21 Employee Retirement Income Security Act 

22 of 1974), and the plan administrator, with 

23 respect to the plan, and 

24 ‘‘(iv) is responsible for ensuring that 

25 all persons who handle assets of, or who 

mstockstill on DSK3G9T082PROD with BILLS

8 

•S 3471 PCS

1 are fiduciaries of, the plan are bonded in 

2 accordance with section 412 of the Em3 ployee Retirement Income Security Act of 

4 1974. 

5 ‘‘(B) AUDITS, EXAMINATIONS AND INVES6 TIGATIONS.—The Secretary may perform au7 dits, examinations, and investigations of pooled 

8 plan providers as may be necessary to enforce 

9 and carry out the purposes of this subsection. 

10 ‘‘(4) GUIDANCE.— 

11 ‘‘(A) IN GENERAL.—The Secretary shall 

12 issue such guidance as the Secretary determines 

13 appropriate to carry out this subsection, includ14 ing guidance— 

15 ‘‘(i) to identify the administrative du16 ties and other actions required to be per17 formed by a pooled plan provider under 

18 this subsection, 

19 ‘‘(ii) which describes the procedures to 

20 be taken to terminate a plan which fails to 

21 meet the requirements to be a plan de22 scribed in paragraph (1), including the 

23 proper treatment of, and actions needed to 

24 be taken by, any participating employer of 

25 the plan and the assets and liabilities of 

mstockstill on DSK3G9T082PROD with BILLS

9 

•S 3471 PCS

1 the plan with respect to employees of that 

2 employer, and 

3 ‘‘(iii) identifying appropriate cases to 

4 which the rules of paragraph (2)(A) will 

5 apply to employers failing to take the ac6 tions described in paragraph (1). 

7 The Secretary shall take into account under 

8 clause (iii) whether the failure of an employer 

9 or pooled plan provider to provide any disclo10 sures or other information, or to take any other 

11 action, necessary to administer a plan or to 

12 allow a plan to meet requirements applicable to 

13 the plan under section 401(a) or 408, whichever 

14 is applicable, has continued over a period of 

15 time that clearly demonstrates a lack of com16 mitment to compliance. 

17 ‘‘(B) PROSPECTIVE APPLICATION.—Any 

18 guidance issued by the Secretary under this 

19 paragraph shall not apply to any action or fail20 ure occurring before the issuance of such guid21 ance. 

22 ‘‘(5) MODEL PLAN.—The Secretary shall, in 

23 consultation with the Secretary of Labor when ap24 propriate, publish model plan language which meets 

25 the requirements of this subsection and of paramstockstill on DSK3G9T082PROD with BILLS

10 

•S 3471 PCS

1 graphs (43) and (44) of section 3 of the Employee 

2 Retirement Income Security Act of 1974 and which 

3 may be adopted in order for a plan to be treated as 

4 a plan described in paragraph (1)(B).’’. 

5 (2) CONFORMING AMENDMENT.—Paragraph (3) 

6 of section 413(b) of such Code is amended by strik7 ing ‘‘section 401(a)’’ and inserting ‘‘sections 401(a) 

8 and 408(c)’’. 

9 (3) TECHNICAL AMENDMENT.—Subsection (c) 

10 of section 408 of such Code is amended by inserting 

11 after paragraph (2) the following new paragraph: 

12 ‘‘(3) There is a separate accounting for any in13 terest of an employee or member (or spouse of an 

14 employee or member) in a Roth IRA.’’. 

15 (b) NO COMMON INTEREST REQUIRED FOR POOLED

16 EMPLOYER PLANS.—Section 3(2) of the Employee Retire17 ment Income Security Act of 1974 (29 U.S.C. 1002(2)) 

18 is amended by adding at the end the following: 

19 ‘‘(C) A pooled employer plan shall be treat20 ed as— 

21 ‘‘(i) a single employee pension benefit 

22 plan or single pension plan; and 

23 ‘‘(ii) a plan to which section 210(a) 

24 applies.’’. 

mstockstill on DSK3G9T082PROD with BILLS

11 

•S 3471 PCS

1 (c) POOLED EMPLOYER PLAN AND PROVIDER DE2 FINED.— 

3 (1) IN GENERAL.—Section 3 of the Employee 

4 Retirement Income Security Act of 1974 (29 U.S.C. 

5 1002) is amended by adding at the end the fol6 lowing: 

7 ‘‘(43) POOLED EMPLOYER PLAN.— 

8 ‘‘(A) IN GENERAL.—The term ‘pooled em9 ployer plan’ means a plan— 

10 ‘‘(i) which is an individual account 

11 plan established or maintained for the pur12 pose of providing benefits to the employees 

13 of 2 or more employers; 

14 ‘‘(ii) which is a plan described in sec15 tion 401(a) of the Internal Revenue Code 

16 of 1986 which includes a trust exempt 

17 from tax under section 501(a) of such 

18 Code or a plan that consists of individual 

19 retirement accounts described in section 

20 408 of such Code (including by reason of 

21 subsection (c) thereof); and 

22 ‘‘(iii) the terms of which meet the re23 quirements of subparagraph (B). 

24 Such term shall not include a plan with respect 

25 to which all of the participating employers have 

mstockstill on DSK3G9T082PROD with BILLS

12 

•S 3471 PCS

1 both a common interest other than having 

2 adopted the plan and control of the plan. 

3 ‘‘(B) REQUIREMENTS FOR PLAN TERMS.— 

4 The requirements of this subparagraph are met 

5 with respect to any plan if the terms of the 

6 plan— 

7 ‘‘(i) designate a pooled plan provider 

8 and provide that the pooled plan provider 

9 is a named fiduciary of the plan; 

10 ‘‘(ii) designate one or more trustees 

11 meeting the requirements of section 

12 408(a)(2) of the Internal Revenue Code of 

13 1986 (other than a participating employer) 

14 to be responsible for collecting contribu15 tions to, and holding the assets of, the 

16 plan and require such trustees to imple17 ment written contribution collection proce18 dures that are reasonable, diligent, and 

19 systematic; 

20 ‘‘(iii) provide that each participating 

21 employer retains fiduciary responsibility 

22 for— 

23 ‘‘(I) the selection and monitoring 

24 in accordance with section 404(a) of 

25 the person designated as the pooled 

mstockstill on DSK3G9T082PROD with BILLS

13 

•S 3471 PCS

1 plan provider and any other person 

2 who, in addition to the pooled plan 

3 provider, is designated as a named fi4 duciary of the plan; and 

5 ‘‘(II) to the extent not otherwise 

6 delegated to another fiduciary by the 

7 pooled plan provider and subject to 

8 the provisions of section 404(c), the 

9 investment and management of that 

10 portion of the plan’s assets attrib11 utable to the employees of that par12 ticipating employer; 

13 ‘‘(iv) provide that a participating em14 ployer, or a participant or beneficiary, is 

15 not subject to unreasonable restrictions, 

16 fees, or penalties with regard to ceasing 

17 participation, receipt of distributions, or 

18 otherwise transferring assets of the plan in 

19 accordance with section 208 or paragraph 

20 (44)(C)(i)(II); 

21 ‘‘(v) require— 

22 ‘‘(I) the pooled plan provider to 

23 provide to participating employers any 

24 disclosures or other information which 

25 the Secretary may require, including 

mstockstill on DSK3G9T082PROD with BILLS

14 

•S 3471 PCS

1 any disclosures or other information 

2 to facilitate the selection or any moni3 toring of the pooled plan provider by 

4 participating employers; and 

5 ‘‘(II) each participating employer 

6 to take such actions as the Secretary 

7 or the pooled plan provider determines 

8 are necessary to administer the plan 

9 or for the plan to meet any require10 ment applicable under this Act or the 

11 Internal Revenue Code of 1986 to a 

12 plan described in section 401(a) of 

13 such Code or to a plan that consists 

14 of individual retirement accounts de15 scribed in section 408 of such Code 

16 (including by reason of subsection (c) 

17 thereof), whichever is applicable, in18 cluding providing any disclosures or 

19 other information which the Secretary 

20 may require or which the pooled plan 

21 provider otherwise determines is nec22 essary to administer the plan or to 

23 allow the plan to meet such require24 ments; and 

mstockstill on DSK3G9T082PROD with BILLS

15 

•S 3471 PCS

1 ‘‘(vi) provide that any disclosure or 

2 other information required to be provided 

3 under clause (v) may be provided in elec4 tronic form and will be designed to ensure 

5 only reasonable costs are imposed on 

6 pooled plan providers and participating 

7 employers. 

8 ‘‘(C) EXCEPTIONS.—The term ‘pooled em9 ployer plan’ does not include— 

10 ‘‘(i) a multiemployer plan; or 

11 ‘‘(ii) a plan established before Janu12 ary 1, 2016, unless the plan administrator 

13 elects that the plan will be treated as a 

14 pooled employer plan and the plan meets 

15 the requirements of this title applicable to 

16 a pooled employer plan established on or 

17 after such date. 

18 ‘‘(44) POOLED PLAN PROVIDER.— 

19 ‘‘(A) IN GENERAL.—The term ‘pooled plan 

20 provider’ means a person who— 

21 ‘‘(i) is designated by the terms of a 

22 pooled employer plan as a named fiduciary, 

23 as the plan administrator, and as the per24 son responsible for the performance of all 

25 administrative duties (including conducting 

mstockstill on DSK3G9T082PROD with BILLS

16 

•S 3471 PCS

1 proper testing with respect to the plan and 

2 employees of each participating employer) 

3 which are reasonably necessary to ensure 

4 that— 

5 ‘‘(I) the plan meets any require6 ment applicable under this Act or the 

7 Internal Revenue Code of 1986 to a 

8 plan described in section 401(a) of 

9 such Code or to a plan that consists 

10 of individual retirement accounts de11 scribed in section 408 of such Code 

12 (including by reason of subsection (c) 

13 thereof), whichever is applicable; and 

14 ‘‘(II) each participating employer 

15 takes such actions as the Secretary or 

16 pooled plan provider determines are 

17 necessary for the plan to meet the re18 quirements described in subclause (I), 

19 including providing the disclosures 

20 and information described in para21 graph (43)(B)(v)(II); 

22 ‘‘(ii) registers as a pooled plan pro23 vider with the Secretary, and provides to 

24 the Secretary such other information as 

mstockstill on DSK3G9T082PROD with BILLS

17 

•S 3471 PCS

1 the Secretary may require, before begin2 ning operations as a pooled plan provider; 

3 ‘‘(iii) acknowledges in writing that 

4 such person is a named fiduciary, and the 

5 plan administrator, with respect to the 

6 pooled employer plan; and 

7 ‘‘(iv) is responsible for ensuring that 

8 all persons who handle assets of, or who 

9 are fiduciaries of, the pooled employer plan 

10 are bonded in accordance with section 412. 

11 ‘‘(B) AUDITS, EXAMINATIONS AND INVES12 TIGATIONS.—The Secretary may perform au13 dits, examinations, and investigations of pooled 

14 plan providers as may be necessary to enforce 

15 and carry out the purposes of this paragraph 

16 and paragraph (43). 

17 ‘‘(C) GUIDANCE.— 

18 ‘‘(i) IN GENERAL.—The Secretary 

19 shall issue such guidance as the Secretary 

20 determines appropriate to carry out this 

21 paragraph and paragraph (43), including 

22 guidance— 

23 ‘‘(I) to identify the administra24 tive duties and other actions required 

25 to be performed by a pooled plan promstockstill on DSK3G9T082PROD with BILLS

18 

•S 3471 PCS

1 vider under either such paragraph; 

2 and 

3 ‘‘(II) which requires in appro4 priate cases that if a participating 

5 employer fails to take the actions re6 quired under subparagraph 

7 (A)(i)(II)— 

8 ‘‘(aa) the assets of the plan 

9 attributable to employees of the 

10 participating employer are trans11 ferred to a plan maintained only 

12 by the participating employer (or 

13 its successor), to an eligible re14 tirement plan as defined in sec15 tion 402(c)(8)(B) of the Internal 

16 Revenue Code of 1986 for each 

17 individual whose account is 

18 transferred, or to any other ar19 rangement that the Secretary de20 termines is appropriate in such 

21 guidance; and 

22 ‘‘(bb) the participating em23 ployer described in item (aa) 

24 (and not the plan with respect to 

25 which the failure occurred or any 

mstockstill on DSK3G9T082PROD with BILLS

19 

•S 3471 PCS

1 other participating employer in 

2 such plan) shall, except to the ex3 tent provided in such guidance, 

4 be liable for any liabilities with 

5 respect to such plan attributable 

6 to employees of the participating 

7 employer. 

8 The Secretary shall take into account 

9 under subclause (II) whether the failure of 

10 an employer or pooled plan provider to 

11 provide any disclosures or other informa12 tion, or to take any other action, necessary 

13 to administer a plan or to allow a plan to 

14 meet requirements described in subpara15 graph (A)(i)(II) has continued over a pe16 riod of time that clearly demonstrates a 

17 lack of commitment to compliance. The 

18 Secretary may waive the requirements of 

19 subclause (II)(aa) in appropriate cir20 cumstances if the Secretary determines it 

21 is in the best interests of the employees of 

22 the participating employer described in 

23 such clause to retain the assets in the plan 

24 with respect to which the employer’s fail25 ure occurred. 

mstockstill on DSK3G9T082PROD with BILLS

20 

•S 3471 PCS

1 ‘‘(ii) PROSPECTIVE APPLICATION.— 

2 Any guidance issued by the Secretary 

3 under this subparagraph shall not apply to 

4 any action or failure occurring before the 

5 issuance of such guidance. 

6 ‘‘(D) AGGREGATION RULES.—For purposes 

7 of this paragraph— 

8 ‘‘(i) IN GENERAL.—In determining 

9 whether a person meets the requirements 

10 of this paragraph to be a pooled plan pro11 vider with respect to any plan, all persons 

12 who are members of the same controlled 

13 group and who perform services for the 

14 plan shall be treated as one person. 

15 ‘‘(ii) MEMBERS OF COMMON GROUP.— 

16 Persons shall be treated as members of the 

17 same controlled group if such persons are 

18 treated as a single employer under sub19 section (c) or (d) of section 210.’’. 

20 (2) BONDING REQUIREMENTS FOR POOLED EM21 PLOYER PLANS.—The last sentence of section 412(a) 

22 of the Employee Retirement Income Security Act of 

23 1974 (29 U.S.C. 1112(a)) is amended by inserting 

24 ‘‘or in the case of a pooled employer plan (as defined 

25 in section 3(43)’’ after ‘‘section 407(d)(1))’’. 

mstockstill on DSK3G9T082PROD with BILLS

21 

•S 3471 PCS

1 (3) CONFORMING AND TECHNICAL AMEND2 MENTS.—Section 3 of the Employee Retirement In3 come Security Act of 1974 (29 U.S.C. 1002) is 

4 amended— 

5 (A) in paragraph (16)(B)— 

6 (i) by striking ‘‘or’’ at the end of 

7 clause (ii), and 

8 (ii) by striking the period at the end 

9 and inserting ‘‘, or (iv) in the case of a 

10 pooled employer plan, the pooled plan pro11 vider.’’; and 

12 (B) by striking the second paragraph (41). 

13 (d) EFFECTIVE DATE.— 

14 (1) IN GENERAL.—The amendments made by 

15 this section shall apply to years beginning after De16 cember 31, 2019. 

17 (2) RULE OF CONSTRUCTION.—Nothing in the 

18 amendments made by subsection (a) shall be con19 strued as limiting the authority of the Secretary of 

20 the Treasury or the Secretary’s delegate (determined 

21 without regard to such amendment) to provide for 

22 the proper treatment of a failure to meet any re23 quirement applicable under the Internal Revenue 

24 Code of 1986 with respect to one employer (and its 

25 employees) in a multiple employer plan. 

mstockstill on DSK3G9T082PROD with BILLS

22 

•S 3471 PCS

1 SEC. 102. POOLED EMPLOYER AND MULTIPLE EMPLOYER 

2 PLAN REPORTING. 

3 (a) ADDITIONAL INFORMATION.—Section 103 of the 

4 Employee Retirement Income Security Act of 1974 (29 

5 U.S.C. 1023) is amended— 

6 (1) in subsection (a)(1)(B), by striking ‘‘appli7 cable subsections (d), (e), and (f)’’ and inserting 

8 ‘‘applicable subsections (d), (e), (f), and (g)’’; and 

9 (2) by amending subsection (g) to read as fol10 lows: 

11 ‘‘(g) ADDITIONAL INFORMATION WITH RESPECT TO

12 POOLED EMPLOYER AND MULTIPLE EMPLOYER

13 PLANS.—An annual report under this section for a plan 

14 year shall include— 

15 ‘‘(1) with respect to any plan to which section 

16 210(a) applies (including a pooled employer plan), a 

17 list of participating employers and a good faith esti18 mate of the percentage of total contributions made 

19 by such participating employers during the plan 

20 year; and 

21 ‘‘(2) with respect to a pooled employer plan, the 

22 identifying information for the person designated 

23 under the terms of the plan as the pooled plan pro24 vider.’’. 

25 (b) SIMPLIFIED ANNUAL REPORTS.—Section 104(a) 

26 of the Employee Retirement Income Security Act of 1974 

mstockstill on DSK3G9T082PROD with BILLS

23 

•S 3471 PCS

1 (29 U.S.C. 1024(a)) is amended by striking paragraph 

2 (2)(A) and inserting the following: 

3 ‘‘(2)(A) With respect to annual reports required 

4 to be filed with the Secretary under this part, the 

5 Secretary may by regulation prescribe simplified an6 nual reports for any pension plan that— 

7 ‘‘(i) covers fewer than 100 participants; or 

8 ‘‘(ii) is a plan described in section 210(a) 

9 that covers fewer than 1,000 participants, but 

10 only if no single participating employer has 100 

11 or more participants covered by the plan.’’. 

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

13 this section shall apply to annual reports for plan years 

14 beginning after December 31, 2019. 

15 SEC. 103. REMOVAL OF 10 PERCENT CAP FROM AUTOMATIC 

16 ENROLLMENT SAFE HARBOR AFTER 1ST 

17 PLAN YEAR. 

18 (a) IN GENERAL.—Clause (iii) of section 

19 401(k)(13)(C) of the Internal Revenue Code of 1986 is 

20 amended by striking ‘‘, does not exceed 10 percent, and 

21 is at least’’ and inserting ‘‘and is’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Subclause (I) of section 401(k)(13)(C)(iii) 

24 of the Internal Revenue Code of 1986 is amended by 

mstockstill on DSK3G9T082PROD with BILLS

24 

•S 3471 PCS

1 striking ‘‘3 percent’’ and inserting ‘‘at least 3 per2 cent, but not greater than 10 percent,’’. 

3 (2) Subclause (II) of section 401(k)(13)(C)(iii) 

4 of such Code is amended by striking ‘‘4 percent’’ 

5 and inserting ‘‘at least 4 percent’’. 

6 (3) Subclause (III) of section 401(k)(13)(C)(iii) 

7 of such Code is amended by striking ‘‘5 percent’’ 

8 and inserting ‘‘at least 5 percent’’. 

9 (4) Subclause (IV) of section 401(k)(13)(C)(iii) 

10 of such Code is amended by striking ‘‘6 percent’’ 

11 and inserting ‘‘at least 6 percent’’. 

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

13 this section shall apply to plan years beginning after De14 cember 31, 2016. 

15 SEC. 104. RULES RELATING TO ELECTION OF SAFE HARBOR 

16 401(k) STATUS. 

17 (a) LIMITATION OF ANNUAL SAFE HARBOR NOTICE

18 TO MATCHING CONTRIBUTION PLANS.— 

19 (1) IN GENERAL.—Subparagraph (A) of section 

20 401(k)(12) of the Internal Revenue Code of 1986 is 

21 amended by striking ‘‘if such arrangement’’ and all 

22 that follows and inserting ‘‘if such arrangement— 

23 ‘‘(i) meets the contribution require24 ments of subparagraph (B) and the notice 

25 requirements of subparagraph (D), or 

mstockstill on DSK3G9T082PROD with BILLS

25 

•S 3471 PCS

1 ‘‘(ii) meets the contribution require2 ments of subparagraph (C).’’. 

3 (2) AUTOMATIC CONTRIBUTION ARRANGE4 MENTS.—Subparagraph (B) of section 401(k)(13) of 

5 such Code is amended by striking ‘‘means’’ and all 

6 that follows and inserting ‘‘means a cash or deferred 

7 arrangement— 

8 ‘‘(A) which is described in subparagraph 

9 (D)(i)(I) and meets the applicable requirements 

10 of subparagraphs (C) through (E), or 

11 ‘‘(B) which is described in subparagraph 

12 (D)(i)(II) and meets the applicable require13 ments of subparagraphs (C) and (D).’’. 

14 (b) NONELECTIVE CONTRIBUTIONS.—Section 

15 401(k)(12) of the Internal Revenue Code of 1986 is 

16 amended by redesignating subparagraph (F) as subpara17 graph (G), and by inserting after subparagraph (E) the 

18 following new subparagraph: 

19 ‘‘(F) TIMING OF PLAN AMENDMENT FOR

20 EMPLOYER MAKING NONELECTIVE CONTRIBU21 TIONS.— 

22 ‘‘(i) IN GENERAL.—Except as pro23 vided in clause (ii), a plan may be amend24 ed after the beginning of a plan year to 

25 provide that the requirements of subparamstockstill on DSK3G9T082PROD with BILLS

26 

•S 3471 PCS

1 graph (C) shall apply to the arrangement 

2 for the plan year, but only if the amend3 ment is adopted— 

4 ‘‘(I) at any time before the 30th 

5 day before the close of the plan year, 

6 or 

7 ‘‘(II) at any time before the last 

8 day under paragraph (8)(A) for dis9 tributing excess contributions for the 

10 plan year. 

11 ‘‘(ii) EXCEPTION WHERE PLAN PRO12 VIDED FOR MATCHING CONTRIBUTIONS.— 

13 Clause (i) shall not apply to any plan year 

14 if the plan provided at any time during the 

15 plan year that the requirements of sub16 paragraph (B) or paragraph (13)(D)(i)(I) 

17 applied to the plan year. 

18 ‘‘(iii) 4-PERCENT CONTRIBUTION RE19 QUIREMENT.—Clause (i)(II) shall not 

20 apply to an arrangement unless the 

21 amount of the contributions described in 

22 subparagraph (C) which the employer is 

23 required to make under the arrangement 

24 for the plan year with respect to any emmstockstill on DSK3G9T082PROD with BILLS

27 

•S 3471 PCS

1 ployee is an amount equal to at least 4 

2 percent of the employee’s compensation.’’. 

3 (c) AUTOMATIC CONTRIBUTION ARRANGEMENTS.— 

4 Section 401(k)(13) of the Internal Revenue Code of 1986 

5 is amended by adding at the end the following : 

6 ‘‘(F) TIMING OF PLAN AMENDMENT FOR

7 EMPLOYER MAKING NONELECTIVE CONTRIBU8 TIONS.— 

9 ‘‘(i) IN GENERAL.—Except as pro10 vided in clause (ii), a plan may be amend11 ed after the beginning of a plan year to 

12 provide that the requirements of subpara13 graph (D)(i)(II) shall apply to the arrange14 ment for the plan year, but only if the 

15 amendment is adopted— 

16 ‘‘(I) at any time before the 30th 

17 day before the close of the plan year, 

18 or 

19 ‘‘(II) at any time before the last 

20 day under paragraph (8)(A) for dis21 tributing excess contributions for the 

22 plan year. 

23 ‘‘(ii) EXCEPTION WHERE PLAN PRO24 VIDED FOR MATCHING CONTRIBUTIONS.— 

25 Clause (i) shall not apply to any plan year 

mstockstill on DSK3G9T082PROD with BILLS

28 

•S 3471 PCS

1 if the plan provided at any time during the 

2 plan year that the requirements of sub3 paragraph (D)(i)(I) or paragraph (12)(B) 

4 applied to the plan year. 

5 ‘‘(iii) 4-PERCENT CONTRIBUTION RE6 QUIREMENT.—Clause (i)(II) shall not 

7 apply to an arrangement unless the 

8 amount of the contributions described in 

9 subparagraph (D)(i)(II) which the em10 ployer is required to make under the ar11 rangement for the plan year with respect 

12 to any employee is an amount equal to at 

13 least 4 percent of the employee’s com14 pensation.’’. 

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

16 this section shall apply to plan years beginning after De17 cember 31, 2016. 

18 SEC. 105. INCREASE IN CREDIT LIMITATION FOR SMALL 

19 EMPLOYER PENSION PLAN STARTUP COSTS. 

20 (a) IN GENERAL.—Paragraph (1) of section 45E(b) 

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

22 as follows: 

23 ‘‘(1) for the first credit year and each of the 2 

24 taxable years immediately following the first credit 

25 year, the greater of— 

mstockstill on DSK3G9T082PROD with BILLS

29 

•S 3471 PCS

1 ‘‘(A) $500, or 

2 ‘‘(B) the lesser of— 

3 ‘‘(i) $250 for each employee of the eli4 gible employer who is not a highly com5 pensated employee (as defined in section 

6 414(q)) and who is eligible to participate 

7 in the eligible employer plan maintained by 

8 the eligible employer, or 

9 ‘‘(ii) $5,000, and’’. 

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

11 this section shall apply to taxable years beginning after 

12 December 31, 2016. 

13 SEC. 106. SMALL EMPLOYER AUTOMATIC ENROLLMENT 

14 CREDIT. 

15 (a) IN GENERAL.—Subpart D of part IV of sub16 chapter A of chapter 1 of the Internal Revenue Code of 

17 1986 is amended by adding at the end the following new 

18 section: 

19 ‘‘SEC. 45S. AUTO-ENROLLMENT OPTION FOR RETIREMENT 

20 SAVINGS OPTIONS PROVIDED BY SMALL EM21 PLOYERS. 

22 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

23 the case of an eligible employer, the retirement auto-en24 rollment credit determined under this section for any tax25 able year is an amount equal to— 

mstockstill on DSK3G9T082PROD with BILLS

30 

•S 3471 PCS

1 ‘‘(1) $500 for any taxable year occurring during 

2 the credit period, and 

3 ‘‘(2) zero for any other taxable year. 

4 ‘‘(b) CREDIT PERIOD.—For purposes of subsection 

5 (a)— 

6 ‘‘(1) IN GENERAL.—The credit period with re7 spect to any eligible employer is the 3-taxable-year 

8 period beginning with the first taxable year for 

9 which the employer includes an eligible automatic 

10 contribution arrangement (as defined in section 

11 414(w)(3)) in a qualified employer plan (as defined 

12 in section 4972(d)) sponsored by the employer. 

13 ‘‘(2) MAINTENANCE OF ARRANGEMENT.—No 

14 taxable year with respect to an employer shall be 

15 treated as occurring within the credit period unless 

16 the arrangement described in paragraph (1) is in17 cluded in the plan for such year. 

18 ‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this 

19 section, the term ‘eligible employer’ has the meaning given 

20 such term in section 408(p)(2)(C)(i).’’. 

21 (b) CREDIT TO BE PART OF GENERAL BUSINESS

22 CREDIT.—Subsection (b) of section 38 of the Internal 

23 Revenue Code of 1986 is amended by striking ‘‘plus’’ at 

24 the end of paragraph (35), by striking the period at the 

mstockstill on DSK3G9T082PROD with BILLS

31 

•S 3471 PCS

1 end of paragraph (36) and inserting ‘‘, plus’’, and by add2 ing at the end the following new paragraph: 

3 ‘‘(37) in the case of an eligible employer (as de4 fined in section 45S(c)), the retirement auto-enroll5 ment credit determined under section 45S(a).’’. 

6 (c) CLERICAL AMENDMENT.—The table of sections 

7 for subpart D of part IV of subchapter A of chapter 1 

8 of the Internal Revenue Code of 1986 is amended by in9 serting after the item relating to section 45R the following 

10 new item: 

‘‘Sec. 45S. Auto-enrollment option for retirement savings options provided by 

small employers.’’. 

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

12 this section shall apply to taxable years beginning after 

13 December 31, 2016. 

14 SEC. 107. CERTAIN TAXABLE NON-TUITION FELLOWSHIP 

15 AND STIPEND PAYMENTS TREATED AS COM16 PENSATION FOR IRA PURPOSES. 

17 (a) IN GENERAL.—Paragraph (1) of section 219(f) 

18 of the Internal Revenue Code of 1986 is amended by add19 ing at the end the following: ‘‘The term ‘compensation’ 

20 shall include any amount paid to an individual to aid the 

21 individual in the pursuit of graduate or postdoctoral 

22 study.’’. 

mstockstill on DSK3G9T082PROD with BILLS

32 

•S 3471 PCS

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

2 this section shall apply to taxable years beginning after 

3 December 31, 2016. 

4 SEC. 108. REPEAL OF MAXIMUM AGE FOR TRADITIONAL IRA 

5 CONTRIBUTIONS. 

6 (a) IN GENERAL.—Paragraph (1) of section 219(d) 

7 of the Internal Revenue Code of 1986 is repealed. 

8 (b) CONFORMING AMENDMENT.—Subsection (c) of 

9 section 408A of the Internal Revenue Code of 1986 is 

10 amended by striking paragraph (4) and by redesignating 

11 paragraphs (5), (6), and (7) as paragraphs (4), (5), and 

12 (6), respectively. 

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

14 this section shall apply to contributions made for taxable 

15 years beginning after December 31, 2016. 

16 SEC. 109. EXPANSION OF IRA OWNERSHIP OF S CORPORA17 TION BANK STOCK. 

18 (a) IN GENERAL.—Section 1361(c)(2)(A)(vi) of the 

19 Internal Revenue Code of 1986 is amended by striking ‘‘, 

20 but only to the extent of the stock held by such trust in 

21 such bank or company as of the date of the enactment 

22 of this clause’’. 

23 (b) SALE OF STOCK IN IRA RELATING TO S COR24 PORATION ELECTION EXEMPT FROM PROHIBITED

25 TRANSACTION RULES.—Section 4975(d)(16) of the Intermstockstill on DSK3G9T082PROD with BILLS

33 

•S 3471 PCS

1 nal Revenue Code of 1986 is amended by striking sub2 paragraph (B) and by redesignating subparagraphs (C), 

3 (D), (E), and (F) as subparagraphs (B), (C), (D) and (E), 

4 respectively. 

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

6 this section shall take effect on January 1, 2016. 

7 SEC. 110. EXTENDED ROLLOVER PERIOD FOR PLAN LOAN 

8 OFFSET AMOUNTS. 

9 (a) IN GENERAL.—Paragraph (3) of section 402(c) 

10 of the Internal Revenue Code of 1986 is amended by re11 designating subparagraph (B) as subparagraph (C) and 

12 by inserting after subparagraph (A) the following new sub13 paragraph: 

14 ‘‘(B) ROLLOVER OF CERTAIN PLAN LOAN

15 OFFSET AMOUNTS.— 

16 ‘‘(i) IN GENERAL.—In the case of an 

17 eligible rollover distribution of a qualified 

18 plan loan offset amount, the requirements 

19 of subparagraph (A) shall be treated as 

20 met if such transfer occurs on or before 

21 the due date (including extensions) for fil22 ing the return of tax for the taxable year 

23 in which such amount is treated as distrib24 uted from a qualified employer plan. 

mstockstill on DSK3G9T082PROD with BILLS

34 

•S 3471 PCS

1 ‘‘(ii) QUALIFIED PLAN LOAN OFFSET

2 AMOUNT.—For purposes of this subpara3 graph, the term ‘qualified plan loan offset 

4 amount’ means a plan loan offset amount 

5 which is treated as distributed from a 

6 qualified employer plan to a participant or 

7 beneficiary solely by reason of— 

8 ‘‘(I) the termination of the quali9 fied employer plan, or 

10 ‘‘(II) the failure to meet the re11 payment terms of the loan from such 

12 plan because of the severance from 

13 employment of the participant. 

14 ‘‘(iii) PLAN LOAN OFFSET AMOUNT.— 

15 For purposes of clause (ii), the term ‘plan 

16 loan offset amount’ means the amount by 

17 which the participant’s accrued benefit 

18 under the plan is reduced in order to repay 

19 a loan from the plan. 

20 ‘‘(iv) LIMITATION.—This subpara21 graph shall not apply to any plan loan off22 set amount unless such plan loan offset 

23 amount relates to a loan to which section 

24 72(p)(1) does not apply by reason of sec25 tion 72(p)(2). 

mstockstill on DSK3G9T082PROD with BILLS

35 

•S 3471 PCS

1 ‘‘(v) QUALIFIED EMPLOYER PLAN.— 

2 For purposes of this subsection, the term 

3 ‘qualified employer plan’ has the meaning 

4 given such term by section 72(p)(4).’’. 

5 (b) CONFORMING AMENDMENT.—Subparagraph (A) 

6 of section 402(c)(3) of the Internal Revenue Code of 1986 

7 is amended by striking ‘‘subparagraph (B)’’ and inserting 

8 ‘‘subparagraphs (B) and (C)’’. 

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

10 this section shall apply to transfers made after December 

11 31, 2016. 

12 SEC. 111. MODIFICATION OF RULES RELATING TO HARD13 SHIP WITHDRAWALS FROM CASH OR DE14 FERRED ARRANGEMENTS. 

15 (a) RULES RELATING TO AMOUNTS WITHDRAWN

16 AND AVAILABLE LOANS.— 

17 (1) IN GENERAL.—Section 401(k) of the Inter18 nal Revenue Code of 1986 is amended by adding at 

19 the end the following: 

20 ‘‘(14) SPECIAL RULES RELATING TO HARDSHIP

21 WITHDRAWALS.—For purposes of paragraph 

22 (2)(B)(i)(IV)— 

23 ‘‘(A) AMOUNTS WHICH MAY BE WITH24 DRAWN.—The following amounts may be dis25 tributed upon hardship of the employee: 

mstockstill on DSK3G9T082PROD with BILLS

36 

•S 3471 PCS

1 ‘‘(i) Contributions to a profit-sharing 

2 or stock bonus plan to which section 

3 402(e)(3) applies. 

4 ‘‘(ii) Qualified nonelective contribu5 tions (as defined in subsection (m)(4)(C)). 

6 ‘‘(iii) Qualified matching contributions 

7 described in paragraph (3)(D)(ii)(I). 

8 ‘‘(iv) Earnings on any contributions 

9 described in clause (i), (ii), or (iii). 

10 ‘‘(B) NO REQUIREMENT TO TAKE AVAIL11 ABLE LOAN.—A distribution shall not be treat12 ed as failing to be made upon the hardship of 

13 an employee solely because the employee does 

14 not take any available loan under the plan.’’. 

15 (2) CONFORMING AMENDMENT.—Subclause 

16 (IV) of section 401(k)(2)(B)(i) of the Internal Rev17 enue Code of 1986 is amended to read as follows: 

18 ‘‘(IV) subject to the provisions of 

19 paragraph (14), upon hardship of the 

20 employee, or’’. 

21 (b) MODIFICATION OF RULES GOVERNING CONDI22 TIONING PARTICIPATION IN AN ARRANGEMENT UPON

23 HARDSHIP DISTRIBUTIONS.—Not later than 1 year after 

24 the date of the enactment of this Act, the Secretary of 

mstockstill on DSK3G9T082PROD with BILLS

37 

•S 3471 PCS

1 the Treasury shall modify Treasury Regulation section 

2 1.401(k)–1(d)(3)(iv)(E) to— 

3 (1) delete the prohibition imposed by paragraph 

4 (2) thereof, and 

5 (2) to make any other modifications necessary 

6 to carry out the purposes of section 

7 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 

8 1986. 

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

10 this section, and the modifications under subsection (b), 

11 shall apply to plan years beginning after December 31, 

12 2016. 

13 SEC. 112. QUALIFIED EMPLOYER PLANS PROHIBITED FROM 

14 MAKING LOANS THROUGH CREDIT CARDS 

15 AND OTHER SIMILAR ARRANGEMENTS. 

16 (a) IN GENERAL.—Paragraph (2) of section 72(p) of 

17 the Internal Revenue Code of 1986 is amended by redesig18 nating subparagraph (D) as subparagraph (E) and by in19 serting after subparagraph (C) the following new subpara20 graph: 

21 ‘‘(D) PROHIBITION OF LOANS THROUGH

22 CREDIT CARDS AND OTHER SIMILAR ARRANGE23 MENTS.— 

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in clause (ii), subparagraph (A) shall 

mstockstill on DSK3G9T082PROD with BILLS

38 

•S 3471 PCS

1 not apply to any loan which is made 

2 through the use of any credit card or any 

3 other similar arrangement. 

4 ‘‘(ii) EXCEPTION FOR EXISTING CRED5 IT CARD SYSTEMS.—Clause (i) shall not 

6 apply to any loan to the extent such loan 

7 is provided through an electronic card sys8 tem which, as of September 21, 2016, was 

9 available for use to provide loans under 

10 qualified employer plans. 

11 ‘‘(iii) DISALLOWED TRANSACTIONS.— 

12 If any card through which a loan is pro13 vided under the exception of clause (ii) is 

14 used for any transaction— 

15 ‘‘(I) in an amount equal to or 

16 less than $1,000, or 

17 ‘‘(II) with or on the premises of 

18 any establishment described in clause 

19 (i), (ii), or (iii) of section 

20 408(a)(12)(A) of the Social Security 

21 Act, 

22 the amount of such transaction shall be 

23 treated as having been received by the in24 dividual as a distribution in accordance 

25 with subparagraph (A) of paragraph (1). 

mstockstill on DSK3G9T082PROD with BILLS

39 

•S 3471 PCS

1 ‘‘(iv) COST-OF-LIVING ADJUST2 MENT.—In the case of any loan made dur3 ing a plan year beginning after December 

4 31, 2017, the $1,000 amount under clause 

5 (iii)(I) shall be increased by an amount 

6 equal to— 

7 ‘‘(I) such dollar amount, multi8 plied by 

9 ‘‘(II) the cost-of-living adjust10 ment determined under section 1(f)(3) 

11 for the calendar year in which the 

12 plan year begins, determined by sub13 stituting ‘calendar year 2016’ for ‘cal14 endar year 1992’ in subparagraph (B) 

15 thereof. Any increase determined 

16 under the preceding sentence shall be 

17 rounded to the next lowest multiple of 

18 $50.’’. 

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

20 subsection (a) shall apply to plan years beginning after 

21 December 31, 2016. 

22 (c) STUDY.—The Comptroller General of the United 

23 States shall, not later than the date which is 1 year after 

24 the date of the enactment of this Act— 

mstockstill on DSK3G9T082PROD with BILLS

40 

•S 3471 PCS

1 (1) study the impact of loans from qualified 

2 employer plans (as defined in section 72(p)(4)(A) of 

3 the Internal Revenue Code of 1986) provided 

4 through credit cards and similar arrangements on 

5 the use of retirement savings for purposes other 

6 than funding retirement; and 

7 (2) report the results of such study to the Com8 mittee on Finance of the Senate and the Committee 

9 on the Ways and Means of the House of Representa10 tives. 

11 If the study under paragraph (1) determines that such 

12 loans, after implementation of the restrictions imposed by 

13 the amendment made by subsection (a), result in greater 

14 usage of retirement savings for purposes other than fund15 ing retirement than loans made by other means, the report 

16 under paragraph (2) shall include recommendations to re17 duce such result. 

18 SEC. 113. PORTABILITY OF LIFETIME INCOME OPTIONS. 

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

20 the Internal Revenue Code of 1986 is amended by insert21 ing after paragraph (37) the following new paragraph: 

22 ‘‘(38) PORTABILITY OF LIFETIME INCOME.— 

23 ‘‘(A) IN GENERAL.—Except as may be oth24 erwise provided by regulations, a trust forming 

25 part of a defined contribution plan shall not be 

mstockstill on DSK3G9T082PROD with BILLS

41 

•S 3471 PCS

1 treated as failing to constitute a qualified trust 

2 under this section solely by reason of allowing— 

3 ‘‘(i) qualified distributions of a life4 time income investment, or 

5 ‘‘(ii) distributions of a lifetime income 

6 investment in the form of a qualified plan 

7 distribution annuity contract, 

8 on or after the date that is 90 days prior to the 

9 date on which such lifetime income investment 

10 is no longer authorized to be held as an invest11 ment option under the plan. 

12 ‘‘(B) DEFINITIONS.—For purposes of this 

13 subsection— 

14 ‘‘(i) the term ‘qualified distribution’ 

15 means a direct trustee-to-trustee transfer 

16 described in paragraph (31)(A) to an eligi17 ble retirement plan (as defined in section 

18 402(c)(8)(B)), 

19 ‘‘(ii) the term ‘lifetime income invest20 ment’ means an investment option which is 

21 designed to provide an employee with elec22 tion rights— 

23 ‘‘(I) which are not uniformly 

24 available with respect to other invest25 ment options under the plan, and 

mstockstill on DSK3G9T082PROD with BILLS

42 

•S 3471 PCS

1 ‘‘(II) which are to a lifetime in2 come feature available through a con3 tract or other arrangement offered 

4 under the plan (or under another eli5 gible retirement plan (as so defined), 

6 if paid by means of a direct trustee7 to-trustee transfer described in para8 graph (31)(A) to such other eligible 

9 retirement plan), 

10 ‘‘(iii) the term ‘lifetime income fea11 ture’ means— 

12 ‘‘(I) a feature which guarantees a 

13 minimum level of income annually (or 

14 more frequently) for at least the re15 mainder of the life of the employee or 

16 the joint lives of the employee and the 

17 employee’s designated beneficiary, or 

18 ‘‘(II) an annuity payable on be19 half of the employee under which pay20 ments are made in substantially equal 

21 periodic payments (not less frequently 

22 than annually) over the life of the em23 ployee or the joint lives of the em24 ployee and the employee’s designated 

25 beneficiary, and 

mstockstill on DSK3G9T082PROD with BILLS

43 

•S 3471 PCS

1 ‘‘(iv) the term ‘qualified plan distribu2 tion annuity contract’ means an annuity 

3 contract purchased for a participant and 

4 distributed to the participant by a plan or 

5 contract described in subparagraph (B) of 

6 section 402(c)(8) (without regard to 

7 clauses (i) and (ii) thereof).’’. 

8 (b) CASH OR DEFERRED ARRANGEMENT.— 

9 (1) IN GENERAL.—Clause (i) of section 

10 401(k)(2)(B) of the Internal Revenue Code of 1986, 

11 as amended by section 111(b), is amended by strik12 ing ‘‘or’’ at the end of subclause (IV), by striking 

13 ‘‘and’’ at the end of subclause (V) and inserting 

14 ‘‘or’’, and by adding at the end the following new 

15 subclause: 

16 ‘‘(VI) except as may be otherwise 

17 provided by regulations, with respect 

18 to amounts invested in a lifetime in19 come investment (as defined in sub20 section (a)(38)(B)(ii)), the date that 

21 is 90 days prior to the date that such 

22 lifetime income investment may no 

23 longer be held as an investment option 

24 under the arrangement,’’. 

mstockstill on DSK3G9T082PROD with BILLS

44 

•S 3471 PCS

1 (2) DISTRIBUTION REQUIREMENT.—Subpara2 graph (B) of section 401(k)(2) of such Code is 

3 amended by striking ‘‘and’’ at the end of clause (i), 

4 by striking the semicolon at the end of clause (ii) 

5 and inserting ‘‘, and’’, and by adding at the end the 

6 following new clause: 

7 ‘‘(iii) except as may be otherwise pro8 vided by regulations, in the case of 

9 amounts described in clause (i)(VI), will be 

10 distributed only in the form of a qualified 

11 distribution (as defined in subsection 

12 (a)(38)(B)(i)) or a qualified plan distribu13 tion annuity contract (as defined in sub14 section (a)(38)(B)(iv)),’’. 

15 (c) SECTION 403(b) PLANS.— 

16 (1) ANNUITY CONTRACTS.—Paragraph (11) of 

17 section 403(b) of the Internal Revenue Code of 1986 

18 is amended by striking ‘‘or’’ at the end of subpara19 graph (B), by striking the period at the end of sub20 paragraph (C) and inserting ‘‘, or’’, and by inserting 

21 after subparagraph (C) the following new subpara22 graph: 

23 ‘‘(D) except as may be otherwise provided 

24 by regulations, with respect to amounts invested 

mstockstill on DSK3G9T082PROD with BILLS

45 

•S 3471 PCS

1 in a lifetime income investment (as defined in 

2 section 401(a)(38)(B)(ii))— 

3 ‘‘(i) on or after the date that is 90 

4 days prior to the date that such lifetime 

5 income investment may no longer be held 

6 as an investment option under the con7 tract, and 

8 ‘‘(ii) in the form of a qualified dis9 tribution (as defined in section 

10 401(a)(38)(B)(i)) or a qualified plan dis11 tribution annuity contract (as defined in 

12 section 401(a)(38)(B)(iv)).’’. 

13 (2) CUSTODIAL ACCOUNTS.—Subparagraph (A) 

14 of section 403(b)(7) of such Code is amended by 

15 striking ‘‘if—’’ and all that follows and inserting ‘‘if 

16 the amounts are to be invested in regulated invest17 ment company stock to be held in that custodial ac18 count, and under the custodial account— 

19 ‘‘(i) no such amounts may be paid or 

20 made available to any distributee (unless 

21 such amount is a distribution to which sec22 tion 72(t)(2)(G) applies) before— 

23 ‘‘(I) the employee dies, 

24 ‘‘(II) the employee attains age 

591 25 ⁄2, 

mstockstill on DSK3G9T082PROD with BILLS

46 

•S 3471 PCS

1 ‘‘(III) the employee has a sever2 ance from employment, 

3 ‘‘(IV) the employee becomes dis4 abled (within the meaning of section 

5 72(m)(7)), 

6 ‘‘(V) in the case of contributions 

7 made pursuant to a salary reduction 

8 agreement (within the meaning of sec9 tion 3121(a)(5)(D)), the employee en10 counters financial hardship, or 

11 ‘‘(VI) except as may be otherwise 

12 provided by regulations, with respect 

13 to amounts invested in a lifetime in14 come investment (as defined in section 

15 401(a)(38)(B)(ii)), the date that is 90 

16 days prior to the date that such life17 time income investment may no longer 

18 be held as an investment option under 

19 the contract, and 

20 ‘‘(ii) in the case of amounts described 

21 in clause (i)(VI), such amounts will be dis22 tributed only in the form of a qualified dis23 tribution (as defined in section 

24 401(a)(38)(B)(i)) or a qualified plan dismstockstill on DSK3G9T082PROD with BILLS

47 

•S 3471 PCS

1 tribution annuity contract (as defined in 

2 section 401(a)(38)(B)(iv)).’’. 

3 (d) ELIGIBLE DEFERRED COMPENSATION PLANS.— 

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

5 457(d)(1) of the Internal Revenue Code of 1986 is 

6 amended by striking ‘‘or’’ at the end of clause (ii), 

7 by inserting ‘‘or’’ at the end of clause (iii), and by 

8 adding after clause (iii) the following: 

9 ‘‘(iv) except as may be otherwise pro10 vided by regulations, in the case of a plan 

11 maintained by an employer described in 

12 subsection (e)(1)(A), with respect to 

13 amounts invested in a lifetime income in14 vestment (as defined in section 

15 401(a)(38)(B)(ii)), the date that is 90 

16 days prior to the date that such lifetime 

17 income investment may no longer be held 

18 as an investment option under the plan,’’. 

19 (2) DISTRIBUTION REQUIREMENT.—Paragraph 

20 (1) of section 457(d) of such Code is amended by 

21 striking ‘‘and’’ at the end of subparagraph (B), by 

22 striking the period at the end of subparagraph (C) 

23 and inserting ‘‘, and’’, and by inserting after sub24 paragraph (C) the following new subparagraph: 

mstockstill on DSK3G9T082PROD with BILLS

48 

•S 3471 PCS

1 ‘‘(D) except as may be otherwise provided 

2 by regulations, in the case of amounts described 

3 in subparagraph (A)(iv), such amounts will be 

4 distributed only in the form of a qualified dis5 tribution (as defined in section 

6 401(a)(38)(B)(i)) or a qualified plan distribu7 tion annuity contract (as defined in section 

8 401(a)(38)(B)(iv)).’’. 

9 (e) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to plan years beginning after De11 cember 31, 2016. 

12 SEC. 114. TREATMENT OF CUSTODIAL ACCOUNTS ON TER13 MINATION OF SECTION 403(b) PLANS. 

14 (a) IN GENERAL.—Section 403(b)(7) of the Internal 

15 Revenue Code of 1986 is amended by adding at the end 

16 the following: 

17 ‘‘(D) TREATMENT OF CUSTODIAL AC18 COUNT UPON PLAN TERMINATION.— 

19 ‘‘(i) IN GENERAL.—If— 

20 ‘‘(I) an employer terminates the 

21 plan under which amounts are con22 tributed to a custodial account under 

23 subparagraph (A), and 

24 ‘‘(II) the person holding the as25 sets of the account has demonstrated 

mstockstill on DSK3G9T082PROD with BILLS

49 

•S 3471 PCS

1 to the satisfaction of the Secretary 

2 under section 408(a)(2) that the per3 son is qualified to be a trustee of an 

4 individual retirement plan, 

5 then, as of the date of the termination, the 

6 custodial account shall be deemed to be an 

7 individual retirement plan for purposes of 

8 this title. 

9 ‘‘(ii) TREATMENT AS ROTH IRA.—Any 

10 custodial account treated as an individual 

11 retirement plan under clause (i) shall be 

12 treated as a Roth IRA only if the custodial 

13 account was a designated Roth account.’’. 

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

15 this section shall apply to plan terminations occurring 

16 after December 31, 2016. 

17 SEC. 115. CLARIFICATION OF RETIREMENT INCOME AC18 COUNT RULES RELATING TO CHURCH-CON19 TROLLED ORGANIZATIONS. 

20 (a) IN GENERAL.—Subparagraph (B) of section 

21 403(b)(9) of the Internal Revenue Code of 1986 is amend22 ed by inserting ‘‘(including an employee described in sec23 tion 414(e)(3)(B))’’ after ‘‘employee described in para24 graph (1)’’. 

mstockstill on DSK3G9T082PROD with BILLS

50 

•S 3471 PCS

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

2 this section shall apply to years beginning before, on, or 

3 after the date of the enactment of this Act. 

4 TITLE II—ADMINISTRATIVE 

5 IMPROVEMENTS 

6 SEC. 201. PLAN ADOPTED BY FILING DUE DATE FOR YEAR 

7 MAY BE TREATED AS IN EFFECT AS OF CLOSE 

8 OF YEAR. 

9 (a) IN GENERAL.—Subsection (b) of section 401 of 

10 the Internal Revenue Code of 1986 is amended— 

11 (1) by striking ‘‘RETROACTIVE CHANGES IN

12 PLAN.—A stock bonus’’ and inserting ‘‘PLAN

13 AMENDMENTS.— 

14 ‘‘(1) CERTAIN RETROACTIVE CHANGES IN

15 PLAN.—A stock bonus’’, and 

16 (2) by adding at the end the following new 

17 paragraph: 

18 ‘‘(2) ADOPTION OF PLAN.—If an employer 

19 adopts a stock bonus, pension, profit-sharing, or an20 nuity plan after the close of a taxable year but be21 fore the time prescribed by law for filing the return 

22 of the employer for the taxable year (including ex23 tensions thereof), the employer may elect to treat 

24 the plan as having been adopted as of the last day 

25 of the taxable year.’’. 

mstockstill on DSK3G9T082PROD with BILLS

51 

•S 3471 PCS

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

2 this section shall apply to plans adopted for taxable years 

3 beginning after December 31, 2016. 

4 SEC. 202. COMBINED ANNUAL REPORT FOR GROUP OF 

5 PLANS. 

6 (a) IN GENERAL.—The Secretary of the Treasury 

7 and the Secretary of Labor shall, in cooperation, modify 

8 the returns required under section 6058 of the Internal 

9 Revenue Code of 1986 and the reports required by section 

10 104 of the Employee Retirement Income Security Act of 

11 1974 (29 U.S.C. 1024) so that all members of a group 

12 of plans described in subsection (c) may file a single aggre13 gated annual return or report satisfying the requirements 

14 of both such sections. 

15 (b) ADMINISTRATIVE REQUIREMENTS.—In devel16 oping the consolidated return or report under subsection 

17 (a), the Secretary of the Treasury and the Secretary of 

18 Labor may require such return or report to include any 

19 information regarding each plan in the group as such Sec20 retaries determine is necessary or appropriate for the en21 forcement and administration of the Internal Revenue 

22 Code of 1986 and the Employee Retirement Income Secu23 rity Act of 1974. 

24 (c) PLANS DESCRIBED.—A group of plans is de25 scribed in this subsection if all plans in the group— 

mstockstill on DSK3G9T082PROD with BILLS

52 

•S 3471 PCS

1 (1) are individual account plans or defined con2 tribution plans (as defined in section 3(34) of the 

3 Employee Retirement Income Security Act of 1974 

4 (29 U.S.C. 1002(34)) or in section 414(i) of the In5 ternal Revenue Code of 1986); 

6 (2) have— 

7 (A) the same trustee (as described in sec8 tion 403(a) of such Act (29 U.S.C. 1103(a))); 

9 (B) the same one or more named fidu10 ciaries (as described in section 402(a) of such 

11 Act (29 U.S.C. 1102(a))); 

12 (C) the same administrator (as defined in 

13 section 3(16)(A) of such Act (29 U.S.C. 

14 1002(16)(A))) and plan administrator (as de15 fined in section 414(g) of the Internal Revenue 

16 Code of 1986); and 

17 (D) plan years beginning on the same 

18 date; and 

19 (3) provide the same investments or investment 

20 options to participants and beneficiaries. 

21 A plan not subject to title I of the Employee Retirement 

22 Income Security Act of 1974 shall be treated as meeting 

23 the requirements of paragraph (2) as part of a group of 

24 plans if the same person that performs each of the func25 tions described in such paragraph, as applicable, for all 

mstockstill on DSK3G9T082PROD with BILLS

53 

•S 3471 PCS

1 other plans in such group performs each of such functions 

2 for such plan. 

3 (d) CLARIFICATION RELATING TO ELECTRONIC FIL4 ING OF RETURNS FOR DEFERRED COMPENSATION

5 PLANS.— 

6 (1) IN GENERAL.—Section 6011(e) of the Inter7 nal Revenue Code of 1986 is amended by adding at 

8 the end the following new paragraph: 

9 ‘‘(5) APPLICATION OF NUMERICAL LIMITATION

10 TO RETURNS RELATING TO DEFERRED COMPENSA11 TION PLANS.—For purposes of applying the numer12 ical limitation under paragraph (2)(A) to any return 

13 required under section 6058, information regarding 

14 each plan for which information is provided on such 

15 return shall be treated as a separate return.’’. 

16 (2) EFFECTIVE DATE.—The amendment made 

17 by paragraph (1) shall apply to returns required to 

18 be filed with respect to plan years beginning after 

19 December 31, 2016. 

20 (e) EFFECTIVE DATE.—The modification required by 

21 subsection (a) shall be implemented not later than Janu22 ary 1, 2020, and shall apply to returns and reports for 

23 plan years beginning after December 31, 2019. 

mstockstill on DSK3G9T082PROD with BILLS

54 

•S 3471 PCS

1 SEC. 203. DISCLOSURE REGARDING LIFETIME INCOME. 

2 (a) IN GENERAL.—Subparagraph (B) of section 

3 105(a)(2) of the Employee Retirement Income Security 

4 Act of 1974 (29 U.S.C. 1025(a)(2)) is amended— 

5 (1) in clause (i), by striking ‘‘and’’ at the end; 

6 (2) in clause (ii), by striking ‘‘diversification.’’ 

7 and inserting ‘‘diversification, and’’; and 

8 (3) by inserting at the end the following: 

9 ‘‘(iii) the lifetime income disclosure 

10 described in subparagraph (D)(i). 

11 In the case of pension benefit statements de12 scribed in clause (i) of paragraph (1)(A), a life13 time income disclosure under clause (iii) of this 

14 subparagraph shall be required to be included 

15 in only one pension benefit statement during 

16 any one 12-month period.’’. 

17 (b) LIFETIME INCOME.—Paragraph (2) of section 

18 105(a) of the Employee Retirement Income Security Act 

19 of 1974 (29 U.S.C. 1025(a)) is amended by adding at the 

20 end the following new subparagraph: 

21 ‘‘(D) LIFETIME INCOME DISCLOSURE.— 

22 ‘‘(i) IN GENERAL.— 

23 ‘‘(I) DISCLOSURE.—A lifetime in24 come disclosure shall set forth the life25 time income stream equivalent of the 

mstockstill on DSK3G9T082PROD with BILLS

55 

•S 3471 PCS

1 total benefits accrued with respect to 

2 the participant or beneficiary. 

3 ‘‘(II) LIFETIME INCOME STREAM

4 EQUIVALENT OF THE TOTAL BENE5 FITS ACCRUED.—For purposes of this 

6 subparagraph, the term ‘lifetime in7 come stream equivalent of the total 

8 benefits accrued’ means the amount of 

9 monthly payments the participant or 

10 beneficiary would receive if the total 

11 accrued benefits of such participant or 

12 beneficiary were used to provide life13 time income streams described in sub14 clause (III), based on assumptions 

15 specified in rules prescribed by the 

16 Secretary. 

17 ‘‘(III) LIFETIME INCOME

18 STREAMS.—The lifetime income 

19 streams described in this subclause 

20 are a qualified joint and survivor an21 nuity (as defined in section 205(d)), 

22 based on assumptions specified in 

23 rules prescribed by the Secretary, in24 cluding the assumption that the par25 ticipant or beneficiary has a spouse of 

mstockstill on DSK3G9T082PROD with BILLS

56 

•S 3471 PCS

1 equal age, and a single life annuity. 

2 Such lifetime income streams may 

3 have a term certain or other features 

4 to the extent permitted under rules 

5 prescribed by the Secretary. 

6 ‘‘(ii) MODEL DISCLOSURE.—Not later 

7 than 1 year after the date of the enact8 ment of the Retirement Enhancement and 

9 Savings Act of 2016, the Secretary shall 

10 issue a model lifetime income disclosure, 

11 written in a manner so as to be understood 

12 by the average plan participant, which— 

13 ‘‘(I) explains that the lifetime in14 come stream equivalent is only pro15 vided as an illustration; 

16 ‘‘(II) explains that the actual 

17 payments under the lifetime income 

18 stream described in clause (i)(III) 

19 which may be purchased with the 

20 total benefits accrued will depend on 

21 numerous factors and may vary sub22 stantially from the lifetime income 

23 stream equivalent in the disclosures; 

mstockstill on DSK3G9T082PROD with BILLS

57 

•S 3471 PCS

1 ‘‘(III) explains the assumptions 

2 upon which the lifetime income stream 

3 equivalent was determined; and 

4 ‘‘(IV) provides such other similar 

5 explanations as the Secretary con6 siders appropriate. 

7 ‘‘(iii) ASSUMPTIONS AND RULES.— 

8 Not later than 1 year after the date of the 

9 enactment of the Retirement Enhancement 

10 and Savings Act of 2016, the Secretary 

11 shall— 

12 ‘‘(I) prescribe assumptions which 

13 administrators of individual account 

14 plans may use in converting total ac15 crued benefits into lifetime income 

16 stream equivalents for purposes of 

17 this subparagraph; and 

18 ‘‘(II) issue interim final rules 

19 under clause (i). 

20 In prescribing assumptions under sub21 clause (I), the Secretary may prescribe a 

22 single set of specific assumptions (in which 

23 case the Secretary may issue tables or fac24 tors which facilitate such conversions), or 

25 ranges of permissible assumptions. To the 

mstockstill on DSK3G9T082PROD with BILLS

58 

•S 3471 PCS

1 extent that an accrued benefit is or may be 

2 invested in a lifetime income stream de3 scribed in clause (i)(III), the assumptions 

4 prescribed under subclause (I) shall, to the 

5 extent appropriate, permit administrators 

6 of individual account plans to use the 

7 amounts payable under such lifetime in8 come stream as a lifetime income stream 

9 equivalent. 

10 ‘‘(iv) LIMITATION ON LIABILITY.—No 

11 plan fiduciary, plan sponsor, or other per12 son shall have any liability under this title 

13 solely by reason of the provision of lifetime 

14 income stream equivalents which are de15 rived in accordance with the assumptions 

16 and rules described in clause (iii) and 

17 which include the explanations contained in 

18 the model lifetime income disclosure de19 scribed in clause (ii). This clause shall 

20 apply without regard to whether the provi21 sion of such lifetime income stream equiva22 lent is required by subparagraph (B)(iii). 

23 ‘‘(v) EFFECTIVE DATE.—The require24 ment in subparagraph (B)(iii) shall apply 

25 to pension benefit statements furnished 

mstockstill on DSK3G9T082PROD with BILLS

59 

•S 3471 PCS

1 more than 12 months after the latest of 

2 the issuance by the Secretary of— 

3 ‘‘(I) interim final rules under 

4 clause (i); 

5 ‘‘(II) the model disclosure under 

6 clause (ii); or 

7 ‘‘(III) the assumptions under 

8 clause (iii).’’. 

9 SEC. 204. FIDUCIARY SAFE HARBOR FOR SELECTION OF 

10 LIFETIME INCOME PROVIDER. 

11 Section 404 of the Employee Retirement Income Se12 curity Act of 1974 (29 U.S.C. 1104) is amended by adding 

13 at the end the following: 

14 ‘‘(e) SAFE HARBOR FOR ANNUITY SELECTION.— 

15 ‘‘(1) IN GENERAL.—With respect to the selec16 tion of an insurer and a guaranteed retirement in17 come contract, the requirements of subsection 

18 (a)(1)(B) will be deemed to be satisfied if a fidu19 ciary— 

20 ‘‘(A) engages in an objective, thorough, 

21 and analytical search for the purpose of identi22 fying insurers from which to purchase such con23 tracts; 

24 ‘‘(B) with respect to each insurer identified 

25 under subparagraph (A)— 

mstockstill on DSK3G9T082PROD with BILLS

60 

•S 3471 PCS

1 ‘‘(i) considers the financial capability 

2 of such insurer to satisfy its obligations 

3 under the guaranteed retirement income 

4 contract; and 

5 ‘‘(ii) considers the cost (including fees 

6 and commissions) of the guaranteed retire7 ment income contract offered by the in8 surer in relation to the benefits and prod9 uct features of the contract and adminis10 trative services to be provided under such 

11 contract; and 

12 ‘‘(C) on the basis of such consideration, 

13 concludes that— 

14 ‘‘(i) at the time of the selection, the 

15 insurer is financially capable of satisfying 

16 its obligations under the guaranteed retire17 ment income contract; and 

18 ‘‘(ii) the relative cost of the selected 

19 guaranteed retirement income contract as 

20 described in subparagraph (B)(ii) is rea21 sonable. 

22 ‘‘(2) FINANCIAL CAPABILITY OF THE IN23 SURER.—A fiduciary will be deemed to satisfy the 

24 requirements of paragraphs (1)(B)(i) and (1)(C)(i) 

25 if— 

mstockstill on DSK3G9T082PROD with BILLS

61 

•S 3471 PCS

1 ‘‘(A) the fiduciary obtains written rep2 resentations from the insurer that— 

3 ‘‘(i) the insurer is licensed to offer 

4 guaranteed retirement income contracts; 

5 ‘‘(ii) the insurer, at the time of selec6 tion and for each of the immediately pre7 ceding 7 plan years— 

8 ‘‘(I) operates under a certificate 

9 of authority from the insurance com10 missioner of its domiciliary State 

11 which has not been revoked or sus12 pended; 

13 ‘‘(II) has filed audited financial 

14 statements in accordance with the 

15 laws of its domiciliary State under ap16 plicable statutory accounting prin17 ciples; 

18 ‘‘(III) maintains (and has main19 tained) reserves which satisfies all the 

20 statutory requirements of all States 

21 where the insurer does business; and 

22 ‘‘(IV) is not operating under an 

23 order of supervision, rehabilitation, or 

24 liquidation; 

mstockstill on DSK3G9T082PROD with BILLS

62 

•S 3471 PCS

1 ‘‘(iii) the insurer undergoes, at least 

2 every 5 years, a financial examination 

3 (within the meaning of the law of its domi4 ciliary State) by the insurance commis5 sioner of the domiciliary State (or rep6 resentative, designee, or other party ap7 proved by such commissioner); and 

8 ‘‘(iv) the insurer will notify the fidu9 ciary of any change in circumstances oc10 curring after the provision of the represen11 tations in clauses (i), (ii), and (ii) which 

12 would preclude the insurer from making 

13 such representations at the time of 

14 issuance of the guaranteed retirement in15 come contract; and 

16 ‘‘(B) after receiving such representations 

17 and as of the time of selection, the fiduciary 

18 has not received any notice described in sub19 paragraph (A)(iv) and is in possession of no 

20 other information which would cause the fidu21 ciary to question the representations provided. 

22 ‘‘(3) NO REQUIREMENT TO SELECT LOWEST

23 COST.—Nothing in this subsection shall be construed 

24 to require a fiduciary to select the lowest cost con25 tract. A fiduciary may consider the value of a conmstockstill on DSK3G9T082PROD with BILLS

63 

•S 3471 PCS

1 tract, including features and benefits of the contract 

2 and attributes of the insurer (including, without lim3 itation, the insurer’s financial strength) in conjunc4 tion with the cost of the contract. 

5 ‘‘(4) TIME OF SELECTION.— 

6 ‘‘(A) IN GENERAL.—For purposes of this 

7 subsection, the time of selection is— 

8 ‘‘(i) the time that the insurer and the 

9 contract are selected for distribution of 

10 benefits to a specific participant or bene11 ficiary; or 

12 ‘‘(ii) if the fiduciary periodically re13 views the continuing appropriateness of the 

14 conclusion described in paragraph (1)(C) 

15 with respect to a selected insurer, taking 

16 into account the considerations described 

17 in such paragraph, the time that the in18 surer and the contract are selected to pro19 vide benefits at future dates to participants 

20 or beneficiaries under the plan. 

21 Nothing in the preceding sentence shall be con22 strued to require the fiduciary to review the ap23 propriateness of a selection after the purchase 

24 of a contract for a participant or beneficiary. 

mstockstill on DSK3G9T082PROD with BILLS

64 

•S 3471 PCS

1 ‘‘(B) PERIODIC REVIEW.—A fiduciary will 

2 be deemed to have conducted the periodic re3 view described in subparagraph (A)(ii) if the fi4 duciary obtains the written representations de5 scribed in clauses (i), (ii), and (iii) of paragraph 

6 (2)(A) from the insurer on an annual basis, un7 less the fiduciary receives any notice described 

8 in paragraph (2)(A)(iv) or otherwise becomes 

9 aware of facts that would cause the fiduciary to 

10 question such representations. 

11 ‘‘(5) LIMITED LIABILITY.—A fiduciary which 

12 satisfies the requirements of this subsection shall not 

13 be liable following the distribution of any benefit, or 

14 the investment by or on behalf of a participant or 

15 beneficiary pursuant to the selected guaranteed re16 tirement income contract, for any losses that may 

17 result to the participant or beneficiary due to an in18 surer’s inability to satisfy its financial obligations 

19 under the terms of such contract. 

20 ‘‘(6) DEFINITIONS.—For purposes of this sub21 section— 

22 ‘‘(A) INSURER.—The term ‘insurer’ means 

23 an insurance company, insurance service, or in24 surance organization, including affiliates of 

25 such companies. 

mstockstill on DSK3G9T082PROD with BILLS

65 

•S 3471 PCS

1 ‘‘(B) GUARANTEED RETIREMENT INCOME

2 CONTRACT.—The term ‘guaranteed retirement 

3 income contract’ means an annuity contract for 

4 a fixed term or a contract (or provision or fea5 ture thereof) which provides guaranteed bene6 fits annually (or more frequently) for at least 

7 the remainder of the life of the participant or 

8 the joint lives of the participant and the partici9 pant’s designated beneficiary as part of an indi10 vidual account plan.’’. 

11 SEC. 205. MODIFICATION OF NONDISCRIMINATION RULES 

12 TO PROTECT OLDER, LONGER SERVICE PAR13 TICIPANTS. 

14 (a) IN GENERAL.—Section 401 of the Internal Rev15 enue Code of 1986 is amended— 

16 (1) by redesignating subsection (o) as sub17 section (p), and 

18 (2) by inserting after subsection (n) the fol19 lowing new subsection: 

20 ‘‘(o) SPECIAL RULES FOR APPLYING NON21 DISCRIMINATION RULES TO PROTECT OLDER, LONGER

22 SERVICE AND GRANDFATHERED PARTICIPANTS .— 

23 ‘‘(1) TESTING OF DEFINED BENEFIT PLANS

24 WITH CLOSED CLASSES OF PARTICIPANTS.— 

mstockstill on DSK3G9T082PROD with BILLS

66 

•S 3471 PCS

1 ‘‘(A) BENEFITS, RIGHTS, OR FEATURES

2 PROVIDED TO CLOSED CLASSES.—A defined 

3 benefit plan which provides benefits, rights, or 

4 features to a closed class of participants shall 

5 not fail to satisfy the requirements of sub6 section (a)(4) by reason of the composition of 

7 such closed class or the benefits, rights, or fea8 tures provided to such closed class, if— 

9 ‘‘(i) for the plan year as of which the 

10 class closes and the 2 succeeding plan 

11 years, such benefits, rights, and features 

12 satisfy the requirements of subsection 

13 (a)(4) (without regard to this subpara14 graph but taking into account the rules of 

15 subparagraph (I)), 

16 ‘‘(ii) after the date as of which the 

17 class was closed, any plan amendment 

18 which modifies the closed class or the ben19 efits, rights, and features provided to such 

20 closed class does not discriminate signifi21 cantly in favor of highly compensated em22 ployees, and 

23 ‘‘(iii) the class was closed before Sep24 tember 21, 2016, or the plan is described 

25 in subparagraph (C). 

mstockstill on DSK3G9T082PROD with BILLS

67 

•S 3471 PCS

1 ‘‘(B) AGGREGATE TESTING WITH DEFINED

2 CONTRIBUTION PLANS PERMITTED ON A BENE3 FITS BASIS.— 

4 ‘‘(i) IN GENERAL.—For purposes of 

5 determining compliance with subsection 

6 (a)(4) and section 410(b), a defined benefit 

7 plan described in clause (iii) may be aggre8 gated and tested on a benefits basis with 

9 1 or more defined contribution plans, in10 cluding with the portion of 1 or more de11 fined contribution plans which— 

12 ‘‘(I) provides matching contribu13 tions (as defined in subsection 

14 (m)(4)(A)), 

15 ‘‘(II) provides annuity contracts 

16 described in section 403(b) which are 

17 purchased with matching contribu18 tions or nonelective contributions, or 

19 ‘‘(III) consists of an employee 

20 stock ownership plan (within the 

21 meaning of section 4975(e)(7)) or a 

22 tax credit employee stock ownership 

23 plan (within the meaning of section 

24 409(a)). 

mstockstill on DSK3G9T082PROD with BILLS

68 

•S 3471 PCS

1 ‘‘(ii) SPECIAL RULES FOR MATCHING

2 CONTRIBUTIONS.—For purposes of clause 

3 (i), if a defined benefit plan is aggregated 

4 with a portion of a defined contribution 

5 plan providing matching contributions— 

6 ‘‘(I) such defined benefit plan 

7 must also be aggregated with any por8 tion of such defined contribution plan 

9 which provides elective deferrals de10 scribed in subparagraph (A) or (C) of 

11 section 402(g)(3), and 

12 ‘‘(II) such matching contribu13 tions shall be treated in the same 

14 manner as nonelective contributions, 

15 including for purposes of applying the 

16 rules of subsection (l). 

17 ‘‘(iii) PLANS DESCRIBED.—A defined 

18 benefit plan is described in this clause if— 

19 ‘‘(I) the plan provides benefits to 

20 a closed class of participants, 

21 ‘‘(II) for the plan year as of 

22 which the class closes and the 2 suc23 ceeding plan years, the plan satisfies 

24 the requirements of section 410(b) 

25 and subsection (a)(4) (without regard 

mstockstill on DSK3G9T082PROD with BILLS

69 

•S 3471 PCS

1 to this subparagraph but taking into 

2 account the rules of subparagraph 

3 (I)), 

4 ‘‘(III) after the date as of which 

5 the class was closed, any plan amend6 ment which modifies the closed class 

7 or the benefits provided to such closed 

8 class does not discriminate signifi9 cantly in favor of highly compensated 

10 employees, and 

11 ‘‘(IV) the class was closed before 

12 September 21, 2016, or the plan is 

13 described in subparagraph (C). 

14 ‘‘(C) PLANS DESCRIBED.—A plan is de15 scribed in this subparagraph if, taking into ac16 count any predecessor plan— 

17 ‘‘(i) such plan has been in effect for 

18 at least 5 years as of the date the class is 

19 closed, and 

20 ‘‘(ii) during the 5-year period pre21 ceding the date the class is closed, there 

22 has not been a substantial increase in the 

23 coverage or value of the benefits, rights, or 

24 features described in subparagraph (A) or 

25 in the coverage or benefits under the plan 

mstockstill on DSK3G9T082PROD with BILLS

70 

•S 3471 PCS

1 described in subparagraph (B)(iii) (which2 ever is applicable). 

3 ‘‘(D) DETERMINATION OF SUBSTANTIAL

4 INCREASE FOR BENEFITS, RIGHTS, AND FEA5 TURES.—In applying subparagraph (C)(ii) for 

6 purposes of subparagraph (A)(iii), a plan shall 

7 be treated as having had a substantial increase 

8 in coverage or value of the benefits, rights, or 

9 features described in subparagraph (A) during 

10 the applicable 5-year period only if, during such 

11 period— 

12 ‘‘(i) the number of participants cov13 ered by such benefits, rights, or features 

14 on the date such period ends is more than 

15 50 percent greater than the number of 

16 such participants on the first day of the 

17 plan year in which such period began, or 

18 ‘‘(ii) such benefits, rights, and fea19 tures have been modified by 1 or more 

20 plan amendments in such a way that, as of 

21 the date the class is closed, the value of 

22 such benefits, rights, and features to the 

23 closed class as a whole is substantially 

24 greater than the value as of the first day 

mstockstill on DSK3G9T082PROD with BILLS

71 

•S 3471 PCS

1 of such 5-year period, solely as a result of 

2 such amendments. 

3 ‘‘(E) DETERMINATION OF SUBSTANTIAL

4 INCREASE FOR AGGREGATE TESTING ON BENE5 FITS BASIS.—In applying subparagraph (C)(ii) 

6 for purposes of subparagraph (B)(iii)(IV), a 

7 plan shall be treated as having had a substan8 tial increase in coverage or benefits during the 

9 applicable 5-year period only if, during such pe10 riod— 

11 ‘‘(i) the number of participants bene12 fiting under the plan on the date such pe13 riod ends is more than 50 percent greater 

14 than the number of such participants on 

15 the first day of the plan year in which such 

16 period began, or 

17 ‘‘(ii) the average benefit provided to 

18 such participants on the date such period 

19 ends is more than 50 percent greater than 

20 the average benefit provided on the first 

21 day of the plan year in which such period 

22 began. 

23 ‘‘(F) CERTAIN EMPLOYEES DIS24 REGARDED.—For purposes of subparagraphs 

25 (D) and (E), any increase in coverage or value 

mstockstill on DSK3G9T082PROD with BILLS

72 

•S 3471 PCS

1 or in coverage or benefits, whichever is applica2 ble, which is attributable to such coverage and 

3 value or coverage and benefits provided to em4 ployees— 

5 ‘‘(i) who became participants as a re6 sult of a merger, acquisition, or similar 

7 event which occurred during the 7-year pe8 riod preceding the date the class is closed, 

9 or 

10 ‘‘(ii) who became participants by rea11 son of a merger of the plan with another 

12 plan which had been in effect for at least 

13 5 years as of the date of the merger, 

14 shall be disregarded, except that clause (ii) 

15 shall apply for purposes of subparagraph (D) 

16 only if, under the merger, the benefits, rights, 

17 or features under 1 plan are conformed to the 

18 benefits, rights, or features of the other plan 

19 prospectively. 

20 ‘‘(G) RULES RELATING TO AVERAGE BEN21 EFIT.—For purposes of subparagraph (E)— 

22 ‘‘(i) the average benefit provided to 

23 participants under the plan will be treated 

24 as having remained the same between the 

25 2 dates described in subparagraph (E)(ii) 

mstockstill on DSK3G9T082PROD with BILLS

73 

•S 3471 PCS

1 if the benefit formula applicable to such 

2 participants has not changed between such 

3 dates, and 

4 ‘‘(ii) if the benefit formula applicable 

5 to 1 or more participants under the plan 

6 has changed between such 2 dates, then 

7 the average benefit under the plan shall be 

8 considered to have increased by more than 

9 50 percent only if— 

10 ‘‘(I) the total amount determined 

11 under section 430(b)(1)(A)(i) for all 

12 participants benefiting under the plan 

13 for the plan year in which the 5-year 

14 period described in subparagraph (E) 

15 ends, exceeds 

16 ‘‘(II) the total amount deter17 mined under section 430(b)(1)(A)(i) 

18 for all such participants for such plan 

19 year, by using the benefit formula in 

20 effect for each such participant for 

21 the first plan year in such 5-year pe22 riod, 

23 by more than 50 percent. In the case of a 

24 CSEC plan (as defined in section 414(y)), 

25 the normal cost of the plan (as determined 

mstockstill on DSK3G9T082PROD with BILLS

74 

•S 3471 PCS

1 under section 433(j)(1)(B)) shall be used 

2 in lieu of the amount determined under 

3 section 430(b)(1)(A)(i). 

4 ‘‘(H) TREATMENT AS SINGLE PLAN.—For 

5 purposes of subparagraphs (E) and (G), a plan 

6 described in section 413(c) shall be treated as 

7 a single plan rather than as separate plans 

8 maintained by each participating employer. 

9 ‘‘(I) SPECIAL RULES.—For purposes of 

10 subparagraphs (A)(i) and (B)(iii)(II), the fol11 lowing rules shall apply: 

12 ‘‘(i) In applying section 410(b)(6)(C), 

13 the closing of the class of participants shall 

14 not be treated as a significant change in 

15 coverage under section 410(b)(6)(C)(i)(II). 

16 ‘‘(ii) 2 or more plans shall not fail to 

17 be eligible to be aggregated and treated as 

18 a single plan solely by reason of having dif19 ferent plan years. 

20 ‘‘(iii) Changes in the employee popu21 lation shall be disregarded to the extent at22 tributable to individuals who become em23 ployees or cease to be employees, after the 

24 date the class is closed, by reason of a 

mstockstill on DSK3G9T082PROD with BILLS

75 

•S 3471 PCS

1 merger, acquisition, divestiture, or similar 

2 event. 

3 ‘‘(iv) Aggregation and all other testing 

4 methodologies otherwise applicable under 

5 subsection (a)(4) and section 410(b) may 

6 be taken into account. 

7 The rule of clause (ii) shall also apply for pur8 poses of determining whether plans to which 

9 subparagraph (B)(i) applies may be aggregated 

10 and treated as 1 plan for purposes of deter11 mining whether such plans meet the require12 ments of subsection (a)(4) and section 410(b). 

13 ‘‘(J) SPUN-OFF PLANS.—For purposes of 

14 this paragraph, if a portion of a defined benefit 

15 plan described in subparagraph (A) or (B)(iii) 

16 is spun off to another employer and the spun17 off plan continues to satisfy the requirements 

18 of— 

19 ‘‘(i) subparagraph (A)(i) or 

20 (B)(iii)(II), whichever is applicable, if the 

21 original plan was still within the 3-year pe22 riod described in such subparagraph at the 

23 time of the spin off, and 

24 ‘‘(ii) subparagraph (A)(ii) or 

25 (B)(iii)(III), whichever is applicable, 

mstockstill on DSK3G9T082PROD with BILLS

76 

•S 3471 PCS

1 the treatment under subparagraph (A) or (B) 

2 of the spun-off plan shall continue with respect 

3 to such other employer. 

4 ‘‘(2) TESTING OF DEFINED CONTRIBUTION

5 PLANS.— 

6 ‘‘(A) TESTING ON A BENEFITS BASIS.—A 

7 defined contribution plan shall be permitted to 

8 be tested on a benefits basis if— 

9 ‘‘(i) such defined contribution plan 

10 provides make-whole contributions to a 

11 closed class of participants whose accruals 

12 under a defined benefit plan have been re13 duced or eliminated, 

14 ‘‘(ii) for the plan year of the defined 

15 contribution plan as of which the class eli16 gible to receive such make-whole contribu17 tions closes and the 2 succeeding plan 

18 years, such closed class of participants sat19 isfies the requirements of section 

20 410(b)(2)(A)(i) (determined by applying 

21 the rules of paragraph (1)(I)), 

22 ‘‘(iii) after the date as of which the 

23 class was closed, any plan amendment to 

24 the defined contribution plan which modi25 fies the closed class or the allocations, benmstockstill on DSK3G9T082PROD with BILLS

77 

•S 3471 PCS

1 efits, rights, and features provided to such 

2 closed class does not discriminate signifi3 cantly in favor of highly compensated em4 ployees, and 

5 ‘‘(iv) the class was closed before Sep6 tember 21, 2016, or the defined benefit 

7 plan under clause (i) is described in para8 graph (1)(C) (as applied for purposes of 

9 paragraph (1)(B)(iii)(IV)). 

10 ‘‘(B) AGGREGATION WITH PLANS INCLUD11 ING MATCHING CONTRIBUTIONS.— 

12 ‘‘(i) IN GENERAL.—With respect to 1 

13 or more defined contribution plans de14 scribed in subparagraph (A), for purposes 

15 of determining compliance with subsection 

16 (a)(4) and section 410(b), the portion of 

17 such plans which provides make-whole con18 tributions or other nonelective contribu19 tions may be aggregated and tested on a 

20 benefits basis with the portion of 1 or 

21 more other defined contribution plans 

22 which— 

23 ‘‘(I) provides matching contribu24 tions (as defined in subsection 

25 (m)(4)(A)), 

mstockstill on DSK3G9T082PROD with BILLS

78 

•S 3471 PCS

1 ‘‘(II) provides annuity contracts 

2 described in section 403(b) which are 

3 purchased with matching contribu4 tions or nonelective contributions, or 

5 ‘‘(III) consists of an employee 

6 stock ownership plan (within the 

7 meaning of section 4975(e)(7)) or a 

8 tax credit employee stock ownership 

9 plan (within the meaning of section 

10 409(a)). 

11 ‘‘(ii) SPECIAL RULES FOR MATCHING

12 CONTRIBUTIONS.—Rules similar to the 

13 rules of paragraph (1)(B)(ii) shall apply 

14 for purposes of clause (i). 

15 ‘‘(C) SPECIAL RULES FOR TESTING DE16 FINED CONTRIBUTION PLAN FEATURES PRO17 VIDING MATCHING CONTRIBUTIONS TO CERTAIN

18 OLDER, LONGER SERVICE PARTICIPANTS.—In 

19 the case of a defined contribution plan which 

20 provides benefits, rights, or features to a closed 

21 class of participants whose accruals under a de22 fined benefit plan have been reduced or elimi23 nated, the plan shall not fail to satisfy the re24 quirements of subsection (a)(4) solely by reason 

25 of the composition of the closed class or the 

mstockstill on DSK3G9T082PROD with BILLS

79 

•S 3471 PCS

1 benefits, rights, or features provided to such 

2 closed class if the defined contribution plan and 

3 defined benefit plan otherwise meet the require4 ments of subparagraph (A) but for the fact that 

5 the make-whole contributions under the defined 

6 contribution plan are made in whole or in part 

7 through matching contributions. 

8 ‘‘(D) SPUN-OFF PLANS.—For purposes of 

9 this paragraph, if a portion of a defined con10 tribution plan described in subparagraph (A) or 

11 (C) is spun off to another employer, the treat12 ment under subparagraph (A) or (C) of the 

13 spun-off plan shall continue with respect to the 

14 other employer if such plan continues to comply 

15 with the requirements of clauses (ii) (if the 

16 original plan was still within the 3-year period 

17 described in such clause at the time of the spin 

18 off) and (iii) of subparagraph (A), as deter19 mined for purposes of subparagraph (A) or (C), 

20 whichever is applicable. 

21 ‘‘(3) DEFINITIONS.—For purposes of this sub22 section— 

23 ‘‘(A) MAKE-WHOLE CONTRIBUTIONS.—Ex24 cept as otherwise provided in paragraph (2)(C), 

25 the term ‘make-whole contributions’ means nonmstockstill on DSK3G9T082PROD with BILLS

80 

•S 3471 PCS

1 elective allocations for each employee in the 

2 class which are reasonably calculated, in a con3 sistent manner, to replace some or all of the re4 tirement benefits which the employee would 

5 have received under the defined benefit plan 

6 and any other plan or qualified cash or deferred 

7 arrangement under subsection (k)(2) if no 

8 change had been made to such defined benefit 

9 plan and such other plan or arrangement. For 

10 purposes of the preceding sentence, consistency 

11 shall not be required with respect to employees 

12 who were subject to different benefit formulas 

13 under the defined benefit plan. 

14 ‘‘(B) REFERENCES TO CLOSED CLASS OF

15 PARTICIPANTS.—References to a closed class of 

16 participants and similar references to a closed 

17 class shall include arrangements under which 1 

18 or more classes of participants are closed, ex19 cept that 1 or more classes of participants 

20 closed on different dates shall not be aggre21 gated for purposes of determining the date any 

22 such class was closed. 

23 ‘‘(C) HIGHLY COMPENSATED EMPLOYEE.— 

24 The term ‘highly compensated employee’ has 

mstockstill on DSK3G9T082PROD with BILLS

81 

•S 3471 PCS

1 the meaning given such term in section 

2 414(q).’’. 

3 (b) PARTICIPATION REQUIREMENTS.—Paragraph 

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

5 1986 is amended by adding at the end the following new 

6 subparagraph: 

7 ‘‘(I) PROTECTED PARTICIPANTS.— 

8 ‘‘(i) IN GENERAL.—A plan shall be 

9 deemed to satisfy the requirements of sub10 paragraph (A) if— 

11 ‘‘(I) the plan is amended— 

12 ‘‘(aa) to cease all benefit ac13 cruals, or 

14 ‘‘(bb) to provide future ben15 efit accruals only to a closed 

16 class of participants, 

17 ‘‘(II) the plan satisfies subpara18 graph (A) (without regard to this sub19 paragraph) as of the effective date of 

20 the amendment, and 

21 ‘‘(III) the amendment was adopt22 ed before September 21, 2016, or the 

23 plan is described in clause (ii). 

24 ‘‘(ii) PLANS DESCRIBED.—A plan is 

25 described in this clause if the plan would 

mstockstill on DSK3G9T082PROD with BILLS

82 

•S 3471 PCS

1 be described in subsection (o)(1)(C), as ap2 plied for purposes of subsection 

3 (o)(1)(B)(iii)(IV) and by treating the effec4 tive date of the amendment as the date the 

5 class was closed for purposes of subsection 

6 (o)(1)(C). 

7 ‘‘(iii) SPECIAL RULES.—For purposes 

8 of clause (i)(II), in applying section 

9 410(b)(6)(C), the amendments described in 

10 clause (i) shall not be treated as a signifi11 cant change in coverage under section 

12 410(b)(6)(C)(i)(II). 

13 ‘‘(iv) SPUN-OFF PLANS.—For pur14 poses of this subparagraph, if a portion of 

15 a plan described in clause (i) is spun off to 

16 another employer, the treatment under 

17 clause (i) of the spun-off plan shall con18 tinue with respect to the other employer.’’. 

19 (c) EFFECTIVE DATE.— 

20 (1) IN GENERAL.—Except as provided in para21 graph (2), the amendments made by this section 

22 shall take effect on the date of the enactment of this 

23 Act, without regard to whether any plan modifica24 tions referred to in such amendments are adopted or 

25 effective before, on, or after such date of enactment. 

mstockstill on DSK3G9T082PROD with BILLS

83 

•S 3471 PCS

1 (2) SPECIAL RULES.— 

2 (A) ELECTION OF EARLIER APPLICA3 TION.—At the election of the plan sponsor, the 

4 amendments made by this section shall apply to 

5 plan years beginning after December 31, 2013. 

6 (B) CLOSED CLASSES OF PARTICIPANTS.— 

7 For purposes of paragraphs (1)(A)(iii), 

8 (1)(B)(iii)(IV), and (2)(A)(iv) of section 401(o) 

9 of the Internal Revenue Code of 1986 (as added 

10 by this section), a closed class of participants 

11 shall be treated as being closed before Sep12 tember 21, 2016, if the plan sponsor’s intention 

13 to create such closed class is reflected in formal 

14 written documents and communicated to par15 ticipants before such date. 

16 (C) CERTAIN POST-ENACTMENT PLAN

17 AMENDMENTS.—A plan shall not be treated as 

18 failing to be eligible for the application of sec19 tion 401(o)(1)(A), 401(o)(1)(B)(iii), or 

20 401(a)(26) of such Code (as added by this sec21 tion) to such plan solely because in the case 

22 of— 

23 (i) such section 401(o)(1)(A), the plan 

24 was amended before the date of the enact25 ment of this Act to eliminate 1 or more 

mstockstill on DSK3G9T082PROD with BILLS

84 

•S 3471 PCS

1 benefits, rights, or features, and is further 

2 amended after such date of enactment to 

3 provide such previously eliminated benefits, 

4 rights, or features to a closed class of par5 ticipants, or 

6 (ii) such section 401(o)(1)(B)(iii) or 

7 section 401(a)(26), the plan was amended 

8 before the date of the enactment of this 

9 Act to cease all benefit accruals, and is 

10 further amended after such date of enact11 ment to provide benefit accruals to a closed 

12 class of participants. 

13 Any such section shall only apply if the plan 

14 otherwise meets the requirements of such sec15 tion and in applying such section, the date the 

16 class of participants is closed shall be the effec17 tive date of the later amendment. 

18 SEC. 206. MODIFICATION OF PBGC PREMIUMS FOR CSEC 

19 PLANS. 

20 (a) FLAT RATE PREMIUM.—Subparagraph (A) of 

21 section 4006(a)(3) of the Employee Retirement Income 

22 Security Act of 1974 (29 U.S.C. 1306(a)(3)) is amend23 ed— 

mstockstill on DSK3G9T082PROD with BILLS

85 

•S 3471 PCS

1 (1) in clause (i), by striking ‘‘plan,’’ and insert2 ing ‘‘plan other than a CSEC plan (as defined in 

3 section 210(f)(1))’’; 

4 (2) in clause (v), by striking ‘‘or’’ at the end; 

5 (3) in clause (vi), by striking the period at the 

6 end and inserting ‘‘, or’’; and 

7 (4) by adding at the end the following new 

8 clause: 

9 ‘‘(vii) in the case of a CSEC plan (as 

10 defined in section 210(f)(1)), for plan 

11 years beginning after December 31, 2015, 

12 for each individual who is a participant in 

13 such plan during the plan year an amount 

14 equal to the sum of— 

15 ‘‘(I) the additional premium (if 

16 any) determined under subparagraph 

17 (E), and 

18 ‘‘(II) $19.’’. 

19 (b) VARIABLE RATE PREMIUM.— 

20 (1) UNFUNDED VESTED BENEFITS.— 

21 (A) IN GENERAL.—Subparagraph (E) of 

22 section 4006(a)(3) of the Employee Retirement 

23 Income Security Act of 1974 (29 U.S.C. 

24 1306(a)(3)) is amended by adding at the end 

25 the following new clause: 

mstockstill on DSK3G9T082PROD with BILLS

86 

•S 3471 PCS

1 ‘‘(v) For purposes of clause (ii), in the 

2 case of a CSEC plan (as defined in section 

3 210(f)(1)), the term ‘unfunded vested ben4 efits’ means, for plan years beginning after 

5 December 31, 2015, the excess (if any) 

6 of— 

7 ‘‘(I) the funding liability of the 

8 plan as determined under section 

9 306(j)(5)(C) for the plan year by only 

10 taking into account vested benefits, 

11 over 

12 ‘‘(II) the fair market value of 

13 plan assets for the plan year which 

14 are held by the plan on the valuation 

15 date.’’. 

16 (B) CONFORMING AMENDMENT.—Clause 

17 (iii) of section 4006(a)(3)(E) of such Act (29 

18 U.S.C. 1306(a)(3)(E)) is amended by striking 

19 ‘‘For purposes’’ and inserting ‘‘Except as pro20 vided in clause (v), for purposes’’. 

21 (2) APPLICABLE DOLLAR AMOUNT.— 

22 (A) IN GENERAL.—Paragraph (8) of sec23 tion 4006(a) of such Act (29 U.S.C. 1306(a)) 

24 is amended by adding at the end the following 

25 new subparagraph: 

mstockstill on DSK3G9T082PROD with BILLS

87 

•S 3471 PCS

1 ‘‘(E) CSEC PLANS.—In the case of a 

2 CSEC plan (as defined in section 210(f)(1)), 

3 the applicable dollar amount shall be $9.’’. 

4 (B) CONFORMING AMENDMENT.—Subpara5 graph (A) of section 4006(a)(8) of such Act (29 

6 U.S.C. 1306(a)(8)) is amended by striking ‘‘(B) 

7 and (C)’’ and inserting ‘‘(B), (C), and (E)’’. 

8 TITLE III—BENEFITS RELATING 

9 TO UNITED STATES TAX COURT 

10 SEC. 301. THRIFT SAVINGS PLAN CONTRIBUTIONS FOR 

11 JUDGES IN THE FEDERAL EMPLOYEES RE12 TIREMENT SYSTEM. 

13 (a) IN GENERAL.—Subsection (j)(3)(B) of section 

14 7447 of the Internal Revenue Code of 1986 is amended 

15 to read as follows: 

16 ‘‘(B) CONTRIBUTIONS FOR BENEFIT OF

17 JUDGE.—No contributions under section 

18 8432(c) of title 5, United States Code, shall be 

19 made for the benefit of a judge who has filed 

20 an election to receive retired pay under sub21 section (e).’’. 

22 (b) OFFSET.—Paragraph (3) of section 7447(j) of 

23 the Internal Revenue Code of 1986 is amended by adding 

24 at the end the following new subparagraph: 

mstockstill on DSK3G9T082PROD with BILLS

88 

•S 3471 PCS

1 ‘‘(F) OFFSET.—In the case of a judge who 

2 receives a distribution from the Thrift Savings 

3 Plan and who later receives retired pay under 

4 subsection (d), the retired pay shall be offset by 

5 an amount equal to the amount of the distribu6 tion which represents the Government’s con7 tribution to the individual’s Thrift Savings Ac8 count during years of service as a full-time judi9 cial officer under the Federal Employees Retire10 ment System, without regard to earnings attrib11 utable to such amount. Where such an offset 

12 would exceed 50 percent of the retired pay to 

13 be received in the first year, the offset may be 

14 divided equally over the first 2 years in which 

15 the individual receives the annuity.’’. 

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

17 this section shall apply to basic pay earned while serving 

18 as a judge of the United States Tax Court on or after 

19 the date of the enactment of this Act. 

20 SEC. 302. CHANGE IN VESTING PERIOD FOR SURVIVOR AN21 NUITIES AND WAIVER OF VESTING PERIOD IN 

22 THE EVENT OF ASSASSINATION. 

23 (a) ELIGIBILITY IN CASE OF DEATH BY ASSASSINA24 TION.—Subsection (h) of section 7448 of the Internal Rev25 enue Code of 1986 is amended to read as follows: 

mstockstill on DSK3G9T082PROD with BILLS

89 

•S 3471 PCS

1 ‘‘(h) ENTITLEMENT TO ANNUITY.— 

2 ‘‘(1) IN GENERAL.— 

3 ‘‘(A) ANNUITY TO SURVIVING SPOUSE.—If 

4 a judge or magistrate judge of the Tax Court 

5 described in paragraph (2) is survived by a sur6 viving spouse but not by a dependent child, 

7 there shall be paid to such surviving spouse an 

8 annuity beginning with the day of the death of 

9 the judge or magistrate judge of the Tax Court 

10 or following the surviving spouse’s attainment 

11 of age 50, whichever is the later, in an amount 

12 computed as provided in subsection (m). 

13 ‘‘(B) ANNUITY TO SURVIVING SPOUSE AND

14 CHILD.—If a judge or magistrate judge of the 

15 Tax Court described in paragraph (2) is sur16 vived by a surviving spouse and dependent child 

17 or children, there shall be paid to such sur18 viving spouse an annuity, beginning on the day 

19 of the death of the judge or magistrate judge 

20 of the Tax Court, in an amount computed as 

21 provided in subsection (m), and there shall also 

22 be paid to or on behalf of each such child an 

23 immediate annuity equal to the lesser of— 

24 ‘‘(i) 10 percent of the average annual 

25 salary of such judge or magistrate judge of 

mstockstill on DSK3G9T082PROD with BILLS

90 

•S 3471 PCS

1 the Tax Court (determined in accordance 

2 with subsection (m)), or 

3 ‘‘(ii) 20 percent of such average an4 nual salary, divided by the number of such 

5 children. 

6 ‘‘(C) ANNUITY TO SURVIVING DEPENDENT

7 CHILDREN.—If a judge or magistrate judge of 

8 the Tax Court described in paragraph (2) 

9 leaves no surviving spouse but leaves a sur10 viving dependent child or children, there shall 

11 be paid to or on behalf of each such child an 

12 immediate annuity equal to the lesser of— 

13 ‘‘(i) 20 percent of the average annual 

14 salary of such judge or magistrate judge of 

15 the Tax Court (determined in accordance 

16 with subsection (m)), or 

17 ‘‘(ii) 40 percent of such average an18 nual salary divided by the number of such 

19 children. 

20 ‘‘(2) COVERED JUDGES.—Paragraph (1) applies 

21 to any judge or magistrate judge of the Tax Court 

22 electing under subsection (b)— 

23 ‘‘(A) who dies while a judge or magistrate 

24 judge of the Tax Court after having rendered at 

25 least 18 months of civilian service computed as 

mstockstill on DSK3G9T082PROD with BILLS

91 

•S 3471 PCS

1 prescribed in subsection (n), for the last 18 

2 months of which the salary deductions provided 

3 for by subsection (c)(1) or the deposits required 

4 by subsection (d) have actually been made or 

5 the salary deductions required by the civil serv6 ice retirement laws have actually been made, or 

7 ‘‘(B) who dies by assassination after hav8 ing rendered less than 18 months of civilian 

9 service computed as prescribed in subsection (n) 

10 if, for the period of such service, the salary de11 ductions provided for by subsection (c)(1) or 

12 the deposits required by subsection (d) have ac13 tually been made. 

14 ‘‘(3) TERMINATION OF ANNUITY.— 

15 ‘‘(A) SURVIVING SPOUSE.—The annuity 

16 payable to a surviving spouse under this sub17 section shall be terminable upon such surviving 

18 spouse’s death or such surviving spouse’s re19 marriage before attaining age 55. 

20 ‘‘(B) SURVIVING CHILD.—Any annuity 

21 payable to a child under this subsection shall be 

22 terminable upon the earliest of— 

23 ‘‘(i) the child attainment of age 18, 

24 ‘‘(ii) the child’s marriage, or 

25 ‘‘(iii) the child’s death, 

mstockstill on DSK3G9T082PROD with BILLS

92 

•S 3471 PCS

1 except that if such child is incapable of self-sup2 port by reason of mental or physical disability 

3 the child’s annuity shall be terminable only 

4 upon death, marriage, or recovery from such 

5 disability. 

6 ‘‘(C) DEPENDENT CHILD AFTER DEATH

7 OF SURVIVING SPOUSE.—In case of the death of 

8 a surviving spouse of a judge or magistrate 

9 judge of the Tax Court leaving a dependent 

10 child or children of the judge or magistrate 

11 judge of the Tax Court surviving such spouse, 

12 the annuity of such child or children shall be 

13 recomputed and paid as provided in paragraph 

14 (1)(C). 

15 ‘‘(D) RECOMPUTATION WITH RESPECT TO

16 OTHER DEPENDENT CHILDREN.—In any case 

17 in which the annuity of a dependent child is 

18 terminated under this subsection, the annuities 

19 of any remaining dependent child or children 

20 based upon the service of the same judge or 

21 magistrate judge of the Tax Court shall be re22 computed and paid as though the child whose 

23 annuity was so terminated had not survived 

24 such judge. 

mstockstill on DSK3G9T082PROD with BILLS

93 

•S 3471 PCS

1 ‘‘(E) SPECIAL RULE FOR ASSASSINATED

2 JUDGES.—In the case of a survivor of a judge 

3 or magistrate judge of the Tax Court described 

4 in paragraph (2)(B), there shall be deducted 

5 from the annuities otherwise payable under this 

6 section an amount equal to the amount of sal7 ary deductions that would have been made if 

8 such deductions had been made for 18 months 

9 prior to the death of the judge or magistrate 

10 judge of the Tax Court.’’. 

11 (b) DEFINITION OF ASSASSINATION.—Section 

12 7448(a) of the Internal Revenue Code of 1986 is amended 

13 by adding at the end the following new paragraph: 

14 ‘‘(10) The terms ‘assassinated’ and ‘assassina15 tion’ mean the killing of a judge or magistrate judge 

16 of the Tax Court that is motivated by the perform17 ance by the judge or magistrate judge of the Tax 

18 Court of his or her official duties.’’. 

19 (c) DETERMINATION OF ASSASSINATION.—Sub20 section (i) of section 7448 of the Internal Revenue Code 

21 of 1986 is amended— 

22 (1) by striking ‘‘OF DEPENDENCY AND DIS23 ABILITY.—Questions’’ and inserting ‘‘BY CHIEF

24 JUDGE.— 

mstockstill on DSK3G9T082PROD with BILLS

94 

•S 3471 PCS

1 ‘‘(1) DEPENDENCY AND DISABILITY.—Ques2 tions’’, and 

3 (2) by adding at the end the following new 

4 paragraph: 

5 ‘‘(2) ASSASSINATION.—The chief judge shall 

6 determine whether the killing of a judge or mag7 istrate judge of the Tax Court was an assassination, 

8 subject to review only by the Tax Court. The head 

9 of any Federal agency that investigates the killing of 

10 a judge or magistrate judge of the Tax Court shall 

11 provide to the chief judge any information that 

12 would assist the chief judge in making such a deter13 mination.’’. 

14 (d) COMPUTATION OF ANNUITIES.—Subsection (m) 

15 of section 7448 of the Internal Revenue Code of 1986 is 

16 amended— 

17 (1) by striking ‘‘ANNUITIES.—The annuity’’ 

18 and inserting ‘‘ANNUITIES.— 

19 ‘‘(1) IN GENERAL.—The annuity’’, 

20 (2) by striking ‘‘the sum of (1) 1.5 percent’’ 

21 and inserting ‘‘the sum of— 

22 ‘‘(A) 1.5 percent’’, 

23 (3) by striking ‘‘and (2) three-fourths of 1 per24 cent’’ and inserting ‘‘and 

25 ‘‘(B) three-fourths of 1 percent’’, 

mstockstill on DSK3G9T082PROD with BILLS

95 

•S 3471 PCS

1 (4) by striking ‘‘prior allowable service, except 

2 that’’ and inserting ‘‘prior allowable service, 

3 ‘‘except that’’, and 

4 (5) by adding at the end the following new 

5 paragraph: 

6 ‘‘(2) ASSASSINATED JUDGES AND MAGISTRATE

7 JUDGES OF THE TAX COURT.—In the case of a 

8 judge or magistrate judge of the Tax Court who is 

9 assassinated and who has served less than 18 

10 months, the annuity of the surviving spouse of such 

11 judge or magistrate judge of the Tax Court shall be 

12 based upon the average annual salary received by 

13 such judge or magistrate judge of the Tax Court for 

14 judicial service.’’. 

15 (e) OTHER BENEFITS.—Section 7448 of the Internal 

16 Revenue Code of 1986 is amended by adding at the end 

17 the following new subsection: 

18 ‘‘(u) OTHER BENEFITS IN CASE OF ASSASSINA19 TION.—In the case of a judge or magistrate judge of the 

20 Tax Court who is assassinated, an annuity shall be paid 

21 under this section notwithstanding a survivor’s eligibility 

22 for or receipt of benefits under chapter 81 of title 5, 

23 United States Code, except that the annuity for which a 

24 surviving spouse is eligible under this section shall be re25 duced to the extent that the total benefits paid under this 

mstockstill on DSK3G9T082PROD with BILLS

96 

•S 3471 PCS

1 section and chapter 81 of that title for any year would 

2 exceed the current salary for that year of the office of the 

3 judge or magistrate judge of the Tax Court.’’. 

4 SEC. 303. COORDINATION OF RETIREMENT AND SURVIVOR 

5 ANNUITY WITH THE FEDERAL EMPLOYEES 

6 RETIREMENT SYSTEM. 

7 (a) RETIREMENT.—Section 7447 of the Internal Rev8 enue Code of 1986 is amended— 

9 (1) by striking ‘‘section 8331(8)’’ in subsection 

10 (g)(2)(C) and inserting ‘‘sections 8331(8) and 

11 8401(19)’’, and 

12 (2) by striking ‘‘Civil Service Commission’’ both 

13 places it appears in subsection (i)(2) and inserting 

14 ‘‘Office of Personnel Management’’. 

15 (b) ANNUITIES TO SURVIVING SPOUSES AND DE16 PENDENT CHILDREN.—Section 7448 of the Internal Rev17 enue Code of 1986 is amended— 

18 (1) by striking ‘‘section 8332’’ in subsection (d) 

19 and inserting ‘‘sections 8332 and 8411’’, and 

20 (2) by striking ‘‘section 8332’’ in subsection (n) 

21 and inserting ‘‘sections 8332 and 8411’’. 

mstockstill on DSK3G9T082PROD with BILLS

97 

•S 3471 PCS

1 SEC. 304. LIMIT ON TEACHING COMPENSATION OF RE2 TIRED JUDGES. 

3 (a) IN GENERAL.—Section 7447 of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new subsection: 

6 ‘‘(k) TEACHING COMPENSATION OF RETIRED

7 JUDGES.—For purposes of the limitation under section 

8 501(a) of the Ethics in Government Act of 1978 (5 U.S.C. 

9 App.), any compensation for teaching approved under sec10 tion 502(a)(5) of such Act shall not be treated as outside 

11 earned income when received by a judge of the United 

12 States Tax Court who has retired under subsection (b) 

13 for teaching performed during any calendar year for which 

14 such a judge has met the requirements of subsection (c), 

15 as certified by the chief judge.’’. 

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

17 this section shall apply to any individual serving as a re18 tired judge of the United States Tax Court on or after 

19 the date of the enactment of this Act. 

20 SEC. 305. GENERAL PROVISIONS RELATING TO MAG21 ISTRATE JUDGES OF THE TAX COURT. 

22 (a) TITLE OF SPECIAL TRIAL JUDGE CHANGED TO

23 MAGISTRATE JUDGE OF THE TAX COURT.—The heading 

24 of section 7443A of the Internal Revenue Code of 1986 

25 is amended by striking ‘‘SPECIAL TRIAL JUDGES’’ and 

mstockstill on DSK3G9T082PROD with BILLS

98 

•S 3471 PCS

1 inserting ‘‘MAGISTRATE JUDGES OF THE TAX

2 COURT’’. 

3 (b) APPOINTMENT, TENURE, AND REMOVAL.—Sub4 section (a) of section 7443A of the Internal Revenue Code 

5 of 1986 is amended to read as follows: 

6 ‘‘(a) APPOINTMENT, TENURE, AND REMOVAL.— 

7 ‘‘(1) APPOINTMENT.—The chief judge may, 

8 from time to time, appoint and reappoint magistrate 

9 judges of the Tax Court for a term of 8 years. The 

10 magistrate judges of the Tax Court shall proceed 

11 under such rules as may be promulgated by the Tax 

12 Court. 

13 ‘‘(2) REMOVAL.— 

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

15 subparagraph (B), removal of a magistrate 

16 judge of the Tax Court during the term for 

17 which such magistrate judge is appointed shall 

18 be only for incompetency, misconduct, neglect 

19 of duty, or physical or mental disability. Re20 moval shall not occur unless a majority of all 

21 the judges of the Tax Court concur in the order 

22 of removal. Before any order of removal shall 

23 be entered, a full specification of the charges 

24 shall be furnished to the magistrate judge of 

25 the Tax Court, and such magistrate judge shall 

mstockstill on DSK3G9T082PROD with BILLS

99 

•S 3471 PCS

1 be accorded by the judges of the Tax Court an 

2 opportunity to be heard on the charges. 

3 ‘‘(B) TERMINATION OF OFFICE.—The of4 fice of a magistrate judge of the Tax Court 

5 shall be terminated if the judges of the Tax 

6 Court determine that the services performed by 

7 such magistrate judge of the Tax Court are no 

8 longer needed.’’. 

9 (c) SALARY.—Subsection (d) of section 7443A of the 

10 Internal Revenue Code of 1986 is amended to read as fol11 lows: 

12 ‘‘(d) SALARY.—Each magistrate judge of the Tax 

13 Court shall receive salary— 

14 ‘‘(1) at a rate equal to 92 percent of the rate 

15 for judges of the Tax Court, and 

16 ‘‘(2) in the same installments as such judges.’’. 

17 (d) EXEMPTION FROM FEDERAL LEAVE PROVI18 SIONS.—Section 7443A of the Internal Revenue Code of 

19 1986 is amended by adding at the end the following new 

20 subsection: 

21 ‘‘(f) EXEMPTION FROM FEDERAL LEAVE PROVI22 SIONS.— 

23 ‘‘(1) IN GENERAL.—A magistrate judge of the 

24 Tax Court shall be exempt from the provisions of 

mstockstill on DSK3G9T082PROD with BILLS

100 

•S 3471 PCS

1 subchapter I of chapter 63 of title 5, United States 

2 Code. 

3 ‘‘(2) TREATMENT OF UNUSED LEAVE.— 

4 ‘‘(A) AFTER SERVICE AS MAGISTRATE

5 JUDGE OF THE TAX COURT.—If an individual 

6 who is exempted under paragraph (1) from the 

7 subchapter referred to in such paragraph was 

8 previously subject to such subchapter and, with9 out a break in service, again becomes subject to 

10 such subchapter on completion of the individ11 ual’s service as a magistrate judge of the Tax 

12 Court, the unused annual leave and sick leave 

13 standing to the individual’s credit at the time 

14 such individual became a magistrate judge of 

15 the Tax Court is deemed to have remained to 

16 the individual’s credit. 

17 ‘‘(B) COMPUTATION OF ANNUITY.—In 

18 computing an annuity under section 8339 or 

19 8415 of title 5, United States Code, the total 

20 service of an individual specified in subpara21 graph (A) who retires on an immediate annuity 

22 or dies leaving a survivor or survivors entitled 

23 to an annuity includes, without regard to the 

24 limitations imposed by subsection (f) of section 

25 8339 of such title 5, the days of unused sick 

mstockstill on DSK3G9T082PROD with BILLS

101 

•S 3471 PCS

1 leave standing to the individual’s credit at the 

2 time such individual became a magistrate judge 

3 of the Tax Court, except that such days will not 

4 be counted in determining average pay or annu5 ity eligibility. 

6 ‘‘(C) LUMP SUM PAYMENT.—Any accumu7 lated and current accrued annual leave or vaca8 tion balances credited to a magistrate judge of 

9 the Tax Court as of the date of the enactment 

10 of this subsection shall be paid in a lump sum 

11 at the time of separation from service pursuant 

12 to the provisions and restrictions set forth in 

13 section 5551 of such title 5 and related provi14 sions referred to in such section.’’. 

15 (e) CONTEMPT AUTHORITY.—Section 7443A of the 

16 Internal Revenue Code of 1986, as amended by this sec17 tion, is amended by adding at the end the following new 

18 subsection: 

19 ‘‘(g) INCIDENTAL POWERS.—A magistrate judge of 

20 the Tax Court appointed under this section shall have the 

21 power to punish for contempt of the authority of the Tax 

22 Court as provided in section 7456(c), except the sentence 

23 imposed by such a magistrate judge of the Tax Court for 

24 any contempt shall not exceed the penalties for a Class 

25 C misdemeanor as set forth in sections 3571(b)(6) and 

mstockstill on DSK3G9T082PROD with BILLS

102 

•S 3471 PCS

1 3581(b)(8) of title 18, United States Code. This sub2 section shall not be construed to limit the authority of a 

3 magistrate judge of the Tax Court to order sanctions 

4 under any other statute or any rule of the Tax Court pre5 scribed pursuant to section 7453.’’. 

6 (f) CONFORMING AMENDMENTS.— 

7 (1) The heading of subsection (b) of section 

8 7443A of the Internal Revenue Code of 1986 is 

9 amended by striking ‘‘SPECIAL TRIAL JUDGES’’ and 

10 inserting ‘‘MAGISTRATE JUDGES OF THE TAX

11 COURT’’. 

12 (2) Subsection (b) of section 7443A of such 

13 Code is amended by striking ‘‘special trial judges of 

14 the court’’ and inserting ‘‘magistrate judges of the 

15 Tax Court’’. 

16 (3) Subsection (c) of section 7443A of such 

17 Code is amended by striking ‘‘special trial judge’’ 

18 and inserting ‘‘magistrate judge of the Tax Court’’. 

19 (4) Subsection (e) of section 7443A of such 

20 Code is amended by striking ‘‘special trial judges’’ 

21 and inserting ‘‘magistrate judges of the Tax Court’’. 

22 (5) The item relating to section 7443A in the 

23 table of sections for part I of subchapter C of chap24 ter 76 of such Code is amended to read as follows: 

‘‘Sec. 7443A. Magistrate judges of the Tax Court.’’. 

mstockstill on DSK3G9T082PROD with BILLS

103 

•S 3471 PCS

1 (6) The heading of section 7448 of such Code 

2 is amended by striking ‘‘SPECIAL TRIAL

3 JUDGES’’and inserting ‘‘MAGISTRATE JUDGES

4 OF THE TAX COURT’’. 

5 (7) Section 7448 of such Code is amended— 

6 (A) by striking ‘‘special trial judge’s’’ each 

7 place it appears in subsections (a)(6), (c)(1), 

8 (d), and (m)(1) and inserting ‘‘magistrate judge 

9 of the Tax Court’s’’, and 

10 (B) by striking ‘‘special trial judge’’ each 

11 place it appears other than in subsection (n) 

12 and inserting ‘‘magistrate judge of the Tax 

13 Court’’. 

14 (8) Subsection (n) of section 7448 of such Code 

15 is amended— 

16 (A) by striking ‘‘special trial judge which 

17 are allowable’’ and inserting ‘‘magistrate judge 

18 of the Tax Court which are allowable’’, and 

19 (B) by striking ‘‘special trial judge of the 

20 Tax Court’’ both places it appears and inserting 

21 ‘‘magistrate judge of the Tax Court’’. 

22 (9) The heading of paragraph (2) of section 

23 7448(b) of such Code is amended by striking ‘‘SPE24 CIAL TRIAL JUDGES’’ and inserting ‘‘MAGISTRATE

25 JUDGES OF THE TAX COURT’’. 

mstockstill on DSK3G9T082PROD with BILLS

104 

•S 3471 PCS

1 (10) The item relating to section 7448 in the 

2 table of sections for part I of subchapter C of chap3 ter 76 of such Code is amended to read as follows: 

‘‘Sec. 7448. Annuities to surviving spouses and dependent children of judges 

and magistrate judges of the Tax Court.’’. 

4 (11) Subsection (a) of section 7456 of such 

5 Code is amended— 

6 (A) by striking ‘‘special trial judge’’ each 

7 place it appears and inserting ‘‘magistrate 

8 judge’’, and 

9 (B) by striking ‘‘(or by the clerk’’ and in10 serting ‘‘of the Tax Court (or by the clerk’’. 

11 (12) Subsection (a) of section 7466 of such 

12 Code is amended by striking ‘‘special trial judge’’ 

13 and inserting ‘‘magistrate judge’’. 

14 (13) Section 7470A of such Code is amended 

15 by striking ‘‘special trial judges’’ both places it ap16 pears in subsections (a) and (b) and inserting ‘‘mag17 istrate judges’’. 

18 (14) Subparagraph (A) of section 7471(a)(2) of 

19 such Code is amended by striking ‘‘special trial 

20 judges’’ and inserting ‘‘magistrate judges’’. 

21 (15) Subsection (c) of section 7471 of such 

22 Code is amended— 

mstockstill on DSK3G9T082PROD with BILLS

105 

•S 3471 PCS

1 (A) by striking ‘‘SPECIAL TRIAL JUDGES’’ 

2 in the heading and inserting ‘‘MAGISTRATE

3 JUDGES OF THE TAX COURT’’, and 

4 (B) by striking ‘‘special trial judges’’ and 

5 inserting ‘‘magistrate judges’’. 

6 (g) EFFECTIVE DATE.— 

7 (1) IN GENERAL.—The amendments made by 

8 this section shall apply to individuals serving as spe9 cial trial judges of the United States Tax Court on 

10 or after the day before the date of enactment of this 

11 Act. 

12 (2) APPOINTMENT SAVINGS PROVISION.—Any 

13 individual serving as a special trial judge of the 

14 United States Tax Court as of the day before the 

15 date of the enactment of this Act shall be considered 

16 to have been appointed as a magistrate judge of the 

17 Tax Court under section 7443A of the Internal Rev18 enue Code of 1986 on such date of enactment, and 

19 service as a special trial judge of the Tax Court be20 fore such date of enactment shall be considered to 

21 be service as a magistrate judge of the Tax Court 

22 for purposes of any provision of law relating to 

23 length of service. 

mstockstill on DSK3G9T082PROD with BILLS

106 

•S 3471 PCS

1 SEC. 306. LIFE INSURANCE FOR MAGISTRATE JUDGES OF 

2 THE TAX COURT AGE 65 OR OLDER. 

3 Section 7472 of the Internal Revenue Code of 1986 

4 is amended by striking ‘‘its judges’’ in the second sentence 

5 and inserting ‘‘the judges and magistrate judges of the 

6 Tax Court’’. 

7 SEC. 307. RETIREMENT AND ANNUITY PROGRAM. 

8 (a) RETIREMENT AND ANNUITY PROGRAM.—Part I 

9 of subchapter C of chapter 76 of the Internal Revenue 

10 Code of 1986 is amended by inserting after section 7443A 

11 the following new section: 

12 ‘‘SEC. 7443B. RETIREMENT FOR MAGISTRATE JUDGES OF 

13 THE TAX COURT. 

14 ‘‘(a) RETIREMENT.— 

15 ‘‘(1) IN GENERAL.—Each magistrate judge of 

16 the Tax Court who makes an election under this sec17 tion shall receive an annuity at the same rate and 

18 in the same manner as magistrate judges of the dis19 trict courts of the United States pursuant to section 

20 377 of title 28, United States Code. 

21 ‘‘(2) RULES OF APPLICATION.—For purposes of 

22 subsection (a), section 377 of title 28, United States 

23 Code, shall be applied with the following modifica24 tions: 

25 ‘‘(A) By substituting— 

mstockstill on DSK3G9T082PROD with BILLS

107 

•S 3471 PCS

1 ‘‘(i) ‘magistrate judge of the Tax 

2 Court’ for ‘judicial official’, ‘judicial offi3 cer’, and ‘magistrate judge’ each place 

4 such terms appear, 

5 ‘‘(ii) ‘magistrate judge of the Tax 

6 Court’s’ for ‘magistrate judge’s’ each place 

7 it appears, 

8 ‘‘(iii) ‘chief judge of the Tax Court’ 

9 for ‘Administrative Office of the United 

10 States Courts’, ‘Director of the Adminis11 trative Office of the United States Courts’, 

12 ‘Director’, and ‘chief judge of the district 

13 court’ each place such terms appear, 

14 ‘‘(iv) ‘Tax Court Judicial Officers’ Re15 tirement Fund’ for ‘Judicial Officers’ Re16 tirement Fund’ each place it appears, 

17 ‘‘(v) ‘under section 7443A of the In18 ternal Revenue Code of 1986’ for ‘under 

19 section 631 of this title’ in subsection 

20 (h)(2), 

21 ‘‘(vi) ‘under section 7443C of the In22 ternal Revenue Code of 1986’ for ‘under 

23 section 155(b), 375, or 636(h) of this title’ 

24 each place it appears in paragraphs (2) 

25 and (3) of subsection (m), and 

mstockstill on DSK3G9T082PROD with BILLS

108 

•S 3471 PCS

1 ‘‘(vii) ‘from the date of appointment, 

2 for those individuals appointed pursuant to 

3 section 7443A of the Internal Revenue 

4 Code of 1986 prior to, and in active service 

5 on, the date of enactment of the Retire6 ment Enhancement and Savings Act of 

7 2016’ for ‘on or after October 1, 1979’ in 

8 subsection (h). 

9 ‘‘(B) By disregarding subsection (m)(2) 

10 and subsection (o). 

11 ‘‘(b) 1-YEAR FORFEITURE FOR FAILURE TO PER12 FORM JUDICIAL DUTIES.—Subject to subparagraph (B) 

13 of section 377(m)(1) of title 28, United States Code, any 

14 magistrate judge of the Tax Court who retires under this 

15 section and who fails to perform judicial duties required 

16 of such individual by section 7443C shall forfeit all rights 

17 to an annuity under this section for a 1-year period which 

18 begins on the 1st day on which such individual fails to 

19 perform such duties. 

20 ‘‘(c) TAX COURT JUDICIAL OFFICERS’ RETIREMENT

21 FUND.— 

22 ‘‘(1) ESTABLISHMENT.—There is established in 

23 the Treasury of the United States a fund which 

24 shall be known as the ‘Tax Court Judicial Officers’ 

25 Retirement Fund’. The Fund is appropriated for the 

mstockstill on DSK3G9T082PROD with BILLS

109 

•S 3471 PCS

1 payment of annuities, refunds, and other payments 

2 under this section. 

3 ‘‘(2) INVESTMENT OF FUND.—The Secretary 

4 shall invest, in interest-bearing securities of the 

5 United States, such currently available portions of 

6 the Tax Court Judicial Officers’ Retirement Fund as 

7 are not immediately required for payments from the 

8 Fund. The income derived from these investments 

9 constitutes a part of the Fund. 

10 ‘‘(3) UNFUNDED LIABILITY.— 

11 ‘‘(A) IN GENERAL.—Not later than the 

12 close of each fiscal year, there shall be depos13 ited in the Tax Court Judicial Officers’ Retire14 ment Fund amounts required to reduce to zero 

15 the unfunded liability, if any, of such Fund. 

16 ‘‘(B) UNFUNDED LIABILITY.—For pur17 poses of subparagraph (A), the term ‘unfunded 

18 liability’ means the amount estimated by the 

19 Secretary to be equal to the excess (as of the 

20 close of the fiscal year involved) of— 

21 ‘‘(i) the present value of all benefits 

22 payable from the Tax Court Judicial Offi23 cers’ Retirement Fund, over 

24 ‘‘(ii) the sum of— 

mstockstill on DSK3G9T082PROD with BILLS

110 

•S 3471 PCS

1 ‘‘(I) the present value of future 

2 deductions to be withheld under this 

3 section from the basic pay of mag4 istrate judges of the Tax Court, plus 

5 ‘‘(II) the balance in such Fund 

6 as of the close of such fiscal year. 

7 ‘‘(d) PARTICIPATION IN THRIFT SAVINGS PLAN.— 

8 ‘‘(1) ELECTION TO CONTRIBUTE.—A mag9 istrate judge of the Tax Court may elect to con10 tribute out of such individual’s basic pay to the 

11 Thrift Savings Fund established by section 8437 of 

12 title 5, United States Code. 

13 ‘‘(2) APPLICABILITY OF TITLE 5 PROVISIONS.— 

14 Except as otherwise provided in this subsection, the 

15 provisions of subchapters III and VII of chapter 84 

16 of such title 5 shall apply with respect to a mag17 istrate judge of the Tax Court who makes an elec18 tion under paragraph (1). 

19 ‘‘(3) SPECIAL RULES.— 

20 ‘‘(A) AMOUNT CONTRIBUTED.—The 

21 amount contributed by a magistrate judge of 

22 the Tax Court to the Thrift Savings Plan in 

23 any pay period shall not exceed the maximum 

24 percentage of such magistrate judge’s basic pay 

mstockstill on DSK3G9T082PROD with BILLS

111 

•S 3471 PCS

1 for such period as allowable under section 

2 8440f of such title 5. 

3 ‘‘(B) CONTRIBUTIONS FOR BENEFIT OF

4 MAGISTRATE JUDGE OF THE TAX COURT.—No 

5 contributions under section 8432(c) of such 

6 title 5 shall be made for the benefit of a mag7 istrate judge of the Tax Court who has filed an 

8 election to receive an annuity under this sec9 tion. 

10 ‘‘(C) APPLICABILITY OF SECTION 8433(B)

11 OF TITLE 5.—Section 8433(b) of such title 5 

12 applies with respect to a magistrate judge of 

13 the Tax Court who makes an election under 

14 paragraph (1) and who— 

15 ‘‘(i) retires entitled to an immediate 

16 annuity under this section (including a dis17 ability annuity under this section), 

18 ‘‘(ii) retires before attaining age 65 

19 but is entitled, upon attaining age 65, to 

20 an annuity under this section, or 

21 ‘‘(iii) retires before becoming entitled 

22 to an immediate annuity, or an annuity 

23 upon attaining age 65, under this section. 

24 ‘‘(D) RETIREMENT AS SEPARATION FROM

25 SERVICE.—With respect to a magistrate judge 

mstockstill on DSK3G9T082PROD with BILLS

112 

•S 3471 PCS

1 of the Tax Court to whom this subsection ap2 plies, retirement under this section is a separa3 tion from service for purposes of subchapters 

4 III and VII of chapter 84 of such title 5. 

5 ‘‘(4) DEFINITIONS.—For purposes of this sub6 section, the terms ‘retirement’ and ‘retire’ include 

7 removal from office under section 7443A(a)(2) on 

8 the sole ground of mental or physical disability. 

9 ‘‘(5) OFFSET.—In the case of a magistrate 

10 judge of the Tax Court who receives a distribution 

11 from the Thrift Savings Plan and who later receives 

12 an annuity under this section, the annuity shall be 

13 offset by an amount equal to the amount which rep14 resents the Government’s contribution to the individ15 ual’s Thrift Savings Account during years of service 

16 as a full-time judicial officer under the Federal Em17 ployees Retirement System, without regard to earn18 ings attributable to such amount. Where such an 

19 offset would exceed 50 percent of the annuity to be 

20 received in the first year, the offset may be divided 

21 equally over the first 2 years in which the individual 

22 receives the annuity. 

23 ‘‘(6) EXCEPTION.—Notwithstanding clauses (i) 

24 and (ii) of paragraph (3)(C), if any magistrate judge 

25 of the Tax Court retires under circumstances makmstockstill on DSK3G9T082PROD with BILLS

113 

•S 3471 PCS

1 ing such magistrate judge of the Tax Court eligible 

2 to make an election under subsection (b) of section 

3 8433 of such title 5, and the nonforfeitable account 

4 balance of such magistrate judge of the Tax Court 

5 is less than an amount which the Executive Director 

6 of the Office of Personnel Management prescribes by 

7 regulation, the Executive Director shall pay the non8 forfeitable account balance to the participant in a 

9 single payment. 

10 ‘‘(e) COORDINATION WITH TITLE 5.—A magistrate 

11 judge of the Tax Court who elects to receive an annuity 

12 under this section— 

13 ‘‘(1) shall not be subject to deductions and con14 tributions otherwise required by section 8334(a) of 

15 title 5 United States Code, 

16 ‘‘(2) shall be excluded from the application of 

17 chapter 84 (other than subchapters III and VII) of 

18 such title 5, and 

19 ‘‘(3) is entitled to a lump-sum credit under sec20 tion 8342(a) or 8424 of such title 5, as the case 

21 may be.’’. 

22 (b) CONFORMING AMENDMENTS.— 

23 (1) Section 3121(b)(5)(E) of the Internal Rev24 enue Code of 1986 is amended by inserting ‘‘or 

mstockstill on DSK3G9T082PROD with BILLS

114 

•S 3471 PCS

1 magistrate judge’’ before ‘‘of the United States Tax 

2 Court’’. 

3 (2) Section 210(a)(5)(E) of the Social Security 

4 Act (42 U.S.C. 410(a)(5)(E)) is amended by insert5 ing ‘‘or a magistrate judge of the Tax Court who 

6 files an election under section 7443B(a) of the Inter7 nal Revenue Code of 1986’’ after ‘‘of the United 

8 States Tax Court’’. 

9 (3) Section 7448(b)(2)(A) of the Internal Rev10 enue Code of 1986 is amended to read as follows: 

11 ‘‘(A) 12 months after the date of the en12 actment of the Retirement Enhancement and 

13 Savings Act of 2016,’’. 

14 (c) CLERICAL AMENDMENT.—The table of sections 

15 for part I of subchapter C of chapter 76 of the Internal 

16 Revenue Code of 1986 is amended by inserting after the 

17 item relating to section 7443A the following new item: 

‘‘Sec. 7443B. Retirement for magistrate judges of the Tax Court.’’. 

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

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

20 of this Act. 

21 SEC. 308. PROVISIONS FOR RECALL. 

22 (a) IN GENERAL.—Part I of subchapter C of chapter 

23 76 of the Internal Revenue Code of 1986, as amended by 

24 section 307, is amended by inserting after section 7443B 

25 the following new section: 

mstockstill on DSK3G9T082PROD with BILLS

115 

•S 3471 PCS

1 ‘‘SEC. 7443C. RECALL OF MAGISTRATE JUDGES OF THE TAX 

2 COURT. 

3 ‘‘(a) RECALLING OF RETIRED MAGISTRATE JUDGES

4 OF THE TAX COURT.—Any individual who has retired 

5 pursuant to section 7443B or the applicable provisions of 

6 title 5 or 28, United States Code, upon reaching the age 

7 and service requirements established under such titles 5 

8 and 28, may be called upon by the chief judge to perform 

9 such judicial duties with the Tax Court as may be re10 quested of such individual for a period or periods specified 

11 by the chief judge, except that in the case of any such 

12 individual— 

13 ‘‘(1) the aggregate of such periods in any 1 cal14 endar year shall not (without the consent of such in15 dividual) exceed 90 calendar days, and 

16 ‘‘(2) such individual shall be relieved of per17 forming such duties during any period in which ill18 ness or disability precludes the performance of such 

19 duties. 

20 Any act, or failure to act, by an individual performing ju21 dicial duties pursuant to this subsection shall have the 

22 same force and effect as if it were the act (or failure to 

23 act) of a magistrate judge of the Tax Court. 

24 ‘‘(b) COMPENSATION.—For the year in which a pe25 riod of recall occurs, the magistrate judge of the Tax 

26 Court shall receive, in addition to the annuity provided 

mstockstill on DSK3G9T082PROD with BILLS

116 

•S 3471 PCS

1 under the provisions of section 7443B, an amount equal 

2 to the difference between that annuity and the current sal3 ary of the office to which the magistrate judge of the Tax 

4 Court is recalled (and allowances for travel and other ex5 penses of the magistrate judge of the Tax Court). The 

6 annuity for years after the year in which a period of recall 

7 occurs of the magistrate judge of the Tax Court who com8 pletes such a period of service, who is not recalled in a 

9 subsequent year, and who retired under section 7443B, 

10 shall be equal to the salary in effect at the end of the 

11 year in which the period of recall occurred for the office 

12 from which such magistrate judge of the Tax Court re13 tired. 

14 ‘‘(c) RULEMAKING AUTHORITY.—The provisions of 

15 this section shall be implemented under such rules and 

16 regulations as may be promulgated by the Tax Court.’’. 

17 (b) CLERICAL AMENDMENT.—The table of sections 

18 for part I of subchapter C of chapter 76 of the Internal 

19 Revenue Code of 1986, as amended by section 307, is 

20 amended by inserting after the item relating to section 

21 7443B the following new item: 

‘‘Sec. 7443C. Recall of magistrate judges of the Tax Court.’’. 

mstockstill on DSK3G9T082PROD with BILLS

117 

•S 3471 PCS

1 TITLE IV—OTHER BENEFITS 

2 SEC. 401. BENEFITS PROVIDED TO VOLUNTEER FIRE3 FIGHTERS AND EMERGENCY MEDICAL RE4 SPONDERS. 

5 (a) INCREASE IN DOLLAR LIMITATION ON QUALI6 FIED PAYMENTS.—Subparagraph (B) of section 

7 139B(c)(2) of the Internal Revenue Code of 1986 is 

8 amended by striking ‘‘$30’’ and inserting ‘‘$50’’. 

9 (b) EXTENSION.—Subsection (d) of section 139B of 

10 the Internal Revenue Code of 1986 is amended by striking 

11 ‘‘beginning after December 31, 2010.’’ and inserting ‘‘be12 ginning— 

13 ‘‘(1) after December 31, 2010, and before Jan14 uary 1, 2017, or 

15 ‘‘(2) after December 31, 2017.’’. 

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

17 this section shall apply to taxable years beginning after 

18 December 31, 2016. 

19 SEC. 402. TREATMENT OF QUALIFIED EQUITY GRANTS. 

20 (a) IN GENERAL.—Section 83 of the Internal Rev21 enue Code of 1986 is amended by adding at the end the 

22 following new subsection: 

23 ‘‘(i) QUALIFIED EQUITY GRANTS.— 

24 ‘‘(1) IN GENERAL.—For purposes of this sub25 title— 

mstockstill on DSK3G9T082PROD with BILLS

118 

•S 3471 PCS

1 ‘‘(A) TIMING OF INCLUSION.—If qualified 

2 stock is transferred to a qualified employee who 

3 makes an election with respect to such stock 

4 under this subsection, subsection (a) shall be 

5 applied by including the amount determined 

6 under such subsection with respect to such 

7 stock in income of the employee in the taxable 

8 year determined under subparagraph (B) in lieu 

9 of the taxable year described in subsection (a). 

10 ‘‘(B) TAXABLE YEAR DETERMINED.—The 

11 taxable year determined under this subpara12 graph is the taxable year of the employee which 

13 includes the earliest of— 

14 ‘‘(i) the first date such qualified stock 

15 becomes transferable (including, solely for 

16 purposes of this clause, becoming transfer17 able to the employer), 

18 ‘‘(ii) the date the employee first be19 comes an excluded employee, 

20 ‘‘(iii) the first date on which any stock 

21 of the corporation which issued the quali22 fied stock becomes readily tradable on an 

23 established securities market (as deter24 mined by the Secretary, but not including 

25 any market unless such market is recogmstockstill on DSK3G9T082PROD with BILLS

119 

•S 3471 PCS

1 nized as an established securities market 

2 by the Secretary for purposes of a provi3 sion of this title other than this sub4 section), 

5 ‘‘(iv) the date that is 5 years after the 

6 first date the rights of the employee in 

7 such stock are transferable or are not sub8 ject to a substantial risk of forfeiture, 

9 whichever occurs earlier, or 

10 ‘‘(v) the date on which the employee 

11 revokes (at such time and in such manner 

12 as the Secretary may provide) the election 

13 under this subsection with respect to such 

14 stock. 

15 ‘‘(2) QUALIFIED STOCK.— 

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 subsection, the term ‘qualified stock’ means, 

18 with respect to any qualified employee, any 

19 stock in a corporation which is the employer of 

20 such employee, if— 

21 ‘‘(i) such stock is received— 

22 ‘‘(I) in connection with the exer23 cise of an option, or 

24 ‘‘(II) in settlement of a restricted 

25 stock unit, and 

mstockstill on DSK3G9T082PROD with BILLS

120 

•S 3471 PCS

1 ‘‘(ii) such option or restricted stock 

2 unit was granted by the corporation— 

3 ‘‘(I) in connection with the per4 formance of services as an employee, 

5 and 

6 ‘‘(II) during a calendar year in 

7 which such corporation was an eligible 

8 corporation. 

9 ‘‘(B) LIMITATION.—The term ‘qualified 

10 stock’ shall not include any stock if the em11 ployee may sell such stock to, or otherwise re12 ceive cash in lieu of stock from, the corporation 

13 at the time that the rights of the employee in 

14 such stock first become transferable or not sub15 ject to a substantial risk of forfeiture. 

16 ‘‘(C) ELIGIBLE CORPORATION.—For pur17 poses of subparagraph (A)(ii)(II)— 

18 ‘‘(i) IN GENERAL.—The term ‘eligible 

19 corporation’ means, with respect to any 

20 calendar year, any corporation if— 

21 ‘‘(I) no stock of such corporation 

22 (or any predecessor of such corpora23 tion) is readily tradable on an estab24 lished securities market (as deter25 mined under paragraph (1)(B)(iii)) 

mstockstill on DSK3G9T082PROD with BILLS

121 

•S 3471 PCS

1 during any preceding calendar year, 

2 and 

3 ‘‘(II) such corporation has a writ4 ten plan under which, in such cal5 endar year, not less than 80 percent 

6 of all employees who provide services 

7 to such corporation in the United 

8 States (or any possession of the 

9 United States) are granted stock op10 tions, or restricted stock units, with 

11 the same rights and privileges to re12 ceive qualified stock. 

13 ‘‘(ii) SAME RIGHTS AND PRIVI14 LEGES.—For purposes of clause (i)(II)— 

15 ‘‘(I) except as provided in sub16 clauses (II) and (III), the determina17 tion of rights and privileges with re18 spect to stock shall be made in a simi19 lar manner as under section 

20 423(b)(5), 

21 ‘‘(II) employees shall not fail to 

22 be treated as having the same rights 

23 and privileges to receive qualified 

24 stock solely because the number of 

25 shares available to all employees is not 

mstockstill on DSK3G9T082PROD with BILLS

122 

•S 3471 PCS

1 equal in amount, so long as the num2 ber of shares available to each em3 ployee is more than a de minimis 

4 amount, and 

5 ‘‘(III) rights and privileges with 

6 respect to the exercise of an option 

7 shall not be treated as the same as 

8 rights and privileges with respect to 

9 the settlement of a restricted stock 

10 unit. 

11 ‘‘(iii) EMPLOYEE.—For purposes of 

12 clause (i)(II), the term ‘employee’ shall not 

13 include any employee described in section 

14 4980E(d)(4) or any excluded employee. 

15 ‘‘(iv) SPECIAL RULE FOR CALENDAR

16 YEARS BEFORE 2017.—In the case of any 

17 calendar year beginning before January 1, 

18 2017, clause (i)(II) shall be applied with19 out regard to whether the rights and privi20 leges with respect to the qualified stock are 

21 the same. 

22 ‘‘(3) QUALIFIED EMPLOYEE; EXCLUDED EM23 PLOYEE.—For purposes of this subsection— 

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

25 employee’ means any individual who— 

mstockstill on DSK3G9T082PROD with BILLS

123 

•S 3471 PCS

1 ‘‘(i) is not an excluded employee, and 

2 ‘‘(ii) agrees in the election made 

3 under this subsection to meet such require4 ments as are determined by the Secretary 

5 to be necessary to ensure that the with6 holding requirements of the corporation 

7 under chapter 24 with respect to the quali8 fied stock are met. 

9 ‘‘(B) EXCLUDED EMPLOYEE.—The term 

10 ‘excluded employee’ means, with respect to any 

11 corporation, any individual— 

12 ‘‘(i) who was a 1-percent owner (with13 in the meaning of section 416(i)(1)(B)(ii)) 

14 at any time during the 10 preceding cal15 endar years, 

16 ‘‘(ii) who is or has been at any prior 

17 time— 

18 ‘‘(I) the chief executive officer of 

19 such corporation or an individual act20 ing in such a capacity, or 

21 ‘‘(II) the chief financial officer of 

22 such corporation or an individual act23 ing in such a capacity, 

24 ‘‘(iii) who bears a relationship de25 scribed in section 318(a)(1) to any indimstockstill on DSK3G9T082PROD with BILLS

124 

•S 3471 PCS

1 vidual described in subclause (I) or (II) of 

2 clause (ii), or 

3 ‘‘(iv) who was for any of the 10 pre4 ceding taxable years one of the 4 highest 

5 compensated officers of such corporation, 

6 determined with respect to each such tax7 able year on the basis of the shareholder 

8 disclosure rules for compensation under 

9 the Securities Exchange Act of 1934 (as if 

10 such rules applied to such corporation). 

11 ‘‘(4) ELECTION.— 

12 ‘‘(A) TIME FOR MAKING ELECTION.—An 

13 election with respect to qualified stock shall be 

14 made under this subsection no later than 30 

15 days after the first date the rights of the em16 ployee in such stock are transferable or are not 

17 subject to a substantial risk of forfeiture, 

18 whichever occurs earlier, and shall be made in 

19 a manner similar to the manner in which an 

20 election is made under subsection (b). 

21 ‘‘(B) LIMITATIONS.—No election may be 

22 made under this section with respect to any 

23 qualified stock if— 

mstockstill on DSK3G9T082PROD with BILLS

125 

•S 3471 PCS

1 ‘‘(i) the qualified employee has made 

2 an election under subsection (b) with re3 spect to such qualified stock, 

4 ‘‘(ii) any stock of the corporation 

5 which issued the qualified stock is readily 

6 tradable on an established securities mar7 ket (as determined under paragraph 

8 (1)(B)(iii)) at any time before the election 

9 is made, or 

10 ‘‘(iii) such corporation purchased any 

11 of its outstanding stock in the calendar 

12 year preceding the calendar year which in13 cludes the first date the rights of the em14 ployee in such stock are transferable or are 

15 not subject to a substantial risk of for16 feiture, unless— 

17 ‘‘(I) not less than 25 percent of 

18 the total dollar amount of the stock so 

19 purchased is deferral stock, and 

20 ‘‘(II) the determination of which 

21 individuals from whom deferral stock 

22 is purchased is made on a reasonable 

23 basis. 

mstockstill on DSK3G9T082PROD with BILLS

126 

•S 3471 PCS

1 ‘‘(C) DEFINITIONS AND SPECIAL RULES

2 RELATED TO LIMITATION ON STOCK REDEMP3 TIONS.— 

4 ‘‘(i) DEFERRAL STOCK.—For pur5 poses of this paragraph, the term ‘deferral 

6 stock’ means stock with respect to which 

7 an election is in effect under this sub8 section. 

9 ‘‘(ii) DEFERRAL STOCK WITH RE10 SPECT TO ANY INDIVIDUAL NOT TAKEN

11 INTO ACCOUNT IF INDIVIDUAL HOLDS DE12 FERRAL STOCK WITH LONGER DEFERRAL

13 PERIOD.—Stock purchased by a corpora14 tion from any individual shall not be treat15 ed as deferral stock for purposes of sub16 paragraph (B)(iii) if such individual (im17 mediately after such purchase) holds any 

18 deferral stock with respect to which an 

19 election has been in effect under this sub20 section for a longer period than the elec21 tion with respect to the stock so pur22 chased. 

23 ‘‘(iii) PURCHASE OF ALL OUT24 STANDING DEFERRAL STOCK.—The re25 quirements of subclauses (I) and (II) of 

mstockstill on DSK3G9T082PROD with BILLS

127 

•S 3471 PCS

1 subparagraph (B)(iii) shall be treated as 

2 met if the stock so purchased includes all 

3 of the corporation’s outstanding deferral 

4 stock. 

5 ‘‘(iv) REPORTING.—Any corporation 

6 which has outstanding deferral stock as of 

7 the beginning of any calendar year and 

8 which purchases any of its outstanding 

9 stock during such calendar year shall in10 clude on its return of tax for the taxable 

11 year in which, or with which, such calendar 

12 year ends the total dollar amount of its 

13 outstanding stock so purchased during 

14 such calendar year and such other infor15 mation as the Secretary may require for 

16 purposes of administering this paragraph. 

17 ‘‘(5) CONTROLLED GROUPS.—For purposes of 

18 this subsection, all corporations which are members 

19 of the same controlled group of corporations (as de20 fined in section 1563(a)) shall be treated as one cor21 poration. 

22 ‘‘(6) NOTICE REQUIREMENT.—Any corporation 

23 which transfers qualified stock to a qualified em24 ployee shall, at the time that (or a reasonable period 

25 before) an amount attributable to such stock would 

mstockstill on DSK3G9T082PROD with BILLS

128 

•S 3471 PCS

1 (but for this subsection) first be includible in the 

2 gross income of such employee— 

3 ‘‘(A) certify to such employee that such 

4 stock is qualified stock, and 

5 ‘‘(B) notify such employee— 

6 ‘‘(i) that the employee may elect to 

7 defer income on such stock under this sub8 section, and 

9 ‘‘(ii) that, if the employee makes such 

10 an election— 

11 ‘‘(I) the amount of income recog12 nized at the end of the deferral period 

13 will be based on the value of the stock 

14 at the time at which the rights of the 

15 employee in such stock first become 

16 transferable or not subject to substan17 tial risk of forfeiture, notwithstanding 

18 whether the value of the stock has de19 clined during the deferral period, 

20 ‘‘(II) the amount of such income 

21 recognized at the end of the deferral 

22 period will be subject to withholding 

23 under section 3401(i) at the rate de24 termined under section 3402(t), and 

mstockstill on DSK3G9T082PROD with BILLS

129 

•S 3471 PCS

1 ‘‘(III) the responsibilities of the 

2 employee (as determined by the Sec3 retary under paragraph (3)(A)(ii)) 

4 with respect to such withholding.’’. 

5 (b) WITHHOLDING.— 

6 (1) TIME OF WITHHOLDING.—Section 3401 of 

7 the Internal Revenue Code of 1986 is amended by 

8 adding at the end the following new subsection: 

9 ‘‘(i) QUALIFIED STOCK FOR WHICH AN ELECTION IS

10 IN EFFECT UNDER SECTION 83(i).—For purposes of sub11 section (a), qualified stock (as defined in section 83(i)) 

12 with respect to which an election is made under section 

13 83(i) shall be treated as wages— 

14 ‘‘(1) received on the earliest date described in 

15 section 83(i)(1)(B), and 

16 ‘‘(2) in an amount equal to the amount in17 cluded in income under section 83 for the taxable 

18 year which includes such date.’’. 

19 (2) AMOUNT OF WITHHOLDING.—Section 3402 

20 of such Code is amended by adding at the end the 

21 following new subsection: 

22 ‘‘(t) RATE OF WITHHOLDING FOR CERTAIN

23 STOCK.—In the case of any qualified stock (as defined in 

24 section 83(i)(2)) with respect to which an election is made 

25 under section 83(i)— 

mstockstill on DSK3G9T082PROD with BILLS

130 

•S 3471 PCS

1 ‘‘(1) the rate of tax under subsection (a) shall 

2 not be less than the maximum rate of tax in effect 

3 under section 1, and 

4 ‘‘(2) such stock shall be treated for purposes of 

5 section 3501(b) in the same manner as a non-cash 

6 fringe benefit.’’. 

7 (c) COORDINATION WITH OTHER DEFERRED COM8 PENSATION RULES.— 

9 (1) ELECTION TO APPLY DEFERRAL TO STATU10 TORY OPTIONS.— 

11 (A) INCENTIVE STOCK OPTIONS.—Section 

12 422(b) of the Internal Revenue Code of 1986 is 

13 amended by adding at the end the following: 

14 ‘‘Such term shall not include any option if an 

15 election is made under section 83(i) with re16 spect to the stock received in connection with 

17 the exercise of such option.’’. 

18 (B) EMPLOYEE STOCK PURCHASE

19 PLANS.—Section 423 of such Code is amend20 ed— 

21 (i) by adding at the end of subsection 

22 (a) the following flush sentence: 

23 ‘‘The preceding sentence shall not apply to any share of 

24 stock with respect to which an election is made under sec25 tion 83(i).’’, and 

mstockstill on DSK3G9T082PROD with BILLS

131 

•S 3471 PCS

1 (ii) in subsection (b)(5), by striking 

2 ′′and′′ before ‘‘the plan’’ and by inserting 

3 ‘‘, and the rules of section 83(i) shall apply 

4 in determining which employees have a 

5 right to make an election under such sec6 tion’’ before the semicolon at the end. 

7 (2) EXCLUSION FROM DEFINITION OF NON8 QUALIFIED DEFERRED COMPENSATION PLAN.—Sub9 section (d) of section 409A of such Code is amended 

10 by adding at the end the following new paragraph: 

11 ‘‘(7) TREATMENT OF QUALIFIED STOCK.—An 

12 arrangement under which an employee may receive 

13 qualified stock (as defined in section 83(i)(2)) shall 

14 not be treated as a nonqualified deferred compensa15 tion plan solely because of an employee’s election, or 

16 ability to make an election, to defer recognition of 

17 income under section 83(i).’’. 

18 (d) INFORMATION REPORTING.—Section 6051(a) of 

19 the Internal Revenue Code of 1986 is amended by striking 

20 ‘‘and’’ at the end of paragraph (13), by striking the period 

21 at the end of paragraph (14) and inserting a comma, and 

22 by inserting after paragraph (14) the following new para23 graphs: 

24 ‘‘(15) the amount includible in gross income 

25 under subparagraph (A) of section 83(i)(1) with remstockstill on DSK3G9T082PROD with BILLS

132 

•S 3471 PCS

1 spect to an event described in subparagraph (B) of 

2 such section which occurs in such calendar year, and 

3 ‘‘(16) the aggregate amount of income which is 

4 being deferred pursuant to elections under section 

5 83(i), determined as of the close of the calendar 

6 year.’’. 

7 (e) PENALTY FOR FAILURE OF EMPLOYER TO PRO8 VIDE NOTICE OF TAX CONSEQUENCES.—Section 6652 of 

9 the Internal Revenue Code of 1986 is amended by adding 

10 at the end the following new subsection: 

11 ‘‘(o) FAILURE TO PROVIDE NOTICE UNDER SECTION

12 83(i).—In the case of each failure to provide a notice as 

13 required by section 83(i)(6), at the time prescribed there14 for, unless it is shown that such failure is due to reason15 able cause and not to willful neglect, there shall be paid, 

16 on notice and demand of the Secretary and in the same 

17 manner as tax, by the person failing to provide such no18 tice, an amount equal to $100 for each such failure, but 

19 the total amount imposed on such person for all such fail20 ures during any calendar year shall not exceed $50,000.’’. 

21 (f) EFFECTIVE DATES.— 

22 (1) IN GENERAL.—Except as provided in para23 graph (2), the amendments made by this section 

24 shall apply to stock attributable to options exercised, 

mstockstill on DSK3G9T082PROD with BILLS

133 

•S 3471 PCS

1 or restricted stock units settled, after December 31, 

2 2016. 

3 (2) REQUIREMENT TO PROVIDE NOTICE.—The 

4 amendments made by subsection (e) shall apply to 

5 failures after December 31, 2016. 

6 (g) TRANSITION RULE.—Until such time as the Sec7 retary (or the Secretary’s delegate) issues regulations or 

8 other guidance for purposes of implementing the require9 ments of paragraph (2)(C)(i)(II) of section 83(i) of the 

10 Internal Revenue Code of 1986 (as added by this section), 

11 or the requirements of paragraph (6) of such section, a 

12 corporation shall be treated as being in compliance with 

13 such requirements (respectively) if such corporation com14 plies with a reasonable good faith interpretation of such 

15 requirements. 

16 TITLE V—REVENUE PROVISIONS 

17 SEC. 501. MODIFICATIONS OF REQUIRED DISTRIBUTION 

18 RULES FOR PENSION PLANS. 

19 (a) MODIFICATION OF RULES WHERE EMPLOYEE

20 DIES BEFORE ENTIRE DISTRIBUTION.— 

21 (1) IN GENERAL.—Section 401(a)(9) of the In22 ternal Revenue Code of 1986 is amended by adding 

23 at the end the following new subparagraph 

24 ‘‘(H) SPECIAL RULES FOR CERTAIN DE25 FINED CONTRIBUTION PLANS.— 

mstockstill on DSK3G9T082PROD with BILLS

134 

•S 3471 PCS

1 ‘‘(i) IN GENERAL.—In the case of dis2 tributions from a defined contribution 

3 plan, a trust forming part of such plan 

4 shall not constitute a qualified trust under 

5 this section unless the plan provides that, 

6 if— 

7 ‘‘(I) an employee dies before the 

8 distribution of the employee’s interest 

9 (whether or not such distribution has 

10 begun in accordance with subpara11 graph (A)), and 

12 ‘‘(II) the aggregate account bal13 ances to the credit of the employee 

14 under all defined contribution plans, 

15 determined as of the date of the em16 ployee’s death, exceeds $450,000, 

17 so much of the entire interest of the em18 ployee as exceeds the dollar amount in sub19 clause (II) will be distributed within 5 

20 years after the death of such employee. 

21 ‘‘(ii) ALLOCATION OF LIMITATION.—If 

22 an employee has an account under more 

23 than 1 defined contribution plan, the 

24 $450,000 amount under clause (i)(II) shall 

25 be allocated among all such plans, as promstockstill on DSK3G9T082PROD with BILLS

135 

•S 3471 PCS

1 vided in regulations prescribed by the Sec2 retary, for purposes of applying clause (i). 

3 ‘‘(iii) TREATMENT OF REMAINING

4 AMOUNT.—The portion of the employee’s 

5 interest distributed under clause (i) shall 

6 not be taken into account for purposes of 

7 determining the rapidity or the method of 

8 distribution of any portion of the interest 

9 of the employee to which clause (i) does 

10 not apply. 

11 ‘‘(iv) MULTIPLE BENEFICIARIES.—In 

12 the case of an employee who has more 

13 than 1 beneficiary, the amount of the por14 tion required to be distributed under clause 

15 (i) which shall be treated as payable to (or 

16 for the benefit of) such beneficiary is the 

17 amount which bears the same ratio to the 

18 total amount of such portion as— 

19 ‘‘(I) the portion of the employee’s 

20 entire interest (determined as of the 

21 date of the employee’s death) which is 

22 payable to (or for the benefit of) such 

23 beneficiary, bears to 

24 ‘‘(II) the amount of the employ25 ee’s entire interest (so determined). 

mstockstill on DSK3G9T082PROD with BILLS

136 

•S 3471 PCS

1 ‘‘(v) EXCEPTION FOR ELIGIBLE DES2 IGNATED BENEFICIARIES.—If— 

3 ‘‘(I) any portion of the employ4 ee’s interest is payable to (or for the 

5 benefit of) an eligible designated bene6 ficiary, 

7 ‘‘(II) such portion will be distrib8 uted (in accordance with regulations) 

9 over the life of such eligible des10 ignated beneficiary (or over a period 

11 not extending beyond the life expect12 ancy of such beneficiary), and 

13 ‘‘(III) such distributions begin 

14 not later than 1 year after the date of 

15 the employee’s death or such later 

16 date as the Secretary may by regula17 tions prescribe, 

18 for purposes of clause (i), the portion re19 ferred to in subclause (I) shall be treated 

20 as distributed on the date on which such 

21 distributions begin. 

22 ‘‘(vi) SPECIAL RULE FOR SURVIVING

23 SPOUSE OF EMPLOYEE.—If the eligible 

24 designated beneficiary is the surviving 

25 spouse of the employee— 

mstockstill on DSK3G9T082PROD with BILLS

137 

•S 3471 PCS

1 ‘‘(I) the date on which the dis2 tributions are required to begin under 

3 clause (v)(III) shall not be earlier 

4 than the date on which the employee 

would have attained age 701 5 ⁄2, and 

6 ‘‘(II) if the surviving spouse dies 

7 before the distributions to such spouse 

8 begin, this subparagraph shall be ap9 plied as if the surviving spouse were 

10 the employee. 

11 ‘‘(vii) RULES UPON DEATH OF ELIGI12 BLE DESIGNATED BENEFICIARY.—If an el13 igible designated beneficiary dies before the 

14 portion of the employee’s interest to which 

15 clause (i) applies which is payable to (or 

16 for the benefit of) such eligible designated 

17 beneficiary is entirely distributed, the ex18 ception under clause (v) shall not apply to 

19 any beneficiary of such eligible designated 

20 beneficiary and the remainder of such por21 tion shall be distributed within 5 years 

22 after the death of such beneficiary. 

23 ‘‘(viii) COORDINATION WITH INDI24 VIDUAL RETIREMENT PLANS.—For pur25 poses of applying the provisions of this 

mstockstill on DSK3G9T082PROD with BILLS

138 

•S 3471 PCS

1 subparagraph and subsections (a)(6) and 

2 (b)(3) of section 408, individual retirement 

3 plans shall be treated as defined contribu4 tion plans in determining the aggregate ac5 count balances to the credit of the em6 ployee under all defined contribution plans 

7 and the amount required to be distributed 

8 to each beneficiary under such provi9 sions.’’. 

10 (2) DEFINITION OF ELIGIBLE DESIGNATED

11 BENEFICIARY.—Section 401(a)(9)(E) of such Code 

12 is amended to read as follows: 

13 ‘‘(E) DEFINITIONS AND RULES RELATING

14 TO DESIGNATED BENEFICIARY.—For purposes 

15 of this paragraph— 

16 ‘‘(i) DESIGNATED BENEFICIARY.—The 

17 term ‘designated beneficiary’ means any 

18 individual designated as a beneficiary by 

19 the employee. 

20 ‘‘(ii) ELIGIBLE DESIGNATED BENE21 FICIARY.—The term ‘eligible designated 

22 beneficiary’ means, with respect to any em23 ployee, any designated beneficiary who is— 

24 ‘‘(I) the surviving spouse of the 

25 employee, 

mstockstill on DSK3G9T082PROD with BILLS

139 

•S 3471 PCS

1 ‘‘(II) subject to clause (iii), a 

2 child of the employee who has not 

3 reached majority (within the meaning 

4 of subparagraph (F)), 

5 ‘‘(III) disabled (within the mean6 ing of section 72(m)(7)), 

7 ‘‘(IV) a chronically ill individual 

8 (within the meaning of section 

9 7702B(c)(2), except that the require10 ments of subparagraph (A)(i) thereof 

11 shall only be treated as met if there is 

12 a certification that, as of such date, 

13 the period of inability described in 

14 such subparagraph with respect to the 

15 individual is an indefinite one which is 

16 reasonably expected to be lengthy in 

17 nature), or 

18 ‘‘(V) an individual not described 

19 in any of the preceding subclauses 

20 who is not more than 10 years young21 er than the employee. 

22 ‘‘(iii) SPECIAL RULE FOR CHIL23 DREN.—Subject to subparagraph (F), an 

24 individual described in clause (ii)(II) shall 

25 cease to be an eligible designated benemstockstill on DSK3G9T082PROD with BILLS

140 

•S 3471 PCS

1 ficiary as of the date the individual reaches 

2 majority and any remainder of the portion 

3 of the interest described in subparagraph 

4 (H)(v) shall be distributed within 5 years 

5 after such date. 

6 ‘‘(iv) TIME FOR DETERMINATION OF

7 ELIGIBLE DESIGNATED BENEFICIARY.— 

8 The determination of whether a designated 

9 beneficiary is an eligible designated bene10 ficiary shall be made as of the date of 

11 death of the employee.’’. 

12 (3) CONFORMING AMENDMENTS.— 

13 (A) Clause (ii) of section 401(a)(9)(B) of 

14 the Internal Revenue Code of 1986 is amended 

15 by striking ‘‘A trust’’ and inserting ‘‘Except as 

16 provided in subparagraph (H), a trust’’. 

17 (B) Section 402(c)(11)(A)(iii) of such 

18 Code is amended by striking ‘‘section 

19 401(a)(9)(B) (other than clause (iv) thereof)’’ 

20 and inserting ‘‘subparagraphs (B) (other than 

21 clause (iv) thereof) and (H) (other than clause 

22 (vi) thereof) of section 401(a)(9)’’. 

23 (4) EFFECTIVE DATES.— 

24 (A) IN GENERAL.—Except as provided in 

25 this paragraph and paragraphs (5) and (6), the 

mstockstill on DSK3G9T082PROD with BILLS

141 

•S 3471 PCS

1 amendments made by this subsection shall 

2 apply to distributions with respect to employees 

3 who die after December 31, 2016. 

4 (B) COLLECTIVE BARGAINING EXCEP5 TION.—In the case of a plan maintained pursu6 ant to 1 or more collective bargaining agree7 ments between employee representatives and 1 

8 or more employers ratified before the date of 

9 enactment of this Act, the amendments made 

10 by this subsection shall apply to distributions 

11 with respect to employees who die in calendar 

12 years beginning after the earlier of— 

13 (i) the later of— 

14 (I) the date on which the last of 

15 such collective bargaining agreements 

16 terminates (determined without re17 gard to any extension thereof agreed 

18 to on or after the date of the enact19 ment of this Act), or 

20 (II) December 31, 2016, or 

21 (ii) December 31, 2018. 

22 For purposes of clause (i)(I), any plan amend23 ment made pursuant to a collective bargaining 

24 agreement relating to the plan which amends 

25 the plan solely to conform to any requirement 

mstockstill on DSK3G9T082PROD with BILLS

142 

•S 3471 PCS

1 added by this section shall not be treated as a 

2 termination of such collective bargaining agree3 ment. 

4 (C) GOVERNMENTAL PLANS.—In the case 

5 of a governmental plan (as defined in section 

6 414(d) of the Internal Revenue Code of 1986), 

7 subparagraph (A) shall be applied by sub8 stituting ‘‘December 31, 2018’’ for ‘‘December 

9 31, 2016’’. 

10 (5) EXCEPTION FOR CERTAIN EXISTING ANNU11 ITY CONTRACTS.— 

12 (A) IN GENERAL.—The amendments made 

13 by this subsection shall not apply to a qualified 

14 annuity which is a binding annuity contract in 

15 effect on the date of enactment of this Act and 

16 at all times thereafter. 

17 (B) QUALIFIED ANNUITY.—For purposes 

18 of this paragraph, the term ‘‘qualified annuity’’ 

19 means, with respect to an employee, an annu20 ity— 

21 (i) which is a commercial annuity (as 

22 defined in section 3405(e)(6) of the Inter23 nal Revenue Code of 1986), 

24 (ii) under which the annuity payments 

25 are made over the life of the employee or 

mstockstill on DSK3G9T082PROD with BILLS

143 

•S 3471 PCS

1 over the joint lives of such employee and a 

2 designated beneficiary (or over a period 

3 not extending beyond the life expectancy of 

4 such employee or the joint life expectancy 

5 of such employee and a designated bene6 ficiary) in accordance with the regulations 

7 described in section 401(a)(9)(A)(ii) of 

8 such Code (as in effect before such amend9 ments) and which meets the other require10 ments of section 401(a)(9) of such Code 

11 (as so in effect) with respect to such pay12 ments, and 

13 (iii) with respect to which— 

14 (I) annuity payments to the em15 ployee have begun before the date of 

16 enactment of this Act, and the em17 ployee has made an irrevocable elec18 tion before such date as to the method 

19 and amount of the annuity payments 

20 to the employee or any designated 

21 beneficiaries, or 

22 (II) if subclause (I) does not 

23 apply, the employee has made an ir24 revocable election before the date of 

25 enactment of this Act as to the methmstockstill on DSK3G9T082PROD with BILLS

144 

•S 3471 PCS

1 od and amount of the annuity pay2 ments to the employee or any des3 ignated beneficiaries. 

4 (6) EXCEPTION FOR CERTAIN BENE5 FICIARIES.— 

6 (A) IN GENERAL.—If an employee dies be7 fore the effective date, then, in applying the 

8 amendments made by this subsection to such 

9 employee’s designated beneficiary who dies after 

10 such date— 

11 (i) such amendments shall apply to 

12 any beneficiary of such designated bene13 ficiary, and 

14 (ii) the designated beneficiary shall be 

15 treated as an eligible designated bene16 ficiary for purposes of applying section 

17 401(a)(9)(H)(iv) of the Internal Revenue 

18 Code of 1986 (as in effect after such 

19 amendments). 

20 (B) EFFECTIVE DATE.—For purposes of 

21 this paragraph, the term ‘‘effective date’’ means 

22 the first day of the first calendar year to which 

23 the amendments made by this subsection apply 

24 to a plan with respect to employees dying on or 

25 after such date. 

mstockstill on DSK3G9T082PROD with BILLS

145 

•S 3471 PCS

1 (b) PROVISIONS RELATING TO PLAN AMEND2 MENTS.— 

3 (1) IN GENERAL.—If this subsection applies to 

4 any plan amendment— 

5 (A) such plan shall be treated as being op6 erated in accordance with the terms of the plan 

7 during the period described in paragraph 

8 (2)(B)(i), and 

9 (B) except as provided by the Secretary of 

10 the Treasury, such plan shall not fail to meet 

11 the requirements of section 411(d)(6) of the In12 ternal Revenue Code of 1986 and section 

13 204(g) of the Employee Retirement Income Se14 curity Act of 1974 by reason of such amend15 ment. 

16 (2) AMENDMENTS TO WHICH SUBSECTION AP17 PLIES.— 

18 (A) IN GENERAL.—This subsection shall 

19 apply to any amendment to any plan or which 

20 is made— 

21 (i) pursuant to any amendment made 

22 by this section or pursuant to any regula23 tion issued by the Secretary of the Treas24 ury under this section or such amend25 ments, and 

mstockstill on DSK3G9T082PROD with BILLS

146 

•S 3471 PCS

1 (ii) on or before the last day of the 

2 first plan year beginning after December 

3 31, 2018, or such later date as the Sec4 retary of the Treasury may prescribe. 

5 In the case of a governmental or collectively 

6 bargained plan to which subparagraph (B) or 

7 (C) of subsection (a)(4) applies, clause (ii) shall 

8 be applied by substituting the date which is 2 

9 years after the date otherwise applied under 

10 such clause. 

11 (B) CONDITIONS.—This subsection shall 

12 not apply to any amendment unless— 

13 (i) during the period— 

14 (I) beginning on the date the leg15 islative or regulatory amendment de16 scribed in paragraph (1)(A) takes ef17 fect (or in the case of a plan amend18 ment not required by such legislative 

19 or regulatory amendment, the effec20 tive date specified by the plan), and 

21 (II) ending on the date described 

22 in subparagraph (A)(ii) (or, if earlier, 

23 the date the plan amendment is 

24 adopted), 

mstockstill on DSK3G9T082PROD with BILLS

147 

•S 3471 PCS

1 the plan is operated as if such plan amend2 ment were in effect; and 

3 (ii) such plan amendment applies 

4 retroactively for such period. 

5 SEC. 502. INCREASE IN PENALTY FOR FAILURE TO FILE. 

6 (a) IN GENERAL.—The second sentence of subsection 

7 (a) of section 6651 of the Internal Revenue Code of 1986 

8 is amended by striking ‘‘$205’’ and inserting ‘‘$400’’. 

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

10 this section shall apply to returns the due date for which 

11 (including extensions) is after December 31, 2016. 

12 SEC. 503. INCREASED PENALTIES FOR FAILURE TO FILE 

13 RETIREMENT PLAN RETURNS. 

14 (a) IN GENERAL.—Subsection (e) of section 6652 of 

15 the Internal Revenue Code of 1986 is amended— 

16 (1) by striking ‘‘$25’’ and inserting ‘‘$100’’, 

17 and 

18 (2) by striking ‘‘$15,000’’ and inserting 

19 ‘‘$50,000’’. 

20 (b) ANNUAL REGISTRATION STATEMENT AND NOTI21 FICATION OF CHANGES.—Subsection (d) of section 6652 

22 of the Internal Revenue Code of 1986 is amended— 

23 (1) by striking ‘‘$1’’ both places it appears in 

24 paragraphs (1) and (2) and inserting ‘‘$2’’, 

mstockstill on DSK3G9T082PROD with BILLS

148 

•S 3471 PCS

1 (2) by striking ‘‘$5,000’’ in paragraph (1) and 

2 inserting ‘‘$10,000’’, and 

3 (3) by striking ‘‘$1,000’’ in paragraph (2) and 

4 inserting ‘‘$5,000’’. 

5 (c) FAILURE TO PROVIDE NOTICE.—Subsection (h) 

6 of section 6652 of the Internal Revenue Code of 1986 is 

7 amended— 

8 (1) by striking ‘‘$10’’ and inserting ‘‘$100’’, 

9 and 

10 (2) by striking ‘‘$5,000’’ and inserting 

11 ‘‘$50,000’’. 

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

13 this section shall apply to returns, statements, and notifi14 cations required to be filed, and notices required to be pro15 vided, after December 31, 2016. 

16 SEC. 504. MODIFICATION OF USER FEE REQUIREMENTS 

17 FOR INSTALLMENT AGREEMENTS. 

18 (a) IN GENERAL.—Section 6159 of the Internal Rev19 enue Code of 1986 is amended by redesignating subsection 

20 (f) as subsection (g) and by inserting after subsection (e) 

21 the following new subsection: 

22 ‘‘(f) INSTALLMENT AGREEMENT FEES.— 

23 ‘‘(1) LIMITATION ON FEE AMOUNT.—The 

24 amount of any fee imposed on an installment agree25 ment under this section may not exceed the amount 

mstockstill on DSK3G9T082PROD with BILLS

149 

•S 3471 PCS

1 of such fee as in effect on the date of the enactment 

2 of this subsection. 

3 ‘‘(2) WAIVER OR REIMBURSEMENT.—In the 

4 case of any taxpayer with an adjusted gross income, 

5 as determined for the most recent year for which 

6 such information is available, which does not exceed 

7 250 percent of the applicable poverty level (as deter8 mined by the Secretary)— 

9 ‘‘(A) if the taxpayer has agreed to make 

10 payments under the installment agreement by 

11 electronic payment through a debit instrument, 

12 no fee shall be imposed on an installment agree13 ment under this section, and 

14 ‘‘(B) if the taxpayer is unable to make 

15 payments under the installment agreement by 

16 electronic payment through a debit instrument, 

17 the Secretary shall, upon completion of the in18 stallment agreement, pay the taxpayer an 

19 amount equal to any such fees imposed.’’. 

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

21 this section shall apply to agreements entered into on or 

22 after the date which is 60 days after the date of the enact23 ment of this Act. 

mstockstill on DSK3G9T082PROD with BILLS

150 

•S 3471 PCS

1 SEC. 505. INCREASE INFORMATION SHARING TO ADMIN2 ISTER EXCISE TAXES. 

3 (a) IN GENERAL.—Section 6103(o) of the Internal 

4 Revenue Code of 1986 is amended by adding at the end 

5 the following new paragraph: 

6 ‘‘(3) TAXES IMPOSED BY SECTION 4481.—Re7 turns and return information with respect to taxes 

8 imposed by section 4481 shall be open to inspection 

9 by or disclosure to officers and employees of United 

10 States Customs and Border Protection of the De11 partment of Homeland Security whose official duties 

12 require such inspection or disclosure for purposes of 

13 administering such section.’’. 

14 (b) CONFORMING AMENDMENTS.—Paragraph (4) of 

15 section 6103(p) of the Internal Revenue Code of 1986 is 

16 amended by striking ‘‘or (o)(1)(A)’’ each place it appears 

17 and inserting ‘‘, (o)(1)(A), or (o)(3)’’. 

18 SEC. 506. REPEAL OF TECHNICAL TERMINATION FOR PART19 NERSHIPS. 

20 (a) IN GENERAL.—Paragraph (1) of section 708(b) 

21 of the Internal Revenue Code of 1986 is amended by strik22 ing ‘‘only if’’ and all that follows and inserting ‘‘only if 

23 no part of any business, financial operation, or venture 

24 of the partnership continues to be carried on by any of 

25 its partners in a partnership.’’. 

26 (b) CONFORMING AMENDMENTS.— 

mstockstill on DSK3G9T082PROD with BILLS

151 

•S 3471 PCS

1 (1) Section 168(i)(7)(B) of the Internal Rev2 enue Code of 1986 is amended by striking the last 

3 sentence thereof. 

4 (2) Section 743(e) of such Code is amended by 

5 striking paragraph (4) and by redesignating para6 graphs (5), (6), and (7) as paragraphs (4), (5), and 

7 (6), respectively. 

8 (3) Section 774 of such Code is amended by 

9 striking subsection (c) and by redesignating sub10 sections (d), (e), and (f) as subsections (c), (d), and 

11 (e), respectively. 

12 (c) EFFECTIVE DATE.— 

13 (1) IN GENERAL.—The amendments made by 

14 this section shall apply to periods beginning after 

15 December 31, 2016. 

16 (2) SPECIAL RULE FOR PERIODS BEGINNING

17 BEFORE 2017.—In the case of any period beginning 

18 before January 1, 2017, section 708(b)(1)(B) of the 

19 Internal Revenue Code of 1986 shall be applied 

20 without regard to any sale or exchange after Decem21 ber 31, 2016. 

22 SEC. 507. PENSION VARIABLE RATE PREMIUM PAYMENT 

23 ACCELERATION. 

24 Notwithstanding section 4007(a) of the Employee 

25 Retirement Income Security Act of 1974 (29 U.S.C. 

mstockstill on DSK3G9T082PROD with BILLS

152 

•S 3471 PCS

1 1307(a)) and section 4007.11 of title 29, Code of Federal 

2 Regulations, any additional premium determined under 

3 subparagraph (E) of section 4006(a)(3) of such Act (29 

4 U.S.C. 1306(a)(3)) the due date for which is (but for this 

5 section) after September 30, 2026, and before December 

6 1, 2026, shall be due not later than September 30, 2026. 

mstockstill on DSK3G9T082PROD with BILLS

mstockstill on DSK3G9T082PROD with BILLS

Calendar No. 670 

114TH CONGRESS 

2D SESSION S. 3471 

[Report No. 114–375] 

A BILL 

To amend the Internal Revenue Code of 1986 to 

poses. encourage retirement savings, and for other purNOVEMBER 16, 2016 

Read twice and placed on the calendar 

mstockstill on DSK3G9T082PROD with BILLS