Retirement Security Flexibility Act of 2019

To provide for an additional nondiscrimination safe harbor for automatic contribution arrangements. 1. Short title This Act may be cited as the Retirement Security Flexibility Act of 2019 2. Additional nondiscrimination safe harbor for automatic contribution arrangements (a) In general Subsection (k) of section 401 (15) Special nonelective and matching contribution rules for small employers (A) In general In the case of a cash or deferred arrangement maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), for purposes of paragraph (13), the arrangement shall be treated as meeting the requirements of subparagraph (D) thereof if under the arrangement, the total elective deferrals (as defined in section 402(g)(3)(A)) with respect to any employee do not exceed an amount equal to the applicable percentage of the limitation otherwise applicable under section 402(g). (B) Applicable percentage For purposes of subparagraph (A), the applicable percentage with respect to an arrangement is— (i) 40 percent in the case of an arrangement which does not meet the requirements of paragraph (13)(D) and is not described in clause (ii) or (iii), (ii) 60 percent in the case of an arrangement which is not described in clause (iii) and which would meet the requirements of paragraph (13)(D) if— (I) equal to at least equal to (II) 2 percent of compensation, and such matching contributions meet the requirement of subsection (m)(11)(B) 6 percent of compensation (III) 1 percent 3 percent (iii) 80 percent in the case of an arrangement which would meet the requirements of paragraph (13)(D) if— (I) equal to at least equal to (II) 4 percent of compensation, and such matching contributions meet the requirement of subsection (m)(11)(B) 6 percent of compensation (III) 2 percent 3 percent (C) Reporting This paragraph shall apply to an arrangement only if the plan includes with the reports required under sections 6057 and 6058— (i) the number of employees eligible to participate in the arrangement, and (ii) the number of participants for the plan year. . (b) Modification of existing automatic contribution safe harbor (1) Qualified percentage (A) In general Clause (iii) of section 401(k)(13)(C) 10 percent 15 percent (B) Conforming amendments (i) Subclause (I) of section 401(k)(13)(C)(iii) (I) by striking 3 percent 3 percent, but not greater than 10 percent, (II) by adding and (ii) Subclause (II) of section 401(k)(13)(C)(iii) of such Code is amended to read as follows: (II) during any subsequent plan year, the lesser of 1 percentage point higher than the percentage in effect for the preceding plan year or 8 percent. . (iii) Section 401(k)(13)(C)(iii) of such Code is amended by striking subclauses (III) and (IV). (2) Automatic re-election Subparagraph (C) of section 401(k)(13) of such Code is amended by striking clause (iv) and by adding at the end the following new clause: (iv) Automatic re-election required The requirements of this subparagraph shall be treated as met only if, under the arrangement, every 3 years each employee— (I) who is eligible to participate in the arrangement, and (II) who is not participating, or is contributing less than 3 percent of compensation, at the time of determination, is treated as having made the election described in clause (i) unless the employee makes a new election under clause (ii). . (c) Effective date (1) In general Except as provided in paragraph (2), the amendments made by this section shall apply to plan years beginning after December 31, 2019. (2) Immediate automatic deferral for current employees not required In the case of an employer who adopts a qualified automatic contribution arrangement (as defined in section 401(k)(13)(B) section 401(k)(13)(C) (A) is eligible to participate in the arrangement (or a predecessor arrangement) immediately before the date the arrangement goes into effect, and (B) has an election in effect on such date either to participate in the arrangement or to not participate in the arrangement.

Summary: Retirement Security Flexibility Act of 2019 This bill modifies the nondiscrimination requirements that apply to certain employer-sponsored 401(k) retirement plans that include automatic contribution arrangements.