SEC. 210. FACILITATING LONGEVITY INSURANCE. 
(a) IN GENERAL.—Paragraph (9) of section 401(a) 
of the Internal Revenue Code of 1986, as amended by this 
Act, is amended by inserting after subparagraph (H) the 
following new subparagraph: 
‘‘(I) LONGEVITY INSURANCE.—
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, any value attributable to 
longevity insurance shall be disregarded in 
determining the value of an employee’s in-
terest under a plan prior to the first date 
that payments are made under the lon-
gevity insurance. 
‘‘(ii) 
LONGEVITY
INSURANCE
DE-
FINED.—For purposes of this subpara-
graph, the term ‘longevity insurance’ 
means an annuity payable on behalf of the 
employee under which—
‘‘(I) payments commence not 
later than 12 months following the 
calendar month in which the employee 
attains age 85 (or would have at-
tained age 85), 
‘‘(II) payments are made in sub-
stantially equal periodic payments 
(not less frequently than annually)
over the life of the employee or the 
joint lives of the employee and the 
employee’s 
designated 
beneficiary, 
taking into account the rules of clause 
(i)(II) of section 402(e)(7)(D), except 
as otherwise provided in subclause 
(III), 
‘‘(III) prior to the death of the 
employee, the annuity does not make 
available any commutation benefit, 
cash surrender value, or other similar 
feature, and 
‘‘(IV) except as provided in rules 
prescribed by the Secretary, in the 
case of an employee’s death prior to 
the date that payments commence, the 
value of any death benefits paid may 
not exceed the premiums paid for 
such annuity, plus interest com-
pounded annually at 3 percent. 
‘‘(iii) ADJUSTING AGE.—For purposes 
of clause (ii)(I), the Secretary shall annu-
ally increase age 85 to reflect increases in 
life expectancy (as determined by the Sec-
retary) that occur on or after January 1,
2006, except that any such increased age 
which is not a whole number shall be 
rounded to the next lower whole number.’’. 
(b) RULES.—Not later than one year after the date 
of enactment of this Act, the Secretary of the Treasury 
shall prescribe rules under which all or a portion of a par-
ticipant’s benefits under any plan described in section 
402(c)(8)(B) of the Internal Revenue Code of 1986 may 
be treated as longevity insurance under the rules of section 
401(a)(9)(I) of such Code. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2006. 
SEC. 211. DIRECT PAYMENT OF TAX REFUNDS TO INDI-
VIDUAL RETIREMENT PLANS. 
(a) IN GENERAL.—Paragraph (3) of section 219(f) 
of the Internal Revenue Code of 1986 is amended to read 
as follows: 
‘‘(3) TIME WHEN CONTRIBUTIONS MADE.—
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), for purposes of this sub-
section, a taxpayer shall be deemed to have 
made a contribution to an individual retirement 
plan on the last day of the preceding taxable 
year if the contribution is made on account of
such taxable year and is made not later than 
the time prescribed by law for filing the return 
for such taxable year (not including extensions 
thereof). 
‘‘(B) DIRECT PAYMENT OF TAX REFUNDS 
TO INDIVIDUAL RETIREMENT PLANS.—
‘‘(i) IN GENERAL.—To the extent pro-
vided in rules prescribed by the Secretary, 
a tax refund owed to a taxpayer and paid 
directly to an individual retirement plan 
shall be deemed a contribution made by 
the taxpayer—
‘‘(I) on the last day of the tax-
able year to which such refund re-
lates, and 
‘‘(II) on account of the taxable 
year to which such refund relates. 
‘‘(ii) 
LIMITATION.—This 
subpara-
graph (B) shall not apply to a tax refund 
unless such refund is shown on a return 
filed not later than the time prescribed by 
law for filing the return for the taxable 
year to which such refund relates (not in-
cluding extensions thereof).
‘‘(iii) DIRECT
PAYMENT.—For pur-
poses of this subparagraph, a tax refund is 
paid directly to an individual retirement 
plan if it is paid in the form of a direct 
transfer from the Secretary to the trustee 
or issuer of the individual retirement plan. 
‘‘(iv) TAX REFUND.—For purposes of 
this subparagraph, the term ‘tax refund’ 
means a refund of an internal revenue tax 
or credit.’’. 
(b) REGULATIONS.—
(1) IN GENERAL.—Not later than 1 year after 
the date of enactment of this Act, the Secretary of 
the Treasury shall issue rules which permit a tax-
payer—
(A) to elect to have all or any portion of 
a tax refund owed to the taxpayer paid directly 
to an RSA, or, if the Secretary determines that 
such direct payments are reasonably admin-
istrable, to individual retirement plans which 
are not RSAs, 
(B) to specify the individual retirement 
plan to which such tax refund is to be paid 
(and the investment option in which such tax 
refund is to be invested), and
(C) to the extent provided in rules pre-
scribed by the Secretary, to specify the taxable 
year on account of which such payment is 
made, 
except that the Secretary may require that the 
amount subject to such an election exceed a dollar 
threshold determined by the Secretary as necessary 
or appropriate to ensure the administrability of such 
elections. 
(2) INFORMATION.—The Secretary may require 
that the taxpayer provide, and agree to the disclo-
sure of, any information necessary to pay the tax re-
fund to the individual retirement plan specified by 
the taxpayer. 
(3) SPECIAL RULE.—The Secretary may pro-
vide that if, for any reason, the trustee or issuer 
does not accept payment of a tax refund, the tax re-
fund shall instead be paid as if the taxpayer had not 
elected a direct payment to an individual retirement 
plan. 
(c) CONFORMING AMENDMENTS.—
(1) Paragraph (3) of section 408(o) of the In-
ternal Revenue Code of 1986 is amended by striking 
‘‘rule’’ and inserting ‘‘rules’’.
(2) Paragraph (7) of section 408A(c) of such 
Code is amended by striking ‘‘rule’’ and inserting 
‘‘rules’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall be effective for tax returns filed after 
final rules implementing the amendments made by this 
section are prescribed. 
SEC. 212. TREATMENT OF QUALIFIED RETIREMENT PLAN-
NING SERVICES. 
(a) IN GENERAL.—Subsection (m) of section 132 of 
the Internal Revenue Code of 1986 (defining qualified re-
tirement services) is amended by adding at the end the 
following new paragraph: 
‘‘(4) NO CONSTRUCTIVE RECEIPT.—No amount 
shall be included in the gross income of any em-
ployee solely because the employee may choose be-
tween any qualified retirement planning services pro-
vided by a qualified investment advisor and com-
pensation which would otherwise be includible in the 
gross income of such employee. The preceding sen-
tence shall apply to highly compensated employees 
only if the choice described in such sentence is avail-
able on substantially the same terms to each mem-
ber of the group of employees normally provided
education and information regarding the employer’s 
qualified employer plan.’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 403(b)(3)(B) of such Code is 
amended 
by 
inserting 
‘‘132(m)(4),’’ 
after 
‘‘132(f)(4),’’. 
(2) Section 414(s)(2) of such Code is amended 
by inserting ‘‘132(m)(4),’’ after ‘‘132(f)(4),’’. 
(3) Section 415(c)(3)(D)(ii) of such Code is 
amended 
by 
inserting 
‘‘132(m)(4),’’ 
after 
‘‘132(f)(4),’’. 
(c) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
SEC. 213. REPEAL OF COMBINED PLAN DEDUCTION LIMIT. 
(a) IN GENERAL.—Paragraph (7) of section 404(a) 
of the Internal Revenue Code of 1986 (relating to limita-
tions on deductions where combination of defined con-
tribution plan and defined benefit plan) is amended by 
adding at the end the following: 
‘‘(D) EXEMPTION.—This paragraph shall 
not apply to contributions by any employer if 
such employer or any member of such employ-
er’s controlled group (within the meaning of 
section 412(l)(8)(C)) maintains a defined ben-
efit plan that is covered by title IV of the Em-
ployee Retirement Income Security Act of 
1974.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to contributions for taxable years 
beginning after December 31, 2005. 
TITLE 
III—EXPANDING 
SMALL 
BUSINESS RETIREMENT PLAN 
COVERAGE AND MAKING THE 
ELECTIVE DEFERRAL RULES 
SIMPLER 
AND 
MORE 
UNI-
FORM 
SEC. 301. ALLOW ADDITIONAL NONELECTIVE CONTRIBU-
TIONS TO SIMPLE PLANS. 
(a) IN GENERAL.—
(1) MODIFICATION TO DEFINITION.—Subpara-
graph (A) of section 408(p)(2) of the Internal Rev-
enue Code of 1986 (defining qualified salary reduc-
tion arrangement) is amended by striking ‘‘and’’ at 
the end of clause (iii), by redesignating clause (iv) 
as clause (v), and by inserting after clause (iii) the 
following new clause: 
‘‘(iv) the employer may make nonelec-
tive contributions of a uniform percentage 
(up to 10 percent) of compensation for
each employee who is eligible to participate 
in the arrangement and who has at least 
$5,000 of compensation from the employer 
for the year, and’’. 
(2) LIMITATION.—Subparagraph (A) of section 
408(p)(2) of such Code (defining qualified salary re-
duction arrangement) is amended by adding at the 
end the following: ‘‘The compensation taken into ac-
count under clause (iv) for any year shall not exceed 
the limitation in effect for such year under section 
401(a)(17).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Section 408(p)(2)(A)(v) of such Code, as re-
designated by subsection (a), is amended by striking 
‘‘or (iii)’’ and inserting ‘‘, (iii), or (iv)’’. 
(2) Paragraph (8) of section 408(p) of such 
Code is amended by inserting ‘‘, the employer con-
tribution actually made under paragraph (2)(A)(iv) 
of this subsection,’’ after ‘‘paragraph (2)(A)(ii) of 
this subsection’’. 
(3) Section 401(k)(11)(B)(i) of such Code is 
amended by striking ‘‘and’’ at the end of subclause 
(II), by redesignating subclause (III) as subclause 
(IV), and by inserting after subclause (II) the fol-
lowing new subclause:
‘‘(III) the employer may make 
nonelective contributions of a uniform 
percentage (up to 10 percent) of com-
pensation for each employee who is el-
igible to participate in the arrange-
ment and who has at least $5,000 of 
compensation from the employer for 
the year, and’’
(4) Section 401(k)(11)(B)(i)(IV) of such Code, 
as redesignated by paragraph (2), is amended by 
striking ‘‘or (II)’’ and inserting ‘‘, (II), or (III)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2005. 
SEC. 302. CONFORM MATCHING CONTRIBUTION RULES FOR 
SIMPLE IRAS AND SIMPLE 401(k)S. 
(a) 
IN
GENERAL.—Subclause 
(II) 
of 
section 
401(k)(11)(B)(i) of the Internal Revenue Code of 1986 
(relating to general rule for contribution requirements) is 
amended by striking ‘‘3 percent’’ and inserting ‘‘the appli-
cable percentage (as defined in section 408(p)(2)(C)(ii))’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to years beginning after December 
31, 2005.
SEC. 303. UNIFORM CATCH-UP CONTRIBUTION RULE. 
(a) 
IN
GENERAL.—Clause 
(iii) 
of 
section 
414(v)(6)(A) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(iii) an eligible deferred compensa-
tion plan (as defined in section 457(b)), 
and’’. 
(b) CONFORMING AMENDMENT.—Paragraph (18) of 
section 457(e) of such Code is amended by striking ‘‘and 
who is a participant in an eligible deferred compensation 
plan of an employer described in paragraph (1)(A)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2005. 
SEC. 304. UNIFORM DEFINITION OF COMPENSATION. 
(a) COMPENSATION.—
(1) IN GENERAL.—Subparagraph (A) of section 
415(c)(3) of the Internal Revenue Code of 1986 is 
amended to read as follows: 
‘‘(A) IN
GENERAL.—The term ‘partici-
pant’s compensation’ means wages (as defined 
by section 3401(a)) and all other payments of 
compensation to an employee by his employer 
(in the course of the employer’s trade or busi-
ness) for the year for which the employer is re-
quired to furnish the employee a written state-
ment under section 6041(d), 6051(a)(3), or 
6052. In accordance with rules prescribed by 
the Secretary, compensation shall be deter-
mined without regard to any rules under section 
3401(a) that limit the remuneration included in 
wages based on the nature or location of the 
employment or the services performed.’’. 
(2) CERTAIN
PICKED
UP
CONTRIBUTIONS.—
Subparagraph (D) of section 415(c)(3) of such Code 
is amended by striking ‘‘and’’ at the end of clause 
(i), redesignating clause (ii) as clause (iii), and in-
serting after clause (i) the following: 
‘‘(ii) any employee contributions that 
are picked up under section 414(h)(2), 
and’’. 
(3) FIVE-YEAR
RULE.—Subparagraph (E) of 
section 415(c)(3) of such Code is amended to read 
as follows: 
‘‘(E) FIVE-YEAR RULE.—In the case of an 
annuity contract described in section 403(b), at 
the election of the employer maintaining the ar-
rangement, the term ‘participant’s compensa-
tion’ shall not be determined for the year but 
shall be determined for the most recent period 
(ending not later than the close of the year)
which constitutes a year of service and which 
precedes the year by no more than five years. 
For purposes of the preceding sentence, under 
rules prescribed by the Secretary, a year of 
service shall be a full year of full-time service 
as an employee (or a combination of more than 
one year of part-year or part-time service).’’. 
(4) APPLICABILITY.—Paragraph (3) of section 
415(c) of such Code is amended by striking ‘‘For 
purposes of paragraph (1)—’’ and inserting ‘‘For 
purposes of this section—’’. 
(b) 403(b) PLANS.—
(1) IN
GENERAL.—Subsection (b) of section 
403 of such Code is amended by striking paragraphs 
(3) and (4). 
(2) CONFORMING AMENDMENTS.—
(A) Clauses (i) and (ii) of section 
414(e)(5)(B) of such Code are amended to read 
as follows: 
‘‘(i) 
the 
minister’s 
compensation 
under section 415(c)(3) shall be deter-
mined by reference to the minister’s earned 
income (within the meaning of section 
401(c)(2)) from such ministry rather than
the amount of compensation which is re-
ceived from an employer, and 
‘‘(ii) the years (and portions of years) 
in which such minister was a self-employed 
individual (within the meaning of section 
401(c)(1)(B)) with respect to such min-
istry shall be included for purposes of sec-
tion 415(c)(3)(E).’’. 
(B) Paragraph (7) of section 414(u) of 
such Code is amended by striking ‘‘403(b)(3), 
415(c)(3),’’ and inserting ‘‘415(c)(3)’’. 
(C) Subparagraph (C) of section 415(c)(7) 
of such Code is amended by striking ‘‘includible 
compensation 
determined 
under 
section 
403(b)(3)’’ and inserting ‘‘compensation deter-
mined under section 415(c)(3)’’. 
(c) SIMPLIFIED EMPLOYEE PENSIONS.—Subpara-
graph (A) of section 402(h)(2) of such Code is amended 
to read as follows: 
‘‘(A) 25 percent of the compensation (with-
in the meaning of section 415(c)(3), except that 
for purposes of this subsection, amounts de-
scribed in section 6051(a)(3) shall be deter-
mined without regard to section 3401(a)(3)) 
from such employer for the year, or’’.
(d) SIMPLE PLANS.—Subparagraph (A) of section 
408(p)(6) of such Code is amended to read as follows: 
‘‘(A) COMPENSATION.—The term ‘com-
pensation’ has the same meaning as the term 
‘participant’s compensation’ (as defined in sec-
tion 415(c)(3)), except that for purposes of this 
subsection, 
amounts 
described 
in 
section 
6051(a)(3) shall be determined without regard 
to section 3401(a)(3).’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to years beginning after December 
31, 2005. 
SEC. 305. UNIFORM WITHDRAWAL RULES. 
(a) IN GENERAL.—Section 414 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following: 
‘‘(w) DISTRIBUTABLE EVENT.—For purposes of this 
part—
‘‘(1) IN
GENERAL.—The term ‘distributable 
event’ means with respect to a participant—
‘‘(A) attainment of age 591⁄2, 
‘‘(B) death, 
‘‘(C) disability (within the meaning of sec-
tion 72(m)(7)), 
‘‘(D) severance from employment,
‘‘(E) hardship, or 
‘‘(F) termination of the plan without the 
establishment or maintenance of a successor 
plan (other than an employee stock ownership 
plan as defined in section 4975(e)(7)). 
‘‘(2) SPECIAL RULES.—
‘‘(A) Subparagraphs (A) and (E) of para-
graph (1) shall not apply to a defined contribu-
tion plan to which section 412 applies. 
‘‘(B) Paragraph (1)(E) shall only apply to 
amounts described in clauses (i) or (ii) of sec-
tion 415(c)(3)(D) (without regard to earnings 
attributable to such amounts). 
‘‘(C) Paragraph (1)(F) shall not apply to 
a plan described in subsection (v)(6)(A)(ii) un-
less the employer maintaining such plan elects 
to maintain the plan pursuant to a plan docu-
ment. Under rules prescribed by the Secretary, 
a plan described in subsection (v)(6)(A)(ii) may 
be treated as terminated without regard to 
whether all assets of the plan are distributed. 
‘‘(D)(i) Paragraph (1)(F) shall not apply 
to an employee unless the employee receives a 
lump sum distribution by reason of the termi-
nation.
‘‘(ii) For purposes of this subparagraph, 
the determination of whether a distribution is a 
lump sum distribution shall be made under sec-
tion 402(e)(4)(D) (without regard to subclauses 
(I), (II), (III), and (IV) of clause (i) thereof) 
or, in the case of plans not described in such 
section, under similar rules. Such term includes 
a distribution that consists in whole or in part 
of an annuity contract.’’. 
(b) 401(k) PLANS.—
(1) Clause (i) of section 401(k)(2)(B) of such 
Code is amended to read as follows: 
‘‘(i) may not be distributable to par-
ticipants or other beneficiaries earlier than 
the occurrence of a distributable event, 
and’’. 
(2) Section 401(k) of such Code is amended by 
striking paragraph (10). 
(3) The last sentence of subparagraph (C) of 
section 401(k)(7) of such Code is amended to read 
as follows: ‘‘For purposes of this section, the term 
‘hardship distribution’ means a distribution de-
scribed in section 414(w)(1)(E) (taking section 
414(w)(2)(B) into account but without regard to 
section 414(w)(2)(A)).