after subsection (b) the following new sub-
section:
‘‘(c) PENALTIES RELATING TO SIMPLE RETIREMENT
ACCOUNTS.—
‘‘(1) EMPLOYER PENALTIES.—An employer who
fails to provide 1 or more notices required by section
408(l)(2)(C) shall pay a penalty of $50 for each day
on which such failures continue.
‘‘(2) TRUSTEE
PENALTIES.—A trustee who
fails—
‘‘(A) to provide 1 or more statements re-
quired by the last sentence of section 408(i)
shall pay a penalty of $50 for each day on
which such failures continue, or
‘‘(B) to provide 1 or more summary de-
scriptions required by section 408(l)(2)(B) shall
pay a penalty of $50 for each day on which
such failures continue.
‘‘(3) REASONABLE
CAUSE
EXCEPTION.—No
penalty shall be imposed under this subsection with
respect to any failure which the taxpayer shows was
due to reasonable cause.’’.
(5) REPORTING REQUIREMENTS.—
(A)(i) Section 408(l) of such Code is
amended by adding at the end the following
new paragraph:
‘‘(2) SIMPLE RETIREMENT ACCOUNTS.—
‘‘(A) NO EMPLOYER REPORTS.—Except as
provided in this paragraph, no report shall be
required under this section by an employer
maintaining a qualified salary reduction ar-
rangement under subsection (p).
‘‘(B) SUMMARY DESCRIPTION.—The trust-
ee of any simple retirement account established
pursuant to a qualified salary reduction ar-
rangement under subsection (p) shall provide to
the employer maintaining the arrangement,
each year a description containing the following
information:
‘‘(i) The name and address of the em-
ployer and the trustee.
‘‘(ii) The requirements for eligibility
for participation.
‘‘(iii) The benefits provided with re-
spect to the arrangement.
‘‘(iv) The time and method of making
elections with respect to the arrangement.
‘‘(v) The procedures for, and effects
of, withdrawals from the arrangement.
‘‘(C) EMPLOYEE NOTIFICATION.—The em-
ployer shall notify each employee immediately
before the period for which an election de-
scribed in subsection (p)(5)(C) may be made of
the employee’s opportunity to make such elec-
tion. Such notice shall include a copy of the de-
scription described in subparagraph (B).’’.
(ii) Section 408(l) of such Code is amend-
ed by striking ‘‘An employer’’ and inserting—
‘‘(1) IN GENERAL.—An employer’’.
(B) Section 408(i) of such Code is amend-
ed by adding at the end the following new flush
sentence:
‘‘In the case of a simple retirement account under sub-
section (p), only one report under this subsection shall be
required to be submitted each calendar year to the Sec-
retary (at the time provided under paragraph (2)) but, in
addition to the report under this subsection, there shall
be furnished, within 30 days after each calendar year, to
the individual on whose behalf the account is maintained
a statement with respect to the account balance as of the
close of, and the account activity during, such calendar
year.’’.
(6) 
EXEMPTION
FROM
TOP-HEAVY
PLAN
RULES.—Section 416(g)(4) of such Code (relating to
special rules for top-heavy plans) is amended by
adding at the end the following new subparagraph:
‘‘(G) SIMPLE
RETIREMENT
ACCOUNTS.—
The term ‘top-heavy plan’ shall not include a
simple 
retirement 
account 
under 
section
408(p).’’.
(7) CONFORMING AMENDMENTS.—
(A) Section 280G(b)(6) of such Code is
amended by striking ‘‘or’’ at the end of sub-
paragraph (B), by striking the period at the
end of subparagraph (C) and inserting ‘‘, or’’
and by adding after subparagraph (C) the fol-
lowing new subparagraph:
‘‘(D) a simple retirement account described
in section 408(p).’’.
(B) Section 402(g)(3) of such Code is
amended by striking ‘‘and’’ at the end of sub-
paragraph (B), by striking the period at the
end of subparagraph (C) and inserting ‘‘, and’’,
and by adding after subparagraph (C) the fol-
lowing new subparagraph:
‘‘(D) any elective employer contribution
under section 408(p)(2)(A)(i).’’.
(C) Subsections (b), (c), (m)(4)(B), and
(n)(3)(B) of section 414 of such Code are each
amended 
by 
inserting 
‘‘408(p),’’ 
after
‘‘408(k),’’.
(D) Section 4972(d)(1)(A) of such Code is
amended by striking ‘‘and’’ at the end of clause
(ii), by striking the period at the end of clause
(iii) and inserting ‘‘, and’’, and by adding after
clause (iii) the following new clause:
‘‘(iv) any simple retirement account
(within the meaning of section 408(p)).’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 1995.
SEC. 2. EXTENSION OF SIMPLE PLAN TO 401(k) ARRANGE-
MENTS.
(a) ALTERNATIVE METHOD OF SATISFYING SECTION
401(k) NONDISCRIMINATION TESTS.—Section 401(k) of
the Internal Revenue Code of 1986 (relating to cash or
deferred arrangements) is amended by adding at the end
the following new paragraph:
‘‘(11) ADOPTION
OF
SIMPLE
PLAN
TO
MEET
NONDISCRIMINATION TESTS.—
‘‘(A) IN GENERAL.—A cash or deferred ar-
rangement maintained by an eligible employer