I
106TH CONGRESS
2D SESSION
H. R. 5546
To amend the Internal Revenue Code of 1986 to improve the retirement
security of American families.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 25, 2000
Mr. ANDREWS (for himself, Mr. CLAY, Mr. KILDEE, Mr. OWENS, Mr. PAYNE,
Mrs. MINK of Hawaii, Ms. WOOLSEY, Mr. ROMERO-BARCELO´, Mr.
FATTAH, Mr. TIERNEY, Mr. KIND, Ms. SANCHEZ, Mr. FORD, Mr.
KUCINICH, and Mr. HOLT) introduced the following bill; which was re-
ferred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to improve
the retirement security of American families.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Retirement Enhancement Revenue Act of 2000’’.
(b) TABLE OF CONTENTS.—The table of contents is
as follows:
Sec. 1. Short title and table of contents.
TITLE I—PUBLIC EMPLOYEE PENSION PLANS
Sec. 101. New qualification requirements for public employee pension plans.
‘‘SUBPART F—PUBLIC EMPLOYEE PENSION PLANS
‘‘Sec. 420A. Reporting and disclosure requirements.
‘‘Sec. 420B. Review by qualified review boards of changes in employer con-
tributions.
‘‘Sec. 420C. Effect on other laws.
‘‘Sec. 420D. Definitions and coverage.
Sec. 102. Effective date of title.
TITLE II—PENSION IMPROVEMENTS
Sec. 201. Automatic enrollment of all employees in 401(k) plans.
Sec. 202. Improvements in simplified employee pensions.
Sec. 203. Pension integration rules.
Sec. 204. Increase to age 75 for beginning mandatory distributions.
Sec. 205. Treatment of multiemployer plans under section 415.
Sec. 206. Restrictions on exclusion of unionized employees from participation in
401(k) plans.
Sec. 207. Repeal of coordination requirements for deferred compensation plans
of State and local governments and tax-exempt organizations.
Sec. 208. Clarification of tax treatment of division of section 457 plan benefits
upon divorce.
Sec. 209. Rollovers allowed among various types of plans.
Sec. 210. Purchase of service credit in governmental defined benefit plans.
TITLE III—ADDITIONAL AMENDMENTS
Sec. 301. Involuntary cash-outs from section 457 plans permitted only if dis-
tribution rolled to a qualified plan.
Sec. 302. Statutory exemption from prohibited transaction rules for emergent
transactions.
Sec. 303. Loans from retirement plans for health insurance and job training ex-
penses.
Sec. 304. Missing participants.
Sec. 305. Income averaging of corrected civil service annuity benefit payments.
TITLE IV—GENERAL PROVISIONS
Sec. 401. General effective date.
Sec. 402. Plan amendments.
TITLE I—PUBLIC EMPLOYEE
PENSION PLANS
SEC. 101. NEW QUALIFICATION REQUIREMENTS FOR PUB-
LIC EMPLOYEE PENSION PLANS.
SEC. (a) IN GENERAL.—Subsection (a) of section
401 of the Internal Revenue Code of 1986 (relating to
requirements for qualification) is amended by inserting
after paragraph (34) the following new paragraph:
‘‘(35) PUBLIC EMPLOYEE PENSION PLANS.—A
trust forming a part of a public employee pension
plan (as defined in section 420D(a)(9)) shall not
constitute a qualified trust under this section unless
the requirements of subpart F of this part are met
in connection with such plan.’’
(b) REQUIREMENTS.—
(1) IN GENERAL.—Part I of subchapter D of
chapter 1 of such Code (relating to pension, profit-
sharing, stock bonus plans, etc.) is amended by in-
serting after subpart E the following new subpart:
‘‘Subpart F—Public Employee Pension Plans
‘‘Sec. 420A. Reporting and disclosure requirements.
‘‘Sec. 420B. Review by qualified review boards of changes in em-
ployer contributions.
‘‘Sec. 420C. Effect on other laws.
‘‘Sec. 420D Definitions and coverage.
‘‘SEC. 420A. REPORTING AND DISCLOSURE REQUIREMENTS.
‘‘(a) IN GENERAL.—The requirements of this sub-
section are met in connection with a public employee pen-
sion plan if the terms of the plan include the requirements
of this section.
‘‘(b) REQUIRED DISCLOSURES.—The plan shall pro-
vide that, within 210 days after the close of each plan
year, the administrator of the plan shall furnish to each
participant, and to each beneficiary receiving benefits
under the plan—
‘‘(1) a statement of the assets and liabilities of
the plan aggregated by categories and valued at
their current value, and the same data displayed in
comparative form for the end of the previous plan
year;
‘‘(2) a statement of receipts and disbursements
during the preceding 12-month period aggregated by
general sources and applications;
‘‘(3) a report containing—
‘‘(A) a description of all investments and
assets of the plan, including their value;
‘‘(B) the names and positions of all of the
trustees of the plan, and the time remaining be-
fore the expiration of their term;
‘‘(C) a description of the method of trustee
selection;
‘‘(D) a description of any changes in in-
vestment policy of the plan during the fiscal
year;
‘‘(E) an evaluation of the long-term sol-
vency of the plan, including the number of par-
ticipants and beneficiaries and a summary of
their benefits, and a projection of the amount
of benefits expected to be paid for the fifth,
tenth, and fifteenth plan year following the date
of the publication of the report; and
‘‘(F) the percentage which the current
value of the assets of the plan is of the current
liability under the plan; and
‘‘(4) any other material as is necessary to fairly
summarize the latest annual report.
Such information shall be written and calculated to be un-
derstood by the average plan participant, and shall be suf-
ficiently accurate and comprehensive to reasonably apprise
such participants and beneficiaries of their rights and obli-
gations under the plan.
‘‘(c) AVAILABILITY OF PLAN DOCUMENTS FOR EX-
AMINATION.—The plan shall provide that the adminis-
trator shall make copies of the plan description and the
latest annual report and the bargaining agreement, trust
agreement, contract, or other instruments under which the
plan was established or is operated available for examina-
tion by any plan participant or beneficiary in the principal
office of the administrator and in such other places as may
be necessary to make available all pertinent information
to all participants (including such places as the Secretary
may prescribe by regulations).
‘‘(d) AVAILABILITY
OF INFORMATION UPON RE-
QUEST.—The plan shall provide that the administrator
shall, upon written request of any participant or bene-
ficiary, furnish a copy of the latest annual report, any ter-
minal report, the bargaining agreement, trust agreement,
contract, or other instruments under which the plan is es-
tablished or operated. The administrator may make a rea-
sonable charge to cover the cost of furnishing such com-
plete copies. The Secretary may by regulation prescribe
the maximum amount which will constitute a reasonable
charge under the preceding sentence.
‘‘SEC. 420B. REVIEW BY QUALIFIED REVIEW BOARDS OF
CHANGES IN EMPLOYER CONTRIBUTIONS.
‘‘(a) IN GENERAL.—The requirements of this section
are met in connection with a public employee pension plan
if, under the plan, changes in employer contributions are
subject to review by a qualified review board established
for the plan as provided in this section. For purposes of
this section, the term ‘qualified review board’ means a
board—
‘‘(1) whose membership is determined under the
law of the principal State in accordance with sub-
section (b), and
‘‘(2) whose powers are determined under the
law of the principal State in accordance with sub-
section (c).
‘‘(b) MEMBERSHIP.—
‘‘(1) IN GENERAL.—The membership of a quali-
fied review board established for a plan shall consist
of 3 members selected from among individuals who,
by means of their education and experience, have
demonstrated expertise in the area of pension fund
management, as follows:
‘‘(A) one member is appointed by the Gov-
ernor of the State,
‘‘(B) one member is selected by the partici-
pants in the plan, by means of an election held
in such form and manner as shall be prescribed
in regulations of the Secretary, and
‘‘(C) one member is selected jointly by the
Governor and by a representative of partici-
pants in the plan (from a certified list of pen-
sion experts established in accordance with
paragraph (2)).
Each member of the board shall have 1 vote. Mem-
bers of the board shall serve for such equivalent
terms as shall be prescribed under the law of the
principal State.
‘‘(2) CERTIFIED LIST OF EXPERTS.—The Gov-
ernor of the State shall, for purposes of paragraph
(1)(C), establish and maintain with respect to each
public employee pension plan (for which such State
is the principal State) a certified list of pension ex-
perts meeting the requirements for membership on
the qualified review board. Individuals may be in-
cluded on such list only by agreement between the
Governor of the State and a representative elected
by participants in the plan, entered into by means
of collective bargaining in such form and manner as
shall be prescribed in regulations of the Secretary.
‘‘(c) POWERS.—The board shall be treated as a quali-
fied review board for purposes of this section with respect
to any public employee pension plan (for which such State
is the principal State) only if the powers of such board
under the law of the principal State include review by the
board, for approval or disapproval by the board, of any
change in the terms of such plan, as a necessary pre-
requisite for such change to take effect, if—
‘‘(1) such change would have the effect of
changing levels of employer contributions to the
plan, and
‘‘(2) such review is requested, in such form and
manner as shall be prescribed in regulations of the
Secretary, by—
‘‘(A) at least one-third of the total number
of trustees of any trust fund forming a part of
the plan, or
‘‘(B) the head of any employee organiza-
tion representing at least 20 percent of the
total number of active participants in the plan.
The board may be treated as a qualified review board for
purposes of this section only if, under the law of the prin-
cipal State, any such change submitted to such review by
the board may take effect only upon approval of the
change by the board.
‘‘SEC. 420C. EFFECT ON OTHER LAWS.
‘‘(a) IN GENERAL.—Nothing in this subpart shall be
construed to alter, amend, modify, invalidate, impair, or
supersede any law of a State or any rule or regulation
issued under any such law, except to the extent that such
law—
‘‘(1) may now or hereafter relate to the subject
matter of the provisions of this subpart as they
apply to any public employee pension plan described
in section 420D(b)(1) and not exempt under section
420D(b)(2), and
‘‘(2) prevents the application of such provisions.
‘‘(b) STATE CAUSES OF ACTION PRESERVED.—Noth-
ing in this subpart shall be construed to apply with respect
to State causes of action available in State courts.
‘‘SEC. 420D. DEFINITIONS AND COVERAGE.
‘‘(a) DEFINITIONS.—For purposes of this subpart—
‘‘(1) ADMINISTRATOR.—The term ‘adminis-
trator’ means—
‘‘(A) the board of trustees, retirement
board, or similar person with administrative re-
sponsibilities in connection with a plan, or any
other person specifically so designated in con-
nection with any requirement of this subpart by
the terms of the instrument or instruments
under which the plan is operated, including but
not limited to the law of any State or of any
political subdivision of any State, or
‘‘(B) in any case in which there is no per-
son described in subparagraph (A) in connec-
tion with the plan, the plan sponsor.
‘‘(2) BENEFICIARY.—The term ‘beneficiary’
means a person designated by a participant, or by
the terms of a public employee pension plan, who is
or may become entitled to a benefit thereunder.
‘‘(3) CURRENT LIABILITY.—The term ‘current
liability’ has the meaning provided in section
302(d)(7) of the Employee Retirement Income Secu-
rity Act of 1974.
‘‘(4) EMPLOYEE.—The term ‘employee’ means
any individual employed by an employer, employer
representative, or other person required to make em-
ployer contributions under the plan.
‘‘(5) EMPLOYEE
ORGANIZATION.—The term
‘employee organization’ means any labor union or
any organization of any kind, or any agency or em-
ployee representation committee, association, group,
or plan, in which employees participate and which
exists for the purpose, in whole or in part, of dealing
with employers or employer representatives con-
cerning a public employee pension plan or other
matters incidental to employment relationships; or
any employees’ beneficiary association organized for
the purpose, in whole or in part, of establishing such
a plan.
‘‘(6) 
EMPLOYER.—The 
term 
‘employer’
means—
‘‘(A) the government of any State or of
any political subdivision of a State,
‘‘(B) any agency or instrumentality of a
government referred to in subparagraph (A), or
‘‘(C) any agency or instrumentality of two
or more governments referred to in subpara-
graph (A).
‘‘(7) EMPLOYER
CONTRIBUTION.—The term
‘employer contribution’ means any contribution to a
public employee pension plan other than a contribu-
tion made by a participant in the plan.
‘‘(8) EMPLOYER REPRESENTATIVE.—The term
‘employer representative’ means—
‘‘(A) any group or association consisting,
in whole or in part, of employers acting, in con-
nection with a public employee pension plan, for
an employer, or
‘‘(B) any person acting, in connection with
a public employee pension plan, indirectly in the
interest of an employer or of a group or asso-
ciation described in subparagraph (A).
‘‘(9) PUBLIC EMPLOYEE PENSION PLAN.—The
terms ‘public employee pension plan’ and ‘plan’
mean any plan, fund, or program which was here-
tofore or is hereafter established or maintained, in
whole or in part, by an employer, an employer rep-
resentative, or an employee organization, or by a
combination thereof, to the extent that by its express
terms or as a result of surrounding circumstances
such plan, fund, or program—
‘‘(A) provides retirement income to em-
ployees, or
‘‘(B) results in a deferral of income by em-
ployees for periods extending to the termination
of covered employment or beyond,
regardless of the method of calculating the contribu-
tions made to the plan, the method of calculating
the benefits under the plan, or the method of distrib-
uting benefits from the plan.
‘‘(10) PRINCIPAL STATE.—The term ‘principal
State’ means, for any plan year with respect to a
public employee pension plan, the State in which, as
of the beginning of such plan year, the largest per-
centage of the participants of the plan employed in
any single State is employed.
‘‘(11) 
GOVERNOR.—The 
term 
‘Governor’
means, in connection with a public employee pension
plan, the Governor (or equivalent official) of the
principal State.
‘‘(12) PARTICIPANT.—The term ‘participant’
means any individual who is or may become eligible
to receive a benefit of any type from a public em-
ployee pension plan or whose beneficiaries may be el-
igible to receive any such benefit.
‘‘(13) PERSON.—The term ‘person’ means a
State, a political subdivision of a State, any agency
or instrumentality of a State or a political subdivi-
sion of a State, an individual, a partnership, a joint
venture, a corporation, a mutual company, a joint-
stock company, a trust, an estate, an unincorporated
organization, an association, or an employee organi-
zation.
‘‘(14) PLAN SPONSOR.—The term ‘plan spon-
sor’ means—
‘‘(A) in the case of a plan established or
maintained solely for employees of a single em-
ployer, such employer,
‘‘(B) in the case of a plan established or
maintained by an employee organization, the
employee organization, or
‘‘(C) in the case of a plan established or
maintained by two or more employers or jointly
by one or more employers and one or more em-
ployee organizations, the association, com-
mittee, board of trustees, or other similar group
of representatives of the parties who establish
or maintain the plan.
‘‘(15) PLAN
YEAR.—The term ‘plan year’
means, with respect to a plan, the calendar, policy,
or fiscal year on which the records of the plan are
kept.
‘‘(16) STATE.—The term ‘State’ means any
State of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Virgin Is-
lands, American Samoa, and Guam.
‘‘(b) COVERAGE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), this subpart shall apply to any public em-
ployee pension plan.
‘‘(2) EXCEPTIONS FROM COVERAGE.—The pro-
visions of this subpart shall not apply to—
‘‘(A) any employee benefit plan described
in section 4(a) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C.
1003(a)), which is not exempt under section
4(b)(1) of such Act (29 U.S.C. 1003(b)(1));
‘‘(B) any plan which is unfunded and is
maintained by an employer or employer rep-
resentative primarily for the purpose of pro-
viding deferred compensation for a select group
of management or highly compensated employ-
ees;
‘‘(C) any arrangement which would be a
severance pay arrangement, as defined in regu-
lations of the Secretary of Labor under section
3(2)(B)(i) of the Employee Retirement Income
Security 
Act 
of 
1974 
(29 
U.S.C.
1002(2)(B)(i)), if the employer were an em-
ployer within the meaning of section 3(5) of
such Act (29 U.S.C. 1002(5));
‘‘(D) any agreement to the extent it is a
coverage agreement entered into pursuant to
section 218 of the Social Security Act (42
U.S.C. 418);
‘‘(E) any individual retirement account or
any individual retirement annuity within the
meaning of section 408, or a retirement bond
within the meaning of section 409;
‘‘(F) any plan described in section 401(d);
‘‘(G) any individual account plan con-
sisting of an annuity contract described in sec-
tion 403(b);
‘‘(H) any eligible State deferred compensa-
tion plan, as defined in section 457(b); or
‘‘(I) any plan maintained solely for the
purpose of complying with applicable workers’
compensation laws or disability insurance
laws.’’
SEC. 102. EFFECTIVE DATE OF TITLE.
The amendments made by this title shall apply with
respect to plan years beginning on or after January 1,
2001.
TITLE II—PENSION
IMPROVEMENTS
SEC. 201. AUTOMATIC ENROLLMENT OF ALL EMPLOYEES IN
401(k) PLANS.
(a) IN GENERAL.—Subparagraph (A) of section
401(m) of the Internal Revenue Code of 1986 (relating
to additional alternative method of satisfying non-
discrimination tests) 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 inserting after
clause (iii) the following new clause:
‘‘(iv) meets the requirements of sub-
paragraph (C).’’.
(b) MINIMUM COVERAGE REQUIREMENTS.—Para-
graph (11) of section 401(m) of such Code is amended
by adding at the end the following new subparagraph:
‘‘(C) 
MINIMUM
COVERAGE
REQUIRE-
MENTS.—The requirements of this subpara-
graph are met if—
‘‘(i) the plan meets the requirements
of section 410(b), or
‘‘(ii) the plan is offered to all eligible
employees.
For purposes of clause (ii), a plan shall be
treated as offered to an eligible employee if the
employee is eligible to participate in the plan
and if the employee may elect to have employer
contributions made on the employee’s behalf
under the plan as elective employer contribu-
tions to such plan on behalf of the employee or
to the employee directly in cash.’’.
SEC. 202. IMPROVEMENTS IN SIMPLIFIED EMPLOYEE PEN-
SIONS.
(a) PARTICIPATION REQUIREMENTS.—Paragraph (2)
of section 408(k) of the Internal Revenue Code of 1986
(relating to participation requirements) is amended—
(1) in subparagraph (A), by adding ‘‘and’’ at
the end; and
(2) by striking subparagraphs (B) and (C) and
inserting the following:
‘‘(B) has completed at least 3 years of
service (as defined in section 411(a)(5)) for the
employer.’’.
(b) 
NONDISCRIMINATION
RULES.—Subparagraph
(C) of section 408(k)(3) of such Code (requiring contribu-
tion to bear uniform relationship to total compensation)
is amended—
(1) in the heading, by striking ‘‘MUST BEAR
UNIFORM RELATIONSHIP TO TOTAL COMPENSATION’’
and inserting ‘‘MUST BE UNIFORM’’; and
(2) by inserting after ‘‘unless contributions
thereto’’ the following: ‘‘are uniform for all employ-
ees maintaining a simplified employee pension or’’.
(c) CONSENT TO PARTICIPATION NOT REQUIRED.—
Paragraph (2) of section 408(k) of such Code (relating
to participation requirements) is amended by adding at
the end the following new sentence: ‘‘An employer may
establish and maintain a simplified employee pension for
an employee without the employee’s consent.’’.
(d) RAISE IN LIMITATION ON CONTRIBUTIONS.—Sec-
tion 404(h)(1) of such Code (relating to special rules for
simplified employee pensions) is amended by striking sub-
paragraph (C) and inserting the following new subpara-
graphs:
‘‘(C) The amount deductible in a taxable
year for a simplified employee pension shall not
exceed $30,000. The excess of the amount con-
tributed over the amount deductible for a tax-
able year shall be deductible in the succeeding
taxable years in order of time, subject to the
limit of the preceding sentence.
‘‘(D) The Secretary shall adjust annually
the $30,000 amount in subparagraph (C) for
increases in the cost-of-living at the same time
and in the same manner as adjustments under
section 415(d), except that the base period shall
be the calendar quarter ending September 30,
2000, and any increase which is not a multiple
of $100 shall be rounded to the next lowest
multiple of $100.’’.
(e) SEPARATE TREATMENT OF CONTRIBUTIONS TO
SIMPLIFIED EMPLOYEE PENSIONS.—
(1) DETERMINATION
OF
DEDUCTIBLE
CON-
TRIBUTIONS.—Subsection (h) of section 404 of such
Code is amended by striking paragraphs (2) and (3)
and inserting the following new paragraph:
‘‘(2) LIMITATION BASED ON COMBINATION OF
PLANS
INAPPLICABLE.—Contributions to a sim-
plified employee pension shall not be taken into ac-
count for purposes of subsection (a)(7).’’.
(2) DETERMINATION
OF
LIMITS
ON
ANNUAL
CONTRIBUTIONS
UNDER
NONDISCRIMINATION
RULES.—Paragraph (5) of section 415(e) of such
Code (relating to special rules for sections 403(b)
and 408) is amended by striking the second sentence
and inserting the following new sentence: ‘‘For pur-
poses of this section, any contribution by an em-
ployer to a simplified employee pension shall not be
taken into account.’’.
(f) JOINT
AND
SURVIVOR
ANNUITY
REQUIRE-
MENTS.—Section 408(k) of such Code is amended—
(1) by redesignating paragraph (9) as para-
graph (10); and
(2) by inserting after paragraph (8) the fol-
lowing new paragraph:
‘‘(9) JOINT AND SURVIVOR ANNUITY REQUIRE-
MENTS.—Requirements similar to the requirements
of section 401(a)(11) shall apply with respect to an-
nuities purchased with amounts distributed from
simplified employee pensions.’’.
(g) ANNUAL REPORTING REQUIRMEENTS FOR SIM-
PLIFIED EMPLOYEE PENSIONS.—Paragraph (1) of section
408(l) of such Code (relating to simplified employer re-
ports) is amended to read as follows:
‘‘(1) IN GENERAL.—The Secretary shall require
by regulations that an employer who makes a con-
tribution on behalf of an employee to a simplified
employee pension shall provide simplified annual re-
ports. The reports required by this subsection shall
be filed in such manner, and information with re-
spect to such contributions shall be furnished to the
employee in such manner, as may be required by
regulations, except that such reports shall include
information sufficient to allow the employee to deter-
mine that the simplified employee pension is in com-
pliance with the requirements of this section.’’.
SEC. 203. PENSION INTEGRATION RULES.
(a) APPLICABILITY OF NEW INTEGRATION RULES
EXTENDED TO ALL EXISTING ACCRUED BENEFITS.—
Notwithstanding subsection (c)(1) of section 1111 of the
Tax Reform Act of 1986 (relating to effective date of ap-
plication of nondiscrimination rules to integrated plans)
(100 Stat. 2440), effective for plan years beginning after
the date of the enactment of this Act, the amendments
made by subsection (a) of such section 1111 shall also
apply to benefits attributable to plan years beginning on
or before December 31, 1988.
(b) INTEGRATION DISALLOWED
FOR SIMPLIFIED
EMPLOYEE PENSIONS.—
(1) IN GENERAL.—Subparagraph (D) of section
408(k)(3) of the Internal Revenue Code of 1986 (re-
lating to permitted disparity under rules limiting
discrimination under simplified employee pensions)
is repealed.
(2) CONFORMING AMENDMENT.—Subparagraph
(C) of such section 408(k)(3) is amended by striking
‘‘and except as provided in subparagraph (D),’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply with respect to taxable
years beginning on or after January 1, 1999.
(c) EVENTUAL REPEAL OF INTEGRATION RULES.—
Effective for plan years beginning on or after January 1,
2002—
(1) subparagraphs (C) and (D) of section
401(a)(5) of the Internal Revenue Code of 1986 (re-
lating to pension integration exceptions under non-
discrimination requirements for qualification) are re-
pealed, and subparagraphs (E), (F), and (G) of such
section 401(a)(5) are redesignated as subparagraphs
(C), (D), and (E), respectively; and
(2) subsection (l) of section 401 of such Code
(relating to nondiscriminatory coordination of de-
fined contribution plans with OASDI) is repealed.
SEC. 204. INCREASE TO AGE 75 FOR BEGINNING MANDA-
TORY DISTRIBUTIONS.
(a) QUALIFIED PENSION PLANS.—Subparagraph (C)
of section 401(a)(9) of the Internal Revenue Code of 1986
(relating to required distributions) is amended by striking
‘‘age 701⁄2’’ each place it appears and inserting ‘‘the appli-
cable age’’.
(b) APPLICABLE AGE.—Subparagraph (C) of section
401(a)(9) of such Code is amended by adding at the end
the following new clause:
‘‘(v) APPLICABLE AGE.—
‘‘(I) IN GENERAL.—For purposes
of this clause, the term applicable age
shall be determined in accordance
with the following table:
Applicable
‘‘Calendar Year:
Age:
2001 .........................................................................................
2002 .........................................................................................
2003 .........................................................................................
2004 .........................................................................................
2005 and each calendar year thereafter ..................................
75.
‘‘(II) ELECTION TO USE AGE OF
SPOUSE.—For purposes of this sub-
paragraph, an employee who files a
joint return for a taxable year may
elect to substitute the age of the em-
ployee’s spouse for his age.’’.
(c) INDIVIDUAL RETIREMENT ACCOUNTS.—Para-
graph (1) of section 219(d) of such Code is amended—
(1) by striking ‘‘age 701⁄2’’ in the text and in-
serting ‘‘the applicable age (as defined in section
401(a)(9)(C)(v))’’, and
(2) by striking ‘‘AGE 701⁄2’’ in the heading and
inserting ‘‘THE APPLICABLE AGE’’.
(d) ROTH IRA’S.—Paragraph (4) of section 408A(c)
of such Code is amended—
(1) by striking ‘‘age 701⁄2’’ in the text and in-
serting ‘‘the applicable age (as defined in section
401(a)(9)(C)(v))’’, and
(2) by striking ‘‘AGE 701⁄2’’ in the heading and
inserting ‘‘THE APPLICABLE AGE’’.
SEC. 205. TREATMENT OF MULTIEMPLOYER PLANS UNDER
SECTION 415.
(a) COMPENSATION LIMIT.—Paragraph (11) of sec-
tion 415(b) of the Internal Revenue Code of 1986 (relat-
ing to limitation for defined benefit plans) is amended to
read as follows:
‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN-
MENTAL AND MULTIEMPLOYER PLANS.—In the case
of a governmental plan (as defined in section
414(d)) or a multiemployer plan (as defined in sec-
tion 414(f)), subparagraph (B) of paragraph (1)
shall not apply.’’.
(b) COMBINING AND AGGREGATION OF PLANS.—
(1) COMBINING OF PLANS.—Subsection (f) of
section 415 of such Code (relating to combining of
plans) is amended by adding at the end the fol-
lowing:
‘‘(3) 
EXCEPTION
FOR
MULTIEMPLOYER
PLANS.—Notwithstanding paragraph (1) and sub-
section (g), a multiemployer plan (as defined in sec-
tion 414(f)) shall not be combined or aggregated
with any other plan maintained by an employer for
purposes of applying the limitations established in
this section, except that such plan shall be combined
or aggregated with another plan which is not such
a multiemployer plan solely for purposes of deter-
mining whether such other plan meets the require-
ments of subsections (b)(1)(A) and (c).’’.
(2) CONFORMING AMENDMENT FOR AGGREGA-
TION OF PLANS.—Subsection (g) of section 415 of
such Code (relating to aggregation of plans) is
amended by striking ‘‘The Secretary’’ and inserting
‘‘Except as provided in subsection (f)(3), the Sec-
retary’’.
SEC. 206. RESTRICTIONS ON EXCLUSION OF UNIONIZED
EMPLOYEES FROM PARTICIPATION IN 401(k)
PLANS.
Paragraph (4) of section 401(k) of the Internal Rev-
enue Code of 1986 (relating to other requirements) is
amended by adding at the end the following new subpara-
graph:
‘‘(D) 
BENEFITS
SUBJECT
OF
BAR-
GAINING.—A cash or deferred arrangement of
any employer shall not be treated as a qualified
cash or deferred arrangement if any employee
of such employer who is described in section
410(b)(3)(A) and who is not eligible to benefit
under the arrangement is not otherwise covered
under an employee pension benefit plan (as de-
fined in section 3(2)(A) of the Employee Retire-
ment Income Security Act of 1974) which is
maintained for employees of such employer pur-
suant to an agreement which the Secretary of
Labor finds to be a collective bargaining agree-
ment between employee representatives and one
or more employers and which is qualified under
section 401(a).’’.
SEC. 207. REPEAL OF COORDINATION REQUIREMENTS FOR
DEFERRED COMPENSATION PLANS OF STATE
AND LOCAL GOVERNMENTS AND TAX-EX-
EMPT ORGANIZATIONS.
(a) IN GENERAL.—Subsection (c) of section 457 of
the Internal Revenue Code of 1986 (relating to deferred
compensation plans of State and local governments and
tax-exempt organizations) is amended to read as follows:
‘‘(c) LIMITATION.—The maximum amount of the
compensation of any one individual which may be deferred
under subsection (a) during any taxable year shall not ex-
ceed the amount in effect under subsection (b)(2)(A) (as
modified by any adjustment provided under subsection
(b)(3)).’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall apply to years beginning after Decem-
ber 31, 2000.
SEC. 208. CLARIFICATION OF TAX TREATMENT OF DIVISION
OF SECTION 457 PLAN BENEFITS UPON DI-
VORCE.
(a) IN GENERAL.—Section 414(p)(11) of the Inter-
nal Revenue Code of 1986 (relating to application of rules
to governmental and church plans) is amended—
(1) by inserting ‘‘or an eligible deferred com-
pensation plan (within the meaning of section
457(b))’’ after ‘‘subsection (e))’’, and
(2) in the heading, by striking ‘‘GOVERN-
MENTAL AND CHURCH PLANS’’ and inserting ‘‘CER-
TAIN OTHER PLANS’’.
(b) WAIVER OF CERTAIN DISTRIBUTION REQUIRE-
MENTS.—Paragraph (10) of section 414(p) of such Code
is amended by striking ‘‘and section 409(d)’’ and inserting
‘‘section 409(d), and section 457(d)’’.
(c) TAX TREATMENT OF PAYMENTS FROM A SEC-
TION 457 PLAN.—Subsection (p) of section 414 of such
Code is amended by redesignating paragraph (12) as para-
graph (13) and inserting after paragraph (11) the fol-
lowing new paragraph:
‘‘(12) TAX TREATMENT OF PAYMENTS FROM A
SECTION 457 PLAN.—If a distribution or payment
from an eligible deferred compensation plan de-
scribed in section 457(b) is made pursuant to a
qualified domestic relations order, rules similar to
the rules of section 402(e)(1)(A) shall apply to such
distribution or payment.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to transfers, distributions, and
payments made after December 31, 2000.
SEC. 209. ROLLOVERS ALLOWED AMONG VARIOUS TYPES
OF PLANS.
(a) ROLLOVERS
FROM
AND
TO
SECTION
457
PLANS.—
(1) ROLLOVERS FROM SECTION 457 PLANS.—
(A) IN GENERAL.—Section 457(e) of the
Internal Revenue Code of 1986 (relating to
other definitions and special rules) is amended
by adding at the end the following:
‘‘(16) ROLLOVER AMOUNTS.—
‘‘(A) GENERAL RULE.—In the case of an
eligible deferred compensation plan established
and maintained by an employer described in
subsection (e)(1)(A), if—
‘‘(i) any portion of the balance to the
credit of an employee in such plan is paid
to such employee in an eligible rollover dis-
tribution (within the meaning of section
402(c)(4) without regard to subparagraph
(C) thereof),
‘‘(ii) the employee transfers any por-
tion of the property such employee receives
in such distribution to an eligible retire-
ment 
plan 
described 
in 
section
402(c)(8)(B), and
‘‘(iii) in the case of a distribution of
property other than money, the amount so
transferred consists of the property distrib-
uted,
then such distribution (to the extent so trans-
ferred) shall not be includible in gross income
for the taxable year in which paid.
‘‘(B) CERTAIN
RULES
MADE
APPLICA-
BLE.—The rules of paragraphs (2) through (7)
(other than paragraph (4)(C)) and (9) of sec-
tion 402(c) and section 402(f) shall apply for
purposes of subparagraph (A).
‘‘(C) REPORTING.—Rollovers under this
paragraph shall be reported to the Secretary in
the same manner as rollovers from qualified re-
tirement 
plans 
(as 
defined 
in 
section
4974(c)).’’.
(B) DEFERRAL LIMIT DETERMINED WITH-
OUT REGARD TO ROLLOVER AMOUNTS.—Section
457(b)(2) of such Code (defining eligible de-
ferred compensation plan) is amended by insert-
ing ‘‘(other than rollover amounts)’’ after ‘‘tax-
able year’’.
(C) DIRECT ROLLOVER.—Paragraph (1) of
section 457(d) of such Code is amended by
striking ‘‘and’’ at the end of subparagraph (A),
by striking the period at the end of subpara-
graph (B) and inserting ‘‘, and’’, and by insert-
ing after subparagraph (B) the following:
‘‘(C) in the case of a plan maintained by
an employer described in subsection (e)(1)(A),
the plan meets requirements similar to the re-
quirements of section 401(a)(31).
Any amount transferred in a direct trustee-to-trust-
ee transfer in accordance with section 401(a)(31)
shall not be includible in gross income for the tax-
able year of transfer.’’.
(D) WITHHOLDING.—
(i) Paragraph (12) of section 3401(a)
of such Code is amended by adding at the
end the following:
‘‘(E) under or to an eligible deferred com-
pensation plan which, at the time of such pay-
ment, is a plan described in section 457(b)
maintained by an employer described in section
457(e)(1)(A); or’’.
(ii) Paragraph (3) of section 3405(c)
of such Code is amended to read as fol-
lows:
‘‘(3) ELIGIBLE ROLLOVER DISTRIBUTION.—For
purposes of this subsection, the term ‘eligible roll-
over distribution’ has the meaning given such term
by section 402(f)(2)(A).’’.
(iii) LIABILITY FOR WITHHOLDING.—
Subparagraph (B) of section 3405(d)(2) of
such Code is amended by striking ‘‘or’’ at
the end of clause (ii), by striking the pe-
riod at the end of clause (iii) and inserting
‘‘, or’’, and by adding at the end the fol-
lowing:
‘‘(iv) section 457(b).’’.
(2) ROLLOVERS TO SECTION 457 PLANS.—
(A) IN GENERAL.—Section 402(c)(8)(B) of
such Code (defining eligible retirement plan) is
amended by striking ‘‘and’’ at the end of clause
(iii), by striking the period at the end of clause
(iv) and inserting ‘‘, and’’, and by inserting
after clause (iv) the following new clause:
‘‘(v) an eligible deferred compensation
plan described in section 457(b) of an em-
ployer described in section 457(e)(1)(A).’’.
(B) 
SEPARATE
ACCOUNTING.—Section
402(c) of such Code is amended by adding at
the end the following new paragraph:
‘‘(11) SEPARATE ACCOUNTING.—Unless a plan
described in clause (v) of paragraph (8)(B) agrees to
separately account for amounts rolled into such plan
from eligible retirement plans not described in such
clause, the plan described in such clause may not ac-
cept transfers or rollovers from such retirement
plans.’’.
(C) 10 PERCENT ADDITIONAL TAX.—Sub-
section (t) of section 72 of such Code (relating
to 10-percent additional tax on early distribu-
tions from qualified retirement plans) is amend-
ed by adding at the end the following new para-
graph:
‘‘(11) SPECIAL RULE FOR ROLLOVERS TO SEC-
TION 457 PLANS.—For purposes of this subsection,
a distribution from an eligible deferred compensation
plan (as defined in section 457(b)) of an employer
described in section 457(e)(1)(A) shall be treated as
a distribution from a qualified retirement plan de-
scribed in section 4974(c)(1) to the extent that such
distribution is attributable to an amount transferred
to an eligible deferred compensation plan from a
qualified retirement plan (as defined in section
4974(c)).’’.
(b) ALLOWANCE
OF ROLLOVERS FROM
AND
TO
403(b) PLANS.—
(1) 
ROLLOVERS
FROM
SECTION
403(b)
PLANS.—Section 403(b)(8)(A)(ii) of such Code (re-
lating to rollover amounts) is amended by striking
‘‘such distribution’’ and all that follows and insert-
ing ‘‘such distribution to an eligible retirement plan
described in section 402(c)(8)(B), and’’.
(2) ROLLOVERS TO SECTION 403(b) PLANS.—
Section 402(c)(8)(B) of such Code (defining eligible
retirement plan), as amended by subsection (a), is
amended by striking ‘‘and’’ at the end of clause (iv),
by striking the period at the end of clause (v) and
inserting ‘‘, and’’, and by inserting after clause (v)
the following new clause:
‘‘(vi) an annuity contract described in
section 403(b).’’.
(c) EXPANDED EXPLANATION TO RECIPIENTS OF
ROLLOVER DISTRIBUTIONS.—Paragraph (1) of section
402(f) of such Code (relating to written explanation to re-
cipients of distributions eligible for rollover treatment) is
amended by striking ‘‘and’’ at the end of subparagraph
(C), by striking the period at the end of subparagraph (D)
and inserting ‘‘, and’’, and by adding at the end the fol-
lowing new subparagraph:
‘‘(E) of the provisions under which dis-
tributions from the eligible retirement plan re-
ceiving the distribution may be subject to re-
strictions and tax consequences which are dif-
ferent from those applicable to distributions
from the plan making such distribution.’’.
(d) SPOUSAL ROLLOVERS.—Section 402(c)(9) of
such Code (relating to rollover where spouse receives dis-
tribution after death of employee) is amended by striking
‘‘; except that’’ and all that follows up to the end period.
(e) CONFORMING AMENDMENTS.—
(1) Section 72(o)(4) of such Code is amended
by 
striking 
‘‘and 
408(d)(3)’’ 
and 
inserting
‘‘403(b)(8), 408(d)(3), and 457(e)(16)’’.
(2) Section 219(d)(2) of such Code is amended
by striking ‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3),
or 457(e)(16)’’.
(3) Section 401(a)(31)(B) of such Code is
amended by striking ‘‘and 403(a)(4)’’ and inserting
‘‘, 403(a)(4), 403(b)(8), and 457(e)(16)’’.
(4) Subparagraph (A) of section 402(f)(2) of
such Code is amended by striking ‘‘or paragraph (4)
of section 403(a)’’ and inserting ‘‘, paragraph (4) of
section 
403(a), 
subparagraph 
(A) 
of 
section
403(b)(8), 
or 
subparagraph 
(A) 
of 
section
457(e)(16)’’.
(5) Paragraph (1) of section 402(f) of such
Code is amended by striking ‘‘from an eligible retire-
ment plan’’.
(6) Subparagraphs (A) and (B) of section
402(f)(1) of such Code are each amended by striking
‘‘another eligible retirement plan’’ and inserting ‘‘an
eligible retirement plan’’.
(7) Subparagraph (B) of section 403(b)(8) of
such Code is amended to read as follows:
‘‘(B) CERTAIN
RULES
MADE
APPLICA-
BLE.—The rules of paragraphs (2) through (7)
and (9) of section 402(c) and section 402(f)
shall apply for purposes of subparagraph (A),
except that section 402(f) shall be applied to
the payer in lieu of the plan administrator.’’.
(8) Section 408(a)(1) of such Code is amended
by 
striking 
‘‘or 
403(b)(8),’’ 
and 
inserting
‘‘403(b)(8), or 457(e)(16)’’.
(9) Subparagraphs (A) and (B) of section
415(b)(2) of such Code are each amended by strik-
ing ‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8),
408(d)(3), and 457(e)(16)’’.
(10) Section 415(c)(2) of such Code is amended
by 
striking 
‘‘and 
408(d)(3)’’ 
and 
inserting
‘‘408(d)(3), and 457(e)(16)’’.
(11) Section 4973(b)(1)(A) of such Code is
amended by striking ‘‘or 408(d)(3)’’ and inserting
‘‘408(d)(3), or 457(e)(16)’’.
(f) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to distributions after De-
cember 31, 2000.
(2) SPECIAL RULE.—Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of
section 1122 of the Tax Reform Act of 1986 shall
not apply to any distribution from an eligible retire-
ment plan (as defined in clause (iii) or (iv) of section
402(c)(8)(B) of the Internal Revenue Code of 1986)
on behalf of an individual if there was a rollover to
such plan on behalf of such individual which is per-
mitted solely by reason of any amendment made by
this section.
SEC. 210. PURCHASE OF SERVICE CREDIT IN GOVERN-
MENTAL DEFINED BENEFIT PLANS.
(a) 403(b) PLANS.—Subsection (b) of section 403 of
the Internal Revenue Code of 1986 is amended by adding
at the end the following new paragraph:
‘‘(13) TRUSTEE-TO-TRUSTEE
TRANSFERS
TO
PURCHASE
PERMISSIVE
SERVICE
CREDIT.—No
amount shall be includible in gross income by reason
of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section
414(d)) if such transfer is—
‘‘(A) for the purchase of permissive service
credit (as defined in section 415(n)(3)(A))
under such plan, or
‘‘(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.’’.
(b) 457 PLANS.—
(1) Subsection (e) of section 457 of such Code
is amended by adding after paragraph (16) the fol-
lowing new paragraph:
‘‘(17) TRUSTEE-TO-TRUSTEE
TRANSFERS
TO
PURCHASE
PERMISSIVE
SERVICE
CREDIT.—No
amount shall be includible in gross income by reason
of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section
414(d)) if such transfer is—
‘‘(A) for the purchase of permissive service
credit (as defined in section 415(n)(3)(A))
under such plan, or
‘‘(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.’’.
(2) Section 457(b)(2) is amended by striking
‘‘(other than rollover amounts)’’ and inserting
‘‘(other than rollover amounts and amounts received
in a transfer referred to in subsection (e)(17))’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to trustee-to-trustee transfers after
December 31, 2000.
TITLE III—ADDITIONAL
AMENDMENTS
SEC. 301. INVOLUNTARY CASH-OUTS FROM SECTION 457
PLANS PERMITTED ONLY IF DISTRIBUTION
ROLLED TO A QUALIFIED PLAN.
(a) IN GENERAL.—Section 457(e)(9) of the Internal
Revenue Code of 1986 is amended—
(1) by striking clause (i) and inserting the fol-
lowing:
‘‘(i) in any case in which such amount
exceeds $500, such amount (to the extent
the distribution of such amount is other-
wise includible in gross income) is distrib-
uted in a trustee-to-trustee transfer to a
qualified plan of such individual which is
specified by such individual.’’; and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) QUALIFIED PLAN.—For purposes of
subparagraph (A), the term ‘qualified plan’
means a plan, contract, pension, or trust de-
scribed in subparagraph (A) or (B) of section
219(g)(5).’’.
(b) 
EXCEPTION
FROM
INCOME
TAX
WITH-
HOLDING.—Paragraph (2) of section 3405(c) of such
Code is amended by inserting before the period ‘‘or if the
distribution is a trustee-to-trustee transfer described in
section 203(e) or 205(g) of the Employee Retirement In-
come Security Act of 1974 or section 457(e)(9) of this
title’’.
SEC. 302. STATUTORY EXEMPTION FROM PROHIBITED
TRANSACTION 
RULES 
FOR 
EMERGENT
TRANSACTIONS.
(a) IN GENERAL.—Section 4975 of the Internal Rev-
enue Code of 1986 (relating to tax on prohibited trans-
actions) is amended—
(1) by redesignating subsections (h) and (i) as
subsections (i) and (j), respectively; and
(2) by inserting after subsection (g) the fol-
lowing new subsection:
‘‘(h) STATUTORY EXEMPTION FROM PROHIBITED
TRANSACTION RULES FOR EMERGENT TRANSACTIONS.—
‘‘(1) IN
GENERAL.—Pursuant to regulations
issued by the Secretary of Labor, a transaction be-
tween a plan and an eligible person constituting the
purchase or sale of a financial product which is in
violation of a restriction imposed by subsection
(c)(1) may be exempted under section 408(a) of the
Employee Retirement Income Security Act of 1974
from treatment as a violation of such restriction if—
‘‘(A) prior to engaging in the transaction,
the plan acquires from the eligible person a
qualifying guarantee, consisting of a letter of
credit or other form of written guarantee,
issued by a bank or similar financial institution
(other than the eligible person requesting the
exemption or an affiliate) regulated and super-
vised by, and subject to periodic examination
by, an agency of a State or of the Federal Gov-
ernment, in a stated amount equal, as of the
close of business on the day preceding the
transaction, to not less than 100 percent of the
amount of plan assets involved in the trans-
action, plus interest on that amount at a rate
determined by the parties to the transaction, or
in the absence of such determination, an inter-
est rate equal to the underpayment rate defined
in section 6621(a)(2);
‘‘(B) the eligible person receives in such
transaction not more than reasonable com-
pensation;
‘‘(C) such transaction is expressly ap-
proved by an independent fiduciary who has in-
vestment authority with respect to the plan as-
sets involved in the transaction;
‘‘(D) within 60 days after the transaction,
the eligible person submits to the Secretary an
application for an exemption under subsection
(a) from such restriction;
‘‘(E) immediately after the acquisition of
the financial product—
‘‘(i) the fair market value of such fi-
nancial product does not exceed 1 percent
of the fair market value of the assets of
the plan, and
‘‘(ii) the aggregate fair market value
of all outstanding financial products ac-
quired by the plan from the eligible person
pursuant to this subsection does not exceed
5 percent of the fair market value of the
assets of the plan;
‘‘(F) the Secretary determines not to grant
the exemption; and
‘‘(G) the transaction is reversed within 60
days after the date of the Secretary’s deter-
mination.
‘‘(2) For purposes of this subsection—
‘‘(A) a guarantee referred to in paragraph
(1) is ‘qualifying’ if such guarantee is irrev-
ocable and, under the terms of the guarantee—
‘‘(i) if the Secretary grants the ex-
emption, the guarantee may expire without
any payments made to the plan, and
‘‘(ii) if the Secretary determines not
to grant the exemption, the plan has the
unconditional right to apply the amounts
under the guarantee to any losses suffered
and to the payment of interest determined
under paragraph (1); and
‘‘(B) the term ‘eligible person’ means a
person that—
‘‘(i) consists of—
‘‘(I) a bank as defined in section
202(a)(2) of the Investment Advisers
Act of 1940,
‘‘(II) an investment adviser reg-
istered under the Investment Advisers
Act of 1940,
‘‘(III) an insurance company
which is qualified to do business in
more than one State, or
‘‘(IV) a broker-dealer registered
under the Securities Exchange Act of
1934,
‘‘(ii) has shareholders’ or partners’ eq-
uity in excess of $1,000,000, and
‘‘(iii) is not described in section 411
of the Employee Retirement Income Secu-
rity Act of 1974.’’.
(b) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to transactions occur-
ring after December 31, 2000.
SEC. 303. LOANS FROM RETIREMENT PLANS FOR HEALTH
INSURANCE AND JOB TRAINING EXPENSES.
(a) QUALIFICATION REQUIREMENT
FOR PENSION
PLANS.—Paragraph (13) of section 401(a) of the Internal
Revenue Code of 1986 (relating to assignment and alien-
ation) is amended by adding at the end the following new
subparagraph:
‘‘(E) LOANS
FROM
RETIREMENT
PLANS
FOR HEALTH INSURANCE AND JOB TRAINING
EXPENSES.—Notwithstanding 
subparagraph
(A), a trust shall not constitute a qualified
trust under this section unless the plan of
which such trust is a part provides that a par-
ticipant or beneficiary who is involuntarily sepa-
rated from employment may, on the date of
such separation, obtain a loan from the plan
the proceeds of which are to be used within 6
months after the date of such loan—
‘‘(i) for payments for insurance which
constitutes medical care for the taxpayer
and the taxpayer’s spouse and dependents,
or
‘‘(ii) for job training expenses.
For purposes of the preceding sentence, the re-
quirements of clauses subparagraphs (B)(iv),
(v), and (vi), (C), (D), and (E) of section
408(e)(7) shall apply, and in the case of a plan
that 
is 
a 
defined 
benefit 
plan, 
section
408(e)(7)(C) shall be applied by substituting
‘accruals (other than contributions)’ for ‘inter-
ests and dividends’.’’.
(b) PROHIBITED TRANSACTION EXEMPTION.—Sec-
tion 4975(d) of such Code (relating to exemptions from
tax on prohibited transactions) is amended by striking
‘‘or’’ at the end of paragraph (14), by striking the period
at the end of paragraph (15) and inserting ‘‘; or’’, and
by inserting after paragraph (15) the following new para-
graph:
‘‘(16) any loan—
‘‘(A) from an individual retirement plan
for the payment of health insurance premiums
or job training expenses that is a qualified loan
(as defined in section 408(e)(7)(B)), or
‘‘(B) made by the plan to a disqualified
person who is a participant or beneficiary of the
plan if such loan—
‘‘(i) is for the payment of health in-
surance premiums or job training ex-
penses, and
‘‘(ii) meets the requirements of sec-
tion 401(a)(13)(E).’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to loans made after the effective
date specified in section 401.
SEC. 304. MISSING PARTICIPANTS.
(a) IN GENERAL.—Section 401(a)(34) of the Internal
Revenue Code of 1986 (relating to benefits of missing par-
ticipants on plan termination) is amended by striking
‘‘title IV’’ and inserting ‘‘section 4050’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to distributions made after 1 year
after the date of the enactment of this Act.
SEC. 305. INCOME AVERAGING OF CORRECTED CIVIL SERV-
ICE ANNUITY BENEFIT PAYMENTS.
(a) IN GENERAL.—Part I of subchapter Q of chapter
1 of the Internal Revenue Code of 1986 (relating to in-
come averaging) is amended by inserting after section
1301 the following new section:
‘‘SEC. 1302. AVERAGING OF CORRECTED CIVIL SERVICE AN-
NUITY BENEFIT PAYMENTS.
‘‘(a) IN GENERAL.—Unless the taxpayer elects not
to have this section apply for a taxable year, any corrected
civil service annuity benefit payment includable in gross
income for such taxable year (without regard to this sec-
tion) shall be so included ratably over the 5-taxable year
period beginning with such taxable year.
‘‘(b) CORRECTED CIVIL SERVICE ANNUITY BENEFIT
PAYMENT.—For purposes of subsection (a), the term ‘cor-
rected civil service annuity benefit payment’ means with
respect to an individual the sum of—
‘‘(1) the lump sum payment awarded by reason
of a court order, or decision of the Merit Systems
Protection Board, under which the individual is enti-
tled to receive an amount equal to all or any part
of an annuity not paid to the individual as a result
of an erroneous application or interpretation of sub-
chapter III of chapter 83 or chapter 84 of title 5,
United States Code, or any other provision of law
(or any rule or regulation relating thereto), plus
‘‘(2) interest on the amount described in para-
graph (1) awarded under section 7704 of title 5,
United States Code.
‘‘(c) ANNUITY.—For purposes of subsection (b), the
term ‘annuity’ has the meaning given to such term by sec-
tion 7704(c) of title 5, United States Code.
‘‘(d) FINALITY OF ELECTION.—An election under
subsection (a) with respect to a corrected civil service an-
nuity benefit payment for a taxable year may not be
changed after the due date of the return for such taxable
year.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for part I of subchapter Q of chapter 1 of such Code is
amended by inserting after the item relating to section
1301 the following new item:
‘‘Sec. 1302. Averaging of corrected civil service annuity benefit
payments.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to payments received after Decem-
ber 31, 2000.
TITLE IV—GENERAL
PROVISIONS
SEC. 401. GENERAL EFFECTIVE DATE.
(a) IN GENERAL.—Except as otherwise provided in
this Act, and subject to subsection (b), the amendments
made by this Act shall apply with respect to plan years
beginning on or after January 1, 2001.
(b) SPECIAL RULE FOR COLLECTIVELY BARGAINED
PLANS.—In the case of a plan maintained pursuant to 1
or more collective bargaining agreements between em-
ployee representatives and 1 or more employers ratified
on or before the date of the enactment of this Act, sub-
section (a) shall be applied to benefits pursuant to, and
individuals covered by, any such agreement by substituting
for ‘‘January 1, 2001’’ the date of the commencement of
the first plan year beginning on or after the earlier of—
(1) the later of—
(A) January 1, 2002, or
(B) the date on which the last of such col-
lective bargaining agreements terminates (de-
termined without regard to any extension there-
of after the date of the enactment of this Act),
or
(2) January 1, 2003.
SEC. 402. PLAN AMENDMENTS.
If any amendment made by this Act requires an
amendment to any plan, such plan amendment shall not
be required to be made before the first plan year beginning
on or after January 1, 2003, if—
(1) during the period after such amendment
made by this Act takes effect and before such first
plan year, the plan is operated in accordance with
the requirements of such amendment made by this
Act, and
(2) such plan amendment applies retroactively
to the period after such amendment made by this
Act takes effect and such first plan year.
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