122
SEC. 606. REPORTING SIMPLIFICATION.
(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
OWNERS AND THEIR SPOUSES.—
(1) IN GENERAL.—The Secretary of the Treasury
and the Secretary of Labor shall modify the require-
ments for filing annual returns with respect to one-
participant retirement plans to ensure that such
plans with assets of $250,000 or less as of the close
of the plan year need not file a return for that year.
(2) ONE-PARTICIPANT
RETIREMENT
PLAN
DE-
FINED.—For purposes of this subsection, the term
‘‘one-participant retirement plan’’ means a retire-
ment plan that—
(A) on the first day of the plan year—
(i) covered only the employer (and the
employer’s spouse) and the employer owned
the entire business (whether or not incor-
porated); or
(ii) covered only one or more partners
(and their spouses) in a business partner-
ship (including partners in an S or C cor-
poration);
(B) meets the minimum coverage require-
ments of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any
123
other plan of the business that covers the employ-
ees of the business;
(C) does not provide benefits to anyone ex-
cept the employer (and the employer’s spouse) or
the partners (and their spouses);
(D) does not cover a business that is a
member of an affiliated service group, a con-
trolled group of corporations, or a group of busi-
nesses under common control; and
(E) does not cover a business that leases em-
ployees.
(3) OTHER DEFINITIONS.—Terms used in para-
graph (2) which are also used in section 414 of the
Internal Revenue Code of 1986 shall have the respec-
tive meanings given such terms by such section.
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
PLANS WITH FEWER THAN 25 EMPLOYEES.—In the case
of plan years beginning after December 31, 2002, the Sec-
retary of the Treasury and the Secretary of Labor shall pro-
vide for the filing of a simplified annual return for any
retirement plan which covers less than 25 employees on the
first day of a plan year and which meets the requirements
described in subparagraphs (B), (D), and (E) of subsection
(a)(2).
124
(c) EFFECTIVE DATE.—The provisions of this section
shall take effect on January 1, 2002.
SEC. 607. IMPROVEMENT OF EMPLOYEE PLANS COMPLI-
ANCE RESOLUTION SYSTEM.
The Secretary of the Treasury shall continue to update
and improve the Employee Plans Compliance Resolution
System (or any successor program) giving special attention
to—
(1) increasing the awareness and knowledge of
small employers concerning the availability and use
of the program;
(2) taking into account special concerns and cir-
cumstances that small employers face with respect to
compliance and correction of compliance failures;
(3) extending the duration of the self-correction
period under the Self-Correction Program for signifi-
cant compliance failures;
(4) expanding the availability to correct insig-
nificant compliance failures under the Self-Correction
Program during audit; and
(5) assuring that any tax, penalty, or sanction
that is imposed by reason of a compliance failure is
not excessive and bears a reasonable relationship to
the nature, extent, and severity of the failure.
125
SEC. 608. REPEAL OF THE MULTIPLE USE TEST.
(a) IN GENERAL.—Paragraph (9) of section 401(m) is
amended to read as follows:
‘‘(9) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection and subsection (k),
including regulations permitting appropriate aggre-
gation of plans and contributions.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to years beginning after December 31,
2001.
SEC. 
609. 
FLEXIBILITY 
IN 
NONDISCRIMINATION, 
COV-
ERAGE, AND LINE OF BUSINESS RULES.
(a) NONDISCRIMINATION.—
(1) IN GENERAL.—The Secretary of the Treasury
shall, by regulation, provide that a plan shall be
deemed to satisfy the requirements of section
401(a)(4) of the Internal Revenue Code of 1986 if
such plan satisfies the facts and circumstances test
under section 401(a)(4) of such Code, as in effect be-
fore January 1, 1994, but only if—
(A) the plan satisfies conditions prescribed
by the Secretary to appropriately limit the
availability of such test; and
126
(B) the plan is submitted to the Secretary
for a determination of whether it satisfies such
test.
Subparagraph (B) shall only apply to the extent pro-
vided by the Secretary.
(2) EFFECTIVE DATES.—
(A) REGULATIONS.—The regulation re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2003.
(B) CONDITIONS
OF
AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under paragraph (1)(A) shall not apply
before the first year beginning not less than 120
days after the date on which such condition is
prescribed.
(b) COVERAGE TEST.—
(1) IN GENERAL.—Section 410(b)(1) (relating to
minimum coverage requirements) is amended by add-
ing at the end the following:
‘‘(D) In the case that the plan fails to meet
the requirements of subparagraphs (A), (B) and
(C), the plan—
‘‘(i) satisfies subparagraph (B), as in
effect immediately before the enactment of
the Tax Reform Act of 1986,
127
‘‘(ii) is submitted to the Secretary for
a determination of whether it satisfies the
requirement described in clause (i), and
‘‘(iii) satisfies conditions prescribed by
the Secretary by regulation that appro-
priately limit the availability of this sub-
paragraph.
Clause (ii) shall apply only to the extent pro-
vided by the Secretary.’’.
(2) EFFECTIVE DATES.—
(A) IN
GENERAL.—The amendment made
by paragraph (1) shall apply to years beginning
after December 31, 2003.
(B) CONDITIONS
OF
AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under regulations prescribed by the Sec-
retary under section 410(b)(1)(D) of the Internal
Revenue Code of 1986 shall not apply before the
first year beginning not less than 120 days after
the date on which such condition is prescribed.
(c) LINE OF BUSINESS RULES.—The Secretary of the
Treasury shall, on or before December 31, 2003, modify the
existing regulations issued under section 414(r) of the Inter-
nal Revenue Code of 1986 in order to expand (to the extent
that the Secretary determines appropriate) the ability of
128
a pension plan to demonstrate compliance with the line of
business requirements based upon the facts and cir-
cumstances surrounding the design and operation of the
plan, even though the plan is unable to satisfy the mechan-
ical tests currently used to determine compliance.
SEC. 610. EXTENSION TO ALL GOVERNMENTAL PLANS OF
MORATORIUM ON APPLICATION OF CERTAIN
NONDISCRIMINATION RULES APPLICABLE TO
STATE AND LOCAL PLANS.
(a) IN GENERAL.—
(1) Subparagraph (G) of section 401(a)(5) of the
Internal Revenue Code of 1986 and subparagraph
(H) of section 401(a)(26) are each amended by strik-
ing ‘‘section 414(d))’’ and all that follows and insert-
ing ‘‘section 414(d)).’’.
(2) Subparagraph (G) of section 401(k)(3) and
paragraph (2) of section 1505(d) of the Taxpayer Re-
lief Act of 1997 are each amended by striking ‘‘main-
tained by a State or local government or political
subdivision thereof (or agency or instrumentality
thereof)’’.
(b) CONFORMING AMENDMENTS.—
(1) The heading for subparagraph (G) of section
401(a)(5) is amended to read as follows: ‘‘GOVERN-
MENTAL PLANS.—’’.
129
(2) The heading for subparagraph (H) of section
401(a)(26) is amended to read as follows: ‘‘EXCEP-
TION FOR GOVERNMENTAL PLANS.—’’.
(3) Subparagraph (G) of section 401(k)(3) is
amended by inserting ‘‘GOVERNMENTAL
PLANS.—’’
after ‘‘(G)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to years beginning after December 31,
2001.
SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DIS-
TRIBUTIONS.
(a) EXPANSION OF PERIOD.—
(1) 
AMENDMENT
OF
INTERNAL
REVENUE
CODE.—
(A) IN
GENERAL.—Subparagraph (A) of
section 417(a)(6) is amended by striking ‘‘90-
day’’ and inserting ‘‘180-day’’.
(B) MODIFICATION OF REGULATIONS.—The
Secretary of the Treasury shall modify the regu-
lations under sections 402(f), 411(a)(11), and
417 of the Internal Revenue Code of 1986 to sub-
stitute ‘‘180 days’’ for ‘‘90 days’’ each place it
appears 
in 
Treasury 
Regulations 
sections
1.402(f)–1, 1.411(a)–11(c), and 1.417(e)–1(b).
130
(2) 
AMENDMENT
OF
ERISA.—Section
205(c)(7)(A) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1055(c)(7)(A)) is
amended by striking ‘‘90-day’’ and inserting ‘‘180-
day’’.
(3) EFFECTIVE DATE.—The amendments made
by paragraph (1)(A) and (2) and the modifications
required by paragraph (1)(B) shall apply to years be-
ginning after December 31, 2001.
(b) CONSENT REGULATION INAPPLICABLE TO CERTAIN
DISTRIBUTIONS.—
(1) IN GENERAL.—The Secretary of the Treasury
shall modify the regulations under section 411(a)(11)
of the Internal Revenue Code of 1986 to provide that
the description of a participant’s right, if any, to
defer receipt of a distribution shall also describe the
consequences of failing to defer such receipt.
(2) EFFECTIVE
DATE.—The modifications re-
quired by paragraph (1) shall apply to years begin-
ning after December 31, 2001.
SEC. 612. ANNUAL REPORT DISSEMINATION.
(a) REPORT
AVAILABLE
THROUGH
ELECTRONIC
MEANS.—Section 104(b)(3) of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1024(b)(3)) is amend-
ed by adding at the end the following new sentence: ‘‘The
131
requirement to furnish information under the previous sen-
tence shall be satisfied if the administrator makes such in-
formation reasonably available through electronic means or
other new technology.’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to reports for years beginning after De-
cember 31, 2000.
SEC. 613. TECHNICAL CORRECTIONS TO SAVER ACT.
Section 517 of the Employee Retirement Income Secu-
rity Act of 1974 (29 U.S.C. 1147) is amended—
(1) in subsection (a), by striking ‘‘2001 and
2005 on or after September 1 of each year involved’’
and inserting ‘‘2001, 2005, and 2009 in the month of
September of each year involved’’;
(2) in subsection (b), by adding at the end the
following new sentence: ‘‘To effectuate the purposes of
this paragraph, the Secretary may enter into a coop-
erative agreement, pursuant to the Federal Grant and
Cooperative Agreement Act of 1977 (31 U.S.C. 6301
et seq.), with the American Savings Education Coun-
cil.’’;
(3) in subsection (e)(2)—
(A) by striking ‘‘Committee on Labor and
Human Resources’’ in subparagraph (D) and in-
132
serting 
‘‘Committee 
on 
Health, 
Education,
Labor, and Pensions’’;
(B) by striking subparagraph (F) and in-
serting the following:
‘‘(F) the Chairman and Ranking Member of
the Subcommittee on Labor, Health and Human
Services, and Education of the Committee on
Appropriations of the House of Representatives
and the Chairman and Ranking Member of the
Subcommittee on Labor, Health and Human
Services, and Education of the Committee on
Appropriations of the Senate;’’;
(C) by redesignating subparagraph (G) as
subparagraph (J); and
(D) by inserting after subparagraph (F) the
following new subparagraphs:
‘‘(G) the Chairman and Ranking Member of
the Committee on Finance of the Senate;
‘‘(H) the Chairman and Ranking Member
of the Committee on Ways and Means of the
House of Representatives;
‘‘(I) the Chairman and Ranking Member of
the Subcommittee on Employer-Employee Rela-
tions of the Committee on Education and the
Workforce of the House of Representatives; and’’;
133
(4) in subsection (e)(3)(A)—
(A) by striking ‘‘There shall be no more
than 200 additional participants.’’ and inserting
‘‘The participants in the National Summit shall
also include additional participants appointed
under this subparagraph.’’;
(B) by striking ‘‘one-half shall be appointed
by the President,’’ in clause (i) and inserting
‘‘not more than 100 participants shall be ap-
pointed under this clause by the President,’’, and
by striking ‘‘and’’ at the end of clause (i);
(C) by striking ‘‘one-half shall be appointed
by the elected leaders of Congress’’ in clause (ii)
and inserting ‘‘not more than 100 participants
shall be appointed under this clause by the elect-
ed leaders of Congress’’, and by striking the pe-
riod at the end of clause (ii) and inserting ‘‘;
and’’;
(D) by adding at the end the following new
clause:
‘‘(iii) The President, in consultation
with the elected leaders of Congress referred
to in subsection (a), may appoint under
this clause additional participants to the
National Summit. The number of such ad-
134
ditional participants appointed under this
clause may not exceed the lesser of 3 percent
of the total number of all additional par-
ticipants appointed under this paragraph,
or 10. Such additional participants shall be
appointed from persons nominated by the
organization referred to in subsection (b)(2)
which is made up of private sector busi-
nesses and associations partnered with Gov-
ernment entities to promote long term fi-
nancial security in retirement through sav-
ings and with which the Secretary is re-
quired thereunder to consult and cooperate
and shall not be Federal, State, or local gov-
ernment employees.’’;
(5) in subsection (e)(3)(B), by striking ‘‘January
31, 1998’’ in subparagraph (B) and inserting ‘‘May
1, 2001, May 1, 2005, and May 1, 2009, for each of
the subsequent summits, respectively’’;
(6) in subsection (f)(1)(C), by inserting ‘‘, no
later than 90 days prior to the date of the commence-
ment of the National Summit,’’ after ‘‘comment’’ in
paragraph (1)(C);
135
(7) in subsection (g), by inserting ‘‘, in consulta-
tion with the congressional leaders specified in sub-
section (e)(2),’’ after ‘‘report’’;
(8) in subsection (i)—
(A) by striking ‘‘beginning on or after Octo-
ber 1, 1997’’ in paragraph (1) and inserting
‘‘2001, 2005, and 2009’’; and
(B) by adding at the end the following new
paragraph:
‘‘(3) RECEPTION AND REPRESENTATION AUTHOR-
ITY.—The Secretary is hereby granted reception and
representation authority limited specifically to the
events at the National Summit. The Secretary shall
use any private contributions accepted in connection
with the National Summit prior to using funds ap-
propriated for purposes of the National Summit pur-
suant to this paragraph.’’; and
(9) in subsection (k)—
(A) by striking ‘‘shall enter into a contract
on a sole-source basis’’ and inserting ‘‘may enter
into a contract on a sole-source basis’’; and
(B) by striking ‘‘fiscal year 1998’’ and in-
serting ‘‘fiscal years 2001, 2005, and 2009’’.
136
TITLE VII—OTHER ERISA
PROVISIONS
SEC. 701. MISSING PARTICIPANTS.
(a) IN GENERAL.—Section 4050 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1350) is
amended by redesignating subsection (c) as subsection (e)
and by inserting after subsection (b) the following new sub-
sections:
‘‘(c) MULTIEMPLOYER PLANS.—The corporation shall
prescribe rules similar to the rules in subsection (a) for mul-
tiemployer plans covered by this title that terminate under
section 4041A.
‘‘(d) PLANS NOT OTHERWISE SUBJECT TO TITLE.—
‘‘(1) TRANSFER TO CORPORATION.—The plan ad-
ministrator of a plan described in paragraph (4) may
elect to transfer a missing participant’s benefits to the
corporation upon termination of the plan.
‘‘(2) INFORMATION TO THE CORPORATION.—To
the extent provided in regulations, the plan adminis-
trator of a plan described in paragraph (4) shall,
upon termination of the plan, provide the corporation
information with respect to benefits of a missing par-
ticipant if the plan transfers such benefits—
‘‘(A) to the corporation, or
137
‘‘(B) to an entity other than the corporation
or a plan described in paragraph (4)(B)(ii).
‘‘(3) PAYMENT BY THE CORPORATION.—If bene-
fits of a missing participant were transferred to the
corporation under paragraph (1), the corporation
shall, upon location of the participant or beneficiary,
pay to the participant or beneficiary the amount
transferred (or the appropriate survivor benefit)
either—
‘‘(A) in a single sum (plus interest), or
‘‘(B) in such other form as is specified in
regulations of the corporation.
‘‘(4) PLANS DESCRIBED.—A plan is described in
this paragraph if—
‘‘(A) the plan is a pension plan (within the
meaning of section 3(2))—
‘‘(i) to which the provisions of this sec-
tion do not apply (without regard to this
subsection), and
‘‘(ii) which is not a plan described in
paragraphs (2) through (11) of section
4021(b), and
‘‘(B) at the time the assets are to be distrib-
uted upon termination, the plan—
‘‘(i) has missing participants, and
138
‘‘(ii) has not provided for the transfer
of assets to pay the benefits of all missing
participants to another pension plan (with-
in the meaning of section 3(2)).
‘‘(5) CERTAIN PROVISIONS NOT TO APPLY.—Sub-
sections (a)(1) and (a)(3) shall not apply to a plan
described in paragraph (4).’’.
(b) EFFECTIVE DATE.—The amendment made by this
section shall apply to distributions made after final regula-
tions implementing subsections (c) and (d) of section 4050
of the Employee Retirement Income Security Act of 1974
(as added by subsection (a)), respectively, are prescribed.
SEC. 702. REDUCED PBGC PREMIUM FOR NEW PLANS OF
SMALL EMPLOYERS.
(a) IN
GENERAL.—Subparagraph (A) of section
4006(a)(3) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended—
(1) in clause (i), by inserting ‘‘other than a new
single-employer plan (as defined in subparagraph
(F)) maintained by a small employer (as so de-
fined),’’ after ‘‘single-employer plan,’’,
(2) in clause (iii), by striking the period at the
end and inserting ‘‘, and’’, and
(3) by adding at the end the following new
clause:
139
‘‘(iv) in the case of a new single-employer plan
(as defined in subparagraph (F)) maintained by a
small employer (as so defined) for the plan year, $5
for each individual who is a participant in such plan
during the plan year.’’.
(b) DEFINITION OF NEW SINGLE-EMPLOYER PLAN.—
Section 4006(a)(3) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1306(a)(3)) is amended by
adding at the end the following new subparagraph:
‘‘(F)(i) For purposes of this paragraph, a single-em-
ployer plan maintained by a contributing sponsor shall be
treated as a new single-employer plan for each of its first
5 plan years if, during the 36-month period ending on the
date of the adoption of such plan, the sponsor or any mem-
ber of such sponsor’s controlled group (or any predecessor
of either) did not establish or maintain a plan to which
this title applies with respect to which benefits were accrued
for substantially the same employees as are in the new sin-
gle-employer plan.
‘‘(ii)(I) For purposes of this paragraph, the term
‘small employer’ means an employer which on the first day
of any plan year has, in aggregation with all members of
the controlled group of such employer, 100 or fewer employ-
ees.
140
‘‘(II) In the case of a plan maintained by two or more
contributing sponsors that are not part of the same con-
trolled group, the employees of all contributing sponsors and
controlled groups of such sponsors shall be aggregated for
purposes of determining whether any contributing sponsor
is a small employer.’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to plans established after December 31,
2001.
SEC. 703. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR
NEW AND SMALL PLANS.
(a) NEW
PLANS.—Subparagraph (E) of section
4006(a)(3) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is amended by add-
ing at the end the following new clause:
‘‘(v) In the case of a new defined benefit plan, the
amount determined under clause (ii) for any plan year
shall be an amount equal to the product of the amount de-
termined under clause (ii) and the applicable percentage.
For purposes of this clause, the term ‘applicable percentage’
means—
‘‘(I) 0 percent, for the first plan year.
‘‘(II) 20 percent, for the second plan year.
‘‘(III) 40 percent, for the third plan year.
‘‘(IV) 60 percent, for the fourth plan year.
141
‘‘(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as de-
fined in section 3(35)) maintained by a contributing spon-
sor shall be treated as a new defined benefit plan for each
of its first 5 plan years if, during the 36-month period end-
ing on the date of the adoption of the plan, the sponsor
and each member of any controlled group including the
sponsor (or any predecessor of either) did not establish or
maintain a plan to which this title applies with respect
to which benefits were accrued for substantially the same
employees as are in the new plan.’’.
(b) SMALL PLANS.—Paragraph (3) of section 4006(a)
of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1306(a)), as amended by section 702(b), is
amended—
(1) by striking ‘‘The’’ in subparagraph (E)(i)
and inserting ‘‘Except as provided in subparagraph
(G), the’’, and
(2) by inserting after subparagraph (F) the fol-
lowing new subparagraph:
‘‘(G)(i) In the case of an employer who has 25 or fewer
employees on the first day of the plan year, the additional
premium determined under subparagraph (E) for each par-
ticipant shall not exceed $5 multiplied by the number of
142
participants in the plan as of the close of the preceding plan
year.
‘‘(ii) For purposes of clause (i), whether an employer
has 25 or fewer employees on the first day of the plan year
is determined taking into consideration all of the employees
of all members of the contributing sponsor’s controlled
group. In the case of a plan maintained by two or more
contributing sponsors, the employees of all contributing
sponsors and their controlled groups shall be aggregated for
purposes of determining whether the 25-or-fewer-employees
limitation has been satisfied.’’.
(c) EFFECTIVE DATES.—
(1) SUBSECTION (a).—The amendments made by
subsection (a) shall apply to plans established after
December 31, 2001.
(2) SUBSECTION (b).—The amendments made by
subsection (b) shall apply to plan years beginning
after December 31, 2001.
SEC. 704. AUTHORIZATION FOR PBGC TO PAY INTEREST ON
PREMIUM OVERPAYMENT REFUNDS.
(a) IN GENERAL.—Section 4007(b) of the Employment
Retirement Income Security Act of 1974 (29 U.S.C.
1307(b)) is amended—
(1) by striking ‘‘(b)’’ and inserting ‘‘(b)(1)’’, and
143
(2) by inserting at the end the following new
paragraph:
‘‘(2) The corporation is authorized to pay, subject to
regulations prescribed by the corporation, interest on the
amount of any overpayment of premium refunded to a des-
ignated payor. Interest under this paragraph shall be cal-
culated at the same rate and in the same manner as interest
is calculated for underpayments under paragraph (1).’’.
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall apply to interest accruing for periods be-
ginning not earlier than the date of the enactment of this
Act.
SEC. 705. SUBSTANTIAL OWNER BENEFITS IN TERMINATED
PLANS.
(a) MODIFICATION OF PHASE-IN OF GUARANTEE.—
Section 4022(b)(5) of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1322(b)(5)) is amended to
read as follows:
‘‘(5)(A) For purposes of this paragraph, the term ‘ma-
jority owner’ means an individual who, at any time during
the 60-month period ending on the date the determination
is being made—
‘‘(i) owns the entire interest in an unincor-
porated trade or business,
144
‘‘(ii) in the case of a partnership, is a partner
who owns, directly or indirectly, 50 percent or more
of either the capital interest or the profits interest in
such partnership, or
‘‘(iii) in the case of a corporation, owns, directly
or indirectly, 50 percent or more in value of either the
voting stock of that corporation or all the stock of that
corporation.
For purposes of clause (iii), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of
1986 shall apply (determined without regard to section
1563(e)(3)(C)).
‘‘(B) In the case of a participant who is a majority
owner, the amount of benefits guaranteed under this section
shall equal the product of—
‘‘(i) a fraction (not to exceed 1) the numerator
of which is the number of years from the later of the
effective date or the adoption date of the plan to the
termination date, and the denominator of which is
10, and
‘‘(ii) the amount of benefits that would be guar-
anteed under this section if the participant were not
a majority owner.’’.
(b) MODIFICATION OF ALLOCATION OF ASSETS.—
145
(1) Section 4044(a)(4)(B) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C.
1344(a)(4)(B)) is amended by striking ‘‘section
4022(b)(5)’’ and inserting ‘‘section 4022(b)(5)(B)’’.
(2) Section 4044(b) of such Act (29 U.S.C.
1344(b)) is amended—
(A) by striking ‘‘(5)’’ in paragraph (2) and
inserting ‘‘(4), (5),’’, and
(B) 
by 
redesignating 
paragraphs 
(3)
through (6) as paragraphs (4) through (7), re-
spectively, and by inserting after paragraph (2)
the following new paragraph:
‘‘(3) If assets available for allocation under
paragraph (4) of subsection (a) are insufficient to sat-
isfy in full the benefits of all individuals who are de-
scribed in that paragraph, the assets shall be allocated
first to benefits described in subparagraph (A) of that
paragraph. Any remaining assets shall then be allo-
cated to benefits described in subparagraph (B) of
that paragraph. If assets allocated to such subpara-
graph (B) are insufficient to satisfy in full the bene-
fits described in that subparagraph, the assets shall be
allocated pro rata among individuals on the basis of
the present value (as of the termination date) of their
respective benefits described in that subparagraph.’’.
146
(c) CONFORMING AMENDMENTS.—
(1) Section 4021 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1321) is
amended—
(A) in subsection (b)(9), by striking ‘‘as de-
fined in section 4022(b)(6)’’, and
(B) by adding at the end the following new
subsection:
‘‘(d) For purposes of subsection (b)(9), the term ‘sub-
stantial owner’ means an individual who, at any time dur-
ing the 60-month period ending on the date the determina-
tion is being made—
‘‘(1) owns the entire interest in an unincor-
porated trade or business,
‘‘(2) in the case of a partnership, is a partner
who owns, directly or indirectly, more than 10 per-
cent of either the capital interest or the profits inter-
est in such partnership, or
‘‘(3) in the case of a corporation, owns, directly
or indirectly, more than 10 percent in value of either
the voting stock of that corporation or all the stock of
that corporation.
For purposes of paragraph (3), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of
147
1986 shall apply (determined without regard to section
1563(e)(3)(C)).’’.
(2) Section 4043(c)(7) of such Act (29 U.S.C.
1343(c)(7)) is amended by striking ‘‘section 4022(b)(6)’’
and inserting ‘‘section 4021(d)’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section shall
apply to plan terminations—
(A) under section 4041(c) of the Employee
Retirement Income Security Act of 1974 (29
U.S.C. 1341(c)) with respect to which notices of
intent to terminate are provided under section
4041(a)(2) of such Act (29 U.S.C. 1341(a)(2))
after December 31, 2001, and
(B) under section 4042 of such Act (29
U.S.C. 1342) with respect to which proceedings
are instituted by the corporation after such date.
(2) CONFORMING
AMENDMENTS.—The amend-
ments made by subsection (c) shall take effect on Jan-
uary 1, 2002.
SEC. 706. CIVIL PENALTIES FOR BREACH OF FIDUCIARY RE-
SPONSIBILITY.
(a) IMPOSITION AND AMOUNT OF PENALTY MADE DIS-
CRETIONARY.—Section 502(l)(1) of the Employee Retire-
148
ment Income Security Act of 1974 (29 U.S.C. 1132(l)(1))
is amended—
(1) by striking ‘‘shall’’ and inserting ‘‘may’’,
and
(2) by striking ‘‘equal to’’ and inserting ‘‘not
greater than’’.
(b) 
APPLICABLE
RECOVERY
AMOUNT.—Section
502(l)(2) of such Act (29 U.S.C. 1132(l)(2)) is amended to
read as follows:
‘‘(2) For purposes of paragraph (1), the term ‘applica-
ble recovery amount’ means any amount which is recovered
from any fiduciary or other person (or from any other per-
son on behalf of any such fiduciary or other person) with
respect to a breach or violation described in paragraph (1)
on or after the 30th day following receipt by such fiduciary
or other person of written notice from the Secretary of the
violation, whether paid voluntarily or by order of a court
in a judicial proceeding instituted by the Secretary under
subsection (a)(2) or (a)(5). The Secretary may, in the Sec-
retary’s sole discretion, extend the 30-day period described
in the preceding sentence.’’.
(c) OTHER RULES.—Section 502(l) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1132(l)) is amended by adding at the end the following new
paragraph:
149
‘‘(5) A person shall be jointly and severally liable for
the penalty described in paragraph (1) to the same extent
that such person is jointly and severally liable for the appli-
cable recovery amount on which the penalty is based.
‘‘(6) No penalty shall be assessed under this subsection
unless the person against whom the penalty is assessed is
given notice and opportunity for a hearing with respect to
the violation and applicable recovery amount.’’.
(d) EFFECTIVE DATES.—
(1) IN
GENERAL.—The amendments made by
this section shall apply to any breach of fiduciary re-
sponsibility or other violation of part 4 of subtitle B
of title I of the Employee Retirement Income Security
Act of 1974 occurring on or after the date of enact-
ment of this Act.
(2) TRANSITION RULE.—In applying the amend-
ment made by subsection (b) (relating to applicable
recovery amount), a breach or other violation occur-
ring before the date of enactment of this Act which
continues after the 180th day after such date (and
which may have been discontinued at any time dur-
ing its existence) shall be treated as having occurred
after such date of enactment.
150
SEC. 707. BENEFIT SUSPENSION NOTICE.
(a) MODIFICATION OF REGULATION.—The Secretary of
Labor 
shall 
modify 
the 
regulation 
under 
section
203(a)(3)(B) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to provide that the
notification required by such regulation—
(1) in the case of an employee who returns to
work for a former employer after commencement of
payment of benefits under the plan shall—
(A) be made during the first calendar
month or payroll period in which the plan with-
holds payments, and
(B) if a reduced rate of future benefit accru-
als will apply to the returning employee (as of
the first date of participation in the plan by the
employee after returning to work), include a
statement that the rate of future benefit accruals
will be reduced, and
(2) in the case of any employee who is not de-
scribed in paragraph (1)—
(A) may be included in the summary plan
description for the plan furnished in accordance
with section 104(b) of such Act (29 U.S.C.
1024(b)), rather than in a separate notice, and
(B) need not include a copy of the relevant
plan provisions.
151
(b) EFFECTIVE DATE.—The modification made under
this section shall apply to plan years beginning after De-
cember 31, 2001.
TITLE VIII—PLAN AMENDMENTS
SEC. 801. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) IN GENERAL.—If this section applies to any plan
or contract amendment—
(1) such plan or contract shall be treated as
being operated in accordance with the terms of the
plan during the period described in subsection
(b)(2)(A); and
(2) except as provided by the Secretary of the
Treasury, such plan shall not fail to meet the require-
ments of section 411(d)(6) of the Internal Revenue
Code of 1986 or section 204(g) of the Employee Re-
tirement Income Security Act of 1974 by reason of
such amendment.
(b) AMENDMENTS TO WHICH SECTION APPLIES.—
(1) IN GENERAL.—This section shall apply to
any amendment to any plan or annuity contract
which is made—
(A) pursuant to any amendment made by
this Act, or pursuant to any regulation issued
under this Act; and
152
(B) on or before the last day of the first
plan year beginning on or after January 1,
2004.
In the case of a governmental plan (as defined in sec-
tion 414(d) of the Internal Revenue Code of 1986),
this paragraph shall be applied by substituting
‘‘2006’’ for ‘‘2004’’.
(2) CONDITIONS.—This section shall not apply to
any amendment unless—
(A) during the period—
(i) beginning on the date the legislative
or regulatory amendment described in para-
graph (1)(A) takes effect (or in the case of
a plan or contract amendment not required
by such legislative or regulatory amend-
ment, the effective date specified by the
plan); and
(ii) ending on the date described in
paragraph (1)(B) (or, if earlier, the date the
plan or contract amendment is adopted),
the plan or contract is operated as if such plan
or contract amendment were in effect; and
(B) such plan or contract amendment ap-
plies retroactively for such period.
153
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CON-
TENTS.
(a) SHORT TITLE.—This Act may be cited as
the ‘‘Comprehensive Retirement Security and
Pension Reform Act of 2001’’.
(b) AMENDMENT OF 1986 CODE.—Except as
otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed
in terms of an amendment to, or repeal of, a
section or other provision, the reference shall
be considered to be made to a section or other
provision of the Internal Revenue Code of
1986.
(c) TABLE OF CONTENTS.—The table of con-
tents of this Act is as follows:
Sec. 1. Short title; references; table of contents.
TITLE I—INDIVIDUAL RETIREMENT ACCOUNT
PROVISIONS
Sec. 101. Modification of IRA contribution limits.
TITLE II—EXPANDING COVERAGE
Sec. 201. Increase in benefit and contribution limits.
Sec. 202. Plan loans for subchapter S owners, partners, and
sole proprietors.
Sec. 203. Modification of top-heavy rules.
Sec. 204. Elective deferrals not taken into account for pur-
poses of deduction limits.
Sec. 205. Repeal of coordination requirements for deferred
compensation plans of State and local govern-
ments and tax-exempt organizations.
Sec. 206. Elimination of user fee for requests to IRS regarding
pension plans.
Sec. 207. Deduction limits.
Sec. 208. Option to treat elective deferrals as after-tax con-
tributions.
154
TITLE III—ENHANCING FAIRNESS FOR WOMEN
Sec. 301. Catch-up contributions for individuals age 50 or over.
Sec. 302. Equitable treatment for contributions of employees to
defined contribution plans.
Sec. 303. Faster vesting of certain employer matching con-
tributions.
Sec. 304. Simplify and update the minimum distribution rules.
Sec. 305. Clarification of tax treatment of division of section
457 plan benefits upon divorce.
Sec. 306. Modification of safe harbor relief for hardship with-
drawals from cash or deferred arrangements.
TITLE IV—INCREASING PORTABILITY FOR PARTICIPANTS
Sec. 401. Rollovers allowed among various types of plans.
Sec. 402. Rollovers of IRAs into workplace retirement plans.
Sec. 403. Rollovers of after-tax contributions.
Sec. 404. Hardship exception to 60-day rule.
Sec. 405. Treatment of forms of distribution.
Sec. 406. Rationalization of restrictions on distributions.
Sec. 407. Purchase of service credit in governmental defined
benefit plans.
Sec. 408. Employers may disregard rollovers for purposes of
cash-out amounts.
Sec. 409. Minimum distribution and inclusion requirements for
section 457 plans.
TITLE V—STRENGTHENING PENSION SECURITY AND
ENFORCEMENT
Sec. 501. Repeal of percent of current liability funding limit.
Sec. 502. Maximum contribution deduction rules modified and
applied to all defined benefit plans.
Sec. 503. Excise tax relief for sound pension funding.
Sec. 504. Excise tax on failure to provide notice by defined
benefit plans significantly reducing future benefit
accruals.
Sec. 505. Treatment of multiemployer plans under section 415.
Sec. 506. Protection of investment of employee contributions
to 401(k) plans.
Sec. 507. Periodic pension benefits statements.
Sec. 508. Prohibited allocations of stock in S corporation
ESOP.
TITLE VI—REDUCING REGULATORY BURDENS
Sec. 601. Modification of timing of plan valuations.
Sec. 602. ESOP dividends may be reinvested without loss of
dividend deduction.
Sec. 603. Repeal of transition rule relating to certain highly
compensated employees.
Sec. 604. Employees of tax-exempt entities.
Sec. 605. Clarification of treatment of employer-provided re-
tirement advice.
Sec. 606. Reporting simplification.
155
Sec. 607. Improvement of employee plans compliance resolu-
tion system.
Sec. 608. Repeal of the multiple use test.
Sec. 609. Flexibility in nondiscrimination, coverage, and line of
business rules.
Sec. 610. Extension to all governmental plans of moratorium
on application of certain nondiscrimination rules
applicable to State and local plans.
Sec. 611. Notice and consent period regarding distributions.
Sec. 612. Annual report dissemination.
Sec. 613. Technical corrections to SAVER Act.
TITLE VII—OTHER ERISA PROVISIONS
Sec. 701. Missing participants.
Sec. 702. Reduced PBGC premium for new plans of small em-
ployers.
Sec. 703. Reduction of additional PBGC premium for new and
small plans.
Sec. 704. Authorization for PBGC to pay interest on premium
overpayment refunds.
Sec. 705. Substantial owner benefits in terminated plans.
Sec. 706. Civil penalties for breach of fiduciary responsibility.
Sec. 707. Benefit suspension notice.
Sec. 708. Studies.
TITLE VIII—PLAN AMENDMENTS
Sec. 801. Provisions relating to plan amendments.
TITLE I—INDIVIDUAL
RETIREMENT ACCOUNTS
SEC. 101. MODIFICATION OF IRA CONTRIBUTION LIMITS.
(a) INCREASE IN CONTRIBUTION LIMIT.—
(1) IN GENERAL.—Paragraph (1)(A) of
section 
219(b) 
(relating 
to 
maximum
amount of deduction) is amended by
striking ‘‘$2,000’’ and inserting ‘‘the de-
ductible amount’’.
(2) 
DEDUCTIBLE
AMOUNT.—Section
219(b) is amended by adding at the end
the following new paragraph:
156
‘‘(5) DEDUCTIBLE
AMOUNT.—For pur-
poses of paragraph (1)(A)—
‘‘(A) IN GENERAL.—The deductible
amount shall be determined in ac-
cordance with the following table:
‘‘For taxable years
The deductible
beginning in:
amount is:
2001 .......................................................................
$3,000
2002 .......................................................................
$4,000
2003 and thereafter ...........................................
$5,000.
‘‘(B) CATCH-UP CONTRIBUTIONS FOR
INDIVIDUALS 50 OR OLDER.—In the case
of an individual who has attained the
age of 50 before the close of the tax-
able year, the deductible amount for
taxable years beginning in 2001 or
2002 shall be $5,000.
‘‘(C) COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN
GENERAL.—In the case
of any taxable year beginning in a
calendar year after 2003, the
$5,000 amount under subpara-
graph (A) shall be increased by an
amount equal to—
‘‘(I) such dollar amount,
multiplied by
‘‘(II) the cost-of-living ad-
justment 
determined 
under
157
section 1(f )(3) for the cal-
endar year in which the tax-
able year begins, determined
by substituting ‘calendar year
2002’ for ‘calendar year 1992’
in subparagraph (B) thereof.
‘‘(ii) ROUNDING RULES.—If any
amount after adjustment under
clause (i) is not a multiple of $500,
such amount shall be rounded to
the next lower multiple of $500.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 408(a)(1) is amended by
striking ‘‘in excess of $2,000 on behalf of
any individual’’ and inserting ‘‘on behalf
of any individual in excess of the amount
in effect for such taxable year under sec-
tion 219(b)(1)(A)’’.
(2) Section 408(b)(2)(B) is amended by
striking ‘‘$2,000’’ and inserting ‘‘the dollar
amount 
in 
effect 
under 
section
219(b)(1)(A)’’.
(3) Section 408(b) is amended by
striking ‘‘$2,000’’ in the matter following
paragraph (4) and inserting ‘‘the dollar
158
amount 
in 
effect 
under 
section
219(b)(1)(A)’’.
(4) Section 408( j) is amended by strik-
ing ‘‘$2,000’’.
(5) Section 408(p)(8) is amended by
striking ‘‘$2,000’’ and inserting ‘‘the dollar
amount 
in 
effect 
under 
section
219(b)(1)(A)’’.
(c) EFFECTIVE
DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 2000.
TITLE II—EXPANDING
COVERAGE
SEC. 201. INCREASE IN BENEFIT AND CONTRIBUTION LIM-
ITS.
(a) DEFINED BENEFIT PLANS.—
(1) DOLLAR LIMIT.—
(A) Subparagraph (A) of section
415(b)(1) (relating to limitation for de-
fined benefit plans) is amended by
striking 
‘‘$90,000’’ 
and 
inserting
‘‘$160,000’’.
(B) Subparagraphs (C) and (D) of
section 415(b)(2) are each amended by
striking ‘‘$90,000’’ each place it ap-
159
pears in the headings and the text
and inserting ‘‘$160,000’’.
(C) 
Paragraph 
(7) 
of 
section
415(b) (relating to benefits under cer-
tain collectively bargained plans) is
amended by striking ‘‘the greater of
$68,212 or one-half the amount other-
wise applicable for such year under
paragraph (1)(A) for ‘$90,000’ ’’ and in-
serting ‘‘one-half the amount other-
wise applicable for such year under
paragraph (1)(A) for ‘$160,000’ ’’.
(2) LIMIT REDUCED WHEN BENEFIT BE-
GINS BEFORE AGE 62.—Subparagraph (C) of
section 415(b)(2) is amended by striking
‘‘the social security retirement age’’ each
place it appears in the heading and text
and inserting ‘‘age 62’’ and by striking the
second sentence.
(3) LIMIT INCREASED WHEN BENEFIT BE-
GINS AFTER AGE 65.—Subparagraph (D) of
section 415(b)(2) is amended by striking
‘‘the social security retirement age’’ each
place it appears in the heading and text
and inserting ‘‘age 65’’.
160
(4) 
COST-OF-LIVING
ADJUSTMENTS.—
Subsection (d) of section 415 (related to
cost-of-living adjustments) is amended—
(A) by striking ‘‘$90,000’’ in para-
graph (1)(A) and inserting ‘‘$160,000’’;
and
(B) in paragraph (3)(A)—
(i) by striking ‘‘$90,000’’ in the
heading and inserting ‘‘$160,000’’;
and
(ii) by striking ‘‘October 1,
1986’’ and inserting ‘‘July 1, 2000’’.
(5) CONFORMING AMENDMENTS.—
(A) Section 415(b)(2) is amended
by striking subparagraph (F).
(B) Section 415(b)(9) is amended
to read as follows:
‘‘(9) SPECIAL RULE FOR COMMERCIAL
AIRLINE PILOTS.—
‘‘(A) IN
GENERAL.—Except as
provided in subparagraph (B), in
the case of any participant who is
a commercial airline pilot, if, as of
the time of the participant’s re-
tirement, regulations prescribed
161
by the Federal Aviation Adminis-
tration require an individual to
separate from service as a com-
mercial airline pilot after attain-
ing any age occurring on or after
age 60 and before age 62, para-
graph (2)(C) shall be applied by
substituting such age for age 62.
‘‘(B) INDIVIDUALS
WHO
SEPA-
RATE
FROM
SERVICE
BEFORE
AGE
60.—If a participant described in
subparagraph (A) separates from
service before age 60, the rules of
paragraph (2)(C) shall apply.’’.
(C) 
Section 
415(b)(10)(C)(i) 
is
amended by striking ‘‘applied without
regard to paragraph (2)(F)’’.
(b) DEFINED CONTRIBUTION PLANS.—
(1) DOLLAR LIMIT.—Subparagraph (A)
of section 415(c)(1) (relating to limitation
for defined contribution plans) is amend-
ed by striking ‘‘$30,000’’ and inserting
‘‘$40,000’’.
162
(2) 
COST-OF-LIVING
ADJUSTMENTS.—
Subsection (d) of section 415 (related to
cost-of-living adjustments) is amended—
(A) by striking ‘‘$30,000’’ in para-
graph (1)(C) and inserting ‘‘$40,000’’;
and
(B) in paragraph (3)(D)—
(i) by striking ‘‘$30,000’’ in the
heading and inserting ‘‘$40,000’’;
and
(ii) by striking ‘‘October 1,
1993’’ and inserting ‘‘July 1, 2000’’.
(c) QUALIFIED TRUSTS.—
(1) 
COMPENSATION
LIMIT.—Sections
401(a)(17), 404(l), 408(k), and 505(b)(7) are
each amended by striking ‘‘$150,000’’ each
place it appears and inserting ‘‘$200,000’’.
(2) BASE
PERIOD
AND
ROUNDING
OF
COST-OF-LIVING
ADJUSTMENT.—Subpara-
graph 
(B) 
of 
section 
401(a)(17) 
is
amended—
(A) by striking ‘‘October 1, 1993’’
and inserting ‘‘July 1, 2000’’; and
163
(B) by striking ‘‘$10,000’’ both
places 
it 
appears 
and 
inserting
‘‘$5,000’’.
(d) ELECTIVE DEFERRALS.—
(1) IN GENERAL.—Paragraph (1) of sec-
tion 402(g) (relating to limitation on ex-
clusion for elective deferrals) is amended
to read as follows:
‘‘(1) IN GENERAL.—
‘‘(A) 
LIMITATION.—Notwith-
standing 
subsections 
(e)(3) 
and
(h)(1)(B), the elective deferrals of any
individual for any taxable year shall
be included in such individual’s gross
income to the extent the amount of
such deferrals for the taxable year ex-
ceeds the applicable dollar amount.
‘‘(B) APPLICABLE DOLLAR AMOUNT.—
For purposes of subparagraph (A),
the applicable dollar amount shall be
the amount determined in accord-
ance with the following table:
‘‘For taxable years
The applicable
beginning in
dollar amount:
calendar year:
2001 ....................................................................... $11,000
2002 ....................................................................... $12,000
2003 ....................................................................... $13,000
164
2004 ....................................................................... $14,000
2005 or thereafter .............................................. $15,000.’’.
(2) 
COST-OF-LIVING
ADJUSTMENT.—
Paragraph (5) of section 402(g) is amend-
ed to read as follows:
‘‘(5) COST-OF-LIVING
ADJUSTMENT.—In
the case of taxable years beginning after
December 31, 2005, the Secretary shall
adjust the $15,000 amount under para-
graph (1)(B) at the same time and in the
same manner as under section 415(d), ex-
cept that the base period shall be the cal-
endar quarter beginning July 1, 2004, and
any increase under this paragraph which
is not a multiple of $500 shall be rounded
to the next lowest multiple of $500.’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 402(g) (relating to lim-
itation on exclusion for elective defer-
rals), as amended by paragraphs (1)
and (2), is further amended by strik-
ing paragraph (4) and redesignating
paragraphs (5), (6), (7), (8), and (9) as
paragraphs (4), (5), (6), (7), and (8), re-
spectively.
165
(B) Paragraph (2) of section 457(c)
is 
amended 
by 
striking
‘‘402(g)(8)(A)(iii)’’ 
and 
inserting
‘‘402(g)(7)(A)(iii)’’.
(C) 
Clause 
(iii) 
of 
section
501(c)(18)(D) is amended by striking
‘‘(other than paragraph (4) thereof)’’.
(e) DEFERRED
COMPENSATION
PLANS
OF
STATE AND LOCAL GOVERNMENTS AND TAX-EX-
EMPT ORGANIZATIONS.—
(1) IN GENERAL.—Section 457 (relating
to deferred compensation plans of State
and local governments and tax-exempt
organizations) is amended—
(A) in subsections (b)(2)(A) and
(c)(1) by striking ‘‘$7,500’’ each place
it appears and inserting ‘‘the applica-
ble dollar amount’’; and
(B) in subsection (b)(3)(A) by
striking 
‘‘$15,000’’ 
and 
inserting
‘‘twice the dollar amount in effect
under subsection (b)(2)(A)’’.
(2) APPLICABLE DOLLAR AMOUNT; COST-
OF-LIVING ADJUSTMENT.—Paragraph (15) of
166
section 457(e) is amended to read as fol-
lows:
‘‘(15) APPLICABLE DOLLAR AMOUNT.—
‘‘(A) IN GENERAL.—The applicable
dollar amount shall be the amount
determined in accordance with the
following table:
‘‘For taxable years
The applicable
beginning in
dollar amount:
calendar year:
2001 .......................................................................
$11,000
2002 .......................................................................
$12,000
2003 .......................................................................
$13,000
2004 .......................................................................
$14,000
2005 or thereafter ..............................................
$15,000.
‘‘(B) 
COST-OF-LIVING
ADJUST-
MENTS.—In the case of taxable years
beginning after December 31, 2005,
the Secretary shall adjust the $15,000
amount under subparagraph (A) at
the same time and in the same man-
ner as under section 415(d), except
that the base period shall be the cal-
endar quarter beginning July 1, 2004,
and any increase under this para-
graph which is not a multiple of $500
shall be rounded to the next lowest
multiple of $500.’’.
(f) SIMPLE RETIREMENT ACCOUNTS.—
167
(1) LIMITATION.—Clause (ii) of section
408(p)(2)(A) (relating to general rule for
qualified salary reduction arrangement)
is amended by striking ‘‘$6,000’’ and in-
serting ‘‘the applicable dollar amount’’.
(2) APPLICABLE DOLLAR AMOUNT.—Sub-
paragraph (E) of 408(p)(2) is amended to
read as follows:
‘‘(E) APPLICABLE
DOLLAR
AMOUNT;
COST-OF-LIVING ADJUSTMENT.—
‘‘(i) IN GENERAL.—For purposes
of subparagraph (A)(ii), the appli-
cable dollar amount shall be the
amount determined in accordance
with the following table:
‘‘For taxable years
The applicable
beginning in
dollar amount:
calendar year:
2001 ................................................................
$7,000
2002 ................................................................
$8,000
2003 ................................................................
$9,000
2004 or thereafter .......................................
$10,000.
‘‘(ii) 
COST-OF-LIVING
ADJUST-
MENT.—In the case of a year be-
ginning after December 31, 2004,
the Secretary shall adjust the
$10,000 amount under clause (i) at
the same time and in the same
manner as under section 415(d),
168
except that the base period taken
into account shall be the calendar
quarter beginning July 1, 2003,
and any increase under this sub-
paragraph which is not a multiple
of $500 shall be rounded to the
next lower multiple of $500.’’.
(3) CONFORMING AMENDMENTS.—
(A) 
Subclause 
(I) 
of 
section
401(k)(11)(B)(i) is amended by strik-
ing 
‘‘$6,000’’ 
and 
inserting 
‘‘the
amount 
in 
effect 
under 
section
408(p)(2)(A)(ii)’’.
(B) Section 401(k)(11) is amended
by striking subparagraph (E).
(g) ROUNDING RULE RELATING TO DEFINED
BENEFIT PLANS
AND DEFINED CONTRIBUTION
PLANS.—Paragraph (4) of section 415(d) is
amended to read as follows:
‘‘(4) ROUNDING.—
‘‘(A) $160,000 
AMOUNT.—Any in-
crease under subparagraph (A) of
paragraph (1) which is not a multiple
of $5,000 shall be rounded to the next
lowest multiple of $5,000.
169
‘‘(B) 
$40,000 
AMOUNT.—Any 
in-
crease under subparagraph (C) of
paragraph (1) which is not a multiple
of $1,000 shall be rounded to the next
lowest multiple of $1,000.’’.
(h) EFFECTIVE
DATE.—The amendments
made by this section shall apply to years be-
ginning after December 31, 2000.
SEC. 202. PLAN LOANS FOR SUBCHAPTER S OWNERS, PART-
NERS, AND SOLE PROPRIETORS.
(a) AMENDMENT
OF
INTERNAL
REVENUE
CODE.—Subparagraph (B) of section 4975(f)(6)
(relating to exemptions not to apply to certain
transactions) is amended by adding at the end
the following new clause:
‘‘(iii) 
LOAN
EXCEPTION.—For
purposes of subparagraph (A)(i),
the term ‘owner-employee’ shall
only include a person described
in subclause (II) or (III) of clause
(i).’’.
(b) 
AMENDMENT
OF
ERISA.—Section
408(d)(2) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1108(d)(2)) is
170
amended by adding at the end the following
new subparagraph:
‘‘(C) For purposes of paragraph (1)(A), the
term ‘owner-employee’ shall only include a
person described in clause (ii) or (iii) of sub-
paragraph (A).’’.
(c) EFFECTIVE
DATE.—The amendments
made by this section shall apply to years be-
ginning after December 31, 2001.
SEC. 203. MODIFICATION OF TOP-HEAVY RULES.
(a) SIMPLIFICATION OF DEFINITION OF KEY
EMPLOYEE.—
(1) IN
GENERAL.—Section 416(i)(1)(A)
(defining key employee) is amended—
(A) by striking ‘‘or any of the 4
preceding plan years’’ in the matter
preceding clause (i);
(B) by striking clause (i) and in-
serting the following:
‘‘(i) an officer of the employer
having an annual compensation
greater than $150,000,’’;
(C) by striking clause (ii) and re-
designating clauses (iii) and (iv) as
clauses (ii) and (iii), respectively; and
171
(D) by striking the second sen-
tence in the matter following clause
(iii), as redesignated by subparagraph
(C).
(2) CONFORMING AMENDMENT.—Section
416(i)(1)(B)(iii) is amended by striking
‘‘and subparagraph (A)(ii)’’.
(b) MATCHING CONTRIBUTIONS TAKEN INTO
ACCOUNT
FOR
MINIMUM
CONTRIBUTION
RE-
QUIREMENTS.—Section 416(c)(2)(A) (relating to
defined contribution plans) is amended by
adding at the end the following: ‘‘Employer
matching contributions (as defined in section
401(m)(4)(A)) shall be taken into account for
purposes of this subparagraph.’’.
(c) DISTRIBUTIONS DURING LAST YEAR BE-
FORE DETERMINATION DATE TAKEN INTO AC-
COUNT.—
(1) IN GENERAL.—Paragraph (3) of sec-
tion 416(g) is amended to read as follows:
‘‘(3) DISTRIBUTIONS DURING LAST YEAR
BEFORE
DETERMINATION
DATE
TAKEN
INTO
ACCOUNT.—
‘‘(A) IN GENERAL.—For purposes of
determining—
172
‘‘(i) the present value of the
cumulative accrued benefit for
any employee, or
‘‘(ii) the amount of the ac-
count of any employee,
such present value or amount shall
be increased by the aggregate dis-
tributions made with respect to such
employee under the plan during the
1-year period ending on the deter-
mination date. The preceding sen-
tence shall also apply to distributions
under a terminated plan which if it
had not been terminated would have
been required to be included in an
aggregation group.
‘‘(B) 5-YEAR PERIOD IN CASE OF IN-
SERVICE DISTRIBUTION.—In the case of
any distribution made for a reason
other than separation from service,
death, or disability, subparagraph (A)
shall be applied by substituting ‘5-
year period’ for ‘1-year period’.’’.
173
(2) BENEFITS
NOT
TAKEN
INTO
AC-
COUNT.—Subparagraph 
(E) 
of 
section
416(g)(4) is amended—
(A) by striking ‘‘LAST 5 YEARS’’ in
the heading and inserting ‘‘LAST YEAR
BEFORE DETERMINATION DATE’’; and
(B) by striking ‘‘5-year period’’
and inserting ‘‘1-year period’’.
(d) DEFINITION
OF
TOP-HEAVY
PLANS.—
Paragraph (4) of section 416(g) (relating to
other special rules for top-heavy plans) is
amended by adding at the end the following
new subparagraph:
‘‘(H) CASH OR DEFERRED ARRANGE-
MENTS USING ALTERNATIVE METHODS OF
MEETING
NONDISCRIMINATION
REQUIRE-
MENTS.—The term ‘top-heavy plan’
shall not include a plan which con-
sists solely of—
‘‘(i) a cash or deferred ar-
rangement which meets the re-
quirements of section 401(k)(12),
and
‘‘(ii) matching contributions
with respect to which the require-
174
ments of section 401(m)(11) are
met.
If, but for this subparagraph, a plan
would be treated as a top-heavy plan
because it is a member of an aggrega-
tion group which is a top-heavy
group, contributions under the plan
may be taken into account in deter-
mining whether any other plan in the
group meets the requirements of sub-
section (c)(2).’’.
(e) FROZEN PLAN EXEMPT FROM MINIMUM
BENEFIT REQUIREMENT.—Subparagraph (C) of
section 416(c)(1) (relating to defined benefit
plans) is amended—
(A) by striking ‘‘clause (ii)’’ in
clause (i) and inserting ‘‘clause (ii) or
(iii)’’; and
(B) by adding at the end the fol-
lowing:
‘‘(iii) EXCEPTION
FOR
FROZEN
PLAN.—For 
purposes 
of 
deter-
mining an employee’s years of
service with the employer, any
service with the employer shall be
175
disregarded to the extent that
such service occurs during a plan
year 
when 
the 
plan 
benefits
(within the meaning of section
410(b)) no key employee or former
key employee.’’.
(f) ELIMINATION OF FAMILY ATTRIBUTION.—
Section 
416(i)(1)(B) 
(defining 
5-percent
owner) is amended by adding at the end the
following new clause:
‘‘(iv) FAMILY
ATTRIBUTION
DIS-
REGARDED.—Solely for purposes of
applying this paragraph (and not
for purposes of any provision of
this title which incorporates by
reference the definition of a key
employee 
or 
5-percent 
owner
under this paragraph), section
318 shall be applied without re-
gard to subsection (a)(1) thereof
in determining whether any per-
son is a 5-percent owner.’’.
(g) EFFECTIVE
DATE.—The amendments
made by this section shall apply to years be-
ginning after December 31, 2001.
176
SEC. 204. ELECTIVE DEFERRALS NOT TAKEN INTO AC-
COUNT FOR PURPOSES OF DEDUCTION LIM-
ITS.
(a) IN GENERAL.—Section 404 (relating to
deduction for contributions of an employer to
an employees’ trust or annuity plan and com-
pensation under a deferred payment plan) is
amended by adding at the end the following
new subsection:
‘‘(n) ELECTIVE DEFERRALS NOT TAKEN INTO
ACCOUNT
FOR PURPOSES
OF DEDUCTION LIM-
ITS.—Elective deferrals (as defined in section
402(g)(3)) shall not be subject to any limita-
tion contained in paragraph (3), (7), or (9) of
subsection (a), and such elective deferrals
shall not be taken into account in applying
any such limitation to any other contribu-
tions.’’.
(b) EFFECTIVE
DATE.—The amendment
made by this section shall apply to years be-
ginning after December 31, 2001.
177
SEC. 205. 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 (relating to deferred compensation plans
of State and local governments and tax-ex-
empt organizations), as amended by section
201, 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 exceed the amount
in effect under subsection (b)(2)(A) (as modi-
fied by any adjustment provided under sub-
section (b)(3)).’’.
(b) EFFECTIVE
DATE.—The amendment
made by subsection (a) shall apply to years
beginning after December 31, 2001.
SEC. 206. ELIMINATION OF USER FEE FOR REQUESTS TO
IRS REGARDING PENSION PLANS.
(a) ELIMINATION OF CERTAIN USER FEES.—
The Secretary of the Treasury or the Sec-
retary’s delegate shall not require payment of
user fees under the program established
under section 10511 of the Revenue Act of
178
1987 for requests to the Internal Revenue
Service for determination letters with respect
to the qualified status of a pension benefit
plan maintained solely by one or more eligible
employers or any trust which is part of the
plan. The preceding sentence shall not apply
to any request—
(1) made after the later of—
(A) the fifth plan year the pension
benefit plan is in existence; or
(B) the end of any remedial
amendment period with respect to
the plan beginning within the first 5
plan years; or
(2) made by the sponsor of any proto-
type or similar plan which the sponsor
intends to market to participating em-
ployers.
(b) PENSION BENEFIT PLAN.—For purposes
of this section, the term ‘‘pension benefit
plan’’ means a pension, profit-sharing, stock
bonus, annuity, or employee stock ownership
plan.
(c) ELIGIBLE EMPLOYER.—For purposes of
this section, the term ‘‘eligible employer’’ has
179
the same meaning given such term in section
408(p)(2)(C)(i)(I) of the Internal Revenue Code
of 1986. The determination of whether an em-
ployer is an eligible employer under this sec-
tion shall be made as of the date of the re-
quest described in subsection (a).
(d) 
DETERMINATION
OF
AVERAGE
FEES
CHARGED.—For purposes of any determina-
tion of average fees charged, any request to
which subsection (a) applies shall not be
taken into account.
(e) EFFECTIVE DATE.—The provisions of
this section shall apply with respect to re-
quests made after December 31, 2001.
SEC. 207. DEDUCTION LIMITS.
(a) STOCK
BONUS
AND
PROFIT
SHARING
TRUSTS.—
(1) IN GENERAL.—Subclause (I) of sec-
tion 
404(a)(3)(A)(i) 
(relating 
to 
stock
bonus 
and 
profit 
sharing 
trusts) 
is
amended by striking ‘‘15 percent’’ and in-
serting ‘‘20 percent’’.
(2) 
CONFORMING
AMENDMENT.—Sub-
paragraph (C) of section 404(h)(1) is
amended by striking ‘‘15 percent’’ each
180
place it appears and inserting ‘‘20 per-
cent’’.
(b) COMPENSATION.—
(1) IN GENERAL.—Section 404(a) (relat-
ing to general rule) is amended by adding
at the end the following:
‘‘(12) DEFINITION
OF
COMPENSATION.—
For purposes of paragraphs (3), (7), (8),
and (9), the term ‘compensation other-
wise paid or accrued during the taxable
year’ shall include amounts treated as
‘participant’s compensation’ under sub-
paragraph (C) or (D) of section 415(c)(3).’’.
(2) CONFORMING AMENDMENTS.—
(A) Subparagraph (B) of section
404(a)(3) is amended by striking the
last sentence thereof.
(B) 
Clause 
(i) 
of 
section
4972(c)(6)(B) is amended by striking
‘‘(within 
the 
meaning 
of 
section
404(a))’’ and inserting ‘‘(within the
meaning of section 404(a) and as ad-
justed under section 404(a)(12))’’.
181
(c) EFFECTIVE
DATE.—The amendments
made by this section shall apply to years be-
ginning after December 31, 2001.
SEC. 208. OPTION TO TREAT ELECTIVE DEFERRALS AS
AFTER-TAX CONTRIBUTIONS.
(a) IN GENERAL.—Subpart A of part I of
subchapter D of chapter 1 (relating to de-
ferred compensation, etc.) is amended by in-
serting after section 402 the following new
section:
‘‘SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFER-
RALS AS PLUS CONTRIBUTIONS.
‘‘(a) GENERAL RULE.—If an applicable re-
tirement plan includes a qualified plus con-
tribution program—
‘‘(1) any designated plus contribution
made by an employee pursuant to the
program shall be treated as an elective
deferral for purposes of this chapter, ex-
cept that such contribution shall not be
excludable from gross income, and
‘‘(2) such plan (and any arrangement
which is part of such plan) shall not be
treated as failing to meet any require-
182
ment of this chapter solely by reason of
including such program.
‘‘(b) QUALIFIED PLUS CONTRIBUTION PRO-
GRAM.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified
plus contribution program’ means a pro-
gram under which an employee may elect
to make designated plus contributions in
lieu of all or a portion of elective defer-
rals the employee is otherwise eligible to
make under the applicable retirement
plan.
‘‘(2) 
SEPARATE
ACCOUNTING
RE-
QUIRED.—A program shall not be treated
as a qualified plus contribution program
unless the applicable retirement plan—
‘‘(A) establishes separate accounts
(‘designated plus accounts’) for the
designated plus contributions of each
employee and any earnings properly
allocable to the contributions, and
‘‘(B) maintains separate record-
keeping with respect to each account.
183
‘‘(c) DEFINITIONS AND RULES RELATING TO
DESIGNATED PLUS CONTRIBUTIONS.—For pur-
poses of this section—
‘‘(1) DESIGNATED PLUS CONTRIBUTION.—
The term ‘designated plus contribution’
means any elective deferral which—
‘‘(A) is excludable from gross in-
come of an employee without regard
to this section, and
‘‘(B) the employee designates (at
such time and in such manner as the
Secretary may prescribe) as not being
so excludable.
‘‘(2) DESIGNATION LIMITS.—The amount
of elective deferrals which an employee
may designate under paragraph (1) shall
not exceed the excess (if any) of—
‘‘(A) the maximum amount of elec-
tive deferrals excludable from gross
income of the employee for the tax-
able year (without regard to this sec-
tion), over
‘‘(B) the aggregate amount of elec-
tive deferrals of the employee for the
184
taxable year which the employee does
not designate under paragraph (1).
‘‘(3) ROLLOVER CONTRIBUTIONS.—
‘‘(A) IN GENERAL.—A rollover con-
tribution of any payment or distribu-
tion from a designated plus account
which is otherwise allowable under
this chapter may be made only if the
contribution is to—
‘‘(i) another designated plus
account of the individual from
whose account the payment or
distribution was made, or
‘‘(ii) a Roth IRA of such indi-
vidual.
‘‘(B) COORDINATION
WITH
LIMIT.—
Any rollover contribution to a des-
ignated plus account under subpara-
graph (A) shall not be taken into ac-
count for purposes of paragraph (1).
‘‘(d) DISTRIBUTION RULES.—For purposes of
this title—
‘‘(1) EXCLUSION.—Any qualified dis-
tribution from a designated plus account
shall not be includible in gross income.
185
‘‘(2) 
QUALIFIED
DISTRIBUTION.—For
purposes of this subsection—
‘‘(A) IN GENERAL.—The term ‘quali-
fied distribution’ has the meaning
given 
such 
term 
by 
section
408A(d)(2)(A) 
(without 
regard 
to
clause (iv) thereof).
‘‘(B) DISTRIBUTIONS
WITHIN
NON-
EXCLUSION PERIOD.—A payment or dis-
tribution from a designated plus ac-
count shall not be treated as a quali-
fied distribution if such payment or
distribution is made within the 5-tax-
able-year period beginning with the
earlier of—
‘‘(i) the first taxable year for
which the individual made a des-
ignated plus contribution to any
designated plus account estab-
lished for such individual under
the same applicable retirement
plan, or
‘‘(ii) if a rollover contribution
was made to such designated plus
account from a designated plus
186
account 
previously 
established
for such individual under another
applicable retirement plan, the
first taxable year for which the
individual 
made 
a 
designated
plus contribution to such pre-
viously established account.
‘‘(C) DISTRIBUTIONS OF EXCESS DE-
FERRALS
AND
EARNINGS.—The 
term
‘qualified distribution’ shall not in-
clude any distribution of any excess
deferral under section 402(g)(2) and
any income on the excess deferral.
‘‘(3) AGGREGATION
RULES.—Section 72
shall be applied separately with respect
to distributions and payments from a des-
ignated plus account and other distribu-
tions and payments from the plan.
‘‘(e) OTHER DEFINITIONS.—For purposes of
this section—
‘‘(1) APPLICABLE
RETIREMENT
PLAN.—
The term ‘applicable retirement plan’
means—
187
‘‘(A) an employees’ trust described
in section 401(a) which is exempt
from tax under section 501(a), and
‘‘(B) a plan under which amounts
are contributed by an individual’s
employer for an annuity contract de-
scribed in section 403(b).
‘‘(2) ELECTIVE
DEFERRAL.—The term
‘elective deferral’ means any elective de-
ferral described in subparagraph (A) or
(C) of section 402(g)(3).’’.
(b) EXCESS DEFERRALS.—Section 402(g) (re-
lating to limitation on exclusion for elective
deferrals) is amended—
(1) by adding at the end of paragraph
(1) the following new sentence: ‘‘The pre-
ceding sentence shall not apply to so
much of such excess as does not exceed
the designated plus contributions of the
individual for the taxable year.’’; and
(2) by inserting ‘‘(or would be in-
cluded but for the last sentence thereof)’’
after ‘‘paragraph (1)’’ in paragraph (2)(A).
188
(c) ROLLOVERS.—Subparagraph (B) of sec-
tion 402(c)(8) is amended by adding at the end
the following:
‘‘If any portion of an eligible rollover
distribution is attributable to pay-
ments or distributions from a des-
ignated plus account (as defined in
section 402A), an eligible retirement
plan with respect to such portion
shall include only another designated
plus account and a Roth IRA.’’.
(d) REPORTING REQUIREMENTS.—
(1) 
W–2 
INFORMATION.—Section
6051(a)(8) is amended by inserting ‘‘, in-
cluding the amount of designated plus
contributions 
(as 
defined 
in 
section
402A)’’ before the comma at the end.
(2) 
INFORMATION.—Section 
6047 
is
amended by redesignating subsection (f)
as subsection (g) and by inserting after
subsection (e) the following new sub-
section:
‘‘(f) DESIGNATED
PLUS
CONTRIBUTIONS.—
The Secretary shall require the plan adminis-
trator of each applicable retirement plan (as
189
defined in section 402A) to make such returns
and reports regarding designated plus con-
tributions (as so defined) to the Secretary,
participants and beneficiaries of the plan, and
such other persons as the Secretary may pre-
scribe.’’.
(e) CONFORMING AMENDMENTS.—
(1) Section 408A(e) is amended by
adding after the first sentence the fol-
lowing new sentence: ‘‘Such term in-
cludes a rollover contribution described
in section 402A(c)(3)(A).’’.
(2) The table of sections for subpart A
of part I of subchapter D of chapter 1 is
amended by inserting after the item re-
lating to section 402 the following new
item:
‘‘Sec. 402A. Optional treatment of elective deferrals
as plus contributions.’’.
(f) EFFECTIVE
DATE.—The amendments
made by this section shall apply to taxable
years beginning after December 31, 2001.
190
TITLE III—ENHANCING
FAIRNESS FOR WOMEN
SEC. 301. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS
AGE 50 OR OVER.
(a) IN GENERAL.—Section 414 (relating to
definitions and special rules) is amended by
adding at the end the following new sub-
section:
‘‘(v) CATCH-UP CONTRIBUTIONS FOR INDIVID-
UALS AGE 50 OR OVER.—
‘‘(1) IN
GENERAL.—An applicable em-
ployer plan shall not be treated as failing
to meet any requirement of this title sole-
ly because the plan permits an eligible
participant to make additional elective
deferrals in any plan year.
‘‘(2) LIMITATION
ON
AMOUNT
OF
ADDI-
TIONAL DEFERRALS.—A plan shall not per-
mit additional elective deferrals under
paragraph (1) for any year in an amount
greater than the lesser of—
‘‘(A) $5,000, or
‘‘(B) the excess (if any) of—
‘‘(i) 
the 
participant’s 
com-
pensation for the year, over
191
‘‘(ii) any other elective defer-
rals of the participant for such
year which are made without re-
gard to this subsection.
‘‘(3) TREATMENT OF CONTRIBUTIONS.—In
the case of any contribution to a plan
under paragraph (1), such contribution
shall not, with respect to the year in
which the contribution is made—
‘‘(A) be subject to any otherwise
applicable limitation contained in
section 
402(g), 
402(h)(2), 
404(a),
404(h), 408(p)(2)(A)(ii), 415, or 457, or
‘‘(B) be taken into account in ap-
plying such limitations to other con-
tributions or benefits under such
plan or any other such plan.
‘‘(4) APPLICATION
OF
NONDISCRIMINA-
TION RULES.—
‘‘(A) IN
GENERAL.—An applicable
employer plan shall not be treated as
failing to meet the nondiscrimination
requirements under section 401(a)(4)
with respect to benefits, rights, and
features if the plan allows all eligible
197
(F) Section 415(c)(7) is amended
to read as follows:
‘‘(7) 
CERTAIN
CONTRIBUTIONS
BY
CHURCH PLANS NOT TREATED AS EXCEEDING
LIMIT.—
‘‘(A) 
IN
GENERAL.—Notwith-
standing any other provision of this
subsection, at the election of a partic-
ipant who is an employee of a church
or a convention or association of
churches, including an organization
described in section 414(e)(3)(B)(ii),
contributions and other additions for
an annuity contract or retirement in-
come account described in section
403(b) with respect to such partici-
pant, when expressed as an annual
addition to such participant’s ac-
count, shall be treated as not exceed-
ing the limitation of paragraph (1) if
such annual addition is not in excess
of $10,000.
‘‘(B) $40,000 
AGGREGATE
LIMITA-
TION.—The total amount of additions
with respect to any participant which
208
‘‘his entire interest has been dis-
tributed to him’’.
(B) 
Clause 
(ii) 
of 
section
401(a)(9)(B) (as so redesignated) is
amended by striking ‘‘clause (ii)’’ and
inserting ‘‘clause (i)’’.
(C) 
Clause 
(iii) 
of 
section
401(a)(9)(B) (as so redesignated) is
amended—
(i) by striking ‘‘clause (iii)(I)’’
and inserting ‘‘clause (ii)(I)’’;
(ii) 
by 
striking 
‘‘clause
(iii)(III)’’ in subclause (I) and in-
serting ‘‘clause (ii)(III)’’;
(iii) by striking ‘‘the date on
which the employee would have
attained age 701⁄2,’’ in subclause
(I) and inserting ‘‘April 1 of the
calendar year following the cal-
endar year in which the spouse
attains 701⁄2,’’; and
(iv) by striking ‘‘the distribu-
tions to such spouse begin,’’ in
subclause (II) and inserting ‘‘his
214
money, the amount so transferred
consists of the property distrib-
uted,
then such distribution (to the extent
so transferred) 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 section 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 retirement
plans (as defined in section 4974(c)).’’.
(B) DEFERRAL
LIMIT
DETERMINED
WITHOUT
REGARD
TO
ROLLOVER
AMOUNTS.—Section 457(b)(2) (defining
eligible deferred compensation plan)
is amended by inserting ‘‘(other than
rollover 
amounts)’’ 
after 
‘‘taxable
year’’.