(A) IN GENERAL.—The term ‘‘covered em-
ployer’’ shall not include an employer for a cal-
endar year if the employer— 
(i) did not employ during the pre-
ceding calendar year more than 10 employ-
ees who each received at least $5,000 of 
compensation 
(as 
defined 
in 
section 
3401(a) of the Internal Revenue Code of 
1986) from the employer for such pre-
ceding calendar year; 
(ii) did not normally employ more 
than 10 employees on a typical business 
day during the preceding calendar year; or 
(iii) was not in existence at all times 
during the calendar year and the preceding 
calendar year. 
(B) OPERATING
RULES.—In determining 
the number of employees for purposes of sub-
paragraph (A)— 
(i) rules consistent with any rules ap-
plicable in determining the number of em-
ployees 
for 
purposes 
of 
section 
408(p)(2)(C) and section 4980B(d) of the 
Internal Revenue Code of 1986 shall apply; 
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(ii) all members of the same family 
(within the meaning of section 318(a)(1) 
of the Internal Revenue Code of 1986) 
shall be treated as 1 individual; and 
(iii) any reference to an employer 
shall include a reference to any predecessor 
employer. 
(4) 
EXCEPTION
FOR
GOVERNMENTS
AND 
CHURCHES.—The term ‘‘covered employer’’ shall not 
include— 
(A) a government or entity described in 
section 414(d) of the Internal Revenue Code of 
1986; or 
(B) a church or a convention or association 
of churches that is exempt from tax under sec-
tion 501 of such Code. 
(5) AGGREGATION RULE.—A person treated as 
a single employer under subsection (a) or (b) of sec-
tion 52 of the Internal Revenue Code of 1986 or 
subsection (m) or (o) of section 414 of such Code 
shall be treated as a single employer. 
(c) QUALIFYING EMPLOYEE.—For purposes of this 
title— 
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(1) IN GENERAL.—The term ‘‘qualifying em-
ployee’’ means any employee who is not an excluded 
employee. 
(2) PLAN SPONSOR’S EMPLOYEES.—If— 
(A) an employer maintains one or more 
qualifying plans or arrangements described in 
section 219(g)(5) of the Internal Revenue Code 
of 1986; and 
(B) the employees of a subsidiary, division, 
or other business unit are generally not eligible 
to participate in any such qualifying plan or ar-
rangement, 
for purposes of this section, the employer shall be 
treated as a covered employer with respect to such 
employees (other than excluded employees), and 
such employees (other than excluded employees) 
shall be treated as qualifying employees for the cal-
endar year. 
(3) EXCLUDED EMPLOYEES.— 
(A) IN
GENERAL.—The term ‘‘excluded 
employee’’ means an employee who is an exclud-
able employee and who is in a class or category 
that the employer excludes from treatment as 
qualifying employees. 
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(B) EXCLUDABLE EMPLOYEE.—The term 
‘‘excludable employee’’ means— 
(i) an employee described in section 
410(b)(3) of the Internal Revenue Code of 
1986; 
(ii) an employee who has not attained 
the age of 21 before the beginning of the 
calendar year; 
(iii) an employee who has not com-
pleted at least 3 months of service with the 
employer; 
(iv) in the case of an employer that 
maintains a qualifying plan or arrange-
ment which excludes employees who have 
not satisfied the minimum age and service 
requirements for participation in the plan, 
an employee who has not satisfied such re-
quirements; 
(v) in the case of an employer that 
maintains an annuity contract (including a 
custodial account or retirement income ac-
count) under section 403(b) of the Internal 
Revenue Code of 1986, an employee who is 
permitted to be excluded from any salary 
reduction arrangement under the contract 
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pursuant to paragraph (12) of such section 
403(b); 
(vi) in the case of an employer that 
maintains an arrangement described in 
section 408(p) of such Code, an employee 
who is not required to be eligible to partici-
pate in the arrangement under paragraph 
(4) of such section 408(p); and 
(vii) in the case of an employer that 
maintains a simplified employee pension 
described in section 408(k) of such Code, 
an employee who is permitted to be ex-
cluded from participation under paragraph 
(2) of such section 408(k). 
(4) GUIDANCE.—The Secretary of Labor (in 
this title referred to as the ‘‘Secretary’’) shall issue 
regulations or other guidance to carry out this sub-
section, including— 
(A) guidelines for determining the classes 
or categories of employees to be covered by a 
USA Retirement Fund; 
(B) guidelines requiring employers to 
specify the classification or categories of em-
ployees (if any) who are excluded from the USA 
Retirement Fund; and 
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(C) rules to prevent avoidance of the re-
quirements of this section. 
(d) AUTOMATIC USA RETIREMENT FUND ARRANGE-
MENT.—For purposes of this title— 
(1) IN GENERAL.—The term ‘‘automatic USA 
Retirement Fund arrangement’’ means an arrange-
ment of an employer (determined without regard to 
whether the employer is required to maintain the ar-
rangement)— 
(A) that covers each qualifying employee of 
the covered employer for the calendar year; 
(B) under which a qualifying employee— 
(i) may elect— 
(I) to contribute to an automatic 
USA Retirement Fund by having the 
employer deposit payroll deduction 
amounts or make other periodic direct 
deposits (including electronic pay-
ments) to the Fund; or 
(II) to have such payments paid 
to the employee directly in cash; 
(ii) is treated as having made the elec-
tion under clause (i)(I) in the amount 
specified in paragraph (4) unless the indi-
vidual specifically elects not to have such 
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