H. R. 2488—137 
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)) 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 following 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 participant shall not exceed $5 
multiplied by the number of 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 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, 2000. 
(2) SUBSECTION (b).—The amendments made by subsection 
(b) shall apply to plan years beginning after December 31, 
2000. 
Subtitle B—Enhancing Fairness for Women 
SEC. 1221. CATCHUP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR 
OVER. 
(a) IN GENERAL.—Section 414 (relating to definitions and spe-
cial rules) is amended by adding at the end the following new 
subsection: 
‘‘(v) CATCHUP CONTRIBUTIONS
FOR INDIVIDUALS AGE 50 OR 
OVER.— 
‘‘(1) IN GENERAL.—An applicable employer plan shall not 
be treated as failing to meet any requirement of this title 
solely because the plan permits an eligible participant to make 
additional elective deferrals in any plan year. 
‘‘(2) LIMITATION ON AMOUNT OF ADDITIONAL DEFERRALS.— 
‘‘(A) IN GENERAL.—A plan shall not permit additional 
elective deferrals under paragraph (1) for any year in an 
amount greater than the lesser of— 
‘‘(i) the applicable percentage of the applicable 
dollar amount for such elective deferrals for such year, 
or 
‘‘(ii) the excess (if any) of— 
‘‘(I) the participant’s compensation for the 
year, over 
‘‘(II) any other elective deferrals of the partici-
pant for such year which are made without regard 
to this subsection. 
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H. R. 2488—138 
‘‘(B) APPLICABLE PERCENTAGE.—For purposes of this 
paragraph, the applicable percentage shall be determined 
in accordance with the following table: 
‘‘For taxable years 
The 
applicable 
beginning in: 
percentage is: 
2001 ...................................................................................................
10 percent
2002 ...................................................................................................
20 percent
2003 ...................................................................................................
30 percent
2004 ...................................................................................................
40 percent
2005 and thereafter ..........................................................................
50 percent. 
‘‘(3) TREATMENT OF CONTRIBUTIONS.—In the case of any 
contribution to a plan under paragraph (1)— 
‘‘(A) such contribution shall not, with respect to the 
year in which the contribution is made— 
‘‘(i) be subject to any otherwise applicable limita-
tion contained in section 402(g), 402(h), 403(b), 404(a), 
404(h), 408, 415, or 457, or 
‘‘(ii) be taken into account in applying such limita-
tions to other contributions or benefits under such 
plan or any other such plan, and 
‘‘(B) such plan shall not be treated as failing to meet 
the requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 
401(k)(11), 401(k)(12), 401(m), 403(b)(12), 408(k), 408(p), 
408B, 410(b), or 416 by reason of the making of (or the 
right to make) such contribution. 
‘‘(4) ELIGIBLE
PARTICIPANT.—For purposes of this sub-
section, the term ‘eligible participant’ means, with respect to 
any plan year, a participant in a plan— 
‘‘(A) who has attained the age of 50 before the close 
of the plan year, and 
‘‘(B) with respect to whom no other elective deferrals 
may (without regard to this subsection) be made to the 
plan for the plan year by reason of the application of 
any limitation or other restriction described in paragraph 
(3) or contained in the terms of the plan. 
‘‘(5) OTHER DEFINITIONS AND RULES.—For purposes of this 
subsection— 
‘‘(A) 
APPLICABLE
DOLLAR
AMOUNT.—The 
term 
‘applicable dollar amount’ means, with respect to any year, 
the 
amount 
in 
effect 
under 
section 
402(g)(1)(B), 
408(p)(2)(E)(i), or 457(e)(15)(A), whichever is applicable to 
an applicable employer plan, for such year. 
‘‘(B) 
APPLICABLE
EMPLOYER
PLAN.—The 
term 
‘applicable employer plan’ means— 
‘‘(i) an employees’ trust described in section 401(a) 
which is exempt from tax under section 501(a), 
‘‘(ii) a plan under which amounts are contributed 
by an individual’s employer for an annuity contract 
described in section 403(b), 
‘‘(iii) an eligible deferred compensation plan under 
section 457 of an eligible employer as defined in section 
457(e)(1)(A), and 
‘‘(iv) an arrangement meeting the requirements 
of section 408 (k) or (p). 
‘‘(C) ELECTIVE DEFERRAL.—The term ‘elective deferral’ 
has the meaning given such term by subsection (u)(2)(C). 
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H. R. 2488—139 
‘‘(D) EXCEPTION
FOR
SECTION
457
PLANS.—This sub-
section shall not apply to an applicable employer plan 
described in subparagraph (B)(iii) for any year to which 
section 457(b)(3) applies.’’. 
(b) EFFECTIVE DATE.—The amendment made by this section 
shall apply to contributions in taxable years beginning after 
December 31, 2000. 
SEC. 
1222. 
EQUITABLE 
TREATMENT 
FOR 
CONTRIBUTIONS 
OF 
EMPLOYEES TO DEFINED CONTRIBUTION PLANS. 
(a) EQUITABLE TREATMENT.— 
(1) IN
GENERAL.—Subparagraph (B) of section 415(c)(1) 
(relating to limitation for defined contribution plans) is 
amended by striking ‘‘25 percent’’ and inserting ‘‘100 percent’’. 
(2) APPLICATION
TO
SECTION
403(b).—Section 403(b) is 
amended— 
(A) by striking ‘‘the exclusion allowance for such tax-
able year’’ in paragraph (1) and inserting ‘‘the applicable 
limit under section 415’’, 
(B) by striking paragraph (2), and 
(C) by inserting ‘‘or any amount received by a former 
employee after the 5th taxable year following the taxable 
year in which such employee was terminated’’ before the 
period at the end of the second sentence of paragraph 
(3). 
(3) CONFORMING AMENDMENTS.— 
(A) Subsection (f ) of section 72 is amended by striking 
‘‘section 
403(b)(2)(D)(iii))’’ 
and 
inserting 
‘‘section 
403(b)(2)(D)(iii), as in effect before the enactment of the 
Taxpayer Refund and Relief Act of 1999)’’. 
(B) Section 404(a)(10)(B) is amended by striking ‘‘, 
the exclusion allowance under section 403(b)(2),’’. 
(C) Section 415(a)(2) is amended by striking ‘‘, and 
the amount of the contribution for such portion shall reduce 
the exclusion allowance as provided in section 403(b)(2)’’. 
(D) Section 415(c)(3) is amended by adding at the end 
the following new subparagraph: 
‘‘(E) ANNUITY CONTRACTS.—In the case of an annuity 
contract described in section 403(b), the term ‘participant’s 
compensation’ means the participant’s includible compensa-
tion determined under section 403(b)(3).’’. 
(E) Section 415(c) is amended by striking paragraph 
(4). 
(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.—Notwithstanding any other provi-
sion of this subsection, at the election of a participant 
who is an employee of a church or a convention or associa-
tion of churches, including an organization described in 
section 414(e)(3)(B)(ii), contributions and other additions 
for an annuity contract or retirement income account 
described in section 403(b) with respect to such participant, 
when expressed as an annual addition to such participant’s 
account, shall be treated as not exceeding the limitation 
of paragraph (1) if such annual addition is not in excess 
of $10,000. 
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H. R. 2488—140 
‘‘(B) 
$40,000 
AGGREGATE
LIMITATION.—The 
total 
amount of additions with respect to any participant which 
may be taken into account for purposes of this subpara-
graph for all years may not exceed $40,000. 
‘‘(C) ANNUAL
ADDITION.—For purposes of this para-
graph, the term ‘annual addition’ has the meaning given 
such term by paragraph (2).’’. 
(G) Subparagraph (B) of section 402(g)(7) (as redesig-
nated by section 1201) is amended by inserting before 
the period at the end the following: ‘‘(as in effect before 
the enactment of the Taxpayer Refund and Relief Act of 
1999)’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to years beginning after December 31, 2000. 
(b) SPECIAL RULES FOR SECTIONS 403(b) AND 408.— 
(1) IN GENERAL.—Subsection (k) of section 415 is amended 
by adding at the end the following new paragraph: 
‘‘(4) SPECIAL RULES FOR SECTIONS 403(b) AND 408.—For pur-
poses of this section, any annuity contract described in section 
403(b) for the benefit of a participant shall be treated as a 
defined contribution plan maintained by each employer with 
respect to which the participant has the control required under 
subsection (b) or (c) of section 414 (as modified by subsection 
(h)). For purposes of this section, any contribution by an 
employer to a simplified employee pension plan for an indi-
vidual for a taxable year shall be treated as an employer 
contribution to a defined contribution plan for such individual 
for such year.’’. 
(2) EFFECTIVE DATE.— 
(A) IN GENERAL.—The amendment made by paragraph 
(1) shall apply to limitation years beginning after December 
31, 1999. 
(B) EXCLUSION
ALLOWANCE.—Effective for limitation 
years beginning in 2000, in the case of any annuity contract 
described in section 403(b) of the Internal Revenue Code 
of 1986, the amount of the contribution disqualified by 
reason of section 415(g) of such Code shall reduce the 
exclusion allowance as provided in section 403(b)(2) of such 
Code. 
(3) MODIFICATION OF 403(b) EXCLUSION ALLOWANCE TO CON-
FORM TO 415 MODIFICATION.—The Secretary of the Treasury 
shall modify the regulations regarding the exclusion allowance 
under section 403(b)(2) of the Internal Revenue Code of 1986 
to render void the requirement that contributions to a defined 
benefit pension plan be treated as previously excluded amounts 
for purposes of the exclusion allowance. For taxable years begin-
ning after December 31, 1999, such regulations shall be applied 
as if such requirement were void. 
(c) DEFERRED COMPENSATION PLANS
OF STATE
AND LOCAL 
GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.— 
(1) IN
GENERAL.—Subparagraph (B) of section 457(b)(2) 
(relating to salary limitation on eligible deferred compensation 
plans) is amended by striking ‘‘331⁄3 percent’’ and inserting 
‘‘100 percent’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to years beginning after December 31, 2000. 
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H. R. 2488—141 
SEC. 1223. FASTER VESTING OF CERTAIN EMPLOYER MATCHING CON-
TRIBUTIONS. 
(a) AMENDMENTS TO 1986 CODE.—Section 411(a) (relating to 
minimum vesting standards) is amended— 
(1) in paragraph (2), by striking ‘‘A plan’’ and inserting 
‘‘Except as provided in paragraph (12), a plan’’, and 
(2) by adding at the end the following: 
‘‘(12) FASTER VESTING FOR MATCHING CONTRIBUTIONS.—In 
the case of matching contributions (as defined in section 
401(m)(4)(A)), paragraph (2) shall be applied— 
‘‘(A) by substituting ‘3 years’ for ‘5 years’ in subpara-
graph (A), and 
‘‘(B) by substituting the following table for the table 
contained in subparagraph (B): 
The 
nonforfeitable 
‘‘Years of service: 
percentage is: 
2 .........................................................................................................
3 .........................................................................................................
4 .........................................................................................................
5 .........................................................................................................
6 .........................................................................................................
100.’’. 
(b) AMENDMENTS TO ERISA.—Section 203(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is 
amended— 
(1) in paragraph (2), by striking ‘‘A plan’’ and inserting 
‘‘Except as provided in paragraph (4), a plan’’, and 
(2) by adding at the end the following: 
‘‘(4) FASTER VESTING FOR MATCHING CONTRIBUTIONS.—In 
the case of matching contributions (as defined in section 
401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph 
(2) shall be applied— 
‘‘(A) by substituting ‘3 years’ for ‘5 years’ in subpara-
graph (A), and 
‘‘(B) by substituting the following table for the table 
contained in subparagraph (B): 
The 
nonforfeitable 
‘‘Years of service: 
percentage is: 
2 .........................................................................................................
3 .........................................................................................................
4 .........................................................................................................
5 .........................................................................................................
6 .........................................................................................................
100.’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in paragraph (2), the 
amendments made by this section shall apply to contributions 
for plan years beginning after December 31, 2000. 
(2) COLLECTIVE BARGAINING AGREEMENTS.—In the case of 
a plan maintained pursuant to one or more collective bargaining 
agreements between employee representatives and one or more 
employers ratified by the date of the enactment of this Act, 
the amendments made by this section shall not apply to con-
tributions on behalf of employees covered by any such agree-
ment for plan years beginning before the earlier of— 
(A) the later of— 
(i) the date on which the last of such collective 
bargaining agreements terminates (determined without 
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H. R. 2488—142 
regard to any extension thereof on or after such date 
of the enactment), or 
(ii) January 1, 2001, or 
(B) January 1, 2005. 
(3) SERVICE
REQUIRED.—With respect to any plan, the 
amendments made by this section shall not apply to any 
employee before the date that such employee has 1 hour of 
service under such plan in any plan year to which the amend-
ments made by this section apply. 
SEC. 1224. SIMPLIFY AND UPDATE THE MINIMUM DISTRIBUTION 
RULES. 
(a) SIMPLIFICATION AND FINALIZATION OF MINIMUM DISTRIBU-
TION REQUIREMENTS.— 
(1) IN GENERAL.—The Secretary of the Treasury shall— 
(A) simplify and finalize the regulations relating to 
minimum 
distribution 
requirements 
under 
sections 
401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 457(d)(2) of 
the Internal Revenue Code of 1986, and 
(B) modify such regulations to— 
(i) reflect current life expectancy, and 
(ii) revise the required distribution methods so 
that, under reasonable assumptions, the amount of 
the required minimum distribution does not decrease 
over a participant’s life expectancy. 
(2) FRESH START.—Notwithstanding subparagraph (D) of 
section 401(a)(9) of such Code, during the first year that regula-
tions are in effect under this subsection, required distributions 
for future years may be redetermined to reflect changes under 
such regulations. Such redetermination shall include the oppor-
tunity to choose a new designated beneficiary and to elect 
a new method of calculating life expectancy. 
(3) 
EFFECTIVE
DATE
FOR
REGULATIONS.—Regulations 
referred to in paragraph (1) shall be effective for years begin-
ning after December 31, 2000, and shall apply in such years 
without regard to whether an individual had previously begun 
receiving minimum distributions. 
(b) REPEAL OF RULE WHERE DISTRIBUTIONS HAD BEGUN BEFORE 
DEATH OCCURS.— 
(1) IN
GENERAL.—Subparagraph (B) of section 401(a)(9) 
is amended by striking clause (i) and redesignating clauses 
(ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively. 
(2) CONFORMING CHANGES.— 
(A) Clause (i) of section 401(a)(9)(B) (as so redesig-
nated) is amended— 
(i) by striking ‘‘FOR OTHER CASES’’ in the heading, 
and 
(ii) by striking ‘‘the distribution of the employee’s 
interest has begun in accordance with subparagraph 
(A)(ii)’’ and inserting ‘‘his entire interest has been 
distributed to him,’’. 
(B) Clause (ii) of section 401(a)(9)(B) (as so redesig-
nated) is amended by striking ‘‘clause (ii)’’ and inserting 
‘‘clause (i)’’. 
(C) Clause (iii) of section 401(a)(9)(B) (as so redesig-
nated) is amended— 
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H. R. 2488—143 
(i) by striking ‘‘clause (iii)(I)’’ and inserting ‘‘clause 
(ii)(I)’’, 
(ii) by striking ‘‘clause (iii)(III)’’ in subclause (I) 
and inserting ‘‘clause (ii)(III)’’, 
(iii) by striking ‘‘the date on which the employee 
would have attained the age 701⁄2,’’ in subclause (I) 
and inserting ‘‘April 1 of the calendar year following 
the calendar year in which the spouse attains 701⁄2,’’, 
and 
(iv) by striking ‘‘the distributions to such spouse 
begin,’’ in subclause (II) and inserting ‘‘his entire 
interest has been distributed to him,’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to years beginning after December 31, 2000. 
(c) REDUCTION IN EXCISE TAX.— 
(1) IN GENERAL.—Subsection (a) of section 4974 is amended 
by striking ‘‘50 percent’’ and inserting ‘‘10 percent’’. 
(2) EFFECTIVE DATE.—The amendment made by this sub-
section shall apply to years beginning after December 31, 2000. 
SEC. 1225. CLARIFICATION OF TAX TREATMENT OF DIVISION OF SEC-
TION 457 PLAN BENEFITS UPON DIVORCE. 
(a) IN GENERAL.—Section 414(p)(11) (relating to application 
of rules to governmental and church plans) is amended— 
(1) by inserting ‘‘or an eligible deferred compensation plan 
(within the meaning of section 457(b))’’ after ‘‘subsection (e))’’, 
and 
(2) in the heading, by striking ‘‘GOVERNMENTAL
AND 
CHURCH PLANS’’ and inserting ‘‘CERTAIN OTHER PLANS’’. 
(b) WAIVER OF CERTAIN DISTRIBUTION REQUIREMENTS.—Para-
graph (10) of section 414(p) is amended by striking ‘‘and section 
409(d)’’ and inserting ‘‘section 409(d), and section 457(d)’’. 
(c) TAX TREATMENT OF PAYMENTS FROM A SECTION 457 PLAN.— 
Subsection (p) of section 414 is amended by redesignating paragraph 
(12) as paragraph (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 described 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. 1226. MODIFICATION OF SAFE HARBOR RELIEF FOR HARDSHIP 
WITHDRAWALS FROM CASH OR DEFERRED ARRANGE-
MENTS. 
(a) IN GENERAL.—The Secretary of the Treasury shall revise 
the regulations relating to hardship distributions under section 
401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide 
that the period an employee is prohibited from making elective 
and employee contributions in order for a distribution to be deemed 
necessary to satisfy financial need shall be equal to 6 months. 
(b) EFFECTIVE DATE.—The revised regulations under subsection 
(a) shall apply to years beginning after December 31, 2000. 
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H. R. 2488—144 
Subtitle C—Increasing Portability for 
Participants 
SEC. 1231. 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) (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 distribution (within the meaning 
of section 402(c)(4) without regard to subparagraph 
(C) thereof), 
‘‘(ii) the employee transfers any portion of the prop-
erty such employee receives in such distribution to 
an eligible retirement 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 distributed, 
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 APPLICABLE.—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 roll-
overs 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’’. 
(C) DIRECT ROLLOVER.—Paragraph (1) of section 457(d) 
is amended by striking ‘‘and’’ at the end of subparagraph 
(A), by striking the period at the end of subparagraph 
(B) and inserting ‘‘, and’’, and by inserting after subpara-
graph (B) the following: 
‘‘(C) in the case of a plan maintained by an employer 
described in subsection (e)(1)(A), the plan meets require-
ments similar to the requirements of section 401(a)(31). 
Any amount transferred in a direct trustee-to-trustee transfer 
in accordance with section 401(a)(31) shall not be includible 
in gross income for the taxable year of transfer.’’. 
(D) WITHHOLDING.— 
(i) Paragraph (12) of section 3401(a) is amended 
by adding at the end the following: 
‘‘(E) under or to an eligible deferred compensation plan 
which, at the time of such payment, is a plan described 
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H. R. 2488—145 
in section 457(b) maintained by an employer described 
in section 457(e)(1)(A); or’’. 
(ii) Paragraph (3) of section 3405(c) is amended 
to read as follows: 
‘‘(3) ELIGIBLE
ROLLOVER
DISTRIBUTION.—For purposes of 
this subsection, the term ‘eligible rollover distribution’ has the 
meaning given such term by section 402(f )(2)(A).’’. 
(iii) LIABILITY FOR WITHHOLDING.—Subparagraph 
(B) of section 3405(d)(2) is amended by striking ‘‘or’’ 
at the end of clause (ii), by striking the period at 
the end of clause (iii) and inserting ‘‘, or’’, and by 
adding at the end the following: 
‘‘(iv) section 457(b).’’. 
(2) ROLLOVERS TO SECTION 457 PLANS.— 
(A) IN GENERAL.—Section 402(c)(8)(B) (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 employer described 
in section 457(e)(1)(A).’’. 
(B) SEPARATE ACCOUNTING.—Section 402(c) 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 accept transfers or rollovers from such retirement 
plans.’’. 
(C) 10 PERCENT ADDITIONAL TAX.—Subsection (t) of sec-
tion 72 (relating to 10-percent additional tax on early dis-
tributions from qualified retirement plans) is amended by 
adding at the end the following new paragraph: 
‘‘(9) SPECIAL RULE FOR ROLLOVERS TO SECTION 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 described 
in 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) (relating to rollover amounts) is amended by 
striking ‘‘such distribution’’ and all that follows and inserting 
‘‘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) (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).’’. 
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H. R. 2488—146 
(c) EXPANDED EXPLANATION TO RECIPIENTS OF ROLLOVER DIS-
TRIBUTIONS.—Paragraph (1) of section 402(f ) (relating to written 
explanation to recipients of distributions eligible for rollover treat-
ment) 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 following new 
subparagraph: 
‘‘(E) of the provisions under which distributions from 
the eligible retirement plan receiving the distribution may 
be subject to restrictions and tax consequences which are 
different from those applicable to distributions from the 
plan making such distribution.’’. 
(d) SPOUSAL ROLLOVERS.—Section 402(c)(9) (relating to rollover 
where spouse receives distribution 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) 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) is amended by striking ‘‘or 408(d)(3)’’ 
and inserting ‘‘408(d)(3), or 457(e)(16)’’. 
(3) Section 401(a)(31)(B) 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) 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 ) is amended by striking 
‘‘from an eligible retirement plan’’. 
(6) Subparagraphs (A) and (B) of section 402(f )(1) are 
amended by striking ‘‘another eligible retirement plan’’ and 
inserting ‘‘an eligible retirement plan’’. 
(7) Subparagraph (B) of section 403(b)(8) is amended to 
read as follows: 
‘‘(B) CERTAIN RULES MADE APPLICABLE.—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 payor 
in lieu of the plan administrator.’’. 
(8) Section 408(a)(1) 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) are each 
amended by striking ‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8), 
408(d)(3), and 457(e)(16)’’. 
(10) Section 415(c)(2) is amended by striking ‘‘and 408(d)(3)’’ 
and inserting ‘‘408(d)(3), and 457(e)(16)’’. 
(11) Section 4973(b)(1)(A) 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 sec-
tion shall apply to distributions after December 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 retirement 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 
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H. R. 2488—147 
to such plan on behalf of such individual which is permitted 
solely by reason of any amendment made by this section. 
SEC. 1232. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT 
PLANS. 
(a) IN
GENERAL.—Subparagraph (A) of section 408(d)(3) 
(relating to rollover amounts) is amended by adding ‘‘or’’ at the 
end of clause (i), by striking clauses (ii) and (iii), and by adding 
at the end the following: 
‘‘(ii) the entire amount received (including money 
and any other property) is paid into an eligible retire-
ment plan for the benefit of such individual not later 
than the 60th day after the date on which the payment 
or distribution is received, except that the maximum 
amount which may be paid into such plan may not 
exceed the portion of the amount received which is 
includible in gross income (determined without regard 
to this paragraph). 
For purposes of clause (ii), the term ‘eligible retirement 
plan’ means an eligible retirement plan described in clause 
(iii), (iv), (v), or (vi) of section 402(c)(8)(B).’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Paragraph (1) of section 403(b) is amended by striking 
‘‘section 408(d)(3)(A)(iii)’’ and inserting ‘‘section 408(d)(3)(A)(ii)’’. 
(2) Clause (i) of section 408(d)(3)(D) is amended by striking 
‘‘(i), (ii), or (iii)’’ and inserting ‘‘(i) or (ii)’’. 
(3) Subparagraph (G) of section 408(d)(3) is amended to 
read as follows: 
‘‘(G) SIMPLE RETIREMENT ACCOUNTS.—In the case of 
any payment or distribution out of a simple retirement 
account (as defined in subsection (p)) to which section 
72(t)(6) applies, this paragraph shall not apply unless such 
payment or distribution is paid into another simple retire-
ment account.’’. 
(c) EFFECTIVE DATE; SPECIAL RULE.— 
(1) EFFECTIVE DATE.—The amendments made by this sec-
tion shall apply to distributions after December 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 retirement 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 permitted 
solely by reason of the amendments made by this section. 
SEC. 1233. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS. 
(a) ROLLOVERS FROM EXEMPT TRUSTS.—Paragraph (2) of section 
402(c) (relating to maximum amount which may be rolled over) 
is amended by adding at the end the following: ‘‘The preceding 
sentence shall not apply to such distribution to the extent— 
‘‘(A) such portion is transferred in a direct trustee- 
to-trustee transfer to a qualified trust which is part of 
a plan which is a defined contribution plan and which 
agrees to separately account for amounts so transferred, 
including separately accounting for the portion of such 
distribution which is includible in gross income and the 
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H. R. 2488—148 
portion of such distribution which is not so includible, 
or 
‘‘(B) such portion is transferred to an eligible retire-
ment plan described in clause (i) or (ii) of paragraph 
(8)(B).’’. 
(b) OPTIONAL DIRECT TRANSFER OF ELIGIBLE ROLLOVER DIS-
TRIBUTIONS.—Subparagraph (B) of section 401(a)(31) (relating to 
limitation) is amended by adding at the end the following: ‘‘The 
preceding sentence shall not apply to such distribution if the plan 
to which such distribution is transferred— 
‘‘(i) agrees to separately account for amounts so 
transferred, including separately accounting for the 
portion of such distribution which is includible in gross 
income and the portion of such distribution which is 
not so includible, or 
‘‘(ii) is an eligible retirement plan described in 
clause (i) or (ii) of section 402(c)(8)(B).’’. 
(c) RULES FOR APPLYING SECTION 72 TO IRAS.—Paragraph (3) 
of section 408(d) (relating to special rules for applying section 
72) is amended by inserting at the end the following: 
‘‘(H) APPLICATION OF SECTION 72.— 
‘‘(i) IN GENERAL.—If— 
‘‘(I) a distribution is made from an individual 
retirement plan, and 
‘‘(II) a rollover contribution is made to an 
eligible retirement plan described in section 
402(c)(8)(B)(iii), (iv), (v), or (vi) with respect to 
all or part of such distribution, 
then, notwithstanding paragraph (2), the rules of 
clause (ii) shall apply for purposes of applying section 
72. 
‘‘(ii) APPLICABLE RULES.—In the case of a distribu-
tion described in clause (i)— 
‘‘(I) section 72 shall be applied separately to 
such distribution, 
‘‘(II) notwithstanding the pro rata allocation 
of income on, and investment in, the contract to 
distributions under section 72, the portion of such 
distribution rolled over to an eligible retirement 
plan described in clause (i) shall be treated as 
from income on the contract (to the extent of the 
aggregate income on the contract from all indi-
vidual retirement plans of the distributee), and 
‘‘(III) appropriate adjustments shall be made 
in applying section 72 to other distributions in 
such taxable year and subsequent taxable years.’’. 
(d) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions made after December 31, 2000. 
SEC. 1234. HARDSHIP EXCEPTION TO 60-DAY RULE. 
(a) EXEMPT TRUSTS.—Paragraph (3) of section 402(c) (relating 
to transfer must be made within 60 days of receipt) is amended 
to read as follows: 
‘‘(3) TRANSFER MUST BE MADE WITHIN 60 DAYS OF RECEIPT.— 
‘‘(A) IN GENERAL.—Except as provided in subparagraph 
(B), paragraph (1) shall not apply to any transfer of a 
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H. R. 2488—149 
distribution made after the 60th day following the day 
on which the distributee received the property distributed. 
‘‘(B) HARDSHIP EXCEPTION.—The Secretary may waive 
the 60-day requirement under subparagraph (A) where the 
failure to waive such requirement would be against equity 
or good conscience, including casualty, disaster, or other 
events beyond the reasonable control of the individual sub-
ject to such requirement.’’. 
(b) IRAS.—Paragraph (3) of section 408(d) (relating to rollover 
contributions), as amended by section 1233, is amended by adding 
after subparagraph (H) the following new subparagraph: 
‘‘(I) WAIVER OF 60-DAY REQUIREMENT.—The Secretary 
may waive the 60-day requirement under subparagraphs 
(A) and (D) where the failure to waive such requirement 
would be against equity or good conscience, including cas-
ualty, disaster, or other events beyond the reasonable con-
trol of the individual subject to such requirement.’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after December 31, 2000. 
SEC. 1235. TREATMENT OF FORMS OF DISTRIBUTION. 
(a) PLAN TRANSFERS.— 
(1) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 
Paragraph (6) of section 411(d) (relating to accrued benefit 
not to be decreased by amendment) is amended by adding 
at the end the following: 
‘‘(D) PLAN TRANSFERS.— 
‘‘(i) A defined contribution plan (in this subpara-
graph referred to as the ‘transferee plan’) shall not 
be treated as failing to meet the requirements of this 
subsection merely because the transferee plan does 
not provide some or all of the forms of distribution 
previously available under another defined contribu-
tion plan (in this subparagraph referred to as the 
‘transferor plan’) to the extent that— 
‘‘(I) the forms of distribution previously avail-
able under the transferor plan applied to the 
account of a participant or beneficiary under the 
transferor plan that was transferred from the 
transferor plan to the transferee plan pursuant 
to a direct transfer rather than pursuant to a 
distribution from the transferor plan, 
‘‘(II) the terms of both the transferor plan 
and the transferee plan authorize the transfer 
described in subclause (I), 
‘‘(III) the transfer described in subclause (I) 
was made pursuant to a voluntary election by 
the participant or beneficiary whose account was 
transferred to the transferee plan, 
‘‘(IV) the election described in subclause (III) 
was made after the participant or beneficiary 
received a notice describing the consequences of 
making the election, 
‘‘(V) if the transferor plan provides for an 
annuity as the normal form of distribution under 
the plan in accordance with section 417, the 
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H. R. 2488—150 
transfer is made with the consent of the partici-
pant’s spouse (if any), and such consent meets 
requirements similar to the requirements imposed 
by section 417(a)(2), and 
‘‘(VI) the transferee plan allows the participant 
or beneficiary described in clause (iii) to receive 
any distribution to which the participant or bene-
ficiary is entitled under the transferee plan in 
the form of a single sum distribution. 
‘‘(ii) Clause (i) shall apply to plan mergers and 
other transactions having the effect of a direct transfer, 
including consolidations of benefits attributable to dif-
ferent employers within a multiple employer plan. 
‘‘(E) ELIMINATION OF FORM OF DISTRIBUTION.—Except 
to the extent provided in regulations, a defined contribution 
plan shall not be treated as failing to meet the require-
ments of this section merely because of the elimination 
of a form of distribution previously available thereunder. 
This subparagraph shall not apply to the elimination of 
a form of distribution with respect to any participant 
unless— 
‘‘(i) a single sum payment is available to such 
participant at the same time or times as the form 
of distribution being eliminated, and 
‘‘(ii) such single sum payment is based on the 
same or greater portion of the participant’s account 
as the form of distribution being eliminated.’’. 
(2) AMENDMENT TO ERISA.—Section 204(g) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) 
is amended by adding at the end the following: 
‘‘(4)(A) A defined contribution plan (in this subparagraph 
referred to as the ‘transferee plan’) shall not be treated as failing 
to meet the requirements of this subsection merely because the 
transferee plan does not provide some or all of the forms of distribu-
tion previously available under another defined contribution plan 
(in this subparagraph referred to as the ‘transferor plan’) to the 
extent that— 
‘‘(i) the forms of distribution previously available under 
the transferor plan applied to the account of a participant 
or beneficiary under the transferor plan that was transferred 
from the transferor plan to the transferee plan pursuant to 
a direct transfer rather than pursuant to a distribution from 
the transferor plan; 
‘‘(ii) the terms of both the transferor plan and the transferee 
plan authorize the transfer described in clause (i); 
‘‘(iii) the transfer described in clause (i) was made pursuant 
to a voluntary election by the participant or beneficiary whose 
account was transferred to the transferee plan; 
‘‘(iv) the election described in clause (iii) was made after 
the participant or beneficiary received a notice describing the 
consequences of making the election; 
‘‘(v) if the transferor plan provides for an annuity as the 
normal form of distribution under the plan in accordance with 
section 205, the transfer is made with the consent of the partici-
pant’s spouse (if any), and such consent meets requirements 
similar to the requirements imposed by section 205(c)(2); and 
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