SMART trust, or a SMART rollover plan (or,
in the case of a distribution that does not ex-
ceed the dollar limit in effect under section
411(a)(11)(A), any other individual retirement
plan).
‘‘(5) AMOUNT
OF
ANNUAL
ACCRUED
BEN-
EFIT.—A plan meets the requirements of this para-
graph for any year only if the requirements of sub-
section (b)(5) are met for such year.
‘‘(6) FUNDING.—
‘‘(A) IN GENERAL.—A plan meets the re-
quirements of this paragraph for any year only
if—
‘‘(i) the requirements of subparagraph
(A) of subsection (b)(6) are met for such
year,
‘‘(ii) in the case of a plan which has
an unfunded annuity amount with respect
to the account of any participant, the plan
requires that the employer make an addi-
tional contribution to such plan (at the
time the annuity contract to which such
amount relates is purchased) equal to the
unfunded annuity amount, and
‘‘(iii) in the case of a plan which has
an unfunded prior year liability with re-
spect to the account of any participant as
of the close of such plan year, the plan re-
quires that the employer make an addi-
tional contribution to such plan for such
year equal to the amount of such unfunded
prior year liability no later than 81⁄2
months following the end of the plan year.
‘‘(B) UNFUNDED ANNUITY AMOUNT.—For
purposes of this paragraph, the term ‘unfunded
annuity amount’ means, with respect to the ac-
count of any participant for whom an annuity
is being purchased, the excess (if any) of—
‘‘(i) the amount necessary to purchase
an annuity contract which meets the re-
quirements of subsection (b)(4) in the
amount of the participant’s accrued benefit
determined under paragraph (5), over
‘‘(ii) the balance in such account at
the time such contract is purchased.
‘‘(C) UNFUNDED
PRIOR
YEAR
LIABIL-
ITY.—For purposes of this paragraph, the term
‘unfunded prior year liability’ means, with re-
spect to any plan year, the excess (if any) of—
‘‘(i) the aggregate present value of the
participants’ accrued benefits under the
plan as of the close of the prior plan year,
over
‘‘(ii) the value of the plan’s assets de-
termined under section 412(c)(2) as of the
close of the plan year (determined without
regard to any contributions for such plan
year).
Such present value shall be determined using
the assumptions specified in subparagraph (D).
‘‘(D) ACTUARIAL ASSUMPTIONS.—In deter-
mining the amount required to be contributed
under subparagraph (A)—
‘‘(i) the assumed interest rate shall be
5 percent per year,
‘‘(ii) the assumed mortality shall be
determined under the applicable mortality
table (as defined in section 417(e)(3), as
modified by the Secretary so that it does
not include any assumption for preretire-
ment mortality), and
‘‘(iii) the assumed retirement age
shall be 65.
‘‘(E) CHANGES IN MORTALITY TABLE.—If
the applicable mortality table under section
417(e)(3) for any plan year is not the same as
such table for the prior plan year, the Secretary
shall prescribe regulations which phase in the
effect of the changes over a reasonable period
of plan years determined by the Secretary.
‘‘(F) PENALTY FOR FAILURE TO MAKE RE-
QUIRED CONTRIBUTION.—The taxes imposed by
section 4971 shall apply to a failure to make
the contribution required by this paragraph in
the same manner as if the amount of the failure
were an accumulated funding deficiency to
which such section applies.
‘‘(7) 
SEPARATE
ACCOUNTS
FOR
PARTICI-
PANTS.—A plan meets the requirements of this
paragraph for any year only if the plan provides—
‘‘(A) for an individual account for each
participant, and
‘‘(B) for benefits based solely on—
‘‘(i) the amount contributed to the
participant’s account,
‘‘(ii) any income, expenses, gains and
losses, and any forfeitures of accounts of
other participants which may be allocated
to such participant’s account, and
‘‘(iii) the amount of any unfunded an-
nuity amount with respect to the partici-
pant.
‘‘(8) TRUST MAY NOT HOLD SECURITIES WHICH
ARE NOT READILY TRADABLE.—A plan meets the
requirements of this paragraph only if the plan pro-
hibits the trust from holding directly or indirectly se-
curities which are not readily tradable on an estab-
lished securities market. Nothing in this paragraph
shall prohibit the trust from holding insurance com-
pany products regulated by State law.
‘‘(9) DEFINITIONS.—The definitions applicable
under subsection (b)(8) shall apply for purposes of
this subsection.
‘‘(d) SPECIAL RULES FOR SMART ANNUITIES AND
TRUSTS.—For purposes of section 401(a), a SMART an-
nuity and a SMART trust shall be treated as meeting the
requirements of the following provisions:
‘‘(1) Section 401(a)(4) (relating to non-
discrimination rules).
‘‘(2) Section 401(a)(26) (relating to minimum
participation).
(A) Section 219(b) is amended by adding
at the end the following new paragraph:
‘‘(5) SPECIAL RULE FOR SMART ANNUITIES.—
This section shall not apply with respect to any
amount contributed to a SMART annuity estab-
lished under section 408B(b).’’
(B) Section 219(g)(5)(A) (defining active
participant) is amended by striking ‘‘or’’ at the
end of clause (v) and by adding at the end the
following new clause:
‘‘(vii) any SMART annuity (within
the meaning of section 408B), or’’.
(c) CONTRIBUTIONS AND DISTRIBUTIONS.—
(1) Section 402 is further amended by adding
at the end the following new subsection:
‘‘(m) TREATMENT OF SMART ANNUITIES.—Rules
similar to the rules of paragraphs (1) and (3) of sub-
section (h) shall apply to contributions and distributions
with respect to SMART annuities under section 408B.’’
(2) Section 408(d)(3) is amended by adding at
the end the following new subparagraph:
‘‘(H) SMART 
ANNUITIES.—This para-
graph shall not apply to any amount paid or
distributed out of a SMART annuity (as de-
fined in section 408B) unless it is paid in a
trustee-to-trustee transfer into a SMART roll-
over plan.’’
(3)(A) Section 412(h) is amended by striking
‘‘or’’ at the end of paragraph (5), by striking the pe-
riod at the end of paragraph (6) and inserting ‘‘,
or’’, and by inserting after paragraph (6) the fol-
lowing new paragraph:
‘‘(7) any plan providing for the purchase of any
SMART annuity or any SMART plan.’’
(B) Section 301(a) of Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1081) is
amended by striking ‘‘or’’ at the end of paragraph
(9), by striking the period at the end of paragraph
(10) and inserting ‘‘; or’’, and by adding at the end
the following new paragraph:
‘‘(11) any plan providing for the purchase of
any SMART annuity or any SMART plan (as such
terms are defined in section 408B of such Code).’’
(4) Section 415(b) is amended by adding at the
end the following new paragraph:
‘‘(12) TREATMENT OF SMART ANNUITIES AND
TRUSTS.—A SMART annuity and a SMART trust
shall be treated as meeting the requirements of this
section, but distributions from such an annuity or
trust shall be taken into account in determining
whether any other plan satisfies the requirements of
this section.’’
(d) 
INCREASED
PENALTY
ON
EARLY
WITH-
DRAWALS.—Section 72(t) (relating to additional tax on
early distributions) is amended by adding at the end the
following new paragraph:
‘‘(9) SPECIAL
RULES
FOR
SMART
ANNUITIES
AND TRUSTS.—In the case of any amount received
from a SMART annuity, a SMART trust, or a
SMART rollover plan (within the meaning of section
408B), paragraph (1) shall be applied by sub-
stituting ‘20 percent’ for ‘10 percent’ and paragraph
(2) shall be applied by substituting ‘age 65’ for ‘age
591⁄2’.’’
(e) SIMPLIFIED EMPLOYER REPORTS.—
(1) SMART ANNUITIES.—Section 408(l) (relat-
ing to simplified employer reports) is amended by
adding at the end the following new paragraph:
‘‘(3) SMART ANNUITIES.—
‘‘(A) SIMPLIFIED REPORT.—The employer
maintaining any SMART annuity (within the
meaning of section 408B) shall file a simplified
annual return with the Secretary containing
only the information described in subparagraph
(B).
‘‘(B) CONTENTS.—The return required by
subparagraph (A) shall set forth—
‘‘(i) the name and address of the em-
ployer,
‘‘(ii) the date the plan was adopted,
‘‘(iii) the number of employees of the
employer,
‘‘(iv) the number of such employees
who are eligible to participate in the plan,
‘‘(v) the total amount contributed by
the employer to each such annuity for such
year and the minimum amount required
under section 408B to be so contributed,
‘‘(vi) the percentage elected under sec-
tion 408B(b)(5)(B),
‘‘(vii) the name of the issuer,
‘‘(viii) 
the 
employer 
identification
number,
‘‘(ix) the name of the plan, and
‘‘(x) the date of the contribution.
‘‘(C) REPORTING BY ISSUER OF SMART AN-
NUITY.—
‘‘(i) IN GENERAL.—The issuer of each
SMART annuity shall provide to the owner
of the annuity for each year a statement
setting forth as of the close of such year—
‘‘(I) the benefits guaranteed at
age 65 under the annuity, and
‘‘(II) the cash surrender value of
the annuity.
‘‘(ii) SUMMARY
DESCRIPTION.—The
issuer of any SMART annuity shall pro-
vide to the employer maintaining the annu-
ity for each year a description containing
the following information:
‘‘(I) The name and address of
the employer and the issuer.
‘‘(II) The requirements for eligi-
bility for participation.
‘‘(III) The benefits provided with
respect to the annuity.
‘‘(IV) The procedures for, and ef-
fects of, withdrawals (including roll-
overs) from the annuity.
‘‘(D) TIME
AND
MANNER
OF
REPORT-
ING.—Any return, report, or statement required
under this paragraph shall be made in such
form and at such time as the Secretary shall
prescribe.’’
(2) SMART TRUSTS.—Section 6059 (relating
to actuarial reports) is amended by redesignating
subsections (c) and (d) as subsections (d) and (e),
respectively, and by inserting after subsection (b)
the following new subsection:
‘‘(c) SMART TRUSTS.—In the case of a SMART
trust (within the meaning of section 408B), the Secretary
shall require a simplified actuarial report which
contains—
‘‘(1) information similar to the information re-
quired in section 408(l)(3)(B),
‘‘(2) the fair market value of the assets of the
trust,
‘‘(3) the amounts distributed directly to partici-
pants,
‘‘(4) the amounts transferred to SMART roll-
over plans, and
‘‘(5) the present value of the annual accrued
benefits under the plan to which the trust relates.’’
(f) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 219(g)(5) is
amended by striking ‘‘or’’ at the end of clause (v)
and by inserting after clause (vi) the following new
clause:
‘‘(vii) any SMART trust or SMART
annuity (within the meaning of section
408B), or’’.
(2) Section 280G(b)(6) is amended by striking
‘‘or’’ at the end of subparagraph (C), by striking the
period at the end of subparagraph (D) and inserting
‘‘, or’’ and by adding after subparagraph (D) the
following new subparagraph:
‘‘(E) a SMART annuity described in sec-
tion 408B.’’
(3) Subsections (b), (c), (m)(4)(B), and
(n)(3)(B) of section 414 are each amended by in-
serting ‘‘408B,’’ after ‘‘408(p),’’.
(4) Section 4972(d)(1)(A) is amended by strik-
ing ‘‘and’’ at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting
‘‘, and’’, and by adding after clause (iv) the fol-
lowing new clause:
‘‘(v) any SMART annuity (within the
meaning of section 408B).’’
(g) REPORTING REQUIREMENTS UNDER ERISA.—
Section 101 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1021) is amended by redesig-
nating subsection (h) as subsection (i) and by inserting
after subsection (g) the following new subsection:
‘‘(h) SMART ANNUITIES.—
‘‘(1) NO EMPLOYER REPORTS.—Except as pro-
vided in this subsection, no report shall be required
under this section by an employer maintaining a
SMART annuity under section 408B(b) of the Inter-
nal Revenue Code of 1986.
‘‘(2) SUMMARY
DESCRIPTION.—The issuer of
any SMART annuity shall provide to the employer
maintaining the annuity for each year a description
containing the following information:
‘‘(A) The name and address of the em-
ployer and the issuer.
‘‘(B) The requirements for eligibility for
participation.
‘‘(C) The benefits provided with respect to
the annuity.
‘‘(D) The procedures for, and effects of,
withdrawals (including rollovers) from the an-
nuity.
‘‘(3) EMPLOYEE NOTIFICATION.—The employer
shall provide each employee eligible to participate in
the SMART annuity with the description described
in paragraph (2) at the same time as the notifica-
tion required under section 408B(b)(5)(B) of the In-
ternal Revenue Code of 1986.’’
(h) $5 PER PARTICIPANT PBGC PREMIUM.—Sub-
paragraph (A) of section 4006(a)(3) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1306)
is amended—
(1) by inserting ‘‘not described in clause (iv)’’
after ‘‘in the case of a single-employer plan’’ in
clause (i),
(2) by striking the period at the end of clause
(iii) and inserting ‘‘; and’’, and
(3) by inserting after clause (iii) the following
new clause:
‘‘(iv) in the case of a single-employer plan de-
scribed in section 408B(c) of the Internal Revenue
Code of 1986, an amount equal to $5 for each par-
ticipant.’’.
(i) CLERICAL AMENDMENT.—The table of sections
for subpart A of part I of subchapter D of chapter 1 is
amended by inserting after the item relating to section
408A the following new item:
‘‘Sec. 408B. SMART plans.’’
(j) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
Subtitle C—Improved Fairness in
Retirement Plan Benefits
SEC. 121. AMENDMENTS TO SIMPLE RETIREMENT AC-
COUNTS.
(a) MINIMUM CONTRIBUTION REQUIREMENT.—
(1) IN
GENERAL.—Paragraph (2) of section
408(p) (defining qualified salary reduction arrange-
ment) is amended—
(A) by striking clauses (iii) and (iv) of sub-
paragraph (A) and inserting the following new
clauses:
‘‘(iii) the employer is required to make
a matching contribution to the simple re-
tirement account for any year in an
amount equal to—
‘‘(I) so much of the amount the
employee elects under clause (i)(I) as
does not exceed 3 percent of com-
pensation for the year, and
‘‘(II) 
a 
uniform 
percentage
(which is at least 50 percent but not
more than 100 percent) of the amount
the employee elects under clause (i)(I)
to the extent that such amount ex-
ceeds 3 percent but does not exceed 5