date for an individual is the last day 
of the calendar year preceding the 
earlier of— 
‘‘(aa) the calendar year in 
which the employee attains age 
701⁄2, or 
‘‘(bb) the calendar year in 
which the employee dies. 
‘‘(II) 
SUBSEQUENT
MEASURE-
MENT DATES.—If, in a calendar year, 
an individual who is exempted from 
the requirements of this paragraph 
pursuant to clause (i) receives con-
tributions, rollovers, or transfers of 
amounts, or accrues additional bene-
fits under a defined benefit plan, that 
were not previously taken into account 
in applying this subparagraph, then 
the last day of that calendar year 
shall be a new measurement date and 
a new determination shall be made as 
to whether clause (i) applies. 
‘‘(v) DETERMINING
VALUE
OF
DE-
FINED
BENEFIT
PLAN
BENEFITS.—The 
value of defined benefit plan benefits is de-
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termined in accordance with the applicable 
interest rate and applicable mortality rate 
assumptions under section 417(e), except 
that the value shall be equal to the amount 
of the single sum payment payable to the 
extent available under the plan. 
‘‘(vi) PHASE-IN
OF
MINIMUM
DIS-
TRIBUTION REQUIREMENTS.—For an indi-
vidual whose aggregate balance exceeds the 
exemption level in clause (i) by less than 
$10,000, required minimum distribution 
requirements will phase in based on the 
ratio of— 
‘‘(I) the amount by which the ag-
gregate balance exceeds the exemption 
level, to 
‘‘(II) $10,000. 
‘‘(vii) 
COST
OF
LIVING
ADJUST-
MENTS.—The Secretary shall adjust annu-
ally the $100,000 amount specified in 
clause (i) for increases in the cost-of-living 
at the same time and in the same manner 
as adjustments under section 415(d); ex-
cept that the base period shall be the cal-
endar quarter beginning July 1, 2012, and 
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any increase which is not a multiple of 
$5,000 shall be rounded to the next lowest 
multiple of $5,000.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to initial measurement dates occur-
ring on or after December 31, 2012. 
SEC. 402. ALTERNATIVE METHODS FOR ELECTRONIC DIS-
CLOSURE. 
(a) AMENDMENT TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.—Part 1 of subtitle B of 
title I of the Employee Retirement Income Security Act 
of 1974 is amended by adding at the end thereof the fol-
lowing new section: 
‘‘SEC. 112. ELECTRONIC COMMUNICATION OF PENSION 
PLAN INFORMATION. 
‘‘(a) IN GENERAL.—In the case of any documents or 
materials that are required under this title to be furnished 
to a plan participant, beneficiary, or other individual with 
respect to a pension plan, such documents or materials 
shall be furnished in accordance with subsection (b) or (c). 
This section shall apply to documents or materials that 
are required to be furnished by operation of law or on indi-
vidual request and to documents or materials described 
in paragraphs (2), (3), (4), and (5) of subsection (b). For 
purposes of this section— 
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‘‘(1) the term ‘documents or materials’ shall in-
clude, without limitation, reports, statements, no-
tices, notifications, and other information, and 
‘‘(2) the term ‘recipient’ shall mean all plan 
participants, beneficiaries, and any other persons en-
titled to documents under this title or regulations 
issued thereunder (including, but not limited to, ‘al-
ternate payees’ within the meaning of section 
206(d)(3) and ‘qualified beneficiaries’ within the 
meaning of section 607(3)). 
‘‘(b) WEBSITES.—Any documents or materials de-
scribed in subsection (a) may be furnished to a recipient 
by posting it on one or more websites if— 
‘‘(1) ACCESS.—Access to such documents or 
materials is available to such recipient on such 
website or websites on either a timely or continuous 
basis, as appropriate. 
‘‘(2) NOTIFICATION
OF
AVAILABILITY.—Such 
recipient has been furnished notification of the avail-
ability of such documents or materials on such 
website or websites and how such documents or ma-
terials can be accessed. 
‘‘(3) FREE PAPER COPY.—Such recipient has 
been apprised of his ability to request and obtain, 
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free of charge, a paper copy of such documents or 
materials. 
‘‘(4) TIMING AND FORM OF NOTIFICATIONS.— 
The notifications described in paragraphs (2) and 
(3) are— 
‘‘(A) written in a manner calculated to be 
understood by the average plan participant, 
‘‘(B) except in the case of notifications de-
scribed in paragraph (5), furnished in advance 
of the date that the document or materials are 
required to be provided, and annually there-
after, and 
‘‘(C) furnished in a manner permitted 
under subsection (c). 
‘‘(5) ADDITIONAL NOTIFICATIONS.— 
‘‘(A) In the case of documents or materials 
described in subparagraph (B), the notifications 
described in paragraphs (2) and (3) must be 
provided within a reasonable period prior to the 
applicable date described in subparagraph 
(B)(ii). 
‘‘(B) Documents or materials are described 
in this subparagraph if they are described in 
subsection (a) and— 
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‘‘(i) such documents or materials re-
late to an event or other occurrence that 
was not scheduled at the time of any prior 
notification, 
‘‘(ii) the documents or materials relate 
to a date by which such recipient should be 
aware of such event or occurrence, and 
‘‘(iii) the recipient would not have had 
any reason to know that such date exists 
and applies to him without the notification. 
Documents or materials to which this require-
ment applies include, without limitation, notifi-
cations regarding a blackout period (as defined 
in section 101(i)(7)) and notifications regarding 
a change in the address of the website. 
‘‘(6) DEFINITION OF WEBSITE.—For purposes 
of this section, the term ‘website’ shall include any 
electronic application, site, or other accessible means 
of storing and displaying data or information. 
‘‘(c) PAPER OR ELECTRONIC COMMUNICATION.— 
‘‘(1) USE OF PAPER OR ELECTRONIC COMMU-
NICATION.—Any documents or materials described 
in subsection (a) may be furnished to a recipient in 
the following manner described in subparagraph (A), 
(B), (C), (D), or (E) of this paragraph, as deter-
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through the use of paper of his ability to re-
quest and obtain, free of charge, a paper copy 
of such documents or materials. 
‘‘(E) Such documents or materials may be 
furnished in any additional manner permitted 
by the Secretary or the Secretary of the Treas-
ury, as applicable. 
‘‘(2) PROTECTIONS
FOR
RECIPIENTS.—Elec-
tronic communications described in paragraph (1) 
(B), (C), or (D) shall only be permitted with respect 
to a plan if appropriate and necessary measures 
have been taken that are reasonably calculated to 
ensure that the system for furnishing documents or 
materials— 
‘‘(A) has safeguards to maximize the likeli-
hood of actual receipt of transmitted informa-
tion, 
‘‘(B) protects the confidentiality of a re-
cipient’s personal information, 
‘‘(C) is designed so that the electronically 
delivered documents or materials are prepared 
and furnished in a manner that is consistent 
with the style, format, and content require-
ments applicable to the documents or materials, 
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‘‘(D) if necessary, apprises each recipient 
of the significance of the documents or mate-
rials, 
‘‘(E) apprises each recipient of the ability 
to request and obtain a paper version of the 
electronically furnished documents or materials, 
and provides such paper version on request, and 
‘‘(F) to the extent required by identical 
regulations prescribed by the Secretary and the 
Secretary of the Treasury, facilitates the ability 
of a recipient who is an employee to make the 
request described in subparagraph (E) with re-
spect to documents or materials that are re-
quired to be furnished to such recipient after 
his termination of employment. 
‘‘(3) NOTIFICATIONS
REGARDING
CONSENT.— 
Electronic communications described in paragraph 
(1)(C) shall only be permitted with respect to a plan 
if recipients are provided with timely notifications 
with respect to— 
‘‘(A) the effect of the consent, 
‘‘(B) hardware and software requirements, 
and 
‘‘(C) changes in the hardware and software 
requirements.’’. 
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(b) AMENDMENT TO INTERNAL REVENUE CODE OF 
1986.—Section 414 of the Internal Revenue Code of 1986 
is amended by adding at the end thereof the following new 
subsection: 
‘‘(y) ELECTRONIC COMMUNICATION OF RETIREMENT 
PLAN INFORMATION.— 
‘‘(1) IN GENERAL.—In the case of any docu-
ments or materials that are required under this title 
to be furnished to a plan participant, beneficiary, or 
other individual with respect to a plan subject to 
this subchapter or to section 457, such documents or 
materials shall be furnished in accordance with para-
graph (2) or (3). This subsection shall apply to doc-
uments or materials that are required to be fur-
nished by operation of law or on individual request 
and to documents or materials described in subpara-
graphs (B), (C), (D), and (E) of paragraph (2). For 
purposes of this subsection— 
‘‘(A) the term ‘documents or materials’ 
shall include, without limitation, reports, state-
ments, notices, notifications, and other informa-
tion, and 
‘‘(B) the term ‘recipient’ shall mean all 
plan participants, beneficiaries, and any other 
persons entitled to documents under this sub-
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chapter or section 457 or regulations issued 
thereunder (including, but not limited to, ‘alter-
nate payees’ within the meaning of subsection 
(p)(8) and ‘qualified beneficiaries’ within the 
meaning of section 4980B(g)(1)). 
‘‘(2) WEBSITES.—Any documents or materials 
described in subsection (a) may be furnished to a re-
cipient by posting it on one or more websites if— 
‘‘(A) ACCESS.—Access to such documents 
or materials is available to such recipient on 
such website or websites on either a timely or 
continuous basis, as appropriate. 
‘‘(B) NOTIFICATION
OF
AVAILABILITY.— 
Such recipient has been furnished notification 
of the availability of such documents or mate-
rials on such website or websites and how such 
documents or materials can be accessed. 
‘‘(C) FREE PAPER COPY.—Such recipient 
has been apprised of his ability to request and 
obtain, free of charge, a paper copy of such 
documents or materials. 
‘‘(D) TIMING
AND
FORM
OF
NOTIFICA-
TIONS.—The notifications described in subpara-
graphs (B) and (C) are— 
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‘‘(i) written in a manner calculated to 
be understood by the average plan partici-
pant, 
‘‘(ii) except in the case of notifications 
described in subparagraph (E), furnished 
in advance of the date that the document 
or materials are required to be provided, 
and annually thereafter, and 
‘‘(iii) furnished in a manner permitted 
under paragraph (3). 
‘‘(E) ADDITIONAL NOTIFICATIONS.— 
‘‘(i) In the case of documents or ma-
terials described in clause (ii), the notifica-
tions described in subparagraphs (B) and 
(C) must be provided within a reasonable 
period prior to the applicable date de-
scribed in clause (ii)(II). 
‘‘(ii) Documents or materials are de-
scribed in this subparagraph if they are de-
scribed in subsection (a) and— 
‘‘(I) such documents or materials 
relate to an event or other occurrence 
that was not scheduled at the time of 
any prior notification, 
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‘‘(II) the documents or materials 
relate to a date by which such recipi-
ent should be aware of such event or 
occurrence, and 
‘‘(III) the recipient would not 
have had any reason to know that 
such date exists and applies to him 
without the notification. 
Documents or materials to which this re-
quirement applies include, without limita-
tion, notifications regarding a change in 
the address of the website. 
‘‘(F) DEFINITION OF WEBSITE.—For pur-
poses of this subsection, the term ‘website’ shall 
include any electronic application, site, or other 
accessible means of storing and displaying data 
or information. 
‘‘(3) PAPER
OR
ELECTRONIC
COMMUNICA-
TION.— 
‘‘(A) USE OF PAPER OR ELECTRONIC COM-
MUNICATION.—Any documents or materials de-
scribed in paragraph (1) may be furnished to a 
recipient in the following manner described in 
clause (i), (ii), (iii), (iv), or (v) of this para-
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‘‘(iv) Such documents or materials 
may be furnished electronically to a recipi-
ent who has the effective ability to access 
the electronic medium used and who has 
received notification through the use of 
paper of his ability to request and obtain, 
free of charge, a paper copy of such docu-
ments or materials. 
‘‘(v) Such documents or materials 
may be furnished in any additional manner 
permitted by the Secretary or the Sec-
retary of the Treasury, as applicable. 
‘‘(B) PROTECTIONS
FOR
RECIPIENTS.— 
Electronic communications described in sub-
paragraph (A) (ii), (iii), or (iv) shall only be 
permitted with respect to a plan if appropriate 
and necessary measures have been taken that 
are reasonably calculated to ensure that the 
system for furnishing documents or materials— 
‘‘(i) has safeguards to maximize the 
likelihood of actual receipt of transmitted 
information, 
‘‘(ii) protects the confidentiality of a 
recipient’s personal information, 
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‘‘(iii) is designed so that the electroni-
cally delivered documents or materials are 
prepared and furnished in a manner that 
is consistent with the style, format, and 
content requirements applicable to the doc-
uments or materials, 
‘‘(iv) if necessary, apprises each re-
cipient of the significance of the documents 
or materials, 
‘‘(v) apprises each recipient of the 
ability to request and obtain a paper 
version of the electronically furnished doc-
uments or materials, and provides such 
paper version on request, and 
‘‘(vi) to the extent required by iden-
tical regulations prescribed by the Sec-
retary and the Secretary of Labor, facili-
tates the ability of a recipient who is an 
employee to make the request described in 
clause (v) with respect to documents or 
materials that are required to be furnished 
to such recipient after his termination of 
employment. 
‘‘(C) NOTIFICATIONS
REGARDING
CON-
SENT.—Electronic communications described in 
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subparagraph (A)(iii) shall only be permitted 
with respect to a plan if recipients are provided 
with timely notifications with respect to— 
‘‘(i) the effect of the consent, 
‘‘(ii) hardware and software require-
ments, and 
‘‘(iii) changes in the hardware and 
software requirements.’’. 
(c) ASSURING COORDINATION.—The Secretary of the 
Treasury and the Secretary of Labor shall ensure, through 
the execution of an interagency memorandum of under-
standing among such Secretaries, that— 
(1) regulations, rulings, and interpretations 
issued by such Secretaries relating to the same mat-
ter over which such Secretaries have responsibility 
under section 112 of Employee Retirement Income 
Security Act of 1974 and 414(y) of the Internal 
Revenue Code of 1986 are administered so as to 
have the same effect at all times; and 
(2) coordination of policies relating to enforcing 
the same requirements through such Secretaries in 
order to have a coordinated enforcement strategy 
that avoids duplication of enforcement efforts and 
assigns priorities in enforcement. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply as of the date of enactment of this 
Act. 
SEC. 403. EXPANSION OF EMPLOYEE PLANS COMPLIANCE 
RESOLUTION SYSTEM. 
(a) IN GENERAL.—Not later than one year after the 
date of the enactment of this Act, the Secretary of the 
Treasury shall modify the Employee Plans Compliance 
Resolution System (as described in Revenue Procedure 
2008–50) to achieve the results specified in the succeeding 
subsections of this section and to further facilitate correc-
tions and compliance in such other means as the Secretary 
deems appropriate. 
(b) LOAN ERROR.— 
(1) In the case of plan loan errors for which 
corrections are specified under the voluntary compli-
ance program, self-correction shall be made available 
by methods applicable to such loans through the vol-
untary compliance program. 
(2) The Secretary of Labor shall treat any loan 
error corrected pursuant to paragraph (1) as meet-
ing the requirements of the Voluntary Fiduciary 
Correction Program of the Department of Labor. 
(c) 403(b) AND 457(b) PLAN CORRECTION.—The 
Secretary of the Treasury shall update the Employee 
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Plans Compliance Resolution System to provide the same 
type of comprehensive correction program that is available 
under such system to retirement plans qualified under sec-
tion 401(a) of the Internal Revenue Code of 1986 to— 
(1) plans maintained pursuant to section 
403(b) of such Code, and 
(2) plans maintained pursuant to section 
457(b) of such Code by an employer described in 
section 457(e)(1)(A) of such Code. 
(d) EPCRS FOR IRAS.—The Secretary of the Treas-
ury shall expand the Employee Plans Compliance Resolu-
tion System to allow custodians of individual retirement 
plans to address inadvertent errors for which the owner 
of an individual retirement plan was not at fault, including 
(but not limited to)— 
(1) waivers of the excise tax that would other-
wise apply under section 4974 of the Internal Rev-
enue Code of 1986, 
(2) under the self-correction component of the 
Employee Plans Compliance Resolution System, 
waivers of the 60-day deadline for a rollover where 
the deadline is missed for reasons beyond the rea-
sonable control of the account owner, and 
(3) rules permitting a nonspouse beneficiary to 
return distributions to an inherited individual retire-
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ment plan described in section 408(d)(3)(C) of the 
Internal Revenue Code of 1986 in a case where, due 
to an inadvertent error by a service provider, the 
beneficiary had reason to believe that the distribu-
tion could be rolled over without inclusion in income 
of any part of the distributed amount. 
(e) REQUIRED MINIMUM DISTRIBUTION CORREC-
TIONS.—The Secretary of the Treasury shall expand the 
Employee Plans Compliance Resolution System to allow 
plans to which such system applies and custodians of indi-
vidual retirement plans to self-correct, without an excise 
tax, any inadvertent errors pursuant to which a distribu-
tion is made no more than 180 days after it was required 
to be made. 
(f) AUTOMATIC FEATURE ERROR CORRECTION.—In 
order to promote the adoption of automatic enrollment 
and automatic escalation, the Secretary of the Treasury 
shall modify the Employee Plans Compliance Resolution 
System to establish specific correction methods for errors 
in implementing automatic enrollment and automatic es-
calation features. 
SEC. 404. USE OF FORFEITURES TO FUND SAFE HARBOR 
CONTRIBUTIONS. 
(a) IN GENERAL.—Section 401(k) is amended by 
adding at the end the following new paragraph: 
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‘‘(14) A matching contribution or nonelective 
contribution described in paragraph (3)(D)(ii), sub-
paragraph (B) or (C) of paragraph (12), or para-
graph (13)(D) shall not fail to satisfy the definition 
under such paragraph merely because the contribu-
tion is funded in whole or in part by forfeitures.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to forfeitures allocated in ac-
cordance with section 401(k)(14) of the Internal Revenue 
Code of 1986 (as amended by subsection (a)) before, on 
or after the date of enactment of this Act. 
SEC. 405. SUBSTANTIAL CESSATION OF OPERATIONS. 
(a) IN GENERAL.—Subsection (e) of section 4062 of 
the Employee Retirement Income Security Act of 1974 is 
amended by striking ‘‘If an employer’’ and inserting ‘‘(1) 
IN GENERAL.—If an employer’’, and by adding at the end 
thereof the following new paragraph: 
‘‘(2) 
SUBSTANTIAL
CESSATION
OF
OPER-
ATIONS.—An employer shall not be treated as hav-
ing a cessation described in paragraph (1) unless— 
‘‘(A) all operations at a facility in a loca-
tion are ceased and— 
‘‘(i) such cessation is reasonably ex-
pected to be permanent, 
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‘‘(ii) no portion of such operations is 
moved to another facility at a different lo-
cation, 
‘‘(iii) no portion of such operations is 
assumed or otherwise transferred to an-
other employer, and 
‘‘(iv) no other operations are reason-
ably expected to be maintained at such fa-
cility, and 
‘‘(B) as a result of the cessation described 
in subparagraph (A), more than 20 percent of 
the employees of the employer have a termi-
nation of employment that is reasonably ex-
pected to be permanent. For purposes of this 
subparagraph, employees of the employer shall 
include all employees treated as employed by a 
single employer under sections 210(c) and 
(d).’’. 
(b) DIRECTION TO THE CORPORATION.—The Pen-
sion Benefit Guaranty Corporation shall not take any en-
forcement, administrative, or other actions pursuant to 
section 4062(e) of such Act that are inconsistent with sub-
paragraph (A) of section 4062(e)(2) of such Act, as 
amended, without regard to whether such actions relate 
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to a cessation or other event that occurs before or after 
the date of enactment of this Act. 
(c) EFFECTIVE
DATE.—Subsection (b) and the 
amendment made by subsection (a) shall apply as of the 
date of enactment of this Act. 
SEC. 406. CHURCH PLAN CLARIFICATION. 
(a) APPLICATION OF CONTROLLED GROUP RULES TO 
CHURCH PLANS.— 
(1) IN GENERAL.—Section 414(c) is amended— 
(A) by striking ‘‘For purposes’’ and insert-
ing the following: 
‘‘(1) IN GENERAL.—For purposes’’, and 
(B) by adding at the end the following new 
paragraph: 
‘‘(2) CHURCH PLANS.— 
‘‘(A) GENERAL RULE.—Except as provided 
in subparagraphs (B) and (C) below, for pur-
poses of this subsection and subsection (m), an 
organization that is otherwise eligible to partici-
pate in a church plan as defined in subsection 
(e) shall not be aggregated with another such 
organization and treated as a single employer 
with such other organization unless— 
‘‘(i) one such organization provides di-
rectly or indirectly at least 80 percent of 
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the operating funds for the other organiza-
tion during the preceding tax year of the 
recipient organization, and 
‘‘(ii) there is a degree of common 
management or supervision between the or-
ganizations. 
For purposes of this subparagraph, a degree of 
common management or supervision exists only 
if the organization providing the operating 
funds is directly involved in the day-to-day op-
erations of the other organization. 
‘‘(B) 
NONQUALIFIED
CHURCH-CON-
TROLLED
ORGANIZATIONS.—Notwithstanding 
the provisions of subparagraph (A), for pur-
poses of this subsection and subsection (m), an 
organization that is a nonqualified church-con-
trolled organization shall be aggregated with 
one or more other nonqualified church-con-
trolled organizations, or with an organization 
that is not exempt from tax under section 501, 
and treated as a single employer with such 
other organizations, if at least 80 percent of the 
directors or trustees of such organizations are 
either representatives of, or directly or indi-
rectly controlled by, the first organization. For 
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purposes of this subparagraph, a ‘nonqualified 
church controlled organization’ shall mean a 
church-controlled organization described in sec-
tion 501(c)(3) that is not a qualified church- 
controlled organization described in section 
3121(w)(3)(B). 
‘‘(C) PERMISSIVE
AGGREGATION
AMONG 
CHURCH-RELATED ORGANIZATIONS.—Organiza-
tions described in subparagraph (A) may elect 
to be treated as under common control for pur-
poses of this subsection. Such election shall be 
made by the church or convention or association 
of churches with which such organizations are 
associated within the meaning of section 
414(e)(3)(D), or by an organization determined 
by such church or convention or association of 
churches to be the appropriate organization for 
making such election. 
‘‘(D) PERMISSIVE
DISAGGREGATION
OF 
CHURCH-RELATED
ORGANIZATIONS.—For pur-
poses of subparagraph (A) above, in the case of 
a church plan (as defined in section 414(e)), 
any employer may permissively disaggregate 
those entities that are not churches (as defined 
in section 403(b)(12)(B)) separately from those 
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entities that are churches, even if such entities 
maintain separate church plans. 
‘‘(E) ANTI-ABUSE RULE.—For purposes of 
subparagraphs (A) and (B), the anti-abuse rule 
in Treasury Regulation section 1.414(c)–5(f) 
shall apply.’’. 
(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to taxable years begin-
ning before, on, or after the date of the enactment 
of this Act. 
(b) APPLICATION OF CONTRIBUTION AND FUNDING 
LIMITATIONS
TO
403(b) GRANDFATHERED
DEFINED 
BENEFIT PLANS.— 
(1) IN GENERAL.—Section 251(e)(5) of the Tax 
Equity and Fiscal Responsibility Act of 1982 (Public 
Law 97–248), is amended— 
(A) by striking ‘‘403(b)(2)’’ and inserting 
‘‘403(b)’’, and 
(B) by inserting before the period at the 
end the following: ‘‘, and shall be subject to the 
applicable limitations of section 415(b) of such 
Code as if it were a defined benefit plan under 
section 401(a) of such Code and not the limita-
tions of section 415(c) of such Code (relating to 
limitation for defined contribution plans).’’. 
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(2) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply as if included in the 
enactment of the Tax Equity and Fiscal Responsi-
bility Act of 1982. 
(c) AUTOMATIC ENROLLMENT BY CHURCH PLANS.— 
(1) IN GENERAL.—This subsection shall super-
sede any law of a State which would directly or indi-
rectly prohibit or restrict the inclusion in any church 
plan (as defined in this subsection) of an automatic 
contribution arrangement. 
(2) DEFINITION OF AUTOMATIC CONTRIBUTION 
ARRANGEMENT.—For purposes of this subsection, 
the term ‘‘automatic contribution arrangement’’ 
means an arrangement— 
(A) under which a participant may elect to 
have the plan sponsor make payments as con-
tributions under the plan on behalf of the par-
ticipant, or to the participant directly in cash, 
and 
(B) under which a participant is treated as 
having elected to have the plan sponsor make 
such contributions in an amount equal to a uni-
form percentage of compensation provided 
under the plan until the participant specifically 
elects not to have such contributions made (or 
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specifically elects to have such contributions 
made at a different percentage). 
(3) NOTICE REQUIREMENTS.— 
(A) The plan administrator of an auto-
matic contribution arrangement shall, within a 
reasonable period before such plan year, provide 
to each participant to whom the arrangement 
applies for such plan year notice of the partici-
pant’s rights and obligations under the arrange-
ment which— 
(i) is sufficiently accurate and com-
prehensive to apprise the participant of 
such rights and obligations, and 
(ii) is written in a manner calculated 
to be understood by the average partici-
pant to whom the arrangement applies. 
(B) A notice shall not be treated as meet-
ing the requirements of subparagraph (A) with 
respect to a participant unless— 
(i) the notice includes an explanation 
of the participant’s right under the ar-
rangement not to have elective contribu-
tions made on the participant’s behalf (or 
to elect to have such contributions made at 
a different percentage), 
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(ii) the participant has a reasonable 
period of time, after receipt of the notice 
described in clause (i) and before the first 
elective contribution is made, to make such 
election, and 
(iii) the notice explains how contribu-
tions made under the arrangement will be 
invested in the absence of any investment 
election by the participant. 
(4) EFFECTIVE
DATE.—This subsection shall 
take effect on the date of the enactment of this Act. 
(d) ALLOW CERTAIN PLAN TRANSFERS AND MERG-
ERS.— 
(1) IN GENERAL.—Section 414 is amended by 
adding at the end the following new subsection: 
‘‘(z) CERTAIN PLAN TRANSFERS AND MERGERS.— 
‘‘(1) IN GENERAL.—Under rules prescribed by 
the Secretary, except as provided in paragraph (2), 
no amount shall be includible in gross income by 
reason of— 
‘‘(A) a transfer of all or a portion of the 
account balance of a participant or beneficiary, 
whether or not vested, from a plan described in 
section 401(a) or an annuity contract described 
in section 403(b), which is a church plan de-
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scribed in section 414(e) to an annuity contract 
described in section 403(b), if such plan and 
annuity contract are both maintained by the 
same church or convention or association of 
churches, 
‘‘(B) a transfer of all or a portion of the 
account balance of a participant or beneficiary, 
whether or not vested, from an annuity contract 
described in section 403(b) to a plan described 
in section 401(a) or an annuity contract de-
scribed in section 403(b), which is a church 
plan described in section 414(e), if such plan 
and annuity contract are both maintained by 
the same church or convention or association of 
churches, or 
‘‘(C) a merger of a plan described in sec-
tion 401(a), or an annuity contract described in 
section 403(b), which is a church plan described 
in section 414(e) with an annuity contract de-
scribed in section 403(b), if such plan and an-
nuity contract are both maintained by the same 
church or convention or association of churches. 
‘‘(2) LIMITATION.—Paragraph (1) shall not 
apply to a transfer or merger unless the partici-
pant’s or beneficiary’s benefit immediately after the 
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transfer or merger is equal to or greater than the 
participant’s or beneficiary’s benefit immediately be-
fore the transfer or merger. 
‘‘(3) QUALIFICATION.—A plan or annuity con-
tract shall not fail to be considered to be described 
in sections 401(a) or 403(b) merely because such 
plan or account engages in a transfer or merger de-
scribed in this subsection. 
‘‘(4) DEFINITIONS.—For purposes of this sub-
section: 
‘‘(A) CHURCH.—The term ‘church’ in-
cludes an organization described in subpara-
graph (A) or (B)(ii) of subsection (e)(3). 
‘‘(B) ANNUITY CONTRACT.—The term ‘an-
nuity contract’ includes a custodial account de-
scribed in section 403(b)(7) and a retirement 
income 
account 
described 
in 
section 
403(b)(9).’’. 
(2) EFFECTIVE DATE.—The amendment made 
by this subsection shall apply to transfers or merg-
ers occurring after the date of the enactment of this 
Act. 
(e) INVESTMENTS BY CHURCH PLANS IN COLLEC-
TIVE TRUSTS.— 
(1) IN GENERAL.—In the case of— 
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(A) a church plan (as defined in section 
414(e) of the Internal Revenue Code 1986), in-
cluding a plan described in section 401(a) of 
such Code and a retirement income account de-
scribed in section 403(b)(9) of such Code, and 
(B) an organization described in section 
414(e)(3)(A) of such Code the principal pur-
pose or function of which is the administration 
of such a plan or account, 
the assets of such plan, account, or organization (in-
cluding any assets otherwise permitted to be com-
mingled for investment purposes with the assets of 
such a plan, account, or organization) may be in-
vested in a group trust otherwise described in Inter-
nal Revenue Service Revenue Ruling 81–100 (as 
modified by Internal Revenue Service Revenue Rul-
ings 2004–67 and 2011–1), or any subsequent rev-
enue ruling that supersedes or modifies such revenue 
ruling, without adversely affecting the tax status of 
the group trust, such plan, account, or organization, 
or any other plan or trust that invests in the group 
trust. 
(2) EFFECTIVE
DATE.—This subsection shall 
apply to investments made after the date of the en-
actment of this Act. 
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