I 
117TH CONGRESS 
1ST SESSION H. R. 2954 
To increase retirement savings, simplify and clarify retirement plan rules, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 4, 2021 
Mr. NEAL (for himself and Mr. BRADY) introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to 
the Committees on Financial Services, and Education and Labor, for a 
period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To increase retirement savings, simplify and clarify 
retirement plan rules, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Securing a Strong Retirement Act of 2021’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
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TITLE I—EXPANDING COVERAGE AND INCREASING RETIREMENT 
SAVINGS 
Sec. 101. Expanding automatic enrollment in retirement plans. 
Sec. 102. Modification of credit for small employer pension plan startup costs. 
Sec. 103. Promotion of Saver’s Credit. 
Sec. 104. Enhancement of 403(b) plans. 
Sec. 105. Increase in age for required beginning date for mandatory distribu-
tions. 
Sec. 106. Indexing IRA catch-up limit. 
Sec. 107. Higher catch-up limit to apply at age 62, 63, and 64. 
Sec. 108. Multiple employer 403(b) plans. 
Sec. 109. Treatment of student loan payments as elective deferrals for purposes 
of matching contributions. 
Sec. 110. Application of credit for small employer pension plan startup costs to 
employers which join an existing plan. 
Sec. 111. Military spouse retirement plan eligibility credit for small employers. 
Sec. 112. Small immediate financial incentives for contributing to a plan. 
Sec. 113. Safe harbor for corrections of employee elective deferral failures. 
Sec. 114. One-year reduction in period of service requirement for long-term, 
part-time workers. 
Sec. 115. Findings relating to S corporation ESOPs. 
TITLE II—PRESERVATION OF INCOME 
Sec. 201. Remove required minimum distribution barriers for life annuities. 
Sec. 202. Qualifying longevity annuity contracts. 
Sec. 203. Insurance-dedicated exchange-traded funds. 
TITLE III—SIMPLIFICATION AND CLARIFICATION OF 
RETIREMENT PLAN RULES 
Sec. 301. Recovery of retirement plan overpayments. 
Sec. 302. Reduction in excise tax on certain accumulations in qualified retire-
ment plans. 
Sec. 303. Performance benchmarks for asset allocation funds. 
Sec. 304. Review and report to the Congress relating to reporting and disclo-
sure requirements. 
Sec. 305. Eliminating unnecessary plan requirements related to unenrolled par-
ticipants. 
Sec. 306. Retirement savings lost and found. 
Sec. 307. Expansion of Employee Plans Compliance Resolution System. 
Sec. 308. Eliminate the ‘‘first day of the month’’ requirement for governmental 
section 457(b) plans. 
Sec. 309. One-time election for qualified charitable distribution to split-interest 
entity; increase in qualified charitable distribution limitation. 
Sec. 310. Distributions to firefighters. 
Sec. 311. Exclusion of certain disability-related first responder retirement pay-
ments. 
Sec. 312. Individual retirement plan statute of limitations for excise tax on ex-
cess contributions and certain accumulations. 
Sec. 313. Requirement to provide paper statements in certain cases. 
Sec. 314. Separate application of top heavy rules to defined contribution plans 
covering excludible employees. 
Sec. 315. Repayment of qualified birth or adoption distribution limited to 3 
years. 
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Sec. 316. Employer may rely on employee certifying that deemed hardship dis-
tribution conditions are met. 
Sec. 317. Penalty-free withdrawals from retirement plans for individuals in case 
of domestic abuse. 
Sec. 318. Reform of family attribution rule. 
Sec. 319. Amendments to increase benefit accruals under plan for previous plan 
year allowed until employer tax return due date. 
Sec. 320. Retroactive first year elective deferrals for sole proprietors. 
Sec. 321. Limiting cessation of IRA treatment to portion of account involved 
in a prohibited transaction. 
TITLE IV—TECHNICAL AMENDMENTS 
Sec. 401. Amendments relating to Setting Every Community Up for Retirement 
Enhancement Act of 2019. 
TITLE V—ADMINISTRATIVE PROVISIONS 
Sec. 501. Provisions relating to plan amendments. 
TITLE VI—REVENUE PROVISIONS 
Sec. 601. Simple and SEP Roth IRAs. 
Sec. 602. Hardship withdrawal rules for 403(b) plans. 
Sec. 603. Elective deferrals generally limited to regular contribution limit. 
Sec. 604. Optional treatment of employer matching contributions as Roth con-
tributions. 
TITLE I—EXPANDING COVERAGE 
AND 
INCREASING 
RETIRE-
MENT SAVINGS 
SEC. 101. EXPANDING AUTOMATIC ENROLLMENT IN RE-
TIREMENT PLANS. 
(a) IN GENERAL.—Subpart B of part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after section 414 the following new 
section: 
‘‘SEC. 414A. REQUIREMENTS RELATED TO AUTOMATIC EN-
ROLLMENT. 
‘‘(a) IN GENERAL.—Except as otherwise provided in 
this section— 
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‘‘(1) an arrangement shall not be treated as a 
qualified cash or deferred arrangement described in 
section 401(k) unless such arrangement meets the 
automatic enrollment requirements of subsection (b), 
and 
‘‘(2) an annuity contract otherwise described in 
section 403(b)(1) which is purchased under a salary 
reduction agreement shall not be treated as de-
scribed in such section unless such agreement meets 
the automatic enrollment requirements of subsection 
(b). 
‘‘(b) AUTOMATIC ENROLLMENT REQUIREMENTS.— 
‘‘(1) IN GENERAL.—An arrangement or agree-
ment meets the requirements of this subsection if 
such arrangement or agreement is an eligible auto-
matic contribution arrangement (as defined in sec-
tion 414(w)(3)) which meets the requirements of 
paragraphs (2) through (4). 
‘‘(2) ALLOWANCE
OF
PERMISSIBLE
WITH-
DRAWALS.—An eligible automatic contribution ar-
rangement meets the requirements of this paragraph 
if such arrangement allows employees to make per-
missible 
withdrawals 
(as 
defined 
in 
section 
414(w)(2)). 
‘‘(3) MINIMUM CONTRIBUTION PERCENTAGE.— 
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‘‘(A) IN GENERAL.—An eligible automatic 
contribution arrangement meets the require-
ments of this paragraph if— 
‘‘(i) the uniform percentage of com-
pensation contributed by the participant 
under such arrangement during the first 
year of participation is not less than 3 per-
cent and not more than 10 percent (unless 
the participant specifically elects not to 
have such contributions made or to have 
such contributions made at a different per-
centage), and 
‘‘(ii) effective for the first day of each 
plan year starting after each completed 
year of participation under such arrange-
ment such uniform percentage is increased 
by 1 percentage point (to at least 10 per-
cent, but not more than 15 percent) unless 
the participant specifically elects not to 
have such contributions made or to have 
such contributions made at a different per-
centage. 
‘‘(B) INITIAL REDUCED CEILING FOR CER-
TAIN PLANS.—In the case of any arrangement 
to which this section applies (other than an ar-
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rangement that meets the requirements of para-
graph (12) or (13) of section 401(k)), for plan 
years ending before January 1, 2025, subpara-
graph (A)(ii) shall be applied by substituting 
‘10 percent’ for ‘15 percent’. 
‘‘(4) INVESTMENT REQUIREMENTS.—An eligible 
automatic contribution arrangement meets the re-
quirements of this paragraph if amounts contributed 
pursuant to such arrangement, and for which no in-
vestment is elected by the participant, are invested 
consistent 
with 
the 
requirements 
of 
section 
2550.404c–5 of title 29, Code of Federal Regula-
tions (or any successor regulations). 
‘‘(c) EXCEPTIONS.—For purposes of this section— 
‘‘(1) SIMPLE PLANS.—Subsection (a) shall not 
apply to any simple plan (within the meaning of sec-
tion 401(k)(11)). 
‘‘(2) EXCEPTION
FOR
PLANS
OR
ARRANGE-
MENTS ESTABLISHED BEFORE ENACTMENT OF SEC-
TION.— 
‘‘(A) IN
GENERAL.—Subsection (a) shall 
not apply to— 
‘‘(i) any qualified cash or deferred ar-
rangement established before the date of 
the enactment of this section, or 
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‘‘(ii) any annuity contract purchased 
under a plan established before the date of 
the enactment of this section. 
‘‘(B) 
POST-ENACTMENT
ADOPTION
OF 
MULTIPLE
EMPLOYER
PLAN.—Subparagraph 
(A) shall not apply in the case of an employer 
adopting after such date of enactment a plan 
maintained by more than one employer, and 
subsection (a) shall apply with respect to such 
employer as if such plan were a single plan. 
‘‘(3) EXCEPTION
FOR
GOVERNMENTAL
AND 
CHURCH PLANS.—Subsection (a) shall not apply to 
any governmental plan (within the meaning of sec-
tion 414(d)) or any church plan (within the meaning 
of section 414(e)). 
‘‘(4) EXCEPTION FOR NEW AND SMALL BUSI-
NESSES.— 
‘‘(A) 
NEW
BUSINESS.—Subsection 
(a) 
shall not apply to any qualified cash or deferred 
arrangement, or any annuity contract pur-
chased under a plan, while the employer main-
taining such plan (and any predecessor em-
ployer) has been in existence for less than 3 
years. 
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‘‘(B) SMALL BUSINESSES.—Subsection (a) 
shall not apply to any qualified cash or deferred 
arrangement, any annuity contract purchased 
under a plan, earlier than the date that is 1 
year after the close of the first taxable year 
with respect to which the employer maintaining 
the plan normally employed more than 10 em-
ployees. 
‘‘(C) TREATMENT
OF
MULTIPLE
EM-
PLOYER PLANS.—In the case of a plan main-
tained by more than 1 employer, subparagraphs 
(A) and (B) shall be applied separately with re-
spect to each such employer, and all such em-
ployers to which subsection (a) applies (after 
the application of this paragraph) shall be 
treated as maintaining a separate plan for pur-
poses of this section.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for subpart B of part I of subchapter D of chapter 1 of 
the Internal Revenue Code of 1986 is amended by insert-
ing after the item relating to section 414 the following 
new item: 
‘‘Sec. 414A. Requirements related to automatic enrollment.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2022. 
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SEC. 102. MODIFICATION OF CREDIT FOR SMALL EM-
PLOYER PENSION PLAN STARTUP COSTS. 
(a) INCREASE IN CREDIT PERCENTAGE FOR SMALL-
ER EMPLOYERS.—Section 45E(e) of the Internal Revenue 
Code of 1986 is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) INCREASED CREDIT FOR CERTAIN SMALL 
EMPLOYERS.—In the case of an employer which 
would be an eligible employer under subsection (c) if 
section 408(p)(2)(C)(i) was applied by substituting 
‘50 employees’ for ‘100 employees’, subsection (a) 
shall be applied by substituting ‘100 percent’ for ‘50 
percent’.’’. 
(b) ADDITIONAL CREDIT FOR EMPLOYER CONTRIBU-
TIONS BY CERTAIN SMALL EMPLOYERS.—Section 45E of 
such Code, as amended by subsection (a), is amended by 
adding at the end the following new subsection: 
‘‘(f) ADDITIONAL CREDIT
FOR EMPLOYER CON-
TRIBUTIONS BY CERTAIN ELIGIBLE EMPLOYERS.— 
‘‘(1) IN GENERAL.—In the case of an eligible 
employer, the credit allowed for the taxable year 
under subsection (a) (determined without regard to 
this subsection) shall be increased by an amount 
equal to the applicable percentage of employer con-
tributions (other than any elective deferrals (as de-
fined in section 402(g)(3))) by the employer to an 
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eligible employer plan (other than a defined benefit 
plan (as defined in section 414(j))). 
‘‘(2) LIMITATIONS.— 
‘‘(A) DOLLAR
LIMITATION.—The amount 
determined under paragraph (1) (before the ap-
plication of subparagraph (B)) with respect to 
any employee of the employer shall not exceed 
$1,000. 
‘‘(B) CREDIT PHASE-IN.—In the case of 
any eligible employer which had for the pre-
ceding taxable year more than 50 employees, 
the amount determined under paragraph (1) 
(without regard to this subparagraph) shall be 
reduced by an amount equal to the product 
of— 
‘‘(i) the amount otherwise so deter-
mined under paragraph (1), multiplied by 
‘‘(ii) a percentage equal to 2 percent-
age points for each employee of the em-
ployer for the preceding taxable year in ex-
cess of 50 employees. 
‘‘(3) APPLICABLE PERCENTAGE.—For purposes 
of this section, the applicable percentage for the tax-
able year during which the eligible employer plan is 
established with respect to the eligible employer shall 
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be 100 percent, and for taxable years thereafter 
shall be determined under the following table: 
‘‘In the case of the following 
taxable 
year 
beginning 
after the taxable year 
during which plan is es-
tablished with respect to 
the eligible employer: 
The applicable percentage shall 
be: 
1st ................................................................................................
100% 
2nd ...............................................................................................
75% 
3rd ...............................................................................................
50% 
4th ................................................................................................
25% 
Any taxable year thereafter .........................................................
0% 
‘‘(4) DETERMINATION OF ELIGIBLE EMPLOYER; 
NUMBER OF EMPLOYEES.—For purposes of this sub-
section, whether an employer is an eligible employer 
and the number of employees of an employer shall 
be determined under the rules of subsection (c), ex-
cept that paragraph (2) thereof shall only apply to 
the taxable year during which the eligible employer 
plan to which this section applies is established with 
respect to the eligible employer.’’. 
(c) 
DISALLOWANCE
OF
DEDUCTION.—Section 
45E(e)(2) of such Code is amended to read as follows: 
‘‘(2) DISALLOWANCE OF DEDUCTION.—No de-
duction shall be allowed— 
‘‘(A) for that portion of the qualified start-
up costs paid or incurred for the taxable year 
which is equal to so much of the portion of the 
credit determined under subsection (a) as is 
properly allocable to such costs, and 
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‘‘(B) for that portion of the employer con-
tributions by the employer for the taxable year 
which is equal to so much of the credit increase 
determined under subsection (f) as is properly 
allocable to such contributions.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2021. 
SEC. 103. PROMOTION OF SAVER’S CREDIT. 
(a) IN GENERAL.—The Secretary of the Treasury 
shall take such steps as the Secretary determines are nec-
essary and appropriate to increase public awareness of the 
credit provided under section 25B of the Internal Revenue 
Code of 1986. 
(b) REPORT TO CONGRESS.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of the enactment of this Act, the Secretary 
shall provide a report to Congress to summarize the 
anticipated promotion efforts of the Treasury under 
subsection (a). 
(2) CONTENTS.—Such report shall include— 
(A) a description of plans for— 
(i) the development and distribution 
of digital and print materials, including the 
distribution of such materials to States for 
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participants in State facilitated retirement 
savings programs, and 
(ii) the translation of such materials 
into the 10 most commonly spoken lan-
guages in the United States after English 
(as determined by reference to the most re-
cent American Community Survey of the 
Bureau of the Census), and 
(B) such other information as the Sec-
retary determines is necessary. 
SEC. 104. ENHANCEMENT OF 403(b) PLANS. 
(a) IN GENERAL.— 
(1) 
PERMITTED
INVESTMENTS.—Section 
403(b)(7)(A) of the Internal Revenue Code of 1986 
is amended by striking ‘‘if the amounts are to be in-
vested in regulated investment company stock to be 
held in that custodial account’’ and inserting ‘‘if the 
amounts are to be held in that custodial account and 
invested in regulated investment company stock or a 
group trust intended to satisfy the requirements of 
Internal Revenue Service Revenue Ruling 81–100 
(or any successor guidance)’’. 
(2) CONFORMING AMENDMENT.—The heading 
of paragraph (7) of section 403(b) of such Code is 
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amended by striking ‘‘FOR REGULATED INVESTMENT 
COMPANY STOCK’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to amounts invested 
after December 31, 2021. 
(b) AMENDMENTS TO THE INVESTMENT COMPANY 
ACT OF 1940.—Section 3(c)(11) of the Investment Com-
pany Act of 1940 (15 U.S.C. 80a–3(c)(11)) is amended 
to read as follows: 
‘‘(11) Any— 
‘‘(A) employee’s stock bonus, pension, or 
profit-sharing trust which meets the require-
ments for qualification under section 401 of the 
Internal Revenue Code of 1986; 
‘‘(B) custodial account meeting the re-
quirements of section 403(b)(7) of such Code; 
‘‘(C) governmental plan described in sec-
tion 3(a)(2)(C) of the Securities Act of 1933; 
‘‘(D) collective trust fund maintained by a 
bank consisting solely of assets of one or 
more— 
‘‘(i) trusts described in subparagraph 
(A); 
‘‘(ii) government plans described in 
subparagraph (C); 
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‘‘(iii) church plans, companies, or ac-
counts that are excluded from the defini-
tion of an investment company under para-
graph (14) of this subsection; or 
‘‘(iv) plans which meet the require-
ments of section 403(b) of the Internal 
Revenue Code of 1986 if— 
‘‘(I) such plan is subject to title 
I of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1001 
et seq.); 
‘‘(II) any employer making such 
plan available agrees to serve as a fi-
duciary for the plan with respect to 
the selection of the plan’s investments 
among which participants can choose; 
or 
‘‘(III) such plan is a govern-
mental plan (as defined in section 
414(d) of such Code); or 
‘‘(E) separate account the assets of which 
are derived solely from— 
‘‘(i) contributions under pension or 
profit-sharing plans which meet the re-
quirements of section 401 of the Internal 
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Revenue Code of 1986 or the requirements 
for deduction of the employer’s contribu-
tion under section 404(a)(2) of such Code; 
‘‘(ii) 
contributions 
under 
govern-
mental plans in connection with which in-
terests, participations, or securities are ex-
empted from the registration provisions of 
section 5 of the Securities Act of 1933 by 
section 3(a)(2)(C) of such Act; 
‘‘(iii) advances made by an insurance 
company in connection with the operation 
of such separate account; and 
‘‘(iv) contributions to a plan described 
in subparagraph (D)(iv).’’. 
(c) AMENDMENTS
TO
THE SECURITIES ACT
OF 
1933.—Section 3(a)(2) of the Securities Act of 1933 (15 
U.S.C. 77c(a)(2)) is amended— 
(1) by striking ‘‘or (D)’’ and inserting ‘‘(D) a 
plan which meets the requirements of section 403(b) 
of such Code if (i) such plan is subject to title I of 
the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1001 et seq.), (ii) any employer 
making such plan available agrees to serve as a fidu-
ciary for the plan with respect to the selection of the 
plan’s investments among which participants can 
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choose, or (iii) such plan is a governmental plan (as 
defined in section 414(d) of such Code); or (E)’’; 
(2) by striking ‘‘(C), or (D)’’ and inserting 
‘‘(C), (D), or (E)’’; and 
(3) by striking ‘‘(iii) which is a plan funded’’ 
and inserting ‘‘(iii) in the case of a plan not de-
scribed in subparagraph (D), which is a plan fund-
ed’’. 
(d) AMENDMENTS TO THE SECURITIES EXCHANGE 
ACT OF 1934.—Section 3(a)(12)(C) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)(12)(C)) is amend-
ed— 
(1) by striking ‘‘or (iv)’’ and inserting ‘‘(iv) a 
plan which meets the requirements of section 403(b) 
of such Code if (I) such plan is subject to title I of 
the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1001 et seq.), (II) any employer 
making such plan available agrees to serve as a fidu-
ciary for the plan with respect to the selection of the 
plan’s investments among which participants can 
choose, or (III) such plan is a governmental plan (as 
defined in section 414(d) of such Code), or (v)’’; 
(2) by striking ‘‘(ii), or (iii)’’ and inserting 
‘‘(ii), (iii), or (iv)’’; and 
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(3) by striking ‘‘(II) is a plan funded’’ and in-
serting ‘‘(II) in the case of a plan not described in 
clause (iv), is a plan funded’’. 
SEC. 105. INCREASE IN AGE FOR REQUIRED BEGINNING 
DATE FOR MANDATORY DISTRIBUTIONS. 
(a) IN GENERAL.—Section 401(a)(9)(C)(i)(I) of the 
Internal Revenue Code of 1986 is amended by striking 
‘‘age 72’’ and inserting ‘‘the applicable age’’. 
(b) SPOUSE BENEFICIARIES; SPECIAL RULE
FOR 
OWNERS.—Subparagraphs (B)(iv)(I) and (C)(ii)(I) of sec-
tion 401(a)(9) of such Code are each amended by striking 
‘‘age 72’’ and inserting ‘‘the applicable age’’. 
(c) APPLICABLE AGE.—Section 401(a)(9)(C) of such 
Code is amended by adding at the end the following new 
clause: 
‘‘(v) APPLICABLE AGE.— 
‘‘(I) In the case of an individual 
who attains age 72 after December 
31, 2021, and age 73 before January 
1, 2029, the applicable age is 73. 
‘‘(II) In the case of an individual 
who attains age 73 after December 
31, 2028, and age 74 before January 
1, 2032, the applicable age is 74. 
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‘‘(III) In the case of an indi-
vidual who attains age 74 after De-
cember 31, 2031, the applicable age is 
75.’’. 
(d) CONFORMING AMENDMENTS.—The last sentence 
of section 408(b) of such Code is amended by striking 
‘‘age 72’’ and inserting ‘‘the applicable age (determined 
under section 401(a)(9)(C)(v) for the calendar year in 
which such taxable year begins)’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions required to be 
made after December 31, 2021, with respect to individuals 
who attain age 72 after such date. 
SEC. 106. INDEXING IRA CATCH-UP LIMIT. 
(a) IN GENERAL.—Subparagraph (C) of section 
219(b)(5) of the Internal Revenue Code of 1986 is amend-
ed by adding at the end the following new clause: 
‘‘(iii) INDEXING OF CATCH-UP LIMITA-
TION.—In the case of any taxable year be-
ginning in a calendar year after 2022, the 
$1,000 amount under subparagraph (B)(ii) 
shall be increased by an amount equal to— 
‘‘(I) such dollar amount, multi-
plied by 
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‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for the calendar year in which the tax-
able year begins, determined by sub-
stituting ‘calendar year 2021’ for ‘cal-
endar year 2016’ in subparagraph 
(A)(ii) thereof. 
If any amount after adjustment under the 
preceding sentence is not a multiple of 
$100, such amount shall be rounded to the 
next lower multiple of $100.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
SEC. 107. HIGHER CATCH-UP LIMIT TO APPLY AT AGE 62, 63, 
AND 64. 
(a) IN GENERAL.— 
(1) PLANS OTHER THAN SIMPLE PLANS.—Sec-
tion 414(v)(2)(B)(i) of the Internal Revenue Code of 
1986 is amended by inserting the following before 
the period: ‘‘($10,000, in the case of an eligible par-
ticipant who has attained age 62, but not age 65, 
before the close of the taxable year)’’. 
(2) SIMPLE PLANS.—Section 414(v)(2)(B)(ii) of 
such Code is amended by inserting the following be-
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fore the period: ‘‘($5,000, in the case of an eligible 
participant who has attained age 62, but not age 65, 
before the close of the taxable year)’’. 
(b) COST-OF-LIVING ADJUSTMENTS.—Subparagraph 
(C) of section 414(v)(2) of such Code is amended by add-
ing at the end the following: ‘‘In the case of a year begin-
ning after December 31, 2022, the Secretary shall adjust 
annually the $10,000 amount in subparagraph (B)(i) and 
the $5,000 amount in subparagraph (B)(ii) for increases 
in the cost-of-living at the same time and in the same 
manner as adjustments under the preceding sentence; ex-
cept that the base period taken into account shall be the 
calendar quarter beginning July 1, 2021.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2022. 
SEC. 108. MULTIPLE EMPLOYER 403(b) PLANS. 
(a) IN GENERAL.—Section 403(b) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(15) MULTIPLE EMPLOYER PLANS.— 
‘‘(A) IN GENERAL.—Except in the case of 
a church plan, this subsection shall not be 
treated as failing to apply to an annuity con-
tract solely by reason of such contract being 
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purchased under a plan maintained by more 
than 1 employer. 
‘‘(B) TREATMENT OF EMPLOYERS FAILING 
TO MEET REQUIREMENTS OF PLAN.— 
‘‘(i) IN GENERAL.—In the case of a 
plan maintained by more than 1 employer, 
this subsection shall not be treated as fail-
ing to apply to an annuity contract held 
under such plan merely because of one or 
more employers failing to meet the require-
ments of this subsection if such plan satis-
fies rules similar to the rules of section 
413(e)(2) with respect to any such em-
ployer failure. 
‘‘(ii) ADDITIONAL REQUIREMENTS IN 
CASE OF NON-GOVERNMENTAL PLANS.—A 
plan shall not be treated as meeting the re-
quirements of this subparagraph unless the 
plan meets the requirements of subpara-
graph (A) or (B) of section 413(e)(1), ex-
cept in the case of a multiple employer 
plan maintained solely by any of the fol-
lowing: A State, a political subdivision of a 
State, or an agency or instrumentality of 
any one or more of the foregoing.’’. 
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(b) ANNUAL REGISTRATION FOR 403(b) MULTIPLE 
EMPLOYER PLAN.—Section 6057 of such Code is amend-
ed by redesignating subsection (g) as subsection (h) and 
by inserting after subsection (f) the following new sub-
section: 
‘‘(g) 403(b) MULTIPLE EMPLOYER PLANS TREATED 
AS ONE PLAN.—In the case of annuity contracts to which 
this section applies and to which section 403(b) applies 
by reason of the plan under which such contracts are pur-
chased meeting the requirements of paragraph (15) there-
of, such plan shall be treated as a single plan for purposes 
of this section.’’. 
(c) ANNUAL INFORMATION RETURNS
FOR 403(b) 
MULTIPLE EMPLOYER PLAN.—Section 6058 of the Inter-
nal Revenue Code of 1986 is amended by redesignating 
subsection (f) as subsection (g) and by inserting after sub-
section (e) the following new subsection: 
‘‘(f) 403(b) MULTIPLE EMPLOYER PLANS TREATED 
AS ONE PLAN.—In the case of annuity contracts to which 
this section applies and to which section 403(b) applies 
by reason of the plan under which such contracts are pur-
chased meeting the requirements of paragraph (15) there-
of, such plan shall be treated as a single plan for purposes 
of this section.’’. 
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(d) AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.— 
(1) TREATED AS POOLED EMPLOYER PLAN.— 
(A) IN GENERAL.—Section 3(43)(A) of the 
Employee Retirement Income Security Act of 
1974 is amended— 
(i) in clause (ii), by striking ‘‘section 
501(a) of such Code or’’ and inserting 
‘‘501(a) of such Code, a plan that consists 
of contracts described in section 403(b) of 
such Code, or’’; and 
(ii) in the flush text at the end, by 
striking ‘‘the plan.’’ and inserting ‘‘the 
plan, but such term shall include any pro-
gram (other than a governmental plan) 
maintained for the benefit of the employees 
of more than 1 employer that consists of 
contracts described in section 403(b) of 
such Code and that meets the require-
ments of subparagraph (A) or (B) of sec-
tion 413(e)(1) of such Code.’’. 
(B) 
CONFORMING
AMENDMENTS.—Sec-
tions 3(43)(B)(v)(II) and 3(44)(A)(i)(I) of such 
Act are each amended by striking ‘‘section 
401(a) of such Code or’’ and inserting ‘‘401(a) 
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of such Code, a plan that consists of contracts 
described in section 403(b) of such Code, or’’. 
(2) FIDUCIARIES.—Section 3(43)(B)(ii) of such 
Act is amended— 
(A) by striking ‘‘trustees meeting the re-
quirements of section 408(a)(2) of the Internal 
Revenue Code of 1986’’ and inserting ‘‘trustees 
(or other fiduciaries in the case of a plan that 
consists of contracts described in section 403(b) 
of the Internal Revenue Code of 1986) meeting 
the requirements of section 408(a)(2) of such 
Code’’, and 
(B) by striking ‘‘holding’’ and inserting 
‘‘holding (or causing to be held under the terms 
of a plan consisting of such contracts)’’. 
(e) REGULATIONS
RELATING
TO
PLAN
TERMI-
NATION.—The Secretary of the Treasury (or the Sec-
retary’s designee) shall prescribe such regulations as may 
be necessary to clarify the treatment of a plan termination 
by an employer in the case of plans to which section 
403(b)(15) of such Code applies. 
(f) MODIFICATION
OF MODEL PLAN LANGUAGE, 
ETC.— 
(1) PLAN
NOTIFICATIONS.—The Secretary of 
the Treasury (or the Secretary’s designee) shall 
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modify the model plan language published under sec-
tion 413(e)(5) of the Internal Revenue Code of 1986 
to include language which notifies participating em-
ployers described in section 501(c)(3), and which are 
exempt from tax under section 501(a), that the plan 
is subject to the Employee Retirement Income Secu-
rity Act of 1974 and that such employer is a plan 
sponsor with respect to its employees participating 
in the multiple employer plan and, as such, has cer-
tain fiduciary duties with respect to the plan and to 
its employees. 
(2) MODEL PLANS FOR MULTIPLE EMPLOYER 
403(b) NON-GOVERNMENTAL PLANS.—For plans to 
which section 403(b)(15)(A) of the Internal Revenue 
Code of 1986 applies (other than a plan maintained 
for its employees by a State, a political subdivision 
of a State, or an agency or instrumentality of any 
one or more of the foregoing) the Secretary shall 
publish model plan language similar to model plan 
language published under section 413(e)(5) of such 
Code. 
(3) EDUCATIONAL OUTREACH TO EMPLOYERS 
EXEMPT FROM TAX.—The Secretary shall provide 
education and outreach to increase awareness to em-
ployers described in section 501(c)(3), and which are 
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exempt from tax under section 501(a), that multiple 
employer plans are subject to the Employee Retire-
ment Income Security Act of 1974 and that such 
employer is a plan sponsor with respect to its em-
ployees participating in the multiple employer plan 
and, as such, has certain fiduciary duties with re-
spect to the plan and to its employees. 
(g) NO INFERENCE WITH RESPECT
TO CHURCH 
PLANS.—Regarding any application of section 403(b) of 
the Internal Revenue Code of 1986 to an annuity contract 
purchased under a church plan (as defined in section 
414(e) of such Code) maintained by more than 1 em-
ployer, or to any application of rules similar to section 
413(e) of such Code to such a plan, no inference shall 
be made from section 403(b)(15)(A) of such Code (as 
added by this Act) not applying to such plans. 
(h) EFFECTIVE DATE.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
December 31, 2021. 
(2) RULE OF CONSTRUCTION.—Nothing in the 
amendments made by subsection (a) shall be con-
strued as limiting the authority of the Secretary of 
the Treasury or the Secretary’s delegate (determined 
without regard to such amendment) to provide for 
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the proper treatment of a failure to meet any re-
quirement applicable under such Code with respect 
to one employer (and its employees) in the case of 
a plan to which section 403(b)(15) applies. 
SEC. 109. TREATMENT OF STUDENT LOAN PAYMENTS AS 
ELECTIVE DEFERRALS FOR PURPOSES OF 
MATCHING CONTRIBUTIONS. 
(a) IN GENERAL.—Section 401(m)(4)(A) of the In-
ternal Revenue Code of 1986 is amended by striking 
‘‘and’’ at the end of clause (i), by striking the period at 
the end of clause (ii) and inserting ‘‘, and’’, and by adding 
at the end the following new clause: 
‘‘(iii) subject to the requirements of 
paragraph (13), any employer contribution 
made to a defined contribution plan on be-
half of an employee on account of a quali-
fied student loan payment.’’. 
(b) QUALIFIED STUDENT LOAN PAYMENT.—Section 
401(m)(4) of such Code is amended by adding at the end 
the following new subparagraph: 
‘‘(D) QUALIFIED
STUDENT
LOAN
PAY-
MENT.—The term ‘qualified student loan pay-
ment’ means a payment made by an employee 
in repayment of a qualified education loan (as 
defined section 221(d)(1)) incurred by the em-
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ployee to pay qualified higher education ex-
penses, but only— 
‘‘(i) to the extent such payments in 
the aggregate for the year do not exceed 
an amount equal to— 
‘‘(I) the limitation applicable 
under section 402(g) for the year (or, 
if lesser, the employee’s compensation 
(as defined in section 415(c)(3)) for 
the year), reduced by 
‘‘(II) the elective deferrals made 
by the employee for such year, and 
‘‘(ii) if the employee certifies to the 
employer making the matching contribu-
tion under this paragraph that such pay-
ment has been made on such loan. 
For purposes of this subparagraph, the term 
‘qualified higher education expenses’ means the 
cost of attendance (as defined in section 472 of 
the Higher Education Act of 1965, as in effect 
on the day before the date of the enactment of 
the Taxpayer Relief Act of 1997) at an eligible 
educational institution (as defined in section 
221(d)(2)).’’. 
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(c) MATCHING
CONTRIBUTIONS
FOR
QUALIFIED 
STUDENT LOAN PAYMENTS.—Section 401(m) of such 
Code is amended by redesignating paragraph (13) as para-
graph (14), and by inserting after paragraph (12) the fol-
lowing new paragraph: 
‘‘(13) MATCHING CONTRIBUTIONS FOR QUALI-
FIED STUDENT LOAN PAYMENTS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (4)(A)(iii), an employer contribution 
made to a defined contribution plan on account 
of a qualified student loan payment shall be 
treated as a matching contribution for purposes 
of this title if— 
‘‘(i) the plan provides matching con-
tributions on account of elective deferrals 
at the same rate as contributions on ac-
count of qualified student loan payments, 
‘‘(ii) the plan provides matching con-
tributions on account of qualified student 
loan payments only on behalf of employees 
otherwise eligible to receive matching con-
tributions on account of elective deferrals, 
‘‘(iii) under the plan, all employees el-
igible to receive matching contributions on 
account of elective deferrals are eligible to 
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the requirements of paragraph (11)(B) or 
(12) of this subsection, or paragraph 
(11)(B)(i)(II), (12)(B), or (13)(D) of sub-
section (k), a plan may treat a qualified 
student loan payment as an elective defer-
ral or an elective contribution, whichever is 
applicable. 
‘‘(iv) ACTUAL
DEFERRAL
PERCENT-
AGE TESTING.—In determining whether a 
plan meets the requirements of subsection 
(k)(3)(A)(ii) for a plan year, the plan may 
apply the requirements of such subsection 
separately with respect to all employees 
who receive matching contributions de-
scribed in paragraph (4)(A)(iii) for the 
plan year. 
‘‘(C) EMPLOYER MAY RELY ON EMPLOYEE 
CERTIFICATION.—The employer may rely on an 
employee certification of payment under para-
graph (4)(D)(ii).’’. 
(d) 
SIMPLE
RETIREMENT
ACCOUNTS.—Section 
408(p)(2) of such Code is amended by adding at the end 
the following new subparagraph: 
‘‘(F) 
MATCHING
CONTRIBUTIONS
FOR 
QUALIFIED STUDENT LOAN PAYMENTS.— 
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‘‘(i) IN
GENERAL.—Subject to the 
rules of clause (iii), an arrangement shall 
not fail to be treated as meeting the re-
quirements of subparagraph (A)(iii) solely 
because under the arrangement, solely for 
purposes of such subparagraph, qualified 
student loan payments are treated as 
amounts elected by the employee under 
subparagraph (A)(i)(I) to the extent such 
payments do not exceed— 
‘‘(I) the applicable dollar amount 
under subparagraph (E) (after appli-
cation of section 414(v)) for the year 
(or, if lesser, the employee’s com-
pensation 
(as 
defined 
in 
section 
415(c)(3)) for the year), reduced by 
‘‘(II) any other amounts elected 
by the employee under subparagraph 
(A)(i)(I) for the year. 
‘‘(ii) QUALIFIED STUDENT LOAN PAY-
MENT.—For purposes of this subpara-
graph— 
‘‘(I) IN
GENERAL.—The term 
‘qualified 
student 
loan 
payment’ 
means a payment made by an em-
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ployee in repayment of a qualified 
education loan (as defined in section 
221(d)(1)) incurred by the employee 
to pay qualified higher education ex-
penses, but only if the employee cer-
tifies to the employer making the 
matching contribution that such pay-
ment has been made on such a loan. 
‘‘(II) QUALIFIED
HIGHER
EDU-
CATION EXPENSES.—The term ‘quali-
fied higher education expenses’ has 
the same meaning as when used in 
section 401(m)(4)(D). 
‘‘(iii) APPLICABLE RULES.—Clause (i) 
shall apply to an arrangement only if, 
under the arrangement— 
‘‘(I) matching contributions on 
account of qualified student loan pay-
ments are provided only on behalf of 
employees otherwise eligible to elect 
contributions 
under 
subparagraph 
(A)(i)(I), and 
‘‘(II) all employees otherwise eli-
gible to participate in the arrange-
ment are eligible to receive matching 
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contributions on account of qualified 
student loan payments.’’. 
(e) 403(b) PLANS.—Section 403(b)(12)(A) of such 
Code is amended by adding at the end the following: ‘‘The 
fact that the employer offers matching contributions on 
account of qualified student loan payments as described 
in section 401(m)(13) shall not be taken into account in 
determining whether the arrangement satisfies the re-
quirements of clause (ii) (and any regulation there-
under).’’. 
(f) 457(b) PLANS.—Section 457(b) of such Code is 
amended by adding at the end the following: ‘‘A plan 
which is established and maintained by an employer which 
is described in subsection (e)(1)(A) shall not be treated 
as failing to meet the requirements of this subsection sole-
ly because the plan, or another plan maintained by the 
employer which meets the requirements of section 401(a) 
or 403(b), provides for matching contributions on account 
of qualified student loan payments as described in section 
401(m)(13).’’. 
(g) REGULATORY AUTHORITY.—The Secretary shall 
prescribe regulations for purposes of implementing the 
amendments made by this section, including regulations— 
(1) permitting a plan to make matching con-
tributions for qualified student loan payments, as 
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defined in sections 401(m)(4)(D) and 408(p)(2)(F) 
of the Internal Revenue Code of 1986, as added by 
this section, at a different frequency than matching 
contributions are otherwise made under the plan, 
provided that the frequency is not less than annu-
ally; 
(2) permitting employers to establish reasonable 
procedures to claim matching contributions for such 
qualified student loan payments under the plan, in-
cluding an annual deadline (not earlier than 3 
months after the close of each plan year) by which 
a claim must be made; and 
(3) promulgating model amendments which 
plans may adopt to implement matching contribu-
tions on such qualified student loan payments for 
purposes of sections 401(m), 408(p), 403(b), and 
457(b) of the Internal Revenue Code of 1986. 
(h) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions made for plan 
years beginning after December 31, 2021. 
SEC. 110. APPLICATION OF CREDIT FOR SMALL EMPLOYER 
PENSION PLAN STARTUP COSTS TO EMPLOY-
ERS WHICH JOIN AN EXISTING PLAN. 
(a) IN GENERAL.—Section 45E(d)(3)(A) of the In-
ternal Revenue Code of 1986 is amended by striking ‘‘ef-
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fective’’ and inserting ‘‘effective with respect to the eligible 
employer’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to eligible employer plans which 
become effective with respect to the eligible employer after 
the date of the enactment of this Act. 
SEC. 111. MILITARY SPOUSE RETIREMENT PLAN ELIGI-
BILITY CREDIT FOR SMALL EMPLOYERS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
section: 
‘‘SEC. 45U. MILITARY SPOUSE RETIREMENT PLAN ELIGI-
BILITY CREDIT FOR SMALL EMPLOYERS. 
‘‘(a) IN GENERAL.—For purposes of section 38, in 
the case of any eligible small employer, the military spouse 
retirement plan eligibility credit determined under this 
section for any taxable year is an amount equal to the 
sum of— 
‘‘(1) $250 with respect to each military spouse 
who is an employee of such employer and who is eli-
gible to participate in an eligible defined contribu-
tion plan of such employer at any time during such 
taxable year, plus 
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‘‘(2) so much of the contributions made by such 
employer to all such plans with respect to such em-
ployee during such taxable year as do not exceed 
$250. 
‘‘(b) LIMITATION.—An individual shall only be taken 
into account as a military spouse under subsection (a) for 
the taxable year which includes the date on which such 
individual began participating in the eligible defined con-
tribution plan of the employer and the 2 succeeding tax-
able years. 
‘‘(c) ELIGIBLE SMALL EMPLOYER.—For purposes of 
this section— 
‘‘(1) IN
GENERAL.—The term ‘eligible small 
employer’ means an eligible employer (as defined in 
section 408(p)(2)(C)(i)(I)). 
‘‘(2) APPLICATION OF 2-YEAR GRACE PERIOD.— 
A 
rule 
similar 
to 
the 
rule 
of 
section 
408(p)(2)(C)(i)(II) shall apply for purposes of this 
section. 
‘‘(d) MILITARY SPOUSE.—For purposes of this sec-
tion— 
‘‘(1) IN GENERAL.—The term ‘military spouse’ 
means, with respect to any employer, any individual 
who is married (within the meaning of section 7703 
as of the first date that the employee is employed by 
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the employer) to an individual who is a member of 
the uniformed services (as defined section 101(a)(5) 
of title 10, United States Code). For purposes of 
this section, an employer may rely on an employee’s 
certification that such employee’s spouse is a mem-
ber of the uniformed services if such certification 
provides the name, rank, and service branch of such 
spouse. 
‘‘(2) EXCLUSION
OF
HIGHLY
COMPENSATED 
EMPLOYEES.—With respect to any employer, the 
term ‘military spouse’ shall not include any indi-
vidual if such individual is a highly compensated em-
ployee of such employer (within the meaning of sec-
tion 414(q)). 
‘‘(e) ELIGIBLE DEFINED CONTRIBUTION PLAN.— 
For purposes of this section, the term ‘eligible defined con-
tribution plan’ means, with respect to any eligible small 
employer, any defined contribution plan (as defined in sec-
tion 414(i)) of such employer if, under the terms of such 
plan— 
‘‘(1) military spouses employed by such em-
ployer are eligible to participate in such plan not 
later than the date which is 2 months after the date 
on which such individual begins employment with 
such employer, and 
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‘‘(2) military spouses who are eligible to partici-
pate in such plan— 
‘‘(A) are immediately eligible to receive an 
amount of employer contributions under such 
plan which is not less the amount of such con-
tributions that a similarly situated participant 
who is not a military spouse would be eligible 
to receive under such plan after 2 years of serv-
ice, and 
‘‘(B) immediately have a nonforfeitable 
right to the employee’s accrued benefit derived 
from employer contributions under such plan. 
‘‘(f) AGGREGATION RULE.—All persons treated as a 
single employer under subsection (b), (c), (m), or (o) of 
section 414 shall be treated as one employer for purposes 
of this section.’’. 
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) of such Code is amended 
by striking ‘‘plus’’ at the end of paragraph (32), by strik-
ing the period at the end of paragraph (33) and inserting 
‘‘, plus’’, and by adding at the end the following new para-
graph: 
‘‘(34) in the case of an eligible small employer 
(as defined in section 45U(c)), the military spouse 
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retirement plan eligibility credit determined under 
section 45U(a).’’. 
(c) SPECIFIED CREDIT
FOR PURPOSES
OF CER-
TIFIED
PROFESSIONAL
ORGANIZATIONS.—Section 
3511(d)(2) of such Code is amended by redesignating sub-
paragraphs (F), (G), and (H) as subparagraphs (G), (H), 
and (I), respectively, and by inserting after subparagraph 
(E) the following new subparagraph: 
‘‘(F) section 45U (military spouse retire-
ment plan eligibility credit),’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by adding at the end the fol-
lowing new item: 
‘‘Sec. 45U. Military spouse retirement plan eligibility credit for small employ-
ers.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
SEC. 112. SMALL IMMEDIATE FINANCIAL INCENTIVES FOR 
CONTRIBUTING TO A PLAN. 
(a) IN GENERAL.—Subparagraph (A) of section 
401(k)(4) of the Internal Revenue Code of 1986 is amend-
ed by inserting ‘‘(other than a de minimis financial incen-
tive)’’ after ‘‘any other benefit’’. 
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(b) SECTION 403(b) PLANS.—Subparagraph (A) of 
section 403(b)(12) of such Code, as amended by the pre-
ceding provisions of this Act, is further amended by add-
ing at the end the following: ‘‘A plan shall not fail to sat-
isfy clause (ii) solely by reason of offering a de minimis 
financial incentive to employees to elect to have the em-
ployer make contributions pursuant to a salary reduction 
agreement.’’. 
(c) EXEMPTION FROM PROHIBITED TRANSACTION 
RULES.—Subsection (d) of section 4975 of such Code is 
amended by striking ‘‘or’’ at the end of paragraph (22), 
by striking the period at the end of paragraph (23) and 
inserting ‘‘, or’’, and by adding at the end the following 
new paragraph: 
‘‘(24) the provision of a de minimis financial in-
centive 
described 
in 
section 
401(k)(4)(A) 
or 
403(b)(12)(A).’’. 
(d) AMENDMENT OF EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.—Subsection (b) of section 
408 of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1108(b)) is amended by adding at the 
end the following new paragraph: 
‘‘(21) The provision of a de minimis financial 
incentive described in section 401(k)(4)(A) or 
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403(b)(12)(A) of the Internal Revenue Code of 
1986.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning after the date of enactment of this Act. 
SEC. 113. SAFE HARBOR FOR CORRECTIONS OF EMPLOYEE 
ELECTIVE DEFERRAL FAILURES. 
(a) IN GENERAL.—Section 414 of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new subsection: 
‘‘(aa) CORRECTING AUTOMATIC CONTRIBUTION ER-
RORS.— 
‘‘(1) IN GENERAL.—Any plan or arrangement 
shall not fail to be treated as a plan described in 
sections 401(a), 403(b), 408, or 457(b), as applica-
ble, solely by reason of a corrected error. 
‘‘(2) CORRECTED ERROR DEFINED.—For pur-
poses of this subsection, the term ‘corrected error’ 
means a reasonable administrative error in imple-
menting an automatic enrollment or automatic esca-
lation feature in accordance with the terms of an eli-
gible automatic contribution arrangement (as de-
fined under subsection (w)(3)), provided that such 
implementation error— 
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‘‘(A) is corrected by the date that is 91⁄2 
months after the end of the plan year during 
which the failure occurred, 
‘‘(B) is corrected in a manner that is fa-
vorable to the participant, and 
‘‘(C) is of a type which is so corrected for 
all similarly situated participants in a non-
discriminatory manner. 
Such correction may occur before or after the partic-
ipant has terminated employment and may occur 
without regard to whether the error is identified by 
the Secretary. 
‘‘(3) REGULATIONS AND GUIDANCE FOR FAVOR-
ABLE CORRECTION METHODS.—The Secretary shall, 
by regulations or other guidance of general applica-
bility, specify the correction methods that are in a 
manner favorable to the participant for purposes of 
paragraph (2)(B).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply with respect to any errors with 
respect to which the date referred to in section 414(aa) 
(as added by this section) is after the date of enactment 
of this Act. 
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SEC. 114. ONE-YEAR REDUCTION IN PERIOD OF SERVICE 
REQUIREMENT FOR LONG-TERM, PART-TIME 
WORKERS. 
(a) IN GENERAL.—Section 401(k)(2)(D)(ii) of the 
Internal Revenue Code of 1986 is amended by striking 
‘‘3’’ and inserting ‘‘2’’. 
(b) CLARIFICATION OF PRIOR SERVICE FOR PUR-
POSES OF VESTING RULES.—Section 112(b) of the Set-
ting Every Community Up for Retirement Enhancement 
Act 
of 
2019 
is 
amended 
by 
striking 
‘‘section 
401(k)(2)(D)(ii)’’ and inserting ‘‘paragraphs (2)(D)(ii) 
and (15)(B)(iii) of section 401(k)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect as if included in the enact-
ment of section 112 of the Setting Every Community Up 
for Retirement Enhancement Act of 2019. 
SEC. 115. FINDINGS RELATING TO S CORPORATION ESOPs. 
Congress finds the following: 
(1) On January 1, 1998, nearly 25 years after 
the Employee Retirement Income Security Act of 
1974 was enacted and the employee stock ownership 
plan (hereafter in this section referred to as an 
‘‘ESOP’’) was created, employees were first per-
mitted to be owners of subchapter S corporations 
pursuant to the Small Business Job Protection Act 
of 1996 (Public Law 104–188). 
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(2) With the passage of the Taxpayer Relief 
Act of 1997 (Public Law 105–34), Congress de-
signed incentives to encourage businesses to become 
ESOP-owned S corporations. 
(3) Since that time, several thousand companies 
have become ESOP-owned S corporations, creating 
an ownership interest for several million Americans 
in companies in every State in the country, in indus-
tries ranging from heavy manufacturing to construc-
tion and contracting to services. 
(4) Every United States worker who is an em-
ployee-owner of an S corporation company through 
an ESOP has a valuable qualified retirement savings 
account. 
(5) Recent studies have shown that employees 
of ESOP-owned S corporations enjoy greater job 
stability, wages and benefits than employees of com-
parable companies; and ESOP companies are better 
able to weather economic downturns. 
(6) Studies also show that employee-owners of 
S corporation ESOP companies have amassed mean-
ingful retirement savings through their ESOP ac-
counts that will give them the means to retire with 
dignity. 
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(7) It is the goal of Congress to preserve and 
foster employee ownership of S corporations through 
ESOPs. 
TITLE II—PRESERVATION OF 
INCOME 
SEC. 201. REMOVE REQUIRED MINIMUM DISTRIBUTION 
BARRIERS FOR LIFE ANNUITIES. 
(a) IN GENERAL.—Section 401(a)(9) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new subparagraph: 
‘‘(J) CERTAIN
INCREASES
IN
PAYMENTS 
UNDER A COMMERCIAL ANNUITY.—Nothing in 
this section shall prohibit a commercial annuity 
(within the meaning of section 3405(e)(6)) that 
is issued in connection with any eligible retire-
ment plan (within the meaning of section 
402(c)(8)(B), other than a defined benefit plan) 
from providing one or more of the following 
types of payments on or after the annuity start-
ing date: 
‘‘(i) annuity payments that increase 
by a constant percentage, applied not less 
frequently than annually, at a rate that is 
less than 5 percent per year, 
‘‘(ii) a lump sum payment that— 
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‘‘(I) results in a shortening of the 
payment period with respect to an an-
nuity or a full or partial commutation 
of the future annuity payments, pro-
vided that such lump sum is deter-
mined 
using 
reasonable 
actuarial 
methods and assumptions, as deter-
mined in good faith by the issuer of 
the contract, or 
‘‘(II) accelerates the receipt of 
annuity payments that are scheduled 
to be received within the ensuing 12 
months, regardless of whether such 
acceleration shortens the payment pe-
riod with respect to the annuity, re-
duces the dollar amount of benefits to 
be paid under the contract, or results 
in a suspension of annuity payments 
during the period being accelerated, 
‘‘(iii) an amount which is in the na-
ture of a dividend or similar distribution, 
provided that the issuer of the contract de-
termines such amount based on a reason-
able comparison of the actuarial factors as-
sumed when calculating the initial annuity 
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payments and the issuer’s experience with 
respect to those factors, or 
‘‘(iv) a final payment upon death that 
does not exceed the excess of the total 
amount of the consideration paid for the 
annuity payments, less the aggregate 
amount of prior distributions or payments 
from or under the contract.’’. 
(b) REGULATIONS AND ENFORCEMENT.— 
(1) REGULATIONS.—By the date that is one 
year after the date of enactment of this Act, the 
Secretary of the Treasury shall amend the regula-
tion issued by the Department of the Treasury relat-
ing to ‘‘Required Distributions from Retirement 
Plans,’’ 69 Fed. Reg. 33288 (June 15, 2004), and 
make any corresponding amendments to other regu-
lations, in order to— 
(A) conform such regulations to subsection 
(a), including by eliminating the types of pay-
ments described in subsection (a) from the 
scope of the requirement in Q&A–14(c) of 
Treasury Regulation section 1.401(a)(9)–6 that 
the total future expected payments must exceed 
the total value being annuitized; 
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(B) amend Q&A–14(c) of Treasury Regu-
lation section 1.401(a)(9)–6 to provide that a 
commercial annuity that provides an initial pay-
ment that is at least equal to the initial pay-
ment that would be required from an individual 
account pursuant to Treasury Regulation sec-
tion 1.401(a)(9)–5 will be deemed to satisfy the 
requirement in Q&A–14(c) of Treasury Regula-
tion section 1.401(a)(9)–6 that the total future 
expected payments must exceed the total value 
being annuitized; and 
(C) amend Q&A–14(e)(3) of Treasury Reg-
ulation section 1.401(a)(9)–6 to provide that 
the total future expected payments under a 
commercial annuity are determined using the 
tables or other actuarial assumptions that the 
issuer of the contract actually uses in pricing 
the premiums and benefits with respect to the 
contract, provided that such tables or other ac-
tuarial assumptions are reasonable. 
(2) ENFORCEMENT.—As of the date of enact-
ment of this Act, the Secretary of the Treasury shall 
administer and enforce the law in accordance with 
subsections (a) and (b). 
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(c) EFFECTIVE DATE.—This section shall take effect 
on the date of the enactment of this Act. 
SEC. 202. QUALIFYING LONGEVITY ANNUITY CONTRACTS. 
(a) IN GENERAL.—Not later than the date which is 
1 year after the date of the enactment of this Act, the 
Secretary of the Treasury or the Secretary’s delegate 
(hereafter in this section referred to as the ‘‘Secretary’’) 
shall amend the regulation issued by the Department of 
the Treasury relating to ‘‘Longevity Annuity Contracts’’ 
(79 Fed. Reg. 37633 (July 2, 2014)), as follows: 
(1) REPEAL 25-PERCENT PREMIUM LIMIT.—The 
Secretary shall amend Q&A–17(b)(3) of Treasury 
Regulation section 1.401(a)(9)–6 and Q&A–12(b)(3) 
of Treasury Regulation section 1.408–8 to eliminate 
the requirement that premiums for qualifying lon-
gevity annuity contracts be limited to a percentage 
of an individual’s account balance, and to make such 
corresponding changes to the regulations and related 
forms as are necessary to reflect the elimination of 
this requirement. 
(2) FACILITATE JOINT AND SURVIVOR BENE-
FITS.—The Secretary shall amend Q&A–17(c) of 
Treasury Regulation section 1.401(a)(9)–6, and 
make such corresponding changes to the regulations 
and related forms as are necessary, to provide that, 
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in the case of a qualifying longevity annuity contract 
which was purchased with joint and survivor annuity 
benefits for the individual and the individual’s 
spouse which were permissible under the regulations 
at the time the contract was originally purchased, a 
divorce occurring after the original purchase and be-
fore the annuity payments commence under the con-
tract will not affect the permissibility of the joint 
and survivor annuity benefits or other benefits under 
the contract, or require any adjustment to the 
amount or duration of benefits payable under the 
contract, provided that any qualified domestic rela-
tions order (within the meaning of section 414(p) of 
the Internal Revenue Code of 1986) or any divorce 
or separation instrument (as defined in subsection 
(b))— 
(A) provides that the former spouse is en-
titled to the survivor benefits under the con-
tract; 
(B) does not modify the treatment of the 
former spouse as the beneficiary under the con-
tract who is entitled to the survivor benefits; or 
(C) does not modify the treatment of the 
former spouse as the measuring life for the sur-
vivor benefits under the contract. 
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(3) PERMIT SHORT FREE LOOK PERIOD.—The 
Secretary shall amend Q&A–17(a)(4) of Treasury 
Regulation section 1.401(a)(9)–6 to ensure that 
such Q&A does not preclude a contract from includ-
ing a provision under which an employee may re-
scind the purchase of the contract within a period 
not exceeding 90 days from the date of purchase. 
(b) DIVORCE OR SEPARATION INSTRUMENT.—For 
purposes of subsection (a)(2), the term ‘‘divorce or separa-
tion instrument’’ means— 
(1) a decree of divorce or separate maintenance 
or a written instrument incident to such a decree, 
(2) a written separation agreement, or 
(3) a decree (not described in paragraph (1)) 
requiring a spouse to make payments for the sup-
port or maintenance of the other spouse. 
(c) EFFECTIVE DATES, ENFORCEMENT, AND INTER-
PRETATIONS.— 
(1) EFFECTIVE DATES.— 
(A) Paragraph (1) of subsection (a) shall 
be effective with respect to contracts purchased 
or received in an exchange on or after the date 
of the enactment of this Act. 
(B) Paragraphs (2) and (3) of subsection 
(a) shall be effective with respect to contracts 
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purchased or received in an exchange on or 
after July 2, 2014. 
(2) ENFORCEMENT AND INTERPRETATIONS.— 
Prior to the date on which the Secretary issues final 
regulations pursuant to subsection (a)— 
(A) the Secretary (or delegate) shall ad-
minister and enforce the law in accordance with 
subsection (a) and the effective dates in para-
graph (1) of this subsection; and 
(B) taxpayers may rely upon their reason-
able good faith interpretations of subsection (a). 
SEC. 
203. 
INSURANCE-DEDICATED 
EXCHANGE-TRADED 
FUNDS. 
(a) IN GENERAL.—Not later than the date which is 
7 years after the date of the enactment of this Act, the 
Secretary of the Treasury (or the Secretary’s delegate) 
shall amend the regulation issued by the Department of 
the Treasury relating to ‘‘Income Tax; Diversification Re-
quirements for Variable Annuity, Endowment, and Life 
Insurance Contracts’’, 54 Fed. Reg. 8728 (March 2, 
1989), and make any necessary corresponding amend-
ments to other regulations, in order to facilitate the use 
of exchange-traded funds as investment options under 
variable contracts within the meaning of section 817(d) 
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of the Internal Revenue Code of 1986, in accordance with 
subsections (b) and (c) of this section. 
(b) DESIGNATE CERTAIN AUTHORIZED PARTICI-
PANTS AND MARKET MAKERS AS ELIGIBLE INVESTORS.— 
The Secretary of the Treasury (or the Secretary’s dele-
gate) shall amend Treas. Reg. section 1.817–5(f)(3) to 
provide that satisfaction of the requirements in Treas. 
Reg. section 1.817–5(f)(2)(i) with respect to an exchange- 
traded fund shall not be prevented by reason of beneficial 
interests in such a fund being held by 1 or more author-
ized participants or market makers. 
(c) DEFINE RELEVANT TERMS.—In amending Treas. 
Reg. section 1.817–5(f)(3) in accordance with subsections 
(b) of this section, the Secretary of the Treasury (or the 
Secretary’s delegate) shall provide definitions consistent 
with the following: 
(1) EXCHANGE-TRADED FUND.—The term ‘‘ex-
change-traded fund’’ means a regulated investment 
company, partnership, or trust— 
(A) that is registered with the Securities 
and Exchange Commission as an open-end in-
vestment company or a unit investment trust; 
(B) the shares of which can be purchased 
or redeemed directly from the fund only by an 
authorized participant; and 
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(C) the shares of which are traded 
throughout the day on a national stock ex-
change at market prices that may or may not 
be the same as the net asset value of the 
shares. 
(2) AUTHORIZED
PARTICIPANT.—The term 
‘‘authorized participant’’ means a financial institu-
tion that is a member or participant of a clearing 
agency registered under section 17A(b) of the Secu-
rities Exchange Act of 1934 that enters into a con-
tractual relationship with an exchange-traded fund 
pursuant to which the financial institution is per-
mitted to purchase and redeem shares directly from 
the fund and to sell such shares to third parties, but 
only if the contractual arrangement or applicable law 
precludes the financial institution from— 
(A) purchasing the shares for its own in-
vestment purposes rather than for the exclusive 
purpose of creating and redeeming such shares 
on behalf of third parties; and 
(B) selling the shares to third parties who 
are not market makers or otherwise described 
in Treas. Reg. section 1.817–5(f) (1) and (3). 
(3) MARKET
MAKER.—The term ‘‘market 
maker’’ means a financial institution that is a reg-
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istered broker or dealer under section 15(b) of the 
Securities Exchange Act of 1934 that maintains li-
quidity for an exchange-traded fund on a national 
stock exchange by being always ready to buy and sell 
shares of such fund on the market, but only if the 
financial institution is contractually or legally pre-
cluded from selling or buying such shares to or from 
persons who are not authorized participants or oth-
erwise described in Treas. Reg. section 1.817–5(f) 
(2) and (3). 
(d) EFFECTIVE DATE.—Subsections (b) and (c) shall 
apply to segregated asset account investments made on 
or after the date that is 7 years after the date of the enact-
ment of this Act. 
TITLE III—SIMPLIFICATION AND 
CLARIFICATION OF RETIRE-
MENT PLAN RULES 
SEC. 301. RECOVERY OF RETIREMENT PLAN OVERPAY-
MENTS. 
(a) OVERPAYMENTS UNDER INTERNAL REVENUE 
CODE OF 1986.— 
(1) QUALIFICATION
REQUIREMENTS.—Section 
414 of the Internal Revenue Code of 1986, as 
amended by the preceding provisions of this Act, is 
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further amended by adding at the end the following 
new subsection: 
‘‘(bb) SPECIAL RULES APPLICABLE
TO BENEFIT 
OVERPAYMENTS.— 
‘‘(1) IN GENERAL.—A plan shall not fail to be 
treated as described in clause (i), (ii), (iii), or (iv) 
of section 219(g)(5)(A) (and shall not fail to be 
treated as satisfying the requirements of section 
401(a) or 403) merely because— 
‘‘(A) the plan fails to obtain payment from 
any participant, beneficiary, employer, plan 
sponsor, fiduciary, or other party on account of 
any inadvertent benefit overpayment made by 
the plan, or 
‘‘(B) the plan sponsor amends the plan to 
increase past or future benefit payments to af-
fected participants and beneficiaries in order to 
adjust for prior inadvertent benefit overpay-
ments. 
‘‘(2) REDUCTION
IN
FUTURE
BENEFIT
PAY-
MENTS
AND
RECOVERY
FROM
RESPONSIBLE 
PARTY.—Paragraph (1) shall not fail to apply to a 
plan merely because, after discovering a benefit over-
payment, such plan— 
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‘‘(A) reduces future benefit payments to 
the correct amount provided for under the 
terms of the plan, or 
‘‘(B) seeks recovery from the person or 
persons responsible for such overpayment. 
‘‘(3) EMPLOYER
FUNDING
OBLIGATIONS.— 
Nothing in this subsection shall relieve an employer 
of any obligation imposed on it to make contribu-
tions to a plan to meet the minimum funding stand-
ards under sections 412 and 430 or to prevent or re-
store an impermissible forfeiture in accordance with 
section 411. 
‘‘(4) OBSERVANCE OF BENEFIT LIMITATIONS.— 
Notwithstanding paragraph (1), a plan to which 
paragraph (1) applies shall observe any limitations 
imposed on it by section 401(a)(17) or 415. The 
plan may enforce such limitations using any method 
approved by the Secretary for recouping benefits 
previously paid or allocations previously made in ex-
cess of such limitations. 
‘‘(5) COORDINATION WITH OTHER QUALIFICA-
TION
REQUIREMENTS.—The Secretary may issue 
regulations or other guidance of general applicability 
specifying how benefit overpayments and their 
recoupment or non-recoupment from a participant or 
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beneficiary shall be taken into account for purposes 
of satisfying any requirement applicable to a plan to 
which paragraph (1) applies.’’. 
(2) ROLLOVERS.—Section 402(c) of such Code 
is amended by adding at the end the following new 
paragraph: 
‘‘(12) In the case of an inadvertent benefit 
overpayment 
from 
a 
plan 
to 
which 
section 
414(bb)(1) applies which is transferred to an eligible 
retirement plan by or on behalf of a participant or 
beneficiary— 
‘‘(A) the portion of such overpayment with 
respect to which recoupment is not sought on 
behalf of the plan shall be treated as having 
been paid in an eligible rollover distribution if 
the payment would have been an eligible roll-
over distribution but for being an overpayment, 
and 
‘‘(B) the portion of such overpayment with 
respect to which recoupment is sought on behalf 
of the plan shall be permitted to be returned to 
such plan and in such case shall be treated as 
an eligible rollover distribution transferred to 
such plan by the participant or beneficiary who 
received such overpayment (and the plans mak-
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