I 
110TH CONGRESS 
2D SESSION 
H. R. 7242 
To make technical corrections to the Pension Protection Act of 2006 relating 
to the Internal Revenue Code of 1986, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 2, 2008 
Mr. ANDREWS introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation 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 committee concerned 
A BILL 
To make technical corrections to the Pension Protection Act 
of 2006 relating to the Internal Revenue Code of 1986, 
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 AND TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Pension Protection Act IRC Amendments of 2008’’. 
(b) TABLE OF CONTENTS.—The table of contents is 
as follows: 
Sec. 1. Short title and table of contents. 
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Sec. 2. Interest rate assumption for applying benefit limitations to lump sum 
distributions. 
Sec. 3. Technical correction to effective date of tax-free exchange provisions 
with respect to qualified long-term care insurance contracts. 
Sec. 4. Clarification of minimum required distribution rules for nonspouse bene-
ficiaries of certain retirement plan distributions. 
Sec. 5. Amendments related to title IX of the Pension Protection Act of 2006. 
Sec. 6. Modification of IRA minimum distribution requirements. 
Sec. 7. Treatment of certain employer-owned life insurance contracts based on 
insured’s status. 
Sec. 8. Failure to satisfy notice and consent requirement for employer-owned 
life insurance contracts. 
Sec. 9. Clarification of deductibility of contributions to both defined contribu-
tion plans and defined benefit plans. 
Sec. 10. Clarifications relating to treatment of distributions from governmental 
retirement plans for health and long-term care insurance for 
public safety officers. 
Sec. 11. Non-safe harbor formulas permitted for combined plans. 
Sec. 12. Safe harbor cash balance formula to deemed to meet requirements of 
sections 401(a)(4) and 411(B)(1). 
Sec. 13. Single participant combined plans. 
Sec. 14. Matching contributions provided through cash balance plan. 
Sec. 15. ESOP may form part of eligible combined plan. 
Sec. 16. Special funding target rule for plans computing accrued benefits by 
reference to hypothetical account balance. 
SEC. 2. INTEREST RATE ASSUMPTION FOR APPLYING BEN-
EFIT LIMITATIONS TO LUMP SUM DISTRIBU-
TIONS. 
(a) 
IN
GENERAL.—Clause 
(ii) 
of 
section 
415(b)(2)(E) of the Internal Revenue Code of 1986 is 
amended— 
(1) by striking subclause (II), 
(2) by redesignating subclause (III) as sub-
clause (II), 
(3) by inserting ‘‘or’’ at the end of subclause 
(I), and 
(4) by striking ‘‘the greatest of’’ and inserting 
‘‘the greater of’’. 
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(b) EFFECTIVE DATE.—The amendments made by 
this section shall be effective as if included in the enact-
ment of section 303 of the Pension Protection Act of 
2006. 
SEC. 3. TECHNICAL CORRECTION TO EFFECTIVE DATE OF 
TAX-FREE EXCHANGE PROVISIONS WITH RE-
SPECT TO QUALIFIED LONG-TERM CARE IN-
SURANCE CONTRACTS. 
(a) IN GENERAL.—Section 844(g)(2) of the Pension 
Protection Act of 2006 (relating to effective date of 
amendments made to section 1035 of the Internal Rev-
enue Code of 1986) is amended to read as follows: 
‘‘(2) TAX-FREE EXCHANGES.— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the amendments made by 
subsection (b) shall apply with respect to ex-
changes occurring after December 31, 2009. 
‘‘(B) EXCHANGES
OF
QUALIFIED
LONG- 
TERM
CARE
INSURANCE
CONTRACTS.—The 
amendment made by subsection (b)(4) shall 
apply with respect to exchanges occurring on or 
after the date of the enactment of this Act.’’. 
(b) NO INFERENCE.—Nothing in the amendment 
made by this section or the amendment made by section 
844(b)(4) of the Pension Protection Act of 2006 shall be 
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construed to create an inference with respect to the treat-
ment of exchanges of qualified long-term care insurance 
contracts under the Internal Revenue Code of 1986 (as 
in effect before the date of the enactment of the Pension 
Protection Act of 2006) other than section 1035(a)(4) of 
the Internal Revenue Code of 1986. 
(c) EFFECTIVE DATE.—The provisions of this section 
(including the amendment made thereby) shall apply as 
if included in the enactment of section 844 of the Pension 
Protection Act of 2006. 
SEC. 4. CLARIFICATION OF MINIMUM REQUIRED DISTRIBU-
TION 
RULES 
FOR 
NONSPOUSE 
BENE-
FICIARIES OF CERTAIN RETIREMENT PLAN 
DISTRIBUTIONS. 
Not later than 90 days after the date of the enact-
ment of this Act, the Secretary of the Treasury shall issue 
the following guidance: 
(1) Permitting a nonspouse beneficiary who is 
receiving distributions from an eligible retirement 
plan 
under 
the 
5-year 
rule 
of 
section 
401(a)(9)(B)(ii) of the Internal Revenue Code of 
1986, to elect to use the life expectancy rule of sec-
tion 401(a)(9)(B)(iii) of such Code in connection 
with an eligible rollover distribution described in sec-
tion 402(c)(11) of such Code, provided that any 
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amounts that would have been required to be distrib-
uted under the life expectancy rule of section 
401(a)(9)(B)(iii) of such Code are distributed by the 
earlier of December 31, 2010 or the end of the 5- 
year 
period 
determined 
under 
section 
401(a)(9)(B)(ii) of such Code. 
(2) Providing that a direct trustee-to-trustee 
transfer under section 402(c)(11) that is made in 
the year following the year of the employee’s death 
may include any undistributed required minimum 
distributions under section 401(a)(9) for such year 
if the nonspouse beneficiary on whose behalf the 
transfer is made is eligible to elect the 5-year rule 
of section 401(a)(9)(B)(ii). 
SEC. 5. AMENDMENTS RELATED TO TITLE IX OF THE PEN-
SION PROTECTION ACT OF 2006. 
(a) AMENDMENTS RELATED TO SECTION 902.— 
(1) Subclause (I) of section 401(k)(13)(D)(i) of 
the Internal Revenue Code of 1986 is amended by 
striking ‘‘such compensation as exceeds 1 percent 
but does not’’ and inserting ‘‘such contributions as 
exceed 1 percent but do not’’. 
(2) Subparagraph (E) of section 401(k)(8) and 
subparagraph (G) of section 411(a)(3) of such Code 
are each amended— 
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(A) by striking ‘‘an erroneous automatic 
contribution’’ and inserting ‘‘a permissible with-
drawal’’, and 
(B) by striking ‘‘ERRONEOUS AUTOMATIC 
CONTRIBUTION’’ in the heading and inserting 
‘‘PERMISSIBLE WITHDRAWAL’’. 
(3) Clause (ii) of section 402(g)(2)(A) of such 
Code is amended by inserting ‘‘through the end of 
such taxable year’’ after ‘‘such amount’’. 
(4) Paragraph (3) of section 414(w) of such 
Code is amended— 
(A) by inserting ‘‘and’’ at the end of sub-
paragraph (B), 
(B) by striking subparagraph (C), and 
(C) by redesignating subparagraph (D) as 
subparagraph (C). 
(5) Paragraph (5) of section 414(w) of such 
Code is amended by striking ‘‘and’’ at the end of 
subparagraph (B), by striking the period at the end 
of subparagraph (C) and inserting a comma, and by 
adding at the end the following new subsections: 
‘‘(D) a simplified employee pension the 
terms of which provide for a salary reduction 
arrangement described in section 408(k)(6), 
and 
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‘‘(E) a simple retirement account (as de-
fined in section 408(p)).’’. 
(b) AMENDMENTS RELATED TO SECTION 903.— 
(1) AMENDMENT
OF
1986
CODE.—Paragraph 
(1) of section 414(x) of such Code is amended by 
adding at the end of paragraph (1) the following 
new sentence: ‘‘The requirements for termination of 
either of the 2 plans shall be applicable separately 
with respect to each plan, except that, prior to final 
distribution of assets pursuant to such termination, 
nothing in this sentence shall be construed to affect 
the application of paragraphs (3) and (4) to the ap-
plicable defined contribution plan forming part of 
the eligible combined plan.’’ 
(2) AMENDMENT OF ERISA.—Section 210(e)(1) 
the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1060(e)(1)) is amended by adding 
at the end the following new sentence: ‘‘The require-
ments for termination of either of the 2 plans shall 
be applicable separately with respect to each plan, 
except that, prior to final distribution of assets pur-
suant to such termination, nothing in this sentence 
shall be construed to affect the application of para-
graphs (3) and (4) to the applicable individual ac-
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count plan forming part of the eligible combined 
plan.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
subsections (a) and (b) shall apply as if included in the 
enactment of sections 902 and 903, respectively, of the 
Pension Protection Act of 2006. 
SEC. 6. MODIFICATION OF IRA MINIMUM DISTRIBUTION 
REQUIREMENTS. 
(a) IN GENERAL.— 
(1) 
MINIMUM
DISTRIBUTION
EXCLUSION 
AMOUNT.—Subsection (a) of section 408 of the In-
ternal Revenue Code of 1986 (relating to individual 
retirement account) is amended by adding at the end 
the following new paragraph: 
‘‘(7) In the case of an interest not acquired by 
reason of the death of another individual, minimum 
distributions shall be required under rules prescribed 
under paragraph (6) only to the extent the value of 
all individual retirement plans of an individual ex-
ceeds $200,000 as of the close of the calendar year 
in which the taxable year begins.’’. 
(2) TAX-SHELTERED
ANNUITIES
AND
INDI-
VIDUAL RETIREMENT PLANS.— 
(A) Paragraph (10) of section 403(b) of 
such Code (relating to distribution require-
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ments) is amended by adding at the end the fol-
lowing new sentence: ‘‘For purposes of meeting 
any minimum distribution requirement with re-
spect to a contract described in this subsection, 
all of an individual’s contracts described in this 
subsection and individual retirement accounts 
and annuities shall be treated as 1 contract, 
and all amounts paid or distributed out of such 
contracts, accounts, and annuities shall be 
treated as 1 distribution.’’ 
(B) Paragraph (2) of section 408(d) of 
such Code (relating to special rules for applying 
section 72) is amended by adding at the end 
the following new sentence: ‘‘For purposes of 
meeting any minimum distribution requirement 
with respect to an individual retirement account 
or annuity, all of an individual’s contracts de-
scribed in section 403(b) and individual retire-
ment accounts and annuities shall be treated as 
1 contract, and all amounts paid or distributed 
out of such contracts, accounts, and annuities 
shall be treated as 1 distribution.’’ 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions made after Decem-
ber 31, 2008. 
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SEC. 7. TREATMENT OF CERTAIN EMPLOYER-OWNED LIFE 
INSURANCE 
CONTRACTS 
BASED 
ON 
IN-
SURED’S STATUS. 
(a) IN GENERAL.—Clause (ii) of section 101(j)(2)(A) 
of the Internal Revenue Code of 1986 (relating to excep-
tions based on insured’s status) is amended by striking 
subclause (II), by redesignating subclause (III) as sub-
clause (IV), and by inserting after subclause (I) the fol-
lowing: 
‘‘(II) a 5-percent owner (as de-
fined in section 414(q)(2)) at any 
time during the current or preceding 
year, 
‘‘(III) an employee who had com-
pensation 
(as 
defined 
in 
section 
415(c)(3)) for the preceding year, or 
whose annual rate of compensation 
(as so defined) for the current year is, 
in excess of the amount described in 
section 414(q)(1)(B)(i), or’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply to life insurance contracts issued 
after the date of the enactment of this Act. 
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SEC. 8. FAILURE TO SATISFY NOTICE AND CONSENT RE-
QUIREMENT FOR EMPLOYER-OWNED LIFE IN-
SURANCE CONTRACTS. 
(a) IN GENERAL.—Subsection (h) of section 101 the 
Internal Revenue Code of 1986 (relating to treatment of 
certain employer-owned life insurance contracts) is amend-
ed by adding at the end the following new paragraph: 
‘‘(6) SPECIAL RULE RELATING TO NOTICE AND 
CONSENT.—The notice and consent requirements of 
paragraph (4) shall be treated as met with respect 
to an employer-owned life insurance contract, if— 
‘‘(A) the requirements of subparagraphs 
(A), (B), and (C) of such paragraph are met 
with respect to the employee not later than 90 
days after the later of— 
‘‘(i) the date of the issuance of such 
contract, or 
‘‘(ii) the date the applicable policy-
holder first becomes the owner of such con-
tract, and 
‘‘(B) it is shown that failure to otherwise 
meet the requirements of paragraph (4) is due 
to reasonable cause and not to willful neglect.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply as if included in the enactment 
of section 863 of the Pension Protection Act of 2006. 
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SEC. 9. CLARIFICATION OF DEDUCTIBILITY OF CONTRIBU-
TIONS TO BOTH DEFINED CONTRIBUTION 
PLANS AND DEFINED BENEFIT PLANS. 
(a) IN GENERAL.—Section 404(a)(3)(C)(iii) of the 
Internal Revenue Code of 1986 is amended by striking ‘‘In 
the case of’’ and all that follows through ‘‘exceed’’ and 
inserting ‘‘Subparagraph (A) shall apply in the case of the 
contributions to the plans referred to in subparagraph (A), 
and trusts forming a part of such plans, only if, and to 
the extent that, the total of all such contributions which 
are made to defined contribution plans, or trusts forming 
a part of defined contribution plans, exceed’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply as if included in the enactment 
of section 803 of the Pension Protection Act of 2006. 
SEC. 10. CLARIFICATIONS RELATING TO TREATMENT OF 
DISTRIBUTIONS FROM GOVERNMENTAL RE-
TIREMENT PLANS FOR HEALTH AND LONG- 
TERM CARE INSURANCE FOR PUBLIC SAFETY 
OFFICERS. 
(a) DEFINITION OF DEPENDENT.—Section 402(l)(1) 
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘(as defined in section 152)’’ and inserting ‘‘(as de-
fined in section 152, determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) of section 152)’’. 
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(b) CLARIFICATION OF DEFINITION OF QUALIFIED 
HEALTH INSURANCE PREMIUMS.—Section 402(l)(4)(D) 
of the Internal Revenue Code of 1986 is amended by add-
ing at the end the following new sentence: ‘‘In the case 
of any such coverage provided under a self-insured ar-
rangement, such term includes the cost of providing such 
coverage.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply as if included in the enactment 
of section 845 of the Pension Protection Act of 2006. 
SEC. 11. NON-SAFE HARBOR FORMULAS PERMITTED FOR 
COMBINED PLANS. 
(a) AMENDMENTS TO INTERNAL REVENUE CODE OF 
1986.— 
(1) ELIMINATION OF SAFE HARBOR REQUIRE-
MENT FOR COMBINED PLANS.—Subparagraph (A) of 
section 414(x)(2) of the Internal Revenue Code of 
1986 is amended— 
(A) by striking clause (iv), and 
(B) by striking ‘‘, and’’ at the end of 
clause (iii) and inserting a period. 
(2) SAFE HARBOR MADE PERMISSIBLE.— 
(A) IN GENERAL.—Paragraph (1) of sec-
tion 414(x) of such Code is amended— 
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(i) 
by 
striking 
‘‘(1) 
GENERAL 
RULE.—Except as provided’’ and inserting 
the following: 
‘‘(1) GENERAL RULES.— 
‘‘(A) TREATMENT OF ELIGIBLE COMBINED 
PLAN.—Except as provided’’, and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(B) PERMISSIBLE COMBINED PLAN SAFE 
HARBOR.— 
‘‘(i) 
SATISFACTION
OF
NON-
DISCRIMINATION
REQUIREMENTS
FOR 
QUALIFIED CASH OR DEFERRED ARRANGE-
MENTS.—A qualified cash or deferred ar-
rangement which is included in an applica-
ble defined contribution plan forming part 
of a safe harbor eligible combined plan 
shall be treated as meeting the require-
ments of section 401(k)(3)(A)(ii) if the re-
quirements of paragraph (2)(C) are met 
with respect to such arrangement. 
‘‘(ii) SATISFACTION
OF
TOP-HEAVY 
RULES.—A defined benefit plan and appli-
cable defined contribution plan forming 
part of a safe harbor eligible combined 
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plan for any plan year shall be treated as 
meeting the requirements of section 416 
for the plan year.’’. 
(B) SAFE
HARBOR
ELIGIBLE
COMBINED 
PLAN
DEFINED.—Paragraph (2) of section 
414(x) of such Code is amended— 
(i) in subparagraph (A), by redesig-
nating clauses (i), (ii), and (iii) as sub-
clauses (I), (II), and (III), respectively, 
and moving such subclauses (as so redesig-
nated) 2 ems to the right, and 
(ii) by striking ‘‘(2) ELIGIBLE COM-
BINED
PLAN.—’’ and all that follows 
through ‘‘(A) IN
GENERAL.—The term’’ 
and inserting the following: 
‘‘(2) ELIGIBLE
COMBINED
PLANS.—For pur-
poses of this subsection— 
‘‘(A) IN GENERAL.— 
‘‘(i) ELIGIBLE COMBINED PLAN.—The 
term’’, and 
(iii) by inserting after subparagraph 
(A)(i) (as amended by this subparagraph) 
the following new clause: 
‘‘(ii) SAFE
HARBOR
ELIGIBLE
COM-
BINED PLAN.—The term ‘safe harbor eligi-
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ble combined plan’ means an eligible com-
bined plan with respect to which the ben-
efit, 
contribution, 
vesting, 
and 
non-
discrimination requirements of subpara-
graphs (B), (C), (D), (E), and (F) are 
met.’’. 
(3) CONFORMING
AMENDMENT.—(A) Para-
graph (3) of section 414(x) of such Code is amended 
by striking ‘‘(3) NONDISCRIMINATION
REQUIRE-
MENTS’’ and all that follows through ‘‘(B) MATCH-
ING
CONTRIBUTIONS.—In applying’’ and inserting 
the following: 
‘‘(3) CONTRIBUTION
AND
NOTICE
REQUIRE-
MENTS RELATING TO MATCHING CONTRIBUTIONS.— 
In applying’’. 
(B) Section 414(x) of such Code is amended by 
striking paragraph (4) and renumbering paragraphs 
(5), (6), and (7) as paragraphs (4), (5), and (6), re-
spectively. 
(C) Paragraph (3) of section 414(x) of such 
Code is amended by striking ‘‘paragraph (5)(B)’’ 
and inserting ‘‘paragraph (4)(B)’’. 
(b) AMENDMENTS TO EMPLOYEE RETIREMENT IN-
COME SECURITY ACT OF 1974.— 
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(1) ELIMINATION OF SAFE HARBOR REQUIRE-
MENT FOR COMBINED PLANS.—Section 210(e)(2)(A) 
of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1060(e)(2)(A)) is amended— 
(A) by striking clause (iv), and 
(B) by striking ‘‘, and’’ at the end of 
clause (iii) and inserting a period. 
(2) SAFE HARBOR MADE PERMISSIBLE.— 
(A) IN
GENERAL.—Section 210(e)(1) of 
such Act (29 U.S.C. 1060(e)(1)) is amended— 
(i) 
by 
striking 
‘‘(1) 
GENERAL 
RULE.—Except as provided’’ and inserting 
the following: 
‘‘(1) GENERAL RULES.— 
‘‘(A) TREATMENT OF ELIGIBLE COMBINED 
PLAN.—Except as provided’’, and 
(ii) by adding at the end the following 
new subparagraph: 
‘‘(B) PERMISSIBLE COMBINED PLAN SAFE 
HARBOR.— 
‘‘(i) 
SATISFACTION
OF
NON-
DISCRIMINATION
REQUIREMENTS
FOR 
QUALIFIED CASH OR DEFERRED ARRANGE-
MENTS.—A qualified cash or deferred ar-
rangement which is included in an applica-
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ble individual account plan forming part of 
a safe harbor eligible combined plan shall 
be treated as meeting the requirements of 
section 401(k)(3)(A)(ii) of the Internal 
Revenue Code of 1986 if the requirements 
of paragraph (2) are met with respect to 
such arrangement.’’. 
(B) SAFE
HARBOR
ELIGIBLE
COMBINED 
PLAN DEFINED.—Section 210(e)(2) of such Act 
(29 U.S.C. 1060(e)(2)) is amended— 
(i) in subparagraph (A) by redesig-
nating clauses (i), (ii), and (iii) as sub-
clauses (I), (II), and (III), respectively, 
and moving such subclauses (as so redesig-
nated) 2 ems to the right, and 
(ii) by striking ‘‘(2) ELIGIBLE COM-
BINED
PLAN.—’’ and all that follows 
through ‘‘(A) IN
GENERAL.—The term’’ 
and inserting the following: 
‘‘(2) ELIGIBLE
COMBINED
PLANS.—For pur-
poses of this subsection— 
‘‘(A) IN GENERAL.— 
‘‘(i) ELIGIBLE COMBINED PLAN.—The 
term’’, and 
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(iii) by inserting after subparagraph 
(A)(i) (as amended by this subparagraph) 
the following new clause: 
‘‘(ii) SAFE
HARBOR
ELIGIBLE
COM-
BINED PLAN.—The term ‘safe harbor eligi-
ble combined plan’ means an eligible com-
bined plan with respect to which the ben-
efit, 
contribution, 
vesting, 
and 
non-
discrimination requirements of subpara-
graphs (B), (C), (D), (E), and (F) are 
met.’’. 
(3) 
CONFORMING
AMENDMENTS.—Section 
210(e) of such Act (29 U.S.C. 1060(e)) is amended 
by striking ‘‘(3) NONDISCRIMINATION
REQUIRE-
MENTS’’ and all that follows through ‘‘(B) MATCH-
ING
CONTRIBUTIONS.—In applying’’ and inserting 
the following: 
‘‘(3) CONTRIBUTION
AND
NOTICE
REQUIRE-
MENTS RELATING TO MATCHING CONTRIBUTIONS.— 
In applying’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply with respect to plan years begin-
ning after December 31, 2009. 
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