I 
111TH CONGRESS 
2D SESSION 
H. R. 4742 
To amend the Internal Revenue Code of 1986 to encourage retirement savings 
by modifying requirements with respect to employer-established IRAs, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 3, 2010 
Mr. KIND (for himself and Mr. REICHERT) introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to 
the Committee on Education and Labor, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to encourage 
retirement savings by modifying requirements with re-
spect to employer-established IRAs, and for other pur-
poses. 
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 
‘‘Small Businesses Add Value for Employees Act of 2009’’ 
or the ‘‘SAVE Act of 2009’’. 
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(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
Sec. 2. Elimination of restriction on SIMPLE IRA rollovers. 
Sec. 3. Allowing mid-year SIMPLE IRA plan termination. 
Sec. 4. Elimination of higher penalty on early SIMPLE IRA distributions. 
Sec. 5. Increase in contributions allowed for SIMPLE IRA. 
Sec. 6. SIMPLE 401(k) parity for additional nonelective employer contribu-
tions. 
Sec. 7. Automatic deferral IRAs. 
Sec. 8. 401(k) automatic deferral percentage parity. 
Sec. 9. Limited transfer of unused balance in flexible spending arrangement. 
Sec. 10. Prior years compensation taken into account in determining maximum 
retirement savings deduction. 
Sec. 11. Expanding small employer pension plan startup cost credit. 
Sec. 12. Financial education. 
Sec. 13. Multiple small employer plan. 
Sec. 14. Amendments to Employee Retirement Income Security Act of 1974. 
SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA 
ROLLOVERS. 
(a) IN GENERAL.—Paragraph (3) of section 408(d) 
of the Internal Revenue Code of 1986 (relating to rollover 
contribution) is amended by striking subparagraph (G). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions in taxable years 
beginning after the date of the enactment of this Act. 
SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMI-
NATION. 
(a) IN GENERAL.—Subsection (p) of section 408 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph: 
‘‘(11) SPECIAL RULES RELATING TO MID-YEAR 
TERMINATION.— 
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SEC. 4. ELIMINATION OF HIGHER PENALTY ON EARLY SIM-
PLE IRA DISTRIBUTIONS. 
(a) IN GENERAL.—Subsection (t) of section 72 of the 
Internal Revenue Code of 1986 (relating to 10-percent ad-
ditional tax on early distributions from qualified retire-
ment plans) is amended by striking paragraph (6). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions in taxable years 
beginning after the date of the enactment of this Act. 
SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIM-
PLE IRA. 
(a) ADDITIONAL NONELECTIVE EMPLOYER CON-
TRIBUTIONS ALLOWED.— 
(1) IN GENERAL.—Subparagraph (A) of section 
408(p)(2) of the Internal Revenue Code of 1986 (re-
lating to qualified salary reduction arrangement) is 
amended by striking ‘‘and’’ at the end of clause (iii), 
by redesignating clause (iv) as clause (v), and by in-
serting after clause (iii) the following new clause: 
‘‘(iv) the employer may make, in addi-
tion to any other contribution under this 
paragraph, nonelective contributions of not 
more than 10 percent of compensation 
(subject to the limitation described in sub-
paragraph (B)(ii)) for each employee who 
is eligible to participate in the arrangement 
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and who has at least $5,000 of compensa-
tion from the employer for the year, and’’. 
(2) CONFORMING AMENDMENT.—Clause (v) of 
section 408(p)(2)(A) of such Code, as redesignated 
by this section, is amended by striking ‘‘clause (i) or 
(iii)’’ and inserting ‘‘clause (i), (iii), or (iv)’’. 
(b) INCREASE IN ELECTIVE CONTRIBUTION LIMITA-
TION.—Subparagraph (E) of section 408(p)(2) is amend-
ed to read as follows: 
‘‘(E) APPLICABLE DOLLAR AMOUNT.—For 
purposes of subparagraph (A)(ii), the applicable 
dollar amount shall be the applicable dollar 
amount in effect under subparagraph (B) of 
section 402(g)(1).’’. 
(c) SIMPLE IRA SUBJECT TO DEFINED CONTRIBU-
TION PLAN LIMITATION.—Subsection (p) of section 408 
of such Code is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(11) SUBJECT
TO
DEFINED
CONTRIBUTION 
PLAN
LIMITATION.—An arrangement shall not be 
treated as a qualified salary reduction arrangement 
for any year if contributions with respect to any em-
ployee for the year exceed the limitation of para-
graph (1) of section 415(c) (relating to limitation for 
defined contribution plans).’’. 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions for taxable years 
beginning after December 31, 2007. 
SEC. 6. SIMPLE 401(k) PARITY FOR ADDITIONAL NONELEC-
TIVE EMPLOYER CONTRIBUTIONS. 
(a) IN GENERAL.—Subparagraph (B) of section 
401(k)(11) of such Code (relating to contribution require-
ments) is amended by adding at the end the following new 
clause: 
‘‘(iv) SPECIAL RULE FOR ADDITIONAL 
NONELECTIVE
EMPLOYER
CONTRIBU-
TIONS.—An arrangement shall not be 
treated as failing to meet the requirements 
of this subparagraph merely because under 
such arrangement the employer makes, in 
addition to any other contribution under 
this subparagraph, nonelective contribu-
tions of not more than 10 percent of com-
pensation for each employee who is eligible 
to participate in the arrangement and who 
has at least $5,000 of compensation from 
the employer for the year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years beginning after De-
cember 31, 2007. 
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SEC. 7. AUTOMATIC DEFERRAL IRAS. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 (re-
lating to pension, profit-sharing, stock bonus plans, etc.) 
is amended by inserting after section 408A the following 
new section: 
‘‘SEC. 408B. AUTOMATIC DEFERRAL IRAS. 
‘‘(a) IN GENERAL.—An automatic deferral IRA shall 
be treated for purposes of this title in the same manner 
as an individual retirement plan. An automatic deferral 
IRA may also be treated as a Roth IRA for purposes of 
this title if it meets the requirements of section 408A. 
‘‘(b) AUTOMATIC DEFERRAL IRA.—For purposes of 
this section, the term ‘automatic deferral IRA’ means an 
individual retirement plan (as defined in section 
7701(a)(37)) with respect to which contributions are made 
under an arrangement which satisfies the requirements of 
paragraphs (1) through (4) of subsection (c). 
‘‘(c) AUTOMATIC DEFERRAL IRA ARRANGEMENTS.— 
‘‘(1) ENROLLMENT.— 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met if each employee eligible 
to participate in the arrangement is treated as 
having elected to have the employer make pay-
ments as elective contributions to an automatic 
deferral IRA on behalf of such employee (which 
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would have otherwise been made to the em-
ployee directly in cash) in an amount equal to 
so much of a qualified percentage of compensa-
tion of such employee as does not exceed the 
deductible amount for such year (within the 
meaning of section 219(b)). 
‘‘(B) ELIGIBILITY.—An employee is eligi-
ble to participate if such employee is described 
in paragraph (2) of section 408(k), except that 
for purposes of determining whether an em-
ployee is described in such paragraph, subpara-
graph (C) thereof shall be applied by sub-
stituting ‘$5,000’ for ‘$450’. 
‘‘(C) ELECTION OUT.—The election treat-
ed as having been made under subparagraph 
(A) shall cease to apply with respect to any em-
ployee who makes an affirmative election— 
‘‘(i) to not have such elective contribu-
tions made, or 
‘‘(ii) not later than the close of the 
30-day period beginning on the date of the 
first contribution with respect to such em-
ployee, to make elective contributions at a 
level specified in such affirmative election. 
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