128 
‘‘(4) LIMITATION ON NUMBER OF LOANS.—Not 
more than 3 loans to an individual under this sub-
section may be outstanding at any time. 
‘‘(5) DELINQUENCIES TREATED AS DISTRIBU-
TION.—Any amount required to be paid by a partici-
pant or beneficiary under paragraph (2)(B) during 
any plan year which is not paid at the time required 
to be paid, and any amount remaining unpaid as of 
the beginning of the plan year beginning after the 
period described in paragraph (2)(B)(ii), shall be 
treated as distributed during such plan year to the 
participant or beneficiary.’’. 
(b) PROHIBITED TRANSACTION EXEMPTION.—Sec-
tion 408(b) of such Act (29 U.S.C. 1108(b)) is amended 
by adding at the end the following new paragraph: 
‘‘(14) Any loan made by the plan to a disquali-
fied person who is a participant or beneficiary of the 
plan if such loan— 
‘‘(A) is for the payment of health insur-
ance premiums or job training expenses, and 
‘‘(B) meets the requirements of section 
206(i).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to loans made after the effective 
date specified in section 601.
129 
SEC. 502. AUTOMATIC ROLLOVER UPON MANDATORY DIS-
TRIBUTION IN EXCESS OF $1,000. 
Section 206 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1056) (as amended by sec-
tions 105, 201, and 501) is amended further by adding 
at the end the following new subsection: 
‘‘(j) DIRECT TRANSFERS OF MANDATORY DISTRIBU-
TIONS IN EXCESS OF $1,000.— 
‘‘(1) IN GENERAL.—A pension plan shall pro-
vide that, if— 
‘‘(A) a distribution described in paragraph 
(2) is made, and 
‘‘(B) the distributee does not elect to have 
such distribution paid directly to an eligible re-
tirement plan and does not elect to receive the 
distribution directly, 
the plan administrator shall make such transfer to 
an individual retirement plan of a designated trustee 
or issuer and shall notify the distributee in writing 
(either separately or as part of a notice required 
under section 402(f) of the Internal Revenue Code 
of 1986) that the distribution may be transferred to 
another individual retirement plan. 
‘‘(2) DISTRIBUTION
DESCRIBED.—A distribu-
tion from a plan is described in this paragraph if 
such distribution is an immediate distribution of the
130 
entire nonforfeitable accrued benefit of the partici-
pant and is in excess of $1,000. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) ELIGIBLE RETIREMENT PLAN.—The 
term ‘eligible retirement plan’ has the meaning 
given such term by section 402(c)(8)(B) of the 
Internal Revenue Code of 1986, except that a 
qualified trust under section 401(a) of such 
Code shall be considered an eligible retirement 
plan only if it is a defined contribution plan, 
the terms of which permit the acceptance of 
rollover distributions. 
‘‘(B) INDIVIDUAL
RETIREMENT
PLAN.— 
The term ‘individual retirement plan’ has the 
meaning 
given 
such 
term 
by 
section 
7701(a)(37) of the Internal Revenue Code of 
1986.’’. 
SEC. 503. PROMPT DISTRIBUTION FROM DEFINED CON-
TRIBUTION PLANS UPON TERMINATION OF 
PARTICIPANT’S COVERED EMPLOYMENT. 
Section 206(a) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1056(a)) is amended—
131 
(1) by redesignating paragraphs (1), (2), and 
(3) as subparagraphs (A), (B), and (C), respectively, 
and by inserting ‘‘(1)’’ after ‘‘(a)’’; 
(2) in the first sentence, by striking ‘‘pension 
plan’’ and inserting ‘‘defined benefit plan’’; 
(3) in the second sentence, by striking ‘‘In the 
case of a plan’’ and inserting ‘‘In the case of a de-
fined benefit plan’’; and 
(4) by adding at the end the following new 
paragraph: 
‘‘(2)(A) Except as provided in subparagraph (B), 
each defined contribution plan shall provide that, unless 
the participant otherwise elects— 
‘‘(i) the payment of benefits under the plan to 
the participant will begin not later than the 60th 
day after the close of the plan year in which occurs 
the date on which the participant attains the earlier 
of age 65 or the normal retirement age specified 
under the plan, and 
‘‘(ii) in any case in which the participant termi-
nates his service with the employer prior to the date 
described in clause (i), the participant’s accrued ben-
efit shall be distributed, in the form of one or more 
rollover 
contributions 
under 
section 
402(c), 
403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16) of
132 
the Internal Revenue Code of 1986, not later than 
the 60th day after the date of the participant’s ter-
mination of such service. 
‘‘(B) In any case in which immediate valuation of the 
participant’s accrued benefit is not practicable, the plan 
may provide for a period of more than 60 days in lieu 
of the 60-day period described in clauses (i) and (ii) of 
subparagraph (A), except that any such longer period pro-
vided by the plan may not extend beyond 60 days after 
the applicable valuation date under the plan.’’. 
TITLE VI—GENERAL 
PROVISIONS 
SEC. 601. GENERAL EFFECTIVE DATE. 
(a) IN GENERAL.—Except as otherwise provided in 
this Act, and subject to subsection (b), the amendments 
made by this Act shall apply with respect to plan years 
beginning on or after January 1, 2006. 
(b) SPECIAL RULE FOR COLLECTIVELY BARGAINED 
PLANS.—In the case of a plan maintained pursuant to 1 
or more collective bargaining agreements between em-
ployee representatives and 1 or more employers ratified 
on or before the date of the enactment of this Act, sub-
section (a) shall be applied to benefits pursuant to, and 
individuals covered by, any such agreement by substituting
133 
for ‘‘January 1, 2002’’ the date of the commencement of 
the first plan year beginning on or after the earlier of— 
(1) the later of— 
(A) January 1, 2007, or 
(B) the date on which the last of such col-
lective bargaining agreements terminates (de-
termined without regard to any extension there-
of after the date of the enactment of this Act), 
or 
(2) January 1, 2008. 
SEC. 602. PLAN AMENDMENTS. 
If any amendment made by this Act requires an 
amendment to any plan, such plan amendment shall not 
be required to be made before the first plan year beginning 
on or after January 1, 2006, if— 
(1) during the period after such amendment 
made by this Act takes effect and before such first 
plan year, the plan is operated in accordance with 
the requirements of such amendment made by this 
Act, and 
(2) such plan amendment applies retroactively 
to the period after such amendment made by this 
Act takes effect and such first plan year. 
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