I
106TH CONGRESS
1ST SESSION
H. R. 1213
To amend the Internal Revenue Code of 1986 to promote expanded retirement
savings.
IN THE HOUSE OF REPRESENTATIVES
MARCH 22, 1999
Mr. NEAL of Massachusetts (for himself, Mr. RANGEL, Mr. COYNE, Mr.
LEVIN, and Mr. MATSUI) introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committee
on Education and the Workforce, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions
as fall within the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to promote
expanded retirement savings.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Employee Pension Portability and Accountability Act of
1999’’.
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment
to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986.
(c) TABLE OF CONTENTS.—
Sec. 1. Short title; amendment of 1986 Code.
Sec. 2. Exclusion for payroll deduction contributions to IRAs.
Sec. 3. Credit for pension plan startup costs of small employers.
Sec. 4. Secure money annuity or retirement (SMART) trusts.
Sec. 5. Faster vesting of employer matching contributions.
Sec. 6. Pension right to know proposals.
Sec. 7. Nondiscrimination rules for qualified cash or deferred arrangements and
matching contributions.
Sec. 8. Definition of highly compensated employees.
Sec. 9. Treatment of multiemployer plans under section 415.
Sec. 10. Full funding limitation for multiemployer plans.
Sec. 11. Elimination of partial termination rules for multiemployer plans.
Sec. 12. Allowance of rollovers from and to 403(b) plans.
Sec. 13. Rollover contributions from deferred compensation plans of State and
local governments.
Sec. 14. Rollovers of IRAs into workplace retirement plans.
Sec. 15. Rollovers of after-tax contributions.
Sec. 16. Purchase of service credit in governmental defined benefit plans.
Sec. 17. Modifications of joint and survivor annuity requirements.
Sec. 18. Periods of family and medical leave treated as hours of service for pen-
sion participation and vesting.
SEC. 2. EXCLUSION FOR PAYROLL DEDUCTION CONTRIBU-
TIONS TO IRAS.
(a) IN GENERAL.—Section 408 (relating to individual
retirement accounts) is amended by redesignating sub-
section (q) as subsection (r) and by inserting after sub-
section (p) the following new subsection:
‘‘(q) QUALIFIED PAYROLL DEDUCTION ARRANGE-
MENT FOR IRA CONTRIBUTIONS.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘qualified payroll deduction arrangement’
means a written arrangement of an employer under
which—
‘‘(A) an employee eligible to participate in
the arrangement may elect to have the employer
make payments—
‘‘(i) to the employee directly in cash,
or
‘‘(ii) as elective employer contributions
to an individual retirement plan (as de-
fined in section 7701(a)(37)), other than
an individual retirement plan described in
section 408(k), 408(p), or 408A(b), on be-
half of the employee for the taxable year in
which the payments otherwise would have
been made to the employee directly in
cash,
‘‘(B) the amount which the employee may
elect under subparagraph (A) for any year may
not exceed a total of $2,000,
‘‘(C) no other contributions may be made
other than contributions described in subpara-
graph (A),
‘‘(D) the employee’s rights to any contribu-
tions made to an individual retirement plan are
nonforfeitable (for this purpose, rules similar to
the rules of subsection (k)(4) shall apply), and
‘‘(E) the employer makes the elective em-
ployer contributions under subparagraph (A)
not later than the close of the 30-day period
following the last day of the month with respect
to which the contributions are to be made.
‘‘(2) ELECTION
NOT
TO
HAVE
SUBSECTION
APPLY.—An employer that maintains an arrange-
ment otherwise described in paragraph (1) may elect
to have contributions treated as though they were
not made under such an arrangement. If an em-
ployer does not make an election described in the
preceding sentence, an employee may elect, before
any contributions are made for the calendar year, to
have contributions on behalf of the employee treated
as though they were not made under an arrange-
ment described in paragraph (1). An employer shall
be deemed to have made an election under this para-
graph for a year if the employer maintained a quali-
fied plan with respect to which contributions were
made or benefits were accrued for such year. For
purposes of the preceding sentence, the term ‘quali-
fied plan’ means a plan, contract, pension, or trust
described in subparagraph (A) or (B) of section
219(g)(5).’’.
(b) TAX TREATMENT OF EMPLOYER CONTRIBUTIONS
MADE UNDER A QUALIFIED PAYROLL DEDUCTION AR-
RANGEMENT.—
(1) COORDINATION
WITH
DEDUCTION
UNDER
SECTION 219.—
(A) Section 219(b) (relating to maximum
amount of deduction) is amended by adding at
the end the following new paragraph:
‘‘(5) SPECIAL
RULE
FOR
CONTRIBUTIONS
UNDER
A
QUALIFIED
PAYROLL
DEDUCTION
AR-
RANGEMENT.—This section shall not apply with re-
spect to any amount contributed under a qualified
payroll deduction arrangement described in section
408(q)(1) (for which an election has not been made
under section 408(q)(2)).’’.
(B) Section 219(g)(1) (relating to the limi-
tation on deduction for active participants) is
amended to read as follows:
‘‘(1) IN GENERAL.—If (for any part of any plan
year ending with or within a taxable year) an indi-
vidual is an active participant, each of the dollar
limitations contained in subsections (b)(1)(A) and
(c)(1)(A) for such taxable year shall be reduced (but
not below zero) by the sum of—
‘‘(A) the amount determined under para-
graph (2), and
‘‘(B) the amount contributed for the tax-
able year under a qualified payroll deduction ar-
rangement described in section 408(q)(1) (for
which an election has not been made under sec-
tion 408(q)(2)).’’.
(2) DEDUCTIBILITY OF EMPLOYER CONTRIBU-
TIONS.—Section 404 (relating to deductions for con-
tributions of an employer to pension, etc., plans) is
amended by adding at the end the following new
subsection:
‘‘(n) SPECIAL RULES FOR CONTRIBUTIONS UNDER
A QUALIFIED PAYROLL DEDUCTION ARRANGEMENT.—
Rules similar to the rules of subsection (m) shall apply
to employer contributions made under a qualified payroll
deduction arrangement described in section 408(q)(1) (for
which an election has not been made under section
408(q)(2)).’’.
(3) CONTRIBUTIONS
AND
DISTRIBUTIONS.—
Section 402 (relating to taxability of beneficiary of
employees’ trust) is amended by adding at the end
the following new subsection:
‘‘(l) TREATMENT
OF CONTRIBUTIONS
AND DIS-
TRIBUTIONS UNDER A QUALIFIED PAYROLL DEDUCTION
ARRANGEMENT.—Rules similar to the rules of paragraphs
(1) and (3) of subsection (h) shall apply to contributions
and distributions made with respect to an individual re-
tirement plan under a qualified payroll deduction arrange-
ment described in section 408(q)(1) (for which an election
has not been made under section 408(q)(2)), except that
contributions made by an employer on behalf of an em-
ployee for a taxable year shall be excluded from income
only to the extent such contributions would have been de-
ductible for such taxable year under section 219, if such
section applied, without regard to section 219(g)(1)(B).
Contributions that are not excluded from income under
the preceding sentence shall be treated as designated non-
deductible contributions under section 408(o).’’.
(c) EXEMPTION FROM WITHHOLDING.—Subsection
(a) of section 3401 (defining wages) is amended by strik-
ing ‘‘or’’ at the end of paragraph (20), by striking the
period at the end of paragraph (21) and inserting ‘‘; or’’,
and by inserting after paragraph (21) the following new
paragraph:
‘‘(22) for any payment made for the benefit of
the employee to an individual retirement plan if the
amount of such payment was deducted and withheld
under section 408(q).’’.
(d) EXCLUSION SHOWN ON W–2.—Subsection (a) of
section 6051 (relating to receipts for employees) is amend-
ed by striking ‘‘and’’ at the end of paragraph (10), by
striking the period at the end of paragraph (11) and in-
serting ‘‘, and’’, and by inserting after paragraph (11) the
following new paragraph:
‘‘(12) the total amount deducted and withheld
pursuant to section 408(q).’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall apply to remuneration paid after Decem-
ber 31, 1999.
SEC. 3. CREDIT FOR PENSION PLAN STARTUP COSTS OF
SMALL EMPLOYERS.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 (relating to business related cred-
its) is amended by adding at the end the following new
section:
‘‘SEC. 45D. SMALL EMPLOYER PENSION PLAN STARTUP
COSTS.
‘‘(a) GENERAL RULE.—For purposes of section 38,
in the case of an eligible employer, the small employer pen-
sion plan startup cost credit determined under this section
for any taxable year is an amount equal to 50 percent
of the qualified startup costs paid or incurred by the tax-
payer during the taxable year.
‘‘(b) DOLLAR LIMITATION.—The amount of the cred-
it determined under this section for any taxable year shall
not exceed—
‘‘(1) $1,000 for the first credit year,
‘‘(2) $500 for each of the 2 taxable years imme-
diately following the first credit year, and
‘‘(3) zero for any other taxable year.
‘‘(c) ELIGIBLE EMPLOYER.—For purposes of this
section—
‘‘(1) IN
GENERAL.—The term ‘eligible em-
ployer’ has the meaning given such term by section
408(p)(2)(C)(i).
‘‘(2) EMPLOYERS
MAINTAINING
QUALIFIED
PLANS
DURING
1997
NOT
ELIGIBLE.—Such term
shall not include an employer if such employer (or
any predecessor employer) maintained a qualified
plan (as defined in section 408(p)(2)(D)(ii)) with re-
spect to which contributions were made, or benefits
were accrued, for service in 1997. If only individuals
other than employees described in subparagraph (A)
or (B) of section 410(b)(3) are eligible to participate
in the qualified employer plan referred to in sub-
section (d)(1), then the preceding sentence shall be
applied without regard to any qualified plan in
which only employees so described are eligible to
participate.
‘‘(d) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(1) QUALIFIED STARTUP COSTS.—
‘‘(A) IN
GENERAL.—The term ‘qualified
startup costs’ means any ordinary and nec-
essary expenses of an eligible employer which
are paid or incurred in connection with—
‘‘(i) the establishment or administra-
tion of an eligible employer plan, or
‘‘(ii) the retirement-related education
of employees with respect to such plan.
‘‘(B) PLAN MUST HAVE AT LEAST 2 PAR-
TICIPANTS.—Such term shall not include any
expense in connection with a plan that does not
have at least 2 individuals who are eligible to
participate.
‘‘(C) PLAN
MUST
BE
ESTABLISHED
BE-
FORE JANUARY 1, 2002.—Such term shall not
include any expense in connection with a plan
established after December 31, 2001.
‘‘(2) ELIGIBLE
EMPLOYER
PLAN.—The term
‘eligible employer plan’ means a qualified employer
plan within the meaning of section 4972(d), or a
qualified payroll deduction arrangement within the
meaning of section 408(q)(2). A qualified payroll de-
duction arrangement shall be treated as an eligible
employer plan only if all employees of the employer
who—
‘‘(A) have been employed for 90 days, and
‘‘(B) are not described in subparagraph
(A) or (C) of section 410(b)(3),
are eligible to make the election under section
408(q)(1)(A).
‘‘(3) FIRST
CREDIT
YEAR.—The term ‘first
credit year’ means—
‘‘(A) the taxable year which includes the
date that the eligible employer plan to which
such costs relate becomes effective, or
‘‘(B) at the election of the eligible em-
ployer, the taxable year preceding the taxable
year referred to in subparagraph (A).
‘‘(e) 
SPECIAL
RULES.—For 
purposes 
of 
this
section—
‘‘(1) AGGREGATION RULES.—All persons treat-
ed as a single employer under subsection (a) or (b)
of section 52, or subsection (n) or (o) of section 414,
shall be treated as one person. All eligible employer
plans shall be treated as 1 eligible employer plan.
‘‘(2) DISALLOWANCE OF DEDUCTION.—No de-
duction shall be allowed for that portion of the quali-
fied startup costs paid or incurred for the taxable
year which is equal to the credit determined under
subsection (a).
‘‘(3) ELECTION NOT TO CLAIM CREDIT.—This
section shall not apply to a taxpayer for any taxable
year if such taxpayer elects to have this section not
apply for such taxable year.’’.
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) (defining current year busi-
ness credit) is amended by striking ‘‘plus’’ at the end of
paragraph (11), by striking the period at the end of para-
graph (12) and inserting ‘‘, plus’’, and by adding at the
end the following new paragraph:
‘‘(13) in the case of an eligible employer (as de-
fined in section 45D(c)), the small employer pension
plan startup cost credit determined under section
45D(a).’’.
(c) CONFORMING AMENDMENTS.—
(1) Section 39(d) is amended by adding at the
end the following new paragraph:
‘‘(8) NO
CARRYBACK
OF
SMALL
EMPLOYER
PENSION PLAN STARTUP COST CREDIT BEFORE EF-
FECTIVE DATE.—No portion of the unused business
credit for any taxable year which is attributable to
the small employer pension plan startup cost credit
determined under section 45D may be carried back
to a taxable year ending on or before the date of the
enactment of section 45D.’’.
(2) Subsection (c) of section 196 is amended by
striking ‘‘and’’ at the end of paragraph (7), by strik-
ing the period at the end of paragraph (8) and in-
serting ‘‘, and’’, and by adding at the end the fol-
lowing new paragraph:
‘‘(9) the small employer pension plan startup
cost credit determined under section 45D(a).’’
(3) The table of sections for subpart D of part
IV of subchapter A of chapter 1 is amended by add-
ing at the end the following new item:
‘‘Sec. 45D. Small employer pension plan startup costs.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to costs paid or incurred in taxable
years ending after the date of the enactment of this Act.
SEC. 4. SECURE MONEY ANNUITY OR RETIREMENT (SMART)
TRUSTS.
(a) IN GENERAL.—Subpart A of part I of subchapter
D of chapter 1 is amended by inserting after section 408A
the following new section:
‘‘SEC. 408B. SMART PLANS.
‘‘(a) EMPLOYER ELIGIBILITY.—
‘‘(1) IN GENERAL.—An employer may establish
and maintain a SMART annuity or a SMART trust
for any year only if—
‘‘(A) the employer is an eligible employer
(as defined in section 408(p)(2)(C)), and
‘‘(B) the employer does not maintain (and
no predecessor of the employer maintains) a
qualified plan (other than a permissible plan)
with respect to which contributions were made,
or benefits were accrued, for service in any year
in the period beginning with the year such an-
nuity or trust became effective and ending with
the year for which the determination is being
made.
The period described in subparagraph (B) shall in-
clude the period of 5 years before the year such
trust or annuity became effective with respect to
qualified plans which are defined benefit plans or
money purchase pension plans.
‘‘(2) DEFINITIONS.—For purposes of paragraph
(1)—
‘‘(A) QUALIFIED PLAN.—The term ‘quali-
fied plan’ has the meaning given such term by
section 408(p)(2)(D)(ii).
‘‘(B) PERMISSIBLE PLAN.—The term ‘per-
missible plan’ means—
‘‘(i) a SIMPLE plan described in sec-
tion 408(p),
‘‘(ii) a SIMPLE 401(k) plan de-
scribed in section 401(k)(11),
‘‘(iii) an eligible deferred compensa-
tion plan described in section 457(b),
‘‘(iv) a collectively bargained plan but
only if the employees eligible to participate
in such plan are not also entitled to a ben-
efit described in subsection (b)(5) or
(c)(5), or
‘‘(v) a plan under which there may be
made only—
‘‘(I) elective deferrals described
in section 402(g)(3), and
‘‘(II) employer matching con-
tributions 
not 
in 
excess 
of 
the
amounts described in subclauses (I)
and (II) of section 401(k)(12)(B)(i).
‘‘(b) SMART ANNUITY.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘SMART annuity’ means an individual re-
tirement annuity (as defined in section 408(b) with-
out regard to paragraph (2) thereof and without re-
gard to the limitation on aggregate annual pre-
miums contained in the flush language of section
408(b)) if—
‘‘(A) such annuity meets the requirements
of paragraphs (2) through (7), and
‘‘(B) the only contributions to such annu-
ity are employer contributions.
Nothing in this section shall be construed as pre-
venting an employer from using a group annuity
contract which is divisible into individual retirement
annuities for purposes of providing SMART annu-
ities.
‘‘(2) PARTICIPATION REQUIREMENTS.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met for any year only if all
employees of the employer who—
‘‘(i) received at least $5,000 in com-
pensation from the employer during any 2
consecutive preceding years, and
‘‘(ii) received at least $5,000 in com-
pensation during the year,
are entitled to the benefit described in para-
graph (5) for such year.
‘‘(B) EXCLUDABLE EMPLOYEES.—An em-
ployer may elect to exclude from the require-
ments under subparagraph (A) employees de-
scribed in subparagraph (A) or (C) of section
410(b)(3).
‘‘(3) VESTING.—The requirements of this para-
graph are met if the employee’s rights to any bene-
fits under the annuity are nonforfeitable.
‘‘(4) BENEFIT
FORM.—The requirements of
this paragraph are met if the only form of benefit
is—
‘‘(A) a benefit payable annually in the
form of a single life annuity with monthly pay-
ments (with no ancillary benefits) beginning at
age 65, or
‘‘(B) any other form of benefit which is the
actuarial equivalent (based on the assumptions
specified in the SMART annuity) of the benefit
described in subparagraph (A).
‘‘(5) AMOUNT
OF
ANNUAL
ACCRUED
BEN-
EFIT.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met for any plan year if the
accrued benefit of each participant derived from
employer contributions for such year, when ex-
pressed as a benefit described in paragraph
(4)(A), equals the applicable percentage of the
participant’s compensation for such year.
‘‘(B) 
APPLICABLE
PERCENTAGE.—For
purposes of this paragraph—
‘‘(i) IN GENERAL.—The term ‘applica-
ble percentage’ means 2 percent.
‘‘(ii) ELECTION OF HIGHER PERCENT-
AGE.—An employer may elect to apply an
applicable percentage of 1 percent for any
year for all employees eligible to partici-
pate in the plan for such year, if the em-
ployer notifies the employees of such per-
centage within a reasonable period before
the beginning of such year. An employer
may also elect to apply an applicable per-
centage of 3 percent for any of the first 5
years that the plan is effective for all em-
ployees eligible to participate in the plan
for such year, if the employer so notifies
the employees.
‘‘(C) COMPENSATION LIMIT.—
‘‘(i) IN GENERAL.—The compensation
taken into account under this paragraph
for any year shall not exceed $100,000.
‘‘(ii) COST-OF-LIVING ADJUSTMENT.—
The Secretary shall adjust annually the
$100,000 amount in clause (i) for in-
creases in the cost-of-living at the same
time and in the same manner as adjust-
ments under section 415(d); except that
the base period shall be the calendar quar-
ter beginning October 1, 1999, and any in-
crease which is not a multiple of $5,000
shall be rounded to the next lowest mul-
tiple of $5,000.
‘‘(6) FUNDING.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met only if the employer is
required to contribute to the annuity for each
plan year the amount necessary to purchase a
SMART annuity in the amount of the benefit
accrued for such year for each participant enti-
tled to such benefit. Such contribution must be
made no later than 81⁄2 months after the end
of the plan year.
‘‘(B) PENALTY FOR FAILURE TO MAKE RE-
QUIRED CONTRIBUTION.—The taxes imposed by
section 4971 shall apply to a failure to make
the contribution required by this paragraph in
the same manner as if the amount of the failure
were an accumulated funding deficiency to
which such section applies.
‘‘(7) LIMITATION ON DISTRIBUTIONS.—
‘‘(A) IN GENERAL.—The requirements of
this paragraph are met only if distributions
may be paid only when the employee attains
age 65, separates from service, dies, or becomes
disabled 
(within 
the 
meaning 
of 
section
72(m)(7)).
‘‘(B) LIMITATION ON DISTRIBUTIONS ON
SEPARATION
FROM
SERVICE
OF
EMPLOYEES
WHO HAVE NOT ATTAINED AGE 65.—Subpara-
graph (A) shall apply to a distribution on sepa-
ration of service of an employee who has not at-
tained age 65 only if—
‘‘(i) the aggregate cash value of an
employee’s SMART annuity does not ex-
ceed the dollar limit in effect under section
411(a)(11)(A), or
‘‘(ii) the distribution is a direct trust-
ee-to-trustee transfer of the entire balance
to the credit of the employee to a SMART
trust 
described 
in 
subsection 
(c), 
a
SMART rollover plan, or a SMART annu-
ity for the benefit of such employee.
‘‘(8) JOINT AND SURVIVOR ANNUITY RULES AP-
PLICABLE.—The requirements of this paragraph are
met only if the annuity satisfies section 401(a)(11).
‘‘(9) DEFINITIONS AND SPECIAL RULE.—
‘‘(A) DEFINITIONS.—The definitions in
section 408(p)(6) shall apply for purposes of
this subsection.
‘‘(B) USE OF DESIGNATED FINANCIAL IN-
STITUTIONS.—A rule similar to the rule of sec-
tion 408(p)(7) (without regard to the last sen-
tence thereof) shall apply for purposes of this
subsection.
‘‘(C) SMART ROLLOVER PLAN.—For pur-
poses of this section, the term ‘SMART rollover
plan’ means an individual retirement plan for
the benefit of the employee to which a rollover
was made from a SMART Annuity, SMART
trust, or another SMART Rollover plan.
‘‘(c) SMART TRUST.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘SMART trust’ means a trust forming part
of a defined benefit plan if—
‘‘(A) such trust meets the requirements of
section 401(a) as modified by subsection (d),
‘‘(B) such plan meets the requirements of
paragraphs (2) through (8), and
‘‘(C) the only contributions to such trust
are employer contributions.
‘‘(2) PARTICIPATION REQUIREMENTS.—A plan
meets the requirements of this paragraph for any
year only if the requirements of subsection (b)(2)
are met for such year.
‘‘(3) VESTING.—A plan meets the requirements
of this paragraph for any year only if the require-
ments of subsection (b)(3) are met for such year.
‘‘(4) BENEFIT FORM.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), a plan meets the require-
ments of this paragraph only if the trustee dis-
tributes a SMART annuity that satisfies sub-
section (b)(4) where the annual benefit de-
scribed in subsection (b)(4)(A) is no less than
the accrued benefit determined under para-
graph (5).
‘‘(B) DIRECT TRANSFERS TO INDIVIDUAL
RETIREMENT
PLAN
OR
SMART
ANNUITY.—A
plan shall not fail to meet the requirements of
this paragraph by reason of permitting, as an
optional form of benefit, the distribution of the
entire balance to the credit of the employee. If
the employee is under age 65, such distribution
must be in the form of a direct trustee-to-trust-
ee transfer to a SMART annuity, another
SMART trust, or a SMART rollover plan (or,
in the case of a distribution that does not ex-
ceed the dollar limit in effect under section
411(a)(11)(A), any other individual retirement
plan).
‘‘(5) AMOUNT
OF
ANNUAL
ACCRUED
BEN-
EFIT.—A plan meets the requirements of this para-
graph for any year only if the requirements of sub-
section (b)(5) are met for such year.
‘‘(6) FUNDING.—
‘‘(A) IN GENERAL.—A plan meets the re-
quirements of this paragraph for any year only
if—
‘‘(i) the requirements of subparagraph
(A) of subsection (b)(6) are met for such
year,
‘‘(ii) in the case of a plan which has
an unfunded annuity amount with respect
to the account of any participant, the plan
requires that the employer make an addi-
tional contribution to such plan (at the
time the annuity contract to which such
amount relates is purchased) equal to the
unfunded annuity amount, and
‘‘(iii) in the case of a plan which has
an unfunded prior year liability with re-
spect to the account of any participant as
of the close of such plan year, the plan re-
quires that the employer make an addi-
tional contribution to such plan for such
year equal to the amount of such unfunded
prior year liability no later than 81⁄2
months following the end of the plan year.
‘‘(B) UNFUNDED ANNUITY AMOUNT.—For
purposes of this paragraph, the term ‘unfunded
annuity amount’ means, with respect to the ac-
count of any participant for whom an annuity
is being purchased, the excess (if any) of—
‘‘(i) the amount necessary to purchase
an annuity contract which meets the re-
quirements of subsection (b)(4) in the
amount of the participant’s accrued benefit
determined under paragraph (5), over
‘‘(ii) the balance in such account at
the time such contract is purchased.
‘‘(C) UNFUNDED
PRIOR
YEAR
LIABIL-
ITY.—For purposes of this paragraph, the term
‘unfunded prior year liability’ means, with re-
spect to any plan year, the excess (if any) of—
‘‘(i) the aggregate present value of the
participants’ accrued benefits under the
plan as of the close of the prior plan year,
over
‘‘(ii) the value of the plan’s assets de-
termined under section 412(c)(2) as of the
close of the plan year (determined without
regard to any contributions for such plan
year).
Such present value shall be determined using
the assumptions specified in subparagraph (D).
‘‘(D) ACTUARIAL ASSUMPTIONS.—In deter-
mining the amount required to be contributed
under subparagraph (A)—
‘‘(i) the assumed interest rate shall be
5 percent per year,
‘‘(ii) the assumed mortality shall be
determined under the applicable mortality
table (as defined in section 417(e)(3), as
modified by the Secretary so that it does
not include any assumption for preretire-
ment mortality), and
‘‘(iii) the assumed retirement age
shall be 65.
‘‘(E) CHANGES IN MORTALITY TABLE.—If
the applicable mortality table under section
417(e)(3) for any plan year is not the same as
such table for the prior plan year, the Secretary
shall prescribe regulations which phase in the
effect of the changes over a reasonable period
of plan years determined by the Secretary.
‘‘(F) PENALTY FOR FAILURE TO MAKE RE-
QUIRED CONTRIBUTION.—The taxes imposed by
section 4971 shall apply to a failure to make
the contribution required by this paragraph in
the same manner as if the amount of the failure
were an accumulated funding deficiency to
which such section applies.
‘‘(7) 
SEPARATE
ACCOUNTS
FOR
PARTICI-
PANTS.—A plan meets the requirements of this
paragraph for any year only if the plan provides—
‘‘(A) for an individual account for each
participant, and
‘‘(B) for benefits based solely on—
‘‘(i) the amount contributed to the
participant’s account,
‘‘(ii) any income, expenses, gains and
losses, and any forfeitures of accounts of
other participants which may be allocated
to such participant’s account, and
‘‘(iii) the amount of any unfunded an-
nuity amount with respect to the partici-
pant.
‘‘(8) TRUST MAY NOT HOLD SECURITIES WHICH
ARE NOT READILY TRADABLE.—A plan meets the
requirements of this paragraph only if the plan pro-
hibits the trust from holding directly or indirectly se-
curities which are not readily tradable on an estab-
lished securities market. Nothing in this paragraph
shall prohibit the trust from holding insurance com-
pany products regulated by State law.
‘‘(9) DEFINITIONS.—The definitions applicable
under subsection (b)(8) shall apply for purposes of
this subsection.
‘‘(d) SPECIAL RULES FOR SMART ANNUITIES AND
TRUSTS.—For purposes of section 401(a), a SMART an-
nuity and a SMART trust shall be treated as meeting the
requirements of the following provisions:
‘‘(1) Section 401(a)(4) (relating to non-
discrimination rules).
‘‘(2) Section 401(a)(26) (relating to minimum
participation).
‘‘(3) Section 410 (relating to minimum partici-
pation and coverage requirements).
‘‘(4) Section 411(b) (relating to accrued benefit
requirements).
‘‘(5) Section 416 (relating to special rules for
top-heavy plans).’’
(b) DEDUCTION RULES.—
(1) IN
GENERAL.—Section 404 is further
amended by adding at the end the following new
subsection:
‘‘(o) SPECIAL RULES FOR SMART ANNUITIES AND
TRUSTS.—
‘‘(1) IN GENERAL.—Employer contributions to
a SMART annuity shall be treated as if they are
made to a plan described in paragraph (1) of sub-
section (a).
‘‘(2) DEDUCTIBLE LIMIT.—For purposes of sec-
tion 404(a)(1)(A)(i), the amount necessary to satisfy
the minimum funding requirement of section
408B(b)(6) or (c)(6) shall be treated as the amount
necessary to satisfy the minimum funding require-
ment of section 412.’’
(2) COORDINATION
WITH
DEDUCTION
UNDER
SECTION 219.—
(A) Section 219(b) is amended by adding
at the end the following new paragraph:
‘‘(5) SPECIAL RULE FOR SMART ANNUITIES.—
This section shall not apply with respect to any
amount contributed to a SMART annuity estab-
lished under section 408B(b).’’
(B) Section 219(g)(5)(A) (defining active
participant) is amended by striking ‘‘or’’ at the
end of clause (v) and by adding at the end the
following new clause:
‘‘(vii) any SMART annuity (within
the meaning of section 408B), or’’.
(c) CONTRIBUTIONS AND DISTRIBUTIONS.—
(1) Section 402 is further amended by adding
at the end the following new subsection:
‘‘(m) TREATMENT OF SMART ANNUITIES.—Rules
similar to the rules of paragraphs (1) and (3) of sub-
section (h) shall apply to contributions and distributions
with respect to SMART annuities under section 408B.’’
(2) Section 408(d)(3) is amended by adding at
the end the following new subparagraph:
‘‘(H) SMART 
ANNUITIES.—This para-
graph shall not apply to any amount paid or
distributed out of a SMART annuity (as de-
fined in section 408B) unless it is paid in a
trustee-to-trustee transfer into a SMART roll-
over plan.’’
(3)(A) Section 412(h) is amended by striking
‘‘or’’ at the end of paragraph (5), by striking the pe-
riod at the end of paragraph (6) and inserting ‘‘,
or’’, and by inserting after paragraph (6) the fol-
lowing new paragraph:
‘‘(7) any plan providing for the purchase of any
SMART annuity or any SMART plan.’’
(B) Section 301(a) of Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1081) is
amended by striking ‘‘or’’ at the end of paragraph
(9), by striking the period at the end of paragraph
(10) and inserting ‘‘; or’’, and by adding at the end
the following new paragraph:
‘‘(11) any plan providing for the purchase of
any SMART annuity or any SMART plan (as such
terms are defined in section 408B of such Code).’’
(4) Section 415(b) is amended by adding at the
end the following new paragraph:
‘‘(12) TREATMENT OF SMART ANNUITIES AND
TRUSTS.—A SMART annuity and a SMART trust
shall be treated as meeting the requirements of this
section, but distributions from such an annuity or
trust shall be taken into account in determining
whether any other plan satisfies the requirements of
this section.’’
(d) 
INCREASED
PENALTY
ON
EARLY
WITH-
DRAWALS.—Section 72(t) (relating to additional tax on
early distributions) is amended by adding at the end the
following new paragraph:
‘‘(9) SPECIAL
RULES
FOR
SMART
ANNUITIES
AND TRUSTS.—In the case of any amount received
from a SMART annuity, a SMART trust, or a
SMART rollover plan (within the meaning of section
408B), paragraph (1) shall be applied by sub-
stituting ‘20 percent’ for ‘10 percent’ and paragraph
(2) shall be applied by substituting ‘age 65’ for ‘age
591⁄2’.’’
(e) SIMPLIFIED EMPLOYER REPORTS.—
(1) SMART ANNUITIES.—Section 408(l) (relat-
ing to simplified employer reports) is amended by
adding at the end the following new paragraph:
‘‘(3) SMART ANNUITIES.—
‘‘(A) SIMPLIFIED REPORT.—The employer
maintaining any SMART annuity (within the
meaning of section 408B) shall file a simplified
annual return with the Secretary containing
only the information described in subparagraph
(B).
‘‘(B) CONTENTS.—The return required by
subparagraph (A) shall set forth—
‘‘(i) the name and address of the em-
ployer,
‘‘(ii) the date the plan was adopted,
‘‘(iii) the number of employees of the
employer,
‘‘(iv) the number of such employees
who are eligible to participate in the plan,
‘‘(v) the total amount contributed by
the employer to each such annuity for such
year and the minimum amount required
under section 408B to be so contributed,
‘‘(vi) the percentage elected under sec-
tion 408B(b)(5)(B),
‘‘(vii) the name of the issuer,
‘‘(viii) 
the 
employer 
identification
number,
‘‘(ix) the name of the plan, and
‘‘(x) the date of the contribution.
‘‘(C) REPORTING BY ISSUER OF SMART AN-
NUITY.—
‘‘(i) IN GENERAL.—The issuer of each
SMART annuity shall provide to the owner
of the annuity for each year a statement
setting forth as of the close of such year—
‘‘(I) the benefits guaranteed at
age 65 under the annuity, and
‘‘(II) the cash surrender value of
the annuity.
‘‘(ii) SUMMARY
DESCRIPTION.—The
issuer of any SMART annuity shall pro-
vide to the employer maintaining the annu-
ity for each year a description containing
the following information:
‘‘(I) The name and address of
the employer and the issuer.
‘‘(II) The requirements for eligi-
bility for participation.
‘‘(III) The benefits provided with
respect to the annuity.
‘‘(IV) The procedures for, and ef-
fects of, withdrawals (including roll-
overs) from the annuity.
‘‘(D) TIME
AND
MANNER
OF
REPORT-
ING.—Any return, report, or statement required
under this paragraph shall be made in such
form and at such time as the Secretary shall
prescribe.’’
(2) SMART TRUSTS.—Section 6059 (relating
to actuarial reports) is amended by redesignating
subsections (c) and (d) as subsections (d) and (e),
respectively, and by inserting after subsection (b)
the following new subsection:
‘‘(c) SMART TRUSTS.—In the case of a SMART
trust (within the meaning of section 408B), the Secretary
shall require a simplified actuarial report which
contains—
‘‘(1) information similar to the information re-
quired in section 408(l)(3)(B),
‘‘(2) the fair market value of the assets of the
trust,
‘‘(3) the amounts distributed directly to partici-
pants,
‘‘(4) the amounts transferred to SMART roll-
over plans, and
‘‘(5) the present value of the annual accrued
benefits under the plan to which the trust relates.’’
(f) CONFORMING AMENDMENTS.—
(1) Subparagraph (A) of section 219(g)(5) is
amended by striking ‘‘or’’ at the end of clause (v)
and by inserting after clause (vi) the following new
clause:
‘‘(vii) any SMART trust or SMART
annuity (within the meaning of section
408B), or’’.
(2) Section 280G(b)(6) is amended by striking
‘‘or’’ at the end of subparagraph (C), by striking the
period at the end of subparagraph (D) and inserting
‘‘, or’’ and by adding after subparagraph (D) the
following new subparagraph:
‘‘(E) a SMART annuity described in sec-
tion 408B.’’
(3) Subsections (b), (c), (m)(4)(B), and
(n)(3)(B) of section 414 are each amended by in-
serting ‘‘408B,’’ after ‘‘408(p),’’.
(4) Section 4972(d)(1)(A) is amended by strik-
ing ‘‘and’’ at the end of clause (iii), by striking the
period at the end of clause (iv) and inserting ‘‘,
and’’, and by adding after clause (iv) the following
new clause:
‘‘(v) any SMART annuity (within the
meaning of section 408B).’’
(g) REPORTING REQUIREMENTS UNDER ERISA.—
Section 101 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1021) is amended by redesig-
nating subsection (h) as subsection (i) and by inserting
after subsection (g) the following new subsection:
‘‘(h) SMART ANNUITIES.—
‘‘(1) NO EMPLOYER REPORTS.—Except as pro-
vided in this subsection, no report shall be required
under this section by an employer maintaining a
SMART annuity under section 408B(b) of the Inter-
nal Revenue Code of 1986.
‘‘(2) SUMMARY
DESCRIPTION.—The issuer of
any SMART annuity shall provide to the employer
maintaining the annuity for each year a description
containing the following information:
‘‘(A) The name and address of the em-
ployer and the issuer.
‘‘(B) The requirements for eligibility for
participation.
‘‘(C) The benefits provided with respect to
the annuity.
‘‘(D) The procedures for, and effects of,
withdrawals (including rollovers) from the an-
nuity.’’
‘‘(3) EMPLOYEE NOTIFICATION.—The employer
shall provide each employee eligible to participate in
the SMART annuity with the description described
in paragraph (2) at the same time as the notifica-
tion required under section 408B(b)(5)(B) of the In-
ternal Revenue Code of 1986.’’
(h) $5 PER PARTICIPANT PBGC PREMIUM.—Sub-
paragraph (A) of section 4006(a)(3) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1306)
is amended—
(1) by inserting ‘‘not described in clause (iv)’’
after ‘‘in the case of a single-employer plan’’ in
clause (i),
(2) by striking the period at the end of clause
(iii) and inserting ‘‘; and’’, and
(3) by inserting after clause (iii) the following
new clause:
‘‘(iv) in the case of a single-employer plan de-
scribed in section 408B(c) of the Internal Revenue
Code of 1986, an amount equal to $5 for each par-
ticipant.’’.
(i) CLERICAL AMENDMENT.—The table of sections
for subpart A of part I of subchapter D of chapter 1 is
amended by inserting after the item relating to section
408A the following new item:
‘‘Sec. 408B. SMART plans.’’
(j) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
SEC. 5. FASTER VESTING OF EMPLOYER MATCHING CON-
TRIBUTIONS.
(a) AMENDMENT OF INTERNAL REVENUE CODE.—
Paragraph (2) of section 411(a) (relating to employer con-
tributions) is amended—
(1) by inserting ‘‘, and, if applicable, (C)’’ after
‘‘or (B)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) MATCHING CONTRIBUTIONS.—In the
case of a plan that includes an accrued benefit
derived from matching contributions (as defined
in section 401(m)(4)(A)), the plan satisfies the
requirements of this subparagraph if—
‘‘(i) if an employee who has completed
at least 3 years of service has a nonforfeit-
able right to 100 percent of the employee’s
accrued benefit derived from such match-
ing contributions, or
‘‘(ii) an employee has a nonforfeitable
right to a percentage of the employee’s ac-
crued 
benefit 
derived 
from 
employer
matching contributions (as so defined) de-
termined under the following table:
The nonforfeitable
‘‘Years of service:
percentage is:
2 ...............................................................................................
3 ...............................................................................................
4 ...............................................................................................
5 ...............................................................................................
6 ...............................................................................................
100.’’
(b) AMENDMENT OF ERISA.—Paragraph (2) of sec-
tion 203(a) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1053(a)) is amended—
(1) by inserting ‘‘, and, if applicable, (C)’’ after
‘‘or (B)’’, and
(2) by adding at the end the following new sub-
paragraph:
‘‘(C) MATCHING CONTRIBUTIONS.—In the
case of a plan that includes an accrued benefit
derived from matching contributions (as defined
in section 401(m)(4)(A) of the Internal Rev-
enue Code of 1986), the plan satisfies the re-
quirements of this subparagraph if—
‘‘(i) if an employee who has completed
at least 3 years of service has a nonforfeit-
able right to 100 percent of the employee’s
accrued benefit derived from such match-
ing contributions, or
‘‘(ii) an employee has a nonforfeitable
right to a percentage of the employee’s ac-
crued 
benefit 
derived 
from 
employer
matching contributions (as so defined) de-
termined under the following table:
The nonforfeitable
‘‘Years of service:
percentage is:
2 ...............................................................................................
3 ...............................................................................................
4 ...............................................................................................
5 ...............................................................................................
6 ...............................................................................................
100.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the amendments made by this
section shall apply to plan years beginning after De-
cember 31, 1999.
(2) APPLICATION TO CURRENT EMPLOYEES.—
The amendments made by this section shall not
apply to any employee who does not have at least 1
hour of service in any plan year beginning after De-
cember 31, 1999.
(3) COLLECTIVE BARGAINING AGREEMENTS.—
In the case of a plan maintained pursuant to 1 or
more collective bargaining agreements between em-
ployee representatives and 1 or more employers rati-
fied by the date of the enactment of this Act, the
amendments made by this section shall not apply to
employees covered by any such agreement in plan
years beginning before the earlier of—
(A) the later of—
(i) the date on which the last of such
collective bargaining agreements termi-
nates (determined without regard to any
extension thereof on or after such date of
enactment), or
(ii) January 1, 1999, or
(B) January 1, 2004.
SEC. 6. PENSION RIGHT TO KNOW PROPOSALS.
(a) SPOUSE’S RIGHT TO KNOW DISTRIBUTION IN-
FORMATION.—
(1) AMENDMENT
OF
INTERNAL
REVENUE
CODE.—Paragraph (3) of section 417(a) (relating to
definitions and special rules for purposes of min-
imum survivor annuity requirements) is amended by
adding at the end the following new subparagraph:
‘‘(C) EXPLANATION TO SPOUSE.—At the
time a plan provides a participant with a writ-
ten explanation under subparagraph (A) or (B),
such plan shall provide a copy of such expla-
nation to such participant’s spouse. If the last
known address of the spouse is the same as the
last known address of the participant, the re-
quirement of the preceding sentence shall be
treated as met if the copy referred to in the
preceding sentence is included in a single mail-
ing made to such address and addressed to both
such participant and spouse.’’.
(2) AMENDMENT OF ERISA.—Paragraph (3) of
section 205(c) of Employee Retirement Income Se-
curity Act of 1974 is amended by adding at the end
the following new subparagraph:
‘‘(C) EXPLANATION TO SPOUSE.—At the
time a plan provides a participant with a writ-
ten explanation under subparagraph (A) or (B),
such plan shall provide a copy of such expla-
nation to such participant’s spouse. If the last
known address of the spouse is the same as the
last known address of the participant, the re-
quirement of the preceding sentence shall be
treated as met if the copy referred to in the
preceding sentence is included in a single mail-
ing made to such address and addressed to both
such participant and spouse.’’.
(b) EMPLOYEE’S RIGHT TO KNOW OF OPPORTUNITY
FOR ELECTIVE CONTRIBUTIONS UNDER 401(k) PLANS.—
Subparagraph (D) of section 401(k)(12) (relating to no-
tice requirements) is amended—
(1) by striking ‘‘, within a reasonable period be-
fore any year,’’ and inserting ‘‘before the 60th day
before the beginning of any year’’, and
(2) by adding at the end the following new
flush sentence:
‘‘The requirements of paragraph (11)(B)(iii)
shall apply for purposes of this subparagraph.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
SEC. 7. NONDISCRIMINATION RULES FOR QUALIFIED CASH
OR DEFERRED ARRANGEMENTS AND MATCH-
ING CONTRIBUTIONS.
(a) ALTERNATIVE METHODS OF SATISFYING SEC-
TION
401(k) NONDISCRIMINATION
TESTS.—Subpara-
graph (B) of section 401(k)(12) (relating to alternative
methods of meeting nondiscrimination requirements) is
amended to read as follows:
‘‘(B) NONELECTIVE AND MATCHING CON-
TRIBUTIONS.—
‘‘(i) IN GENERAL.—The requirements
of this subparagraph are met if the re-
quirements of clauses (ii) and (iii) are met.
‘‘(ii) 
NONELECTIVE
CONTRIBU-
TIONS.—The requirements of this clause
are met if, under the arrangement, the em-
ployer is required, without regard to
whether the employee makes an elective
contribution or employee contribution, to
make a contribution to a defined contribu-
tion plan on behalf of each employee who
is not a highly compensated employee and
who is eligible to participate in the ar-
rangement in an amount equal to at least
1 percent of the employee’s compensation.
‘‘(iii) MATCHING
CONTRIBUTIONS.—
The requirements of this clause are met if,
under the arrangement, the employer
makes matching contributions on behalf of
each employee who is not a highly com-
pensated employee in an amount equal
to—
‘‘(I) 100 percent of the elective
contributions of the employee to the
extent such elective contributions do
not exceed 3 percent of the employee’s
compensation, and
‘‘(II) 50 percent of the elective
contributions of the employee to the
extent that such elective contributions
exceed 3 percent but do not exceed 5
percent of the employee’s compensa-
tion.
‘‘(iv) 
RATE
FOR
HIGHLY
COM-
PENSATED
EMPLOYEES.—The 
require-
ments of clause (iii) are not met if, under
the arrangement, the rate of matching con-
tribution with respect to any rate of elec-
tive contribution of a highly compensated
employee is greater than that with respect
to an employee who is not a highly com-
pensated employee. For purposes of this
clause, to the extent provided in regula-
tions, the last sentences of paragraph
(3)(A) and subsection (m)(2)(B) shall not
apply.
‘‘(v) ALTERNATIVE PLAN DESIGNS.—
If the rate of matching contribution with
respect to any rate of elective contribution
is not equal to the percentage required
under clause (iii), an arrangement shall
not be treated as failing to meet the re-
quirements of clause (iii) if—
‘‘(I) the rate of an employer’s
matching contribution does not in-
crease as an employee’s rate of elec-
tive contribution increase, and
‘‘(II) the aggregate amount of
matching contributions at such rate of
elective contribution is at least equal
to the aggregate amount of matching
contributions which would be made if
matching contributions were made on
the basis of the percentages described
in clause (iii).’’
(b) ALTERNATIVE METHODS OF SATISFYING SEC-
TION
401(m) 
NONDISCRIMINATION
TESTS.—Section
401(m)(11) (relating to alternative method of satisfying
tests) is amended by adding at the end of subparagraph
(B) the following new flush sentence:
‘‘To the extent provided in regulations, the last
sentences of paragraph (2)(B) and subsection
(k)(3)(A) shall not apply for purposes of clause
(iii).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
SEC. 8. DEFINITION OF HIGHLY COMPENSATED EMPLOY-
EES.
(a) IN GENERAL.—Subparagraph (B) of section
414(q)(1) (defining highly compensated employee) is
amended to read as follows:
‘‘(B) for the preceding year had compensa-
tion from the employer in excess of $80,000.’’.
(b) CONFORMING AMENDMENTS.—
(1)(A) Subsection (q) of section 414 is amended
by striking paragraphs (3), (5), and (7) and by re-
designating paragraphs (4), (6), (8), and (9) as
paragraphs (3) through (6), respectively.
(B) Sections 129(d)(8)(B), 401(a)(5)(D)(ii),
408(k)(2)(C), and 416(i)(1)(D) are each amended
by striking ‘‘section 414(q)(4)’’ and inserting ‘‘sec-
tion 414(q)(3)’’.
(C) Section 416(i)(1)(A) is amended by striking
‘‘section 
414(q)(5)’’ 
and 
inserting 
‘‘section
414(r)(9)’’.
(2)(A) Section 414(r) is amended by adding at
the end the following new paragraph:
‘‘(9) EXCLUDED EMPLOYEES.—For purposes of
paragraph (2)(A), the following employees shall be
excluded:
‘‘(A) Employees who have not completed 6
months of service.
‘‘(B) Employees who normally work less
than 171⁄2 hours per week.
‘‘(C) Employees who normally work during
not more than 6 months during any year.
‘‘(D) Employees who have not attained the
age of 21.
‘‘(E) Except to the extent provided in reg-
ulations, employees who are included in a unit
of employees covered by an agreement which
the Secretary of Labor finds to be a collective
bargaining agreement between employee rep-
resentatives and the employer.’’.
(B) Subparagraph (A) of section 414(r)(2) is
amended by striking ‘‘subsection (q)(5)’’ and insert-
ing ‘‘paragraph (9)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
SEC. 9. TREATMENT OF MULTIEMPLOYER PLANS UNDER
SECTION 415.
(a) COMPENSATION LIMIT.—Paragraph (11) of sec-
tion 415(b) (relating to limitation for defined benefit
plans) is amended to read as follows:
‘‘(11) SPECIAL LIMITATION RULE FOR GOVERN-
MENTAL AND MULTIEMPLOYER PLANS.—In the case
of a governmental plan (as defined in section
414(d)) or a multiemployer plan (as defined in sec-
tion 414(f)), subparagraph (B) of paragraph (1)
shall not apply.’’.
(b) EXEMPTION
FOR SURVIVOR
AND DISABILITY
BENEFITS.—Subparagraph (I) of section 415(b)(2) (relat-
ing to limitation for defined benefit plans) is amended—
(1) by inserting ‘‘or a multiemployer plan (as
defined in section 414(f))’’ after ‘‘section 414(d))’’
in clause (i),
(2) by inserting ‘‘or multiemployer plan’’ after
‘‘governmental plan’’ in clause (ii), and
(3) by inserting ‘‘AND MULTIEMPLOYER’’ after
‘‘GOVERNMENTAL’’ in the heading.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 1999.
SEC. 10. FULL FUNDING LIMITATION FOR MULTIEMPLOYER
PLANS.
(a) AMENDMENTS TO CODE.—
(1) 
FULL
FUNDING
LIMITATION.—Section
412(c)(7)(C) (relating to full funding limitation) is
amended—
(A) by inserting ‘‘or in the case of a multi-
employer plan,’’ after ‘‘paragraph (6)(B),’’, and
(B) by inserting ‘‘AND
MULTIEMPLOYER
PLANS’’ after ‘‘PARAGRAPH (6)(B)’’ in the head-
ing thereof.
(2) VALUATION.—Section 412(c)(9) (relating to
annual valuation) is amended—
(A) by inserting ‘‘(3 years in the case of a
multiemployer plan)’’ after ‘‘year’’, and
(B) by striking ‘‘ANNUAL VALUATION’’ in
the heading and inserting ‘‘VALUATION’’.
(b) AMENDMENTS TO ERISA.—
(1) 
FULL
FUNDING
LIMITATION.—Section
302(c)(7)(C) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1082(c)(7)(C)) is
amended—
(A) by inserting ‘‘or in the case of a multi-
employer plan,’’ after ‘‘paragraph (6)(B),’’, and
(B) by inserting ‘‘AND
MULTIEMPLOYER
PLANS’’ after ‘‘PARAGRAPH (6)(B)’’ in the head-
ing thereof.
(2) VALUATION.—Section 302(c)(9) of such Act
(29 U.S.C. 1082(c)(9)) is amended—
(A) by inserting ‘‘(3 years in the case of a
multiemployer plan)’’ after ‘‘year’’, and
(B) by striking ‘‘ANNUAL VALUATION’’ in
the heading and inserting ‘‘VALUATION’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to plan years beginning after De-
cember 31, 1999.
SEC. 11. ELIMINATION OF PARTIAL TERMINATION RULES
FOR MULTIEMPLOYER PLANS.
(a) PARTIAL TERMINATION RULES FOR MULTIEM-
PLOYER PLANS.—Section 411(d)(3) (relating to termi-
nation or partial termination; discontinuance of contribu-
tions) is amended by adding at the end the following new
sentence: ‘‘This paragraph shall not apply in the case of
a partial termination of a multiemployer plan.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to partial terminations beginning
after December 31, 1999.
SEC. 12. ALLOWANCE OF ROLLOVERS FROM AND TO 403(b)
PLANS.
(a) ROLLOVERS FROM SECTION 403(b) PLANS.—
Section 403(b)(8)(A)(ii) (relating to rollover amounts) is
amended by striking ‘‘such distribution’’ and all that fol-
lows and inserting ‘‘such distribution to an eligible retire-
ment plan described in section 402(c)(8)(B), and’’.
(b) ROLLOVERS TO SECTION 403(b) PLANS.—Sec-
tion 402(c)(8)(B) (defining eligible retirement plan) is
amended by striking ‘‘and’’ at the end of clause (ii), by
striking the period at the end of clause (iv) and inserting
‘‘, and’’, and by adding at the end the following:
‘‘(v) an annuity contract described in
section 403(b).’’
(c) CONFORMING AMENDMENTS.—
(1) Section 72(o)(4) is amended by striking
‘‘and 408(d)(3)’’ and inserting ‘‘403(b)(8), and
408(d)(3)’’.
(2) Section 401(a)(31)(B) is amended by strik-
ing ‘‘and 403(a)(4)’’ and inserting ‘‘, 403(a)(4), and
403(b)(8)’’.
(3) Subparagraph (B) of section 403(b)(8) is
amended by inserting ‘‘and (9)’’ after ‘‘through
(7)’’.
(4) Subparagraphs (A) and (B) of section
415(b)(2) are each amended by striking ‘‘and
408(d)(3)’’ 
and 
inserting 
‘‘403(b)(8), 
and
408(d)(3)’’.
(d) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to distributions after De-
cember 31, 1999.
(2) SPECIAL RULE.—Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of
section 1122 of the Tax Reform Act of 1986 shall
not apply to any distribution from an eligible retire-
ment plan on behalf of an individual if there was a
rollover to such plan on behalf of such individual
which is permitted solely by reason of any amend-
ment made by this section.
SEC. 13. ROLLOVER CONTRIBUTIONS FROM DEFERRED
COMPENSATION 
PLANS 
OF 
STATE 
AND
LOCAL GOVERNMENTS.
(a) ROLLOVERS FROM SECTION 457 PLANS.—
(1) IN GENERAL.—Section 457(e) (relating to
other definitions and special rules) is amended by
adding at the end the following:
‘‘(16) ROLLOVER AMOUNTS.—
‘‘(A) GENERAL RULE.—In the case of an
eligible deferred compensation plan of an eligi-
ble employer described in paragraph (1)(A),
if—
‘‘(i) any portion of the balance to the
credit of an employee in such plan is paid
to such employee in a rollover distribution
(other than a distribution described in sub-
section (d)(1)(A)(iii) or in subparagraph
(A) or (B) of section 402(c)(4)),
‘‘(ii) the employee transfers any por-
tion of the property such employee receives
in such distribution to an individual retire-
ment 
plan 
(as 
defined 
in 
section
7701(a)(37), and
‘‘(iii) in the case of a distribution of
property other than money, the amount so
transferred consists of the property distrib-
uted,
then such distribution (to the extent so trans-
ferred) shall not be includible in gross income
for the taxable year in which paid.
‘‘(B) CERTAIN
RULES
MADE
APPLICA-
BLE.—Rules similar to the rules of section
401(a)(31), paragraphs (2), (3), (5), (6), (7),
and (9) of section 402(c), and section 402(f)
shall apply for purposes of subparagraph (A).’’
(2) DISTRIBUTION
REQUIREMENTS.—Section
457(d)(1)(A) (relating to distribution requirements)
is amended by inserting ‘‘except as provided in sub-
section (e)(16),’’ after ‘‘(A)’’.
(3) CONFORMING AMENDMENTS.—
(A) Section 72(o)(4) is amended—
(i) by striking ‘‘and 408(d)(3)’’ and
inserting ‘‘408(d)(3), and 457(e)(16)’’,
(ii) by inserting ‘‘or excludable’’ after
‘‘deductible’’ each place it appears, and
(iii) in the heading by inserting ‘‘OR
EXCLUDABLE’’ after ‘‘DEDUCTIBLE’’.
(B) Section 219(d)(2) is amended by strik-
ing ‘‘or 408(d)(3)’’ and inserting ‘‘408(d)(3), or
457(e)(16)’’.
(C) Section 401(a)(31)(B) is amended by
striking ‘‘and 403(b)(8)’’ and inserting ‘‘,
403(b)(8), and 457(e)(16)’’.
(D) Paragraph (4) of section 402(c) is
amended by inserting ‘‘or in an eligible deferred
compensation plan (as defined in section
457(b)) of an eligible employer described in sec-
tion 457(e)(1)(A)’’ after ‘‘qualified trust’’.
(E) Section 408(a)(1) is amended by strik-
ing ‘‘or 403(b)(8)’’ and inserting ‘‘, 403(b)(8),
or 457(e)(16)’’.
(F) Section 408(d)(3)(A)(ii) is amended by
striking ‘‘or’’ after ‘‘501(a)’’ and inserting a
comma, and by inserting ‘‘, or from an eligible
deferred compensation plan described in section
457(b)’’ after ‘‘contribution)’’.
(G) Subparagraphs (A) and (B) of section
415(b)(2) are each amended by striking ‘‘and
408(d)(3)’’ and inserting ‘‘408(d)(3), and
457(e)(16)’’.
(H) Section 4973(b)(1)(A) is amended by
striking 
‘‘or 
408(d)(3)’’ 
and 
inserting
‘‘408(d)(3), or 457(e)(16)’’.
(d) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to distributions after De-
cember 31, 1999.
(2) SPECIAL RULE.—Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of
section 1122 of the Tax Reform Act of 1986 shall
not apply to any distribution from an individual re-
tirement plan on behalf of an individual if there was
a rollover to such plan on behalf of such individual
which is permitted solely by reason of any amend-
ment made by this section.
SEC. 14. ROLLOVERS OF IRAS INTO WORKPLACE RETIRE-
MENT PLANS.
(a) IN GENERAL.—Subparagraph (A) of section
408(d)(3) (relating to rollover amounts) is amended by
striking ‘‘or’’ at the end of clause (ii), by striking the pe-
riod at the end of clause (iii) and inserting a semicolon,
and by adding at the end the following:
‘‘(iv)(I) the entire amount received
(including money and other property) rep-
resents the entire interest in the account
or the entire value of the annuity,
‘‘(II) no amount in the account and
no part of the value of the annuity is at-
tributable to any source other than a roll-
over contribution from a defined contribu-
tion plan and any earnings on such roll-
over, and
‘‘(III) such entire amount received is
paid into another defined contribution plan
(for the benefit of such individual) not
later than the 60th day after he receives
the payment or distribution; or
‘‘(v)(I) the entire amount received (in-
cluding money and other property) rep-
resents the entire interest in the account
or the entire value of the annuity,
‘‘(II) no amount in any such account
and no part of the value of any such annu-
ity is attributable to any source other than
a rollover contribution from such an ac-
count or annuity of such individual (and
any earnings on such contribution),
‘‘(III) all contributions to all indi-
vidual 
retirement 
accounts, 
and 
all
amounts paid for all individual retirement
annuities, of such individual were allowed
as a deduction under section 219, and
‘‘(IV) such entire amount received is
paid (not later than the 60th day after
being so received) into a defined contribu-
tion plan (for the benefit of such indi-
vidual) under which amounts are held in
trust by a person described in section
408(a)(2) or in a manner that satisfies
section 401(f).
If a payment or distribution from an individual
retirement plan is described in more than one
clause of this subparagraph, such payment or
distribution shall be treated as described only in
the clause specified by the payee or distributee.
For purposes of this subparagraph, the term
‘defined contribution plan’ means a defined con-
tribution plan (as defined in section 414(i))
which includes a trust exempt from tax under
section 501(a), an annuity plan described in
section 403(a), an annuity contract described in
section 403(b), and an eligible deferred com-
pensation plan described in section 457(b) of an
eligible 
employer 
described 
in 
section
457(e)(1)(A).’’
(b) CONFORMING AMENDMENT.—Paragraph (1) of
section 
403(b) 
is 
amended 
by 
striking 
‘‘section
408(d)(3)(A)(iii)’’ and inserting ‘‘clause (iii), (iv), or (v)
of section 408(d)(3)(A)’’.
(c) EFFECTIVE DATE; SPECIAL RULE.—
(1) EFFECTIVE DATE.—The amendments made
by this section shall apply to distributions after De-
cember 31, 1999.
(2) SPECIAL RULE.—Notwithstanding any other
provision of law, subsections (h)(3) and (h)(5) of
section 1122 of the Tax Reform Act of 1986 shall
not apply to any distribution from a defined con-
tribution plan (as defined in section 408(d)(3)(A) of
the Internal Revenue Code of 1986 (as added by
this section) on behalf of an individual if there was
a rollover to such plan on behalf of such individual
which is permitted solely by reason of the amend-
ments made by this section.
SEC. 15. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.
(a) IN GENERAL.—Paragraph (2) of section 402(c)
(relating to rules applicable to rollovers from exempt
trusts) is amended by adding at the end the following new
sentence: ‘‘In accordance with rules prescribed by the Sec-
retary, the preceding sentence shall not apply to any dis-
tribution if—
‘‘(A) the portion of the distribution which
would be so includible is reported by the trust-
ee, and
‘‘(B) the eligible retirement plan to which
it is paid agrees to report such amount in any
subsequent distribution.’’
(b) CONFORMING AMENDMENTS.—
(1) Subparagraph (B) of section 401(a)(31) is
amended by adding at the end the following new
sentence: ‘‘In accordance with rules prescribed by
the Secretary, the preceding sentence shall not apply
to any distribution if—
‘‘(i) the portion of the distribution
which would be so includible is reported by
the trustee, and
‘‘(ii) the eligible retirement plan to
which it is paid agrees to report such
amount in any subsequent distribution.’’
(2) Subparagraph (B) of section 408(d)(3) is
amended—
(A) by striking ‘‘LIMITATION.—’’ in the
heading and inserting ‘‘LIMITATIONS.—’’, and
(B) by adding at the end the following: ‘‘In
addition, this paragraph does not apply unless
rules similar to the rules of section 402(c)(2)
are satisfied, except that the rollover contribu-
tion may exceed the amount includible in in-
come to the extent the rollover contribution con-
sists of nondeductible contributions described in
subsection (o).’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to distributions made after Decem-
ber 31, 1999.
SEC. 16. PURCHASE OF SERVICE CREDIT IN GOVERN-
MENTAL DEFINED BENEFIT PLANS.
(a) 403(b) PLANS.—Subsection (b) of section 403 is
amended by adding at the end the following new para-
graph:
‘‘(13) TRUSTEE-TO-TRUSTEE
TRANSFERS
TO
PURCHASE
PERMISSIVE
SERVICE
CREDIT.—No
amount shall be includible in gross income by reason
of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section
414(d)) if such transfer is—
‘‘(A) for the purchase of permissive service
credit (as defined in section 415(n)(3)(A))
under such plan, or
‘‘(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.’’
(b) 457 PLANS.—Subsection (e) of section 457, as
amended by section 12, is amended by adding at the end
the following new paragraph:
‘‘(17) TRUSTEE-TO-TRUSTEE
TRANSFERS
TO
PURCHASE
PERMISSIVE
SERVICE
CREDIT.—No
amount shall be includible in gross income by reason
of a direct trustee-to-trustee transfer to a defined
benefit governmental plan (as defined in section
414(d)) if such transfer is—
‘‘(A) for the purchase of permissive service
credit (as defined in section 415(n)(3)(A))
under such plan, or
‘‘(B) a repayment to which section 415
does not apply by reason of subsection (k)(3)
thereof.’’
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to trustee-to-trustee transfers after
December 31, 1999.
SEC. 17. MODIFICATIONS OF JOINT AND SURVIVOR ANNU-
ITY REQUIREMENTS.
(a) AMENDMENTS TO ERISA.—
(1) AMOUNT OF ANNUITY.—Paragraph (1) of
section 205(a) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1055(a)) is amend-
ed by inserting ‘‘or, at the election of the partici-
pant, shall be provided in the form of a qualified
joint and 75 percent survivor annuity’’ after ‘‘sur-
vivor annuity,’’.
(2) DEFINITION.—Subsection (d) of section 205
of such Act (29 U.S.C. 1055) is amended—
(A) by redesignating paragraphs (1) and
(2) as subparagraphs (A) and (B), respectively,
(B) by inserting ‘‘(1)’’ after ‘‘(d)’’, and
(C) by adding at the end the following new
paragraph:
‘‘(2) For purposes of this section, the term ‘‘qualified
joint and 75 percent survivor annuity’’ means a joint and
survivor annuity under which the survivor annuity for the
life of the surviving spouse is equal to at least 75 percent
of the amount of the annuity which is payable during the
joint lives of the participant and spouse.’’
(b) AMENDMENTS TO INTERNAL REVENUE CODE.—
(1) AMOUNT OF ANNUITY.—Clause (i) of sec-
tion 401(a)(11)(A) (relating to requirement of joint
and survivor annuity and preretirement survivor an-
nuity) is amended by inserting ‘‘or, at the election
of the participant, shall be provided in the form of
a qualified joint and 75 percent survivor annuity’’
after ‘‘survivor annuity,’’.
(2) DEFINITION.—Section 417 (relating to defi-
nitions and special rules for purposes of minimum
survivor annuity requirements), is amended by re-
designating subsection (f) as subsection (g) and by
inserting after subsection (e) the following new sub-
section:
‘‘(f) DEFINITION OF QUALIFIED JOINT AND 75 PER-
CENT SURVIVOR ANNUITY.—For purposes of this section
and section 401(a)(11), the term ‘‘qualified joint and 75
percent survivor annuity’’ means a joint and survivor an-
nuity under which the survivor annuity for the life of the
surviving spouse is equal to at least 75 percent of the
amount of the annuity which is payable during the joint
lives of the participant and spouse.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (3), the amendments made by this
section shall apply to plan years beginning after De-
cember 31, 1999.
(2) APPLICATION TO CURRENT EMPLOYEES.—
The amendments made by this section shall not
apply to any employee who does not have at least 1
hour of service in any plan year beginning after De-
cember 31, 1999.
(3) COLLECTIVE BARGAINING AGREEMENTS.—
In the case of a plan maintained pursuant to 1 or
more collective bargaining agreements between em-
ployee representatives and 1 or more employers rati-
fied by the date of the enactment of this Act, the
amendments made by this section shall not apply to
employees covered by any such agreement in plan
years beginning before the earlier of—
(A) the later of—
(i) the date on which the last of such
collective bargaining agreements termi-
nates (determined without regard to any
extension thereof on or after such date of
enactment), or
(ii) January 1, 1999, or
(B) January 1, 2004.
SEC. 18. PERIODS OF FAMILY AND MEDICAL LEAVE TREAT-
ED AS HOURS OF SERVICE FOR PENSION
PARTICIPATION AND VESTING.
(a) AMENDMENTS OF INTERNAL REVENUE CODE.—
(1) PARTICIPATION.—
(A) IN GENERAL.—Paragraph (3) of sec-
tion 410(a) (relating to minimum participation
standards) is amended by adding at the end the
following new subparagraph:
‘‘(E) FAMILY AND MEDICAL LEAVE TREAT-
ED AS SERVICE.—
‘‘(i) IN
GENERAL.—For purposes of
this subsection, in the case of an individual
who is absent from work on leave required
to be given to such individual under the
Family and Medical Leave Act of 1993,
the plan shall treat as hours of service—
‘‘(I) the hours of service which
otherwise would normally have been
credited to such individual but for
such absence, or
‘‘(II) in any case in which the
plan is unable to determine the hours
described in subclause (I), 8 hours of
service per day of absence.
‘‘(ii) YEAR
TO
WHICH
HOURS
ARE
CREDITED.—The hours described in clause
(i) shall be treated as hours of service as
provided in this subparagraph—
‘‘(I) only in the year in which the
absence from work begins, if section
411(a)(5)(E)(ii)(I) requires hours to
be credited to the year in which the
absence from work begins, or
‘‘(II) in any other case, in the
immediately following year.’’
(B) COORDINATION WITH TREATMENT OF
MATERNITY AND PATERNITY ABSENCES UNDER
BREAK IN SERVICE RULES.—Subparagraph (E)
of section 410(a)(5) is amended—
(i) by inserting ‘‘NOT UNDER FAMILY
AND MEDICAL LEAVE ACT OF 1993’’ after
‘‘ABSENCES’’ in the heading, and
(ii) by adding at the end of clause (i)
the following new sentence: ‘‘The preceding
sentence shall apply to an absence from
work only if no part of such absence is re-
quired to be given under the Family and
Medical Leave Act of 1993.’’
(2) VESTING.—
(A) IN GENERAL.—Paragraph (5) of sec-
tion 411(a) (relating to minimum vesting stand-
ards) is amended by adding at the end the fol-
lowing new subparagraph:
‘‘(E) FAMILY AND MEDICAL LEAVE TREAT-
ED AS SERVICE.—
‘‘(i) IN
GENERAL.—For purposes of
this subsection, in the case of an individual
who is absent from work on leave required
to be given to such individual under the
Family and Medical Leave Act of 1993,
the plan shall treat as hours of service—
‘‘(I) the hours of service which
otherwise would normally have been
credited to such individual but for
such absence, or
‘‘(II) in any case in which the
plan is unable to determine the hours
described in subclause (I), 8 hours of
service per day of absence.
‘‘(ii) YEAR
TO
WHICH
HOURS
ARE
CREDITED.—The hours described in clause
(i) shall be treated as hours of service as
provided in this subparagraph—
‘‘(I) only in the year in which the
absence from work begins, if the par-
ticipant’s rights in his accrued benefit
derived from employer contributions
are to any extent not nonforfeitable
and the participant would have a year
of service solely because the period of
absence is treated as hours of service
as provided in clause (i); or
‘‘(II) in any other case, in the
immediately following year.’’
(B) COORDINATION WITH TREATMENT OF
MATERNITY AND PATERNITY ABSENCES UNDER
BREAK IN SERVICE RULES.—Subparagraph (E)
of section 411(a)(6) is amended—
(i) by inserting ‘‘NOT UNDER FAMILY
AND MEDICAL LEAVE ACT OF 1993’’ after
‘‘ABSENCES’’ in the heading, and
(ii) by adding at the end of clause (i)
the following new sentence: ‘‘The preceding
sentence shall apply to an absence from
work only if no part of such absence is re-
quired to be given under the Family and
Medical Leave Act of 1993.’’
(b) AMENDMENTS OF ERISA.—
(1) PARTICIPATION.—
(A) IN GENERAL.—Paragraph (3) of sec-
tion 202(a) of the Employee Retirement Income
Security Act of 1974 (relating to minimum par-
ticipation standards) is amended by adding at
the end the following new subparagraph:
‘‘(E)(i) For purposes of this subsection, in the case
of an individual who is absent from work on leave required
to be given to such individual under the Family and Med-
ical Leave Act of 1993, the plan shall treat as hours of
service—
‘‘(I) the hours of service which otherwise would
normally have been credited to such individual but
for such absence, or
‘‘(II) in any case in which the plan is unable to
determine the hours described in subclause (I), 8
hours of service per day of absence.
‘‘(ii) The hours described in clause (i) shall be treated
as hours of service as provided in this subparagraph—
‘‘(I) only in the year in which the absence from
work begins, if section 203(b)(2)(E)(ii)(I) requires
hours to be credited to the year in which the absence
from work begins, or
‘‘(II) in any other case, in the immediately fol-
lowing year.’’
(B) COORDINATION WITH TREATMENT OF
MATERNITY AND PATERNITY ABSENCES UNDER
BREAK IN SERVICE RULES.—Subparagraph (A)
of section 202(b)(5) of such Act is amended by
adding at the end of clause (i) the following
new sentence: ‘‘The preceding sentence shall
apply to an absence from work only if no part
of such absence is required to be given under
the Family and Medical Leave Act of 1993.’’
(2) VESTING.—
(A) IN GENERAL.—Paragraph (2) of sec-
tion 203(b) of such Act (relating to minimum
vesting standards) is amended by adding at the
end the following new subparagraph:
‘‘(E)(i) For purposes of this subsection, in the case
of an individual who is absent from work on leave required
to be given to such individual under the Family and Med-
ical Leave Act of 1993, the plan shall treat as hours of
service—
‘‘(I) the hours of service which otherwise would
normally have been credited to such individual but
for such absence, or
‘‘(II) in any case in which the plan is unable to
determine the hours described in subclause (I), 8
hours of service per day of absence.
‘‘(ii) The hours described in clause (i) shall be treated
as hours of service as provided in this subparagraph—
‘‘(I) only in the year in which the absence from
work begins, if the participant’s rights in his ac-
crued benefit derived from employer contributions
are to any extent not nonforfeitable and the partici-
pant would have a year of service solely because the
period of absence is treated as hours of service as
provided in clause (i); or
‘‘(II) in any other case, in the immediately fol-
lowing year.’’
(B) COORDINATION WITH TREATMENT OF
MATERNITY AND PATERNITY ABSENCES UNDER
BREAK IN SERVICE RULES.—Clause (i) of sec-
tion 203(b)(3)(E) of such Act is amended by
adding at the end of clause (i) the following
new sentence: ‘‘The preceding sentence shall
apply to an absence from work only if no part
of such absence is required to be given under
the Family and Medical Leave Act of 1993.’’
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to plan years beginning after December
31, 1999.
(2) APPLICATION TO CURRENT EMPLOYEES.—
The amendments made by this section shall not
apply to any employee who does not have at least 1
hour of service in any plan year beginning after De-
cember 31, 1999.
Æ