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paragraph (A) shall be provided within a reasonable time
before the effective date of the plan amendment.
‘‘(D) Any notice under subparagraph (A) may be pro-
vided to a person designated, in writing, by the person
to which it would otherwise be provided.
‘‘(E) A plan shall not be treated as failing to meet
the requirements of subparagraph (A) merely because no-
tice is provided before the adoption of the plan amendment
if no material modification of the amendment occurs be-
fore the amendment is adopted.
‘‘(F) The Secretary of the Treasury may by regula-
tions allow any notice under this paragraph to be provided
by using new technologies.
‘‘(4) For purposes of paragraph (3)—
‘‘(A) The term ‘applicable individual’ means,
with respect to any plan amendment—
‘‘(i) each participant in the plan; and
‘‘(ii) any beneficiary who is an alternate
payee 
(within 
the 
meaning 
of 
section
206(d)(3)(K)) under an applicable qualified do-
mestic relations order (within the meaning of
section 206(d)(3)(B)(i)),
whose rate of future benefit accrual under the plan
may reasonably be expected to be significantly re-
duced by such plan amendment.
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‘‘(B) The term ‘applicable pension plan’
means—
‘‘(i) any defined benefit plan; or
‘‘(ii) an individual account plan which is
subject to the funding standards of section 412
of the Internal Revenue Code of 1986.
‘‘(C) A plan amendment which eliminates or
significantly reduces any early retirement benefit or
retirement-type subsidy (within the meaning of sub-
section (g)(2)(A)) shall be treated as having the ef-
fect of significantly reducing the rate of future ben-
efit accrual.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall apply to plan amendments taking
effect on or after the date of the enactment of this
Act.
(2) TRANSITION.—Until such time as the Sec-
retary of the Treasury issues regulations under sec-
tions 4980F(e)(2) and (3) of the Internal Revenue
Code of 1986, and section 204(h)(3) of the Em-
ployee Retirement Income Security Act of 1974, as
added by the amendments made by this section, a
plan shall be treated as meeting the requirements of
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such sections if it makes a good faith effort to com-
ply with such requirements.
(3) SPECIAL NOTICE RULE.—
(A) IN
GENERAL.—The period for pro-
viding any notice required by the amendments
made by this section shall not end before the
date which is 3 months after the date of the en-
actment of this Act.
(B) REASONABLE
NOTICE.—The amend-
ments made by this section shall not apply to
any plan amendment taking effect on or after
the date of the enactment of this Act if, before
April 25, 2001, notice was provided to partici-
pants and beneficiaries adversely affected by
the plan amendment (or their representatives)
which was reasonably expected to notify them
of the nature and effective date of the plan
amendment.
(d) STUDY.—The Secretary of the Treasury shall
prepare a report on the effects of conversions of tradi-
tional defined benefit plans to cash balance or hybrid for-
mula plans. Such study shall examine the effect of such
conversions on longer service participants, including the
incidence and effects of ‘‘wear away’’ provisions under
which participants earn no additional benefits for a period
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of time after the conversion. As soon as practicable, but
not later than 60 days after the date of the enactment
of this Act, the Secretary shall submit such report, to-
gether with recommendations thereon, to the Committee
on Ways and Means and the Committee on Education and
the Workforce of the House of Representatives and the
Committee on Finance and the Committee on Health,
Education, Labor, and Pensions of the Senate.
SEC. 505. TREATMENT OF MULTIEMPLOYER PLANS UNDER
SECTION 415.
(a) COMPENSATION LIMIT.—
(1) IN GENERAL.—Paragraph (11) of section
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.’’.
(2) 
CONFORMING
AMENDMENT.—Section
415(b)(7) (relating to benefits under certain collec-
tively bargained plans) is amended by inserting
‘‘(other than a multiemployer plan)’’ after ‘‘defined
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benefit plan’’ in the matter preceding subparagraph
(A).
(b) COMBINING AND AGGREGATION OF PLANS.—
(1) COMBINING OF PLANS.—Subsection (f) of
section 415 (relating to combining of plans) is
amended by adding at the end the following:
‘‘(3) 
EXCEPTION
FOR
MULTIEMPLOYER
PLANS.—Notwithstanding paragraph (1) and sub-
section (g), a multiemployer plan (as defined in sec-
tion 414(f)) shall not be combined or aggregated—
‘‘(A) with any other plan which is not a
multiemployer plan for purposes of applying
subsection (b)(1)(B) to such other plan, or
‘‘(B) with any other multiemployer plan
for purposes of applying the limitations estab-
lished in this section.’’.
(2) CONFORMING AMENDMENT FOR AGGREGA-
TION OF PLANS.—Subsection (g) of section 415 (re-
lating to aggregation of plans) is amended by strik-
ing ‘‘The Secretary’’ and inserting ‘‘Except as pro-
vided in subsection (f)(3), the Secretary’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 2001.
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SEC. 506. PROTECTION OF INVESTMENT OF EMPLOYEE
CONTRIBUTIONS TO 401(K) PLANS.
(a) IN GENERAL.—Section 1524(b) of the Taxpayer
Relief Act of 1997 is amended to read as follows:
‘‘(b) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section
shall apply to elective deferrals for plan years begin-
ning after December 31, 1998.
‘‘(2) NONAPPLICATION
TO
PREVIOUSLY
AC-
QUIRED PROPERTY.—The amendments made by this
section shall not apply to any elective deferral which
is invested in assets consisting of qualifying em-
ployer securities, qualifying employer real property,
or both, if such assets were acquired before January
1, 1999.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply as if included in the provision of
the Taxpayer Relief Act of 1997 to which it relates.
SEC. 507. PERIODIC PENSION BENEFITS STATEMENTS.
(a) IN GENERAL.—Section 105(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1025
(a)) is amended to read as follows:
‘‘SEC. 105. (a)(1)(A) The administrator of an indi-
vidual account plan shall furnish a pension benefit
statement—
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‘‘(i) to a plan participant at least once annually,
and
‘‘(ii) to a plan beneficiary upon written request.
‘‘(B) The administrator of a defined benefit plan
shall furnish a pension benefit statement—
‘‘(i) at least once every 3 years to each
participant with a nonforfeitable accrued ben-
efit who is employed by the employer maintain-
ing the plan at the time the statement is fur-
nished to participants, and
‘‘(ii) to a plan participant or plan bene-
ficiary of the plan upon written request.
‘‘(2) A pension benefit statement under paragraph
(1)—
‘‘(A) shall indicate, on the basis of the latest
available information—
‘‘(i) the total benefits accrued, and
‘‘(ii) the nonforfeitable pension benefits, if
any, which have accrued, or the earliest date on
which benefits will become nonforfeitable,
‘‘(B) shall be written in a manner calculated to
be understood by the average plan participant, and
‘‘(C) may be provided in written, electronic, or
other appropriate form.
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‘‘(3)(A) In the case of a defined benefit plan, the re-
quirements of paragraph (1)(B)(i) shall be treated as met
with respect to a participant if the administrator provides
the participant at least once each year with notice of the
availability of the pension benefit statement and the ways
in which the participant may obtain such statement. Such
notice shall be provided in written, electronic, or other ap-
propriate form, and may be included with other commu-
nications to the participant if done in a manner reasonably
designed to attract the attention of the participant.
‘‘(B) The Secretary may provide that years in which
no employee or former employee benefits (within the
meaning of section 410(b) of the Internal Revenue Code
of 1986) under the plan need not be taken into account
in determining the 3-year period under paragraph
(1)(B)(i).’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 105 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1025) is
amended by striking subsection (d).
(2) Section 105(b) of such Act (29 U.S.C.
1025(b)) is amended to read as follows:
‘‘(b) In no case shall a participant or beneficiary of
a plan be entitled to more than one statement described
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in subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is appli-
cable, in any 12-month period.’’.
(c) MODEL STATEMENTS.—The Secretary of Labor
shall develop a model benefit statement, written in a man-
ner calculated to be understood by the average plan partic-
ipant, that may be used by plan administrators in com-
plying with the requirements of section 105 of the Em-
ployee Retirement Income Security Act of 1974.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to plan years beginning after De-
cember 31, 2002.
SEC. 508. PROHIBITED ALLOCATIONS OF STOCK IN S COR-
PORATION ESOP.
(a) IN GENERAL.—Section 409 (relating to qualifica-
tions for tax credit employee stock ownership plans) is
amended by redesignating subsection (p) as subsection (q)
and by inserting after subsection (o) the following new
subsection:
‘‘(p) PROHIBITED ALLOCATIONS OF SECURITIES IN
AN S CORPORATION.—
‘‘(1) IN GENERAL.—An employee stock owner-
ship plan holding employer securities consisting of
stock in an S corporation shall provide that no por-
tion of the assets of the plan attributable to (or allo-
cable in lieu of) such employer securities may, dur-
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ing a nonallocation year, accrue (or be allocated di-
rectly or indirectly under any plan of the employer
meeting the requirements of section 401(a)) for the
benefit of any disqualified person.
‘‘(2) FAILURE TO MEET REQUIREMENTS.—
‘‘(A) IN GENERAL.—If a plan fails to meet
the requirements of paragraph (1), the plan
shall be treated as having distributed to any
disqualified person the amount allocated to the
account of such person in violation of para-
graph (1) at the time of such allocation.
‘‘(B) CROSS REFERENCE.—
‘‘For excise tax relating to violations of paragraph
(1) and ownership of synthetic equity, see section
4979A.
‘‘(3) NONALLOCATION YEAR.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—The term ‘nonalloca-
tion year’ means any plan year of an employee
stock ownership plan if, at any time during
such plan year—
‘‘(i) such plan holds employer securi-
ties consisting of stock in an S corpora-
tion, and
‘‘(ii) disqualified persons own at least
50 percent of the number of shares of
stock in the S corporation.
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‘‘(B) ATTRIBUTION RULES.—For purposes
of subparagraph (A)—
‘‘(i) IN GENERAL.—The rules of sec-
tion 318(a) shall apply for purposes of de-
termining ownership, except that—
‘‘(I) in applying paragraph (1)
thereof, the members of an individ-
ual’s family shall include members of
the family described in paragraph
(4)(D), and
‘‘(II) paragraph (4) thereof shall
not apply.
‘‘(ii) DEEMED-OWNED SHARES.—Not-
withstanding the employee trust exception
in section 318(a)(2)(B)(i), individual shall
be treated as owning deemed-owned shares
of the individual.
Solely for purposes of applying paragraph (5),
this subparagraph shall be applied after the at-
tribution rules of paragraph (5) have been ap-
plied.
‘‘(4) DISQUALIFIED PERSON.—For purposes of
this subsection—
‘‘(A) IN GENERAL.—The term ‘disqualified
person’ means any person if—
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‘‘(i) the aggregate number of deemed-
owned shares of such person and the mem-
bers of such person’s family is at least 20
percent of the number of deemed-owned
shares of stock in the S corporation, or
‘‘(ii) in the case of a person not de-
scribed in clause (i), the number of
deemed-owned shares of such person is at
least 10 percent of the number of deemed-
owned shares of stock in such corporation.
‘‘(B) TREATMENT OF FAMILY MEMBERS.—
In the case of a disqualified person described in
subparagraph (A)(i), any member of such per-
son’s family with deemed-owned shares shall be
treated as a disqualified person if not otherwise
treated as a disqualified person under subpara-
graph (A).
‘‘(C) DEEMED-OWNED SHARES.—
‘‘(i) 
IN
GENERAL.—The 
term
‘deemed-owned shares’ means, with respect
to any person—
‘‘(I) the stock in the S corpora-
tion constituting employer securities
of an employee stock ownership plan
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which is allocated to such person
under the plan, and
‘‘(II) such person’s share of the
stock in such corporation which is
held by such plan but which is not al-
located under the plan to participants.
‘‘(ii) 
PERSON’S
SHARE
OF
UNALLOCATED
STOCK.—For purposes of
clause 
(i)(II), 
a 
person’s 
share 
of
unallocated S corporation stock held by
such plan is the amount of the unallocated
stock which would be allocated to such per-
son if the unallocated stock were allocated
to all participants in the same proportions
as the most recent stock allocation under
the plan.
‘‘(D) MEMBER OF FAMILY.—For purposes
of this paragraph, the term ‘member of the
family’ means, with respect to any individual—
‘‘(i) the spouse of the individual,
‘‘(ii) an ancestor or lineal descendant
of the individual or the individual’s spouse,
‘‘(iii) a brother or sister of the indi-
vidual or the individual’s spouse and any
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lineal descendant of the brother or sister,
and
‘‘(iv) the spouse of any individual de-
scribed in clause (ii) or (iii).
A spouse of an individual who is legally sepa-
rated from such individual under a decree of di-
vorce or separate maintenance shall not be
treated as such individual’s spouse for purposes
of this subparagraph.
‘‘(5) TREATMENT OF SYNTHETIC EQUITY.—For
purposes of paragraphs (3) and (4), in the case of
a person who owns synthetic equity in the S corpora-
tion, except to the extent provided in regulations, the
shares of stock in such corporation on which such
synthetic equity is based shall be treated as out-
standing stock in such corporation and deemed-
owned shares of such person if such treatment of
synthetic equity of 1 or more such persons results
in—
‘‘(A) the treatment of any person as a dis-
qualified person, or
‘‘(B) the treatment of any year as a non-
allocation year.
For purposes of this paragraph, synthetic equity
shall be treated as owned by a person in the same
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manner as stock is treated as owned by a person
under the rules of paragraphs (2) and (3) of section
318(a). If, without regard to this paragraph, a per-
son is treated as a disqualified person or a year is
treated as a nonallocation year, this paragraph shall
not be construed to result in the person or year not
being so treated.
‘‘(6) DEFINITIONS.—For purposes of this
subsection—
‘‘(A) 
EMPLOYEE
STOCK
OWNERSHIP
PLAN.—The term ‘employee stock ownership
plan’ has the meaning given such term by sec-
tion 4975(e)(7).
‘‘(B) EMPLOYER SECURITIES.—The term
‘employer security’ has the meaning given such
term by section 409(l).
‘‘(C) SYNTHETIC EQUITY.—The term ‘syn-
thetic equity’ means any stock option, warrant,
restricted stock, deferred issuance stock right,
or similar interest or right that gives the holder
the right to acquire or receive stock of the S
corporation in the future. Except to the extent
provided in regulations, synthetic equity also in-
cludes a stock appreciation right, phantom
stock unit, or similar right to a future cash
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payment based on the value of such stock or
appreciation in such value.
‘‘(7) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection.’’.
(b) COORDINATION WITH SECTION 4975(e)(7).—The
last sentence of section 4975(e)(7) (defining employee
stock ownership plan) is amended by inserting ‘‘, section
409(p),’’ after ‘‘409(n)’’.
(c) EXCISE TAX.—
(1) APPLICATION OF TAX.—Subsection (a) of
section 4979A (relating to tax on certain prohibited
allocations of employer securities) is amended—
(A) by striking ‘‘or’’ at the end of para-
graph (1), and
(B) by striking all that follows paragraph
(2) and inserting the following:
‘‘(3) there is any allocation of employer securi-
ties which violates the provisions of section 409(p),
or a nonallocation year described in subsection
(e)(2)(C) with respect to an employee stock owner-
ship plan, or
‘‘(4) any synthetic equity is owned by a dis-
qualified person in any nonallocation year,
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there is hereby imposed a tax on such allocation or owner-
ship equal to 50 percent of the amount involved.’’.
(2) LIABILITY.—Section 4979A(c) (defining li-
ability for tax) is amended to read as follows:
‘‘(c) LIABILITY FOR TAX.—The tax imposed by this
section shall be paid—
‘‘(1) in the case of an allocation referred to in
paragraph (1) or (2) of subsection (a), by—
‘‘(A) the employer sponsoring such plan, or
‘‘(B) the eligible worker-owned cooperative,
which made the written statement described in sec-
tion 664(g)(1)(E) or in section 1042(b)(3)(B) (as
the case may be), and
‘‘(2) in the case of an allocation or ownership
referred to in paragraph (3) or (4) of subsection (a),
by the S corporation the stock in which was so allo-
cated or owned.’’.
(3) DEFINITIONS.—Section 4979A(e) (relating
to definitions) is amended to read as follows:
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section—
‘‘(1) DEFINITIONS.—Except as provided in
paragraph (2), terms used in this section have the
same respective meanings as when used in sections
409 and 4978.
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‘‘(2) SPECIAL
RULES
RELATING
TO
TAX
IM-
POSED BY REASON OF PARAGRAPH (3) OR (4) OF
SUBSECTION (a).—
‘‘(A) 
PROHIBITED
ALLOCATIONS.—The
amount involved with respect to any tax im-
posed by reason of subsection (a)(3) is the
amount allocated to the account of any person
in violation of section 409(p)(1).
‘‘(B) SYNTHETIC
EQUITY.—The amount
involved with respect to any tax imposed by rea-
son of subsection (a)(4) is the value of the
shares on which the synthetic equity is based.
‘‘(C) SPECIAL RULE DURING FIRST NON-
ALLOCATION YEAR.—For purposes of subpara-
graph (A), the amount involved for the first
nonallocation year of any employee stock owner-
ship plan shall be determined by taking into ac-
count the total value of all the deemed-owned
shares of all disqualified persons with respect to
such plan.
‘‘(D) STATUTE
OF
LIMITATIONS.—The
statutory period for the assessment of any tax
imposed by this section by reason of paragraph
(3) or (4) of subsection (a) shall not expire be-
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fore the date which is 3 years from the later
of—
‘‘(i) the allocation or ownership re-
ferred to in such paragraph giving rise to
such tax, or
‘‘(ii) the date on which the Secretary
is notified of such allocation or owner-
ship.’’.
(d) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by
this section shall apply to plan years beginning after
December 31, 2004.
(2) EXCEPTION FOR CERTAIN PLANS.—In the
case of any—
(A) employee stock ownership plan estab-
lished after March 14, 2001, or
(B) employee stock ownership plan estab-
lished on or before such date if employer securi-
ties held by the plan consist of stock in a cor-
poration with respect to which an election under
section 1362(a) of the Internal Revenue Code
of 1986 is not in effect on such date,
the amendments made by this section shall apply to
plan years ending after March 14, 2001.
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TITLE VI—REDUCING
REGULATORY BURDENS
SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.
(a) AMENDMENT OF INTERNAL REVENUE CODE.—
Paragraph (9) of section 412(c) (relating to annual valu-
ation) is amended to read as follows:
‘‘(9) ANNUAL VALUATION.—
‘‘(A) IN GENERAL.—For purposes of this
section, a determination of experience gains and
losses and a valuation of the plan’s liability
shall be made not less frequently than once
every year, except that such determination shall
be made more frequently to the extent required
in particular cases under regulations prescribed
by the Secretary.
‘‘(B) VALUATION DATE.—
‘‘(i) CURRENT YEAR.—Except as pro-
vided in clause (ii), the valuation referred
to in subparagraph (A) shall be made as of
a date within the plan year to which the
valuation refers or within one month prior
to the beginning of such year.
‘‘(ii) ELECTION TO USE PRIOR YEAR
VALUATION.—The valuation referred to in
subparagraph (A) may be made as of a
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date within the plan year prior to the year
to which the valuation refers if—
‘‘(I) an election is in effect under
this clause with respect to the plan,
and
‘‘(II) as of such date, the value
of the assets of the plan are not less
than 125 percent of the plan’s current
liability (as defined in paragraph
(7)(B)).
‘‘(iii) 
ADJUSTMENTS.—Information
under clause (ii) shall, in accordance with
regulations, be actuarially adjusted to re-
flect significant differences in participants.
‘‘(iv) ELECTION.—An election under
clause (ii), once made, shall be irrevocable
without the consent of the Secretary.’’.
(b) AMENDMENT OF ERISA.—Paragraph (9) of sec-
tion 302(c) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1053(c)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(9)’’; and
(2) by adding at the end the following:
‘‘(B)(i) Except as provided in clause (ii), the valu-
ation referred to in subparagraph (A) shall be made as
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of a date within the plan year to which the valuation refers
or within one month prior to the beginning of such year.
‘‘(ii) The valuation referred to in subparagraph (A)
may be made as of a date within the plan year prior to
the year to which the valuation refers if—
‘‘(I) an election is in effect under this clause
with respect to the plan; and
‘‘(II) as of such date, the value of the assets of
the plan are not less than 125 percent of the plan’s
current liability (as defined in paragraph (7)(B)).
‘‘(iii) Information under clause (ii) shall, in accord-
ance with regulations, be actuarially adjusted to reflect
significant differences in participants.
‘‘(iv) An election under clause (ii), once made, shall
be irrevocable without the consent of the Secretary of the
Treasury.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to plan years beginning after De-
cember 31, 2001.
SEC. 602. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT
LOSS OF DIVIDEND DEDUCTION.
(a) IN GENERAL.—Section 404(k)(2)(A) (defining
applicable dividends) is amended by striking ‘‘or’’ at the
end of clause (ii), by redesignating clause (iii) as clause
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(iv), and by inserting after clause (ii) the following new
clause:
‘‘(iii) is, at the election of such par-
ticipants or their beneficiaries—
‘‘(I) payable as provided in clause
(i) or (ii), or
‘‘(II) paid to the plan and rein-
vested in qualifying employer securi-
ties, or’’.
(b) 
STANDARDS
FOR
DISALLOWANCE.—Section
404(k)(5)(A) (relating to disallowance of deduction) is
amended by inserting ‘‘avoidance or’’ before ‘‘evasion’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginning after
December 31, 2001.
SEC. 603. REPEAL OF TRANSITION RULE RELATING TO CER-
TAIN HIGHLY COMPENSATED EMPLOYEES.
(a) IN GENERAL.—Paragraph (4) of section 1114(c)
of the Tax Reform Act of 1986 is hereby repealed.
(b) EFFECTIVE DATE.—The repeal made by sub-
section (a) shall apply to plan years beginning after De-
cember 31, 2001.
SEC. 604. EMPLOYEES OF TAX-EXEMPT ENTITIES.
(a) IN GENERAL.—The Secretary of the Treasury
shall modify Treasury Regulations section 1.410(b)–6(g)
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to provide that employees of an organization described in
section 403(b)(1)(A)(i) of the Internal Revenue Code of
1986 who are eligible to make contributions under section
403(b) of such Code pursuant to a salary reduction agree-
ment may be treated as excludable with respect to a plan
under section 401(k) or (m) of such Code that is provided
under the same general arrangement as a plan under such
section 401(k), if—
(1) no employee of an organization described in
section 403(b)(1)(A)(i) of such Code is eligible to
participate in such section 401(k) plan or section
401(m) plan; and
(2) 95 percent of the employees who are not
employees of an organization described in section
403(b)(1)(A)(i) of such Code are eligible to partici-
pate in such plan under such section 401(k) or (m).
(b) EFFECTIVE DATE.—The modification required by
subsection (a) shall apply as of the same date set forth
in section 1426(b) of the Small Business Job Protection
Act of 1996.
SEC. 605. CLARIFICATION OF TREATMENT OF EMPLOYER-
PROVIDED RETIREMENT ADVICE.
(a) IN GENERAL.—Subsection (a) of section 132 (re-
lating to exclusion from gross income) is amended by
striking ‘‘or’’ at the end of paragraph (5), by striking the
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period at the end of paragraph (6) and inserting ‘‘, or’’,
and by adding at the end the following new paragraph:
‘‘(7) qualified retirement planning services.’’.
(b) QUALIFIED RETIREMENT PLANNING SERVICES
DEFINED.—Section 132 is amended by redesignating sub-
section (m) as subsection (n) and by inserting after sub-
section (l) the following:
‘‘(m) QUALIFIED RETIREMENT PLANNING SERV-
ICES.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified retirement planning serv-
ices’ means any retirement planning advice or infor-
mation provided to an employee and his spouse by
an employer maintaining a qualified employer plan.
‘‘(2) NONDISCRIMINATION
RULE.—Subsection
(a)(7) shall apply in the case of highly compensated
employees only if such services are available on sub-
stantially the same terms to each member of the
group of employees normally provided education and
information regarding the employer’s qualified em-
ployer plan.
‘‘(3) QUALIFIED EMPLOYER PLAN.—For pur-
poses of this subsection, the term ‘qualified employer
plan’ means a plan, contract, pension, or account de-
scribed in section 219(g)(5).’’.
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(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 2001.
SEC. 606. REPORTING SIMPLIFICATION.
(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
OWNERS AND THEIR SPOUSES.—
(1) IN GENERAL.—The Secretary of the Treas-
ury and the Secretary of Labor shall modify the re-
quirements for filing annual returns with respect to
one-participant retirement plans to ensure that such
plans with assets of $250,000 or less as of the close
of the plan year need not file a return for that year.
(2) ONE-PARTICIPANT RETIREMENT PLAN DE-
FINED.—For purposes of this subsection, the term
‘‘one-participant retirement plan’’ means a retire-
ment plan that—
(A) on the first day of the plan year—
(i) covered only the employer (and the
employer’s spouse) and the employer
owned the entire business (whether or not
incorporated); or
(ii) covered only one or more partners
(and their spouses) in a business partner-
ship (including partners in an S or C cor-
poration);
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(B) meets the minimum coverage require-
ments of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any
other plan of the business that covers the em-
ployees of the business;
(C) does not provide benefits to anyone ex-
cept the employer (and the employer’s spouse)
or the partners (and their spouses);
(D) does not cover a business that is a
member of an affiliated service group, a con-
trolled group of corporations, or a group of
businesses under common control; and
(E) does not cover a business that leases
employees.
(3) OTHER DEFINITIONS.—Terms used in para-
graph (2) which are also used in section 414 of the
Internal Revenue Code of 1986 shall have the re-
spective meanings given such terms by such section.
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
PLANS WITH FEWER THAN 25 EMPLOYEES.—In the case
of plan years beginning after December 31, 2002, the Sec-
retary of the Treasury and the Secretary of Labor shall
provide for the filing of a simplified annual return for any
retirement plan which covers less than 25 employees on
the first day of a plan year and which meets the require-
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ments described in subparagraphs (B), (D), and (E) of
subsection (a)(2).
(c) EFFECTIVE DATE.—The provisions of this section
shall take effect on January 1, 2002.
SEC. 607. IMPROVEMENT OF EMPLOYEE PLANS COMPLI-
ANCE RESOLUTION SYSTEM.
The Secretary of the Treasury shall continue to up-
date and improve the Employee Plans Compliance Resolu-
tion System (or any successor program) giving special at-
tention to—
(1) increasing the awareness and knowledge of
small employers concerning the availability and use
of the program;
(2) taking into account special concerns and
circumstances that small employers face with respect
to compliance and correction of compliance failures;
(3) extending the duration of the self-correction
period under the Self-Correction Program for signifi-
cant compliance failures;
(4) expanding the availability to correct insig-
nificant compliance failures under the Self-Correc-
tion Program during audit; and
(5) assuring that any tax, penalty, or sanction
that is imposed by reason of a compliance failure is
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not excessive and bears a reasonable relationship to
the nature, extent, and severity of the failure.
SEC. 608. REPEAL OF THE MULTIPLE USE TEST.
(a) IN GENERAL.—Paragraph (9) of section 401(m)
is amended to read as follows:
‘‘(9) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary to carry
out the purposes of this subsection and subsection
(k), including regulations permitting appropriate ag-
gregation of plans and contributions.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to years beginning after December
31, 2001.
SEC. 609. FLEXIBILITY IN NONDISCRIMINATION, COV-
ERAGE, AND LINE OF BUSINESS RULES.
(a) NONDISCRIMINATION.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall, by regulation, provide that a plan shall be
deemed to satisfy the requirements of section
401(a)(4) of the Internal Revenue Code of 1986 if
such plan satisfies the facts and circumstances test
under section 401(a)(4) of such Code, as in effect
before January 1, 1994, but only if—
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(A) the plan satisfies conditions prescribed
by the Secretary to appropriately limit the
availability of such test; and
(B) the plan is submitted to the Secretary
for a determination of whether it satisfies such
test.
Subparagraph (B) shall only apply to the extent pro-
vided by the Secretary.
(2) EFFECTIVE DATES.—
(A) REGULATIONS.—The regulation re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2003.
(B) CONDITIONS OF AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under paragraph (1)(A) shall not apply
before the first year beginning not less than
120 days after the date on which such condition
is prescribed.
(b) COVERAGE TEST.—
(1) IN GENERAL.—Section 410(b)(1) (relating
to minimum coverage requirements) is amended by
adding at the end the following:
‘‘(D) In the case that the plan fails to
meet the requirements of subparagraphs (A),
(B) and (C), the plan—
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‘‘(i) satisfies subparagraph (B), as in
effect immediately before the enactment of
the Tax Reform Act of 1986,
‘‘(ii) is submitted to the Secretary for
a determination of whether it satisfies the
requirement described in clause (i), and
‘‘(iii) satisfies conditions prescribed by
the Secretary by regulation that appro-
priately limit the availability of this sub-
paragraph.
Clause (ii) shall apply only to the extent pro-
vided by the Secretary.’’.
(2) EFFECTIVE DATES.—
(A) IN GENERAL.—The amendment made
by paragraph (1) shall apply to years beginning
after December 31, 2003.
(B) CONDITIONS OF AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under regulations prescribed by the Sec-
retary under section 410(b)(1)(D) of the Inter-
nal Revenue Code of 1986 shall not apply be-
fore the first year beginning not less than 120
days after the date on which such condition is
prescribed.
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(c) LINE OF BUSINESS RULES.—The Secretary of
the Treasury shall, on or before December 31, 2003, mod-
ify the existing regulations issued under section 414(r) of
the Internal Revenue Code of 1986 in order to expand
(to the extent that the Secretary determines appropriate)
the ability of a pension plan to demonstrate compliance
with the line of business requirements based upon the
facts and circumstances surrounding the design and oper-
ation of the plan, even though the plan is unable to satisfy
the mechanical tests currently used to determine compli-
ance.
SEC. 610. EXTENSION TO ALL GOVERNMENTAL PLANS OF
MORATORIUM ON APPLICATION OF CERTAIN
NONDISCRIMINATION RULES APPLICABLE TO
STATE AND LOCAL PLANS.
(a) IN GENERAL.—
(1) Subparagraph (G) of section 401(a)(5) of
the Internal Revenue Code of 1986 and subpara-
graph (H) of section 401(a)(26) are each amended
by striking ‘‘section 414(d))’’ and all that follows
and inserting ‘‘section 414(d)).’’.
(2) Subparagraph (G) of section 401(k)(3) and
paragraph (2) of section 1505(d) of the Taxpayer
Relief Act of 1997 are each amended by striking
‘‘maintained by a State or local government or polit-
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ical subdivision thereof (or agency or instrumentality
thereof)’’.
(b) CONFORMING AMENDMENTS.—
(1) The heading for subparagraph (G) of sec-
tion 401(a)(5) is amended to read as follows: ‘‘GOV-
ERNMENTAL PLANS.—’’.
(2) The heading for subparagraph (H) of sec-
tion 401(a)(26) is amended to read as follows: ‘‘EX-
CEPTION FOR GOVERNMENTAL PLANS.—’’.
(3) Subparagraph (G) of section 401(k)(3) is
amended by inserting ‘‘GOVERNMENTAL PLANS.—’’
after ‘‘(G)’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall apply to years beginning after December
31, 2001.
SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DIS-
TRIBUTIONS.
(a) EXPANSION OF PERIOD.—
(1) AMENDMENT
OF
INTERNAL
REVENUE
CODE.—
(A) IN
GENERAL.—Subparagraph (A) of
section 417(a)(6) is amended by striking ‘‘90-
day’’ and inserting ‘‘180-day’’.
(B) MODIFICATION
OF
REGULATIONS.—
The Secretary of the Treasury shall modify the
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regulations under sections 402(f), 411(a)(11),
and 417 of the Internal Revenue Code of 1986
to substitute ‘‘180 days’’ for ‘‘90 days’’ each
place it appears in Treasury Regulations sec-
tions 1.402(f)–1, 1.411(a)–11(c), and 1.417(e)–
1(b).
(2) AMENDMENT OF ERISA.—
(A) IN GENERAL.—Section 205(c)(7)(A) of
the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1055(c)(7)(A)) is amended
by striking ‘‘90-day’’ and inserting ‘‘180-day’’.
(B) MODIFICATION
OF
REGULATIONS.—
The Secretary of the Treasury shall modify the
regulations under part 2 of subtitle B of title
I of the Employee Retirement Income Security
Act of 1974 to the extent that they relate to
sections 203(e) and 205 of such Act to sub-
stitute ‘‘180 days’’ for ‘‘90 days’’ each place it
appears.
(3) EFFECTIVE DATE.—The amendments made
by paragraph (1)(A) and (2)(A) and the modifica-
tions required by paragraph (1)(B) shall apply to
years beginning after December 31, 2001.
(b) CONSENT REGULATION INAPPLICABLE TO CER-
TAIN DISTRIBUTIONS.—
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(1) IN GENERAL.—The Secretary of the Treas-
ury shall modify the regulations under section
411(a)(11) of the Internal Revenue Code of 1986
and under section 205 of the Employee Retirement
Income Security Act of 1974 to provide that the de-
scription of a participant’s right, if any, to defer re-
ceipt of a distribution shall also describe the con-
sequences of failing to defer such receipt.
(2) EFFECTIVE DATE.—The modifications re-
quired by paragraph (1) shall apply to years begin-
ning after December 31, 2001.
SEC. 612. ANNUAL REPORT DISSEMINATION.
(a) REPORT AVAILABLE THROUGH ELECTRONIC
MEANS.—Section 104(b)(3) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1024(b)(3)) is
amended by adding at the end the following new sentence:
‘‘The requirement to furnish information under the pre-
vious sentence shall be satisfied if the administrator makes
such information reasonably available through electronic
means or other new technology.’’.
(b) EFFECTIVE DATE.—The amendment made by
this section shall apply to reports for years beginning after
December 31, 2000.
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SEC. 613. TECHNICAL CORRECTIONS TO SAVER ACT.
Section 517 of the Employee Retirement Income Se-
curity Act of 1974 (29 U.S.C. 1147) is amended—
(1) in subsection (a), by striking ‘‘2001 and
2005 on or after September 1 of each year involved’’
and inserting ‘‘2001, 2005, and 2009 in the month
of September of each year involved’’;
(2) in subsection (b), by adding at the end the
following new sentence: ‘‘To effectuate the purposes
of this paragraph, the Secretary may enter into a co-
operative agreement, pursuant to the Federal Grant
and Cooperative Agreement Act of 1977 (31 U.S.C.
6301 et seq.), with the American Savings Education
Council or any other appropriate, qualified entity.’’;
(3) in subsection (e)(2)—
(A) by striking ‘‘Committee on Labor and
Human Resources’’ in subparagraph (D) and
inserting ‘‘Committee on Health, Education,
Labor, and Pensions’’;
(B) by striking subparagraph (F) and in-
serting the following:
‘‘(F) the Chairman and Ranking Member
of the Subcommittee on Labor, Health and
Human Services, and Education of the Com-
mittee on Appropriations of the House of Rep-
resentatives and the Chairman and Ranking
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Member of the Subcommittee on Labor, Health
and Human Services, and Education of the
Committee on Appropriations of the Senate;’’;
(C) by redesignating subparagraph (G) as
subparagraph (J); and
(D) by inserting after subparagraph (F)
the following new subparagraphs:
‘‘(G) the Chairman and Ranking Member
of the Committee on Finance of the Senate;
‘‘(H) the Chairman and Ranking Member
of the Committee on Ways and Means of the
House of Representatives;
‘‘(I) the Chairman and Ranking Member
of the Subcommittee on Employer-Employee
Relations of the Committee on Education and
the Workforce of the House of Representatives;
and’’;
(4) in subsection (e)(3)—
(A) by striking ‘‘There shall be not more
than 200 additional participants.’’ in subpara-
graph (A) and inserting ‘‘The participants in
the National Summit shall also include addi-
tional participants appointed under this sub-
paragraph.’’;
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(B) by striking ‘‘one-half shall be ap-
pointed by the President,’’ in subparagraph
(A)(i) and inserting ‘‘not more than 100 par-
ticipants shall be appointed under this clause by
the President,’’;
(C) by striking ‘‘one-half shall be ap-
pointed by the elected leaders of Congress’’ in
subparagraph (A)(ii) and inserting ‘‘not more
than 100 participants shall be appointed under
this clause by the elected leaders of Congress’’;
(D) by redesignating subparagraph (B) as
subparagraph (C); and
(E) by inserting after subparagraph (A)
the following new subparagraph:
‘‘(B) PRESIDENTIAL AUTHORITY FOR AD-
DITIONAL
APPOINTMENTS.—The President, in
consultation with the elected leaders of Con-
gress referred to in subsection (a), may appoint
under this subparagraph additional participants
to the National Summit. The number of such
additional participants appointed under this
subparagraph may not exceed the lesser of 3
percent of the total number of all additional
participants appointed under this paragraph, or
10. Such additional participants shall be ap-
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pointed from persons nominated by the organi-
zation referred to in subsection (b)(2) which is
made up of private sector businesses and asso-
ciations partnered with Government entities to
promote long term financial security in retire-
ment through savings and with which the Sec-
retary is required thereunder to consult and co-
operate and shall not be Federal, State, or local
government employees.’’;
(5) in subsection (e)(3)(C) (as redesignated), by
striking ‘‘January 31, 1998’’ and inserting ‘‘May 1,
2001, May 1, 2005, and May 1, 2009, for each of
the subsequent summits, respectively’’;
(6) in subsection (f)(1)(C), by inserting ‘‘, no
later than 90 days prior to the date of the com-
mencement of the National Summit,’’ after ‘‘com-
ment’’;
(7) in subsection (g), by inserting ‘‘, in con-
sultation with the congressional leaders specified in
subsection (e)(2),’’ after ‘‘report’’ the first place it
appears;
(8) in subsection (i)—
(A) by striking ‘‘beginning on or after Oc-
tober 1, 1997’’ in paragraph (1) and inserting
‘‘2001, 2005, and 2009’’; and
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(B) by adding at the end the following new
paragraph:
‘‘(3) RECEPTION
AND
REPRESENTATION
AU-
THORITY.—The Secretary is hereby granted recep-
tion and representation authority limited specifically
to the events at the National Summit. The Secretary
shall use any private contributions accepted in con-
nection with the National Summit prior to using
funds appropriated for purposes of the National
Summit pursuant to this paragraph.’’; and
(9) in subsection (k)—
(A) by striking ‘‘shall enter into a contract
on a sole-source basis’’ and inserting ‘‘may
enter into a contract on a sole-source basis’’;
and
(B) by striking ‘‘fiscal year 1998’’ and in-
serting ‘‘fiscal years 2001, 2005, and 2009’’.
TITLE VII—OTHER ERISA
PROVISIONS
SEC. 701. MISSING PARTICIPANTS.
(a) IN GENERAL.—Section 4050 of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 1350)
is amended by redesignating subsection (c) as subsection
(e) and by inserting after subsection (b) the following new
subsections:
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‘‘(c) MULTIEMPLOYER
PLANS.—The corporation
shall prescribe rules similar to the rules in subsection (a)
for multiemployer plans covered by this title that termi-
nate under section 4041A.
‘‘(d) PLANS NOT OTHERWISE SUBJECT TO TITLE.—
‘‘(1) TRANSFER TO CORPORATION.—The plan
administrator of a plan described in paragraph (4)
may elect to transfer a missing participant’s benefits
to the corporation upon termination of the plan.
‘‘(2) INFORMATION TO THE CORPORATION.—To
the extent provided in regulations, the plan adminis-
trator of a plan described in paragraph (4) shall,
upon termination of the plan, provide the corpora-
tion information with respect to benefits of a miss-
ing participant if the plan transfers such benefits—
‘‘(A) to the corporation, or
‘‘(B) to an entity other than the corpora-
tion or a plan described in paragraph (4)(B)(ii).
‘‘(3) PAYMENT BY THE CORPORATION.—If ben-
efits of a missing participant were transferred to the
corporation under paragraph (1), the corporation
shall, upon location of the participant or beneficiary,
pay to the participant or beneficiary the amount
transferred (or the appropriate survivor benefit)
either—