I 
110TH CONGRESS 
2D SESSION 
H. R. 5160 
To amend the Internal Revenue Code of 1986 to encourage retirement savings 
by modifying requirements with respect to employer-established IRAs, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 29, 2008 
Mr. KIND (for himself and Mr. HULSHOF) introduced the following bill; which 
was referred to the Committee on Ways and Means, and in addition to 
the Committee on Education and Labor, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to encourage 
retirement savings by modifying requirements with re-
spect to employer-established IRAs, and for other pur-
poses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Small Businesses Add 
Value for Employees Act of 2008’’ or the ‘‘SAVE Act of 
2008’’. 
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SEC. 2. ELIMINATION OF RESTRICTION ON SIMPLE IRA 
ROLLOVERS. 
(a) IN GENERAL.—Paragraph (3) of section 408(d) 
of the Internal Revenue Code of 1986 (relating to rollover 
contribution) is amended by striking subparagraph (G). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to distributions in taxable years 
beginning after the date of the enactment of this Act. 
SEC. 3. ALLOWING MID-YEAR SIMPLE IRA PLAN TERMI-
NATION. 
(a) IN GENERAL.—Subsection (p) of section 408 of 
the Internal Revenue Code of 1986 is amended by adding 
at the end the following new paragraph: 
‘‘(11) SPECIAL RULES RELATING TO MID-YEAR 
TERMINATION.— 
‘‘(A) IN
GENERAL.—An employer may 
elect to terminate (in such form and manner as 
the Secretary may provide) the qualified salary 
reduction arrangement of the employer at any 
time during the year. 
‘‘(B) PRORATION
AND
APPLICATION
OF 
QUALIFIED PLAN LIMITATION.—In the case of a 
year during which an employer terminates a 
qualified salary reduction arrangement before 
the end of such year— 
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SEC. 5. INCREASE IN CONTRIBUTIONS ALLOWED FOR SIM-
PLE IRA. 
(a) ADDITIONAL NONELECTIVE EMPLOYER CON-
TRIBUTIONS ALLOWED.— 
(1) IN GENERAL.—Subparagraph (A) of section 
408(p)(2) of the Internal Revenue Code of 1986 (re-
lating to qualified salary reduction arrangement) is 
amended by striking ‘‘and’’ at the end of clause (iii), 
by redesignating clause (iv) as clause (v), and by in-
serting after clause (iii) the following new clause: 
‘‘(iv) the employer may make, in addi-
tion to any other contribution under this 
paragraph, nonelective contributions of not 
more than 10 percent of compensation 
(subject to the limitation described in sub-
paragraph (B)(ii)) for each employee who 
is eligible to participate in the arrangement 
and who has at least $5,000 of compensa-
tion from the employer for the year, and’’. 
(2) CONFORMING AMENDMENT.—Clause (v) of 
section 408(p)(2)(A) of such Code, as redesignated 
by this section, is amended by striking ‘‘clause (i) or 
(iii)’’ and inserting ‘‘clause (i), (iii), or (iv)’’. 
(b) INCREASE IN ELECTIVE CONTRIBUTION LIMITA-
TION.—Subparagraph (E) of section 408(p)(2) is amend-
ed to read as follows: 
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‘‘(E) APPLICABLE DOLLAR AMOUNT.—For 
purposes of subparagraph (A)(ii), the applicable 
dollar amount shall be the applicable dollar 
amount in effect under subparagraph (B) of 
section 402(g)(1).’’. 
(c) SIMPLE IRA SUBJECT TO DEFINED CONTRIBU-
TION PLAN LIMITATION.—Subsection (p) of section 408 
of such Code is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(11) SUBJECT
TO
DEFINED
CONTRIBUTION 
PLAN
LIMITATION.—An arrangement shall not be 
treated as a qualified salary reduction arrangement 
for any year if contributions with respect to any em-
ployee for the year exceed the limitation of para-
graph (1) of section 415(c) (relating to limitation for 
defined contribution plans).’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to contributions for taxable years 
beginning after December 31, 2007. 
SEC. 6. SIMPLE 401(k) PARITY FOR ADDITIONAL NONELEC-
TIVE EMPLOYER CONTRIBUTIONS. 
(a) IN GENERAL.—Subparagraph (B) of section 
401(k)(11) of such Code (relating to contribution require-
ments) is amended by adding at the end the following new 
clause: 
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‘‘(iv) SPECIAL RULE FOR ADDITIONAL 
NONELECTIVE
EMPLOYER
CONTRIBU-
TIONS.—An arrangement shall not be 
treated as failing to meet the requirements 
of this subparagraph merely because under 
such arrangement the employer makes, in 
addition to any other contribution under 
this subparagraph, nonelective contribu-
tions of not more than 10 percent of com-
pensation for each employee who is eligible 
to participate in the arrangement and who 
has at least $5,000 of compensation from 
the employer for the year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to plan years beginning after De-
cember 31, 2007. 
SEC. 7. AUTOMATIC DEFERRAL IRAS. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 of the Internal Revenue Code of 1986 (re-
lating to pension, profit-sharing, stock bonus plans, etc.) 
is amended by inserting after section 408A the following 
new section: 
‘‘SEC. 408B. AUTOMATIC DEFERRAL IRAS. 
‘‘(a) IN GENERAL.—An automatic deferral IRA shall 
be treated for purposes of this title in the same manner 
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as an individual retirement plan. An automatic IRA may 
also be treated as a Roth IRA for purposes of this title 
if it meets the requirements of section 408A. 
‘‘(b) AUTOMATIC DEFERRAL IRA.—For purposes of 
this section, the term ‘automatic deferral IRA’ means an 
individual retirement plan (as defined in section 
7701(a)(37)) with respect to which contributions are made 
under an arrangement which satisfies the requirements of 
paragraphs (1) through (4) of subsection (c). 
‘‘(c) AUTOMATIC DEFERRAL IRA ARRANGEMENTS.— 
‘‘(1) ENROLLMENT.— 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met if each employee eligible 
to participate in the arrangement is treated as 
having elected to have the employer make pay-
ments as elective contributions to an automatic 
deferral IRA on behalf of such employee (which 
would have otherwise been made to the em-
ployee directly in cash) in an amount equal to 
so much of a qualified percentage of compensa-
tion of such employee as does not exceed the 
deductible amount for such year (within the 
meaning of section 219(b)). 
‘‘(B) ELIGIBILITY.—An employee is eligi-
ble to participate if such employee is described 
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in paragraph (2) of section 408(k), except that 
for purposes of determining whether an em-
ployee is described in such paragraph, subpara-
graph (C) thereof shall be applied by sub-
stituting ‘$5,000’ for ‘$450’. 
‘‘(C) ELECTION OUT.—The election treat-
ed as having been made under subparagraph 
(A) shall cease to apply with respect to any em-
ployee who makes an affirmative election— 
‘‘(i) to not have such elective contribu-
tions made, or 
‘‘(ii) not later than the close of the 
30-day period beginning on the date of the 
first contribution with respect to such em-
ployee, to make elective contributions at a 
level specified in such affirmative election. 
‘‘(D) QUALIFIED PERCENTAGE.—For pur-
poses of this paragraph, the term ‘qualified per-
centage’ means, with respect to any employee, 
any percentage determined under the trust 
agreement if such percentage is applied uni-
formly, is at least 3 percent, and does not ex-
ceed 10 percent. 
‘‘(2) NOTICE.— 
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‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met if, within a reasonable 
period before the first day an employee is eligi-
ble to participate in the arrangement, the em-
ployee receives written notice of the employee’s 
rights and obligations under the arrangement 
which— 
‘‘(i) is sufficiently accurate and com-
prehensive to apprise the employee of such 
rights, and 
‘‘(ii) is written in a manner calculated 
to be understood by the average employee 
to whom the arrangement applies. 
‘‘(B) TIMING
AND
CONTENT.—A notice 
shall not be treated as meeting the require-
ments of subparagraph (A) with respect to an 
employee unless— 
‘‘(i) the notice explains the employee’s 
right to elect not to have elective contribu-
tions made on the employee’s behalf (or to 
elect to have such contributions made at a 
different percentage), 
‘‘(ii) the notice explains how contribu-
tions made under the arrangement will be 
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following the last day of the month with respect 
to which the contributions are to be made, 
‘‘(B) an employee may elect to terminate 
participation in the arrangement at any time 
during the year, except that if the employee so 
terminates, the arrangement may provide that 
the employee may elect to resume participation 
until the beginning of the next year, and 
‘‘(C) each employee eligible to participate 
may elect, during the 30-day period before the 
beginning of any year, or to modify the amount 
subject to such arrangement, for such year.’’. 
(b) PREEMPTION OF CONFLICTING STATE LAWS.— 
Any law of a State shall be superseded if it would directly 
or indirectly prohibit or restrict an employer from creating 
or organizing an automatic deferral IRA (as defined in 
section 408B of the Internal Revenue Service of 1986). 
(c) CLERICAL AMENDMENT.—The table of sections 
for subpart A of part I of subchapter D of chapter 1 of 
the Internal Revenue Code of 1986 is amended by insert-
ing after the item relating to 408A the following new item: 
‘‘408B. Automatic deferral IRAs.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2007. 
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SEC. 8. EXPANDING SMALL EMPLOYER PENSION PLAN 
STARTUP COST CREDIT. 
(a) IN GENERAL.— 
(1) INCLUDING
STARTUP
COSTS
FOR
EM-
PLOYER-ESTABLISHED IRAS.—Paragraph (2) of sec-
tion 45E(d) of the Internal Revenue Code of 1986 
(defining eligible employer plan) is amended by in-
serting before the period ‘‘and a plan of which a 
trust described in section 408(c) is a part’’. 
(2) ADDITIONAL CREDIT AMOUNT.— 
(A) IN GENERAL.—Subsection (a) of sec-
tion 45E of such Code is amended by striking 
‘‘50 percent of’’ and all that follows and insert-
ing ‘‘the sum of— 
‘‘(1) 50 percent of the qualified startup costs 
paid or incurred by the taxpayer during the taxable 
year, plus 
‘‘(2) $25 multiplied by the number of employees 
of the employer who participate in any eligible em-
ployer plan of the employer for the first time in such 
taxable year.’’. 
(B) 
CONFORMING
AMENDMENT.—Para-
graph (2) of section 45E(c) of such Code (de-
fining eligible employer) is amended— 
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(i) by striking ‘‘qualified employer 
plan’’ in each place it appears and insert-
ing ‘‘eligible employer plan’’, and 
(ii) by striking ‘‘QUALIFIED’’ in the 
heading thereof and inserting ‘‘ELIGIBLE’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to costs paid or incurred in taxable 
years beginning after the date of the enactment of this 
Act. 
SEC. 9. AMENDMENT TO EMPLOYEE RETIREMENT INCOME 
SECURITY ACT OF 1974. 
(a) IN GENERAL.—Section 3(2) of the Employee Re-
tirement Income Security Act of 1974 (29 U.S.C. 
1002(2)) is amended by adding at the end the following 
new subparagraph: 
‘‘(C) An individual retirement plan (as defined in sec-
tion 7701(a)(37) of the Internal Revenue Code of 1986) 
shall not be considered a pension plan merely because an 
employer establishes a payroll deduction program for the 
purpose of enabling employees to make voluntary con-
tributions to such account or annuity.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on the date of the enactment 
of this Act. 
Æ 
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