687 
‘‘(v) EXCEPTION.—This subparagraph 
shall not apply to an applicable defined 
contribution plan (as defined in paragraph 
(35)(E)).’’ 
(B) Section 409(h)(7) of such Code is 
amended by inserting ‘‘or subparagraph (B) or 
(C) of section 401(a)(35)’’ before the period at 
the end. 
(C) Section 4980(c)(3)(A) of such Code is 
amended by striking ‘‘if—’’ and all that follows 
and inserting ‘‘if the requirements of subpara-
graphs (B), (C), and (D) are met.’’ 
(b) AMENDMENTS OF ERISA.— 
(1) IN GENERAL.—Section 204 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1054) is amended by redesignating subsection (j) as 
subsection (k) and by inserting after subsection (i) 
the following new subsection: 
‘‘(j) DIVERSIFICATION REQUIREMENTS FOR CERTAIN 
INDIVIDUAL ACCOUNT PLANS.— 
‘‘(1) IN GENERAL.—An applicable individual ac-
count plan shall meet the diversification require-
ments of paragraphs (2), (3), and (4). 
‘‘(2) EMPLOYEE
CONTRIBUTIONS
AND
ELEC-
TIVE DEFERRALS INVESTED IN EMPLOYER SECURI-
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ccoleman on PROD1PC71 with BILLS
688 
TIES.—In the case of the portion of an applicable in-
dividual’s account attributable to employee contribu-
tions and elective deferrals which is invested in em-
ployer securities, a plan meets the requirements of 
this paragraph if the applicable individual may elect 
to direct the plan to divest any such securities and 
to reinvest an equivalent amount in other investment 
options meeting the requirements of paragraph (4). 
‘‘(3) EMPLOYER CONTRIBUTIONS INVESTED IN 
EMPLOYER SECURITIES.—In the case of the portion 
of the account attributable to employer contributions 
other than elective deferrals which is invested in em-
ployer securities, a plan meets the requirements of 
this paragraph if each applicable individual who— 
‘‘(A) is a participant who has completed at 
least 3 years of service, or 
‘‘(B) is a beneficiary of a participant de-
scribed in subparagraph (A) or of a deceased 
participant, 
may elect to direct the plan to divest any such secu-
rities and to reinvest an equivalent amount in other 
investment options meeting the requirements of 
paragraph (4). 
‘‘(4) INVESTMENT OPTIONS.— 
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ccoleman on PROD1PC71 with BILLS
689 
‘‘(A) IN GENERAL.—The requirements of 
this paragraph are met if the plan offers not 
less than 3 investment options, other than em-
ployer securities, to which an applicable indi-
vidual may direct the proceeds from the divest-
ment of employer securities pursuant to this 
subsection, each of which is diversified and has 
materially different risk and return characteris-
tics. 
‘‘(B) TREATMENT OF CERTAIN RESTRIC-
TIONS AND CONDITIONS.— 
‘‘(i) TIME FOR MAKING INVESTMENT 
CHOICES.—A plan shall not be treated as 
failing to meet the requirements of this 
paragraph merely because the plan limits 
the time for divestment and reinvestment 
to periodic, reasonable opportunities occur-
ring no less frequently than quarterly. 
‘‘(ii) CERTAIN
RESTRICTIONS
AND 
CONDITIONS
NOT
ALLOWED.—Except as 
provided in regulations, a plan shall not 
meet the requirements of this paragraph if 
the plan imposes restrictions or conditions 
with respect to the investment of employer 
securities which are not imposed on the in-
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ccoleman on PROD1PC71 with BILLS
690 
vestment of other assets of the plan. This 
subparagraph shall not apply to any re-
strictions or conditions imposed by reason 
of the application of securities laws. 
‘‘(5) 
APPLICABLE
INDIVIDUAL
ACCOUNT 
PLAN.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘applicable 
individual account plan’ means any individual 
account plan (as defined in section 3(34)) which 
holds any publicly traded employer securities. 
‘‘(B) EXCEPTION FOR CERTAIN ESOPS.— 
Such term does not include an employee stock 
ownership plan if— 
‘‘(i) there are no contributions to such 
plan (or earnings thereunder) which are 
held within such plan and are subject to 
subsection (k) or (m) of section 401 of the 
Internal Revenue Code of 1986, and 
‘‘(ii) such plan is a separate plan (for 
purposes of section 414(l) of such Code) 
with respect to any other defined benefit 
plan or individual account plan maintained 
by the same employer or employers. 
‘‘(C) EXCEPTION
FOR
ONE
PARTICIPANT 
PLANS.—Such term shall not include a one-par-
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ccoleman on PROD1PC71 with BILLS
691 
ticipant retirement plan (as defined in section 
101(i)(8)(B)). 
‘‘(D) CERTAIN PLANS TREATED AS HOLD-
ING
PUBLICLY
TRADED
EMPLOYER
SECURI-
TIES.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in regulations or in clause (ii), a plan 
holding employer securities which are not 
publicly traded employer securities shall be 
treated as holding publicly traded employer 
securities if any employer corporation, or 
any member of a controlled group of cor-
porations which includes such employer 
corporation, has issued a class of stock 
which is a publicly traded employer secu-
rity. 
‘‘(ii) EXCEPTION FOR CERTAIN CON-
TROLLED GROUPS WITH PUBLICLY TRAD-
ED
SECURITIES.—Clause (i) shall not 
apply to a plan if— 
‘‘(I) no employer corporation, or 
parent corporation of an employer 
corporation, has issued any publicly 
traded employer security, and 
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ccoleman on PROD1PC71 with BILLS
692 
‘‘(II) no employer corporation, or 
parent corporation of an employer 
corporation, has issued any special 
class of stock which grants particular 
rights to, or bears particular risks for, 
the holder or issuer with respect to 
any corporation described in clause (i) 
which has issued any publicly traded 
employer security. 
‘‘(iii) DEFINITIONS.—For purposes of 
this subparagraph, the term— 
‘‘(I) ‘controlled group of corpora-
tions’ has the meaning given such 
term by section 1563(a) of the Inter-
nal Revenue Code of 1986, except 
that ‘50 percent’ shall be substituted 
for ‘80 percent’ each place it appears, 
‘‘(II) 
‘employer 
corporation’ 
means a corporation which is an em-
ployer maintaining the plan, and 
‘‘(III) ‘parent corporation’ has 
the meaning given such term by sec-
tion 424(e) of such Code. 
‘‘(6) OTHER
DEFINITIONS.—For purposes of 
this paragraph— 
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ccoleman on PROD1PC71 with BILLS
693 
‘‘(A) APPLICABLE INDIVIDUAL.—The term 
‘applicable individual’ means— 
‘‘(i) any participant in the plan, and 
‘‘(ii) any beneficiary who has an ac-
count under the plan with respect to which 
the beneficiary is entitled to exercise the 
rights of a participant. 
‘‘(B) ELECTIVE
DEFERRAL.—The term 
‘elective deferral’ means an employer contribu-
tion described in section 402(g)(3)(A) of the In-
ternal Revenue Code of 1986. 
‘‘(C) EMPLOYER
SECURITY.—The term 
‘employer security’ has the meaning given such 
term by section 407(d)(1). 
‘‘(D) 
EMPLOYEE
STOCK
OWNERSHIP 
PLAN.—The term ‘employee stock ownership 
plan’ has the meaning given such term by sec-
tion 4975(e)(7) of such Code. 
‘‘(E) PUBLICLY TRADED EMPLOYER SECU-
RITIES.—The term ‘publicly traded employer 
securities’ means employer securities which are 
readily tradable on an established securities 
market. 
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ccoleman on PROD1PC71 with BILLS
694 
‘‘(F) YEAR OF SERVICE.—The term ‘year 
of service’ has the meaning given such term by 
section 203(b)(2). 
‘‘(7) TRANSITION RULE FOR SECURITIES AT-
TRIBUTABLE TO EMPLOYER CONTRIBUTIONS.— 
‘‘(A) RULES PHASED IN OVER 3 YEARS.— 
‘‘(i) IN GENERAL.—In the case of the 
portion of an account to which paragraph 
(3) applies and which consists of employer 
securities acquired in a plan year begin-
ning before January 1, 2007, paragraph 
(3) shall only apply to the applicable per-
centage of such securities. This subpara-
graph shall be applied separately with re-
spect to each class of securities. 
‘‘(ii) EXCEPTION FOR CERTAIN PAR-
TICIPANTS AGED 55 OR OVER.—Clause (i) 
shall not apply to an applicable individual 
who is a participant who has attained age 
55 and completed at least 3 years of serv-
ice before the first plan year beginning 
after December 31, 2005. 
‘‘(B) 
APPLICABLE
PERCENTAGE.—For 
purposes of subparagraph (A), the applicable 
percentage shall be determined as follows: 
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ccoleman on PROD1PC71 with BILLS
695 
‘‘Plan year to which 
The applicable 
paragraph (3) applies: 
percentage is: 
1st ......................................................................................................
2d .......................................................................................................
3d .......................................................................................................
100.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
407(b)(3) of such Act (29 U.S.C. 1107(b)(3)) is 
amended by adding at the end the following: 
‘‘(D) For diversification requirements for quali-
fying employer securities held in certain individual 
account plans, see section 204(j).’’. 
(c) EFFECTIVE DATES.— 
(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, 2006. 
(2) SPECIAL
RULE
FOR
COLLECTIVELY
BAR-
GAINED AGREEMENTS.—In the case of a plan main-
tained pursuant to 1 or more collective bargaining 
agreements between employee representatives and 1 
or more employers ratified on or before the date of 
the enactment of this Act, paragraph (1) shall be 
applied to benefits pursuant to, and individuals cov-
ered by, any such agreement by substituting for 
‘‘December 31, 2006’’ the earlier of— 
(A) the later of— 
(i) December 31, 2007, or 
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ccoleman on PROD1PC71 with BILLS
696 
(ii) the date on which the last of such 
collective bargaining agreements termi-
nates (determined without regard to any 
extension thereof after such date of enact-
ment), or 
(B) December 31, 2008. 
(3) SPECIAL RULE FOR CERTAIN EMPLOYER SE-
CURITIES HELD IN AN ESOP.— 
(A) IN GENERAL.—In the case of employer 
securities to which this paragraph applies, the 
amendments made by this section shall apply to 
plan years beginning after the earlier of— 
(i) December 31, 2007, or 
(ii) the first date on which the fair 
market value of such securities exceeds the 
guaranteed minimum value described in 
subparagraph (B)(ii). 
(B) APPLICABLE SECURITIES.—This para-
graph shall apply to employer securities which 
are attributable to employer contributions other 
than elective deferrals, and which, on Sep-
tember 17, 2003— 
(i) consist of preferred stock, and 
(ii) are within an employee stock own-
ership 
plan 
(as 
defined 
in 
section 
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ccoleman on PROD1PC71 with BILLS
697 
4975(e)(7) of the Internal Revenue Code 
of 1986), the terms of which provide that 
the value of the securities cannot be less 
than the guaranteed minimum value speci-
fied by the plan on such date. 
(C) COORDINATION
WITH
TRANSITION 
RULE.—In applying section 401(a)(35)(H) of 
the Internal Revenue Code of 1986 and section 
204(j)(7) of the Employee Retirement Income 
Security Act of 1974 (as added by this section) 
to employer securities to which this paragraph 
applies, the applicable percentage shall be de-
termined without regard to this paragraph. 
SEC. 902. INCREASING PARTICIPATION THROUGH AUTO-
MATIC CONTRIBUTION ARRANGEMENTS. 
(a) IN GENERAL.—Section 401(k) of the Internal 
Revenue Code of 1986 (relating to cash or deferred ar-
rangement) is amended by adding at the end the following 
new paragraph: 
‘‘(13) ALTERNATIVE METHOD FOR AUTOMATIC 
CONTRIBUTION
ARRANGEMENTS
TO
MEET
NON-
DISCRIMINATION REQUIREMENTS.— 
‘‘(A) IN GENERAL.—A qualified automatic 
contribution arrangement shall be treated as 
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ccoleman on PROD1PC71 with BILLS
698 
meeting 
the 
requirements 
of 
paragraph 
(3)(A)(ii). 
‘‘(B) QUALIFIED
AUTOMATIC
CONTRIBU-
TION
ARRANGEMENT.—For purposes of this 
paragraph, the term ‘qualified automatic con-
tribution arrangement’ means any cash or de-
ferred arrangement which meets the require-
ments of subparagraphs (C) through (E). 
‘‘(C) AUTOMATIC DEFERRAL.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if, under the 
arrangement, each employee eligible to 
participate in the arrangement is treated 
as having elected to have the employer 
make elective contributions in an amount 
equal to a qualified percentage of com-
pensation. 
‘‘(ii) ELECTION
OUT.—The election 
treated as having been made under clause 
(i) shall cease to apply with respect to any 
employee if such employee makes an af-
firmative election— 
‘‘(I) to not have such contribu-
tions made, or 
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ccoleman on PROD1PC71 with BILLS
699 
‘‘(II) to make elective contribu-
tions at a level specified in such af-
firmative election. 
‘‘(iii) QUALIFIED PERCENTAGE.—For 
purposes of this subparagraph, the term 
‘qualified percentage’ means, with respect 
to any employee, any percentage deter-
mined under the arrangement if such per-
centage is applied uniformly, does not ex-
ceed 10 percent, and is at least— 
‘‘(I) 3 percent during the period 
ending on the last day of the first 
plan year which begins after the date 
on which the first elective contribution 
described in clause (i) is made with 
respect to such employee, 
‘‘(II) 4 percent during the first 
plan year following the plan year de-
scribed in subclause (I), 
‘‘(III) 5 percent during the sec-
ond plan year following the plan year 
described in subclause (I), and 
‘‘(IV) 6 percent during any sub-
sequent plan year. 
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ccoleman on PROD1PC71 with BILLS
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‘‘(iv) AUTOMATIC
DEFERRAL
FOR 
CURRENT
EMPLOYEES
NOT
REQUIRED.— 
Clause (i) may be applied without taking 
into account any employee who— 
‘‘(I) was eligible to participate in 
the arrangement (or a predecessor ar-
rangement) immediately before the 
date on which such arrangement be-
comes a qualified automatic contribu-
tion arrangement (determined after 
application of this clause), and 
‘‘(II) had an election in effect on 
such date either to participate in the 
arrangement or to not participate in 
the arrangement. 
‘‘(D) MATCHING
OR
NONELECTIVE
CON-
TRIBUTIONS.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if, under the 
arrangement, the employer— 
‘‘(I) makes matching contribu-
tions on behalf of each employee who 
is not a highly compensated employee 
in an amount equal to the sum of 100 
percent of the elective contributions of 
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ccoleman on PROD1PC71 with BILLS
701 
the employee to the extent that such 
contributions do not exceed 1 percent 
of compensation plus 50 percent of so 
much of such compensation as exceeds 
1 percent but does not exceed 6 per-
cent of compensation, or 
‘‘(II) is required, without regard 
to whether the employee makes an 
elective contribution or employee con-
tribution, to make a contribution to a 
defined contribution plan on behalf of 
each employee who is not a highly 
compensated employee and who is eli-
gible to participate in the arrange-
ment in an amount equal to at least 
3 percent of the employee’s compensa-
tion. 
‘‘(ii) APPLICATION
OF
RULES
FOR 
MATCHING CONTRIBUTIONS.—The rules of 
clauses (ii) and (iii) of paragraph (12)(B) 
shall apply for purposes of clause (i)(I). 
‘‘(iii) WITHDRAWAL AND VESTING RE-
STRICTIONS.—An arrangement shall not be 
treated as meeting the requirements of 
clause (i) unless, with respect to employer 
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ccoleman on PROD1PC71 with BILLS
702 
contributions (including matching con-
tributions) taken into account in deter-
mining whether the requirements of clause 
(i) are met— 
‘‘(I) any employee who has com-
pleted at least 2 years of service 
(within 
the 
meaning 
of 
section 
411(a)) has a nonforfeitable right to 
100 percent of the employee’s accrued 
benefit derived from such employer 
contributions, and 
‘‘(II) the requirements of sub-
paragraph (B) of paragraph (2) are 
met with respect to all such employer 
contributions. 
‘‘(iv) 
APPLICATION
OF
CERTAIN 
OTHER
RULES.—The rules of subpara-
graphs (E)(ii) and (F) of paragraph (12) 
shall apply for purposes of subclauses (I) 
and (II) of clause (i). 
‘‘(E) NOTICE REQUIREMENTS.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if, within a 
reasonable period before each plan year, 
each employee eligible to participate in the 
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ccoleman on PROD1PC71 with BILLS
703 
arrangement for such year receives written 
notice of the employee’s rights and obliga-
tions under the arrangement which— 
‘‘(I) is sufficiently accurate and 
comprehensive to apprise the employee 
of such rights and obligations, and 
‘‘(II) is written in a manner cal-
culated to be understood by the aver-
age employee to whom the arrange-
ment applies. 
‘‘(ii) TIMING AND CONTENT REQUIRE-
MENTS.—A notice shall not be treated as 
meeting the requirements of clause (i) with 
respect to an employee unless— 
‘‘(I) the notice explains the em-
ployee’s right under the arrangement 
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) in the case of an arrange-
ment under which the employee may 
elect among 2 or more investment op-
tions, the notice explains how con-
tributions made under the arrange-
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ccoleman on PROD1PC71 with BILLS
704 
ment will be invested in the absence of 
any investment election by the em-
ployee, and 
‘‘(III) the employee has a reason-
able period of time after receipt of the 
notice described in subclauses (I) and 
(II) and before the first elective con-
tribution is made to make either such 
election.’’. 
(b) MATCHING CONTRIBUTIONS.—Section 401(m) of 
such Code (relating to nondiscrimination test for matching 
contributions and employee contributions) is amended by 
redesignating paragraph (12) as paragraph (13) and by 
inserting after paragraph (11) the following new para-
graph: 
‘‘(12) ALTERNATIVE METHOD FOR AUTOMATIC 
CONTRIBUTION
ARRANGEMENTS.—A defined con-
tribution plan shall be treated as meeting the re-
quirements of paragraph (2) with respect to match-
ing contributions if the plan— 
‘‘(A) is a qualified automatic contribution 
arrangement (as defined in subsection (k)(13)), 
and 
‘‘(B) meets the requirements of paragraph 
(11)(B).’’. 
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ccoleman on PROD1PC71 with BILLS
705 
(c) EXCLUSION FROM DEFINITION OF TOP-HEAVY 
PLANS.— 
(1) ELECTIVE
CONTRIBUTION
RULE.—Clause 
(i) of section 416(g)(4)(H) of such Code is amended 
by 
inserting 
‘‘or 
401(k)(13)’’ 
after 
‘‘section 
401(k)(12)’’. 
(2) MATCHING
CONTRIBUTION
RULE.—Clause 
(ii) of section 416(g)(4)(H) of such Code is amended 
by 
inserting 
‘‘or 
401(m)(12)’’ 
after 
‘‘section 
401(m)(11)’’. 
(d) TREATMENT OF WITHDRAWALS OF CONTRIBU-
TIONS DURING FIRST 90 DAYS.— 
(1) IN GENERAL.—Section 414 of the Internal 
Revenue Code of 1986 is amended by adding at the 
end the following new subsection: 
‘‘(w) SPECIAL RULES FOR CERTAIN WITHDRAWALS 
FROM ELIGIBLE AUTOMATIC CONTRIBUTION ARRANGE-
MENTS.— 
‘‘(1) IN
GENERAL.—If an eligible automatic 
contribution arrangement allows an employee to 
elect to make permissible withdrawals— 
‘‘(A) the amount of any such withdrawal 
shall be includible in the gross income of the 
employee for the taxable year of the employee 
in which the distribution is made, 
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ccoleman on PROD1PC71 with BILLS
706 
‘‘(B) no tax shall be imposed under section 
72(t) with respect to the distribution, and 
‘‘(C) the arrangement shall not be treated 
as violating any restriction on distributions 
under this title solely by reason of allowing the 
withdrawal. 
In the case of any distribution to an employee by 
reason of an election under this paragraph, employer 
matching contributions shall be forfeited or subject 
to such other treatment as the Secretary may pre-
scribe. 
‘‘(2) PERMISSIBLE
WITHDRAWAL.—For pur-
poses of this subsection— 
‘‘(A) IN GENERAL.—The term ‘permissible 
withdrawal’ means any withdrawal from an eli-
gible automatic contribution arrangement meet-
ing the requirements of this paragraph which— 
‘‘(i) is made pursuant to an election 
by an employee, and 
‘‘(ii) consists of elective contributions 
described in paragraph (3)(B) (and earn-
ings attributable thereto). 
‘‘(B) TIME FOR MAKING ELECTION.—Sub-
paragraph (A) shall not apply to an election by 
an employee unless the election is made no later 
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ccoleman on PROD1PC71 with BILLS
707 
than the date which is 90 days after the date 
of the first elective contribution with respect to 
the employee under the arrangement. 
‘‘(C) AMOUNT
OF
DISTRIBUTION.—Sub-
paragraph (A) shall not apply to any election by 
an employee unless the amount of any distribu-
tion by reason of the election is equal to the 
amount of elective contributions made with re-
spect to the first payroll period to which the eli-
gible automatic contribution arrangement ap-
plies to the employee and any succeeding pay-
roll period beginning before the effective date of 
the election (and earnings attributable thereto). 
‘‘(3) ELIGIBLE AUTOMATIC CONTRIBUTION AR-
RANGEMENT.—For purposes of this subsection, the 
term ‘eligible automatic contribution arrangement’ 
means an arrangement under an applicable employer 
plan— 
‘‘(A) under which a participant may elect 
to have the employer make payments as con-
tributions under the plan on behalf of the par-
ticipant, or to the participant directly in cash, 
‘‘(B) under which the participant is treated 
as having elected to have the employer make 
such contributions in an amount equal to a uni-
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ccoleman on PROD1PC71 with BILLS
708 
form percentage of compensation provided 
under the plan until the participant specifically 
elects not to have such contributions made (or 
specifically elects to have such contributions 
made at a different percentage), 
‘‘(C) under which, in the absence of an in-
vestment election by the participant, contribu-
tions described in subparagraph (B) are in-
vested in accordance with regulations prescribed 
by the Secretary of Labor under section 
404(c)(5) of the Employee Retirement Income 
Security Act of 1974, and 
‘‘(D) which meets the requirements of 
paragraph (4). 
‘‘(4) NOTICE REQUIREMENTS.— 
‘‘(A) IN GENERAL.—The administrator of 
a plan containing an arrangement described in 
paragraph (3) shall, within a reasonable period 
before each plan year, give to each employee to 
whom an arrangement described in paragraph 
(3) applies for such plan year notice of the em-
ployee’s rights and obligations under the ar-
rangement which— 
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‘‘(i) is sufficiently accurate and com-
prehensive to apprise the employee of such 
rights and obligations, and 
‘‘(ii) is written in a manner calculated 
to be understood by the average employee 
to whom the arrangement applies. 
‘‘(B) TIME AND FORM OF NOTICE.—A no-
tice shall not be treated as meeting the require-
ments of subparagraph (A) with respect to an 
employee unless— 
‘‘(i) the notice includes an explanation 
of the employee’s right under the arrange-
ment 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 employee has a reasonable 
period of time after receipt of the notice 
described in clause (i) and before the first 
elective contribution is made to make such 
election, and 
‘‘(iii) the notice explains how contribu-
tions made under the arrangement will be 
invested in the absence of any investment 
election by the employee. 
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‘‘(5) APPLICABLE EMPLOYER PLAN.—For pur-
poses of this subsection, the term ‘applicable em-
ployer plan’ means— 
‘‘(A) an employees’ trust described in sec-
tion 401(a) which is exempt from tax under 
section 501(a), 
‘‘(B) a plan under which amounts are con-
tributed by an individual’s employer for an an-
nuity contract described in section 403(b), and 
‘‘(C) an eligible deferred compensation 
plan described in section 457(b) which is main-
tained by an eligible employer described in sec-
tion 457(e)(1)(A). 
‘‘(6) SPECIAL RULE.—A withdrawal described 
in paragraph (1) (subject to the limitation of para-
graph (2)(C)) shall not be taken into account for 
purposes of section 401(k)(3).’’. 
(2) VESTING CONFORMING AMENDMENTS.— 
(A) Section 411(a)(3)(G) of such Code is 
amended by inserting ‘‘an erroneous automatic 
contribution under section 414(w),’’ after 
‘‘402(g)(2)(A),’’. 
(B) The heading of section 411(a)(3)(G) of 
such Code is amended by inserting ‘‘OR ERRO-
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NEOUS AUTOMATIC CONTRIBUTION’’ before 
the period. 
(C) Section 401(k)(8)(E) of such Code is 
amended by inserting ‘‘an erroneous automatic 
contribution under section 414(w),’’ after 
‘‘402(g)(2)(A),’’. 
(D) The heading of section 401(k)(8)(E) 
of such Code is amended by inserting ‘‘OR ER-
RONEOUS AUTOMATIC CONTRIBUTION’’ be-
fore the period. 
(E) Section 203(a)(3)(F) of the Employee 
Retirement Income Security Act of 1974 (29 
U.S.C. 1053(a)(3)(F)) is amended by inserting 
‘‘an erroneous automatic contribution under 
section 
414(w) 
of 
such 
Code,’’ 
after 
‘‘402(g)(2)(A) of such Code,’’. 
(e) EXCESS CONTRIBUTIONS.— 
(1) EXPANSION OF CORRECTIVE DISTRIBUTION 
PERIOD FOR AUTOMATIC CONTRIBUTION ARRANGE-
MENTS.—Subsection (f) of section 4979 of the Inter-
nal Revenue Code of 1986 is amended— 
(A) by inserting ‘‘(6 months in the case of 
an excess contribution or excess aggregate con-
tribution to an eligible automatic contribution 
arrangement 
(as 
defined 
in 
section 
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414(w)(3)))’’ after ‘‘21⁄2 months’’ in paragraph 
(1), and 
(B) by striking ‘‘21⁄2 MONTHS OF’’ in the 
heading and inserting ‘‘SPECIFIED
PERIOD 
AFTER’’. 
(2) YEAR
OF
INCLUSION.—Paragraph (2) of 
section 4979(f) of such Code is amended to read as 
follows: 
‘‘(2) YEAR OF INCLUSION.—Any amount dis-
tributed as provided in paragraph (1) shall be treat-
ed as earned and received by the recipient in the re-
cipient’s taxable year in which such distributions 
were made.’’. 
(3) SIMPLIFICATION
OF
ALLOCABLE
EARN-
INGS.— 
(A) SECTION 4979.—Paragraph (1) of sec-
tion 4979(f) of such Code is amended by adding 
‘‘through the end of the plan year for which the 
contribution was made’’ after ‘‘thereto’’. 
(B) SECTION 401(k) AND 401(M).— 
(i) Clause (i) of section 401(k)(8)(A) 
of such Code is amended by adding 
‘‘through the end of such year’’ after 
‘‘such contributions’’. 
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(ii) Subparagraph (A) of section 
401(m)(6) of such Code is amended by 
adding ‘‘through the end of such year’’ 
after ‘‘to such contributions’’. 
(f) PREEMPTION OF CONFLICTING STATE REGULA-
TION.— 
(1) IN GENERAL.—Section 514 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 
1144) is amended by adding at the end the following 
new subsection: 
‘‘(e)(1) Notwithstanding any other provision of this 
section, this title shall supersede any law of a State which 
would directly or indirectly prohibit or restrict the inclu-
sion in any plan of an automatic contribution arrange-
ment. The Secretary may prescribe regulations which 
would establish minimum standards that such an arrange-
ment would be required to satisfy in order for this sub-
section to apply in the case of such arrangement. 
‘‘(2) For purposes of this subsection, the term ‘auto-
matic contribution arrangement’ means an arrange-
ment—— 
‘‘(A) under which a participant may elect to 
have the plan sponsor make payments as contribu-
tions under the plan on behalf of the participant, or 
to the participant directly in cash, 
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‘‘(B) under which a participant is treated as 
having elected to have the plan sponsor make such 
contributions in an amount equal to a uniform per-
centage of compensation provided under the plan 
until the participant specifically elects not to have 
such contributions made (or specifically elects to 
have such contributions made at a different percent-
age), and 
‘‘(C) under which such contributions are in-
vested in accordance with regulations prescribed by 
the Secretary under section 404(c)(5). 
‘‘(3)(A) The plan administrator of an automatic con-
tribution arrangement shall, within a reasonable period 
before such plan year, provide to each participant to whom 
the arrangement applies for such plan year notice of the 
participant’s rights and obligations under the arrange-
ment which— 
‘‘(i) is sufficiently accurate and comprehensive 
to apprise the participant of such rights and obliga-
tions, and 
‘‘(ii) is written in a manner calculated to be un-
derstood by the average participant to whom the ar-
rangement applies. 
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‘‘(B) A notice shall not be treated as meeting the re-
quirements of subparagraph (A) with respect to a partici-
pant unless— 
‘‘(i) the notice includes an explanation of the 
participant’s right under the arrangement not to 
have elective contributions made on the participant’s 
behalf (or to elect to have such contributions made 
at a different percentage), 
‘‘(ii) the participant has a reasonable period of 
time, after receipt of the notice described in clause 
(i) and before the first elective contribution is made, 
to make such election, and 
‘‘(iii) the notice explains how contributions 
made under the arrangement will be invested in the 
absence of any investment election by the partici-
pant.’’. 
(2) ENFORCEMENT.—Section 502(c)(4) of such 
Act (29 U.S.C. 1132(c)(4)) is amended by striking 
‘‘or section 302(b)(7)(F)(vi)’’ inserting ‘‘, section 
302(b)(7)(F)(vi), or section 514(e)(3)’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2007, except that the amendments made by 
subsection (f) shall take effect on the date of the enact-
ment of this Act. 
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SEC. 903. TREATMENT OF ELIGIBLE COMBINED DEFINED 
BENEFIT PLANS AND QUALIFIED CASH OR 
DEFERRED ARRANGEMENTS. 
(a) AMENDMENTS OF INTERNAL REVENUE CODE.— 
Section 414 of the Internal Revenue Code of 1986, as 
amended by this Act, is amended by adding at the end 
the following new subsection: 
‘‘(x) SPECIAL RULES FOR ELIGIBLE COMBINED DE-
FINED BENEFIT PLANS AND QUALIFIED CASH OR DE-
FERRED ARRANGEMENTS.— 
‘‘(1) GENERAL RULE.—Except as provided in 
this subsection, the requirements of this title shall 
be applied to any defined benefit plan or applicable 
defined contribution plan which are part of an eligi-
ble combined plan in the same manner as if each 
such plan were not a part of the eligible combined 
plan. 
‘‘(2) ELIGIBLE
COMBINED
PLAN.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
combined plan’ means a plan— 
‘‘(i) which is maintained by an em-
ployer which, at the time the plan is estab-
lished, is a small employer, 
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‘‘(ii) which consists of a defined ben-
efit plan and an applicable defined con-
tribution plan, 
‘‘(iii) the assets of which are held in 
a single trust forming part of the plan and 
are clearly identified and allocated to the 
defined benefit plan and the applicable de-
fined contribution plan to the extent nec-
essary for the separate application of this 
title under paragraph (1), and 
‘‘(iv) with respect to which the ben-
efit, 
contribution, 
vesting, 
and 
non-
discrimination requirements of subpara-
graphs (B), (C), (D), (E), and (F) are 
met. 
For purposes of this subparagraph, the term 
‘small employer’ has the meaning given such 
term by section 4980D(d)(2), except that such 
section shall be applied by substituting ‘500’ for 
‘50’ each place it appears. 
‘‘(B) BENEFIT REQUIREMENTS.— 
‘‘(i) IN
GENERAL.—The benefit re-
quirements of this subparagraph are met 
with respect to the defined benefit plan 
forming part of the eligible combined plan 
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if the accrued benefit of each participant 
derived from employer contributions, when 
expressed as an annual retirement benefit, 
is not less than the applicable percentage 
of the participant’s final average pay. For 
purposes of this clause, final average pay 
shall be determined using the period of 
consecutive years (not exceeding 5) during 
which the participant had the greatest ag-
gregate compensation from the employer. 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of clause (i), the applicable per-
centage is the lesser of— 
‘‘(I) 1 percent multiplied by the 
number of years of service with the 
employer, or 
‘‘(II) 20 percent. 
‘‘(iii) SPECIAL RULE FOR APPLICABLE 
DEFINED BENEFIT PLANS.—If the defined 
benefit plan under clause (i) is an applica-
ble defined benefit plan as defined in sec-
tion 411(a)(13)(B) which meets the inter-
est 
credit 
requirements 
of 
section 
411(b)(5)(B)(i), the plan shall be treated 
as meeting the requirements of clause (i) 
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with respect to any plan year if each par-
ticipant receives a pay credit for the year 
which is not less than the percentage of 
compensation determined in accordance 
with the following table: 
‘‘If the participant’s age as of the 
beginning of the year is— 
The percentage is— 
30 or less ............................................................................................
Over 30 but less than 40 ...................................................................
40 or over but less than 50 ...............................................................
50 or over ...........................................................................................
8. 
‘‘(iv) YEARS OF SERVICE.—For pur-
poses of this subparagraph, years of serv-
ice shall be determined under the rules of 
paragraphs (4), (5), and (6) of section 
411(a), except that the plan may not dis-
regard any year of service because of a 
participant making, or failing to make, any 
elective deferral with respect to the quali-
fied cash or deferred arrangement to which 
subparagraph (C) applies. 
‘‘(C) CONTRIBUTION REQUIREMENTS.— 
‘‘(i) IN GENERAL.—The contribution 
requirements of this subparagraph with re-
spect to any applicable defined contribu-
tion plan forming part of an eligible com-
bined plan are met if— 
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‘‘(I) the qualified cash or de-
ferred arrangement included in such 
plan constitutes an automatic con-
tribution arrangement, and 
‘‘(II) the employer is required to 
make matching contributions on be-
half of each employee eligible to par-
ticipate in the arrangement in an 
amount equal to 50 percent of the 
elective contributions of the employee 
to the extent such elective contribu-
tions do not exceed 4 percent of com-
pensation. 
Rules similar to the rules of clauses (ii) 
and (iii) of section 401(k)(12)(B) shall 
apply for purposes of this clause. 
‘‘(ii) 
NONELECTIVE
CONTRIBU-
TIONS.—An applicable defined contribution 
plan shall not be treated as failing to meet 
the requirements of clause (i) because the 
employer makes nonelective contributions 
under the plan but such contributions shall 
not be taken into account in determining 
whether the requirements of clause (i)(II) 
are met. 
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‘‘(D) VESTING REQUIREMENTS.—The vest-
ing requirements of this subparagraph are met 
if— 
‘‘(i) in the case of a defined benefit 
plan forming part of an eligible combined 
plan an employee who has completed at 
least 3 years of service has a nonforfeitable 
right to 100 percent of the employee’s ac-
crued benefit under the plan derived from 
employer contributions, and 
‘‘(ii) in the case of an applicable de-
fined contribution plan forming part of eli-
gible combined plan— 
‘‘(I) an employee has a non-
forfeitable right to any matching con-
tribution made under the qualified 
cash or deferred arrangement included 
in such plan by an employer with re-
spect to any elective contribution, in-
cluding matching contributions in ex-
cess of the contributions required 
under subparagraph (C)(i)(II), and 
‘‘(II) an employee who has com-
pleted at least 3 years of service has 
a nonforfeitable right to 100 percent 
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of the employee’s accrued benefit de-
rived under the arrangement from 
nonelective contributions of the em-
ployer. 
For purposes of this subparagraph, the 
rules of section 411 shall apply to the ex-
tent not inconsistent with this subpara-
graph. 
‘‘(E) UNIFORM PROVISION OF CONTRIBU-
TIONS AND BENEFITS.—In the case of a defined 
benefit plan or applicable defined contribution 
plan forming part of an eligible combined plan, 
the requirements of this subparagraph are met 
if all contributions and benefits under each 
such plan, and all rights and features under 
each such plan, must be provided uniformly to 
all participants. 
‘‘(F) REQUIREMENTS MUST BE MET WITH-
OUT TAKING INTO ACCOUNT SOCIAL SECURITY 
AND SIMILAR CONTRIBUTIONS AND BENEFITS 
OR OTHER PLANS.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if the re-
quirements of clauses (ii) and (iii) are met. 
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‘‘(ii) SOCIAL SECURITY AND SIMILAR 
CONTRIBUTIONS.—The 
requirements 
of 
this clause are met if— 
‘‘(I) the requirements of subpara-
graphs (B) and (C) are met without 
regard to section 401(l), and 
‘‘(II) the requirements of sections 
401(a)(4) and 410(b) are met with re-
spect to both the applicable defined 
contribution plan and defined benefit 
plan forming part of an eligible com-
bined plan without regard to section 
401(l). 
‘‘(iii) OTHER
PLANS
AND
ARRANGE-
MENTS.—The requirements of this clause 
are met if the applicable defined contribu-
tion plan and defined benefit plan forming 
part of an eligible combined plan meet the 
requirements of sections 401(a)(4) and 
410(b) without being combined with any 
other plan. 
‘‘(3) NONDISCRIMINATION REQUIREMENTS FOR 
QUALIFIED CASH OR DEFERRED ARRANGEMENT.— 
‘‘(A) IN
GENERAL.—A qualified cash or 
deferred arrangement which is included in an 
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applicable defined contribution plan forming 
part of an eligible combined plan shall be treat-
ed as meeting the requirements of section 
401(k)(3)(A)(ii) if the requirements of para-
graph (2)(C) are met with respect to such ar-
rangement. 
‘‘(B) MATCHING CONTRIBUTIONS.—In ap-
plying section 401(m)(11) to any matching con-
tribution with respect to a contribution to which 
paragraph (2)(C) applies, the contribution re-
quirement of paragraph (2)(C) and the notice 
requirements of paragraph (5)(B) shall be sub-
stituted for the requirements otherwise applica-
ble under clauses (i) and (ii) of section 
401(m)(11)(A). 
‘‘(4) SATISFACTION OF TOP-HEAVY RULES.—A 
defined benefit plan and applicable defined contribu-
tion plan forming part of an eligible combined plan 
for any plan year shall be treated as meeting the re-
quirements of section 416 for the plan year. 
‘‘(5) AUTOMATIC
CONTRIBUTION
ARRANGE-
MENT.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—A qualified cash or 
deferred arrangement shall be treated as an 
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automatic contribution arrangement if the ar-
rangement— 
‘‘(i) provides that each employee eligi-
ble to participate in the arrangement is 
treated as having elected to have the em-
ployer make elective contributions in an 
amount equal to 4 percent of the employ-
ee’s compensation unless the employee spe-
cifically elects not to have such contribu-
tions made or to have such contributions 
made at a different rate, and 
‘‘(ii) meets the notice requirements 
under subparagraph (B). 
‘‘(B) NOTICE REQUIREMENTS.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if the re-
quirements of clauses (ii) and (iii) are met. 
‘‘(ii) REASONABLE PERIOD TO MAKE 
ELECTION.—The 
requirements 
of 
this 
clause are met if each employee to whom 
subparagraph (A)(i) applies— 
‘‘(I) receives a notice explaining 
the employee’s right under the ar-
rangement to elect not to have elective 
contributions made on the employee’s 
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behalf or to have the contributions 
made at a different rate, and 
‘‘(II) has a reasonable period of 
time after receipt of such notice and 
before the first elective contribution is 
made to make such election. 
‘‘(iii) ANNUAL
NOTICE
OF
RIGHTS 
AND OBLIGATIONS.—The requirements of 
this clause are met if each employee eligi-
ble to participate in the arrangement is, 
within a reasonable period before any year, 
given notice of the employee’s rights and 
obligations under the arrangement. 
The requirements of clauses (i) and (ii) of sec-
tion 401(k)(12)(D) shall be met with respect to 
the notices described in clauses (ii) and (iii) of 
this subparagraph. 
‘‘(6) COORDINATION
WITH
OTHER
REQUIRE-
MENTS.— 
‘‘(A) TREATMENT OF SEPARATE PLANS.— 
Section 414(k) shall not apply to an eligible 
combined plan. 
‘‘(B) REPORTING.—An eligible combined 
plan shall be treated as a single plan for pur-
poses of sections 6058 and 6059. 
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‘‘(7) APPLICABLE
DEFINED
CONTRIBUTION 
PLAN.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘applicable 
defined contribution plan’ means a defined con-
tribution plan which includes a qualified cash or 
deferred arrangement. 
‘‘(B) QUALIFIED CASH OR DEFERRED AR-
RANGEMENT.—The term ‘qualified cash or de-
ferred arrangement’ has the meaning given 
such term by section 401(k)(2).’’. 
(b) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
(1) IN GENERAL.—Section 210 of the Employee 
Retirement Income Security Act of 1974 is amended 
by adding at the end the following new subsection: 
‘‘(e) SPECIAL RULES FOR ELIGIBLE COMBINED DE-
FINED BENEFIT PLANS AND QUALIFIED CASH OR DE-
FERRED ARRANGEMENTS.— 
‘‘(1) GENERAL RULE.—Except as provided in 
this subsection, this Act shall be applied to any de-
fined benefit plan or applicable individual account 
plan which are part of an eligible combined plan in 
the same manner as if each such plan were not a 
part of the eligible combined plan. 
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‘‘(2) ELIGIBLE
COMBINED
PLAN.—For pur-
poses of this subsection— 
‘‘(A) IN
GENERAL.—The term ‘eligible 
combined plan’ means a plan— 
‘‘(i) which is maintained by an em-
ployer which, at the time the plan is estab-
lished, is a small employer, 
‘‘(ii) which consists of a defined ben-
efit plan and an applicable individual ac-
count plan each of which qualifies under 
section 401(a) of the Internal Revenue 
Code of 1986, 
‘‘(iii) the assets of which are held in 
a single trust forming part of the plan and 
are clearly identified and allocated to the 
defined benefit plan and the applicable in-
dividual account plan to the extent nec-
essary for the separate application of this 
Act under paragraph (1), and 
‘‘(iv) with respect to which the ben-
efit, 
contribution, 
vesting, 
and 
non-
discrimination requirements of subpara-
graphs (B), (C), (D), (E), and (F) are 
met. 
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For purposes of this subparagraph, the term 
‘small employer’ has the meaning given such 
term by section 4980D(d)(2) of the Internal 
Revenue Code of 1986, except that such section 
shall be applied by substituting ‘500’ for ‘50’ 
each place it appears. 
‘‘(B) BENEFIT REQUIREMENTS.— 
‘‘(i) IN
GENERAL.—The benefit re-
quirements of this subparagraph are met 
with respect to the defined benefit plan 
forming part of the eligible combined plan 
if the accrued benefit of each participant 
derived from employer contributions, when 
expressed as an annual retirement benefit, 
is not less than the applicable percentage 
of the participant’s final average pay. For 
purposes of this clause, final average pay 
shall be determined using the period of 
consecutive years (not exceeding 5) during 
which the participant had the greatest ag-
gregate compensation from the employer. 
‘‘(ii) APPLICABLE PERCENTAGE.—For 
purposes of clause (i), the applicable per-
centage is the lesser of— 
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‘‘(I) 1 percent multiplied by the 
number of years of service with the 
employer, or 
‘‘(II) 20 percent. 
‘‘(iii) SPECIAL RULE FOR APPLICABLE 
DEFINED BENEFIT PLANS.—If the defined 
benefit plan under clause (i) is an applica-
ble defined benefit plan as defined in sec-
tion 203(f)(3)(B) which meets the interest 
credit 
requirements 
of 
section 
204(b)(5)(B)(i), the plan shall be treated 
as meeting the requirements of clause (i) 
with respect to any plan year if each par-
ticipant receives pay credit for the year 
which is not less than the percentage of 
compensation determined in accordance 
with the following table: 
‘‘If the participant’s age as of the 
beginning of the year is— 
The percentage is— 
30 or less ............................................................................................
Over 30 but less than 40 ...................................................................
40 or over but less than 50 ...............................................................
50 or over ...........................................................................................
8. 
‘‘(iv) YEARS OF SERVICE.—For pur-
poses of this subparagraph, years of serv-
ice shall be determined under the rules of 
paragraphs (1), (2), and (3) of section 
203(b), except that the plan may not dis-
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ccoleman on PROD1PC71 with BILLS
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regard any year of service because of a 
participant making, or failing to make, any 
elective deferral with respect to the quali-
fied cash or deferred arrangement to which 
subparagraph (C) applies. 
‘‘(C) CONTRIBUTION REQUIREMENTS.— 
‘‘(i) IN GENERAL.—The contribution 
requirements of this subparagraph with re-
spect to any applicable individual account 
plan forming part of an eligible combined 
plan are met if— 
‘‘(I) the qualified cash or de-
ferred arrangement included in such 
plan constitutes an automatic con-
tribution arrangement, and 
‘‘(II) the employer is required to 
make matching contributions on be-
half of each employee eligible to par-
ticipate in the arrangement in an 
amount equal to 50 percent of the 
elective contributions of the employee 
to the extent such elective contribu-
tions do not exceed 4 percent of com-
pensation. 
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ccoleman on PROD1PC71 with BILLS
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Rules similar to the rules of clauses (ii) 
and (iii) of section 401(k)(12)(B) of the 
Internal Revenue Code of 1986 shall apply 
for purposes of this clause. 
‘‘(ii) 
NONELECTIVE
CONTRIBU-
TIONS.—An applicable individual account 
plan shall not be treated as failing to meet 
the requirements of clause (i) because the 
employer makes nonelective contributions 
under the plan but such contributions shall 
not be taken into account in determining 
whether the requirements of clause (i)(II) 
are met. 
‘‘(D) VESTING REQUIREMENTS.—The vest-
ing requirements of this subparagraph are met 
if— 
‘‘(i) in the case of a defined benefit 
plan forming part of an eligible combined 
plan an employee who has completed at 
least 3 years of service has a nonforfeitable 
right to 100 percent of the employee’s ac-
crued benefit under the plan derived from 
employer contributions, and 
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ccoleman on PROD1PC71 with BILLS
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‘‘(ii) in the case of an applicable indi-
vidual account plan forming part of eligible 
combined plan— 
‘‘(I) an employee has a non-
forfeitable right to any matching con-
tribution made under the qualified 
cash or deferred arrangement included 
in such plan by an employer with re-
spect to any elective contribution, in-
cluding matching contributions in ex-
cess of the contributions required 
under subparagraph (C)(i)(II), and 
‘‘(II) an employee who has com-
pleted at least 3 years of service has 
a nonforfeitable right to 100 percent 
of the employee’s accrued benefit de-
rived under the arrangement from 
nonelective contributions of the em-
ployer. 
For purposes of this subparagraph, the 
rules of section 203 shall apply to the ex-
tent not inconsistent with this subpara-
graph. 
‘‘(E) UNIFORM PROVISION OF CONTRIBU-
TIONS AND BENEFITS.—In the case of a defined 
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ccoleman on PROD1PC71 with BILLS
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benefit plan or applicable individual account 
plan forming part of an eligible combined plan, 
the requirements of this subparagraph are met 
if all contributions and benefits under each 
such plan, and all rights and features under 
each such plan, must be provided uniformly to 
all participants. 
‘‘(F) REQUIREMENTS MUST BE MET WITH-
OUT TAKING INTO ACCOUNT SOCIAL SECURITY 
AND SIMILAR CONTRIBUTIONS AND BENEFITS 
OR OTHER PLANS.— 
‘‘(i) IN GENERAL.—The requirements 
of this subparagraph are met if the re-
quirements of clauses (ii) and (iii) are met. 
‘‘(ii) SOCIAL SECURITY AND SIMILAR 
CONTRIBUTIONS.—The 
requirements 
of 
this clause are met if— 
‘‘(I) the requirements of subpara-
graphs (B) and (C) are met without 
regard to section 401(l) of the Inter-
nal Revenue Code of 1986, and 
‘‘(II) the requirements of sections 
401(a)(4) and 410(b) of the Internal 
Revenue Code of 1986 are met with 
respect to both the applicable defined 
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ccoleman on PROD1PC71 with BILLS
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contribution plan and defined benefit 
plan forming part of an eligible com-
bined plan without regard to section 
401(l) of the Internal Revenue Code 
of 1986. 
‘‘(iii) OTHER
PLANS
AND
ARRANGE-
MENTS.—The requirements of this clause 
are met if the applicable defined contribu-
tion plan and defined benefit plan forming 
part of an eligible combined plan meet the 
requirements of sections 401(a)(4) and 
410(b) of the Internal Revenue Code of 
1986 without being combined with any 
other plan. 
‘‘(3) NONDISCRIMINATION REQUIREMENTS FOR 
QUALIFIED CASH OR DEFERRED ARRANGEMENT.— 
‘‘(A) IN
GENERAL.—A qualified cash or 
deferred arrangement which is included in an 
applicable individual account plan forming part 
of an eligible combined plan shall be treated as 
meeting 
the 
requirements 
of 
section 
401(k)(3)(A)(ii) of the Internal Revenue Code 
of 1986 if the requirements of paragraph (2) 
are met with respect to such arrangement. 
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