739 
such term by section 401(k)(2) of the Internal 
Revenue Code of 1986.’’. 
(2) CONFORMING CHANGES.— 
(A) The heading for section 210 of such 
Act is amended to read as follows: 
‘‘SEC. 210. MULTIPLE EMPLOYER PLANS AND OTHER SPE-
CIAL RULES.’’. 
(B) The table of contents in section 1 of 
such Act is amended by striking the item relat-
ing to section 210 and inserting the following 
new item: 
‘‘Sec. 210. Multiple employer plans and other special rules.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2009. 
SEC. 904. FASTER VESTING OF EMPLOYER NONELECTIVE 
CONTRIBUTIONS. 
(a) AMENDMENTS
TO
THE INTERNAL REVENUE 
CODE OF 1986.— 
(1) IN
GENERAL.—Paragraph (2) of section 
411(a) of the Internal Revenue Code of 1986 (relat-
ing to employer contributions) is amended to read as 
follows: 
‘‘(2) EMPLOYER CONTRIBUTIONS.— 
‘‘(A) DEFINED BENEFIT PLANS.— 
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‘‘(i) IN GENERAL.—In the case of a 
defined benefit plan, a plan satisfies the 
requirements of this paragraph if it satis-
fies the requirements of clause (ii) or (iii). 
‘‘(ii) 5-YEAR VESTING.—A plan satis-
fies the requirements of this clause if an 
employee who has completed at least 5 
years of service has a nonforfeitable right 
to 100 percent of the employee’s accrued 
benefit derived from employer contribu-
tions. 
‘‘(iii) 3 TO 7 YEAR VESTING.—A plan 
satisfies the requirements of this clause if 
an employee has a nonforfeitable right to 
a percentage of the employee’s accrued 
benefit derived from employer contribu-
tions determined under the following table: 
The nonforfeitable 
‘‘ Years of service: 
percentage is: 
3 .........................................................................................................
4 .........................................................................................................
5 .........................................................................................................
6 .........................................................................................................
7 or more ...........................................................................................
100. 
‘‘(B) DEFINED CONTRIBUTION PLANS.— 
‘‘(i) IN GENERAL.—In the case of a 
defined contribution plan, a plan satisfies 
the requirements of this paragraph if it 
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satisfies the requirements of clause (ii) or 
(iii). 
‘‘(ii) 3-YEAR VESTING.—A plan satis-
fies the requirements of this clause if an 
employee who has completed at least 3 
years of service has a nonforfeitable right 
to 100 percent of the employee’s accrued 
benefit derived from employer contribu-
tions. 
‘‘(iii) 2 TO 6 YEAR VESTING.—A plan 
satisfies the requirements of this clause if 
an employee has a nonforfeitable right to 
a percentage of the employee’s accrued 
benefit derived from employer contribu-
tions determined under the following table: 
The nonforfeitable 
‘‘ Years of service: 
percentage is: 
2 .........................................................................................................
3 .........................................................................................................
4 .........................................................................................................
5 .........................................................................................................
6 or more ...........................................................................................
100.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
411(a) of such Code (relating to general rule for 
minimum vesting standards) is amended by striking 
paragraph (12). 
(b) AMENDMENTS TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
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(1) IN
GENERAL.—Paragraph (2) of section 
203(a) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1053(a)(2)) is amended to 
read as follows: 
‘‘(2)(A)(i) In the case of a defined benefit plan, 
a plan satisfies the requirements of this paragraph 
if it satisfies the requirements of clause (ii) or (iii). 
‘‘(ii) A plan satisfies the requirements of this 
clause if an employee who has completed at least 5 
years of service has a nonforfeitable right to 100 
percent of the employee’s accrued benefit derived 
from employer contributions. 
‘‘(iii) A plan satisfies the requirements of this 
clause if an employee has a nonforfeitable right to 
a percentage of the employee’s accrued benefit de-
rived from employer contributions determined under 
the following table: 
The nonforfeitable 
‘‘ Years of service: 
percentage is: 
3 .........................................................................................................
4 .........................................................................................................
5 .........................................................................................................
6 .........................................................................................................
7 or more ...........................................................................................
100. 
‘‘(B)(i) In the case of an individual account 
plan, a plan satisfies the requirements of this para-
graph if it satisfies the requirements of clause (ii) or 
(iii). 
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‘‘(ii) A plan satisfies the requirements of this 
clause if an employee who has completed at least 3 
years of service has a nonforfeitable right to 100 
percent of the employee’s accrued benefit derived 
from employer contributions. 
‘‘(iii) A plan satisfies the requirements of this 
clause if an employee has a nonforfeitable right to 
a percentage of the employee’s accrued benefit de-
rived from employer contributions determined under 
the following table: 
The nonforfeitable 
‘‘ Years of service: 
percentage is: 
2 .........................................................................................................
3 .........................................................................................................
4 .........................................................................................................
5 .........................................................................................................
6 or more ...........................................................................................
100.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
203(a) of such Act is amended by striking para-
graph (4). 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—Except as provided in para-
graphs (2) and (4), the amendments made by this 
section shall apply to contributions for plan years 
beginning after December 31, 2006. 
(2) COLLECTIVE BARGAINING AGREEMENTS.— 
In the case of a plan maintained pursuant to one or 
more collective bargaining agreements between em-
ployee representatives and one or more employers 
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ccoleman on PROD1PC71 with BILLS
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ratified before the date of the enactment of this Act, 
the amendments made by this section shall not apply 
to contributions on behalf of employees covered by 
any such agreement for plan years beginning before 
the earlier of— 
(A) the later of— 
(i) the date on which the last of such 
collective bargaining agreements termi-
nates (determined without regard to any 
extension thereof on or after such date of 
the enactment); or 
(ii) January 1, 2007; or 
(B) January 1, 2009. 
(3) SERVICE REQUIRED.—With respect to any 
plan, the amendments made by this section shall not 
apply to any employee before the date that such em-
ployee has 1 hour of service under such plan in any 
plan year to which the amendments made by this 
section apply. 
(4) SPECIAL
RULE
FOR
STOCK
OWNERSHIP 
PLANS.—Notwithstanding paragraph (1) or (2), in 
the case of an employee stock ownership plan (as de-
fined in section 4975(e)(7) of the Internal Revenue 
Code of 1986) which had outstanding on September 
26, 2005, a loan incurred for the purpose of acquir-
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ccoleman on PROD1PC71 with BILLS
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ing qualifying employer securities (as defined in sec-
tion 4975(e)(8) of such Code), the amendments 
made by this section shall not apply to any plan year 
beginning before the earlier of— 
(A) the date on which the loan is fully re-
paid, or 
(B) the date on which the loan was, as of 
September 26, 2005, scheduled to be fully re-
paid. 
SEC. 905. DISTRIBUTIONS DURING WORKING RETIREMENT. 
(a) AMENDMENT TO THE EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Subparagraph (A) of 
section 3(2) of the Employee Retirement Income Security 
Act of 1974 (29 U.S.C. 1002(2)) is amended by adding 
at the end the following new sentence: ‘‘A distribution 
from a plan, fund, or program shall not be treated as 
made in a form other than retirement income or as a dis-
tribution prior to termination of covered employment sole-
ly because such distribution is made to an employee who 
has attained age 62 and who is not separated from em-
ployment at the time of such distribution.’’. 
(b) AMENDMENT TO THE INTERNAL REVENUE CODE 
OF 1986.—Subsection (a) of section 401 of the Internal 
Revenue Code of 1986 (as amended by this Act) is amend-
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ed by inserting after paragraph (35) the following new 
paragraph: 
‘‘(36) DISTRIBUTIONS
DURING
WORKING
RE-
TIREMENT.—A trust forming part of a pension plan 
shall not be treated as failing to constitute a quali-
fied trust under this section solely because the plan 
provides that a distribution may be made from such 
trust to an employee who has attained age 62 and 
who is not separated from employment at the time 
of such distribution.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions in plan years be-
ginning after December 31, 2006. 
SEC. 906. TREATMENT OF CERTAIN PENSION PLANS OF IN-
DIAN TRIBAL GOVERNMENTS. 
(a) DEFINITION OF GOVERNMENT PLAN TO INCLUDE 
CERTAIN PENSION PLANS OF INDIAN TRIBAL GOVERN-
MENTS.— 
(1) AMENDMENT TO INTERNAL REVENUE CODE 
OF 1986.—Section 414(d) of the Internal Revenue 
Code of 1986 (defining governmental plan) is 
amended by adding at the end the following: ‘‘The 
term ‘governmental plan’ includes a plan which is 
established and maintained by an Indian tribal gov-
ernment (as defined in section 7701(a)(40)), a sub-
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division of an Indian tribal government (determined 
in accordance with section 7871(d)), or an agency or 
instrumentality of either, and all of the participants 
of which are employees of such entity substantially 
all of whose services as such an employee are in the 
performance of essential governmental functions but 
not in the performance of commercial activities 
(whether or not an essential government function).’’. 
(2) AMENDMENT TO EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.— 
(A) Section 3(32) of the Employee Retire-
ment Income Security Act of 1974 (29 U.S.C. 
1002(32)) is amended by adding at the end the 
following: ‘‘The term ‘governmental plan’ in-
cludes a plan which is established and main-
tained by an Indian tribal government (as de-
fined in section 7701(a)(40) of the Internal 
Revenue Code of 1986), a subdivision of an In-
dian tribal government (determined in accord-
ance with section 7871(d) of such Code), or an 
agency or instrumentality of either, and all of 
the participants of which are employees of such 
entity substantially all of whose services as such 
an employee are in the performance of essential 
governmental functions but not in the perform-
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ance of commercial activities (whether or not an 
essential government function)’’. 
(B) Section 4021(b)(2) of such Act is 
amended by adding at the end the following: 
‘‘or which is described in the last sentence of 
section 3(32)’’. 
(b) CLARIFICATION THAT TRIBAL GOVERNMENTS 
ARE SUBJECT TO THE SAME PENSION PLAN RULES AND 
REGULATIONS APPLIED TO STATE AND OTHER LOCAL 
GOVERNMENTS
AND
THEIR
POLICE
AND
FIRE-
FIGHTERS.— 
(1) AMENDMENTS
TO
INTERNAL
REVENUE 
CODE OF 1986.— 
(A) POLICE
AND
FIREFIGHTERS.—Sub-
paragraph (H) section 415(b)(2) of the Internal 
Revenue Code of 1986 (defining participant) is 
amended— 
(i) in clause (i), by striking ‘‘State or 
political subdivision’’ and inserting ‘‘State, 
Indian tribal government (as defined in 
section 7701(a)(40)), or any political sub-
division’’; and 
(ii) in clause (ii)(I), by striking ‘‘State 
or political subdivision’’ each place it ap-
pears and inserting ‘‘State, Indian tribal 
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government (as so defined), or any political 
subdivision’’. 
(B) STATE
AND
LOCAL
GOVERNMENT 
PLANS.— 
(i) IN GENERAL.—Subparagraph (A) 
of section 415(b)(10) of such Code (relat-
ing to limitation to equal accrued benefit) 
is amended by inserting ‘‘or a govern-
mental plan described in the last sentence 
of section 414(d) (relating to plans of In-
dian tribal governments),’’ after ‘‘fore-
going,’’. 
(ii) CONFORMING AMENDMENT.—The 
heading of paragraph (1) of section 415(b) 
of such Code is amended by striking ‘‘SPE-
CIAL RULE FOR STATE AND’’ and inserting 
‘‘SPECIAL RULE FOR STATE, INDIAN TRIB-
AL, AND’’. 
(C) GOVERNMENT
PICK
UP
CONTRIBU-
TIONS.—Paragraph (2) of section 414(h) of 
such Code (relating to designation by units of 
government) is amended by inserting ‘‘or a gov-
ernmental plan described in the last sentence of 
section 414(d) (relating to plans of Indian trib-
al governments),’’ after ‘‘foregoing,’’. 
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(2) AMENDMENTS TO EMPLOYEE RETIREMENT 
INCOME SECURITY ACT OF 1974.—Section 4021(b) of 
the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1321(b)) is amended— 
(A) in paragraph (12), by striking ‘‘or’’ at 
the end; 
(B) in paragraph (13), by striking ‘‘plan.’’ 
and inserting ‘‘plan; or’’; and 
(C) by adding at the end the following: 
‘‘(14) established and maintained by an Indian 
tribal government (as defined in section 7701(a)(40) 
of the Internal Revenue Code of 1986), a subdivision 
of an Indian tribal government (determined in ac-
cordance with section 7871(d) of such Code), or an 
agency or instrumentality of either, and all of the 
participants of which are employees of such entity 
substantially all of whose services as such an em-
ployee are in the performance of essential govern-
mental functions but not in the performance of com-
mercial activities (whether or not an essential gov-
ernment function).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to any year beginning on or after 
the date of the enactment of this Act. 
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TITLE 
X—PROVISIONS 
RELAT-
ING TO SPOUSAL PENSION 
PROTECTION 
SEC. 
1001. 
REGULATIONS 
ON 
TIME 
AND 
ORDER 
OF 
ISSUANCE OF DOMESTIC RELATIONS OR-
DERS. 
Not later than 1 year after the date of the enactment 
of this Act, the Secretary of Labor shall issue regulations 
under section 206(d)(3) of the Employee Retirement Secu-
rity Act of 1974 and section 414(p) of the Internal Rev-
enue Code of 1986 which clarify that— 
(1) a domestic relations order otherwise meet-
ing the requirements to be a qualified domestic rela-
tions order, including the requirements of section 
206(d)(3)(D) of such Act and section 414(p)(3) of 
such Code, shall not fail to be treated as a qualified 
domestic relations order solely because— 
(A) the order is issued after, or revises, an-
other domestic relations order or qualified do-
mestic relations order; or 
(B) of the time at which it is issued; and 
(2) any order described in paragraph (1) shall 
be subject to the same requirements and protections 
which apply to qualified domestic relations orders, 
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including the provisions of section 206(d)(3)(H) of 
such Act and section 414(p)(7) of such Code. 
SEC. 1002. ENTITLEMENT OF DIVORCED SPOUSES TO RAIL-
ROAD 
RETIREMENT 
ANNUITIES 
INDE-
PENDENT OF ACTUAL ENTITLEMENT OF EM-
PLOYEE. 
(a) IN GENERAL.—Section 2 of the Railroad Retire-
ment Act of 1974 (45 U.S.C. 231a) is amended— 
(1) in subsection (c)(4)(i), by striking ‘‘(A) is 
entitled to an annuity under subsection (a)(1) and 
(B)’’; and 
(2) in subsection (e)(5), by striking ‘‘or di-
vorced wife’’ the second place it appears. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall take effect 1 year after the date of the 
enactment of this Act. 
SEC. 1003. EXTENSION OF TIER II RAILROAD RETIREMENT 
BENEFITS TO SURVIVING FORMER SPOUSES 
PURSUANT TO DIVORCE AGREEMENTS. 
(a) IN GENERAL.—Section 5 of the Railroad Retire-
ment Act of 1974 (45 U.S.C. 231d) is amended by adding 
at the end the following: 
‘‘(d) Notwithstanding any other provision of law, the 
payment of any portion of an annuity computed under sec-
tion 3(b) to a surviving former spouse in accordance with 
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a court decree of divorce, annulment, or legal separation 
or the terms of any court-approved property settlement 
incident to any such court decree shall not be terminated 
upon the death of the individual who performed the service 
with respect to which such annuity is so computed unless 
such termination is otherwise required by the terms of 
such court decree.’’ 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect 1 year after the date of the 
enactment of this Act. 
SEC. 1004. REQUIREMENT FOR ADDITIONAL SURVIVOR AN-
NUITY OPTION. 
(a) AMENDMENTS TO INTERNAL REVENUE CODE.— 
(1) ELECTION OF SURVIVOR ANNUITY.—Section 
417(a)(1)(A) of the Internal Revenue Code of 1986 
is amended— 
(A) in clause (i), by striking ‘‘, and’’ and 
inserting a comma; 
(B) by redesignating clause (ii) as clause 
(iii); and 
(C) by inserting after clause (i) the fol-
lowing: 
‘‘(ii) if the participant elects a waiver 
under clause (i), may elect the qualified op-
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tional survivor annuity at any time during the 
applicable election period, and’’. 
(2) DEFINITION.—Section 417 of such Code is 
amended by adding at the end the following: 
‘‘(g) DEFINITION
OF QUALIFIED OPTIONAL SUR-
VIVOR ANNUITY.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the term ‘qualified optional survivor annuity’ 
means an annuity— 
‘‘(A) for the life of the participant with a 
survivor annuity for the life of the spouse which 
is equal to the applicable percentage of the 
amount of the annuity which is payable during 
the joint lives of the participant and the spouse, 
and 
‘‘(B) which is the actuarial equivalent of a 
single annuity for the life of the participant. 
Such term also includes any annuity in a form hav-
ing the effect of an annuity described in the pre-
ceding sentence. 
‘‘(2) APPLICABLE PERCENTAGE.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), if the survivor annuity percentage— 
‘‘(i) is less than 75 percent, the appli-
cable percentage is 75 percent, and 
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‘‘(ii) is greater than or equal to 75 
percent, the applicable percentage is 50 
percent. 
‘‘(B) SURVIVOR ANNUITY PERCENTAGE.— 
For purposes of subparagraph (A), the term 
‘survivor annuity percentage’ means the per-
centage which the survivor annuity under the 
plan’s qualified joint and survivor annuity bears 
to the annuity payable during the joint lives of 
the participant and the spouse.’’. 
(3) NOTICE.—Section 417(a)(3)(A)(i) of such 
Code is amended by inserting ‘‘and of the qualified 
optional survivor annuity’’ after ‘‘annuity’’. 
(b) AMENDMENTS TO ERISA.— 
(1) ELECTION OF SURVIVOR ANNUITY.—Section 
205(c)(1)(A) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1055(c)(1)(A)) is 
amended— 
(A) in clause (i), by striking ‘‘, and’’ and 
inserting a comma; 
(B) by redesignating clause (ii) as clause 
(iii); and 
(C) by inserting after clause (i) the fol-
lowing: 
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‘‘(ii) if the participant elects a waiver 
under clause (i), may elect the qualified op-
tional survivor annuity at any time during the 
applicable election period, and’’. 
(2) DEFINITION.—Section 205(d) of such Act 
(29 U.S.C. 1055(d)) is amended— 
(A) by inserting ‘‘(1)’’ after ‘‘(d)’’; 
(B) by redesignating paragraphs (1) and 
(2) as subparagraphs (A) and (B), respectively; 
and 
(C) by adding at the end the following: 
‘‘(2)(A) For purposes of this section, the term ‘quali-
fied optional survivor annuity’ means an annuity— 
‘‘(i) for the life of the participant with a sur-
vivor annuity for the life of the spouse which is 
equal to the applicable percentage of the amount of 
the annuity which is payable during the joint lives 
of the participant and the spouse, and 
‘‘(ii) which is the actuarial equivalent of a sin-
gle annuity for the life of the participant. 
Such term also includes any annuity in a form having the 
effect of an annuity described in the preceding sentence. 
‘‘(B)(i) For purposes of subparagraph (A), if the sur-
vivor annuity percentage— 
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‘‘(I) is less than 75 percent, the applicable per-
centage is 75 percent, and 
‘‘(II) is greater than or equal to 75 percent, the 
applicable percentage is 50 percent. 
‘‘(ii) For purposes of clause (i), the term ‘survivor 
annuity percentage’ means the percentage which the sur-
vivor annuity under the plan’s qualified joint and survivor 
annuity bears to the annuity payable during the joint lives 
of the participant and the spouse.’’. 
(3) NOTICE.—Section 205(c)(3)(A)(i) of such 
Act (29 U.S.C. 1055(c)(3)(A)(i)) is amended by in-
serting ‘‘and of the qualified optional survivor annu-
ity’’ after ‘‘annuity’’. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
this section shall apply to plan years beginning after 
December 31, 2007. 
(2) SPECIAL
RULE
FOR
COLLECTIVELY
BAR-
GAINED PLANS.—In the case of a plan maintained 
pursuant to 1 or more collective bargaining agree-
ments between employee representatives and 1 or 
more employers ratified on or before the date of the 
enactment of this Act, the amendments made by this 
section shall not apply to plan years beginning be-
fore the earlier of— 
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ccoleman on PROD1PC71 with BILLS
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(A) the later of— 
(i) January 1, 2008, or 
(ii) the date on which the last collec-
tive bargaining agreement related to the 
plan terminates (determined without re-
gard to any extension thereof after the 
date of enactment of this Act), or 
(B) January 1, 2009. 
TITLE XI—ADMINISTRATIVE 
PROVISIONS 
SEC. 1101. EMPLOYEE PLANS COMPLIANCE RESOLUTION 
SYSTEM. 
(a) IN GENERAL.—The Secretary of the Treasury 
shall have full authority to establish and implement the 
Employee Plans Compliance Resolution System (or any 
successor program) and any other employee plans correc-
tion policies, including the authority to waive income, ex-
cise, or other taxes to ensure that any tax, penalty, or 
sanction is not excessive and bears a reasonable relation-
ship to the nature, extent, and severity of the failure. 
(b) IMPROVEMENTS.—The Secretary of the Treasury 
shall continue to update and improve the Employee Plans 
Compliance Resolution System (or any successor pro-
gram), giving special attention to— 
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ccoleman on PROD1PC71 with BILLS
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(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 
not excessive and bears a reasonable relationship to 
the nature, extent, and severity of the failure. 
SEC. 1102. NOTICE AND CONSENT PERIOD REGARDING DIS-
TRIBUTIONS. 
(a) EXPANSION OF PERIOD.— 
(1) AMENDMENT
OF
INTERNAL
REVENUE 
CODE.— 
(A) IN GENERAL.—Section 417(a)(6)(A) of 
the Internal Revenue Code of 1986 is amended 
by striking ‘‘90-day’’ and inserting ‘‘180-day’’. 
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(B) MODIFICATION
OF
REGULATIONS.— 
The Secretary of the Treasury shall modify the 
regulations under sections 402(f), 411(a)(11), 
and 417 of the Internal Revenue Code of 1986 
by substituting ‘‘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 relating to sections 203(e) and 205 
of such Act by substituting ‘‘180 days’’ for ‘‘90 
days’’ each place it appears. 
(3) EFFECTIVE DATE.—The amendments and 
modifications made or required by this subsection 
shall apply to years beginning after December 31, 
2006. 
(b) NOTIFICATION OF RIGHT TO DEFER.— 
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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.— 
(A) IN GENERAL.—The modifications re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2006. 
(B) REASONABLE NOTICE.—A plan shall 
not be treated as failing to meet the require-
ments of section 411(a)(11) of such Code or 
section 205 of such Act with respect to any de-
scription of consequences described in para-
graph (1) made within 90 days after the Sec-
retary of the Treasury issues the modifications 
required by paragraph (1) if the plan adminis-
trator makes a reasonable attempt to comply 
with such requirements. 
SEC. 1103. REPORTING SIMPLIFICATION. 
(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR 
OWNERS AND THEIR SPOUSES.— 
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(1) IN GENERAL.—The Secretary of the Treas-
ury shall modify the requirements 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 with respect to which the following re-
quirements are met: 
(A) on the first day of the plan year— 
(i) the plan covered only one indi-
vidual (or the individual and the individ-
ual’s spouse) and the individual owned 100 
percent of the plan sponsor (whether or 
not incorporated), or 
(ii) the plan covered only one or more 
partners (or partners and their spouses) in 
the plan sponsor; 
(B) the plan meets the minimum coverage 
requirements of section 410(b) of the Internal 
Revenue Code of 1986 without being combined 
with any other plan of the business that covers 
the employees of the business; 
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(C) the plan does not provide benefits to 
anyone except the individual (and the individ-
ual’s spouse) or the partners (and their 
spouses); 
(D) the plan does not cover a business that 
is a member of an affiliated service group, a 
controlled group of corporations, or a group of 
businesses under common control; and 
(E) the plan does not cover a business that 
uses the services of leased employees (within 
the meaning of section 414(n) of such Code). 
For purposes of this paragraph, the term ‘‘partner’’ 
includes a 2-percent shareholder (as defined in sec-
tion 1372(b) of such Code) of an S corporation. 
(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. 
(4) EFFECTIVE DATE.—The provisions of this 
subsection shall apply to plan years beginning on or 
after January 1, 2007. 
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR 
PLANS WITH FEWER THAN 25 PARTICIPANTS.—In the 
case of plan years beginning after December 31, 2006, the 
Secretary of the Treasury and the Secretary of Labor shall 
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provide for the filing of a simplified annual return for any 
retirement plan which covers less than 25 participants on 
the first day of a plan year and which meets the require-
ments described in subparagraphs (B), (D), and (E) of 
subsection (a)(2). 
SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE 
AND EMPLOYMENT RETENTION PLANS MAIN-
TAINED BY LOCAL EDUCATIONAL AGENCIES 
AND OTHER ENTITIES. 
(a) VOLUNTARY EARLY RETIREMENT INCENTIVE 
PLANS.— 
(1) TREATMENT AS PLAN PROVIDING SEVER-
ANCE PAY.—Section 457(e)(11) of the Internal Rev-
enue Code of 1986 (relating to certain plans ex-
cluded) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) CERTAIN VOLUNTARY EARLY RETIRE-
MENT INCENTIVE PLANS.— 
‘‘(i) IN
GENERAL.—If an applicable 
voluntary early retirement incentive plan— 
‘‘(I) makes payments or supple-
ments as an early retirement benefit, 
a retirement-type subsidy, or a benefit 
described in the last sentence of sec-
tion 411(a)(9), and 
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765 
‘‘(II) such payments or supple-
ments are made in coordination with 
a defined benefit plan which is de-
scribed in section 401(a) and includes 
a trust exempt from tax under section 
501(a) and which is maintained by an 
eligible employer described in para-
graph (1)(A) or by an education asso-
ciation described in clause (ii)(II), 
such applicable plan shall be treated for 
purposes of subparagraph (A)(i) as a bona 
fide severance pay plan with respect to 
such payments or supplements to the ex-
tent such payments or supplements could 
otherwise have been provided under such 
defined benefit plan (determined as if sec-
tion 411 applied to such defined benefit 
plan). 
‘‘(ii) APPLICABLE VOLUNTARY EARLY 
RETIREMENT INCENTIVE PLAN.—For pur-
poses of this subparagraph, the term ‘ap-
plicable voluntary early retirement incen-
tive plan’ means a voluntary early retire-
ment incentive plan maintained by— 
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‘‘(I) a local educational agency 
(as defined in section 9101 of the Ele-
mentary and Secondary Education 
Act of 1965 (20 U.S.C. 7801)), or 
‘‘(II) an education association 
which principally represents employees 
of 1 or more agencies described in 
subclause (I) and which is described 
in section 501(c) (5) or (6) and ex-
empt from tax under section 501(a).’’ 
(2) AGE
DISCRIMINATION
IN
EMPLOYMENT 
ACT.—Section 4(l)(1) of the Age Discrimination in 
Employment Act of 1967 (29 U.S.C. 623(l)(1)) is 
amended— 
(A) by inserting ‘‘(A)’’ after ‘‘(1)’’, 
(B) by redesignating subparagraphs (A) 
and (B) as clauses (i) and (ii), respectively, 
(C) by redesignating clauses (i) and (ii) of 
subparagraph (B) (as in effect before the 
amendments made by subparagraph (B)) as 
subclauses (I) and (II), respectively, and 
(D) by adding at the end the following: 
‘‘(B) A voluntary early retirement incentive 
plan that— 
‘‘(i) is maintained by— 
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‘‘(I) a local educational agency (as de-
fined in section 9101 of the Elementary 
and Secondary Education Act of 1965 (20 
U.S.C. 7801), or 
‘‘(II) an education association which 
principally represents employees of 1 or 
more agencies described in subclause (I) 
and which is described in section 501(c) 
(5) or (6) of the Internal Revenue Code of 
1986 and exempt from taxation under sec-
tion 501(a) of such Code, and 
‘‘(ii) makes payments or supplements de-
scribed in subclauses (I) and (II) of subpara-
graph (A)(ii) in coordination with a defined 
benefit plan (as so defined) maintained by an 
eligible 
employer 
described 
in 
section 
457(e)(1)(A) of such Code or by an education 
association described in clause (i)(II), 
shall be treated solely for purposes of subparagraph 
(A)(ii) as if it were a part of the defined benefit plan 
with respect to such payments or supplements. Pay-
ments or supplements under such a voluntary early 
retirement incentive plan shall not constitute sever-
ance pay for purposes of paragraph (2).’’. 
(b) EMPLOYMENT RETENTION PLANS.— 
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768 
(1) IN GENERAL.—Section 457(f)(2) of the In-
ternal Revenue Code of 1986 (relating to exceptions) 
is amended by striking ‘‘and’’ at the end of subpara-
graph (D), by striking the period at the end of sub-
paragraph (E) and inserting ‘‘, and’’, and by adding 
at the end the following: 
‘‘(F) that portion of any applicable employ-
ment retention plan described in paragraph (4) 
with respect to any participant.’’ 
(2) DEFINITIONS AND RULES RELATING TO EM-
PLOYMENT RETENTION PLANS.—Section 457(f) of 
such Code is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) EMPLOYMENT
RETENTION
PLANS.—For 
purposes of paragraph (2)(F)— 
‘‘(A) IN GENERAL.—The portion of an ap-
plicable employment retention plan described in 
this paragraph with respect to any participant 
is that portion of the plan which provides bene-
fits payable to the participant not in excess of 
twice the applicable dollar limit determined 
under subsection (e)(15). 
‘‘(B) OTHER RULES.— 
‘‘(i) LIMITATION.—Paragraph (2)(F) 
shall only apply to the portion of the plan 
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described in subparagraph (A) for years 
preceding the year in which such portion is 
paid or otherwise made available to the 
participant. 
‘‘(ii) TREATMENT.—A plan shall not 
be treated for purposes of this title as pro-
viding for the deferral of compensation for 
any year with respect to the portion of the 
plan described in subparagraph (A). 
‘‘(C) APPLICABLE
EMPLOYMENT
RETEN-
TION PLAN.—The term ‘applicable employment 
retention plan’ means an employment retention 
plan maintained by— 
‘‘(i) a local educational agency (as de-
fined in section 9101 of the Elementary 
and Secondary Education Act of 1965 (20 
U.S.C. 7801), or 
‘‘(ii) an education association which 
principally represents employees of 1 or 
more agencies described in clause (i) and 
which is described in section 501(c) (5) or 
(6) and exempt from taxation under sec-
tion 501(a). 
‘‘(D) EMPLOYMENT
RETENTION
PLAN.— 
The term ‘employment retention plan’ means a 
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plan to pay, upon termination of employment, 
compensation to an employee of a local edu-
cational agency or education association de-
scribed in subparagraph (C) for purposes of— 
‘‘(i) retaining the services of the em-
ployee, or 
‘‘(ii) rewarding such employee for the 
employee’s service with 1 or more such 
agencies or associations.’’. 
(c) COORDINATION WITH ERISA.—Section 3(2)(B) 
of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1002(2)(B)) is amended by adding at the end 
the following: ‘‘An applicable voluntary early retirement 
incentive plan (as defined in section 457(e)(11)(D)(ii) of 
the Internal Revenue Code of 1986) making payments or 
supplements described in section 457(e)(11)(D)(i) of such 
Code, and an applicable employment retention plan (as de-
fined in section 457(f)(4)(C) of such Code) making pay-
ments of benefits described in section 457(f)(4)(A) of such 
Code, shall, for purposes of this title, be treated as a wel-
fare plan (and not a pension plan) with respect to such 
payments and supplements.’’ 
(d) EFFECTIVE DATES.— 
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771 
(1) IN GENERAL.—The amendments made by 
this Act shall take effect on the date of the enact-
ment of this Act. 
(2) 
TAX
AMENDMENTS.—The 
amendments 
made by subsections (a)(1) and (b) shall apply to 
taxable years ending after the date of the enactment 
of this Act. 
(3) ERISA AMENDMENTS.—The amendment 
made by subsection (c) shall apply to plan years 
ending after the date of the enactment of this Act. 
(4) CONSTRUCTION.—Nothing in the amend-
ments made by this section shall alter or affect the 
construction of the Internal Revenue Code of 1986, 
the Employee Retirement Income Security Act of 
1974, or the Age Discrimination in Employment Act 
of 1967 as applied to any plan, arrangement, or con-
duct to which such amendments do not apply. 
SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSA-
TION AS A RESULT OF PENSION ROLLOVERS. 
(a) IN GENERAL.—Section 3304(a) of the Internal 
Revenue Code of 1986 (relating to requirements for State 
unemployment laws) is amended by adding at the end the 
following new flush sentence: 
‘‘Compensation shall not be reduced under paragraph (15) 
for any pension, retirement or retired pay, annuity, or 
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similar payment which is not includible in gross income 
of the individual for the taxable year in which paid because 
it was part of a rollover distribution.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to weeks beginning on or after the 
date of the enactment of this Act. 
SEC. 1106. REVOCATION OF ELECTION RELATING TO 
TREATMENT AS MULTIEMPLOYER PLAN. 
(a) AMENDMENT TO ERISA.—Section 3(37) of the 
Employee Retirement Income Security Act of 1974 is 
amended by adding at the end the following new subpara-
graph (G): 
‘‘(G)(i) Within 1 year after the enactment of 
the Pension Protection Act of 2006— 
‘‘(I) an election under subparagraph (E) 
may be revoked, pursuant to procedures pre-
scribed by the Pension Benefit Guaranty Cor-
poration, if, for each of the 3 plan years prior 
to the date of the enactment of that Act, the 
plan would have been a multiemployer plan but 
for the election under subparagraph (E), and 
‘‘(II) a plan that meets the criteria in 
clauses (i) and (ii) of subparagraph (A) of this 
paragraph or that is described in clause (vi) 
may, pursuant to procedures prescribed by the 
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Pension Benefit Guaranty Corporation, elect to 
be a multiemployer plan, if— 
‘‘(aa) for each of the 3 plan years im-
mediately before the date of the enactment 
of the Pension Protection Act of 2006, the 
plan has met those criteria or is so de-
scribed, 
‘‘(bb) substantially all of the plan’s 
employer contributions for each of those 
plan years were made or required to be 
made by organizations that were exempt 
from tax under section 501 of the Internal 
Revenue Code of 1986, and 
‘‘(cc) the plan was established prior to 
September 2, 1974. 
‘‘(ii) An election under this paragraph shall be 
effective for all purposes under this Act and under 
the Internal Revenue Code of 1986, starting with 
the first plan year ending after the date of the en-
actment of the Pension Protection Act of 2006. 
‘‘(iii) Once made, an election under this para-
graph shall be irrevocable, except that a plan de-
scribed in subclause (i)(II) shall cease to be a multi-
employer plan as of the plan year beginning imme-
diately after the first plan year for which the major-
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ity of its employer contributions were made or re-
quired to be made by organizations that were not ex-
empt from tax under section 501 of the Internal 
Revenue Code of 1986. 
‘‘(iv) The fact that a plan makes an election 
under clause (i)(II) does not imply that the plan was 
not a multiemployer plan prior to the date of the 
election or would not be a multiemployer plan with-
out regard to the election. 
‘‘(v)(I) No later than 30 days before an election 
is made under this paragraph, the plan adminis-
trator shall provide notice of the pending election to 
each plan participant and beneficiary, each labor or-
ganization representing such participants or bene-
ficiaries, and each employer that has an obligation 
to contribute to the plan, describing the principal 
differences between the guarantee programs under 
title IV and the benefit restrictions under this title 
for single employer and multiemployer plans, along 
with such other information as the plan adminis-
trator chooses to include. 
‘‘(II) Within 180 days after the date of enact-
ment of the Pension Protection Act of 2006, the 
Secretary shall prescribe a model notice under this 
subparagraph. 
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