I 
115TH CONGRESS 
1ST SESSION H. R. 3499 
To amend the Internal Revenue Code of 1986 to expand personal saving 
and retirement savings coverage by enabling employees not covered by 
qualifying retirement plans to save for retirement through automatic 
IRA arrangements, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 27, 2017 
Mr. NEAL introduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committee on Education and 
the Workforce, for a period to be subsequently determined by the Speak-
er, in each case for consideration of such provisions as fall within the ju-
risdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to expand 
personal saving and retirement savings coverage by ena-
bling employees not covered by qualifying retirement 
plans to save for retirement through automatic IRA ar-
rangements, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; REFERENCE. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Automatic IRA Act of 2017’’. 
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(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
SEC. 2. EMPLOYEES NOT COVERED BY QUALIFYING RE-
TIREMENT PLANS OR ARRANGEMENTS ENTI-
TLED TO PARTICIPATE IN AUTOMATIC IRA 
ARRANGEMENTS. 
(a) IN GENERAL.—Subpart A of part I of subchapter 
D of chapter 1 (relating to pension, profit-sharing, stock 
bonus plans, etc.) is amended by inserting after section 
408A the following new section: 
‘‘SEC. 408B. RIGHT TO AUTOMATIC IRA ARRANGEMENTS AT 
WORK. 
‘‘(a) REQUIREMENT TO PROVIDE AUTOMATIC IRA 
ARRANGEMENT.—Each covered employer shall make 
available to each qualifying employee of the employer for 
the calendar year an automatic IRA arrangement. 
‘‘(b) COVERED EMPLOYER.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection or subsection (c)(2), the 
term ‘covered employer’ means, with respect to any 
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year, an employer which does not maintain a quali-
fying plan or arrangement described in section 
219(g)(5) for the calendar year. 
‘‘(2) EXCLUDED PLANS.—A qualifying plan or 
arrangement shall not be taken into account for pur-
poses of paragraph (1) if— 
‘‘(A) the plan or arrangement is frozen as 
of the first day of the preceding calendar year, 
or 
‘‘(B) in the case of a plan or arrangement 
under which the only contributions are discre-
tionary on the part of the employer or other 
plan sponsor, no employer contribution has 
been made to the plan or arrangement for the 
2-plan-year period ending with the last plan 
year ending in the second preceding calendar 
year and it is not reasonable to assume that an 
employer contribution will be made for the last 
plan year ending in the preceding calendar 
year. 
‘‘(3) EXCEPTION
FOR
CERTAIN
SMALL
AND 
NEW
EMPLOYERS.—The term ‘covered employer’ 
does not include an employer for a calendar year if 
the employer either— 
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‘‘(A) did not employ more than 10 employ-
ees who received at least $5,000 of compensa-
tion (as defined in section 3401(a)) from the 
employer for the preceding calendar year, 
‘‘(B) did not normally employ more than 
10 employees on a typical business day of the 
preceding calendar year, or 
‘‘(C) was not in existence at all times dur-
ing the calendar year and the preceding cal-
endar year. 
‘‘(4) EXCEPTION
FOR
GOVERNMENTS
AND 
CHURCHES.—The term ‘covered employer’ does not 
include— 
‘‘(A) a government or entity described in 
section 414(d), or 
‘‘(B) a church or a convention or associa-
tion of churches which is exempt from tax 
under section 501. 
‘‘(5) AGGREGATION RULE.—All persons treated 
as a single employer under subsection (a) or (b) of 
section 52 or subsection (m) or (o) of section 414 
shall be treated as a single employer. 
‘‘(6) OPERATING RULES.—In determining the 
number of employees for purposes of this section— 
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‘‘(A) rules consistent with any rules appli-
cable in determining the number of employees 
for purposes of section 408(p)(2)(C) and sec-
tion 4980B(d) shall apply, 
‘‘(B) all members of the same family 
(within the meaning of section 318(a)(1)) shall 
be treated as 1 individual, and 
‘‘(C) any reference to an employer shall in-
clude a reference to any predecessor employer. 
‘‘(c) QUALIFYING EMPLOYEE.—For purposes of this 
section— 
‘‘(1) IN GENERAL.—The term ‘qualifying em-
ployee’ means any employee of the employer who is 
not an excluded employee. 
‘‘(2) PLAN SPONSOR’S EMPLOYEES.—If— 
‘‘(A) an employer maintains one or more 
qualifying plans or arrangements described in 
section 219(g)(5), and 
‘‘(B) the employees of a subsidiary, divi-
sion, or other major business unit are generally 
not eligible to participate in any such qualifying 
plan or arrangement, 
then, for purposes of this section, the employer shall 
be treated as a covered employer with respect to 
such employees (other than excluded employees), 
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and such employees (other than excluded employees) 
shall be treated as qualifying employees, but only if 
there are 50 or more ineligible employees of such 
subsidiary, division or other major business unit con-
stituting at least 10 percent of the employees of the 
employer (other than excludable employees). 
‘‘(3) EXCLUDED EMPLOYEES.— 
‘‘(A) IN
GENERAL.—The term ‘excluded 
employee’ means an employee of the employer 
who is an excludable employee and who is in a 
class or category that the employer excludes 
from treatment as qualifying employees. 
‘‘(B) EXCLUDABLE EMPLOYEE.—The term 
‘excludable employee’ means— 
‘‘(i) any employee described in section 
410(b)(3), 
‘‘(ii) any employee who has not at-
tained the age of 18 before the beginning 
of the calendar year, 
‘‘(iii) any employee who has not com-
pleted at least 3 months of service with the 
employer, 
‘‘(iv) in the case of an employer that 
maintains a qualifying plan or arrange-
ment which excludes employees who have 
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not satisfied the minimum age and service 
requirements for participation in the plan, 
any employee who has not satisfied such 
requirements, 
‘‘(v) in the case of an employer that 
maintains a section 403(b) annuity con-
tract (including a custodial account or re-
tirement income account), any employee 
who is permitted to be excluded from any 
salary reduction arrangement under the 
contract pursuant to section 403(b)(12), 
‘‘(vi) in the case of an employer that 
maintains an arrangement described in 
section 408(p), any employee who is not 
required to be eligible to participate in the 
arrangement under section 408(p)(4), and 
‘‘(vii) in the case of an employer that 
maintains a simplified employee pension 
described in section 408(k), any employee 
who is permitted to be excluded from par-
ticipation under section 408(k)(2). 
‘‘(4) GUIDANCE.—The Secretary shall issue 
regulations or other guidance to carry out this sub-
section, including— 
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‘‘(A) guidelines for determining the classes 
or categories of employees to be covered by an 
automatic IRA arrangement, 
‘‘(B) if an employer excludes employees 
from the automatic IRA arrangement, guide-
lines providing that the employer shall specify 
the classification or categories of employees who 
are so excluded, and 
‘‘(C) rules to prevent avoidance of the re-
quirements of this section. 
‘‘(d) AUTOMATIC IRA ARRANGEMENT.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘automatic IRA 
arrangement’ means an arrangement of an employer 
(determined without regard to whether the employer 
is required to maintain the arrangement)— 
‘‘(A) which covers each qualifying employee 
of the covered employer for the calendar year, 
‘‘(B) under which a qualifying employee— 
‘‘(i) may elect— 
‘‘(I) to contribute to an indi-
vidual retirement plan, or to purchase 
a qualified retirement bond on behalf 
of the employee, by having the em-
ployer 
deposit 
payroll 
deduction 
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amounts or make other periodic direct 
deposits (including electronic pay-
ments) to the plan or to be invested in 
retirement bonds (whether to the Sec-
retary of the Treasury or to a des-
ignated trustee or other agent for that 
purpose), or 
‘‘(II) to have such payments paid 
to the employee directly in cash, 
‘‘(ii) is treated as having made the 
election under clause (i)(I) in the amount 
specified in paragraph (4) until the indi-
vidual specifically elects not to have such 
contributions or purchases made (or spe-
cifically elects to have such contributions 
or purchases made at a different percent-
age or in a different amount), and 
‘‘(iii) may elect to modify the manner 
in which such amounts are invested for 
such year, 
‘‘(C) which meets the administrative re-
quirements of paragraph (2), including the no-
tice requirement of paragraph (2)(C), and 
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‘‘(D) which does not charge unreasonable 
additional fees solely on the basis that the bal-
ance in an automatic IRA is small. 
‘‘(2) ADMINISTRATIVE REQUIREMENTS.— 
‘‘(A) PAYMENTS.—The requirements of 
this paragraph are met with respect to any 
automatic IRA arrangement if the employer 
makes the payments elected or treated as elect-
ed under paragraph (1)(B)— 
‘‘(i) on or before the last day of the 
month following the month in which the 
compensation otherwise would have been 
payable to the employee in cash, or 
‘‘(ii) before such later deadline pre-
scribed by the Secretary for making such 
payments, but not later than the due date 
for the deposit of tax required to be de-
ducted and withheld under chapter 24 (re-
lating to collection of income tax at source 
on wages) for the payroll period to which 
such payments relate. 
‘‘(B) TERMINATION
OF
EMPLOYEE
PAR-
TICIPATION.—Subject to a requirement for rea-
sonable notice, an employee may elect to termi-
nate participation in the arrangement at any 
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time during a calendar year, except that if an 
employee so terminates, the arrangement may 
provide that the employee may not elect to re-
sume participation until the beginning of the 
next calendar year. 
‘‘(C) NOTICE OF ELECTION PERIOD.—The 
requirements of this paragraph shall not be 
treated as met with respect to any year unless 
the employer notifies each employee eligible to 
participate, within a reasonable period of time 
before the 30th day before the beginning of 
such year (and, for the first year the employee 
is so eligible, the 30th day before the first day 
such employee is so eligible), of— 
‘‘(i) the payments that may be elected 
or treated as elected under paragraph 
(1)(B), 
‘‘(ii) the opportunity to make the elec-
tion to terminate participation in the ar-
rangement under subparagraph (B), 
‘‘(iii) the opportunity to make the 
election under paragraph (1)(B)(ii) to have 
contributions or purchases made at a dif-
ferent percentage or in a different amount, 
and 
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‘‘(iv) the opportunity under paragraph 
(1)(B)(iii) to modify the manner in which 
such amounts are invested for such year. 
‘‘(D) EMPLOYER MAY PERMIT EMPLOYEES 
TO CHOOSE IRA.—Subject to subsection (f), if 
the employer so elects, the arrangement pro-
vides that an employee may elect to have con-
tributions made to any individual retirement 
plan specified by the employee. 
‘‘(E) EMPLOYER MAY PERMIT EMPLOYEES 
TO
CHOOSE
RETIREMENT
BOND.—Subject to 
subsection (f), if the employer so elects, the ar-
rangement provides that an employee may elect 
to have payments applied toward the purchase 
of retirement bonds. 
‘‘(3) DEFAULT INVESTMENTS.—If an employee 
is treated under clause (ii) of paragraph (1)(B) as 
having made an election to participate in an auto-
matic IRA arrangement— 
‘‘(A) the employee shall be deemed to have 
made an election to make contributions and 
payments in the amount determined under such 
clause, and 
‘‘(B) such contributions shall— 
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‘‘(i) if the employer has made an elec-
tion under subsection (f)(2), be transferred 
to an individual retirement plan of the des-
ignated trustee or issuer but only if the 
contributions are invested as provided in 
paragraph (5), or 
‘‘(ii) be applied toward the purchase 
of a retirement bond. 
‘‘(4) AMOUNT
OF
CONTRIBUTIONS
AND
PAY-
MENTS.— 
‘‘(A) IN GENERAL.—The amount specified 
in this paragraph is— 
‘‘(i) 3 percent of compensation, or 
‘‘(ii) such other percentage of com-
pensation as is specified in regulations pre-
scribed by the Secretary which is not less 
than 2 percent or more than 6 percent. 
‘‘(B) AUTHORITY TO PROVIDE FOR PERI-
ODIC INCREASES.—In the case of qualifying em-
ployees under an automatic IRA arrangement 
for 2 or more consecutive years, the Secretary 
may by regulation provide for periodic (not 
more frequent than annual) increases in the 
percentage of compensation an employee is 
deemed to have elected under subparagraph 
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(A). The considerations the Secretary shall take 
into account in issuing any regulations under 
this subparagraph and subparagraph (A) shall 
include the potential effects on lower-income 
employees as well as on adequacy of savings. 
‘‘(C) PERMITTED
ADDITIONAL
PROCE-
DURES
TO
LIMIT
CONTRIBUTIONS.—An em-
ployer— 
‘‘(i) shall have no responsibility for 
any calendar year for determining whether, 
or ensuring that, the contributions with re-
spect to any employee do not exceed the 
deductible amount in effect for taxable 
years beginning in the calendar year under 
section 219(b)(5) (determined without re-
gard to subparagraph (B) thereof), and 
‘‘(ii) shall not be treated as failing to 
satisfy the requirements of this section or 
any other provision of this title merely be-
cause the employer chooses to limit the 
contributions under this subsection on be-
half of a qualifying employee for any cal-
endar year in a manner reasonably de-
signed to avoid exceeding such deductible 
amount. 
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‘‘(5) REQUIRED INVESTMENTS.— 
‘‘(A) IN GENERAL.—Amounts contributed 
under paragraph (3)(B)(i) shall be invested 
only in the class of assets or funds described in 
subparagraph (B) unless the employer elects a 
class of assets or funds described in subpara-
graph (C), (D), (E), or (F). 
‘‘(B) TARGET DATE/LIFECYCLE OPTION.— 
The class of assets or funds described in this 
subparagraph is the class of assets or funds 
that constitutes a qualified default investment 
alternative under Department of Labor regula-
tion section 2550.404c–5(e)(4)(i). 
‘‘(C) 
PRINCIPAL
PRESERVATION.—The 
class of assets or funds described in this sub-
paragraph is the class of assets or funds that 
is designed to protect the principal of the indi-
vidual on an ongoing basis, including passbook 
savings, certificates of deposit, insurance con-
tracts, mutual funds, United States savings 
bonds (which may be indexed for inflation), in-
cluding through a myRA established for the 
benefit of the employee, and similar assets spec-
ified in regulations. 
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‘‘(D) BALANCED
OPTION.—The class of 
assets or funds described in this subparagraph 
is the class of assets or funds that constitutes 
a qualified default investment alternative under 
Department 
of 
Labor 
regulation 
section 
2550.404c–5(e)(4)(ii). 
‘‘(E) GUARANTEED LIFETIME INCOME OP-
TION OR EQUIVALENT.—The class of assets or 
funds described in this subparagraph is the 
class of assets or funds that is designed to pro-
vide an employee with the right to elect to re-
ceive distributions as a defined level of income 
annually (or more frequently) for at least the 
remainder of the life of the employee or the 
joint lives of the employee and the employee’s 
designated beneficiary. No later than 12 
months after the date of enactment of this Act, 
the Secretary of Labor and the Secretary shall 
issue guidance defining a guaranteed lifetime 
income or equivalent. 
‘‘(F) OTHER.—Any other class of assets or 
funds determined by the Secretary to be a 
qualified investment for purposes of this sec-
tion. 
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‘‘(6) COORDINATION
WITH
WITHHOLDING.— 
The Secretary shall modify the withholding exemp-
tion certificate under section 3402(f) so that, in the 
case of any qualifying employee covered under an 
automatic IRA arrangement, any notice and election 
requirements with respect to the arrangement may 
be met through the use of an attachment to such 
certificate or other modifications of the withholding 
exemption procedures. 
‘‘(7) TREATMENT
AS
IRA.—A qualifying em-
ployee for whom an automatic IRA is established 
under paragraph (1) may elect, at such time and in 
such manner and form as the Secretary may pre-
scribe, whether to treat the individual retirement 
plan as described, or not described, in section 408A. 
If no such election is made, the plan shall be treated 
as described in section 408A and shall meet the re-
quirements of section 408A and may be a myRA es-
tablished for the benefit of the employee. 
‘‘(8) EMPLOYER’S OPTION TO OBTAIN AFFIRMA-
TIVE
ELECTIONS
FROM
EMPLOYEES
INSTEAD
OF 
AUTOMATIC
ENROLLMENT.—As an alternative to 
automatic enrollment, an employer may choose to 
comply with subsection (d)(1)(B)(ii) by notifying 
employees that the employer wishes to obtain from 
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each qualifying employee an affirmative election ei-
ther to contribute or not to contribute to an auto-
matic IRA, provided that any qualifying employee 
who fails to make such an election is treated in the 
manner provided under subsection (d)(1)(B)(ii). 
‘‘(e) AUTOMATIC IRA CONTRIBUTIONS AND RETIRE-
MENT BOND PURCHASES TREATED LIKE OTHER CON-
TRIBUTIONS TO INDIVIDUAL RETIREMENT PLANS.— 
‘‘(1) TAX TREATMENT UNAFFECTED.—The fact 
that a contribution to an individual retirement plan 
or purchase of a retirement bond is made on behalf 
of an employee under an automatic IRA arrange-
ment instead of being made directly by the employee 
shall not affect the deductibility or other tax treat-
ment of the contribution or of other amounts under 
this title. 
‘‘(2) PAYROLL SAVINGS CONTRIBUTIONS TAKEN 
INTO ACCOUNT.—Any contribution to an individual 
retirement plan or purchase of a retirement bond 
made on behalf of an employee under an automatic 
IRA arrangement shall be taken into account in ap-
plying the limitations on contributions to individual 
retirement plans and the other provisions of this 
title applicable to individual retirement plans as if 
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the contribution or purchase had been made directly 
by the employee. 
‘‘(f) DEPOSITS TO PLANS OF A DESIGNATED TRUST-
EE OR ISSUER AND FOR RETIREMENT BONDS.— 
‘‘(1) IN GENERAL.—An employer shall not be 
treated as failing to satisfy the requirements of this 
section or any other provision of this title merely be-
cause the employer makes all contributions (or all 
contributions on behalf of employees who do not 
specify an individual retirement plan, trustee, or 
issuer to receive the contributions) to individual re-
tirement plans specified in paragraph (2) or to the 
Secretary or his agent for the purchase of retirement 
bonds specified in paragraph (3). 
‘‘(2) INDIVIDUAL RETIREMENT PLANS OTHER 
THAN
THOSE
SELECTED
BY
EMPLOYEE.—An em-
ployer may elect to have contributions for all quali-
fying employees participating in an automatic IRA 
arrangement made to individual retirement plans of 
a trustee or issuer under the arrangement that has 
been designated by the employer. The preceding sen-
tence shall not apply unless each participant is noti-
fied in writing that the participant’s balance may be 
transferred without cost or penalty to another indi-
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vidual retirement plan established by or on behalf of 
the participant. 
‘‘(3) RETIREMENT BONDS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
provide that contributions deposited under sub-
paragraph (B) shall be applied to the purchase 
of a retirement bond in the name of each appli-
cable employee. 
‘‘(B) PAYROLL DEPOSIT FEATURES.—The 
Secretary shall establish procedures so that con-
tributions may be applied to the purchase of re-
tirement bonds without undue administrative or 
paperwork requirements on participating em-
ployers. Such procedures shall ensure that only 
1 such retirement bond of each type (traditional 
or Roth) is issued for each TIN. 
‘‘(4) PAYROLL TAX DEPOSIT PROCEDURE.—The 
procedures the Secretary shall establish may include 
a procedure under which an employer— 
‘‘(A) may include with each deposit of tax 
required to be deducted and withheld under 
chapter 24 the aggregate amounts, for the pe-
riod covered by the deposit, which qualifying 
employees have designated under clause (i)(I) of 
subsection (d)(1)(B) (or are deemed to have 
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designated under clause (ii) of such subsection) 
as contributions to purchase retirement bonds 
on behalf of the employees under paragraph 
(3), and 
‘‘(B) specifies, in such manner as the Sec-
retary may prescribe, information needed to 
purchase retirement bonds on behalf of each ap-
plicable employee for whom a contribution is to 
be made, including— 
‘‘(i) the employee’s name and TIN, 
and 
‘‘(ii) the amount of the contribution. 
‘‘(5) PURPOSES.—The purposes of the retire-
ment bond program established under this sub-
section and subsection (g) include— 
‘‘(A) providing new savers a convenient, 
low-cost investment option suitable for the ini-
tial accumulation of small automatic IRA con-
tributions, 
‘‘(B) reflecting the intent that the long- 
term investment of automatic IRA funds for 
most savers be in the private market rather 
than in retirement bonds, encouraging and as-
sisting 
individuals 
who 
accumulate 
larger 
amounts in retirement bonds to transfer those 
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