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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710 
‘‘(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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ccoleman on PROD1PC71 with BILLS
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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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ccoleman on PROD1PC71 with BILLS
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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— 
‘‘(I) the qualified cash or de-
ferred arrangement included in such 
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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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ccoleman on PROD1PC71 with BILLS
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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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ccoleman on PROD1PC71 with BILLS
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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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ccoleman on PROD1PC71 with BILLS
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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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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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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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‘‘(B) MATCHING CONTRIBUTIONS.—In ap-
plying section 401(m)(11) of such Code to any 
matching contribution with respect to a con-
tribution to which paragraph (2)(C) applies, the 
contribution requirement of paragraph (2)(C) 
and the notice requirements of paragraph 
(5)(B) shall be substituted for the requirements 
otherwise applicable under clauses (i) and (ii) of 
section 401(m)(11)(A) of such Code. 
‘‘(4) AUTOMATIC
CONTRIBUTION
ARRANGE-
MENT.—For purposes of this subsection— 
‘‘(A) IN
GENERAL.—A qualified cash or 
deferred arrangement shall be treated as an 
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 
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ccoleman on PROD1PC71 with BILLS
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‘‘(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 
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, 
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ccoleman on PROD1PC71 with BILLS
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given notice of the employee’s rights and 
obligations under the arrangement. 
The requirements of this subparagraph shall 
not be treated as met unless the requirements 
of clauses (i) and (ii) of section 401(k)(12)(D) 
of the Internal Revenue Code of 1986 are met 
with respect to the notices described in clauses 
(ii) and (iii) of this subparagraph. 
‘‘(5) COORDINATION
WITH
OTHER
REQUIRE-
MENTS.— 
‘‘(A) TREATMENT OF SEPARATE PLANS.— 
The except clause in section 3(35) 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 section 103. 
‘‘(6) 
APPLICABLE
INDIVIDUAL
ACCOUNT 
PLAN.—For purposes of this subsection— 
‘‘(A) IN GENERAL.—The term ‘applicable 
individual account plan’ means an individual ac-
count 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 
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