I 
109TH CONGRESS 
1ST SESSION H. R. 1960
To amend the Internal Revenue Code of 1986 to expand pension coverage 
and savings opportunities and to provide other pension reforms. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 28, 2005
Mr. PORTMAN introduced the following bill; which was referred to the Com-
mittee on Ways and Means, and in addition to the Committee on Edu-
cation and the Workforce, for a period to be subsequently determined by 
the Speaker, in each case for consideration of such provisions as fall with-
in the jurisdiction of the committee concerned 
A BILL 
To amend the Internal Revenue Code of 1986 to expand 
pension coverage and savings opportunities and to pro-
vide other pension reforms.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Pension Preservation and Savings Expansion Act of 
2005’’. 
(b) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows:
Sec. 1. Short title; table of contents. 
TITLE I—MAKING TODAY’S RETIREMENT SAVINGS 
OPPORTUNITIES PERMANENT 
Sec. 101. Pensions and individual retirement arrangement provisions of Eco-
nomic Growth and Tax Relief Reconciliation Act of 2001 made 
permanent. 
Sec. 102. Saver’s credit made permanent. 
TITLE II—BUILDING AND PRESERVING RETIREMENT ASSETS 
AND ENHANCING PORTABILITY 
Sec. 201. Retirement savings account. 
Sec. 202. Expansion of Saver’s credit. 
Sec. 203. Faster vesting of employer nonelective contributions. 
Sec. 204. Allow rollovers by nonspouse beneficiaries of certain retirement plan 
distributions. 
Sec. 205. Enhancing portability of after-tax amounts. 
Sec. 206. IRA eligibility for the disabled. 
Sec. 207. Exclusion of certain qualified annuity payments and facilitation of 
such payments and rollovers. 
Sec. 208. Exclusion of certain nonqualified annuity payments. 
Sec. 209. Increasing participation through automatic contribution arrange-
ments. 
Sec. 210. Facilitating longevity insurance. 
Sec. 211. Direct payment of tax refunds to individual retirement plans. 
Sec. 212. Treatment of qualified retirement planning services. 
Sec. 213. Repeal of combined plan deduction limit. 
TITLE III—EXPANDING SMALL BUSINESS RETIREMENT PLAN 
COVERAGE AND MAKING THE ELECTIVE DEFERRAL RULES 
SIMPLER AND MORE UNIFORM 
Sec. 301. Allow additional nonelective contributions to SIMPLE Plans. 
Sec. 302. Conform matching contribution rules for SIMPLE IRAs and SIM-
PLE 401(k)s. 
Sec. 303. Uniform catch-up contribution rule. 
Sec. 304. Uniform definition of compensation. 
Sec. 305. Uniform withdrawal rules. 
Sec. 306. Allow level dollar contributions to SEPs. 
Sec. 307. Tax treatment of certain nontrade or business SEP contributions. 
Sec. 308. Uniform availability of designated RSA contributions. 
Sec. 309. Allow certain plan transfers and mergers. 
TITLE IV—EXPANDING RETIREMENT SAVINGS FOR TAX-EXEMPT 
ORGANIZATION AND GOVERNMENT EMPLOYEES 
Sec. 401. Waiver of 10 percent early withdrawal penalty tax on certain dis-
tributions of pension plans for public safety employees. 
Sec. 402. Clarifications regarding purchase of permissive service credit. 
Sec. 403. Eligibility for participation in retirement plans. 
Sec. 404. Clarification of minimum distribution rules. 
Sec. 405. Church plan rule. 
Sec. 406. Clarification of treatment of Indian tribal governments. 
Sec. 407. Deferral agreements. 
Sec. 408. Plans maintained by State or local governments.
Sec. 409. Clarification of treatment of section 403(b) programs. 
TITLE V—SIMPLIFICATION AND EQUITY 
Sec. 501. Updating and simplifying the minimum distribution rules. 
Sec. 502. Clarification of catch-up contributions. 
Sec. 503. Treatment of unclaimed benefits. 
Sec. 504. Allow direct rollovers from retirement plans to RSA. 
Sec. 505. Reform excise tax on excess contributions. 
Sec. 506. Intermediate sanctions for inadvertent failures. 
Sec. 507. Clarification of substantially equal periodic payment rule. 
Sec. 508. Clarification of treatment of distributions of annuity contracts. 
Sec. 509. Golden parachute excise tax to apply to excessive employee remunera-
tion paid by corporation after declaration of bankruptcy. 
Sec. 510. Differential pay. 
Sec. 511. Excess benefit plans. 
Sec. 512. Tax treatment of employee contributions to contributory defined ben-
efit plans. 
Sec. 513. Protecting older, longer service participants. 
Sec. 514. Clarification regarding elective deferrals. 
Sec. 515. Reform of the minimum participation rule. 
TITLE VI—IMPROVEMENTS IN PENSION SECURITY 
Sec. 601. Periodic pension benefits statements. 
Sec. 602. Inapplicability of relief from fiduciary liability during blackout peri-
ods. 
Sec. 603. Diversification requirements for defined contribution plans that hold 
employer securities. 
Sec. 604. Effective dates and related rules. 
TITLE VII—OTHER TAX PROVISIONS RELATING TO PENSIONS 
Sec. 701. Reporting simplification. 
Sec. 702. Improvement of Employee Plans Compliance Resolution System. 
Sec. 703. Extension of moratorium on application of certain nondiscrimination 
rules to all governmental plans. 
Sec. 704. Notice and consent period regarding distributions. 
Sec. 705. Qualified group legal services plans. 
Sec. 706. Tax-free distributions from individual retirement plans for charitable 
purposes. 
TITLE VIII—MISCELLANEOUS PROVISIONS 
Sec. 801. Provisions relating to plan amendments.
TITLE I—MAKING TODAY’S RE-
TIREMENT SAVINGS OPPOR-
TUNITIES PERMANENT 
SEC. 101. PENSIONS AND INDIVIDUAL RETIREMENT AR-
RANGEMENT 
PROVISIONS 
OF 
ECONOMIC 
GROWTH AND TAX RELIEF RECONCILIATION 
ACT OF 2001 MADE PERMANENT. 
(a) IN GENERAL.—Section 901 of the Economic 
Growth and Tax Relief Reconciliation Act of 2001 is 
amended by adding at the end the following new sub-
section: 
‘‘(c) EXCEPTION.—Subsections (a) and (b) shall not 
apply to the provisions of, and amendments made by, sub-
titles (A) through (F) of title VI (relating to pension and 
individual retirement arrangement provisions).’’. 
(b) CONFORMING AMENDMENTS.—Section 901(b) of 
such Act is amended—
(1) by striking ‘‘and the Employee Retirement 
Income Security Act of 1974’’ in the text, and 
(2) by striking ‘‘OF CERTAIN LAWS’’ in the 
heading. 
SEC. 102. SAVER’S CREDIT MADE PERMANENT. 
(a) IN GENERAL.—Section 25B of the Internal Rev-
enue Code of 1986 (relating to elective deferrals and IRA
contributions by certain individuals) is amended by strik-
ing subsection (h). 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2005. 
TITLE II—BUILDING AND PRE-
SERVING 
RETIREMENT 
AS-
SETS AND ENHANCING PORT-
ABILITY 
SEC. 201. RETIREMENT SAVINGS ACCOUNT. 
(a) RETIREMENT SAVINGS ACCOUNT.—
(1) NAME CHANGED FROM ROTH IRA, ETC.—
(A) IN GENERAL.—The Internal Revenue 
Code of 1986 is amended—
(i) by striking ‘‘a’’ each place it imme-
diately precedes ‘‘Roth’’ and inserting 
‘‘an’’, 
(ii) by striking ‘‘Roth IRA’’ and 
‘‘Roth IRAs’’ each place such terms appear 
and inserting ‘‘RSA’’ and ‘‘RSAs’’, respec-
tively, and 
(iii) by striking ‘‘Roth contribution’’, 
‘‘Roth contributions’’, ‘‘Roth account’’ and 
‘‘Roth accounts’’ each place such terms ap-
pear and inserting ‘‘RSA contribution’’,
‘‘RSA contributions’’, ‘‘RSA account’’, and 
‘‘RSA accounts’’, respectively. 
(B) RSA DEFINED.—Subsection (a) of sec-
tion 7701 of such Code is amended by adding 
at the end the following paragraph: 
‘‘(48) RSA.—The term ‘RSA’ means a retire-
ment savings account described in section 408A.’’. 
(2) UNIVERSAL AVAILABILITY.—Subsection (c) 
of section 408A is amended—
(A) by striking paragraph (3), and 
(B) by redesignating paragraphs (4), (5), 
(6), and (7) as paragraphs (3), (4), (5), and 
(6), respectively. 
(3) REPEAL OF 5-YEAR RULE.—Paragraph (2) 
of section 408A(d) of such Code is amended by 
striking subparagraph (B) and redesignating sub-
paragraph (C) as subparagraph (B). 
(4) INCOME OVER 4 YEARS.—Clause (iii) of sec-
tion 408A(d)(3)(A) of such Code is amended by 
striking ‘‘January 1, 1999’’ and inserting ‘‘after De-
cember 31, 2005, and before January 1, 2007’’. 
(5) ORDERING
RULE.—Subparagraph (B) of 
section 408A(d)(4) of such Code is amended to read 
as follows:
‘‘(B) ORDERING RULES.—For purposes of 
applying this section and section 72 to any dis-
tribution from an RSA, such distribution shall 
be treated as made—
‘‘(i) from income attributable to con-
tributions to the RSA to the extent that 
the amount of such distribution, when 
added to all previous distributions from the 
RSA, does not exceed the aggregate in-
come attributable to contributions to the 
RSA, and 
‘‘(ii) to the extent that such distribu-
tion exceeds such income, from contribu-
tions in the following order: 
‘‘(I) Contributions other than 
qualified 
rollover 
contributions 
to 
which paragraph (3) applies. 
‘‘(II) Qualified rollover contribu-
tions to which paragraph (3) applies 
on a first-in, first-out basis. 
For purposes of this subparagraph, income at-
tributable to contributions to the RSA shall in-
clude income that is attributable to contribu-
tions to another RSA or to a designated RSA 
account and that is rolled over into the RSA.’’.
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 402A(d) of such 
Code is amended by striking subparagraph (B) and 
by redesignating subparagraph (C) as subparagraph 
(B). 
(2) Subsection (d) of section 402A of such Code 
is amended by adding at the end the following: 
‘‘(5) ORDERING RULES.—For purposes of ap-
plying section 72 to any distribution from a partici-
pant’s designated RSA account, such distribution 
shall be treated as made from income attributable to 
contributions to the designated RSA account to the 
extent that the amount of such distribution, when 
added to all previous distributions from the des-
ignated RSA account, does not exceed the aggregate 
income attributable to contributions to the des-
ignated RSA account. For purposes of this para-
graph, income attributable to contributions to a des-
ignated RSA account shall include income that is at-
tributable to contributions to another such account 
or to an RSA and that is rolled over into the des-
ignated RSA account.’’. 
(3) Subparagraph (B) of section 4973(f)(1) and 
subparagraph (B) of section 4973(f)(2) of such Code
are each amended by striking ‘‘sections 408A(c)(2) 
and (c)(3)’’ and inserting ‘‘section 408A(c)(2)’’. 
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by 
this section shall apply to years beginning after De-
cember 31, 2005. 
(2) SPECIAL RULE.—The amendment made by 
subsection (a)(5) shall only apply to the extent that 
distributions from RSAs exceed the amount of con-
tributions to such RSAs that have been made but 
not distributed as of December 31, 2005. 
SEC. 202. EXPANSION OF SAVER’S CREDIT. 
(a) EXPANSION.—The table contained in subsection 
(b) of section 25B of the Internal Revenue Code of 1986 
(relating to applicable percentage) is amended to read as 
follows:
‘‘Adjusted Gross Income 
Joint return 
Head of Household 
All other cases 
Applicable 
precentage 
Over 
Not over 
Over 
Not over 
Over 
Not over 
$30,000
$22,500
$15,000
30,000
40,000
22,500
30,000
15,000
20,000
40,000
50,000
30,000
37,500
20,000
25,000
50,000
37,500
25,000
0’’. 
(b) ADJUSTMENT FOR INFLATION.—Section 25B of 
such Code (as amended by subsection (a)) is further 
amended by redesignating subsection (h) as subsection (i) 
and by inserting after subsection (g) the following new 
subsection: