730
‘‘(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-
731
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.
732
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
733
‘‘(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
734
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
735
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.
736
‘‘(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
737
‘‘(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,
738
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
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.—
740
‘‘(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