‘‘(2) FINANCIAL
CAPABILITY
OF
THE
IN-
SURER.—A fiduciary will be deemed to satisfy the 
requirements of paragraphs (1)(B)(i) and (1)(C)(i) 
if— 
‘‘(A) the fiduciary obtains written rep-
resentations from the insurer that— 
‘‘(i) the insurer is licensed to offer 
guaranteed retirement income contracts; 
‘‘(ii) the insurer, at the time of selec-
tion and for each of the immediately pre-
ceding 7 plan years— 
‘‘(I) operates under a certificate 
of authority from the insurance com-
missioner of its domiciliary State 
which has not been revoked or sus-
pended; 
‘‘(II) has filed audited financial 
statements in accordance with the 
laws of its domiciliary State under ap-
plicable statutory accounting prin-
ciples; 
‘‘(III) maintains (and has main-
tained) reserves which satisfies all the 
statutory requirements of all States 
where the insurer does business; and 
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‘‘(IV) is not operating under an 
order of supervision, rehabilitation, or 
liquidation; 
‘‘(iii) the insurer undergoes, at least 
every 5 years, a financial examination 
(within the meaning of the law of its domi-
ciliary State) by the insurance commis-
sioner of the domiciliary State (or rep-
resentative, designee, or other party ap-
proved by such commissioner); and 
‘‘(iv) the insurer will notify the fidu-
ciary of any change in circumstances oc-
curring after the provision of the represen-
tations in clauses (i), (ii), and (iii) which 
would preclude the insurer from making 
such representations at the time of 
issuance of the guaranteed retirement in-
come contract; and 
‘‘(B) after receiving such representations 
and as of the time of selection, the fiduciary 
has not received any notice described in sub-
paragraph (A)(iv) and is in possession of no 
other information which would cause the fidu-
ciary to question the representations provided. 
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‘‘(3) NO
REQUIREMENT
TO
SELECT
LOWEST 
COST.—Nothing in this subsection shall be construed 
to require a fiduciary to select the lowest cost con-
tract. A fiduciary may consider the value of a con-
tract, including features and benefits of the contract 
and attributes of the insurer (including, without lim-
itation, the insurer’s financial strength) in conjunc-
tion with the cost of the contract. 
‘‘(4) TIME OF SELECTION.— 
‘‘(A) IN GENERAL.—For purposes of this 
subsection, the time of selection is— 
‘‘(i) the time that the insurer and the 
contract are selected for distribution of 
benefits to a specific participant or bene-
ficiary; or 
‘‘(ii) if the fiduciary periodically re-
views the continuing appropriateness of the 
conclusion described in paragraph (1)(C) 
with respect to a selected insurer, taking 
into account the considerations described 
in such paragraph, the time that the in-
surer and the contract are selected to pro-
vide benefits at future dates to participants 
or beneficiaries under the plan. 
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Nothing in the preceding sentence shall be con-
strued to require the fiduciary to review the ap-
propriateness of a selection after the purchase 
of a contract for a participant or beneficiary. 
‘‘(B) PERIODIC REVIEW.—A fiduciary will 
be deemed to have conducted the periodic re-
view described in subparagraph (A)(ii) if the fi-
duciary obtains the written representations de-
scribed in clauses (i), (ii), and (iii) of paragraph 
(2)(A) from the insurer on an annual basis, un-
less the fiduciary receives any notice described 
in paragraph (2)(A)(iv) or otherwise becomes 
aware of facts that would cause the fiduciary to 
question such representations. 
‘‘(5) LIMITED
LIABILITY.—A fiduciary which 
satisfies the requirements of this subsection shall not 
be liable following the distribution of any benefit, or 
the investment by or on behalf of a participant or 
beneficiary pursuant to the selected guaranteed re-
tirement income contract, for any losses that may 
result to the participant or beneficiary due to an in-
surer’s inability to satisfy its financial obligations 
under the terms of such contract. 
‘‘(6) DEFINITIONS.—For purposes of this sub-
section— 
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‘‘(A) INSURER.—The term ‘insurer’ means 
an insurance company, insurance service, or in-
surance organization, including affiliates of 
such companies. 
‘‘(B) GUARANTEED RETIREMENT INCOME 
CONTRACT.—The term ‘guaranteed retirement 
income contract’ means an annuity contract for 
a fixed term or a contract (or provision or fea-
ture thereof) which provides guaranteed bene-
fits annually (or more frequently) for at least 
the remainder of the life of the participant or 
the joint lives of the participant and the partici-
pant’s designated beneficiary as part of an indi-
vidual account plan.’’. 
SEC. 205. MODIFICATION OF NONDISCRIMINATION RULES 
TO PROTECT OLDER, LONGER SERVICE PAR-
TICIPANTS. 
(a) IN GENERAL.—Section 401 of the Internal Rev-
enue Code of 1986 is amended— 
(1) by redesignating subsection (o) as sub-
section (p); and 
(2) by inserting after subsection (n) the fol-
lowing new subsection: 
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‘‘(o) 
SPECIAL
RULES
FOR
APPLYING
NON-
DISCRIMINATION RULES TO PROTECT OLDER, LONGER 
SERVICE AND GRANDFATHERED PARTICIPANTS.— 
‘‘(1) TESTING
OF
DEFINED
BENEFIT
PLANS 
WITH CLOSED CLASSES OF PARTICIPANTS.— 
‘‘(A) BENEFITS, RIGHTS, OR
FEATURES 
PROVIDED
TO
CLOSED
CLASSES.—A defined 
benefit plan which provides benefits, rights, or 
features to a closed class of participants shall 
not fail to satisfy the requirements of sub-
section (a)(4) by reason of the composition of 
such closed class or the benefits, rights, or fea-
tures provided to such closed class, if— 
‘‘(i) for the plan year as of which the 
class closes and the 2 succeeding plan 
years, such benefits, rights, and features 
satisfy the requirements of subsection 
(a)(4) (without regard to this subpara-
graph but taking into account the rules of 
subparagraph (I)), 
‘‘(ii) after the date as of which the 
class was closed, any plan amendment 
which modifies the closed class or the ben-
efits, rights, and features provided to such 
closed class does not discriminate signifi-
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cantly in favor of highly compensated em-
ployees, and 
‘‘(iii) the class was closed before Sep-
tember 21, 2016, or the plan is described 
in subparagraph (C). 
‘‘(B) AGGREGATE TESTING WITH DEFINED 
CONTRIBUTION PLANS PERMITTED ON A BENE-
FITS BASIS.— 
‘‘(i) IN
GENERAL.—For purposes of 
determining compliance with subsection 
(a)(4) and section 410(b), a defined benefit 
plan described in clause (iii) may be aggre-
gated and tested on a benefits basis with 
1 or more defined contribution plans, in-
cluding with the portion of 1 or more de-
fined contribution plans which— 
‘‘(I) provides matching contribu-
tions 
(as 
defined 
in 
subsection 
(m)(4)(A)), 
‘‘(II) provides annuity contracts 
described in section 403(b) which are 
purchased with matching contribu-
tions or nonelective contributions, or 
‘‘(III) consists of an employee 
stock ownership plan (within the 
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meaning of section 4975(e)(7)) or a 
tax credit employee stock ownership 
plan (within the meaning of section 
409(a)). 
‘‘(ii) SPECIAL RULES FOR MATCHING 
CONTRIBUTIONS.—For purposes of clause 
(i), if a defined benefit plan is aggregated 
with a portion of a defined contribution 
plan providing matching contributions— 
‘‘(I) such defined benefit plan 
must also be aggregated with any por-
tion of such defined contribution plan 
which provides elective deferrals de-
scribed in subparagraph (A) or (C) of 
section 402(g)(3), and 
‘‘(II) such matching contribu-
tions shall be treated in the same 
manner as nonelective contributions, 
including for purposes of applying the 
rules of subsection (l). 
‘‘(iii) PLANS DESCRIBED.—A defined 
benefit plan is described in this clause if— 
‘‘(I) the plan provides benefits to 
a closed class of participants, 
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‘‘(II) for the plan year as of 
which the class closes and the 2 suc-
ceeding plan years, the plan satisfies 
the requirements of section 410(b) 
and subsection (a)(4) (without regard 
to this subparagraph but taking into 
account the rules of subparagraph 
(I)), 
‘‘(III) after the date as of which 
the class was closed, any plan amend-
ment which modifies the closed class 
or the benefits provided to such closed 
class does not discriminate signifi-
cantly in favor of highly compensated 
employees, and 
‘‘(IV) the class was closed before 
September 21, 2016, or the plan is 
described in subparagraph (C). 
‘‘(C) PLANS DESCRIBED.—A plan is de-
scribed in this subparagraph if, taking into ac-
count any predecessor plan— 
‘‘(i) such plan has been in effect for 
at least 5 years as of the date the class is 
closed, and 
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‘‘(ii) during the 5-year period pre-
ceding the date the class is closed, there 
has not been a substantial increase in the 
coverage or value of the benefits, rights, or 
features described in subparagraph (A) or 
in the coverage or benefits under the plan 
described in subparagraph (B)(iii) (which-
ever is applicable). 
‘‘(D) DETERMINATION
OF
SUBSTANTIAL 
INCREASE FOR BENEFITS, RIGHTS, AND FEA-
TURES.—In applying subparagraph (C)(ii) for 
purposes of subparagraph (A)(iii), a plan shall 
be treated as having had a substantial increase 
in coverage or value of the benefits, rights, or 
features described in subparagraph (A) during 
the applicable 5-year period only if, during such 
period— 
‘‘(i) the number of participants cov-
ered by such benefits, rights, or features 
on the date such period ends is more than 
50 percent greater than the number of 
such participants on the first day of the 
plan year in which such period began, or 
‘‘(ii) such benefits, rights, and fea-
tures have been modified by 1 or more 
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plan amendments in such a way that, as of 
the date the class is closed, the value of 
such benefits, rights, and features to the 
closed class as a whole is substantially 
greater than the value as of the first day 
of such 5-year period, solely as a result of 
such amendments. 
‘‘(E) DETERMINATION
OF
SUBSTANTIAL 
INCREASE FOR AGGREGATE TESTING ON BENE-
FITS BASIS.—In applying subparagraph (C)(ii) 
for purposes of subparagraph (B)(iii)(IV), a 
plan shall be treated as having had a substan-
tial increase in coverage or benefits during the 
applicable 5-year period only if, during such pe-
riod— 
‘‘(i) the number of participants bene-
fiting under the plan on the date such pe-
riod ends is more than 50 percent greater 
than the number of such participants on 
the first day of the plan year in which such 
period began, or 
‘‘(ii) the average benefit provided to 
such participants on the date such period 
ends is more than 50 percent greater than 
the average benefit provided on the first 
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day of the plan year in which such period 
began. 
‘‘(F) 
CERTAIN
EMPLOYEES
DIS-
REGARDED.—For purposes of subparagraphs 
(D) and (E), any increase in coverage or value 
or in coverage or benefits, whichever is applica-
ble, which is attributable to such coverage and 
value or coverage and benefits provided to em-
ployees— 
‘‘(i) who became participants as a re-
sult of a merger, acquisition, or similar 
event which occurred during the 7-year pe-
riod preceding the date the class is closed, 
or 
‘‘(ii) who became participants by rea-
son of a merger of the plan with another 
plan which had been in effect for at least 
5 years as of the date of the merger, 
shall be disregarded, except that clause (ii) 
shall apply for purposes of subparagraph (D) 
only if, under the merger, the benefits, rights, 
or features under 1 plan are conformed to the 
benefits, rights, or features of the other plan 
prospectively. 
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‘‘(G) RULES RELATING TO AVERAGE BEN-
EFIT.—For purposes of subparagraph (E)— 
‘‘(i) the average benefit provided to 
participants under the plan will be treated 
as having remained the same between the 
2 dates described in subparagraph (E)(ii) 
if the benefit formula applicable to such 
participants has not changed between such 
dates, and 
‘‘(ii) if the benefit formula applicable 
to 1 or more participants under the plan 
has changed between such 2 dates, then 
the average benefit under the plan shall be 
considered to have increased by more than 
50 percent only if— 
‘‘(I) the total amount determined 
under section 430(b)(1)(A)(i) for all 
participants benefiting under the plan 
for the plan year in which the 5-year 
period described in subparagraph (E) 
ends, exceeds 
‘‘(II) the total amount deter-
mined under section 430(b)(1)(A)(i) 
for all such participants for such plan 
year, by using the benefit formula in 
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effect for each such participant for 
the first plan year in such 5-year pe-
riod, 
by more than 50 percent. In the case of a 
CSEC plan (as defined in section 414(y)), 
the normal cost of the plan (as determined 
under section 433(j)(1)(B)) shall be used 
in lieu of the amount determined under 
section 430(b)(1)(A)(i). 
‘‘(H) TREATMENT AS SINGLE PLAN.—For 
purposes of subparagraphs (E) and (G), a plan 
described in section 413(c) shall be treated as 
a single plan rather than as separate plans 
maintained by each participating employer. 
‘‘(I) SPECIAL
RULES.—For purposes of 
subparagraphs (A)(i) and (B)(iii)(II), the fol-
lowing rules shall apply: 
‘‘(i) In applying section 410(b)(6)(C), 
the closing of the class of participants shall 
not be treated as a significant change in 
coverage under section 410(b)(6)(C)(i)(II). 
‘‘(ii) Two or more plans shall not fail 
to be eligible to be aggregated and treated 
as a single plan solely by reason of having 
different plan years. 
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‘‘(iii) Changes in the employee popu-
lation shall be disregarded to the extent at-
tributable to individuals who become em-
ployees or cease to be employees, after the 
date the class is closed, by reason of a 
merger, acquisition, divestiture, or similar 
event. 
‘‘(iv) Aggregation and all other testing 
methodologies otherwise applicable under 
subsection (a)(4) and section 410(b) may 
be taken into account. 
The rule of clause (ii) shall also apply for pur-
poses of determining whether plans to which 
subparagraph (B)(i) applies may be aggregated 
and treated as 1 plan for purposes of deter-
mining whether such plans meet the require-
ments of subsection (a)(4) and section 410(b). 
‘‘(J) SPUN-OFF PLANS.—For purposes of 
this paragraph, if a portion of a defined benefit 
plan described in subparagraph (A) or (B)(iii) 
is spun off to another employer and the spun- 
off plan continues to satisfy the requirements 
of— 
‘‘(i) 
subparagraph 
(A)(i) 
or 
(B)(iii)(II), whichever is applicable, if the 
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original plan was still within the 3-year pe-
riod described in such subparagraph at the 
time of the spin off, and 
‘‘(ii) 
subparagraph 
(A)(ii) 
or 
(B)(iii)(III), whichever is applicable, 
the treatment under subparagraph (A) or (B) 
of the spun-off plan shall continue with respect 
to such other employer. 
‘‘(2) TESTING
OF
DEFINED
CONTRIBUTION 
PLANS.— 
‘‘(A) TESTING ON A BENEFITS BASIS.—A 
defined contribution plan shall be permitted to 
be tested on a benefits basis if— 
‘‘(i) such defined contribution plan 
provides make-whole contributions to a 
closed class of participants whose accruals 
under a defined benefit plan have been re-
duced or eliminated, 
‘‘(ii) for the plan year of the defined 
contribution plan as of which the class eli-
gible to receive such make-whole contribu-
tions closes and the 2 succeeding plan 
years, such closed class of participants sat-
isfies 
the 
requirements 
of 
section 
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410(b)(2)(A)(i) (determined by applying 
the rules of paragraph (1)(I)), 
‘‘(iii) after the date as of which the 
class was closed, any plan amendment to 
the defined contribution plan which modi-
fies the closed class or the allocations, ben-
efits, rights, and features provided to such 
closed class does not discriminate signifi-
cantly in favor of highly compensated em-
ployees, and 
‘‘(iv) the class was closed before Sep-
tember 21, 2016, or the defined benefit 
plan under clause (i) is described in para-
graph (1)(C) (as applied for purposes of 
paragraph (1)(B)(iii)(IV)). 
‘‘(B) AGGREGATION WITH PLANS INCLUD-
ING MATCHING CONTRIBUTIONS.— 
‘‘(i) IN GENERAL.—With respect to 1 
or more defined contribution plans de-
scribed in subparagraph (A), for purposes 
of determining compliance with subsection 
(a)(4) and section 410(b), the portion of 
such plans which provides make-whole con-
tributions or other nonelective contribu-
tions may be aggregated and tested on a 
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benefits basis with the portion of 1 or 
more other defined contribution plans 
which— 
‘‘(I) provides matching contribu-
tions 
(as 
defined 
in 
subsection 
(m)(4)(A)), 
‘‘(II) provides annuity contracts 
described in section 403(b) which are 
purchased with matching contribu-
tions or nonelective contributions, or 
‘‘(III) consists of an employee 
stock ownership plan (within the 
meaning of section 4975(e)(7)) or a 
tax credit employee stock ownership 
plan (within the meaning of section 
409(a)). 
‘‘(ii) SPECIAL RULES FOR MATCHING 
CONTRIBUTIONS.—Rules similar to the 
rules of paragraph (1)(B)(ii) shall apply 
for purposes of clause (i). 
‘‘(C) SPECIAL
RULES
FOR
TESTING
DE-
FINED
CONTRIBUTION
PLAN
FEATURES
PRO-
VIDING MATCHING CONTRIBUTIONS TO CERTAIN 
OLDER, LONGER
SERVICE
PARTICIPANTS.—In 
the case of a defined contribution plan which 
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provides benefits, rights, or features to a closed 
class of participants whose accruals under a de-
fined benefit plan have been reduced or elimi-
nated, the plan shall not fail to satisfy the re-
quirements of subsection (a)(4) solely by reason 
of the composition of the closed class or the 
benefits, rights, or features provided to such 
closed class if the defined contribution plan and 
defined benefit plan otherwise meet the require-
ments of subparagraph (A) but for the fact that 
the make-whole contributions under the defined 
contribution plan are made in whole or in part 
through matching contributions. 
‘‘(D) SPUN-OFF PLANS.—For purposes of 
this paragraph, if a portion of a defined con-
tribution plan described in subparagraph (A) or 
(C) is spun off to another employer, the treat-
ment under subparagraph (A) or (C) of the 
spun-off plan shall continue with respect to the 
other employer if such plan continues to comply 
with the requirements of clauses (ii) (if the 
original plan was still within the 3-year period 
described in such clause at the time of the spin 
off) and (iii) of subparagraph (A), as deter-
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mined for purposes of subparagraph (A) or (C), 
whichever is applicable. 
‘‘(3) DEFINITIONS.—For purposes of this sub-
section— 
‘‘(A) MAKE-WHOLE CONTRIBUTIONS.—Ex-
cept as otherwise provided in paragraph (2)(C), 
the term ‘make-whole contributions’ means non-
elective allocations for each employee in the 
class which are reasonably calculated, in a con-
sistent manner, to replace some or all of the re-
tirement benefits which the employee would 
have received under the defined benefit plan 
and any other plan or qualified cash or deferred 
arrangement under subsection (k)(2) if no 
change had been made to such defined benefit 
plan and such other plan or arrangement. For 
purposes of the preceding sentence, consistency 
shall not be required with respect to employees 
who were subject to different benefit formulas 
under the defined benefit plan. 
‘‘(B) REFERENCES TO CLOSED CLASS OF 
PARTICIPANTS.—References to a closed class of 
participants and similar references to a closed 
class shall include arrangements under which 1 
or more classes of participants are closed, ex-
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cept that 1 or more classes of participants 
closed on different dates shall not be aggre-
gated for purposes of determining the date any 
such class was closed. 
‘‘(C) HIGHLY COMPENSATED EMPLOYEE.— 
The term ‘highly compensated employee’ has 
the meaning given such term in section 
414(q).’’. 
(b) 
PARTICIPATION
REQUIREMENTS.—Paragraph 
(26) of section 401(a) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new 
subparagraph: 
‘‘(I) PROTECTED PARTICIPANTS.— 
‘‘(i) IN
GENERAL.—A plan shall be 
deemed to satisfy the requirements of sub-
paragraph (A) if— 
‘‘(I) the plan is amended— 
‘‘(aa) to cease all benefit ac-
cruals, or 
‘‘(bb) to provide future ben-
efit accruals only to a closed 
class of participants, 
‘‘(II) the plan satisfies subpara-
graph (A) (without regard to this sub-
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pamtmann on DSKBFK8HB2PROD with BILLS
paragraph) as of the effective date of 
the amendment, and 
‘‘(III) the amendment was adopt-
ed before September 21, 2016, or the 
plan is described in clause (ii). 
‘‘(ii) PLANS DESCRIBED.—A plan is 
described in this clause if the plan would 
be described in subsection (o)(1)(C), as ap-
plied 
for 
purposes 
of 
subsection 
(o)(1)(B)(iii)(IV) and by treating the effec-
tive date of the amendment as the date the 
class was closed for purposes of subsection 
(o)(1)(C). 
‘‘(iii) SPECIAL RULES.—For purposes 
of clause (i)(II), in applying section 
410(b)(6)(C), the amendments described in 
clause (i) shall not be treated as a signifi-
cant change in coverage under section 
410(b)(6)(C)(i)(II). 
‘‘(iv) SPUN-OFF
PLANS.—For pur-
poses of this subparagraph, if a portion of 
a plan described in clause (i) is spun off to 
another employer, the treatment under 
clause (i) of the spun-off plan shall con-
tinue with respect to the other employer.’’. 
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pamtmann on DSKBFK8HB2PROD with BILLS
(c) EFFECTIVE DATE.— 
(1) IN GENERAL.—Except as provided in para-
graph (2), the amendments made by this section 
shall take effect on the date of the enactment of this 
Act, without regard to whether any plan modifica-
tions referred to in such amendments are adopted or 
effective before, on, or after such date of enactment. 
(2) SPECIAL RULES.— 
(A) ELECTION
OF
EARLIER
APPLICA-
TION.—At the election of the plan sponsor, the 
amendments made by this section shall apply to 
plan years beginning after December 31, 2013. 
(B) CLOSED CLASSES OF PARTICIPANTS.— 
For 
purposes 
of 
paragraphs 
(1)(A)(iii), 
(1)(B)(iii)(IV), and (2)(A)(iv) of section 401(o) 
of the Internal Revenue Code of 1986 (as added 
by this section), a closed class of participants 
shall be treated as being closed before Sep-
tember 21, 2016, if the plan sponsor’s intention 
to create such closed class is reflected in formal 
written documents and communicated to par-
ticipants before such date. 
(C) 
CERTAIN
POST-ENACTMENT
PLAN 
AMENDMENTS.—A plan shall not be treated as 
failing to be eligible for the application of sec-
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pamtmann on DSKBFK8HB2PROD with BILLS
tion 
401(o)(1)(A), 
401(o)(1)(B)(iii), 
or 
401(a)(26) of such Code (as added by this sec-
tion) to such plan solely because in the case 
of— 
(i) such section 401(o)(1)(A), the plan 
was amended before the date of the enact-
ment of this Act to eliminate 1 or more 
benefits, rights, or features, and is further 
amended after such date of enactment to 
provide such previously eliminated benefits, 
rights, or features to a closed class of par-
ticipants, or 
(ii) such section 401(o)(1)(B)(iii) or 
section 401(a)(26), the plan was amended 
before the date of the enactment of this 
Act to cease all benefit accruals, and is 
further amended after such date of enact-
ment to provide benefit accruals to a closed 
class of participants. 
Any such section shall only apply if the plan 
otherwise meets the requirements of such sec-
tion and in applying such section, the date the 
class of participants is closed shall be the effec-
tive date of the later amendment. 
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SEC. 206. MODIFICATION OF PBGC PREMIUMS FOR CSEC 
PLANS. 
(a) FLAT RATE PREMIUM.—Subparagraph (A) of 
section 4006(a)(3) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1306(a)(3)) is amend-
ed— 
(1) in clause (i), by striking ‘‘plan,’’ and insert-
ing ‘‘plan other than a CSEC plan (as defined in 
section 210(f)(1))’’; 
(2) in clause (v), by striking ‘‘or’’ at the end; 
(3) in clause (vi), by striking the period at the 
end and inserting ‘‘, or’’; and 
(4) by adding at the end the following new 
clause: 
‘‘(vii) in the case of a CSEC plan (as 
defined in section 210(f)(1)), for plan 
years beginning after December 31, 2017, 
for each individual who is a participant in 
such plan during the plan year an amount 
equal to the sum of— 
‘‘(I) the additional premium (if 
any) determined under subparagraph 
(E), and 
‘‘(II) $19.’’. 
(b) VARIABLE RATE PREMIUM.— 
(1) UNFUNDED VESTED BENEFITS.— 
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