To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to reduce administrative burdens and encourage retirement plan formation and retention.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Business Pension Promotion Act 
of 2011''.

SEC. 2. ALTERNATIVE VALUATION DATE FOR REQUIRED MINIMUM DISTRIBUTIONS.

    If the Secretary of the Treasury determines there has been a 
significant and broadly applicable decrease in the value of investment 
assets held by defined contribution plans and individual retirement 
accounts for any calendar year, the Secretary may--
            (1) allow taxpayers to use a later valuation date than 
        would otherwise be required under Treasury Regulations to 
        determine the required minimum distribution for such year from 
        individual accounts under section 401(a)(9), 403(b)(10), 
        408(a)(6), 408(b)(3), or 457(d)(2) of the Internal Revenue Code 
        of 1986,
            (2) allow additional time for making any such 
        distributions, and
            (3) provide such other relief as may be appropriate in 
        light of such a decrease in investment asset values.

SEC. 3. DEDUCTION FOR PENSION AND IRA CONTRIBUTIONS ALLOWED IN 
              COMPUTING NET EARNINGS FROM SELF-EMPLOYMENT.

    (a) In General.--Subsection (a) of section 1402 of the Internal 
Revenue Code of 1986 is amended by striking ``and'' at the end of 
paragraph (16), by striking the period at the end of paragraph (17) and 
inserting ``, and'', and by inserting after paragraph (17) the 
following new paragraph:
            ``(18) any deduction allowed under section 404 by reason of 
        section 404(a)(8)(C) (other than any deduction allowed for 
        elective deferrals (as defined in section 402(g)(3)) shall be 
        allowed, except that the amount of such deduction shall be 
        determined without regard to this paragraph.''.
    (b) Conforming Amendment.--Clause (v) of section 401(c)(2)(A) of 
such Code is amended by inserting ``for elective deferrals (as defined 
in section 402(g)(3))'' after ``to the taxpayer''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2011.

SEC. 4. ADJUSTED FUNDING TARGET ATTAINMENT PERCENTAGE DETERMINED 
              WITHOUT REGARD TO REDUCTION FOR CREDIT BALANCES FOR 
              FUNDING-BASED LIMITS UNDER SINGLE EMPLOYER PLANS.

    (a) Amendment of 1986 Code.--Paragraph (2) of section 436(j) of the 
Internal Revenue Code of 1986 is amended--
            (1) by striking the period at the end and inserting ``, 
        and'',
            (2) by striking ``under paragraph (1) by increasing'' and 
        inserting the following: ``under paragraph (1)--
                    ``(A) by increasing'', and
            (3) by adding at the end the following new subparagraph:
                    ``(B) without regard to the reduction under section 
                430(f)(4)(B).''.
    (b) Amendment of ERISA.--Section 206(g)(9)(B) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1056(g)(9)(B)) is 
amended--
            (1) by striking the period at the end and inserting ``, 
        and'',
            (2) by striking ``under subparagraph (A) by increasing'' 
        and inserting the following: ``under subparagraph (A)--
                            ``(i) by increasing'', and
            (3) by adding at the end the following new clause:
                            ``(ii) without regard to the reduction 
                        under section 303(f)(4)(B).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2011.

SEC. 5. REPEAL OF TAX ON NONDEDUCTIBLE CONTRIBUTIONS TO QUALIFIED 
              EMPLOYER PLANS.

    Effective for taxable years beginning after December 31, 2011, 
section 4972 is repealed.

SEC. 6. INTERIM AMENDMENTS TO QUALIFIED PLANS.

    The Secretary of the Treasury shall, not later than 2 years after 
the date of the enactment of this Act, revise the administrative rules 
governing interim amendments of qualified plans to provide greater 
flexibility and reduce plan sponsor burden, while taking into account 
the need for plan terms to reflect the benefits to which participants 
are entitled.

SEC. 7. GRANDFATHERING OF PLANS WITH NORMAL RETIREMENT AGE BASED ON 
              EARLIER OF ATTAINMENT OF SPECIFIC AGE OR COMPLETION OF 30 
              OR MORE YEARS OF BENEFIT ACCRUAL SERVICE.

    (a) Amendment of 1986 Code.--
            (1) In general.--Section 411 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(f) Special Rule for Determining Normal Retirement Age for 
Certain Existing Defined Benefit Plans.--
            ``(1) In general.--An applicable trust shall not fail to be 
        treated as a qualified trust under section 401(a) of the 
        Internal Revenue Code of 1986, and shall not be treated as 
        failing to have a uniform normal retirement age for purposes of 
        this subchapter, solely because the plan of which it is a part 
        has a normal retirement age described in paragraph (2)(A).
            ``(2) Applicable trust.--For purposes of this subsection--
                    ``(A) In general.--The term `applicable trust' 
                means a trust forming a part of a plan that on December 
                5, 2011, has a normal retirement age which is the 
                earlier of--
                            ``(i) the attainment of an age which is not 
                        earlier than age 60 but not later than 65, or
                            ``(ii) the completion of 30 or more years 
                        of benefit accrual service.
                    ``(B) Limited application of specified normal 
                retirement age permitted.--A trust shall not fail to be 
                treated as an applicable trust solely because, as of 
                such date, a normal retirement age described in 
                subparagraph (A) only applies to certain participants 
                or certain employers participating in the plan of which 
                such trust is a part.
                    ``(C) Expanded application permitted.--If, after 
                such date, the plan of which an applicable trust is a 
                part expands the application of a normal retirement age 
                described in subparagraph (A) to additional 
                participants or employers, such trust shall be treated 
                as an applicable trust with respect to any such 
                participants and employers.''.
            (2) Service-based retirements in governmental plans.--
                    (A) In general.--Subsection (e) of section 411 of 
                such Code is amended by adding at the end the following 
                new paragraph:
            ``(3) A plan described in paragraph (1)(A) shall not be 
        treated as failing to meet any requirement of this subchapter 
        or any regulation issued under this subchapter, or as failing 
        to have a permissible normal retirement age for the purposes of 
        this subchapter or any regulation issued under this subchapter, 
        solely because--
                    ``(A) the plan expresses its normal retirement age 
                (whether stated in, or implied through, the terms of 
                the plan) based on years of service or a combination of 
                years of service and the chronological age of the plan 
                participant, or
                    ``(B) the plan expresses a normal retirement 
                benefit as a benefit payable without actuarial 
                reduction for age upon attainment of an age, years of 
                service, or a combination of age and years of 
                service.''.
                    (B) Rules.--Not later than 180 after the date of 
                the enactment of this Act, the Secretary of the 
                Treasury shall modify the rules for determining normal 
                retirement age under sections 401(a) and 411 of the 
                Internal Revenue Code of 1986, including Treasury 
                Regulation Sec.  1.401(a)-1, to be consistent with the 
                amendment made by this paragraph.
    (b) Amendments of ERISA.--Section 204 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1054) is amended by 
redesignating subsection (k) as subsection (l) and by inserting after 
subsection (j) the following new subsection:
    ``(k) Special Rule for Determining Normal Retirement Age for 
Certain Existing Defined Benefit Plans.--
            ``(1) In general.--An applicable trust shall not fail to 
        meet any of the requirements of this title, and shall not be 
        treated as failing to have a uniform normal retirement age for 
        purposes of this title, solely because the plan of which it is 
        a part has a normal retirement age described in paragraph 
        (2)(A).
            ``(2) Applicable trust.--For purposes of this subsection--
                    ``(A) In general.--The term `applicable trust' 
                means a trust forming a part of a plan that on December 
                5, 2011, has a normal retirement age which is the 
                earlier of--
                            ``(i) the attainment of an age which is not 
                        earlier than age 60 but not later than 65, or
                            ``(ii) the completion of 30 or more years 
                        of benefit accrual service.
                    ``(B) Limited application of specified normal 
                retirement age permitted.--A trust shall not fail to be 
                treated as an applicable trust solely because, as of 
                such date, the normal retirement age described in 
                subparagraph (A) only applies to certain participants 
                or certain employers participating in the plan of which 
                such trust is a part.
                    ``(C) Expanded application permitted.--If, after 
                such date, the plan of which an applicable trust is a 
                part expands the application of the normal retirement 
                age described in subparagraph (A) to additional 
                participants or employers, such trust shall be treated 
                as an applicable trust with respect to any such 
                participants and employers.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning before, on, or after the date of the enactment 
of this Act.

Summary: Small Business Pension Promotion Act of 2011 - Authorizes the Secretary of the Treasury to take steps to address any significant and broadly applicable decrease in the value of investments held by defined contribution plans and individual retirement accounts (IRAs), including by allowing: (1) taxpayers to use a later asset valuation date than otherwise required, and (2) additional time for making distributions from such plans and accounts.

Amends the Internal Revenue Code to: (1) allow a deduction in computing the net earnings from self-employment income for pension and IRA contributions, (2) allow a determination of the adjusted funding target attainment percentage for tax-exempt retirement plans without regard to the reduction for credit balances for funding-based limits on benefits under single employer plans, (3) repeal the excise tax on nondeductible contributions to qualified employer plans, and (4) provide a  special rule for determining normal retirement age for certain existing defined benefit plans. Makes conforming amendments to the Employee Retirement Income Security Act (ERISA).

Requires the Secretary to revise administrative rules governing interim amendments of qualified pension plans to provide greater flexibility and reduce plan sponsor burden.