RISE Act
Bill: H.R.5891 | Sponsor: Rep. Scott, Robert C. "Bobby" (D-VA)
Policy area: Commerce

Summary:
Retirement Improvement and Savings Enhancement Act of 2021 or the RISE Act
This bill makes various changes with respect to employer-sponsored retirement plans.
Among other changes, the bill establishes the Retirement Savings Lost and Found database to allow individuals to locate the administrator of their plan. It also allows 403(b) plans (i.e., plans sponsored by certain charities, educational institutions, and nonprofit organizations) to participate in multiple employer plans and pooled employer plans.

To improve and enhance retirement savings, and for other purposes.


 


    Be it enacted by the Senate and House of Representatives 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 ``Retirement 
Improvement and Savings Enhancement Act of 2021'' or the ``RISE Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Retirement savings lost and found.
Sec. 3. Retirement plan modernization act.
Sec. 4. Multiple employer 403(b) plans.
Sec. 5. Small immediate financial incentives for contributing to a 
                            plan.
Sec. 6. Performance benchmarks for asset allocation funds.
Sec. 7. Pooled employer plans modification.
Sec. 8. Review of pension risk transfer interpretive bulletin.
Sec. 9. Review and report to congress relating to reporting and 
                            disclosure requirements.
Sec. 10. Eliminating unnecessary plan requirements related to 
                            unenrolled participants.
Sec. 11. Recovery of retirement plan overpayments.
Sec. 12. Improving coverage for part-time workers.

SEC. 2. RETIREMENT SAVINGS LOST AND FOUND.

    (a) Establishment of Retirement Savings Lost and Found.--Part 5 of 
title I of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1341 et seq.) is amended by adding at the end the following:

``SEC. 523. RETIREMENT SAVINGS LOST AND FOUND.

    ``(a) Establishment.--
            ``(1) In general.--Not later than 2 years after the date of 
        the enactment of this section, the Secretary of Labor, in 
        consultation with the Secretary of the Treasury, shall 
        establish an online searchable database (to be managed by the 
        Department of Labor in accordance with this section) to be 
        known as the `Retirement Savings Lost and Found'. The 
        Retirement Savings Lost and Found shall--
                    ``(A) allow an individual to search for information 
                that enables the individual to locate the administrator 
                of any plan described in paragraph (2) with respect to 
                which the individual is or was a participant or 
                beneficiary, and provide contact information for the 
                administrator of any such plan;
                    ``(B) allow the Department of Labor to assist such 
                an individual in locating any such plan of the 
                individual; and
                    ``(C) allow the Department of Labor to make any 
                necessary changes to contact information on record for 
                the administrator based on any changes to the plan due 
                to merger or consolidation of the plan with any other 
                plan, division of the plan into two or more plans, 
                bankruptcy, termination, change in name of the plan, 
                change in name or address of the administrator, or 
                other causes.
        The Retirement Savings Lost and Found established under this 
        paragraph shall include information reported under this section 
        and other relevant information obtained by the Department of 
        Labor.
            ``(2) Plans described.--A plan described in this paragraph 
        is a plan to which the vesting standards of section 203 apply.
    ``(b) Administration.--The Retirement Savings Lost and Found 
established under subsection (a) shall provide individuals described in 
subsection (a)(1) only with the ability to search for information that 
enables the individual to locate the administrator and contact 
information for the administrator of any plan with respect to which the 
individual is or was a participant or beneficiary, sufficient to allow 
the individual to locate the individual's plan in order to recover any 
benefit owing to the individual under the plan.
    ``(c) Safeguarding Participant Privacy and Security.--In 
establishing the Retirement Savings Lost and Found under subsection 
(a), the Department of Labor shall take all necessary and proper 
precautions to ensure that individuals' plan information maintained by 
the Retirement Savings Lost and Found is protected.
    ``(d) Definition of Administrator.--For purposes of this section 
and section 523, the term `administrator' has the meaning given such 
term in section 3(16)(A).
    ``(e) Information Collection From Plans.--Effective with respect to 
plan years beginning after the second December 31 occurring after the 
date of the enactment of this subsection, the administrator of a plan 
to which the vesting standards of section 203 apply shall submit to the 
Department of Labor, at such time and in such form and manner as is 
prescribed in regulations--
            ``(1) the information described in paragraphs (1) through 
        (4) of section 6057(b) of the Internal Revenue Code of 1986;
            ``(2) the information described in subparagraphs (A), (B), 
        (E), and (F) of section 6057(a)(2) of the Internal Revenue Code 
        of 1986; and
            ``(3) such other information as the Secretary of Labor may 
        require.
    ``(f) Information Collection From Federal Agencies.--The Secretary 
of Labor is authorized to access and receive information collected by 
other Federal agencies that may be necessary to perform work related to 
the Retirement Savings Lost and Found. Such necessary and appropriate 
information, which shall be furnished to the Secretary of Labor on 
request, includes information covered by section 6103 of the Internal 
Revenue Code of 1986 and section 205(r) of the Social Security Act.
    ``(g) Program Integrity Audit.--On an annual basis for each of the 
first 5 years beginning one year after the establishment of the 
database in subsection (a)(1) and every 5 years thereafter, the 
Inspector General of the Department of Labor shall conduct an audit of 
the administration of the Retirement Savings Lost and Found.''.
    (b) Conforming Amendment.--The table of contents for the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.) is 
amended by inserting after the matter relating to section 521 the 
following:

``Sec. 523.Retirement Savings Lost and Found.''.

SEC. 3. RETIREMENT PLAN MODERNIZATION ACT.

    Section 203(e)(1) of the Employee Retirement Income Security Act of 
1974 and sections 401(a)(31)(B)(ii) and 411(a)(11)(A) of the Internal 
Revenue Code of 1986 and are each amended by striking ``$5,000'' and 
inserting ``$7,000''.

SEC. 4. MULTIPLE EMPLOYER 403(B) PLANS.

    (a) In General.--Section 403(b) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(15) Multiple employer plans.--
                    ``(A) In general.--Except in the case of a church 
                plan, this subsection shall not be treated as failing 
                to apply to an annuity contract solely by reason of 
                such contract being purchased under a plan maintained 
                by more than 1 employer.
                    ``(B) Treatment of employers failing to meet 
                requirements of plan.--
                            ``(i) In general.--In the case of a plan 
                        maintained by more than 1 employer, this 
                        subsection shall not be treated as failing to 
                        apply to an annuity contract held under such 
                        plan merely because of one or more employers 
                        failing to meet the requirements of this 
                        subsection if such plan satisfies rules similar 
                        to the rules of section 413(e)(2) with respect 
                        to any such employer failure.
                            ``(ii) Additional requirements in case of 
                        non-governmental plans.--A plan shall not be 
                        treated as meeting the requirements of this 
                        subparagraph unless the plan meets the 
                        requirements of subparagraph (A) or (B) of 
                        section 413(e)(1), except in the case of a 
                        multiple employer plan maintained solely by any 
                        of the following: A State, a political 
                        subdivision of a State, or an agency or 
                        instrumentality of any one or more of the 
                        foregoing.''.
    (b) Annual Registration for 403(b) Multiple Employer Plan.--Section 
6057 of the Internal Revenue Code of 1986 is amended by redesignating 
subsection (g) as subsection (h) and by inserting after subsection (f) 
the following new subsection:
    ``(g) 403(b) Multiple Employer Plans Treated as One Plan.--In the 
case of annuity contracts to which this section applies and to which 
section 403(b) applies by reason of the plan under which such contracts 
are purchased meeting the requirements of paragraph (15) thereof, such 
plan shall be treated as a single plan for purposes of this section.''.
    (c) Annual Information Returns for 403(b) Multiple Employer Plan.--
Section 6058 of the Internal Revenue Code of 1986 is amended by 
redesignating subsection (f) as subsection (g) and by inserting after 
subsection (e) the following new subsection:
    ``(f) 403(b) Multiple Employer Plans Treated as One Plan.--In the 
case of annuity contracts to which this section applies and to which 
section 403(b) applies by reason of the plan under which such contracts 
are purchased meeting the requirements of paragraph (15) thereof, such 
plan shall be treated as a single plan for purposes of this section.''.
    (d) Amendments to Employee Retirement Income Security Act of 
1974.--
            (1) In general.--Section 3(43)(A) of the Employee 
        Retirement Income Security Act of 1974 is amended--
                    (A) in clause (ii), by striking ``section 501(a) of 
                such Code or'' and inserting ``section 501(a) of such 
                Code, a plan that consists of contracts described in 
                section 403(b) of such Code, or''; and
                    (B) in the flush text at the end, by striking ``the 
                plan.'' and inserting ``the plan, but such term shall 
                include any program (other than a governmental plan) 
                maintained for the benefit of the employees of more 
                than 1 employer that consists of contracts described in 
                section 403(b) of such Code and that meets the 
                requirements of subparagraph (A) or (B) of section 
                413(e)(1) of such Code.''.
            (2) Conforming amendments.--Sections 3(43)(B)(v)(II) and 
        3(44)(A)(i)(I) of the Employee Retirement Income Security Act 
        of 1974 are each amended by striking ``section 401(a) of such 
        Code or'' and inserting ``section 401(a) of such Code, a plan 
        that consists of contracts described in section 403(b) of such 
        Code, or''.
    (e) Regulations Relating to Plan Termination.--The Secretary of the 
Treasury (or the Secretary's designee) shall prescribe such regulations 
as may be necessary to clarify the treatment of a plan termination by 
an employer in the case of plans to which section 403(b)(15) of the 
Internal Revenue Code of 1986 applies.
    (f) Modification of Model Plan Language, etc.--
            (1) Plan notifications.--The Secretary of the Treasury (or 
        the Secretary's designee) shall modify the model plan language 
        published under section 413(e)(5) of the Internal Revenue Code 
        of 1986 to include language that notifies participating 
        employers described in section 501(c)(3), and which are exempt 
        from tax under section 501(a), that the plan is subject to the 
        Employee Retirement Income Security Act of 1974 and that such 
        employer is a plan sponsor with respect to its employees 
        participating in the multiple employer plan and, as such, has 
        certain fiduciary duties with respect to the plan and to its 
        employees.
            (2) Model plans for multiple employer 403(b) non-
        governmental plans.--For plans to which section 403(b)(15)(A) 
        of the Internal Revenue Code of 1986 applies (other than a plan 
        maintained for its employees by a State, a political 
        subdivision of a State, or an agency or instrumentality of any 
        one or more of the foregoing), the Secretary of the Treasury 
        shall publish model plan language similar to model plan 
        language published under section 413(e)(5) of such Code.
            (3) Educational outreach to employers exempt from tax.--The 
        Secretary of the Treasury shall provide education and outreach 
        to increase awareness to employers described in section 
        501(c)(3) of the Internal Revenue Code of 1986, and which are 
        exempt from tax under section 501(a) of such Code, that 
        multiple employer plans are subject to the Employee Retirement 
        Income Security Act of 1974 and that such employer is a plan 
        sponsor with respect to its employees participating in the 
        multiple employer plan and, as such, has certain fiduciary 
        duties with respect to the plan and to its employees.
    (g) No Inference With Respect to Church Plans.--Regarding any 
application of section 403(b) of the Internal Revenue Code of 1986 to 
an annuity contract purchased under a church plan (as defined in 
section 414(e) of such Code) maintained by more than 1 employer, or to 
any application of rules similar to section 413(e) of such Code to such 
a plan, no inference shall be made from section 403(b)(15)(A) of such 
Code (as added by this Act) not applying to such plans.
    (h) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to plan years beginning after December 31, 2021.
            (2) Rule of construction.--Nothing in the amendments made 
        by subsection (a) shall be construed as limiting the authority 
        of the Secretary of the Treasury or the Secretary's delegate 
        (determined without regard to such amendment) to provide for 
        the proper treatment of a failure to meet any requirement 
        applicable under the Internal Revenue Code of 1986 with respect 
        to one employer (and its employees) in the case of a plan to 
        which section 403(b)(15) of the Internal Revenue Code of 1986 
        applies.

SEC. 5. SMALL IMMEDIATE FINANCIAL INCENTIVES FOR CONTRIBUTING TO A 
              PLAN.

    (a) In General.--Subparagraph (A) of section 401(k)(4) of the 
Internal Revenue Code of 1986 is amended by inserting ``(other than a 
de minimis financial incentive)'' after ``any other benefit''.
    (b) Section 403(b) Plans.--Subparagraph (A) of section 403(b)(12) 
of the Internal Revenue Code of 1986, is further amended by adding at 
the end the following: ``A plan shall not fail to satisfy clause (ii) 
solely by reason of offering a de minimis financial incentive to 
employees to elect to have the employer make contributions pursuant to 
a salary reduction agreement.''.
    (c) Exemption From Prohibited Transaction Rules.--Subsection (d) of 
section 4975 of the Internal Revenue Code of 1986 is amended by 
striking ``or'' at the end of paragraph (22), by striking the period at 
the end of paragraph (23) and inserting ``, or'', and by adding at the 
end the following new paragraph:
            ``(24) the provision of a de minimis financial incentive 
        described in section 401(k)(4)(A) or 403(b)(12)(A).''.
    (d) Amendment of Employee Retirement Income Security Act of 1974.--
Subsection (b) of section 408 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1108(b)) is amended by adding at the 
end the following new paragraph:
            ``(21) The provision of a de minimis financial incentive 
        described in section 401(k)(4)(A) or section 403(b)(12)(A) of 
        the Internal Revenue Code of 1986.''.
    (e) Effective Date.--The amendments made by this section shall 
apply with respect to plan years beginning after the date of enactment 
of this Act.

SEC. 6. PERFORMANCE BENCHMARKS FOR ASSET ALLOCATION FUNDS.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary of Labor shall provide that, in the case of 
a designated investment alternative that contains a mix of asset 
classes, the administrator of a plan may, but is not required to, use a 
benchmark that is a blend of different broad-based securities market 
indices if--
            (1) the blend is reasonably representative of the asset 
        class holdings of the designated investment alternative;
            (2) for purposes of determining the blend's returns for 1-, 
        5-, and 10-calendar-year periods (or for the life of the 
        alternative, if shorter), the blend is modified at least once 
        per year to reflect changes in the asset class holdings of the 
        designated investment alternative;
            (3) the blend is furnished to participants and 
        beneficiaries in a manner that is reasonably designed to be 
        understandable; and
            (4) each securities market index that is used for an 
        associated asset class would separately satisfy the 
        requirements of such regulation for such asset class.
    (b) Study.--Not later than 3 years after the date of enactment of 
this Act, the Secretary of Labor shall deliver a report to the 
Committees on Finance and Health, Education, Labor, and Pensions of the 
Senate and the Committees on Ways and Means and Education and Labor of 
the House of Representatives regarding the utilization, effectiveness, 
and participants' understanding of the benchmarking requirements under 
this section.

SEC. 7. POOLED EMPLOYER PLANS MODIFICATION.

    Section 3(43)(B)(ii) of the Employee Retirement Income Security Act 
of 1974 (29 U.S.C. 1002(43)(B)(ii)) is amended to read as follows:
                            ``(ii) designate a named fiduciary (other 
                        than an employer in the plan) to be responsible 
                        for collecting contributions to the plan and 
                        require such fiduciary to implement written 
                        contribution collection procedures that are 
                        reasonable, diligent, and systematic;''.

SEC. 8. REVIEW OF PENSION RISK TRANSFER INTERPRETIVE BULLETIN.

    Not later than 1 year after the date of enactment of this Act, the 
Secretary of Labor shall--
            (1) review section 2509.95-1 of title 29, Code of Federal 
        Regulations (relating to the fiduciary standards under the 
        Employee Retirement Income Security Act of 1974 when selecting 
        an annuity provider for a defined benefit pension plan) to 
        determine whether amendments to such section are warranted; and
            (2) report to Congress on the findings of such review, 
        including an assessment of any risk to participants.

SEC. 9. REVIEW AND REPORT TO CONGRESS RELATING TO REPORTING AND 
              DISCLOSURE REQUIREMENTS.

    (a) Study.--As soon as practicable after the date of enactment of 
this Act, the Secretary of Labor, the Secretary of the Treasury, and 
the Director of the Pension Benefit Guaranty Corporation shall review 
the reporting and disclosure requirements as applicable to each such 
agency head, of--
            (1) the Employee Retirement Income Security Act of 1974 
        applicable to pension plans (as defined in section 3(2) of such 
        Act (29 U.S.C. 1002(2)); and
            (2) the Internal Revenue Code of 1986 applicable to 
        qualified retirement plans (as defined in section 4974(c) of 
        such Code, without regard to paragraphs (4) and (5) of such 
        section).
    (b) Report.--
            (1) In general.--Not later than 2 years after the date of 
        enactment of this Act, the Secretary of Labor, the Secretary of 
        the Treasury, and the Director of the Pension Benefit Guaranty 
        Corporation, jointly, and after consultation with a balanced 
        group of participant and employer representatives, shall with 
        respect to plans referenced in subsection (a) report on the 
        effectiveness of the applicable reporting and disclosure 
        requirements and make such recommendations as may be 
        appropriate to the Committee on Education and Labor and the 
        Committee on Ways and Means of the House of Representatives and 
        the Committee on Health, Education, Labor, and Pensions and the 
        Committee on Finance of the Senate to consolidate, simplify, 
        standardize, and improve such requirements so as to simplify 
        reporting for such plans and ensure that plans can furnish and 
        participants and beneficiaries timely receive and better 
        understand the information they need to monitor their plans, 
        plan for retirement, and obtain the benefits they have earned.
            (2) Analysis of effectiveness.--To assess the effectiveness 
        of the applicable reporting and disclosure requirements, the 
        report shall include an analysis, based on plan data, of how 
        participants and beneficiaries are providing preferred contact 
        information, the methods by which plan sponsors and plans are 
        furnishing disclosures, and the rate at which participants and 
        beneficiaries (grouped by key demographics) are receiving, 
        accessing, understanding, and retaining disclosures.
            (3) Collection of information.--The agencies shall conduct 
        appropriate surveys and data collection to obtain any needed 
        information.

SEC. 10. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO 
              UNENROLLED PARTICIPANTS.

    (a) Amendment of Employee Retirement Income Security Act of 1974.--
            (1) In general.--Part 1 of subtitle B of subchapter I of 
        the Employee Retirement Income Security Act of 1974 is amended 
        by redesignating section 111 as section 112 and by inserting 
        after section 110 the following new section:

``SEC. 111. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO 
              UNENROLLED PARTICIPANTS.

    ``(a) In General.--Notwithstanding any other provision of this 
title, with respect to any individual account plan, no disclosure, 
notice, or other plan document (other than the notices and documents 
described in paragraphs (1) and (2)) shall be required to be furnished 
under this title to any unenrolled participant if the unenrolled 
participant receives--
            ``(1) an annual reminder notice of such participant's 
        eligibility to participate in such plan and any applicable 
        election deadlines under the plan; and
            ``(2) any document requested by such participant that the 
        participant would be entitled to receive notwithstanding this 
        section.
    ``(b) Unenrolled Participant.--For purposes of this section, the 
term `unenrolled participant' means an employee who--
            ``(1) is eligible to participate in an individual account 
        plan;
            ``(2) has received the summary plan description pursuant to 
        section 104(b) and any other eligibility notices required to be 
        furnished under this title in connection with such 
        participant's initial eligibility to participate in such plan;
            ``(3) is not participating in such plan;
            ``(4) does not have a balance in the plan; and
            ``(5) satisfies such other criteria as the Secretary of 
        Labor may determine appropriate, as prescribed in guidance 
        issued in consultation with the Secretary of Treasury.
For purposes of this section, any eligibility to participate in the 
plan following any period for which such employee was not eligible to 
participate shall be treated as initial eligibility.
    ``(c) Annual Reminder Notice.--For purposes of this section, the 
term `annual reminder notice' means a notice provided in accordance 
with section 2520.104b-1 of title 29, Code of Federal Regulations (or 
any successor regulation), which--
            ``(1) is furnished in connection with the annual open 
        season election period with respect to the plan or, if there is 
        no such period, is furnished within a reasonable period prior 
        to the beginning of each plan year;
            ``(2) notifies the unenrolled participant of--
                    ``(A) the unenrolled participant's eligibility to 
                participate in the plan; and
                    ``(B) the key benefits and rights under the plan, 
                with a focus on employer contributions and vesting 
                provisions; and
            ``(3) provides such information in a prominent manner 
        calculated to be understood by the average participant.''.
            (2) Clerical amendment.--The table of contents in section 1 
        of the Employee Retirement Income Security Act of 1974 is 
        amended by striking the item relating to section 111 and by 
        inserting after the item relating to section 110 the following 
        new items:

``Sec. 111. Eliminating unnecessary plan requirements related to 
                            unenrolled participants.
``Sec. 112. Repeal and effective date.''.
    (b) Amendment of Internal Revenue Code of 1986.--Section 414 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(aa) Eliminating Unnecessary Plan Requirements Related to 
Unenrolled Participants.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title, with respect to any defined contribution plan, no 
        disclosure, notice, or other plan document (other than the 
        notices and documents described in subparagraphs (A) and (B)) 
        shall be required to be furnished under this title to any 
        unenrolled participant if the unenrolled participant receives--
                    ``(A) an annual reminder notice of such 
                participant's eligibility to participate in such plan 
                and any applicable election deadlines under the plan, 
                and
                    ``(B) any document requested by such participant 
                that the participant would be entitled to receive 
                notwithstanding this subsection.
            ``(2) Unenrolled participant.--For purposes of this 
        subsection, the term `unenrolled participant' means an employee 
        who--
                    ``(A) is eligible to participate in a defined 
                contribution plan,
                    ``(B) has received the summary plan description 
                pursuant to section 104(b) of the Employee Retirement 
                Income Security Act of 1974 and any other eligibility 
                notices in connection with such participant's initial 
                eligibility to participate in such plan,
                    ``(C) is not participating in such plan,
                    ``(D) does not have a balance in the plan, and
                    ``(E) satisfies such other criteria as the 
                Secretary of the Treasury may determine appropriate, as 
                prescribed in guidance issued in consultation with the 
                Secretary of Labor.
        For purposes of this subsection, any eligibility to participate 
        in the plan following any period for which such employee was 
        not eligible to participate shall be treated as initial 
        eligibility.
            ``(3) Annual reminder notice.--For purposes of this 
        subsection, the term `annual reminder notice' means the notice 
        described in section 111(c) of the Employee Retirement Income 
        Security Act of 1974.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2021.

SEC. 11. RECOVERY OF RETIREMENT PLAN OVERPAYMENTS.

    (a) Overpayments Under ERISA.--Section 206 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1056) is amended by 
adding at the end the following new subsection:
    ``(h) Special Rules Applicable to Benefit Overpayments.--
            ``(1) General rule.--In the case of an inadvertent benefit 
        overpayment by any pension plan, the responsible plan fiduciary 
        shall not be considered to have failed to comply with the 
        requirements of this title merely because such fiduciary 
        determines, in the exercise of its fiduciary discretion, not to 
        seek recovery of all or part of such overpayment from--
                    ``(A) any participant or beneficiary,
                    ``(B) any plan sponsor of, or contributing employer 
                to--
                            ``(i) an individual account plan, provided 
                        that the amount needed to prevent or restore 
                        any impermissible forfeiture from any 
                        participant's or beneficiary's account arising 
                        in connection with the overpayment is, 
                        separately from and independently of the 
                        overpayment, allocated to such account pursuant 
                        to the nonforfeitability requirements of 
                        section 203 (for example, out of the plan's 
                        forfeiture account, additional employer 
                        contributions, or recoveries from those 
                        responsible for the overpayment), or
                            ``(ii) a defined benefit pension plan 
                        subject to the funding rules in part 3 of this 
                        subtitle B, unless the responsible plan 
                        fiduciary determines, in the exercise of its 
                        fiduciary discretion, that failure to recover 
                        all or part of the overpayment faster than 
                        required under such funding rules would 
                        materially affect the plan's ability to pay 
                        benefits due to other participants and 
                        beneficiaries, or
                    ``(C) any fiduciary of the plan, other than a 
                fiduciary (including a plan sponsor or contributing 
                employer acting in a fiduciary capacity) whose breach 
                of its fiduciary duties resulted in such overpayment, 
                provided that if the plan has established prudent 
                procedures to prevent and minimize overpayment of 
                benefits and the relevant plan fiduciaries have 
                followed such procedures, an inadvertent benefit 
                overpayment will not give rise to a breach of fiduciary 
                duty.
            ``(2) Reduction in future benefit payments and recovery 
        from responsible party.--Paragraph (1) shall not fail to apply 
        with respect to any inadvertent benefit overpayment merely 
        because, after discovering such overpayment, the responsible 
        plan fiduciary--
                    ``(A) reduces future benefit payments to the 
                correct amount provided for under the terms of the 
                plan, or
                    ``(B) seeks recovery from the person or persons 
                responsible for the overpayment.
            ``(3) Employer funding obligations.--Nothing in this 
        subsection shall relieve an employer of any obligation imposed 
        on it to make contributions to a plan to meet the minimum 
        funding standards under part 3 of this subtitle B or to prevent 
        or restore an impermissible forfeiture in accordance with 
        section 203.
            ``(4) Recoupment from participants and beneficiaries.--If 
        the responsible plan fiduciary, in the exercise of its 
        fiduciary discretion, decides to seek recoupment from a 
        participant or beneficiary of all or part of an inadvertent 
        benefit overpayment made by the plan to such participant or 
        beneficiary, it may do so, subject to the following conditions:
                    ``(A) No interest or other additional amounts (such 
                as collection costs or fees) are sought on overpaid 
                amounts for any period before or after the date of 
                correction of such overpayment.
                    ``(B) If the plan seeks to recoup past overpayments 
                of a non-decreasing periodic benefit by reducing future 
                benefit payments--
                            ``(i) the reduction ceases after the plan 
                        has recovered the full dollar amount of the 
                        overpayment,
                            ``(ii) the amount recouped each calendar 
                        year does not exceed 10 percent of the full 
                        dollar amount of the overpayment, and
                            ``(iii) future benefit payments are not 
                        reduced to below 90 percent of the periodic 
                        amount otherwise payable under the terms of the 
                        plan.
                Alternatively, if the plan seeks to recoup past 
                overpayments of a non-decreasing periodic benefit 
                through one or more installment payments, the sum of 
                such installment payments in any calendar year does not 
                exceed the sum of the reductions that would be 
                permitted in such year under the preceding sentence.
                    ``(C) If the plan seeks to recoup past overpayments 
                of a benefit other than a non-decreasing periodic 
                benefit, the plan satisfies requirements developed by 
                the Secretary for purposes of this subparagraph.
                    ``(D) Efforts to recoup overpayments are--
                            ``(i) not accompanied by threats of 
                        litigation, unless the responsible plan 
                        fiduciary reasonably believes it could prevail 
                        in a civil action brought in Federal or State 
                        court to recoup the overpayments, and
                            ``(ii) not made through a collection agency 
                        or similar third party, unless the participant 
                        or beneficiary ignores or rejects efforts to 
                        recoup the overpayment following either a final 
                        judgment in Federal or State court or a 
                        settlement between the participant or 
                        beneficiary and the plan, in either case 
                        authorizing such recoupment.
                    ``(E) Recoupment of past overpayments to a 
                participant is not sought from any beneficiary of the 
                participant, including a spouse, surviving spouse, 
                former spouse, or other beneficiary.
                    ``(F) Recoupment may not be sought if the first 
                overpayment occurred more than 3 years before the 
                participant or beneficiary is first notified in writing 
                of the error.
                    ``(G) A participant or beneficiary from whom 
                recoupment is sought is entitled to contest all or part 
                of the recoupment pursuant to the plan's claims 
                procedures.
                    ``(H) In determining the amount of recoupment to 
                seek, the responsible plan fiduciary may take into 
                account the hardship that recoupment likely would 
                impose on the participant or beneficiary.
            ``(5) Effect of culpability.--Subparagraphs (A) through (F) 
        of paragraph (4) shall not apply to protect a participant or 
        beneficiary who is culpable. For purposes of this paragraph, a 
        participant or beneficiary is culpable if the individual bears 
        responsibility for the overpayment (such as through 
        misrepresentations or omissions that led to the overpayment), 
        or if the individual knew, or had good reason to know under the 
        circumstances, that the benefit payment or payments were 
        materially in excess of the correct amount. Notwithstanding the 
        preceding sentence, an individual is not culpable merely 
        because the individual believed the benefit payment or payments 
        were or might be in excess of the correct amount, if the 
        individual raised that question with an authorized plan 
        representative and was told the payment or payments were not in 
        excess of the correct amount. With respect to a culpable 
        participant or beneficiary, efforts to recoup overpayments 
        shall not be made through threats of litigation, unless a 
        lawyer for the plan could make the representations required 
        under Rule 11 of the Federal Rules of Civil Procedure if the 
        litigation were brought in Federal court.''.
    (b) Overpayments Under Internal Revenue Code of 1986.--
            (1) Qualification requirements.--Section 414 of the 
        Internal Revenue Code of 1986, is further amended by adding at 
        the end the following new subsection:
    ``(bb) Special Rules Applicable to Benefit Overpayments.--
            ``(1) In general.--A plan shall not fail to be treated as 
        described in clause (i), (ii), (iii), or (iv) of section 
        219(g)(5)(A) (and shall not fail to be treated as satisfying 
        the requirements of section 401(a) or 403) merely because--
                    ``(A) the plan fails to obtain payment from any 
                participant, beneficiary, employer, plan sponsor, 
                fiduciary, or other party on account of any inadvertent 
                benefit overpayment made by the plan, or
                    ``(B) the plan sponsor amends the plan to reduce 
                past or future benefit payments to affected 
                participants and beneficiaries in order to adjust for 
                prior inadvertent benefit overpayments.
            ``(2) Reduction in future benefit payments and recovery 
        from responsible party.--Paragraph (1) shall not fail to apply 
        to a plan merely because, after discovering a benefit 
        overpayment, such plan--
                    ``(A) reduces future benefit payments to the 
                correct amount provided for under the terms of the 
                plan, or
                    ``(B) seeks recovery from the person or persons 
                responsible for such overpayment.
            ``(3) Employer funding obligations.--Nothing in this 
        subsection shall relieve an employer of any obligation imposed 
        on it to make contributions to a plan to meet the minimum 
        funding standards under sections 412 and 430 or to prevent or 
        restore an impermissible forfeiture in accordance with section 
        411.
            ``(4) Observance of benefit limitations.--Notwithstanding 
        paragraph (1), a plan to which paragraph (1) applies shall 
        observe any limitations imposed on it by section 401(a)(17) or 
        415. The plan may enforce such limitations using any method 
        approved by the Secretary of the Treasury for recouping 
        benefits previously paid or allocations previously made in 
        excess of such limitations.
            ``(5) Coordination with other qualification requirements.--
        The Secretary of the Treasury may issue regulations or other 
        guidance of general applicability specifying how benefit 
        overpayments and their recoupment or non-recoupment from a 
        participant or beneficiary shall be taken into account for 
        purposes of satisfying any requirement applicable to a plan to 
        which paragraph (1) applies.''.
            (2) Rollovers.--Section 402(c) of such Code is amended by 
        adding at the end the following new paragraph:
            ``(12) In the case of an inadvertent benefit overpayment 
        from a plan to which section 414(bb)(1) applies that is 
        transferred to an eligible retirement plan by or on behalf of a 
        participant or beneficiary--
                    ``(A) the portion of such overpayment with respect 
                to which recoupment is not sought on behalf of the plan 
                shall be treated as having been paid in an eligible 
                rollover distribution if the payment would have been an 
                eligible rollover distribution but for being an 
                overpayment, and
                    ``(B) the portion of such overpayment with respect 
                to which recoupment is sought on behalf of the plan 
                shall be permitted to be returned to such plan and in 
                such case shall be treated as an eligible rollover 
                distribution transferred to such plan by the 
                participant or beneficiary who received such 
                overpayment (and the plans making and receiving such 
                transfer shall be treated as permitting such transfer).
        In any case in which recoupment is sought on behalf of the plan 
        but is disputed by the participant or beneficiary who received 
        such overpayment, such dispute shall be subject to the claims 
        procedures of the plan that made such overpayment, such plan 
        shall notify the plan receiving the rollover of such dispute, 
        and the plan receiving the rollover shall retain such 
        overpayment on behalf of the participant or beneficiary (and 
        shall be entitled to treat such overpayment as plan assets) 
        pending the outcome of such procedures.''.
    (c) Effective Date.--The amendments made by this section shall 
apply as of the date of the enactment of this Act.
    (d) Certain Actions Before Date of Enactment.--Plans, fiduciaries, 
employers, and plan sponsors are entitled to rely on--
            (1) a good faith interpretation of then existing 
        administrative guidance for inadvertent benefit overpayment 
        recoupments and recoveries that commenced before the date of 
        enactment of this Act, and
            (2) determinations made before the date of enactment of 
        this Act by the responsible plan fiduciary, in the exercise of 
        its fiduciary discretion, not to seek recoupment or recovery of 
        all or part of an inadvertent benefit overpayment.
In the case of a benefit overpayment that occurred prior to the date of 
enactment of this Act, any installment payments by the participant or 
beneficiary to the plan or any reduction in periodic benefit payments 
to the participant or beneficiary, which were made in recoupment of 
such overpayment and which commenced prior to such date, may continue 
after such date. Nothing in this subsection shall relieve a fiduciary 
from responsibility for an overpayment that resulted from a breach of 
its fiduciary duties.

SEC. 12. IMPROVING COVERAGE FOR PART-TIME WORKERS.

    (a) Amendment of Employee Retirement Income Security Act of 1974.--
            (1) In general.--Section 202 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1052) is amended by 
        adding at the end the following new subsection:
    ``(c) Special Rule for Certain Part-time Employees.--
            ``(1) In general.--A pension plan that includes either a 
        qualified cash or deferred arrangement (as defined in section 
        401(k) of the Internal Revenue Code of 1986) or a salary 
        reduction agreement (as described in section 403(b) of such 
        Code) shall not require, as a condition of participation in the 
        arrangement or agreement, that an employee complete a period of 
        service with the employer (or employers) maintaining the plan 
        extending beyond the close of the earlier of--
                    ``(A) the period permitted under subsection (a)(1) 
                (determined without regard to subparagraph (B)(i) 
                thereof); or
                    ``(B) the first 24-month period--
                            ``(i) consisting of 2 consecutive 12-month 
                        periods during each of which the employee has 
                        at least 500 hours of service; and
                            ``(ii) by the close of which the employee 
                        has attained the age of 21.
            ``(2) Exception.--Paragraph (1)(B) shall not apply to any 
        employee described in section 410(b)(3) of the Internal Revenue 
        Code of 1986.
            ``(3) Coordination with other rules.--
                    ``(A) In general.--In the case of employees who are 
                eligible to participate in the arrangement or agreement 
                solely by reason of paragraph (1)(B):
                            ``(i) Exclusions.--An employer may elect to 
                        exclude such employees from the application of 
                        subsections (a)(4), (k)(3), (k)(12), (k)(13), 
                        (k)(15)(B)(i)(I), and (m)(2) of section 401 of 
                        the Internal Revenue Code of 1986 and section 
                        410(b) of such Code.
                            ``(ii) Time of participation.--The rules of 
                        subsection (a)(4) shall apply to such 
                        employees.
                    ``(B) Top-heavy rules.--An employer may elect to 
                exclude all employees who are eligible to participate 
                in a plan maintained by the employer solely by reason 
                of paragraph (1)(B) from the application of the vesting 
                and benefit requirements under subsections (b) and (c) 
                of section 416 of the Internal Revenue Code of 1986.
            ``(4) 12-month period.--For purposes of this subsection, 
        12-month periods shall be determined in the same manner as 
        under the last sentence of subsection (a)(3)(A), except that 
        12-month periods beginning before January 1, 2021, shall not be 
        taken into account.''
            (2) Vesting.--Section 203(b) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended by 
        redesignating paragraph (4) as paragraph (5) and by inserting 
        after paragraph (3) the following new paragraph:
            ``(4) Part-time employees.--For purposes of determining 
        whether an employee who is eligible to participate in a 
        qualified cash or deferred arrangement or a salary reduction 
        agreement under a plan solely by reason of section 202(c)(1)(B) 
        has a nonforfeitable right to employer contributions--
                    ``(A) except as provided in subparagraph (B), each 
                12-month period for which the employee has at least 500 
                hours of service shall be treated as a year of service;
                    ``(B) paragraph (3) shall be applied by 
                substituting `at least 500 hours of service' for `more 
                than 500 hours of service' in subparagraph (A) thereof; 
                and
                    ``(C) 12-month periods occurring before the 24-
                month period described in section 202(c)(1)(B) shall 
                not be treated as years of service.
        For purposes of this paragraph, 12-month periods shall be 
        determined in the same manner as under the last sentence of 
        section 202(a)(3)(A), except that 12-month periods beginning 
        before January 1, 2021, shall not be taken into account.''.
            (3) Pre-2021 service.--Section 112(b) of the Setting Every 
        Community Up for Retirement Enhancement Act of 2019 (26 U.S.C. 
        401 note) is amended by striking ``section 401(k)(2)(D)(ii)'' 
        and inserting ``paragraphs (2)(D)(ii) and (15)(B)(iii) of 
        section 401(k)''.
    (b) Conforming Amendments to Internal Revenue Code of 1986.--
            (1) In general.--Section 410(a) of the Internal Revenue 
        Code of 1986 is amended by adding at the end the following new 
        paragraph:
            ``(6) Special rule for certain part-time employees.--
                    ``(A) In general.--In the case of a plan that 
                includes either a qualified cash or deferred 
                arrangement (as defined in section 401(k)), a trust of 
                which such plan is a part shall not constitute a 
                qualified trust under section 401(a) if the plan 
                requires, as a condition of participation in the plan 
                or arrangement, that an employee complete a period of 
                service with the employer (or employers) maintaining 
                the plan extending beyond the close of the earlier of--
                            ``(i) the period permitted under paragraph 
                        (1) (determined without regard to subparagraph 
                        (B)(i) thereof), or
                            ``(ii) the first 24-month period--
                                    ``(I) consisting of 2 consecutive 
                                12-month periods during each of which 
                                the employee has at least 500 hours of 
                                service, and
                                    ``(II) by the close of which the 
                                employee has attained the age of 21.
                    ``(B) Exception.--Subparagraph (A)(ii) shall not 
                apply to any employee described in section 410(b)(3).
                    ``(C) Coordination with other rules.--
                            ``(i) In general.--In the case of employees 
                        who are eligible to participate in the 
                        arrangement or agreement solely by reason of 
                        subparagraph (A)(ii)--
                                    ``(I) Exclusions.--An employer may 
                                elect to exclude such employees from 
                                the application of subsection (b) and 
                                of subsections (a)(4), (k)(3), (k)(12), 
                                (k)(13), (k)(15)(B)(i)(I), and (m)(2) 
                                of section 401.
                                    ``(II) Time of participation.--The 
                                rules of paragraph (4) shall apply to 
                                such employees.
                            ``(ii) Top-heavy rules.--An employer may 
                        elect to exclude all employees who are eligible 
                        to participate in a plan maintained by the 
                        employer solely by reason of subparagraph 
                        (A)(ii) from the application of the vesting and 
                        benefit requirements under subsections (b) and 
                        (c) of section 416.
                    ``(D) 12-month period.--For purposes of this 
                paragraph, 12-month periods shall be determined in the 
                same manner as under the last sentence of paragraph 
                (3)(A), except that 12-month periods beginning before 
                January 1, 2021, shall not be taken into account.''.
            (2) Vesting.--Section 410(a) of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following:
            ``(7) Part-time employees.--For purposes of determining 
        whether an employee who is eligible to participate in a 
        qualified cash or deferred arrangement or a salary reduction 
        agreement under a plan solely by reason of paragraph (6)(A)(ii) 
        has a nonforfeitable right to employer contributions--
                    ``(A) except as provided in subparagraph (B), each 
                12-month period for which the employee has at least 500 
                hours of service shall be treated as a year of service,
                    ``(B) section 411(a)(6) shall be applied by 
                substituting `at least 500 hours of service' for `more 
                than 500 hours of service' in subparagraph (A) thereof, 
                and
                    ``(C) 12-month periods occurring before the 24-
                month period described in paragraph (6)(A)(ii) shall 
                not be treated as years of service.
        For purposes of this paragraph, 12-month periods shall be 
        determined in the same manner as under paragraph (6)(D).''.
                                                 Union Calendar No. 180

117th CONGRESS

  2d Session

                               H. R. 5891

                      [Report No. 117-250, Part I]

_______________________________________________________________________