Title: Retirement Security Act of 2017
Policy area: Taxation

Summary:
Retirement Security Act of 2017
This bill amends the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 (ERISA) to modify various requirements for employer-provided retirement plans.
The bill modifies the qualification requirements for certain multiple employer plans with pooled providers. The bill applies to defined contribution plans that: (1) are sponsored by employers all of which have both a common interest other than having adopted the plan and control of the plan, or (2) have a pooled plan provider. Such a plan that meets specified requirements may not be disqualified or otherwise lose its tax-favored status because a participating employer fails to take actions required with respect to the plan.
The bill also: (1) permits pooled employer plans that meet certain requirements to be treated under ERISA as a single employee pension benefit plan or single pension plan that is a multiple employer plan, and (2) modifies reporting requirements for pooled employer and multiple employer plans.
With respect to 401(k) retirement plans, the bill: (1) modifies requirements related to default rates for elective deferrals under automatic enrollment plans, the election of safe harbor 401(k) status, and nondiscrimination rules; (2) allows a business-related safe harbor adoption tax credit for small employers, and (3) requires the Department of the Treasury to simplify regulations regarding the timing of participant notices.
The bill also: (1) increases the limit on the amount of the credit for small employer pension plan startup costs, (2) allows a business-related tax credit for small employers who include and maintain an automatic contribution arrangement in an employer-sponsored retirement plan, and (3) requires Treasury to modify tax forms to permit individuals to claim the saver's credit on Form 1040EZ.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1383 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 1383

   To amend the Internal Revenue Code of 1986 to modify safe harbor 
requirements applicable to automatic contribution arrangements, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 20, 2017

Ms. Collins (for herself and Mr. Nelson) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to modify safe harbor 
requirements applicable to automatic contribution arrangements, 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.

    This Act may be cited as the ``Retirement Security Act of 2017''.

SEC. 2. MULTIPLE EMPLOYER PLANS.

    (a) Qualification Requirements.--
            (1) In general.--Section 413 of the Internal Revenue Code 
        of 1986 is amended by adding at the end the following new 
        subsection:
    ``(e) Application of Qualification Requirements for Certain 
Multiple Employer Plans With Pooled Plan Providers.--
            ``(1) In general.--Except as provided in paragraph (2), if 
        a defined contribution plan to which subsection (c) applies--
                    ``(A) is sponsored by employers all of which have 
                both a common interest other than having adopted the 
                plan and control of the plan, or
                    ``(B) in the case of a plan not described in 
                subparagraph (A), has a pooled plan provider,
        then the plan shall not be treated as failing to meet the 
        requirements under this title applicable to a plan described in 
        section 401(a) or to a plan that consists of individual 
        retirement accounts described in section 408 (including by 
        reason of subsection (c) thereof), whichever is applicable, 
        merely because one or more employers of employees covered by 
        the plan fail to take such actions as are required of such 
        employers for the plan to meet such requirements.
            ``(2) Limitations.--
                    ``(A) In general.--Paragraph (1) shall not apply to 
                any plan unless the terms of the plan provide that in 
                cases of employers failing to take the actions 
                described in paragraph (1)--
                            ``(i) the assets of the plan attributable 
                        to employees of the employer will be 
                        transferred to a plan maintained only by the 
                        employer (or its successor), to an eligible 
                        retirement plan as defined in section 
                        402(c)(8)(B) for each individual whose account 
                        is transferred, or to any other arrangement 
                        that the Secretary determines is appropriate, 
                        unless the Secretary determines it is in the 
                        best interests of such employees to retain the 
                        assets in the plan, and
                            ``(ii) the employer described in clause (i) 
                        (and not the plan with respect to which the 
                        failure occurred or any other participating 
                        employer in such plan) shall, except to the 
                        extent provided by the Secretary, be liable for 
                        any liabilities with respect to such plan 
                        attributable to employees of the employer.
                    ``(B) Failures by pooled plan providers.--If the 
                pooled plan provider of a plan described in paragraph 
                (1)(B) does not perform substantially all of the 
                administrative duties which are required of the 
                provider under paragraph (3)(A)(i) for any plan year, 
                the Secretary, in the Secretary's own discretion, may 
                provide that the determination as to whether the plan 
                meets the requirements under this title applicable to a 
                plan described in section 401(a) or to a plan that 
                consists of individual retirement accounts described in 
                section 408 (including by reason of subsection (c) 
                thereof), whichever is applicable, shall be made in the 
                same manner as would be made without regard to 
                paragraph (1).
            ``(3) Pooled plan provider.--For purposes of this 
        subsection--
                    ``(A) In general.--The term `pooled plan provider' 
                means, with respect to any plan, a person who--
                            ``(i) is designated by the terms of the 
                        plan as a named fiduciary (as defined in 
                        section 402(a)(2) of the Employee Retirement 
                        Income Security Act of 1974), as the plan 
                        administrator, and as the person responsible to 
                        perform all administrative duties (including 
                        conducting proper testing with respect to the 
                        plan and employees of each participating 
                        employer) which are reasonably necessary to 
                        ensure that--
                                    ``(I) the plan meets any 
                                requirement applicable under the 
                                Employee Retirement Income Security Act 
                                of 1974 or this title to a plan 
                                described in section 401(a) or to a 
                                plan that consists of individual 
                                retirement accounts described in 
                                section 408 (including by reason of 
                                subsection (c) thereof), whichever is 
                                applicable, and
                                    ``(II) each participating employer 
                                takes such actions as the Secretary or 
                                such person determines are necessary 
                                for the plan to meet the requirements 
                                described in subclause (I), including 
                                providing to such person any 
                                disclosures or other information which 
                                the Secretary may require or which such 
                                person otherwise determines is 
                                necessary to administer the plan or to 
                                allow the plan to meet such 
                                requirements,
                            ``(ii) registers as a pooled plan provider 
                        with the Secretary, and provides such other 
                        information to the Secretary as the Secretary 
                        may require, before beginning operations as a 
                        pooled plan provider,
                            ``(iii) acknowledges in writing that such 
                        person is a named fiduciary (within the meaning 
                        of section 402(a)(2) of the Employee Retirement 
                        Income Security Act of 1974), and the plan 
                        administrator, with respect to the plan, and
                            ``(iv) is responsible for ensuring that all 
                        persons who handle assets of, or who are 
                        fiduciaries of, the plan are bonded in 
                        accordance with section 412 of the Employee 
                        Retirement Income Security Act of 1974.
                    ``(B) Audits, examinations and investigations.--The 
                Secretary may perform audits, examinations, and 
                investigations of pooled plan providers as may be 
                necessary to enforce and carry out the purposes of this 
                subsection.
            ``(4) Guidance.--
                    ``(A) In general.--The Secretary shall issue such 
                guidance as the Secretary determines appropriate to 
                carry out this subsection, including guidance--
                            ``(i) to identify the administrative duties 
                        and other actions required to be performed by a 
                        pooled plan provider under this subsection,
                            ``(ii) which describes the procedures to be 
                        taken to terminate a plan which fails to meet 
                        the requirements to be a plan described in 
                        paragraph (1), including the proper treatment 
                        of, and actions needed to be taken by, any 
                        participating employer of the plan and the 
                        assets and liabilities of the plan with respect 
                        to employees of that employer, and
                            ``(iii) identifying appropriate cases to 
                        which the rules of paragraph (2)(A) will apply 
                        to employers failing to take the actions 
                        described in paragraph (1).
                The Secretary shall take into account under clause 
                (iii) whether the failure of an employer or pooled plan 
                provider to provide any disclosures or other 
                information, or to take any other action, necessary to 
                administer a plan or to allow a plan to meet 
                requirements applicable to the plan under section 
                401(a) or 408, whichever is applicable, has continued 
                over a period of time that clearly demonstrates a lack 
                of commitment to compliance.
                    ``(B) Prospective application.--Any guidance issued 
                by the Secretary under this paragraph shall not apply 
                to any action or failure occurring before the issuance 
                of such guidance.
            ``(5) Model plan.--The Secretary shall, in consultation 
        with the Secretary of Labor when appropriate, publish model 
        plan language which meets the requirements of this subsection 
        and of paragraphs (43) and (44) of section 3 of the Employee 
        Retirement Income Security Act of 1974 and which may be adopted 
        in order for a plan to be treated as a plan described in 
        paragraph (1)(B).''.
            (2) Conforming amendment.--Paragraph (3) of section 413(b) 
        of such Code is amended by striking ``section 401(a)'' and 
        inserting ``sections 401(a) and 408(c)''.
            (3) Technical amendment.--Subsection (c) of section 408 of 
        such Code is amended by inserting after paragraph (2) the 
        following new paragraph:
            ``(3) There is a separate accounting for any interest of an 
        employee or member (or spouse of an employee or member) in a 
        Roth IRA.''.
    (b) No Common Interest Required for Pooled Employer Plans.--Section 
3(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1002(2)) is amended by adding at the end the following:
                    ``(C) A pooled employer plan shall be treated as--
                            ``(i) a single employee pension benefit 
                        plan or single pension plan; and
                            ``(ii) a plan to which section 210(a) 
                        applies.''.
    (c) Pooled Employer Plan and Provider Defined.--
            (1) In general.--Section 3 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1002) is amended by 
        adding at the end the following:
            ``(43) Pooled employer plan.--
                    ``(A) In general.--The term `pooled employer plan' 
                means a plan--
                            ``(i) which is an individual account plan 
                        established or maintained for the purpose of 
                        providing benefits to the employees of 2 or 
                        more employers;
                            ``(ii) which is a plan described in section 
                        401(a) of the Internal Revenue Code of 1986 
                        which includes a trust exempt from tax under 
                        section 501(a) of such Code or a plan that 
                        consists of individual retirement accounts 
                        described in section 408 of such Code 
                        (including by reason of subsection (c) 
                        thereof); and
                            ``(iii) the terms of which meet the 
                        requirements of subparagraph (B).
                Such term shall not include a plan with respect to 
                which all of the participating employers have both a 
                common interest other than having adopted the plan and 
                control of the plan.
                    ``(B) Requirements for plan terms.--The 
                requirements of this subparagraph are met with respect 
                to any plan if the terms of the plan--
                            ``(i) designate a pooled plan provider and 
                        provide that the pooled plan provider is a 
                        named fiduciary of the plan;
                            ``(ii) designate one or more trustees 
                        meeting the requirements of section 408(a)(2) 
                        of the Internal Revenue Code of 1986 (other 
                        than a participating employer) to be 
                        responsible for collecting contributions to, 
                        and holding the assets of, the plan and require 
                        such trustees to implement written contribution 
                        collection procedures that are reasonable, 
                        diligent, and systematic;
                            ``(iii) provide that each participating 
                        employer retains fiduciary responsibility for--
                                    ``(I) the selection and monitoring 
                                in accordance with section 404(a) of 
                                the person designated as the pooled 
                                plan provider and any other person who, 
                                in addition to the pooled plan 
                                provider, is designated as a named 
                                fiduciary of the plan; and
                                    ``(II) to the extent not otherwise 
                                delegated to another fiduciary by the 
                                pooled plan provider and subject to the 
                                provisions of section 404(c), the 
                                investment and management of that 
                                portion of the plan's assets 
                                attributable to the employees of that 
                                participating employer;
                            ``(iv) provide that a participating 
                        employer, or a participant or beneficiary, is 
                        not subject to unreasonable restrictions, fees, 
                        or penalties with regard to ceasing 
                        participation, receipt of distributions, or 
                        otherwise transferring assets of the plan in 
                        accordance with section 208 or paragraph 
                        (44)(C)(i)(II);
                            ``(v) require--
                                    ``(I) the pooled plan provider to 
                                provide to participating employers any 
                                disclosures or other information which 
                                the Secretary may require, including 
                                any disclosures or other information to 
                                facilitate the selection or any 
                                monitoring of the pooled plan provider 
                                by participating employers; and
                                    ``(II) each participating employer 
                                to take such actions as the Secretary 
                                or the pooled plan provider determines 
                                are necessary to administer the plan or 
                                for the plan to meet any requirement 
                                applicable under this Act or the 
                                Internal Revenue Code of 1986 to a plan 
                                described in section 401(a) of such 
                                Code or to a plan that consists of 
                                individual retirement accounts 
                                described in section 408 of such Code 
                                (including by reason of subsection (c) 
                                thereof), whichever is applicable, 
                                including providing any disclosures or 
                                other information which the Secretary 
                                may require or which the pooled plan 
                                provider otherwise determines is 
                                necessary to administer the plan or to 
                                allow the plan to meet such 
                                requirements; and
                            ``(vi) provide that any disclosure or other 
                        information required to be provided under 
                        clause (v) may be provided in electronic form 
                        and will be designed to ensure only reasonable 
                        costs are imposed on pooled plan providers and 
                        participating employers.
                    ``(C) Exceptions.--The term `pooled employer plan' 
                does not include--
                            ``(i) a multiemployer plan; or
                            ``(ii) a plan established before January 1, 
                        2016, unless the plan administrator elects that 
                        the plan will be treated as a pooled employer 
                        plan and the plan meets the requirements of 
                        this title applicable to a pooled employer plan 
                        established on or after such date.
            ``(44) Pooled plan provider.--
                    ``(A) In general.--The term `pooled plan provider' 
                means a person who--
                            ``(i) is designated by the terms of a 
                        pooled employer plan as a named fiduciary, as 
                        the plan administrator, and as the person 
                        responsible for the performance of all 
                        administrative duties (including conducting 
                        proper testing with respect to the plan and 
                        employees of each participating employer) which 
                        are reasonably necessary to ensure that--
                                    ``(I) the plan meets any 
                                requirement applicable under this Act 
                                or the Internal Revenue Code of 1986 to 
                                a plan described in section 401(a) of 
                                such Code or to a plan that consists of 
                                individual retirement accounts 
                                described in section 408 of such Code 
                                (including by reason of subsection (c) 
                                thereof), whichever is applicable; and
                                    ``(II) each participating employer 
                                takes such actions as the Secretary or 
                                pooled plan provider determines are 
                                necessary for the plan to meet the 
                                requirements described in subclause 
                                (I), including providing the 
                                disclosures and information described 
                                in paragraph (43)(B)(v)(II);
                            ``(ii) registers as a pooled plan provider 
                        with the Secretary, and provides to the 
                        Secretary such other information as the 
                        Secretary may require, before beginning 
                        operations as a pooled plan provider;
                            ``(iii) acknowledges in writing that such 
                        person is a named fiduciary, and the plan 
                        administrator, with respect to the pooled 
                        employer plan; and
                            ``(iv) is responsible for ensuring that all 
                        persons who handle assets of, or who are 
                        fiduciaries of, the pooled employer plan are 
                        bonded in accordance with section 412.
                    ``(B) Audits, examinations and investigations.--The 
                Secretary may perform audits, examinations, and 
                investigations of pooled plan providers as may be 
                necessary to enforce and carry out the purposes of this 
                paragraph and paragraph (43).
                    ``(C) Guidance.--
                            ``(i) In general.--The Secretary shall 
                        issue such guidance as the Secretary determines 
                        appropriate to carry out this paragraph and 
                        paragraph (43), including guidance--
                                    ``(I) to identify the 
                                administrative duties and other actions 
                                required to be performed by a pooled 
                                plan provider under either such 
                                paragraph; and
                                    ``(II) which requires in 
                                appropriate cases that if a 
                                participating employer fails to take 
                                the actions required under subparagraph 
                                (A)(i)(II)--
                                            ``(aa) the assets of the 
                                        plan attributable to employees 
                                        of the participating employer 
                                        are transferred to a plan 
                                        maintained only by the 
                                        participating employer (or its 
                                        successor), to an eligible 
                                        retirement plan as defined in 
                                        section 402(c)(8)(B) of the 
                                        Internal Revenue Code of 1986 
                                        for each individual whose 
                                        account is transferred, or to 
                                        any other arrangement that the 
                                        Secretary determines is 
                                        appropriate in such guidance; 
                                        and
                                            ``(bb) the participating 
                                        employer described in item (aa) 
                                        (and not the plan with respect 
                                        to which the failure occurred 
                                        or any other participating 
                                        employer in such plan) shall, 
                                        except to the extent provided 
                                        in such guidance, be liable for 
                                        any liabilities with respect to 
                                        such plan attributable to 
                                        employees of the participating 
                                        employer.
                        The Secretary shall take into account under 
                        subclause (II) whether the failure of an 
                        employer or pooled plan provider to provide any 
                        disclosures or other information, or to take 
                        any other action, necessary to administer a 
                        plan or to allow a plan to meet requirements 
                        described in subparagraph (A)(i)(II) has 
                        continued over a period of time that clearly 
                        demonstrates a lack of commitment to 
                        compliance. The Secretary may waive the 
                        requirements of subclause (II)(aa) in 
                        appropriate circumstances if the Secretary 
                        determines it is in the best interests of the 
                        employees of the participating employer 
                        described in such clause to retain the assets 
                        in the plan with respect to which the 
                        employer's failure occurred.
                            ``(ii) Prospective application.--Any 
                        guidance issued by the Secretary under this 
                        subparagraph shall not apply to any action or 
                        failure occurring before the issuance of such 
                        guidance.
                    ``(D) Aggregation rules.--For purposes of this 
                paragraph--
                            ``(i) In general.--In determining whether a 
                        person meets the requirements of this paragraph 
                        to be a pooled plan provider with respect to 
                        any plan, all persons who are members of the 
                        same controlled group and who perform services 
                        for the plan shall be treated as one person.
                            ``(ii) Members of common group.--Persons 
                        shall be treated as members of the same 
                        controlled group if such persons are treated as 
                        a single employer under subsection (c) or (d) 
                        of section 210.''.
            (2) Bonding requirements for pooled employer plans.--The 
        last sentence of section 412(a) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1112(a)) is amended by 
        inserting ``or in the case of a pooled employer plan (as 
        defined in section 3(43)'' after ``section 407(d)(1))''.
            (3) Conforming and technical amendments.--Section 3 of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1002) is amended--
                    (A) in paragraph (16)(B)--
                            (i) by striking ``or'' at the end of clause 
                        (ii), and
                            (ii) by striking the period at the end and 
                        inserting ``, or (iv) in the case of a pooled 
                        employer plan, the pooled plan provider.''; and
                    (B) by striking the second paragraph (41).
    (d) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to years beginning after December 31, 2017.
            (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 a multiple employer 
        plan.

SEC. 3. POOLED EMPLOYER AND MULTIPLE EMPLOYER PLAN REPORTING.

    (a) Additional Information.--Section 103 of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1023) is amended--
            (1) in subsection (a)(1)(B), by striking ``applicable 
        subsections (d), (e), and (f)'' and inserting ``applicable 
        subsections (d), (e), (f), and (g)''; and
            (2) by amending subsection (g) to read as follows:
    ``(g) Additional Information With Respect to Pooled Employer and 
Multiple Employer Plans.--An annual report under this section for a 
plan year shall include--
            ``(1) with respect to any plan to which section 210(a) 
        applies (including a pooled employer plan), a list of 
        participating employers and a good faith estimate of the 
        percentage of total contributions made by such participating 
        employers during the plan year; and
            ``(2) with respect to a pooled employer plan, the 
        identifying information for the person designated under the 
        terms of the plan as the pooled plan provider.''.
    (b) Simplified Annual Reports.--Section 104(a) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1024(a)) is amended 
by striking paragraph (2)(A) and inserting the following:
            ``(2)(A) With respect to annual reports required to be 
        filed with the Secretary under this part, the Secretary may by 
        regulation prescribe simplified annual reports for any pension 
        plan that--
                    ``(i) covers fewer than 100 participants; or
                    ``(ii) is a plan described in section 210(a) that 
                covers fewer than 1,000 participants, but only if no 
                single participating employer has 100 or more 
                participants covered by the plan.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to annual reports for plan years beginning after December 31, 
2017.

SEC. 4. REMOVAL OF 10 PERCENT CAP FROM AUTOMATIC ENROLLMENT SAFE HARBOR 
              AFTER 1ST PLAN YEAR.

    (a) In General.--Clause (iii) of section 401(k)(13)(C) of the 
Internal Revenue Code of 1986 is amended by striking ``, does not 
exceed 10 percent, and is at least'' and inserting ``and is''.
    (b) Conforming Amendments.--
            (1) Subclause (I) of section 401(k)(13)(C)(iii) of the 
        Internal Revenue Code of 1986 is amended by striking ``3 
        percent'' and inserting ``at least 3 percent, but not greater 
        than 10 percent,''.
            (2) Subclause (II) of section 401(k)(13)(C)(iii) of such 
        Code is amended by striking ``4 percent'' and inserting ``at 
        least 4 percent''.
            (3) Subclause (III) of section 401(k)(13)(C)(iii) of such 
        Code is amended by striking ``5 percent'' and inserting ``at 
        least 5 percent''.
            (4) Subclause (IV) of section 401(k)(13)(C)(iii) of such 
        Code is amended by striking ``6 percent'' and inserting ``at 
        least 6 percent''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2017.

SEC. 5. RULES RELATING TO ELECTION OF SAFE HARBOR 401(K) STATUS.

    (a) Limitation of Annual Safe Harbor Notice to Matching 
Contribution Plans.--
            (1) In general.--Subparagraph (A) of section 401(k)(12) of 
        the Internal Revenue Code of 1986 is amended by striking ``if 
        such arrangement'' and all that follows and inserting ``if such 
        arrangement--
                            ``(i) meets the contribution requirements 
                        of subparagraph (B) and the notice requirements 
                        of subparagraph (D), or
                            ``(ii) meets the contribution requirements 
                        of subparagraph (C).''.
            (2) Automatic contribution arrangements.--Subparagraph (B) 
        of section 401(k)(13) of such Code is amended by striking 
        ``means'' and all that follows and inserting ``means a cash or 
        deferred arrangement--
                            ``(i) which is described in subparagraph 
                        (D)(i)(I) and meets the applicable requirements 
                        of subparagraphs (C) through (E), or
                            ``(ii) which is described in subparagraph 
                        (D)(i)(II) and meets the applicable 
                        requirements of subparagraphs (C) and (D).''.
    (b) Nonelective Contributions.--Section 401(k)(12) of the Internal 
Revenue Code of 1986 is amended by redesignating subparagraph (F) as 
subparagraph (G), and by inserting after subparagraph (E) the following 
new subparagraph:
                    ``(F) Timing of plan amendment for employer making 
                nonelective contributions.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a plan may be amended after the 
                        beginning of a plan year to provide that the 
                        requirements of subparagraph (C) shall apply to 
                        the arrangement for the plan year, but only if 
                        the amendment is adopted--
                                    ``(I) at any time before the 30th 
                                day before the close of the plan year, 
                                or
                                    ``(II) at any time before the last 
                                day under paragraph (8)(A) for 
                                distributing excess contributions for 
                                the plan year.
                            ``(ii) Exception where plan provided for 
                        matching contributions.--Clause (i) shall not 
                        apply to any plan year if the plan provided at 
                        any time during the plan year that the 
                        requirements of subparagraph (B) or paragraph 
                        (13)(D)(i)(I) applied to the plan year.
                            ``(iii) 4-percent contribution 
                        requirement.--Clause (i)(II) shall not apply to 
                        an arrangement unless the amount of the 
                        contributions described in subparagraph (C) 
                        which the employer is required to make under 
                        the arrangement for the plan year with respect 
                        to any employee is an amount equal to at least 
                        4 percent of the employee's compensation.''.
    (c) Automatic Contribution Arrangements.--Section 401(k)(13) of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following:
                    ``(F) Timing of plan amendment for employer making 
                nonelective contributions.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a plan may be amended after the 
                        beginning of a plan year to provide that the 
                        requirements of subparagraph (D)(i)(II) shall 
                        apply to the arrangement for the plan year, but 
                        only if the amendment is adopted--
                                    ``(I) at any time before the 30th 
                                day before the close of the plan year, 
                                or
                                    ``(II) at any time before the last 
                                day under paragraph (8)(A) for 
                                distributing excess contributions for 
                                the plan year.
                            ``(ii) Exception where plan provided for 
                        matching contributions.--Clause (i) shall not 
                        apply to any plan year if the plan provided at 
                        any time during the plan year that the 
                        requirements of subparagraph (D)(i)(I) or 
                        paragraph (12)(B) applied to the plan year.
                            ``(iii) 4-percent contribution 
                        requirement.--Clause (i)(II) shall not apply to 
                        an arrangement unless the amount of the 
                        contributions described in subparagraph 
                        (D)(i)(II) which the employer is required to 
                        make under the arrangement for the plan year 
                        with respect to any employee is an amount equal 
                        to at least 4 percent of the employee's 
                        compensation.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2017.

SEC. 6. INCREASE IN CREDIT LIMITATION FOR SMALL EMPLOYER PENSION PLAN 
              STARTUP COSTS.

    (a) In General.--Paragraph (1) of section 45E(b) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(1) for the first credit year and each of the 2 taxable 
        years immediately following the first credit year, the greater 
        of--
                    ``(A) $500, or
                    ``(B) the lesser of--
                            ``(i) $250 for each employee of the 
                        eligible employer who is not a highly 
                        compensated employee (as defined in section 
                        414(q)) and who is eligible to participate in 
                        the eligible employer plan maintained by the 
                        eligible employer, or
                            ``(ii) $5,000, and''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2017.

SEC. 7. SMALL EMPLOYER AUTOMATIC ENROLLMENT CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45S. AUTO-ENROLLMENT OPTION FOR RETIREMENT SAVINGS OPTIONS 
              PROVIDED BY SMALL EMPLOYERS.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible employer, the retirement auto-enrollment credit determined 
under this section for any taxable year is an amount equal to--
            ``(1) $500 for any taxable year occurring during the credit 
        period, and
            ``(2) zero for any other taxable year.
    ``(b) Credit Period.--For purposes of subsection (a)--
            ``(1) In general.--The credit period with respect to any 
        eligible employer is the 3-taxable-year period beginning with 
        the first taxable year for which the employer includes an 
        eligible automatic contribution arrangement (as defined in 
        section 414(w)(3)) in a qualified employer plan (as defined in 
        section 4972(d)) sponsored by the employer.
            ``(2) Maintenance of arrangement.--No taxable year with 
        respect to an employer shall be treated as occurring within the 
        credit period unless the arrangement described in paragraph (1) 
        is included in the plan for such year.
    ``(c) Eligible Employer.--For purposes of this section, the term 
`eligible employer' has the meaning given such term in section 
408(p)(2)(C)(i).''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of the Internal Revenue Code of 1986 is amended by 
striking ``plus'' at the end of paragraph (35), by striking the period 
at the end of paragraph (36) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
            ``(37) in the case of an eligible employer (as defined in 
        section 45S(c)), the retirement auto-enrollment credit 
        determined under section 45S(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 45R the 
following new item:

``Sec. 45S. Auto-enrollment option for retirement savings options 
                            provided by small employers.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

SEC. 8. SECURE DEFERRAL ARRANGEMENTS.

    (a) In General.--Subsection (k) of section 401 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(14) Alternative method for secure deferral arrangements 
        to meet nondiscrimination requirements.--
                    ``(A) In general.--A secure deferral arrangement 
                shall be treated as meeting the requirements of 
                paragraph (3)(A)(ii).
                    ``(B) Secure deferral arrangement.--For purposes of 
                this paragraph, the term `secure deferral arrangement' 
                means any cash or deferred arrangement which meets the 
                requirements of subparagraphs (C), (D), and (E) of 
                paragraph (13), except as modified by this paragraph.
                    ``(C) Qualified percentage.--For purposes of this 
                paragraph, with respect to any employee, the term 
                `qualified percentage' means, in lieu of the meaning 
                given such term in paragraph (13)(C)(iii), any 
                percentage determined under the arrangement if such 
                percentage is applied uniformly and is--
                            ``(i) at least 6 percent, but not greater 
                        than 10 percent, during the period ending on 
                        the last day of the first plan year which 
                        begins after the date on which the first 
                        elective contribution described in paragraph 
                        (13)(C)(i) is made with respect to such 
                        employee,
                            ``(ii) at least 8 percent during the first 
                        plan year following the plan year described in 
                        clause (i), and
                            ``(iii) at least 10 percent during any 
                        subsequent plan year.
                    ``(D) Matching contributions.--
                            ``(i) In general.--For purposes of this 
                        paragraph, an arrangement shall be treated as 
                        having met the requirements of paragraph 
                        (13)(D)(i) if and only if the employer makes 
                        matching contributions on behalf of each 
                        employee who is not a highly compensated 
                        employee in an amount equal to the sum of--
                                    ``(I) 100 percent of the elective 
                                contributions of the employee to the 
                                extent that such contributions do not 
                                exceed 1 percent of compensation,
                                    ``(II) 50 percent of so much of 
                                such contributions as exceed 1 percent 
                                but do not exceed 6 percent of 
                                compensation, plus
                                    ``(III) 25 percent of so much of 
                                such contributions as exceed 6 percent 
                                but do not exceed 10 percent of 
                                compensation.
                            ``(ii) Application of rules for matching 
                        contributions.--The rules of clause (ii) of 
                        paragraph (12)(B) and clauses (iii) and (iv) of 
                        paragraph (13)(D) shall apply for purposes of 
                        clause (i) but the rule of clause (iii) of 
                        paragraph (12)(B) shall not apply for such 
                        purposes. The rate of matching contribution for 
                        each incremental deferral must be at least as 
                        high as the rate specified in clause (i), and 
                        may be higher, so long as such rate does not 
                        increase as an employee's rate of elective 
                        contributions increases.''.
    (b) Matching Contributions and Employee Contributions.--Subsection 
(m) of section 401 of the Internal Revenue Code of 1986 is amended by 
redesignating paragraph (13) as paragraph (14) and by inserting after 
paragraph (12) the following new paragraph:
            ``(13) Alternative method for secure deferral 
        arrangements.--A defined contribution plan shall be treated as 
        meeting the requirements of paragraph (2) with respect to 
        matching contributions and employee contributions if the plan--
                    ``(A) is a secure deferral arrangement (as defined 
                in subsection (k)(14)),
                    ``(B) meets the requirements of clauses (ii) and 
                (iii) of paragraph (11)(B), and
                    ``(C) provides that matching contributions on 
                behalf of any employee may not be made with respect to 
                an employee's contributions or elective deferrals in 
                excess of 10 percent of the employee's compensation.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2017.

SEC. 9. CREDIT FOR EMPLOYERS WITH RESPECT TO MODIFIED SAFE HARBOR 
              REQUIREMENTS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by section 7, is 
further amended by adding at the end the following new section:

``SEC. 45T. CREDIT FOR SMALL EMPLOYERS WITH RESPECT TO MODIFIED SAFE 
              HARBOR REQUIREMENTS FOR AUTOMATIC CONTRIBUTION 
              ARRANGEMENTS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
small employer, the safe harbor adoption credit determined under this 
section for any taxable year is the amount equal to the total of the 
employer's matching contributions under section 401(k)(14)(D) during 
the taxable year on behalf of employees who are not highly compensated 
employees, subject to the limitations of subsection (b).
    ``(b) Limitations.--
            ``(1) Limitation with respect to compensation.--The credit 
        determined under subsection (a) with respect to contributions 
        made on behalf of an employee who is not a highly compensated 
        employee shall not exceed 2 percent of the compensation of such 
        employee for the taxable year.
            ``(2) Limitation with respect to years of participation.--
        Credit shall be determined under subsection (a) with respect to 
        contributions made on behalf of an employee who is not a highly 
        compensated employee only during the first 5 years such 
        employee participates in the qualified automatic contribution 
        arrangement.
    ``(c) Definitions.--
            ``(1) In general.--Any term used in this section which is 
        also used in section 401(k)(14) shall have the same meaning as 
        when used in such section.
            ``(2) Small employer.--The term `small employer' means an 
        eligible employer (as defined in section 408(p)(2)(C)(i)).
    ``(d) Denial of Double Benefit.--No deduction shall be allowable 
under this title for any contribution with respect to which a credit is 
allowed under this section.''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of the Internal Revenue Code of 1986, as amended by 
section 7, is further amended--
            (1) by striking ``plus'' at the end of paragraph (36),
            (2) by striking the period at the end of paragraph (37) and 
        inserting ``, plus'', and
            (3) by adding at the end the following new paragraph:
            ``(38) the safe harbor adoption credit determined under 
        section 45T.''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by section 7, is further amended by adding after the 
item relating to section 45S the following new item:

``Sec. 45T. Credit for small employers with respect to modified safe 
                            harbor requirements for automatic 
                            contribution arrangements.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years that include any portion of a plan year 
beginning after December 31, 2017.

SEC. 10. MODIFICATION OF REGULATIONS.

    The Secretary of the Treasury shall promulgate regulations or other 
guidance that--
            (1) simplify and clarify the rules regarding the timing of 
        participant notices required under section 401(k)(13)(E) of the 
        Internal Revenue Code of 1986, with specific application to--
                    (A) plans that allow employees to be eligible for 
                participation immediately upon beginning employment, 
                and
                    (B) employers with multiple payroll and 
                administrative systems, and
            (2) simplify and clarify the automatic escalation rules 
        under sections 401(k)(13)(C)(iii) and 401(k)(14)(C) of the 
        Internal Revenue Code of 1986 in the context of employers with 
        multiple payroll and administrative systems.
Such regulations or guidance shall address the particular case of 
employees within the same plan who are subject to different notice 
timing and different percentage requirements, and provide assistance 
for plan sponsors in managing such cases.

SEC. 11. OPPORTUNITY TO CLAIM THE SAVER'S CREDIT ON FORM 1040EZ.

    The Secretary of the Treasury shall modify the forms for the return 
of tax of individuals in order to allow individuals claiming the credit 
under section 25B of the Internal Revenue Code of 1986 to file (and 
claim such credit on) Form 1040EZ.
                                 <all>