Title: To amend the Internal Revenue Code of 1986 to require that qualified cash or deferred arrangements allow certain long-term employees to participate.
Policy area: Taxation

Summary:
This bill amends provisions of the Internal Revenue Code relating to tax-preferred pension plans and arrangements to provide that qualified cash or deferred arrangements must allow long-term employees working more than 500 but less than 1,000 hours per year to participate in such arrangements.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1874 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 1874

 To amend the Internal Revenue Code of 1986 to require that qualified 
  cash or deferred arrangements allow certain long-term employees to 
                              participate.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 26, 2019

 Mrs. Murphy introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to require that qualified 
  cash or deferred arrangements allow certain long-term employees to 
                              participate.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. QUALIFIED CASH OR DEFERRED ARRANGEMENTS MUST ALLOW LONG-TERM 
              EMPLOYEES WORKING MORE THAN 500 BUT LESS THAN 1,000 HOURS 
              PER YEAR TO PARTICIPATE.

    (a) Participation Requirement.--
            (1) In general.--Section 401(k)(2)(D) of the Internal 
        Revenue Code of 1986 is amended to read as follows:
                    ``(D) which does not require, as a condition of 
                participation in the 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 section 
                        410(a)(1) (determined without regard to 
                        subparagraph (B)(i) thereof), or
                            ``(ii) subject to the provisions of 
                        paragraph (15), the first period of 3 
                        consecutive 12-month periods during each of 
                        which the employee has at least 500 hours of 
                        service.''.
            (2) Special rules.--Section 401(k) of such Code is amended 
        by adding at the end the following new paragraph:
            ``(15) Special rules for participation requirement for 
        long-term, part-time workers.--For purposes of paragraph 
        (2)(D)(ii)--
                    ``(A) Age requirement must be met.--Paragraph 
                (2)(D)(ii) shall not apply to an employee unless the 
                employee has met the requirement of section 
                410(a)(1)(A)(i) by the close of the last of the 12-
                month periods described in such paragraph.
                    ``(B) Nondiscrimination and top-heavy rules not to 
                apply.--
                            ``(i) Nondiscrimination rules.--In the case 
                        of employees who are eligible to participate in 
                        the arrangement solely by reason of paragraph 
                        (2)(D)(ii)--
                                    ``(I) notwithstanding subsection 
                                (a)(4), an employer shall not be 
                                required to make nonelective or 
                                matching contributions on behalf of 
                                such employees even if such 
                                contributions are made on behalf of 
                                other employees eligible to participate 
                                in the arrangement, and
                                    ``(II) an employer may elect to 
                                exclude such employees from the 
                                application of subsection (a)(4), 
                                paragraph (3), subsection (m)(2), and 
                                section 410(b).
                            ``(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 paragraph 
                        (2)(D)(ii) from the application of the vesting 
                        and benefit requirements under subsections (b) 
                        and (c) of section 416.
                            ``(iii) Vesting.--For purposes of 
                        determining whether an employee described in 
                        clause (i) has a nonforfeitable right to 
                        employer contributions (other than 
                        contributions described in paragraph (3)(D)(i)) 
                        under the arrangement, each 12-month period for 
                        which the employee has at least 500 hours of 
                        service shall be treated as a year of service.
                            ``(iv) Employees who become full-time 
                        employees.--This subparagraph shall cease to 
                        apply to any employee as of the first plan year 
                        beginning after the plan year in which the 
                        employee meets the requirements of section 
                        410(a)(1)(A)(ii) without regard to paragraph 
                        (2)(D)(ii).
                    ``(C) Exception for employees under collectively 
                bargained plans, etc.--Paragraph (2)(D)(ii) shall not 
                apply to employees described in section 410(b)(3).
                    ``(D) Special rules.--
                            ``(i) Time of participation.--The rules of 
                        section 410(a)(4) shall apply to an employee 
                        eligible to participate in an arrangement 
                        solely by reason of paragraph (2)(D)(ii).
                            ``(ii) 12-month periods.--12-month periods 
                        shall be determined in the same manner as under 
                        the last sentence of section 410(a)(3)(A).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2020, except that, for 
purposes of section 401(k)(2)(D)(ii) of the Internal Revenue Code of 
1986 (as added by such amendments), 12-month periods beginning before 
January 1, 2021, shall not be taken into account.
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