USA Retirement Funds Act

Bill: 113-hr-5828
Sponsor: full_name: Rep. Cartwright, Matt [D-PA-17]
Introduced: 2014-12-10
Policy area: Labor and Employment
Subjects: Accounting and auditing

Administrative law and regulatory procedures

Banking and financial institutions regulation

Bankruptcy

Civil actions and liability

Consumer affairs

Department of the Treasury

Employee benefits and pensions

Financial services and investments

Fraud offenses and financial crimes

Government information and archives

Government studies and investigations

Government trust funds

Income tax deductions

Income tax exclusion

Small business

Tax-exempt organizations
Latest action: action_date: 2014-12-10
text: Referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Summaries:
action_date: 2014-12-10
action_desc: Introduced in House
text: <p>USA Retirement Funds Act - Requires each employer (except certain small employers, governments, and churches) that does not maintain a qualifying plan or arrangement meeting specified criteria for any part of a calendar year to make available to each qualifying employee for the calendar year an automatic USA Retirement Fund arrangement.</p> <p>Defines an &quot;automatic USA Retirement Fund arrangement&quot; as one that covers each qualifying employee of the covered employer for the calendar year and under which a qualifying employee: (1) may elect to contribute to an automatic USA Retirement Fund through payroll deductions or other periodic direct deposits (including electronic payments), or to have such payments made to the employee directly in cash; (2) is treated as having made such an election in a certain amount unless the individual specifically elects not to have such contributions made or to have them made at a different percentage or in a different amount; and (3) may elect annually to modify the selection of the USA Retirement Fund to which contributions are made for such year.</p> <p>Requires an employer to make all contributions on behalf of employees to the USA Retirement Fund the employee has specified, or to the one designated by the employer if the employee has not selected one.</p> <p>Specifies requirements for the establishment of each USA Retirement Fund and its board of trustees.</p> <p>Limits an employer's contribution to a Fund on behalf of each employee to $5,000. Prohibits an employee from contributing more than $15,000 per year to a Fund.</p> <p>Requires a Fund to pay benefits in the form of an annuity meeting certain criteria.</p> <p>Exempts a Fund from income taxation. Imposes, however, a tax on Fund income as unrelated business income of a charitable organization.</p> <p>Allows a qualifying employee to take a deduction for the taxable year equal to the amount of contributions made to a Fund.</p> <p>Directs the Secretary of Labor (Secretary, unless otherwise provided) to recognize an independent, private Commission for USA Retirement Funds Funding to make recommendations on the funding of Funds.</p> <p>Amends the Employee Retirement Income Security Act of 1974 (ERISA) to declare that an employer shall not be a fiduciary with respect to the selection, management, or administration of a USA Retirement Fund solely because it makes the Fund available through an automatic USA Retirement Fund arrangement. Affirms a participating employer's responsibility, however, for meeting enrollment requirements and transmitting contributions.</p> <p>Prescribes civil monetary penalties and enforcement measures for employer failure to remit timely contributions to Automatic USA Retirement Fund arrangements, and criminal penalties for false statements.</p> <p>Amends ERISA to treat a pooled employer plan, under which a single individual account plan provides benefits to the employees of two or more employers, as a single employee pension benefit plan or single pension plan without regard to whether the participating employers share a common interest other than participation in the plan.</p> <p>Declares that a small employer that is a plan sponsor of an employee pension benefit plan shall not be liable for a breach of fiduciary responsibility of a small employer plan service provider with respect to the same plan if the small employer prudently selects and monitors the small employer plan named fiduciary.</p> <p>Declares the sense of Congress that a person may be providing investment advice meeting specified requirements when advising a plan participant to take a permissible plan distribution, and such advice is combined with a recommendation as to how the distribution should be invested.</p> <p>Directs the Comptroller General (GAO) to study the extent to which advisors, broker-dealers, and other financial professionals dealing with individual and employer-provided retirement plans are aware of, and receive ongoing training regarding, specified fiduciary requirements.</p> <p>Amends ERISA to require statements reporting a participant's benefit rights to illustrate the participant's benefit as an estimated lifetime income stream beginning at retirement.</p> <p>Prescribes safe harbor criteria for a fiduciary to satisfy requirements for the selection of an insurer and lifetime retirement income contract.</p> <p>Declares that the availability of annuity purchase rights, death benefit guarantees, investment guarantees, or other features in insurance contracts will not, in and of themselves, affect the status of a fund, product, or portfolio as a default investment.</p> <p>Limits the liability of a named fiduciary or any appointing fiduciary for any act or omission of the annuity administrator of an individual account plan.</p> <p>Amends ERISA and the Internal Revenue Code to prescribe requirements for treatment of a fixed annual crediting rate of 3% (or lower but not zero) for an applicable defined benefit plan (hybrid plan) as a reasonable minimum guaranteed rate of return.</p> <p>Authorizes the Secretary of the Treasury to prescribe by regulation that a rate of return available in the market, and based exclusively or primarily on the returns on employer securities, on alternative investments generally not appropriate as an exclusive or primary investment for retirement, or on other similar investments, is not permitted if it: (1) is designed to evade the requirement that any interest credit (or an equivalent amount) for any plan year under the terms of an applicable defined benefit plan be at a rate not greater than a market rate of return, and (2) is not consistent with the purposes of a defined benefit plan.</p> <p>Prescribes requirements to protect plan participants from retroactive benefit decreases and plan freezes.</p> <p>Formulates a special rule for determining normal retirement age for certain existing defined benefit plans.</p> <p>Prohibits the Pension Benefit Guaranty Corporation (PBGC) from bringing any new action against a plan sponsor to enforce before January 30, 2016, the (shutdown) liability of an employer that ceases operations at a facility and as a result more than 20% of the total number of its employees participating under a plan established and maintained by the employer are separated from employment. Directs GAO to study the effectiveness, fairness, and utility of such shutdown liability requirements.</p> <p>Revises requirements for determination of the alternative funding target attainment percentage with respect to the prohibition against a single-employer plan's providing an unpredictable contingent event benefit if the adjusted funding target attainment percentage for a plan year is less than 60%, or would be less than 60% taking into account that specified occurrence. Requires the alternative funding target attainment percentage to be determined without regard to reductions by the amount of the prefunding balance and the funding standard carryover balance otherwise deemed for the value of plan assets in certain circumstances.</p> <p>Revises or prescribes requirements for: (1) the method for determining changes for quarterly contributions, (2) a plan sponsor election to discount contributions from a final due date, (3) the timeliness of plan sponsor elections and notices, (4) multiemployer plan disclosures and reporting, (5) the payment of lump sum distributions in bankruptcy, (6) PBGC authority to institute proceedings to terminate a plan, and (7) appointment of the PBGC to administer a plan.</p> <p>Directs the Secretary of Labor, the Secretary of the Treasury, and the PBGC jointly to establish an electronic database containing each: (1) defined benefit plan funding notice submitted to the PBGC by a multiemployer plan, (2) report submitted by a multiemployer plan with respect to whether it is in endangered and critical status or making scheduled progress in meeting the requirements of a funding improvement or rehabilitation plan, and (3) notice submitted to the Secretary of Labor and the PBGC by a multiemployer plan on whether it is or will be in endangered or critical status for a plan year.</p> <p>Makes technical modifications to the formula for determining the liability of any person who is, on the date a single-employer plan is terminated in a distress termination or one otherwise instituted by the PBGC, a contributing sponsor of the plan, or a member of such a contributing sponsor's controlled group.</p> <p>Authorizes the PBGC to apply to the appropriate U.S. district court for a decree enforcing a determination that a plan be terminated.</p> <p>Authorizes the PBGC to issue regulations to require plan sponsors or plan administrators to maintain records necessary to enable them to determine benefits as of a plan termination date.</p> <p>Repeals the requirement that the terminating date of a pension plan for PBGC purposes be the date the plan sponsor files for bankruptcy.</p> <p>Authorizes the Secretary, if an accountant or accounting firm has engaged in any act or practice, or failed to act, in violation of requirements for the preparation and issuance of audit reports, or of professional standards, to issue an order to bar an accountant or accounting firm (or one of its divisions or components), on a temporary or permanent basis, from directly or indirectly engaging in specified activities relating to performing or supervising plan audits.</p> <p>Requires a plan administrator to account separately for 50% of a participant's benefits during a specified segregation period if an action concerning such benefits is pending pursuant to a state domestic relations law.</p> <p>Makes it unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has filed or made any oral or written complaint (including to a fiduciary, an employer, or the Secretary) in any inquiry or proceeding relating to ERISA or the Welfare and Pension Plans Disclosure Act.</p>

tv_txt: I 113th CONGRESS 2d Session H. R. 5828 IN THE HOUSE OF REPRESENTATIVES December 10, 2014 Mr. Cartwright (for himself and Mr. Ellison ) introduced the following bill; which was referred to the Committee on Education and the Workforce , and in addition to the Committee on Ways and Means , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide for USA Retirement Funds, and for other purposes.

1. Short title This Act may be cited as the USA Retirement Funds Act . 2. Automatic USA Retirement Fund arrangements (a) Requirement To provide access Each covered employer shall make available to each qualifying employee for the calendar year an automatic USA Retirement Fund arrangement. (b) Covered employer For purposes of this title— (1) In general Except as otherwise provided in this subsection and subsection (c)(2), the term covered employer means, with respect to any calendar year, an employer who does not maintain a qualifying plan or arrangement for any part of such year. (2) Qualifying plan or arrangement (A) In general The term qualifying plan or arrangement means a plan or arrangement described in section 219(g)(5) of the Internal Revenue Code of 1986. (B) Exceptions Such term shall not include the following: (i) Frozen defined benefit plan A defined benefit plan that had no ongoing accruals as of the first day of the preceding calendar year, unless the plan failed to have accruals only because of the application of section 206 of the Employee Retirement Income Security Act ( 29 U.S.C. 1056 ) and section 436 of the Internal Revenue Code of 1986. (ii) Defined contribution plan without lifetime income options A defined contribution plan that does not provide participants with a distribution option that provides lifetime income. (iii) Plans not meeting contribution requirements A plan— (I) which consists of a cash or deferred arrangement (as defined in section 401(k) of such Code) with respect to which the employer does not automatically enroll all eligible employees at contribution rates at or above those specified in subsection (d)(4); or (II) for which the only contributions are nonelective employer contributions and with respect to which the employer’s annual contribution rate is not at or above the rates specified in subsection (d)(4). (3) Exception for certain small and new employers (A) In general The term covered employer shall not include an employer for a calendar year if the employer— (i) did not employ during the preceding calendar year more than 10 employees who each received at least $5,000 of compensation (as defined in section 3401(a) of the Internal Revenue Code of 1986) from the employer for such preceding calendar year; (ii) did not normally employ more than 10 employees on a typical business day during the preceding calendar year; or (iii) was not in existence at all times during the calendar year and the preceding calendar year. (B) Operating rules In determining the number of employees for purposes of subparagraph (A)— (i) rules consistent with any rules applicable in determining the number of employees for purposes of section 408(p)(2)(C) and section 4980B(d) of the Internal Revenue Code of 1986 shall apply; (ii) all members of the same family (within the meaning of section 318(a)(1) of the Internal Revenue Code of 1986) shall be treated as 1 individual; and (iii) any reference to an employer shall include a reference to any predecessor employer. (4) Exception for governments and churches The term covered employer shall not include— (A) a government or entity described in section 414(d) of the Internal Revenue Code of 1986; or (B) a church or a convention or association of churches that is exempt from tax under section 501 of such Code. (5) Aggregation rule A person treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 or subsection (m) or (o) of section 414 of such Code shall be treated as a single employer. (c) Qualifying employee For purposes of this title— (1) In general The term qualifying employee means any employee who is not an excluded employee. (2) Plan sponsor's employees If— (A) an employer maintains one or more qualifying plans or arrangements described in section 219(g)(5) of the Internal Revenue Code of 1986; and (B) the employees of a subsidiary, division, or other business unit are generally not eligible to participate in any such qualifying plan or arrangement, for purposes of this section, the employer shall be treated as a covered employer with respect to such employees (other than excluded employees), and such employees (other than excluded employees) shall be treated as qualifying employees for the calendar year. (3) Excluded employees (A) In general The term excluded employee means an employee who is an excludable employee and who is in a class or category that the employer excludes from treatment as qualifying employees. (B) Excludable employee The term excludable employee means— (i) an employee described in section 410(b)(3) of the Internal Revenue Code of 1986; (ii) an employee who has not attained the age of 21 before the beginning of the calendar year; (iii) an employee who has not completed at least 3 months of service with the employer; (iv) in the case of an employer that maintains a qualifying plan or arrangement which excludes employees who have not satisfied the minimum age and service requirements for participation in the plan, an employee who has not satisfied such requirements; (v) in the case of an employer that maintains an annuity contract (including a custodial account or retirement income account) under section 403(b) of the Internal Revenue Code of 1986, an employee who is permitted to be excluded from any salary reduction arrangement under the contract pursuant to paragraph (12) of such section 403(b); (vi) in the case of an employer that maintains an arrangement described in section 408(p) of such Code, an employee who is not required to be eligible to participate in the arrangement under paragraph (4) of such section 408(p); and (vii) in the case of an employer that maintains a simplified employee pension described in section 408(k) of such Code, an employee who is permitted to be excluded from participation under paragraph (2) of such section 408(k). (4) Guidance The Secretary of Labor (in this title referred to as the Secretary ) shall issue regulations or other guidance to carry out this subsection, including— (A) guidelines for determining the classes or categories of employees to be covered by a USA Retirement Fund; (B) guidelines requiring employers to specify the classification or categories of employees (if any) who are excluded from the USA Retirement Fund; and (C) rules to prevent avoidance of the requirements of this section. (d) Automatic USA Retirement Fund arrangement For purposes of this title— (1) In general The term automatic USA Retirement Fund arrangement means an arrangement of an employer (determined without regard to whether the employer is required to maintain the arrangement)— (A) that covers each qualifying employee of the covered employer for the calendar year; (B) under which a qualifying employee— (i) may elect— (I) to contribute to an automatic USA Retirement Fund by having the employer deposit payroll deduction amounts or make other periodic direct deposits (including electronic payments) to the Fund; or (II) to have such payments paid to the employee directly in cash; (ii) is treated as having made the election under clause (i)(I) in the amount specified in paragraph (4) unless the individual specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage or in a different amount); and (iii) not more than once per calendar year, may elect to modify the selection of the USA Retirement Fund to which contributions are made for such year; and (C) that meets the administrative requirements of paragraph (3), including the notice requirement of paragraph (3)(C). (2) Automatic re-enrollment An employee’s election not to contribute to a USA Retirement Fund (or to have such contributions made at a different percentage or in a different amount from those specified in paragraph (4)) shall expire after 2 years. After such 2-year period and absent a new election, the employee shall be treated as having made the election under paragraph (1)(B)(i)(I) in the amount specified in paragraph (4). (3) Administrative requirements (A) Payments An employer shall make the payments elected or treated as elected under paragraph (1)(B) on or before— (i) the last day of the month following the month in which the compensation otherwise would have been payable to the employee in cash; or (ii) such later date as the Secretary may prescribe. (B) Termination of employee participation Subject to a requirement for reasonable notice, an employee may elect to terminate participation in the arrangement at any time during a calendar year. The arrangement may provide that, if an employee so terminates participation, the employee may not elect to resume participation until the beginning of the next calendar year. (C) Notice of election period The employer shall notify each employee eligible to participate for a year in a USA Retirement Fund arrangement, within a reasonable period of time before the 30th day before the beginning of such year (and, for the first year the employee is so eligible, the 30th day before the first day such employee is so eligible), of— (i) the payments that may be elected or treated as elected under paragraph (1)(B); (ii) the opportunity to make the election to terminate participation in the arrangement under subparagraph (B); (iii) the opportunity to make the election under paragraph (1)(B)(ii) to have contributions or purchases made at a different percentage or in a different amount; and (iv) the opportunity under paragraph (1)(B)(iii) to modify the manner in which such amounts are invested for such year. (D) Employees may choose usa retirement fund The arrangement shall provide that a qualified employee may elect to have contributions made to any USA Retirement Fund available to the employee. (4) Amount of contributions and payments The amount specified in this paragraph is— (A) 3 percent of compensation for the calendar year beginning on January 1, 2015; (B) 4 percent of compensation for the calendar year beginning on January 1, 2016; (C) 5 percent of compensation for the calendar year beginning on January 1, 2017; and (D) 6 percent of compensation for calendar years beginning after December 31, 2017. (5) Coordination with withholding The Secretary of the Treasury shall modify the withholding exemption certificate under section 3402(f) of the Internal Revenue Code of 1986 so that, in the case of any qualifying employee covered by a USA Retirement Fund arrangement, any notice and election requirements with respect to the arrangement may be met through the use of an attachment to such certificate or other modifications of the withholding exemption procedures. (e) Deposits to USA Retirement Funds (1) In general Except as provided in paragraph (2), an employer shall make all contributions on behalf of employees to the USA Retirement Fund specified by the employee. (2) USA retirement funds other than those selected by employee In the absence of an affirmative selection of a USA Retirement Fund by the employee, contributions on behalf of the employee shall be made to the USA Retirement Fund designated by the employer. (3) Regulations The Secretary may issue such regulations as are necessary to carry out this subsection. (f) Preemption of conflicting State laws The requirements under this section preempt any law of a State that directly or indirectly prohibits or restricts the establishment or operation of an automatic USA Retirement Fund arrangement. Nothing in this section shall be construed to impair or preempt any State law to the extent such State law provides a remedy for the failure to make payroll deposit payments under any such automatic USA Retirement Fund arrangement within the period required. 3. Establishment of USA Retirement Funds (a) Qualification as a USA Retirement Fund For purposes of this title— (1) In general The term USA Retirement Fund means a fund for which the Secretary has determined the requirements under this title are met. (2) Request for determination The board of trustees of a program established for purposes of being treated as a USA Retirement Fund under this section shall, prior to beginning operations, submit to the Secretary (at such time and in such manner as the Secretary may prescribe) a request for the Secretary to make a determination as to whether the plan meets the requirements of this title for such treatment. Such request shall include copies of the written documents establishing the plan and such other materials as the Secretary may request. The Secretary shall make such determination within 180 days of receiving such request. (3) Periodic review The Secretary shall establish a process to periodically review each plan determined to be a USA Retirement Fund under paragraph (1) to ensure that the plan continues to meet the requirements of this title. (4) Public list of plans The Secretary shall maintain a public list of plans determined by the Secretary to qualify as USA Retirement Funds. Such list shall be posted to a publicly available Internet website. (b) Participation (1) Eligibility An individual may participate in any USA Retirement Fund for which such individual meets the eligibility requirements, individually or through an arrangement established by an employer. (2) Participation in other plans An individual who participates in a USA Retirement Fund shall not be precluded from participating in a plan or arrangement described in section 219(g)(5) of the Internal Revenue Code of 1986. (c) Governance (1) Assets held in trust; board of trustees For purposes of this title— (A) the assets of each USA Retirement Fund shall be held in trust, and (B) the Fund shall be governed by a board of trustees which shall consist of at least 3 individuals who— (i) are independent of service providers to the Fund; (ii) meet the qualification requirements established under this section; and (iii) are collectively able to adequately represent the interests of active participants, retirees, and contributing employers. (2) Independence requirement An individual is not independent of Fund service providers for purposes of paragraph (1)(B)(i) if such individual— (A) is an employee of any Fund service provider; (B) is a current or former officer or director of a significant Fund service provider, or is otherwise affiliated with such a provider; (C) is a member of the immediate family of any person who is affiliated with a significant Fund service provider; (D) derives more than 1 percent of the individual's annual income from a significant Fund service provider; (E) derives more than 5 percent of the individual's annual income from any Fund service provider; or (F) fails to meet meets such other criteria as are specified by the Secretary to ensure the independence of the board of directors. (3) Multiple trusteeships No individual may serve on the board of trustees of more than 1 USA Retirement Fund unless the Secretary receives attestation from the board of trustees of each applicable USA Retirement Fund and the individual that, at the time of appointment, there is no reasonably foreseeable conflict between the duties of such individual to the participants in each applicable USA Retirement Fund. In no case may an individual serve on the boards of trustees of more than 3 USA Retirement Funds. (4) Trustee qualifications Each trustee of a USA Retirement Fund shall attest that the trustee is knowledgeable of the trustee's duties and responsibilities as a fiduciary of a USA Retirement Fund. The Secretary may require by regulation such other qualifications and documentation as may be necessary to ensure that trustees are suitable and qualified. Such requirements may include those related to education, training, and minimum competency standards. (5) Trustee selection and removal (A) In general Each board of trustees of a USA Retirement Fund shall establish written procedures regarding the appointment, removal, and replacement of trustees on the board. Such procedures shall— (i) take effect after adoption by the majority of the board of trustees; (ii) be readily available to participants; (iii) provide participants with a reasonable opportunity to comment on, or participate in, the trustee selection process; and (iv) provide for periodic election of trustees. (B) Removal by the secretary The Secretary may require removal or suspension of a trustee if the conduct of the trustee is fraudulent or is causing, or can be reasonably expected to cause, significant, imminent, and irreparable harm to the participants or beneficiaries of a USA Retirement Fund. (C) Funds without qualified trustees If a board of trustees of a USA Retirement Fund has no members meeting the criteria under this subsection, the Secretary shall appoint replacement trustees. (6) Trustee compensation Trustees of the Fund may be compensated at reasonable rates from the Fund, but only if such compensation is paid in accordance with the written board compensation policy adopted under paragraph (7)(A)(iv). (7) Transparency and participant democracy (A) Publicly available policies The board of trustees of a USA Retirement Fund shall adopt and make available to participants and beneficiaries of, and employers contributing to, the USA Retirement Fund— (i) a written investment policy statement; (ii) a written lifetime income policy statement; (iii) an annual performance assessment of the board of trustees, including an evaluation of weaknesses of the board and a plan to address such weaknesses; (iv) a written board compensation policy that includes current compensation levels and provides a reasonable opportunity for comment from participants, beneficiaries, and employers; and (v) a written policy addressing conflicts of interests with respect to trustees. (B) Participant input regarding board of trustees (i) In general The board of trustees of a USA Retirement Fund shall establish procedures whereby a participant or beneficiary of such USA Retirement Fund may— (I) petition the board of trustees to remove a trustee or service provider; (II) comment on the management and administration of the USA Retirement Fund; and (III) with respect to a USA Retirement Fund with more than $250,000,000 of assets, vote to approve or disapprove the compensation of the trustees at least once every 3 years. (ii) Effect of vote If participants and beneficiaries of a USA Retirement Fund vote to disapprove the compensation of trustees under clause (i)(III)— (I) the results of such vote shall not be binding on the board of trustees; and (II) the board of trustees shall notify the Secretary of the results of such vote and provide an explanation of why the compensation is reasonable or anticipated changes to the compensation. (8) Liability insurance for trustees The trustees of each USA Retirement Fund shall have fiduciary liability insurance with a per-claim limit equal to no less than the greater of— (A) 5 percent of plan assets; or (B) $1,000,000. (9) Trustee duties (A) In general The trustees of a USA Retirement Fund shall manage the Fund with the intention of providing each participant with a cost-effective stream of income in retirement and reducing benefit level volatility (particularly for those approaching retirement). (B) Applicability of other requirements Each trustee of a USA Retirement Fund shall be a fiduciary subject to sections 404(a), 404(b), 405, 406, and 408 through 413 of the Employee Retirement Income Security Act of 1974 with respect to the Fund and participants and beneficiaries of the Fund. Each such trustee shall be subject to the standards and remedies of such sections and section 502 of such Act, as if the Fund were an employee benefit plan. (d) Contribution limitations (1) Employer Subject to paragraph (3), employers may, in addition to contributions an employee elects (or is treated as having elected) to have made, make a contribution of up to $5,000 per year to a USA Retirement Fund on behalf of each employee eligible to participate in a USA Retirement Fund, provided such contributions are made in a uniform manner (as the same dollar amount for each such employee or the same percentage of pay for each such employee) and are not intended to benefit solely highly compensated employees. (2) Employee An employee may not elect (or shall not be treated as having as elected) to contribute more than $15,000 per year to a USA Retirement Fund. (3) Annual indexing of amount The dollar amounts under paragraphs (1) and (2) shall be indexed annually for inflation. (e) Benefits in the form of an annuity (1) In general A USA Retirement Fund shall pay benefits in the form of an annuity in accordance with paragraph (2). The amount of such benefits shall be dependent on the amount of contributions made by the participant, the experience of the Fund, and the form of distribution elected by the participant. The amount of an annuity may be adjusted to reflect the experience of the Fund as necessary to protect the financial integrity of the Fund, except that annuity payments for those in pay status shall not be reduced more than 5 percent per year unless the Fund is faced with a significant financial hardship and the Secretary has approved the reduction. (2) Annuity A USA Retirement Fund shall pay benefits in accordance with one of the following: (A) In the case of a participant who does not die before the annuity starting date, the benefit payable to such participant shall be provided in the form of a qualified joint and survivor annuity (as defined in section 205(d)(1) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1055(d)(1) )). (B) In the case of a participant who dies before the annuity starting date and who has a surviving spouse, a qualified preretirement survivor annuity (as defined in section 205(d)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(d)(2))) shall be provided to the surviving spouse of such participant. (C) In lieu of a qualified joint and survivor annuity form of benefit or the qualified preretirement survivor annuity form of benefit (or both), a participant may elect to receive a distribution described in subsection (f)(2) if one of the following conditions are met: (i) (I) The spouse of the participant consents in writing to the election. (II) Such election designates a beneficiary (or form of benefits) which may not be changed without spousal consent (or the consent of the spouse expressly permits designations by the participant without any requirement of further consent by the spouse). (III) The spouse’s consent acknowledges the effect of such election and is witnessed by a plan representative or a notary public. (ii) It is established to the satisfaction of a Fund representative that the consent required under subclause (I) cannot be obtained because there is no spouse, because the spouse cannot be located, or because of such other circumstances as the Secretary may by regulations prescribe. The consent of a spouse (or establishment that the consent of a spouse cannot be obtained) under this subparagraph shall be effective only with respect to such spouse. (3) Commencement of benefit payments A participant may elect the time to start receiving benefit payments from the USA Retirement Fund, except that a participant— (A) except as provided in subsection (f)(2)(B), may not elect to receive benefit payments before reaching the age of 60; and (B) must begin receiving benefit payments before the age of 72. (4) Notice Each Fund shall provide to each participant, within a reasonable period of time before the annuity starting date, a written explanation substantially similar to that required by section 205(c)(3) of the Employee Retirement Income Security Act of 1974  ( 29 U.S.C. 1055(c)(3) ). (5) Assignment or alienation of fund benefits Benefits under a USA Retirement Fund shall be subject to section 206(d) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1056(d) ). (f) Limits on withdrawals and transfers (1) Transfers A participant may, not more frequently than once per year, transfer such participant's benefit to another USA Retirement Fund. (2) Limits on distributions (A) In general Except as provided in subparagraphs (B) and (C), a participant may not take a distribution other than one described in subsection (e)(2). (B) Participants aged 59 and younger A participant may before age 60 take a distribution of a portion of the participant's benefit if such distribution does not to exceed $5,500 and is rolled over to a qualifying plan or arrangement described in section 219(g)(5) of the Internal Revenue Code of 1986 or an individual retirement plan. (C) Participants aged 60 and older A participant who is 60 or older but who has not entered pay status may elect one time to take a distribution of the greater of $10,000 or 50 percent of the participant's benefit if the participant demonstrates to the satisfaction of the trustees of the Fund that the participant has sufficient retirement income apart from the Fund or is facing a substantial hardship. (g) Methods for providing annuitized benefit payments (1) In general A USA Retirement Fund shall establish and maintain mechanisms for adequately securing the payment of annuity benefits from the Fund. The Fund shall include a written description of such mechanisms in the investment and lifetime income policy statements required to be disclosed to participants. (2) Specific goals The mechanisms described in paragraph (1) shall ensure that— (A) each participant receives a stream of income for life; (B) each participant and beneficiary has an opportunity to be protected against longevity risk; and (C) volatility in benefit levels is minimized for participants and beneficiaries in pay status and those approaching pay status. (3) Self-annuitization (A) In general Notwithstanding any other provision of law, a USA Retirement Fund may self-annuitize if the Fund meets such requirements as the Secretary establishes as necessary to protect participants and beneficiaries in consideration of the recommendations of the Commission under section 103. (B) Duty to address emerging issues The Secretary shall, periodically and in accordance with established procedures, update the funding requirements promulgated under this paragraph in response to changing economic and business conditions to the extent necessary to carry out the purposes of this Act, taking into consideration the recommendations of the Commission. (h) Reporting and disclosure (1) Annual statement The trustees of a USA Retirement Fund shall provide each participant in the Fund an annual statement of— (A) the estimated amount of the monthly benefit which the participant or beneficiary is projected to receive from the USA Retirement Fund, in the form of the default benefit described in the plan in accordance with subsection (e)(2); (B) an explanation, written in a manner calculated to be understood by the average plan participant, that includes interest and mortality assumptions used in calculating the estimate and a statement that actual benefits may be materially different from such estimate; (C) a disclosure of Fund fees and performance that is substantially similar to the disclosures required of individual account plans under the Employee Retirement Income Security Act of 1974; (D) any other disclosures, including projected benefit estimates, that the board of trustees of the USA Retirement Fund determines appropriate; and (E) such other disclosures as may be required by the Secretary. (2) Summary plan description The trustees of a USA Retirement Fund shall provide participants a summary plan description (as described in section 102 of the Employee Retirement Income Security Act ( 29 U.S.C. 1022 )) as required by section 104(b) of the Employee Retirement Income Security Act ( 29 U.S.C. 1024(b) ). (3) Annual reports The trustees of a USA Retirement Fund shall file with the Secretary of Labor periodic reports in accordance with regulations promulgated by the Secretary. (4) Additional requirements Each USA Retirement Fund shall be subject to sections 106 and 107 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1026 , 1027). (i) Tax treatment (1) USA Retirement Fund A USA Retirement Fund is exempt from taxation under subtitle A of the Internal Revenue Code of 1986. Notwithstanding the preceding sentence, a USA Retirement Fund is subject to the taxes imposed by section 511 of such Code (relating to imposition of tax on unrelated business income of charitable, etc. organizations). (2) Contributions In the case of an individual, there shall be allowed as a deduction for the taxable year an amount equal to the amount of contributions to a USA Retirement Fund made by or on behalf of the individual under an automatic USA Retirement Fund arrangement under section 2(d). (3) Rollover contributions For purposes of this Act, rules similar to the rules of subparagraphs (A) and (D) of section 408(d)(3) of the Internal Revenue Code of 1986 shall apply. (4) Distributions Any distribution from a USA Retirement Fund shall be includible in the gross income of the distributee in the manner as provided in section 72 of the Internal Revenue Code of 1986. (5) Prohibited transactions, etc For purposes of this Act, rules similar to the rules of paragraphs (2), (3), and (4) of section 408(e)(2) of the Internal Revenue Code of 1986 shall apply. (6) Reports The trustees of a USA Retirement Fund shall make such reports regarding such Fund to the Secretary of the Treasury and to designated beneficiaries with respect to contributions, distributions, and such other matters as the Secretary of the Treasury may require. The reports required by this paragraph shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the Secretary of the Treasury. 4. Commission on USA Retirement Funds (a) Recognition of private commission The Secretary shall— (1) recognize an independent, private commission, to be known as the Commission for USA Retirement Funds Funding (referred to in this title as the Commission ), and (2) in carrying out the Secretary's duties under this title, consider the recommendations of such Commission. (b) Commission The Commission recognized under subsection (a) shall meet the following requirements: (1) Membership (A) Composition The Commission shall be composed of 9 members selected by the Secretary, in consultation with the Secretary of the Treasury, of whom no more than 5 may be from one political party. The Secretary shall designate one member of the Commission as the Chairman. No person may be appointed to the Commission if, during the 2-year period preceding the date of appointment, such person was a trustee of a USA Retirement Fund. (B) Date The appointments of the members of the Commission shall be made not later than 90 days after the date of enactment of this Act. (C) Period of appointment; vacancies Members shall be appointed for terms of 2 years and may be appointed for consecutive terms. Any vacancy in the Commission shall not affect its powers, and shall be filled in the same manner as the original appointment. (2) Majority vote The Commission may act by majority vote of its members, provided that at least 7 members are present. (3) Commission personnel matters (A) Compensation of members Each member of the Commission who is not an officer or employee of the Federal Government shall be compensated at a rate equal to the daily equivalent of the annual rate of basic pay prescribed for level IV of the Executive Schedule under section 5315 of title 5, United States Code, for each day (including travel time) during which such member is engaged in the performance of the duties of the Commission. All members of the Commission who are officers or employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States. (B) Travel expenses The members of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for employees of agencies under subchapter I of chapter 57 of title 5, United States Code, while away from their homes or regular places of business in the performance of services for the Commission. (C) Staff (i) In general The Chairman of the Commission may, without regard to the civil service laws and regulations, appoint and terminate an executive director and such other additional personnel as may be necessary to enable the Commission to perform its duties. The employment of an executive director shall be subject to confirmation by the Commission. (ii) Compensation The Chairman of the Commission may fix the compensation of the executive director and other personnel without regard to chapter 51 and subchapter III of chapter 53 of title 5, United States Code, relating to classification of positions and General Schedule pay rates, except that the rate of pay for the executive director and other personnel may not exceed the rate payable for level V of the Executive Schedule under section 5316 of such title. (iii) Detail of government employees Any Federal Government employee may be detailed to the Commission without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege. (iv) Procurement of temporary and intermittent services The Chairman of the Commission may procure temporary and intermittent services under section 3109(b) of title 5, United States Code, at rates for individuals which do not exceed the daily equivalent of the annual rate of basic pay prescribed for level V of the Executive Schedule under section 5316 of such title. (4) Recommendations and regulations on funding and distribution requirements (A) In general After taking into consideration the recommendations of the Commission and providing the public notice and an opportunity for comment, the Secretary shall promulgate regulations with respect to funding and distribution requirements for USA Retirement Funds, as necessary or appropriate in the public interest and for the protection of participants and beneficiaries, including regulations described in subparagraphs (B) and (C). (B) Requirements relating to annuity payments made directly by a Fund The regulations under subparagraph (A) shall provide that in the case of annuity payments made directly by the Fund— (i) the maximum annuity payment for a participant or beneficiary shall be determined using the mortality tables and interest rates prescribed by the Secretary under subparagraph (C) at the time benefits commence; and (ii) the level of benefits paid may be adjusted periodically in order to reflect the mortality experience and the investment experience of the Fund, but only after the Fund has obtained a certification from a member of the American Academy of Actuaries that the adjustment is sustainable for the remaining lifetime of participants then receiving benefits, based on the mortality tables and interest rates prescribed under subparagraph (C) by the Secretary for that time. (C) Mortality tables and interest rates used requirements The regulations promulgated under subparagraph (A) shall include the following: (i) Mortality Tables (I) In general The Secretary shall prescribe mortality tables to be used in determining annuity payments made directly by the Fund. Such tables shall be based on the actual experience of insurance companies that issue group annuities and projected trends in such experience. In prescribing such tables, the Secretary shall take into account results of available independent studies of the mortality of individuals receiving annuities under group annuity contracts. (II) Periodic revisions of mortality tables The Secretary shall make revisions, to become effective as soon as practicable, in any mortality table in effect to reflect more recent actual experience of insurance companies that issue group annuities and projected trends in such experience. In revising such tables, the Secretary shall take into account the results of more recent available independent studies of the mortality and projected trends of individuals receiving annuities under group annuity contracts. (ii) Interest Rates The Secretary shall prescribe interest rates to be used in determining annuity payments made directly by the Fund. Such rates shall be based on the yields on investment grade corporate bonds with varying maturities and that are in the top 3 quality levels available. Interest rates shall be prescribed quarterly or more frequently, as determined by the Secretary. (5) Duty to address best practices The Commission shall prepare, and periodically update, a report that describes the best practices for the governance of boards of trustees of USA Retirement Funds, including board of trustee composition, appointment procedures, term length, term staggering, trustee qualifications, delegation of duties, and performance assessment procedures. 5. Limitation on employer liability Section 404 of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1021 et seq. ) is amended by adding at the end the following: (e) An employer shall not be a fiduciary with respect to the selection, management or administration of a USA Retirement Fund solely because such employer makes available such Fund through an automatic USA Retirement Fund arrangement. Notwithstanding the preceding sentence, employers participating in a USA Retirement Fund shall be responsible for meeting the enrollment requirements and transmitting contributions, as required under the USA Retirement Funds Act . . 6. Enforcement and fraud prevention (a) Penalty for failure to timely remit contributions to automatic USA Retirement Fund arrangements (1) In general If an employer is required under an automatic USA Retirement Fund arrangement to deposit amounts withheld from an employee's compensation into a USA Retirement Fund but fails to do so within the time prescribed under section 2(d)(3), such amounts shall be treated as assets of a USA Retirement Fund. (2) Failure to provide access to payroll savings arrangements (A) General rule A covered employer who fails to meet the requirements of section 2(a) for a calendar year shall be subject to a civil money penalty of $100 per calendar year for each employee to whom such failure relates. (B) Exceptions No civil money penalty shall be imposed under this paragraph for a failure to meet the requirements under section 2(a)— (i) during a period for which the Secretary determines that the employer subject to liability for the civil money penalty did not know that the failure existed and exercised reasonable diligence to meet the requirements of section 2(a); or (ii) (I) the employer subject to liability for the civil money penalty exercised reasonable diligence to meet the requirements of section 2(a); and (II) the employer provides the automatic USA Retirement Fund arrangement described to each employee eligible to participate in the arrangement by the end of the 90-day period beginning on the first date the employer knew, or exercising reasonable diligence should have known, that such failure existed. (C) Waiver by the secretary In the case of a failure to meet the requirements of section 2(a) that is due to reasonable cause and not to willful neglect, the Secretary may, in the sole discretion of the Secretary, waive part or all of the civil money penalty imposed under this paragraph to the extent that the payment of such civil money penalty would be excessive or otherwise inequitable relative to the failure involved. (D) Procedures for notice The Secretary may prescribe and implement procedures for obtaining confirmation that employers are in compliance with subsection (a). The Secretary, in the discretion of such Secretary, may prescribe that the confirmation shall be obtained on an annual or less frequent basis, and may use for this purpose the annual report or quarterly report for employment taxes, or such other means as the Secretary may deem advisable. (b) Civil actions and enforcement (1) Administration and enforcement Part 5 of title I of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1132 et seq. ) shall apply to a USA Retirement Fund as if a USA Retirement Fund were an employee benefit plan. (2) Amendment Section 502(a) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1132 et seq. ) is amended— (A) in paragraph (9), by striking ; or and inserting ; ; (B) in paragraph (10), by striking the period at the end and inserting ; or ; and (C) by adding at the end the following: (11) in the event that an employer fails to make timely contributions or payments to a USA Retirement Fund established under title I of the USA Retirement Funds Act , by the Secretary, a participant, a beneficiary, or a fiduciary, to compel an employer to make such contributions or payments as if such contributions or payments were delinquent contributions or payments under section 515 or subsection (g)(2). . (3) Non-preemption of certain State law Nothing in this section shall preempt State law insofar as State law relates to the enforcement of an obligation to contribute to a USA Retirement Fund. (c) False statements (1) In general No person, in connection with a plan or other arrangement that is or purports to be a USA Retirement Fund, shall make a false statement or false representation of fact, knowing it to be false, in connection with the marketing or sale of such plan or arrangement, to any employee, any member of an employee organization, any beneficiary, any employer, any employee organization, the Secretary, or any State, or the representative or agent of any such person, State, or the Secretary, concerning— (A) the financial condition or solvency of such fund or arrangement; (B) the benefits provided by such fund or arrangement; (C) the regulatory status of such fund or other arrangement under any Federal or State law governing collective bargaining, labor management relations, or intern union affairs; or (D) the regulatory status of such fund or other arrangement. (2) Penalty Any person who violates this subsection shall, upon conviction, be imprisoned not more than 10 years or fined under title 18, United States Code, or both. (d) Cease and desist orders (1) Issuance of order The Secretary may issue a cease and desist (ex parte) order under this title if the Secretary determines that the alleged conduct of a fund purporting to be a USA Retirement Fund is fraudulent, or creates an immediate danger to the public safety or welfare, or is causing or can be reasonably expected to cause significant, imminent, and irreparable public injury. (2) Hearings (A) In general A person who is adversely affected by the issuance of a cease and desist order under paragraph (1) may request a hearing by the Secretary regarding such order. The Secretary may require that a hearing under this paragraph, including all related information and evidence, be conducted in a confidential manner. (B) Burden of proof The burden of proof in any hearing conducted under subparagraph (A) shall be on the party requesting the hearing to show cause why the cease and desist order should be set aside. (C) Determination Based upon the evidence presented at a hearing under subparagraph (A), the Secretary may affirm, modify, or set aside the cease and desist order at issue, in whole or in part. (3) Regulations The Secretary may promulgate such regulations or other guidance as may be necessary or appropriate to carry out this subsection.