,i #aacth ,,congress #ast ,session ,h4 ,r4 #bjce ,,in ,,the ,,house ,,of ,,representatives ,may #af1 #bjac ,mr4 ,neal introduced the following bill2 which was referred to the ,committee on ,ways and ,means1 and in addition to the ,committee on ,education and the ,workforce1 for a period to be subsequently determined by the ,speaker1 in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to expand personal saving and retirement savings coverage by enabling employees not covered by qualifying retirement plans to save for retirement through automatic ,,ira arrangements1 and for other purposes4 #a4 ,short title2 reference 7a7 ,short title ,this ,act may be cited as the ,automatic ,,ira ,act of #bjac4 7b7 ,amendment of #aihf ,code ,except as otherwise expressly provided1 whenever in this ,act an amendment or repeal is expressed in terms of an amendment to1 or repeal of1 a section or other provision1 the reference shall be considered to be made to a section or other provision of the ,internal ,revenue ,code of #aihf4 #b4 ,employees not covered by qualifying retirement plans or arrangements entitled to participate in automatic ,,ira arrangements 7a7 ,in general ,subpart ,a of part ,i of subchapter ,d of chapter #a 7relating to pension1 profit-sharing1 stock bonus plans1 etc47 is amended by inserting after section #djh;,a the following new section3 #djh;,b4 ,right to automatic ,,ira arrangements at work 7a7 ,requirement ,to provide automatic ,,ira arrangement ,each covered employer shall make available to each qualifying employee of the employer for the calendar year an automatic ,,ira arrangement4 7b7 ,covered employer ,for purposes of this section-- 7#a7 ,in general ,except as otherwise provided in this subsection or subsection 7c77#b71 the term covered employer means1 with respect to any year1 an employer which does not maintain a qualifying plan or arrangement described in section #bai7;g77#e7 for the calendar year4 7#b7 ,excluded plans ,a qualifying plan or arrangement shall not be taken into account for purposes of paragraph 7#a7 if-- 7,a7 the plan or arrangement is frozen as of the first day of the preceding calendar year1 or 7,b7 in the case of a plan or arrangement under which the only contributions are discretionary on the part of the employer or other plan sponsor1 no employer contribution has been made to the plan or arrangement for the #b-plan-year period ending with the last plan year ending in the second preceding calendar year and it is not reasonable to assume that an employer contribution will be made for the last plan year ending in the preceding calendar year4 7#c7 ,exception for certain small and new employers 7,a7 ,in general ,the term covered employer does not include an employer for a calendar year if the employer either-- 7i7 did not employ more than #aj employees who received at least #e1jjj of compensation 7as defined in section #cdja7;a77 from the employer for the preceding calendar year1 7ii7 did not normally employ more than #aj employees on a typical business day of the preceding calendar year1 or 7iii7 was not in existence at all times during the calendar year and the preceding calendar year4 7,b7 ,operating rules ,in determining the number of employees for purposes of subparagraph 7,a7-- 7i7 rules consistent with any rules applicable in determining the number of employees for purposes of section #djh7p77#b77;,c7 and section #dihj;,b7d7 shall apply1 7ii7 all members of the same family 7within the meaning of section #cah7;a77#a77 shall be treated as #a individual1 and 7iii7 any reference to an employer shall include a reference to any predecessor employer4 7#d7 ,exception for governments and churches ,the term covered employer does not include-- 7,a7 a government or entity described in section #dad7;d71 or 7,b7 a church or a convention or association of churches which is exempt from tax under section #eja4 7#e7 ,aggregation rule ,all persons treated as a single employer under subsection 7a7 or 7b7 of section #eb or subsection 7m7 or 7o7 of section #dad shall be treated as a single employer4 7c7 ,qualifying employee ,for purposes of this section-- 7#a7 ,in general ,the term qualifying employee means any employee of the employer who is not an excluded employee4 7#b7 ,plan sponsor's employees ,if-- 7,a7 an employer maintains one or more qualifying plans or arrangements described in section #bai7;g77#e71 and 7,b7 the employees of a subsidiary1 division1 or other major business unit are generally not eligible to participate in any such qualifying plan or arrangement1 then1 for purposes of this section1 the employer shall be treated as a covered employer with respect to such employees 7other than excluded employees71 and such employees 7other than excluded employees7 shall be treated as qualifying employees1 but only if there are #ej or more ineligible employees of such subsidiary1 division or other major business unit constituting at least #aj percent of the employees of the employer 7other than excludable employees74 7#c7 ,excluded employees 7,a7 ,in general ,the term excluded employee means an employee of the employer who is an excludable employee and who is in a class or category that the employer excludes from treatment as qualifying employees4 7,b7 ,excludable employee ,the term excludable employee means-- 7i7 any employee described in section #daj7;b77#c71 7ii7 any employee who has not attained the age of #ah before the beginning of the calendar year1 7iii7 any employee who has not completed at least #c months of service with the employer1 7iv7 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 plan1 any employee who has not satisfied such requirements1 7v7 in the case of an employer that maintains a section #djc7;b7 annuity contract 7including a custodial account or retirement income account71 any employee who is permitted to be excluded from any salary reduction arrangement under the contract pursuant to section #djc7;b77#ab71 7vi7 in the case of an employer that maintains an arrangement described in section #djh7p71 any employee who is not required to be eligible to participate in the arrangement under section #djh7p77#d71 and 7vii7 in the case of an employer that maintains a simplified employee pension described in section #djh7k71 any employee who is permitted to be excluded from participation under section #djh7k77#b74 7#d7 ,guidance ,the ,secretary shall issue regulations or other guidance to carry out this subsection1 including-- 7,a7 guidelines for determining the classes or categories of employees to be covered by an automatic ,,ira arrangement1 7,b7 if an employer excludes employees from the automatic ,,ira arrangement1 guidelines providing that the employer shall specify the classification or categories of employees who are so excluded1 and 7,c7 rules to prevent avoidance of the requirements of this section4 7d7 ,automatic ,,ira arrangement ,for purposes of this section-- 7#a7 ,in general ,the term automatic ,,ira arrangement means an arrangement of an employer 7determined without regard to whether the employer is required to maintain the arrangement7-- 7,a7 which covers each qualifying employee of the covered employer for the calendar year1 7,b7 under which a qualifying employee-- 7i7 may elect-- 7,i7 to contribute to an individual retirement plan1 or to purchase a qualified retirement bond on behalf of the employee1 by having the employer deposit payroll deduction amounts or make other periodic direct deposits 7including electronic payments7 to the plan or to be invested in retirement bonds 7whether to the ,secretary of the ,treasury or to a designated trustee or other agent for that purpose71 or 7,,ii7 to have such payments paid to the employee directly in cash1 7ii7 is treated as having made the election under clause 7i77,i7 in the amount specified in paragraph 7#d7 until the individual specifically elects not to have such contributions or purchases made 7or specifically elects to have such contributions or purchases made at a different percentage or in a different amount71 and 7iii7 may elect to modify the manner in which such amounts are invested for such year1 7,c7 which meets the administrative requirements of paragraph 7#b71 including the notice requirement of paragraph 7#b77;,c71 and 7,d7 which does not charge unreasonable additional fees solely on the basis that the balance in an automatic ,,ira is small4 7#b7 ,administrative requirements 7,a7 ,payments ,the requirements of this paragraph are met with respect to any automatic ,,ira arrangement if the employer makes the payments elected or treated as elected under paragraph 7#a77;,b7-- 7i7 on or before the last day of the month following the month in which the compensation otherwise would have been payable to the employee in cash1 or 7ii7 before such later deadline prescribed by the ,secretary for making such payments1 but not later than the due date for the deposit of tax required to be deducted and withheld under chapter #bd 7relating to collection of income tax at source on wages7 for the payroll period to which such payments relate4 7,b7 ,termination of employee participation ,subject to a requirement for reasonable notice1 an employee may elect to terminate participation in the arrangement at any time during a calendar year1 except that if an employee so terminates1 the arrangement may provide that the employee may not elect to resume participation until the beginning of the next calendar year4 7,c7 ,notice of election period ,the requirements of this paragraph shall not be treated as met with respect to any year unless the employer notifies each employee eligible to participate1 within a reasonable period of time before the #cjth day before the beginning of such year 7and1 for the first year the employee is so eligible1 the #cjth day before the first day such employee is so eligible71 of-- 7i7 the payments that may be elected or treated as elected under paragraph 7#a77;,b71 7ii7 the opportunity to make the election to terminate participation in the arrangement under paragraph 7#b77;,b71 7iii7 the opportunity to make the election under paragraph 7#a77;,b77ii7 to have contributions or purchases made at a different percentage or in a different amount1 and 7iv7 the opportunity under paragraph 7#a77;,b77iii7 to modify the manner in which such amounts are invested for such year4 7,d7 ,employer may permit employees to choose ,,ira ,subject to subsection 7f71 if the employer so elects1 the arrangement provides that an employee may elect to have contributions made to any individual retirement plan specified by the employee4 7,e7 ,employer may permit employees to choose retirement bond ,subject to subsection 7f71 if the employer so elects1 the arrangement provides that an employee may elect to have payments applied toward the purchase of retirement bonds4 7#c7 ,default investments ,if an employee is treated under clause 7ii7 of paragraph 7#a77;,b7 as having made an election to participate in an automatic ,,ira arrangement-- 7,a7 the employee shall be deemed to have made an election to make contributions and payments in the amount determined under such clause1 7,b7 such contributions shall-- 7i7 if the employer has made an election under subsection 7f77#b71 be transferred to an individual retirement plan of the designated trustee or issuer but only if the contributions are invested as provided in paragraph 7#e71 or 7ii7 be applied toward the purchase of a retirement bond4 7#d7 ,amount of contributions and payments 7,a7 ,in general ,the amount specified in this paragraph is-- 7i7 #c percent of compensation1 or 7ii7 such other percentage of compensation as is specified in regulations prescribed by the ,secretary which is not less than #b percent or more than #f percent4 7,b7 ,authority to provide for periodic increases ,in the case of qualifying employees under an automatic ,,ira arrangement for #b or more consecutive years1 the ,secretary may by regulation provide for periodic 7not more frequent than annual7 increases in the percentage of compensation an employee is deemed to have elected under subparagraph 7,a74 ,the considerations the ,secretary shall take into account in issuing any regulations under this subparagraph and subparagraph 7,a7 shall include the potential effects on lower-income employees as well as on adequacy of savings4 7,c7 ,permitted additional procedures to limit contributions ,an employer-- 7i7 shall have no responsibility for any calendar year for determining whether1 or ensuring that1 the contributions with respect to any employee do not exceed the deductible amount in effect for taxable years beginning in the calendar year under section #bai7;b77#e7 7determined without regard to subparagraph 7,b7 thereof71 and 7ii7 shall not be treated as failing to satisfy the requirements of this section or any other provision of this title merely because the employer chooses to limit the contributions under this subsection on behalf of a qualifying employee for any calendar year in a manner reasonably designed to avoid exceeding such deductible amount4 7#e7 ,required investments 7,a7 ,in general ,amounts contributed under paragraph 7#c77;,b77i7 shall be invested only in the class of assets or funds described in subparagraph 7,b7 unless the employer elects a class of assets or funds described in subparagraph 7,c71 7,d71 7,e71 or 7,f74 7,b7 ,target date_/lifecycle option ,the class of assets or funds described in this subparagraph is the class of assets or funds that constitutes a qualified default investment alternative under ,department of ,labor regulation section #beej4djd;c-#e7;e77#d77;i74 7,c7 ,principal preservation ,the class of assets or funds described in this subparagraph is the class of assets or funds that is designed to protect the principal of the individual on an ongoing basis1 including passbook savings1 certificates of deposit1 insurance contracts1 mutual funds1 ,united ,states savings bonds 7which may be indexed for inflation71 and similar assets specified in regulations4 7,d7 ,balanced option ,the class of assets or funds described in this subparagraph is the class of assets or funds that constitutes a qualified default investment alternative under ,department of ,labor regulation section #beej4djd;c-#e7;e77#d77;ii74 7,e7 ,guaranteed lifetime income option or equivalent ,the class of assets or funds described in this subparagraph is the class of assets or funds that is designed to provide an employee with the right to elect to receive distributions as a defined level of income annually 7or more frequently7 for at least the remainder of the life of the employee or the joint lives of the employee and the employee's designated beneficiary4 ,no later than #ab months after the date of enactment of this ,act1 the ,secretary of ,labor and the ,secretary shall issue guidance defining a guaranteed lifetime income or equivalent4 7,f7 ,other ,any other class of assets or funds determined by the ,secretary to be a qualified investment for purposes of this section4 7#f7 ,coordination with withholding ,the ,secretary shall modify the withholding exemption certificate under section #cdjb7;f7 so that1 in the case of any qualifying employee covered under an automatic ,,ira arrangement1 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 procedures4 7#g7 ,treatment as ,,ira ,a qualifying employee for whom an automatic ,,ira is established under paragraph 7#a7 may elect1 at such time and in such manner and form as the ,secretary may prescribe1 whether to treat the individual retirement plan as described1 or not described1 in section #djh;,a4 ,if no such election is made1 the plan shall be treated as described in section #djh;,a and shall meet the requirements of section #djh;,a4 7#h7 ,employer's ,option to ,obtain ,affirmative ,elections from ,employees ,instead of ,automatic ,enrollment ,as an alternative to automatic enrollment1 an employer may choose to comply with subsection 7d77#a77;,b77ii7 by notifying employees that the employer wishes to obtain from each qualifying employee an affirmative election either to contribute or not to contribute to an automatic ,,ira1 provided that any qualifying employee who fails to make such an election is treated in the manner provided under subsection 7d77#a77;,b77ii74 7e7 ,automatic ,,ira contributions and retirement bond purchases treated like other contributions to individual retirement plans 7#a7 ,tax treatment unaffected ,the fact that a contribution to an individual retirement plan or purchase of a retirement bond is made on behalf of an employee under an automatic ,,ira arrangement instead of being made directly by the employee shall not affect the deductibility or other tax treatment of the contribution or of other amounts under this title4 7#b7 ,payroll savings contributions taken into account ,any contribution to an individual retirement plan or purchase of a retirement bond made on behalf of an employee under an automatic ,,ira arrangement shall be taken into account in applying the limitations on contributions to individual retirement plans and the other provisions of this title applicable to individual retirement plans as if the contribution or purchase had been made directly by the employee4 7f7 ,deposits to plans of a designated trustee or issuer and for retirement bonds 7#a7 ,in general ,an employer shall not be treated as failing to satisfy the requirements of this section or any other provision of this title merely because the employer makes all contributions 7or all contributions on behalf of employees who do not specify an individual retirement plan1 trustee1 or issuer to receive the contributions7 to individual retirement plans specified in paragraph 7#b7 or to the ,secretary or his agent for the purchase of retirement bonds specified in paragraph 7#c74 7#b7 ,individual retirement plans other than those selected by employee ,an employer may elect to have contributions for all qualifying employees participating in an automatic ,,ira arrangement made to individual retirement plans of a trustee or issuer under the arrangement that has been designated by the employer4 ,the preceding sentence shall not apply unless each participant is notified in writing that the participant's balance may be transferred without cost or penalty to another individual retirement plan established by or on behalf of the participant4 7#c7 ,retirement bonds 7,a7 ,in general ,the ,secretary shall provide that contributions deposited under subparagraph 7,b7 shall be applied to the purchase of a retirement bond in the name of each applicable employee4 7,b7 ,payroll deposit features ,the ,secretary shall establish procedures so that contributions may be applied to the purchase of retirement bonds without undue administrative or paperwork requirements on participating employers4 ,such procedures shall ensure that only #a such retirement bond of each type 7traditional or ,roth7 is issued for each ,,tin4 7#d7 ,payroll tax deposit procedure ,the procedures the ,secretary shall establish may include a procedure under which an employer-- 7,a7 may include with each deposit of tax required to be deducted and withheld under chapter #bd the aggregate amounts1 for the period covered by the deposit1 which qualifying employees have designated under subsection clause 7i77,i7 of subsection 7d77#a77;,b7 7or are deemed to have designated under clause 7ii7 of such subsection7 as contributions to purchase retirement bonds on behalf of the employees under paragraph 7#c71 and 7,b7 specifies1 in such manner as the ,secretary may prescribe1 information needed to purchase retirement bonds on behalf of each applicable employee for whom a contribution is to be made1 including-- 7i7 the employee's name and ,,tin1 and 7ii7 the amount of the contribution4 7#e7 ,purposes ,the purposes of the retirement bond program established under this subsection and subsection 7g7 include-- 7,a7 providing new savers a convenient1 low-cost investment option suitable for the initial accumulation of small automatic ,,ira contributions1 7,b7 to reflect the intent that the long-term investment of automatic ,,ira funds for most savers be in the private market rather than in retirement bonds1 encouraging and assisting individuals who accumulate larger amounts in retirement bonds to transfer those funds to individual retirement plans in the private market1 while 7,c7 permitting individuals to remain invested in retirement bonds if they choose to do so4 7#f7 ,regulations ,the ,secretary may issue such regulations as are necessary to carry out the purposes of this subsection and subsection 7g71 including-- 7,a7 establishment of procedures to communicate to individuals the importance of investment diversification and the transfer option described in subparagraph 7,b71 7,b7 simplified procedures under which holders of retirement bonds may periodically choose to have the bonds or their proceeds transferred to available individual retirement plans1 and 7,c7 means by which individuals may elect 7or be treated as electing7 whether to have retirement bonds or their proceeds so transferred4 ,any such transfer shall be treated as a rollover contribution for purposes of section #djh7;d77#c7 7other than subparagraph 7,b7 thereof74 7g7 ,retirement bond 7#a7 ,retirement bond ,the term retirement bond means a bond issued under chapter #ca of title #ca1 which by its terms1 or by regulations prescribed by the ,secretary under such chapter-- 7,a7 provides for interest to be credited at rates that take into account the expected duration of the funds invested in retirement bonds and at rates determined or adjusted in a manner and with sufficient frequency to provide substantial protection from inflation1 7,b7 is not transferable1 and 7,c7 is designed for investment for retirement under automatic ,,ira arrangements or other savings vehicles4 7#b7 ,individual retirement plan rules applicable ,the provisions of this title applicable to an individual retirement plan 7as defined in section #ggja7;a77#cg771 including provisions relating to contributions1 holding and distributions1 shall apply to a retirement bond1 except as determined by the ,secretary4 7#c7 ,annual statement ,as soon as practicable after the close of the calendar year1 the ,secretary shall make available an annual statement to each participant setting forth-- 7,a7 payments made by or on behalf of the participant for the retirement bond1 7,b7 amounts earned by the retirement bond1 7,c7 the value of the account as of the close of such calendar year1 7,d7 the importance of diversifying retirement savings1 7,e7 the benefits of a well-balanced and diversified investment portfolio1 7,f7 a notice of the internet website of the ,department of ,labor for sources of information on individual investing and diversification1 7,g7 the procedures for redeeming a retirement bond and directly transferring the redeemed amount into an individual retirement plan1 7,h7 other factors affecting retirement savings decisions1 and 7,i7 such other information as the ,secretary determines necessary or appropriate4 7h7 ,model notice ,the ,secretary shall-- 7#a7 provide a model notice1 written in a manner calculated to be understandable to the average worker1 that is simple for employers to use-- 7,a7 to notify employees of the requirement under this section for the employer to provide certain employees with the opportunity to participate in an automatic ,,ira arrangement1 and 7,b7 to satisfy the requirements of subsection 7d77#b77;,c71 7#b7 provide uniform forms for enrollment1 including automatic enrollment1 in an automatic ,,ira arrangement1 and 7#c7 establish a website or other electronic means that small employers can access and use to obtain information on automatic ,,ira arrangements and to obtain required notices and forms4 ,the information referred to in paragraph 7#c7 shall be provided in a manner designed to assist employers and providers by facilitating the identification by employers of private-sector providers of individual retirement plans and associated investment options that are appropriate for use in automatic ,,ira arrangements4 7i7 ,cross reference ,for provision preempting conflicting ,state laws1 see section #b7k7 of the ,automatic ,,ira ,act of #bjac4 4 7b7 ,mandatory transfers ,section #dja7;a77#ca77;,b7 is amended-- 7#a7 by inserting 7including an automatic ,,ira arrangement7 after individual retirement plan each place it appears1 and 7#b7 by adding at the end the following new sentence3 ,any amount so transferred 7and any earnings thereon7 shall be invested in a default investment described in section #djh;,b7d77#e744 7c7 ,penalty for failure ,to timely remit contributions to automatic ,,ira arrangements ,section #dige7;c7 is amended by adding at the end the following new paragraph3 7#g7 ,special rule for automatic ,,ira arrangements ,for purposes of paragraph 7#a71 if an employer is required under an automatic ,,ira arrangement under section #djh;,b to deposit amounts withheld from an employee's compensation into an automatic ,,ira or toward the purchase of a retirement bond but fails to do so within the time prescribed under section #djh;,b7d77#b77;,a71 such amounts shall be treated as assets of the automatic ,,ira4 4 7d7 ,coordination with ,employee ,retirement ,income ,security ,act of #aigd 7#a7 ,exemption 7,a7 ,in general ,section #c7b7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajjb7b77 is amended-- 7i7 by inserting or 7,c7 after subparagraph 7,b7 in subparagraph 7,a71 and 7ii7 by adding at the end the following new subparagraph3 7,c7 ,an automatic ,,ira arrangement described in section #djh;,b7d7 of the ,internal ,revenue ,code of #aihf shall not be treated as an employee pension benefit plan or pension plan if1 under the arrangement1 contributions are to be made to an automatic ,,ira the provider of which is included in the website list established under section #djh;,b7h77#c7 of such ,code1 are to be made to an individual retirement plan designated by the employee1 or are to be invested in retirement bonds 7whether to the ,secretary of the ,treasury or to a designated trustee or other agent for that purpose74 4 7,b7 ,customer identification program ,notwithstanding the amendment made by subparagraph 7,a71 an individual retirement plan established pursuant to an automatic ,,ira arrangement described in section #djh;,b7d7 of the ,internal ,revenue ,code of #aihf shall1 for purposes of any customer identification program established under section #ecah7l7 of title #ca1 ,united ,states ,code1 be treated as an account opened for the purpose of participating in an employee benefit plan established under the ,employee ,retirement ,income ,security ,act of #aigd4 7#b7 ,fiduciary duties ,section #djd7;c77#b7 of such ,act is amended-- 7,a7 by inserting the following sentence before the last sentence3 ,in the case of an automatic ,,ira under section #djh;,b of such ,code that is not exempt under section #c7b77;,c71 a participant or beneficiary shall1 for purposes of paragraph 7#a71 be treated as exercising control over the assets in the account on and after the #gth day after notice has been given to an employee that such automatic ,,ira has been established on behalf of the employee41 and 7,b7 by inserting or with respect to an automatic ,,ira under section #djh;,b of such ,code after arrangement in the last sentence4 7e7 ,notice of availability of investment guidelines 7#a7 ,in general ,section #djh7;i7 7relating to reports7 is amended by adding at the end the following new sentences3 ,any report furnished under paragraph 7#b7 to an individual shall include notice of the internet website of the ,department of ,labor for sources of information on individual investing and diversification44 7#b7 ,update ,information ,such information shall be modified 7or updated7 by the ,secretary of ,labor in consultation with the ,secretary of the ,treasury and the ,chairman of the ,securities and ,exchange ,commission to address needed changes due to the creation of automatic ,i,r,as4 7f7 ,failure ,to provide access to payroll savings arrangements ,chapter #dc 7relating to qualified pension1 etc41 plans7 is amended by adding at the end the following new section3 #dihj;,j4 ,requirements for covered employers to provide employees access to automatic ,,ira arrangements 7a7 ,general rule ,there is hereby imposed a tax on any failure by a covered employer 7as defined in section #djh;,b7 to meet the requirements of subsection 7d7 for a calendar year4 7b7 ,amount 7#a7 ,in general ,the amount of the tax imposed by subsection 7a7 on any failure for any calendar year shall be #ajj with respect to each employee to whom such failure relates4 7#b7 ,tax not to apply where failure not discovered and reasonable diligence exercised ,no tax shall be imposed by subsection 7a7 on any failure during any period for which it is established to the satisfaction of the ,secretary that the employer subject to liability for the tax did not know that the failure existed and exercised reasonable diligence to meet the requirements of subsection 7d74 7#c7 ,tax not to apply to failures corrected within #ij days ,no tax shall be imposed by subsection 7a7 on any failure if-- 7,a7 the employer subject to liability for the tax under subsection 7a7 exercised reasonable diligence to meet the requirements of subsection 7d71 and 7,b7 the employer provides the automatic ,,ira arrangement described in section #djh;,b to each employee eligible to participate in the arrangement by the end of the #ij-;day period beginning on the first date the employer knew1 or exercising reasonable diligence would have known1 that such failure existed4 7#d7 ,waiver by ,secretary ,in the case of a failure which is due to reasonable cause and not to willful neglect1 the ,secretary may waive part or all of the tax imposed by subsection 7a7 to the extent that the payment of such tax would be excessive or otherwise inequitable relative to the failure involved4 7c7 ,procedures for notice ,the ,secretary may prescribe and implement procedures for obtaining confirmation that employers are in compliance with the requirements of subsection 7d74 ,the ,secretary1 in the ,secretary's discretion1 may prescribe that the confirmation shall be obtained on an annual or less frequent basis1 and may use for this purpose the annual report or quarterly report for employment taxes1 or such other means as the ,secretary may deem advisable4 7d7 ,requirement ,to provide employee access to automatic ,,ira arrangements ,the requirements of this subsection are met if the employer meets the requirements of section #djh;,b4 4 7g7 ,waiver of early withdrawal penalty for certain distributions following initial election ,to participate in automatic ,,ira arrangement ,subsection 7t7 of section #gb is amended by adding at the end the following new paragraph3 7#aa7 ,distribution following initial election to participate in automatic ,,ira arrangement ,paragraph 7#a7 shall not apply in the case of a distribution to a qualifying employee made not later than #ij days after the initial election under section #djh;,b7d77#a77;,b77ii74 4 7h7 ,bankruptcy ,section #ebb of title #aa1 ,united ,states ,code1 is amended-- 7#a7 in subsection 7d77#ab7 by inserting #djh;,b1 after #djh;,a11 and 7#b7 in subsection 7n7 by inserting 1 or in an automatic ,,ira arrangement described in section #djh;,b14 7i7 ,automatic ,,ira ,advisory ,group 7#a7 ,in general ,not later than #fj days after the date of enactment of this ,act1 the ,secretary of the ,treasury and the ,secretary of ,labor shall jointly establish an ,automatic ,,ira ,advisory ,group 7in this subsection referred to as the ,advisory ,group74 ,the purpose of the ,advisory ,group shall be to make recommendations regarding the automatic ,,ira investment options described in section #djh;,b7d77#e7 of the ,internal ,revenue ,code of #aihf and the website described in section #djh;,b7h77#c7 of such ,code1 including1 with respect to automatic ,,ira arrangements1 the disclosure of information regarding fees and expenses1 the use of low-cost investment options1 the appropriate use of electronic methods to provide notice and disclosure1 and such other related matters as may be determined by the ,secretaries4 7#b7 ,membership ,the ,advisory ,group shall consist of not more than #ae members and shall be composed of-- 7,a7 such persons as the ,secretaries of the ,treasury and ,labor may consider appropriate to provide expertise regarding investments for retirement1 including providers of individual retirement accounts and individual retirement annuities described in section #djh or #djh;,a of such ,code1 and 7,b7 one or more representatives of the ,department of ,labor and of the ,department of the ,treasury4 7#c7 ,compensation ,the members of the ,advisory ,group shall serve without compensation4 7#d7 ,administrative support ,the ,department of the ,treasury and the ,department of ,labor shall jointly provide appropriate administrative support to the ,advisory ,group1 including technical assistance4 ,the ,advisory ,group may use the services and facilities of such ,departments1 with or without reimbursement1 as jointly determined by such ,departments4 7#e7 ,report by advisory group ,not later than #ab months after the date of the enactment of this ,act1 the ,advisory ,group shall submit to the ,secretary of ,labor and the ,secretary of the ,treasury a report containing its recommendations4 ,the ,secretaries may request that the ,advisory ,group submit subsequent reports4 7j7 ,conforming amendments 7#a7 ,the table of sections for subpart ,a of part ,i of subchapter ,d of chapter #a is amended by inserting after the item relating to section #djh;,a the following new item3 ,sec4 #djh;,b4 ,right to automatic ,,ira arrangements at work4 4 7#b7 ,the table of sections for chapter #dc is amended by adding at the end the following new item3 ,sec4 #dihj;,j4 ,requirements for employers to provide employees access to automatic ,,ira arrangements4 4 7k7 ,preemption of conflicting ,state laws ,the amendments made by this section shall supersede any law of a ,state that would directly or indirectly prohibit or restrict the establishment or operation of an automatic ,,ira arrangement meeting the requirements of section #djh;,b of the ,internal ,revenue ,code of #aihf4 ,nothing in such amendments shall be construed to impair or supersede any ,state law to the extent it provides a remedy for the failure to make payroll deposit payments under any such automatic ,,ira arrangement within the period required under such section #djh;,b4 7l7 ,effective date ,the amendments made by this section shall apply to calendar years beginning after ,december #ca1 #bjad4 #c4 ,credit for small employers maintaining automatic ,,ira arrangements 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a 7relating to business related credits7 is amended by adding at the end the following new section3 #de,s4 ,small employer automatic ,,ira arrangement 7a7 ,general rule ,for purposes of section #ch1 in the case of an eligible employer maintaining an automatic ,,ira arrangement meeting the requirements of section #djh;,b 7without regard to whether the employer is required to maintain the arrangement71 the small employer automatic ,,ira arrangement credit determined under this section for any taxable year is the amount determined under subsection 7b74 7b7 ,amount of credit 7#a7 ,in general ,the amount of the credit determined under this section for any taxable year with respect to an eligible employer shall be the sum of-- 7,a7 #be multiplied by the number of qualifying employees 7within the meaning of section #djh;,b7c77 for whom contributions are made under the automatic ,,ira arrangement referred to in subsection 7a7 for the calendar year in which the taxable year begins1 plus 7,b7 #ejj for the taxable year which begins in the first calendar year1 and #bej for the taxable year which begins in the second calendar year1 in which the eligible employer maintains an automatic ,,ira arrangement meeting the requirements of section #djh;,b4 7#b7 ,limitation ,no more than #aj qualifying employees may be taken into account under paragraph 7#a77;,a7 for a taxable year4 7#c7 ,duration of credit ,the credit described in paragraph 7#a77;,a7 shall apply only for a taxable year which begins in the first #f calendar years in which the eligible employer maintains an automatic ,,ira arrangement meeting the requirements of section #djh;,b4 7#d7 ,coordination with small employer startup credit 7,a7 ,no credit shall be allowed under this section to the employer for any taxable year if a credit is determined under section #de;,e with respect to the employer for the taxable year4 7,b7 ,if the eligible employer maintains an automatic ,,ira arrangement meeting the requirements of section #djh;,b with respect to any of the first three calendar years for which the employer could adopt such an arrangement and subsequently adopts an eligible employer plan for its employees for any of those years which it maintains for such third taxable year1 then section #de;,e7b77#a7 shall be applied with respect to the eligible employer by replacing #b taxable years with #c taxable years4 7c7 ,eligible employer ,for purposes of this section1 the term eligible employer means1 with respect to any calendar year in which the taxable year begins1 an employer which-- 7#a7 maintains an automatic ,,ira arrangement meeting the requirements of section #djh;,b1 7#b7 on each day during the preceding calendar year1 had no more than #ajj employees1 and 7#c7 did not maintain a qualifying plan or arrangement 7described in section #djh;,b7b77 during the portion of the calendar year preceding the adoption of the automatic ,,ira arrangement and the #b preceding calendar years4 7d7 ,other rules ,for purposes of this section1 the rules of section #de;,e7e7 shall apply4 4 7b7 ,credit allowed as part of general business credit ,section #ch7;b7 7defining current year business credit7 is amended by striking plus at the end of paragraph 7#ce71 by striking the period at the end of paragraph 7#cf7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#cg7 in the case of an eligible employer 7as defined in section #de,s7c77 maintaining an automatic ,,ira arrangement meeting the requirements of section #djh;,b1 the small employer automatic ,,ira arrangement credit determined under section #de,s7a74 4 7c7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a is amended by adding at the end the following new item3 ,sec4 #de,s4 ,small employer automatic ,,ira arrangement4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjad4 #d4 ,studies 7a7 ,in general ,the ,secretary of the ,treasury and the ,secretary of ,labor shall jointly conduct a separate study of the feasibility and desirability of each of the following3 7#a7 ,extending to automatic ,,ira arrangements spousal consent requirements similar to1 or based on1 those that apply under the ,federal ,employees' ,thrift ,savings ,plan1 including consideration of whether modifications of such requirements are necessary to apply them to automatic ,,ira arrangements4 7#b7 ,establishing procedures under which amounts saved by employees in retirement bonds would be automatically transferred into alternative diversified investments provided by the private sector when employees' automatic ,,ira balances reach a certain dollar level as well as procedures facilitating employees' ability to transfer into such private sector investments4 7b7 ,study of consolidation of individual retirement plans ,the ,secretary of the ,treasury and the ,secretary of ,labor shall jointly conduct a separate study of the feasibility and desirability of-- 7#a7 using data submitted on investments in individual retirement accounts and annuities to enable individuals with multiple such accounts and annuities that include very small amounts to receive periodic notices informing them about the location of these accounts and how such accounts and annuities might be consolidated1 and 7#b7 using investment arrangements associated with automatic ,i,r,as to assist in addressing the problem of abandoned accounts4 7c7 ,report ,not later than #ah months after the date of the enactment of this ,act1 the ,secretaries shall report the results of each study conducted under this section1 together with any recommendations for legislative changes1 to the ,committees on ,finance and ,health1 ,education1 ,labor1 and ,pensions of the ,senate and the ,committees on ,ways and ,means and ,education and the ,workforce of the ,house of ,representatives4 #e4 ,eliminating barriers to use of multiple employer plans ,by ,december #ca1 #bjac1 the ,secretaries of the ,treasury and ,labor shall-- 7#a7 prescribe administrative guidance establishing conditions under which an employer participating in a plan described in section #dac7;c7 of the ,internal ,revenue ,code of #aihf shall not have any liability under title ,i of the ,employee ,retirement ,income ,security ,act of #aigd with respect to the acts or omissions of one or more other participating employers1 which regulations may require that the portion of the plan attributable to such participating employers be spun off to plans maintained by such employers1 7#b7 prescribe administrative guidance establishing conditions under which a plan described in section #dac7;c7 of such ,code may be treated as satisfying the qualification requirements of sections #dja7;a7 and #dac7;c7 of such ,code despite the violation of such requirements by one or more participating employers1 including requiring1 if appropriate1 that the portion of the plan attributable to such participating employers be spun off to plans maintained by such employers1 and 7#c7 prescribe administrative guidance providing simplified means by which plans described in section #dac7;c7 of such ,code may satisfy the requirements of section #ajc of the ,employee ,retirement ,income ,security ,act of #aigd4 #f4 ,increase in credit limitation for small employer pension plan startup costs 7a7 ,in general ,paragraph 7#a7 of section #de;,e7b7 is amended to read as follows3 7#a7 for the first credit year and each of the #b taxable years immediately following the first credit year1 the greater of-- 7,a7 #ejj1 or 7,b7 the lesser of-- 7i7 #bej for each employee of the eligible employer who is not a highly compensated employee 7as defined in section #dae7q77 and who is eligible to participate in the eligible employer plan maintained by the eligible employer1 or 7ii7 #e1jjj4 4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after ,december #ca1 #bjac4