,i #aacth ,,congress #b;d ,session ,h4 ,r4 #ehge ,,in ,,the ,,house ,,of ,,representatives ,december #aa1 #bjad ,mr4 ,kind 7for himself and ,mr4 ,reichert7 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 encourage retirement savings by modifying requirements with respect to employer-established ,i,r,as1 and for other purposes4 #a4 ,short title2 table of contents 7a7 ,short title ,this ,act may be cited as the ,small ,businesses ,add ,value for ,employees ,act of #bjad or the ,,save ,act of #bjad4 7b7 ,table of contents ,the table of contents for this ,act is as follows3 ,sec4 #a4 ,short title2 table of contents4 ,sec4 #b4 ,elimination of restriction on ,,simple ,,ira rollovers4 ,sec4 #c4 ,allowing mid-year ,,simple ,,ira plan termination4 ,sec4 #d4 ,elimination of higher penalty on early ,,simple ,,ira distributions4 ,sec4 #e4 ,increase in contributions allowed for ,,simple ,,ira4 ,sec4 #f4 ,,simple #dja7k7 parity for additional nonelective employer contributions4 ,sec4 #g4 ,automatic deferral ,i,r,as4 ,sec4 #h4 ,modification of automatic enrollment safe harbor4 ,sec4 #i4 ,secure deferral arrangements4 ,sec4 #aj4 ,credit for employers with respect to modified safe harbor requirements4 ,sec4 #aa4 ,modification of regulations4 ,sec4 #ab4 ,limited transfer of unused balance in flexible spending arrangement4 ,sec4 #ac4 ,prior years compensation taken into account in determining maximum retirement savings deduction4 ,sec4 #ad4 ,expanding small employer pension plan startup cost credit4 ,sec4 #ae4 ,financial education4 ,sec4 #af4 ,small employer plans4 ,sec4 #ag4 ,modification of ,,erisa rules relating to multiple employer defined contribution plans4 ,sec4 #ah4 ,clarification of treatment of individual retirement plans with payroll deduction4 ,sec4 #ai4 ,disclosure regarding lifetime income4 ,sec4 #bj4 ,lifetime income safe harbor4 #b4 ,elimination of restriction on ,,simple ,,ira rollovers 7a7 ,in general ,paragraph 7#c7 of section #djh7;d7 of the ,internal ,revenue ,code of #aihf 7relating to rollover contribution7 is amended by striking subparagraph 7,g74 7b7 ,effective date ,the amendment made by this section shall apply to distributions in taxable years beginning after the date of the enactment of this ,act4 #c4 ,allowing mid-year ,,simple ,,ira plan termination 7a7 ,in general ,subsection 7p7 of section #djh of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#aa7 ,special rules relating to mid-year termination 7,a7 ,in general ,an employer may elect to terminate 7in such form and manner as the ,secretary may provide7 the qualified salary reduction arrangement of the employer at any time during the year4 7,b7 ,proration and application of qualified plan limitation ,in the case of a year during which an employer terminates a qualified salary reduction arrangement before the end of such year-- 7i7 the applicable dollar amount determined under paragraph 7#b77;,e7 for such year and the applicable dollar amount determined under section #dad7v77#b77;,b77ii7 for such year shall both be prorated to the date of such termination1 7ii7 for purposes of determining the compensation of an employee for such arrangement for such year1 the year of such termination shall be treated as ending on the date of such termination1 and 7iii7 subparagraph 7,d7 of paragraph 7#b7 shall not apply with respect to a qualified plan maintained in such year only after the date of such termination4 7,c7 ,matching contribution ,termination of an arrangement under subparagraph 7,a7 shall not be construed to modify the requirement of subparagraph 7,a77iii7 7with respect to any elective employer contributions7 or 7,b7 7with respect to nonelective contributions7 of paragraph 7#b7 made by the employer on behalf of an employee during the portion of such year the qualified salary reduction arrangement is in effect4 4 7b7 ,effective date ,the amendments made by this section shall apply to years beginning after the date of the enactment of this ,act4 #d4 ,elimination of higher penalty on early ,,simple ,,ira distributions 7a7 ,in general ,subsection 7t7 of section #gb of the ,internal ,revenue ,code of #aihf 7relating to #aj-percent additional tax on early distributions from qualified retirement plans7 is amended by striking paragraph 7#f74 7b7 ,effective date ,the amendment made by this section shall apply to distributions in taxable years beginning after the date of the enactment of this ,act4 #e4 ,increase in contributions allowed for ,,simple ,,ira 7a7 ,additional nonelective employer contributions allowed 7#a7 ,in general ,subparagraph 7,a7 of section #djh7p77#b7 of the ,internal ,revenue ,code of #aihf 7relating to qualified salary reduction arrangement7 is amended by striking and at the end of clause 7iii71 by redesignating clause 7iv7 as clause 7v71 and by inserting after clause 7iii7 the following new clause3 7iv7 the employer may make1 in addition to any other contribution under this paragraph1 nonelective contributions which meet the requirements of subparagraph 7,f71 and 4 7#b7 ,requirements relating to additional nonelective contributions ,paragraph 7#b7 of section #djh7p7 of such ,code is amended by adding at the end the following new subparagraph3 7,f7 ,requirements relating to additional nonelective contributions under subparagraph 7,a77iv7 7i7 ,in general ,nonelective contributions meet the requirements of this subparagraph if-- 7,i7 such contributions do not exceed more than #aj percent of compensation 7subject to the limitation described in subparagraph 7,b77ii77 for each employee who is eligible to participate in the arrangement and who has at least #e1jjj of compensation from the employer for the year1 and 7,,ii7 such contributions are made either as a uniform percentage of compensation or a uniform dollar amount for all participants4 7ii7 ,permitted disparity rules not applicable ,section #dja7l7 shall not apply for purposes of determining whether the requirements of clause 7i7 are met4 4 7#c7 ,conforming amendment ,clause 7v7 of section #djh7p77#b77;,a7 of such ,code1 as redesignated by this section1 is amended by striking clause 7i7 or 7iii7 and inserting clause 7i71 7iii71 or 7iv74 7b7 ,increase in elective contribution limitation ,subparagraph 7,e7 of section #djh7p77#b7 is amended to read as follows3 7,e7 ,applicable dollar amount ,for purposes of subparagraph 7,a77ii71 the applicable dollar amount shall be the applicable dollar amount in effect under section #djb7;g77#a74 4 7c7 ,,simple ,,ira subject to defined contribution plan limitation ,subsection 7p7 of section #djh of such ,code1 as amended by section #c1 is amended by adding at the end the following new paragraph3 7#ab7 ,subject to defined contribution plan limitation ,an arrangement shall not be treated as a qualified salary reduction arrangement for any year if contributions with respect to any employee for the year exceed the limitation of paragraph 7#a7 of section #dae7;c7 7relating to limitation for defined contribution plans74 4 7d7 ,effective date ,the amendments made by this section shall apply to contributions for taxable years beginning after ,december #ca1 #bjae4 #f4 ,,simple #dja7k7 parity for additional nonelective employer contributions 7a7 ,in general ,subparagraph 7,b7 of section #dja7k77#aa7 of such ,code 7relating to contribution requirements7 is amended by adding at the end the following new clause3 7iv7 ,special rule for additional nonelective employer contributions ,an arrangement shall not be treated as failing to meet the requirements of this subparagraph merely because under such arrangement the employer makes1 in addition to any other contribution under this subparagraph1 nonelective contributions of not more than #aj percent of compensation for each employee who is eligible to participate in the arrangement and who has at least #e1jjj of compensation from the employer for the year4 4 7b7 ,effective date ,the amendment made by this section shall apply to plan years beginning after ,december #ca1 #bjae4 #g4 ,automatic deferral ,i,r,as 7a7 ,in general ,subpart ,a of part ,i of subchapter ,d of chapter #a of the ,internal ,revenue ,code of #aihf 7relating to pension1 profit-sharing1 stock bonus plans1 etc47 is amended by inserting after section #djh;,a the following new section3 #djh;,b4 ,automatic deferral ,i,r,as 7a7 ,in general ,an automatic deferral ,,ira shall be treated for purposes of this title in the same manner as an individual retirement plan4 ,an automatic deferral ,,ira may also be treated as a ,roth ,,ira for purposes of this title if it meets the requirements of section #djh;,a4 7b7 ,automatic deferral ,,ira ,for purposes of this section1 the term automatic deferral ,,ira means an individual retirement plan 7as defined in section #ggja7;a77#cg77 with respect to which contributions are made under an arrangement which satisfies the requirements of paragraphs 7#a7 through 7#d7 of subsection 7c74 7c7 ,automatic deferral ,,ira arrangements 7#a7 ,enrollment 7,a7 ,in general ,the requirements of this paragraph are met if each employee eligible to participate in the arrangement is treated as having elected to have the employer make payments as elective contributions to an automatic deferral ,,ira on behalf of such employee 7which would have otherwise been made to the employee directly in cash7 in an amount equal to so much of a qualified percentage of compensation of such employee as does not exceed the deductible amount for such year 7within the meaning of section #bai7;b774 7,b7 ,eligibility ,for purposes of subparagraph 7,a71 an employee is eligible to participate if such employee has at least #e1jjj of compensation from the employer for the preceding year4 7,c7 ,election out ,the election treated as having been made under subparagraph 7,a7 shall cease to apply with respect to any employee who makes an affirmative election-- 7i7 to not have such elective contributions made1 or 7ii7 not later than the close of the #cj-;day period beginning on the date of the first contribution with respect to such employee1 to make elective contributions at a level specified in such affirmative election4 7,d7 ,qualified percentage ,for purposes of this paragraph1 the term qualified percentage means1 with respect to any employee1 any percentage determined under the arrangement if such percentage is applied uniformly1 does not exceed #ae percent1 and is at least-- 7i7 #c percent during the period ending on the last day of the first plan year which begins after the date on which the first elective contribution described in subparagraph 7,a7 is made with respect to such employee1 and 7ii7 during any subsequent plan year1 a percentage equal to-- 7,i7 #c percent1 plus 7,,ii7 #a percent multiplied by the number of plan years 7but not more than #ab7 beginning after the plan year described in clause 7i74 7#b7 ,notice 7,a7 ,in general ,the requirements of this paragraph are met if1 within a reasonable period before the first day an employee is eligible to participate in the arrangement1 the employee receives written notice of the employee's rights and obligations under the arrangement which-- 7i7 is sufficiently accurate and comprehensive to apprise the employee of such rights1 and 7ii7 is written in a manner calculated to be understood by the average employee to whom the arrangement applies4 7,b7 ,timing and content ,a notice shall not be treated as meeting the requirements of subparagraph 7,a7 with respect to an employee unless-- 7i7 the notice explains the employee's right to elect not to have elective contributions made on the employee's behalf 7or to elect to have such contributions made at a different percentage71 7ii7 the notice explains how contributions made under the arrangement will be invested in the absence of any investment election by the employee1 and 7iii7 the employee has a reasonable period of time after receipt of the notice described in clauses 7i7 and 7ii7 and before the first elective contribution is made to make either such election4 7#c7 ,default investment arrangement ,the requirements of this paragraph are met if-- 7,a7 in the absence of an investment election by the employee with respect to the employee's interest in the trust1 such interest is invested as provided in regulations prescribed pursuant to subparagraph 7,a7 of section #djd7;c77#e7 of the ,employee ,retirement ,income ,security ,act of #aigd1 and 7,b7 the employer provides each employee who has an interest in the trust1 notice which meets the requirements of subparagraph 7,b7 of such section4 7#d7 ,administrative requirements ,the requirements of this paragraph are met if-- 7,a7 an employer must make-- 7i7 the elective contributions under paragraph 7#a77;,a7 not later than the close of the #cj-;day period following the last day of the month with respect to which the contributions are to be made1 and 7ii7 a payment of interest at the overpayment rate 7as determined under section #ffba7;a77 on any such elective contribution made after the end of the period specified in clause 7i71 7,b7 an employee may elect to terminate participation in the arrangement at any time during the year1 except that if the employee so terminates1 the arrangement may provide that the employee may not elect to resume participation until the beginning of the next year1 and 7,c7 each employee eligible to participate may elect1 during the #cj-;day period before the beginning of any year1 or to modify the amount subject to such arrangement1 for such year4 4 7b7 ,failure ,to ,make ,timely ,contributions ,chapter #dc of such ,code is amended by adding at the end the following3 #dihj;,j4 ,failure to make timely contributions under ,automatic deferral ,i,r,as 7a7 ,initial tax ,if at any time during any taxable year an employer maintains an automatic deferral ,,ira which is part of a plan to which section #djh;,b applies1 there is hereby imposed on the employer for the taxable year a tax equal to #aj percent of the aggregate required contributions to such automatic deferral ,,ira for all plan years that are not paid by the date specified in section #djh;,b7c77#d77;,a77i7 and that remain unpaid as of the end of any plan year ending with or within the taxable year4 7b7 ,additional tax ,if a tax is imposed under subsection 7a7 on any unpaid required contribution and such amount remains unpaid as of the close of the taxable period1 there is hereby imposed a tax equal to #ajj percent of the unpaid required contribution to the extent not so paid or corrected4 7c7 ,limitations on amount of tax 7#a7 ,tax not to apply where failure not discovered exercising reasonable diligence ,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 did not know1 and exercising reasonable diligence would not have known1 that such failure existed4 7#b7 ,tax not to apply to failures corrected within #cj days ,no tax shall be imposed by subsection 7a7 on any failure if-- 7,a7 such failure was due to reasonable cause and not to willful neglect1 and 7,b7 such failure is corrected during the #cj-;day period beginning on the #ast date the employer knew1 or exercising reasonable diligence would have known1 that such failure existed4 7#c7 ,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 relative to the failure involved4 4 7c7 ,preemption of conflicting ,state laws ,any law of a ,state shall be superseded if it would directly or indirectly prohibit or restrict an employer from creating or maintaining an automatic deferral ,,ira 7as defined in section #djh;,b of the ,internal ,revenue ,service of #aihf74 7d7 ,clerical amendment ,the table of sections for subpart ,a of part ,i of subchapter ,d of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after the item relating to #djh;,a the following new item3 #djh;,b4 ,automatic deferral ,i,r,as4 4 7e7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjae4 #h4 ,modification of automatic enrollment safe harbor 7a7 ,in general 7#a7 ,removal of #aj percent cap ,clause 7iii7 of section #dja7k77#ac77;,c7 of the ,internal ,revenue ,code of #aihf is amended by striking 1 does not exceed #aj percent1 and is at least and inserting and is4 7#b7 ,conforming amendments 7,a7 ,subclause 7,i7 of section #dja7k77#ac77;,c77iii7 of such ,code is amended by striking #c percent and inserting at least #c percent1 but not greater than #aj percent14 7,b7 ,subclause 7,,ii7 of section #dja7k77#ac77;,c77iii7 of such ,code is amended by striking #d percent and inserting at least #d percent1 but not greater than #ae percent14 7,c7 ,subclause 7,,iii7 of section #dja7k77#ac77;,c77iii7 of such ,code is amended by striking #e percent and inserting at least #e percent4 7,d7 ,subclause 7,,iv7 of section #dja7k77#ac77;,c77iii7 of such ,code is amended by striking #f percent and inserting at least #f percent4 7b7 ,effective date ,the amendments made by this section shall apply to plan years beginning after the date of enactment of this ,act4 #i4 ,secure deferral arrangements 7a7 ,in general ,subsection 7k7 of section #dja of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new paragraph3 7#ad7 ,alternative method for secure deferral arrangements to meet nondiscrimination requirements 7,a7 ,in general ,a secure deferral arrangement shall be treated as meeting the requirements of paragraph 7#c77;,a77ii74 7,b7 ,secure deferral arrangement ,for purposes of this paragraph1 the term secure deferral arrangement means any cash or deferred arrangement which meets the requirements of subparagraphs 7,c71 7,d71 and 7,e7 of paragraph 7#ac71 except as modified by this paragraph4 7,c7 ,qualified percentage ,for purposes of this paragraph1 with respect to any employee1 the term qualified percentage means1 in lieu of the meaning given such term in paragraph 7#ac77;,c77iii71 any percentage determined under the arrangement if such percentage is applied uniformly and is-- 7i7 at least #f percent1 but not greater than #aj percent1 during the period ending on the last day of the first plan year which begins after the date on which the first elective contribution described in paragraph 7#ac77;,c77i7 is made with respect to such employee1 7ii7 at least #h percent during the first plan year following the plan year described in clause 7i71 and 7iii7 at least #aj percent during any subsequent plan year4 7,d7 ,matching contributions 7i7 ,in general ,for purposes of this paragraph1 an arrangement shall be treated as having met the requirements of paragraph 7#ac77;,d77i7 if and only if the employer makes matching contributions on behalf of each employee who is not a highly compensated employee in an amount equal to the sum of-- 7,i7 #ajj percent of the elective contributions of the employee to the extent that such contributions do not exceed #a percent of compensation1 7,,ii7 #ej percent of so much of such contributions as exceed #a percent but do not exceed #f percent of compensation1 plus 7,,iii7 #be percent of so much of such contributions as exceed #f percent but do not exceed #aj percent of compensation4 7ii7 ,application of rules for matching contributions ,the rules of clause 7ii7 of paragraph 7#ab77;,b7 and clauses 7iii7 and 7iv7 of paragraph 7#ac77;,d7 shall apply for purposes of clause 7i7 but the rule of clause 7iii7 of paragraph 7#ab77;,b7 shall not apply for such purposes4 ,the rate of matching contribution for each incremental deferral must be at least as high as the rate specified in clause 7i71 and may be higher1 so long as such rate does not increase as an employee's rate of elective contributions increases4 4 7b7 ,matching contributions and employee contributions ,subsection 7m7 of section #dja of the ,internal ,revenue ,code of #aihf is amended by redesignating paragraph 7#ac7 as paragraph 7#ad7 and by inserting after paragraph 7#ab7 the following new paragraph3 7#ac7 ,alternative method for secure deferral arrangements ,a defined contribution plan shall be treated as meeting the requirements of paragraph 7#b7 with respect to matching contributions and employee contributions if the plan-- 7,a7 is a secure deferral arrangement 7as defined in subsection 7k77#ad771 7,b7 meets the requirements of clauses 7ii7 and 7iii7 of paragraph 7#aa77;,b71 and 7,c7 provides that matching contributions on behalf of any employee may not be made with respect to an employee's contributions or elective deferrals in excess of #aj percent of the employee's compensation4 4 7c7 ,effective date ,the amendments made by this section shall apply to plan years beginning after ,december #ca1 #bjae4 #aj4 ,credit for employers with respect to modified safe harbor requirements 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de,s4 ,credit for small employers with respect to modified safe harbor requirements for automatic contribution arrangements 7a7 ,general rule ,for purposes of section #ch1 in the case of a small employer1 the safe harbor adoption credit determined under this section for any taxable year is the amount equal to the total of the employer's matching contributions under section #dja7k77#ad77;,d7 during the taxable year on behalf of employees who are not highly compensated employees1 subject to the limitations of subsection 7b74 7b7 ,limitations 7#a7 ,limitation with respect to compensation ,the credit determined under subsection 7a7 with respect to contributions made on behalf of an employee who is not a highly compensated employee shall not exceed #b percent of the compensation of such employee for the taxable year4 7#b7 ,limitation with respect to years of participation ,credit shall be determined under subsection 7a7 with respect to contributions made on behalf of an employee who is not a highly compensated employee only during the first #e years such employee participates in the qualified automatic contribution arrangement4 7c7 ,definitions 7#a7 ,in general ,any term used in this section which is also used in section #dja7k77#ad7 shall have the same meaning as when used in such section4 7#b7 ,small employer ,the term small employer means an eligible employer 7as defined in section #djh7p77#b77;,c77i774 7d7 ,denial of double benefit ,no deduction shall be allowable under this title for any contribution with respect to which a credit is allowed under this section4 4 7b7 ,credit ,to be part of general business credit ,subsection 7b7 of section #ch of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by striking plus at the end of paragraph 7#ce71 7#b7 by striking the period at the end of paragraph 7#cf7 and inserting 1 plus1 and 7#c7 by adding at the end the following new paragraph3 7#cg7 the safe harbor adoption credit determined under section #de,s4 4 7c7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding after the item relating to section #de,r the following new item3 ,sec4 #de,s4 ,credit for small employers with respect to modified safe harbor requirements for automatic contribution arrangements4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years that include any portion of a plan year beginning after ,december #ca1 #bjae4 #aa4 ,modification of regulations ,the ,secretary of the ,treasury shall promulgate regulations or other guidance that-- 7#a7 simplify and clarify the rules regarding the timing of participant notices required under section #dja7k77#ac77;,e7 of the ,internal ,revenue ,code of #aihf1 with specific application to-- 7,a7 plans that allow employees to be eligible for participation immediately upon beginning employment1 and 7,b7 employers with multiple payroll and administrative systems1 and 7#b7 simplify and clarify the automatic escalation rules under sections #dja7k77#ac77;,c77iii7 and #dja7k77#ad77;,c7 of the ,internal ,revenue ,code of #aihf in the context of employers with multiple payroll and administrative systems4 ,such regulations or guidance shall address the particular case of employees within the same plan who are subject to different notice timing and different percentage requirements1 and provide assistance for plan sponsors in managing such cases4 #ab4 ,limited transfer of unused balance in flexible spending arrangement 7a7 ,in general ,section #abe of the ,internal ,revenue ,code of #aihf is amended by redesignating subsections 7k7 and 7l7 as subsections 7l7 and 7m71 respectively1 and by inserting after subsection 7h7 the following new subsection3 7k7 ,special rule for unused benefits in flexible spending arrangements 7#a7 ,in general ,for purposes of this title1 a plan or other arrangement shall not fail to be treated as a cafeteria plan or flexible spending arrangement merely because such arrangement provides for qualified retirement distributions4 7#b7 ,qualified retirement distribution 7,a7 ,in general ,for purposes of this section1 the term qualified retirement distribution means any distribution to an individual of all or a portion of the employee's account under such arrangement1 but only to the extent-- 7i7 the amount does not exceed the lesser of-- 7,i7 #bej1 or 7,,ii7 the unused benefits with respect to the arrangement1 and 7ii7 the amount received is paid in the form of a direct trustee-to-trustee transfer to a qualified retirement plan 7as defined in section #digd7;c771 or an eligible deferred compensation plan 7as defined in section #deg7;b77 of an eligible employer described in section #deg7;e77#a77;,a71 maintained by the same employer as the employer maintaining the cafeteria plan or flexible spending arrangement of the individual4 7,b7 ,unused benefits ,for purposes of this paragraph1 the term unused benefits means1 with respect to an employee1 the excess of-- 7i7 the maximum amount of reimbursement allowable to the employee during a plan year under a flexible spending arrangement1 over 7ii7 the actual amount of reimbursement during such year under such arrangement4 7,c7 ,special rules for treatment of contributions to retirement plans ,for purposes of this title1 qualified retirement distributions-- 7i7 shall be treated as elective deferrals 7as defined in section #djb7;g77#c77 under an annuity contract described in section #djc7;b71 7ii7 shall be treated as elective deferrals 7as so defined7 in the case of contributions to a qualified cash or deferred arrangement 7as defined in section #dja7k77 under a plan which is described in section #dja7;a7 which includes a trust which is exempt from tax under section #eja7;a71 7iii7 shall be treated as deferred compensation in the case of contributions to an eligible deferred compensation plan 7as defined in section #deg7;b77 maintained by an employer described in section #deg7;e77#a77;,a71 and 7iv7 shall be treated in the manner designated for purposes of section #djh or #djh;,a in the case of contributions to an individual retirement plan4 4 7b7 ,effective date ,the amendments made by this section shall apply to plan years ending after the date of the enactment of this ,act4 #ac4 ,prior years compensation taken into account in determining maximum retirement savings deduction 7a7 ,in general ,subparagraph 7,b7 of section #bai7;b77#a7 of the ,internal ,revenue ,code of #aihf is amended by inserting or the preceding taxable year after such taxable year4 7b7 ,effective date ,the amendment made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4 #ad4 ,expanding small employer pension plan startup cost credit 7a7 ,in general 7#a7 ,including startup costs for employer-established ,i,r,as ,paragraph 7#b7 of section #de;,e7d7 of the ,internal ,revenue ,code of #aihf 7defining eligible employer plan7 is amended by striking means a qualified employer plan and all that follows and inserting3 means-- 7,a7 a qualified employer plan within the meaning of section #digb7;d71 and 7,b7 a plan of which an automatic deferral ,,ira described in section #djh;,b is a part4 4 7#b7 ,additional credit amount 7,a7 ,in general ,subsection 7a7 of section #de;,e of such ,code is amended by striking #ej percent of and all that follows and inserting the sum of-- 7#a7 the applicable percentage of the qualified startup costs paid or incurred by the taxpayer during the taxable year1 plus 7#b7 #be multiplied by the number of employees of the employer who participate in any eligible employer plan of the employer for the first time in such taxable year4 4 7,b7 ,applicable percentage ,subsection 7d7 of section #de;,e of such ,code is amended by adding at the end the following new paragraph3 7#d7 ,applicable percentage ,the applicable percentage is-- 7,a7 in the case of a plan described in subsection 7d77#b77;,a71 #ge percent1 or 7,b7 in the case of a plan described in subsection 7d77#b77;,b71 #ej percent4 4 7,c7 ,conforming amendment ,paragraph 7#b7 of section #de;,e7c7 of such ,code 7defining eligible employer7 is amended-- 7i7 by striking qualified employer plan in each place it appears and inserting eligible employer plan1 and 7ii7 by striking qualified in the heading thereof and inserting eligible4 7#c7 ,increased limitation ,paragraph 7#a7 of section #de;,e7b7 of such ,code is amended by striking #ejj and inserting #gej 7#b1jjj in the case of qualified startup costs attributable to a plan described in subsection 7d77#b77;,a774 7b7 ,effective date ,the amendment made by this section shall apply to costs paid or incurred in taxable years beginning after the date of the enactment of this ,act4 #ae4 ,financial education 7a7 ,retirement plan education for small businesses ,not later than #f months after the date of the enactment of this ,act-- 7#a7 the ,department of the ,treasury ,office of ,financial ,education1 in consultation with the ,department of ,labor1 shall develop and implement an outreach plan to educate small businesses on the types of retirement plans available and the benefits and requirements of such plans1 and 7#b7 the ,secretary of the ,treasury and the ,secretary of ,labor shall develop recommendations for small businesses in order to improve retirement outcomes4 ,such recommendations shall take into account established behavioral trends of employee investment and the effect of default design features such as auto escalation1 expansion of auto rollovers1 auto diversification for near retirees1 and automatic forms of distribution4 7b7 ,financial literacy 7#a7 ,in general ,not later than #a year after the date of the enactment of this ,act1 the ,secretary of the ,treasury1 in consultation with the ,secretary of ,education1 shall develop sample age-appropriate curricula to be made available for financial literacy education in elementary and secondary schools4 7#b7 ,content of curricula ,such curricula shall include the following3 7,a7 ,how to balance a checkbook1 read a credit card statement1 and calculate interest rates4 7,b7 ,what a pay stub is and why ,federal and ,state income taxes and ,social ,security and ,medicare taxes are withheld from wages4 7,c7 ,the differences between various types of bank accounts4 7,d7 ,the significance of a credit score and how to read credit reports4 7,e7 ,the marketing techniques frequently used by individuals and businesses to attract patrons4 7,f7 ,the importance of saving for college and retirement1 including the various methods for saving such as traditional pensions1 #dja7k7s1 and ,i,r,as4 #af4 ,small employer plans 7a7 ,in general ,paragraph 7#aa7 of section #dja7k7 of the ,internal ,revenue ,code of #aihf is amended by adding the following at the end thereof3 7,e7 ,deferral only small employer plan 7i7 ,in general ,in the case of a plan described in clause 7ii7-- 7,i7 the amount described in subparagraph 7,b77i77,i7 shall be #aj1jjj1 in lieu of the amount in effect under section #djh7p77#b77;,a77ii71 7,,ii7 such #aj1jjj amount shall1 in the case years beginning after ,december #ca1 #bjaf1 be adjusted as described in section #djh7p77#b77;,e77ii7 except that the base period taken into account shall be the calendar quarter beginning ,july #a1 #bjae1 7,,iii7 subclause 7,,ii7 of subparagraph 7,b77i7 and clause 7ii7 of subparagraph 7,b7 shall not apply1 and 7,,iv7 section #dad7v7 shall not apply4 7ii7 ,plan described ,a plan is described in this clause if the plan satisfies the following requirements3 7,i7 ,such plan satisfies the requirements of this paragraph1 as modified by clause 7i74 7,,ii7 ,the plan includes a qualified automatic contribution arrangement1 as defined in paragraph 7#ac71 except that subparagraph 7,d7 of paragraph 7#ac7 shall not apply and the qualified percentage shall be determined by reference to subclauses 7,i71 7,,ii71 7,,iii71 and 7,,iv7 of paragraph 7#ac77;,c77iii74 7,,iii7 ,the plan does not permit any participant or beneficiary to receive or maintain a loan from the plan4 7,,iv7 ,the plan does not permit hardship distributions described in paragraph 7#b77;,b77i77,,iv7 except to the extent any such distribution is deemed1 under regulations prescribed by the ,secretary1 to be on account of an immediate and heavy financial need of the employee and necessary to satisfy an immediate and heavy financial need of the employee4 7,v7 ,the plan is maintained pursuant to a model plan document published by the ,secretary4 4 7b7 ,simplification 7#a7 ,model plan ,within one year of the date of the enactment of this ,act1 the ,secretary of the ,treasury shall publish a model plan that may be used to satisfy the requirement of subclause 7,v7 of section #dja7k77#aa77;,e77ii7 of the ,internal ,revenue ,code of #aihf4 7#b7 ,protection against loss ,within #abj days of the date of the enactment of this ,act1 the ,secretary of ,labor shall amend ,department of ,labor ,regulation section #beej4djd;c-#e7;e77#d77;iv77,b7 so that1 in the case of a plan described in section #dja7k77#aa77;,e7 of such ,code four years shall be substituted for #abj days4 7#c7 ,clarifying duties and reducing burdens for multiple employer plans ,within one year of the date of the enactment of this ,act1 the ,secretary of ,labor shall-- 7,a7 publish rules clarifying the extent to which the fiduciary duties1 if any1 of a participating employer fiduciary with respect to a plan described in section #dac7;c7 of such ,code are limited to-- 7i7 the selection and monitoring of the named fiduciary1 and 7ii7 the investment and management of the portion of the plan's assets attributable to employees of the employer to the extent not otherwise delegated to another fiduciary1 and 7,b7 prescribe interim final regulations providing simplified means by which plans described in section #dac7;c7 of such ,code may satisfy the requirements of sections #ajb1 #ajc1 and #aje of the ,employee ,retirement ,income ,security ,act of #aigd4 ,for purposes of this paragraph1 the term participating employer fiduciary means the participating employer1 any employee of such participating employer that serves as fiduciary1 any committee of such employees1 and any other person whose fiduciaries duties with respect to the plan relate solely to the participating employer and not to the operation of the plan with respect to all participating employers4 7#d7 ,elimination of disincentive to pooling ,not later than one year after the date of the enactment of this ,act1 the ,secretary of the ,treasury shall prescribe final regulations under which a plan described in section #dac7;c7 of such ,code may be treated as satisfying the qualification requirements of section #dja7;a7 of such ,code despite the violation of such requirements with respect to one or more participating employers without regard to whether such violation continues4 ,solely for this purpose1 a plan shall be treated as violating the qualification requirements of section #dja7;a7 of such ,code with respect to a participating employer if such employer has failed to provide the plan sponsor with the information needed to comply with such requirements and such failure has continued over a period of time that clearly demonstrates a lack of commitment to compliance4 ,such rules may require that the portion of the plan attributable to such participating employers be spun off to plans maintained by such employers4 7c7 ,effective date 7#a7 ,in general ,except as provided in paragraph 7#b71 the amendments made by this section shall apply to years beginning after ,december #ca1 #bjae4 7#b7 ,exception ,subsection 7b7 shall apply as of the date of the enactment of this ,act4 #ag4 ,modification of ,,erisa rules relating to multiple employer defined contribution plans 7a7 ,in general 7#a7 ,requirement of common interest ,section #c7b7 of the ,employee ,retirement ,income ,security ,act of #aigd is amended by adding at the end the following3 7,c7 7i7 ,a qualified multiple employer plan shall not fail to be treated as an employee pension benefit plan or pension plan solely because the employers maintaining the plan share no common interest4 7ii7 ,for purposes of this subparagraph1 the term qualified multiple employer plan means a plan described in section #dac7;c7 of the ,internal ,revenue ,code of #aihf which-- 7,i7 is an individual account plan with respect to which the requirements of clauses 7iii71 7iv71 and 7v7 are met1 and 7,,ii7 includes in its annual report required to be filed under section #ajd7;a7 the name and identifying information of each employer maintaining the plan4 7iii7 ,the requirements of this clause are met if1 under the plan1 each employer maintaining the plan retains fiduciary responsibility for-- 7,i7 the selection and monitoring of the named fiduciary1 and 7,,ii7 the investment and management of the portion of the plan's assets attributable to employees of the employer to the extent not otherwise delegated to another fiduciary4 7iv7 ,the requirements of this clause are met if1 under the plan1 an employer maintaining the plan is not subject to unreasonable restrictions1 fees1 or penalties by reason of ceasing to maintain1 or otherwise transferring assets from1 the plan4 7v7 ,the requirements of this clause are met if each employer maintaining the plan is an eligible employer as defined in section #djh7p77#b77;,c77i7 of the ,internal ,revenue ,code of #aihf1 applied-- 7,i7 by substituting #ejj for #ajj in subclause 7,i7 thereof1 7,,ii7 by substituting #e for #b each place it appears in subclause 7,,ii7 thereof1 and 7,,iii7 without regard to the last sentence of subclause 7,,ii7 thereof4 4 7#b7 ,simplified reporting for small multiple employer plans ,section #ajd7;a7 of such ,act 7#bi ,u4,s4,c4 #ajbd7;a77 is amended by adding at the end the following3 7#g7 7,a7 ,in the case of any eligible small multiple employer plan1 the ,secretary may by regulation waive the requirement under section #ajc7;a77#c7 to engage an independent qualified public accountant in cases where the ,secretary determines it appropriate4 7,b7 ,for purposes of this paragraph1 the term eligible small multiple employer plan means1 with respect to any plan year-- 7i7 a qualified multiple employer plan1 as defined in section #c7b77;,c77ii71 or 7ii7 any other plan described in section #dac7;c7 of the ,internal ,revenue ,code of #aihf that satisfies the requirements of clause 7v7 of section #c7b77;,c74 4 7b7 ,conforming amendment ,section #c7b77;,a7 of such ,act is amended by striking ,except as provided in subparagraph 7,b7 and inserting ,except as provided in subparagraphs 7,b7 and 7,c74 7c7 ,effective date ,the amendments made by this section shall apply to years beginning after ,december #ca1 #bjae4 #ah4 ,clarification of treatment of individual retirement plans with payroll deduction 7a7 ,in general ,section #c7b7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajjb7b771 as amended by this ,act1 is amended by adding at the end the following new subparagraph3 7,e7 ,neither an individual retirement plan 7as defined in section #ggja7;a77#cg7 of the ,internal ,revenue ,code of #aihf7 nor an automatic deferral ,,ira arrangement 7as described in section #djh;,b of such ,code7 maintained in connection with any such individual retirement plan shall be considered a pension plan merely because an employer establishes a payroll deduction program for the purpose of enabling employees to make voluntary contributions to such account or annuity4 4 7b7 ,effective date ,the amendments made by this section shall take effect on the date of the enactment of this ,act4 #ai4 ,disclosure regarding lifetime income 7a7 ,in general ,subparagraph 7,b7 of section #aje7;a77#b7 of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #ajbe7;a77#b77 is amended-- 7#a7 in clause 7i71 by striking and at the end2 7#b7 in clause 7ii71 by striking diversification4 and inserting diversification1 and2 and 7#c7 by inserting at the end the following3 7iii7 the lifetime income disclosure described in subparagraph 7,d77i74 ,in the case of pension benefit statements described in clause 7i7 of paragraph 7#a77;,a71 a lifetime income disclosure under clause 7iii7 of this subparagraph shall only be required to be included in one pension benefit statement during any one #ab-month period4 4 7b7 ,lifetime income ,paragraph 7#b7 of section #aje7;a7 of such ,act 7#bi ,u4,s4,c4 #ajbe7;a77 is amended by adding at the end the following new subparagraph3 7,d7 ,lifetime income disclosure 7i7 ,in general 7,i7 ,disclosure ,a lifetime income disclosure shall set forth the lifetime income stream equivalent of the total benefits accrued with respect to the participant or beneficiary4 7,,ii7 ,lifetime income stream equivalent of the total benefits accrued ,for purposes of this subparagraph1 the term lifetime income stream equivalent of the total benefits accrued means the amount of monthly payments the participant or beneficiary would receive if the total accrued benefits of such participant or beneficiary were used to provide lifetime income streams described in subclause 7,,iii71 based on assumptions specified in rules prescribed by the ,secretary4 7,,iii7 ,lifetime income streams ,the lifetime income streams described in this subclause are a qualified joint and survivor annuity 7as defined in section #bje7;d771 based on assumptions specified in rules prescribed by the ,secretary1 including the assumption that the participant or beneficiary has a spouse of equal age1 and a single life annuity4 ,such lifetime income streams may have a term certain or other features to the extent permitted under rules prescribed by the ,secretary4 7ii7 ,model disclosure ,not later than #a year after the date of the enactment of the ,lifetime ,income ,disclosure ,act1 the ,secretary shall issue a model lifetime income disclosure1 written in a manner so as to be understood by the average plan participant1 that-- 7,i7 explains that the lifetime income stream equivalent is only provided as an illustration2 7,,ii7 explains that the actual payments under the lifetime income stream described in clause 7i77,,iii7 that may be purchased with the total benefits accrued will depend on numerous factors and may vary substantially from the lifetime income stream equivalent in the disclosures2 7,,iii7 explains the assumptions upon which the lifetime income stream equivalent was determined2 and 7,,iv7 provides such other similar explanations as the ,secretary considers appropriate4 7iii7 ,assumptions and rules ,not later than #a year after the date of the enactment of the ,lifetime ,income ,disclosure ,act1 the ,secretary shall-- 7,i7 prescribe assumptions that administrators of individual account plans may use in converting total accrued benefits into lifetime income stream equivalents for purposes of this subparagraph2 and 7,,ii7 issue interim final rules under clause 7i74 ,in prescribing assumptions under subclause 7,i71 the ,secretary may prescribe a single set of specific assumptions 7in which case the ,secretary may issue tables or factors that facilitate such conversions71 or ranges of permissible assumptions4 ,to the extent that an accrued benefit is or may be invested in a lifetime income stream described in clause 7i77,,iii71 the assumptions prescribed under subclause 7,i7 shall1 to the extent appropriate1 permit administrators of individual account plans to use the amounts payable under such lifetime income stream as a lifetime income stream equivalent4 7iv7 ,limitation on liability ,no plan fiduciary1 plan sponsor1 or other person shall have any liability under this title solely by reason of the provision of lifetime income stream equivalents which are derived in accordance with the assumptions and rules described in clause 7iii7 and which include the explanations contained in the model lifetime income disclosure described in clause 7ii74 ,this clause shall apply without regard to whether the provision of such lifetime income stream equivalent is required by subparagraph 7,b77iii74 7v7 ,effective date ,the requirement in subparagraph 7,b77iii7 shall apply to pension benefit statements furnished more than #ab months after the latest of the issuance by the ,secretary of-- 7,i7 interim final rules under clause 7i72 7,,ii7 the model disclosure under clause 7ii72 or 7,,iii7 the assumptions under clause 7iii74 4 7c7 ,effective date ,the amendments made by this section shall take effect on the date of the enactment of this ,act4 #bj4 ,lifetime income safe harbor ,section #djd of the ,employee ,retirement ,income ,security ,act of #aigd 7#bi ,u4,s4,c4 #aajd7 is amended by adding at the end the following3 7e7 ,safe harbor for annuity selection 7#a7 ,in general ,with respect to the selection of an insurer and a guaranteed retirement income contract1 the requirements of subsection 7a77#a77;,b7 will be deemed to be satisfied if a fiduciary-- 7,a7 engages in an objective1 thorough and analytical search for the purpose of identifying insurers from which to purchase guaranteed retirement income contracts2 7,b7 with respect to each insurer identified by the fiduciary under subparagraph 7,a7-- 7i7 considers the financial capability of such insurer to satisfy its obligations under the guaranteed retirement income contract2 and 7ii7 considers the cost 7including fees and commissions7 of the guaranteed retirement income contract offered by the insurer in relation to the benefits and product features of the contract and administrative services to be provided under such contract2 and 7,c7 on the basis of the foregoing1 concludes that-- 7i7 at the time of the selection1 the insurer is financially capable of satisfying its obligations under the guaranteed retirement income contract2 and 7ii7 the cost 7including fees and commissions7 of the selected guaranteed retirement income contract is reasonable in relation to the benefits and product features of the contract and the administrative services to be provided under such contract4 7#b7 ,financial capability of the insurer ,for purposes of this section1 a fiduciary will be deemed to satisfy the requirements of paragraphs 7#a77;,b77i7 and 7#a77;,c77i7 if-- 7,a7 the fiduciary obtains written representations from the insurer that-- 7i7 the insurer is licensed to offer guaranteed retirement income contracts2 7ii7 the insurer1 at the time of selection and for each of the immediately preceding seven years-- 7,i7 operates under a certificate of authority from the ,insurance ,commissioner of its domiciliary ,state that has not been revoked or suspended2 7,,ii7 has filed audited financial statements in accordance with the laws of its domiciliary ,state under applicable statutory accounting principles2 7,,iii7 maintains 7and has maintained7 reserves that satisfies all the statutory requirements of all ,states where the insurer does business2 and 7,,iv7 is not operating under an order of supervision1 rehabilitation1 or liquidation2 and 7iii7 the insurer undergoes1 at least every five years1 a financial examination 7within the meaning of the law of its domiciliary ,state7 by the ,insurance ,commissioner of the domiciliary ,state 7or representative1 designee1 or other party approved thereby72 7,b7 if1 following the issuance of the representations described in clauses 7i7 through 7iii7 of subparagraph 7,a71 there is any change that would preclude the insurer from making the same representations at the time of issuance of the guaranteed retirement income contract1 the insurer shall notify the fiduciary1 in advance of the issuance of any guaranteed retirement income contract1 that the fiduciary can no longer rely on one or more of the representations2 and 7,c7 the fiduciary has not received the notification described in subparagraph 7,b7 and has no other facts that would cause it to question the representations described in clauses 7i7 through 7iii7 of subparagraph 7,a74 7#c7 ,the final regulation described in 7a7 shall clarify that the standard of care is not construed to require a fiduciary to select the lowest cost contract4 ,accordingly1 a fiduciary may consider the value1 including features and benefits of the contract and attributes of the insurer in conjunction with the contract's cost4 ,attributes of the insurer that may be considered may include1 without limitation1 the issuer's financial strength4 7#d7 ,time of selection 7,a7 ,for purposes of paragraph 7#a71 the time of selection may be either-- 7i7 the time that the insurer and contract are selected for distribution of benefits to a specific participant or beneficiary2 or 7ii7 the time that the insurer and contract are selected to provide benefits at future dates to participants or beneficiaries1 provided that the selecting fiduciary periodically reviews the continuing appropriateness of the conclusion described in paragraph 7#a77;,c71 taking into account the considerations described in paragraph 7#a74 ,for purposes of this paragraph1 a fiduciary is not required to review the appropriateness of this conclusion following the purchase of any contract7s7 for specific participants or beneficiaries4 7,b7 ,for purposes of paragraph 7#d77;,a77ii71 a fiduciary will be deemed to have conducted a periodic review of the financial capability of the insurer if the fiduciary obtains the written representations described in clauses 7i7 through 7iii7 of paragraph 7#b77;,a7 on an annual basis1 unless1 in the interim1 the fiduciary has received the notice described in paragraph 7#b77;,b7 or otherwise becomes aware of facts that would cause it to question the such representations4 7#e7 ,limited liability ,a fiduciary that is deemed to satisfy the requirements of this section shall not be liable following the distribution of any benefit or the investment by or on behalf of a participant or beneficiary pursuant to the selected guaranteed retirement income contract for any losses that may result to the participant or beneficiary due to an insurer's inability to satisfy its financial obligations under the terms of such contract4 7#f7 ,definitions ,for purposes of this section-- 7,a7 ,insurer ,the term insurer means an insurance company1 insurance service or insurance organization qualified to do business in a ,state2 and includes affiliates of such companies to the extent the affiliate is licensed to offer guaranteed retirement income contracts4 7,b7 ,guaranteed retirement income contract ,the term guaranteed retirement income contract means an annuity contract for a fixed term or a contract 7or provision or feature thereof7 designed to provide a participant guaranteed benefits annually 7or more frequently7 for at least the remainder of the life of the participant or joint lives of the participant or the participant's designated beneficiary as part of an individual account plan4 ,this section sets forth an optional means by which a plan fiduciary will be considered to satisfy the responsibilities set forth in section #djd7;a77#a77;,b7 with respect to the selection of insurers and guaranteed retirement income contracts4 ,this section does not establish minimum requirements or the exclusive means for satisfying these responsibilities4 4