,,ii #aafth ,,congress #ast ,session ,s4 #bceb ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,july #ca1 #bjai ,mr4 ,cardin 7for himself and ,mr4 ,portman7 introduced the following bill2 which was read twice and referred to the ,committee on ,finance ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to modify nondiscrimination rules to protect older1 longer service participants in retirement plans4 #a4 ,short title ,this ,act may be cited as the ,retirement ,security ,preservation ,act of #bjai4 #b4 ,modification of nondiscrimination rules to protect older1 longer service participants 7a7 ,in general ,section #dja of the ,internal ,revenue ,code of #aihf is amended-- 7#a7 by redesignating subsection 7o7 as subsection 7p72 and 7#b7 by inserting after subsection 7n7 the following new subsection3 7o7 ,special rules for applying nondiscrimination rules ,to protect older1 longer service and grandfathered participants 7#a7 ,testing of defined benefit plans with closed classes of participants 7,a7 ,benefits1 rights1 or features provided to closed classes ,a defined benefit plan which provides benefits1 rights1 or features to a closed class of participants shall not fail to satisfy the requirements of subsection 7a77#d7 by reason of the composition of such closed class or the benefits1 rights1 or features provided to such closed class1 if-- 7i7 for the plan year as of which the class closes and the #b succeeding plan years1 such benefits1 rights1 and features satisfy the requirements of subsection 7a77#d7 7without regard to this subparagraph but taking into account the rules of subparagraph 7,i771 7ii7 after the date as of which the class was closed1 any plan amendment which modifies the closed class or the benefits1 rights1 and features provided to such closed class does not discriminate significantly in favor of highly compensated employees1 and 7iii7 the class was closed before ,april #e1 #bjag1 or the plan is described in subparagraph 7,c74 7,b7 ,aggregate testing with defined contribution plans permitted on a benefits basis 7i7 ,in general ,for purposes of determining compliance with subsection 7a77#d7 and section #daj7;b71 a defined benefit plan described in clause 7iii7 may be aggregated and tested on a benefits basis with one or more defined contribution plans1 including with the portion of one or more defined contribution plans which-- 7,i7 provides matching contributions 7as defined in subsection 7m77#d77;,a771 7,,ii7 provides annuity contracts described in section #djc7;b7 which are purchased with matching contributions or nonelective contributions1 or 7,,iii7 consists of an employee stock ownership plan 7within the meaning of section #dige7;e77#g77 or a tax credit employee stock ownership plan 7within the meaning of section #dji7;a774 7ii7 ,special rules for matching contributions ,for purposes of clause 7i71 if a defined benefit plan is aggregated with a portion of a defined contribution plan providing matching contributions-- 7,i7 such defined benefit plan must also be aggregated with any portion of such defined contribution plan which provides elective deferrals described in subparagraph 7,a7 or 7,c7 of section #djb7;g77#c71 and 7,,ii7 such matching contributions shall be treated in the same manner as nonelective contributions1 including for purposes of applying the rules of subsection 7l74 7iii7 ,plans described ,a defined benefit plan is described in this clause if-- 7,i7 the plan provides benefits to a closed class of participants1 7,,ii7 for the plan year as of which the class closes and the #b succeeding plan years1 the plan satisfies the requirements of section #daj7;b7 and subsection 7a77#d7 7without regard to this subparagraph but taking into account the rules of subparagraph 7,i771 7,,iii7 after the date as of which the class was closed1 any plan amendment which modifies the closed class or the benefits provided to such closed class does not discriminate significantly in favor of highly compensated employees1 and 7,,iv7 the class was closed before ,april #e1 #bjag1 or the plan is described in subparagraph 7,c74 7,c7 ,plans described ,a plan is described in this subparagraph if1 taking into account any predecessor plan-- 7i7 such plan has been in effect for at least #e years as of the date the class is closed1 and 7ii7 during the #e-year period preceding the date the class is closed1 there has not been a substantial increase in the coverage or value of the benefits1 rights1 or features described in subparagraph 7,a7 or in the coverage or benefits under the plan described in subparagraph 7,b77iii7 7whichever is applicable74 7,d7 ,determination of substantial increase for benefits1 rights1 and features ,in applying subparagraph 7,c77ii7 for purposes of subparagraph 7,a77iii71 a plan shall be treated as having had a substantial increase in coverage or value of the benefits1 rights1 or features described in subparagraph 7,a7 during the applicable #e-year period only if1 during such period-- 7i7 the number of participants covered by such benefits1 rights1 or features on the date such period ends is more than #ej percent greater than the number of such participants on the first day of the plan year in which such period began1 or 7ii7 such benefits1 rights1 and features have been modified by one or more plan amendments in such a way that1 as of the date the class is closed1 the value of such benefits1 rights1 and features to the closed class as a whole is substantially greater than the value as of the first day of such #e-year period1 solely as a result of such amendments4 7,e7 ,determination of substantial increase for aggregate testing on benefits basis ,in applying subparagraph 7,c77ii7 for purposes of subparagraph 7,b77iii77,,iv71 a plan shall be treated as having had a substantial increase in coverage or benefits during the applicable #e-year period only if1 during such period-- 7i7 the number of participants benefitting under the plan on the date such period ends is more than #ej percent greater than the number of such participants on the first day of the plan year in which such period began1 or 7ii7 the average benefit provided to such participants on the date such period ends is more than #ej percent greater than the average benefit provided on the first day of the plan year in which such period began4 7,f7 ,certain employees disregarded ,for purposes of subparagraphs 7,d7 and 7,e71 any increase in coverage or value or in coverage or benefits1 whichever is applicable1 which is attributable to such coverage and value or coverage and benefits provided to employees-- 7i7 who became participants as a result of a merger1 acquisition1 or similar event which occurred during the #g-year period preceding the date the class is closed1 or 7ii7 who became participants by reason of a merger of the plan with another plan which had been in effect for at least #e years as of the date of the merger1 shall be disregarded1 except that clause 7ii7 shall apply for purposes of subparagraph 7,d7 only if1 under the merger1 the benefits1 rights1 or features under #a plan are conformed to the benefits1 rights1 or features of the other plan prospectively4 7,g7 ,rules relating to average benefit ,for purposes of subparagraph 7,e7-- 7i7 the average benefit provided to participants under the plan will be treated as having remained the same between the #b dates described in subparagraph 7,e77ii7 if the benefit formula applicable to such participants has not changed between such dates1 and 7ii7 if the benefit formula applicable to one or more participants under the plan has changed between such #b dates1 then the average benefit under the plan shall be considered to have increased by more than #ej percent only if-- 7,i7 the total amount determined under section #dcj7;b77#a77;,a77i7 for all participants benefitting under the plan for the plan year in which the #e-year period described in subparagraph 7,e7 ends1 exceeds 7,,ii7 the total amount determined under section #dcj7;b77#a77;,a77i7 for all such participants for such plan year1 by using the benefit formula in effect for each such participant for the first plan year in such #e-year period1 by more than #ej percent4 ,in the case of a ,,csec plan 7as defined in section #dad7y771 the normal cost of the plan 7as determined under section #dcc7;j77#a77;,b77 shall be used in lieu of the amount determined under section #dcj7;b77#a77;,a77i74 7,h7 ,treatment as single plan ,for purposes of subparagraphs 7,e7 and 7,g71 a plan described in section #dac7;c7 shall be treated as a single plan rather than as separate plans maintained by each employer in the plan4 7,i7 ,special rules ,for purposes of subparagraphs 7,a77i7 and 7,b77iii77,,ii71 the following rules shall apply3 7i7 ,in applying section #daj7;b77#f77;,c71 the closing of the class of participants shall not be treated as a significant change in coverage under section #daj7;b77#f77;,c77i77,,ii74 7ii7 ,two or more plans shall not fail to be eligible to be aggregated and treated as a single plan solely by reason of having different plan years4 7iii7 ,changes in the employee population shall be disregarded to the extent attributable to individuals who become employees or cease to be employees1 after the date the class is closed1 by reason of a merger1 acquisition1 divestiture1 or similar event4 7iv7 ,aggregation and all other testing methodologies otherwise applicable under subsection 7a77#d7 and section #daj7;b7 may be taken into account4 ,the rule of clause 7ii7 shall also apply for purposes of determining whether plans to which subparagraph 7,b77i7 applies may be aggregated and treated as #a plan for purposes of determining whether such plans meet the requirements of subsection 7a77#d7 and section #daj7;b74 7,j7 ,spun-off plans ,for purposes of this paragraph1 if a portion of a defined benefit plan described in subparagraph 7,a7 or 7,b77iii7 is spun off to another employer and the spun-off plan continues to satisfy the requirements of-- 7i7 subparagraph 7,a77i7 or 7,b77iii77,,ii71 whichever is applicable1 if the original plan was still within the #c-year period described in such subparagraph at the time of the spin off1 and 7ii7 subparagraph 7,a77ii7 or 7,b77iii77,,iii71 whichever is applicable1 the treatment under subparagraph 7,a7 or 7,b7 of the spun-off plan shall continue with respect to such other employer4 7#b7 ,testing of defined contribution plans 7,a7 ,testing on a benefits basis ,a defined contribution plan shall be permitted to be tested on a benefits basis if-- 7i7 such defined contribution plan provides make-whole contributions to a closed class of participants whose accruals under a defined benefit plan have been reduced or eliminated1 7ii7 for the plan year of the defined contribution plan as of which the class eligible to receive such make-whole contributions closes and the #b succeeding plan years1 such closed class of participants satisfies the requirements of section #daj7;b77#b77;,a77i7 7determined by applying the rules of paragraph 7#a77;,i771 7iii7 after the date as of which the class was closed1 any plan amendment to the defined contribution plan which modifies the closed class or the allocations1 benefits1 rights1 and features provided to such closed class does not discriminate significantly in favor of highly compensated employees1 and 7iv7 the class was closed before ,april #e1 #bjag1 or the defined benefit plan under clause 7i7 is described in paragraph 7#a77;,c7 7as applied for purposes of paragraph 7#a77;,b77iii77,,iv774 7,b7 ,aggregation with plans including matching contributions 7i7 ,in general ,with respect to one or more defined contribution plans described in subparagraph 7,a71 for purposes of determining compliance with subsection 7a77#d7 and section #daj7;b71 the portion of such plans which provides make-whole contributions or other nonelective contributions may be aggregated and tested on a benefits basis with the portion of one or more other defined contribution plans which-- 7,i7 provides matching contributions 7as defined in subsection 7m77#d77;,a771 7,,ii7 provides annuity contracts described in section #djc7;b7 which are purchased with matching contributions or nonelective contributions1 or 7,,iii7 consists of an employee stock ownership plan 7within the meaning of section #dige7;e77#g77 or a tax credit employee stock ownership plan 7within the meaning of section #dji7;a774 7ii7 ,special rules for matching contributions ,rules similar to the rules of paragraph 7#a77;,b77ii7 shall apply for purposes of clause 7i74 7,c7 ,special rules for testing defined contribution plan features providing matching contributions to certain older1 longer service participants ,in the case of a defined contribution plan which provides benefits1 rights1 or features to a closed class of participants whose accruals under a defined benefit plan have been reduced or eliminated1 the plan shall not fail to satisfy the requirements of subsection 7a77#d7 solely by reason of the composition of the closed class or the benefits1 rights1 or features provided to such closed class if the defined contribution plan and defined benefit plan otherwise meet the requirements of subparagraph 7,a7 but for the fact that the make-whole contributions under the defined contribution plan are made in whole or in part through matching contributions4 7,d7 ,spun-off plans ,for purposes of this paragraph1 if a portion of a defined contribution plan described in subparagraph 7,a7 or 7,c7 is spun off to another employer1 the treatment under subparagraph 7,a7 or 7,c7 of the spun-off plan shall continue with respect to the other employer if such plan continues to comply with the requirements of clauses 7ii7 7if the original plan was still within the #c-year period described in such clause at the time of the spin off7 and 7iii7 of subparagraph 7,a71 as determined for purposes of subparagraph 7,a7 or 7,c71 whichever is applicable4 7#c7 ,definitions and special rule ,for purposes of this subsection-- 7,a7 ,make-whole contributions ,except as otherwise provided in paragraph 7#b77;,c71 the term make-whole contributions means nonelective allocations for each employee in the class which are reasonably calculated1 in a consistent manner1 to replace some or all of the retirement benefits which the employee would have received under the defined benefit plan and any other plan or qualified cash or deferred arrangement under subsection 7k77#b7 if no change had been made to such defined benefit plan and such other plan or arrangement4 ,for purposes of the preceding sentence1 consistency shall not be required with respect to employees who were subject to different benefit formulas under the defined benefit plan4 7,b7 ,references to closed class of participants ,references to a closed class of participants and similar references to a closed class shall include arrangements under which one or more classes of participants are closed1 except that one or more classes of participants closed on different dates shall not be aggregated for purposes of determining the date any such class was closed4 7,c7 ,highly compensated employee ,the term highly compensated employee has the meaning given such term in section #dad7q74 4 7b7 ,participation requirements ,paragraph 7#bf7 of section #dja7;a7 of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new subparagraph3 7,i7 ,protected participants 7i7 ,in general ,a plan shall be deemed to satisfy the requirements of subparagraph 7,a7 if-- 7,i7 the plan is amended-- 7aa7 to cease all benefit accruals1 or 7bb7 to provide future benefit accruals only to a closed class of participants1 7,,ii7 the plan satisfies subparagraph 7,a7 7without regard to this subparagraph7 as of the effective date of the amendment1 and 7,,iii7 the amendment was adopted before ,april #e1 #bjag1 or the plan is described in clause 7ii74 7ii7 ,plans described ,a plan is described in this clause if the plan would be described in subsection 7o77#a77;,c71 as applied for purposes of subsection 7o77#a77;,b77iii77,,iv7 and by treating the effective date of the amendment as the date the class was closed for purposes of subsection 7o77#a77;,c74 7iii7 ,special rules ,for purposes of clause 7i77,,ii71 in applying section #daj7;b77#f77;,c71 the amendments described in clause 7i7 shall not be treated as a significant change in coverage under section #daj7;b77#f77;,c77i77,,ii74 7iv7 ,spun-off plans ,for purposes of this subparagraph1 if a portion of a plan described in clause 7i7 is spun off to another employer1 the treatment under clause 7i7 of the spun-off plan shall continue with respect to the other employer4 4 7c7 ,effective date 7#a7 ,in general ,except as provided in paragraph 7#b71 the amendments made by this section shall take effect on the date of the enactment of this ,act1 without regard to whether any plan modifications referred to in such amendments are adopted or effective before1 on1 or after such date of enactment4 7#b7 ,special rules 7,a7 ,election of earlier application ,at the election of the plan sponsor1 the amendments made by this section shall apply to plan years beginning after ,december #ca1 #bjac4 7,b7 ,closed classes of participants ,for purposes of paragraphs 7#a77;,a77iii71 7#a77;,b77iii77,,iv71 and 7#b77;,a77iv7 of section #dja7o7 of the ,internal ,revenue ,code of #aihf 7as added by this section71 a closed class of participants shall be treated as being closed before ,april #e1 #bjag1 if the plan sponsor's intention to create such closed class is reflected in formal written documents and communicated to participants before such date4 7,c7 ,certain post-enactment plan amendments ,a plan shall not be treated as failing to be eligible for the application of section #dja7o77#a77;,a71 #dja7o77#a77;,b77iii71 or #dja7;a77#bf7 of such ,code 7as added by this section7 to such plan solely because in the case of-- 7i7 such section #dja7o77#a77;,a71 the plan was amended before the date of the enactment of this ,act to eliminate one or more benefits1 rights1 or features1 and is further amended after such date of enactment to provide such previously eliminated benefits1 rights1 or features to a closed class of participants1 or 7ii7 such section #dja7o77#a77;,b77iii7 or section #dja7;a77#bf71 the plan was amended before the date of the enactment of this ,act to cease all benefit accruals1 and is further amended after such date of enactment to provide benefit accruals to a closed class of participants4 ,any such section shall only apply if the plan otherwise meets the requirements of such section and in applying such section1 the date the class of participants is closed shall be the effective date of the later amendment4