,,ii  #aafth ,,congress  #ast ,session  
,s4 #cbb  ,,in ,,the ,,senate ,,of ,,the
 ,,united ,,states  ,february #d1       
#bjai,ms4 ,collins 7for herself and ,mr4
 ,warner7 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 promote retirement savings  
on behalf of small business employees by
 making improvements to ,,simple        
retirement accounts and easing the      
transition from a ,,simple plan to a    
#dja7k7 plan1 and for other purposes4   
#a4 ,short title ,this ,act may be cited
 as the ,,simple ,plan ,modernization   
,act4  #b4 ,contribution limit for      
simple ,i,r,as  7a7 ,in general         
,subparagraph 7,e7 of section           
#djh7p77#b7 of the ,internal ,revenue   
,code of #aihf is amended--  7#a7 by    
striking amount is and all that follows 
in clause 7i7 and inserting 8dollar     
amount is--  7,i7 #af1jjj in the case of
 an eligible employer described in      

clause 7iii7 which had not more than #be
 employees who received at least #e1jjj 
of compensation from the employer for   
the preceding year1  7,,ii7 #af1jjj in  
the case of an eligible employer        
described in clause 7iii7 which is not  
described in subclause 7,i7 and which   
elects1 at such time and in such manner 
as prescribed by the ,secretary1 the    
application of this subclause for the   
year1 and  7,,iii7 #aj1jjj in any other 
case4  2  7#b7 by striking              
adjustment4--,in the case of in clause  
7ii7 and inserting 8adjustment4--  7,i7 
,certain large employers ,in the case of
  2  7#c7 by striking clause 7i7 in     
clause 7ii7 and inserting clause        
7i77,,iii72 and  7#d7 by adding at the  
end of clause 7ii7 the following new    
subclause3  7,,ii7 ,other employers ,in 
the case of a year beginning after      
,december #ca1 #bjbj1 the ,secretary    
shall adjust annually the #af1jjj amount
 in subclauses 7,i7 and 7,,ii7 of clause
 7i7 in the manner provided under       

subclause 7,i7 of this clause1 except   
that the base period taken into account 
shall be the calendar quarter beginning 
,july #a1 #bjai4  4  7b7 ,catch-,up     
contributions ,paragraph 7#b7 of section
 #dad7v7 of the ,internal ,revenue ,code
 of #aihf is amended-- 7#a7 in          
subparagraph 7,b7--  7,a7 by striking   
the applicable in clause 7ii7 and       
inserting except as provided in clause  
7iii71 the applicable2 and  7,b7 by     
adding at the end the following new     
clause3  7iii7 ,in the case of an       
applicable employer plan-- 7,i7 which is
 maintained by an eligible employer     
described in section                    
#djh7p77#b77;,e77i77,i71 or  7,,ii7 to  
which an election under section         
#djh7p77#b77;,e77i77,,ii7 applies for   
the year 7including a plan described in 
section #dja7k77#aa7 which is maintained
 by an eligible employer described in   
section #djh7p77#b77;,e77i77,,ii7 and to
 which such election applies by reason  
of subparagraphs 7,b77i77,i7 and 7,e7 of

 section #dja7k77#aa771  the applicable 
dollar amount is #d1ejj4  2 and  7#b7 in
 subparagraph 7,c71 by striking the     
#e1jjj amount in subparagraph 7,b77i7   
and the #b1ejj amount in subparagraph   
7,b77ii7 and inserting each of the      
dollar amounts in subparagraph 7,b74    
7c7 ,employer match ,clause 7ii7 of     
section #djh7p77#b77;,c7 of the         
,internal ,revenue ,code of #aihf is    
amended--  7#a7 by striking ,the term in
 subclause 7,i7 and inserting ,except as
 provided in subclause 7,,iv71 the term2
  7#b7 by adding at the end the         
following new subclause3  7,,iv7        
,special rule for electing larger       
employers ,in the case of an employer   
which had more than #be employees who   
received at least #e1jjj of compensation
 from the employer for the preceding    
year1 and which makes the election under
 subparagraph 7,e77i77,,ii7 for any     
year1 subclause 7,i7 shall be applied   
for such year by substituting #d percent
 for #c percent4  2 and  7#c7 by        

striking #c percent each place it       
appears in subclauses 7,,ii7 and 7,,iii7
 and inserting the applicable           
percentage4  7d7 ,increase in           
nonelective employer contribution for   
electing larger employers ,subparagraph 
7,b7 of section #djh7p77#b7 of the      
,internal ,revenue ,code of #aihf is    
amended by adding at the end the        
following new clause3  7iii7 ,special   
rule for electing larger employers ,in  
the case of an employer which had more  
than #be employees who received at least
 #e1jjj of compensation from the        
employer for the preceding year1 and    
which makes the election under          
subparagraph 7,e77i77,,ii7 for any year1
 clause 7i7 shall be applied for such   
year by substituting #c percent for #b  
percent4  4  7e7 ,transition rule       
,paragraph 7#b7 of section #djh7p7 of   
the ,internal ,revenue ,code of #aihf is
 amended by adding at the end the       
following new subparagraph3  7,f7       
#b-year grace period ,an eligible       

employer which had not more than #be    
employees who received at least #e1jjj  
of compensation from the employer for #a
 or more years1 and which has more than 
#be such employees for any subsequent   
year1 shall be treated for purposes of  
subparagraph 7,e77i7 as having #be such 
employees for the #b years following the
 last year the employer had not more    
than #be such employees1 and not as     
having made the election under          
subparagraph 7,e77i77,,ii7 for such #b  
years4 ,rules similar to the second     
sentence of subparagraph 7,c77i77,,ii7  
shall apply for purposes of this        
subparagraph4  4  7f7 ,amendments apply 
only if employer has not had another    
plan within #c years ,subparagraph 7,e7 
of section #djh7p77#b7 of the ,internal 
,revenue ,code of #aihf1 as amended by  
subsection 7a71 is amended by adding at 
the end the following new clause3  7iii7
 ,employer has not had another plan     
within #c years ,an eligible employer is
 described in this clause only if1      

during the #c-taxable-year period       
immediately preceding the #ast year the 
employer maintains the qualified salary 
reduction arrangement under this        
paragraph1 neither the employer nor any 
member of any controlled group including
 the employer 7or any predecessor of    
either7 established or maintained any   
plan described in clause 7i71 7ii71 or  
7iv7 of section #bai7;g77#e77;,a7 with  
respect to which contributions were     
made1 or benefits were accrued1 for     
substantially the same employees as are 
eligible to participate in such         
qualified salary reduction arrangement4 
4  7g7 ,conforming amendments relating  
to simple #dja7k7s  7#a7 ,subclause 7,i7
 of section #dja7k77#aa77;,b77i7 of the 
,internal ,revenue ,code of #aihf is    
amended by inserting 7after the         
application of any election under       
section #djh7p77#b77;,e77i77,,ii77      
before the comma4  7#b7 ,paragraph 7#aa7
 of section #dja7k7 of such ,code is    
amended by adding at the end the        

following new subparagraph3  7,e7       
,employers electing increased           
contributions ,in the case of an        
employer which applies an election under
 section #djh7p77#b77;,e77i77,,ii7 for  
purposes of the contribution            
requirements of this paragraph under    
subparagraph 7,b77i77,i71 rules similar 
to the rules of subparagraphs 7,b77iii71
 7,c77ii77,,iv71 and 7,f7 of section    
#djh7p77#b7 shall apply for purposes of 
subparagraphs 7,b77i77,,ii7 and 7,b77ii7
 of this paragraph4  4  7h7 ,plan forms 
,to be shared with ,secretary           
,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 ,plan   
arrangement and notices to be shared    
with ,secretary ,the trustee or issuer  
7in the case of an individual retirement
 annuity7 of a simple retirement account
 shall provide to the ,secretary1 at the
 time the qualified salary reduction    
arrangement is established 7or not later

 than ,december #ca1 #bjbj1 in the case 
of arrangements in effect on the date of
 the enactment of this paragraph71 a    
copy of the written arrangement         
described in paragraph 7#b77;,a74  4    
7i7 ,effective date ,the amendments made
 by this section shall apply to taxable 
years beginning after ,december #ca1    
#bjai4  7j7 ,reports by ,secretary  7#a7
 ,in general ,the ,secretary of the     
,treasury shall1 not later than         
,december #ca1 #bjbj1 and annually      
thereafter1 report to the ,committees on
 ,finance and ,health1 ,education1      
,labor1 and ,pensions of the ,senate and
 the ,committees on ,ways and ,means and
 ,education and ,labor of the ,house of 
,representatives on the data described  
in paragraph 7#b71 together with any    
recommendations the ,secretary deems    
appropriate4  7#b7 ,data described ,for 
purposes of the report required under   
paragraph 7#a71 the ,secretary of the   
,treasury shall collect data and        
information on--  7,a7 the number of    

plans described in section #djh7p7 or   
#dja7k77#aa7 of the ,internal ,revenue  
,code of #aihf that are maintained or   
established during a year2  7,b7 the    
number of participants eligible to      
participate in such plans for such year2
  7,c7 median contribution amounts for  
the participants described in           
subparagraph 7,b72  7,d7 the types of   
investments that are most common under  
such plans2 and  7,e7 the fee levels    
charged in connection with the          
maintenance of accounts under such      
plans4  ,such data and information shall
 be collected separately for each type  
of plan4 ,for purposes of collecting    
such data1 the ,secretary of the        
,treasury may use such data as is       
otherwise available to the ,secretary   
for publication and may use such        
approaches as are appropriate under the 
circumstances1 including the use of     
voluntary surveys and collaboration on  
studies4  #c4 ,employers allowed to     
replace simple retirement accounts with 

safe harbor #dja7k7 plans during a year 
7a7 ,in general ,section #djh7p7 of the 
,internal ,revenue ,code of #aihf1 as   
amended by section #b1 is amended by    
adding at the end the following new     
paragraph3  7#ab7 ,replacement of simple
 retirement accounts with safe harbor   
plans during plan year  7,a7 ,in general
 ,subject to the requirements of this   
paragraph1 an employer may elect 7in    
such form and manner as the ,secretary  
may prescribe7 at any time during a year
 to terminate the qualified salary      
reduction arrangement under paragraph   
7#b71 but only if the employer          
establishes and maintains 7as of the day
 after the termination date7 a safe     
harbor plan to replace the terminated   
arrangement4  7,b7 ,combined limits on  
contributions ,the terminated           
arrangement and safe harbor plan shall  
both be treated as violating the        
requirements of paragraph 7#b77;,a77ii7 
or section #dja7;a77#cj7 7whichever is  
applicable7 if the aggregate elective   

contributions of the employee under the 
terminated arrangement during its last  
plan year and under the safe harbor plan
 during its transition year exceed the  
sum of--  7i7 the applicable dollar     
amount for such arrangement 7determined 
on a full-year basis7 under this        
subsection 7after the application of    
section #dad7v77 with respect to the    
employee for such last plan year        
multiplied by a fraction equal to the   
number of days in such plan year divided
 by #cfe1 and  7ii7 the applicable      
dollar amount 7as so determined7 under  
section #djb7;g77#a7 for such safe      
harbor plan on such elective            
contributions during the transition year
 multiplied by a fraction equal to the  
number of days in such transition year  
divided by #cfe4  7,c7 ,transition year 
,for purposes of this paragraph1 the    
transition year is the period beginning 
after the termination date and ending on
 the last day of the calendar year      
during which the termination occurs4    

7,d7 ,safe harbor plan ,for purposes of 
this paragraph1 the term safe harbor    
plan means a qualified cash or deferred 
arrangement which meets the requirements
 of paragraph 7#aa71 7#ab71 or 7#ac7 of 
section #dja7k74  4  7b7 ,waiver of     
#b-,year withdrawal limitation in case  
of plans converting to #dja7k7 or       
#djc7;b7  7#a7 ,in general ,paragraph   
7#f7 of section #gb7t7 of the ,internal 
,revenue ,code of #aihf is amended--    
7,a7 by striking accounts4--,in the case
 of and inserting 8accounts4--  7,a7 ,in
 general ,in the case of  2 and  7,b7 by
 adding at the end the following new    
subparagraph3  7,b7 ,waiver in case of  
plan conversion to #dja7k7 or #djc7;b7  
,in the case of an employee of an       
employer which terminates the qualified 
salary reduction arrangement of the     
employer under section #djh7p7 and      
establishes a qualified cash or deferred
 arrangement described in section       
#dja7k7 or purchases annuity contracts  
described in section #djc7;b71          

subparagraph 7,a7 shall not apply to any
 amount which is paid in a rollover     
contribution described in section       
#djh7;d77#c7 into a qualified trust     
under section #dja7k7 7but only if such 
contribution is subsequently subject to 
the rules of section #dja7k77#b77;,b77  
or an annuity contract described in     
section #djc7;b7 7but only if such      
contribution is subsequently subject to 
the rules of section #djc7;b77#aa77 for 
the benefit of the employee4  4  7#b7   
,conforming amendment ,subparagraph 7,g7
 of section #djh7;d77#c7 of such ,code  
is amended by striking #gb7t77#f7 and   
inserting #gb7t77#f77;,a74  7c7         
,effective date ,the amendments made by 
this section shall apply to plan years  
beginning after ,december #ca1 #bjai4