Employee Benefits Simplification and Expansion Act of 1991

Employee Benefits Simplification and Expansion Act of 1991 - Title I: Nondiscrimination Provisions - Amends the Internal Revenue Code with respect to employee benefit plans. Redefines the term "highly compensated employee" for pension, profit sharing, and stock bonus plans, etc., purposes. Makes such employee one who is a five-percent owner or who has compensation from the employer in excess of $50,000. Provides a special rule where no employees are treated as highly compensated.

Provides that the cost of living adjustment with respect to any calendar year is based on the increase in the applicable index as of the close of the calendar quarter ending September 30 of the preceding calendar year. Requires the rounding of such amounts to the nearest $1,000, except that elective deferrals and elective contributions to simplified employee pensions are to be rounded to the nearest $100.

Allows an employer to determine an employee's compensation solely by reference to such employee's base pay.

Provides that the minimum participation rule applies only to defined benefit pension plans. Requires such plans to benefit not less than 25 employees, or the greater of 40 percent of all employees or two employees (or if there is only one employee, such employee).

Sets forth alternative methods of meeting nondiscrimination requirements for cash or deferred arrangements, including specified contribution and notice requirements. Sets forth alternative methods of satisfying the nondiscrimination test for matching contributions. Revises the method for distributing excess contributions to highly compensated employees.

Title II: Distributions - Allows distributions from qualified pension plans to be rolled over tax-free to an individual retirement account or another qualified plan or annuity.

Eliminates five-year forward averaging for lump-sum distributions from qualified plans.

Requires certain tax-free distributions to be made in the form of a direct trustee-to-trustee transfer to an eligible individual retirement plan. Sets forth administrative requirements in making such distributions.

Requires distributions to be made from qualified plans by April 1 of the calendar year following the later of: (1) the calendar year in which the employee attains age 70; or (2) the calendar year in which the employee retires. (Present law requires such distributions no later than April 1 of the calendar year following the calendar year in which the employee attains age 70 1/2.)

Title III: Miscellaneous Provisions - Revises the definition of a leased employee to include one whose services are performed under the control of a service recipient, instead of one whose services are historically performed by employees.

Replaces the 59 1/2- and 70 1/2-year age requirement with 59- and 70-year age requirements for specified pension plans.

Eliminates the special aggregation rules that apply to plans maintained by owner-employees that do not apply to other qualified plans.

Makes the 150 percent current liability limitation on the deduction allowed for employer contributions to qualified pension plans inapplicable to multi-employer plans. Repeals the present law annual valuation requirement for such plans and applies the prior law requirement that valuations be performed at least every three years.

Sets forth affiliation requirements for employers jointly maintaining a voluntary employees' beneficiary association.

Provides that compensation, in the case of a governmental plan, includes any amount which is contributed by the employer pursuant to a salary reduction agreement and which is not includible in the gross income of an employee under cafeteria plans, cash or deferred arrangements, tax-exempt organization or public school annuities, State or local government plans, or deferred compensation plans of State and local governments and tax-exempt organizations.

Makes the following limitations inapplicable to plans maintained by State and local governments and certain tax-exempt organizations: (1) excess benefit limitations; (2) compensation limitation on benefits; and (3) limitations on disability and survivor benefits.

Allows government plan employers to revoke the grandfather election on the limitation to equal accrued benefits.

Modifies provisions relating to simplified employee pensions. Increases the number of allowable participants for salary reduction arrangements from 25 to 100. Allows participation after one year of service (currently, three years of service is required). Repeals the requirement that at least 50 percent of eligible employees participate in a salary reduction arrangement.

Eliminates certain requirements regarding contributions on behalf of disabled employees.

Allows rural cooperative plans which include cash or deferred arrangements to make distributions to participants after attainment of age 59.

Includes reports of pension and annuity payments in information returns and payee statements. Eliminates reports of designated distributions from the scope of the $25 per day penalty. Provides a $10 reporting threshold for designated distributions.

Makes tax-exempt organizations eligible for cash or deferred arrangement pension plans.