To provide for pension reform, and for other purposes.
Title I: Individual Retirement Accounts - Amends the Code to increase the annual dollar Individual Retirement Account (IRA) contribution limit from $2,000 to $3,000 in 2001, $4,000 in 2002, and $5,000 in 2003, with indexing thereafter. Provides, for individuals age 50 and older, that such limits shall be increased by 50 percent. Increases the adjusted gross income phase-out limits.
(Sec. 102) Amends the Code and ERISA (the Employee Retirement Income Security Act of 1974) to permit employees to make IRA contributions under a qualified employer plan.
(Sec. 103) Permits specified tax-free withdrawals from IRAs for charitable purposes.
(Sec 104) Increases the income phase-out range for Roth IRA contributions for married couples filing a joint return.
Title II: Expanding Coverage - Provides for increases in amounts of benefit and contribution limits. Sets indexes for inflation in various increments on such increased limits.
(Sec. 202) Revises requirements relating to plan loans for subchapter S owners, partners, and sole proprietors.
(Sec. 203) Revises specified top-heavy rules. Repeals family aggregation rules. Revises the definition of key employee. Provides that, at the election of the employer, any employee elective contribution to a plan shall not be taken into account for purposes of determining: (1) whether a plan is a top-heavy plan (or whether any aggregation group which includes such plan is a top-heavy group); or (2) compensation. Requires that employer matching contributions be taken into account for purposes of minimum contribution requirements. Revises requirements for qualifications. Provides for distributions during the last year before a determination date is taken into account. Excludes from the definition of top-heavy plan: (1) cash or deferred arrangements using alternative methods of meeting nondiscrimination requirements; and (2) defined contribution plans using alternative methods of meeting nondiscrimination requirements. Provides that elective deferrals will not be taken into account for purposes of a special rule where the maximum contribution is less than three percent.
(Sec. 204) Provides that elective deferrals shall not be taken into account for purposes of limits on certain plan contributions.
(Sec. 205) Repeals specified coordination requirements under the Code for deferred compensation plans of State and local governments and tax-exempt organizations.
(Sec. 206) Revises certain deduction limits for stock bonus and profit sharing trusts and for defined contribution plans.
(Sec. 207) Provides for optional treatment of elective deferrals as ROTH contributions.
(Sec. 208) Allows a tax credit, for eligible taxpayers with an AGI of $50,000 (on a joint return) or less, of up to a maximum of $2,000 annually for qualified retirement savings contributions.
(Sec. 209) Provides a small employer pension plan credit for qualified employer contributions made to any qualified retirement plan on behalf of non-highly compensated employees.
(Sec. 210) Provides for a small employer pension plan startup costs credit.
Title III: Enhancing Fairness for Women - Allows individuals who are age 50 or older to make additional contributions to an applicable employer plan (Section 401(k) plan or similar plan).
(Sec. 302) Sets forth requirements relating to equitable treatment for contributions of employees to defined contribution plans. Increases the 25 percent of compensation limitation on annual additions under a defined contribution plan to 100 percent. Declares that certain contributions by church plans are not to be treated as exceeding a specified limit. Sets limits on contributions to a tax-sheltered annuity which are similar to the limits applicable to tax-qualified plans. Increases the 33 and one-third percent of compensation limitation on deferrals under a section 457 plan to 100 percent of compensation.
(Sec. 303) Provides for faster vesting of certain employer matching contributions under the Code and ERISA. Requires employer matching contributions to vest at least as rapidly as under three-year cliff vesting or under six-year graded vesting that provides for a nonforfeitable right to 20 percent of employer matching contributions for each year of service beginning with the participant's second year of service and ending with 100 percent after six years of service.
(Sec. 304) Revises minimum distribution rules under the Code. Revises requirements for actuarial adjustment of benefits under a defined benefit plan.
Directs the Secretary of the Treasury (the Secretary) to: (1) simplify and finalize the regulations relating to minimum distribution requirements; and (2) modify such regulations to reflect increases in life expectancy, and revise required distribution methods so that, under reasonable assumptions, the amount of the required minimum distribution does not decrease over a participant's life expectancy. Provides that, during the first year that such revised regulations are in effect, required distributions for future years may be redetermined, with the opportunity to choose a new designated beneficiary and to elect a new method of calculating life expectancy.
Excludes specified amounts from minimum distribution requirements. Repeals a rule relating to distributions begun before death occurs.
Reduces the excise tax on failures to satisfy the minimum distribution rules to ten percent of the amount that was required to be distributed but was not distributed.
(Sec. 305) Revises requirements relating to tax treatment of division of section 457 plan benefits upon divorce. Applies the taxation rules for qualified plan distributions pursuant to a qualified domestic relations order to distributions made pursuant to a domestic relations order from a section 457 plan. Provides that a section 457 plan is not to be treated as violating the restrictions on distributions from such plans due to payments to an alternate payee under a qualified domestic relations order.
(Sec. 306) Modifies provisions for safe harbor relief for hardship withdrawals from 401(k) plans. Directs the Secretary to reduce from 12 months to six months the period during which an employee is prohibited from making elective contributions and employee contributions in order for a distribution to be deemed necessary to satisfy an immediate and heavy financial need. Provides that a hardship distribution made pursuant to plan terms is not an eligible rollover distribution.
(Sec 307) Makes the ten percent excise tax on nondeductible contributions inapplicable to a nondeductible SIMPLE plan or a SIMPLE IRA solely because the contributions are not trade or business expenses.
Title IV: Increasing Portability for Participants - Permits rollovers from and to various types of plans under the Code.
(Sec. 402) Permits individual retirement plan (IRA) rollovers into workplace retirement plans only if certain conditions are met.
(Sec. 403) Permits rollover of after-tax contributions in an exempt trust under specified conditions.
(Sec. 404) Sets forth a hardship exception to the 60-day rule. Authorizes the Secretary to waive the 60-day rollover period if the failure to waive such requirement would be against equity or good conscience, including cases of casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.
(Sec. 405) Sets forth requirements for treatment of forms of distribution available under transferor and transferee plans under the Code and ERISA.
(Sec. 406) Revises restrictions on distributions, including the same desk exception. Repeals business sale requirements.
(Sec. 407) Authorizes trustee-to-trustee transfers to purchase permissive service credit with respect to governmental defined benefit plans.
(Sec. 408) Allows employers to disregard rollovers for purposes of cash-out amounts, under retirement plan provisions of the Code.
(Sec. 409) Revises minimum distribution and inclusion requirements for section 457 plans.
Title V: Strengthening Pension Security and Enforcement - Subtitle A: General Provisions - Increases and repeals, for plan years beginning in 2004 and following years, the current liability full funding limit.
(Sec. 502) Revises maximum contribution deduction rules. Applies such rules to all defined benefit plans.
(Sec. 503) Allows an employer, in determining the amount of nondeductible contributions for any taxable year, to elect not to take into account any contributions to a defined benefit plan except to the extent that they exceed the full-funding limitation.
(Sec. 504) Makes certain compensation limitations for defined benefit plans inapplicable to governmental and multiemployer plans. Prohibits combining or aggregating a multiemployer plan with any other plan maintained by the employer for the purpose of applying such limitations.
(Sec. 505) Amends the Taxpayer Relief Act of 1997 to protect investment of employee contributions to 401(k) plans by providing that specified requirements apply to elective deferrals for plan years beginning after December 31, 1998.
(Sec. 506) Requires that pension benefit statements be furnished annually (once every three years for defined benefit plans) or on request. Allows written or electronic statements. Requires multiemployer plans to furnish a statement (written or electronic) on request.
(Sec. 507) Imposes an excise tax on employee stock ownership plans (ESOPs) that engage in prohibited transactions with disqualified individuals who are deemed to be substantial shareholders of the corporation sponsoring the plan.
Subtitle B: Treatment of Plan Amendments Reducing Future Benefit Accruals - Imposes a tax on the failure of a defined benefit plan or an individual account plan subject to minimum funding standards (excludes governmental, church, and other specified plans from such tax) to meet specified notice requirements for plan amendments which significantly reduce benefit accruals.
(Sec. 522) Establishes rules for making the determination as to when a plan amendment reduces accrued benefits.
Title VI: Reducing Regulatory Burdens - Revises requirements relating to timing of plan valuations.
(Sec. 602) Allows applicable dividends of ESOPs to be reinvested without loss of dividend deduction.
(Sec. 603) Repeals a transition rule relating to certain highly compensated employees under the Tax Reform Act of 1986.
(Sec. 604) Directs the Secretary to modify certain regulations with respect to certain plan participation by employees of tax-exempt entities under the Code.
(Sec. 605) Treats the provision of certain retirement planning services by an employer to an employee as a de minimis fringe benefit to the extent it is not treated as a working condition fringe.
Prohibits including an amount in an employee's gross income solely because the employee may choose between any retirement planning fringe and compensation otherwise includible in gross income, providing such choices are available in a way that does not discriminate in favor of highly compensated employees.
(Sec. 606) Directs the Secretary to provide simplified annual filing requirements for one-participant (an owner and spouse) retirement plans with assets below a specified amount.
(Sec. 607) Directs the Secretary to continue to update and improve the Employee Plans Compliance Resolution System (EPCRS), or any successor program, giving special attention to: (1) increasing the awareness and knowledge of small employers concerning the availability and use of EPCRS; (2) taking into account special concerns and circumstances that small employers face with respect to compliance and correction of compliance failures; (3) extending the duration of the self-correction period under the Administrative Policy Regarding Self-Correction (APRSC) for significant compliance failures; (4) expanding the availability to correct insignificant compliance failures under APRSC during audit; and (5) assuring that any tax, penalty, or sanction that is imposed by reason of a compliance failure is not excessive and bears a reasonable relationship to the nature, extent, and severity of the failure.
(Sec. 608) Repeals a multiple use test, and directs the Secretary to prescribe regulations, as necessary, including ones permitting appropriate aggregation of plans and contributions.
(Sec. 609) Directs the Secretary to provide by regulation circumstances under which plans can use a facts and circumstances test, which was in effect before 1994, to satisfy nondiscrimination, coverage, and line of business rules.
(Sec. 610) Exempts plans maintained by any governmental entity from certain nondiscrimination rules.
(Sec. 611) Directs the Secretary to modify specified regulations to require: (1) that the applicable distribution notice period be not more than 180 (currently 90) and not less than 30 days before the date distribution commences; and (2) the description of a participant's right, if any, to defer receipt of a distribution include a description of the consequences of failing to defer such receipt.
(Sec. 612) Revises ERISA requirements for annual report dissemination.
(Sec. 613) Revises ERISA provisions concerning the National Summit on Retirement Savings.
(Sec. 614) Requires a study concerning the effects of this Act on pension coverage.
Title VII: Plan Amendments - Prescribes time requirements for plan amendments or annuity contract amendments.
Title VIII: Compliance With Budget Act - Sets forth Budget Act compliance provisions.
Motion to reconsider laid on the table Agreed to without objection.
Considered under the provisions of rule H. Res. 557. (consideration: CR H6477-6529; text of measure as reported in House: CR H6477-6493)
Rule provides for consideration of H.R. 1102 with 1 hour of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. In lieu of the amendment recommended by the Committee on Education and the Workforce now printed in the bill, an amendment in the nature of a substitute consisting of the text of the amendment recommended by the Committee on Ways and Means now printed in H.R. 4843 shall be considered as adopted. Measure will be considered read. A specified amendment is in order.
DEBATE - The House proceeded with one hour of debate on H.R. 1102.
DEBATE - Pursuant to H. Res. 557, the House proceeded with one hour of debate on the amendment in the nature of a substitute offered by Mr. Neal.
PREVIOUS QUESTION ORDERED - Pursuant to the provisions of H. Res. 557, the previous question was ordered on the Neal amendment as modified and on the bill.
Mr. Neal moved to recommit with instructions to Ways and Means.
DEBATE - The House proceeded with 10 minutes of debate on the motion to recommit with instructions. The instructions contained in the motion require the bill to be reported back to the House forthwith with an amendment adding a new title which provides for contingencies that must be met before the tax and pension relief provisions of the bill can be enacted.
The previous question on the motion to recommit with instructions was ordered without objection.
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On motion to recommit with instructions Failed by the Yeas and Nays: 185 - 239 (Roll no. 411). (text: CR H6526-6527)
Roll Call #411 (House)Passed/agreed to in House: On passage Passed by recorded vote: 401 - 25 (Roll no. 412).
Roll Call #412 (House)On passage Passed by recorded vote: 401 - 25 (Roll no. 412).
Roll Call #412 (House)Motion to reconsider laid on the table Agreed to without objection.
Received in the Senate.
Read the first time. Placed on Senate Legislative Calendar under Read the First Time.
Read the second time. Placed on Senate Legislative Calendar under General Orders. Calendar No. 772.
Referred to the Committee on Finance.
Committee on Finance. Ordered to be reported with an amendment in the nature of a substitute favorably.
Committee on Finance. Reported by Senator Roth with an amendment in the nature of a substitute and an amendment to the title. With written report No. 411.
Committee on Finance. Reported by Senator Roth with an amendment in the nature of a substitute and an amendment to the title. With written report No. 411.
Placed on Senate Legislative Calendar under General Orders. Calendar No. 802.