Debt Relief and Retirement Security Reconciliation Act

Debt Relief and Retirement Security Reconciliation Act - Division A: Debt Relief - Title I: Debt Reduction Lock-Box - Amends Federal public finance provisions to establish the Public Debt Reduction Payment Account in the Treasury. Requires the Secretary of the Treasury to use amounts in the Account to pay at maturity, or redeem or buy before maturity, any Government obligation held by the public and included in the public debt. Provides that any obligation which is paid, redeemed, or bought with amounts from the Account shall be canceled and retired and prohibits its reissuance.

Appropriates funds for the Account. Prohibits such appropriation from being considered as direct spending for purposes of pay-as-you-go provisions of the Balanced Budget and Emergency Deficit Control Act of 1985 (Gramm-Rudman-Hollings Act).

(Sec. 102) Reduces the public debt limit by the amount appropriated into the Account.

(Sec. 103) Bars Account receipts and disbursements from being counted as new budget authority, outlays, receipts, or deficit or surplus for purposes of : (1) the Federal Government budget as submitted by the President; (2) the congressional budget; or (3) the Gramm-Rudman-Hollings Act.

(Sec. 105) Requires the Secretary to report to specified congressional committees on the Account.

Title II: Social Security and Medicare Lock-Box - Amends H. Con. Res. 290 (106th Congress) to replace a point of order in the House of Representatives or the Senate against consideration of any revision of such resolution or any concurrent budget resolution for FY 2002 that sets forth a deficit for any fiscal year with one that provides a point of order against consideration of any budget resolution that sets forth a surplus for any fiscal year that is less than the surplus of the Federal Hospital Insurance Trust Fund for such year.

Makes it out of order in the House or the Senate to consider any bill, joint resolution, amendment, motion, or conference report if the enactment of the reported bill or resolution, the adoption and enactment of an amendment, or the enactment of a bill or resolution in the form recommended in the conference report would cause the on-budget surplus for any fiscal year to be less than the projected surplus of the Federal Hospital Insurance Trust Fund for such year or increase the amount by which the on-budget surplus for any fiscal year would be less than such trust fund surplus for that year. Makes such point of order inapplicable to social security or Medicare reform legislation.

Requires any Federal budget submitted by the President that recommends an on-budget surplus for any fiscal year that is less than the surplus of the Federal Hospital Insurance Trust Fund for such year to include proposed legislative language for social security or Medicare reform legislation.

Makes the lock-box requirements of H. Con. Res. 290 (106th Congress) and the preceding paragraph inapplicable upon the enactment of social security and Medicare reform legislation.

Defines "social security reform legislation" and "Medicare reform legislation" as a bill or joint resolution to save social security or Medicare, respectively, that specifies that it constitutes reform legislation for purposes of such resolution.

(Sec. 202) Requires any official Federal Government statement of the Federal or congressional budget surplus or deficit totals to exclude the outlays and receipts of the Old-Age, Survivors, and Disability Insurance Program under the Social Security Act. Requires such outlays and receipts to be submitted in separate social security budget documents.

Division B: Retirement Security - Title XI: Individual Retirement Account Provisions - Amends the Internal Revenue Code (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 limit shall be $5,000 beginning in 2001, with indexing after 2003.

Title XII: Expanding Coverage - Provides for increases in amounts of benefit and contribution limits. Sets indexes for inflation in various increments on such increased limits.

(Sec. 1202) Revises requirements relating to plan loans for subchapter S owners, partners, and sole proprietors.

(Sec. 1203) 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. 1204) Provides that elective deferrals shall not be taken into account for purposes of limits on certain plan contributions.

(Sec. 1205) Repeals specified coordination requirements under the Code for deferred compensation plans of State and local governments and tax-exempt organizations.

(Sec. 1206) Eliminates user fee requirements for requests to the Internal Revenue Service (IRS) concerning the status of pension plans.

(Sec. 1207) Revises certain deduction limits for stock bonus and profit sharing trusts and for defined contribution plans.

(Sec. 1208) Provides for optional treatment of elective deferrals as plus contributions.

Title XIII: 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). Sets such maximum permitted additional contribution at $5,000, indexed in 2006 and thereafter.

(Sec. 1302) 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. 1303) Provides for faster vesting of certain employer matching contributions under the Code.

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. 1304) 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. 1305) 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. 1306) 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.

Title XIV: Increasing Portability for Participants - Permits rollovers from and to various types of plans under the Code.

(Sec. 1402) Permits individual retirement plan (IRA) rollovers into workplace retirement plans only if certain conditions are met.

(Sec. 1403) Permits rollover of after-tax contributions in an exempt trust under specified conditions.

(Sec. 1404) 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. 1405) Sets forth requirements for treatment of forms of distribution available under transferor and transferee plans under the Code.

(Sec. 1406) Revises restrictions on distributions, including the same desk exception. Repeals business sale requirements.

(Sec. 1407) Authorizes trustee-to-trustee transfers to purchase permissive service credit with respect to governmental defined benefit plans.

(Sec. 1408) Allows employers to disregard rollovers for purposes of cash-out amounts, under retirement plan provisions of the Code.

(Sec. 1409) Revises minimum distribution and inclusion requirements for section 457 plans.

Title XV: Strengthening Pension Security and Enforcement - Revises the percentage of current liability funding limit.

(Sec. 1502) Revises maximum contribution deduction rules. Applies such rules to all defined benefit plans.

(Sec. 1503) 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. 1504) Requires plan administrators of defined benefit plans (other than governmental plans and certain church plans) with more than 100 participants to notify plan participants and beneficiaries in advance of an amendment that significantly reduces the rate of future benefit accruals. Requires such notice to include sufficient information to allow participants and beneficiaries to understand the effect of the amendment. Imposes an excise tax on the employer or upon a multiemployer plan if the required notice is not provided.

(Sec. 1505) Makes certain limitation rules (under section 415 of the Code) for defined benefit plans inapplicable to governmental or multiemployer plans. Sets forth special rules relating to the combination or aggregation of multiemployer plans.

(Sec. 1506) 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.

Title XVI: Reducing Regulatory Burdens - Revises requirements relating to timing of plan valuations.

(Sec. 1602) Allows applicable dividends of ESOPs to be reinvested without loss of dividend deduction.

(Sec. 1603) Repeals a transition rule relating to certain highly compensated employees under the Tax Reform Act of 1986.

(Sec. 1604) Directs the Secretary to modify certain regulations with respect to certain plan participation by employees of tax-exempt entities under the Code.

(Sec. 1605) 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. 1606) Directs the Secretary to provide simplified annual filing requirements for: (1) one-participant (an owner and spouse) retirement plans with assets below a specified amount; or (2) retirement plans for fewer than 25 employees.

(Sec. 1607) 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. 1608) Repeals a multiple use test, and directs the Secretary to prescribe regulations, as necessary, including ones permitting appropriate aggregation of plans and contributions.

(Sec. 1609) 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. 1610) Exempts plans maintained by any governmental entity from certain nondiscrimination rules.

(Sec. 1611) 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.

Title XVII: Plan Amendments - Prescribes requirements for plan amendments or annuity contract amendments under the Code.