Comprehensive Retirement Security and Pension Reform Act of 2001

H.R. 10 ~ Comprehensive Retirement Security and Pension Reform

Act of 2001 Part 3

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H.R.10

Comprehensive Retirement Security and Pension Reform Act of 2001 (Engrossed in House )

(d) REPORTING REQUIREMENTS-

(1) W-2 INFORMATION- Section 6051(a)(8) is amended by inserting `, including the amount of designated plus contributions (as defined in section 402A)' before the comma at the end.

(2) INFORMATION- Section 6047 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

`(f) DESIGNATED PLUS CONTRIBUTIONS- The Secretary shall require the plan administrator of each applicable retirement plan (as defined in section 402A) to make such returns and reports regarding designated plus contributions (as so defined) to the Secretary, participants and beneficiaries of the plan, and such other persons as the Secretary may prescribe.'.

(e) CONFORMING AMENDMENTS-

(1) Section 408A(e) is amended by adding after the first sentence the following new sentence: `Such term includes a rollover contribution described in section 402A(c)(3)(A).'.

(2) The table of sections for subpart A of part I of subchapter D of chapter 1 is amended by inserting after the item relating to section 402 the following new item:

`Sec. 402A. Optional treatment of elective deferrals as plus contributions.'.

(f) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

SEC. 209. AVAILABILITY OF QUALIFIED PLANS TO SELF-EMPLOYED INDIVIDUALS WHO ARE EXEMPT FROM THE SELF-EMPLOYMENT TAX BY REASON OF THEIR RELIGIOUS BELIEFS.

(a) IN GENERAL- Subparagraph (A) of section 401(c)(2) (defining earned income) is amended by adding at the end thereof the following new sentence: `For purposes of this part only (other than sections 419 and 419A), this subparagraph shall be applied as if the term `trade or business' for purposes of section 1402 included service described in section 1402(c)(6).'.

(b) SIMPLE RETIREMENT ACCOUNTS- Clause (ii) of section 408(p)(6)(A) (defining self-employed) is amended by adding at the end the following new sentence: `The preceding sentence shall be applied as if the term `trade or business' for purposes of section 1402 included service described in section 1402(c)(6).'.

SEC. 210. CERTAIN NONRESIDENT ALIENS EXCLUDED IN APPLYING MINIMUM COVERAGE REQUIREMENTS.

(a) IN GENERAL- Subparagraph (C) of section 410(b)(3) (relating to exclusion of certain employees) is amended by inserting `, determined without regard to the reference to subchapter D in the last sentence thereof' after `section 861(a)(3)'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to plan years beginning after December 31, 2001.

TITLE III--ENHANCING FAIRNESS FOR WOMEN

SEC. 301. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER.

(a) IN GENERAL- Section 414 (relating to definitions and special rules) is amended by adding at the end the following new subsection:

`(v) CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER-

`(1) IN GENERAL- An applicable employer plan shall not be treated as failing to meet any requirement of this title solely because the plan permits an eligible participant to make additional elective deferrals in any plan year.

`(2) LIMITATION ON AMOUNT OF ADDITIONAL DEFERRALS- A plan shall not permit additional elective deferrals under paragraph (1) for any year in an amount greater than the lesser of--

`(A) $5,000, or

`(B) the excess (if any) of--

`(i) the participant's compensation for the year, over

`(ii) any other elective deferrals of the participant for such year which are made without regard to this subsection.

`(3) TREATMENT OF CONTRIBUTIONS- In the case of any contribution to a plan under paragraph (1), such contribution shall not, with respect to the year in which the contribution is made--

`(A) be subject to any otherwise applicable limitation contained in section 402(g), 402(h)(2), 404(a), 404(h), 408(p)(2)(A)(ii), 415, or 457, or

`(B) be taken into account in applying such limitations to other contributions or benefits under such plan or any other such plan.

`(4) APPLICATION OF NONDISCRIMINATION RULES-

`(A) IN GENERAL- An applicable employer plan shall not be treated as failing to meet the nondiscrimination requirements under section 401(a)(4) with respect to benefits, rights, and features if the plan allows all eligible participants to make the same election with respect to the additional elective deferrals under this subsection.

`(B) AGGREGATION- For purposes of subparagraph (A), all plans maintained by employers who are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 plan.

`(5) ELIGIBLE PARTICIPANT- For purposes of this subsection, the term `eligible participant' means, with respect to any plan year, a participant in a plan--

`(A) who has attained the age of 50 before the close of the plan year, and

`(B) with respect to whom no other elective deferrals may (without regard to this subsection) be made to the plan for the plan year by reason of the application of any limitation or other restriction described in paragraph (3) or comparable limitation contained in the terms of the plan.

`(6) OTHER DEFINITIONS AND RULES- For purposes of this subsection--

`(A) APPLICABLE EMPLOYER PLAN- The term `applicable employer plan' means--

`(i) an employees' trust described in section 401(a) which is exempt from tax under section 501(a),

`(ii) a plan under which amounts are contributed by an individual's employer for an annuity contract described in section 403(b),

`(iii) an eligible deferred compensation plan under section 457 of an eligible employer as defined in section 457(e)(1)(A), and

`(iv) an arrangement meeting the requirements of section 408 (k) or (p).

`(B) ELECTIVE DEFERRAL- The term `elective deferral' has the meaning given such term by subsection (u)(2)(C).

`(C) EXCEPTION FOR SECTION 457 PLANS- This subsection shall not apply to an applicable employer plan described in subparagraph (A)(iii) for any year to which section 457(b)(3) applies.

`(D) COST-OF-LIVING ADJUSTMENT- In the case of a year beginning after December 31, 2006, the Secretary shall adjust annually the $5,000 amount in paragraph (2)(A) for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2005, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to contributions in taxable years beginning after December 31, 2001.

SEC. 302. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES TO DEFINED CONTRIBUTION PLANS.

(a) EQUITABLE TREATMENT-

(1) IN GENERAL- Subparagraph (B) of section 415(c)(1) (relating to limitation for defined contribution plans) is amended by striking `25 percent' and inserting `100 percent'.

(2) APPLICATION TO SECTION 403(b)- Section 403(b) is amended--

(A) by striking `the exclusion allowance for such taxable year' in paragraph (1) and inserting `the applicable limit under section 415';

(B) by striking paragraph (2); and

(C) by inserting `or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated' before the period at the end of the second sentence of paragraph (3).

(3) CONFORMING AMENDMENTS-

(A) Subsection (f) of section 72 is amended by striking `section 403(b)(2)(D)(iii))' and inserting `section 403(b)(2)(D)(iii), as in effect before the enactment of the Comprehensive Retirement Security and Pension Reform Act of 2001)'.

(B) Section 404(a)(10)(B) is amended by striking `, the exclusion allowance under section 403(b)(2),'.

`(3) SPECIAL RULE FOR MONEY PURCHASE PLANS- For purposes of paragraph (1)(B), in the case of a defined contribution plan which is subject to the funding standards of section 412, section 415(c)(1)(B) shall be applied by substituting `25 percent' for `100 percent'.'.

(D) Section 415(a)(2) is amended by striking `, and the amount of the contribution for such portion shall reduce the exclusion allowance as provided in section 403(b)(2)'.

(E) Section 415(c)(3) is amended by adding at the end the following new subparagraph:

`(E) ANNUITY CONTRACTS- In the case of an annuity contract described in section 403(b), the term `participant's compensation' means the participant's includible compensation determined under section 403(b)(3).'.

(F) Section 415(c) is amended by striking paragraph (4).

(G) Section 415(c)(7) is amended to read as follows:

`(7) CERTAIN CONTRIBUTIONS BY CHURCH PLANS NOT TREATED AS EXCEEDING LIMIT-

`(A) IN GENERAL- Notwithstanding any other provision of this subsection, at the election of a participant who is an employee of a church or a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such participant, when expressed as an annual addition to such participant's account, shall be treated as not exceeding the limitation of paragraph (1) if such annual addition is not in excess of $10,000.

`(B) $40,000 AGGREGATE LIMITATION- The total amount of additions with respect to any participant which may be taken into account for purposes of this subparagraph for all years may not exceed $40,000.

`(C) ANNUAL ADDITION- For purposes of this paragraph, the term `annual addition' has the meaning given such term by paragraph (2).'.

(H) Subparagraph (B) of section 402(g)(7) (as redesignated by section 201) is amended by inserting before the period at the end the following: `(as in effect before the enactment of the Comprehensive Retirement Security and Pension Reform Act of 2001)'.

(I) Section 664(g) is amended--

(i) in paragraph (3)(E) by striking `limitations under section 415(c)' and inserting `applicable limitation under paragraph (7)', and

(ii) by adding at the end the following new paragraph:

`(7) APPLICABLE LIMITATION-

`(A) IN GENERAL- For purposes of paragraph (3)(E), the applicable limitation under this paragraph with respect to a participant is an amount equal to the lesser of--

`(i) $30,000, or

`(ii) 25 percent of the participant's compensation (as defined in section 415(c)(3)).

`(B) COST-OF-LIVING ADJUSTMENT- The Secretary shall adjust annually the $30,000 amount under subparagraph (A)(i) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning October 1, 1993, and any increase under this subparagraph which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.'.

(4) EFFECTIVE DATE- The amendments made by this subsection shall apply to years beginning after December 31, 2001.

(b) SPECIAL RULES FOR SECTIONS 403(b) AND 408-

(1) IN GENERAL- Subsection (k) of section 415 is amended by adding at the end the following new paragraph:

`(4) SPECIAL RULES FOR SECTIONS 403(B) AND 408- For purposes of this section, any annuity contract described in section 403(b) for the benefit of a participant shall be treated as a defined contribution plan maintained by each employer with respect to which the participant has the control required under subsection (b) or (c) of section 414 (as modified by subsection (h)). For purposes of this section, any contribution by an employer to a simplified employee pension plan for an individual for a taxable year shall be treated as an employer contribution to a defined contribution plan for such individual for such year.'.

(2) EFFECTIVE DATE-

(A) IN GENERAL- The amendment made by paragraph (1) shall apply to limitation years beginning after December 31, 1999.

(B) EXCLUSION ALLOWANCE- Effective for limitation years beginning in 2000, in the case of any annuity contract described in section 403(b) of the Internal Revenue Code of 1986, the amount of the contribution disqualified by reason of section 415(g) of such Code shall reduce the exclusion allowance as provided in section 403(b)(2) of such Code.

(3) MODIFICATION OF 403(b) EXCLUSION ALLOWANCE TO CONFORM TO 415 MODIFICATION- The Secretary of the Treasury shall modify the regulations regarding the exclusion allowance under section 403(b)(2) of the Internal Revenue Code of 1986 to render void the requirement that contributions to a defined benefit pension plan be treated as previously excluded amounts for purposes of the exclusion allowance. For taxable years beginning after December 31, 1999, such regulations shall be applied as if such requirement were void.

(1) IN GENERAL- Subparagraph (B) of section 457(b)(2) (relating to salary limitation on eligible deferred compensation plans) is amended by striking `33 1/3 percent' and inserting `100 percent'.

(2) EFFECTIVE DATE- The amendment made by this subsection shall apply to years beginning after December 31, 2001.

SEC. 303. FASTER VESTING OF CERTAIN EMPLOYER MATCHING CONTRIBUTIONS.

(a) AMENDMENT OF INTERNAL REVENUE CODE- Section 411(a) (relating to minimum vesting standards) is amended--

(1) in paragraph (2) in the matter preceding subparagraph (A), by striking `A plan' and inserting `Except as provided in paragraph (12), a plan'; and

(2) by adding at the end the following:

`(12) FASTER VESTING FOR MATCHING CONTRIBUTIONS- In the case of matching contributions (as defined in section 401(m)(4)(A)), paragraph (2) shall be applied--

`(A) by substituting `3 years' for `5 years' in subparagraph (A), and

`(B) by substituting the following table for the table contained in subparagraph (B):

--The nonforfeitable

`Years of service:

--percentage is:

--20

--40

--60

--80

--100.'.

(b) AMENDMENT OF ERISA- Section 203(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--

(1) in paragraph (2), in the matter preceding subparagraph (A), by striking `A plan' and inserting `Except as provided in paragraph (4), a plan', and

(2) by adding at the end the following:

`(4) In the case of matching contributions (as defined in section 401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph (2) shall be applied--

`(A) by substituting `3 years' for `5 years' in subparagraph (A), and

`(B) by substituting the following table for the table contained in subparagraph (B):

--The nonforfeitable

`Years of service:

--percentage is:

--20

--40

--60

--80

--100.'.

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to contributions for plan years beginning after December 31, 2001.

(2) COLLECTIVE BARGAINING AGREEMENTS- In the case of a plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified by the date of the enactment of this Act, the amendments made by this section shall not apply to contributions on behalf of employees covered by any such agreement for plan years beginning before the earlier of--

(A) the later of--

(i) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof on or after such date of the enactment); or

(ii) January 1, 2002; or

(B) January 1, 2006.

(3) SERVICE REQUIRED- With respect to any plan, the amendments made by this section shall not apply to any employee before the date that such employee has 1 hour of service under such plan in any plan year to which the amendments made by this section apply.

SEC. 304. MODIFICATIONS TO MINIMUM DISTRIBUTION RULES.

(a) LIFE EXPECTANCY TABLES- The Secretary of the Treasury shall modify the life expectancy tables under the regulations relating to minimum distribution requirements under sections 401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 457(d)(2) of the Internal Revenue Code to reflect current life expectancy.

(b) REPEAL OF RULE WHERE DISTRIBUTIONS HAD BEGUN BEFORE DEATH OCCURS-

(1) IN GENERAL- Subparagraph (B) of section 401(a)(9) is amended by striking clause (i) and redesignating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively.

(2) CONFORMING CHANGES-

(A) Clause (i) of section 401(a)(9)(B) (as so redesignated) is amended--

(i) by striking `FOR OTHER CASES' in the heading; and

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