SAVE Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2927 To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to improve rules relating to retirement plans. IN THE HOUSE OF REPRESENTATIVES APRIL 30, 2021 Mr. KIND (for himself, Mr. KELLY of Pennsylvania, and Mr. SMITH of Mis- souri) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To amend the Internal Revenue Code of 1986 and the Em- ployee Retirement Income Security Act of 1974 to im- prove rules relating to retirement plans. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Savings for All Voca- 4 tions Enhancement Act of 2021’’ or the ‘‘SAVE Act of 5 2021’’. 6 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 2927 IH SEC. 2. MULTIPLE EMPLOYER 403(b) PLANS. 1 (a) IN GENERAL.—Section 403(b) of the Internal 2 Revenue Code of 1986 is amended by adding at the end 3 the following new paragraph: 4 ‘‘(15) MULTIPLE EMPLOYER PLANS.— 5 ‘‘(A) IN GENERAL.—Except in the case of 6 a church plan, this subsection shall not be 7 treated as failing to apply to an annuity con- 8 tract solely by reason of such contract being 9 purchased under a plan maintained by more 10 than 1 employer. 11 ‘‘(B) TREATMENT OF EMPLOYERS FAILING 12 TO MEET REQUIREMENTS OF PLAN.— 13 ‘‘(i) IN GENERAL.—In the case of a 14 plan maintained by more than 1 employer, 15 this subsection shall not be treated as fail- 16 ing to apply to an annuity contract held 17 under such plan merely because of one or 18 more employers failing to meet the require- 19 ments of this subsection if such plan satis- 20 fies rules similar to the rules of section 21 413(e)(2) with respect to any such em- 22 ployer failure. 23 ‘‘(ii) ADDITIONAL REQUIREMENTS IN 24 CASE OF NON-GOVERNMENTAL PLANS.—A 25 plan shall not be treated as meeting the re- 26 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 2927 IH quirements of this subparagraph unless the 1 plan meets the requirements of subpara- 2 graph (A) or (B) of section 413(e)(1), ex- 3 cept in the case of a multiple employer 4 plan maintained solely by any of the fol- 5 lowing: A State, a political subdivision of a 6 State, or an agency or instrumentality of 7 any one or more of the foregoing.’’. 8 (b) ANNUAL REGISTRATION FOR 403(b) MULTIPLE 9 EMPLOYER PLAN.—Section 6057 of such Code is amend- 10 ed by redesignating subsection (g) as subsection (h) and 11 by inserting after subsection (f) the following new sub- 12 section: 13 ‘‘(g) 403(b) MULTIPLE EMPLOYER PLANS TREATED 14 AS ONE PLAN.—In the case of annuity contracts to which 15 this section applies and to which section 403(b) applies 16 by reason of the plan under which such contracts are pur- 17 chased meeting the requirements of paragraph (15) there- 18 of, such plan shall be treated as a single plan for purposes 19 of this section.’’. 20 (c) ANNUAL INFORMATION RETURNS FOR 403(b) 21 MULTIPLE EMPLOYER PLAN.—Section 6058 of the Inter- 22 nal Revenue Code of 1986 is amended by redesignating 23 subsection (f) as subsection (g) and by inserting after sub- 24 section (e) the following new subsection: 25 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 2927 IH ‘‘(f) 403(b) MULTIPLE EMPLOYER PLANS TREATED 1 AS ONE PLAN.—In the case of annuity contracts to which 2 this section applies and to which section 403(b) applies 3 by reason of the plan under which such contracts are pur- 4 chased meeting the requirements of paragraph (15) there- 5 of, such plan shall be treated as a single plan for purposes 6 of this section.’’. 7 (d) AMENDMENTS TO EMPLOYEE RETIREMENT IN- 8 COME SECURITY ACT OF 1974.— 9 (1) TREATED AS POOLED EMPLOYER PLAN.— 10 (A) IN GENERAL.—Section 3(43)(A) of the 11 Employee Retirement Income Security Act of 12 1974 is amended— 13 (i) in clause (ii), by striking ‘‘section 14 501(a) of such Code or’’ and inserting 15 ‘‘501(a) of such Code, a plan that consists 16 of contracts described in section 403(b) of 17 such Code, or’’; and 18 (ii) in the flush text at the end, by 19 striking ‘‘the plan.’’ and inserting ‘‘the 20 plan, but such term shall include any pro- 21 gram (other than a governmental plan) 22 maintained for the benefit of the employees 23 of more than 1 employer that consists of 24 contracts described in section 403(b) of 25 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 2927 IH such Code and that meets the require- 1 ments of subparagraph (A) or (B) of sec- 2 tion 413(e)(1) of such Code.’’. 3 (B) CONFORMING AMENDMENTS.—Sec- 4 tions 3(43)(B)(v)(II) and 3(44)(A)(i)(I) of such 5 Act are each amended by striking ‘‘section 6 401(a) of such Code or’’ and inserting ‘‘401(a) 7 of such Code, a plan that consists of contracts 8 described in section 403(b) of such Code, or’’. 9 (2) FIDUCIARIES.—Section 3(43)(B)(ii) of such 10 Act is amended— 11 (A) by striking ‘‘trustees meeting the re- 12 quirements of section 408(a)(2) of the Internal 13 Revenue Code of 1986’’ and inserting ‘‘trustees 14 (or other fiduciaries in the case of a plan that 15 consists of contracts described in section 403(b) 16 of the Internal Revenue Code of 1986) meeting 17 the requirements of section 408(a)(2) of such 18 Code’’, and 19 (B) by striking ‘‘holding’’ and inserting 20 ‘‘holding (or causing to be held under the terms 21 of a plan consisting of such contracts)’’. 22 (e) REGULATIONS RELATING TO PLAN TERMI- 23 NATION.—The Secretary of the Treasury (or the Sec- 24 retary’s designee) shall prescribe such regulations as may 25 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 2927 IH be necessary to clarify the treatment of a plan termination 1 by an employer in the case of plans to which section 2 403(b)(15) of such Code applies. 3 (f) MODIFICATION OF MODEL PLAN LANGUAGE, 4 ETC.— 5 (1) PLAN NOTIFICATIONS.—The Secretary of 6 the Treasury (or the Secretary’s designee) shall 7 modify the model plan language published under sec- 8 tion 413(e)(5) of the Internal Revenue Code of 1986 9 to include language which notifies participating em- 10 ployers which are exempt from tax under section 11 501(a) of such Code that the plan is subject to the 12 Employee Retirement Income Security Act of 1974 13 and that such employer is a plan sponsor with re- 14 spect to its employees participating in the multiple 15 employer plan and, as such, has certain fiduciary 16 duties with respect to the plan and to its employees. 17 (2) MODEL PLANS FOR MULTIPLE EMPLOYER 18 403(b) NON-GOVERNMENTAL PLANS.—For plans to 19 which section 403(b)(15)(A) of the Internal Revenue 20 Code of 1986 applies (other than a plan maintained 21 for its employees by a State, a political subdivision 22 of a State, or an agency or instrumentality of any 23 one or more of the foregoing) the Secretary shall 24 publish model plan language similar to model plan 25 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 2927 IH language published under section 413(e)(5) of such 1 Code. 2 (3) EDUCATIONAL OUTREACH TO EMPLOYERS 3 EXEMPT FROM TAX.—The Secretary shall provide 4 education and outreach to increase awareness to em- 5 ployers which are exempt from tax under section 6 501(a) of such Code that multiple employer plans 7 are subject to the Employee Retirement Income Se- 8 curity Act of 1974 and that such employer is a plan 9 sponsor with respect to its employees participating 10 in the multiple employer plan and, as such, has cer- 11 tain fiduciary duties with respect to the plan and to 12 its employees. 13 (g) NO INFERENCE WITH RESPECT TO CHURCH 14 PLANS.—Regarding any application of section 403(b) of 15 the Internal Revenue Code of 1986 to an annuity contract 16 purchased under a church plan (as defined in section 17 414(e) of such Code) maintained by more than 1 em- 18 ployer, or to any application of rules similar to section 19 413(e) of such Code to such a plan, no inference shall 20 be made from section 403(b)(15)(A) of such Code (as 21 added by this Act) not applying to such plans. 22 (h) EFFECTIVE DATE.— 23 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 2927 IH (1) IN GENERAL.—The amendments made by 1 this section shall apply to plan years beginning after 2 December 31, 2021. 3 (2) RULE OF CONSTRUCTION.—Nothing in the 4 amendments made by subsection (a) shall be con- 5 strued as limiting the authority of the Secretary of 6 the Treasury or the Secretary’s delegate (determined 7 without regard to such amendment) to provide for 8 the proper treatment of a failure to meet any re- 9 quirement applicable under such Code with respect 10 to one employer (and its employees) in the case of 11 a plan to which section 403(b)(15) applies. 12 SEC. 3. APPLICATION OF CREDIT FOR SMALL EMPLOYER 13 PENSION PLAN STARTUP COSTS TO EMPLOY- 14 ERS WHICH JOIN AN EXISTING PLAN. 15 (a) IN GENERAL.—Section 45E(d)(3)(A) of the In- 16 ternal Revenue Code of 1986 is amended by striking ‘‘ef- 17 fective’’ and inserting ‘‘effective with respect to the eligible 18 employer’’. 19 (b) EFFECTIVE DATE.—The amendment made by 20 this section shall apply to eligible employer plans which 21 become effective with respect to the eligible employer after 22 the date of the enactment of this Act. 23 SEC. 4. FINDINGS RELATING TO S CORPORATION ESOPs. 24 Congress finds the following: 25 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 2927 IH (1) On January 1, 1998, nearly 25 years after 1 the Employee Retirement Income Security Act of 2 1974 was enacted and the employee stock ownership 3 plan (hereafter in this section referred to as an 4 ‘‘ESOP’’) was created, employees were first per- 5 mitted to be owners of subchapter S corporations 6 pursuant to the Small Business Job Protection Act 7 of 1996 (Public Law 104–188). 8 (2) With the passage of the Taxpayer Relief 9 Act of 1997 (Public Law 105–34), Congress de- 10 signed incentives to encourage businesses to become 11 ESOP-owned S corporations. 12 (3) Since that time, several thousand companies 13 have become ESOP-owned S corporations, creating 14 an ownership interest for several million Americans 15 in companies in every State in the country, in indus- 16 tries ranging from heavy manufacturing to construc- 17 tion and contracting to services. 18 (4) Every United States worker who is an em- 19 ployee-owner of an S corporation company through 20 an ESOP has a valuable qualified retirement savings 21 account. 22 (5) Recent studies have shown that employees 23 of ESOP-owned S corporations enjoy greater job 24 stability, wages and benefits than employees of com- 25 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 2927 IH parable companies; and ESOP companies are better 1 able to weather economic downturns. 2 (6) Studies also show that employee-owners of 3 S corporation ESOP companies have amassed mean- 4 ingful retirement savings through their ESOP ac- 5 counts that will give them the means to retire with 6 dignity. 7 (7) It is the goal of Congress to preserve and 8 foster employee ownership of S corporations through 9 ESOPs. 10 SEC. 5. REDUCTION IN EXCISE TAX ON CERTAIN ACCUMU- 11 LATIONS IN QUALIFIED RETIREMENT PLANS. 12 (a) IN GENERAL.—Section 4974(a) of the Internal 13 Revenue Code of 1986 is amended by striking ‘‘50 per- 14 cent’’ and inserting ‘‘25 percent’’. 15 (b) REDUCTION IN EXCISE TAX ON FAILURES TO 16 TAKE REQUIRED MINIMUM DISTRIBUTIONS.—Section 17 4974 of such Code is amended by adding at the end the 18 following new subsection: 19 ‘‘(e) REDUCTION OF TAX IN CERTAIN CASES.— 20 ‘‘(1) REDUCTION.—In the case of a taxpayer 21 who— 22 ‘‘(A) corrects, during the correction win- 23 dow, a shortfall of distributions from an indi- 24 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 2927 IH vidual retirement plan which resulted in imposi- 1 tion of a tax under subsection (a), and 2 ‘‘(B) submits a return, during the correc- 3 tion window, reflecting such tax (as modified by 4 this subsection), 5 the first sentence of subsection (a) shall be applied 6 by substituting ‘10 percent’ for ‘25 percent’. 7 ‘‘(2) CORRECTION WINDOW.—For purposes of 8 this subsection, the term ‘correction window’ means 9 the period of time beginning on the date on which 10 the tax under subsection (a) is imposed with respect 11 to a shortfall of distributions from an individual re- 12 tirement plan, and ending on the earlier of— 13 ‘‘(A) the date on which the Secretary initi- 14 ates an audit, or otherwise demands payment, 15 with respect to the shortfall of distributions, or 16 ‘‘(B) the last day of the second taxable 17 year that begins after the end of the taxable 18 year in which the tax under subsection (a) is 19 imposed.’’. 20 (c) EFFECTIVE DATE.—The amendments made by 21 this section shall apply to taxable years beginning after 22 December 31, 2021. 23 VerDate Sep 11 2014 16:44 Jun 23, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2927.IH H2927 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 2927 IH SEC. 6. INDIVIDUAL RETIREMENT PLAN STATUTE OF LIMI- 1 TATIONS FOR EXCISE TAX ON EXCESS CON- 2 TRIBUTIONS AND CERTAIN ACCUMULATIONS. 3 Section 6501(l) of the Internal Revenue Code of 1986 4 is amended by adding at the end the following new para- 5 graph: 6 ‘‘(4) INDIVIDUAL RETIREMENT PLANS.— 7 ‘‘(A) IN GENERAL.—For purposes of any 8 tax imposed by section 4973 or 4974 in connec- 9 tion with an individual retirement plan, the re- 10 turn referred to in this section shall be the in- 11 come tax return filed by the [Text truncated for display. Full text available on Congress.gov.]