Securing a Strong Retirement Act of 2022

IIB 117TH CONGRESS 2D SESSION H. R. 2954 IN THE SENATE OF THE UNITED STATES MARCH 30, 2022 Received; read twice and referred to the Committee on Finance AN ACT To increase retirement savings, simplify and clarify retirement plan rules, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 2 HR 2954 RFS SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 1 (a) SHORT TITLE.—This Act may be cited as the 2 ‘‘Securing a Strong Retirement Act of 2022’’. 3 (b) TABLE OF CONTENTS.—The table of contents for 4 this Act is as follows: 5 Sec. 1. Short title; table of contents. TITLE I—EXPANDING COVERAGE AND INCREASING RETIREMENT SAVINGS Sec. 101. Expanding automatic enrollment in retirement plans. Sec. 102. Modification of credit for small employer pension plan startup costs. Sec. 103. Promotion of Saver’s Credit. Sec. 104. Enhancement of Saver’s Credit. Sec. 105. Enhancement of 403(b) plans. Sec. 106. Increase in age for required beginning date for mandatory distribu- tions. Sec. 107. Indexing IRA catch-up limit. Sec. 108. Higher catch-up limit to apply at age 62, 63, and 64. Sec. 109. Pooled employer plans modification. Sec. 110. Multiple employer 403(b) plans. Sec. 111. Treatment of student loan payments as elective deferrals for purposes of matching contributions. Sec. 112. Application of credit for small employer pension plan startup costs to employers which join an existing plan. Sec. 113. Military spouse retirement plan eligibility credit for small employers. Sec. 114. Small immediate financial incentives for contributing to a plan. Sec. 115. Safe harbor for corrections of employee elective deferral failures. Sec. 116. Improving coverage for part-time workers. Sec. 117. Deferral of tax for certain sales of employer stock to employee stock ownership plan sponsored by S corporation. Sec. 118. Certain securities treated as publicly traded in case of employee stock ownership plans. TITLE II—PRESERVATION OF INCOME Sec. 201. Remove required minimum distribution barriers for life annuities. Sec. 202. Qualifying longevity annuity contracts. Sec. 203. Insurance-dedicated exchange-traded funds. TITLE III—SIMPLIFICATION AND CLARIFICATION OF RETIREMENT PLAN RULES Sec. 301. Recovery of retirement plan overpayments. Sec. 302. Reduction in excise tax on certain accumulations in qualified retire- ment plans. Sec. 303. Performance benchmarks for asset allocation funds. Sec. 304. Review and report to Congress relating to reporting and disclosure requirements. Sec. 305. Eliminating unnecessary plan requirements related to unenrolled par- ticipants. VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 3 HR 2954 RFS Sec. 306. Retirement savings lost and found. Sec. 307. Updating dollar limit for mandatory distributions. Sec. 308. Expansion of Employee Plans Compliance Resolution System. Sec. 309. Eliminate the ‘‘first day of the month’’ requirement for governmental section 457(b) plans. Sec. 310. One-time election for qualified charitable distribution to split-interest entity; increase in qualified charitable distribution limitation. Sec. 311. Distributions to firefighters. Sec. 312. Exclusion of certain disability-related first responder retirement pay- ments. Sec. 313. Individual retirement plan statute of limitations for excise tax on ex- cess contributions and certain accumulations. Sec. 314. Requirement to provide paper statements in certain cases. Sec. 315. Separate application of top heavy rules to defined contribution plans covering excludible employees. Sec. 316. Repayment of qualified birth or adoption distribution limited to 3 years. Sec. 317. Employer may rely on employee certifying that deemed hardship dis- tribution conditions are met. Sec. 318. Penalty-free withdrawals from retirement plans for individuals in case of domestic abuse. Sec. 319. Reform of family attribution rules. Sec. 320. Amendments to increase benefit accruals under plan for previous plan year allowed until employer tax return due date. Sec. 321. Retroactive first year elective deferrals for sole proprietors. Sec. 322. Limiting cessation of IRA treatment to portion of account involved in a prohibited transaction. Sec. 323. Review of pension risk transfer interpretive bulletin. TITLE IV—TECHNICAL AMENDMENTS Sec. 401. Amendments relating to Setting Every Community Up for Retirement Enhancement Act of 2019. TITLE V—ADMINISTRATIVE PROVISIONS Sec. 501. Provisions relating to plan amendments. TITLE VI—REVENUE PROVISIONS Sec. 601. Simple and SEP Roth IRAs. Sec. 602. Hardship withdrawal rules for 403(b) plans. Sec. 603. Elective deferrals generally limited to regular contribution limit. Sec. 604. Optional treatment of employer matching contributions as Roth con- tributions. TITLE VII—BUDGETARY EFFECTS Sec. 701. Determination of budgetary effects. VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6211 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 4 HR 2954 RFS TITLE I—EXPANDING COVERAGE 1 AND INCREASING RETIRE- 2 MENT SAVINGS 3 SEC. 101. EXPANDING AUTOMATIC ENROLLMENT IN RE- 4 TIREMENT PLANS. 5 (a) IN GENERAL.—Subpart B of part I of subchapter 6 D of chapter 1 of the Internal Revenue Code of 1986 is 7 amended by inserting after section 414 the following new 8 section: 9 ‘‘SEC. 414A. REQUIREMENTS RELATED TO AUTOMATIC EN- 10 ROLLMENT. 11 ‘‘(a) IN GENERAL.—Except as otherwise provided in 12 this section— 13 ‘‘(1) an arrangement shall not be treated as a 14 qualified cash or deferred arrangement described in 15 section 401(k) unless such arrangement meets the 16 automatic enrollment requirements of subsection (b), 17 and 18 ‘‘(2) an annuity contract otherwise described in 19 section 403(b)(1) which is purchased under a salary 20 reduction agreement shall not be treated as de- 21 scribed in such section unless such agreement meets 22 the automatic enrollment requirements of subsection 23 (b). 24 ‘‘(b) AUTOMATIC ENROLLMENT REQUIREMENTS.— 25 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 5 HR 2954 RFS ‘‘(1) IN GENERAL.—An arrangement or agree- 1 ment meets the requirements of this subsection if 2 such arrangement or agreement is an eligible auto- 3 matic contribution arrangement (as defined in sec- 4 tion 414(w)(3)) which meets the requirements of 5 paragraphs (2) through (4). 6 ‘‘(2) ALLOWANCE OF PERMISSIBLE WITH- 7 DRAWALS.—An eligible automatic contribution ar- 8 rangement meets the requirements of this paragraph 9 if such arrangement allows employees to make per- 10 missible withdrawals (as defined in section 11 414(w)(2)). 12 ‘‘(3) MINIMUM CONTRIBUTION PERCENTAGE.— 13 ‘‘(A) IN GENERAL.—An eligible automatic 14 contribution arrangement meets the require- 15 ments of this paragraph if— 16 ‘‘(i) the uniform percentage of com- 17 pensation contributed by the participant 18 under such arrangement during the first 19 year of participation is not less than 3 per- 20 cent and not more than 10 percent (unless 21 the participant specifically elects not to 22 have such contributions made or to have 23 such contributions made at a different per- 24 centage), and 25 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 6 HR 2954 RFS ‘‘(ii) effective for the first day of each 1 plan year starting after each completed 2 year of participation under such arrange- 3 ment such uniform percentage is increased 4 by 1 percentage point (to at least 10 per- 5 cent, but not more than 15 percent) unless 6 the participant specifically elects not to 7 have such contributions made or to have 8 such contributions made at a different per- 9 centage. 10 ‘‘(B) INITIAL REDUCED CEILING FOR CER- 11 TAIN PLANS.—In the case of any eligible auto- 12 matic contribution arrangement (other than an 13 arrangement that meets the requirements of 14 paragraph (12) or (13) of section 401(k)), for 15 plan years ending before January 1, 2025, sub- 16 paragraph (A)(ii) shall be applied by sub- 17 stituting ‘10 percent’ for ‘15 percent’. 18 ‘‘(4) INVESTMENT REQUIREMENTS.—An eligible 19 automatic contribution arrangement meets the re- 20 quirements of this paragraph if amounts contributed 21 pursuant to such arrangement, and for which no in- 22 vestment is elected by the participant, are invested 23 in accordance with the requirements of section 24 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 7 HR 2954 RFS 2550.404c-5 of title 29, Code of Federal Regulations 1 (or any successor regulations). 2 ‘‘(c) EXCEPTIONS.—For purposes of this section— 3 ‘‘(1) SIMPLE PLANS.—Subsection (a) shall not 4 apply to any simple plan (within the meaning of sec- 5 tion 401(k)(11)). 6 ‘‘(2) EXCEPTION FOR PLANS OR ARRANGE- 7 MENTS ESTABLISHED BEFORE ENACTMENT OF SEC- 8 TION.— 9 ‘‘(A) IN GENERAL.—Subsection (a) shall 10 not apply to— 11 ‘‘(i) any qualified cash or deferred ar- 12 rangement established before the date of 13 the enactment of this section, or 14 ‘‘(ii) any annuity contract purchased 15 under a plan established before the date of 16 the enactment of this section. 17 ‘‘(B) POST-ENACTMENT ADOPTION OF 18 MULTIPLE EMPLOYER PLAN.—Subparagraph 19 (A) shall not apply in the case of an employer 20 adopting after such date of enactment a plan 21 maintained by more than one employer, and 22 subsection (a) shall apply with respect to such 23 employer as if such plan were a single plan. 24 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 8 HR 2954 RFS ‘‘(3) EXCEPTION FOR GOVERNMENTAL AND 1 CHURCH PLANS.—Subsection (a) shall not apply to 2 any governmental plan (within the meaning of sec- 3 tion 414(d)) or any church plan (within the meaning 4 of section 414(e)). 5 ‘‘(4) EXCEPTION FOR NEW AND SMALL BUSI- 6 NESSES.— 7 ‘‘(A) NEW BUSINESS.—Subsection (a) 8 shall not apply to any qualified cash or deferred 9 arrangement, or any annuity contract pur- 10 chased under a plan, while the employer main- 11 taining such plan (and any predecessor em- 12 ployer) has been in existence for less than 3 13 years. 14 ‘‘(B) SMALL BUSINESSES.—Subsection (a) 15 shall not apply to any qualified cash or deferred 16 arrangement, or any annuity contract pur- 17 chased under a plan, earlier than the date that 18 is 1 year after the close of the first taxable year 19 with respect to which the employer maintaining 20 the plan normally employed more than 10 em- 21 ployees. 22 ‘‘(C) TREATMENT OF MULTIPLE EM- 23 PLOYER PLANS.—In the case of a plan main- 24 tained by more than 1 employer, subparagraphs 25 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 9 HR 2954 RFS (A) and (B) shall be applied separately with re- 1 spect to each such employer, and all such em- 2 ployers to which subsection (a) applies (after 3 the application of this paragraph) shall be 4 treated as maintaining a separate plan for pur- 5 poses of this section.’’. 6 (b) CLERICAL AMENDMENT.—The table of sections 7 for subpart B of part I of subchapter D of chapter 1 of 8 such Code is amended by inserting after the item relating 9 to section 414 the following new item: 10 ‘‘Sec. 414A. Requirements related to automatic enrollment.’’. (c) EFFECTIVE DATE.—The amendments made by 11 this section shall apply to plan years beginning after De- 12 cember 31, 2023. 13 SEC. 102. MODIFICATION OF CREDIT FOR SMALL EM- 14 PLOYER PENSION PLAN STARTUP COSTS. 15 (a) INCREASE IN CREDIT PERCENTAGE FOR SMALL- 16 ER EMPLOYERS.—Section 45E(e) of the Internal Revenue 17 Code of 1986 is amended by adding at the end the fol- 18 lowing new paragraph: 19 ‘‘(4) INCREASED CREDIT FOR CERTAIN SMALL 20 EMPLOYERS.—In the case of an employer which 21 would be an eligible employer under subsection (c) if 22 section 408(p)(2)(C)(i) was applied by substituting 23 ‘50 employees’ for ‘100 employees’, subsection (a) 24 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 10 HR 2954 RFS shall be applied by substituting ‘100 percent’ for ‘50 1 percent’.’’. 2 (b) ADDITIONAL CREDIT FOR EMPLOYER CONTRIBU- 3 TIONS BY CERTAIN SMALL EMPLOYERS.—Section 45E of 4 such Code, as amended by subsection (a), is amended by 5 adding at the end the following new subsection: 6 ‘‘(f) ADDITIONAL CREDIT FOR EMPLOYER CON- 7 TRIBUTIONS BY CERTAIN ELIGIBLE EMPLOYERS.— 8 ‘‘(1) IN GENERAL.—In the case of an eligible 9 employer, the credit allowed for the taxable year 10 under subsection (a) (determined without regard to 11 this subsection) shall be increased by an amount 12 equal to the applicable percentage of employer con- 13 tributions (other than any elective deferrals (as de- 14 fined in section 402(g)(3)) by the employer to an eli- 15 gible employer plan (other than a defined benefit 16 plan (as defined in section 414(j))). 17 ‘‘(2) LIMITATIONS.— 18 ‘‘(A) DOLLAR LIMITATION.—The amount 19 determined under paragraph (1) (before the ap- 20 plication of subparagraph (B)) with respect to 21 any employee of the employer shall not exceed 22 $1,000. 23 ‘‘(B) CREDIT PHASE-IN.—In the case of 24 any eligible employer which had for the pre- 25 VerDate Sep 11 2014 04:49 Mar 31, 2022 Jkt 029200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2954.RFS H2954 kjohnson on DSK79L0C42PROD with BILLS 11 HR 2954 RFS ceding taxable year more than 50 employees, 1 the amount determined under paragraph (1) 2 (without regard to this subparagraph) shall be 3 reduced by an amount equal to the product 4 of— 5 ‘‘(i) the amount otherwise so deter- 6 mined under paragraph (1), multiplied by 7 ‘‘(ii) a percentage equal to 2 percent- 8 age points for each employee of the em- 9 ployer for the preceding taxable year in ex- 10 cess of 50 employees. 11 ‘‘(3) APPLICABLE PERCENTAGE.—For purposes 12 of this section, the applicable percentage for the tax- 13 able year during which the eligible employer plan is 14 established with respect to the eligible employer shall 15 be 100 percent, and for taxable years thereafter 16 shall be determined under the following table: 17 ‘‘In the case of the fo [Text truncated for display. 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