Improving Access to Retirement Savings Act

II 117TH CONGRESS 1ST SESSION S. 1703 To amend the Internal Revenue Code of 1986 to increase retirement savings, to improve retirement plan administration, and for other purposes. IN THE SENATE OF THE UNITED STATES MAY 19, 2021 Mr. GRASSLEY (for himself, Ms. HASSAN, and Mr. LANKFORD) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to increase retirement savings, to improve retirement plan adminis- tration, 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 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Improving Access to 4 Retirement Savings Act’’. 5 SEC. 2. MULTIPLE EMPLOYER 403(b) PLANS. 6 (a) IN GENERAL.—Section 403(b) of the Internal 7 Revenue Code of 1986 is amended by adding at the end 8 the following new paragraph: 9 ‘‘(15) MULTIPLE EMPLOYER PLANS.— 10 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1703 IS ‘‘(A) IN GENERAL.—Except in the case of 1 a church plan, this subsection shall not be 2 treated as failing to apply to an annuity con- 3 tract solely by reason of such contract being 4 purchased under a plan maintained by more 5 than 1 employer. 6 ‘‘(B) TREATMENT OF EMPLOYERS FAILING 7 TO MEET REQUIREMENTS OF PLAN.— 8 ‘‘(i) IN GENERAL.—In the case of a 9 plan maintained by more than 1 employer, 10 this subsection shall not be treated as fail- 11 ing to apply to an annuity contract held 12 under such plan merely because of 1 or 13 more employers failing to meet the require- 14 ments of this subsection, if such plan satis- 15 fies rules similar to the rules of section 16 413(e)(2) with respect to any such em- 17 ployer failure. 18 ‘‘(ii) ADDITIONAL REQUIREMENTS IN 19 CASE OF NON-GOVERNMENTAL PLANS.—A 20 plan shall not be treated as meeting the re- 21 quirements of this subsection unless the 22 plan meets the requirements of subpara- 23 graph (A) or (B) of section 413(e)(1), ex- 24 cept in the case of a multiple employer 25 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1703 IS plan maintained solely by a State, a polit- 1 ical subdivision of a State, or an agency or 2 instrumentality thereof.’’. 3 (b) ANNUAL REGISTRATION FOR 403(b) MULTIPLE 4 EMPLOYER PLAN.—Section 6057 of the Internal Revenue 5 Code of 1986 is amended by redesignating subsection (g) 6 as subsection (h) and by inserting after subsection (f) the 7 following new subsection: 8 ‘‘(g) 403(b) MULTIPLE EMPLOYER PLANS TREATED 9 AS 1 PLAN.—In the case of annuity contracts to which 10 this section applies and to which section 403(b) applies 11 by reason of the plan under which such contracts are pur- 12 chased meeting the requirements of paragraph (15) there- 13 of, such plan shall be treated as a single plan for purposes 14 of this section.’’. 15 (c) ANNUAL INFORMATION RETURNS FOR 403(b) 16 MULTIPLE EMPLOYER PLAN.—Section 6058 of the Inter- 17 nal Revenue Code of 1986 is amended by redesignating 18 subsection (f) as subsection (g) and by inserting after sub- 19 section (e) the following new subsection: 20 ‘‘(f) 403(b) MULTIPLE EMPLOYER PLANS TREATED 21 AS 1 PLAN.—In the case of annuity contracts to which 22 this section applies and to which section 403(b) applies 23 by reason of the plan under which such contracts are pur- 24 chased meeting the requirements of paragraph (15) there- 25 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1703 IS of, such plan shall be treated as a single plan for purposes 1 of this section.’’. 2 (d) AMENDMENTS TO EMPLOYEE RETIREMENT IN- 3 COME SECURITY ACT OF 1974.— 4 (1) TREATED AS POOLED EMPLOYER PLAN.— 5 (A) IN GENERAL.—Section 3(43)(A) of the 6 Employee Retirement Income Security Act of 7 1974 (29 U.S.C. 1002(43)(A)) is amended— 8 (i) in clause (ii), by striking ‘‘section 9 501(a) of such Code or’’ and inserting 10 ‘‘501(a) of such Code, a plan that consists 11 of contracts described in section 403(b) of 12 such Code, or’’; and 13 (ii) in the flush text at the end, by 14 striking ‘‘the plan.’’ and inserting ‘‘the 15 plan, but such term shall include any pro- 16 gram (other than a governmental plan) 17 maintained for the benefit of the employees 18 of more than 1 employer that consists of 19 contracts described in section 403(b) of 20 such Code and that meets the require- 21 ments of subparagraph (A) or (B) of sec- 22 tion 413(e)(1) of such Code.’’. 23 (B) CONFORMING AMENDMENTS.—Para- 24 graphs (43)(B)(v)(II) and (44)(A)(i)(I) of sec- 25 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1703 IS tion 3 of such Act (29 U.S.C. 1002) are each 1 amended by striking ‘‘section 401(a) of such 2 Code or’’ and inserting ‘‘401(a) of such Code, 3 a plan that consists of contracts described in 4 section 403(b) of such Code, or’’. 5 (2) FIDUCIARIES.—Section 3(43)(B)(ii) of such 6 Act (29 U.S.C. 1002(43)(B)(ii)) is amended— 7 (A) by striking ‘‘trustees meeting the re- 8 quirements of section 408(a)(2) of the Internal 9 Revenue Code of 1986’’ and inserting ‘‘trustees 10 (or other fiduciaries in the case of a plan that 11 consists of contracts described in section 403(b) 12 of the Internal Revenue Code of 1986) meeting 13 the requirements of section 408(a)(2) of such 14 Code’’; and 15 (B) by striking ‘‘holding’’ and inserting 16 ‘‘holding (or causing to be held under the terms 17 of a plan consisting of such contracts)’’. 18 (e) REGULATIONS.— 19 (1) PLAN TERMINATION.—The Secretary of the 20 Treasury (or the Secretary’s designee) shall pre- 21 scribe such regulations as may be necessary to clar- 22 ify the treatment of a plan termination by an em- 23 ployer in the case of plans to which section 24 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1703 IS 403(b)(15) of the Internal Revenue Code of 1986 1 applies. 2 (2) EDUCATIONAL OUTREACH TO EMPLOYERS 3 EXEMPT FROM TAX.—The Secretary of the Treasury 4 (or the Secretary’s designee), in consultation with 5 the Secretary of Labor, shall provide education and 6 outreach to increase awareness among employers 7 which are exempt from tax under section 501(a) of 8 such Code that— 9 (A) multiple employer plans are subject to 10 the Employee Retirement Income Security Act 11 of 1974, and 12 (B) each employer is a plan sponsor with 13 respect to its employees participating in the 14 multiple employer plan and, as such, has cer- 15 tain fiduciary duties with respect to the plan 16 and to its employees. 17 (f) MODIFICATION OF MODEL PLAN LANGUAGE.— 18 (1) PLAN NOTIFICATIONS.—The Secretary of 19 the Treasury (or the Secretary’s designee) shall 20 modify the model plan language published under sec- 21 tion 413(e)(5) of the Internal Revenue Code of 1986 22 to include language which notifies participating em- 23 ployers which are exempt from tax under section 24 501(a) of such Code that the plan is subject to the 25 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1703 IS Employee Retirement Income Security Act of 1974 1 and that such employer is a plan sponsor with re- 2 spect to its employees participating in the multiple 3 employer plan and, as such, has certain fiduciary 4 duties with respect to the plan and to its employees. 5 (2) MODEL PLANS FOR MULTIPLE EMPLOYER 6 403(b) NON-GOVERNMENTAL PLANS.—For plans to 7 which section 403(b)(15)(A) of the Internal Revenue 8 Code of 1986 applies (other than a plan maintained 9 for its employees by a State, a political subdivision 10 of a State, or an agency or instrumentality thereof) 11 the Secretary shall publish model plan language 12 similar to model plan language published under sec- 13 tion 413(e)(5) of such Code. 14 (g) NO INFERENCE WITH RESPECT TO CHURCH 15 PLANS.—Regarding any application of section 403(b) of 16 the Internal Revenue Code of 1986 to an annuity contract 17 purchased under a church plan (as defined in section 18 414(e) of such Code) maintained by more than 1 em- 19 ployer, or to any application of rules similar to section 20 413(e) of such Code to such a plan, no inference shall 21 be drawn solely because section 403(b)(15)(A) of such 22 Code (as added by this Act) does not apply to such plans. 23 (h) EFFECTIVE DATE.— 24 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1703 IS (1) IN GENERAL.—The amendments made by 1 this section shall apply to plan years beginning after 2 December 31, 2022. 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 the Internal Revenue 10 Code of 1986 with respect to one employer (and its 11 employees) in the case of a plan to which section 12 403(b)(15) applies. 13 SEC. 3. SAFE HARBOR FOR CORRECTIONS OF EMPLOYEE 14 ELECTIVE DEFERRAL FAILURES. 15 (a) IN GENERAL.—Section 414 of the Internal Rev- 16 enue Code of 1986 is amended by adding at the end the 17 following new subsection: 18 ‘‘(aa) CORRECTING AUTOMATIC CONTRIBUTION ER- 19 RORS.— 20 ‘‘(1) IN GENERAL.—Any plan or arrangement 21 shall not fail to be treated as a plan described in 22 section 401(a), 403(b), 408, or 457(b), as applica- 23 ble, solely by reason of a corrected error. 24 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 9 •S 1703 IS ‘‘(2) CORRECTED ERROR.—For purposes of this 1 subsection, the term ‘corrected error’ means a rea- 2 sonable administrative error in implementing an 3 automatic enrollment or automatic escalation feature 4 in accordance with the terms of an eligible automatic 5 contribution arrangement (as defined under sub- 6 section (w)(3)), provided that such implementation 7 error— 8 ‘‘(A) is corrected by the date which is 91⁄2 9 months after the end of the plan year during 10 which the failure occurred, 11 ‘‘(B) is corrected in a manner which is fa- 12 vorable to the participant, and 13 ‘‘(C) is of a type which is so corrected for 14 all similarly situated participants in a non- 15 discriminatory manner. 16 Such correction may occur before or after the partic- 17 ipant has terminated employment and may occur 18 without regard to whether the error is identified by 19 the Secretary. 20 ‘‘(3) REGULATIONS AND GUIDANCE FOR FAVOR- 21 ABLE CORRECTION METHODS.—The Secretary shall, 22 by regulations or other guidance of general applica- 23 bility, specify the correction methods which are in a 24 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 10 •S 1703 IS manner favorable to the participant for purposes of 1 paragraph (2)(B).’’. 2 (b) EFFECTIVE DATE.—The amendment made by 3 this section shall apply to the correction of any error with 4 respect to which the date described in section 5 414(aa)(2)(A) of the Internal Revenue Code of 1986 (as 6 added by this section) is after the date of enactment of 7 this Act. 8 SEC. 4. APPLICATION OF CREDIT FOR SMALL EMPLOYER 9 PENSION PLAN STARTUP COSTS TO EMPLOY- 10 ERS WHICH JOIN AN EXISTING PLAN. 11 (a) IN GENERAL.—Section 45E(d)(3)(A) of the In- 12 ternal Revenue Code of 1986 is amended by striking ‘‘ef- 13 fective’’ and inserting ‘‘effective with respect to the eligible 14 employer’’. 15 (b) EFFECTIVE DATE.—The amendment made by 16 this section shall apply to eligible employer plans which 17 become effective with respect to the eligible employer after 18 the date of the enactment of this Act. 19 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 11 •S 1703 IS SEC. 5. AMENDMENTS TO INCREASE BENEFIT ACCRUALS 1 UNDER PLAN FOR PREVIOUS PLAN YEAR AL- 2 LOWED UNTIL EMPLOYER TAX RETURN DUE 3 DATE. 4 (a) IN GENERAL.—Section 401(b) of the Internal 5 Revenue Code of 1986 is amended by adding at the end 6 the following new paragraph: 7 ‘‘(3) RETROACTIVE PLAN AMENDMENTS THAT 8 INCREASE BENEFIT ACCRUALS.—If— 9 ‘‘(A) an employer amends a stock bonus, 10 pension, profit-sharing, or annuity plan to in- 11 crease benefits accrued under the plan effective 12 for the preceding plan year (other than increas- 13 ing the amount of matching contributions (as 14 defined in subsection (m)(4)(A))), 15 ‘‘(B) such amendment would not otherwise 16 cause the plan to fail to meet any of the re- 17 quirements of this subchapter, and 18 ‘‘(C) such amendment is adopted before 19 the time prescribed by law for filing the return 20 of the employer for a taxable year (including 21 extensions thereof) during which such amend- 22 ment is effective, 23 the employer may elect to treat such amendment as 24 having been adopted as of the last day of the plan 25 year in which the amendment is effective.’’. 26 VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS 12 •S 1703 IS (b) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to plan years beginning after De- 2 cember 31, 2022. 3 Æ VerDate Sep 11 2014 03:27 Jun 03, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\S1703.IS S1703 kjohnson on DSK79L0C42PROD with BILLS