Retirement Security Act of 2019

II 116TH CONGRESS 1ST SESSION S. 321 To amend the Internal Revenue Code of 1986 to modify safe harbor require- ments applicable to automatic contribution arrangements, and for other purposes. IN THE SENATE OF THE UNITED STATES FEBRUARY 4, 2019 Ms. COLLINS (for herself and Ms. HASSAN) 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 modify safe harbor requirements applicable to automatic con- tribution arrangements, 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 ‘‘Retirement Security 4 Act of 2019’’. 5 SEC. 2. MULTIPLE EMPLOYER PLANS. 6 (a) QUALIFICATION REQUIREMENTS.— 7 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 321 IS (1) IN GENERAL.—Section 413 of the Internal 1 Revenue Code of 1986 is amended by adding at the 2 end the following new subsection: 3 ‘‘(e) APPLICATION OF QUALIFICATION REQUIRE- 4 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH 5 POOLED PLAN PROVIDERS.— 6 ‘‘(1) IN GENERAL.—Except as provided in para- 7 graph (2), if a defined contribution plan to which 8 subsection (c) applies— 9 ‘‘(A) is maintained by employers which 10 have a common interest other than having 11 adopted the plan, or 12 ‘‘(B) in the case of a plan not described in 13 subparagraph (A), has a pooled plan provider, 14 then the plan shall not be treated as failing to meet 15 the requirements under this title applicable to a plan 16 described in section 401(a) or to a plan that consists 17 of individual retirement accounts described in sec- 18 tion 408 (including by reason of subsection (c) 19 thereof), whichever is applicable, merely because one 20 or more employers of employees covered by the plan 21 fail to take such actions as are required of such em- 22 ployers for the plan to meet such requirements. 23 ‘‘(2) LIMITATIONS.— 24 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 321 IS ‘‘(A) IN GENERAL.—Paragraph (1) shall 1 not apply to any plan unless the terms of the 2 plan provide that in the case of any employer 3 in the plan failing to take the actions described 4 in paragraph (1)— 5 ‘‘(i) the assets of the plan attributable 6 to employees of such employer (or bene- 7 ficiaries of such employees) will be trans- 8 ferred to a plan maintained only by such 9 employer (or its successor), to an eligible 10 retirement plan as defined in section 11 402(c)(8)(B) for each individual whose ac- 12 count is transferred, or to any other ar- 13 rangement that the Secretary determines is 14 appropriate, unless the Secretary deter- 15 mines it is in the best interests of the em- 16 ployees of such employer (and the bene- 17 ficiaries of such employees) to retain the 18 assets in the plan, and 19 ‘‘(ii) such employer (and not the plan 20 with respect to which the failure occurred 21 or any other employer in such plan) shall, 22 except to the extent provided by the Sec- 23 retary, be liable for any liabilities with re- 24 spect to such plan attributable to employ- 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 321 IS ees of such employer (or beneficiaries of 1 such employees). 2 ‘‘(B) FAILURES BY POOLED PLAN PRO- 3 VIDERS.—If the pooled plan provider of a plan 4 described in paragraph (1)(B) does not perform 5 substantially all of the administrative duties 6 which are required of the provider under para- 7 graph (3)(A)(i) for any plan year, the Secretary 8 may provide that the determination as to 9 whether the plan meets the requirements under 10 this title applicable to a plan described in sec- 11 tion 401(a) or to a plan that consists of indi- 12 vidual retirement accounts described in section 13 408 (including by reason of subsection (c) 14 thereof), whichever is applicable, shall be made 15 in the same manner as would be made without 16 regard to paragraph (1). 17 ‘‘(3) POOLED PLAN PROVIDER.— 18 ‘‘(A) IN GENERAL.—For purposes of this 19 subsection, the term ‘pooled plan provider’ 20 means, with respect to any plan, a person 21 who— 22 ‘‘(i) is designated by the terms of the 23 plan as a named fiduciary (within the 24 meaning of section 402(a)(2) of the Em- 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 321 IS ployee Retirement Income Security Act of 1 1974), as the plan administrator, and as 2 the person responsible to perform all ad- 3 ministrative duties (including conducting 4 proper testing with respect to the plan and 5 the employees of each employer in the 6 plan) which are reasonably necessary to 7 ensure that— 8 ‘‘(I) the plan meets any require- 9 ment applicable under the Employee 10 Retirement Income Security Act of 11 1974 or this title to a plan described 12 in section 401(a) or to a plan that 13 consists of individual retirement ac- 14 counts described in section 408 (in- 15 cluding by reason of subsection (c) 16 thereof), whichever is applicable, and 17 ‘‘(II) each employer in the plan 18 takes such actions as the Secretary or 19 such person determines are necessary 20 for the plan to meet the requirements 21 described in subclause (I), including 22 providing to such person any disclo- 23 sures or other information which the 24 Secretary may require or which such 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 321 IS person otherwise determines are nec- 1 essary to administer the plan or to 2 allow the plan to meet such require- 3 ments, 4 ‘‘(ii) registers as a pooled plan pro- 5 vider with the Secretary, and provides such 6 other information to the Secretary as the 7 Secretary may require, before beginning 8 operations as a pooled plan provider, 9 ‘‘(iii) acknowledges in writing that 10 such person is a named fiduciary (within 11 the meaning of section 402(a)(2) of the 12 Employee Retirement Income Security Act 13 of 1974), and the plan administrator, with 14 respect to the plan, and 15 ‘‘(iv) is responsible for ensuring that 16 all persons who handle assets of, or who 17 are fiduciaries of, the plan are bonded in 18 accordance with section 412 of the Em- 19 ployee Retirement Income Security Act of 20 1974. 21 ‘‘(B) AUDITS, EXAMINATIONS AND INVES- 22 TIGATIONS.—The Secretary may perform au- 23 dits, examinations, and investigations of pooled 24 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 321 IS plan providers as may be necessary to enforce 1 and carry out the purposes of this subsection. 2 ‘‘(C) AGGREGATION RULES.—For purposes 3 of this paragraph, in determining whether a 4 person meets the requirements of this para- 5 graph to be a pooled plan provider with respect 6 to any plan, all persons who perform services 7 for the plan and who are treated as a single 8 employer under subsection (b), (c), (m), or (o) 9 of section 414 shall be treated as one person. 10 ‘‘(D) TREATMENT OF EMPLOYERS AS PLAN 11 SPONSORS.—Except with respect to the admin- 12 istrative duties of the pooled plan provider de- 13 scribed in subparagraph (A)(i), each employer 14 in a plan which has a pooled plan provider shall 15 be treated as the plan sponsor with respect to 16 the portion of the plan attributable to employ- 17 ees of such employer (or beneficiaries of such 18 employees). 19 ‘‘(4) GUIDANCE.—The Secretary shall issue 20 such guidance as the Secretary determines appro- 21 priate to carry out this subsection, including guid- 22 ance— 23 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 321 IS ‘‘(A) to identify the administrative duties 1 and other actions required to be performed by 2 a pooled plan provider under this subsection, 3 ‘‘(B) which describes the procedures to be 4 taken to terminate a plan which fails to meet 5 the requirements to be a plan described in para- 6 graph (1), including the proper treatment of, 7 and actions needed to be taken by, any em- 8 ployer in the plan and the assets and liabilities 9 of the plan attributable to employees of such 10 employer (or beneficiaries of such employees), 11 and 12 ‘‘(C) identifying appropriate cases to which 13 the rules of paragraph (2)(A) will apply to em- 14 ployers in the plan failing to take the actions 15 described in paragraph (1). 16 The Secretary shall take into account under sub- 17 paragraph (C) whether the failure of an employer or 18 pooled plan provider to provide any disclosures or 19 other information, or to take any other action, nec- 20 essary to administer a plan or to allow a plan to 21 meet requirements applicable to the plan under sec- 22 tion 401(a) or 408, whichever is applicable, has con- 23 tinued over a period of time that demonstrates a 24 lack of commitment to compliance. 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 321 IS ‘‘(5) MODEL PLAN.—The Secretary shall pub- 1 lish model plan language which meets the require- 2 ments of this subsection and of paragraphs (43) and 3 (44) of section 3 of the Employee Retirement In- 4 come Security Act of 1974 and which may be adopt- 5 ed in order for a plan to be treated as a plan de- 6 scribed in paragraph (1)(B).’’. 7 (2) CONFORMING AMENDMENT.—Section 8 413(c)(2) of such Code is amended by striking ‘‘sec- 9 tion 401(a)’’ and inserting ‘‘sections 401(a) and 10 408(c)’’. 11 (3) TECHNICAL AMENDMENT.—Section 408(c) 12 of such Code is amended by inserting after para- 13 graph (2) the following new paragraph: 14 ‘‘(3) There is a separate accounting for any in- 15 terest of an employee or member (or spouse of an 16 employee or member) in a Roth IRA.’’. 17 (b) NO COMMON INTEREST REQUIRED FOR POOLED 18 EMPLOYER PLANS.—Section 3(2) of the Employee Retire- 19 ment Income Security Act of 1974 (29 U.S.C. 1002(2)) 20 is amended by adding at the end the following: 21 ‘‘(C) A pooled employer plan shall be treat- 22 ed as— 23 ‘‘(i) a single employee pension benefit 24 plan or single pension plan; and 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 321 IS ‘‘(ii) a plan to which section 210(a) 1 applies.’’. 2 (c) POOLED EMPLOYER PLAN AND PROVIDER DE- 3 FINED.— 4 (1) IN GENERAL.—Section 3 of the Employee 5 Retirement Income Security Act of 1974 (29 U.S.C. 6 1002) is amended by adding at the end the fol- 7 lowing: 8 ‘‘(43) POOLED EMPLOYER PLAN.— 9 ‘‘(A) IN GENERAL.—The term ‘pooled em- 10 ployer plan’ means a plan— 11 ‘‘(i) which is an individual account 12 plan established or maintained for the pur- 13 pose of providing benefits to the employees 14 of 2 or more employers; 15 ‘‘(ii) which is a plan described in sec- 16 tion 401(a) of the Internal Revenue Code 17 of 1986 which includes a trust exempt 18 from tax under section 501(a) of such 19 Code or a plan that consists of individual 20 retirement accounts described in section 21 408 of such Code (including by reason of 22 subsection (c) thereof); and 23 ‘‘(iii) the terms of which meet the re- 24 quirements of subparagraph (B). 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 321 IS Such term shall not include a plan maintained 1 by employers which have a common interest 2 other than having adopted the plan. 3 ‘‘(B) REQUIREMENTS FOR PLAN TERMS.— 4 The requirements of this subparagraph are met 5 with respect to any plan if the terms of the 6 plan— 7 ‘‘(i) designate a pooled plan provider 8 and provide that the pooled plan provider 9 is a named fiduciary of the plan; 10 ‘‘(ii) designate one or more trustees 11 meeting the requirements of section 12 408(a)(2) of the Internal Revenue Code of 13 1986 (other than an employer in the plan) 14 to be responsible for collecting contribu- 15 tions to, and holding the assets of, the 16 plan and require such trustees to imple- 17 ment written contribution collection proce- 18 dures that are reasonable, diligent, and 19 systematic; 20 ‘‘(iii) provide that each employer in 21 the plan retains fiduciary responsibility 22 for— 23 ‘‘(I) the selection and monitoring 24 in accordance with section 404(a) of 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 321 IS the person designated as the pooled 1 plan provider and any other person 2 who, in addition to the pooled plan 3 provider, is designated as a named fi- 4 duciary of the plan; and 5 ‘‘(II) to the extent not otherwise 6 delegated to another fiduciary by the 7 pooled plan provider and subject to 8 the provisions of section 404(c), the 9 investment and management of the 10 portion of the plan’s assets attrib- 11 utable to the employees of the em- 12 ployer (or beneficiaries of such em- 13 ployees); 14 ‘‘(iv) provide that employers in the 15 plan, and participants and beneficiaries, 16 are not subject to unreasonable restric- 17 tions, fees, or penalties with regard to 18 ceasing participation, receipt of distribu- 19 tions, or otherwise transferring assets of 20 the plan in accordance with section 208 or 21 paragraph (44)(C)(i)(II); 22 ‘‘(v) require— 23 ‘‘(I) the pooled plan provider to 24 provide to employers in the plan any 25 VerDate Sep 11 2014 22:58 Feb 12, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S321.IS S321 pamtmann on DSKBFK8HB2PROD with BILLS 13 •S 321 IS disclosures or other information which 1 the Secretary may require, including 2 any disclosures or other information 3 to facilitate the selection or any moni- 4 toring of the pooled plan provider by 5 employers in the plan; and 6 ‘‘(II) each employer in the plan 7 to take such actions as the Secretary 8 or the pooled plan provider determines 9 are necessary to administer the plan 10 or for the plan to meet any require- 11 ment applicable under this Act or the 12 Internal Revenue Code of 1986 to a 13 plan described in section 401(a) of 14 such Code or to a plan that [Text 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