Family Savings Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1084 To amend the Internal Revenue Code of 1986 to encourage retirement and family savings, and for other purposes. IN THE HOUSE OF REPRESENTATIVES FEBRUARY 7, 2019 Mr. KELLY of Pennsylvania (for himself, Mr. WENSTRUP, Mr. ARRINGTON, Mr. LAHOOD, Mr. SMITH of Missouri, Mr. FERGUSON, Mr. SCHWEIKERT, Mr. ESTES, Mr. REED, and Mr. MARCHANT) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committees on Education and Labor, and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the com- mittee concerned A BILL To amend the Internal Revenue Code of 1986 to encourage retirement and family savings, 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; ETC. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Family Savings Act of 2019’’. 5 (b) AMENDMENT OF 1986 CODE.—Except as other- 6 wise expressly provided, whenever in this Act an amend- 7 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1084 IH ment or repeal is expressed in terms of an amendment 1 to, or repeal of, a section or other provision, the reference 2 shall be considered to be made to a section or other provi- 3 sion of the Internal Revenue Code of 1986. 4 (c) TABLE OF CONTENTS.—The table of contents for 5 this Act is as follows: 6 Sec. 1. Short title; etc. TITLE I—EXPANDING AND PRESERVING RETIREMENT SAVINGS Sec. 101. Multiple employer plans; pooled employer plans. Sec. 102. Rules relating to election of safe harbor 401(k) status. Sec. 103. Certain taxable non-tuition fellowship and stipend payments treated as compensation for IRA purposes. Sec. 104. Repeal of maximum age for traditional IRA contributions. Sec. 105. Qualified employer plans prohibited from making loans through credit cards and other similar arrangements. Sec. 106. Portability of lifetime income investments. Sec. 107. Treatment of custodial accounts on termination of section 403(b) plans. Sec. 108. Clarification of retirement income account rules relating to church- controlled organizations. Sec. 109. Increase in 10 percent cap for automatic enrollment safe harbor after 1st plan year. Sec. 110. Increase in credit limitation for small employer pension plan startup costs. Sec. 111. Small employer automatic enrollment credit. Sec. 112. Exemption from required minimum distribution rules for individuals with certain account balances. Sec. 113. Elective deferrals by members of the Ready Reserve of a reserve com- ponent of the Armed Forces. TITLE II—ADMINISTRATIVE IMPROVEMENTS Sec. 201. Plan adopted by filing due date for year may be treated as in effect as of close of year. Sec. 202. Modification of nondiscrimination rules to protect older, longer serv- ice participants. Sec. 203. Fiduciary safe harbor for selection of lifetime income provider. Sec. 204. Disclosure regarding lifetime income. Sec. 205. Modification of PBGC premiums for CSEC plans. TITLE III—OTHER SAVINGS PROVISIONS Sec. 301. Expansion of section 529 plans. Sec. 302. Penalty-free withdrawals from retirement plans for individuals in case of birth of child or adoption. VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1084 IH TITLE IV—BUDGETARY EFFECTS Sec. 401. Budgetary effects. TITLE I—EXPANDING AND PRE- 1 SERVING RETIREMENT SAV- 2 INGS 3 SEC. 101. MULTIPLE EMPLOYER PLANS; POOLED EM- 4 PLOYER PLANS. 5 (a) QUALIFICATION REQUIREMENTS.— 6 (1) IN GENERAL.—Section 413 is amended by 7 adding at the end the following new subsection: 8 ‘‘(e) APPLICATION OF QUALIFICATION REQUIRE- 9 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH 10 POOLED PLAN PROVIDERS.— 11 ‘‘(1) IN GENERAL.—Except as provided in para- 12 graph (2), if a defined contribution plan to which 13 subsection (c) applies— 14 ‘‘(A) is maintained by employers which 15 have a common interest other than having 16 adopted the plan, or 17 ‘‘(B) in the case of a plan not described in 18 subparagraph (A), has a pooled plan provider, 19 then the plan shall not be treated as failing to meet 20 the requirements under this title applicable to a plan 21 described in section 401(a) or to a plan that consists 22 of individual retirement accounts described in sec- 23 tion 408 (including by reason of subsection (c) 24 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1084 IH thereof), whichever is applicable, merely because one 1 or more employers of employees covered by the plan 2 fail to take such actions as are required of such em- 3 ployers for the plan to meet such requirements. 4 ‘‘(2) LIMITATIONS.— 5 ‘‘(A) IN GENERAL.—Paragraph (1) shall 6 not apply to any plan unless the terms of the 7 plan provide that in the case of any employer 8 in the plan failing to take the actions described 9 in paragraph (1)— 10 ‘‘(i) the assets of the plan attributable 11 to employees of such employer (or bene- 12 ficiaries of such employees) will be trans- 13 ferred to a plan maintained only by such 14 employer (or its successor), to an eligible 15 retirement plan as defined in section 16 402(c)(8)(B) for each individual whose ac- 17 count is transferred, or to any other ar- 18 rangement that the Secretary determines is 19 appropriate, unless the Secretary deter- 20 mines it is in the best interests of the em- 21 ployees of such employer (and the bene- 22 ficiaries of such employees) to retain the 23 assets in the plan, and 24 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1084 IH ‘‘(ii) such employer (and not the plan 1 with respect to which the failure occurred 2 or any other employer in such plan) shall, 3 except to the extent provided by the Sec- 4 retary, be liable for any liabilities with re- 5 spect to such plan attributable to employ- 6 ees of such employer (or beneficiaries of 7 such employees). 8 ‘‘(B) FAILURES BY POOLED PLAN PRO- 9 VIDERS.—If the pooled plan provider of a plan 10 described in paragraph (1)(B) does not perform 11 substantially all of the administrative duties 12 which are required of the provider under para- 13 graph (3)(A)(i) for any plan year, the Secretary 14 may provide that the determination as to 15 whether the plan meets the requirements under 16 this title applicable to a plan described in sec- 17 tion 401(a) or to a plan that consists of indi- 18 vidual retirement accounts described in section 19 408 (including by reason of subsection (c) 20 thereof), whichever is applicable, shall be made 21 in the same manner as would be made without 22 regard to paragraph (1). 23 ‘‘(3) POOLED PLAN PROVIDER.— 24 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1084 IH ‘‘(A) IN GENERAL.—For purposes of this 1 subsection, the term ‘pooled plan provider’ 2 means, with respect to any plan, a person 3 who— 4 ‘‘(i) is designated by the terms of the 5 plan as a named fiduciary (within the 6 meaning of section 402(a)(2) of the Em- 7 ployee Retirement Income Security Act of 8 1974), as the plan administrator, and as 9 the person responsible to perform all ad- 10 ministrative duties (including conducting 11 proper testing with respect to the plan and 12 the employees of each employer in the 13 plan) which are reasonably necessary to 14 ensure that— 15 ‘‘(I) the plan meets any require- 16 ment applicable under the Employee 17 Retirement Income Security Act of 18 1974 or this title to a plan described 19 in section 401(a) or to a plan that 20 consists of individual retirement ac- 21 counts described in section 408 (in- 22 cluding by reason of subsection (c) 23 thereof), whichever is applicable, and 24 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1084 IH ‘‘(II) each employer in the plan 1 takes such actions as the Secretary or 2 such person determines are necessary 3 for the plan to meet the requirements 4 described in subclause (I), including 5 providing to such person any disclo- 6 sures or other information which the 7 Secretary may require or which such 8 person otherwise determines are nec- 9 essary to administer the plan or to 10 allow the plan to meet such require- 11 ments, 12 ‘‘(ii) registers as a pooled plan pro- 13 vider with the Secretary, and provides such 14 other information to the Secretary as the 15 Secretary may require, before beginning 16 operations as a pooled plan provider, 17 ‘‘(iii) acknowledges in writing that 18 such person is a named fiduciary (within 19 the meaning of section 402(a)(2) of the 20 Employee Retirement Income Security Act 21 of 1974), and the plan administrator, with 22 respect to the plan, and 23 ‘‘(iv) is responsible for ensuring that 24 all persons who handle assets of, or who 25 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1084 IH are fiduciaries of, the plan are bonded in 1 accordance with section 412 of the Em- 2 ployee Retirement Income Security Act of 3 1974. 4 ‘‘(B) AUDITS, EXAMINATIONS AND INVES- 5 TIGATIONS.—The Secretary may perform au- 6 dits, examinations, and investigations of pooled 7 plan providers as may be necessary to enforce 8 and carry out the purposes of this subsection. 9 ‘‘(C) AGGREGATION RULES.—For purposes 10 of this paragraph, in determining whether a 11 person meets the requirements of this para- 12 graph to be a pooled plan provider with respect 13 to any plan, all persons who perform services 14 for the plan and who are treated as a single 15 employer under subsection (b), (c), (m), or (o) 16 of section 414 shall be treated as one person. 17 ‘‘(D) TREATMENT OF EMPLOYERS AS PLAN 18 SPONSORS.—Except with respect to the admin- 19 istrative duties of the pooled plan provider de- 20 scribed in subparagraph (A)(i), each employer 21 in a plan which has a pooled plan provider shall 22 be treated as the plan sponsor with respect to 23 the portion of the plan attributable to employ- 24 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 1084 IH ees of such employer (or beneficiaries of such 1 employees). 2 ‘‘(4) GUIDANCE.—The Secretary shall issue 3 such guidance as the Secretary determines appro- 4 priate to carry out this subsection, including guid- 5 ance— 6 ‘‘(A) to identify the administrative duties 7 and other actions required to be performed by 8 a pooled plan provider under this subsection, 9 ‘‘(B) which describes the procedures to be 10 taken to terminate a plan which fails to meet 11 the requirements to be a plan described in para- 12 graph (1), including the proper treatment of, 13 and actions needed to be taken by, any em- 14 ployer in the plan and the assets and liabilities 15 of the plan attributable to employees of such 16 employer (or beneficiaries of such employees), 17 and 18 ‘‘(C) identifying appropriate cases to which 19 the rules of paragraph (2)(A) will apply to em- 20 ployers in the plan failing to take the actions 21 described in paragraph (1). 22 The Secretary shall take into account under sub- 23 paragraph (C) whether the failure of an employer or 24 pooled plan provider to provide any disclosures or 25 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 1084 IH other information, or to take any other action, nec- 1 essary to administer a plan or to allow a plan to 2 meet requirements applicable to the plan under sec- 3 tion 401(a) or 408, whichever is applicable, has con- 4 tinued over a period of time that demonstrates a 5 lack of commitment to compliance. 6 ‘‘(5) MODEL PLAN.—The Secretary shall pub- 7 lish model plan language which meets the require- 8 ments of this subsection and of paragraphs (43) and 9 (44) of section 3 of the Employee Retirement In- 10 come Security Act of 1974 and which may be adopt- 11 ed in order for a plan to be treated as a plan de- 12 scribed in paragraph (1)(B).’’. 13 (2) CONFORMING AMENDMENT.—Section 14 413(c)(2) is amended by striking ‘‘section 401(a)’’ 15 and inserting ‘‘sections 401(a) and 408(c)’’. 16 (3) TECHNICAL AMENDMENT.—Section 408(c) 17 is amended by inserting after paragraph (2) the fol- 18 lowing new paragraph: 19 ‘‘(3) There is a separate accounting for any in- 20 terest of an employee or member (or spouse of an 21 employee or member) in a Roth IRA.’’. 22 (b) NO COMMON INTEREST REQUIRED FOR POOLED 23 EMPLOYER PLANS.—Section 3(2) of the Employee Retire- 24 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 1084 IH ment Income Security Act of 1974 (29 U.S.C. 1002(2)) 1 is amended by adding at the end the following: 2 ‘‘(C) A pooled employer plan shall be treat- 3 ed as— 4 ‘‘(i) a single employee pension benefit 5 plan or single pension plan; and 6 ‘‘(ii) a plan to which section 210(a) 7 applies.’’. 8 (c) POOLED EMPLOYER PLAN AND PROVIDER DE- 9 FINED.— 10 (1) IN GENERAL.—Section 3 of the Employee 11 Retirement Income Security Act of 1974 (29 U.S.C. 12 1002) is amended by adding at the end the fol- 13 lowing: 14 ‘‘(43) POOLED EMPLOYER PLAN.— 15 ‘‘(A) IN GENERAL.—The term ‘pooled em- 16 ployer plan’ means a plan— 17 ‘‘(i) which is an individual account 18 plan established or maintained for the pur- 19 pose of providing benefits to the employees 20 of 2 or more employers; 21 ‘‘(ii) which is a plan described in sec- 22 tion 401(a) of the Internal Revenue Code 23 of 1986 which includes a trust exempt 24 from tax under section 501(a) of such 25 VerDate Sep 11 2014 01:44 Feb 21, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1084.IH H1084 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 1084 IH Code or a plan that consists of individual 1 retirement accounts described in section 2 408 of such Code (including by reason of 3 subsection (c) thereof); and 4 ‘‘(iii) the terms of which meet the re- 5 quirements of subparagraph (B). 6 Such term shall not include a plan maintai [Text truncated for display. 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