Providing Retirement Security to Workers in Small Businesses, Cooperatives, and Service Organizations Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 1993 To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to modify the rules relating to multiple employer plans and pooled employer plans and to modify PBGC pre- miums for CSEC plans. IN THE HOUSE OF REPRESENTATIVES MARCH 29, 2019 Mr. KIND (for himself and Mr. KELLY of Pennsylvania) introduced the fol- lowing bill; which was referred to the Committee on Education and Labor, and in addition to the Committee on Ways and Means, for a pe- riod to be subsequently determined by the Speaker, in each case for con- sideration of such provisions as fall within the jurisdiction of the com- mittee concerned A BILL To amend the Internal Revenue Code of 1986 and the Em- ployee Retirement Income Security Act of 1974 to mod- ify the rules relating to multiple employer plans and pooled employer plans and to modify PBGC premiums for CSEC plans. 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 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 2 •HR 1993 IH SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Providing Retirement 2 Security to Workers in Small Businesses, Cooperatives, 3 and Service Organizations Act of 2019’’. 4 SEC. 2. MULTIPLE EMPLOYER PLANS; POOLED EMPLOYER 5 PLANS. 6 (a) QUALIFICATION REQUIREMENTS.— 7 (1) IN GENERAL.—Section 413 of the Internal 8 Code of 1986 is amended by adding at the end the 9 following new subsection: 10 ‘‘(e) APPLICATION OF QUALIFICATION REQUIRE- 11 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH 12 POOLED PLAN PROVIDERS.— 13 ‘‘(1) IN GENERAL.—Except as provided in para- 14 graph (2), if a defined contribution plan to which 15 subsection (c) applies— 16 ‘‘(A) is maintained by employers which 17 have a common interest other than having 18 adopted the plan, or 19 ‘‘(B) in the case of a plan not described in 20 subparagraph (A), has a pooled plan provider, 21 then the plan shall not be treated as failing to meet 22 the requirements under this title applicable to a plan 23 described in section 401(a) or to a plan that consists 24 of individual retirement accounts described in sec- 25 tion 408 (including by reason of subsection (c) 26 VerDate Sep 11 2014 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 3 •HR 1993 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 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 4 •HR 1993 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 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 5 •HR 1993 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 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 6 •HR 1993 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 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 7 •HR 1993 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 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 8 •HR 1993 IH ees of such employer (or beneficiaries of such 1 employees). 2 ‘‘(4) GUIDANCE.— 3 ‘‘(A) IN GENERAL.—The Secretary shall 4 issue such guidance as the Secretary determines 5 appropriate to carry out this subsection, includ- 6 ing guidance— 7 ‘‘(i) to identify the administrative du- 8 ties and other actions required to be per- 9 formed by a pooled plan provider under 10 this subsection, 11 ‘‘(ii) which describes the procedures to 12 be taken to terminate a plan which fails to 13 meet the requirements to be a plan de- 14 scribed in paragraph (1), including the 15 proper treatment of, and actions needed to 16 be taken by, any employer in the plan and 17 the assets and liabilities of the plan attrib- 18 utable to employees of such employer (or 19 beneficiaries of such employees), and 20 ‘‘(iii) identifying appropriate cases to 21 which the rules of paragraph (2)(A) will 22 apply to employers in the plan failing to 23 take the actions described in paragraph 24 (1). 25 VerDate Sep 11 2014 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 9 •HR 1993 IH The Secretary shall take into account under 1 clause (iii) whether the failure of an employer 2 or pooled plan provider to provide any disclo- 3 sures or other information, or to take any other 4 action, necessary to administer a plan or to 5 allow a plan to meet requirements applicable to 6 the plan under section 401(a) or 408, whichever 7 is applicable, has continued over a period of 8 time that demonstrates a lack of commitment 9 to compliance. 10 ‘‘(B) GOOD FAITH COMPLIANCE WITH LAW 11 BEFORE GUIDANCE.—An employer or pooled 12 plan provider shall not be treated as failing to 13 meet a requirement of guidance issued by the 14 Secretary under this paragraph if, before the 15 issuance of such guidance, the employer or 16 pooled plan provider complies in good faith with 17 a reasonable interpretation of the provisions of 18 this subsection to which such guidance relates. 19 ‘‘(5) MODEL PLAN.—The Secretary shall pub- 20 lish model plan language which meets the require- 21 ments of this subsection and of paragraphs (43) and 22 (44) of section 3 of the Employee Retirement In- 23 come Security Act of 1974 and which may be adopt- 24 VerDate Sep 11 2014 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 10 •HR 1993 IH ed in order for a plan to be treated as a plan de- 1 scribed in paragraph (1)(B).’’. 2 (2) CONFORMING AMENDMENT.—Section 3 413(c)(2) of such Code is amended by striking ‘‘sec- 4 tion 401(a)’’ and inserting ‘‘sections 401(a) and 5 408(c)’’. 6 (3) TECHNICAL AMENDMENT.—Section 408(c) 7 of such Code is amended by inserting after para- 8 graph (2) the following new paragraph: 9 ‘‘(3) There is a separate accounting for any in- 10 terest of an employee or member (or spouse of an 11 employee or member) in a Roth IRA.’’. 12 (b) NO COMMON INTEREST REQUIRED FOR POOLED 13 EMPLOYER PLANS.—Section 3(2) of the Employee Retire- 14 ment Income Security Act of 1974 (29 U.S.C. 1002(2)) 15 is amended by adding at the end the following: 16 ‘‘(C) A pooled employer plan shall be treat- 17 ed as— 18 ‘‘(i) a single employee pension benefit 19 plan or single pension plan; and 20 ‘‘(ii) a plan to which section 210(a) 21 applies.’’. 22 (c) POOLED EMPLOYER PLAN AND PROVIDER DE- 23 FINED.— 24 VerDate Sep 11 2014 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 11 •HR 1993 IH (1) IN GENERAL.—Section 3 of the Employee 1 Retirement Income Security Act of 1974 (29 U.S.C. 2 1002) is amended by adding at the end the fol- 3 lowing: 4 ‘‘(43) POOLED EMPLOYER PLAN.— 5 ‘‘(A) IN GENERAL.—The term ‘pooled em- 6 ployer plan’ means a plan— 7 ‘‘(i) which is an individual account 8 plan established or maintained for the pur- 9 pose of providing benefits to the employees 10 of 2 or more employers; 11 ‘‘(ii) which is a plan described in sec- 12 tion 401(a) of the Internal Revenue Code 13 of 1986 which includes a trust exempt 14 from tax under section 501(a) of such 15 Code or a plan that consists of individual 16 retirement accounts described in section 17 408 of such Code (including by reason of 18 subsection (c) thereof); and 19 ‘‘(iii) the terms of which meet the re- 20 quirements of subparagraph (B). 21 Such term shall not include a plan maintained 22 by employers which have a common interest 23 other than having adopted the plan. 24 VerDate Sep 11 2014 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 12 •HR 1993 IH ‘‘(B) REQUIREMENTS FOR PLAN TERMS.— 1 The requirements of this subparagraph are met 2 with respect to any plan if the terms of the 3 plan— 4 ‘‘(i) designate a pooled plan provider 5 and provide that the pooled plan provider 6 is a named fiduciary of the plan; 7 ‘‘(ii) designate one or more trustees 8 meeting the requirements of section 9 408(a)(2) of the Internal Revenue Code of 10 1986 (other than an employer in the plan) 11 to be responsible for collecting contribu- 12 tions to, and holding the assets of, the 13 plan and require such trustees to imple- 14 ment written contribution collection proce- 15 dures that are reasonable, diligent, and 16 systematic; 17 ‘‘(iii) provide that each employer in 18 the plan retains fiduciary responsibility 19 for— 20 ‘‘(I) the selection and monitoring 21 in accordance with section 404(a) of 22 the person designated as the pooled 23 plan provider and any other person 24 who, in addition to the pooled plan 25 VerDate Sep 11 2014 06:12 Apr 12, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H1993.IH H1993 kjohnson on DSK79L0C42 with BILLS 13 •HR 1993 IH provider, is designated as a named fi- 1 duciary of the plan; and 2 ‘‘(II) to the extent not otherwise 3 delegated to another fiduciary by the 4 pooled plan provider and subject to 5 the provisions of section 404(c), the 6 investment and management of the 7 portion of the plan’s assets attrib- 8 utable to the employees of the em- 9 ployer (or beneficiaries of such em- 10 ployees); 11 ‘‘(iv) provide that employers in the 12 plan, and participants and benefi [Text truncated for display. 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