Retirement Enhancement and Savings Act of 2019

II 116TH CONGRESS 1ST SESSION S. 972 To amend the Internal Revenue Code of 1986 to encourage retirement savings, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 1, 2019 Mr. GRASSLEY (for himself and Mr. WYDEN) 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 encourage retirement 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 ‘‘Retirement Enhancement and Savings Act of 2019’’. 5 (b) TABLE OF CONTENTS.—The table of contents of 6 this Act is as follows: 7 Sec. 1. Short title, etc. TITLE I—EXPANDING AND PRESERVING RETIREMENT SAVINGS Sec. 101. Multiple employer plans; pooled employer plans. Sec. 102. Pooled employer and multiple employer plan reporting. VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 2 •S 972 IS Sec. 103. Removal of 10-percent cap from automatic enrollment safe harbor after first plan year. Sec. 104. Rules relating to election of safe harbor 401(k) status. Sec. 105. Increase in credit limitation for small employer pension plan startup costs. Sec. 106. Small employer automatic enrollment credit. Sec. 107. Certain taxable non-tuition fellowship and stipend payments treated as compensation for IRA purposes. Sec. 108. Repeal of maximum age for traditional IRA contributions. Sec. 109. Expansion of IRA ownership of S corporation bank stock. Sec. 110. Qualified employer plans prohibited from making loans through credit cards and other similar arrangements. Sec. 111. Portability of lifetime income options. Sec. 112. Treatment of custodial accounts on termination of section 403(b) plans. Sec. 113. Clarification of retirement income account rules relating to church- controlled organizations. 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. Combined annual report for group of plans. Sec. 203. Disclosure regarding lifetime income. Sec. 204. Fiduciary safe harbor for selection of lifetime income provider. Sec. 205. Modification of nondiscrimination rules to protect older, longer serv- ice participants. Sec. 206. Modification of PBGC premiums for CSEC plans. TITLE III—BENEFITS RELATING TO UNITED STATES TAX COURT Sec. 301. Thrift Savings Plan contributions for judges in the Federal Employ- ees Retirement System. Sec. 302. Change in vesting period for survivor annuities and waiver of vesting period in the event of assassination. Sec. 303. Coordination of retirement and survivor annuity with the Federal Employees Retirement System. Sec. 304. Limit on teaching compensation of retired judges. Sec. 305. General provisions relating to magistrate judges of the Tax Court. Sec. 306. Life insurance for magistrate judges of the tax court age 65 or older. Sec. 307. Retirement and annuity program. Sec. 308. Provisions for recall. TITLE IV—OTHER BENEFITS Sec. 401. Benefits provided to volunteer firefighters and emergency medical re- sponders. TITLE V—REVENUE PROVISIONS Sec. 501. Modifications of required distribution rules for defined contribution accounts and plans. Sec. 502. Increase in penalty for failure to file. Sec. 503. Increased penalties for failure to file retirement plan returns. Sec. 504. Increase information sharing to administer excise taxes. VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6211 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 3 •S 972 IS 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 of the Internal 7 Revenue Code of 1986 is amended by adding at the 8 end the following new subsection: 9 ‘‘(e) APPLICATION OF QUALIFICATION REQUIRE- 10 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH 11 POOLED PLAN PROVIDERS.— 12 ‘‘(1) IN GENERAL.—Except as provided in para- 13 graph (2), if a defined contribution plan to which 14 subsection (c) applies— 15 ‘‘(A) is maintained by employers which 16 have a common interest other than having 17 adopted the plan, or 18 ‘‘(B) in the case of a plan not described in 19 subparagraph (A), has a pooled plan provider, 20 then the plan shall not be treated as failing to meet 21 the requirements under this title applicable to a plan 22 described in section 401(a) or to a plan that consists 23 of individual retirement accounts described in sec- 24 tion 408 (including by reason of subsection (c) 25 VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 4 •S 972 IS 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 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 5 •S 972 IS ‘‘(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 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 6 •S 972 IS ‘‘(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 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 7 •S 972 IS ‘‘(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 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 8 •S 972 IS 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), and except to 21 the extent that employers in the plan are treat- 22 ed as a single employer under subsection (c), 23 each employer in a plan which has a pooled 24 plan provider shall be treated as the plan spon- 25 VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 9 •S 972 IS sor with respect to the portion of the plan at- 1 tributable to employees of such employer (or 2 beneficiaries of such employees). 3 ‘‘(4) GUIDANCE.— 4 ‘‘(A) IN GENERAL.—The Secretary shall 5 issue such guidance as the Secretary determines 6 appropriate to carry out the purposes of this 7 subsection, including guidance— 8 ‘‘(i) to identify the administrative du- 9 ties and other actions required to be per- 10 formed by a pooled plan provider under 11 this subsection, 12 ‘‘(ii) which describes the procedures to 13 be taken to terminate a plan which fails to 14 meet the requirements to be a plan de- 15 scribed in paragraph (1), including the ac- 16 tions needed to be taken by any employer 17 in the plan and the proper treatment of 18 such employers and the assets and liabil- 19 ities of the plan attributable to employees 20 of such employers (or beneficiaries of such 21 employees), and 22 ‘‘(iii) identifying appropriate cases to 23 which the rules of paragraph (2)(A) will 24 apply to employers in the plan failing to 25 VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 10 •S 972 IS take the actions described in paragraph 1 (1). 2 The Secretary shall take into account under 3 clause (iii) whether the failure of an employer 4 or pooled plan provider to provide any disclo- 5 sures or other information, or to take any other 6 action, necessary to administer a plan or to 7 allow a plan to meet requirements applicable to 8 the plan under section 401(a) or 408, whichever 9 is applicable, has continued over a period of 10 time that demonstrates a lack of commitment 11 to compliance. 12 ‘‘(B) GOOD FAITH COMPLIANCE WITH LAW 13 BEFORE GUIDANCE.—An employer or pooled 14 plan provider shall not be treated as failing to 15 meet any requirement of this subsection if, be- 16 fore the issuance of the guidance under sub- 17 paragraph (A), the employer or pooled plan pro- 18 vider has complied in good faith with a reason- 19 able interpretation of the provisions of this sub- 20 section to which such guidance relates. 21 ‘‘(5) MODEL PLAN.—The Secretary, in con- 22 sultation with the Secretary of Labor, shall publish 23 model plan language which meets the requirements 24 of this subsection and of paragraphs (43) and (44) 25 VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 11 •S 972 IS of section 3 of the Employee Retirement Income Se- 1 curity Act of 1974 and which may be adopted in 2 order for a plan to be treated as a plan described 3 in paragraph (1)(B).’’. 4 (2) CONFORMING AMENDMENT.—Section 5 413(c)(2) of such Code is amended by striking ‘‘sec- 6 tion 401(a)’’ and inserting ‘‘sections 401(a) and 7 408(c)’’. 8 (3) TECHNICAL AMENDMENTS.— 9 (A) Section 45E(d)(3)(A) of such Code is 10 amended by striking ‘‘effective’’ and inserting 11 ‘‘effective with respect to the eligible employer’’. 12 (B) Section 408(c) of such Code is amend- 13 ed by inserting after paragraph (2) the fol- 14 lowing new paragraph: 15 ‘‘(3) There is a separate accounting for any in- 16 terest of an employee or member (or spouse of an 17 employee or member) in a Roth IRA.’’. 18 (b) NO COMMON INTEREST REQUIRED FOR POOLED 19 EMPLOYER PLANS.—Section 3(2) of the Employee Retire- 20 ment Income Security Act of 1974 (29 U.S.C. 1002(2)) 21 is amended by adding at the end the following: 22 ‘‘(C) A pooled employer plan shall be treat- 23 ed as— 24 VerDate Sep 11 2014 01:04 Apr 10, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S972.IS S972 pbinns on DSK79D2C42PROD with BILLS 12 •S 972 IS ‘‘(i) a single employee pension benefit 1 plan or single pension plan; and 2 ‘‘(ii) a plan to which section 210(a) 3 a [Text truncated for display. 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