Women’s Retirement Protection Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 2005 To amend the Employee Retirement Income Security Act of 1974 to provide for greater spousal protection under defined contribution plans, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 1, 2019 Ms. UNDERWOOD (for herself, Ms. SCHAKOWSKY, Mr. NORCROSS, and Ms. BONAMICI) introduced the following bill; which was referred to the Com- mittee on Education and Labor, and in addition to the Committee on Fi- nancial Services, 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 committee concerned A BILL To amend the Employee Retirement Income Security Act of 1974 to provide for greater spousal protection under defined contribution plans, 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 ‘‘Women’s Retirement 4 Protection Act of 2019’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 2005 IH (1) Approximately 29 percent of households 1 headed by individuals aged 55 through 74 have no 2 defined benefit plan or retirement savings, according 3 to 2016 data from the Survey of Consumer Fi- 4 nances. 5 (2) Just over one-third of the private sector 6 workforce does not have access to a retirement plan 7 at the workplace, and only half of the workforce ac- 8 tually participates in a retirement plan. 9 (3) Women’s retirement preparedness often lags 10 significantly behind their male counterparts’, result- 11 ing in the median retirement income for women in 12 2016 being just 58 percent of men’s retirement in- 13 come. 14 (4) Women are 1.5 times as likely as men to 15 live in poverty after age 65. 16 (5) Women make up 2⁄3 of low-wage workers, 17 even though they comprise less than half of all work- 18 ers, and low-wage workers are less likely than other 19 workers to participate in a retirement plan at work. 20 (6) Because of the pay gap, women working 21 full-time, year-round typically lose $403,440 over a 22 40-year career thereby requiring the average woman 23 to work almost a decade longer than her male coun- 24 terpart to make up that career wage gap. 25 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 2005 IH (7) Due to the lower lifetime wages stemming 1 from unequal pay and caregiving duties, the average 2 Social Security benefit for a woman age 65 or older 3 is $14,044 a year, while men of the same age receive 4 $18,173 a year, on average. 5 (8) Just 1 in 5 part-time workers who work a 6 full year are eligible for a retirement plan, and 7 women are almost twice as likely to work part-time 8 as men. 9 (9) While traditional defined benefit retirement 10 plans have spousal protections, defined contribution 11 retirement plans, which have become increasingly 12 common, currently provide no similar spousal protec- 13 tions. 14 (10) Every year, more than 1,200,000 couples 15 get divorced in the United States. After the family 16 home, retirement savings tends to be the largest 17 asset to be divided in a divorce. 18 (11) While fees and expenses associated with 19 retirement plans have been in decline, participants 20 have seen direct charges for processing qualified do- 21 mestic relations orders increase significantly. 22 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 2005 IH SEC. 3. INCREASING SPOUSAL PROTECTION UNDER DE- 1 FINED CONTRIBUTION PLANS. 2 (a) IN GENERAL.—Part 2 of subtitle B of title I of 3 the Employee Retirement Income Security Act of 1974 4 (29 U.S.C. 1051 et seq.) is amended by inserting after 5 section 205 the following new section: 6 ‘‘SEC. 205A. ADDITIONAL SPOUSAL CONSENT REQUIRE- 7 MENTS. 8 ‘‘(a) IN GENERAL.—Each individual account plan to 9 which section 205 does not apply shall provide that, except 10 as provided in subsections (c) and (d), no distribution may 11 be made under the plan unless the spousal consent re- 12 quirements of subsection (e) are met. 13 ‘‘(b) COORDINATION WITH SECTION 205.—Nothing 14 in this section shall be construed to exempt an individual 15 account plan from the requirements of paragraph (1)(C) 16 or (2) of section 205(b) with respect to any participant. 17 ‘‘(c) EXCEPTIONS FOR CERTAIN DISTRIBUTIONS.— 18 Subsection (a) shall not apply to— 19 ‘‘(1) any distribution that is— 20 ‘‘(A) a minimum required distribution de- 21 scribed in section 4974(b) of the Internal Rev- 22 enue Code of 1986; 23 ‘‘(B) a result of the use of the partici- 24 pant’s accrued benefit as security for a loan, in- 25 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 2005 IH cluding any distribution required by reason of a 1 failure to comply with the terms of such loan; 2 ‘‘(C) made upon hardship of the partici- 3 pant; or 4 ‘‘(D) permitted under section 203(e)(1) to 5 be made without the consent of the participant; 6 ‘‘(2) any distribution in the form of a qualified 7 joint and survivor annuity (as defined in section 8 205(d)(1)), a qualified optional survivor annuity (as 9 defined in section 205(d)(2)), a qualified preretire- 10 ment survivor annuity (as defined in section 205(e)), 11 or a series of substantially equal periodic payments 12 (not less frequently than annually) made for the 13 joint lives (or life expectancies) of the participant 14 and the participant’s spouse; or 15 ‘‘(3) in the case of a participant who does not 16 elect a form of benefit described in paragraph (2) 17 under the plan or who is participating in a plan that 18 does not provide such a form of benefit, any dis- 19 tribution of the participant’s entire nonforfeitable 20 accrued benefit if 50 percent of such accrued benefit 21 is transferred to an individual retirement plan (as 22 defined in section 7701(a)(37) of the Internal Rev- 23 enue Code of 1986) of the spouse of the participant. 24 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 2005 IH A transfer described in paragraph (3) to an individual re- 1 tirement plan shall be treated in the same manner as a 2 transfer under section 408(d)(6) of the Internal Revenue 3 Code of 1986. 4 ‘‘(d) EXCEPTIONS FOR CERTAIN ROLLOVER CON- 5 TRIBUTIONS.—Subsection (a) shall not apply to any dis- 6 tribution that is an eligible rollover distribution (as de- 7 fined in section 402(f)(2)(A) of the Internal Revenue Code 8 of 1986) made in the form of a direct trustee-to-trustee 9 transfer within the meaning of section 401(a)(31) of the 10 Internal Revenue Code of 1986— 11 ‘‘(1) to a plan to which this section or section 12 205 applies; or 13 ‘‘(2) to an individual retirement plan (as de- 14 fined in section 7701(a)(37) of the Internal Revenue 15 Code of 1986) if— 16 ‘‘(A) the beneficiary of such plan is the 17 spouse of the participant, or the spousal con- 18 sent requirements of subsection (e) are met 19 with respect to any designation of 1 or more 20 other beneficiaries; and 21 ‘‘(B) the beneficiary of such plan (whether 22 the spouse or other beneficiary designated 23 under paragraph (1)) may not be changed un- 24 less— 25 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 2005 IH ‘‘(i) the spousal consent requirements 1 of subsection (e) are met with respect to 2 any such change, or 3 ‘‘(ii) the spousal consent under sub- 4 paragraph (A) to the designation of a ben- 5 eficiary other than the spouse expressly 6 permits such designation to be changed 7 without the further consent of the spouse. 8 ‘‘(e) SPOUSAL CONSENT REQUIREMENTS.— 9 ‘‘(1) IN GENERAL.—For purposes of this sec- 10 tion, except as provided in paragraph (2), the spous- 11 al consent requirements of this subsection are met 12 with respect to any distribution or any designation 13 or change of beneficiary if— 14 ‘‘(A) the plan provides to each participant, 15 within a reasonable period of time before such 16 distribution or designation or change of bene- 17 ficiary is made and consistent with such regula- 18 tions as the Secretary of the Treasury may pre- 19 scribe, a written explanation of the rights of the 20 participant and the participant’s spouse under 21 this section; 22 ‘‘(B) the spouse of the participant consents 23 in writing to the distribution or designation or 24 change of beneficiary; 25 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 2005 IH ‘‘(C) in the case of a distribution, the writ- 1 ten consent under subparagraph (B) is made 2 during the consent period; and 3 ‘‘(D) the written consent under subpara- 4 graph (B)— 5 ‘‘(i) acknowledges the effect of such 6 distribution or designation or change of 7 beneficiary; and 8 ‘‘(ii) is witnessed by a plan represent- 9 ative or a notary public. 10 ‘‘(2) EXCEPTIONS UNDER SECTION 205(C)(2)(B) 11 TO APPLY.—The requirements of paragraph (1) 12 (other than subparagraph (A) thereof) shall not 13 apply with respect to any distribution or designation 14 or change of beneficiary if a participant establishes 15 to the satisfaction of the plan administrator that— 16 ‘‘(A) there is no spouse; 17 ‘‘(B) the participant and the participant’s 18 spouse have not been married throughout the 1- 19 year period ending on the date of the distribu- 20 tion or designation or change of beneficiary; or 21 ‘‘(C) such consent cannot be obtained be- 22 cause— 23 ‘‘(i) the spouse cannot be located; 24 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 2005 IH ‘‘(ii) due to exceptional circumstances, 1 requiring the participant to seek the 2 spouse’s consent would be inappropriate; 3 or 4 ‘‘(iii) of such other circumstances as 5 the Secretary of the Treasury may by reg- 6 ulations prescribe. 7 ‘‘(3) CONSENT LIMITED TO SPOUSE AND 8 EVENT.—Any written consent by a spouse under 9 paragraph (1), or the establishment by a participant 10 that an exception under paragraph (2) applies with 11 respect to a spouse, shall be effective only with re- 12 spect to that spouse and to the distribution or des- 13 ignation or change of beneficiary to which it relates. 14 ‘‘(4) CONSENT PERIOD.—For purposes of this 15 subsection, the term ‘consent period’ means, with re- 16 spect to any distribution— 17 ‘‘(A) the 90-day period immediately pre- 18 ceding the date of such distribution; or 19 ‘‘(B) such other period as the Secretary of 20 the Treasury may provide. 21 ‘‘(f) DISCHARGE OF PLAN FROM LIABILITY.—Rules 22 similar to the rules of section 205(c)(6) shall apply for 23 purposes of this section.’’. 24 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 2005 IH (b) CLERICAL AMENDMENT.—The table of sections 1 of part 2 of subtitle B of title I of the Employee Retire- 2 ment Income Security Act of 1974 is amended by insert- 3 ing after the item relating to section 205 the following 4 new item: 5 ‘‘Sec. 205A. Additional spousal consent requirements.’’. (c) RIGHT OF ACTION.—Section 502(a) of the Em- 6 ployee Retirement Income Security Act of 1974 (29 7 U.S.C. 1132) is amended by striking ‘‘or’’ at the end of 8 paragraph (10), by striking the period at the end of para- 9 graph (11) and inserting ‘‘; or’’, and by adding at the end 10 the following new paragraph: 11 ‘‘(12) by an individual for appropriate relief in 12 the case of a violation of the individual’s rights 13 under section 205A.’’. 14 (d) PARALLEL AMENDMENT TO SECTION 205.—Sec- 15 tion 205(c)(2)(B) of the Employee Retirement Income Se- 16 curity Act of 1974 (29 U.S.C. 1055(c)(2)(B)) is amended 17 by inserting ‘‘, because due to exceptional circumstances 18 requiring the participant to seek the spouse’s consent 19 would be inappropriate’’ after ‘‘located’’. 20 SEC. 4. IMPROVING COVERAGE FOR LONG-TERM PART- 21 TIME WORKERS. 22 (a) IN GENERAL.—Section 202 of the Employee Re- 23 tirement Income Security Act of 1974 (29 U.S.C. 1052) 24 VerDate Sep 11 2014 18:19 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 2005 IH is amended by adding at the end the following new sub- 1 section: 2 ‘‘(c) SPECIAL RULE FOR CERTAIN PART-TIME EM- 3 PLOYEES.— 4 ‘‘(1) IN GENERAL.—A pension plan that in- 5 cludes either a qualified cash or deferred arrange- 6 ment (as defined in section 401(k) of the Internal 7 Revenue Code of 1986) or a salary reduction agree- 8 ment (as described in section 403(b) of such Code) 9 shall not require, as a condition of participation in 10 the arrangement or agreement, that an employee 11 complete a period of service with the employer (or 12 employers) maintaining the plan extending beyond 13 the close of the earlier of— 14 ‘‘(A) the period permitted under subsection 15 (a)(1) (determined without regard to subpara- 16 graph (B)(i) thereof) and section 410(a)(1) of 17 such Code (determined without regard to sub- 18 paragraph (B)(i) thereof); or 19 ‘‘(B) the first 24-month period— 20 ‘‘(i) consisting of 2 consecutive 12- 21 month periods during each of which the 22 employee has at least 500 hours of service; 23 and 24 VerDate Sep 11 2014 01:55 Apr 09, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2005.IH H2005 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 2005 IH ‘‘(ii) by the close of which the em- 1 ployee has attained the age of 21. 2 ‘‘(2) EXCEPTION.—Paragraph (1)(B) shall not 3 apply to employees who are included in a unit of em- 4 ployees covered by an agreement which the Secretary 5 finds to be a collective bargaining agreement be- 6 tween employee representatives and 1 or more em- 7 ployers, if there is evidence that retirement benefits 8 were the subject of good faith bargaining between 9 such employee representatives and such employer or 10 employers. 11 ‘‘(3) COORDINATION WITH OTHER RULES.—In 12 the case of employees who are not highly com- 13 pensated employees (within the meaning of section 14 414(q) of the Internal Revenue Code of 198 [Text truncated for display. 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