A bill to amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to modify the requirements for multiple employer plans, and for other purposes.

II 116TH CONGRESS 1ST SESSION S. 1011 To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to modify the requirements for multiple employer plans, and for other purposes. IN THE SENATE OF THE UNITED STATES APRIL 3, 2019 Mr. COTTON (for himself, Mr. YOUNG, and Mr. JONES) 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 and the Em- ployee Retirement Income Security Act of 1974 to mod- ify the requirements for multiple employer 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. MULTIPLE EMPLOYER PLANS. 3 (a) QUALIFICATION REQUIREMENTS.— 4 (1) IN GENERAL.—Section 413 of the Internal 5 Revenue Code of 1986 is amended by adding at the 6 end the following new subsection: 7 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 2 •S 1011 IS ‘‘(e) APPLICATION OF QUALIFICATION REQUIRE- 1 MENTS FOR CERTAIN MULTIPLE EMPLOYER PLANS WITH 2 POOLED PLAN PROVIDERS.— 3 ‘‘(1) IN GENERAL.—Except as provided in para- 4 graph (2), if a defined contribution plan to which 5 subsection (c) applies— 6 ‘‘(A) is sponsored by employers all of 7 which have both a common interest other than 8 having adopted the plan and control of the 9 plan, or 10 ‘‘(B) in the case of a plan not described in 11 subparagraph (A), has a pooled plan provider, 12 then the plan shall not be treated as failing to meet 13 the requirements under this title applicable to a plan 14 described in section 401(a) or to a plan that consists 15 of individual retirement accounts described in sec- 16 tion 408 (including by reason of subsection (c) 17 thereof), whichever is applicable, merely because one 18 or more employers of employees covered by the plan 19 fail to take such actions as are required of such em- 20 ployers for the plan to meet such requirements. 21 ‘‘(2) LIMITATIONS.— 22 ‘‘(A) IN GENERAL.—Paragraph (1) shall 23 not apply to any plan unless the terms of the 24 plan provide that in cases of employers failing 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 3 •S 1011 IS to take the actions described in paragraph 1 (1)— 2 ‘‘(i) the assets of the plan attributable 3 to employees of the employer will be trans- 4 ferred to a plan maintained only by the 5 employer (or its successor), to an eligible 6 retirement plan as defined in section 7 402(c)(8)(B) for each individual whose ac- 8 count is transferred, or to any other ar- 9 rangement that the Secretary determines is 10 appropriate, unless the Secretary deter- 11 mines it is in the best interests of such em- 12 ployees to retain the assets in the plan, 13 and 14 ‘‘(ii) the employer described in clause 15 (i) (and not the plan with respect to which 16 the failure occurred or any other partici- 17 pating employer in such plan) shall, except 18 to the extent provided by the Secretary, be 19 liable for any liabilities with respect to 20 such plan attributable to employees of the 21 employer. 22 ‘‘(B) FAILURES BY POOLED PLAN PRO- 23 VIDERS.—If the pooled plan provider of a plan 24 described in paragraph (1)(B) does not perform 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 4 •S 1011 IS substantially all of the administrative duties 1 which are required of the provider under para- 2 graph (3)(A)(i) for any plan year, the Sec- 3 retary, in the Secretary’s own discretion, may 4 provide that the determination as to whether 5 the plan meets the requirements under this title 6 applicable to a plan described in section 401(a) 7 or to a plan that consists of individual retire- 8 ment accounts described in section 408 (includ- 9 ing by reason of subsection (c) thereof), which- 10 ever is applicable, shall be made in the same 11 manner as would be made without regard to 12 paragraph (1). 13 ‘‘(3) POOLED PLAN PROVIDER.—For purposes 14 of this subsection— 15 ‘‘(A) IN GENERAL.—The term ‘pooled plan 16 provider’ means, with respect to any plan, a 17 person who— 18 ‘‘(i) is designated by the terms of the 19 plan as a named fiduciary (within the 20 meaning of section 402(a)(2) of the Em- 21 ployee Retirement Income Security Act of 22 1974), as the plan administrator, and as 23 the person responsible to perform all ad- 24 ministrative duties (including conducting 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 5 •S 1011 IS proper testing with respect to the plan and 1 employees of each participating employer) 2 which are reasonably necessary to ensure 3 that— 4 ‘‘(I) the plan meets any require- 5 ment applicable under the Employee 6 Retirement Income Security Act of 7 1974 or this title to a plan described 8 in section 401(a) or to a plan that 9 consists of individual retirement ac- 10 counts described in section 408 (in- 11 cluding by reason of subsection (c) 12 thereof), whichever is applicable, and 13 ‘‘(II) each participating employer 14 takes such actions as the Secretary or 15 such person determines are necessary 16 for the plan to meet the requirements 17 described in subclause (I), including 18 providing to such person any disclo- 19 sures or other information which the 20 Secretary may require or which such 21 person otherwise determines is nec- 22 essary to administer the plan or to 23 allow the plan to meet such require- 24 ments, 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 6 •S 1011 IS ‘‘(ii) registers as a pooled plan pro- 1 vider with the Secretary, and provides such 2 other information to the Secretary as the 3 Secretary may require, before beginning 4 operations as a pooled plan provider, 5 ‘‘(iii) acknowledges in writing that 6 such person is a named fiduciary (within 7 the meaning of section 402(a)(2) of the 8 Employee Retirement Income Security Act 9 of 1974), and the plan administrator, with 10 respect to the plan, and 11 ‘‘(iv) is responsible for ensuring that 12 all persons who handle assets of, or who 13 are fiduciaries of, the plan are bonded in 14 accordance with section 412 of the Em- 15 ployee Retirement Income Security Act of 16 1974. 17 ‘‘(B) AUDITS, EXAMINATIONS, AND INVES- 18 TIGATIONS.—The Secretary may perform au- 19 dits, examinations, and investigations of pooled 20 plan providers as may be necessary to enforce 21 and carry out the purposes of this subsection. 22 ‘‘(4) GUIDANCE.— 23 ‘‘(A) IN GENERAL.—The Secretary shall 24 issue such guidance as the Secretary determines 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 7 •S 1011 IS appropriate to carry out this subsection, includ- 1 ing guidance— 2 ‘‘(i) to identify the administrative du- 3 ties and other actions required to be per- 4 formed by a pooled plan provider under 5 this subsection, 6 ‘‘(ii) which describes the procedures to 7 be taken to terminate a plan which fails to 8 meet the requirements to be a plan de- 9 scribed in paragraph (1), including the 10 proper treatment of, and actions needed to 11 be taken by, any participating employer of 12 the plan and the assets and liabilities of 13 the plan with respect to employees of that 14 employer, and 15 ‘‘(iii) identifying appropriate cases to 16 which the rules of paragraph (2)(A) will 17 apply to employers failing to take the ac- 18 tions described in paragraph (1). 19 The Secretary shall take into account under 20 clause (iii) whether the failure of an employer 21 or pooled plan provider to provide any disclo- 22 sures or other information, or to take any other 23 action, necessary to administer a plan or to 24 allow a plan to meet requirements applicable to 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 8 •S 1011 IS the plan under section 401(a) or 408, whichever 1 is applicable, has continued over a period of 2 time that clearly demonstrates a lack of com- 3 mitment to compliance. 4 ‘‘(B) PROSPECTIVE APPLICATION.—Any 5 guidance issued by the Secretary under this 6 paragraph shall not apply to any action or fail- 7 ure occurring before the issuance of such guid- 8 ance. 9 ‘‘(5) MODEL PLAN.—Not later than June 30, 10 2020, the Secretary shall, in consultation with the 11 Secretary of Labor when appropriate, publish— 12 ‘‘(A) model plan language which may be 13 adopted by a plan to which subsection (c) ap- 14 plies and which is not described in paragraph 15 (1)(B), in order for the plan to qualify for the 16 application of this subsection, and 17 ‘‘(B) model plan language which meets the 18 requirements of this subsection and of para- 19 graphs (43) and (44) of section 3 of the Em- 20 ployee Retirement Income Security Act of 1974 21 and which may be adopted in order for a plan 22 to be treated as a plan described in paragraph 23 (1)(B).’’. 24 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 9 •S 1011 IS (2) CONFORMING AMENDMENT.—Paragraph (2) 1 of section 413(c) of such Code is amended by strik- 2 ing ‘‘section 401(a)’’ and inserting ‘‘sections 401(a) 3 and 408(c)’’. 4 (3) TECHNICAL AMENDMENT.—Subsection (c) 5 of section 408 of such Code is amended by inserting 6 after paragraph (2) the following new paragraph: 7 ‘‘(3) There is a separate accounting for any in- 8 terest of an employee or member (or spouse of an 9 employee or member) in a Roth IRA.’’. 10 (b) NO COMMON INTEREST REQUIRED FOR POOLED 11 EMPLOYER PLANS.—Section 3(2) of the Employee Retire- 12 ment Income Security Act of 1974 (29 U.S.C. 1002(2)) 13 is amended by adding at the end the following: 14 ‘‘(C) A pooled employer plan shall be treat- 15 ed as— 16 ‘‘(i) a single employee pension benefit 17 plan or single pension plan; and 18 ‘‘(ii) a plan to which section 210(a) 19 applies.’’. 20 (c) POOLED EMPLOYER PLAN AND PROVIDER DE- 21 FINED.— 22 (1) IN GENERAL.—Section 3 of the Employee 23 Retirement Income Security Act of 1974 (29 U.S.C. 24 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 10 •S 1011 IS 1002) is amended by adding at the end the fol- 1 lowing: 2 ‘‘(43) POOLED EMPLOYER PLAN.— 3 ‘‘(A) IN GENERAL.—The term ‘pooled em- 4 ployer plan’ means a plan— 5 ‘‘(i) which is an individual account 6 plan established or maintained for the pur- 7 pose of providing benefits to the employees 8 of two or more employers; 9 ‘‘(ii) which is a plan described in sec- 10 tion 401(a) of the Internal Revenue Code 11 of 1986 which includes a trust exempt 12 from tax under section 501(a) of such 13 Code or a plan that consists of individual 14 retirement accounts described in section 15 408 of such Code (including by reason of 16 subsection (c) thereof); and 17 ‘‘(iii) the terms of which meet the re- 18 quirements of subparagraph (B). 19 Such term shall not include a plan with respect 20 to which all of the participating employers have 21 both a common interest other than having 22 adopted the plan and control of the plan. 23 ‘‘(B) REQUIREMENTS FOR PLAN TERMS.— 24 The requirements of this subparagraph are met 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 11 •S 1011 IS with respect to any plan if the terms of the 1 plan— 2 ‘‘(i) designate a pooled plan provider 3 and provide that the pooled plan provider 4 is a named fiduciary of the plan; 5 ‘‘(ii) designate one or more trustees 6 meeting the requirements of section 7 408(a)(2) of the Internal Revenue Code of 8 1986 (other than a participating employer) 9 to be responsible for collecting contribu- 10 tions to, and holding the assets of, the 11 plan and require such trustees to imple- 12 ment written contribution collection proce- 13 dures that are reasonable, diligent, and 14 systematic; 15 ‘‘(iii) except as provided in section 16 404(e), provide that each participating em- 17 ployer retains fiduciary responsibility for— 18 ‘‘(I) the selection and monitoring 19 in accordance with section 404(a) of 20 the person designated as the pooled 21 plan provider and any other person 22 who, in addition to the pooled plan 23 provider, is designated as a named fi- 24 duciary of the plan; and 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 12 •S 1011 IS ‘‘(II) to the extent not otherwise 1 delegated to another fiduciary by the 2 pooled plan provider and subject to 3 the provisions of section 404(c), the 4 investment and management of that 5 portion of the plan’s assets attrib- 6 utable to the employees of that par- 7 ticipating employer; 8 ‘‘(iv) provide that a participating em- 9 ployer, or a participant or beneficiary, is 10 not subject to unreasonable restrictions, 11 fees, or penalties with regard to ceasing 12 participation, receipt of distributions, or 13 otherwise transferring assets of the plan in 14 accordance with section 208 or paragraph 15 (44)(C)(i)(II); 16 ‘‘(v) require— 17 ‘‘(I) the pooled plan provider to 18 provide to participating employers any 19 disclosures or other information which 20 the Secretary may require, including 21 any disclosures or other information 22 to facilitate the selection or any moni- 23 toring of the pooled plan provider by 24 participating employers; and 25 VerDate Sep 11 2014 23:53 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1011.IS S1011 pamtmann on DSKBFK8HB2PROD with BILLS 13 •S 1011 IS ‘‘(II) each participating employer 1 to take such actions as the Secretary 2 or the pooled plan provider determines 3 are necessary to administer the plan 4 or for the plan to meet any require- 5 ment applicable under this Act or the 6 Internal Revenue Code of 1986 to a 7 plan described in section 401(a) of 8 such Code or to a plan that consists 9 of individual retirement accounts de- 10 scribed in section 408 of such Code 11 (including by reason of subsection (c) 12 thereof), whichever is applicable, in- 13 cluding providing an [Text truncated for display. 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