Improving Access to Retirement Savings Act

II 116TH CONGRESS 2D SESSION S. 5064 To amend the Internal Revenue Code of 1986 to increase retirement savings, to improve retirement plan administration, and for other purposes. IN THE SENATE OF THE UNITED STATES DECEMBER 18, 2020 Mr. GRASSLEY (for himself, Ms. HASSAN, and Mr. LANKFORD) 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 increase retirement savings, to improve retirement plan adminis- tration, 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 ‘‘Improving Access to 4 Retirement Savings Act’’. 5 SEC. 2. MULTIPLE EMPLOYER 403(b) PLANS. 6 (a) IN GENERAL.—Section 403(b) of the Internal 7 Revenue Code of 1986 is amended by adding at the end 8 the following new paragraph: 9 ‘‘(15) MULTIPLE EMPLOYER PLANS.— 10 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 5064 IS ‘‘(A) IN GENERAL.—Except in the case of 1 a church plan, this subsection shall not be 2 treated as failing to apply to an annuity con- 3 tract solely by reason of such contract being 4 purchased under a plan maintained by more 5 than 1 employer. 6 ‘‘(B) TREATMENT OF EMPLOYERS FAILING 7 TO MEET REQUIREMENTS OF PLAN.— 8 ‘‘(i) IN GENERAL.—In the case of a 9 plan maintained by more than 1 employer, 10 this subsection shall not be treated as fail- 11 ing to apply to an annuity contract held 12 under such plan merely because of 1 or 13 more employers failing to meet the require- 14 ments of this subsection, if such plan satis- 15 fies rules similar to the rules of section 16 413(e)(2) with respect to any such em- 17 ployer failure. 18 ‘‘(ii) ADDITIONAL REQUIREMENTS IN 19 CASE OF NON-GOVERNMENTAL PLANS.—A 20 plan shall not be treated as meeting the re- 21 quirements of this subsection unless the 22 plan meets the requirements of subpara- 23 graph (A) or (B) of section 413(e)(1), ex- 24 cept in the case of a multiple employer 25 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 5064 IS plan maintained solely by a State, a polit- 1 ical subdivision of a State, or an agency or 2 instrumentality thereof.’’. 3 (b) ANNUAL REGISTRATION FOR 403(b) MULTIPLE 4 EMPLOYER PLAN.—Section 6057 of the Internal Revenue 5 Code of 1986 is amended by redesignating subsection (g) 6 as subsection (h) and by inserting after subsection (f) the 7 following new subsection: 8 ‘‘(g) 403(b) MULTIPLE EMPLOYER PLANS TREATED 9 AS 1 PLAN.—In the case of annuity contracts to which 10 this section applies and to which section 403(b) applies 11 by reason of the plan under which such contracts are pur- 12 chased meeting the requirements of paragraph (15) there- 13 of, such plan shall be treated as a single plan for purposes 14 of this section.’’. 15 (c) ANNUAL INFORMATION RETURNS FOR 403(b) 16 MULTIPLE EMPLOYER PLAN.—Section 6058 of the Inter- 17 nal Revenue Code of 1986 is amended by redesignating 18 subsection (f) as subsection (g) and by inserting after sub- 19 section (e) the following new subsection: 20 ‘‘(f) 403(b) MULTIPLE EMPLOYER PLANS TREATED 21 AS 1 PLAN.—In the case of annuity contracts to which 22 this section applies and to which section 403(b) applies 23 by reason of the plan under which such contracts are pur- 24 chased meeting the requirements of paragraph (15) there- 25 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 5064 IS of, such plan shall be treated as a single plan for purposes 1 of this section.’’. 2 (d) AMENDMENTS TO EMPLOYEE RETIREMENT IN- 3 COME SECURITY ACT OF 1974.— 4 (1) TREATED AS POOLED EMPLOYER PLAN.— 5 (A) IN GENERAL.—Section 3(43)(A) of the 6 Employee Retirement Income Security Act of 7 1974 (29 U.S.C. 1002(43)(A)) is amended— 8 (i) in clause (ii), by striking ‘‘section 9 501(a) of such Code or’’ and inserting 10 ‘‘501(a) of such Code, a plan that consists 11 of contracts described in section 403(b) of 12 such Code, or’’; and 13 (ii) in the flush text at the end, by 14 striking ‘‘the plan.’’ and inserting ‘‘the 15 plan, but such term shall include any pro- 16 gram (other than a governmental plan) 17 maintained for the benefit of the employees 18 of more than 1 employer that consists of 19 contracts described in section 403(b) of 20 such Code and that meets the require- 21 ments of subparagraph (A) or (B) of sec- 22 tion 413(e)(1) of such Code.’’. 23 (B) CONFORMING AMENDMENTS.—Para- 24 graphs (43)(B)(v)(II) and (44)(A)(i)(I) of sec- 25 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 5064 IS tion 3 of such Act (29 U.S.C. 1002) are each 1 amended by striking ‘‘section 401(a) of such 2 Code or’’ and inserting ‘‘401(a) of such Code, 3 a plan that consists of contracts described in 4 section 403(b) of such Code, or’’. 5 (2) FIDUCIARIES.—Section 3(43)(B)(ii) of such 6 Act (29 U.S.C. 1002(43)(B)(ii)) is amended— 7 (A) by striking ‘‘trustees meeting the re- 8 quirements of section 408(a)(2) of the Internal 9 Revenue Code of 1986’’ and inserting ‘‘trustees 10 (or other fiduciaries in the case of a plan that 11 consists of contracts described in section 403(b) 12 of the Internal Revenue Code of 1986) meeting 13 the requirements of section 408(a)(2) of such 14 Code’’; and 15 (B) by striking ‘‘holding’’ and inserting 16 ‘‘holding (or causing to be held under the terms 17 of a plan consisting of such contracts)’’. 18 (e) REGULATIONS RELATING TO PLAN TERMI- 19 NATION.—The Secretary of the Treasury (or the Sec- 20 retary’s designee) shall prescribe such regulations as may 21 be necessary to clarify the treatment of a plan termination 22 by an employer in the case of plans to which section 23 403(b)(15) of the Internal Revenue Code of 1986 applies. 24 (f) MODIFICATION OF MODEL PLAN LANGUAGE.— 25 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 5064 IS (1) PLAN NOTIFICATIONS.—The Secretary of 1 the Treasury (or the Secretary’s designee) shall 2 modify the model plan language published under sec- 3 tion 413(e)(5) of the Internal Revenue Code of 1986 4 to include language which notifies participating em- 5 ployers which are exempt from tax under section 6 501(a) of such Code that the plan is subject to the 7 Employee Retirement Income Security Act of 1974 8 and that such employer is a plan sponsor with re- 9 spect to its employees participating in the multiple 10 employer plan and, as such, has certain fiduciary 11 duties with respect to the plan and to its employees. 12 (2) MODEL PLANS FOR MULTIPLE EMPLOYER 13 403(b) NON-GOVERNMENTAL PLANS.—For plans to 14 which section 403(b)(15)(A) of the Internal Revenue 15 Code of 1986 applies (other than a plan maintained 16 for its employees by a State, a political subdivision 17 of a State, or an agency or instrumentality thereof) 18 the Secretary shall publish model plan language 19 similar to model plan language published under sec- 20 tion 413(e)(5) of such Code. 21 (g) NO INFERENCE WITH RESPECT TO CHURCH 22 PLANS.—Regarding any application of section 403(b) of 23 the Internal Revenue Code of 1986 to an annuity contract 24 purchased under a church plan (as defined in section 25 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 5064 IS 414(e) of such Code) maintained by more than 1 em- 1 ployer, or to any application of rules similar to section 2 413(e) of such Code to such a plan, no inference shall 3 be drawn solely because section 403(b)(15)(A) of such 4 Code (as added by this Act) does not apply to such plans. 5 (h) EFFECTIVE DATE.— 6 (1) IN GENERAL.—The amendments made by 7 this section shall apply to plan years beginning after 8 December 31, 2020. 9 (2) RULE OF CONSTRUCTION.—Nothing in the 10 amendments made by subsection (a) shall be con- 11 strued as limiting the authority of the Secretary of 12 the Treasury or the Secretary’s delegate (determined 13 without regard to such amendment) to provide for 14 the proper treatment of a failure to meet any re- 15 quirement applicable under the Internal Revenue 16 Code of 1986 with respect to one employer (and its 17 employees) in the case of a plan to which section 18 403(b)(15) applies. 19 SEC. 3. SAFE HARBOR FOR CORRECTIONS OF EMPLOYEE 20 ELECTIVE DEFERRAL FAILURES. 21 (a) IN GENERAL.—Section 414 of the Internal Rev- 22 enue Code of 1986 is amended by adding at the end the 23 following new subsection: 24 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 5064 IS ‘‘(aa) CORRECTING AUTOMATIC CONTRIBUTION ER- 1 RORS.— 2 ‘‘(1) IN GENERAL.—Any plan or arrangement 3 shall not fail to be treated as a plan described in 4 section 401(a), 403(b), 408, or 457(b), as applica- 5 ble, solely by reason of a corrected error. 6 ‘‘(2) CORRECTED ERROR.—For purposes of this 7 subsection, the term ‘corrected error’ means a rea- 8 sonable administrative error in implementing an 9 automatic enrollment or automatic escalation feature 10 in accordance with the terms of an eligible automatic 11 contribution arrangement (as defined under sub- 12 section (w)(3)), provided that such implementation 13 error— 14 ‘‘(A) is corrected by the date which is 91⁄2 15 months after the end of the plan year during 16 which the failure occurred, 17 ‘‘(B) is corrected in a manner which is fa- 18 vorable to the participant, and 19 ‘‘(C) is of a type which is so corrected for 20 all similarly situated participants in a non- 21 discriminatory manner. 22 Such correction may occur before or after the partic- 23 ipant has terminated employment and may occur 24 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 5064 IS without regard to whether the error is identified by 1 the Secretary. 2 ‘‘(3) REGULATIONS AND GUIDANCE FOR FAVOR- 3 ABLE CORRECTION METHODS.—The Secretary shall, 4 by regulations or other guidance of general applica- 5 bility, specify the correction methods which are in a 6 manner favorable to the participant for purposes of 7 paragraph (2)(B).’’. 8 (b) EFFECTIVE DATE.—The amendment made by 9 this section shall apply to the correction of any error with 10 respect to which the date described in section 11 414(aa)(2)(A) of the Internal Revenue Code of 1986 (as 12 added by this section) is after the date of enactment of 13 this Act. 14 SEC. 4. APPLICATION OF CREDIT FOR SMALL EMPLOYER 15 PENSION PLAN STARTUP COSTS TO EMPLOY- 16 ERS WHICH JOIN AN EXISTING PLAN. 17 (a) IN GENERAL.—Section 45E(d)(3)(A) of the In- 18 ternal Revenue Code of 1986 is amended by striking ‘‘ef- 19 fective’’ and inserting ‘‘effective with respect to the eligible 20 employer’’. 21 (b) EFFECTIVE DATE.—The amendment made by 22 this section shall apply to eligible employer plans which 23 VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS 10 •S 5064 IS become effective with respect to the eligible employer after 1 the date of the enactment of this Act. 2 Æ VerDate Sep 11 2014 02:13 Jan 11, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6301 E:\BILLS\S5064.IS S5064 pbinns on DSKJLVW7X2PROD with BILLS