[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3221 Introduced in Senate (IS)]
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115th CONGRESS
2d Session
S. 3221
To provide for an additional nondiscrimination safe harbor for
automatic contribution arrangements.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 17, 2018
Mr. Young (for himself, Mr. Booker, Mr. Cotton, and Ms. Heitkamp)
introduced the following bill; which was read twice and referred to the
Committee on Finance
_______________________________________________________________________
A BILL
To provide for an additional nondiscrimination safe harbor for
automatic contribution arrangements.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Retirement Security Flexibility Act
of 2018''.
SEC. 2. ADDITIONAL NONDISCRIMINATION SAFE HARBOR FOR AUTOMATIC
CONTRIBUTION ARRANGEMENTS.
(a) In General.--Subsection (k) of section 401 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
paragraph:
``(14) Special nonelective and matching contribution rules
for small employers.--
``(A) In general.--In the case of a cash or
deferred arrangement maintained by an eligible employer
(as defined in section 408(p)(2)(C)(i)), for purposes
of paragraph (13), the arrangement shall be treated as
meeting the requirements of subparagraph (D) thereof if
under the arrangement, the total elective deferrals (as
defined in section 402(g)(3)(A)) with respect to any
employee do not exceed an amount equal to the
applicable percentage of the limitation otherwise
applicable under section 402(g).
``(B) Applicable percentage.--For purposes of
subparagraph (A), the applicable percentage with
respect to an arrangement is--
``(i) 40 percent in the case of an
arrangement which does not meet the
requirements of paragraph (13)(D) and is not
described in clause (ii) or (iii),
``(ii) 60 percent in the case of an
arrangement which is not described in clause
(iii) and which would meet the requirements of
paragraph (13)(D) if--
``(I) `equal to at least' were
substituted for `equal to' in clause
(i)(I) thereof,
``(II) `2 percent of compensation,
and such matching contributions meet
the requirement of subsection
(m)(11)(B)' were substituted for `6
percent of compensation' in clause
(i)(I) thereof, and
``(III) `1 percent' were
substituted for `3 percent' in clause
(i)(II) thereof, and
``(iii) 80 percent in the case of an
arrangement which would meet the requirements
of paragraph (13)(D) if--
``(I) `equal to at least' were
substituted for `equal to' in clause
(i)(I) thereof,
``(II) `4 percent of compensation,
and such matching contributions meet
the requirement of subsection
(m)(11)(B)' were substituted for `6
percent of compensation' in clause
(i)(I) thereof, and
``(III) `2 percent' were
substituted for `3 percent' in clause
(i)(II) thereof.
``(C) Reporting.--This paragraph shall apply to an
arrangement only if the plan includes with the reports
required under sections 6057 and 6058--
``(i) the number of employees eligible to
participate in the arrangement, and
``(ii) the number of participants for the
plan year.''.
(b) Modification of Existing Automatic Contribution Safe Harbor.--
(1) Qualified percentage.--
(A) In general.--Clause (iii) of section
401(k)(13)(C) of the Internal Revenue Code of 1986 is
amended by striking ``10 percent'' and inserting ``15
percent''.
(B) Conforming amendments.--
(i) Subclause (I) of section
401(k)(13)(C)(iii) of the Internal Revenue Code
of 1986 is amended--
(I) by striking ``3 percent'' and
inserting ``3 percent, but not greater
than 10 percent,'', and
(II) by adding ``and'' at the end.
(ii) Subclause (II) of section
401(k)(13)(C)(iii) of such Code is amended to
read as follows:
``(II) during any subsequent plan
year, the lesser of 1 percentage point
higher than the percentage in effect
for the preceding plan year or 8
percent.''.
(iii) Section 401(k)(13)(C)(iii) of such
Code is amended by striking subclauses (III)
and (IV).
(2) Automatic re-election.--Subparagraph (C) of section
401(k)(13) of such Code is amended by striking clause (iv) and
by adding at the end the following new clause:
``(iv) Automatic re-election required.--The
requirements of this subparagraph shall be
treated as met only if, under the arrangement,
every 3 years each employee--
``(I) who is eligible to
participate in the arrangement, and
``(II) who is not participating, or
is contributing less than 3 percent of
compensation, at the time of
determination,
is treated as having made the election
described in clause (i) unless the employee
makes a new election under clause (ii).''.
(c) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan years
beginning after December 31, 2018.
(2) Immediate automatic deferral for current employees not
required.--In the case of an employer who adopts a qualified
automatic contribution arrangement (as defined in section
401(k)(13)(B) of the Internal Revenue Code of 1986) after
December 31, 2018, solely for the first and second plan years
for which the arrangement is in effect, clauses (i) and (iv) of
section 401(k)(13)(C) of the Internal Revenue Code of 1986 (as
amended by this section) may be applied without taking into
account any employee who--
(A) is eligible to participate in the arrangement
(or a predecessor arrangement) immediately before the
date the arrangement goes into effect, and
(B) has an election in effect on such date either
to participate in the arrangement or to not participate
in the arrangement.
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