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Title IV — Simplification and Clarification of Qualified Retirement Plan Rules

H.R. 2117 · 113th Congress · May 22, 2013 · Lineage

IV Simplification and Clarification of Qualified Retirement Plan Rules

Sec. 401 Exception from required distributions where aggregate retirement savings do not exceed $100,000

(a)
In general— Section 401(a)(9) (relating to required distributions) is amended by adding at the end the following new subparagraph:

“(I) Exception from required minimum distributions during life of employee or beneficiary where assets do not exceed $100,000

“(i) In general—If, as of a measurement date, the aggregate balance to the credit of an employee under all applicable eligible retirement plans does not exceed $100,000, then the requirements of subparagraph (A) shall not apply to the employee during any succeeding calendar year. In addition, if, as of a measurement date, the aggregate balance to the credit of an employee under all applicable eligible retirement plans does not exceed $100,000, then the requirements of subparagraph (B) shall not apply during any succeeding calendar year to the employee’s designated beneficiary with respect to the designated beneficiary’s interest in the balance to the credit of the deceased employee.

“(ii) Applicable eligible retirement plan—For purposes of this subparagraph, the term applicable eligible retirement plan means an eligible retirement plan (as defined in section 402(c)(8)(B)) and any other plan, contract, or arrangement to which the requirements of this paragraph apply.

“(iii) Special rule for benefits paid as a life annuity from defined benefit plan—In determining the aggregate balance under clause (i), there shall not be taken into account the value of any benefits under a defined benefit plan that, on the measurement date, are being paid as a life annuity.

“(iv) Measurement date

“(I) Initial measurement dates—The initial measurement date for an individual is the last day of the calendar year preceding the earlier of—

“(aa) the calendar year in which the employee attains age 70½, or

“(bb) the calendar year in which the employee dies.

“(II) Subsequent measurement dates—If, in a calendar year, an individual who is exempted from the requirements of this paragraph pursuant to clause (i) receives contributions, rollovers, or transfers of amounts, or accrues additional benefits under a defined benefit plan, that were not previously taken into account in applying this subparagraph, then the last day of that calendar year shall be a new measurement date and a new determination shall be made as to whether clause (i) applies.

“(v) Determining value of defined benefit plan benefits—The value of defined benefit plan benefits is determined in accordance with the applicable interest rate and applicable mortality rate assumptions under section 417(e), except that the value shall be equal to the amount of the single sum payment payable to the extent available under the plan.

“(vi) Phase-in of minimum distribution requirements—For an individual whose aggregate balance exceeds the exemption level in clause (i) by less than $10,000, required minimum distribution requirements will phase in based on the ratio of—

“(I) the amount by which the aggregate balance exceeds the exemption level, to

“(II) $10,000.

“(vii) Cost of living adjustments—The Secretary shall adjust annually the $100,000 amount specified in clause (i) for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period shall be the calendar quarter beginning July 1, 2013, and any increase which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.”

(b)
Effective date— The amendment made by this section shall apply to initial measurement dates occurring on or after December 31, 2013.

Sec. 402 Expansion of Employee Plans Compliance Resolution System

(a)
In general— Not later than one year after the date of the enactment of this Act, the Secretary of the Treasury shall modify the Employee Plans Compliance Resolution System (as described in Revenue Procedure 2013–12) to achieve the results specified in the succeeding subsections of this section and to further facilitate corrections and compliance in such other means as the Secretary deems appropriate.
(b)
Loan error—
(1)
In the case of plan loan errors for which corrections are specified under the voluntary compliance program, self-correction shall be made available by methods applicable to such loans through the voluntary compliance program.
(2)
The Secretary of Labor shall treat any loan error corrected pursuant to paragraph (1) as meeting the requirements of the Voluntary Fiduciary Correction Program of the Department of Labor.
(c)
457(b) plan correction— The Secretary of the Treasury shall update the Employee Plans Compliance Resolution System to provide the same type of comprehensive correction program that is available under such system to retirement plans qualified under section 401(a) of the Internal Revenue Code of 1986 to plans maintained pursuant to section 457(b) of such Code by an employer described in section 457(e)(1)(A) of such Code.
(d)
EPCRS for IRAs— The Secretary of the Treasury shall expand the Employee Plans Compliance Resolution System to allow custodians of individual retirement plans to address inadvertent errors for which the owner of an individual retirement plan was not at fault, including (but not limited to)—
(1)
waivers of the excise tax that would otherwise apply under section 4974 of the Internal Revenue Code of 1986,
(2)
under the self-correction component of the Employee Plans Compliance Resolution System, waivers of the 60-day deadline for a rollover where the deadline is missed for reasons beyond the reasonable control of the account owner, and
(3)
rules permitting a nonspouse beneficiary to return distributions to an inherited individual retirement plan described in section 408(d)(3)(C) of the Internal Revenue Code of 1986 in a case where, due to an inadvertent error by a service provider, the beneficiary had reason to believe that the distribution could be rolled over without inclusion in income of any part of the distributed amount.
(e)
Required minimum distribution corrections— The Secretary of the Treasury shall expand the Employee Plans Compliance Resolution System to allow plans to which such system applies and custodians of individual retirement plans to self-correct, without an excise tax, any inadvertent errors pursuant to which a distribution is made no more than 180 days after it was required to be made.
(f)
Automatic feature error correction— In order to promote the adoption of automatic enrollment and automatic escalation, the Secretary of the Treasury shall modify the Employee Plans Compliance Resolution System to establish specific correction methods for errors in implementing automatic enrollment and automatic escalation features.

Sec. 403 Use of forfeitures to fund safe harbor contributions

(a)
In general— Section 401(k) (as amended by this Act) is amended by adding at the end the following new paragraph:

“(17) A matching contribution or nonelective contribution described in paragraph (3)(D)(ii), subparagraph (B) or (C) of paragraph (12), or paragraph (13)(D) shall not fail to satisfy the definition under such paragraph merely because the contribution is funded in whole or in part by forfeitures.”

(b)
Effective date— The amendment made by subsection (a) shall apply to forfeitures allocated in accordance with section 401(k)(14) of the Internal Revenue Code of 1986 (as amended by subsection (a)) before, on or after the date of enactment of this Act.

Sec. 404 Substantial cessation of operations

(a)
In general— Subsection (e) of section 4062 of the Employee Retirement Income Security Act of 1974 is amended by striking “If an employer” and inserting “(1) In General.—If an employer”, and by adding at the end thereof the following new paragraph:

“(2) Substantial cessation of operations—An employer shall not be treated as having a cessation described in paragraph (1) unless—

“(A) all operations at a facility in a location are ceased and—

“(i) such cessation is reasonably expected to be permanent,

“(ii) no portion of such operations is moved to another facility at a different location,

“(iii) no portion of such operations is assumed or otherwise transferred to another employer, and

“(iv) no other operations are reasonably expected to be maintained at such facility, and

“(B) as a result of the cessation described in subparagraph (A), more than 20 percent of the employees of the employer have a termination of employment that is reasonably expected to be permanent. For purposes of this subparagraph, employees of the employer shall include all employees treated as employed by a single employer under sections 210(c) and (d).”

(b)
Direction to the corporation— The Pension Benefit Guaranty Corporation shall not take any enforcement, administrative, or other actions pursuant to section 4062(e) of such Act that are inconsistent with subparagraph (A) of section 4062(e)(2) of such Act, as amended, without regard to whether such actions relate to a cessation or other event that occurs before or after the date of enactment of this Act.
(c)
Effective date— Subsection (b) and the amendment made by subsection (a) shall apply as of the date of enactment of this Act.

Sec. 405 Church plan clarification

(a)
Application of controlled group rules to church plans—
(1)
In general— Section 414(c) is amended—
(A)
by striking “For purposes” and inserting the following:

“(1) In general—For purposes”

(B)
by adding at the end the following new paragraph:

“(2) Church plans

“(A) General Rule—Except as provided in subparagraphs (B) and (C), for purposes of this subsection and subsection (m), an organization that is otherwise eligible to participate in a church plan as defined in subsection (e) shall not be aggregated with another such organization and treated as a single employer with such other organization unless—

“(i) one such organization provides directly or indirectly at least 80 percent of the operating funds for the other organization during the preceding tax year of the recipient organization, and

“(ii) there is a degree of common management or supervision between the organizations.

“(B) Nonqualified Church-Controlled Organizations—Notwithstanding the provisions of subparagraph (A), for purposes of this subsection and subsection (m), an organization that is a nonqualified church-controlled organization shall be aggregated with one or more other nonqualified church-controlled organizations, or with an organization that is not exempt from tax under section 501, and treated as a single employer with such other organizations, if at least 80 percent of the directors or trustees of such organizations are either representatives of, or directly or indirectly controlled by, the first organization. For purposes of this subparagraph, a “nonqualified church controlled organization” shall mean a church-controlled organization described in section 501(c)(3) that is not a qualified church-controlled organization described in section 3121(w)(3)(B).

“(C) Permissive Aggregation Among Church-Related Organizations—Organizations described in subparagraph (A) may elect to be treated as under common control for purposes of this subsection. Such election shall be made by the church or convention or association of churches with which such organizations are associated within the meaning of section 414(e)(3)(D), or by an organization determined by such church or convention or association of churches to be the appropriate organization for making such election.

“(D) Permissive Disaggregation of Church-Related Organizations—For purposes of subparagraph (A) above, in the case of a church plan (as defined in section 414(e)), any employer may permissively disaggregate those entities that are not churches (as defined in section 403(b)(12)(B)) separately from those entities that are churches, even if such entities maintain separate church plans.

“(E) Anti-Abuse Rule—For purposes of subparagraphs (A) and (B), the anti-abuse rule in Treasury Regulation section 1.414(c)–5(f) shall apply.”

(2)
Effective date— The amendments made by this subsection shall apply to taxable years beginning before, on, or after the date of the enactment of this Act.
(b)
Application of contribution and funding limitations to 403(b) grandfathered defined benefit plans—
(1)
In general— Section 251(e)(5) of the Tax Equity and Fiscal Responsibility Act of 1982 (Public Law 97–248), is amended—
(A)
by striking “403(b)(2)” and inserting “403(b)”, and
(B)
by inserting before the period at the end the following: “, and shall be subject to the applicable limitations of section 415(b) of such Code as if it were a defined benefit plan under section 401(a) of such Code and not the limitations of section 415(c) of such Code (relating to limitation for defined contribution plans).”.
(2)
Effective date— The amendments made by this subsection shall apply as if included in the enactment of the Tax Equity and Fiscal Responsibility Act of 1982.
(c)
Automatic enrollment by church plans—
(1)
In general— This subsection shall supersede any law of a State that relates to wage, salary, or payroll payment, collection, deduction, garnishment, assignment or withholding which would directly or indirectly prohibit or restrict the inclusion in any church plan (as defined in this subsection) of an automatic contribution arrangement.
(2)
Definition of automatic contribution arrangement— For purposes of this subsection, the term automatic contribution arrangement means an arrangement—
(A)
under which a participant may elect to have the plan sponsor make payments as contributions under the plan on behalf of the participant, or to the participant directly in cash, and
(B)
under which a participant is treated as having elected to have the plan sponsor make such contributions in an amount equal to a uniform percentage of compensation provided under the plan until the participant specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage).
(3)
Notice requirements—
(A)
The plan administrator of an automatic contribution arrangement shall, within a reasonable period before such plan year, provide to each participant to whom the arrangement applies for such plan year notice of the participant’s rights and obligations under the arrangement which—
(i)
is sufficiently accurate and comprehensive to apprise the participant of such rights and obligations, and
(ii)
is written in a manner calculated to be understood by the average participant to whom the arrangement applies.
(B)
A notice shall not be treated as meeting the requirements of subparagraph (A) with respect to a participant unless—
(i)
the notice includes an explanation of the participant’s right under the arrangement not to have elective contributions made on the participant’s behalf (or to elect to have such contributions made at a different percentage),
(ii)
the participant has a reasonable period of time, after receipt of the notice described in subparagraph (A) and before the first elective contribution is made, to make such election, and
(iii)
the notice explains how contributions made under the arrangement will be invested in the absence of any investment election by the participant.
(4)
Effective date— This subsection shall take effect on the date of the enactment of this Act.
(d)
Allow certain plan transfers and mergers—
(1)
In general— Section 414 is amended by adding at the end the following new subsection:

“(y) Certain plan transfers and mergers

“(1) In general—Under rules prescribed by the Secretary, except as provided in paragraph (2), no amount shall be includible in gross income by reason of—

“(A) a transfer of all or a portion of the account balance of a participant or beneficiary, whether or not vested, from a plan described in section 401(a) or an annuity contract described in section 403(b), which is a church plan described in section 414(e) to an annuity contract described in section 403(b), if such plan and annuity contract are both maintained by the same church or convention or association of churches,

“(B) a transfer of all or a portion of the account balance of a participant or beneficiary, whether or not vested, from an annuity contract described in section 403(b) to a plan described in section 401(a) or an annuity contract described in section 403(b), which is a church plan described in section 414(e), if such plan and annuity contract are both maintained by the same church or convention or association of churches, or

“(C) a merger of a plan described in section 401(a), or an annuity contract described in section 403(b), which is a church plan described in section 414(e) with an annuity contract described in section 403(b), if such plan and annuity contract are both maintained by the same church or convention or association of churches.

“(2) Limitation—Paragraph (1) shall not apply to a transfer or merger unless the participant’s or beneficiary's benefit immediately after the transfer or merger is equal to or greater than the participant’s or beneficiary's benefit immediately before the transfer or merger.

“(3) Qualification—A plan or annuity contract shall not fail to be considered to be described in sections 401(a) or 403(b) merely because such plan or account engages in a transfer or merger described in this subsection.

“(4) Definitions—For purposes of this subsection:

“(A) Church—The term church includes an organization described in subparagraph (A) or (B)(ii) of subsection (e)(3).

“(B) Annuity contract—The term annuity contract includes a custodial account described in section 403(b)(7) and a retirement income account described in section 403(b)(9).”

(2)
Effective date— The amendment made by this subsection shall apply to transfers or mergers occurring after the date of the enactment of this Act.
(e)
Investments by church plans in collective trusts—
(1)
In general— In the case of—
(A)
a church plan (as defined in section 414(e) of the Internal Revenue Code 1986), including a plan described in section 401(a) of such Code and a retirement income account described in section 403(b)(9) of such Code, and
(B)
an organization described in section 414(e)(3)(A) of such Code the principal purpose or function of which is the administration of such a plan or account,
(2)
Effective date— This subsection shall apply to investments made after the date of the enactment of this Act.

Sec. 406 Protecting older, longer service participants

(a)
In general— Paragraph (4) of section 401(a) of the Internal Revenue Code of 1986 is amended to read as follows:

“(4) Nondiscrimination

“(A) In general—A trust shall not constitute a qualified trust under this section unless the contributions or benefits provided under the plan do not discriminate in favor of highly compensated employees (within the meaning of section 414(q)). For purposes of this paragraph, there shall be excluded from consideration employees described in section 410(b)(3) (A) and (C).

“(B) Protection of older, longer service participants

“(i)

“(I) A defined benefit plan described in subclause (II) shall not fail to satisfy this paragraph with respect to plan benefits, rights, or features by reason of—

“(aa) the composition of the closed class of participants described in subclause (II), or

“(bb) the benefits, rights, or features provided to such closed class.

“(II) A plan is described in this subclause if—

“(aa) the plan provides benefits, rights, or features to a closed class of participants,

“(bb) such closed class and such benefits, rights, and features satisfy the requirements of subparagraph (A) (without regard to this clause) as of the date that the class was closed, and

“(cc) after the date as of which the class was closed, any plan amendments that modify the closed class or the benefits, rights, and features provided to such closed class satisfy subparagraph (A) (without regard to this clause).

“(ii)

“(I) A defined contribution plan described in subclause (II) shall permitted to be tested on a benefits basis.

“(II) A defined contribution plan is described in this subclause if—

“(aa) the plan provides make-whole contributions to a closed class of participants whose defined benefit plan accruals have been reduced or eliminated,

“(bb) such closed class of participants satisfies section 410(b)(2)(A)(i) as of the date that the class of participants was closed, and

“(cc) after the date as of which the class was closed, any plan amendments that modify the closed class or the allocations, benefits, rights, and features provided to such closed class satisfy subparagraph (A) (without regard to this clause).

“(III) In addition to other testing methodologies otherwise applicable, for purposes of determining compliance with this paragraph and with section 410(b) of the portion of one or more defined contribution plans described in subclause (II) that provide make-whole contributions, such portion of such plans may be aggregated and tested on a benefits basis with the portion of one or more defined contribution plans that—

“(aa) provides matching contributions (as defined in subsection (m)(4)(A)), or

“(bb) consists of an employee stock ownership plan within the meaning of section 4975(e)(7) or a tax credit employee stock ownership plan within the meaning of section 409(a).

“(C) Definitions—For purposes of this paragraph—

“(i) Make-whole contributions—The term make-whole contributions means allocations for each employee in the class that are reasonably calculated, in a consistent manner, to replace some or all of the retirement benefits that the employee would have received under the defined benefit plan and any other plan or arrangement if the employee had continued to benefit at the same level under such defined benefit plan and such other plan or arrangement.

“(ii) References to closed class of participants—References to a closed class of participants and similar references to a closed class shall include arrangements under which one or more classes of participants are closed.

“(D) Protecting grandfathered participants in defined benefit plans

“(i) One or more defined benefit plans described in clause (ii) shall be permitted to be tested on a benefits basis with one or more defined contribution plans.

“(ii) A defined benefit plan is described in this clause if—

“(I) the plan provides benefits to a closed class of participants,

“(II) the plan and such benefits satisfy the requirements of subparagraph (A) (without regard to this subparagraph) as of the date the class was closed, and

“(III) after the date as of which the class was closed, any plan amendments that modify the closed class or the benefits provided to such closed class satisfy subparagraph (A) (without regard to this subparagraph).

“(iii) In addition to other testing methodologies otherwise applicable, for purposes of determining compliance with this paragraph and with section 410(b) of one or more defined benefit plans described in clause (ii), such plans may be aggregated and tested on a benefits basis with the portion of one or more defined contribution plans that—

“(I) provides matching contributions (as defined in subsection (m)(4)(A)), or

“(II) consists of an employee stock ownership plan within the meaning of section 4975(e)(7) or a tax credit employee stock ownership plan within the meaning of section 409(a).

“(E) Rules—The Secretary may prescribe rules designed to prevent abuse of the plan designs otherwise permitted by reason of subparagraphs (B) and (D). Such rules shall be directed towards abuses under which the defined benefit plan was established within a specified period prior to the date that—

“(i) the class of participants described in subparagraphs (B)(i)(II)(aa), (B)(ii)(II)(aa), and (D)(ii)(I) is closed, or

“(ii) the defined benefit plan accruals have been reduced or eliminated, in the case of the make-whole contributions described in subparagraph (C).

“(F) Transition rules—Within one year after the date of enactment of the Retirement Plan Simplification and Enhancement Act of 2013, the Secretary shall prescribe rules that facilitate the use of the provisions of subparagraph (B) and (D) without regard to—

“(i) whether the closing of the class of participants referred to in such subparagraphs occurred before or after such date of enactment, or

“(ii) plan amendments that were adopted or effective before such date of enactment and that would not have been necessary if subparagraphs (B) and (D) had been in effect.”

(b)
Participation requirements— Paragraph (26) of section 401(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(I) Protected participants—A plan described in this subparagraph shall be deemed to satisfy the requirements of subparagraph (A). A plan is described in this paragraph if—

“(i) the plan is amended to—

“(I) cease all benefit accruals, or

“(II) provide future benefit accruals only to a closed class of participants, and

“(ii) the plan satisfies subparagraph (A) (without regard to this subparagraph) as of the effective date of the amendment.”

(c)
Effective date— The amendments made by this section shall take effect on the date of the enactment of this Act, without regard to whether any plan modifications referenced in such amendments are adopted or effective before, on, or after such date of enactment.

Sec. 407 Review and report to the Congress relating to reporting and disclosure requirements

(a)
Study— As soon as practicable after the date of the enactment of this Act, the Secretary of Labor, the Secretary of the Treasury, and the Pension Benefit Guaranty Corporation shall review the reporting and disclosure requirements of—
(1)
title I of the Employee Retirement Income Security Act of 1974 applicable to pension plans (as defined in section 3(2) of such Act), and
(2)
the Internal Revenue Code of 1986 applicable to qualified retirement plans (as defined in section 4974(c) of such Code without regard to paragraphs (4) and (5) thereof).
(b)
Report— Not later than 18 months after the date of the enactment of this Act, the Secretary of Labor, the Secretary of the Treasury, and the Pension Benefit Guaranty Corporation, jointly, shall make such recommendations as may be appropriate to the appropriate committees of the Congress to consolidate, simplify, standardize, and improve the applicable reporting and disclosure requirements so as to simplify reporting for plans referenced to in subsection (a) and ensure that needed understandable information is provided to participants and beneficiaries of such plans.

Sec. 408 Consolidation of defined contribution plan notices

(a)
In general—
(1)
Not later than 18 months after the date of the enactment of this Act, the Secretary of Labor and the Secretary of the Treasury shall adopt final regulations providing that a plan may, but is not required to, consolidate two or more of the notices required under sections 404(c)(5)(B) and 514(e)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(e)(3)), sections 401(k)(12)(D), 401(k)(13)(E), and 414(w)(4) of the Internal Revenue Code of 1986, and section 2550.404a–5 of title 29, Code of Federal Regulations (29 C.F.R. 2550.404a–5) into a single notice or, to the extent provided by such regulations, consolidate such notices with the summary plan description or summary of material modifications described in section 104(b) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)), so long as the combined notice, summary plan description or summary of material modifications includes the required content, clearly identifies the issues addressed therein, and is provided at the time and with the frequency required for each such notice.
(2)
The Secretary of Labor and the Secretary of the Treasury may include in such regulations rules to ensure that, to the extent such notices are consolidated with the summary plan description or summary of material modifications, the presentation, placement, or prominence of the information in such notices shall not have the effect of failing to inform participants and beneficiaries regarding the information in such notices.
(b)
Provision of annual notices without regard to plan year—
(1)
Clause (i) of section 404(c)(5)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(5)(B)) is amended—
(A)
in subclause (I) by striking “within a reasonable period of time before each plan year,” and inserting “within a reasonable period before the arrangement described in subparagraph (A) applies to such participant or beneficiary, and thereafter at least once within any 12-month period (without regard to the plan year) during which such arrangement applies,”, and
(B)
in subclause (II) by striking “and before the beginning of the plan year”.
(2)
Subparagraph (A) of section 514(e)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(e)(3)(A)) is amended by striking “, within a reasonable period before such plan year, provide to each participant to whom the arrangement applies for such plan year” and inserting “, within a reasonable period before the arrangement applies to a participant or beneficiary, and thereafter at least once within any 12-month period (without regard to the plan year) during which such arrangement applies, provide”.
(3)
Clause (i) of section 401(k)(13)(E) of the Internal Revenue Code of 1986 is amended by striking “, within a reasonable period before each plan year, each employee eligible to participate in the arrangement for such year receives” and inserting “each employee eligible to participate in the arrangement receives, within a reasonable period before the employee becomes eligible, and thereafter within a reasonable period before each plan year during which such arrangement applies,”.
(4)
Subparagraph (D) of section 401(k)(12) of the Internal Revenue Code of 1986 is amended by striking “, within a reasonable period before any year, given written notice” and inserting “given written notice, within a reasonable period before the employee becomes eligible, and thereafter within a reasonable period before each plan year during which such arrangement applies,”.
(5)
Subparagraph (A) of section 414(w)(4) of the Internal Revenue Code of 1986 is amended by striking “, within a reasonable period before each plan year, give to each employee to whom an arrangement described in paragraph (3) applies for such plan year” and inserting “, within a reasonable period before an arrangement described in paragraph (3) applies to an employee, and thereafter at least once within any 12-month period (without regard to the plan year) during which such arrangement applies, give to each such employee”.

Sec. 409 Performance benchmarks for asset allocation funds

Not later than six months after the date of enactment of this Act, the Secretary of Labor shall modify the regulations under section 404 of the Employee Retirement Income Security Act of 1974 to provide that, in the case of a designated investment alternative that contains a mix of asset classes, a plan administrator may, but is not required to, use a benchmark that is a blend of different broad-based securities market indices if—
(1)
the blend is reasonably representative of the asset class holdings of the designated investment alternative;
(2)
for purposes of determining the blend’s returns for 1-, 5-, and 10-calendar year periods (or for the life of the alternative, if shorter), the blend is modified at least once per year to reflect changes in the asset class holdings of the designated investment alternative; and
(3)
each securities market index that is used for an associated asset class would separately satisfy the requirements of such regulations for such asset class.

Sec. 410 Permit nonspousal beneficiaries to roll assets to plans

(a)
In general— Section 402(c) is amended by adding at the end the following new paragraph:

“(12) Distributions to qualified plan of nonspouse beneficiary—If, with respect to any portion of a distribution from an eligible retirement plan described in paragraph (8)(B)(iii) of a deceased employee, a direct trustee-to-trustee transfer is made to a plan or annuity described in clause (iii), (iv), (v), or (vi) of paragraph (8)(B) of an individual who is a designated beneficiary (as defined by section 401(a)(9)(E)) of the employee and who is not the surviving spouse of the employee—

“(A) the transfer shall be treated as an eligible rollover distribution, and

“(B) section 401(a)(9)(B) (other than clause (iv) thereof) shall apply to such plan.”

(b)
Effective date— The amendment made by subsection (a) shall apply to distributions made after the date of the enactment of this Act.

Sec. 411 Eliminate the “first day of the month” requirement

(a)
In general— Paragraph (4) of section 457(b) is amended to read as follows:

“(4) which provides that compensation will be deferred only if an agreement providing for such deferral has been entered into before the compensation is currently available to the individual,”

(b)
Effective date— The amendment made by this section shall apply to years beginning after the date of the enactment of this Act.