To amend the Internal Revenue Code of 1986 to provide a credit for re-enrollment provisions in retirement plans of small employers.

“45BB. Credit for re-enrollment provisions in plans provided by small employers

“(a) In general—For purposes of section 38, in the case of an eligible employer, the retirement re-enrollment credit determined under this section for any taxable year is an amount equal to—

“(1) $500 for any taxable year occurring during the credit period, and

“(2) zero for any other taxable year.

“(b) Credit period—For purposes of subsection (a)—

“(1) In general—The credit period with respect to any eligible employer is the 3-taxable-year period beginning with the first taxable year for which the employer includes a re-enrollment provision in an eligible automatic contribution arrangement under a qualified employer plan (as defined in section 4972(d)) maintained by the employer.

“(2) Maintenance of arrangement—No taxable year with respect to an employer shall be treated as occurring within the credit period unless the provision described in paragraph (1) is included in the plan for such year.

“(c) Re-Enrollment provision—For purposes of this section—

“(1) In general—The term re-enrollment provision means a provision of an eligible automatic contribution arrangement under which each employee eligible to participate in the arrangement who is not contributing or is contributing less than the percentage applicable to an eligible employee in the first year of eligibility is treated as being in such first year of eligibility in each applicable year with respect to the employee.

“(2) Election out—The election treated as having been made under paragraph (1) shall cease to apply with respect to any employee if such employee makes an affirmative election—

“(A) not to have such contributions made, or

“(B) to make elective contributions at a level specified in such affirmative election.

“(3) Applicable year every third year

“(A) In general—The term applicable year means, with respect to an employee, such employee’s first plan year of eligibility under the arrangement and all subsequent plan years of eligibility.

“(B) Exception—Following any applicable year of an employee (determined after the application of this subparagraph), the plan may elect to treat the next 1 or 2 plan years as not being applicable years with respect to such employee.

“(d) Definitions—For purposes of this section—

“(1) Eligible employer—The term eligible employer has the meaning given such term in section 408(p)(2)(C)(i).

“(2) Eligible automatic contribution arrangement—The term eligible automatic contribution arrangement has the meaning given such term in section 414(w)(3).”

“(42) in the case of an eligible employer (as defined in section 45BB(d)(1)), the retirement re-enrollment credit determined under section 45BB(a).”