Automatic IRA Act of 2013 - Amends the Internal Revenue Code to: (1) require certain employers who do not maintain qualifying retirement plans or arrangements to make available to their eligible employees a payroll deposit individual retirement account (IRA) arrangement (automatic IRA arrangement) which grants such employees the right to opt-out of participation; (2) require the Secretary of the Treasury to provide employers with a model notice for notifying employees of their opportunity to participate in an automatic IRA arrangement and to provide participants with an annual statement setting forth payments, earnings, value, and other specified information; (3) impose a penalty on employers who fail to provide eligible employees access to an automatic IRA arrangement; (4) establish an Automatic IRA Advisory Group to make recommendations regarding investment options; (5) allow employers who do not have more than 100 employees a tax credit for costs associated with establishing an automatic IRA arrangement; and (6) increase the dollar limitation on the tax credit for small employer pension plan startup costs.
Requires the Secretary and the Secretary of Labor to jointly conduct feasibility studies on: (1) extending spousal consent requirements to automatic IRA arrangements; (2) automatically transferring amounts saved by employees in retirement bonds into alternative, private sector, diversified investments when employees' automatic IRA balances reach a certain dollar level; (3) using investment data to notify individuals with multiple small balance retirement accounts of consolidation options; and (4) using investment arrangements associated with automatic IRAs to assist in addressing the problem of abandoned accounts.
Directs the Secretaries to prescribe administrative guidance for the use of multiple employer plans.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2035 Introduced in House (IH)]
113th CONGRESS
1st Session
H. R. 2035
To amend the Internal Revenue Code of 1986 to expand personal saving
and retirement savings coverage by enabling employees not covered by
qualifying retirement plans to save for retirement through automatic
IRA arrangements, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 16, 2013
Mr. Neal introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Education and the Workforce, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand personal saving
and retirement savings coverage by enabling employees not covered by
qualifying retirement plans to save for retirement through automatic
IRA arrangements, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCE.
(a) Short Title.--This Act may be cited as the ``Automatic IRA Act
of 2013''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
SEC. 2. EMPLOYEES NOT COVERED BY QUALIFYING RETIREMENT PLANS OR
ARRANGEMENTS ENTITLED TO PARTICIPATE IN AUTOMATIC IRA
ARRANGEMENTS.
(a) In General.--Subpart A of part I of subchapter D of chapter 1
(relating to pension, profit-sharing, stock bonus plans, etc.) is
amended by inserting after section 408A the following new section:
``SEC. 408B. RIGHT TO AUTOMATIC IRA ARRANGEMENTS AT WORK.
``(a) Requirement To Provide Automatic IRA Arrangement.--Each
covered employer shall make available to each qualifying employee of
the employer for the calendar year an automatic IRA arrangement.
``(b) Covered Employer.--For purposes of this section--
``(1) In general.--Except as otherwise provided in this
subsection or subsection (c)(2), the term `covered employer'
means, with respect to any year, an employer which does not
maintain a qualifying plan or arrangement described in section
219(g)(5) for the calendar year.
``(2) Excluded plans.--A qualifying plan or arrangement
shall not be taken into account for purposes of paragraph (1)
if--
``(A) the plan or arrangement is frozen as of the
first day of the preceding calendar year, or
``(B) in the case of a plan or arrangement under
which the only contributions are discretionary on the
part of the employer or other plan sponsor, no employer
contribution has been made to the plan or arrangement
for the 2-plan-year period ending with the last plan
year ending in the second preceding calendar year and
it is not reasonable to assume that an employer
contribution will be made for the last plan year ending
in the preceding calendar year.
``(3) Exception for certain small and new employers.--
``(A) In general.--The term `covered employer' does
not include an employer for a calendar year if the
employer either--
``(i) did not employ more than 10 employees
who received at least $5,000 of compensation
(as defined in section 3401(a)) from the
employer for the preceding calendar year,
``(ii) did not normally employ more than 10
employees on a typical business day of the
preceding calendar year, or
``(iii) was not in existence at all times
during the calendar year and the preceding
calendar year.
``(B) Operating rules.--In determining the number
of employees for purposes of subparagraph (A)--
``(i) rules consistent with any rules
applicable in determining the number of
employees for purposes of section 408(p)(2)(C)
and section 4980B(d) shall apply,
``(ii) all members of the same family
(within the meaning of section 318(a)(1)) shall
be treated as 1 individual, and
``(iii) any reference to an employer shall
include a reference to any predecessor
employer.
``(4) Exception for governments and churches.--The term
`covered employer' does not include--
``(A) a government or entity described in section
414(d), or
``(B) a church or a convention or association of
churches which is exempt from tax under section 501.
``(5) Aggregation rule.--All persons treated as a single
employer under subsection (a) or (b) of section 52 or
subsection (m) or (o) of section 414 shall be treated as a
single employer.
``(c) Qualifying Employee.--For purposes of this section--
``(1) In general.--The term `qualifying employee' means any
employee of the employer who is not an excluded employee.
``(2) Plan sponsor's employees.--If--
``(A) an employer maintains one or more qualifying
plans or arrangements described in section 219(g)(5),
and
``(B) the employees of a subsidiary, division, or
other major business unit are generally not eligible to
participate in any such qualifying plan or arrangement,
then, for purposes of this section, the employer shall be
treated as a covered employer with respect to such employees
(other than excluded employees), and such employees (other than
excluded employees) shall be treated as qualifying employees,
but only if there are 50 or more ineligible employees of such
subsidiary, division or other major business unit constituting
at least 10 percent of the employees of the employer (other
than excludable employees).
``(3) Excluded employees.--
``(A) In general.--The term `excluded employee'
means an employee of the employer who is an excludable
employee and who is in a class or category that the
employer excludes from treatment as qualifying
employees.
``(B) Excludable employee.--The term `excludable
employee' means--
``(i) any employee described in section
410(b)(3),
``(ii) any employee who has not attained
the age of 18 before the beginning of the
calendar year,
``(iii) any employee who has not completed
at least 3 months of service with the employer,
``(iv) in the case of an employer that
maintains a qualifying plan or arrangement
which excludes employees who have not satisfied
the minimum age and service requirements for
participation in the plan, any employee who has
not satisfied such requirements,
``(v) in the case of an employer that
maintains a section 403(b) annuity contract
(including a custodial account or retirement
income account), any employee who is permitted
to be excluded from any salary reduction
arrangement under the contract pursuant to
section 403(b)(12),
``(vi) in the case of an employer that
maintains an arrangement described in section
408(p), any employee who is not required to be
eligible to participate in the arrangement
under section 408(p)(4), and
``(vii) in the case of an employer that
maintains a simplified employee pension
described in section 408(k), any employee who
is permitted to be excluded from participation
under section 408(k)(2).
``(4) Guidance.--The Secretary shall issue regulations or
other guidance to carry out this subsection, including--
``(A) guidelines for determining the classes or
categories of employees to be covered by an automatic
IRA arrangement,
``(B) if an employer excludes employees from the
automatic IRA arrangement, guidelines providing that
the employer shall specify the classification or
categories of employees who are so excluded, and
``(C) rules to prevent avoidance of the
requirements of this section.
``(d) Automatic IRA Arrangement.--For purposes of this section--
``(1) In general.--The term `automatic IRA arrangement'
means an arrangement of an employer (determined without regard
to whether the employer is required to maintain the
arrangement)--
``(A) which covers each qualifying employee of the
covered employer for the calendar year,
``(B) under which a qualifying employee--
``(i) may elect--
``(I) to contribute to an
individual retirement plan, or to
purchase a qualified retirement bond on
behalf of the employee, by having the
employer deposit payroll deduction
amounts or make other periodic direct
deposits (including electronic
payments) to the plan or to be invested
in retirement bonds (whether to the
Secretary of the Treasury or to a
designated trustee or other agent for
that purpose), or
``(II) to have such payments paid
to the employee directly in cash,
``(ii) is treated as having made the
election under clause (i)(I) in the amount
specified in paragraph (4) until the individual
specifically elects not to have such
contributions or purchases made (or
specifically elects to have such contributions
or purchases made at a different percentage or
in a different amount), and
``(iii) may elect to modify the manner in
which such amounts are invested for such year,
``(C) which meets the administrative requirements
of paragraph (2), including the notice requirement of
paragraph (2)(C), and
``(D) which does not charge unreasonable additional
fees solely on the basis that the balance in an
automatic IRA is small.
``(2) Administrative requirements.--
``(A) Payments.--The requirements of this paragraph
are met with respect to any automatic IRA arrangement
if the employer makes the payments elected or treated
as elected under paragraph (1)(B)--
``(i) on or before the last day of the
month following the month in which the
compensation otherwise would have been payable
to the employee in cash, or
``(ii) before such later deadline
prescribed by the Secretary for making such
payments, but not later than the due date for
the deposit of tax required to be deducted and
withheld under chapter 24 (relating to
collection of income tax at source on wages)
for the payroll period to which such payments
relate.
``(B) Termination of employee participation.--
Subject to a requirement for reasonable notice, an
employee may elect to terminate participation in the
arrangement at any time during a calendar year, except
that if an employee so terminates, the arrangement may
provide that the employee may not elect to resume
participation until the beginning of the next calendar
year.
``(C) Notice of election period.--The requirements
of this paragraph shall not be treated as met with
respect to any year unless the employer notifies each
employee eligible to participate, within a reasonable
period of time before the 30th day before the beginning
of such year (and, for the first year the employee is
so eligible, the 30th day before the first day such
employee is so eligible), of--
``(i) the payments that may be elected or
treated as elected under paragraph (1)(B),
``(ii) the opportunity to make the election
to terminate participation in the arrangement
under paragraph (2)(B),
``(iii) the opportunity to make the
election under paragraph (1)(B)(ii) to have
contributions or purchases made at a different
percentage or in a different amount, and
``(iv) the opportunity under paragraph
(1)(B)(iii) to modify the manner in which such
amounts are invested for such year.
``(D) Employer may permit employees to choose
ira.--Subject to subsection (f), if the employer so
elects, the arrangement provides that an employee may
elect to have contributions made to any individual
retirement plan specified by the employee.
``(E) Employer may permit employees to choose
retirement bond.--Subject to subsection (f), if the
employer so elects, the arrangement provides that an
employee may elect to have payments applied toward the
purchase of retirement bonds.
``(3) Default investments.--If an employee is treated under
clause (ii) of paragraph (1)(B) as having made an election to
participate in an automatic IRA arrangement--
``(A) the employee shall be deemed to have made an
election to make contributions and payments in the
amount determined under such clause,
``(B) such contributions shall--
``(i) if the employer has made an election
under subsection (f)(2), be transferred to an
individual retirement plan of the designated
trustee or issuer but only if the contributions
are invested as provided in paragraph (5), or
``(ii) be applied toward the purchase of a
retirement bond.
``(4) Amount of contributions and payments.--
``(A) In general.--The amount specified in this
paragraph is--
``(i) 3 percent of compensation, or
``(ii) such other percentage of
compensation as is specified in regulations
prescribed by the Secretary which is not less
than 2 percent or more than 6 percent.
``(B) Authority to provide for periodic
increases.--In the case of qualifying employees under
an automatic IRA arrangement for 2 or more consecutive
years, the Secretary may by regulation provide for
periodic (not more frequent than annual) increases in
the percentage of compensation an employee is deemed to
have elected under subparagraph (A). The considerations
the Secretary shall take into account in issuing any
regulations under this subparagraph and subparagraph
(A) shall include the potential effects on lower-income
employees as well as on adequacy of savings.
``(C) Permitted additional procedures to limit
contributions.--An employer--
``(i) shall have no responsibility for any
calendar year for determining whether, or
ensuring that, the contributions with respect
to any employee do not exceed the deductible
amount in effect for taxable years beginning in
the calendar year under section 219(b)(5)
(determined without regard to subparagraph (B)
thereof), and
``(ii) shall not be treated as failing to
satisfy the requirements of this section or any
other provision of this title merely because
the employer chooses to limit the contributions
under this subsection on behalf of a qualifying
employee for any calendar year in a manner
reasonably designed to avoid exceeding such
deductible amount.
``(5) Required investments.--
``(A) In general.--Amounts contributed under
paragraph (3)(B)(i) shall be invested only in the class
of assets or funds described in subparagraph (B) unless
the employer elects a class of assets or funds
described in subparagraph (C), (D), (E), or (F).
``(B) Target date/lifecycle option.--The class of
assets or funds described in this subparagraph is the
class of assets or funds that constitutes a qualified
default investment alternative under Department of
Labor regulation section 2550.404c-5(e)(4)(i).
``(C) Principal preservation.--The class of assets
or funds described in this subparagraph is the class of
assets or funds that is designed to protect the
principal of the individual on an ongoing basis,
including passbook savings, certificates of deposit,
insurance contracts, mutual funds, United States
savings bonds (which may be indexed for inflation), and
similar assets specified in regulations.
``(D) Balanced option.--The class of assets or
funds described in this subparagraph is the class of
assets or funds that constitutes a qualified default
investment alternative under Department of Labor
regulation section 2550.404c-5(e)(4)(ii).
``(E) Guaranteed lifetime income option or
equivalent.--The class of assets or funds described in
this subparagraph is the class of assets or funds that
is designed to provide an employee with the right to
elect to receive distributions as a defined level of
income annually (or more frequently) for at least the
remainder of the life of the employee or the joint
lives of the employee and the employee's designated
beneficiary. No later than 12 months after the date of
enactment of this Act, the Secretary of Labor and the
Secretary shall issue guidance defining a guaranteed
lifetime income or equivalent.
``(F) Other.--Any other class of assets or funds
determined by the Secretary to be a qualified
investment for purposes of this section.
``(6) Coordination with withholding.--The Secretary shall
modify the withholding exemption certificate under section
3402(f) so that, in the case of any qualifying employee covered
under an automatic IRA arrangement, any notice and election
requirements with respect to the arrangement may be met through
the use of an attachment to such certificate or other
modifications of the withholding exemption procedures.
``(7) Treatment as ira.--A qualifying employee for whom an
automatic IRA is established under paragraph (1) may elect, at
such time and in such manner and form as the Secretary may
prescribe, whether to treat the individual retirement plan as
described, or not described, in section 408A. If no such
election is made, the plan shall be treated as described in
section 408A and shall meet the requirements of section 408A.
``(8) Employer's option to obtain affirmative elections
from employees instead of automatic enrollment.--As an
alternative to automatic enrollment, an employer may choose to
comply with subsection (d)(1)(B)(ii) by notifying employees
that the employer wishes to obtain from each qualifying
employee an affirmative election either to contribute or not to
contribute to an automatic IRA, provided that any qualifying
employee who fails to make such an election is treated in the
manner provided under subsection (d)(1)(B)(ii).
``(e) Automatic IRA Contributions and Retirement Bond Purchases
Treated Like Other Contributions to Individual Retirement Plans.--
``(1) Tax treatment unaffected.--The fact that a
contribution to an individual retirement plan or purchase of a
retirement bond is made on behalf of an employee under an
automatic IRA arrangement instead of being made directly by the
employee shall not affect the deductibility or other tax
treatment of the contribution or of other amounts under this
title.
``(2) Payroll savings contributions taken into account.--
Any contribution to an individual retirement plan or purchase
of a retirement bond made on behalf of an employee under an
automatic IRA arrangement shall be taken into account in
applying the limitations on contributions to individual
retirement plans and the other provisions of this title
applicable to individual retirement plans as if the
contribution or purchase had been made directly by the
employee.
``(f) Deposits to Plans of a Designated Trustee or Issuer and for
Retirement Bonds.--
``(1) In general.--An employer shall not be treated as
failing to satisfy the requirements of this section or any
other provision of this title merely because the employer makes
all contributions (or all contributions on behalf of employees
who do not specify an individual retirement plan, trustee, or
issuer to receive the contributions) to individual retirement
plans specified in paragraph (2) or to the Secretary or his
agent for the purchase of retirement bonds specified in
paragraph (3).
``(2) Individual retirement plans other than those selected
by employee.--An employer may elect to have contributions for
all qualifying employees participating in an automatic IRA
arrangement made to individual retirement plans of a trustee or
issuer under the arrangement that has been designated by the
employer. The preceding sentence shall not apply unless each
participant is notified in writing that the participant's
balance may be transferred without cost or penalty to another
individual retirement plan established by or on behalf of the
participant.
``(3) Retirement bonds.--
``(A) In general.--The Secretary shall provide that
contributions deposited under subparagraph (B) shall be
applied to the purchase of a retirement bond in the
name of each applicable employee.
``(B) Payroll deposit features.--The Secretary
shall establish procedures so that contributions may be
applied to the purchase of retirement bonds without
undue administrative or paperwork requirements on
participating employers. Such procedures shall ensure
that only 1 such retirement bond of each type
(traditional or Roth) is issued for each TIN.
``(4) Payroll tax deposit procedure.--The procedures the
Secretary shall establish may include a procedure under which
an employer--
``(A) may include with each deposit of tax required
to be deducted and withheld under chapter 24 the
aggregate amounts, for the period covered by the
deposit, which qualifying employees have designated
under subsection clause (i)(I) of subsection (d)(1)(B)
(or are deemed to have designated under clause (ii) of
such subsection) as contributions to purchase
retirement bonds on behalf of the employees under
paragraph (3), and
``(B) specifies, in such manner as the Secretary
may prescribe, information needed to purchase
retirement bonds on behalf of each applicable employee
for whom a contribution is to be made, including--
``(i) the employee's name and TIN, and
``(ii) the amount of the contribution.
``(5) Purposes.--The purposes of the retirement bond
program established under this subsection and subsection (g)
include--
``(A) providing new savers a convenient, low-cost
investment option suitable for the initial accumulation
of small automatic IRA contributions,
``(B) to reflect the intent that the long-term
investment of automatic IRA funds for most savers be in
the private market rather than in retirement bonds,
encouraging and assisting individuals who accumulate
larger amounts in retirement bonds to transfer those
funds to individual retirement plans in the private
market, while
``(C) permitting individuals to remain invested in
retirement bonds if they choose to do so.
``(6) Regulations.--The Secretary may issue such
regulations as are necessary to carry out the purposes of this
subsection and subsection (g), including--
``(A) establishment of procedures to communicate to
individuals the importance of investment
diversification and the transfer option described in
subparagraph (B),
``(B) simplified procedures under which holders of
retirement bonds may periodically choose to have the
bonds or their proceeds transferred to available
individual retirement plans, and
``(C) means by which individuals may elect (or be
treated as electing) whether to have retirement bonds
or their proceeds so transferred.
Any such transfer shall be treated as a rollover contribution
for purposes of section 408(d)(3) (other than subparagraph (B)
thereof).
``(g) Retirement Bond.--
``(1) Retirement bond.--The term `retirement bond' means a
bond issued under chapter 31 of title 31, which by its terms,
or by regulations prescribed by the Secretary under such
chapter--
``(A) provides for interest to be credited at rates
that take into account the expected duration of the
funds invested in retirement bonds and at rates
determined or adjusted in a manner and with sufficient
frequency to provide substantial protection from
inflation,
``(B) is not transferable, and
``(C) is designed for investment for retirement
under automatic IRA arrangements or other savings
vehicles.
``(2) Individual retirement plan rules applicable.--The
provisions of this title applicable to an individual retirement
plan (as defined in section 7701(a)(37)), including provisions
relating to contributions, holding and distributions, shall
apply to a retirement bond, except as determined by the
Secretary.
``(3) Annual statement.--As soon as practicable after the
close of the calendar year, the Secretary shall make available
an annual statement to each participant setting forth--
``(A) payments made by or on behalf of the
participant for the retirement bond,
``(B) amounts earned by the retirement bond,
``(C) the value of the account as of the close of
such calendar year,
``(D) the importance of diversifying retirement
savings,
``(E) the benefits of a well-balanced and
diversified investment portfolio,
``(F) a notice of the internet website of the
Department of Labor for sources of information on
individual investing and diversification,
``(G) the procedures for redeeming a retirement
bond and directly transferring the redeemed amount into
an individual retirement plan,
``(H) other factors affecting retirement savings
decisions, and
``(I) such other information as the Secretary
determines necessary or appropriate.
``(h) Model Notice.--The Secretary shall--
``(1) provide a model notice, written in a manner
calculated to be understandable to the average worker, that is
simple for employers to use--
``(A) to notify employees of the requirement under
this section for the employer to provide certain
employees with the opportunity to participate in an
automatic IRA arrangement, and
``(B) to satisfy the requirements of subsection
(d)(2)(C),
``(2) provide uniform forms for enrollment, including
automatic enrollment, in an automatic IRA arrangement, and
``(3) establish a website or other electronic means that
small employers can access and use to obtain information on
automatic IRA arrangements and to obtain required notices and
forms.
The information referred to in paragraph (3) shall be provided
in a manner designed to assist employers and providers by
facilitating the identification by employers of private-sector
providers of individual retirement plans and associated
investment options that are appropriate for use in automatic
IRA arrangements.
``(i) Cross Reference.--For provision preempting conflicting State
laws, see section 2(k) of the Automatic IRA Act of 2013.''.
(b) Mandatory Transfers.--Section 401(a)(31)(B) is amended--
(1) by inserting ``(including an automatic IRA
arrangement)'' after ``individual retirement plan'' each place
it appears, and
(2) by adding at the end the following new sentence: ``Any
amount so transferred (and any earnings thereon) shall be
invested in a default investment described in section
408B(d)(5).''.
(c) Penalty for Failure To Timely Remit Contributions to Automatic
IRA Arrangements.--Section 4975(c) is amended by adding at the end the
following new paragraph:
``(7) Special rule for automatic ira arrangements.--For
purposes of paragraph (1), if an employer is required under an
automatic IRA arrangement under section 408B to deposit amounts
withheld from an employee's compensation into an automatic IRA
or toward the purchase of a retirement bond but fails to do so
within the time prescribed under section 408B(d)(2)(A), such
amounts shall be treated as assets of the automatic IRA.''.
(d) Coordination With Employee Retirement Income Security Act of
1974.--
(1) Exemption.--
(A) In general.--Section 3(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1002(2)) is amended--
(i) by inserting ``or (C)'' after
``subparagraph (B)'' in subparagraph (A), and
(ii) by adding at the end the following new
subparagraph:
``(C) An automatic IRA arrangement described in
section 408B(d) of the Internal Revenue Code of 1986
shall not be treated as an employee pension benefit
plan or pension plan if, under the arrangement,
contributions are to be made to an automatic IRA the
provider of which is included in the website list
established under section 408B(h)(3) of such Code, are
to be made to an individual retirement plan designated
by the employee, or are to be invested in retirement
bonds (whether to the Secretary of the Treasury or to a
designated trustee or other agent for that purpose).''.
(B) Customer identification program.--
Notwithstanding the amendment made by subparagraph (A),
an individual retirement plan established pursuant to
an automatic IRA arrangement described in section
408B(d) of the Internal Revenue Code of 1986 shall, for
purposes of any customer identification program
established under section 5318(l) of title 31, United
States Code, be treated as an account opened for the
purpose of participating in an employee benefit plan
established under the Employee Retirement Income
Security Act of 1974.
(2) Fiduciary duties.--Section 404(c)(2) of such Act is
amended--
(A) by inserting the following sentence before the
last sentence: ``In the case of an automatic IRA under
section 408B of such Code that is not exempt under
section 3(2)(C), a participant or beneficiary shall,
for purposes of paragraph (1), be treated as exercising
control over the assets in the account on and after the
7th day after notice has been given to an employee that
such automatic IRA has been established on behalf of
the employee.'', and
(B) by inserting ``or with respect to an automatic
IRA under section 408B of such Code'' after
``arrangement'' in the last sentence.
(e) Notice of Availability of Investment Guidelines.--
(1) In general.--Section 408(i) (relating to reports) is
amended by adding at the end the following new sentences: ``Any
report furnished under paragraph (2) to an individual shall
include notice of the internet website of the Department of
Labor for sources of information on individual investing and
diversification.''.
(2) Update information.--Such information shall be modified
(or updated) by the Secretary of Labor in consultation with the
Secretary of the Treasury and the Chairman of the Securities
and Exchange Commission to address needed changes due to the
creation of automatic IRAs.
(f) Failure To Provide Access to Payroll Savings Arrangements.--
Chapter 43 (relating to qualified pension, etc., plans) is amended by
adding at the end the following new section:
``SEC. 4980J. REQUIREMENTS FOR COVERED EMPLOYERS TO PROVIDE EMPLOYEES
ACCESS TO AUTOMATIC IRA ARRANGEMENTS.
``(a) General Rule.--There is hereby imposed a tax on any failure
by a covered employer (as defined in section 408B) to meet the
requirements of subsection (d) for a calendar year.
``(b) Amount.--
``(1) In general.--The amount of the tax imposed by
subsection (a) on any failure for any calendar year shall be
$100 with respect to each employee to whom such failure
relates.
``(2) Tax not to apply where failure not discovered and
reasonable diligence exercised.--No tax shall be imposed by
subsection (a) on any failure during any period for which it is
established to the satisfaction of the Secretary that the
employer subject to liability for the tax did not know that the
failure existed and exercised reasonable diligence to meet the
requirements of subsection (d).
``(3) Tax not to apply to failures corrected within 90
days.--No tax shall be imposed by subsection (a) on any failure
if--
``(A) the employer subject to liability for the tax
under subsection (a) exercised reasonable diligence to
meet the requirements of subsection (d), and
``(B) the employer provides the automatic IRA
arrangement described in section 408B to each employee
eligible to participate in the arrangement by the end
of the 90-day period beginning on the first date the
employer knew, or exercising reasonable diligence would
have known, that such failure existed.
``(4) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax would
be excessive or otherwise inequitable relative to the failure
involved.
``(c) Procedures for Notice.--The Secretary may prescribe and
implement procedures for obtaining confirmation that employers are in
compliance with the requirements of subsection (d). The Secretary, in
the Secretary's discretion, may prescribe that the confirmation shall
be obtained on an annual or less frequent basis, and may use for this
purpose the annual report or quarterly report for employment taxes, or
such other means as the Secretary may deem advisable.
``(d) Requirement To Provide Employee Access to Automatic IRA
Arrangements.--The requirements of this subsection are met if the
employer meets the requirements of section 408B.''.
(g) Waiver of Early Withdrawal Penalty for Certain Distributions
Following Initial Election To Participate in Automatic IRA
Arrangement.--Subsection (t) of section 72 is amended by adding at the
end the following new paragraph:
``(11) Distribution following initial election to
participate in automatic ira arrangement.--Paragraph (1) shall
not apply in the case of a distribution to a qualifying
employee made not later than 90 days after the initial election
under section 408B(d)(1)(B)(ii).''.
(h) Bankruptcy.--Section 522 of title 11, United States Code, is
amended--
(1) in subsection (d)(12) by inserting ``408B,'' after
``408A,'', and
(2) in subsection (n) by inserting ``, or in an automatic
IRA arrangement described in section 408B,''.
(i) Automatic IRA Advisory Group.--
(1) In general.--Not later than 60 days after the date of
enactment of this Act, the Secretary of the Treasury and the
Secretary of Labor shall jointly establish an Automatic IRA
Advisory Group (in this subsection referred to as the
``Advisory Group''). The purpose of the Advisory Group shall be
to make recommendations regarding the automatic IRA investment
options described in section 408B(d)(5) of the Internal Revenue
Code of 1986 and the website described in section 408B(h)(3) of
such Code, including, with respect to automatic IRA
arrangements, the disclosure of information regarding fees and
expenses, the use of low-cost investment options, the
appropriate use of electronic methods to provide notice and
disclosure, and such other related matters as may be determined
by the Secretaries.
(2) Membership.--The Advisory Group shall consist of not
more than 15 members and shall be composed of--
(A) such persons as the Secretaries of the Treasury
and Labor may consider appropriate to provide expertise
regarding investments for retirement, including
providers of individual retirement accounts and
individual retirement annuities described in section
408 or 408A of such Code, and
(B) one or more representatives of the Department
of Labor and of the Department of the Treasury.
(3) Compensation.--The members of the Advisory Group shall
serve without compensation.
(4) Administrative support.--The Department of the Treasury
and the Department of Labor shall jointly provide appropriate
administrative support to the Advisory Group, including
technical assistance. The Advisory Group may use the services
and facilities of such Departments, with or without
reimbursement, as jointly determined by such Departments.
(5) Report by advisory group.--Not later than 12 months
after the date of the enactment of this Act, the Advisory Group
shall submit to the Secretary of Labor and the Secretary of the
Treasury a report containing its recommendations. The
Secretaries may request that the Advisory Group submit
subsequent reports.
(j) Conforming Amendments.--
(1) The table of sections for subpart A of part I of
subchapter D of chapter 1 is amended by inserting after the
item relating to section 408A the following new item:
``Sec. 408B. Right to automatic IRA arrangements at work.''.
(2) The table of sections for chapter 43 is amended by
adding at the end the following new item:
``Sec. 4980J. Requirements for employers to provide employees access to
automatic IRA arrangements.''.
(k) Preemption of Conflicting State Laws.--The amendments made by
this section shall supersede any law of a State that would directly or
indirectly prohibit or restrict the establishment or operation of an
automatic IRA arrangement meeting the requirements of section 408B of
the Internal Revenue Code of 1986. Nothing in such amendments shall be
construed to impair or supersede any State law to the extent it
provides a remedy for the failure to make payroll deposit payments
under any such automatic IRA arrangement within the period required
under such section 408B.
(l) Effective Date.--The amendments made by this section shall
apply to calendar years beginning after December 31, 2014.
SEC. 3. CREDIT FOR SMALL EMPLOYERS MAINTAINING AUTOMATIC IRA
ARRANGEMENTS.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
(relating to business related credits) is amended by adding at the end
the following new section:
``SEC. 45S. SMALL EMPLOYER AUTOMATIC IRA ARRANGEMENT.
``(a) General Rule.--For purposes of section 38, in the case of an
eligible employer maintaining an automatic IRA arrangement meeting the
requirements of section 408B (without regard to whether the employer is
required to maintain the arrangement), the small employer automatic IRA
arrangement credit determined under this section for any taxable year
is the amount determined under subsection (b).
``(b) Amount of Credit.--
``(1) In general.--The amount of the credit determined
under this section for any taxable year with respect to an
eligible employer shall be the sum of--
``(A) $25 multiplied by the number of qualifying
employees (within the meaning of section 408B(c)) for
whom contributions are made under the automatic IRA
arrangement referred to in subsection (a) for the
calendar year in which the taxable year begins, plus
``(B) $500 for the taxable year which begins in the
first calendar year, and $250 for the taxable year
which begins in the second calendar year, in which the
eligible employer maintains an automatic IRA
arrangement meeting the requirements of section 408B.
``(2) Limitation.--No more than 10 qualifying employees may
be taken into account under paragraph (1)(A) for a taxable
year.
``(3) Duration of credit.--The credit described in
paragraph (1)(A) shall apply only for a taxable year which
begins in the first 6 calendar years in which the eligible
employer maintains an automatic IRA arrangement meeting the
requirements of section 408B.
``(4) Coordination with small employer startup credit.--
``(A) No credit shall be allowed under this section
to the employer for any taxable year if a credit is
determined under section 45E with respect to the
employer for the taxable year.
``(B) If the eligible employer maintains an
automatic IRA arrangement meeting the requirements of
section 408B with respect to any of the first three
calendar years for which the employer could adopt such
an arrangement and subsequently adopts an eligible
employer plan for its employees for any of those years
which it maintains for such third taxable year, then
section 45E(b)(1) shall be applied with respect to the
eligible employer by replacing `2 taxable years' with
`3 taxable years'.
``(c) Eligible Employer.--For purposes of this section, the term
`eligible employer' means, with respect to any calendar year in which
the taxable year begins, an employer which--
``(1) maintains an automatic IRA arrangement meeting the
requirements of section 408B,
``(2) on each day during the preceding calendar year, had
no more than 100 employees, and
``(3) did not maintain a qualifying plan or arrangement
(described in section 408B(b)) during the portion of the
calendar year preceding the adoption of the automatic IRA
arrangement and the 2 preceding calendar years.
``(d) Other Rules.--For purposes of this section, the rules of
section 45E(e) shall apply.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) (defining current year business credit) is amended by striking
``plus'' at the end of paragraph (35), by striking the period at the
end of paragraph (36) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(37) in the case of an eligible employer (as defined in
section 45S(c)) maintaining an automatic IRA arrangement
meeting the requirements of section 408B, the small employer
automatic IRA arrangement credit determined under section
45S(a).''.
(c) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 is amended by adding at the end
the following new item:
``Sec. 45S. Small employer automatic IRA arrangement.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2014.
SEC. 4. STUDIES.
(a) In General.--The Secretary of the Treasury and the Secretary of
Labor shall jointly conduct a separate study of the feasibility and
desirability of each of the following:
(1) Extending to automatic IRA arrangements spousal consent
requirements similar to, or based on, those that apply under
the Federal Employees' Thrift Savings Plan, including
consideration of whether modifications of such requirements are
necessary to apply them to automatic IRA arrangements.
(2) Establishing procedures under which amounts saved by
employees in retirement bonds would be automatically
transferred into alternative diversified investments provided
by the private sector when employees' automatic IRA balances
reach a certain dollar level as well as procedures facilitating
employees' ability to transfer into such private sector
investments.
(b) Study of Consolidation of Individual Retirement Plans.--The
Secretary of the Treasury and the Secretary of Labor shall jointly
conduct a separate study of the feasibility and desirability of--
(1) using data submitted on investments in individual
retirement accounts and annuities to enable individuals with
multiple such accounts and annuities that include very small
amounts to receive periodic notices informing them about the
location of these accounts and how such accounts and annuities
might be consolidated, and
(2) using investment arrangements associated with automatic
IRAs to assist in addressing the problem of abandoned accounts.
(c) Report.--Not later than 18 months after the date of the
enactment of this Act, the Secretaries shall report the results of each
study conducted under this section, together with any recommendations
for legislative changes, to the Committees on Finance and Health,
Education, Labor, and Pensions of the Senate and the Committees on Ways
and Means and Education and the Workforce of the House of
Representatives.
SEC. 5. ELIMINATING BARRIERS TO USE OF MULTIPLE EMPLOYER PLANS.
By December 31, 2013, the Secretaries of the Treasury and Labor
shall--
(1) prescribe administrative guidance establishing
conditions under which an employer participating in a plan
described in section 413(c) of the Internal Revenue Code of
1986 shall not have any liability under title I of the Employee
Retirement Income Security Act of 1974 with respect to the acts
or omissions of one or more other participating employers,
which regulations may require that the portion of the plan
attributable to such participating employers be spun off to
plans maintained by such employers,
(2) prescribe administrative guidance establishing
conditions under which a plan described in section 413(c) of
such Code may be treated as satisfying the qualification
requirements of sections 401(a) and 413(c) of such Code despite
the violation of such requirements by one or more participating
employers, including requiring, if appropriate, that the
portion of the plan attributable to such participating
employers be spun off to plans maintained by such employers,
and
(3) prescribe administrative guidance providing simplified
means by which plans described in section 413(c) of such Code
may satisfy the requirements of section 103 of the Employee
Retirement Income Security Act of 1974.
SEC. 6. INCREASE IN CREDIT LIMITATION FOR SMALL EMPLOYER PENSION PLAN
STARTUP COSTS.
(a) In General.--Paragraph (1) of section 45E(b) is amended to read
as follows:
``(1) for the first credit year and each of the 2 taxable
years immediately following the first credit year, the greater
of--
``(A) $500, or
``(B) the lesser of--
``(i) $250 for each employee of the
eligible employer who is not a highly
compensated employee (as defined in section
415(q)) and who is eligible to participate in
the eligible employer plan maintained by the
eligible employer, or
``(ii) $5,000.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2013.
<all>
Introduced in House
Introduced in House
Sponsor introductory remarks on measure. (CR H2706)
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Subcommittee on Health, Employment, Labor, and Pensions.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line