This bill shortens the maximum time, from three consecutive 12-month periods of at least 500 hours of service to two such periods, that an employer may require before a part-time employee is eligible for participation in certain employer-sponsored retirement plans.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 3751 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
2d Session
S. 3751
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to improve retirement plan coverage for
part-time workers.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 3, 2022
Mr. Casey (for himself and Mr. Scott of South Carolina) introduced the
following bill; which was read twice and referred to the Committee on
Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to improve retirement plan coverage for
part-time workers.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. IMPROVING COVERAGE FOR PART-TIME WORKERS.
(a) Amendments to Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 202 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1052) is amended by
adding at the end the following new subsection:
``(c) Special Rule for Certain Part-Time Employees.--
``(1) In general.--A pension plan that includes either a
qualified cash or deferred arrangement (as defined in section
401(k) of the Internal Revenue Code of 1986) or a salary
reduction agreement (as described in section 403(b) of such
Code) shall not require, as a condition of participation in the
arrangement or agreement, that an employee complete a period of
service with the employer (or employers) maintaining the plan
extending beyond the close of the earlier of--
``(A) the period permitted under subsection (a)(1)
(determined without regard to subparagraph (B)(i)
thereof); or
``(B) the first 24-month period--
``(i) consisting of 2 consecutive 12-month
periods during each of which the employee has
at least 500 hours of service; and
``(ii) by the close of which the employee
has attained the age of 21.
``(2) Exception.--Paragraph (1)(B) shall not apply to any
employee described in section 410(b)(3) of the Internal Revenue
Code of 1986.
``(3) Coordination with other rules.--
``(A) In general.--In the case of employees who are
eligible to participate in the arrangement or agreement
solely by reason of paragraph (1)(B):
``(i) Exclusions.--An employer may elect to
exclude such employees from the application of
subsections (a)(4), (k)(3), (k)(12), (k)(13),
(k)(15)(B)(i)(I), and (m)(2) of section 401 of
the Internal Revenue Code of 1986 and section
410(b) of such Code.
``(ii) Time of participation.--The rules of
subsection (a)(4) shall apply with respect to
such employees.
``(B) Top-heavy rules.--An employer may elect to
exclude all employees who are eligible to participate
in a plan maintained by the employer solely by reason
of paragraph (1)(B) from the application of the vesting
and benefit requirements under subsections (b) and (c)
of section 416 of the Internal Revenue Code of 1986.
``(4) 12-month period.--For purposes of this subsection,
12-month periods shall be determined in the same manner as
under the last sentence of subsection (a)(3)(A), except that
12-month periods beginning before January 1, 2022, shall not be
taken into account.''.
(2) Vesting.--Section 203(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended by
redesignating paragraph (4) as paragraph (5) and by inserting
after paragraph (3) the following new paragraph:
``(4) Part-time employees.--For purposes of determining
whether an employee who is eligible to participate in a
qualified cash or deferred arrangement or a salary reduction
agreement under a plan solely by reason of section 202(c)(1)(B)
has a nonforfeitable right to employer contributions--
``(A) except as provided in subparagraph (B), each
12-month period for which the employee has at least 500
hours of service shall be treated as a year of service;
``(B) paragraph (3) shall be applied by
substituting `at least 500 hours of service' for `more
than 500 hours of service' in subparagraph (A) thereof;
and
``(C) 12-month periods occurring before the 24-
month period described in section 202(c)(1)(B) shall
not be treated as years of service.
For purposes of this paragraph, 12-month periods shall be
determined in the same manner as under the last sentence of
section 202(a)(3)(A), except that 12-month periods beginning
before January 1, 2022, shall not be taken into account.''.
(b) Conforming Amendment to Internal Revenue Code of 1986.--Section
410(a) of the Internal Revenue Code of 1986 is amended by adding at the
end the following new paragraphs:
``(6) Special rule for certain part-time employees.--
``(A) In general.--In the case of a plan that
includes either a qualified cash or deferred
arrangement (as defined in section 401(k)), a trust of
which such plan is a part shall not constitute a
qualified trust under section 401(a) if the plan
requires, as a condition of participation in the plan
or arrangement, that an employee complete a period of
service with the employer (or employers) maintaining
the plan extending beyond the close of the earlier of--
``(i) the period permitted under paragraph
(1) (determined without regard to subparagraph
(B)(i) thereof), or
``(ii) the first 24-month period--
``(I) consisting of 2 consecutive
12-month periods during each of which
the employee has at least 500 hours of
service, and
``(II) by the close of which the
employee has attained the age of 21.
``(B) Exception.--Subparagraph (A)(ii) shall not
apply to any employee described in subsection (b)(3).
``(C) Coordination with other rules.--
``(i) In general.--In the case of employees
who are eligible to participate in the
arrangement or agreement solely by reason of
subparagraph (A)(ii)--
``(I) Exclusions.--An employer may
elect to exclude such employees from
the application of subsection (b) and
of subsections (a)(4), (k)(3), (k)(12),
(k)(13), (k)(15)(B)(i)(I), and (m)(2)
of section 401.
``(II) Time of participation.--The
rules of paragraph (4) shall apply with
respect to such employees.
``(ii) Top-heavy rules.--An employer may
elect to exclude all employees who are eligible
to participate in a plan maintained by the
employer solely by reason of subparagraph
(A)(ii) from the application of the vesting and
benefit requirements under subsections (b) and
(c) of section 416.
``(D) 12-month period.--For purposes of this
paragraph, 12-month periods shall be determined in the
same manner as under the last sentence of paragraph
(3)(A), except that 12-month periods beginning before
January 1, 2022, shall not be taken into account.
``(7) Part-time employees.--For purposes of determining
whether an employee who is eligible to participate in a
qualified cash or deferred arrangement or a salary reduction
agreement under a plan solely by reason of paragraph (6)(A)(ii)
has a nonforfeitable right to employer contributions--
``(A) except as provided in subparagraph (B), each
12-month period for which the employee has at least 500
hours of service shall be treated as a year of service,
``(B) section 411(a)(6) shall be applied by
substituting `at least 500 hours of service' for `more
than 500 hours of service' in subparagraph (A) thereof,
and
``(C) 12-month periods occurring before the 24-
month period described in paragraph (6)(A)(ii) shall
not be treated as years of service.
For purposes of this paragraph, 12-month periods shall be
determined in the same manner as under paragraph (6)(D).''.
(c) Pre-2021 Service.--Section 112(b) of the Setting Every
Community Up for Retirement Enhancement Act of 2019 (26 U.S.C. 401
note) is amended by striking ``section 401(k)(2)(D)(ii)'' and inserting
``paragraphs (2)(D)(ii) and (15)(B)(iii) of section 401(k)''.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after the date which is 1 year after the
date of the enactment of this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
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