117th CONGRESS 1st Session |
To establish the Retirement Savings Lost and Found, and for other purposes.
November 3, 2021
Ms. Bonamici introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, 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
To establish the Retirement Savings Lost and Found, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
This Act may be cited as the “Retirement Savings Lost and Found Act of 2021”.
SEC. 2. Retirement Savings Lost and Found.
(1) ESTABLISHMENT OF RETIREMENT SAVINGS LOST AND FOUND.—Subtitle C of title IV of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1341 et seq.) is amended by adding at the end the following:
“SEC. 4051. Retirement Savings Lost and Found.
“(1) IN GENERAL.—Not later than 3 years after the date of the enactment of this section, the Secretary, in consultation with the Secretary of the Treasury, shall establish an online searchable database (to be managed by the Secretary in accordance with this section) to be known as the ‘Retirement Savings Lost and Found’. The Retirement Savings Lost and Found shall—
“(A) allow an individual to search for information that enables the individual to locate the administrator of any plan described in paragraph (2) with respect to which the individual is or was a participant or beneficiary, and to provide contact information for the administrator of any such plan;
“(B) allow the Secretary to assist such an individual in locating any such plan of the individual; and
“(C) allow the Secretary to make any necessary changes to contact information on record for the administrator based on any changes to the plan due to merger or consolidation of the plan with any other plan, division of the plan into two or more plans, bankruptcy, termination, change in name of the plan, change in name or address of the administrator, or other causes.
The Retirement Savings Lost and Found established under this paragraph shall include information reported under this section and other relevant information obtained by the Secretary.
“(2) PLANS DESCRIBED.—A plan described in this paragraph is a plan to which the vesting standards of section 203 apply.
“(b) Administration.—The Retirement Savings Lost and Found established under subsection (a) shall provide individuals described in subsection (a)(1) only with the ability to view contact information for the administrator of any plan with respect to which the individual is or was a participant or beneficiary, sufficient to allow the individual to locate the individual’s plan in order to recover any benefit owing to the individual under the plan.
“(c) Safeguarding participant privacy and security.—In establishing the Retirement Savings Lost and Found under subsection (a), the Secretary shall take all necessary and proper precautions to ensure that individuals’ plan information maintained by the Retirement Savings Lost and Found is protected and that persons other than the individual cannot fraudulently claim the benefits to which any individual is entitled.
“(d) Definitions.—For purposes of this section and section 4052—
“(1) the term ‘administrator’ has the meaning given such term in section 3(16)(A); and
“(2) the term ‘Secretary’ means the Secretary of Labor.
“SEC. 4052. Office of the Retirement Savings Lost and Found.
“(a) Establishment; Responsibilities of Office.—
“(1) IN GENERAL.—Not later than 2 years after the date of the enactment of this section, the Secretary, in consultation with the Secretary of the Treasury, shall establish within the Department of Labor an Office of the Retirement Savings Lost and Found (in this section referred to as the ‘Office’).
“(2) RESPONSIBILITIES OF OFFICE.—The Office shall—
“(A) carry out subsection (b) of this section; and
“(B) maintain the Retirement Savings Lost and Found established under section 4051.
“(b) Certain non-Responsive participants entitled to small benefits.—
“(A) TRANSFER TO THE OFFICE OF THE RETIREMENT SAVINGS LOST AND FOUND.—The administrator of a plan that is not terminated and to which section 401(a)(31)(B) of the Internal Revenue Code of 1986 applies may transfer to the Office the amount allowed to be transferred under section 401(a)(31)(B)(iv) of such Code for a non-responsive participant (after the requirements of section 401(a)(31)(B)(iii) are met).
“(B) INFORMATION AND PAYMENT TO THE OFFICE.—Upon making a transfer under subparagraph (A), the administrator shall provide to the Office such information and certifications as the Office shall specify, including with respect to the transferred amount and the non-responsive participant, within such time and in such manner as may be specified by the Office.
“(C) INFORMATION REQUIREMENTS AFTER TRANSFER.—
“(i) IN GENERAL.—In the event that, after a transfer is made under subparagraph (A), the relevant non-responsive participant contacts the administrator, the administrator shall notify and provide such information to the non-responsive participant, within such time and in such manner, as the Office shall specify.
“(ii) CIVIL PENALTY.—The Secretary may assess a civil penalty against the administrator of a plan of up to $100 a day from the date of the administrator’s failure or refusal to provide notice and required information to a non-responsive participant in accordance with clause (i).
“(D) SEARCH AND PAYMENT BY THE OFFICE FOLLOWING TRANSFER.—Upon receiving information described in subparagraph (C), the Office shall attempt to contact (including conducting a search for) the non-responsive participant for whom the Office has received a transfer under subparagraph (A). Upon location of a non-responsive participant who claims benefits, the Office shall make a single payment to the non-responsive participant in an amount equal to the sum of—
“(i) the amount transferred to the Office under subparagraph (A) for such participant; and
“(ii) interest, determined in the same manner as for purposes of section 4050.
The Office shall take all reasonable steps to assist the participant to roll over the payment made under this paragraph to an eligible retirement plan (as defined in section 402(c)(8) of the Internal Revenue Code of 1986) in a manner that ensures that such payment will not be includible in the gross income of the participant for the taxable year in which paid.
“(2) DEFINITION.—For purposes of this subsection, the term ‘non-responsive participant’ means—
“(A) a participant or beneficiary of a plan described in paragraph (1)(A)—
“(i) who is entitled to a benefit subject to a transfer under section 401(a)(31)(B)(iii) of the Internal Revenue Code of 1986; and
“(ii) for whom the plan has satisfied the conditions in such section and section 401(a)(31)(B)(iv) of such Code, and any requirements relating to the location of missing participants established by the Secretary pursuant to title I of this Act; and
“(B) any other participant or beneficiary determined to be lost or missing under regulations to be issued by the Secretary, in consultation with the Secretary of the Treasury.
“(3) REGULATORY AUTHORITY.—The Secretary shall prescribe such regulations as are necessary to carry out the purposes of this section.
“(c) Information collection.—The administrator of a plan to which the vesting standards of section 203 apply shall submit to the Office, at such time and in such form and manner as is prescribed in regulations—
“(1) the information described in paragraphs (1) through (4) of section 6057(b) of the Internal Revenue Code of 1986;
“(2) the information described in subparagraphs (A), (B), (E), and (F) of section 6057(a)(2) of the Internal Revenue Code of 1986; and
“(3) such other information as the Secretary may require.
“(d) Program integrity audit.—On an annual basis for each of the first 5 years beginning after the date of enactment of this section and every 5 years thereafter, the Inspector General of the Department of Labor shall conduct an audit of the administration of the Retirement Savings Lost and Found by the Office, including an assessment of fraud relating to claims of benefits.
“(e) Application of State escheat laws.—No State law relating to the disposition of unclaimed or abandoned property under which a benefit amount under a plan to which this section applies would escheat to a State or otherwise become the property of a State under such a law shall apply with respect to any such benefit amount for any period beginning on or after the date of enactment of this section.
“(f) Effective date.—The requirements of subsections (b), (c), and (d) shall apply with respect to plan years beginning after the second December 31 occurring after the date of the enactment of this section.
“(g) Authorization of appropriations.—There are authorized to be appropriated such sums as may be necessary to carry out this section.”.
(2) CONFORMING AMENDMENT.—The table of contents for the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.) is amended by inserting after the matter relating to section 4050 the following:
“Sec. 4051. Retirement Savings Lost and Found.
“Sec. 4052. Office of the Retirement Savings Lost and Found.”.
(b) Mandatory transfers of rollover distributions.—
(A) IN GENERAL.—Subparagraph (B) of section 404(c)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(3)) is amended by striking the period at the end and inserting “, and, to the extent the Secretary of Labor provides in guidance or regulations issued after the enactment of this Act, is made to—
“(i) a target date or life cycle fund held under such account;
“(ii) as described in section 2550.404a–2 of title 29, Code of Federal Regulations, an investment product held under such account designed to preserve principal and provide a reasonable rate of return;
“(iii) the Office of the Retirement Savings Lost and Found in accordance with section 401(a)(31)(B)(iv) of the Internal Revenue Code of 1986 and section 4052(b)(1)(A); or
“(iv) such other option as the Secretary of Labor may so provide.”.
(B) REGULATIONS.—Not later than 1 year after the date of the enactment of this Act, the Secretary of Labor shall promulgate regulations identifying the target date or life cycle funds, or specifying the characteristics of such a fund, that will be deemed to meet the requirements of section 404(c)(3)(B)(i) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)(3)(B)), as amended by subparagraph (A).
(2) EXPANSION OF CAP; AUTHORITY TO TRANSFER LESSER AMOUNTS.—
(A) CAP.—Sections 401(a)(31)(B)(ii) and 411(a)(11)(A) of the Internal Revenue Code of 1986 and section 203(e)(1) of the Employee Retirement Income Security Act of 1974 are each amended by striking “$5,000” and inserting “$6,000”.
(B) DISTRIBUTION OF LARGER AMOUNTS TO INDIVIDUAL RETIREMENT PLANS ONLY.—Section 401(a)(31)(B)(i) of such Code is amended by adding at the end the following: “The Office of the Retirement Savings Lost and Found established by section 4051 of the Employee Retirement Income Security Act of 1974 shall not be treated as a trustee or issuer that is eligible to receive such distributions.”.
(i) AMENDMENT OF INTERNAL REVENUE CODE OF 1986.—Section 401(a)(31)(B) of such Code is amended by adding at the end the following new clauses:
“(iii) TREATMENT OF LESSER AMOUNTS.—In the case of a trust which is part of an eligible plan (as defined in clause (ii)) to which the vesting standards of section 203 of the Employee Retirement Income Security Act of 1974 apply, such trust shall not be a qualified trust under this section unless such plan provides that, if a participant in the plan separates from the service covered by the plan and the nonforfeitable accrued benefit described in clause (ii) is not in excess of $1,000 (including in any case in which payment of such a benefit is attempted but not accepted by the participant or beneficiary within 6 months of such payment attempt)—
“(I) the plan administrator may, after conducting a diligent search as provided in clause (vi) and notifying the participant (either separately or as part of the notice under section 402(f) of such Code) that the participant is entitled to such benefit, or attempting to pay the benefit directly to the participant, transfer such amount to the Office in accordance with clause (iv); and
“(II) the plan administrator shall not charge against the benefit any administrative or other fee for such transfer.
“(iv) TRANSFERS TO RETIREMENT SAVINGS LOST AND FOUND.—If, after a plan administrator takes the actions required under clause (iii)(I), the participant does not—
“(I) not later than 3 years after the notification under such paragraph, make an election under subparagraph (A) or elect to receive a distribution of the benefit directly, or
“(II) accept any payment made under such clause within 3 years of the attempted payment,
the plan administrator may transfer the amount of such benefit to the Office of the Retirement Savings Lost and Found in accordance with section 4052(b) of the Employee Retirement Income Security Act of 1974.
“(v) INCOME TAX TREATMENT OF TRANSFERS TO AND DISTRIBUTIONS FROM RETIREMENT SAVINGS LOST AND FOUND.—For purposes of determining the income tax treatment of transfers to the Office of the Retirement Savings Lost and Found under clause (iv) or of transfers to an employee benefit plan or individual retirement account—
“(I) such a transfer shall be treated as a transfer to an individual retirement plan under clause (i); and
“(II) the distribution of such amounts by the Office of the Retirement Savings Lost and Found shall be treated as a distribution in accordance with section 4050(a) of the Employee Retirement Income Security Act of 1974 from an individual retirement plan.
“(vi) DILIGENT SEARCH.—For purposes of clause (iii), a diligent search requires taking all of the following steps, consistent with guidance issued by the Secretary of Labor, in consultation with the Secretary of the Treasury, not later than 18 months after the date of enactment of this clause:
“(I) A search for alternate contact information (address, telephone, or email) in the possession of the plan, any related plan, or the plan sponsor.
“(II) Use of free online search engines, public record databases, publicly available directories, or obituaries.
“(III) Use of a commercial locator service, a credit reporting agency or a proprietary internet search tool for locating individuals.
“(IV) The mailing of a contact letter sent by United States Postal Service via certified mail to the last known address and to any other alternate address found.”.
(ii) AMENDMENT OF EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.—Section 404 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1104) is amended by adding at the end the following new subsection:
“(f) Safe harbor with respect to transferring account balance of missing participants.—
“(1) IN GENERAL.—With respect to the transfer requirements of section 401(a)(31)(B) of the Internal Revenue Code of 1986, the requirements of subsection (a)(1)(B) with respect to the administrator will be deemed to be satisfied in the case of a participant—
“(A) who separates from the service covered by the plan, and
“(B) the nonforfeitable accrued benefit of whom (as described in section 401(a)(31)(B)(ii) of such Code) is not in excess of $1,000,
if the administrator adopts practices and procedures with respect to maintaining up-to-date contact information on participants and fulfills the requirements of paragraphs (2), (3), and (4).
“(2) NOTIFICATION.—The requirements of this paragraph are satisfied if the administrator conducts a diligent search as provided in paragraph (4) and notifies the participant (either separately or as part of the notice under section 402(f) of such Code) that the participant is entitled to such benefit, or attempts to pay the benefit directly to the participant.
“(3) TRANSFERS TO RETIREMENT SAVINGS LOST AND FOUND.—If, after an administrator takes the actions required under paragraph (2), the participant does not—
“(A) not later than 3 years after the notification under such paragraph, make an election under section 401(a)(31)(A) of such Code or elect to receive a distribution of the benefit directly, or
“(B) accept any payment made under such paragraph within 3 years of the attempted payment,
the administrator may transfer the amount of such benefit to the Office of the Retirement Savings Lost and Found in accordance with section 4052(b).
“(4) DILIGENT SEARCH.—For purposes of paragraph (2), a diligent search requires taking all of the following steps, consistent with guidance issued by the Secretary of Labor, in consultation with the Secretary of the Treasury, not later than 18 months after the date of enactment of this clause:
“(A) A search for alternate contact information (address, telephone, or email) in the possession of the plan, any related plan, or the plan sponsor.
“(B) Use of free online search engines, public record databases, publicly available directories, or obituaries.
“(C) Use of a commercial locator service, a credit reporting agency or a proprietary internet search tool for locating individuals.
“(D) The mailing of a contact letter sent by United States Postal Service via certified mail to the last known address and to any other alternate address found.
An administrator of a plan that takes all of the steps described in the preceding subparagraphs and that adopts practices and procedures with respect to maintaining up-to-date contact information on participants shall be deemed to meet its fiduciary duty under section 404 with respect to locating a non-responsive participant (as defined in section 4052(b)(2)).”.
(D) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to vested benefits with respect to participants who separate from service connected to the plan in plan years beginning 1 year after the finalization of the regulations issued pursuant to section 4052(b)(2).
(c) Better reporting for mandatory transfers.—
(1) IN GENERAL.—Paragraph (2) of section 6057(a) of the Internal Revenue Code of 1986 is amended—
(i) by striking “during such plan year” in clause (i) and inserting “during the plan year immediately preceding such plan year”;
(ii) by adding “and” at the end of clause (i); and
(iii) by striking clause (iii);
(B) by redesignating subparagraph (E) as subparagraph (G);
(C) by striking “and” at the end of subparagraph (D); and
(D) by inserting after subparagraph (D) the following new subparagraphs:
“(E) the name and taxpayer identifying number of each participant or former participant in the plan—
“(i) who, during the current plan year or any previous plan year, was reported under subparagraph (C), and with respect to whom the benefits described in subparagraph (C)(ii) were fully paid during the plan year,
“(ii) with respect to whom any amount was distributed under section 401(a)(31)(B) during the plan year, or
“(iii) with respect to whom a deferred annuity contract was distributed during the plan year,
“(F) in the case of a participant or former participant to whom subparagraph (E) applies (and to the extent provided in regulations designed to protect privacy to be issued by the Secretary of Labor)—
“(i) in the case of a participant described in clause (ii) thereof, the name and address of the designated trustee or issuer described in section 401(a)(31)(B)(i) and the account number of the individual retirement plan to which the amount was distributed, and
“(ii) in the case of a participant described in clause (iii) thereof, the name and address of the issuer of such annuity contract and the contract or certificate number, and”.
(2) RULES RELATING TO DIRECT TRUSTEE-TO-TRUSTEE TRANSFERS.—
(A) IN GENERAL.—Paragraph (6) of section 402(e) of such Code is amended—
(i) by striking “transfers.—Any” and inserting “transfers.—
“(A) IN GENERAL.—Any”; and
(ii) by adding at the end the following new subparagraph:
“(B) NOTIFICATION OF TRUSTEE.—In the case of a distribution under section 401(a)(31)(B), the administrator shall notify the designated trustee or issuer described in clause (i) thereof that the transfer is a mandatory distribution required by such section.”.
(B) PENALTY.—Subsection (i) of section 6652 of such Code is amended—
(i) by striking “to Recipients” in the heading and inserting “or Notification”;
(ii) by striking “402(f),” and inserting “402(f) or a notification as required by section 402(e)(6)(B),”; and
(iii) by striking “such written explanation” and inserting “such written explanation or notification”.
(C) REPORTS.—Subsection (i) of section 408 of such Code is amended—
(i) by redesignating subparagraphs (A) and (B) of paragraph (2) as clauses (i) and (ii), respectively, and by moving such clauses 2 ems to the right;
(ii) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively, and by moving such subparagraphs 2 ems to the right;
(iii) by striking “as the Secretary prescribes” in subparagraph (B)(ii), as so redesignated, and all that follows through “a simple retirement account” and inserting “as the Secretary prescribes”.
“(3) SIMPLE RETIREMENT ACCOUNTS.—In the case of a simple retirement account”;
(iv) by striking “Reports.—The trustee of” and inserting “Reports.—
“(1) IN GENERAL.—The trustee of”;
(v) by striking “under paragraph (2)” in paragraph (3), as redesignated by clause (iii), and inserting “under paragraph (1)(B)”; and
(vi) by inserting after paragraph (1)(B)(ii), as redesignated by the preceding clauses, the following new paragraph:
“(2) MANDATORY DISTRIBUTIONS.—In the case of an account, contract, or annuity to which a transfer under section 401(a)(31)(B) is made (including a transfer from the individual retirement plan to which the original transfer under such section was made to another individual retirement plan), the report required by this subsection for the year of the transfer and any year in which the information previously reported in subparagraph (B) changes shall—
“(A) identify such transfer as a mandatory distribution required by such section,
“(B) include the name, address, and taxpayer identifying number of the trustee or issuer of the individual retirement plan to which the amount is transferred, and
“(C) be filed with the Secretary of Labor.”.
(3) NOTIFICATION OF PARTICIPANTS UPON SEPARATION.—Subsection (e) of section 6057 of such Code is amended by inserting “, and, with respect to any benefit of the individual subject to section 401(a)(31)(B), a notice of availability of, and the contact information for, the Retirement Savings Lost and Found established under section 4051 of the Employee Retirement Income Security Act of 1974” before the period at the end of the second sentence.
(4) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to distributions made in, and returns and reports relating to, years beginning after the second December 31 occurring after the date of the enactment of this Act.
(d) Requirement of electronic filing.—
(1) IN GENERAL.—Paragraph (2) of section 6011(e) of the Internal Revenue Code of 1986 is amended—
(A) by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and by moving such clauses 2 ems to the right;
(B) by striking “Regulations.—In prescribing” and inserting “Regulations.—
“(A) IN GENERAL.—In prescribing”; and
(C) by adding at the end the following new subparagraph:
“(C) EXCEPTIONS.—Notwithstanding subparagraph (A), the Secretary shall require returns or reports required under—
“(i) sections 6057, 6058, and 6059, and
“(ii) sections 408(i), 6041, and 6047 to the extent such return or report relates to the tax treatment of a distribution from a plan, account, contract, or annuity,
to be filed on magnetic media, but only with respect to persons who are required to file at least 50 returns during the calendar year which includes the first day of the plan year to which such returns or reports relate.”.
(2) EFFECTIVE DATE.—The amendments made by this paragraph shall apply to returns and reports relating to years beginning after the second December 31 occurring after the date of the enactment of this Act.