117th CONGRESS 1st Session |
To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to improve rules relating to retirement plans.
April 30, 2021
Mr. Kind (for himself, Mr. Kelly of Pennsylvania, and Mr. Smith of Missouri) 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 amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to improve rules relating to retirement plans.
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 “Savings for All Vocations Enhancement Act of 2021” or the “SAVE Act of 2021”.
SEC. 2. MULTIPLE EMPLOYER 403(b) PLANS.
(a) In general.—Section 403(b) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(15) MULTIPLE EMPLOYER PLANS.—
“(A) IN GENERAL.—Except in the case of a church plan, this subsection shall not be treated as failing to apply to an annuity contract solely by reason of such contract being purchased under a plan maintained by more than 1 employer.
“(B) TREATMENT OF EMPLOYERS FAILING TO MEET REQUIREMENTS OF PLAN.—
“(i) IN GENERAL.—In the case of a plan maintained by more than 1 employer, this subsection shall not be treated as failing to apply to an annuity contract held under such plan merely because of one or more employers failing to meet the requirements of this subsection if such plan satisfies rules similar to the rules of section 413(e)(2) with respect to any such employer failure.
“(ii) ADDITIONAL REQUIREMENTS IN CASE OF NON-GOVERNMENTAL PLANS.—A plan shall not be treated as meeting the requirements of this subparagraph unless the plan meets the requirements of subparagraph (A) or (B) of section 413(e)(1), except in the case of a multiple employer plan maintained solely by any of the following: A State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing.”.
(b) Annual registration for 403(b) multiple employer plan.—Section 6057 of such Code is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:
“(g) 403(b) multiple employer plans treated as one plan.—In the case of annuity contracts to which this section applies and to which section 403(b) applies by reason of the plan under which such contracts are purchased meeting the requirements of paragraph (15) thereof, such plan shall be treated as a single plan for purposes of this section.”.
(c) Annual information returns for 403(b) multiple employer plan.—Section 6058 of the Internal Revenue Code of 1986 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:
“(f) 403(b) multiple employer plans treated as one plan.—In the case of annuity contracts to which this section applies and to which section 403(b) applies by reason of the plan under which such contracts are purchased meeting the requirements of paragraph (15) thereof, such plan shall be treated as a single plan for purposes of this section.”.
(d) Amendments to Employee Retirement Income Security Act of 1974.—
(1) TREATED AS POOLED EMPLOYER PLAN.—
(A) IN GENERAL.—Section 3(43)(A) of the Employee Retirement Income Security Act of 1974 is amended—
(i) in clause (ii), by striking “section 501(a) of such Code or” and inserting “501(a) of such Code, a plan that consists of contracts described in section 403(b) of such Code, or”; and
(ii) in the flush text at the end, by striking “the plan.” and inserting “the plan, but such term shall include any program (other than a governmental plan) maintained for the benefit of the employees of more than 1 employer that consists of contracts described in section 403(b) of such Code and that meets the requirements of subparagraph (A) or (B) of section 413(e)(1) of such Code.”.
(B) CONFORMING AMENDMENTS.—Sections 3(43)(B)(v)(II) and 3(44)(A)(i)(I) of such Act are each amended by striking “section 401(a) of such Code or” and inserting “401(a) of such Code, a plan that consists of contracts described in section 403(b) of such Code, or”.
(2) FIDUCIARIES.—Section 3(43)(B)(ii) of such Act is amended—
(A) by striking “trustees meeting the requirements of section 408(a)(2) of the Internal Revenue Code of 1986” and inserting “trustees (or other fiduciaries in the case of a plan that consists of contracts described in section 403(b) of the Internal Revenue Code of 1986) meeting the requirements of section 408(a)(2) of such Code”, and
(B) by striking “holding” and inserting “holding (or causing to be held under the terms of a plan consisting of such contracts)”.
(e) Regulations relating to plan termination.—The Secretary of the Treasury (or the Secretary’s designee) shall prescribe such regulations as may be necessary to clarify the treatment of a plan termination by an employer in the case of plans to which section 403(b)(15) of such Code applies.
(f) Modification of model plan language, etc.—
(1) PLAN NOTIFICATIONS.—The Secretary of the Treasury (or the Secretary’s designee) shall modify the model plan language published under section 413(e)(5) of the Internal Revenue Code of 1986 to include language which notifies participating employers which are exempt from tax under section 501(a) of such Code that the plan is subject to the Employee Retirement Income Security Act of 1974 and that such employer is a plan sponsor with respect to its employees participating in the multiple employer plan and, as such, has certain fiduciary duties with respect to the plan and to its employees.
(2) MODEL PLANS FOR MULTIPLE EMPLOYER 403(b) NON-GOVERNMENTAL PLANS.—For plans to which section 403(b)(15)(A) of the Internal Revenue Code of 1986 applies (other than a plan maintained for its employees by a State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing) the Secretary shall publish model plan language similar to model plan language published under section 413(e)(5) of such Code.
(3) EDUCATIONAL OUTREACH TO EMPLOYERS EXEMPT FROM TAX.—The Secretary shall provide education and outreach to increase awareness to employers which are exempt from tax under section 501(a) of such Code that multiple employer plans are subject to the Employee Retirement Income Security Act of 1974 and that such employer is a plan sponsor with respect to its employees participating in the multiple employer plan and, as such, has certain fiduciary duties with respect to the plan and to its employees.
(g) No inference with respect to church plans.—Regarding any application of section 403(b) of the Internal Revenue Code of 1986 to an annuity contract purchased under a church plan (as defined in section 414(e) of such Code) maintained by more than 1 employer, or to any application of rules similar to section 413(e) of such Code to such a plan, no inference shall be made from section 403(b)(15)(A) of such Code (as added by this Act) not applying to such plans.
(1) IN GENERAL.—The amendments made by this section shall apply to plan years beginning after December 31, 2021.
(2) RULE OF CONSTRUCTION.—Nothing in the amendments made by subsection (a) shall be construed as limiting the authority of the Secretary of the Treasury or the Secretary’s delegate (determined without regard to such amendment) to provide for the proper treatment of a failure to meet any requirement applicable under such Code with respect to one employer (and its employees) in the case of a plan to which section 403(b)(15) applies.
SEC. 3. Application of credit for small employer pension plan startup costs to employers which join an existing plan.
(a) In general.—Section 45E(d)(3)(A) of the Internal Revenue Code of 1986 is amended by striking “effective” and inserting “effective with respect to the eligible employer”.
(b) Effective date.—The amendment made by this section shall apply to eligible employer plans which become effective with respect to the eligible employer after the date of the enactment of this Act.
SEC. 4. FINDINGS RELATING TO S CORPORATION ESOPs.
Congress finds the following:
(1) On January 1, 1998, nearly 25 years after the Employee Retirement Income Security Act of 1974 was enacted and the employee stock ownership plan (hereafter in this section referred to as an “ESOP”) was created, employees were first permitted to be owners of subchapter S corporations pursuant to the Small Business Job Protection Act of 1996 (Public Law 104–188).
(2) With the passage of the Taxpayer Relief Act of 1997 (Public Law 105–34), Congress designed incentives to encourage businesses to become ESOP-owned S corporations.
(3) Since that time, several thousand companies have become ESOP-owned S corporations, creating an ownership interest for several million Americans in companies in every State in the country, in industries ranging from heavy manufacturing to construction and contracting to services.
(4) Every United States worker who is an employee-owner of an S corporation company through an ESOP has a valuable qualified retirement savings account.
(5) Recent studies have shown that employees of ESOP-owned S corporations enjoy greater job stability, wages and benefits than employees of comparable companies; and ESOP companies are better able to weather economic downturns.
(6) Studies also show that employee-owners of S corporation ESOP companies have amassed meaningful retirement savings through their ESOP accounts that will give them the means to retire with dignity.
(7) It is the goal of Congress to preserve and foster employee ownership of S corporations through ESOPs.
SEC. 5. Reduction in excise tax on certain accumulations in qualified retirement plans.
(a) In general.—Section 4974(a) of the Internal Revenue Code of 1986 is amended by striking “50 percent” and inserting “25 percent”.
(b) Reduction in excise tax on failures To take required minimum distributions.—Section 4974 of such Code is amended by adding at the end the following new subsection:
“(e) Reduction of tax in certain cases.—
“(1) REDUCTION.—In the case of a taxpayer who—
“(A) corrects, during the correction window, a shortfall of distributions from an individual retirement plan which resulted in imposition of a tax under subsection (a), and
“(B) submits a return, during the correction window, reflecting such tax (as modified by this subsection),
the first sentence of subsection (a) shall be applied by substituting ‘10 percent’ for ‘25 percent’.
“(2) CORRECTION WINDOW.—For purposes of this subsection, the term ‘correction window’ means the period of time beginning on the date on which the tax under subsection (a) is imposed with respect to a shortfall of distributions from an individual retirement plan, and ending on the earlier of—
“(A) the date on which the Secretary initiates an audit, or otherwise demands payment, with respect to the shortfall of distributions, or
“(B) the last day of the second taxable year that begins after the end of the taxable year in which the tax under subsection (a) is imposed.”.
(c) Effective date.—The amendments made by this section shall apply to taxable years beginning after December 31, 2021.
SEC. 6. Individual retirement plan statute of limitations for excise tax on excess contributions and certain accumulations.
Section 6501(l) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(4) INDIVIDUAL RETIREMENT PLANS.—
“(A) IN GENERAL.—For purposes of any tax imposed by section 4973 or 4974 in connection with an individual retirement plan, the return referred to in this section shall be the income tax return filed by the person on whom the tax under such section is imposed for the year in which the act (or failure to act) giving rise to the liability for such tax occurred.
“(B) RULE IN CASE OF INDIVIDUALS NOT REQUIRED TO FILE RETURN.—In the case of a person who is not required to file an income tax return for such year—
“(i) the return referred to in this section shall be the income tax return that such person would have been required to file but for the fact that such person was not required to file such return, and
“(ii) the 3-year period referred to in subsection (a) with respect to the return shall be deemed to begin on the date by which the return would have been required to be filed (excluding any extension thereof).”.