ERISA ACT and the 107th Congress

ERISA Appears in the following Actions of the 107th Congress
---------------------------------------
1 . ERISA Guaranteed Benefits COLA Act of 2001 (Introduced in House)[H.R.83.IH]
2 . Emergency Retiree Health Benefits Protection Act of 2002 (Introduced in Senate)[S.2904.IS]
3 . White-Collar Crime Penalty Enhancement Act of 2002 (Introduced in Senate)[S.2717.IS]
4 . Emergency Retiree Health Benefits Protection Act of 2001 (Introduced in House)[H.R.1322.IH]
5 . COBRA Coverage Extension and Affordability Act of 2001 (Introduced in House)[H.R.2005.IH]
6 . Health Care Account Act of 2001 (Introduced in House)[H.R.2658.IH]
7 . To amend title I of the Employee Retirement Income Security Act of 1974 to provide, in the case of an employee welfare benefit plan providing benefits in the event of disability, an... (Introduced in House)[H.R.1422.IH]
8 . To amend title I of the Employee Retirement Income Security Act of 1974 to provide, in the case of an employee welfare benefit plan providing benefits in the event of disability, an... (Introduced in House)[H.R.1104.IH]
9 . Safeguarding America's Retirement Act of 2002 (Introduced in House)[H.R.3677.IH]
10 . To amend title IV of the Employee Retirement Income Security Act of 1974 to increase the phase-in limitation applicable to the guarantee under such title of benefit improvements made... (Introduced in House)[H.R.2134.IH]
11 . Women's Pension Protection Act of 2002 (Introduced in Senate)[S.2707.IS]
12 . Pension Protection Act of 2002 (Introduced in House)[H.R.4778.IH]
13 . Health Insurance Continuation Improvement Act of 2001 (Introduced in House)[H.R.1663.IH]
14 . Retirement Security Protection Act of 2002 (Introduced in Senate)[S.1919.IS]
15 . Mental Health and Substance Abuse Parity Amendments of 2001 (Introduced in House)[H.R.162.IH]
16 . Reconstructive Surgery Act of 2001 (Introduced in Senate)[S.576.IS]
17 . Comprehensive Insurance Coverage of Childhood Immunization Act of 2001 (Introduced in House)[H.R.580.IH]
18 . Reconstructive Surgery Act of 2002 (Introduced in House)[H.R.4959.IH]
19 . Improved Patient Access to Clinical Studies Act of 2001 (Introduced in Senate)[S.257.IS]
20 . Equity in Fertility Coverage Act of 2001 (Introduced in House)[H.R.568.IH]
21 . Primary Care for Children Act of 2001 (Introduced in House)[H.R.2342.IH]
22 . National Employee Savings and Trust Equity Guarantee Act (Introduced in Senate)[S.1971.IS]
23 . Comprehensive Retirement Security and Pension Reform Act of 2001 (Introduced in Senate)[S.631.IS]
24 . Comprehensive Retirement Security and Pension Reform Act of 2001 (Reported in House)[H.R.10.RH]
25 . Comprehensive Retirement Security and Pension Reform Act of 2001 (Introduced in House)[H.R.10.IH]
26 . Comprehensive Retirement Security and Pension Reform Act of 2001 (Engrossed as Agreed to or Passed by House)[H.R.10.EH]
27 . Comprehensive Retirement Security and Pension Reform Act of 2001 (Placed on Calendar in Senate)[H.R.10.PCS]
28 . Prompt Payment of Health Benefit Claims Act of 2001 (Introduced in House)[H.R.287.IH]
29 . Retirement Security and Savings Act of 2001 (Introduced in Senate)[S.742.IS]
30 . Health Benefits Claims Prompt Payment Act of 2002 (Introduced in House)[H.R.4983.IH]
31 . States' Right To Innovate in Health Care Act of 2001 (Introduced in House)[H.R.1033.IH]
32 . Eliminate Colorectal Cancer Act of 2001 (Reported in Senate)[S.710.RS]
33 . Pension Plan Protection Act (Introduced in Senate)[S.1921.IS]
34 . Eliminate Colorectal Cancer Act of 2001 (Introduced in Senate)[S.710.IS]
35 . Health Security for All Americans Act (Introduced in House)[H.R.5269.IH]
36 . American Health Security Act of 2001 (Introduced in House)[H.R.1200.IH]
37 . To amend the Public Health Service Act, the Employee Retirement Income Security Act of 1974, and the Internal Revenue Code of 1986 to require that group and individual health insurance... (Introduced in House)[H.R.547.IH]
38 . Eliminate Colorectal Cancer Act of 2001 (Introduced in House)[H.R.1520.IH]
39 . Women's Obstetrician and Gynecologist Medical Access Now Act (Introduced in House)[H.R.1440.IH]
40 . Retirement Account Portability Act of 2001 (Introduced in House)[H.R.155.IH]
41 . Family Building Act of 2001 (Introduced in House)[H.R.389.IH]
42 . Treatment of Children's Deformities Act of 2001 (Introduced in House)[H.R.792.IH]
43 . National Employee Savings and Trust Equity Guarantee Act (Reported in Senate)[S.1971.RS]
44 . Retirement Opportunity Expansion Act of 2001 (Introduced in House)[H.R.3488.IH]
45 . Second Opinion Coverage Act of 2002 (Introduced in House)[H.R.5325.IH]
46 . Mammogram Availability Act of 2001 (Introduced in House)[H.R.292.IH]
47 . Osteoporosis Early Detection and Prevention Act of 2001 (Introduced in House)[H.R.1683.IH]
48 . Hormone Replacement Therapy Alternative Treatment Fairness Act (Introduced in House)[H.R.5204.IH]
49 . WIRE Act (Introduced in Senate)[S.2190.IS]
50 . Early Detection and Prevention of Osteoporosis and Related Bone Diseases Act of 2001 (Introduced in Senate)[S.819.IS]

Status: [Not necessarily complete]

On 12/5/2001, S.Amdt. 2170 incorporated H.R. 1140, the Railroad Retirement and Survivors' Improvement Act, as substitute text in H.R. 10, formerly the Comprehensive Retirement Security and Pension Reform Act. H.R. 10, as enacted into law, was the Railroad Retirement and Survivor's Improvement Act. In separate actions, provisions of the prior version of H.R. 10, the Comprehensive Retirement Security and Pension Reform Act (as passed in the House), were included in H.R. 1836, the Economic Growth and Tax Relief Reconciliation Act. H.R. 1836 became P.L. 107-16 on 6/7/2001. --

the details:

107th CONGRESS

1st Session

To provide for pension reform, and for other purposes.

HR 10 EH

107th CONGRESS

1st Session

To provide for pension reform, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

(a) SHORT TITLE- This Act may be cited as the `Comprehensive Retirement Security and Pension Reform Act of 2001'.

(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.

(c) TABLE OF CONTENTS- The table of contents of this Act is as follows:

Sec. 1. Short title; references; table of contents.

Sec. 101. Modification of IRA contribution limits.

Sec. 201. Increase in benefit and contribution limits.

Sec. 202. Plan loans for subchapter S owners, partners, and sole proprietors.

Sec. 203. Modification of top-heavy rules.

Sec. 204. Elective deferrals not taken into account for purposes of deduction limits.

Sec. 205. Repeal of coordination requirements for deferred compensation plans of State and local governments and tax-exempt organizations.

Sec. 206. Elimination of user fee for requests to IRS regarding pension plans.

Sec. 207. Deduction limits.

Sec. 208. Option to treat elective deferrals as after-tax contributions.

Sec. 209. Availability of qualified plans to self-employed individuals who are exempt from the self-employment tax by reason of their religious beliefs.

Sec. 210. Certain nonresident aliens excluded in applying minimum coverage requirements.

Sec. 301. Catch-up contributions for individuals age 50 or over.

Sec. 302. Equitable treatment for contributions of employees to defined contribution plans.

Sec. 303. Faster vesting of certain employer matching contributions.

Sec. 304. Modifications to minimum distribution rules.

Sec. 305. Clarification of tax treatment of division of section 457 plan benefits upon divorce.

Sec. 306. Provisions relating to hardship distributions.

Sec. 307. Waiver of tax on nondeductible contributions for domestic or similar workers.

Sec. 401. Rollovers allowed among various types of plans.

Sec. 402. Rollovers of IRAs into workplace retirement plans.

Sec. 403. Rollovers of after-tax contributions.

Sec. 404. Hardship exception to 60-day rule.

Sec. 405. Treatment of forms of distribution.

Sec. 406. Rationalization of restrictions on distributions.

Sec. 407. Purchase of service credit in governmental defined benefit plans.

Sec. 408. Employers may disregard rollovers for purposes of cash-out amounts.

Sec. 409. Minimum distribution and inclusion requirements for section 457 plans.

Sec. 501. Repeal of percent of current liability funding limit.

Sec. 502. Maximum contribution deduction rules modified and applied to all defined benefit plans.

Sec. 503. Excise tax relief for sound pension funding.

Sec. 504. Excise tax on failure to provide notice by defined benefit plans significantly reducing future benefit accruals.

Sec. 505. Treatment of multiemployer plans under section 415.

Sec. 506. Protection of investment of employee contributions to 401(k) plans.

Sec. 507. Periodic pension benefits statements.

Sec. 508. Prohibited allocations of stock in S corporation ESOP.

Sec. 601. Modification of timing of plan valuations.

Sec. 602. ESOP dividends may be reinvested without loss of dividend deduction.

Sec. 603. Repeal of transition rule relating to certain highly compensated employees.

Sec. 604. Employees of tax-exempt entities.

Sec. 605. Clarification of treatment of employer-provided retirement advice.

Sec. 606. Reporting simplification.

Sec. 607. Improvement of employee plans compliance resolution system.

Sec. 608. Repeal of the multiple use test.

Sec. 609. Flexibility in nondiscrimination, coverage, and line of business rules.

Sec. 610. Extension to all governmental plans of moratorium on application of certain nondiscrimination rules applicable to State and local plans.

Sec. 611. Notice and consent period regarding distributions.

Sec. 612. Annual report dissemination.

Sec. 613. Technical corrections to SAVER Act.

Sec. 701. Missing participants.

Sec. 702. Reduced PBGC premium for new plans of small employers.

Sec. 703. Reduction of additional PBGC premium for new and small plans.

Sec. 704. Authorization for PBGC to pay interest on premium overpayment refunds.

Sec. 705. Substantial owner benefits in terminated plans.

Sec. 706. Civil penalties for breach of fiduciary responsibility.

Sec. 707. Benefit suspension notice.

Sec. 708. Studies.

Sec. 801. Provisions relating to plan amendments.

(a) INCREASE IN CONTRIBUTION LIMIT-

(1) IN GENERAL- Paragraph (1)(A) of section 219(b) (relating to maximum amount of deduction) is amended by striking `$2,000' and inserting `the deductible amount'.

(2) DEDUCTIBLE AMOUNT- Section 219(b) is amended by adding at the end the following new paragraph:

`(5) DEDUCTIBLE AMOUNT- For purposes of paragraph (1)(A)--

`(A) IN GENERAL- The deductible amount shall be determined in accordance with the following table:

`For taxable years

--The deductible

beginning in:

--amount is:

2002

$3,000

2003

$4,000

2004 and thereafter

$5,000.

`(B) CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS 50 OR OLDER- In the case of an individual who has attained the age of 50 before the close of the taxable year, the deductible amount for taxable years beginning in 2002 or 2003 shall be $5,000.

`(C) COST-OF-LIVING ADJUSTMENT-

`(i) IN GENERAL- In the case of any taxable year beginning in a calendar year after 2004, the $5,000 amount under subparagraph (A) shall be increased by an amount equal to--

`(I) such dollar amount, multiplied by

`(II) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2003' for `calendar year 1992' in subparagraph (B) thereof.

`(ii) ROUNDING RULES- If any amount after adjustment under clause (i) is not a multiple of $500, such amount shall be rounded to the next lower multiple of $500.'.

(b) CONFORMING AMENDMENTS-

(1) Section 408(a)(1) is amended by striking `in excess of $2,000 on behalf of any individual' and inserting `on behalf of any individual in excess of the amount in effect for such taxable year under section 219(b)(1)(A)'.

(2) Section 408(b)(2)(B) is amended by striking `$2,000' and inserting `the dollar amount in effect under section 219(b)(1)(A)'.

(3) Section 408(b) is amended by striking `$2,000' in the matter following paragraph (4) and inserting `the dollar amount in effect under section 219(b)(1)(A)'.

(4) Section 408(j) is amended by striking `$2,000'.

(5) Section 408(p)(8) is amended by striking `$2,000' and inserting `the dollar amount in effect under section 219(b)(1)(A)'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

(a) DEFINED BENEFIT PLANS-

(1) DOLLAR LIMIT-

(A) Subparagraph (A) of section 415(b)(1) (relating to limitation for defined benefit plans) is amended by striking `$90,000' and inserting `$160,000'.

(B) Subparagraphs (C) and (D) of section 415(b)(2) are each amended by striking `$90,000' each place it appears in the headings and the text and inserting `$160,000'.

(C) Paragraph (7) of section 415(b) (relating to benefits under certain collectively bargained plans) is amended by striking `the greater of $68,212 or one-half the amount otherwise applicable for such year under paragraph (1)(A) for `$90,000' and inserting `one-half the amount otherwise applicable for such year under paragraph (1)(A) for `$160,000'.

(2) LIMIT REDUCED WHEN BENEFIT BEGINS BEFORE AGE 62- Subparagraph (C) of section 415(b)(2) is amended by striking `the social security retirement age' each place it appears in the heading and text and inserting `age 62' and by striking the second sentence.

(3) LIMIT INCREASED WHEN BENEFIT BEGINS AFTER AGE 65- Subparagraph (D) of section 415(b)(2) is amended by striking `the social security retirement age' each place it appears in the heading and text and inserting `age 65'.

(4) COST-OF-LIVING ADJUSTMENTS- Subsection (d) of section 415 (related to cost-of-living adjustments) is amended--

(A) by striking `$90,000' in paragraph (1)(A) and inserting `$160,000'; and

(B) in paragraph (3)(A)--

(i) by striking `$90,000' in the heading and inserting `$160,000'; and

(ii) by striking `October 1, 1986' and inserting `July 1, 2001'.

(5) CONFORMING AMENDMENTS-

(A) Section 415(b)(2) is amended by striking subparagraph (F).

(B) Section 415(b)(9) is amended to read as follows:

`(9) SPECIAL RULE FOR COMMERCIAL AIRLINE PILOTS-

`(A) IN GENERAL- Except as provided in subparagraph (B), in the case of any participant who is a commercial airline pilot, if, as of the time of the participant's retirement, regulations prescribed by the Federal Aviation Administration require an individual to separate from service as a commercial airline pilot after attaining any age occurring on or after age 60 and before age 62, paragraph (2)(C) shall be applied by substituting such age for age 62.

`(B) INDIVIDUALS WHO SEPARATE FROM SERVICE BEFORE AGE 60- If a participant described in subparagraph (A) separates from service before age 60, the rules of paragraph (2)(C) shall apply.'.

(C) Section 415(b)(10)(C)(i) is amended by striking `applied without regard to paragraph (2)(F)'.

(b) DEFINED CONTRIBUTION PLANS-

(1) DOLLAR LIMIT- Subparagraph (A) of section 415(c)(1) (relating to limitation for defined contribution plans) is amended by striking `$30,000' and inserting `$40,000'.

(2) COST-OF-LIVING ADJUSTMENTS- Subsection (d) of section 415 (related to cost-of-living adjustments) is amended--

(A) by striking `$30,000' in paragraph (1)(C) and inserting `$40,000'; and

(B) in paragraph (3)(D)--

(i) by striking `$30,000' in the heading and inserting `$40,000'; and

(ii) by striking `October 1, 1993' and inserting `July 1, 2001'.

(c) QUALIFIED TRUSTS-

(1) COMPENSATION LIMIT- Sections 401(a)(17), 404(l), 408(k), and 505(b)(7) are each amended by striking `$150,000' each place it appears and inserting `$200,000'.

(2) BASE PERIOD AND ROUNDING OF COST-OF-LIVING ADJUSTMENT- Subparagraph (B) of section 401(a)(17) is amended--

(A) by striking `October 1, 1993' and inserting `July 1, 2001'; and

(B) by striking `$10,000' both places it appears and inserting `$5,000'.

(d) ELECTIVE DEFERRALS-

(1) IN GENERAL- Paragraph (1) of section 402(g) (relating to limitation on exclusion for elective deferrals) is amended to read as follows:

`(1) IN GENERAL-

`(A) LIMITATION- Notwithstanding subsections (e)(3) and (h)(1)(B), the elective deferrals of any individual for any taxable year shall be included in such individual's gross income to the extent the amount of such deferrals for the taxable year exceeds the applicable dollar amount.

`(B) APPLICABLE DOLLAR AMOUNT- For purposes of subparagraph (A), the applicable dollar amount shall be the amount determined in accordance with the following table:

`For taxable years

--The applicable

beginning in

-- dollar amount:

calendar year:

2002

--$11,000

2003

--$12,000

2004

--$13,000

2005

--$14,000

2006 or thereafter

--$15,000.'.

(2) COST-OF-LIVING ADJUSTMENT- Paragraph (5) of section 402(g) is amended to read as follows:

`(5) COST-OF-LIVING ADJUSTMENT- In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under paragraph (1)(B) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.'.

(3) CONFORMING AMENDMENTS-

(A) Section 402(g) (relating to limitation on exclusion for elective deferrals), as amended by paragraphs (1) and (2), is further amended by striking paragraph (4) and redesignating paragraphs (5), (6), (7), (8), and (9) as paragraphs (4), (5), (6), (7), and (8), respectively.

(B) Paragraph (2) of section 457(c) is amended by striking `402(g)(8)(A)(iii)' and inserting `402(g)(7)(A)(iii)'.

(C) Clause (iii) of section 501(c)(18)(D) is amended by striking `(other than paragraph (4) thereof)'.

(e) DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS-

(1) IN GENERAL- Section 457 (relating to deferred compensation plans of State and local governments and tax-exempt organizations) is amended--

(A) in subsections (b)(2)(A) and (c)(1) by striking `$7,500' each place it appears and inserting `the applicable dollar amount'; and

(B) in subsection (b)(3)(A) by striking `$15,000' and inserting `twice the dollar amount in effect under subsection (b)(2)(A)'.

(2) APPLICABLE DOLLAR AMOUNT; COST-OF-LIVING ADJUSTMENT- Paragraph (15) of section 457(e) is amended to read as follows:

`(15) APPLICABLE DOLLAR AMOUNT-

`(A) IN GENERAL- The applicable dollar amount shall be the amount determined in accordance with the following table:

`For taxable years

--The applicable

beginning in

-- dollar amount:

calendar year:

2002

--$11,000

2003

--$12,000

2004

--$13,000

2005

--$14,000

2006 or thereafter

--$15,000.

`(B) COST-OF-LIVING ADJUSTMENTS- In the case of taxable years beginning after December 31, 2006, the Secretary shall adjust the $15,000 amount under subparagraph (A) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning July 1, 2005, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.'.

(f) SIMPLE RETIREMENT ACCOUNTS-

(1) LIMITATION- Clause (ii) of section 408(p)(2)(A) (relating to general rule for qualified salary reduction arrangement) is amended by striking `$6,000' and inserting `the applicable dollar amount'.

(2) APPLICABLE DOLLAR AMOUNT- Subparagraph (E) of 408(p)(2) is amended to read as follows:

`(E) APPLICABLE DOLLAR AMOUNT; COST-OF-LIVING ADJUSTMENT-

`(i) IN GENERAL- For purposes of subparagraph (A)(ii), the applicable dollar amount shall be the amount determined in accordance with the following table:

`For taxable years

--The applicable

beginning in

-- dollar amount:

calendar year:

2002

--$7,000

2003

--$8,000

2004

--$9,000

2005 or thereafter

--$10,000.

`(ii) COST-OF-LIVING ADJUSTMENT- In the case of a year beginning after December 31, 2005, the Secretary shall adjust the $10,000 amount under clause (i) at the same time and in the same manner as under section 415(d), except that the base period taken into account shall be the calendar quarter beginning July 1, 2004, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500.'.

(3) CONFORMING AMENDMENTS-

(A) Subclause (I) of section 401(k)(11)(B)(i) is amended by striking `$6,000' and inserting `the amount in effect under section 408(p)(2)(A)(ii)'.

(B) Section 401(k)(11) is amended by striking subparagraph (E).

(g) ROUNDING RULE RELATING TO DEFINED BENEFIT PLANS AND DEFINED CONTRIBUTION PLANS- Paragraph (4) of section 415(d) is amended to read as follows:

`(4) ROUNDING-

`(A) $160,000 AMOUNT- Any increase under subparagraph (A) of paragraph (1) which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.

`(B) $40,000 AMOUNT- Any increase under subparagraph (C) of paragraph (1) which is not a multiple of $1,000 shall be rounded to the next lowest multiple of $1,000.'.

(h) EFFECTIVE DATE- The amendments made by this section shall apply to years beginning after December 31, 2001.

(a) AMENDMENT OF INTERNAL REVENUE CODE- Subparagraph (B) of section 4975(f)(6) (relating to exemptions not to apply to certain transactions) is amended by adding at the end the following new clause:

`(iii) LOAN EXCEPTION- For purposes of subparagraph (A)(i), the term `owner-employee' shall only include a person described in subclause (II) or (III) of clause (i).'.

(b) AMENDMENT OF ERISA- Section 408(d)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2)) is amended by adding at the end the following new subparagraph:

`(C) For purposes of paragraph (1)(A), the term `owner-employee' shall only include a person described in clause (ii) or (iii) of subparagraph (A).'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to years beginning after December 31, 2001.

(a) SIMPLIFICATION OF DEFINITION OF KEY EMPLOYEE-

(1) IN GENERAL- Section 416(i)(1)(A) (defining key employee) is amended--

(A) by striking `or any of the 4 preceding plan years' in the matter preceding clause (i);

(B) by striking clause (i) and inserting the following:

`(i) an officer of the employer having an annual compensation greater than $150,000,';

(C) by striking clause (ii) and redesignating clauses (iii) and (iv) as clauses (ii) and (iii), respectively; and

(D) by striking the second sentence in the matter following clause (iii), as redesignated by subparagraph (C).

(2) CONFORMING AMENDMENT- Section 416(i)(1)(B)(iii) is amended by striking `and subparagraph (A)(ii)'.

(b) MATCHING CONTRIBUTIONS TAKEN INTO ACCOUNT FOR MINIMUM CONTRIBUTION REQUIREMENTS- Section 416(c)(2)(A) (relating to defined contribution plans) is amended by adding at the end the following: `Employer matching contributions (as defined in section 401(m)(4)(A)) shall be taken into account for purposes of this subparagraph.'.

(c) DISTRIBUTIONS DURING LAST YEAR BEFORE DETERMINATION DATE TAKEN INTO ACCOUNT-

(1) IN GENERAL- Paragraph (3) of section 416(g) is amended to read as follows:

`(3) DISTRIBUTIONS DURING LAST YEAR BEFORE DETERMINATION DATE TAKEN INTO ACCOUNT-

`(A) IN GENERAL- For purposes of determining--

`(i) the present value of the cumulative accrued benefit for any employee, or

`(ii) the amount of the account of any employee,

such present value or amount shall be increased by the aggregate distributions made with respect to such employee under the plan during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which if it had not been terminated would have been required to be included in an aggregation group.

`(B) 5-YEAR PERIOD IN CASE OF IN-SERVICE DISTRIBUTION- In the case of any distribution made for a reason other than separation from service, death, or disability, subparagraph (A) shall be applied by substituting `5-year period' for `1-year period'.'.

(2) BENEFITS NOT TAKEN INTO ACCOUNT- Subparagraph (E) of section 416(g)(4) is amended--

(A) by striking `LAST 5 YEARS' in the heading and inserting `LAST YEAR BEFORE DETERMINATION DATE'; and

(B) by striking `5-year period' and inserting `1-year period'.

(d) DEFINITION OF TOP-HEAVY PLANS- Paragraph (4) of section 416(g) (relating to other special rules for top-heavy plans) is amended by adding at the end the following new subparagraph:

`(H) CASH OR DEFERRED ARRANGEMENTS USING ALTERNATIVE METHODS OF MEETING NONDISCRIMINATION REQUIREMENTS- The term `top-heavy plan' shall not include a plan which consists solely of--

`(i) a cash or deferred arrangement which meets the requirements of section 401(k)(12), and

`(ii) matching contributions with respect to which the requirements of section 401(m)(11) are met.

If, but for this subparagraph, a plan would be treated as a top-heavy plan because it is a member of an aggregation group which is a top-heavy group, contributions under the plan may be taken into account in determining whether any other plan in the group meets the requirements of subsection (c)(2).'.

(e) FROZEN PLAN EXEMPT FROM MINIMUM BENEFIT REQUIREMENT- Subparagraph (C) of section 416(c)(1) (relating to defined benefit plans) is amended--

(A) by striking `clause (ii)' in clause (i) and inserting `clause (ii) or (iii)'; and

(B) by adding at the end the following:

`(iii) EXCEPTION FOR FROZEN PLAN- For purposes of determining an employee's years of service with the employer, any service with the employer shall be disregarded to the extent that such service occurs during a plan year when the plan benefits (within the meaning of section 410(b)) no key employee or former key employee.'.

(f) ELIMINATION OF FAMILY ATTRIBUTION- Section 416(i)(1)(B) (defining 5-percent owner) is amended by adding at the end the following new clause:

`(iv) FAMILY ATTRIBUTION DISREGARDED- Solely for purposes of applying this paragraph (and not for purposes of any provision of this title which incorporates by reference the definition of a key employee or 5-percent owner under this paragraph), section 318 shall be applied without regard to subsection (a)(1) thereof in determining whether any person is a 5-percent owner.'.

(g) EFFECTIVE DATE- The amendments made by this section shall apply to years beginning after December 31, 2001.

(a) IN GENERAL- Section 404 (relating to deduction for contributions of an employer to an employees' trust or annuity plan and compensation under a deferred payment plan) is amended by adding at the end the following new subsection:

`(n) ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR PURPOSES OF DEDUCTION LIMITS- Elective deferrals (as defined in section 402(g)(3)) shall not be subject to any limitation contained in paragraph (3), (7), or (9) of subsection (a), and such elective deferrals shall not be taken into account in applying any such limitation to any other contributions.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to years beginning after December 31, 2001.

(a) IN GENERAL- Subsection (c) of section 457 (relating to deferred compensation plans of State and local governments and tax-exempt organizations), as amended by section 201, is amended to read as follows:

`(c) LIMITATION- The maximum amount of the compensation of any one individual which may be deferred under subsection (a) during any taxable year shall not exceed the amount in effect under subsection (b)(2)(A) (as modified by any adjustment provided under subsection (b)(3)).'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to years beginning after December 31, 2001.

(a) ELIMINATION OF CERTAIN USER FEES- The Secretary of the Treasury or the Secretary's delegate shall not require payment of user fees under the program established under section 10511 of the Revenue Act of 1987 for requests to the Internal Revenue Service for determination letters with respect to the qualified status of a pension benefit plan maintained solely by one or more eligible employers or any trust which is part of the plan. The preceding sentence shall not apply to any request--

(1) made after the later of--

(A) the fifth plan year the pension benefit plan is in existence; or

(B) the end of any remedial amendment period with respect to the plan beginning within the first 5 plan years; or

(2) made by the sponsor of any prototype or similar plan which the sponsor intends to market to participating employers.

(b) PENSION BENEFIT PLAN- For purposes of this section, the term `pension benefit plan' means a pension, profit-sharing, stock bonus, annuity, or employee stock ownership plan.

(c) ELIGIBLE EMPLOYER- For purposes of this section, the term `eligible employer' has the same meaning given such term in section 408(p)(2)(C)(i)(I) of the Internal Revenue Code of 1986. The determination of whether an employer is an eligible employer under this section shall be made as of the date of the request described in subsection (a).

(d) DETERMINATION OF AVERAGE FEES CHARGED- For purposes of any determination of average fees charged, any request to which subsection (a) applies shall not be taken into account.

(e) EFFECTIVE DATE- The provisions of this section shall apply with respect to requests made after December 31, 2001.

(a) STOCK BONUS AND PROFIT SHARING TRUSTS-

(1) IN GENERAL- Subclause (I) of section 404(a)(3)(A)(i) (relating to stock bonus and profit sharing trusts) is amended by striking `15 percent' and inserting `20 percent'.

(2) CONFORMING AMENDMENT- Subparagraph (C) of section 404(h)(1) is amended by striking `15 percent' each place it appears and inserting `20 percent'.

(b) COMPENSATION-

(1) IN GENERAL- Section 404(a) (relating to general rule) is amended by adding at the end the following:

`(12) DEFINITION OF COMPENSATION- For purposes of paragraphs (3), (7), (8), and (9), the term `compensation otherwise paid or accrued during the taxable year' shall include amounts treated as `participant's compensation' under subparagraph (C) or (D) of section 415(c)(3).'.

(2) CONFORMING AMENDMENTS-

(A) Subparagraph (B) of section 404(a)(3) is amended by striking the last sentence.

(B) Clause (i) of section 4972(c)(6)(B) is amended by striking `(within the meaning of section 404(a))' and inserting `(within the meaning of section 404(a) and as adjusted under section 404(a)(12))'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to years beginning after December 31, 2001.

(a) IN GENERAL- Subpart A of part I of subchapter D of chapter 1 (relating to deferred compensation, etc.) is amended by inserting after section 402 the following new section:

`(a) GENERAL RULE- If an applicable retirement plan includes a qualified plus contribution program--

`(1) any designated plus contribution made by an employee pursuant to the program shall be treated as an elective deferral for purposes of this chapter, except that such contribution shall not be excludable from gross income, and

`(2) such plan (and any arrangement which is part of such plan) shall not be treated as failing to meet any requirement of this chapter solely by reason of including such program.

`(b) QUALIFIED PLUS CONTRIBUTION PROGRAM- For purposes of this section--

`(1) IN GENERAL- The term `qualified plus contribution program' means a program under which an employee may elect to make designated plus contributions in lieu of all or a portion of elective deferrals the employee is otherwise eligible to make under the applicable retirement plan.

`(2) SEPARATE ACCOUNTING REQUIRED- A program shall not be treated as a qualified plus contribution program unless the applicable retirement plan--

`(A) establishes separate accounts (`designated plus accounts') for the designated plus contributions of each employee and any earnings properly allocable to the contributions, and

`(B) maintains separate recordkeeping with respect to each account.

`(c) DEFINITIONS AND RULES RELATING TO DESIGNATED PLUS CONTRIBUTIONS- For purposes of this section--

`(1) DESIGNATED PLUS CONTRIBUTION- The term `designated plus contribution' means any elective deferral which--

`(A) is excludable from gross income of an employee without regard to this section, and

`(B) the employee designates (at such time and in such manner as the Secretary may prescribe) as not being so excludable.

`(2) DESIGNATION LIMITS- The amount of elective deferrals which an employee may designate under paragraph (1) shall not exceed the excess (if any) of--

`(A) the maximum amount of elective deferrals excludable from gross income of the employee for the taxable year (without regard to this section), over

`(B) the aggregate amount of elective deferrals of the employee for the taxable year which the employee does not designate under paragraph (1).

`(3) ROLLOVER CONTRIBUTIONS-

`(A) IN GENERAL- A rollover contribution of any payment or distribution from a designated plus account which is otherwise allowable under this chapter may be made only if the contribution is to--

`(i) another designated plus account of the individual from whose account the payment or distribution was made, or

`(ii) a Roth IRA of such individual.

`(B) COORDINATION WITH LIMIT- Any rollover contribution to a designated plus account under subparagraph (A) shall not be taken into account for purposes of paragraph (1).

`(d) DISTRIBUTION RULES- For purposes of this title--

`(1) EXCLUSION- Any qualified distribution from a designated plus account shall not be includible in gross income.

`(2) QUALIFIED DISTRIBUTION- For purposes of this subsection--

`(A) IN GENERAL- The term `qualified distribution' has the meaning given such term by section 408A(d)(2)(A) (without regard to clause (iv) thereof).

`(B) DISTRIBUTIONS WITHIN NONEXCLUSION PERIOD- A payment or distribution from a designated plus account shall not be treated as a qualified distribution if such payment or distribution is made within the 5-taxable-year period beginning with the earlier of--

`(i) the first taxable year for which the individual made a designated plus contribution to any designated plus account established for such individual under the same applicable retirement plan, or

`(ii) if a rollover contribution was made to such designated plus account from a designated plus account previously established for such individual under another applicable retirement plan, the first taxable year for which the individual made a designated plus contribution to such previously established account.

`(C) DISTRIBUTIONS OF EXCESS DEFERRALS AND CONTRIBUTIONS AND EARNINGS THEREON- The term `qualified distribution' shall not include any distribution of an excess deferral under section 402(g)(2) or any excess contribution under section 401(k)(8), and any income on the excess deferral or contribution.

`(3) TREATMENT OF DISTRIBUTIONS OF CERTAIN EXCESS DEFERRALS- Notwithstanding section 72, if any excess deferral under section 402(g)(2) attributable to a designated plus contribution is not distributed on or before the 1st April 15 following the close of the taxable year in which such excess deferral is made, the amount of such excess deferral shall--

`(A) not be treated as investment in the contract, and

`(B) be included in gross income for the taxable year in which such excess is distributed.

`(4) AGGREGATION RULES- Section 72 shall be applied separately with respect to distributions and payments from a designated plus account and other distributions and payments from the plan.

`(e) OTHER DEFINITIONS- For purposes of this section--

`(1) APPLICABLE RETIREMENT PLAN- The term `applicable retirement plan' means--

`(A) an employees' trust described in section 401(a) which is exempt from tax under section 501(a), and

`(B) a plan under which amounts are contributed by an individual's employer for an annuity contract described in section 403(b).

`(2) ELECTIVE DEFERRAL- The term `elective deferral' means any elective deferral described in subparagraph (A) or (C) of section 402(g)(3).'.

(b) EXCESS DEFERRALS- Section 402(g) (relating to limitation on exclusion for elective deferrals) is amended--

(1) by adding at the end of paragraph (1)(A) (as added by section 201(d)(1)) the following new sentence: `The preceding sentence shall not apply to so much of such excess as does not exceed the designated plus contributions of the individual for the taxable year.'; and

(2) by inserting `(or would be included but for the last sentence thereof)' after `paragraph (1)' in paragraph (2)(A).

(c) ROLLOVERS- Subparagraph (B) of section 402(c)(8) is amended by adding at the end the following:

`If any portion of an eligible rollover distribution is attributable to payments or distributions from a designated plus account (as defined in section 402A), an eligible retirement plan with respect to such portion shall include only another designated plus account and a Roth IRA.'.

(d) REPORTING REQUIREMENTS-

(1) W-2 INFORMATION- Section 6051(a)(8) is amended by inserting `, including the amount of designated plus contributions (as defined in section 402A)' before the comma at the end.

(2) INFORMATION- Section 6047 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection:

`(f) DESIGNATED PLUS CONTRIBUTIONS- The Secretary shall require the plan administrator of each applicable retirement plan (as defined in section 402A) to make such returns and reports regarding designated plus contributions (as so defined) to the Secretary, participants and beneficiaries of the plan, and such other persons as the Secretary may prescribe.'.

(e) CONFORMING AMENDMENTS-

(1) Section 408A(e) is amended by adding after the first sentence the following new sentence: `Such term includes a rollover contribution described in section 402A(c)(3)(A).'.

(2) 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 402 the following new item:

`Sec. 402A. Optional treatment of elective deferrals as plus contributions.'.

(f) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

(a) IN GENERAL- Subparagraph (A) of section 401(c)(2) (defining earned income) is amended by adding at the end thereof the following new sentence: `For purposes of this part only (other than sections 419 and 419A), this subparagraph shall be applied as if the term `trade or business' for purposes of section 1402 included service described in section 1402(c)(6).'.

(b) SIMPLE RETIREMENT ACCOUNTS- Clause (ii) of section 408(p)(6)(A) (defining self-employed) is amended by adding at the end the following new sentence: `The preceding sentence shall be applied as if the term `trade or business' for purposes of section 1402 included service described in section 1402(c)(6).'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

(a) IN GENERAL- Subparagraph (C) of section 410(b)(3) (relating to exclusion of certain employees) is amended by inserting `, determined without regard to the reference to subchapter D in the last sentence thereof' after `section 861(a)(3)'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to plan years beginning after December 31, 2001.

(a) IN GENERAL- Section 414 (relating to definitions and special rules) is amended by adding at the end the following new subsection:

`(v) CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR OVER-

`(1) IN GENERAL- An applicable employer plan shall not be treated as failing to meet any requirement of this title solely because the plan permits an eligible participant to make additional elective deferrals in any plan year.

`(2) LIMITATION ON AMOUNT OF ADDITIONAL DEFERRALS- A plan shall not permit additional elective deferrals under paragraph (1) for any year in an amount greater than the lesser of--

`(A) $5,000, or

`(B) the excess (if any) of--

`(i) the participant's compensation for the year, over

`(ii) any other elective deferrals of the participant for such year which are made without regard to this subsection.

`(3) TREATMENT OF CONTRIBUTIONS- In the case of any contribution to a plan under paragraph (1), such contribution shall not, with respect to the year in which the contribution is made--

`(A) be subject to any otherwise applicable limitation contained in section 402(g), 402(h)(2), 404(a), 404(h), 408(p)(2)(A)(ii), 415, or 457, or

`(B) be taken into account in applying such limitations to other contributions or benefits under such plan or any other such plan.

`(4) APPLICATION OF NONDISCRIMINATION RULES-

`(A) IN GENERAL- An applicable employer plan shall not be treated as failing to meet the nondiscrimination requirements under section 401(a)(4) with respect to benefits, rights, and features if the plan allows all eligible participants to make the same election with respect to the additional elective deferrals under this subsection.

`(B) AGGREGATION- For purposes of subparagraph (A), all plans maintained by employers who are treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 plan.

`(5) ELIGIBLE PARTICIPANT- For purposes of this subsection, the term `eligible participant' means, with respect to any plan year, a participant in a plan--

`(A) who has attained the age of 50 before the close of the plan year, and

`(B) with respect to whom no other elective deferrals may (without regard to this subsection) be made to the plan for the plan year by reason of the application of any limitation or other restriction described in paragraph (3) or comparable limitation contained in the terms of the plan.

`(6) OTHER DEFINITIONS AND RULES- For purposes of this subsection--

`(A) APPLICABLE EMPLOYER PLAN- The term `applicable employer plan' means--

`(i) an employees' trust described in section 401(a) which is exempt from tax under section 501(a),

`(ii) a plan under which amounts are contributed by an individual's employer for an annuity contract described in section 403(b),

`(iii) an eligible deferred compensation plan under section 457 of an eligible employer as defined in section 457(e)(1)(A), and

`(iv) an arrangement meeting the requirements of section 408 (k) or (p).

`(B) ELECTIVE DEFERRAL- The term `elective deferral' has the meaning given such term by subsection (u)(2)(C).

`(C) EXCEPTION FOR SECTION 457 PLANS- This subsection shall not apply to an applicable employer plan described in subparagraph (A)(iii) for any year to which section 457(b)(3) applies.

`(D) COST-OF-LIVING ADJUSTMENT- In the case of a year beginning after December 31, 2006, the Secretary shall adjust annually the $5,000 amount in paragraph (2)(A) for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2005, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500.'.

(b) EFFECTIVE DATE- The amendment made by this section shall apply to contributions in taxable years beginning after December 31, 2001.

(a) EQUITABLE TREATMENT-

(1) IN GENERAL- Subparagraph (B) of section 415(c)(1) (relating to limitation for defined contribution plans) is amended by striking `25 percent' and inserting `100 percent'.

(2) APPLICATION TO SECTION 403(b)- Section 403(b) is amended--

(A) by striking `the exclusion allowance for such taxable year' in paragraph (1) and inserting `the applicable limit under section 415';

(B) by striking paragraph (2); and

(C) by inserting `or any amount received by a former employee after the fifth taxable year following the taxable year in which such employee was terminated' before the period at the end of the second sentence of paragraph (3).

(3) CONFORMING AMENDMENTS-

(A) Subsection (f) of section 72 is amended by striking `section 403(b)(2)(D)(iii))' and inserting `section 403(b)(2)(D)(iii), as in effect before the enactment of the Comprehensive Retirement Security and Pension Reform Act of 2001)'.

(B) Section 404(a)(10)(B) is amended by striking `, the exclusion allowance under section 403(b)(2),'.

(C) Section 404(j) is amended by adding at the end the following new paragraph:

`(3) SPECIAL RULE FOR MONEY PURCHASE PLANS- For purposes of paragraph (1)(B), in the case of a defined contribution plan which is subject to the funding standards of section 412, section 415(c)(1)(B) shall be applied by substituting `25 percent' for `100 percent'.'.

(D) Section 415(a)(2) is amended by striking `, and the amount of the contribution for such portion shall reduce the exclusion allowance as provided in section 403(b)(2)'.

(E) Section 415(c)(3) is amended by adding at the end the following new subparagraph:

`(E) ANNUITY CONTRACTS- In the case of an annuity contract described in section 403(b), the term `participant's compensation' means the participant's includible compensation determined under section 403(b)(3).'.

(F) Section 415(c) is amended by striking paragraph (4).

(G) Section 415(c)(7) is amended to read as follows:

`(7) CERTAIN CONTRIBUTIONS BY CHURCH PLANS NOT TREATED AS EXCEEDING LIMIT-

`(A) IN GENERAL- Notwithstanding any other provision of this subsection, at the election of a participant who is an employee of a church or a convention or association of churches, including an organization described in section 414(e)(3)(B)(ii), contributions and other additions for an annuity contract or retirement income account described in section 403(b) with respect to such participant, when expressed as an annual addition to such participant's account, shall be treated as not exceeding the limitation of paragraph (1) if such annual addition is not in excess of $10,000.

`(B) $40,000 AGGREGATE LIMITATION- The total amount of additions with respect to any participant which may be taken into account for purposes of this subparagraph for all years may not exceed $40,000.

`(C) ANNUAL ADDITION- For purposes of this paragraph, the term `annual addition' has the meaning given such term by paragraph (2).'.

(H) Subparagraph (B) of section 402(g)(7) (as redesignated by section 201) is amended by inserting before the period at the end the following: `(as in effect before the enactment of the Comprehensive Retirement Security and Pension Reform Act of 2001)'.

(I) Section 664(g) is amended--

(i) in paragraph (3)(E) by striking `limitations under section 415(c)' and inserting `applicable limitation under paragraph (7)', and

(ii) by adding at the end the following new paragraph:

`(7) APPLICABLE LIMITATION-

`(A) IN GENERAL- For purposes of paragraph (3)(E), the applicable limitation under this paragraph with respect to a participant is an amount equal to the lesser of--

`(i) $30,000, or

`(ii) 25 percent of the participant's compensation (as defined in section 415(c)(3)).

`(B) COST-OF-LIVING ADJUSTMENT- The Secretary shall adjust annually the $30,000 amount under subparagraph (A)(i) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quarter beginning October 1, 1993, and any increase under this subparagraph which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000.'.

(4) EFFECTIVE DATE- The amendments made by this subsection shall apply to years beginning after December 31, 2001.

(b) SPECIAL RULES FOR SECTIONS 403(b) AND 408-

(1) IN GENERAL- Subsection (k) of section 415 is amended by adding at the end the following new paragraph:

`(4) SPECIAL RULES FOR SECTIONS 403(B) AND 408- For purposes of this section, any annuity contract described in section 403(b) for the benefit of a participant shall be treated as a defined contribution plan maintained by each employer with respect to which the participant has the control required under subsection (b) or (c) of section 414 (as modified by subsection (h)). For purposes of this section, any contribution by an employer to a simplified employee pension plan for an individual for a taxable year shall be treated as an employer contribution to a defined contribution plan for such individual for such year.'.

(2) EFFECTIVE DATE-

(A) IN GENERAL- The amendment made by paragraph (1) shall apply to limitation years beginning after December 31, 1999.

(B) EXCLUSION ALLOWANCE- Effective for limitation years beginning in 2000, in the case of any annuity contract described in section 403(b) of the Internal Revenue Code of 1986, the amount of the contribution disqualified by reason of section 415(g) of such Code shall reduce the exclusion allowance as provided in section 403(b)(2) of such Code.

(3) MODIFICATION OF 403(b) EXCLUSION ALLOWANCE TO CONFORM TO 415 MODIFICATION- The Secretary of the Treasury shall modify the regulations regarding the exclusion allowance under section 403(b)(2) of the Internal Revenue Code of 1986 to render void the requirement that contributions to a defined benefit pension plan be treated as previously excluded amounts for purposes of the exclusion allowance. For taxable years beginning after December 31, 1999, such regulations shall be applied as if such requirement were void.

(c) DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS-

(1) IN GENERAL- Subparagraph (B) of section 457(b)(2) (relating to salary limitation on eligible deferred compensation plans) is amended by striking `33 1/3 percent' and inserting `100 percent'.

(2) EFFECTIVE DATE- The amendment made by this subsection shall apply to years beginning after December 31, 2001.

(a) AMENDMENT OF INTERNAL REVENUE CODE- Section 411(a) (relating to minimum vesting standards) is amended--

(1) in paragraph (2) in the matter preceding subparagraph (A), by striking `A plan' and inserting `Except as provided in paragraph (12), a plan'; and

(2) by adding at the end the following:

`(12) FASTER VESTING FOR MATCHING CONTRIBUTIONS- In the case of matching contributions (as defined in section 401(m)(4)(A)), paragraph (2) shall be applied--

`(A) by substituting `3 years' for `5 years' in subparagraph (A), and

`(B) by substituting the following table for the table contained in subparagraph (B):

--The nonforfeitable

`Years of service:

--percentage is:

2

--20

3

--40

4

--60

5

--80

6

--100.'.

(b) AMENDMENT OF ERISA- Section 203(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended--

(1) in paragraph (2), in the matter preceding subparagraph (A), by striking `A plan' and inserting `Except as provided in paragraph (4), a plan', and

(2) by adding at the end the following:

`(4) In the case of matching contributions (as defined in section 401(m)(4)(A) of the Internal Revenue Code of 1986), paragraph (2) shall be applied--

`(A) by substituting `3 years' for `5 years' in subparagraph (A), and

`(B) by substituting the following table for the table contained in subparagraph (B):

--The nonforfeitable

`Years of service:

--percentage is:

2

--20

3

--40

4

--60

5

--80

6

--100.'.

(c) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to contributions for plan years beginning after December 31, 2001.

(2) COLLECTIVE BARGAINING AGREEMENTS- In the case of a plan maintained pursuant to one or more collective bargaining agreements between employee representatives and one or more employers ratified by the date of the enactment of this Act, the amendments made by this section shall not apply to contributions on behalf of employees covered by any such agreement for plan years beginning before the earlier of--

(A) the later of--

(i) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof on or after such date of the enactment); or

(ii) January 1, 2002; or

(B) January 1, 2006.

(3) SERVICE REQUIRED- With respect to any plan, the amendments made by this section shall not apply to any employee before the date that such employee has 1 hour of service under such plan in any plan year to which the amendments made by this section apply.

(a) LIFE EXPECTANCY TABLES- The Secretary of the Treasury shall modify the life expectancy tables under the regulations relating to minimum distribution requirements under sections 401(a)(9), 408(a)(6) and (b)(3), 403(b)(10), and 457(d)(2) of the Internal Revenue Code to reflect current life expectancy.

(b) REPEAL OF RULE WHERE DISTRIBUTIONS HAD BEGUN BEFORE DEATH OCCURS-

(1) IN GENERAL- Subparagraph (B) of section 401(a)(9) is amended by striking clause (i) and redesignating clauses (ii), (iii), and (iv) as clauses (i), (ii), and (iii), respectively.

(2) CONFORMING CHANGES-

(A) Clause (i) of section 401(a)(9)(B) (as so redesignated) is amended--

(i) by striking `FOR OTHER CASES' in the heading; and

(ii) by striking `the distribution of the employee's interest has begun in accordance with subparagraph (A)(ii)' and inserting `his entire interest has been distributed to him'.

(B) Clause (ii) of section 401(a)(9)(B) (as so redesignated) is amended by striking `clause (ii)' and inserting `clause (i)'.

(C) Clause (iii) of section 401(a)(9)(B) (as so redesignated) is amended--

(i) by striking `clause (iii)(I)' and inserting `clause (ii)(I)';

(ii) by striking `clause (iii)(III)' in subclause (I) and inserting `clause (ii)(III)';

(iii) by striking `the date on which the employee would have attained age 70 1/2 ,' in subclause (I) and inserting `April 1 of the calendar year following the calendar year in which the spouse attains 70 1/2 ,'; and

(iv) by striking `the distributions to such spouse begin,' in subclause (II) and inserting `his entire interest has been distributed to him,'.

(3) EFFECTIVE DATE-

(A) IN GENERAL- Except as provided in subparagraph (B), the amendments made by this subsection shall apply to years beginning after December 31, 2001.

(B) DISTRIBUTIONS TO SURVIVING SPOUSE-

(i) IN GENERAL- In the case of an employee described in clause (ii), distributions to the surviving spouse of the employee shall not be required to commence prior to the date on which such distributions would have been required to begin under section 401(a)(9)(B) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of this Act).

(ii) CERTAIN EMPLOYEES- An employee is described in this clause if such employee dies before--

(I) the date of the enactment of this Act, and

(II) the required beginning date (within the meaning of section 401(a)(9)(C) of the Internal Revenue Code of 1986) of the employee.

(c) REDUCTION IN EXCISE TAX-

(1) IN GENERAL- Subsection (a) of section 4974 is amended by striking `50 percent' and inserting `10 percent'.

(2) EFFECTIVE DATE- The amendment made by this subsection shall apply to years beginning after December 31, 2001.

(a) IN GENERAL- Section 414(p)(11) (relating to application of rules to governmental and church plans) is amended--

(1) by inserting `or an eligible deferred compensation plan (within the meaning of section 457(b))' after `subsection (e))'; and

(2) in the heading, by striking `GOVERNMENTAL AND CHURCH PLANS' and inserting `CERTAIN OTHER PLANS'.

(b) WAIVER OF CERTAIN DISTRIBUTION REQUIREMENTS- Paragraph (10) of section 414(p) is amended by striking `and section 409(d)' and inserting `section 409(d), and section 457(d)'.

(c) TAX TREATMENT OF PAYMENTS FROM A SECTION 457 PLAN- Subsection (p) of section 414 is amended by redesignating paragraph (12) as paragraph (13) and inserting after paragraph (11) the following new paragraph:

`(12) TAX TREATMENT OF PAYMENTS FROM A SECTION 457 PLAN- If a distribution or payment from an eligible deferred compensation plan described in section 457(b) is made pursuant to a qualified domestic relations order, rules similar to the rules of section 402(e)(1)(A) shall apply to such distribution or payment.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to transfers, distributions, and payments made after December 31, 2001.

(a) SAFE HARBOR RELIEF-

(1) IN GENERAL- The Secretary of the Treasury shall revise the regulations relating to hardship distributions under section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of 1986 to provide that the period an employee is prohibited from making elective and employee contributions in order for a distribution to be deemed necessary to satisfy financial need shall be equal to 6 months.

(2) EFFECTIVE DATE- The revised regulations under this subsection shall apply to years beginning after December 31, 2001.

(b) HARDSHIP DISTRIBUTIONS NOT TREATED AS ELIGIBLE ROLLOVER DISTRIBUTIONS-

(1) MODIFICATION OF DEFINITION OF ELIGIBLE ROLLOVER- Subparagraph (C) of section 402(c)(4) (relating to eligible rollover distribution) is amended to read as follows:

`(C) any distribution which is made upon hardship of the employee.'.

(2) EFFECTIVE DATE- The amendment made by this subsection shall apply to distributions made after December 31, 2001.

(a) IN GENERAL- Section 4972(c)(6) (relating to exceptions to nondeductible contributions), as amended by section 502, is amended by striking `or' at the end of subparagraph (A), by striking the period and inserting `, and' at the end of subparagraph (B), and by inserting after subparagraph (B) the following new subparagraph:

`(C) so much of the contributions to a simple retirement account (within the meaning of section 408(p)) or a simple plan (within the meaning of section 401(k)(11)) which are not deductible when contributed solely because such contributions are not made in connection with a trade or business of the employer.'.

(b) EXCLUSION OF CERTAIN CONTRIBUTIONS- Section 4972(c)(6) is amended by adding at the end the following new sentence: `Subparagraph (C) shall not apply to contributions made on behalf of the employer or a member of the employer's family (as defined in section 447(e)(1)).'.

(c) NO INFERENCE- Nothing in the amendments made by this section shall be construed to infer the proper treatment of nondeductible contributions under the laws in effect before such amendments.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to taxable years beginning after December 31, 2001.

(a) ROLLOVERS FROM AND TO SECTION 457 PLANS-

(1) ROLLOVERS FROM SECTION 457 PLANS-

(A) IN GENERAL- Section 457(e) (relating to other definitions and special rules) is amended by adding at the end the following:

`(16) ROLLOVER AMOUNTS-

`(A) GENERAL RULE- In the case of an eligible deferred compensation plan established and maintained by an employer described in subsection (e)(1)(A), if--

`(i) any portion of the balance to the credit of an employee in such plan is paid to such employee in an eligible rollover distribution (within the meaning of section 402(c)(4) without regard to subparagraph (C) thereof),

`(ii) the employee transfers any portion of the property such employee receives in such distribution to an eligible retirement plan described in section 402(c)(8)(B), and

`(iii) in the case of a distribution of property other than money, the amount so transferred consists of the property distributed,

then such distribution (to the extent so transferred) shall not be includible in gross income for the taxable year in which paid.

`(B) CERTAIN RULES MADE APPLICABLE- The rules of paragraphs (2) through (7) (other than paragraph (4)(C)) and (9) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A).

`(C) REPORTING- Rollovers under this paragraph shall be reported to the Secretary in the same manner as rollovers from qualified retirement plans (as defined in section 4974(c)).'.

(B) DEFERRAL LIMIT DETERMINED WITHOUT REGARD TO ROLLOVER AMOUNTS- Section 457(b)(2) (defining eligible deferred compensation plan) is amended by inserting `(other than rollover amounts)' after `taxable year'.

(C) DIRECT ROLLOVER- Paragraph (1) of section 457(d) is amended by striking `and' at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting `, and', and by inserting after subparagraph (B) the following:

`(C) in the case of a plan maintained by an employer described in subsection (e)(1)(A), the plan meets requirements similar to the requirements of section 401(a)(31).

Any amount transferred in a direct trustee-to-trustee transfer in accordance with section 401(a)(31) shall not be includible in gross income for the taxable year of transfer.'.

(D) WITHHOLDING-

(i) Paragraph (12) of section 3401(a) is amended by adding at the end the following:

`(E) under or to an eligible deferred compensation plan which, at the time of such payment, is a plan described in section 457(b) maintained by an employer described in section 457(e)(1)(A); or'.

(ii) Paragraph (3) of section 3405(c) is amended to read as follows:

`(3) ELIGIBLE ROLLOVER DISTRIBUTION- For purposes of this subsection, the term `eligible rollover distribution' has the meaning given such term by section 402(f)(2)(A).'.

(iii) LIABILITY FOR WITHHOLDING- Subparagraph (B) of section 3405(d)(2) is amended by striking `or' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting `, or', and by adding at the end the following:

`(iv) section 457(b) and which is maintained by an eligible employer described in section 457(e)(1)(A).'.

(2) ROLLOVERS TO SECTION 457 PLANS-

(A) IN GENERAL- Section 402(c)(8)(B) (defining eligible retirement plan) is amended by striking `and' at the end of clause (iii), by striking the period at the end of clause (iv) and inserting `, and', and by inserting after clause (iv) the following new clause:

`(v) an eligible deferred compensation plan described in section 457(b) which is maintained by an eligible employer described in section 457(e)(1)(A).'.

(B) SEPARATE ACCOUNTING- Section 402(c) is amended by adding at the end the following new paragraph:

`(10) SEPARATE ACCOUNTING- Unless a plan described in clause (v) of paragraph (8)(B) agrees to separately account for amounts rolled into such plan from eligible retirement plans not described in such clause, the plan described in such clause may not accept transfers or rollovers from such retirement plans.'.

(C) 10 PERCENT ADDITIONAL TAX- Subsection (t) of section 72 (relating to 10-percent additional tax on early distributions from qualified retirement plans) is amended by adding at the end the following new paragraph:

`(9) SPECIAL RULE FOR ROLLOVERS TO SECTION 457 PLANS- For purposes of this subsection, a distribution from an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A) shall be treated as a distribution from a qualified retirement plan described in section 4974(c)(1) to the extent that such distribution is attributable to an amount transferred to an eligible deferred compensation plan from a qualified retirement plan (as defined in section 4974(c)).'.

(b) ALLOWANCE OF ROLLOVERS FROM AND TO 403(b) PLANS-

(1) ROLLOVERS FROM SECTION 403(b) PLANS- Section 403(b)(8)(A)(ii) (relating to rollover amounts) is amended by striking `such distribution' and all that follows and inserting `such distribution to an eligible retirement plan described in section 402(c)(8)(B), and'.

(2) ROLLOVERS TO SECTION 403(b) PLANS- Section 402(c)(8)(B) (defining eligible retirement plan), as amended by subsection (a), is amended by striking `and' at the end of clause (iv), by striking the period at the end of clause (v) and inserting `, and', and by inserting after clause (v) the following new clause:

`(vi) an annuity contract described in section 403(b).'.

(c) EXPANDED EXPLANATION TO RECIPIENTS OF ROLLOVER DISTRIBUTIONS- Paragraph (1) of section 402(f) (relating to written explanation to recipients of distributions eligible for rollover treatment) is amended by striking `and' at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and inserting `, and', and by adding at the end the following new subparagraph:

`(E) of the provisions under which distributions from the eligible retirement plan receiving the distribution may be subject to restrictions and tax consequences which are different from those applicable to distributions from the plan making such distribution.'.

(d) SPOUSAL ROLLOVERS- Section 402(c)(9) (relating to rollover where spouse receives distribution after death of employee) is amended by striking `; except that' and all that follows up to the end period.

(e) CONFORMING AMENDMENTS-

(1) Section 72(o)(4) is amended by striking `and 408(d)(3)' and inserting `403(b)(8), 408(d)(3), and 457(e)(16)'.

(2) Section 219(d)(2) is amended by striking `or 408(d)(3)' and inserting `408(d)(3), or 457(e)(16)'.

(3) Section 401(a)(31)(B) is amended by striking `and 403(a)(4)' and inserting `, 403(a)(4), 403(b)(8), and 457(e)(16)'.

(4) Subparagraph (A) of section 402(f)(2) is amended by striking `or paragraph (4) of section 403(a)' and inserting `, paragraph (4) of section 403(a), subparagraph (A) of section 403(b)(8), or subparagraph (A) of section 457(e)(16)'.

(5) Paragraph (1) of section 402(f) is amended by striking `from an eligible retirement plan'.

(6) Subparagraphs (A) and (B) of section 402(f)(1) are amended by striking `another eligible retirement plan' and inserting `an eligible retirement plan'.

(7) Subparagraph (B) of section 403(b)(8) is amended to read as follows:

`(B) CERTAIN RULES MADE APPLICABLE- The rules of paragraphs (2) through (7) and (9) of section 402(c) and section 402(f) shall apply for purposes of subparagraph (A), except that section 402(f) shall be applied to the payor in lieu of the plan administrator.'.

(8) Section 408(a)(1) is amended by striking `or 403(b)(8),' and inserting `403(b)(8), or 457(e)(16)'.

(9) Subparagraphs (A) and (B) of section 415(b)(2) are each amended by striking `and 408(d)(3)' and inserting `403(b)(8), 408(d)(3), and 457(e)(16)'.

(10) Section 415(c)(2) is amended by striking `and 408(d)(3)' and inserting `408(d)(3), and 457(e)(16)'.

(11) Section 4973(b)(1)(A) is amended by striking `or 408(d)(3)' and inserting `408(d)(3), or 457(e)(16)'.

(f) EFFECTIVE DATE; SPECIAL RULE-

(1) EFFECTIVE DATE- The amendments made by this section shall apply to distributions after December 31, 2001.

(2) REASONABLE NOTICE- No penalty shall be imposed on a plan for the failure to provide the information required by the amendment made by subsection (c) with respect to any distribution made before the date that is 90 days after the date on which the Secretary of the Treasury issues a safe harbor rollover notice after the date of the enactment of this Act, if the administrator of such plan makes a reasonable attempt to comply with such requirement.

(3) SPECIAL RULE- Notwithstanding any other provision of law, subsections (h)(3) and (h)(5) of section 1122 of the Tax Reform Act of 1986 shall not apply to any distribution from an eligible retirement plan (as defined in clause (iii) or (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 1986) on behalf of an individual if there was a rollover to such plan on behalf of such individual which is permitted solely by reason of any amendment made by this section.

(a) IN GENERAL- Subparagraph (A) of section 408(d)(3) (relating to rollover amounts) is amended by adding `or' at the end of clause (i), by striking clauses (ii) and (iii), and by adding at the end the following:

`(ii) the entire amount received (including money and any other property) is paid into an eligible retirement plan for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received, except that the maximum amount which may be paid into such plan may not exceed the portion of the amount received which is includible in gross income (determined without regard to this paragraph).

For purposes of clause (ii), the term `eligible retirement plan' means an eligible retirement plan described in clause (iii), (iv), (v), or (vi) of section 402(c)(8)(B).'.

(b) CONFORMING AMENDMENTS-

(1) Paragraph (1) of section 403(b) is amended by striking `section 408(d)(3)(A)(iii)' and inserting `section 408(d)(3)(A)(ii)'.

(2) Clause (i) of section 408(d)(3)(D) is amended by striking `(i), (ii), or (iii)' and inserting `(i) or (ii)'.

(3) Subparagraph (G) of section 408(d)(3) is amended to read as follows:

`(G) SIMPLE RETIREMENT ACCOUNTS- In the case of any payment or distribution out of a simple retirement account (as defined in subsection (p)) to which section 72(t)(6) applies, this paragraph shall not apply unless such payment or distribution is paid into another simple retirement account.'.

(c) EFFECTIVE DATE; SPECIAL RULE-

(1) EFFECTIVE DATE- The amendments made by this section shall apply to distributions after December 31, 2001.

(2) SPECIAL RULE- Notwithstanding any other provision of law, subsections (h)(3) and (h)(5) of section 1122 of the Tax Reform Act of 1986 shall not apply to any distribution from an eligible retirement plan (as defined in clause (iii) or (iv) of section 402(c)(8)(B) of the Internal Revenue Code of 1986) on behalf of an individual if there was a rollover to such plan on behalf of such individual which is permitted solely by reason of the amendments made by this section.

(a) ROLLOVERS FROM EXEMPT TRUSTS- Paragraph (2) of section 402(c) (relating to maximum amount which may be rolled over) is amended by adding at the end the following: `The preceding sentence shall not apply to such distribution to the extent--

`(A) such portion is transferred in a direct trustee-to-trustee transfer to a qualified trust which is part of a plan which is a defined contribution plan and which agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, or

`(B) such portion is transferred to an eligible retirement plan described in clause (i) or (ii) of paragraph (8)(B).'.

(b) OPTIONAL DIRECT TRANSFER OF ELIGIBLE ROLLOVER DISTRIBUTIONS- Subparagraph (B) of section 401(a)(31) (relating to limitation) is amended by adding at the end the following:

`The preceding sentence shall not apply to such distribution if the plan to which such distribution is transferred--

`(i) agrees to separately account for amounts so transferred, including separately accounting for the portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible, or

`(ii) is an eligible retirement plan described in clause (i) or (ii) of section 402(c)(8)(B).'.

(c) RULES FOR APPLYING SECTION 72 TO IRAS- Paragraph (3) of section 408(d) (relating to special rules for applying section 72) is amended by inserting at the end the following:

`(H) APPLICATION OF SECTION 72-

`(i) IN GENERAL- If--

`(I) a distribution is made from an individual retirement plan, and

`(II) a rollover contribution is made to an eligible retirement plan described in section 402(c)(8)(B)(iii), (iv), (v), or (vi) with respect to all or part of such distribution,

then, notwithstanding paragraph (2), the rules of clause (ii) shall apply for purposes of applying section 72.

`(ii) APPLICABLE RULES- In the case of a distribution described in clause (i)--

`(I) section 72 shall be applied separately to such distribution,

`(II) notwithstanding the pro rata allocation of income on, and investment in, the contract to distributions under section 72, the portion of such distribution rolled over to an eligible retirement plan described in clause (i) shall be treated as from income on the contract (to the extent of the aggregate income on the contract from all individual retirement plans of the distributee), and

`(III) appropriate adjustments shall be made in applying section 72 to other distributions in such taxable year and subsequent taxable years.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to distributions after December 31, 2001.

(a) EXEMPT TRUSTS- Paragraph (3) of section 402(c) (relating to transfer must be made within 60 days of receipt) is amended to read as follows:

`(3) TRANSFER MUST BE MADE WITHIN 60 DAYS OF RECEIPT-

`(A) IN GENERAL- Except as provided in subparagraph (B), paragraph (1) shall not apply to any transfer of a distribution made after the 60th day following the day on which the distributee received the property distributed.

`(B) HARDSHIP EXCEPTION- The Secretary may waive the 60-day requirement under subparagraph (A) where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.'.

(b) IRAS- Paragraph (3) of section 408(d) (relating to rollover contributions), as amended by section 403, is amended by adding after subparagraph (H) the following new subparagraph:

`(I) WAIVER OF 60-DAY REQUIREMENT- The Secretary may waive the 60-day requirement under subparagraphs (A) and (D) where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.'.

(c) EFFECTIVE DATE- The amendments made by this section shall apply to distributions after December 31, 2001.

(a) PLAN TRANSFERS-

(1) AMENDMENT OF INTERNAL REVENUE CODE- Paragraph (6) of section 411(d) (relating to accrued benefit not to be decreased by amendment) is amended by adding at the end the following:

`(D) PLAN TRANSFERS-

`(i) IN GENERAL- A defined contribution plan (in this subparagraph referred to as the `transferee plan') shall not be treated as failing to meet the requirements of this subsection merely because the transferee plan does not provide some or all of the forms of distribution previously available under another defined contribution plan (in this subparagraph referred to as the `transferor plan') to the extent that--

`(I) the forms of distribution previously available under the transferor plan applied to the account of a participant or beneficiary under the transferor plan that was transferred from the transferor plan to the transferee plan pursuant to a direct transfer rather than pursuant to a distribution from the transferor plan,

`(II) the terms of both the transferor plan and the transferee plan authorize the transfer described in subclause (I),

`(III) the transfer described in subclause (I) was made pursuant to a voluntary election by the participant or beneficiary whose account was transferred to the transferee plan,

`(IV) the election described in subclause (III) was made after the participant or beneficiary received a notice describing the consequences of making the election, and

`(V) the transferee plan allows the participant or beneficiary described in subclause (III) to receive any distribution to which the participant or beneficiary is entitled under the transferee plan in the form of a single sum distribution.

`(ii) EXCEPTION- Clause (i) shall apply to plan mergers and other transactions having the effect of a direct transfer, including consolidations of benefits attributable to different employers within a multiple employer plan.

`(E) ELIMINATION OF FORM OF DISTRIBUTION- Except to the extent provided in regulations, a defined contribution plan shall not be treated as failing to meet the requirements of this section merely because of the elimination of a form of distribution previously available thereunder. This subparagraph shall not apply to the elimination of a form of distribution with respect to any participant unless--

`(i) a single sum payment is available to such participant at the same time or times as the form of distribution being eliminated, and

`(ii) such single sum payment is based on the same or greater portion of the participant's account as the form of distribution being eliminated.'.

(2) AMENDMENT OF ERISA- Section 204(g) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is amended by adding at the end the following:

`(4)(A) A defined contribution plan (in this subparagraph referred to as the `transferee plan') shall not be treated as failing to meet the requirements of this subsection merely because the transferee plan does not provide some or all of the forms of distribution previously available under another defined contribution plan (in this subparagraph referred to as the `transferor plan') to the extent that--

`(i) the forms of distribution previously available under the transferor plan applied to the account of a participant or beneficiary under the transferor plan that was transferred from the transferor plan to the transferee plan pursuant to a direct transfer rather than pursuant to a distribution from the transferor plan;

`(ii) the terms of both the transferor plan and the transferee plan authorize the transfer described in clause (i);

`(iii) the transfer described in clause (i) was made pursuant to a voluntary election by the participant or beneficiary whose account was transferred to the transferee plan;

`(iv) the election described in clause (iii) was made after the participant or beneficiary received a notice describing the consequences of making the election; and

`(v) the transferee plan allows the participant or beneficiary described in clause (iii) to receive any distribution to which the participant or beneficiary is entitled under the transferee plan in the form of a single sum distribution.

`(B) Subparagraph (A) shall apply to plan mergers and other transactions having the effect of a direct transfer, including consolidations of benefits attributable to different employers within a multiple employer plan.

`(5) Except to the extent provided in regulations promulgated by the Secretary of the Treasury, a defined contribution plan shall not be treated as failing to meet the requirements of this subsection merely because of the elimination of a form of distribution previously available thereunder. This paragraph shall not apply to the elimination of a form of distribution with respect to any participant unless--

`(A) a single sum payment is available to such participant at the same time or times as the form of distribution being eliminated; and

`(B) such single sum payment is based on the same or greater portion of the participant's account as the form of distribution being eliminated.'.

(3) EFFECTIVE DATE- The amendments made by this subsection shall apply to years beginning after December 31, 2001.

(b) REGULATIONS-

(1) AMENDMENT OF INTERNAL REVENUE CODE- Paragraph (6)(B) of section 411(d) (relating to accrued benefit not to be decreased by amendment) is amended by inserting after the second sentence the following new sentence: `The Secretary shall by regulations provide that this subparagraph shall not apply to any plan amendment which reduces or eliminates benefits or subsidies which create significant burdens or complexities for the plan and plan participants and does not adversely affect the rights of any participant in a more than de minimis manner.'.

(2) AMENDMENT OF ERISA- Section 204(g)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)(2)) is amended by inserting before the last sentence the following new sentence: `The Secretary of the Treasury shall by regulations provide that this paragraph shall not apply to any plan amendment which reduces or eliminates benefits or subsidies which create significant burdens or complexities for the plan and plan participants and does not adversely affect the rights of any participant in a more than de minimis manner.'.

(3) SECRETARY DIRECTED- Not later than December 31, 2003, the Secretary of the Treasury is directed to issue regulations under section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974, including the regulations required by the amendment made by this subsection. Such regulations shall apply to plan years beginning after December 31, 2003, or such earlier date as is specified by the Secretary of the Treasury.

(a) MODIFICATION OF SAME DESK EXCEPTION-

(1) SECTION 401(k)-

(A) Section 401(k)(2)(B)(i)(I) (relating to qualified cash or deferred arrangements) is amended by striking `separation from service' and inserting `severance from employment'.

(B) Subparagraph (A) of section 401(k)(10) (relating to distributions upon termination of plan or disposition of assets or subsidiary) is amended to read as follows:

`(A) IN GENERAL- An event described in this subparagraph is the termination of the plan without establishment or maintenance of another defined contribution plan (other than an employee stock ownership plan as defined in section 4975(e)(7)).'.

(C) Section 401(k)(10) is amended--

(i) in subparagraph (B)--

(I) by striking `An event' in clause (i) and inserting `A termination'; and

(II) by striking `the event' in clause (i) and inserting `the termination';

(ii) by striking subparagraph (C); and

(iii) by striking `OR DISPOSITION OF ASSETS OR SUBSIDIARY' in the heading.

(2) SECTION 403(b)-

(A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are each amended by striking `separates from service' and inserting `has a severance from employment'.

(B) The heading for paragraph (11) of section 403(b) is amended by striking `SEPARATION FROM SERVICE' and inserting `SEVERANCE FROM EMPLOYMENT'.

(3) SECTION 457- Clause (ii) of section 457(d)(1)(A) is amended by striking `is separated from service' and inserting `has a severance from employment'.

(b) EFFECTIVE DATE- The amendments made by this section shall apply to distributions after December 31, 2001.

(a) 403(b) PLANS- Subsection (b) of section 403 is amended by adding at the end the following new paragraph:

`(13) TRUSTEE-TO-TRUSTEE TRANSFERS TO PURCHASE PERMISSIVE SERVICE CREDIT- No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is--

`(A) for the purchase of permissive service credit (as defined in section 415(n)(3)(A)) under such plan, or

`(B) a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.'.

(b) 457 PLANS- Subsection (e) of section 457 is amended by adding after paragraph (16) the following new paragraph:

`(17) TRUSTEE-TO-TRUSTEE TRANSFERS TO PURCHASE PERMISSIVE SERVICE CREDIT- No amount shall be includible in gross income by reason of a direct trustee-to-trustee transfer to a defined benefit governmental plan (as defined in section 414(d)) if such transfer is--

`(A) for the purchase of permissive service credit (as defined in section 415(n)(3)(A)) under such plan, or

`(B) a repayment to which section 415 does not apply by reason of subsection (k)(3) thereof.'.