[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5891 Reported in House (RH)]
<DOC>
Union Calendar No. 180
117th CONGRESS
2d Session
H. R. 5891
[Report No. 117-250, Part I]
To improve and enhance retirement savings, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
November 5, 2021
Mr. Scott of Virginia (for himself, Ms. Foxx, Mr. DeSaulnier, and Mr.
Allen) introduced the following bill; which was referred to the
Committee on Education and Labor, and in addition to the Committee on
Ways and Means, 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
February 25, 2022
Reported from the Committee on Education and Labor with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
February 25, 2022
Committee on Ways and Means discharged; committed to the Committee of
the Whole House on the State of the Union and ordered to be printed
[For text of introduced bill, see copy of bill as introduced on
November 5, 2021]
_______________________________________________________________________
A BILL
To improve and enhance retirement savings, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Improvement and Savings Enhancement Act of 2021'' or the ``RISE Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Retirement savings lost and found.
Sec. 3. Retirement plan modernization act.
Sec. 4. Multiple employer 403(b) plans.
Sec. 5. Small immediate financial incentives for contributing to a
plan.
Sec. 6. Performance benchmarks for asset allocation funds.
Sec. 7. Pooled employer plans modification.
Sec. 8. Review of pension risk transfer interpretive bulletin.
Sec. 9. Review and report to congress relating to reporting and
disclosure requirements.
Sec. 10. Eliminating unnecessary plan requirements related to
unenrolled participants.
Sec. 11. Recovery of retirement plan overpayments.
Sec. 12. Improving coverage for part-time workers.
SEC. 2. RETIREMENT SAVINGS LOST AND FOUND.
(a) Establishment of Retirement Savings Lost and Found.--Part 5 of
title I of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1341 et seq.) is amended by adding at the end the following:
``SEC. 523. RETIREMENT SAVINGS LOST AND FOUND.
``(a) Establishment.--
``(1) In general.--Not later than 2 years after the date of
the enactment of this section, the Secretary of Labor, in
consultation with the Secretary of the Treasury, shall
establish an online searchable database (to be managed by the
Department of Labor in accordance with this section) to be
known as the `Retirement Savings Lost and Found'. The
Retirement Savings Lost and Found shall--
``(A) allow an individual to search for information
that enables the individual to locate the administrator
of any plan described in paragraph (2) with respect to
which the individual is or was a participant or
beneficiary, and provide contact information for the
administrator of any such plan;
``(B) allow the Department of Labor to assist such
an individual in locating any such plan of the
individual; and
``(C) allow the Department of Labor to make any
necessary changes to contact information on record for
the administrator based on any changes to the plan due
to merger or consolidation of the plan with any other
plan, division of the plan into two or more plans,
bankruptcy, termination, change in name of the plan,
change in name or address of the administrator, or
other causes.
The Retirement Savings Lost and Found established under this
paragraph shall include information reported under this section
and other relevant information obtained by the Department of
Labor.
``(2) Plans described.--A plan described in this paragraph
is a plan to which the vesting standards of section 203 apply.
``(b) Administration.--The Retirement Savings Lost and Found
established under subsection (a) shall provide individuals described in
subsection (a)(1) only with the ability to search for information that
enables the individual to locate the administrator and contact
information for the administrator of any plan with respect to which the
individual is or was a participant or beneficiary, sufficient to allow
the individual to locate the individual's plan in order to recover any
benefit owing to the individual under the plan.
``(c) Safeguarding Participant Privacy and Security.--In
establishing the Retirement Savings Lost and Found under subsection
(a), the Department of Labor shall take all necessary and proper
precautions to ensure that individuals' plan information maintained by
the Retirement Savings Lost and Found is protected.
``(d) Definition of Administrator.--For purposes of this section
and section 523, the term `administrator' has the meaning given such
term in section 3(16)(A).
``(e) Information Collection From Plans.--Effective with respect to
plan years beginning after the second December 31 occurring after the
date of the enactment of this subsection, the administrator of a plan
to which the vesting standards of section 203 apply shall submit to the
Department of Labor, at such time and in such form and manner as is
prescribed in regulations--
``(1) the information described in paragraphs (1) through
(4) of section 6057(b) of the Internal Revenue Code of 1986;
``(2) the information described in subparagraphs (A), (B),
(E), and (F) of section 6057(a)(2) of the Internal Revenue Code
of 1986; and
``(3) such other information as the Secretary of Labor may
require.
``(f) Information Collection From Federal Agencies.--The Secretary
of Labor is authorized to access and receive information collected by
other Federal agencies that may be necessary to perform work related to
the Retirement Savings Lost and Found. Such necessary and appropriate
information, which shall be furnished to the Secretary of Labor on
request, includes information covered by section 6103 of the Internal
Revenue Code of 1986 and section 205(r) of the Social Security Act.
``(g) Program Integrity Audit.--On an annual basis for each of the
first 5 years beginning one year after the establishment of the
database in subsection (a)(1) and every 5 years thereafter, the
Inspector General of the Department of Labor shall conduct an audit of
the administration of the Retirement Savings Lost and Found.''.
(b) Conforming Amendment.--The table of contents for the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1001 et seq.) is
amended by inserting after the matter relating to section 521 the
following:
``Sec. 523.Retirement Savings Lost and Found.''.
SEC. 3. RETIREMENT PLAN MODERNIZATION ACT.
Section 203(e)(1) of the Employee Retirement Income Security Act of
1974 and sections 401(a)(31)(B)(ii) and 411(a)(11)(A) of the Internal
Revenue Code of 1986 and are each amended by striking ``$5,000'' and
inserting ``$7,000''.
SEC. 4. 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 the Internal Revenue Code of 1986 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) In general.--Section 3(43)(A) of the Employee
Retirement Income Security Act of 1974 is amended--
(A) in clause (ii), by striking ``section 501(a) of
such Code or'' and inserting ``section 501(a) of such
Code, a plan that consists of contracts described in
section 403(b) of such Code, or''; and
(B) 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.''.
(2) Conforming amendments.--Sections 3(43)(B)(v)(II) and
3(44)(A)(i)(I) of the Employee Retirement Income Security Act
of 1974 are each amended by striking ``section 401(a) of such
Code or'' and inserting ``section 401(a) of such Code, a plan
that consists of contracts described in section 403(b) of such
Code, or''.
(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 the
Internal Revenue Code of 1986 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 that notifies participating
employers described in section 501(c)(3), and which are exempt
from tax under section 501(a), 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 of the Treasury
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 of the Treasury shall provide education and outreach
to increase awareness to employers described in section
501(c)(3) of the Internal Revenue Code of 1986, and 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.
(h) Effective Date.--
(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 the Internal Revenue Code of 1986 with respect
to one employer (and its employees) in the case of a plan to
which section 403(b)(15) of the Internal Revenue Code of 1986
applies.
SEC. 5. SMALL IMMEDIATE FINANCIAL INCENTIVES FOR CONTRIBUTING TO A
PLAN.
(a) In General.--Subparagraph (A) of section 401(k)(4) of the
Internal Revenue Code of 1986 is amended by inserting ``(other than a
de minimis financial incentive)'' after ``any other benefit''.
(b) Section 403(b) Plans.--Subparagraph (A) of section 403(b)(12)
of the Internal Revenue Code of 1986, is further amended by adding at
the end the following: ``A plan shall not fail to satisfy clause (ii)
solely by reason of offering a de minimis financial incentive to
employees to elect to have the employer make contributions pursuant to
a salary reduction agreement.''.
(c) Exemption From Prohibited Transaction Rules.--Subsection (d) of
section 4975 of the Internal Revenue Code of 1986 is amended by
striking ``or'' at the end of paragraph (22), by striking the period at
the end of paragraph (23) and inserting ``, or'', and by adding at the
end the following new paragraph:
``(24) the provision of a de minimis financial incentive
described in section 401(k)(4)(A) or 403(b)(12)(A).''.
(d) Amendment of Employee Retirement Income Security Act of 1974.--
Subsection (b) of section 408 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1108(b)) is amended by adding at the
end the following new paragraph:
``(21) The provision of a de minimis financial incentive
described in section 401(k)(4)(A) or section 403(b)(12)(A) of
the Internal Revenue Code of 1986.''.
(e) Effective Date.--The amendments made by this section shall
apply with respect to plan years beginning after the date of enactment
of this Act.
SEC. 6. PERFORMANCE BENCHMARKS FOR ASSET ALLOCATION FUNDS.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Secretary of Labor shall provide that, in the case of
a designated investment alternative that contains a mix of asset
classes, the administrator of a plan may, but is not required to, use a
benchmark that is a blend of different broad-based securities market
indices if--
(1) the blend is reasonably representative of the asset
class holdings of the designated investment alternative;
(2) for purposes of determining the blend's returns for 1-,
5-, and 10-calendar-year periods (or for the life of the
alternative, if shorter), the blend is modified at least once
per year to reflect changes in the asset class holdings of the
designated investment alternative;
(3) the blend is furnished to participants and
beneficiaries in a manner that is reasonably designed to be
understandable; and
(4) each securities market index that is used for an
associated asset class would separately satisfy the
requirements of such regulation for such asset class.
(b) Study.--Not later than 3 years after the date of enactment of
this Act, the Secretary of Labor shall deliver a report to the
Committees on Finance and Health, Education, Labor, and Pensions of the
Senate and the Committees on Ways and Means and Education and Labor of
the House of Representatives regarding the utilization, effectiveness,
and participants' understanding of the benchmarking requirements under
this section.
SEC. 7. POOLED EMPLOYER PLANS MODIFICATION.
Section 3(43)(B)(ii) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1002(43)(B)(ii)) is amended to read as follows:
``(ii) designate a named fiduciary (other
than an employer in the plan) to be responsible
for collecting contributions to the plan and
require such fiduciary to implement written
contribution collection procedures that are
reasonable, diligent, and systematic;''.
SEC. 8. REVIEW OF PENSION RISK TRANSFER INTERPRETIVE BULLETIN.
Not later than 1 year after the date of enactment of this Act, the
Secretary of Labor shall--
(1) review section 2509.95-1 of title 29, Code of Federal
Regulations (relating to the fiduciary standards under the
Employee Retirement Income Security Act of 1974 when selecting
an annuity provider for a defined benefit pension plan) to
determine whether amendments to such section are warranted; and
(2) report to Congress on the findings of such review,
including an assessment of any risk to participants.
SEC. 9. REVIEW AND REPORT TO CONGRESS RELATING TO REPORTING AND
DISCLOSURE REQUIREMENTS.
(a) Study.--As soon as practicable after the date of enactment of
this Act, the Secretary of Labor, the Secretary of the Treasury, and
the Director of the Pension Benefit Guaranty Corporation shall review
the reporting and disclosure requirements as applicable to each such
agency head, of--
(1) the Employee Retirement Income Security Act of 1974
applicable to pension plans (as defined in section 3(2) of such
Act (29 U.S.C. 1002(2)); and
(2) the Internal Revenue Code of 1986 applicable to
qualified retirement plans (as defined in section 4974(c) of
such Code, without regard to paragraphs (4) and (5) of such
section).
(b) Report.--
(1) In general.--Not later than 2 years after the date of
enactment of this Act, the Secretary of Labor, the Secretary of
the Treasury, and the Director of the Pension Benefit Guaranty
Corporation, jointly, and after consultation with a balanced
group of participant and employer representatives, shall with
respect to plans referenced in subsection (a) report on the
effectiveness of the applicable reporting and disclosure
requirements and make such recommendations as may be
appropriate to the Committee on Education and Labor and the
Committee on Ways and Means of the House of Representatives and
the Committee on Health, Education, Labor, and Pensions and the
Committee on Finance of the Senate to consolidate, simplify,
standardize, and improve such requirements so as to simplify
reporting for such plans and ensure that plans can furnish and
participants and beneficiaries timely receive and better
understand the information they need to monitor their plans,
plan for retirement, and obtain the benefits they have earned.
(2) Analysis of effectiveness.--To assess the effectiveness
of the applicable reporting and disclosure requirements, the
report shall include an analysis, based on plan data, of how
participants and beneficiaries are providing preferred contact
information, the methods by which plan sponsors and plans are
furnishing disclosures, and the rate at which participants and
beneficiaries (grouped by key demographics) are receiving,
accessing, understanding, and retaining disclosures.
(3) Collection of information.--The agencies shall conduct
appropriate surveys and data collection to obtain any needed
information.
SEC. 10. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO
UNENROLLED PARTICIPANTS.
(a) Amendment of Employee Retirement Income Security Act of 1974.--
(1) In general.--Part 1 of subtitle B of subchapter I of
the Employee Retirement Income Security Act of 1974 is amended
by redesignating section 111 as section 112 and by inserting
after section 110 the following new section:
``SEC. 111. ELIMINATING UNNECESSARY PLAN REQUIREMENTS RELATED TO
UNENROLLED PARTICIPANTS.
``(a) In General.--Notwithstanding any other provision of this
title, with respect to any individual account plan, no disclosure,
notice, or other plan document (other than the notices and documents
described in paragraphs (1) and (2)) shall be required to be furnished
under this title to any unenrolled participant if the unenrolled
participant receives--
``(1) an annual reminder notice of such participant's
eligibility to participate in such plan and any applicable
election deadlines under the plan; and
``(2) any document requested by such participant that the
participant would be entitled to receive notwithstanding this
section.
``(b) Unenrolled Participant.--For purposes of this section, the
term `unenrolled participant' means an employee who--
``(1) is eligible to participate in an individual account
plan;
``(2) has received the summary plan description pursuant to
section 104(b) and any other eligibility notices required to be
furnished under this title in connection with such
participant's initial eligibility to participate in such plan;
``(3) is not participating in such plan;
``(4) does not have a balance in the plan; and
``(5) satisfies such other criteria as the Secretary of
Labor may determine appropriate, as prescribed in guidance
issued in consultation with the Secretary of Treasury.
For purposes of this section, any eligibility to participate in the
plan following any period for which such employee was not eligible to
participate shall be treated as initial eligibility.
``(c) Annual Reminder Notice.--For purposes of this section, the
term `annual reminder notice' means a notice provided in accordance
with section 2520.104b-1 of title 29, Code of Federal Regulations (or
any successor regulation), which--
``(1) is furnished in connection with the annual open
season election period with respect to the plan or, if there is
no such period, is furnished within a reasonable period prior
to the beginning of each plan year;
``(2) notifies the unenrolled participant of--
``(A) the unenrolled participant's eligibility to
participate in the plan; and
``(B) the key benefits and rights under the plan,
with a focus on employer contributions and vesting
provisions; and
``(3) provides such information in a prominent manner
calculated to be understood by the average participant.''.
(2) Clerical amendment.--The table of contents in section 1
of the Employee Retirement Income Security Act of 1974 is
amended by striking the item relating to section 111 and by
inserting after the item relating to section 110 the following
new items:
``Sec. 111. Eliminating unnecessary plan requirements related to
unenrolled participants.
``Sec. 112. Repeal and effective date.''.
(b) Amendment of Internal Revenue Code of 1986.--Section 414 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new subsection:
``(aa) Eliminating Unnecessary Plan Requirements Related to
Unenrolled Participants.--
``(1) In general.--Notwithstanding any other provision of
this title, with respect to any defined contribution plan, no
disclosure, notice, or other plan document (other than the
notices and documents described in subparagraphs (A) and (B))
shall be required to be furnished under this title to any
unenrolled participant if the unenrolled participant receives--
``(A) an annual reminder notice of such
participant's eligibility to participate in such plan
and any applicable election deadlines under the plan,
and
``(B) any document requested by such participant
that the participant would be entitled to receive
notwithstanding this subsection.
``(2) Unenrolled participant.--For purposes of this
subsection, the term `unenrolled participant' means an employee
who--
``(A) is eligible to participate in a defined
contribution plan,
``(B) has received the summary plan description
pursuant to section 104(b) of the Employee Retirement
Income Security Act of 1974 and any other eligibility
notices in connection with such participant's initial
eligibility to participate in such plan,
``(C) is not participating in such plan,
``(D) does not have a balance in the plan, and
``(E) satisfies such other criteria as the
Secretary of the Treasury may determine appropriate, as
prescribed in guidance issued in consultation with the
Secretary of Labor.
For purposes of this subsection, any eligibility to participate
in the plan following any period for which such employee was
not eligible to participate shall be treated as initial
eligibility.
``(3) Annual reminder notice.--For purposes of this
subsection, the term `annual reminder notice' means the notice
described in section 111(c) of the Employee Retirement Income
Security Act of 1974.''.
(c) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2021.
SEC. 11. RECOVERY OF RETIREMENT PLAN OVERPAYMENTS.
(a) Overpayments Under ERISA.--Section 206 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1056) is amended by
adding at the end the following new subsection:
``(h) Special Rules Applicable to Benefit Overpayments.--
``(1) General rule.--In the case of an inadvertent benefit
overpayment by any pension plan, the responsible plan fiduciary
shall not be considered to have failed to comply with the
requirements of this title merely because such fiduciary
determines, in the exercise of its fiduciary discretion, not to
seek recovery of all or part of such overpayment from--
``(A) any participant or beneficiary,
``(B) any plan sponsor of, or contributing employer
to--
``(i) an individual account plan, provided
that the amount needed to prevent or restore
any impermissible forfeiture from any
participant's or beneficiary's account arising
in connection with the overpayment is,
separately from and independently of the
overpayment, allocated to such account pursuant
to the nonforfeitability requirements of
section 203 (for example, out of the plan's
forfeiture account, additional employer
contributions, or recoveries from those
responsible for the overpayment), or
``(ii) a defined benefit pension plan
subject to the funding rules in part 3 of this
subtitle B, unless the responsible plan
fiduciary determines, in the exercise of its
fiduciary discretion, that failure to recover
all or part of the overpayment faster than
required under such funding rules would
materially affect the plan's ability to pay
benefits due to other participants and
beneficiaries, or
``(C) any fiduciary of the plan, other than a
fiduciary (including a plan sponsor or contributing
employer acting in a fiduciary capacity) whose breach
of its fiduciary duties resulted in such overpayment,
provided that if the plan has established prudent
procedures to prevent and minimize overpayment of
benefits and the relevant plan fiduciaries have
followed such procedures, an inadvertent benefit
overpayment will not give rise to a breach of fiduciary
duty.
``(2) Reduction in future benefit payments and recovery
from responsible party.--Paragraph (1) shall not fail to apply
with respect to any inadvertent benefit overpayment merely
because, after discovering such overpayment, the responsible
plan fiduciary--
``(A) reduces future benefit payments to the
correct amount provided for under the terms of the
plan, or
``(B) seeks recovery from the person or persons
responsible for the overpayment.
``(3) Employer funding obligations.--Nothing in this
subsection shall relieve an employer of any obligation imposed
on it to make contributions to a plan to meet the minimum
funding standards under part 3 of this subtitle B or to prevent
or restore an impermissible forfeiture in accordance with
section 203.
``(4) Recoupment from participants and beneficiaries.--If
the responsible plan fiduciary, in the exercise of its
fiduciary discretion, decides to seek recoupment from a
participant or beneficiary of all or part of an inadvertent
benefit overpayment made by the plan to such participant or
beneficiary, it may do so, subject to the following conditions:
``(A) No interest or other additional amounts (such
as collection costs or fees) are sought on overpaid
amounts for any period before or after the date of
correction of such overpayment.
``(B) If the plan seeks to recoup past overpayments
of a non-decreasing periodic benefit by reducing future
benefit payments--
``(i) the reduction ceases after the plan
has recovered the full dollar amount of the
overpayment,
``(ii) the amount recouped each calendar
year does not exceed 10 percent of the full
dollar amount of the overpayment, and
``(iii) future benefit payments are not
reduced to below 90 percent of the periodic
amount otherwise payable under the terms of the
plan.
Alternatively, if the plan seeks to recoup past
overpayments of a non-decreasing periodic benefit
through one or more installment payments, the sum of
such installment payments in any calendar year does not
exceed the sum of the reductions that would be
permitted in such year under the preceding sentence.
``(C) If the plan seeks to recoup past overpayments
of a benefit other than a non-decreasing periodic
benefit, the plan satisfies requirements developed by
the Secretary for purposes of this subparagraph.
``(D) Efforts to recoup overpayments are--
``(i) not accompanied by threats of
litigation, unless the responsible plan
fiduciary reasonably believes it could prevail
in a civil action brought in Federal or State
court to recoup the overpayments, and
``(ii) not made through a collection agency
or similar third party, unless the participant
or beneficiary ignores or rejects efforts to
recoup the overpayment following either a final
judgment in Federal or State court or a
settlement between the participant or
beneficiary and the plan, in either case
authorizing such recoupment.
``(E) Recoupment of past overpayments to a
participant is not sought from any beneficiary of the
participant, including a spouse, surviving spouse,
former spouse, or other beneficiary.
``(F) Recoupment may not be sought if the first
overpayment occurred more than 3 years before the
participant or beneficiary is first notified in writing
of the error.
``(G) A participant or beneficiary from whom
recoupment is sought is entitled to contest all or part
of the recoupment pursuant to the plan's claims
procedures.
``(H) In determining the amount of recoupment to
seek, the responsible plan fiduciary may take into
account the hardship that recoupment likely would
impose on the participant or beneficiary.
``(5) Effect of culpability.--Subparagraphs (A) through (F)
of paragraph (4) shall not apply to protect a participant or
beneficiary who is culpable. For purposes of this paragraph, a
participant or beneficiary is culpable if the individual bears
responsibility for the overpayment (such as through
misrepresentations or omissions that led to the overpayment),
or if the individual knew, or had good reason to know under the
circumstances, that the benefit payment or payments were
materially in excess of the correct amount. Notwithstanding the
preceding sentence, an individual is not culpable merely
because the individual believed the benefit payment or payments
were or might be in excess of the correct amount, if the
individual raised that question with an authorized plan
representative and was told the payment or payments were not in
excess of the correct amount. With respect to a culpable
participant or beneficiary, efforts to recoup overpayments
shall not be made through threats of litigation, unless a
lawyer for the plan could make the representations required
under Rule 11 of the Federal Rules of Civil Procedure if the
litigation were brought in Federal court.''.
(b) Overpayments Under Internal Revenue Code of 1986.--
(1) Qualification requirements.--Section 414 of the
Internal Revenue Code of 1986, is further amended by adding at
the end the following new subsection:
``(bb) Special Rules Applicable to Benefit Overpayments.--
``(1) In general.--A plan shall not fail to be treated as
described in clause (i), (ii), (iii), or (iv) of section
219(g)(5)(A) (and shall not fail to be treated as satisfying
the requirements of section 401(a) or 403) merely because--
``(A) the plan fails to obtain payment from any
participant, beneficiary, employer, plan sponsor,
fiduciary, or other party on account of any inadvertent
benefit overpayment made by the plan, or
``(B) the plan sponsor amends the plan to reduce
past or future benefit payments to affected
participants and beneficiaries in order to adjust for
prior inadvertent benefit overpayments.
``(2) Reduction in future benefit payments and recovery
from responsible party.--Paragraph (1) shall not fail to apply
to a plan merely because, after discovering a benefit
overpayment, such plan--
``(A) reduces future benefit payments to the
correct amount provided for under the terms of the
plan, or
``(B) seeks recovery from the person or persons
responsible for such overpayment.
``(3) Employer funding obligations.--Nothing in this
subsection shall relieve an employer of any obligation imposed
on it to make contributions to a plan to meet the minimum
funding standards under sections 412 and 430 or to prevent or
restore an impermissible forfeiture in accordance with section
411.
``(4) Observance of benefit limitations.--Notwithstanding
paragraph (1), a plan to which paragraph (1) applies shall
observe any limitations imposed on it by section 401(a)(17) or
415. The plan may enforce such limitations using any method
approved by the Secretary of the Treasury for recouping
benefits previously paid or allocations previously made in
excess of such limitations.
``(5) Coordination with other qualification requirements.--
The Secretary of the Treasury may issue regulations or other
guidance of general applicability specifying how benefit
overpayments and their recoupment or non-recoupment from a
participant or beneficiary shall be taken into account for
purposes of satisfying any requirement applicable to a plan to
which paragraph (1) applies.''.
(2) Rollovers.--Section 402(c) of such Code is amended by
adding at the end the following new paragraph:
``(12) In the case of an inadvertent benefit overpayment
from a plan to which section 414(bb)(1) applies that is
transferred to an eligible retirement plan by or on behalf of a
participant or beneficiary--
``(A) the portion of such overpayment with respect
to which recoupment is not sought on behalf of the plan
shall be treated as having been paid in an eligible
rollover distribution if the payment would have been an
eligible rollover distribution but for being an
overpayment, and
``(B) the portion of such overpayment with respect
to which recoupment is sought on behalf of the plan
shall be permitted to be returned to such plan and in
such case shall be treated as an eligible rollover
distribution transferred to such plan by the
participant or beneficiary who received such
overpayment (and the plans making and receiving such
transfer shall be treated as permitting such transfer).
In any case in which recoupment is sought on behalf of the plan
but is disputed by the participant or beneficiary who received
such overpayment, such dispute shall be subject to the claims
procedures of the plan that made such overpayment, such plan
shall notify the plan receiving the rollover of such dispute,
and the plan receiving the rollover shall retain such
overpayment on behalf of the participant or beneficiary (and
shall be entitled to treat such overpayment as plan assets)
pending the outcome of such procedures.''.
(c) Effective Date.--The amendments made by this section shall
apply as of the date of the enactment of this Act.
(d) Certain Actions Before Date of Enactment.--Plans, fiduciaries,
employers, and plan sponsors are entitled to rely on--
(1) a good faith interpretation of then existing
administrative guidance for inadvertent benefit overpayment
recoupments and recoveries that commenced before the date of
enactment of this Act, and
(2) determinations made before the date of enactment of
this Act by the responsible plan fiduciary, in the exercise of
its fiduciary discretion, not to seek recoupment or recovery of
all or part of an inadvertent benefit overpayment.
In the case of a benefit overpayment that occurred prior to the date of
enactment of this Act, any installment payments by the participant or
beneficiary to the plan or any reduction in periodic benefit payments
to the participant or beneficiary, which were made in recoupment of
such overpayment and which commenced prior to such date, may continue
after such date. Nothing in this subsection shall relieve a fiduciary
from responsibility for an overpayment that resulted from a breach of
its fiduciary duties.
SEC. 12. IMPROVING COVERAGE FOR PART-TIME WORKERS.
(a) Amendment of Employee Retirement Income Security Act of 1974.--
(1) In general.--Section 202 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1052) is amended by
adding at the end the following new subsection:
``(c) Special Rule for Certain Part-time Employees.--
``(1) In general.--A pension plan that includes either a
qualified cash or deferred arrangement (as defined in section
401(k) of the Internal Revenue Code of 1986) or a salary
reduction agreement (as described in section 403(b) of such
Code) shall not require, as a condition of participation in the
arrangement or agreement, that an employee complete a period of
service with the employer (or employers) maintaining the plan
extending beyond the close of the earlier of--
``(A) the period permitted under subsection (a)(1)
(determined without regard to subparagraph (B)(i)
thereof); or
``(B) the first 24-month period--
``(i) consisting of 2 consecutive 12-month
periods during each of which the employee has
at least 500 hours of service; and
``(ii) by the close of which the employee
has attained the age of 21.
``(2) Exception.--Paragraph (1)(B) shall not apply to any
employee described in section 410(b)(3) of the Internal Revenue
Code of 1986.
``(3) Coordination with other rules.--
``(A) In general.--In the case of employees who are
eligible to participate in the arrangement or agreement
solely by reason of paragraph (1)(B):
``(i) Exclusions.--An employer may elect to
exclude such employees from the application of
subsections (a)(4), (k)(3), (k)(12), (k)(13),
(k)(15)(B)(i)(I), and (m)(2) of section 401 of
the Internal Revenue Code of 1986 and section
410(b) of such Code.
``(ii) Time of participation.--The rules of
subsection (a)(4) shall apply to such
employees.
``(B) Top-heavy rules.--An employer may elect to
exclude all employees who are eligible to participate
in a plan maintained by the employer solely by reason
of paragraph (1)(B) from the application of the vesting
and benefit requirements under subsections (b) and (c)
of section 416 of the Internal Revenue Code of 1986.
``(4) 12-month period.--For purposes of this subsection,
12-month periods shall be determined in the same manner as
under the last sentence of subsection (a)(3)(A), except that
12-month periods beginning before January 1, 2021, shall not be
taken into account.''
(2) Vesting.--Section 203(b) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1053(a)) is amended by
redesignating paragraph (4) as paragraph (5) and by inserting
after paragraph (3) the following new paragraph:
``(4) Part-time employees.--For purposes of determining
whether an employee who is eligible to participate in a
qualified cash or deferred arrangement or a salary reduction
agreement under a plan solely by reason of section 202(c)(1)(B)
has a nonforfeitable right to employer contributions--
``(A) except as provided in subparagraph (B), each
12-month period for which the employee has at least 500
hours of service shall be treated as a year of service;
``(B) paragraph (3) shall be applied by
substituting `at least 500 hours of service' for `more
than 500 hours of service' in subparagraph (A) thereof;
and
``(C) 12-month periods occurring before the 24-
month period described in section 202(c)(1)(B) shall
not be treated as years of service.
For purposes of this paragraph, 12-month periods shall be
determined in the same manner as under the last sentence of
section 202(a)(3)(A), except that 12-month periods beginning
before January 1, 2021, shall not be taken into account.''.
(3) Pre-2021 service.--Section 112(b) of the Setting Every
Community Up for Retirement Enhancement Act of 2019 (26 U.S.C.
401 note) is amended by striking ``section 401(k)(2)(D)(ii)''
and inserting ``paragraphs (2)(D)(ii) and (15)(B)(iii) of
section 401(k)''.
(b) Conforming Amendments to Internal Revenue Code of 1986.--
(1) In general.--Section 410(a) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
paragraph:
``(6) Special rule for certain part-time employees.--
``(A) In general.--In the case of a plan that
includes either a qualified cash or deferred
arrangement (as defined in section 401(k)), a trust of
which such plan is a part shall not constitute a
qualified trust under section 401(a) if the plan
requires, as a condition of participation in the plan
or arrangement, that an employee complete a period of
service with the employer (or employers) maintaining
the plan extending beyond the close of the earlier of--
``(i) the period permitted under paragraph
(1) (determined without regard to subparagraph
(B)(i) thereof), or
``(ii) the first 24-month period--
``(I) consisting of 2 consecutive
12-month periods during each of which
the employee has at least 500 hours of
service, and
``(II) by the close of which the
employee has attained the age of 21.
``(B) Exception.--Subparagraph (A)(ii) shall not
apply to any employee described in section 410(b)(3).
``(C) Coordination with other rules.--
``(i) In general.--In the case of employees
who are eligible to participate in the
arrangement or agreement solely by reason of
subparagraph (A)(ii)--
``(I) Exclusions.--An employer may
elect to exclude such employees from
the application of subsection (b) and
of subsections (a)(4), (k)(3), (k)(12),
(k)(13), (k)(15)(B)(i)(I), and (m)(2)
of section 401.
``(II) Time of participation.--The
rules of paragraph (4) shall apply to
such employees.
``(ii) Top-heavy rules.--An employer may
elect to exclude all employees who are eligible
to participate in a plan maintained by the
employer solely by reason of subparagraph
(A)(ii) from the application of the vesting and
benefit requirements under subsections (b) and
(c) of section 416.
``(D) 12-month period.--For purposes of this
paragraph, 12-month periods shall be determined in the
same manner as under the last sentence of paragraph
(3)(A), except that 12-month periods beginning before
January 1, 2021, shall not be taken into account.''.
(2) Vesting.--Section 410(a) of the Internal Revenue Code
of 1986 is amended by adding at the end the following:
``(7) Part-time employees.--For purposes of determining
whether an employee who is eligible to participate in a
qualified cash or deferred arrangement or a salary reduction
agreement under a plan solely by reason of paragraph (6)(A)(ii)
has a nonforfeitable right to employer contributions--
``(A) except as provided in subparagraph (B), each
12-month period for which the employee has at least 500
hours of service shall be treated as a year of service,
``(B) section 411(a)(6) shall be applied by
substituting `at least 500 hours of service' for `more
than 500 hours of service' in subparagraph (A) thereof,
and
``(C) 12-month periods occurring before the 24-
month period described in paragraph (6)(A)(ii) shall
not be treated as years of service.
For purposes of this paragraph, 12-month periods shall be
determined in the same manner as under paragraph (6)(D).''.
Union Calendar No. 180
117th CONGRESS
2d Session
H. R. 5891
[Report No. 117-250, Part I]
_______________________________________________________________________
A BILL
To improve and enhance retirement savings, and for other purposes.
_______________________________________________________________________
February 25, 2022
Reported from the Committee on Education and Labor with an amendment
February 25, 2022
Committee on Ways and Means discharged; committed to the Committee of
the Whole House on the State of the Union and ordered to be printed