Text: H.R.5398 — 108th Congress (2003-2004)All Information (Except Text)

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Introduced in House (11/19/2004)

 
[Congressional Bills 108th Congress]
[From the U.S. Government Printing Office]
[H.R. 5398 Introduced in House (IH)]






108th CONGRESS
  2d Session
                                H. R. 5398

 To amend the Internal Revenue Code of 1986 to improve the retirement 
                     security of American families.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 19, 2004

 Mr. Andrews introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to improve the retirement 
                     security of American families.

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

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Retirement 
Enhancement Revenue Act of 2004''.
    (b) Table of Contents.--The table of contents is as follows:

Sec. 1. Short title and table of contents.
                 TITLE I--PUBLIC EMPLOYEE PENSION PLANS

Sec. 101. New qualification requirements for public employee pension 
                            plans.
                     TITLE II--PENSION IMPROVEMENTS

Sec. 201. Automatic enrollment of all employees in 401(k) plans.
Sec. 202. Diversification requirements for defined contribution plans 
                            that hold employer securities.
Sec. 203. Improvements in simplified employee pensions.
Sec. 204. Pension integration rules.
Sec. 205. Increase to age 75 for beginning mandatory distributions.
Sec. 206. Restrictions on exclusion of unionized employees from 
                            participation in 401(k) plans.
Sec. 207. Removal of $5,000 limit on plans subject to automatic 
                            rollover upon mandatory distribution.
           TITLE III--TAX CREDITS TO PROMOTE PENSION COVERAGE

Sec. 301. Savers credit made refundable and permanent.
Sec. 302. Credit for qualified pension plan contributions of small 
                            employers.
Sec. 303. Notice.
            TITLE IV--IMPROVED PENSION PROTECTIONS FOR WOMEN

Sec. 401. Modifications of joint and survivor annuity requirements.
Sec. 402. Entitlement of divorced spouses to railroad retirement 
                            annuities independent of actual entitlement 
                            of employee.
Sec. 403. Extension of tier II railroad retirement benefits to 
                            surviving former spouses pursuant to 
                            divorce agreements.
TITLE V--DEFINED BENEFIT PLANS WHICH INCLUDE QUALIFIED CASH OR DEFERRED 
                              ARRANGEMENTS

Sec. 501. Defined benefit plan with deferred compensation arrangement 
                            in a single plan.
Sec. 502. Defined benefit accruals satisfy 401(k) safe harbor.
Sec. 503. Additional accruals under defined benefit plan provided as 
                            matching contributions.
Sec. 504. Limitation on deductions where combination of defined 
                            contribution plan and defined benefit plan.
Sec. 505. Conforming amendments to the Employee Retirement Income 
                            Security Act of 1974.
                    TITLE VI--ADDITIONAL AMENDMENTS

Sec. 601. Exemption from prohibited transaction rules for certain 
                            aborted emergent transactions.
Sec. 602. Loans from retirement plans for health insurance and job 
                            training expenses.
Sec. 603. Treatment of unclaimed benefits.
Sec. 604. Income averaging of corrected civil service annuity benefit 
                            payments.
Sec. 605. Prohibited transaction exemption for the provision of 
                            investment advice.
Sec. 606. Increase in deductible contributions to single-employer 
                            defined benefit plan upon payment of 
                            increased premium to the Pension Benefit 
                            Guaranty Corporation.
Sec. 607. Exemption from prohibited transaction rules for certain 
                            aborted emergent transactions.
Sec. 608. Pension benefit information.
Sec. 609. Permanency of transition rule in Retirement Protection Act of 
                            1994.
                     TITLE VII--GENERAL PROVISIONS

Sec. 701. General effective date.
Sec. 702. Plan amendments.

                 TITLE I--PUBLIC EMPLOYEE PENSION PLANS

SEC. 101. NEW QUALIFICATION REQUIREMENTS FOR PUBLIC EMPLOYEE PENSION 
              PLANS.

    (a) In General.--Subsection (a) of section 401 of the Internal 
Revenue Code of 1986 (relating to requirements for qualification) is 
amended by inserting after paragraph (34) the following new paragraph:
            ``(35) Public employee pension plans.--A trust forming a 
        part of a public employee pension plan (as defined in section 
        420C(a)(9)) shall not constitute a qualified trust under this 
        section unless the requirements of subpart F of this part are 
        met in connection with such plan.
    (b) Requirements.--Part I of subchapter D of chapter 1 of such Code 
(relating to pension, profit-sharing, stock bonus plans, etc.) is 
amended by inserting after subpart E the following new subpart:

               ``Subpart F--Public Employee Pension Plans

``Sec. 420A. Reporting and disclosure requirements.
``Sec. 420B. Review by qualified review boards of changes in employer 
                            contributions.
``Sec. 420C. Definitions and coverage.

``SEC. 420A. REPORTING AND DISCLOSURE REQUIREMENTS.

    ``(a) In General.--A public employee pension plan does not meet the 
requirements of section 401(a)(35) unless the terms of the plan include 
the requirements of this section.
    ``(b) Required Disclosures.--The plan shall provide that, within 
210 days after the close of each plan year, the administrator of the 
plan shall furnish to each participant, and to each beneficiary 
receiving benefits under the plan--
            ``(1) a statement of the assets and liabilities of the plan 
        aggregated by categories and valued at their current value, and 
        the same data displayed in comparative form for the end of the 
        previous plan year,
            ``(2) a statement of receipts and disbursements during the 
        preceding 12-month period aggregated by general sources and 
        applications,
            ``(3) a report containing--
                    ``(A) a description of all investments and assets 
                of the plan, including their value,
                    ``(B) the names and positions of all of the 
                trustees of the plan, and the time remaining before the 
                expiration of their term,
                    ``(C) a description of the method of trustee 
                selection,
                    ``(D) a description of any changes in investment 
                policy of the plan during the fiscal year,
                    ``(E) an evaluation of the long-term solvency of 
                the plan, including the number of participants and 
                beneficiaries and a summary of their benefits, and a 
                projection of the amount of benefits expected to be 
                paid for the fifth, tenth, and fifteenth plan year 
                following the date of the publication of the report, 
                and
                    ``(F) the percentage which the current value of the 
                assets of the plan is of the current liability under 
                the plan, and
            ``(4) any other material as is necessary to fairly 
        summarize the latest annual report.
Such information shall be written and calculated to be understood by 
the average plan participant, and shall be sufficiently accurate and 
comprehensive to reasonably apprise such participants and beneficiaries 
of their rights and obligations under the plan.
    ``(c) Availability of Plan Documents for Examination.--The plan 
shall provide that the administrator shall make copies of the plan 
description and the latest annual report and the bargaining agreement, 
trust agreement, contract, or other instruments under which the plan 
was established or is operated available for examination by any plan 
participant or beneficiary in the principal office of the administrator 
and in such other places as may be necessary to make available all 
pertinent information to all participants (including such places as the 
Secretary may prescribe by regulations).
    ``(d) Availability of Information Upon Request.--The plan shall 
provide that the administrator shall, upon written request of any 
participant or beneficiary, furnish a copy of the latest annual report, 
any terminal report, the bargaining agreement, trust agreement, 
contract, or other instruments under which the plan is established or 
operated. The administrator may make a reasonable charge to cover the 
cost of furnishing such complete copies. The Secretary may by 
regulation prescribe the maximum amount which will constitute a 
reasonable charge under the preceding sentence.

``SEC. 420B. REVIEW BY QUALIFIED REVIEW BOARDS OF CHANGES IN EMPLOYER 
              CONTRIBUTIONS.

    ``(a) In General.--A public employee pension plan does not meet the 
requirements of section 401(a)(35) unless, under the plan, changes in 
employer contributions are subject to review by a qualified review 
board established for the plan as provided in this section. For 
purposes of this section, the term `qualified review board' means a 
board--
            ``(1) whose membership is determined under the law of the 
        principal State in accordance with subsection (b), and
            ``(2) whose powers are determined under the law of the 
        principal State in accordance with subsection (c).
    ``(b) Membership.--
            ``(1) In general.--The membership of a qualified review 
        board established for a plan shall consist of 3 members 
        selected from among individuals who, by means of their 
        education and experience, have demonstrated expertise in the 
        area of pension fund management, as follows:
                    ``(A) one member is appointed by the Governor of 
                the State,
                    ``(B) one member is selected by the participants in 
                the plan, by means of an election held in such form and 
                manner as shall be prescribed in regulations of the 
                Secretary, and
                    ``(C) one member is selected jointly by the 
                Governor and by a representative of participants in the 
                plan (from a certified list of pension experts 
                established in accordance with paragraph (2)).
        Each member of the board shall have 1 vote. Members of the 
        board shall serve for such equivalent terms as shall be 
        prescribed under the law of the principal State.
            ``(2) Certified list of experts.--The Governor of the State 
        shall, for purposes of paragraph (1)(C), establish and maintain 
        with respect to each public employee pension plan (for which 
        such State is the principal State) a certified list of pension 
        experts meeting the requirements for membership on the 
        qualified review board. Individuals may be included on such 
        list only by agreement between the Governor of the State and a 
        representative elected by participants in the plan, entered 
        into by means of collective bargaining in such form and manner 
        as shall be prescribed in regulations of the Secretary.
    ``(c) Powers.--The board shall be treated as a qualified review 
board for purposes of this section with respect to any public employee 
pension plan (for which such State is the principal State) only if the 
powers of such board under the law of the principal State include 
review by the board, for approval or disapproval by the board, of any 
change in the terms of such plan, as a necessary prerequisite for such 
change to take effect, if--
            ``(1) such change would have the effect of changing levels 
        of employer contributions to the plan, and
            ``(2) such review is requested, in such form and manner as 
        shall be prescribed in regulations of the Secretary, by--
                    ``(A) at least one-third of the total number of 
                trustees of any trust fund forming a part of the plan, 
                or
                    ``(B) the head of any employee organization 
                representing at least 20 percent of the total number of 
                active participants in the plan.
The board may be treated as a qualified review board for purposes of 
this section only if, under the law of the principal State, any such 
change submitted to such review by the board may take effect only upon 
approval of the change by the board.

``SEC. 420C. DEFINITIONS AND COVERAGE.

    ``(a) Definitions.--For purposes of this subpart--
            ``(1) Administrator.--The term `administrator' means--
                    ``(A) the board of trustees, retirement board, or 
                similar person with administrative responsibilities in 
                connection with a plan, or any other person 
                specifically so designated in connection with any 
                requirement of this subpart by the terms of the 
                instrument or instruments under which the plan is 
                operated, including but not limited to the law of any 
                State or of any political subdivision of any State, or
                    ``(B) in any case in which there is no person 
                described in subparagraph (A) in connection with the 
                plan, the plan sponsor.
            ``(2) Beneficiary.--The term `beneficiary' means a person 
        designated by a participant, or by the terms of a public 
        employee pension plan, who is or may become entitled to a 
        benefit thereunder.
            ``(3) Current liability.--The term `current liability' has 
        the meaning provided in section 302(d)(7) of the Employee 
        Retirement Income Security Act of 1974.
            ``(4) Employee.--The term `employee' means any individual 
        employed by an employer, employer representative, or other 
        person required to make employer contributions under the plan.
            ``(5) Employee organization.--The term `employee 
        organization' means any labor union or any organization of any 
        kind, or any agency or employee representation committee, 
        association, group, or plan, in which employees participate and 
        which exists for the purpose, in whole or in part, of dealing 
        with employers or employer representatives concerning a public 
        employee pension plan or other matters incidental to employment 
        relationships; or any employees' beneficiary association 
        organized for the purpose, in whole or in part, of establishing 
        such a plan.
            ``(6) Employer.--The term `employer' means--
                    ``(A) the government of any State or of any 
                political subdivision of a State,
                    ``(B) any agency or instrumentality of a government 
                referred to in subparagraph (A), or
                    ``(C) any agency or instrumentality of two or more 
                governments referred to in subparagraph (A).
            ``(7) Employer contribution.--The term `employer 
        contribution' means any contribution to a public employee 
        pension plan other than a contribution made by a participant in 
        the plan.
            ``(8) Employer representative.--The term `employer 
        representative' means--
                    ``(A) any group or association consisting, in whole 
                or in part, of employers acting, in connection with a 
                public employee pension plan, for an employer, or
                    ``(B) any person acting, in connection with a 
                public employee pension plan, indirectly in the 
                interest of an employer or of a group or association 
                described in subparagraph (A).
            ``(9) Public employee pension plan.--The terms `public 
        employee pension plan' and `plan' mean any plan, fund, or 
        program which was heretofore or is hereafter established or 
        maintained, in whole or in part, by an employer, an employer 
        representative, or an employee organization, or by a 
        combination thereof, to the extent that by its express terms or 
        as a result of surrounding circumstances such plan, fund, or 
        program--
                    ``(A) provides retirement income to employees, or
                    ``(B) results in a deferral of income by employees 
                for periods extending to the termination of covered 
                employment or beyond,
        regardless of the method of calculating the contributions made 
        to the plan, the method of calculating the benefits under the 
        plan, or the method of distributing benefits from the plan.
            ``(10) Principal state.--The term `principal State' means, 
        for any plan year with respect to a public employee pension 
        plan, the State in which, as of the beginning of such plan 
        year, the largest percentage of the participants of the plan 
        employed in any single State is employed.
            ``(11) Governor.--The term `Governor' means, in connection 
        with a public employee pension plan, the Governor (or 
        equivalent official) of the principal State.
            ``(12) Participant.--The term `participant' means any 
        individual who is or may become eligible to receive a benefit 
        of any type from a public employee pension plan or whose 
        beneficiaries may be eligible to receive any such benefit.
            ``(13) Person.--The term `person' means a State, a 
        political subdivision of a State, any agency or instrumentality 
        of a State or a political subdivision of a State, an 
        individual, a partnership, a joint venture, a corporation, a 
        mutual company, a joint-stock company, a trust, an estate, an 
        unincorporated organization, an association, or an employee 
        organization.
            ``(14) Plan sponsor.--The term `plan sponsor' means--
                    ``(A) in the case of a plan established or 
                maintained solely for employees of a single employer, 
                such employer,
                    ``(B) in the case of a plan established or 
                maintained by an employee organization, the employee 
                organization, or
                    ``(C) in the case of a plan established or 
                maintained by two or more employers or jointly by one 
                or more employers and one or more employee 
                organizations, the association, committee, board of 
                trustees, or other similar group of representatives of 
                the parties who establish or maintain the plan.
            ``(15) Plan year.--The term `plan year' means, with respect 
        to a plan, the calendar, policy, or fiscal year on which the 
        records of the plan are kept.
            ``(16) State.--The term `State' means any State of the 
        United States, the District of Columbia, the Commonwealth of 
        Puerto Rico, the Virgin Islands, American Samoa, and Guam.
    ``(b) Coverage.--
            ``(1) In general.--Except as provided in paragraph (2), 
        this subpart shall apply to any public employee pension plan.
            ``(2) Exceptions from coverage.--The provisions of this 
        subpart shall not apply to--
                    ``(A) any employee benefit plan described in 
                section 4(a) of the Employee Retirement Income Security 
                Act of 1974 (29 U.S.C. 1003(a)), which is not exempt 
                under section 4(b)(1) of such Act (29 U.S.C. 
                1003(b)(1)),
                    ``(B) any plan which is unfunded and is maintained 
                by an employer or employer representative primarily for 
                the purpose of providing deferred compensation for a 
                select group of management or highly compensated 
                employees,
                    ``(C) any arrangement which would be a severance 
                pay arrangement, as defined in regulations of the 
                Secretary of Labor under section 3(2)(B)(i) of the 
                Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1002(2)(B)(i)), if the employer were an employer 
                within the meaning of section 3(5) of such Act (29 
                U.S.C. 1002(5)),
                    ``(D) any agreement to the extent it is a coverage 
                agreement entered into pursuant to section 218 of the 
                Social Security Act (42 U.S.C. 418),
                    ``(E) any individual retirement account or any 
                individual retirement annuity within the meaning of 
                section 408, or a retirement bond within the meaning of 
                section 409,
                    ``(F) any plan described in section 401(d),
                    ``(G) any individual account plan consisting of an 
                annuity contract described in section 403(b),
                    ``(H) any eligible State deferred compensation 
                plan, as defined in section 457(b), or
                    ``(I) any plan maintained solely for the purpose of 
                complying with applicable workers' compensation laws or 
                disability insurance laws.''.

                     TITLE II--PENSION IMPROVEMENTS

SEC. 201. AUTOMATIC ENROLLMENT OF ALL EMPLOYEES IN 401(K) PLANS.

    (a) In General.--Subparagraph (A) of section 401(m)(11) of the 
Internal Revenue Code of 1986 (relating to additional alternative 
method of satisfying nondiscrimination tests) is amended by striking 
``and'' at the end of clause (ii), by striking the period at the end of 
clause (iii) and inserting ``, and'', and by inserting after clause 
(iii) the following new clause:
                            ``(iv) meets the requirements of 
                        subparagraph (C).''.
    (b) Minimum Coverage Requirements.--Paragraph (11) of section 
401(m) of such Code is amended by adding at the end the following new 
subparagraph:
                    ``(C) Minimum coverage requirements.--The 
                requirements of this subparagraph are met if--
                            ``(i) the plan meets the requirements of 
                        section 410(b), or
                            ``(ii) the plan is offered to all eligible 
                        employees.
                For purposes of clause (ii) a plan shall be treated as 
                offered to an eligible employee if, under the plan, 
                employer contributions are made on the employee's 
                behalf under the plan, unless, pursuant to an election 
                by the employee, payments are made to the employee 
                directly in cash in lieu of such employer 
                contributions.''.
    (c) Preemption of State Law.--The amendments made by this section 
supersede any provision of a statute, regulation, or rule of a State or 
political subdivision of a State that would otherwise require an 
employer to obtain an employee's consent before making a deduction from 
the wages of such employee.
    (d) Guidelines for Meeting Fiduciary Requirements.--Section 404(a) 
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1104(a)) is amended by adding at the end the following new paragraph:
    ``(3)(A) The Secretary shall prescribe by regulation guidelines for 
compliance with the requirements of the diversification requirement of 
paragraph (1)(C) and the prudence requirement (to the extent that it 
requires diversification) of paragraph (1)(B) in the case of plans 
which are treated as in compliance with the requirements of section 
401(m)(2) of the Internal Revenue Code of 1986 solely by reason of 
compliance with the requirements of section 401(m)(11) of such Code. 
Such guidelines shall consist of criteria for meeting a standard of 
well-balanced and highly diversified investment of plan assets. 
Compliance with such guidelines shall be deemed compliance with such 
requirements.
    ``(B) The criteria prescribed by the Secretary pursuant to 
subparagraph (A) shall include at least the following:
            ``(i) sufficiently limited investment of plan assets in 
        securities issued by any single issuer (other than in 
        obligations issued by, or guaranteed as to both principal and 
        interest by, the Government of the United States);
            ``(ii) sufficient diversification of investment among and 
        within asset classes, which shall include at least sufficient 
        diversification measured as between stocks and bonds, 
        sufficient diversification measured as among varieties of stock 
        categorized by large capitalization, medium capitalization, and 
        small capitalization, and sufficient diversification measured 
        as between investment funds focused on growth and investment 
        funds focused on income; and
            ``(iii) adequate prospects for a reasonable rate of return 
        on the investment, together with adequate assurance against 
        loss of principal and minimization of fees and other associated 
        costs chargeable to participants.''.

SEC. 202. DIVERSIFICATION REQUIREMENTS FOR DEFINED CONTRIBUTION PLANS 
              THAT HOLD EMPLOYER SECURITIES.

    (a) In General.--Subsection (a) of section 401 of the Internal 
Revenue Code of 1986 (relating to requirements for qualification), as 
amended by this Act, is further amended by inserting after paragraph 
(35) the following new paragraph:
            ``(36) Diversification requirements for defined 
        contribution plans that hold employer securities.--
                    ``(A) In general.--In the case of a defined 
                contribution plan described in this subsection that 
                includes a trust which is exempt from tax under section 
                501(a) and which holds employer securities that are 
                readily tradable on an established securities market, 
                such trust shall not constitute a qualified trust under 
                this section unless such plan meets the requirements of 
                subparagraphs (B) and (C).
                    ``(B) Elective deferrals invested in employer 
                securities.--
                            ``(i) In general.--In the case of the 
                        portion of the account attributable to elective 
                        deferrals which is invested in employer 
                        securities, a plan meets the requirements of 
                        this subparagraph if each applicable individual 
                        in such plan may elect to direct the plan to 
                        divest any portion of such securities in the 
                        individual's account and to reinvest an 
                        equivalent amount in other investment options 
                        which meet the requirements of subparagraph 
                        (D). The preceding sentence shall apply to the 
                        extent that the amount attributable to 
                        reinvested portion exceeds the amount to which 
                        a prior election under this subparagraph or 
                        paragraph (28) applies.
                            ``(ii) Applicable individual.--For purposes 
                        of this subparagraph, the term `applicable 
                        individual' means--
                                    ``(I) any participant in the plan,
                                    ``(II) any beneficiary who is an 
                                alternate payee (within the meaning of 
                                section 414(p)(8)) under an applicable 
                                qualified domestic relations order 
                                (within the meaning of section 
                                414(p)(1)(A)), and
                                    ``(III) any beneficiary of a 
                                deceased participant or alternate 
                                payee.
                    ``(C) Other employer contributions.--
                            ``(i) In general.--In the case of the 
                        portion of the account attributable to employer 
                        contributions (other than elective deferrals) 
                        which is invested in employer securities, a 
                        plan meets the requirements of this 
                        subparagraph if each qualified participant in 
                        the plan may elect to direct the plan to divest 
                        any portion of such securities in the 
                        participant's account and to reinvest an 
                        equivalent amount in other investment options 
                        which meet the requirements of subparagraph 
                        (E). The preceding sentence shall apply to the 
                        extent that the amount attributable to such 
                        reinvested portion exceeds the amount to which 
                        a prior election under this subparagraph or 
                        paragraph (28) applies.
                            ``(ii) Qualified participant.--For purposes 
                        of this subparagraph, the term `qualified 
                        participant' means--
                                    ``(I) any participant in the plan 
                                who has completed at least 3 years of 
                                service (as determined under section 
                                411(a)) under the plan,
                                    ``(II) any beneficiary who, with 
                                respect to a participant who met the 
                                service requirement in subclause (I), 
                                is an alternate payee (within the 
                                meaning of section 414(p)(8)) under an 
                                applicable qualified domestic relations 
                                order (within the meaning of section 
                                414(p)(1)(A)), and
                                    ``(III) any beneficiary of a 
                                deceased participant who met the 
                                service requirement in subclause (I) or 
                                alternate payee described in subclause 
                                (II).
                    ``(D) Investment options.--The requirements of this 
                subparagraph are met if the plan offers not less than 3 
                investment options (not inconsistent with regulations 
                prescribed by the Secretary) other than employer 
                securities.
                    ``(E) Preservation of authority of plan to limit 
                investment.--Nothing in this paragraph shall be 
                construed to limit the authority of a plan to impose 
                limitations on the portion of plan assets in any 
                account which may be invested in employer securities.
                    ``(F) Other definitions and rules.--For purposes of 
                this paragraph--
                            ``(i) Employer securities.--The term 
                        `employer securities' shall have the meaning 
                        given such term by section 407(d)(1) of the 
                        Employee Retirement Income Security Act of 
                        1974.
                            ``(ii) Elective deferrals.--For purposes of 
                        this subparagraph, the term `elective 
                        deferrals' means an employer contribution 
                        described in section 402(g)(3)(A) and any 
                        employee contribution.
                            ``(iii) Election.--Elections under this 
                        paragraph shall be not less frequently than 
                        quarterly.
                            ``(iv) Employee stock ownership plan.--The 
                        term `employee stock ownership plan' shall have 
                        the same meaning given to such term by section 
                        4975(e)(7).''.
    (b) Conforming Amendments.--
            (1) Section 401(a)(28) of such Code is amended by adding at 
        the end the following new subparagraph:
                    ``(D) Application.--This paragraph shall not apply 
                with respect to employer securities which are readily 
                tradable on an established securities market.''.
            (2) Section 409(h)(7) of such Code is amended by inserting 
        at the end ``or subparagraph (B) or (C) of section 
        401(a)(36)''.
            (3) Section 4975(e)(7) of such Code is amended by adding at 
        the end the following new sentence: ``A plan shall not fail to 
        be treated as an employee stock ownership plan merely because 
        the plan meets the requirements of section 401(a)(36) (or 
        provides greater diversification rights) or because 
        participants in such plan exercise diversification rights under 
        such section (or greater diversification rights available under 
        the plan).''.
            (4) Section 4980(c)(3)(A) of such Code is amended by 
        striking ``if--'' and all that follows and inserting ``if the 
        requirements of subparagraphs (B) and (C) are met.''.
            (5) Section 407 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1107) is amended by adding at the end 
        the following new subsection:
    ``(g) Notwithstanding section 408(e) or any other provision of this 
title, an individual account plan may not include provisions that do 
not meet the requirements of section 401(a)(36)(B) of the Internal 
Revenue Code of 1986.''.

SEC. 203. IMPROVEMENTS IN SIMPLIFIED EMPLOYEE PENSIONS.

    (a) Participation Requirements.--Paragraph (2) of section 408(k) of 
the Internal Revenue Code of 1986 (relating to participation 
requirements) is amended--
            (1) in subparagraph (A), by adding ``and'' at the end, and
            (2) by striking subparagraphs (B) and (C) and inserting the 
        following:
                    ``(B) has completed at least 3 years of service (as 
                defined in section 411(a)(5)) for the employer.''.
    (b) Nondiscrimination Rules.--Subparagraph (C) of section 408(k)(3) 
of such Code (requiring contribution to bear uniform relationship to 
total compensation) is amended--
            (1) in the heading, by striking ``must bear uniform 
        relationship to total compensation'' and inserting ``must be 
        uniform'', and
            (2) by inserting after ``unless contributions thereto'' the 
        following: ``are uniform for all employees maintaining a 
        simplified employee pension or''.
    (c) Consent to Participation not Required.--Paragraph (2) of 
section 408(k) of such Code (relating to participation requirements) is 
amended by adding at the end the following new flush sentence: ``An 
employer may establish and maintain a simplified employee pension for 
an employee without the employee's consent.''.
    (d) Separate Treatment of Contributions to Simplified Employee 
Pensions.--Subsection (h) of section 404 of such Code is amended by 
striking paragraphs (2) and (3) and inserting the following new 
paragraph:
            ``(2) Limitation based on combination of plans 
        inapplicable.--Contributions to a simplified employee pension 
        shall not be taken into account for purposes of subsection 
        (a)(7).''.
    (e) Joint and Survivor Annuity Requirements.--Section 408(k) of 
such Code is amended--
            (1) by redesignating paragraph (9) as paragraph (10), and
            (2) by inserting after paragraph (8) the following new 
        paragraph:
            ``(9) Joint and survivor annuity requirements.--
        Requirements similar to the requirements of section 401(a)(11) 
        shall apply with respect to annuities purchased with amounts 
        distributed from simplified employee pensions.''.
    (f) Annual Reporting Requirements for Simplified Employee 
Pensions.--Paragraph (1) of section 408(l) of such Code (relating to 
simplified employer reports) is amended to read as follows:
            ``(1) In general.--The Secretary shall require by 
        regulations that an employer who makes a contribution on behalf 
        of an employee to a simplified employee pension shall provide 
        simplified annual reports. The reports required by this 
        subsection shall be filed in such manner, and information with 
        respect to such contributions shall be furnished to the 
        employee in such manner, as may be required by regulations, 
        except that such reports shall include information sufficient 
        to allow the employee to determine that the simplified employee 
        pension is in compliance with the requirements of this 
        section.''.
    (g) Deductibility of Contributions to Simplified Employee Pensions 
in Connection With Domestic Service.--
            (1) In general.--Section 404 of such Code (relating to 
        deductions for contributions of an employer to an employee's 
        trust or annuity plan and compensation under a deferred-payment 
        plan) is amended by adding at the end the following new 
        subsection:
    ``(o) Deductibility of Contributions to Simplified Employee 
Pensions in Connection With Domestic Service.--
            ``(1) In general.--Solely for purposes of subsection (a), 
        contributions by an employer to a simplified employee pension 
        of an employee in connection with service constituting domestic 
        service employment shall be treated as if such contributions 
        would otherwise be deductible under section 162 but for 
        subsection (a).
            ``(2) Domestic service employment.--For purposes of 
        paragraph (1), the term `domestic service employment' means 
        domestic service in a private home of the employer (within the 
        meaning of the last sentence of section 3510(c)) in any case in 
        which taxes are imposed by chapter 21 or 23 on remuneration 
        paid for such service.''.
            (2) Effective date.--The amendment made by this subsection 
        shall apply to taxable years beginning after December 31, 2004.

SEC. 204. PENSION INTEGRATION RULES.

    (a) Applicability of New Integration Rules Extended to All Existing 
Accrued Benefits.--Notwithstanding subsection (c)(1) of section 1111 of 
the Tax Reform Act of 1986 (relating to effective date of application 
of nondiscrimination rules to integrated plans) (100 Stat. 2440), 
effective for plan years beginning after the date of the enactment of 
this Act, the amendments made by subsection (a) of such section 1111 
shall also apply to benefits attributable to plan years beginning on or 
before December 31, 1988.
    (b) Integration Disallowed for Simplified Employee Pensions.--
            (1) In general.--Subparagraph (D) of section 408(k)(3) of 
        the Internal Revenue Code of 1986 (relating to permitted 
        disparity under rules limiting discrimination under simplified 
        employee pensions) is repealed.
            (2) Conforming amendment.--Subparagraph (C) of such section 
        408(k)(3) is amended by striking ``and except as provided in 
        subparagraph (D),''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to taxable years beginning on or after 
        January 1, 2005.
    (c) Eventual Repeal of Integration Rules.--Effective for plan years 
beginning on or after January 1, 2006--
            (1) subparagraphs (C) and (D) of section 401(a)(5) of the 
        Internal Revenue Code of 1986 (relating to pension integration 
        exceptions under nondiscrimination requirements for 
        qualification) are repealed, and subparagraphs (E), (F), and 
        (G) of such section 401(a)(5) are redesignated as subparagraphs 
        (C), (D), and (E), respectively, and
            (2) subsection (l) of section 401 of such Code (relating to 
        permitted disparity in plan contributions or benefits) is 
        repealed.

SEC. 205. INCREASE TO AGE 75 FOR BEGINNING MANDATORY DISTRIBUTIONS.

    (a) Qualified Pension Plans.--Subparagraph (C) of section 401(a)(9) 
of the Internal Revenue Code of 1986 (relating to required 
distributions) is amended by striking ``age 70\1/2\'' each place it 
appears and inserting ``the applicable age''.
    (b) Applicable Age.--Subparagraph (C) of section 401(a)(9) of such 
Code is amended by adding at the end the following new clause:
                            ``(v) Applicable age.--
                                    ``(I) In general.--For purposes of 
                                this clause, the term applicable age 
                                shall be determined in accordance with 
                                the following table:

                                                             Applicable
  ``Calendar year:                                                 age:
    2005..........................................                  71 
    2006..........................................                  72 
    2007..........................................                  73 
    2008..........................................                  74 
    2009 and each calendar year thereafter........                  75.
                                    ``(II) Election to use age of 
                                spouse.--For purposes of this 
                                subparagraph, an employee who files a 
                                joint return for a taxable year may 
                                elect to substitute the age of the 
                                employee's spouse for his age.''.
    (c) Individual Retirement Accounts.--Paragraph (1) of section 
219(d) of such Code is amended--
            (1) by striking ``age 70\1/2\'' in the text and inserting 
        ``the applicable age (as defined in section 401(a)(9)(C)(v))'', 
        and
            (2) by striking ``age 70\1/2\'' in the heading and 
        inserting ``the applicable age''.
    (d) Roth IRA's.--Paragraph (4) of section 408A(c) of such Code is 
amended--
            (1) by striking ``age 70\1/2\'' in the text and inserting 
        ``the applicable age (as defined in section 401(a)(9)(C)(v))'', 
        and
            (2) by striking ``age 70\1/2\'' in the heading and 
        inserting ``the applicable age''.

SEC. 206. RESTRICTIONS ON EXCLUSION OF UNIONIZED EMPLOYEES FROM 
              PARTICIPATION IN 401(K) PLANS.

    Paragraph (4) of section 401(k) of the Internal Revenue Code of 
1986 (relating to other requirements) is amended by adding at the end 
the following new subparagraph:
                    ``(D) Benefits subject of bargaining.--A cash or 
                deferred arrangement of any employer shall not be 
                treated as a qualified cash or deferred arrangement if 
                any employee of such employer--
                            ``(i) who is described in section 
                        410(b)(3)(A), and
                            ``(ii) who is not eligible to benefit under 
                        the arrangement,
                is not otherwise covered under an employee pension 
                benefit plan (as defined in section 3(2)(A) of the 
                Employee Retirement Income Security Act of 1974) which 
                is maintained for employees of such employer pursuant 
                to an agreement which the Secretary of Labor finds to 
                be a collective bargaining agreement between employee 
                representatives and one or more employers and which is 
                qualified under section 401(a).''.

SEC. 207. REMOVAL OF $5,000 LIMIT ON PLANS SUBJECT TO AUTOMATIC 
              ROLLOVER UPON MANDATORY DISTRIBUTION.

    Section 401(a)(31)(B) of the Internal Revenue Code of 1986 
(relating to certain mandatory distributions) is amended--
            (1) in clause (i), by striking ``In case of a trust which 
        is part of an eligible plan, such trust'' and inserting ``A 
        trust'',
            (2) in clause (i)(I), by striking ``in excess of $1,000'', 
        and
            (3) by striking clause (ii) and inserting the following new 
        clause:
                            ``(ii) Distribution described.--A 
                        distribution from a plan is described in this 
                        clause if such distribution is an immediate 
                        distribution of the entire nonforfeitable 
                        accrued benefit of the participant and is in 
                        excess of $1,000.''.

           TITLE III--TAX CREDITS TO PROMOTE PENSION COVERAGE

SEC. 301. SAVERS CREDIT MADE REFUNDABLE AND PERMANENT.

    (a) Savers Credit Made Refundable.--
            (1) In general.--The Internal Revenue Code of 1986 is 
        amended by redesignating section 25B as section 35A and by 
        moving such section after section 35 in subpart C of part IV of 
        subchapter A of chapter 1 of such Code (relating to refundable 
        credits).
            (2) Conforming amendments.--
                    (A) Section 35A of such Code, as so redesignated, 
                is amended by striking subsection (g) and redesignating 
                subsection (h) as subsection (g).
                    (B) Subparagraph (B) of section 24(b)(3) of such 
                Code is amended by striking ``sections 23 and 25B'' and 
                inserting ``section 23''.
                    (C) Subparagraph (C) of section 25(e)(1) of such 
                Code is amended by striking ``25B,''.
                    (D) Each of the following provisions of such Code 
                are amended by striking ``24, and 25B'' and inserting 
                ``and 24'':
                            (i) Section 26(a)(1).
                            (ii) Section 904(h).
                            (iii) Section 1400C(d).
                    (E) Paragraph (2) of section 1324(b) of title 31, 
                United States Code, is amended by inserting ``or 35A'' 
                after ``section 35''.
                    (F) The table of sections for subpart A of part IV 
                of subchapter A of chapter 1 of the Internal Revenue 
                Code of 1986 is amended by striking the item relating 
                to section 25B.
                    (G) The table of sections for subpart C of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                inserting after the item relating to section 35 the 
                following new item:

``Sec. 35A. Elective deferrals and IRA contributions by certain 
                            individuals.''.
    (b) Savers Credit Made Permanent.--
            (1) In general.--Section 35A of the Internal Revenue Code 
        of 1986, as amended by this section, is amended by striking 
        subsection (g).
            (2) Repeal of egtrra sunset.--Title IX of the Economic 
        Growth and Tax Relief Reconciliation Act of 2001 shall not 
        apply to section 618 of such Act.

SEC. 302. CREDIT FOR QUALIFIED PENSION PLAN CONTRIBUTIONS OF SMALL 
              EMPLOYERS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45G. SMALL EMPLOYER PENSION PLAN CONTRIBUTIONS.

    ``(a) General Rule.--For purposes of section 38, in the case of an 
eligible employer, the small employer pension plan contribution credit 
determined under this section for any taxable year is an amount equal 
to 50 percent of the amount which would (but for subsection (f)(1)) be 
allowed as a deduction under section 404 for such taxable year for 
qualified employer contributions made to any qualified retirement plan 
on behalf of any nonhighly compensated employee.
    ``(b) Credit Limited to 3 Years.--The credit allowable by this 
section shall be allowed only with respect to the period of 3 taxable 
years beginning with the taxable year in which the qualified retirement 
plan becomes effective.
    ``(c) Qualified Employer Contribution.--For purposes of this 
section--
            ``(1) Defined contribution plans.--In the case of a defined 
        contribution plan, the term `qualified employer contribution' 
        means the amount of nonelective and matching contributions to 
        the plan made by the employer on behalf of any nonhighly 
        compensated employee to the extent such amount does not exceed 
        3 percent of such employee's compensation from the employer for 
        the year.
            ``(2) Defined benefit plans.--In the case of a defined 
        benefit plan, the term `qualified employer contribution' means 
        the amount of employer contributions to the plan made on behalf 
        of any nonhighly compensated employee to the extent that the 
        accrued benefit of such employee derived from such 
        contributions for the year do not exceed the equivalent (as 
        determined under regulations prescribed by the Secretary and 
        without regard to contributions and benefits under the Social 
        Security Act) of 3 percent of such employee's compensation from 
        the employer for the year.
    ``(d) Qualified Retirement Plan.--
            ``(1) In general.--The term `qualified retirement plan' 
        means any plan described in section 401(a) which includes a 
        trust exempt from tax under section 501(a) if the plan meets--
                    ``(A) the contribution requirements of paragraph 
                (2),
                    ``(B) the vesting requirements of paragraph (3), 
                and
                    ``(C) the distributions requirements of paragraph 
                (4).
            ``(2) Contribution requirements.--
                    ``(A) In general.--The requirements of this 
                paragraph are met if, under the plan--
                            ``(i) the employer is required to make 
                        nonelective contributions of at least 1 percent 
                        of compensation (or the equivalent thereof in 
                        the case of a defined benefit plan) for each 
                        nonhighly compensated employee who is eligible 
                        to participate in the plan, and
                            ``(ii) except in the case of a defined 
                        benefit plan, allocations of nonelective 
                        employer contributions are either in equal 
                        dollar amounts for all employees covered by the 
                        plan or bear a uniform relationship to the 
                        total compensation, or the basic or regular 
                        rate of compensation, of the employees covered 
                        by the plan.
                    ``(B) Compensation limitation.--The compensation 
                taken into account under subparagraph (A) for any year 
                shall not exceed the limitation in effect for such year 
                under section 401(a)(17).
            ``(3) Vesting requirements.--The requirements of this 
        paragraph are met if the plan satisfies the requirements of 
        subparagraph (A) or (B).
                    ``(A) 3-year vesting.--A plan satisfies the 
                requirements of this subparagraph if an employee who 
                has completed at least 3 years of service has a 
                nonforfeitable right to 100 percent of the employee's 
                accrued benefit derived from employer contributions.
                    ``(B) 5-year graded vesting.--A plan satisfies the 
                requirements of this subparagraph if an employee has a 
                nonforfeitable right to a percentage of the employee's 
                accrued benefit derived from employer contributions 
                determined under the following table:

                                                     The nonforfeitable
  ``Years of service:                                    percentage is:
        1......................................................     20 
        2......................................................     40 
        3......................................................     60 
        4......................................................     80 
        5 or more..............................................    100.
            ``(4) Distribution requirements.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the requirements of this paragraph 
                are met if, under the plan--
                            ``(i) in the case of a profit-sharing or 
                        stock bonus plan, amounts are distributable 
                        only as provided in section 401(k)(2)(B), and
                            ``(ii) in the case of a pension plan, 
                        amounts are distributable subject to the 
                        limitations applicable to other distributions 
                        from the plan.
                    ``(B) Distributions within 5 years after 
                separation, etc.--In no event shall a plan meet the 
                requirements of this paragraph unless, under the plan, 
                amounts distributed--
                            ``(i) after separation from service or 
                        severance from employment, and
                            ``(ii) within 5 years after the date of the 
                        earliest employer contribution to the plan,
                may be distributed only in a direct trustee-to-trustee 
                transfer to a plan having the same distribution 
                restrictions as the distributing plan.
    ``(e) Other Definitions.--For purposes of this section--
            ``(1) Eligible employer.--The term `eligible employer' has 
        the meaning given such term by section 408(p)(2)(C)(i).
            ``(2) Nonhighly compensated employees.--The term `highly 
        compensated employee' has the meaning given such term by 
        section 414(q) (determined without regard to section 
        414(q)(1)(B)(ii)).
    ``(f) Special Rules.--
            ``(1) Disallowance of deduction.--No deduction shall be 
        allowed for that portion of the qualified employer 
        contributions paid or incurred for the taxable year which is 
        equal to the credit determined under subsection (a).
            ``(2) Election not to claim credit.--This section shall not 
        apply to a taxpayer for any taxable year if such taxpayer 
        elects to have this section not apply for such taxable year.
    ``(g) Recapture of Credit on Forfeited Contributions.--If any 
accrued benefit which is forfeitable by reason of subsection (d)(3) is 
forfeited, the employer's tax imposed by this chapter for the taxable 
year in which the forfeiture occurs shall be increased by 35 percent of 
the employer contributions from which such benefit is derived to the 
extent such contributions were taken into account in determining the 
credit under this section.
    ``(h) Regulations.--The Secretary shall prescribe such regulations 
as may be appropriate to carry out the purposes of this section, 
including regulations to prevent the abuse of the purposes of this 
section through the use of multiple plans.
    ``(i) Termination.--This section shall not apply to any plan 
established after December 31, 2012.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of such Code (defining current year business credit) is amended 
by striking ``plus'' at the end of paragraph (13), by striking the 
period at the end of paragraph (14) and inserting ``, plus'', and by 
adding at the end the following new paragraph:
            ``(16) in the case of an eligible employer (as defined in 
        section 45G(e)), the small employer pension plan contribution 
        credit determined under section 45G(a).''.
    (c) Conforming Amendments.--
            (1) Section 39(d) of such Code is amended by adding at the 
        end the following new paragraph:
            ``(11) No carryback of small employer pension plan 
        contribution credit before january 1, 2002.--No portion of the 
        unused business credit for any taxable year which is 
        attributable to the small employer pension plan contribution 
        credit determined under section 45G may be carried back to a 
        taxable year beginning before January 1, 2005.''.
            (2) Subsection (c) of section 196 of such Code is amended 
        by striking ``and'' at the end of paragraph (9), by striking 
        the period at the end of paragraph (10) and inserting ``, 
        and'', and by adding at the end the following new paragraph:
            ``(11) the small employer pension plan contribution credit 
        determined under section 45G(a).''.
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by adding at 
        the end the following new item:

``Sec 45G. Small employer pension plan contributions.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to contributions paid or incurred in taxable years beginning 
after December 31, 2004.

SEC. 303. NOTICE.

    The Secretary of the Treasury shall establish an ongoing program, 
in coordination with employers, under which the Secretary shall ensure 
that employees and other affected individuals remain fully and 
effectively notified of the availability of tax credits under sections 
35, 35A, and 45G of the Internal Revenue Code of 1986.

            TITLE IV--IMPROVED PENSION PROTECTIONS FOR WOMEN

SEC. 401. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS.

    (a) Amount of Annuity.--
            (1) Option to elect qualified alternative joint and 
        survivor annuity form of benefit upon waiver of qualified joint 
        and survivor annuity form of benefit.--Section 417(a)(1)(A) of 
        the Internal Revenue Code of 1986 is amended to read as 
        follows:
                    ``(A) under the plan, each participant--
                            ``(i) may elect at any time during the 
                        applicable election period to waive the 
                        qualified joint and survivor annuity form of 
                        benefit,
                            ``(ii) may elect at any time during the 
                        applicable election period to waive the 
                        qualified preretirement survivor annuity form 
                        of benefit,
                            ``(iii) may elect at any time during the 
                        applicable election period, in any case in 
                        which the qualified joint and survivor annuity 
                        form of benefit is not provided by reason of a 
                        waiver under clause (i), to be provided a 
                        qualified alternative joint and survivor 
                        annuity form of benefit, and
                            ``(iv) may revoke any such election at any 
                        time during the applicable election period, 
                        and''.
            (2) Qualified alternative joint and survivor annuity 
        defined.--Section 417 of such Code is amended by adding at the 
        end the following new subsection:
    ``(i) Definition of Qualified Optional Survivor Annuity.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified alternative joint and survivor annuity' means an 
        annuity--
                    ``(A) for the life of the participant with a 
                survivor annuity for the life of the spouse which is 
                equal to the applicable percentage (determined under 
                paragraph (2)) of (and not greater than 100 percent of) 
                the amount of the annuity which is payable during the 
                joint lives of the participant and the spouse, and
                    ``(B) which is the actuarial equivalent of a single 
                annuity for the life of the participant.
        Such term also includes any annuity form having the effect of 
        an annuity described in the preceding sentence.
            ``(2) Applicable percentage.--
                    ``(A) In general.--For purposes of paragraph (1)--
                            ``(i) if the base survivor annuity 
                        percentage is less than 75 percent, the 
                        applicable percentage is 75 percent, and
                            ``(ii) if the base survivor annuity 
                        percentage is equal to at least 75 percent, the 
                        applicable percentage is 50 percent.
                    ``(B) Survivor annuity percentage.--For purposes of 
                subparagraph (A), the term `survivor annuity 
                percentage' means the percentage which the survivor 
                annuity under the plan's qualified joint and survivor 
                annuity form of benefit bears to the annuity payable 
                during the joint lives of the participant and the 
                spouse under such form of benefit.''.
    (b) Exemption in the Case of Plans Offering Fully Subsidized 
Qualified Joint and Survivor Annuities.--Section 417(a)(5) of the 
Internal Revenue Code of 1986 is amended--
            (1) by redesignating subparagraph (B) as subparagraph (C), 
        and
            (2) by inserting after subparagraph (A) the following new 
        subparagraph:
    ``(B) Qualified Alternative Joint and Survivor Annuities.--The 
requirements of this subsection shall not apply with respect to the 
qualified alternative joint and survivor annuity form of benefit if the 
plan fully subsidizes the costs of the qualified joint and survivor 
annuity form of benefit.''.
    (c) Illustration Requirement.--Section 417(a)(3)(A)(i) of the 
Internal Revenue Code of 1986 is amended to read as follows:
            ``(i) the terms and conditions of the qualified joint and 
        survivor annuity form of benefit offered by the plan, the terms 
        and conditions of the qualified preretirement survivor annuity 
        form of benefit offered by the plan, and the terms and 
        conditions of the qualified alternative joint and survivor 
        annuity form of benefit offered by the plan, accompanied by an 
        illustration of the benefits under each such form of benefit 
        for the particular participant and spouse and an 
        acknowledgement form to be signed by the participant and the 
        spouse that they have read and considered the illustration 
        before any election is made pursuant to clause (i) or (ii) of 
        subsection (c)(1)(A).''.
    (d) Rule of Construction.--For purposes of section 411(d)(6) of the 
Internal Revenue Code of 1986, a plan shall not be treated as having 
decreased the accrued benefit of a participant solely by reason of the 
adoption of a plan amendment under which a qualified alternative joint 
and survivor annuity form of benefit is added to the plan in accordance 
with section 417(a)(1)(A)(ii) of such Code (as amended by this 
section).

SEC. 402. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD RETIREMENT 
              ANNUITIES INDEPENDENT OF ACTUAL ENTITLEMENT OF EMPLOYEE.

    (a) In General.--Section 2 of the Railroad Retirement Act of 1974 
(45 U.S.C. 231a) is amended--
            (1) in subsection (c)(4)(i), by striking ``(A) is entitled 
        to an annuity under subsection (a)(1) and (B)''; and
            (2) in subsection (e)(5), by striking ``or divorced wife'' 
        the second place it appears.
    (b) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of the enactment of this Act.

SEC. 403. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS TO 
              SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE AGREEMENTS.

    (a) In General.--Section 5 of the Railroad Retirement Act of 1974 
(45 U.S.C. 231d) is amended by adding at the end the following:
    ``(d) Notwithstanding any other provision of law, the payment of 
any portion of an annuity computed under section 3(b) to a surviving 
former spouse in accordance with a court decree of divorce, annulment, 
or legal separation or the terms of any court-approved property 
settlement incident to any such court decree shall not be terminated 
upon the death of the individual who performed the service with respect 
to which such annuity is so computed unless such termination is 
otherwise required by the terms of such court decree.''
    (b) Effective Date.--The amendment made by this section shall take 
effect 1 year after the date of the enactment of this Act.

TITLE V--DEFINED BENEFIT PLANS WHICH INCLUDE QUALIFIED CASH OR DEFERRED 
                              ARRANGEMENTS

SEC. 501. DEFINED BENEFIT PLAN WITH DEFERRED COMPENSATION ARRANGEMENT 
              IN A SINGLE PLAN.

    (a) Defined Benefit Plan Permitted to Have 401(k) Arrangement.--
            (1) In general.--Paragraphs (1) and (2) of section 401(k) 
        of the Internal Revenue Code of 1986 are both amended by 
        striking ``or a rural cooperative plan'' and inserting ``, a 
        rural cooperative plan, or a defined benefit plan''.
            (2) Adjustment of 401(k) rules.--Section 401(k) of such 
        Code is amended--
                    (A) in paragraph (2)(B)(i)(III), by striking ``in 
                the case of a profit-sharing or stock bonus plan,'',
                    (B) in paragraph (2)(B)(i)(IV), by striking ``to a 
                profit-sharing or stock bonus plan'', and
                    (C) in paragraph (10)(A), by inserting before the 
                period at the end the following: ``or a defined benefit 
                plan that includes a qualified cash or deferred 
                arrangement''.
    (b) Qualified Cash or Deferred Arrangement Under Defined Benefit 
Plan Satisfies Definitely Determinable Benefit Requirement.--Subsection 
(a) of section 401 of such Code is amended by inserting after paragraph 
(34) the following new paragraph:
            ``(35) Qualified cash or deferred arrangement under defined 
        benefit plan satisfies definitely determinable benefit 
        requirement.--A trust forming part of a defined benefit plan 
        shall not be treated as failing to constitute a qualified trust 
        merely because such plan includes a qualified cash or deferred 
        arrangement.''.
    (c) Clarification of Extent to Which Defined Contribution and 
Defined Benefit Rules Apply.--
            (1) Treatment as defined benefit plan.--Subsection (j) of 
        section 414 of such Code is amended to read as follows:
    ``(j) Defined Benefit Plan.--For purposes of this part--
            ``(1) In general.--The term `defined benefit plan' means 
        any plan which is not a defined contribution plan.
            ``(2) Plans including qualified cash and deferred 
        arrangements.--Except as otherwise provided in this title--
                    ``(A) a pension plan which provides benefits other 
                than benefits described in subsection (i) shall not be 
                treated as a `defined contribution plan' on the basis 
                of the inclusion in the plan of a qualified cash or 
                deferred arrangement, and
                    ``(B) any such pension plan which includes such an 
                arrangement shall be treated as a single plan.''.
            (2) Special rules.--Subsection (k) of section 414 of such 
        Code is amended--
                    (A) by redesignating paragraphs (1), (2), and (3), 
                as subparagraphs (A), (B), and (C), respectively, and 
                by moving such subparagraphs 2 ems to the right,
                    (B) by striking ``A defined benefit plan'' and 
                inserting the following:
            ``(1) Plans with separate accounts.--A defined benefit 
        plan'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(2) Plans with cash or deferred arrangements.--In the 
        case of a defined benefit plan which includes a qualified cash 
        or deferred arrangement--
                    ``(A) rules similar to the rules of subparagraphs 
                (A), (B), and (C) of paragraph (1) shall apply,
                    ``(B) for purposes of section 401(a)(4) (relating 
                to nondiscrimination testing), section 401(a)(9) 
                (relating to required distributions), section 
                401(a)(26) (relating to additional participation 
                requirements), section 401(a)(31) (relating to direct 
                transfer of eligible rollover distributions), section 
                404 (relating to deduction for contributions of an 
                employer to an employees' trust or annuity plan and 
                compensation under a deferred-payment plan), section 
                412 (relating to minimum funding standards), section 
                414(l) (relating to merger and consolidations of plans 
                or transfers of plan assets), and section 416 (relating 
                to special rules for top-heavy plans), such plan shall 
                be treated as consisting of a defined contribution plan 
                to the extent benefits are attributable to such 
                arrangement and as a defined benefit plan with respect 
                to the remaining portion of benefits under the plan, 
                and
                    ``(C) for purposes of sections 411(a)(11) and 
                417(e), the present value of the portion of the benefit 
                attributable to such arrangement shall be treated as 
                being the fair market value of such arrangement.''.
    (d) Application of Pre-Termination Restrictions.--The Secretary of 
the Treasury shall amend Treasury Regulation section 1.401(a)(4)-5(b) 
to provide that, in the case of a defined benefit plan which includes a 
qualified cash or deferred arrangement--
            (1) the provisions of such section shall not apply to such 
        arrangement, and
            (2) the assets attributable to such arrangement shall be 
        disregarded in applying the requirements of such section to 
        such plan.
    (e) Treatment as Single Plan for Information Reporting.--Subsection 
(a) of section 6058 of such Code is amended by adding at the end the 
following: ``For purposes of the preceding sentence, a defined benefit 
plan which includes a qualified cash or deferred arrangement shall be 
treated as a single plan.''.
    (f) Rules for Income Tax Deduction.--
            (1) Treatment of cash or deferred arrangement as separate 
        profit sharing plan.--Subparagraph (A) of section 404(a)(3) of 
        such Code is amended by adding at the end the following new 
        clause:
                            ``(vi) For purposes of this subparagraph, 
                        employer contributions made with respect to a 
                        qualified cash or deferred arrangement which is 
                        part of a defined benefit plan shall be treated 
                        in the same manner as contributions to a stock 
                        bonus or profit-sharing plan.''.
            (2) Special deduction limit for defined benefit plan.--
        Paragraph (1) of section 404(a) is amended by redesignating 
        subparagraphs (E) and (F) as subparagraphs (F) and (G), 
        respectively, and by inserting after subparagraph (D) the 
        following new subparagraph:
                    ``(E) Special rule for defined benefit plans with 
                qualified cash or deferred arrangements.--In the case 
                of a defined benefit plan which includes a qualified 
                cash or deferred arrangement, the maximum amount 
                deductible under this section (notwithstanding any 
                other limitation under this paragraph) with respect to 
                such plan shall not be less than the full funding 
                limitation that would be determined under section 
                412(c)(7)(A) if 130 percent of the amount determined 
                clause (i) of such section were substituted for the 
                amount otherwise determined under clause (i).''.
    (g) Allowable Reductions in Rate of Benefit Accrual.--Subsection 
(e) of section 4980F of such Code is amended by adding at the end the 
following new paragraph:
            ``(6) Exception for qualified cash or deferred 
        arrangements.--A plan shall not be treated as failing to meet 
        the requirements of paragraph (1) merely because of a reduction 
        in, or elimination of, any contributions to a qualified cash or 
        deferred arrangement which is part of such plan.''.
    (h) Defined Benefit Funding Standards not to Apply to Qualified 
Cash or Deferred Arrangements.--Subsection (h) of section 412 of such 
Code is amended by striking ``or'' at the end of paragraph (5), by 
striking the period at the end of paragraph (6) and inserting ``, or'', 
and by inserting after paragraph (6) the following new paragraph:
            ``(7) any qualified cash or deferred arrangement which is 
        part of a defined benefit plan.''.
    (i) Inclusion in Cafeteria Plan.--Subparagraph (B) of section 
125(d)(2) of such Code is amended by striking ``or rural cooperative 
plan (within the meaning of section 401(k)(7))'' and inserting ``rural 
cooperative plan (within the meaning of section 401(k)(7)), or a 
defined benefit plan''.
    (j) Vesting Requirements.--Section 411(a) is amended by adding the 
following new paragraph:
            ``(13) Faster vesting for accruals under defined benefit 
        plans with cash or deferred arrangements.--In the case of a 
        defined benefit plan which includes a qualified cash or 
        deferred arrangement, benefit accruals and employer 
        contributions (other than elective deferrals, as defined in 
        section 401(m)(4)) shall be treated as matching contributions 
        for purposes of paragraph (12).''.
    (k) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

SEC. 502. DEFINED BENEFIT ACCRUALS SATISFY 401(K) SAFE HARBOR.

    (a) In General.--Paragraph (12) of section 401(k) of the Internal 
Revenue Code of 1986 is amended--
            (1) in subparagraph (A)(i) by inserting ``or the benefit 
        accrual requirements of subparagraph (D)'' after ``or (C)'', 
        and
            (2) by redesignating subparagraphs (D), (E), and (F) as 
        subparagraphs (E), (F), and (G), respectively, and by inserting 
        after subparagraph (C) the following new subparagraph:
                    ``(D) Benefit accruals.--
                            ``(i) In general.--The requirements of this 
                        subparagraph are met if the requirements of 
                        clause (ii) or (iii) are met.
                            ``(ii) Traditional formula.--
                                    ``(I) In general.--The requirements 
                                of this clause are met if, under the 
                                arrangement, the employer is required, 
                                without regard to whether the employee 
                                makes an elective contribution or 
                                employee contribution, to provide an 
                                accrual under a defined benefit plan on 
                                behalf of each employee who is not a 
                                highly compensated employee and who is 
                                eligible to participate in the 
                                arrangement. Such accrual shall be for 
                                each year in which the participant is 
                                eligible for the arrangement, and the 
                                plan is satisfying the requirements of 
                                this subparagraph, in an amount equal 
                                to at least 1 percent of average 
                                compensation multiplied by years of 
                                service, payable as a life annuity 
                                commencing at age 65. The plan may cap 
                                the cumulative benefit accrued under 
                                such formula to an amount that is not 
                                less than 20 percent of average 
                                compensation.
                                    ``(II) Average compensation.--For 
                                purposes of subclause (I), the term 
                                `average compensation' means the 
                                average compensation (as defined by 
                                section 414(s)) received by the 
                                participant during the testing period. 
                                The plan may define the testing period 
                                as all years of service of the 
                                participant, as a period of consecutive 
                                years of service of the participant 
                                which produces the highest average 
                                compensation, or as a period of 
                                consecutive years of service which 
                                includes the last year of service of 
                                the participant. The testing period 
                                shall not include fewer than 3 years of 
                                service except in the case of 
                                participants with fewer than 3 years of 
                                service.
                                    ``(III) Years of service.--For 
                                purposes of this clause, a year of 
                                service shall be determined under 
                                paragraphs (4), (5), and (6) of section 
                                411(a), except the plan need not 
                                include as a year of service any year 
                                of service ending in a plan year that 
                                began before the employee became a 
                                participant in the plan, or any year of 
                                service that begins in a plan year in 
                                which the participant dies, has a 
                                severance from employment, or becomes 
                                disabled (within the meaning of section 
                                72(m)(7)).
                                    ``(IV) Adjustments for early and 
                                late retirement.--The amount determined 
                                under subclause (I) shall be adjusted 
                                actuarially if benefits under the plan 
                                commence later than age 65. Such amount 
                                may (but is not required to) be 
                                adjusted for early retirement if 
                                benefits commence (or normal retirement 
                                age is) earlier than age 65.
                            ``(iii) Cash balance formula.--
                                    ``(I) In general.--The requirements 
                                of this clause are met if, under the 
                                arrangement, the employer is required, 
                                without regard to whether the employee 
                                makes an elective contribution or 
                                employee contribution, to provide a 
                                hypothetical allocation under a cash 
                                balance plan on behalf of each employee 
                                who is not a highly compensated 
                                employee and who is eligible to 
                                participate in the arrangement in any 
                                year in an amount which is not less 
                                than the product of the average 
                                compensation of the employee (within 
                                the meaning of clause (ii)(II), 
                                multiplied by the cash balance 
                                contribution percentage with respect to 
                                such employee.
                                    ``(II) Cash balance contribution 
                                percentage.--For purposes of subclause 
                                (I), the term `cash balance 
                                contribution percentage' means, with 
                                respect to any employee, 2 percent if 
                                such employee has not attained age 31, 
                                4 percent if such employee has attained 
                                age 31 but has not attained age 40, 6 
                                percent if such employee has attained 
                                age 40 but has not attained age 50, and 
                                8 percent if such employee has attained 
                                age 50.
                                    ``(III) Cash balance plan 
                                defined.--For purposes of subclause 
                                (I), a cash balance plan is a defined 
                                benefit plan that defines an employee's 
                                benefits by reference to the employee's 
                                hypothetical account. Such hypothetical 
                                account is determined by reference, 
                                first, to hypothetical contribution 
                                allocations, and, second, to 
                                hypothetical interest credits (on an 
                                annual or more frequent basis). The 
                                right to future interest credits are 
                                determined without regard to future 
                                service.
                                    ``(IV) No predecessor defined 
                                benefit plan.--The requirements of this 
                                clause shall not be treated as met if, 
                                during the 3-year period immediately 
                                preceding the effective date of a cash 
                                balance plan meeting the requirements 
                                of subclause (I), the employer (or any 
                                related employer, within the meaning of 
                                subsection (b), (c), (m), or (o) of 
                                section 414), maintained a defined 
                                benefit plan that was not a cash 
                                balance plan and which benefited any 
                                participant who is a participant in the 
                                plan which meets the requirements of 
                                subclause (I).''.
    (b) Conforming Amendments.--
            (1) Section 401(k)(12)(A)(ii) of such Code is amended by 
        striking ``subparagraph (D)'' and inserting ``subparagraph 
        (E)''.
            (2) Section 401(k)(12)(F)(i) of such Code (as redesignated 
        by subsection (a)) is amended by adding at the end the 
        following: ``An arrangement shall not be treated as meeting the 
        requirements of subparagraph (D) of this paragraph unless the 
        requirements of paragraph (2)(B) are met with respect to the 
        benefit accruals provided pursuant to subparagraph (D) of this 
        paragraph.''.
            (3) Section 401(k)(12)(F)(ii) of such Code (as redesignated 
        by subsection (a)) is amended--
                    (A) by striking ``subparagraph (B) or (C)'' the 
                first place it appears and inserting ``subparagraph 
                (B), (C), or (D)'', and
                    (B) by inserting ``and benefit accruals under 
                subparagraph (D)'' after ``subparagraph (B) or (C)'' 
                the second place it appears.
            (4) Section 416(g)(4)(H) of such Code is amended to read as 
        follows:
                    ``(H) Cash or deferred arrangements using 
                alternative methods of meeting nondiscrimination 
                requirements.--
                            ``(i) In general.--The term `top-heavy 
                        plan' shall not include a plan described in 
                        clause (ii) or (iii).
                            ``(ii) Defined contribution plan.--The plan 
                        described in this clause is a defined 
                        contribution 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.
                            ``(iii) Defined benefit plan.-- The plan 
                        described in this clause is a defined benefit 
                        plan which consists exclusively of one or 
                        more--
                                    ``(I) cash or deferred arrangements 
                                which meet the requirements of section 
                                401(k)(12), and
                                    ``(II) qualified matching accruals, 
                                as described in section 401(m)(12).
                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 or benefits under the plan may be taken 
                into account in determining whether any other plan in 
                the group meets the requirements of subsection (c) and, 
                a plan meeting the requirements of section 
                401(k)(12)(D) shall be deemed to satisfy the 
                requirements of subsection (c).''.
            (5) Special rule for plan with multiple accrual formulas.--
        Paragraph (1) of section 411(b) of such Code is amended by 
        adding at the end the following new subparagraph:
                    ``(I) Multiple formulas.--
                            ``(i) In general.--If a defined benefit 
                        plan contains multiple accrual formulas, the 
                        requirements of this paragraph may be satisfied 
                        separately for each formula.
                            ``(ii) Certain benefit accruals treated as 
                        multiple accruals treated as multiple accrual 
                        formulas.--For purposes of this subparagraph, a 
                        plan has multiple accrual formulas if a 
                        participant's accrued benefit is determined 
                        either as the greater of the benefit determined 
                        under two or more separate formulas or as the 
                        sum of the benefit determined under two or more 
                        separate formulas.
                            ``(iii) Certain formulas treated as 
                        separate accrual formulas.--For purposes of 
                        clause (i), the benefit formulas described in 
                        section 401(k)(12)(D) and section 401(m)(12) 
                        shall be treated as separate from the minimum 
                        benefit formula described in section 
                        416(c)(1).''.
    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to years beginning 
        after December 31, 2005.
            (2) Cash balance formula.--Section 401(k)(12)(D)(iii) of 
        the Internal Revenue Code of 1986, as added by subsection 
        (a)(2), shall not apply to plan years beginning before the 
        effective date of an Act which provides for the application of 
        section 411(b)(1)(H) of such Code to cash balance plans.

SEC. 503. ADDITIONAL ACCRUALS UNDER DEFINED BENEFIT PLAN PROVIDED AS 
              MATCHING CONTRIBUTIONS.

    (a) Certain Arrangements Under Defined Benefit Plan Satisfy 
Definitely Determinable Benefit Requirement.--Paragraph (35) of section 
401(a) of the Internal Revenue Code of 1986 (as added by section 2(b)) 
is amended by inserting ``or qualified matching accruals (as defined in 
subsection (m)(12))'' before the period at the end.
    (b) Matching Accruals.--Subsection (m) of section 401 of such Code 
is amended by redesignating paragraph (12) as paragraph (13) and by 
inserting after paragraph (11) the following new paragraph:
            ``(12) Special rules relating to qualified matching 
        accruals under a defined benefit plan.--For purposes of this 
        section--
                    ``(A) Qualified matching accrual.--The term 
                `qualified matching accrual' means an amount funded by 
                an employer in the form of a benefit accrual under a 
                defined benefit plan to match elective deferrals under 
                a qualified cash or deferred arrangement which is part 
                of such plan and which meets the formula requirements 
                of subparagraph (B). The benefit accrual shall be 
                determined under a nondiscretionary formula set forth 
                in the defined benefit plan. For purposes of 
                determining such benefit accrual, the amount of 
                elective deferrals taken into account under such 
                formula may be limited under the plan.
                    ``(B) Formula requirements.--A benefit accrual 
                meets the requirements of this subparagraph if such 
                accrual is a hypothetical contribution that is added to 
                a participant's hypothetical account balance, the 
                amount of which is determined, in accordance with the 
                matching accrual formula set forth in the plan, with 
                reference to the amount of the elective deferrals made 
                by the participant for the plan year to a qualified 
                cash or deferred arrangement which is part of the 
                defined benefit plan. Matching accruals under the 
                formula may vary with age or other employment-related 
                factors.
                    ``(C) Coordinate with employer contributions.--For 
                purposes of paragraph (4), the term `employer 
                contributions' shall not include any amount contributed 
                by an employer to a defined benefit plan for the 
                purpose of funding any qualified matching accruals.
                    ``(D) Safe harbor formula.--A qualified matching 
                accrual formula shall be deemed to satisfy subsection 
                (a)(4) if it satisfies the requirements of clauses (i) 
                and (ii).
                            ``(i) Elective deferrals at or above 
                        maximum matchable rate.--For an employee who 
                        makes elective deferrals at or above the 
                        maximum matchable rate, the qualified matching 
                        benefit accrual for the plan year is a 
                        hypothetical allocation under a cash balance 
                        plan (as defined in section 
                        401(k)(12)(D)(iii)(III)) that equals a 
                        percentage (not greater than 4 percent) of 
                        compensation (as defined in section 414(s)).
                            ``(ii) Elective deferrals below maximum 
                        matchable rate.--For employees who make 
                        elective deferrals at a rate that is below the 
                        maximum matchable rate, the qualified matching 
                        benefit accrual for such plan year shall be 
                        prorated. The plan may prorate the qualified 
                        benefit accrual on the basis of whole 
                        percentages, and the plan may require that an 
                        employee's elective deferrals be stated as 
                        whole percentages.
                            ``(iii) Maximum matchable rate.--For 
                        purposes of this subparagraph, the maximum 
                        matchable rate must be a specified percentage 
                        of compensation which does not exceed 4 
                        percent.''.
    (c) Exception to Benefit Contingency Rule.--Subparagraph (A) of 
section 401(k)(4) of such Code is amended by inserting ``or qualified 
matching accruals (as defined in subsection (m)(12)'' after ``section 
401(m))''.
    (d) Forfeitures by Reason of Excess Deferral.--Subparagraph (G) of 
section 411(a)(3) of the Code is amended by adding at the end the 
following: ``A rule similar to the rule of the preceding sentence shall 
apply with respect to qualified matching accruals (as defined in 
section 401(m)(12)).''
    (e) Accrued Benefit Requirement With Respect to Matching 
Accruals.--Paragraph (1) of section 411(b) of such Code is amended by 
adding at the end the following new subparagraph:
                    ``(J) In the case of qualified matching accruals 
                (as defined in section 401(m)(12)), the requirements 
                for accrued benefits set forth in subparagraphs (A) 
                through (H) of this subsection shall be applied on the 
                basis of the rate of matching accruals available to 
                participants, without regard to the actual elective 
                deferrals made by participants.''.
    (f) Participation Requirements With Respect to Qualified Matching 
Accruals.--Paragraph (26) of section 401(a) of such Code is amended by 
redesignating subparagraph (I) as subparagraph (J), and by inserting 
after subparagraph (H) the following new subparagraph:
                    ``(I) Special testing rules for qualified matching 
                accruals.--
                            ``(i) If a defined benefit plan includes 
                        qualified matching accruals (as defined in 
                        section 401(m)(12)), the rules in clauses (ii) 
                        and (iii) shall apply.
                            ``(ii) Qualified matching accruals only 
                        benefit formula.--If the only benefit formula 
                        in the defined benefit plan is a qualified 
                        matching accrual formula, the requirements of 
                        this paragraph shall be applied by treating a 
                        participant's annual benefit accrual as the 
                        maximum accrual that was available to the 
                        participant for the plan year, regardless of 
                        whether the maximum matchable elective 
                        deferrals were actually made by the 
                        participant. If the qualified matching accrual 
                        formula applies to elective deferrals in excess 
                        of 6 percent of compensation, then the 
                        requirements of this paragraph must be applied 
                        by taking into account the actual matching 
                        accruals earned by participants for the plan 
                        year.
                            ``(iii) Multiple formulas.--If the defined 
                        benefit plan includes one or more benefit 
                        formulas in addition to a qualified matching 
                        accrual formula, the employer may elect to 
                        apply clause (ii) to the qualified matching 
                        accrual formulas only if the requirements of 
                        this paragraph are satisfied separately with 
                        respect to the benefit accruals that are 
                        determined without regard to the qualified 
                        matching accrual formula.''.
    (g) Regulations for Meeting Nondiscrimination Requirements.--
            (1) In general.--The Secretary of the Treasury shall 
        prescribe regulations on ways in which qualified matching 
        accruals (as defined by section 401(m)(12) of the the Internal 
        Revenue Code of 1986, as added by this section) that do not 
        satisfy the formula requirements of section 401(m)(12)(D) of 
        such Code (as enacted by subsection (b) of this section) can 
        satisfy the nondiscrimination requirements of section 401(a)(4) 
        of such Code. The regulations may prescribe safe harbor 
        formulas in addition to those prescribed by section 
        401(m)(12)(D).
            (2) Temporary and final form.--The Secretary shall 
        prescribe the regulations required by paragraph (1) in 
        temporary form not later than 6 months after the effective date 
        of this section and in final form not later than 18 months 
        after the effective date of this section.
    (h) Plan Years Beginning Before Issuance of Regulations.--For plan 
years beginning prior to the date the regulations described in 
subsection (g) are issued in final form, a plan's qualified matching 
accrual formula must satisfy a reasonable, good faith, interpretation 
of section 401(a)(4) of such Code.
    (i) Effective Date.--The amendments made by this section shall be 
effective for plan years beginning after the effective date of the Act 
described in section 3(c)(2).

SEC. 504. LIMITATION ON DEDUCTIONS WHERE COMBINATION OF DEFINED 
              CONTRIBUTION PLAN AND DEFINED BENEFIT PLAN.

    (a) Elective Deferrals.--Clause (ii) of section 404(a)(7)(C) of the 
Internal Revenue Code of 1986 (relating to elective deferrals) is 
amended to read as follows:
                            ``(ii) Elective deferrals.--For purposes of 
                        this paragraph, an employee shall not be 
                        treated as a beneficiary of a defined 
                        contribution plan for a taxable year if the 
                        only employer contributions made on behalf of 
                        such employee for the taxable year are elective 
                        deferrals (as defined in section 402(g)(3)).''.
    (b) Limitation not Applicable to Defined Benefit Plans With Cash or 
Deferred Arrangement.--Subparagraph (C) of section 404(a)(7) is amended 
by adding at the end the following:
                            ``(iii) Defined benefit plan with cash or 
                        deferred arrangement.--For purposes of this 
                        paragraph, an employee shall not be treated as 
                        a beneficiary of a defined contribution plan 
                        for a taxable year merely because the employee 
                        is a beneficiary of a cash or deferred 
                        arrangement which is part of a defined benefit 
                        plan for such year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to years beginning after December 31, 2005.

SEC. 505. CONFORMING AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME 
              SECURITY ACT OF 1974.

    (a) Definition.--Section 3 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002) is amended by adding at the end 
the following new paragraph:
    ``(42) The term `qualified cash or deferred arrangement' has the 
meaning provided such term in section 401(k)(2) of the Internal Revenue 
Code of 1986. ''.
    (b) General Rules Regarding Treatment of Pension Plans Including 
Qualified Cash or Deferred Arrangements.--Section 3(35) of such Act (29 
U.S.C. 1002(35)) is amended--
            (1) by redesignating subparagraphs (A) and (B) as clauses 
        (i) and (ii), respectively;
            (2) by inserting ``(A)'' after ``(35)''; and
            (3) by adding at the end the following new subparagraph:
    ``(B)(i) Except as provided in this title--
                    ``(I) a pension plan which provides benefits other 
                than benefits described in paragraph (34) shall not be 
                treated as an `individual account plan' or a `defined 
                contribution plan' on the basis of the inclusion in the 
                plan of a qualified cash or deferred arrangement, and
                    ``(II) any such pension plan which includes such an 
                arrangement shall be treated as a single plan.
    ``(ii) Any pension plan which provides benefits other than benefits 
described in paragraph (34) and which includes a qualified cash or 
deferred arrangement--
            ``(I) for purposes of section 202, shall be treated as an 
        individual account plan or a defined contribution plan;
            ``(II) for purposes of section 203, shall be treated as an 
        individual account plan or defined contribution plan to the 
        extent benefits are attributable to such arrangement and as a 
        defined benefit plan with respect to the remaining portion of 
        benefits under the plan, and
            ``(III) for purposes of sections 406, 407, and 408, shall, 
        in any case in which the arrangement (if treated as a separate 
        plan) would be an eligible individual account plan (as defined 
        in section 407(d)(3)), be treated as an individual account plan 
        or defined contribution plan with respect to assets 
        attributable to such arrangement and as a defined benefit plan 
        with respect to the remaining assets of the plan, and shall, in 
        any other case, be treated as a single defined benefit plan.''.
    (c) Valuation of Benefits Attributable to Separate Accounts.--
            (1) Restrictions on immediate distribution.--Section 203(e) 
        of such Act (29 U.S.C. 1053(e)) is amended by adding at the end 
        the following new paragraph:
    ``(5) In the case of a defined benefit plan which provides a 
benefit derived from employer contributions (including elective 
deferrals (as defined in section 402(g)(3) of the Internal Revenue Code 
of 1986)) under a qualified cash or deferred arrangement which is 
maintained under such plan, for purposes of this subsection, the 
present value of the portion of the benefit attributable to such 
arrangement shall be deemed to be an amount equal to the fair market 
value of such arrangement.''.
            (2) Survivor benefits.--Section 205 of such Act (29 U.S.C. 
        1055) is amended--
                    (A) by redesignating subsection (l) as subsection 
                (m); and
                    (B) by inserting after subsection (k) the following 
                new subsection:
    ``(l) In the case of a defined benefit plan which provides a 
benefit derived from employer contributions (including elective 
deferrals (as defined in section 402(g)(3) of the Internal Revenue Code 
of 1986)) under a qualified cash or deferred arrangement which is 
maintained under such plan, for purposes of this section, the present 
value of the portion of the benefit attributable to such arrangement 
shall be deemed to be an amount equal to the fair market value of such 
arrangement.''.
    (d) Allowable Reductions in Rate of Benefit Accrual.--Section 
204(h) of such Act (29 U.S.C. 1054(h)) is amended by adding at the end 
the following new paragraph:
    ``(10) A plan shall not be treated as failing to meet the 
requirements of this subsection merely because of a reduction in, or 
elimination of, any contributions to a qualified cash or deferred 
arrangement which is part of such plan.''.
    (e) Application of Minimum Funding Standard.--
            (1) Exception from standard.--Section 301(a) of such Act 
        (29 U.S.C. 1081(a)) is amended by adding at the end the 
        following new paragraph:
            ``(11) any qualified cash or deferred arrangement which is 
        part of a defined benefit plan.''.
            (2) Continued application of standard to other portion of 
        defined benefit plan.--Section 302(c) of such Act (29 U.S.C. 
        1082(c)) is amended by adding at the end the following new 
        paragraph:
            ``(13) Continued application of standard to other portion 
        of defined benefit plan.--This section shall be applied to a 
        defined benefit plan by disregarding the value of the trust 
        attributable to any qualified cash or deferred arrangement.''.
    (f) Vesting Requirements.--Section 203(a)(3) of such Act (29 U.S.C. 
1053(a)(3)(F)) is amended by adding at the end the following new 
subparagraph:
            ``(G) Faster vesting for accruals under defined benefit 
        plans with cash or deferred arrangements.--In the case of a 
        defined benefit plan which includes a qualified cash or 
        deferred arrangement, the rules described in subparagraph (F) 
        shall be applied to benefit accruals under such plan and to 
        matching contributions and nonelective contributions made under 
        such arrangement.''
    (g) Application of Accrual Rules With Regard to Qualified Matching 
Accruals.--Section 204(b)(1) of such Act (29 U.S.C. 1054(b)(1)) is 
amended by adding at the end the following new subparagraph:
    ``(I) In the case of qualified matching accruals (as defined in 
section 401(m)(12) of the Internal Revenue Code of 1986), the 
requirements for accrued benefits set forth in subparagraphs (A) 
through (H) of this paragraph shall be applied on the basis of the rate 
of such qualified matching accruals available to participants, without 
regard to the actual elective deferrals made by participants.''.
    (h) Multiple Accrual Formulas.--Section 204(b)(1) of such Act (as 
amended by subsection (g)) is further amended by adding at the end the 
following new subparagraph:
    ``(J)(i) If a defined benefit plan contains multiple accrual 
formulas, the requirements of this paragraph may be satisfied 
separately for each formula.
    ``(ii) For purposes of this subparagraph, a plan has multiple 
accrual formulas if a participant's accrued benefit is determined 
either as the greater of the benefit determined under two or more 
separate formulas or as the sum of the benefit determined under two or 
more separate formulas.
    ``(iii) For purposes of clause (i), the benefit formulas described 
in section 401(k)(12)(D) and section 401(m)(12) of the Internal Revenue 
Code of 1986 shall be treated as separate from the minimum benefit 
formula described in section 416(c)(1) of such Code.''.
    (i) Forfeitures by Reason of Excess Deferral.--Subparagraph (F) of 
section 203(a)(3) of such Act (29 U.S.C. 1053(a)(3)(F)) is amended by 
adding at the end the following: ``A rule similar to the rule of the 
preceding sentence shall apply with respect to qualified matching 
accruals (as defined in section 401(m)(12) of the Internal Revenue Code 
of 1986).''
    (j) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2005.

                    TITLE VI--ADDITIONAL AMENDMENTS

SEC. 601. EXEMPTION FROM PROHIBITED TRANSACTION RULES FOR CERTAIN 
              ABORTED EMERGENT TRANSACTIONS.

    (a) In General.--Section 4975(c) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(7) Special rule for certain aborted emergent 
        transactions.--
                    ``(A) In general.--Pursuant to regulations issued 
                by the Secretary, if--
                            ``(i) in the case of a qualifying 
                        transaction between an employee benefit plan 
                        and an eligible person which would, but for 
                        this paragraph, be in violation of a 
                        restriction imposed by paragraph (1), the 
                        eligible person submits to the Secretary, not 
                        later than 60 days after the date of the 
                        transaction, an application for an exemption 
                        under paragraph (2) from such restriction in 
                        the case of such transaction,
                            ``(ii) the Secretary determines not to 
                        grant the exemption, and
                            ``(iii) the transaction is reversed within 
                        60 days after the date of the Secretary's 
                        determination,
                then the transaction shall be exempted under paragraph 
                (2) from treatment as a violation of such restriction.
                    ``(B) Qualifying transaction.--The term `qualifying 
                transaction' means, in connection with an eligible 
                person, a transaction between an employee benefit plan 
                and such eligible person constituting the purchase or 
                sale of a financial product, if--
                            ``(i) prior to engaging in the transaction, 
                        the plan acquires from the eligible person a 
                        sufficient guarantee, consisting of a letter of 
                        credit or other form of written guarantee, 
                        issued by a bank or similar financial 
                        institution (other than the eligible person 
                        requesting the exemption or an affiliate) 
                        regulated and supervised by, and subject to 
                        periodic examination by, an agency of a State 
                        or of the Federal Government, in a stated 
                        amount equal, as of the close of business on 
                        the day preceding the transaction, to not less 
                        than 100 percent of the amount of plan assets 
                        involved in the transaction, plus interest on 
                        that amount at a rate determined by the parties 
                        to the transaction, or in the absence of such 
                        determination, an interest rate equal to the 
                        underpayment rate defined in section 
                        6621(a)(2),
                            ``(ii) the eligible person receives in such 
                        transaction not more than reasonable 
                        compensation,
                            ``(iii) such transaction is expressly 
                        approved by an independent fiduciary who has 
                        investment authority with respect to the plan 
                        assets involved in the transaction, and
                            ``(iv) immediately after the acquisition of 
                        the financial product--
                                    ``(I) the fair market value of such 
                                financial product does not exceed 1 
                                percent of the fair market value of the 
                                assets of the plan, and
                                    ``(II) the aggregate fair market 
                                value of all outstanding financial 
                                products acquired by the plan from the 
                                eligible person pursuant to this 
                                subsection does not exceed 5 percent of 
                                the fair market value of the assets of 
                                the plan.
                    ``(C) Sufficient guarantee.--A guarantee referred 
                to in subparagraph (B) is `sufficient' if such 
                guarantee is irrevocable and, under the terms of the 
                guarantee, if the Secretary determines not to grant the 
                exemption, the plan has the unconditional right to 
                apply the amounts under the guarantee to any losses 
                suffered and to the payment of interest determined 
                under the terms of the transaction. A guarantee shall 
                not be treated as failing to be `sufficient' solely 
                because, under the terms of the guarantee, if the 
                Secretary grants the exemption, the guarantee may 
                expire without any payments made to the plan.
                    ``(D) Eligible person.--The term `eligible person' 
                means a person that--
                            ``(i) consists of--
                                    ``(I) a bank as defined in section 
                                202(a)(2) of the Investment Advisers 
                                Act of 1940,
                                    ``(II) an investment adviser 
                                registered under the Investment 
                                Advisers Act of 1940,
                                    ``(III) an insurance company which 
                                is qualified to do business in more 
                                than one State, or
                                    ``(IV) a broker-dealer registered 
                                under the Securities Exchange Act of 
                                1934,
                            ``(ii) has shareholders' or partners' 
                        equity in excess of $1,000,000, and
                            ``(iii) is not described in section 411 of 
                        the Employee Retirement Income Security Act of 
                        1974 (29 U.S.C. 1111).''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to transactions occurring after December 31, 2005.

SEC. 602. LOANS FROM RETIREMENT PLANS FOR HEALTH INSURANCE AND JOB 
              TRAINING EXPENSES.

    (a) Qualification Requirement for Pension Plans.--Paragraph (13) of 
section 401(a) of the Internal Revenue Code of 1986 (relating to 
assignment and alienation) is amended by adding at the end the 
following new subparagraph:
                    ``(E) Loans from retirement plans for health 
                insurance and job training expenses.--Notwithstanding 
                subparagraph (A), a trust shall not constitute a 
                qualified trust under this section unless the plan of 
                which such trust is a part provides that a participant 
                or beneficiary who is involuntarily separated from 
                employment may, on the date of such separation, obtain 
                a loan from the plan the proceeds of which are to be 
                used within 6 months after the date of such loan--
                            ``(i) for payments for insurance which 
                        constitutes medical care for the taxpayer and 
                        the taxpayer's spouse and dependents, or
                            ``(ii) for job training expenses.''.
    (b) Prohibited Transaction Exemption.--Section 4975(d) of such Code 
(relating to exemptions from tax on prohibited transactions) is amended 
by striking ``or'' at the end of paragraph (14), by striking the period 
at the end of paragraph (15) and inserting ``; or'', and by inserting 
after paragraph (15) the following new paragraph:
            ``(16) any loan--
                    ``(A) from an individual retirement plan for the 
                payment of health insurance premiums or job training 
                expenses that is a qualified loan (as defined in 
                section 408 of the Employee Retirement Income Security 
                Act of 1974), or
                    ``(B) made by the plan to a disqualified person who 
                is a participant or beneficiary of the plan if such 
                loan--
                            ``(i) is for the payment of health 
                        insurance premiums or job training expenses, 
                        and
                            ``(ii) meets the requirements of section 
                        401(a)(13)(E).''.
    (c) Effective Date.--The amendments made by this section shall 
apply to loans made after the effective date specified in section 501.

SEC. 603. TREATMENT OF UNCLAIMED BENEFITS.

    (a) In General.--Section 401(a)(34) of the Internal Revenue Code of 
1986 (relating to benefits of missing participants) is amended to read 
as follows:
            ``(34) Unclaimed benefits.--A trust forming part of a plan 
        shall not be treated as failing to constitute a qualified trust 
        under this section merely because the plan of which such trust 
        is a part treats unclaimed benefits in a manner that satisfies 
        the requirements of section 414(w).''.
    (b) Requirements.--Section 414 of such Code (relating to 
definitions and special rules) is amended by adding at the end the 
following new subsection:
    ``(w) Unclaimed Benefits.--
            ``(1) In general.--A plan meets the requirements of this 
        subsection only if--
                    ``(A) Ongoing plans.--In the case of an ongoing 
                plan, the plan provides for one or more of the 
                following with respect to unclaimed benefits:
                            ``(i) In the case of an unclaimed benefit 
                        to which section 401(a)(31)(B) applies, a 
                        transfer under section 401(a)(31)(B).
                            ``(ii) A transfer to the Pension Benefit 
                        Guaranty Corporation, in accordance with 
                        section 4050(e) of the Employee Retirement 
                        Income Security Act of 1974.
                            ``(iii) Any other treatment permitted under 
                        rules prescribed by the Secretary.
                    ``(B) Terminated plans.--In the case of a 
                terminated plan, the plan provides for the following 
                with respect to unclaimed benefits:
                            ``(i) Defined benefit plans.--In the case 
                        of a defined benefit plan, one or more of the 
                        following:
                                    ``(I) In the case of an unclaimed 
                                benefit to which section 401(a)(31)(B) 
                                applies, a transfer under section 
                                401(a)(31)(B).
                                    ``(II) A transfer of the unclaimed 
                                benefit to another defined benefit plan 
                                maintained by the employer.
                                    ``(III) The purchase of an annuity 
                                contract to provide for an individual's 
                                unclaimed benefit.
                                    ``(IV) A transfer to the Pension 
                                Benefit Guaranty Corporation in 
                                accordance with section 4050(a) or 
                                4050(e) (as applicable) of the Employee 
                                Retirement Income Security Act of 1974.
                                    ``(V) Any other treatment permitted 
                                under rules prescribed by the 
                                Secretary.
                            ``(ii) Defined contribution plans.--In the 
                        case of a defined contribution plan, one or 
                        more of the following:
                                    ``(I) In the case of an unclaimed 
                                benefit to which section 401(a)(31)(B) 
                                applies, a transfer under section 
                                401(a)(31)(B).
                                    ``(II) A transfer of the unclaimed 
                                benefit to another defined contribution 
                                plan maintained by the employer.
                                    ``(III) The purchase of an annuity 
                                contract to provide for an individual's 
                                unclaimed benefit.
                                    ``(IV) A transfer to the Pension 
                                Benefit Guaranty Corporation in 
                                accordance with section 4050(d) or 
                                4050(e) (as applicable) of the Employee 
                                Retirement Income Security Act of 1974.
                                    ``(V) Any other treatment permitted 
                                under rules prescribed by the 
                                Secretary.
            ``(2) Treatment of transfers to pension benefit guaranty 
        corporation.--
                    ``(A) Transfers to pbgc.--Amounts transferred from 
                a plan to the Pension Benefit Guaranty Corporation 
                pursuant to paragraph (1) shall be treated as a 
                transfer under section 401(a)(31)(A).
                    ``(B) Distributions from pbgc.--Except as provided 
                in rules prescribed by the Secretary, amounts 
                distributed by the Pension Benefit Guaranty Corporation 
                shall be treated as distributed by an individual 
                retirement plan under section 408(d) (without regard to 
                paragraphs (4), (5) and (7) thereof). Rules similar to 
                the rules of section 402(c)(4) shall apply.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Unclaimed benefit.--The term `unclaimed 
                benefit' means--
                            ``(i) any benefit of a participant or 
                        beneficiary which is distributable under the 
                        terms of the plan to the participant or 
                        beneficiary, if the distribution of the benefit 
                        has not commenced within 1 year after the later 
                        of the date on which the benefit first became 
                        so distributable or the participant's severance 
                        from employment;
                            ``(ii) any benefit or other amount of a 
                        participant or beneficiary which is 
                        distributable under the terms of the plan with 
                        respect to a missing participant, or
                            ``(iii) any benefit to which section 
                        401(a)(31)(B) applies or would apply if 
                        subclause (I) of section 401(a)(31)(B)(i) did 
                        not require the distribution to exceed $1,000.
                A benefit otherwise described in clause (i) shall not 
                be treated as an unclaimed benefit under clause (i) if 
                the participant or beneficiary elects not to have such 
                treatment apply. Any such participant or beneficiary 
                shall be given reasonable notice of the opportunity to 
                make such an election. If the participant or 
                beneficiary fails to make such an election within a 
                reasonable period specified in the notice, any 
                subsequent election shall not be given effect and the 
                benefit shall be treated as an unclaimed benefit. A 
                notice mailed to the last known address of the 
                participant or beneficiary shall be treated as a notice 
                to the participant or beneficiary for purposes of this 
                paragraph.
                    ``(B) Ongoing plan.--The term `ongoing plan' means 
                any plan which has neither terminated nor is in the 
                process of terminating.
                    ``(C) Terminated plan.--The term `terminated plan' 
                means any plan which has terminated or is in the 
                process of terminating.
                    ``(D) Missing participant.--The term `missing 
                participant' shall have the meaning given to such term 
                by section 4050(b)(1) of the Employee Retirement Income 
                Security Act of 1974.''.
    (c) Conforming Amendment.--Subparagraph (B) of section 401(a)(31) 
of such Code is amended by adding at the end the following:
                            ``(iii) Other permitted transfers.--A plan 
                        administrator shall be treated as having 
                        complied with the requirements of this 
                        subparagraph if such plan administrator 
                        complies with the requirements of section 
                        414(w).''.

SEC. 604. INCOME AVERAGING OF CORRECTED CIVIL SERVICE ANNUITY BENEFIT 
              PAYMENTS.

    (a) In General.--Part I of subchapter Q of chapter 1 of the 
Internal Revenue Code of 1986 (relating to income averaging) is amended 
by inserting after section 1301 the following new section:

``SEC. 1302. AVERAGING OF CORRECTED CIVIL SERVICE ANNUITY BENEFIT 
              PAYMENTS.

    ``(a) In General.--Unless the taxpayer elects not to have this 
section apply for a taxable year, any corrected civil service annuity 
benefit payment includable in gross income for such taxable year 
(without regard to this section) shall be so included ratably over the 
5-taxable year period beginning with such taxable year.
    ``(b) Corrected Civil Service Annuity Benefit Payment.--For 
purposes of subsection (a), the term `corrected civil service annuity 
benefit payment' means with respect to an individual the sum of--
            ``(1) the lump sum payment awarded by reason of a court 
        order, or decision of the Merit Systems Protection Board, under 
        which the individual is entitled to receive an amount equal to 
        all or any part of an annuity not paid to the individual as a 
        result of an erroneous application or interpretation of 
        subchapter III of chapter 83 or chapter 84 of title 5, United 
        States Code, or any other provision of law (or any rule or 
        regulation relating thereto), plus
            ``(2) interest on the amount described in paragraph (1) 
        awarded under section 7704 of title 5, United States Code.
    ``(c) Annuity.--For purposes of subsection (b), the term `annuity' 
has the meaning given to such term by section 7704(c) of title 5, 
United States Code.
    ``(d) Finality of Election.--An election under subsection (a) with 
respect to a corrected civil service annuity benefit payment for a 
taxable year may not be changed after the due date of the return for 
such taxable year.''.
    (b) Clerical Amendment.--The table of sections for part I of 
subchapter Q of chapter 1 of such Code is amended by inserting after 
the item relating to section 1301 the following new item:

``Sec. 1302. Averaging of corrected civil service annuity benefit 
                            payments.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to payments received after December 31, 2004.

SEC. 605. PROHIBITED TRANSACTION EXEMPTION FOR THE PROVISION OF 
              INVESTMENT ADVICE.

    (a) Prohibited Transaction Exemption.--Subsection (d) of section 
4975 of the Internal Revenue Code of 1986 (relating to exemptions from 
tax on prohibited transactions), as amended by this Act, is further 
amended--
            (1) in paragraph (15), by striking ``or'' at the end,
            (2) in paragraph (16), by striking the period at the end 
        and inserting ``; or'', and
            (3) by adding at the end the following new paragraph:
            ``(17) any transaction described in subsection (f)(7)(A) in 
        connection with the provision of investment advice described in 
        subsection (e)(3)(B), in any case in which--
                    ``(A) the plan provides for individual accounts and 
                permits a participant or beneficiary to exercise 
                control over assets in his or her account,
                    ``(B) the advice is qualified investment advice 
                provided to a participant or beneficiary of the plan by 
                a fiduciary adviser in connection with any sale, 
                acquisition, or holding of a security or other property 
                for purposes of investment of plan assets, and
                    ``(C) the requirements of subsection (f)(7)(B) are 
                met in connection with each instance of the provision 
                of the advice.''.
    (b) Transactions Allowed and Related Requirements.--Subsection (f) 
of such section 4975 (relating to other definitions and special rules) 
is amended by adding at the end the following new paragraph:
            ``(7) Investment advice provided by fiduciary advisers.--
                    ``(A) Allowable transactions.--The transactions 
                referred to in subsection (d)(16), in connection with 
                the provision of investment advice by a fiduciary 
                adviser, are the following:
                            ``(i) the provision of the advice to the 
                        participant or beneficiary,
                            ``(ii) the sale, acquisition, or holding of 
                        a security or other property (including any 
                        lending of money or other extension of credit 
                        associated with the sale, acquisition, or 
                        holding of a security or other property) 
                        pursuant to the advice, and
                            ``(iii) the direct or indirect receipt of 
                        fees or other compensation by the fiduciary 
                        adviser or an affiliate thereof (or any 
                        employee, agent, or registered representative 
                        of the fiduciary adviser or affiliate) in 
                        connection with the provision of the advice.
                    ``(B) Requirements for exemption from prohibited 
                transactions with respect to provision of investment 
                advice.--The requirements of this subparagraph 
                (referred to in subsection (d)(16)(C)) are met in 
                connection with the provision of qualified investment 
                advice provided to a participant or beneficiary of an 
                employee benefit plan by a fiduciary adviser with 
                respect to the plan in connection with any sale, 
                acquisition, or holding of a security or other property 
                for purposes of investment of amounts held by the plan, 
                if the requirements of the following clauses are met:
                            ``(i) Written disclosures.--At a time 
                        contemporaneous with the provision of the 
                        advice in connection with the sale, 
                        acquisition, or holding of the security or 
                        other property, the fiduciary adviser shall 
                        provide to the recipient of the advice a clear 
                        and conspicuous notification, written in a 
                        manner to be reasonably understood by the 
                        average plan participant pursuant to 
                        regulations which shall be prescribed by the 
                        Secretary (including mathematical examples), of 
                        the following:
                                    ``(I) Interests held by the 
                                fiduciary adviser.--Any interest of the 
                                fiduciary adviser in, or any 
                                affiliation or contractual relationship 
                                of the fiduciary adviser (or affiliates 
                                thereof) with any third party having an 
                                interest in, the security or other 
                                property.
                                    ``(II) Related fees or compensation 
                                in connection with the provision of the 
                                advice.--All fees or other compensation 
                                relating to the advice (including fees 
                                or other compensation itemized with 
                                respect to each security or other 
                                property with respect to which the 
                                advice is provided) that the fiduciary 
                                adviser (or any affiliate thereof) is 
                                to receive (including compensation 
                                provided by any third party) in 
                                connection with the provision of the 
                                advice or in connection with the sale, 
                                acquisition, or holding of the security 
                                or other property.
                                    ``(III) Ongoing fees or 
                                compensation in connection with the 
                                security or property involved.--All 
                                fees or other compensation that the 
                                fiduciary adviser (or any affiliate 
                                thereof) is to receive, on an ongoing 
                                basis, in connection with any security 
                                or other property with respect to which 
                                the fiduciary adviser gives the advice.
                                    ``(IV) Applicable limitations on 
                                scope of advice.--Any limitation placed 
                                (in accordance with the requirements of 
                                this subsection) on the scope of the 
                                advice to be provided by the fiduciary 
                                adviser with respect to the sale, 
                                acquisition, or holding of the security 
                                or other property.
                                    ``(V) Types of services generally 
                                offered.--The types of services offered 
                                by the fiduciary adviser in connection 
                                with the provision of qualified 
                                investment advice by the fiduciary 
                                adviser.
                                    ``(VI) Fiduciary status of the 
                                fiduciary adviser.--That the fiduciary 
                                advisor is a fiduciary of the plan.
                            ``(ii) Disclosure by fiduciary adviser in 
                        accordance with applicable securities laws.--
                        The fiduciary adviser shall provide appropriate 
                        disclosure, in connection with the sale, 
                        acquisition, or holding of the security or 
                        other property, in accordance with all 
                        applicable securities laws.
                            ``(iii) Transaction occurring solely at 
                        direction of recipient of advice.--The sale, 
                        acquisition, or holding of the security or 
                        other property shall occur solely at the 
                        direction of the recipient of the advice.
                            ``(iv) Reasonable compensation.--The 
                        compensation received by the fiduciary adviser 
                        and affiliates thereof in connection with the 
                        sale, acquisition, or holding of the security 
                        or other property shall be reasonable.
                            ``(v) Arm's length transaction.--The terms 
                        of the sale, acquisition, or holding of the 
                        security or other property shall be at least as 
                        favorable to the plan as an arm's length 
                        transaction would be.
                    ``(C) Continued availability of information for at 
                least 1 year.--The requirements of subparagraph (B)(i) 
                shall be deemed not to have been met in connection with 
                the initial or any subsequent provision of advice 
                described in subparagraph (B) if, at any time during 
                the 1-year period following the provision of the 
                advice, the fiduciary adviser fails to maintain the 
                information described in subclauses (I) through (IV) of 
                subparagraph (B)(i) in currently accurate form or to 
                make the information available, upon request and 
                without charge, to the recipient of the advice.
                    ``(D) Evidence of compliance maintained for at 
                least 6 years.--A fiduciary adviser referred to in 
                subparagraph (B) who has provided advice referred to in 
                such subparagraph shall, for a period of not less than 
                6 years after the provision of the advice, maintain any 
                records necessary for determining whether the 
                requirements of the preceding provisions of this 
                paragraph and of subsection (d)(16) have been met. A 
                transaction prohibited under subsection (c)(1) shall 
                not be considered to have occurred solely because the 
                records are lost or destroyed prior to the end of the 
                6-year period due to circumstances beyond the control 
                of the fiduciary adviser.
                    ``(E) Model disclosure forms.--The Secretary shall 
                prescribe regulations setting forth model disclosure 
                forms to assist fiduciary advisers in complying with 
                the disclosure requirements of under this paragraph.
                    ``(F) Annual reviews by the secretary.--The 
                Secretary shall conduct annual reviews of randomly 
                selected fiduciary advisers providing qualified 
                investment advice to participants and beneficiaries. In 
                the case of each review, the Secretary shall review the 
                following:
                            ``(i) Compliance by advice computer models 
                        with generally accepted investment management 
                        principles.--The extent to which advice 
                        computer models employed by the fiduciary 
                        adviser comply with generally accepted 
                        investment management principles.
                            ``(ii) Compliance with disclosure 
                        requirements.--The extent to which disclosures 
                        provided by the fiduciary adviser have complied 
                        with the requirements of this subsection.
                            ``(iii) Extent of violations.--The extent 
                        to which any violations of fiduciary duties 
                        have occurred in connection with the provision 
                        of the advice.
                            ``(iv) Extent of reported complaints.--The 
                        extent to which complaints to relevant agencies 
                        have been made in connection with the provision 
                        of the advice.
                Any proprietary information obtained by the Secretary 
                shall be treated as confidential.
                    ``(G) Duty of conflicted fiduciary adviser to 
                provide for alternative independent advice.--
                            ``(i) In general.--In connection with any 
                        qualified investment advice provided by a 
                        fiduciary adviser to a participant or 
                        beneficiary regarding any security or other 
                        property, if the fiduciary adviser--
                                    ``(I) has an interest in the 
                                security or other property, or
                                    ``(II) has an affiliation or 
                                contractual relationship with any third 
                                party that has an interest in the 
                                security or other property,
                        the requirements of subparagraph (B) shall be 
                        treated as not met in connection with the 
                        advice unless the fiduciary adviser has 
                        arranged, as an alternative to the advice that 
                        would otherwise be provided by the fiduciary 
                        advisor, for qualified investment advice with 
                        respect to the security or other property 
                        provided by at least one alternative investment 
                        adviser meeting the requirements of clause 
                        (ii).
                            ``(ii) Independence and qualifications of 
                        alternative investment adviser.--Any 
                        alternative investment adviser whose qualified 
                        investment advice is arranged for by a 
                        fiduciary adviser pursuant to clause (i)--
                                    ``(I) shall have no material 
                                interest in, and no material 
                                affiliation or contractual relationship 
                                with any third party having a material 
                                interest in, the security or other 
                                property with respect to which the 
                                investment adviser is providing the 
                                advice, and
                                    ``(II) shall meet the requirements 
                                of a fiduciary adviser under 
                                subparagraph (H)(i), except that an 
                                alternative investment adviser may not 
                                be a fiduciary of the plan other than 
                                in connection with the provision of the 
                                advice.
                            ``(iii) Scope and fees of alternative 
                        investment advice.--Any qualified investment 
                        advice provided pursuant to this subparagraph 
                        by an alternative investment adviser shall be 
                        of the same type and scope, and provided under 
                        the same terms and conditions (including no 
                        additional charge to the participant or 
                        beneficiary), as apply with respect to the 
                        qualified investment advice to be provided by 
                        the fiduciary adviser.
                    ``(H) Fiduciary adviser defined.--For purposes of 
                this paragraph and subsection (d)(16)--
                            ``(i) In general.--The term `fiduciary 
                        adviser' means, with respect to a plan, a 
                        person who--
                                    ``(I) is a fiduciary of the plan by 
                                reason of the provision of qualified 
                                investment advice by such person to a 
                                participant or beneficiary,
                                    ``(II) meets the qualifications of 
                                clause (ii), and
                                    ``(III) meets the additional 
                                requirements of clause (iii).
                            ``(ii) Qualifications.--A person meets the 
                        qualifications of this clause if such person--
                                    ``(I) is registered as an 
                                investment adviser under the Investment 
                                Advisers Act of 1940 (15 U.S.C. 80b-1 
                                et seq.),
                                    ``(II) if not registered as an 
                                investment adviser under such Act by 
                                reason of section 203A(a)(1) of such 
                                Act (15 U.S.C. 80b-3a(a)(1)), is 
                                registered under the laws of the State 
                                in which the fiduciary maintains its 
                                principal office and place of business, 
                                and, at the time the fiduciary last 
                                filed the registration form most 
                                recently filed by the fiduciary with 
                                such State in order to maintain the 
                                fiduciary's registration under the laws 
                                of such State, also filed a copy of 
                                such form with the Secretary,
                                    ``(III) is registered as a broker 
                                or dealer under the Securities Exchange 
                                Act of 1934 (15 U.S.C. 78a et seq.),
                                    ``(IV) is a bank or similar 
                                financial institution referred to in 
                                subsection (d)(4),
                                    ``(V) is an insurance company 
                                qualified to do business under the laws 
                                of a State, or
                                    ``(VI) is any other comparable 
                                entity which satisfies such criteria as 
                                the Secretary determines appropriate.
                            ``(iii) Additional requirements with 
                        respect to certain employees or other agents of 
                        certain advisers.--A person meets the 
                        additional requirements of this clause if every 
                        individual who is employed (or otherwise 
                        compensated) by such person and whose scope of 
                        duties includes the provision of qualified 
                        investment advice on behalf of such person to 
                        any participant or beneficiary is--
                                    ``(I) a registered representative 
                                of such person,
                                    ``(II) an individual described in 
                                subclause (I), (II), or (III) of clause 
                                (ii), or
                                    ``(III) such other comparable 
                                qualified individual as may be 
                                designated in regulations of the 
                                Secretary.
                    ``(I) Additional definitions.--For purposes of this 
                paragraph and subsection (d)(16)--
                            ``(i) Qualified investment advice.--The 
                        term `qualified investment advice' means, in 
                        connection with a participant or beneficiary, 
                        investment advice referred to in subsection 
                        (e)(3)(B) which--
                                    ``(I) consists of an individualized 
                                recommendation to the participant or 
                                beneficiary with respect to the 
                                purchase, sale, or retention of 
                                securities or other property for the 
                                individual account of the participant 
                                or beneficiary, in accordance with 
                                generally accepted investment 
                                management principles, and
                                    ``(II) takes into account all 
                                investment options under the plan.
                            ``(ii) Affiliate.--The term `affiliate' of 
                        another entity means an affiliated person of 
                        such entity (as defined in section 2(a)(3) of 
                        the Investment Company Act of 1940 (15 U.S.C. 
                        80a-2(a)(3))).
                            ``(iii) Registered representative.--The 
                        term `registered representative' of another 
                        entity means a person described in section 
                        3(a)(18) of the Securities Exchange Act of 1934 
                        (15 U.S.C. 78c(a)(18)) (substituting such 
                        entity for the broker or dealer referred to in 
                        such section) or a person described in section 
                        202(a)(17) of the Investment Advisers Act of 
                        1940 (15 U.S.C. 80b-2(a)(17)) (substituting 
                        such entity for the investment adviser referred 
                        to in such section).''.
    (c) Effective Date.--The amendments made by this section shall 
apply with respect to advice referred to in section 4975(e)(3)(B) of 
the Internal Revenue Code of 1986 provided on or after January 1, 2005.

SEC. 606. INCREASE IN DEDUCTIBLE CONTRIBUTIONS TO SINGLE-EMPLOYER 
              DEFINED BENEFIT PLAN UPON PAYMENT OF INCREASED PREMIUM TO 
              THE PENSION BENEFIT GUARANTY CORPORATION.

    (a) Increase in Deductible Contributions.--Paragraph (1) of section 
404(a) of the Internal Revenue Code of 1986 (relating to deduction for 
contributions to pension trusts) is amended--
            (1) by redesignating subparagraph (E) as subparagraph (F); 
        and
            (2) by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) Special rule in the event of payment of 
                increased pbgc premium with respect to single-employer 
                defined benefit plan.--In any case in which the 
                Secretary--
                            ``(i) receives certification by the plan 
                        administrator of a single-employer defined 
                        benefit plan that the increased premium 
                        authorized under section 4006(a)(3)(F) of the 
                        Employee Retirement Income Security Act of 1974 
                        has been paid for any plan year, and
                            ``(ii) receives certification of such 
                        payment from the Pension Benefit Guaranty 
                        Corporation,
                 the maximum amount deductible under the limitations of 
                this paragraph for such plan year shall not be less 
                than 150 percent of current liability determined under 
                section 412(l).''.
    (b) Election of Payment of Increased Premium.--Section 4006(a)(3) 
of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1306(a)(3)) is amended by adding at the end the following new 
subparagraph:
    ``(F) The corporation shall provide for payment of the premium for 
any plan year for basic benefits guaranteed under this title with 
respect to a single-employer plan for any plan year at an increased 
annual rate equal to $24.70 in any case in which such payment is 
accompanied by certification by the contributing sponsor or plan 
administrator that such payment is made for purposes of increased 
deductibility of contributions for such plan year under section 
404(a)(1)(E) of the Internal Revenue Code of 1986. The Corporation 
shall promptly certify receipt of any premium at the increased annual 
rate provided for under this subparagraph to the Secretary of the 
Treasury.''.

SEC. 607. EXEMPTION FROM PROHIBITED TRANSACTION RULES FOR CERTAIN 
              ABORTED EMERGENT TRANSACTIONS.

    (a) In General.--Section 4975(c) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(7) Special rule for certain aborted emergent 
        transactions.--
                    ``(A) In general.--Pursuant to regulations issued 
                by the Secretary, if--
                            ``(i) in the case of a qualifying 
                        transaction between an employee benefit plan 
                        and an eligible person which would, but for 
                        this paragraph, be in violation of a 
                        restriction imposed by paragraph (1), the 
                        eligible person submits to the Secretary, not 
                        later than 60 days after the date of the 
                        transaction, an application for an exemption 
                        under paragraph (2) from such restriction in 
                        the case of such transaction,
                            ``(ii) the Secretary determines not to 
                        grant the exemption, and
                            ``(iii) the transaction is reversed within 
                        60 days after the date of the Secretary's 
                        determination,
                then the transaction shall be exempted under paragraph 
                (2) from treatment as a violation of such restriction.
                    ``(B) Qualifying transaction.--The term `qualifying 
                transaction' means, in connection with an eligible 
                person, a transaction between an employee benefit plan 
                and such eligible person constituting the purchase or 
                sale of a financial product, if--
                            ``(i) prior to engaging in the transaction, 
                        the plan acquires from the eligible person a 
                        sufficient guarantee, consisting of a letter of 
                        credit or other form of written guarantee, 
                        issued by a bank or similar financial 
                        institution (other than the eligible person 
                        requesting the exemption or an affiliate) 
                        regulated and supervised by, and subject to 
                        periodic examination by, an agency of a State 
                        or of the Federal Government, in a stated 
                        amount equal, as of the close of business on 
                        the day preceding the transaction, to not less 
                        than 100 percent of the amount of plan assets 
                        involved in the transaction, plus interest on 
                        that amount at a rate determined by the parties 
                        to the transaction, or in the absence of such 
                        determination, an interest rate equal to the 
                        underpayment rate defined in section 
                        6621(a)(2),
                            ``(ii) the eligible person receives in such 
                        transaction not more than reasonable 
                        compensation,
                            ``(iii) such transaction is expressly 
                        approved by an independent fiduciary who has 
                        investment authority with respect to the plan 
                        assets involved in the transaction, and
                            ``(iv) immediately after the acquisition of 
                        the financial product--
                                    ``(I) the fair market value of such 
                                financial product does not exceed 1 
                                percent of the fair market value of the 
                                assets of the plan, and
                                    ``(II) the aggregate fair market 
                                value of all outstanding financial 
                                products acquired by the plan from the 
                                eligible person pursuant to this 
                                subsection does not exceed 5 percent of 
                                the fair market value of the assets of 
                                the plan.
                    ``(C) Sufficient guarantee.--A guarantee referred 
                to in subparagraph (B) is `sufficient' if such 
                guarantee is irrevocable and, under the terms of the 
                guarantee, if the Secretary determines not to grant the 
                exemption, the plan has the unconditional right to 
                apply the amounts under the guarantee to any losses 
                suffered and to the payment of interest determined 
                under the terms of the transaction. A guarantee shall 
                not be treated as failing to be `sufficient' solely 
                because, under the terms of the guarantee, if the 
                Secretary grants the exemption, the guarantee may 
                expire without any payments made to the plan.
                    ``(D) Eligible person.--The term `eligible person' 
                means a person that--
                            ``(i) consists of--
                                    ``(I) a bank as defined in section 
                                202(a)(2) of the Investment Advisers 
                                Act of 1940,
                                    ``(II) an investment adviser 
                                registered under the Investment 
                                Advisers Act of 1940,
                                    ``(III) an insurance company which 
                                is qualified to do business in more 
                                than one State, or
                                    ``(IV) a broker-dealer registered 
                                under the Securities Exchange Act of 
                                1934,
                            ``(ii) has shareholders' or partners' 
                        equity in excess of $1,000,000, and
                            ``(iii) is not described in section 411 of 
                        the Employee Retirement Income Security Act of 
                        1974 (29 U.S.C. 1111).''.
    (b) Effective Date.--The amendment made by this section shall apply 
with respect to transactions occurring after December 31, 2005.

SEC. 608. PENSION BENEFIT INFORMATION.

    (a) In General.--Chapter 43 of the Internal Revenue Code of 1986 
(relating to qualified pension, etc., plans) is amended by adding at 
the end the following new section:

``SEC. 4980G. FAILURE OF APPLICABLE PLANS TO PROVIDE NOTICE OF 
              GENERALLY ACCEPTED INVESTMENT PRINCIPLES.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of any applicable pension plan to meet the requirements of 
subsection (e) with respect to any applicable individual.
    ``(b) Amount of Tax.--The amount of the tax imposed by subsection 
(a) on any failure with respect to any applicable individual shall be 
$100 for each day in the noncompliance period with respect to such 
failure.
    ``(c) Limitations on Amount of Tax.--
            ``(1) Tax not to apply to failures corrected within 30 
        days.--No tax shall be imposed by subsection (a) on any failure 
        if--
                    ``(A) any person subject to liability for the tax 
                under subsection (d) exercised reasonable diligence to 
                meet the requirements of subsection (e), and
                    ``(B) such person provides the notice described in 
                subsection (e) during the 30-day period beginning on 
                the first date such person knew, or exercising 
                reasonable diligence should have known, that such 
                failure existed.
            ``(2) Overall limitation for unintentional failures.--
                    ``(A) In general.--If the person subject to 
                liability for tax under subsection (d) exercised 
                reasonable diligence to meet the requirements of 
                subsection (e) and paragraph (1) is not otherwise 
                applicable, the tax imposed by subsection (a) for 
                failures during the taxable year of the employer (or, 
                in the case of a multiemployer plan, the taxable year 
                of the trust forming part of the plan) shall not exceed 
                $500,000. For purposes of the preceding sentence, all 
                multiemployer plans of which the same trust forms a 
                part shall be treated as 1 plan.
                    ``(B) Taxable years in the case of certain 
                controlled groups.--For purposes of this paragraph, if 
                all persons who are treated as a single employer for 
                purposes of this section do not have the same taxable 
                year, the taxable years taken into account shall be 
                determined under principles similar to the principles 
                of section 1561.
            ``(3) Waiver by secretary.--In the case of a failure which 
        is due to reasonable cause and not to willful neglect, the 
        Secretary may waive part or all of the tax imposed by 
        subsection (a) to the extent that the payment of such tax would 
        be excessive or otherwise inequitable relative to the failure 
        involved.
    ``(d) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
    ``(e) Notice of Generally Accepted Investment Principles.--
            ``(1) In general.--The plan administrator of an applicable 
        pension plan shall provide notice of generally accepted 
        investment principles, including principles of risk management 
        and diversification, to each applicable individual.
            ``(2) Notice.--The notice required by paragraph (1) shall 
        be written in a manner calculated to be understood by the 
        average plan participant and shall provide sufficient 
        information (as determined in accordance with rules or other 
        guidance adopted by the Secretary) to allow applicable 
        individuals to understand generally accepted investment 
        principles, including principles of risk management and 
        diversification.
            ``(3) Timing of notice.--The notice required by paragraph 
        (1) shall be provided upon enrollment of the applicable 
        individual in such plan and at least once per plan year 
        thereafter.
            ``(4) Form and manner of notice.--The notice required by 
        paragraph (1) shall be in writing, except that such notice may 
        be in electronic or other form to the extent that such form is 
        reasonably accessible to the applicable individual.
    ``(f) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Applicable individual.--The term `applicable 
        individual' means with respect to an applicable pension plan--
                    ``(A) any participant in the applicable pension 
                plan,
                    ``(B) any beneficiary who is an alternate payee 
                (within the meaning of section 414(p)(8)) under an 
                applicable qualified domestic relations order (within 
                the meaning of section 414(p)(1)(A)), and
                    ``(C) any beneficiary of a deceased participant or 
                alternate payee described in subparagraph (A) or (B), 
                as the case may be,
        who has an accrued benefit under the plan and who is entitled 
        to direct the investment (or hypothetical investment) of some 
        or all of such accrued benefit.
            ``(2) Applicable pension plan.--The term `applicable 
        pension plan' means--
                    ``(A) a plan described in section 219(g)(5)(A) 
                (other than in clause (iii) thereof), and
                    ``(B) an eligible deferred compensation plan (as 
                defined in section 457(b)) of an eligible employer 
                described in section 457(e)(1)(A),
        which permits any participant to direct the investment of some 
        or all of his account in the plan or under which the accrued 
        benefit of any participant depends in whole or in part on 
        hypothetical investments directed by the participant.''.
    (b) Clerical Amendment.--The table of sections for chapter 43 of 
such Code is amended by adding at the end the following new item:

``Sec. 4980G. Failure of applicable plans to provide notice of 
                            generally accepted investment 
                            principles.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect 60 days after the adoption of rules or other 
        guidance to carry out the amendments made by this section, 
        which shall include a model notice of generally accepted 
        investment principles, including principles of risk management 
        and diversification.
            (2) Model investment principles.--For purposes of paragraph 
        (1), not later than 120 days after the date of the enactment of 
        this Act, the Secretary of the Treasury, in consultation with 
        the Secretary of Labor, shall issue rules or other guidance and 
        a model notice which meets the requirements of section 4980G of 
        the Internal Revenue Code of 1986 (as added by this section).

SEC. 609. PERMANENCY OF TRANSITION RULE IN RETIREMENT PROTECTION ACT OF 
              1994.

    (a) Transition Rule Made Permanent.--Section 769(c) of the 
Retirement Protection Act of 1994 (26 U.S.C. 412 note) is amended--
            (1) in the heading, by striking ``Transition''; and
            (2) in paragraph (1), by striking ``transition'' and by 
        striking ``for any plan year beginning after 1996 and before 
        2010''.
    (b) Special Rules.--Paragraph (2) of section 769(c) of the 
Retirement Protection Act of 1994 is amended to read as follows:
            ``(2) Special rules.--The rules described in this paragraph 
        are as follows:
                    ``(A) For purposes of section 412(l)(9)(A) of the 
                Internal Revenue Code of 1986 and section 302(d)(9)(A) 
                of the Employee Retirement Income Security Act of 1974, 
                the funded current liability percentage for any plan 
                year shall be treated as not less than 90 percent.
                    ``(B) For purposes of section 412(m) of the 
                Internal Revenue Code of 1986 and section 302(e) of the 
                Employee Retirement Income Security Act of 1974, the 
                funded current liability percentage for any plan year 
                shall be treated as not less than 100 percent.
                    ``(C) For purposes of determining unfunded vested 
                benefits under section 4006(a)(3)(E)(iii) of the 
                Employee Retirement Income Security Act of 1974, the 
                mortality table shall be the mortality table used by 
                the plan.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2004.

                     TITLE VII--GENERAL PROVISIONS

SEC. 701. GENERAL EFFECTIVE DATE.

    (a) In General.--Except as otherwise provided in this Act, and 
subject to subsection (b), the amendments made by this Act shall apply 
with respect to plan years beginning on or after January 1, 2005.
    (b) Special Rule for Collectively Bargained Plans.--In the case of 
a plan maintained pursuant to 1 or more collective bargaining 
agreements between employee representatives and 1 or more employers 
ratified on or before the date of the enactment of this Act, subsection 
(a) shall be applied to benefits pursuant to, and individuals covered 
by, any such agreement by substituting for ``January 1, 2005'' the date 
of the commencement of the first plan year beginning on or after the 
earlier of--
            (1) the later of--
                    (A) January 1, 2006, or
                    (B) the date on which the last of such collective 
                bargaining agreements terminates (determined without 
                regard to any extension thereof after the date of the 
                enactment of this Act), or
            (2) January 1, 2007.

SEC. 702. PLAN AMENDMENTS.

    If any amendment made by this Act requires an amendment to any 
plan, such plan amendment shall not be required to be made before the 
first plan year beginning on or after January 1, 2007, if--
            (1) during the period after such amendment made by this Act 
        takes effect and before such first plan year, the plan is 
        operated in accordance with the requirements of such amendment 
        made by this Act, and
            (2) such plan amendment applies retroactively to the period 
        after such amendment made by this Act takes effect and such 
        first plan year.
                                 <all>