Retirement Security for the 21st Century Act

TABLE OF CONTENTS:

Title I: Expanding Small Business Coverage

Title II: Enhancing Fairness for Women and Families

Title III: Increasing Portability for Participants

Title IV: Strengthening Pension Security and Enforcement

Title V: Reducing Regulatory Burdens

Retirement Security for the 21st Century Act - Title I: Expanding Small Business Coverage - Amends Internal Revenue Code (IRC) deferred compensation provisions to prohibit treating as an elective deferral any matching contribution made on behalf of a self-employed individual.

(Sec. 102) Exempts from prohibited transaction taxes certain transactions regarding a trust forming part of a stock bonus, pension, or profit-sharing plan involving loans to, payments for services rendered by, or acquisitions from or sales to an owner-employee. Amends the Employee Retirement Income Security Act of 1974 (ERISA) to exempt such transactions from provisions: (1) limiting plan holding of employer securities and employer real property; (2) prohibiting certain fiduciary actions, benefits, and compensation; and (3) relating to certain plan transactions involving employer securities or employer real property.

(Sec. 103) Allows an employer to establish payroll deductions for contributions to employee individual retirement plans without incurring ERISA liability.

(Sec. 104) Amends the IRC to allow an eligible employer to establish and maintain a SAFE annuity (an individual retirement annuity) or a SAFE trust (a trust forming part of a defined benefit plan), both to be funded by the employer. Makes the employer contributions deductible without limitation and otherwise provides for the treatment of contributions and distributions. Mandates a penalty for early withdrawals. Requires simplified employer reports for SAFE annuities and simplified actuarial reports for SAFE trusts.

Amends the Employee Retirement Income Security Act of 1974 to exempt SAFE trusts from coverage requirements and SAFE annuities from certain employer reporting requirements.

(Sec. 105) Amends the IRC to modify definitions applicable to special rules for top-heavy plans. Requires consideration of employer matching contributions in determining whether a defined contribution plan meets minimum contribution requirements.

Title II: Enhancing Fairness for Women and Children - Removes a requirement that an individual's spouse's participation in certain pension plans reduce the individual's dollar limitations on retirement contribution deductions.

(Sec. 202) Makes the salary percentage limitations on additions to defined contribution plans inapplicable to elective deferrals.

(Sec. 203) Permits participants on maternity or paternity leave to make additional elective deferrals. Provides for the treatment and timing of the contributions and sets forth other definitions and rules.

(Sec. 204) Amends the IRC and ERISA to set three- and five-year vesting periods for matching contributions under a qualified cash or deferred arrangement. Provides for the treatment of matching contributions.

(Sec. 205) Amends Federal civil service retirement and Federal employees' retirement system provisions to entitle a former spouse of a deceased former employee to a deferred annuity in certain circumstances.

(Sec. 206) Amends the IRC to provide for the circumstances in which a distribution or payment from an eligible deferred compensation plan must be treated as made pursuant to a qualified domestic relations order.

Title III: Increasing Portability for Participants - Excludes from gross income any portion of an individual's eligible retirement plan rolled over or transferred into another eligible retirement plan. Sets forth related rules.

(Sec. 302) Allows plans to accept rollover contributions.

(Sec. 303) Amends the IRC and ERISA to set forth the circumstances in which a defined contribution plan will not be treated as failing to meet requirements merely because the transferee plan does not provide some or all the forms of distribution previously available under another defined contribution plan.

(Sec. 304) Amends the IRC to allow amounts in a qualified cash or deferred arrangement to be distributed after: (1) severance from employment (currently, after separation from service); or (2) a plan termination (currently, a plan termination, a disposition of assets, or a disposition of a subsidiary).

Title IV: Strengthening Pension Security and Enforcement - Amends the IRC and ERISA to modify the definition of "full-funding limitation" and set forth a special amortization rule. Amends the IRC to change deductibility requirements regarding an employer's contributions to an employees' trust annuity plan and compensation under a deferred-payment plan.

(Sec. 402) Amends ERISA to modify requirements regarding missing participants.

(Sec. 403) Amends ERISA and the IRC to exempt from a requirement that plans prohibit the assignment or alienation of benefits any offset of a benefit against an amount a participant is ordered or required to pay under certain criminal or civil judgements or settlements.

(Sec. 404) Amends ERISA to increase the maximum civil penalty authorized for certain prohibited transactions.

(Sec. 405) Modifies the definition of "eligible individual account plan" for provisions regarding the acquisition and holding of employer securities and employer real property by certain plans.

(Sec. 406) Requires that pension benefit statements be furnished annually (once every three years for defined benefit plans) or on request. Allows written or electronic statements. Requires multiemployer plans to furnish a statement (written or electronic) on request.

(Sec. 407) Allows (currently, requires) civil monetary penalties of up to (currently, equal to) specified amounts regarding certain breaches of fiduciary responsibility. Modifies the amounts and makes the liability joint and severable.

(Sec. 408) Amends the IRC to modify requirements regarding the tax on nondeductible contributions.

(Sec. 409) Prohibits plans from making loans to beneficiaries through any revolving credit arrangement.

Title V: Reducing Regulatory Burdens - Makes certain nondiscrimination and participation requirements inapplicable to a governmental plan.

(Sec. 502) Declares that a trust does not fail to be qualified if it made good faith efforts but failed to satisfy requirements and substantially corrected the failure. Allows, in some circumstances, the plan to be required to make a payment bearing a reasonable relationship to the severity of the plan's failure to satisfy requirements. Modifies requirements regarding the taxability of the beneficiary of a nonexempt trust.

(Sec. 503) Amends ERISA to remove a requirement to file a summary plan description, a plan description, modifications and changes, and documents relating to the employee benefit plan. Authorizes a civil monetary penalty for failure to furnish such material on request.

(Sec. 504) Mandates issuance of coordinated guidance to: (1) modify operational and time requirements to permit the use of new technologies; and (2) clarify the extent to which State paper transaction laws are preempted and the extent to which IRC requirements shall be interpreted to permit paperless transactions.

(Sec. 505) Amends the IRC and ERISA to increase the dollar amount that, if exceeded, requires a participant's consent for immediate distribution.

(Sec. 506) Amends the IRC to modify requirements regarding plan valuation timing.

(Sec. 507) Amends ERISA to change requirements, in the case of a terminated single-employer plan, regarding the guarantee of benefits and the allocation of assets.

(Sec. 508) Amends the IRC to modify the definition of "applicable dividend" for provisions relating to deductions for dividends paid on certain employer securities.

(Sec. 509) Changes the definition of "includible compensation" for provisions relating to the taxability of beneficiaries under annuities purchased by section 501(c)(3) organizations or public schools. Mandates a change in the regulations regarding the exclusion allowance to reflect an amendment made by the Small Business Job Protection Act of 1996.