Sec. 2. Automatic USA Retirement Fund arrangements
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Each covered employer shall make available to each qualifying employee for the calendar year an automatic USA Retirement Fund arrangement. For purposes of this title— Except as otherwise provided in this subsection and subsection (c)(2), the term covered employer means, with respect to any calendar year, an employer who does not maintain a qualifying plan or arrangement for any part of such year. The term qualifying plan or arrangement means a plan or arrangement described in section 219(g)(5) of the Internal Revenue Code of 1986.
Such term shall not include the following: A defined benefit plan that had no ongoing accruals as of the first day of the preceding calendar year, unless the plan failed to have accruals only because of the application of section 206 of the Employee Retirement Income Security Act ( 29 U.S.C. 1056 ) and section 436 of the Internal Revenue Code of 1986. A defined contribution plan that does not provide participants with a distribution option that provides lifetime income. A plan— which consists of a cash or deferred arrangement (as defined in section 401(k) of such Code) with respect to which the employer does not automatically enroll all eligible employees at contribution rates at or above those specified in subsection (d)(4); or for which the only contributions are nonelective employer contributions and with respect to which the employer’s annual contribution rate is not at or above the rates specified in subsection (d)(4).
The term covered employer shall not include an employer for a calendar year if the employer— did not employ during the preceding calendar year more than 10 employees who each received at least $5,000 of compensation (as defined in section 3401(a) of the Internal Revenue Code of 1986) from the employer for such preceding calendar year; did not normally employ more than 10 employees on a typical business day during the preceding calendar year; or was not in existence at all times during the calendar year and the preceding calendar year.
In determining the number of employees for purposes of subparagraph (A)— rules consistent with any rules applicable in determining the number of employees for purposes of section 408(p)(2)(C) and section 4980B(d) of the Internal Revenue Code of 1986 shall apply; all members of the same family (within the meaning of section 318(a)(1) of the Internal Revenue Code of 1986) shall be treated as 1 individual; and any reference to an employer shall include a reference to any predecessor employer.
The term covered employer shall not include— a government or entity described in section 414(d) of the Internal Revenue Code of 1986; or a church or a convention or association of churches that is exempt from tax under section 501 of such Code. A person treated as a single employer under subsection
(a)or
(b)of section 52 of the Internal Revenue Code of 1986 or subsection
(m)or
(o)of section 414 of such Code shall be treated as a single employer. For purposes of this title— The term qualifying employee means any employee who is not an excluded employee. If— an employer maintains one or more qualifying plans or arrangements described in section 219(g)(5) of the Internal Revenue Code of 1986; and the employees of a subsidiary, division, or other business unit are generally not eligible to participate in any such qualifying plan or arrangement, for purposes of this section, the employer shall be treated as a covered employer with respect to such employees (other than excluded employees), and such employees (other than excluded employees) shall be treated as qualifying employees for the calendar year. The term excluded employee means an employee who is an excludable employee and who is in a class or category that the employer excludes from treatment as qualifying employees. The term excludable employee means— an employee described in section 410(b)(3) of the Internal Revenue Code of 1986; an employee who has not attained the age of 21 before the beginning of the calendar year; an employee who has not completed at least 3 months of service with the employer; in the case of an employer that maintains a qualifying plan or arrangement which excludes employees who have not satisfied the minimum age and service requirements for participation in the plan, an employee who has not satisfied such requirements; in the case of an employer that maintains an annuity contract (including a custodial account or retirement income account) under section 403(b) of the Internal Revenue Code of 1986, an employee who is permitted to be excluded from any salary reduction arrangement under the contract pursuant to paragraph
(12)of such section 403(b); in the case of an employer that maintains an arrangement described in section 408(p) of such Code, an employee who is not required to be eligible to participate in the arrangement under paragraph
(4)of such section 408(p); and in the case of an employer that maintains a simplified employee pension described in section 408(k) of such Code, an employee who is permitted to be excluded from participation under paragraph
(2)of such section 408(k). The Secretary of Labor (in this title referred to as the Secretary ) shall issue regulations or other guidance to carry out this subsection, including— guidelines for determining the classes or categories of employees to be covered by a USA Retirement Fund; guidelines requiring employers to specify the classification or categories of employees (if any) who are excluded from the USA Retirement Fund; and rules to prevent avoidance of the requirements of this section. For purposes of this title— The term automatic USA Retirement Fund arrangement means an arrangement of an employer (determined without regard to whether the employer is required to maintain the arrangement)— that covers each qualifying employee of the covered employer for the calendar year; under which a qualifying employee— may elect— to contribute to an automatic USA Retirement Fund by having the employer deposit payroll deduction amounts or make other periodic direct deposits (including electronic payments) to the Fund; or to have such payments paid to the employee directly in cash; is treated as having made the election under clause (i)(I) in the amount specified in paragraph
(4)unless the individual specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage or in a different amount); and not more than once per calendar year, may elect to modify the selection of the USA Retirement Fund to which contributions are made for such year; and that meets the administrative requirements of paragraph (3), including the notice requirement of paragraph (3)(C). An employee’s election not to contribute to a USA Retirement Fund (or to have such contributions made at a different percentage or in a different amount from those specified in paragraph (4)) shall expire after 2 years. After such 2-year period and absent a new election, the employee shall be treated as having made the election under paragraph (1)(B)(i)(I) in the amount specified in paragraph (4). An employer shall make the payments elected or treated as elected under paragraph (1)(B) on or before— the last day of the month following the month in which the compensation otherwise would have been payable to the employee in cash; or such later date as the Secretary may prescribe. Subject to a requirement for reasonable notice, an employee may elect to terminate participation in the arrangement at any time during a calendar year. The arrangement may provide that, if an employee so terminates participation, the employee may not elect to resume participation until the beginning of the next calendar year. The employer shall notify each employee eligible to participate for a year in a USA Retirement Fund arrangement, within a reasonable period of time before the 30th day before the beginning of such year (and, for the first year the employee is so eligible, the 30th day before the first day such employee is so eligible), of— the payments that may be elected or treated as elected under paragraph (1)(B); the opportunity to make the election to terminate participation in the arrangement under subparagraph (B); the opportunity to make the election under paragraph (1)(B)(ii) to have contributions or purchases made at a different percentage or in a different amount; and the opportunity under paragraph (1)(B)(iii) to modify the manner in which such amounts are invested for such year. The arrangement shall provide that a qualified employee may elect to have contributions made to any USA Retirement Fund available to the employee. The amount specified in this paragraph is— 3 percent of compensation for the calendar year beginning on January 1, 2015; 4 percent of compensation for the calendar year beginning on January 1, 2016; 5 percent of compensation for the calendar year beginning on January 1, 2017; and 6 percent of compensation for calendar years beginning after December 31, 2017. The Secretary of the Treasury shall modify the withholding exemption certificate under section 3402(f) of the Internal Revenue Code of 1986 so that, in the case of any qualifying employee covered by a USA Retirement Fund arrangement, any notice and election requirements with respect to the arrangement may be met through the use of an attachment to such certificate or other modifications of the withholding exemption procedures. Except as provided in paragraph (2), an employer shall make all contributions on behalf of employees to the USA Retirement Fund specified by the employee. In the absence of an affirmative selection of a USA Retirement Fund by the employee, contributions on behalf of the employee shall be made to the USA Retirement Fund designated by the employer. The Secretary may issue such regulations as are necessary to carry out this subsection. The requirements under this section preempt any law of a State that directly or indirectly prohibits or restricts the establishment or operation of an automatic USA Retirement Fund arrangement. Nothing in this section shall be construed to impair or preempt any State law to the extent such State law provides a remedy for the failure to make payroll deposit payments under any such automatic USA Retirement Fund arrangement within the period required.
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Sec. 2
Automatic USA Retirement Fund arrangements
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