Sec. 3. Deferral-only arrangements
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Subsection
(k)of section 401 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: A deferral-only arrangement shall be treated as meeting the requirements of paragraph (3)(A)(ii). For purposes of this paragraph, the term deferral-only arrangement means any cash or deferred arrangement which meets— the automatic deferral requirements of subparagraph (C), the elective contribution requirement of subparagraph (D), and the requirements of subparagraph
(E)of paragraph (13). The requirements of this subparagraph are met if, under the arrangement, each employee eligible to participate in the arrangement who is not contributing or is contributing less than the qualified percentage applicable to an eligible employee in the first year of eligibility is treated as having elected in applicable years to have the employer make elective contributions in an amount equal to the qualified percentage of compensation applicable under clause (iii). In the absence of an election out as described in clause (ii), such election shall, as adjusted under clause (iii), remain in effect for all subsequent years, regardless of whether such years are applicable years. The election treated as having been made under clause
(i)shall cease to apply with respect to any employee if such employee makes an affirmative election— to not have such contributions made, or to make elective contributions at a level specified in such affirmative election. For purposes of this subparagraph, with respect to any employee, the term qualified percentage means, in lieu of the meaning given such term in paragraph (13)(C)(iii), any percentage determined under the arrangement if such percentage is applied uniformly and is— at least 6 percent, but not greater than 10 percent, during the period ending on the last day of the first plan year which begins after the date on which the first elective contribution described in clause
(i)is made with respect to such employee (disregarding any elective contribution made for any preceding year that preceded a year in which the employee made an affirmative election described in clause (ii)), at least 7 percent during the first plan year following the plan year described in subclause (I), at least 8 percent during the first plan year following the plan year described in subclause (II), at least 9 percent during the first plan year following the plan year described in subclause (III), and At least 10 percent during any subsequent plan year. For purposes of this subparagraph, the term applicable year means, with respect to an employee, such employee’s first plan year of eligibility under the arrangement, and all subsequent plan years of eligibility. Following any applicable year of the employee (determined after the application of this subclause), the plan may elect to treat the next one or two plan years as not being applicable years with respect to such employee. The requirements of this subparagraph are met if under the plan containing the arrangement— the only contributions which may be made are elective contributions of employees who are eligible to participate in the arrangement, and the aggregate amount of such elective contributions which may be made with respect to any employee for any calendar year shall not exceed $8,000. In the case of any calendar year beginning after December 31, 2018, the $8,000 amount under clause
(i)shall be adjusted in the same manner as cost of living adjustments are made under section 402(g)(4), except that 2017 shall be substituted for 2005 . For catch-up contributions for individuals age 50 or over, see section 414(v). . Clause
(i)of section 414(v)(2)(B) of such Code is amended by inserting , 401(k)(14), after 401(k)(11) . Section 414(v)(2)(B) of such Code is amended by adding at the end thereof the following clause: in the case of an applicable employer plan described in section 401(k)(14), the applicable dollar amount is $1,000. . Section 414(v)(2)(C) of such Code is amended by— by striking (B)(i) and and inserting (B)(i), and by inserting after subparagraph (B)(ii) the following: , and the $1,000 amount described in subparagraph (B)(iii) , and inserting after 2005 the following: (the calendar quarter beginning July 1, 2017, in the case of the $1,000 amount described in subparagraph (B)(iii)) . Section 104(a)(2)(A) of the Employee Retirement Income Security Act of 1974 ( 29 U.S.C. 1024(a)(2) ) is amended by inserting or for any pension plan which is a deferral-only arrangement described in before the period at the end. section 401(k)(14)(B) of the Internal Revenue Code of 1986 Clause
(i)of section 416(g)(4)(H) of such Code is amended by striking or 401(k)(13) and inserting 401(k)(13), or 401(k)(14) . The amendments made by this section shall apply to plan years beginning after December 31, 2017.
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Sec. 3
Deferral-only arrangements
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