Bill Would Allow 403(b) Open MEPs

Rep. Ron Kind (D-WI) has introduced legislation that would increase access to retirement savings for employees of nonprofit organizations that have 403(b) plans.

The bill would expand access to savings by:

 

• allowing 403(b) plans to utilize open multiple employer plans (MEPs), which would allow 403(b) plans for workers from non-profits such as hospitals, school districts and churches to pool their retirement investments together, creating better opportunities and security for their retirements; 
• rectifying penalties that IRA holders can face by bringing them in line with 401(k) penalties; and
• providing an incentive to owners of S-Corporations to convert to ESOPs.  

The bill would amend Internal Revenue Code Section 403(b) by adding a provision concerning MEPs: 
 

‘(15) MULTIPLE EMPLOYER PLANS.—  

‘‘(A) IN GENERAL.—Except in the case of  a church plan, this subsection shall not be  treated as failing to apply to an annuity contract solely by reason of such contract being purchased under a plan maintained by more than 1 employer. 

‘‘(B) TREATMENT OF EMPLOYERS FAILING TO MEET REQUIREMENTS OF PLAN.— 

‘‘(i) IN GENERAL.—In the case of a plan maintained by more than 1 employer, this subsection shall not be treated as failing to apply to an annuity contract held under such plan merely because of one or more employers failing to meet the require ments of this subsection if such plan satisfies rules similar to the rules of section 413(e)(2) with respect to any such employer failure. 

‘‘(ii) ADDITIONAL REQUIREMENTS IN CASE OF NON-GOVERNMENTAL PLANS.—A plan shall not be treated as meeting the requirements of this subparagraph unless the plan meets the requirements of subparagraph (A) or (B) of section 413(e)(1), except in the case of a multiple employer plan maintained solely by any of the following: A State, a political subdivision of a State, or an agency or instrumentality of any one or more of the foregoing.’’

(b) ANNUAL REGISTRATION FOR 403(b) MULTIPLE EMPLOYER PLAN.—Section 6057 of such Code is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

‘‘(g) 403(b) MULTIPLE EMPLOYER PLANS TREATED AS ONE PLAN.—In the case of annuity contracts to which this section applies and to which section 403(b) applies by reason of the plan under which such contracts are purchased meeting the requirements of paragraph (15) there of, such plan shall be treated as a single plan for purposes of this section.’’

(c) ANNUAL INFORMATION RETURNS FOR 403(b) 22 MULTIPLE EMPLOYER PLAN.—Section 6058 of the Inter23 nal Revenue Code of 1986 is amended by redesignating subsection (f) as subsection (g) and by inserting after subsection (e) the following new subsection: 

‘‘(f) 403(b) MULTIPLE EMPLOYER PLANS TREATED 2 AS ONE PLAN.—In the case of annuity contracts to which this section applies and to which Section 403(b) applies by reason of the plan under which such contracts are purchased meeting the requirements of paragraph (15) thereof, such plan shall be treated as a single plan for purposes of this section.’’

His legislation seeks to “help more Americans better plan for retirement,” Kind said in a press release. “Too many Wisconsinites find saving for retirement to be out of reach and confusing but these are commonsense steps to make retirement savings as easy and understandable as possible for everyone, no matter what they do.”