June 24, 1991
TO: PENSION COMMITTEE NO. 15-91
RE: REP. CHANDLER INTRODUCES PENSION SIMPLIFICATION BILL
__________________________________________________________
House Ways and Means Committee Member Rod Chandler recently
introduced this year's first pension simplification bill. The
bill contains many of the provisions found in the pension
simplification bill introduced last year by Senator Pryor. (See
Institute Memorandum to Pension Committee No. 18-90, dated July
31, 1990.)
The Chandler pension simplification bill provides a design-
based safe-harbor to satisfy 401(k) discrimination rules. A plan
utilizing the safe-harbor must provide a 100 percent match for
elective deferrals up to 3 percent of compensation or a 50
percent match for the first 6 percent of compensation.
Alternatively, a safe harbor is available if all eligible
employees must receive a 3 percent contribution.
As in last year's bill, the Chandler proposal would revise
the SARSEP to increase the number of allowable participants to
100, use a "one-year of service" requirement for participation
purposes and allow a 3 percent contribution to satisfy
discrimination tests.
The bill would permit rollovers for any plan distribution
other than those attributable to after-tax contributions or
required minimum distributions. Also, the bill repeals 5 year
averaging effective January 1, 1997.
Unlike the 1990 Pryor pension simplification bill, the
Chandler bill does not contain a pension portability provision.
A copy of H.R. 2641, the Employee Benefits Simplification
Act of 1991, is attached, together with a summary of the bill.
We will keep you informed of further developments.
W. Richard Mason
Assistant Counsel - Pension
Attachment