July 19, 1991
TO: FEDERAL LEGISLATION MEMBERS NO. 10-91
FEDERAL LEGISLATION COMMITTEE NO. 11-91
RE: PENSION SIMPLIFICATION LEGISLATION INTRODUCED
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In the final days before the July 4th Congressional Recess,
key members of the House and Senate introduced three major
initiatives to make pension plans more accessible to small
business. Attached are Congressional Record statements on H.R.
2641, the "Employee Benefits Simplification Act of 1991,"
introduced by Rep. Rod Chandler (R-WA); H.R. 2730, the "Pension
Access and Simplification Act of 1991," introduced by Rep. Dan
Rostenkowski (D-IL); and S. 1364/H.R. 2742, the "Employee
Benefits Simplification Act," introduced by Senator David Pryor
(D-AR) and Rep. Ben Cardin (D-MD).
Each of the three bills adopts recommendations to expand the
availability of salary reduction simplified employee pension
plans (SARSEPs) to employers with 100 or fewer employees. This
figure is up from the current limit of 25 employees.
Another significant provision in the Pryor-Cardin bill would
modify the discrimination rules applicable to SARSEPs. Under
their bill, no minimum participation rules would apply.
Discrimination rules would be satisfied if either (1) all
participating non-highly compensated employees receive at least a
100 percent match on elective deferrals up to 3 percent of
compensation, and at least a 50 percent match on elective
deferrals of 3 to 5 percent of compensation or (2) all eligible
non-highly compensated employees receive 3 percent of
compensation. These revised SARSEP discrimination rules mirror
the proposed 401(k) discrimination rules under the bill.
On July 25, the Institute will testify on this legislation
before the Ways and Means Committee.
This memo can also be found on FUNDS, the Institute's Fund
User Network and Delivery System, under Legislative Affairs,
Washington Update. We will keep you informed as this matter
develops.
Julie Domenick
Vice President
Legislative Affairs