May 28, 1996
TO: BOARD OF GOVERNORS No. 26-96
FEDERAL LEGISLATION MEMBERS No. 6-96
PUBLIC INFORMATION COMMITTEE No. 22-96
RE: HOUSE PASSES LEGISLATION WITH PENSION SIMPLIFICATION
PROVISIONS
______________________________________________________________________________
I am pleased to report that on May 22, 1996, the House of Representatives passed H.R. 3448,
the "Small Business Job Protection Act of 1996." Included in the bill are small employer pension
and pension simplification provisions supported by the Institute, but vetoed in last years budget
reconciliation bill.
The House-passed bill includes the following provisions:
A new simplified retirement plan (called a SIMPLE plan) for small businesses with 100 or fewer
employees (previously contained in legislation vetoed by the President). A SIMPLE plan could
either be an IRA for each employee or be part of a 401(k) plan. Employees could contribute up
to $6,000 of their wages; employers would generally have to match employee contributions up
to 3% of the employee’s pay. Alternatively, employers could make a two-percent-of-
compensation contribution for each eligible employee. SIMPLE plans would not be subject to
nondiscrimination or top-heavy rules. All contributions to an employees account would be
fully vested. Salary Reduction Simplified Employee Pension (SARSEP) provisions of present
law would be repealed (though currently established SARSEPs could continue); other kinds
of Simplified Employee Pensions would not be affected.
Simplified nondiscrimination rules for 401(k) plans; and
Expanding 401(k) plan availability to tax-exempt organizations, except state and local
governments.
Enclosed is a copy of the bill as printed in the May 22 Congressional Record. It is the only
version of the bill currently available. We will keep you informed as this legislation advances.
For those members with access privileges, this memo can be found on ICINet. For
additional information, please contact as follows:
Legislative Affairs 202-326-8319
Media Relations 202-326-5860
ICINET 202-326-5933
Matthew P. Fink
President
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