SECTION 1. SIMPLIFIED METHOD FOR COMPLYING WITH PENSION REQUIREMENTS.

    (a) General Rule.--Subpart B of part I of subchapter D of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 417A. SIMPLIFIED METHOD FOR COMPLYING WITH PENSION REQUIREMENTS.

    ``(a) General Rule.--An employer is entitled to the benefits of 
this section for any year if--
            ``(1) such employer maintains a qualified simplified 
        defined contribution plan during such year, and
            ``(2) such employer maintains a qualified simplified 
        defined benefit plan during such year.
    ``(b) Benefits of Section.--If an employer is entitled to the 
benefits of this section for any year--
            ``(1) Increase in permitted compensation.--In applying 
        sections 401(a)(17) and 404(l) to the qualified simplified 
        defined contribution plan and the qualified simplified defined 
        benefit plan, the dollar limitation contained in such sections 
        shall be $200,000. The Secretary shall adjust the $200,000 
        amount contained in the preceding sentence at the same time and 
        in the same manner as the adjustment under section 
        401(a)(17)(B).
            ``(2) Modification of funding rules.--
                    ``(A) Increase in full funding limitation.--The 
                full funding limitation for the qualified simplified 
                defined benefit plan shall be determined under section 
                412(c)(7)(A) as if such section did not include 
                subclause (I) of clause (i) thereof.
                    ``(B) Waiver of quarterly contribution 
                requirements.--Section 412(m) shall not apply to the 
                qualified simplified defined benefit plan.
            ``(3) Waiver of certain discrimination rules.--The 
        requirements of section 401(k)(3) shall be treated as satisfied 
        with respect to any cash or deferred arrangement maintained by 
        the employer during such year and the requirements of section 
        401(m) shall be treated as satisfied with respect to any plan 
        maintained by the employer during such year.
            ``(4) Combined limit waived.--The requirements of section 
        415(e) shall be treated as satisfied with respect to the 
        qualified simplified defined contribution plan and the 
        qualified simplified defined benefit plan.
            ``(5) Other requirements deemed satisfied.--The 
        requirements of the following provisions shall be treated as 
        satisfied with respect to the qualified simplified defined 
        contribution plan and the qualified simplified defined benefit 
        plan:
                    ``(A) Section 401(a)(4).
                    ``(B) Section 401(a)(26).
                    ``(C) Section 401(l).
                    ``(D) Subsections (a) and (b) of section 410.
                    ``(E) Subsection (b) of section 411.
                    ``(F) Section 416.
    ``(c) Simplified Defined Contribution Plan.--
            ``(1) In general.--A defined contribution plan is a 
        qualified simplified defined contribution plan if--
                    ``(A) all employees of the employer (not excluded 
                pursuant to paragraph (2)) are eligible to participate 
                in such plan,
                    ``(B) the employer contribution for each year for 
                each participant in the plan is a uniform percentage 
                (which is not less than 3 percent) of such 
                participant's compensation (within the meaning of 
                section 414(s)),
                    ``(C) such plan provides that each employee covered 
                by the plan has a nonforfeitable right to 100 percent 
                of such employee's accrued benefit derived from 
                employer contributions, and
                    ``(D) the balance to the credit of the employee 
                under such plan--
                            ``(i) except as required by section 
                        401(a)(9), may not be distributed earlier than 
                        separation from service, death, or disability, 
                        and
                            ``(ii) in the case of any distribution 
                        other than by reason of death, such 
                        distribution may be made only in the form of--
                                    ``(I) an annuity for the life of 
                                the employee (or a joint and survivor 
                                annuity as provided in section 417),
                                    ``(II) a direct trustee-to-trustee 
                                transfer as provided in section 
                                401(a)(31), or
                                    ``(III) a distribution to a pension 
                                portability clearinghouse (if any) 
                                established to accept distributions.
            ``(2) Certain exclusions permitted.--For purposes of 
        paragraph (1), an employee may be excluded until such employee 
        has completed 6 months of service for the employer.
    ``(d) Simplified Defined Benefit Plan.--
            ``(1) In general.--A defined benefit plan is a qualified 
        simplified defined benefit plan if--
                    ``(A) all employees of the employer (not excluded 
                pursuant to paragraph (3)) are eligible to participate 
                in such plan, and
                    ``(B) the accrued benefit derived from employer 
                contributions for each participant, when expressed as 
                an annual retirement benefit, is equal to the required 
                benefit determined under paragraph (2).
            ``(2) Amount of required benefit.--
                    ``(A) In general.--The required benefit determined 
                under this paragraph is an amount equal to the product 
                of--
                            ``(i) the plan's qualified accrual rate 
                        multiplied by the number of years of service 
                        with the employer, and
                            ``(ii) the participant's average 
                        compensation for the testing period.
                    ``(B) Qualified accrual rate.--For purposes of 
                subparagraph (A):
                            ``(i) A plan's qualified accrual rate is 
                        the uniform accrual rate set forth in such plan 
                        so long as such rate exceeds 0.5 percent.
                            ``(ii) A plan may provide that the accrual 
                        rate with respect to so much of the 
                        participant's average compensation for the 
                        testing period as does not exceed covered 
                        compensation (as defined in section 
                        401(l)(5)(E)) shall be less than the accrual 
                        rate for compensation above covered 
                        compensation (as so defined) so long as such 
                        difference is not greater than 1 percentage 
                        point. Nothing in the preceding sentence shall 
                        be construed as permitting an accrual rate of 
                        less than 0.5 percent.
                    ``(C) Years of service.--For purposes of this 
                paragraph, years of service shall be determined under 
                the rules of paragraphs (4), (5), and (6) of section 
                411(a).
                    ``(D) Annual retirement benefit.--For purposes of 
                this paragraph, the term `annual retirement benefit' 
                means a benefit payable annually in the form of a 
                single life annuity (with no ancillary benefits) 
                beginning at the normal retirement age under the plan.
                    ``(E) Testing period.--For purposes of this 
                paragraph--
                            ``(i) In general.--A participant's testing 
                        period shall be the period of years (not less 
                        than 3 nor exceeding 5) during which the 
                        participant has the greatest aggregate 
                        compensation from the employer.
                            ``(ii) Year must be included in year of 
                        service.--The years taken into account under 
                        clause (i) shall be properly adjusted for years 
                        not included in a year of service.
            ``(3) Excluded employees.--For purposes of this 
        subsection--
                    ``(A) In general.--The employer may exclude--
                            ``(i) employees who have not completed 6 
                        months of service,
                            ``(ii) employees who normally work less 
                        than 17\1/2\ hours per week,
                            ``(iii) employees who normally work during 
                        not more than 6 months during the year,
                            ``(iv) employees who have not attained age 
                        21, and
                            ``(v) employees who are included in a unit 
                        of employees covered by an agreement which the 
                        Secretary of Labor finds to be a collective 
                        bargaining agreement between employee 
                        representatives and the employer.
                    ``(B) Employees covered by existing defined benefit 
                plan.--The employer may exclude employees who are 
                covered under another defined benefit plan maintained 
                by the employer if--
                            ``(i) such plan was in existence on the 
                        date of the enactment of this section, and
                            ``(ii) such plan meets the applicable 
                        requirements of this part without regard to 
                        this section.
                The employer may exclude employees under the preceding 
                sentence only if all employees described in the 
                preceding sentence are so excluded.
                    ``(C) Special rule.--If accruals under any defined 
                benefit plan referred to in subparagraph (B) cease and 
                the employees covered by such defined benefit plan are 
                covered by another plan which would otherwise qualify 
                under this subsection, such other plan shall not be 
                treated as meeting the requirements of this subsection 
                unless, in determining the annual retirement benefit of 
                each such employee under the plan referred to in 
                subparagraph (B), such employee's average compensation 
                for the testing period (determined by treating such 
                plans as 1 plan) is used.
    ``(e) Special Rules.--
            ``(1) Aggregation rules.--All employees treated as employed 
        by a single employer under subsections (a) and (b) of section 
        414 shall be so treated for purposes of this section.
            ``(2) Integration with social security not committed.--
        Except as provided in subsection (d)(2)(B), a plan shall not be 
        treated as meeting the requirements of subsection (c) or (d) 
        unless such plan meets such requirements without taking into 
        account contributions or benefits under chapter 2 (relating to 
        tax on self-employment income), chapter 21 (relating to Federal 
        Insurance Contribution Act), title II of the Social Security 
        Act, or any other Federal or State law.''
    (b) Clerical Amendment.--The table of sections for subpart B of 
part I of subchapter B of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 417A. Simplified method for 
                                        complying with pension 
                                        requirements.''

SEC. 2. STUDY.

    (a) General Rule.--The Secretary of Labor and the Secretary of the 
Treasury shall conduct a joint study on the feasibility of establishing 
a pension portability clearinghouse to accept rollovers from tax-
qualified pension plans as well as to receive tax deductible 
contributions from employers not maintaining qualified pension plans. 
Such study shall also determine the feasibility of having participant-
directed accounts with various investment options with varying degrees 
of risk.
    (b) Report.--Not later than the date 1 year after the date of the 
enactment of this Act, the Secretaries referred to in subsection (a) 
shall submit a report to the Congress on the study conducted under 
subsection (a), together with such recommendations as such Secretaries 
may deem advisable.
Amends the Internal Revenue Code to modify certain pension requirements to provide a simplified method for compliance.  Entitles employers to the benefits of this Act if the employer maintains a qualified simplified defined contribution plan and a qualified simplified defined benefit plan. 
Directs the Secretary of Labor and the Secretary of the Treasury to conduct a joint study of the feasibility of establishing a pension portability clearinghouse to accept rollovers from tax-qualified pension plans as well as to receive tax deductible contributions from employers not maintaining qualified pension plans.
To amend the Internal Revenue Code of 1986 to facilitate portability, enhance pension coverage, and provide employers an optional simplified method of complying with certain pension requirements.