Bill Summary
The Women's Retirement Protection Act aims to improve spousal protection under defined contribution plans, address retirement disparities between men and women, and establish spousal consent requirements for distributions from individual account plans. It also amends the legislation to improve coverage for long-term part-time workers, requires financial service providers to provide access to consumer education materials, and authorizes grants for promoting financial literacy for women.
Possible Impacts
1. Women will be provided with greater spousal protection under defined contribution plans, potentially increasing their retirement income and reducing poverty rates.
2. Spousal consent requirements for distributions from individual account plans will be increased, giving spouses more control over their retirement savings.
3. Long-term part-time workers will have improved coverage under the Employee Retirement Income Security Act, potentially increasing their retirement benefits and reducing financial insecurity.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 975 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 975
To amend the Employee Retirement Income Security Act of 1974 to provide
for greater spousal protection under defined contribution plans, and
for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 1, 2019
Mrs. Murray (for herself, Ms. Warren, Ms. Smith, Ms. Baldwin, Ms.
Stabenow, Mrs. Shaheen, Ms. Klobuchar, Mr. Sanders, Mrs. Gillibrand,
Mr. Kaine, Mrs. Feinstein, Ms. Cantwell, Ms. Cortez Masto, Ms. Hirono,
Ms. Duckworth, Ms. Hassan, Ms. Harris, Mr. Merkley, Mr. Menendez, Mr.
Bennet, Ms. Rosen, Mr. Blumenthal, and Mr. Wyden) introduced the
following bill; which was read twice and referred to the Committee on
Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 to provide
for greater spousal protection under defined contribution plans, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Women's Retirement Protection Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Approximately 29 percent of households headed by
individuals aged 55 through 74 have no defined benefit plan or
retirement savings, according to 2016 data from the Survey of
Consumer Finances.
(2) Just over one-third of the private sector workforce
does not have access to a retirement plan at the workplace, and
only half of the workforce actually participates in a
retirement plan.
(3) Women's retirement preparedness often lags
significantly behind their male counterparts', resulting in the
median retirement income for women in 2016 being just 58
percent of men's retirement income.
(4) Women are 1.5 times as likely as men to live in poverty
after age 65.
(5) Women make up \2/3\ of low-wage workers, even though
they comprise less than half of all workers, and low-wage
workers are less likely than other workers to participate in a
retirement plan at work.
(6) Because of the pay gap, women working full-time, year-
round typically lose $403,440 over a 40-year career thereby
requiring the average woman to work almost a decade longer than
her male counterpart to make up that career wage gap.
(7) Due to the lower lifetime wages stemming from unequal
pay and caregiving duties, the average Social Security benefit
for a woman age 65 or older is $14,044 a year, while men of the
same age receive $18,173 a year, on average.
(8) Just 1 in 5 part-time workers who work a full year are
eligible for a retirement plan, and women are almost twice as
likely to work part-time as men.
(9) While traditional defined benefit retirement plans have
spousal protections, defined contribution retirement plans,
which have become increasingly common, currently provide no
similar spousal protections.
(10) Every year, more than 1,200,000 couples get divorced
in the United States. After the family home, retirement savings
tends to be the largest asset to be divided in a divorce.
(11) While fees and expenses associated with retirement
plans have been in decline, participants have seen direct
charges for processing qualified domestic relations orders
increase significantly.
SEC. 3. INCREASING SPOUSAL PROTECTION UNDER DEFINED CONTRIBUTION PLANS.
(a) In General.--Part 2 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1051 et seq.) is
amended by inserting after section 205 the following new section:
``SEC. 205A. ADDITIONAL SPOUSAL CONSENT REQUIREMENTS.
``(a) In General.--Each individual account plan to which section
205 does not apply shall provide that, except as provided in
subsections (c) and (d), no distribution may be made under the plan
unless the spousal consent requirements of subsection (e) are met.
``(b) Coordination With Section 205.--Nothing in this section shall
be construed to exempt an individual account plan from the requirements
of paragraph (1)(C) or (2) of section 205(b) with respect to any
participant.
``(c) Exceptions for Certain Distributions.--Subsection (a) shall
not apply to--
``(1) any distribution that is--
``(A) a minimum required distribution described in
section 4974(b) of the Internal Revenue Code of 1986;
``(B) a result of the use of the participant's
accrued benefit as security for a loan, including any
distribution required by reason of a failure to comply
with the terms of such loan;
``(C) made upon hardship of the participant; or
``(D) permitted under section 203(e)(1) to be made
without the consent of the participant;
``(2) any distribution in the form of a qualified joint and
survivor annuity (as defined in section 205(d)(1)), a qualified
optional survivor annuity (as defined in section 205(d)(2)), a
qualified preretirement survivor annuity (as defined in section
205(e)), or a series of substantially equal periodic payments
(not less frequently than annually) made for the joint lives
(or life expectancies) of the participant and the participant's
spouse; or
``(3) in the case of a participant who does not elect a
form of benefit described in paragraph (2) under the plan or
who is participating in a plan that does not provide such a
form of benefit, any distribution of the participant's entire
nonforfeitable accrued benefit if 50 percent of such accrued
benefit is transferred to an individual retirement plan (as
defined in section 7701(a)(37) of the Internal Revenue Code of
1986) of the spouse of the participant.
A transfer described in paragraph (3) to an individual retirement plan
shall be treated in the same manner as a transfer under section
408(d)(6) of the Internal Revenue Code of 1986.
``(d) Exceptions for Certain Rollover Contributions.--Subsection
(a) shall not apply to any distribution that is an eligible rollover
distribution (as defined in section 402(f)(2)(A) of the Internal
Revenue Code of 1986) made in the form of a direct trustee-to-trustee
transfer within the meaning of section 401(a)(31) of the Internal
Revenue Code of 1986--
``(1) to a plan to which this section or section 205
applies; or
``(2) to an individual retirement plan (as defined in
section 7701(a)(37) of the Internal Revenue Code of 1986) if--
``(A) the beneficiary of such plan is the spouse of
the participant, or the spousal consent requirements of
subsection (e) are met with respect to any designation
of 1 or more other beneficiaries; and
``(B) the beneficiary of such plan (whether the
spouse or other beneficiary designated under paragraph
(1)) may not be changed unless--
``(i) the spousal consent requirements of
subsection (e) are met with respect to any such
change, or
``(ii) the spousal consent under
subparagraph (A) to the designation of a
beneficiary other than the spouse expressly
permits such designation to be changed without
the further consent of the spouse.
``(e) Spousal Consent Requirements.--
``(1) In general.--For purposes of this section, except as
provided in paragraph (2), the spousal consent requirements of
this subsection are met with respect to any distribution or any
designation or change of beneficiary if--
``(A) the plan provides to each participant, within
a reasonable period of time before such distribution or
designation or change of beneficiary is made and
consistent with such regulations as the Secretary of
the Treasury may prescribe, a written explanation of
the rights of the participant and the participant's
spouse under this section;
``(B) the spouse of the participant consents in
writing to the distribution or designation or change of
beneficiary;
``(C) in the case of a distribution, the written
consent under subparagraph (B) is made during the
consent period; and
``(D) the written consent under subparagraph (B)--
``(i) acknowledges the effect of such
distribution or designation or change of
beneficiary; and
``(ii) is witnessed by a plan
representative or a notary public.
``(2) Exceptions under section 205(c)(2)(b) to apply.--The
requirements of paragraph (1) (other than subparagraph (A)
thereof) shall not apply with respect to any distribution or
designation or change of beneficiary if a participant
establishes to the satisfaction of the plan administrator
that--
``(A) there is no spouse;
``(B) the participant and the participant's spouse
have not been married throughout the 1-year period
ending on the date of the distribution or designation
or change of beneficiary; or
``(C) such consent cannot be obtained because--
``(i) the spouse cannot be located;
``(ii) due to exceptional circumstances,
requiring the participant to seek the spouse's
consent would be inappropriate; or
``(iii) of such other circumstances as the
Secretary of the Treasury may by regulations
prescribe.
``(3) Consent limited to spouse and event.--Any written
consent by a spouse under paragraph (1), or the establishment
by a participant that an exception under paragraph (2) applies
with respect to a spouse, shall be effective only with respect
to that spouse and to the distribution or designation or change
of beneficiary to which it relates.
``(4) Consent period.--For purposes of this subsection, the
term `consent period' means, with respect to any distribution--
``(A) the 90-day period immediately preceding the
date of such distribution; or
``(B) such other period as the Secretary of the
Treasury may provide.
``(f) Discharge of Plan From Liability.--Rules similar to the rules
of section 205(c)(6) shall apply for purposes of this section.''.
(b) Clerical Amendment.--The table of sections of part 2 of
subtitle B of title I of the Employee Retirement Income Security Act of
1974 is amended by inserting after the item relating to section 205 the
following new item:
``Sec. 205A. Additional spousal consent requirements.''.
(c) Right of Action.--Section 502(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132) is amended by striking
``or'' at the end of paragraph (10), by striking the period at the end
of paragraph (11) and inserting ``; or'', and by adding at the end the
following new paragraph:
``(12) by an individual for appropriate relief in the case
of a violation of the individual's rights under section
205A.''.
(d) Parallel Amendment to Section 205.--Section 205(c)(2)(B) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(2)(B)) is amended by inserting ``, because due to exceptional
circumstances requiring the participant to seek the spouse's consent
would be inappropriate'' after ``located''.
SEC. 4. IMPROVING COVERAGE FOR LONG-TERM PART-TIME WORKERS.
(a) In General.--Section 202 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1052) is amended by adding at the end
the following new subsection:
``(c) Special Rule for Certain Part-Time Employees.--
``(1) In general.--A pension plan that includes either a
qualified cash or deferred arrangement (as defined in section
401(k) of the Internal Revenue Code of 1986) or a salary
reduction agreement (as described in section 403(b) of such
Code) shall not require, as a condition of participation in the
arrangement or agreement, that an employee complete a period of
service with the employer (or employers) maintaining the plan
extending beyond the close of the earlier of--
``(A) the period permitted under subsection (a)(1)
(determined without regard to subparagraph (B)(i)
thereof) and section 410(a)(1) of such Code (determined
without regard to subparagraph (B)(i) thereof); or
``(B) the first 24-month period--
``(i) consisting of 2 consecutive 12-month
periods during each of which the employee has
at least 500 hours of service; and
``(ii) by the close of which the employee
has attained the age of 21.
``(2) Exception.--Paragraph (1)(B) shall not apply to
employees who are included in a unit of employees covered by an
agreement which the Secretary finds to be a collective
bargaining agreement between employee representatives and 1 or
more employers, if there is evidence that retirement benefits
were the subject of good faith bargaining between such employee
representatives and such employer or employers.
``(3) Coordination with other rules.--In the case of
employees who are not highly compensated employees (within the
meaning of section 414(q) of the Internal Revenue Code of 1986)
and who are eligible to participate in the arrangement or
agreement solely by reason of paragraph (1)(B):
``(A) Exclusions.--An employer may elect to exclude
such employees from the determination of whether the
plan that includes the arrangement or agreement
satisfies the requirements of subsections (a)(4),
(k)(3), (k)(12), (k)(13), (m)(2), (m)(11), and (m)(12)
of section 401 of such Code, section 410(b) of such
Code, and section 416 of such Code. If the employer so
excludes such employees with respect to the
requirements of any such provision, such employees
shall be excluded with respect to the requirements of
all such provisions. This subparagraph shall cease to
apply to any employee as of the first plan year
beginning after the plan year in which the employee
completes 1 year of service (without regard to
paragraph (1)(B) of this subsection).
``(B) Time of participation.--The rules of
subsection (a)(4) and section 410(a)(4) of the Internal
Revenue Code of 1986 shall apply to such employees.
``(4) 12-month period.--For purposes of this subsection,
12-month periods shall be determined in the same manner as
under the last sentence of subsection (a)(3)(A), except that
12-month periods beginning before January 1, 2019, shall not be
taken into account.''.
(b) Vesting.--Section 203(b) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1053(a)) is amended by redesignating
paragraph (4) as paragraph (5) and by inserting after paragraph (3) the
following new paragraph:
``(4) Part-Time Employees.--For purposes of determining whether an
employee who is eligible to participate in a qualified cash or deferred
arrangement or a salary reduction agreement under a plan solely by
reason of section 202(c)(1)(B) has a nonforfeitable right to employer
contributions--
``(A) except as provided in subparagraph (B), each 12-month
period for which the employee has at least 500 hours of service
shall be treated as a year of service; and
``(B) 12-month periods occurring before the 24-month period
described in section 202(c)(1)(B) shall not be treated as years
of service.
For purposes of this paragraph, 12-month periods shall be determined in
the same manner as under the last sentence of section 202(a)(3)(A),
except that 12-month periods beginning before January 1, 2019, shall
not be taken into account.''.
(c) Penalty.--Section 502 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132) is amended by adding at the end
the following new subsection:
``(n) Requirements Relating to Part-Time Employees.--In the case of
a plan that fails to permit participation as required by section
202(c), the Secretary may assess a civil penalty against the plan
sponsor in an amount equal to $10,000 per year per employee to whom
such failure relates. The Secretary may, in the Secretary's sole
discretion, waive or reduce the penalty under this subsection if the
Secretary determines that the plan sponsor acted reasonably and in good
faith.''.
SEC. 5. EFFECTIVE DATES.
(a) Increasing Spousal Protection Under Defined Contribution
Plans.--Except as provided in subsections (c) and (d), the amendments
made by section 2 shall apply to distributions and rollover
contributions made in plan years beginning after the date that is 6
months after the date of the enactment of this Act.
(b) Ensuring Coverage for Long-Term Part-Time Workers.--Except as
provided in subsections (c) and (d), the amendments made by section 3
shall apply to plan years beginning after December 31, 2019.
(c) Collective Bargaining Agreements.--In the case of a plan
maintained pursuant to one or more collective bargaining agreements
between employee representatives and one or more employers ratified
before the date of the enactment of this Act, the amendments made by
sections 2 and 3 shall not apply to distributions or rollover
contributions on behalf of employees covered by any such agreement for
plan years beginning before the earlier of--
(1) the later of--
(A) the date on which the last of such collective
bargaining agreements terminates (determined without
regard to any extension thereof on or after such date
of the enactment); or
(B) the day after the date specified in subsection
(a) or (b), whichever is applicable; or
(2) the date that is 3 years after the applicable day
described in paragraph (1)(B).
(d) Provisions Relating To Plan Amendments.--
(1) In general.--If this paragraph applies to any plan or
contract amendment, such plan or contract shall be treated as
being operated in accordance with the terms of the plan during
the period described in paragraph (2)(C).
(2) Amendments to which paragraph (1) applies.--
(A) In general.--Paragraph (1) shall apply to any
amendment to any plan or annuity contract which is
made--
(i) pursuant to the amendments made by
section 2 or 3 or pursuant to any regulation
issued under either such section; and
(ii) on or before the last day of the first
plan year beginning on or after the date that
is 3 years after the applicable day described
in subsection (c)(1)(B).
In the case of a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of 1986),
this subparagraph shall be applied by substituting ``5
years'' for ``3 years'' in clause (ii).
(B) Conditions.--Subparagraph (A) shall not apply
to any amendment unless--
(i) the plan or contract is operated as if
such plan or contract amendment were in effect
for the period described in subparagraph (C);
and
(ii) such plan or contract amendment
applies retroactively for such period.
(C) Period described.--The period described in this
subparagraph is the period--
(i) beginning on the effective date
specified by the plan; and
(ii) ending on the date described in
subparagraph (A)(ii) (or, if earlier, the date
the plan or contract amendment is adopted).
SEC. 6. ACCESS TO INDEPENDENT CONSUMER INFORMATION AND UNDERSTANDING.
(a) Definitions.--As used in this section--
(1) the term ``consumer'' means any person who purchases or
acquires any goods, products, services, or credit related to
the retirement or later life economic security of the consumer;
and
(2) the term ``financial product or service provider''
means any person who engages in the business of providing any
retirement financial product or service to any consumer.
(b) Required Link to Consumer Awareness Information.--In any offer
for the sale, exchange, or other transfer of a retirement financial
product or service to a consumer carried out by a financial product or
service provider, such provider shall provide, in a manner consistent
with subsection (c), an easily accessible link to the website of the
Bureau of Consumer Financial Protection (CFPB) at which the consumer
may access information, literature, guides, programs, tools,
strategies, or any other resource produced by the CFPB or other Federal
agency relating to retirement planning or later life economic security.
(c) Determination.--In order to ensure that the requirement under
subsection (b) is effectively carried out, the Financial Literacy and
Education Commission (FLEC) shall determine and publish on its website
the appropriate link to the CFPB's website for access to the CFPB's and
other Federal agencies' consumer education materials, the preferred
format of such link, and any accompanying description of the CFPB and
the consumer education materials associated with such link.
SEC. 7. GRANTS TO PROMOTE FINANCIAL LITERACY FOR WOMEN.
(a) Authorization of Grant Awards.--The Secretary of Labor, acting
through the Director of the Women's Bureau, shall award grants on a
competitive basis to eligible entities to enable such entities to
improve the financial literacy of women who are working age or in
retirement, to increase the likelihood of the women realizing a secure
and stable retirement.
(b) Definition of Eligible Entity.--In this section, the term
``eligible entity'' means a community-based organization with proven
experience and expertise in serving working-age or retired women.
(c) Application.--An eligible entity that desires to receive a
grant under this section shall submit an application to the Secretary
of Labor at such time, in such manner, and accompanied by such
information as such Secretary may require.
(d) Minimum Grant Amount.--The Secretary of Labor shall award
grants under this section in amounts of not less than $250,000.
(e) Use of Funds.--An eligible entity that receives a grant under
this section shall use the grant funds to develop and implement
financial literacy education, and related activities including
outreach, awareness building, and counseling to increase women's
knowledge of retirement planning and consumer, economic, and personal
financial concepts.
(f) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $100,000,000 for fiscal year
2020 and each succeeding fiscal year.
SEC. 8. GRANTS TO ASSIST LOW-INCOME WOMEN AND SURVIVORS OF DOMESTIC
VIOLENCE IN OBTAINING QUALIFIED DOMESTIC RELATIONS
ORDERS.
(a) Authorization of Grant Awards.--The Secretary of Labor, acting
through the Director of the Women's Bureau in conjunction with the
Assistant Secretary of the Employee Benefits Security Administration,
shall award grants, on a competitive basis, to eligible entities to
enable such entities to assist low-income women and survivors of
domestic violence in obtaining qualified domestic relations orders and
ensuring that those women actually obtain the benefits to which they
are entitled through those orders.
(b) Definition of Eligible Entity.--In this section, the term
``eligible entity'' means a community-based organization with proven
experience and expertise in serving women and the financial and
retirement needs of women.
(c) Application.--An eligible entity that desires to receive a
grant under this section shall submit an application to the Secretary
of Labor at such time, in such manner, and accompanied by such
information as the Secretary of Labor may require.
(d) Minimum Grant Amount.--The Secretary of Labor shall award
grants under this section in amounts of not less than $250,000.
(e) Use of Funds.--An eligible entity that receives a grant under
this section shall use the grant funds to develop programs to offer
help to low-income women or survivors of domestic violence who need
assistance in preparing, obtaining, and effectuating a qualified
domestic relations order.
(f) Authorization of Appropriations.--There is authorized to be
appropriated to carry out this section $100,000,000 for fiscal year
2020 and each succeeding fiscal year.
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