Page:United States Statutes at Large Volume 120.djvu/1070

 PUBLIC LAW 109–280—AUG. 17, 2006

120 STAT. 1039

(ii) Subparagraph (A) of section 401(m)(6) of such Code is amended by adding ‘‘through the end of such year’’ after ‘‘to such contributions’’. (f) PREEMPTION OF CONFLICTING STATE REGULATION.— (1) IN GENERAL.—Section 514 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144) is amended by adding at the end the following new subsection: ‘‘(e)(1) Notwithstanding any other provision of this section, this title shall supersede any law of a State which would directly or indirectly prohibit or restrict the inclusion in any plan of an automatic contribution arrangement. The Secretary may prescribe regulations which would establish minimum standards that such an arrangement would be required to satisfy in order for this subsection to apply in the case of such arrangement. ‘‘(2) For purposes of this subsection, the term ‘automatic contribution arrangement’ means an arrangement— ‘‘(A) under which a participant may elect to have the plan sponsor make payments as contributions under the plan on behalf of the participant, or to the participant directly in cash, ‘‘(B) under which a participant is treated as having elected to have the plan sponsor make such contributions in an amount equal to a uniform percentage of compensation provided under the plan until the participant specifically elects not to have such contributions made (or specifically elects to have such contributions made at a different percentage), and ‘‘(C) under which such contributions are invested in accordance with regulations prescribed by the Secretary under section 404(c)(5). ‘‘(3)(A) The plan administrator of an automatic contribution arrangement shall, within a reasonable period before such plan year, provide to each participant to whom the arrangement applies for such plan year notice of the participant’s rights and obligations under the arrangement which— ‘‘(i) is sufficiently accurate and comprehensive to apprise the participant of such rights and obligations, and ‘‘(ii) is written in a manner calculated to be understood by the average participant to whom the arrangement applies. ‘‘(B) A notice shall not be treated as meeting the requirements of subparagraph (A) with respect to a participant unless— ‘‘(i) the notice includes an explanation of the participant’s right under the arrangement not to have elective contributions made on the participant’s behalf (or to elect to have such contributions made at a different percentage), ‘‘(ii) the participant has a reasonable period of time, after receipt of the notice described in clause (i) and before the first elective contribution is made, to make such election, and ‘‘(iii) the notice explains how contributions made under the arrangement will be invested in the absence of any investment election by the participant.’’. (2) ENFORCEMENT.—Section 502(c)(4) of such Act (29 U.S.C. 1132(c)(4)) is amended by striking ‘‘or section 302(b)(7)(F)(vi)’’ inserting ‘‘, section 302(b)(7)(F)(vi), or section 514(e)(3)’’. (g) EFFECTIVE DATE.—The amendments made by this section shall apply to plan years beginning after December 31, 2007, except that the amendments made by subsection (f) shall take effect on the date of the enactment of this Act.

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26 USC 401.

26 USC 401 note.

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