text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Keep Student Loans Affordable Act of 
  2013''.
  
  SEC. 2. INTEREST RATE EXTENSION.
  
      Section 455(b)(7)(D) of the Higher Education Act of 1965 (20 U.S.C. 
  1087e(b)(7)(D)) is amended--
              (1) in the matter preceding clause (i), by striking ``and 
          before July 1, 2013,'' and inserting ``and before July 1, 
          2014,''; and
              (2) in clause (v), by striking ``and before July 1, 2013,'' 
          and inserting ``and before July 1, 2014,''.
  
  SEC. 3. MODIFICATIONS OF REQUIRED DISTRIBUTION RULES FOR PENSION PLANS.
  
      (a) In General.--Section 401(a)(9)(B) of the Internal Revenue Code 
  of 1986 is amended to read as follows:
                      ``(B) Required distributions where employee dies 
                  before entire interest is distributed.--
                              ``(i) 5-year general rule.--A trust shall 
                          not constitute a qualified trust under this 
                          section unless the plan provides that, if an 
                          employee dies before the distribution of the 
                          employee's interest (whether or not such 
                          distribution has begun in accordance with 
                          subparagraph (A)), the entire interest of the 
                          employee will be distributed within 5 years 
                          after the death of such employee.
                              ``(ii) Exception for eligible designated 
                          beneficiaries.--If--
                                      ``(I) any portion of the employee's 
                                  interest is payable to (or for the 
                                  benefit of) an eligible designated 
                                  beneficiary,
                                      ``(II) such portion will be 
                                  distributed (in accordance with 
                                  regulations) over the life of such 
                                  eligible designated beneficiary (or 
                                  over a period not extending beyond the 
                                  life expectancy of such beneficiary), 
                                  and
                                      ``(III) such distributions begin 
                                  not later than 1 year after the date of 
                                  the employee's death or such later date 
                                  as the Secretary may by regulations 
                                  prescribe,
                          then, for purposes of clause (i) and except as 
                          provided in clause (iv) or subparagraph 
                          (E)(iii), the portion referred to in subclause 
                          (I) shall be treated as distributed on the date 
                          on which such distributions begin.
                              ``(iii) Special rule for surviving spouse 
                          of employee.--If the eligible designated 
                          beneficiary referred to in clause (ii)(I) is 
                          the surviving spouse of the employee--
                                      ``(I) the date on which the 
                                  distributions are required to begin 
                                  under clause (ii)(III) shall not be 
                                  earlier than the date on which the 
                                  employee would have attained age 70\1/
                                  2\, and
                                      ``(II) if the surviving spouse dies 
                                  before the distributions to such spouse 
                                  begin, this subparagraph shall be 
                                  applied as if the surviving spouse were 
                                  the employee.
                              ``(iv) Rules upon death of eligible 
                          designated beneficiary.--If an eligible 
                          designated beneficiary dies before the portion 
                          of an employee's interest described in clause 
                          (ii) is entirely distributed, clause (ii) shall 
                          not apply to any beneficiary of such eligible 
                          designated beneficiary and the remainder of 
                          such portion shall be distributed within 5 
                          years after the death of such beneficiary.''.
      (b) Definition of Eligible Designated Beneficiary.--Section 
  401(a)(9)(E) of the Internal Revenue Code of 1986 is amended to read as 
  follows:
                      ``(E) Definitions and rules relating to designated 
                  beneficiary.--For purposes of this paragraph--
                              ``(i) Designated beneficiary.--The term 
                          `designated beneficiary' means any individual 
                          designated as a beneficiary by the employee.
                              ``(ii) Eligible designated beneficiary.--
                          The term `eligible designated beneficiary' 
                          means, with respect to any employee, any 
                          designated beneficiary who, as of the date of 
                          death of the employee, is--
                                      ``(I) the surviving spouse of the 
                                  employee,
                                      ``(II) subject to clause (iii), a 
                                  child of the employee who has not 
                                  reached majority (within the meaning of 
                                  subparagraph (F)),
                                      ``(III) disabled (within the 
                                  meaning of section 72(m)(7)),
                                      ``(IV) a chronically ill individual 
                                  (within the meaning of section 
                                  7702B(c)(2), except that the 
                                  requirements of subparagraph (A)(i) 
                                  thereof shall only be treated as met if 
                                  there is a certification that, as of 
                                  such date, the period of inability 
                                  described in such subparagraph with 
                                  respect to the individual is an 
                                  indefinite one that is reasonably 
                                  expected to be lengthy in nature), or
                                      ``(V) an individual not described 
                                  in any of the preceding subparagraphs 
                                  who is not more than 10 years younger 
                                  than the employee.
                              ``(iii) Special rule for children.--Subject 
                          to subparagraph (F), an individual described in 
                          clause (ii)(II) shall cease to be an eligible 
                          designated beneficiary as of the date the 
                          individual reaches majority and the requirement 
                          of subparagraph (B)(i) shall not be treated as 
                          met with respect to any remaining portion of an 
                          employee's interest payable to the individual 
                          unless such portion is distributed within 5 
                          years after such date.''.
      (c) Required Beginning Date.--Section 401(a)(9)(C) of the Internal 
  Revenue Code of 1986 is amended by adding at the end the following new 
  clause:
                              ``(v) Employees becoming 5-percent owners 
                          after age 70\1/2\.--If an employee becomes a 5-
                          percent owner (as defined in section 416) with 
                          respect to a plan year ending in a calendar 
                          year after the calendar year in which the 
                          employee attains age 70\1/2\, then clause 
                          (i)(II) shall be applied by substituting the 
                          calendar year in which the employee became such 
                          an owner for the calendar year in which the 
                          employee retires.''.
      (d) Effective Dates.--
              (1) In general.--Except as provided in this subsection, the 
          amendments made by this section shall apply to distributions 
          with respect to employees who die after December 31, 2013.
              (2) Required beginning date.--
                      (A) In general.--The amendment made by subsection 
                  (c) shall apply to employees becoming a 5-percent owner 
                  with respect to plan years ending in calendar years 
                  beginning before, on, or after the date of the 
                  enactment of this Act.
                      (B) Special rule.--If--
                              (i) an employee became a 5-percent owner 
                          with respect to a plan year ending in a 
                          calendar year which began before January 1, 
                          2013, and
                              (ii) the employee has not retired before 
                          calendar year 2014,
                  such employee shall be treated as having become a 5-
                  percent owner with respect to a plan year ending in 
                  2013 for purposes of applying section 401(a)(9)(C)(v) 
                  of the Internal Revenue Code of 1986 (as added by the 
                  amendment made by subsection (c)).
              (3) Exception for certain beneficiaries.--If a designated 
          beneficiary of an employee who dies before January 1, 2014, 
          dies after December 31, 2013--
                      (A) the amendments made by this section shall apply 
                  to any beneficiary of such designated beneficiary, and
                      (B) the designated beneficiary shall be treated as 
                  an eligible designated beneficiary for purposes of 
                  applying section 401(a)(9)(B)(iv) of such Code (as in 
                  effect after the amendments made by this section).
              (4) Exception for certain existing annuity contracts.--
                      (A) In general.--The amendments made by this 
                  section shall not apply to a qualified annuity which is 
                  a binding annuity contract in effect on the date of the 
                  enactment of this Act and at all times thereafter.
                      (B) Qualified annuity contract.--For purposes of 
                  this paragraph, the term ``qualified annuity'' means, 
                  with respect to an employee, an annuity--
                              (i) which is a commercial annuity (as 
                          defined in section 3405(e)(6) of such Code) or 
                          payable by a defined benefit plan,
                              (ii) under which the annuity payments are 
                          substantially equal periodic payments (not less 
                          frequently than annually) over the lives of 
                          such employee and a designated beneficiary (or 
                          over a period not extending beyond the life 
                          expectancy of such employee or the life 
                          expectancy of such employee and a designated 
                          beneficiary) in accordance with the regulations 
                          described in section 401(a)(9)(A)(ii) of such 
                          Code (as in effect before such amendments) and 
                          which meets the other requirements of this 
                          section 401(a)(9) of such Code (as so in 
                          effect) with respect to such payments, and
                              (iii) with respect to which--
                                      (I) annuity payments to the 
                                  employee have begun before January 1, 
                                  2014, and the employee has made an 
                                  irrevocable election before such date 
                                  as to the method and amount of the 
                                  annuity payments to the employee or any 
                                  designated beneficiaries, or
                                      (II) if subclause (I) does not 
                                  apply, the employee has made an 
                                  irrevocable election before the date of 
                                  the enactment of this Act as to the 
                                  method and amount of the annuity 
                                  payments to the employee or any 
                                  designated beneficiaries.
target: Keep Student Loans Affordable Act of 2013 - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to extend the 3.4% interest rate on Direct Stafford loans first disbursed to undergraduate students between July 1, 2011, and July 1, 2013, to Direct Stafford loans first disbursed to undergraduate students between July 1, 2011, and July 1, 2014.  Amends the Internal Revenue Code to modify rules for required distributions from tax-exempt pension plans to an employee who dies before such employee's entire interest is distributed to require such interest to be distributed within five years after the death of such employee, subject to exceptions for an eligible designated beneficiary and surviving spouse of such employee. Defines "eligible designated beneficiary" to include a disabled or chronically-ill individual. Exempts from such modification a binding annuity contract in effect on the enactment date of this Act. 
feat_title: Keep Student Loans Affordable Act of 2013