automatic IRA arrangement merely because such arrangement is required, provided for, facilitated, or otherwise offered, in whole or in part, by a State (or a political subdivision, agency, or instrumentality thereof). (I) Individual retirement account For purposes of this paragraph, the term individual retirement account shall have the meaning given such term by section 408(a), except that such term shall include individual retirement annuities (as defined in section 408(b)). . (2) Other rules applicable to automatic IRA arrangements (A) Penalty for failure to timely remit contributions to automatic IRA arrangements Section 4975(c) is amended by adding at the end the following new paragraph: (7) Special rule for automatic IRA arrangements For purposes of paragraph (1), if an employer is required under an automatic IRA arrangement (as defined in section 414(dd)(1)(B)) to deposit amounts withheld from an employee’s compensation into an individual retirement account (within the meaning of section 414(dd)(8)(I)) but fails to do so within the time prescribed under section 414(dd)(8)(B)(i), such amounts shall be treated as assets of the individual retirement account. . (B) Waiver of early withdrawal penalty for certain distributions following initial election to participate in automatic IRA arrangement Section 72(t) is amended by adding at the end the following new paragraph: (11) Distribution following initial election to participate in automatic IRA arrangement Paragraph (1) shall not apply in the case of a distribution— (A) to an individual from an individual retirement account (within the meaning of section 414(dd)(8)(I)) that is part of an automatic IRA arrangement (as defined in section 414(dd)(8)(A)), and (B) made not later than 90 days after the individual is first treated under clause (ii) of section 414(dd)(8)(A) as having made an election under clause (i)(I) of such section. . (C) Automatic IRA Advisory Group (i) In general Not later than 90 days after the date of the enactment of this Act, the Secretary of