[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2502 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2502

To amend the Internal Revenue Code of 1986 and title I of the Employee 
     Retirement Income Security Act of 1974 with regard to pension 
 integration, participation, and vesting requirements, to provide for 
division of pension benefits upon divorce unless otherwise provided in 
qualified domestic relations orders, to provide for studies relating to 
cost-of-living adjustments and pension portability, and to clarify the 
 continued availability, under provisions governing domestic relations 
orders, of remedies relating to matters treated in such orders entered 
                              before 1985.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 23, 1993

Mrs. Kennelly introduced the following bill; which was referred jointly 
      to the Committees on Ways and Means and Education and Labor

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 and title I of the Employee 
     Retirement Income Security Act of 1974 with regard to pension 
 integration, participation, and vesting requirements, to provide for 
division of pension benefits upon divorce unless otherwise provided in 
qualified domestic relations orders, to provide for studies relating to 
cost-of-living adjustments and pension portability, and to clarify the 
 continued availability, under provisions governing domestic relations 
orders, of remedies relating to matters treated in such orders entered 
                              before 1985.

    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 ``Pension Reform Act of 1993''.

SEC. 2. PENSION INTEGRATION RULES.

    (a) Applicability of New Integration Rules Extended to All Existing 
Accrued Benefits.--Notwithstanding subsection (c)(1) of section 1111 of 
the Tax Reform Act of 1986 (relating to effective date of application 
of nondiscrimination rules to integrated plans) (100 Stat. 2440), 
effective for plan years beginning after the date of the enactment of 
this Act, the amendments made by subsection (a) of such section 1111 
shall also apply to benefits attributable to plan years beginning on or 
before December 31, 1988.
    (b) Integration Disallowed for Simplified Employee Pensions.--
            (1) In general.--Subparagraph (D) of section 408(k)(3) of 
        the Internal Revenue Code of 1986 (relating to permitted 
        disparity under rules limiting discrimination under simplified 
        employee pensions) is repealed.
            (2) Conforming amendment.--Subparagraph (C) of such section 
        408(k)(3) is amended by striking ``and except as provided in 
        subparagraph (D),''.
            (3) Effective date.--The amendments made by this subsection 
        shall apply with respect to taxable years beginning on or after 
        January 1, 1993.
    (c) Eventual Repeal of Integration Rules.--Effective for plan years 
beginning on or after January 1, 2002--
            (1) subparagraphs (C) and (D) of section 401(a)(5) of the 
        Internal Revenue Code of 1986 (relating to pension integration 
        exceptions under nondiscrimination requirements for 
        qualification) are repealed, and subparagraph (E) of such 
        section 401(a)(5) is redesignated as subparagraph (C); and
            (2) subsection (l) of section 401 of such Code (relating to 
        nondiscriminatory coordination of defined contribution plans 
        with OASDI) is repealed.

SEC. 3. APPLICATION OF MINIMUM COVERAGE REQUIREMENTS WITH RESPECT TO 
              SEPARATE LINES OF BUSINESS.

    (a) In General.--Subsection (b) of section 410 of the Internal 
Revenue Code of 1986 (relating to minimum coverage requirements) is 
amended--
            (1) in paragraph (1), by striking ``A trust'' and inserting 
        ``In any case in which the employer with respect to a plan is 
        treated, under section 414(r), as operating separate lines of 
        business for a plan year, a trust'', and by inserting ``for 
        such plan year'' after ``requirements''; and
            (2) by redesignating paragraphs (3) through (6) as 
        paragraphs (4) through (7), respectively and by inserting after 
        paragraph (2) the following new paragraph:
            ``(3) Special rule where employer operates single line of 
        business.--In any case in which the employer with respect to a 
        plan is not treated, under section 414(r), as operating 
        separate lines of business for a plan year, a trust shall not 
        constitute a qualified trust under section 401(a) unless such 
        trust is designated by the employer as part of a plan which 
        benefits all employees of the employer.''.
    (b) Limitation on Line of Business Exception.--Paragraph (6) of 
section 410(b) of such Code (as redesignated by subsection (a)(2) of 
this section) is amended by inserting ``other than paragraph (1)(A)'' 
after ``this subsection''.

SEC. 4. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER PLANS.

    (a) Internal Revenue Code Amendment.--Paragraph (2) of section 
411(a) of the Internal Revenue Code of 1986 (relating to minimum 
vesting standards) is amended--
            (1) by striking ``subparagraph (A), (B), or (C)'' and 
        inserting ``subparagraph (A) or (B)''; and
            (2) by striking subparagraph (C).
    (b) ERISA Amendment.--Paragraph (2) of section 203(a)(2) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(2)) 
is amended--
            (1) by striking ``subparagraph (A), (B), or (C)'' and 
        inserting ``subparagraph (A) or (B)''; and
            (2) by striking subparagraph (C).

SEC. 5. DIVISION OF PENSION BENEFITS UPON DIVORCE.

    (a) Amendments to the Internal Revenue Code of 1986.--
            (1) In general.--Subsection (a) of section 401 of the 
        Internal Revenue Code of 1986 (relating to requirements for 
        qualification) is amended--
                    (A) by inserting after paragraph (31) the following 
                new paragraph:
            ``(32) Division of pension benefits upon divorce.--
                    ``(A) In general.--In the case of a divorce of a 
                participant in a pension plan from a spouse who is, 
                immediately before the divorce, a beneficiary under the 
                plan, a trust forming a part of such plan shall not 
                constitute a qualified trust under this section unless 
                the plan provides that at least 50 percent of the 
                marital share of the accrued benefit of the participant 
                under the plan ceases to be an accrued benefit of such 
                participant and becomes an accrued benefit of such 
                divorced spouse, determined and payable upon the 
                earlier of the retirement of the participant, the 
                participant's death, or the termination of the plan, 
                except to the extent that a qualified domestic 
                relations order in connection with such divorce 
                provides otherwise.
                    ``(B) Limitation.--Subparagraph (A) shall not be 
                construed--
                            ``(i) to require a plan to provide any type 
                        or form of benefit, or any option, not 
                        otherwise provided under the plan,
                            ``(ii) to require the plan to provide 
                        increased benefits (determined on the basis of 
                        actuarial value),
                            ``(iii) to require the payment of benefits 
                        to the divorced spouse which are required to be 
                        paid to another individual in accordance with 
                        this paragraph or pursuant to a domestic 
                        relations order previously determined to be a 
                        qualified domestic relations order, or
                            ``(iv) to require payment of benefits to 
                        the divorced spouse in the form of a qualified 
                        joint and survivor annuity to the divorced 
                        spouse and his or her subsequent spouse.
                    ``(C) Definitions.--For purposes of this 
                paragraph--
                            ``(i) Domestic relations order; qualified 
                        domestic relations order.--The terms `domestic 
                        relations order' and `qualified domestic 
                        relations order' shall have the meanings 
                        provided in section 414(p).
                            ``(ii) Marital share.--The term `marital 
                        share' means, in connection with an accrued 
                        benefit under a pension plan, the product 
                        derived by multiplying--
                                    ``(I) the actuarial present value 
                                of the accrued benefit, by
                                    ``(II) a fraction, the numerator of 
                                which is the period of time, during the 
                                marriage between the spouse and the 
                                participant in the plan, which 
                                constitutes creditable service by the 
                                participant under the plan, and the 
                                denominator of which is the total 
                                period of time which constitutes 
                                creditable service by the participant 
                                under the plan.
                            ``(iii) Qualified joint and survivor 
                        annuity.--The term `qualified joint and 
                        survivor annuity' has the meaning provided in 
                        section 417(b).
                    ``(D) Regulations.--In prescribing regulations 
                under this paragraph, the Secretary shall consult with 
                the Secretary of Labor.''; and
                    (B) in the last sentence, by striking ``and (20)'' 
                and inserting ``(20), and (32)''.
            (2) Conforming amendments.--
                    (A) Subparagraph (B) of section 401(a)(13) of such 
                Code (relating to special rules for domestic relations 
                orders) is amended by inserting ``or if such creation, 
                assignment, or recognition pursuant to such order is 
                necessary for compliance with the requirements of 
                paragraph (32)'' before the period.
                    (B) Subsection (p) of section 414 of such Code 
                (defining qualified domestic relations orders) is 
                amended--
                            (i) in paragraph (3)(C), by inserting ``or 
                        to a divorced spouse of the participant in 
                        connection with a previously occurring divorce 
                        as required under section 401(a)(32)'' before 
                        the period; and
                            (ii) in paragraph (7)(C), by striking ``if 
                        there had been no order'' and inserting ``in 
                        accordance with section 401(a)(32) as if there 
                        had been no qualified domestic relations 
                        order''.
    (b) Amendments to the Employee Retirement Income Security Act of 
1974.--
            (1) In general.--Section 206 of Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1056) is amended by adding at 
        the end the following new subsection:
    ``(e)(1) In the case of a divorce of a participant in a pension 
plan from a spouse who is, immediately before the divorce, a 
beneficiary under the plan, the plan shall provide that at least 50 
percent of the marital share of the accrued benefit of the participant 
under the plan ceases to be an accrued benefit of such participant and 
becomes an accrued benefit of such divorced spouse, determined and 
payable upon the earlier of the retirement of the participant, the 
participant's death, or the termination of the plan, except to the 
extent that a qualified domestic relations order in connection with 
such divorce provides otherwise.
    ``(2) Paragraph (1) shall not be construed--
            ``(A) to require a plan to provide any type or form of 
        benefit, or any option, not otherwise provided under the plan,
            ``(B) to require the plan to provide increased benefits 
        (determined on the basis of actuarial value),
            ``(C) to require the payment of benefits to the divorced 
        spouse which are required to be paid to another individual in 
        accordance with this subsection or pursuant to a domestic 
        relation order previously determined to be a qualified domestic 
        relations order, or
            ``(D) to require payment of benefits to the divorced spouse 
        in the form of a joint and survivor annuity to the divorced 
        spouse and his or her subsequent spouse.
    ``(3) For purposes of this subsection--
            ``(A) The terms `domestic relations order' and `qualified 
        domestic relations order' shall have the meanings provided in 
        subsection (d)(3)(B).
            ``(B) The term `marital share' means, in connection with an 
        accrued benefit under a pension plan, the product derived by 
        multiplying--
                    ``(i) the actuarial present value of the accrued 
                benefit, by
                    ``(ii) a fraction--
                            ``(I) the numerator of which is the period 
                        of time, during the marriage between the spouse 
                        and the participant in the plan, which 
                        constitutes creditable service by the 
                        participant under the plan, and
                            ``(II) the denominator of which is the 
                        total period of time which constitutes 
                        creditable service by the participant under the 
                        plan.
            ``(C) The term `qualified joint and survivor annuity' shall 
        have the meaning provided in section 205(d).
    ``(4) In prescribing regulations under this subsection, the 
Secretary shall consult with the Secretary of the Treasury.''.
            (2) Conforming amendments.--Section 206(d) of such Act (29 
        U.S.C. 1056(d)) is amended--
                    (A) in the first sentence of paragraph (3), by 
                inserting ``or if such creation, assignment, or 
                recognition pursuant to such order is necessary for 
                compliance with the requirements of subsection (e)'' 
                before the period;
                    (B) in paragraph (3)(D)(iii), by inserting ``or to 
                a divorced spouse of the participant in connection with 
                a previously occurring divorce as required under 
                subsection (e)'' before the period; and
                    (C) in paragraph (3)(H)(iii), by striking ``if 
                there had been no order'' and inserting ``in accordance 
                with subsection (e) as if there had been no qualified 
                domestic relations order''.

SEC. 6. EFFECTIVE DATES.

    (a) In General.--Except as provided in subsection (b), the 
amendments made by this Act, other than section 2, shall apply with 
respect to plan years beginning on or after January 1, 1994, and the 
amendments made by section 5 shall apply only with respect to divorces 
becoming final in such plan years.
    (b) Special Rule for Collectively Bargained Plans.--In the case of 
a plan maintained pursuant to 1 or more collective bargaining 
agreements between employee representatives and 1 or more employers 
ratified on or before the date of the enactment of this Act, subsection 
(a) shall be applied to benefits pursuant to, and individuals covered 
by, any such agreement by substituting for ``January 1, 1994'' the date 
of the commencement of the first plan year beginning on or after the 
earlier of--
            (1) the later of--
                    (A) January 1, 1994, or
                    (B) the date on which the last of such collective 
                bargaining agreements terminates (determined without 
                regard to any extension thereof after the date of the 
                enactment of this Act), or
            (2) January 1, 1996.
    (c) Plan Amendments.--If any amendment made by this Act requires an 
amendment to any plan, such plan amendment shall not be required to be 
made before the first plan year beginning on or after January 1, 1994, 
if--
            (1) during the period after such amendment made by this Act 
        takes effect and before such first plan year, the plan is 
        operated in accordance with the requirements of such amendment 
        made by this Act, and
            (2) such plan amendment applies retroactively to the period 
        after such amendment made by this Act takes effect and such 
        first plan year.
A plan shall not be treated as failing to provide definitely 
determinable benefits or contributions, or to be operated in accordance 
with the provisions of the plan, merely because it operates in 
accordance with this subsection.

SEC. 7. STUDY ON COST-OF-LIVING ADJUSTMENTS UNDER PRIVATE PENSION 
              PLANS.

    (a) Study by General Accounting Office.--As soon as possible after 
the date of the enactment of this Act, the Comptroller General of the 
United States, in accordance with the authority provided under section 
11016(d) of the Single-Employer Pension Plan Amendments Act of 1986 
(100 Stat. 275), shall undertake a thorough study with respect to 
alternative methods of requiring employee pension benefit plans to 
provide cost-of-living and other adjustments to benefits payable under 
such plans.
    (b) Matters To Be Studied.--The Comptroller General, in carrying 
out the study provided for in this section, shall address, analyze, and 
report specifically on--
            (1) the effect inflation is having and may be expected to 
        have on women receiving private pension benefits as either plan 
        participants or beneficiaries,
            (2) the number of plans which provide for cost-of-living or 
        other adjustments to benefits,
            (3) the manner in which plans providing for such 
        adjustments determine when, and for whom, an adjustment will be 
        made,
            (4) the frequency with which other plans make cost-of-
        living and other benefit adjustments, and how the determination 
        to make such adjustments is made,
            (5) the possible application of funds currently available 
        for employer reversions for cost-of-living and other benefit 
        adjustments, and
            (6) the costs incurred in requiring such adjustments to 
        benefits.
    (c) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Comptroller General shall submit to the Committee on 
Ways and Means and the Committee on Education and Labor of the House of 
Representatives and the Committee on Finance and the Committee on Labor 
and Human Resources of the Senate a report of the findings of the study 
provided for by this section, together with any recommendations the 
Comptroller General considers appropriate.

SEC. 8. STUDY ON PENSION PORTABILITY.

    (a) Study by General Accounting Office.--As soon as possible after 
the date of the enactment of this Act, the Comptroller General of the 
United States, in accordance with the authority provided under section 
11016(d) of the Single-Employer Pension Plan Amendments Act of 1986 
(100 Stat. 275), shall undertake a thorough study with respect to 
alternative pension portability mechanisms, including mechanisms for 
promoting portability of benefits, credited service, and current values 
of cash distributions, for preserving and enhancing the real value of 
deferred vested pension benefits.
    (b) Matters To Be Studied.--The Comptroller General, in carrying 
out the study provided for in this section, shall address, analyze, and 
report specifically on--
            (1) the types of possible portability mechanisms for both 
        defined benefit plans and defined contribution plans,
            (2) the manner in which, and extent to which, each 
        mechanism would preserve and enhance the real value of deferred 
        vested benefits,
            (3) the most effective ways to ensure that retirement money 
        will be used for retirement,
            (4) the measures necessary to be taken to effectively 
        ensure that the joint and survivor annuity form of benefit will 
        be preserved,
            (5) the existing rules under the Employee Retirement Income 
        Security Act of 1974, the Internal Revenue Code of 1986, and 
        other applicable provisions of law which can be considered 
        portability mechanisms, their effectiveness, and the frequency 
        of their use, and
            (6) the costs of establishing effective portability 
        mechanisms for both defined benefit plans and defined 
        contribution plans.
    (c) Report.--Not later than 2 years after the date of the enactment 
of this Act, the Comptroller General shall submit to the Committee on 
Ways and Means and the Committee on Education and Labor of the House of 
Representatives and the Committee on Finance and the Committee on Labor 
and Human Resources of the Senate a report of the findings of the study 
provided for by this section, together with any recommendations the 
Comptroller General considers appropriate.

SEC. 9. CLARIFICATION OF CONTINUED AVAILABILITY OF REMEDIES RELATING TO 
              MATTERS TREATED IN DOMESTIC RELATIONS ORDERS ENTERED 
              BEFORE 1985.

    (a) In General.--In any case in which--
            (1) under a prior domestic relations order entered before 
        January 1, 1985, in an action for divorce--
                    (A) the right of a spouse under a pension plan to 
                an accrued benefit under such plan was not divided 
                between spouses,
                    (B) any right of a spouse with respect to such an 
                accrued benefit was waived without the informed consent 
                of such spouse, or
                    (C) the right of a spouse as a participant under a 
                pension plan to an accrued benefit under such plan was 
                divided so that the other spouse received less than 
                such other spouse's pro rata share of the accrued 
                benefit under the plan, or
            (2) a court of competent jurisdiction determines that any 
        further action is appropriate with respect to any matter to 
        which a prior domestic relations order entered before such date 
        applies,
nothing in the provisions of section 104, 204, or 303 of the Retirement 
Equity Act of 1984 (Public Law 98-397) or the amendments made thereby 
shall be construed to require or permit the treatment, for purposes of 
such provisions, of a domestic relations order, which is entered on or 
after the date of the enactment of this Act and which supercedes, 
amends the terms of, or otherwise affects such prior domestic relations 
order, as other than a qualified domestic relations order solely 
because such prior domestic relations order was entered before January 
1, 1985.
    (b) Definitions.--For purposes of this section--
            (1) In general.--Terms used in this section which are 
        defined in section 3 of the Employee Retirement Income Security 
        Act of 1974 (29 U.S.C. 1002) shall have the meanings provided 
        such terms by such section.
            (2) Pro rata share.--The term ``pro rata share'' of a 
        spouse means, in connection with an accrued benefit under a 
        pension plan, 50 percent of the product derived by 
        multiplying--
                    (A) the actuarial present value of the accrued 
                benefit, by
                    (B) a fraction--
                            (i) the numerator of which is the period of 
                        time, during the marriage between the spouse 
                        and the participant in the plan, which 
                        constitutes creditable service by the 
                        participant under the plan, and
                            (ii) the denominator of which is the total 
                        period of time which constitutes creditable 
                        service by the participant under the plan.
            (3) Plan.--All pension plans in which a person has been a 
        participant shall be treated as one plan with respect to such 
        person.

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