[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[S. 1570 Introduced in Senate (IS)]

  2d Session
                                S. 1570

 To amend the Employee Retirement Income Security Act of 1974 and the 
 Internal Revenue Code of 1986 to provide that the restrictions on the 
 assignment or alienation of pension plan benefits shall not apply to 
          court-ordered criminal fines or victim restitution.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

            February 20 (legislative day, February 7), 1996

  Mr. McCain introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Employee Retirement Income Security Act of 1974 and the 
 Internal Revenue Code of 1986 to provide that the restrictions on the 
 assignment or alienation of pension plan benefits shall not apply to 
          court-ordered criminal fines or victim restitution.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. ASSIGNMENT OR ALIENATION OF PENSION PLANS FOR PAYMENT OF 
              CRIMINAL FINES AND VICTIM RESTITUTION.

    (a) Amendments to ERISA.--
            (1) In general.--Section 206(d) of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1056(d)) is amended by 
        adding at the end the following new paragraph:
            ``(4)(A) Paragraph (1) shall not apply to a qualified 
        criminal restitution order and each pension plan shall provide 
        for payments in accordance with the applicable requirements of 
        a qualified criminal restitution order.
            ``(B) For purposes of this paragraph, the term `qualified 
        criminal restitution order' means a judgment, order, or 
        decree--
                    ``(i) which is issued by a Federal or State court 
                in connection with a criminal conviction of a 
                participant under a plan,
                    ``(ii) which imposes a criminal fine on the 
                participant or which requires the participant to make 
                restitution to 1 or more victims of the crime for which 
                convicted,
                    ``(iii)(I) which creates or recognizes a right to 
                attach all or a portion of the benefits payable with 
                respect to the participant under a plan, or
                    ``(II) which creates or recognizes the existence of 
                a victim's right to, or assigns to a victim the right 
                to, receive all or a part of those benefits, and
                    ``(iv) with respect to which the requirements of 
                subparagraphs (C) and (D) of paragraph (3) are met 
                (determined after application of paragraph (3)(E)), 
                except that in applying such subparagraphs, the term 
                `criminal restitution order' shall be substituted for 
                the term `domestic relations order'.
            ``(C) The requirements of subparagraphs (G), (H), and (I) 
        of paragraph (3) shall apply to any plan administrator or 
        fiduciary of a plan to which this paragraph applies.
            ``(D) Rules similar to the rules of subparagraph (J) and 
        (N) of paragraph (3) shall apply for purposes of this 
        paragraph.''
            (2) Preemption.--Paragraph (7) of section 514(b) of such 
        Act (29 U.S.C. 1144(b)(7)) is amended by inserting ``or to 
        qualified criminal restitution orders (within the meaning of 
        section 206(d)(3)(B))'' before the period at the end.
    (b) Amendments to Internal Revenue Code of  1986.--
            (1) In general.--Paragraph (13) of section 401(a) of the 
        Internal Revenue Code of 1986 (relating to assignment of 
        benefits) is amended by adding at the end the following new 
        subparagraph:
                    ``(C) Special rules for criminal restitution 
                orders.--Subparagraph (A) shall not apply to a 
                qualified criminal restitution order (within the 
                meaning of section 414(u)).''
            (2) Qualified criminal restitution order.--Section 414 of 
        such Code is amended by adding at the end the following new 
        subsection:
    ``(u) Qualified Criminal Restitution Order.--For purposes of this 
title--
            ``(1) In general.--The term `qualified criminal restitution 
        order' means a judgment, order, or decree--
                    ``(A) which is issued by a Federal or State court 
                in connection with a criminal conviction of a 
                participant under a plan,
                    ``(B) which imposes a criminal fine on the 
                participant or which requires the participant to make 
                restitution to 1 or more victims of the crime for which 
                convicted,
                    ``(C)(i) which creates or recognizes a right to 
                attach all or a portion of the benefits payable with 
                respect to the participant under a plan, or
                    ``(ii) which creates or recognizes the existence of 
                a victim's right to, or assigns to a victim the right 
                to, receive all or a part of those benefits, and
                    ``(D) with respect to which the requirements of 
                paragraphs (2) and (3) of subsection (p) are met 
                (determined after application of subsection (p)(4)), 
                except that in applying such paragraphs, the term 
                `criminal restitution order' shall be substituted for 
                the term `domestic relations order'.
            ``(2) Plan and fiduciary.--The provisions of paragraphs (6) 
        and (7) of subsection (p) shall apply to any plan administrator 
        or fiduciary of a plan to which this paragraph applies.
            ``(3) Special rules.--Rules similar to the rules of 
        paragraphs (9), (10), (11), and (12) of subsection (p) shall 
        apply for purposes of this subsection.''
            (3) Tax treatment of distributions.--
                    (A) Section 402(e)(1) is amended by adding the end 
                the following new subparagraph:
                    ``(C) Criminal restitution orders.--Rules similar 
                to the rules of subparagraphs (A) and (B) shall apply 
                to payments or distributions to victims of a criminal 
                offense pursuant to a qualified criminal restitution 
                order described in section 414(u).''
                    (B) Section 72(m)(10) is amended--
                            (i) by adding at the end the following new 
                        sentence: ``The preceding sentence shall also 
                        apply to payments or distributions made to 
                        victims of a criminal offense pursuant to a 
                        qualified criminal restitution order described 
                        in section 414(u).'', and
                            (ii) by inserting ``or qualified criminal 
                        restitution orders'' after ``orders'' in the 
                        heading.
                    (C) Subparagraph (J) of section 402(d)(4) is 
                amended by adding at the end the following new 
                sentence: ``This subparagraph shall also apply to any 
                distributions or payments to victims of a criminal 
                offense pursuant to a qualified criminal restitution 
                order described in section 414(u).''
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified criminal restitution orders issued on and after the 
date of the enactment of this Act.
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