[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2759 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2759

To amend the Internal Revenue Code of 1986 and the Employee Retirement 
     Income Security Act of 1974 to prevent the wearing away of an 
employee's accrued benefit under a defined benefit plan by the adoption 
of a plan amendment reducing future accruals and to require notice with 
respect to such reduced future accruals and an election opportunity to 
    continue benefit accruals without regard to such plan amendment.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             August 5, 1999

  Mr. Hinchey (for himself and Mr. Sanders) introduced the following 
  bill; which was referred to the Committee on Ways and Means, and in 
addition to the Committee on Education and the Workforce, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 and the Employee Retirement 
     Income Security Act of 1974 to prevent the wearing away of an 
employee's accrued benefit under a defined benefit plan by the adoption 
of a plan amendment reducing future accruals and to require notice with 
respect to such reduced future accruals and an election opportunity to 
    continue benefit accruals without regard to such plan amendment.

    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 ``Older Workers Pension Protection Act 
of 1999''.

SEC. 2. NOTICE AND ELECTION TO CONTINUE BENEFIT ACCRUALS UNDER FORMER 
              DEFINED BENEFIT PLAN INSTEAD OF UNDER CASH BALANCE PLAN.

    (a) Amendment to Internal Revenue Code.--Paragraph (6) of section 
411(d) of the Internal Revenue Code of 1986 (relating to accrued 
benefit may not be decreased by amendment) is amended by adding at the 
end the following new subparagraph:
                    ``(D) Treatment of plan amendments wearing away 
                accrued benefit.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), a plan amendment adopted by a 
                        large defined benefit plan shall be treated as 
                        reducing accrued benefits of a participant if, 
                        under the terms of the plan after the adoption 
                        of the amendment, the accrued benefit of the 
                        participant may at any time be less than the 
                        sum of--
                                    ``(I) the participant's accrued 
                                benefit for years of service before the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect immediately before the 
                                effective date, plus
                                    ``(II) the participant's accrued 
                                benefit determined under the formula 
                                applicable to benefit accruals under 
                                the current plan as applied to years of 
                                service after such effective date.
                            ``(ii) Election to continue benefit 
                        accruals under former defined benefit plan 
                        instead of under cash balance plan.--
                                    ``(I) In general.--For purposes of 
                                subparagraph (A), in the case of a plan 
                                amendment adopted by a defined benefit 
                                plan that reduces accrued benefits of a 
                                participant (determined without regard 
                                to clause (i)), such defined benefit 
                                plan shall be treated as not satisfying 
                                the requirements of this section unless 
                                such plan provides each participant who 
                                has a nonforfeitable right to 100 
                                percent of his accrued benefits with 
                                notice which meets the requirements of 
                                subclause (II) and an election to 
                                continue to accrue benefits under such 
                                plan, determined under the terms of 
                                such plan as in effect immediately 
                                before the effective date of such plan 
                                amendment.
                                    ``(II) Notice requirements.--For 
                                purposes of subclause (I), a notice 
                                meets the requirements of this 
                                subclause if the notice is written in a 
                                manner calculated to be understood by 
                                the average plan participant, provides 
                                sufficient information (as determined 
                                in accordance with regulations 
                                prescribed by the Secretary) to allow 
                                applicable individuals to understand 
                                the effect of the plan amendment, and 
                                is provided within a reasonable time 
                                before the effective date of the plan 
                                amendment. Notice shall not be treated 
                                as failing to meet the requirements of 
                                the preceding sentence merely because 
                                notice is provided before the adoption 
                                of the plan amendment if no material 
                                modification of the amendment occurs 
                                before the amendment is adopted.
                            ``(iii) Large defined benefit plan.--For 
                        purposes of this subparagraph, the term `large 
                        defined benefit plan' means any defined benefit 
                        plan which had 100 or more participants who had 
                        accrued a benefit under the plan (whether or 
                        not vested) as of the last day of the plan year 
                        preceding the plan year in which the plan 
                        amendment becomes effective.
                            ``(iv) Protected accrued benefit.--For 
                        purposes of this subparagraph, an accrued 
                        benefit shall include any early retirement 
                        benefit or retirement-type subsidy (within the 
                        meaning of subparagraph (B)(i)), but only with 
                        respect to a participant who satisfies (either 
                        before or after the effective date of the 
                        amendment) the conditions for the benefit or 
                        subsidy under the terms of the plan as in 
                        effect immediately before such date.''
    (b) Amendment of ERISA.--Section 204(g) of the Employee Retirement 
Income Security Act of 1974 is amended by adding at the end the 
following new paragraph:
    ``(4)(A) For purposes of paragraph (1), a plan amendment adopted by 
a large defined benefit plan shall be treated as reducing accrued 
benefits of a participant if, under the terms of the plan after the 
adoption of the amendment, the accrued benefit of the participant may 
at any time be less than the sum of--
            ``(i) the participant's accrued benefit for years of 
        service before the effective date of the amendment, determined 
        under the terms of the plan as in effect immediately before the 
        effective date, plus
            ``(ii) the participant's accrued benefit determined under 
        the formula applicable to benefit accruals under the current 
        plan as applied to years of service after such effective date.
    ``(B)(i) For purposes of paragraph (1), in the case of a plan 
amendment adopted by a defined benefit plan that reduces accrued 
benefits of a participant (determined without regard to subparagraph 
(A)), such defined benefit plan shall be treated as not satisfying the 
requirements of this section unless such plan provides each participant 
who has a nonforfeitable right to 100 percent of his accrued benefits 
with notice which meets the requirements of clause (ii) and an election 
to continue to accrue benefits under such plan, determined under the 
terms of such plan as in effect immediately before the effective date 
of such plan amendment.
    ``(ii) For purposes of clause (i), a notice meets the requirements 
of this clause if the notice is written in a manner calculated to be 
understood by the average plan participant, provides sufficient 
information (as determined in accordance with regulations prescribed by 
the Secretary) to allow applicable individuals to understand the effect 
of the plan amendment, and is provided within a reasonable time before 
the effective date of the plan amendment. Notice shall not be treated 
as failing to meet the requirements of the preceding sentence merely 
because notice is provided before the adoption of the plan amendment if 
no material modification of the amendment occurs before the amendment 
is adopted.
    ``(C) For purposes of this paragraph, the term `large defined 
benefit plan' means any defined benefit plan which had 100 or more 
participants who had accrued a benefit under the plan (whether or not 
vested) as of the last day of the plan year preceding the plan year in 
which the plan amendment becomes effective.
    ``(D) For purposes of this paragraph, an accrued benefit shall 
include any early retirement benefit or retirement-type subsidy (within 
the meaning of paragraph (2)(A)), but only with respect to a 
participant who satisfies (either before or after the effective date of 
the amendment) the conditions for the benefit or subsidy under the 
terms of the plan as in effect immediately before such date.''
    (c) Effective Date.--The amendments made by this section shall 
apply to plan amendments adopted after June 29, 1999.
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