[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3463 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 3463

 To amend the Internal Revenue Code of 1986 to provide protections for 
participants in cash or deferred arrangements under section 401(k) with 
     respect to the acquisition and holding of employer securities.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           December 12, 2001

 Mr. Deutsch (for himself, Mr. Green of Texas, Mr. Frost, Ms. Lee, and 
Mr. Lipinski) introduced the following bill; which was referred to the 
                      Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide protections for 
participants in cash or deferred arrangements under section 401(k) with 
     respect to the acquisition and holding of employer securities.

    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 Protection Act''.

SEC. 2. PROHIBITION ON 401(K) PLANS ON USING EMPLOYEE CONTRIBUTIONS TO 
              ACQUIRING OR HOLDING MORE THAN 10 PERCENT VALUE IN 
              EMPLOYER SECURITIES.

    (a) In General.--Section 401(k) of the Internal Revenue Code of 
1986 (relating to cash or deferred arrangements) is amended by adding 
at the end the following new paragraph:
            ``(13) Prohibitions relating to employer securities.--
                    ``(A) In general.--In the case of a cash or 
                deferred arrangement of an employer, such arrangement 
                shall not be treated as a qualified cash or deferred 
                arrangement under this section unless such arrangement 
                meets the requirements of subparagraphs (B), (C), and 
                (D).
                    ``(B) Acquisition of employer securities.--A cash 
                or deferred arrangement of an employer meets the 
                requirements of this subparagraph if--
                            ``(i) with respect to any employee, amounts 
                        in the plan of which such cash or deferred 
                        arrangement is a part and which are 
                        attributable to employee contributions under 
                        such arrangement are used to acquire employer 
                        securities, and
                            ``(ii) immediately after such acquisition, 
                        the aggregate fair market value of employer 
                        securities held on behalf of such employee by 
                        the plan which are attributable to employee 
                        contributions does not exceed 10 percent of the 
                        fair market value of all assets of the plan 
                        attributable to such employee's contributions.
                    ``(C) Holding employer securities.--A cash or 
                deferred arrangement of an employer meets the 
                requirements of this subparagraph if, with respect to 
                any employee, as of December 31 of any year, the fair 
                market value of employer securities held by the plan of 
                which such arrangement is a part on behalf of such 
                employee is 10 percent or less of the aggregate fair 
                market value of the assets of the plan attributable to 
                such employee's contributions.
                    ``(D) Divestment of employer securities.--A cash or 
                deferred arrangement of an employer meets the 
                requirements of this subparagraph if the plan of which 
                such arrangement is a part permits participants to 
                direct the plan to divest the participant's account of 
                employer securities after 3 years after the date on 
                which such securities are acquired.
                    ``(E) Employer securities.--For purposes of this 
                paragraph, the term `employer securities' has the 
                meaning given such term by section 409(l).''.
    (b) Effective Date; Transition Rule.--
            (1) Effective date.--Except as provided in paragraph (2), 
        the amendment made by this section shall apply to plans on and 
        after the date of the enactment of this Act.
            (2) Transition rule for plans holding excess securities.--
        In the case of a plan which on the date of the enactment of 
        this Act has holdings of employer securities (as defined in 
        section 401(k)(13) of the Internal Revenue Code of 1986) in 
        excess of the amount specified in such section 401(k)(13)(B), 
        section 401(k)(13) of the Internal Revenue Code of 1986 (as 
        added by this section) shall apply to any acquisition of such 
        securities on or after such date of enactment, but section 
        401(k)(13)(C) of such Code shall not apply to the specific 
        holdings which constitute such excess during the period of such 
        excess.
                                 <all>