[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4181 Introduced in House (IH)]







107th CONGRESS
  2d Session
                                H. R. 4181

  To amend the Internal Revenue Code of 1986 to prohibit pension plan 
 amendments reducing the rate of future benefit accrual, subject to a 
  safe harbor where the plan provides notice of the amendment and an 
election to continue benefit accruals under the former plan instead of 
                           the amended plan.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 11, 2002

  Mr. Gutknecht (for himself, Mr. Gilman, Mr. Sweeney, Mr. Sabo, Mr. 
 Sanders, and Mr. Hastings of Florida) 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 prohibit pension plan 
 amendments reducing the rate of future benefit accrual, subject to a 
  safe harbor where the plan provides notice of the amendment and an 
election to continue benefit accruals under the former plan instead of 
                           the amended plan.

    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 ``Vested Worker Protection Act of 
2002''.

SEC. 2. SAFE HARBOR IN EVENT OF REDUCTION IN FUTURE BENEFIT ACCRUALS 
              WHERE PLAN PROVIDES NOTICE AND ELECTION TO CONTINUE 
              BENEFIT ACCRUALS UNDER FORMER PLAN INSTEAD OF AMENDED 
              PLAN.

    (a) In General.--Paragraph (1) of section 411(b) of the Internal 
Revenue Code of 1986 (relating to defined benefit plans) is amended by 
adding at the end the following new subparagraph:
                    ``(I) Safe harbor upon reduction in future benefit 
                accruals.--
                            ``(i) In general.--An applicable pension 
                        plan that adopts an amendment which has the 
                        effect of reducing the rate of future benefit 
                        accrual of 1 or more participants shall be 
                        treated as not meeting the requirements of this 
                        paragraph unless such plan provides each 
                        participant who is, as of the date of the 
                        adoption of the plan amendment, a fully vested 
                        participant with--
                                    ``(I) written notice which meets 
                                the requirements of section 4980F, and
                                    ``(II) 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) Protected accrued benefit.--For 
                        purposes of clause (i), an accrued benefit 
                        shall include any early retirement benefit or 
                        retirement-type subsidy (within the meaning of 
                        subsection (d)(6)(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.
                            ``(iii) Timing of election.--Except as 
                        provided in regulations, the election required 
                        by clause (i)(II) shall be provided at least 90 
                        days before the effective date of the 
                        amendment.
                            ``(iv) Exemption upon showing of distress 
                        criteria.--This subparagraph shall not apply 
                        with respect to any plan amendment if the plan 
                        sponsor, prior to the date of the adoption of 
                        the amendment, demonstrates to the satisfaction 
                        of the Secretary that, under regulations of the 
                        Secretary, requirements--
                                    ``(I) applicable with respect to 
                                the adoption of the plan amendment, and
                                    ``(II) similar to the requirements 
                                of clause (i), (ii), or (iii) of 
                                section 4041(c)(2)(B) of the Employee 
                                Retirement Income Security Act of 1974 
                                applicable with respect to a distress 
                                termination,
                        are met by each employer required (under the 
                        terms of the plan as in effect immediately 
                        before the adoption of the plan amendment) to 
                        make contributions under the plan.
                            ``(v) Fully vested participant.--For 
                        purposes of this subparagraph, the term `fully 
                        vested participant' means a participant who 
                        under the plan has a nonforfeitable right to 
                        the participant's entire accrued benefit.
                            ``(vi) Applicable pension plan.--The term 
                        `applicable pension plan' means--
                                    ``(I) a defined benefit plan, or
                                    ``(II) an individual account plan 
                                which is subject to the funding 
                                standards of section 412,
                        which had 100 or more active 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. Such term shall 
                        not include any governmental plan (within the 
                        meaning of section 414(d)) or any church plan 
                        (within the meaning of section 414(e)) with 
                        respect to which the election provided by 
                        section 410(d) has not been made.''.
    (b) Excise Tax on Failure To Offer Election.--
            (1) In general.--Chapter 43 of subtitle D of the Internal 
        Revenue Code of 1986 (as amended by section 2 of this Act) is 
amended further by adding at the end the following new section:

``SEC. 4980G. FAILURE TO OFFER ELECTION TO CONTINUE BENEFIT ACCRUALS 
              UNDER FORMER APPLICABLE PENSION PLAN IN EVENT OF 
              REDUCTIONS IN FUTURE BENEFIT ACCRUALS.

    ``(a) Imposition of Tax.--There is hereby imposed a tax on the 
failure of any applicable pension plan to meet the requirements of 
subsection (d).
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of the tax imposed by 
        subsection (a) shall be 50 percent of the lesser of--
                    ``(A) the reduction in the future employer benefit 
                cost for the plan attributable to the plan amendment 
                referred to in subsection (d) (determined, as provided 
                in regulations of the Secretary, as of the date of the 
                adoption of such plan amendment), or
                    ``(B) the amount of the excess pension assets in 
                such plan, determined as of the effective date of the 
                amendment.
            ``(2) Future employer benefit cost.--For purposes of 
        paragraph (1)(A), the term `future employer benefit cost' for a 
        plan means the present value of future accruals, by current 
        participants and beneficiaries, of benefits derived from 
        employer contributions (within the meaning of section 
        411(c)(1)).
            ``(3) Excess pension assets.--For purposes of paragraph 
        (1), the term `excess pension assets' has the meaning given to 
        such term by section 420(e)(2).
    ``(c) Liability for Tax.--The following shall be liable for the tax 
imposed by subsection (a):
            ``(1) In the case of a plan other than a multiemployer 
        plan, the employer.
            ``(2) In the case of a multiemployer plan, the plan.
For purposes of the preceding sentence, all multiemployer plans of 
which the same trust forms a part shall be treated as 1 plan. For 
purposes of this paragraph, if not all persons who are treated as a 
single employer for purposes of this section have the same taxable 
year, the taxable years taken into account shall be determined under 
principles similar to the principles of section 1561.
    ``(d) Election To Continue Benefit Accruals Under Former Applicable 
Pension Plan In Event of Reductions in Future Benefit Accruals.--In the 
case that an applicable pension plan adopts an amendment which has the 
effect of reducing the rate of future benefit accrual of 1 or more 
participants, the requirements of this subsection are met if the plan 
administrator provides each fully vested participant with--
            ``(1) written notice which meets the requirements of 
        section 4980F, and
            ``(2) 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.
    ``(e) Timing of Election.--Except as provided in regulations, the 
election required by subsection (d) shall be provided at least 90 days 
before the effective date of such amendment.
    ``(f) Protected Accrued Benefit.--For purposes of this section, an 
accrued benefit shall include any early retirement benefit or 
retirement-type subsidy (within the meaning of section 
411(d)(6)(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.
    ``(g) Exemption upon Showing of Distress Criteria.--This section 
shall not apply with respect to any plan amendment if the plan sponsor, 
prior to the date of the adoption of the amendment, demonstrates to the 
satisfaction of the Secretary that, under regulations of the Secretary, 
requirements--
            ``(1) applicable with respect to the adoption of the plan 
        amendment, and
            ``(2) similar to the requirements of clause (i), (ii), or 
        (iii) of section 4041(c)(2)(B) of the Employee Retirement 
        Income Security Act of 1974 applicable with respect to a 
        distress termination,
are met by each employer required (under the terms of the plan as in 
effect immediately before the adoption of the plan amendment) to make 
contributions under the plan.
    ``(h) Definitions.--For purposes of this section--
            ``(1) Applicable pension plan.--The term `applicable 
        pension plan' means--
                    ``(A) a defined benefit plan, or
                    ``(B) an individual account plan which is subject 
                to the funding standards of section 412,
                which had 100 or more active 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. Such term shall not include any governmental 
                plan (within the meaning of section 414(d)) or any 
                church plan (within the meaning of section 414(e)) with 
                respect to which the election provided by section 
                410(d) has not been made.
            ``(2) Fully vested participant.--The term `fully vested 
        participant' means a participant who has under the plan a 
        nonforfeitable right to the participant's entire accrued 
        benefit.''.
            (2) Clerical amendment.--The table of sections for chapter 
        43 of subtitle D of such Code (as amended by section 2 of this 
        Act) is amended further by adding at the end the following new 
        item:

``Sec. 4980G. Failure to offer election to continue benefit accruals 
                            under former applicable pension plan in 
                            event of reductions in future benefit 
                            accruals.''.

SEC. 3. EFFECTIVE DATES.

    (a) In General.--The amendments made by this Act shall apply to 
plans and plan amendments taking effect after 60 days after the date of 
the enactment of this Act.
    (b) Special Rule.--The period for providing any notice required by 
the amendments made by this Act shall not end before the date which is 
90 days after the date of the enactment of this Act.
                                 <all>