[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1838 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1838

 To amend the Employee Retirement Income Security Act of 1974 and the 
 Internal Revenue Code of 1986 to ensure that individual account plans 
 protect workers by limiting the amount of employer stock each worker 
may hold and encouraging diversification of investment of plan assets, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           December 18, 2001

Mrs. Boxer (for herself and Mr. Corzine) introduced the following bill; 
     which was read twice and referred to the Committee on Health, 
                     Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
 To amend the Employee Retirement Income Security Act of 1974 and the 
 Internal Revenue Code of 1986 to ensure that individual account plans 
 protect workers by limiting the amount of employer stock each worker 
may hold and encouraging diversification of investment of plan assets, 
                        and for other purposes.

    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 and 
Diversification Act of 2001''.

SEC. 2. 20-PERCENT LIMITATION ON EMPLOYER STOCK AND REAL PROPERTY HELD 
              BY PARTICIPANT IN CERTAIN INDIVIDUAL ACCOUNT PLANS.

    (a) In General.--Section 407 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1107) is amended by adding at the end 
the following:
    ``(g) Diversification Requirements Applicable to Certain Individual 
Account Plans.--
            ``(1) In general.--An applicable individual account plan 
        shall not be treated as an eligible individual account plan (as 
        defined in subsection (d)(3)) unless the plan meets--
                    ``(A) the acquisition and holding requirements of 
                paragraph (2), and
                    ``(B) the divestment requirement of paragraph (3).
            ``(2) Acquisition and holding requirements.--A plan meets 
        the requirements of this paragraph only if--
                    ``(A) the plan may not acquire qualifying employer 
                securities or qualifying employer real property to the 
                extent that, immediately after the acquisition, the 
                fair market value of all qualifying employer securities 
                and qualifying employer real property allocated (or to 
                be allocated) to any participant or beneficiary would 
                exceed 20 percent of the fair market value of all 
                assets allocated (or to be allocated) to such 
                participant or beneficiary under the plan, and
                    ``(B) as of the last day of any calendar quarter, 
                the fair market value of all qualifying employer 
                securities and qualifying employer real property 
                allocated (or to be allocated) to any participant or 
                beneficiary does not exceed 20 percent of the fair 
                market value of all assets allocated (or to be 
                allocated) to such participant or beneficiary.
            ``(3) Opportunity for employee to divest employer 
        securities.--A plan meets the requirements of this paragraph if 
        each employee who has a nonforfeitable right to 100 percent of 
        the employee's accrued benefit derived from employer 
        contributions may, at any time after the 90th day following the 
        allocation of any qualifying employer securities or qualifying 
        employer real property to the employee under the plan, direct 
        the plan to divest the employee's account of such securities or 
        property and reinvest an equivalent amount in other assets.
            ``(4) Divestiture.--
                    ``(A) In general.--The Secretary shall prescribe 
                regulations under which--
                            ``(i) a plan is given a reasonable period 
                        of time to divest itself of qualifying employer 
                        securities and qualifying employer real 
                        property in order to meet the requirements of 
                        this subsection, and
                            ``(ii) in the case of a plan in which a 
                        participant or beneficiary exercises control 
                        over assets in an account, the participant is 
                        given reasonable notice of the requirement, and 
                        a reasonable period of time, to make such 
                        divestiture.
                    ``(B) Waiver in de minimis cases.--The Secretary 
                may by regulations waive the application of paragraph 
                (2)(B) in cases where the failure with respect to any 
                participant or beneficiary is de minimis and due solely 
                to market fluctuation.
            ``(5) Definitions and special rules.--For purposes of this 
        subsection--
                    ``(A) Applicable individual account plan.--The term 
                `applicable individual account plan' means an 
                individual account plan other than an employee stock 
                ownership plan as defined in section 4975(e)(7) of the 
                Internal Revenue Code of 1986.
                    ``(B) Aggregation.--All applicable individual 
                account plans (other than multiemployer plans) 
                maintained by the same employer shall be treated as a 
                single plan.
            ``(6) Transition rules.--
                    ``(A) In general.--If, as of December 31, 2002, the 
                fair market value of qualifying employer securities and 
                qualifying employer real property allocated (or to be 
                allocated) under any plan to any one participant or 
                beneficiary exceeds 20 percent of the fair market value 
                of all assets so allocated (or to be allocated), the 
                plan shall be treated as meeting the requirements of 
                paragraph (2)(B). This subparagraph shall cease to 
                apply if any such securities or property are allocated 
                after December 31, 2002, to the participant or 
                beneficiary without the requirements of paragraph 
                (2)(A) or subparagraph (B) being met.
                    ``(B) Contractual requirements.--If qualifying 
                employer securities or qualifying employer real 
                property are acquired after December 31, 2002, pursuant 
                to a contract in effect on the date of enactment of 
                this subsection and at all times thereafter, the fair 
                market value of such securities or property as of 
                December 31, 2002, shall be taken into account under 
                subparagraph (A).''
    (b) Conforming Amendment.--Section 407(b)(1) of such Act (29 U.S.C. 
1107(b)(1)) is amended by striking ``Subsection (a)'' and inserting 
``Subject to subsection (g), subsection (a)''.

SEC. 3. IMPROVEMENTS IN ABILITY OF EMPLOYEES TO DIVERSIFY ASSETS IN 
              ESOPS.

    (a) In General.--Subparagraph (B)(iii) of section 401(a)(28) of the 
Internal Revenue Code of 1986 (relating to additional requirements for 
employee stock ownerships plans) is amended--
            (1) by striking ``10 years'' and inserting ``5 years'', and
            (2) by striking ``age 55'' and inserting ``age 35''.
    (b) Trustee-to-Trustee Transfer Required.--Clause (ii) of section 
401(a)(28)(B) of such Code is amended by adding at the end the 
following new flush sentence:
                        ``In the case of a qualified participant who 
                        has not attained the age of 55 on or before the 
                        date of any distribution described in subclause 
                        (I), a plan shall be treated as meeting the 
                        requirements of subclause (I) only if such 
                        distribution is made in the form of a direct 
                        trustee-to-trustee transfer to an eligible 
                        retirement plan (as defined in paragraph 
                        (31)(D)) specified by the participant.''

SEC. 4. REDUCTION IN DEDUCTION FOR EMPLOYER MATCHING CONTRIBUTIONS TO 
              DEFINED CONTRIBUTION PLANS MADE IN EMPLOYER SECURITIES.

    Section 404(a) of the Internal Revenue Code of 1986 (relating to 
deduction for contributions of an employer to an employee trust, etc.) 
is amended by adding at the end the following:
            ``(12) Limitations on deductions for employer matching 
        contributions made in employer securities.--In the case of an 
        employer matching contribution of employer securities (as 
        defined in section 409(l)) to a defined contribution plan other 
        than an employee stock ownership plan (as defined in section 
        4975(e)(7)), the amount of the deduction allowed shall be equal 
        to 50 percent of the amount allowable without regard to this 
        paragraph.''

SEC. 5. EFFECTIVE DATES.

    (a) In General.--The amendments made by this Act shall apply to 
years beginning after December 31, 2002.
    (b) Collective Bargaining Agreements.--In the case of a plan 
maintained pursuant to one or more collective bargaining agreements 
between employee representatives and one or more employers ratified by 
the date of the enactment of this Act, the amendments made by this Act 
shall not apply with respect to employees covered by any such agreement 
for plan years beginning before the earlier of--
            (1) the later of--
                    (A) the date on which the last of such collective 
                bargaining agreements terminates (determined without 
                regard to any extension thereof on or after such date 
                of enactment), or
                    (B) January 1, 2003, or
            (2) January 1, 2005.
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