[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3108 Engrossed Amendment Senate (EAS)]
In the Senate of the United States,
January 28, 2004.
Resolved, That the bill from the House of Representatives (H.R.
3108) entitled ``An Act to amend the Employee Retirement Income
Security Act of 1974 and the Internal Revenue Code of 1986 to
temporarily replace the 30-year Treasury rate with a rate based on
long-term corporate bonds for certain pension plan funding requirements
and other provisions, and for other purposes.'', do pass with the
following
AMENDMENT:
Page 2, line 3, strike out all after ``section'' and insert:
1. SHORT TITLE.
This Act may be cited as the ``Pension Stability Act''.
SEC. 2. TEMPORARY REPLACEMENT OF INTEREST RATE ON 30-YEAR TREASURY
SECURITIES WITH INTEREST RATE ON CONSERVATIVELY INVESTED
LONG-TERM CORPORATE BONDS.
(a) Internal Revenue Code of 1986.--
(1) Determination of permissible range.--
(A) In general.--Section 412(b)(5)(B)(ii) of the
Internal Revenue Code of 1986 is amended--
(i) in subclause (I), by inserting ``or
(III)'' after ``subclause (II)'';
(ii) by redesignating subclause (II) as
subclause (III);
(iii) by inserting after subclause (I) the
following new subclause:
``(II) Special rule for 2004 and
2005.--In the case of plan years
beginning in 2004 or 2005, the term
`permissible range' means a rate of
interest which is not above, and not
more than 10 percent below, the
weighted average of the conservative
long-term corporate bond rates during
the 4-year period ending on the last
day before the beginning of the plan
year. The Secretary shall, by
regulation, prescribe a method for
periodically determining conservative
long-term bond rates for purposes of
this paragraph. Such rates shall
reflect the rates of interest on
amounts invested conservatively in
long-term corporate bonds and shall be
based on the use of 2 or more indices
that are in the top 2 quality levels
available reflecting average maturities
of 20 years or more.''; and
(iv) in subclause (III), as so
redesignated--
(I) by inserting ``or (II)'' after
``subclause (I)'' the first place it
appears; and
(II) by striking ``subclause (I)''
the second place it appears and
inserting ``such subclause''.
(2) Determination of current liability.--Section
412(l)(7)(C)(i) of such Code is amended by adding at the end
the following new subclause:
``(IV) Special rule for 2004 and
2005.--For plan years beginning in 2004
or 2005, notwithstanding subclause (I),
the rate of interest used to determine
current liability under this subsection
shall be the rate of interest under
subsection (b)(5).''.
(3) Conforming amendment.--Section 412(m)(7) of such Code
is amended to read as follows:
``(7) Special rule for 2002.--In any case in which the
interest rate used to determine current liability is determined
under subsection (l)(7)(C)(i)(III), for purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability of the plan for the preceding plan year
shall be redetermined using 120 percent as the specified
percentage determined under subsection (l)(7)(C)(i)(II).''.
(4) Limitation on certain assumptions.--Section
415(b)(2)(E)(ii) of such Code is amended by inserting ``,
except that in the case of plan years beginning in 2004 or
2005, `5.5 percent' shall be substituted for `5 percent' in
clause (i)'' before the period at the end.
(5) Election to disregard modification for deduction
purposes.--Section 404(a)(1) of such Code is amended by adding
at the end the following new subparagraph:
``(F) Election to disregard modified interest
rate.--An employer may elect to disregard subsections
(b)(5)(B)(ii)(II) and (l)(7)(C)(i) of section 412
solely for purposes of determining the interest rate
used in calculating the maximum amount of the deduction
allowable under this section for contributions to a
plan to which such subsections apply.''
(b) Employee Retirement Income Security Act of 1974.--
(1) Determination of permissible range.--
(A) In general.--Section 302(b)(5)(B)(ii) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1082(b)(5)(B)(ii)) is amended--
(i) in subclause (I), by inserting ``or
(III)'' after ``subclause (II)'';
(ii) by redesignating subclause (II) as
subclause (III);
(iii) by inserting after subclause (I) the
following new subclause:
``(II) Special rule for years 2004 and
2005.--In the case of plan years beginning in
2004 or 2005, the term `permissible range'
means a rate of interest which is not above,
and not more than 10 percent below, the
weighted average of the conservative long-term
corporate bond rates (as determined under
section 412(b)(5)(B)(ii)(II) of the Internal
Revenue Code of 1986) during the 4-year period
ending on the last day before the beginning of
the plan year.''; and
(iv) in subclause (III), as so
redesignated--
(I) by inserting ``or (II)'' after
``subclause (I)'' the first place it
appears; and
(II) by striking ``subclause (I)''
the second place it appears and
inserting ``such subclause''.
(2) Determination of current liability.--Section
302(d)(7)(C)(i) of such Act (29 U.S.C. 1082(d)(7)(C)(i)) is
amended by adding at the end the following new subclause:
``(IV) Special rule for 2004 and
2005.--For plan years beginning in 2004
or 2005, notwithstanding subclause (I),
the rate of interest used to determine
current liability under this subsection
shall be the rate of interest under
subsection (b)(5).''.
(3) Conforming amendment.--Section 302(e)(7) of such Act
(29 U.S.C. 1082(e)(7)) is amended to read as follows:
``(7) Special rule for 2002.--In any case in which the
interest rate used to determine current liability is determined
under subsection (d)(7)(C)(i)(III), for purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability of the plan for the preceding plan year
shall be redetermined using 120 as the specified percentage
determined under subsection (d)(7)(C)(i)(II).''.
(4) PBGC.--Section 4006(a)(3)(E)(iii) of such Act (29
U.S.C. 1306(a)(3)(E)(iii)) is amended by adding at the end the
following new subclause:
``(V) In the case of plan years beginning in 2004 or 2005,
the annual yield taken into account under subclause (II) shall
be the annual yield computed by using the conservative long-
term corporate bond rate (as determined under section
412(b)(5)(B)(ii)(II) of the Internal Revenue Code of 1986) for
the month preceding the month in which the plan year begins.''
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan years
beginning after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(l)(9)(B)(ii) and (m)(1) of section 412 of the Internal Revenue
Code of 1986, and subsections (d)(9)(B)(ii) and (e)(1) of
section 302 of the Employee Retirement Income Security Act of
1974 to plan years beginning after December 31, 2003, the
amendments made by this section may be applied as if such
amendments had been in effect for all years beginning before
such date.
(3) Transition rule for section 415 limitation.--In the
case of any participant or beneficiary receiving a distribution
after December 31, 2003 and before January 1, 2005, the amount
payable under any form of benefit subject to section 417(b)(3)
of the Internal Revenue Code of 1986 and subject to adjustment
under section 415(b)(2)(B) of such Code shall not, solely by
reason of the amendment made by subsection (a)(4), be less than
the amount that would have been so payable had the amount
payable been determined using the applicable interest rate in
effect as of the last day of the last plan year beginning
before January 1, 2004.
SEC. 3. ELECTION OF ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION.
(a) Amendment of 1986 Code.--Section 412(l) of the Internal Revenue
Code of 1986 (relating to applicability of subsection) is amended by
adding at the end the following new paragraph:
``(12) Alternative increase for certain plans meeting
requirements in 2000.--
``(A) In general.--In the case of a defined benefit
plan established and maintained by an applicable
employer, if this subsection did not apply to the plan
for the plan year beginning in 2000 (determined without
regard to paragraph (6)), then, at the election of the
employer, the increased amount under paragraph (1) for
any applicable plan year shall be the greater of--
``(i) 20 percent (40 percent in the case of
an applicable plan year beginning after
December 27, 2004) of the increased amount
under paragraph (1) determined without regard
to this paragraph, or
``(ii) the increased amount which would be
determined under paragraph (1) if the deficit
reduction contribution under paragraph (2) for
the applicable plan year were determined
without regard to subparagraphs (A), (B), and
(D) of paragraph (2).
``(B) Restrictions on benefit increases.--No
amendment which increases the liabilities of the plan
by reason of any increase in benefits, any change in
the accrual of benefits, or any change in the rate at
which benefits become nonforfeitable shall be adopted
during any applicable plan year, unless--
``(i) the funded current liability
percentage (as defined in paragraph (8)(B)) as
of the end of such plan year is projected
(taking into account the effect of the
amendment) to be at least 75 percent,
``(ii) the amendment provides for an
increase in benefits under a formula which is
not based on a participant's compensation, but
only if the rate of such increase is not in
excess of the contemporaneous rate of increase
in average wages of participants covered by the
amendment,
``(iii) the amendment is required by a
collective bargaining agreement which is in
effect on the date of enactment of this
subparagraph, or
``(iv) the amendment is otherwise described
in subparagraph (A) or (C) of subsection
(f)(2).
If a plan is amended during any applicable plan year in
violation of the preceding sentence, any election under
this paragraph shall not apply to any applicable plan
year ending on or after the date on which such
amendment is adopted.
``(C) Applicable employer.--For purposes of this
paragraph--
``(i) In general.--The term `applicable
employer' means an employer which is--
``(I) a commercial passenger
airline,
``(II) primarily engaged in the
production or manufacture of a steel
mill product, or the mining or
processing of iron ore or beneficiated
iron ore products, or
``(III) an organization described
in section 501(c)(5) and which
established the plan to which this
paragraph applies on June 30, 1955.
``(ii) Other employers may apply for
relief.--
``(I) In general.--Except as
provided in subclause (II), an employer
other than an employer described in
clause (i) shall be treated as an
applicable employer if the employer
files an application (at such time and
in such manner as the Secretary may
prescribe) to be treated as an
applicable employer for purposes of
this paragraph.
``(II) Exception.--Subclause (I)
shall not apply to an employer if,
within 90 days of the filing of the
application, the Secretary determines
(taking into account the application of
this paragraph) that there is a
reasonable likelihood that the employer
will be unable to make future required
contributions to the plan in a timely
manner.
``(D) Applicable plan year.--For purposes of this
paragraph--
``(i) In general.--The term `applicable
plan year' means any plan year beginning after
December 27, 2003, and before December 28,
2005, for which the employer elects the
application of this paragraph.
``(ii) Limitation on number of years which
may be elected.--An election may not be made
under this paragraph with respect to more than
2 plan years.
``(E) Election.--An election under this paragraph
shall be made at such time and in such manner as the
Secretary may prescribe.''
(b) Amendment of ERISA.--Section 302(d) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1082(d)) is amended by adding at
the end the following new paragraph:
``(12) Alternative increase for certain plans meeting
requirements in 2000.--
``(A) In general.--In the case of a defined benefit
plan established and maintained by an applicable
employer, if this subsection did not apply to the plan
for the plan year beginning in 2000 (determined without
regard to paragraph (6)), then, at the election of the
employer, the increased amount under paragraph (1) for
any applicable plan year shall be the greater of--
``(i) 20 percent (40 percent in the case of
an applicable plan year beginning after
December 27, 2004) of the increased amount
under paragraph (1) determined without regard
to this paragraph, or
``(ii) the increased amount which would be
determined under paragraph (1) if the deficit
reduction contribution under paragraph (2) for
the applicable plan year were determined
without regard to subparagraphs (A), (B), and
(D) of paragraph (2).
``(B) Restrictions on benefit increases.--No
amendment which increases the liabilities of the plan
by reason of any increase in benefits, any change in
the accrual of benefits, or any change in the rate at
which benefits become nonforfeitable under the plan
shall be adopted during any applicable plan year,
unless--
``(i) the funded current liability
percentage (as defined in paragraph (8)(B)) as
of the end of such plan year is projected
(taking into account the effect of the
amendment) to be at least 75 percent,
``(ii) the amendment provides for an
increase in benefits under a formula which is
not based on a participant's compensation, but
only if the rate of such increase is not in
excess of the contemporaneous rate of increase
in average wages of participants covered by the
amendment,
``(iii) the amendment is required by a
collective bargaining agreement which is in
effect on the date of enactment of this
subparagraph, or
``(iv) the amendment is otherwise described
in subparagraph (A) or (C) of section
304(b)(2).
If a plan is amended during any applicable plan year in
violation of the preceding sentence, any election under
this paragraph shall not apply to any applicable plan
year ending on or after the date on which such
amendment is adopted.
``(C) Applicable employer.--For purposes of this
paragraph--
``(i) In general.--The term `applicable
employer' means an employer which is--
``(I) a commercial passenger
airline,
``(II) primarily engaged in the
production or manufacture of a steel
mill product, or the mining or
processing of iron ore or beneficiated
iron ore products, or
``(III) an organization described
in section 501(c)(5) of the Internal
Revenue Code of 1986 and which
established the plan to which this
paragraph applies on June 30, 1955.
``(ii) Other employers may apply for
relief.--
``(I) In general.--Except as
provided in subclause (II), an employer
other than an employer described in
clause (i) shall be treated as an
applicable employer if the employer
files an application (at such time and
in such manner as the Secretary of the
Treasury may prescribe) to be treated
as an applicable employer for purposes
of this paragraph.
``(II) Exception.--Subclause (I)
shall not apply to an employer if,
within 90 days of the filing of the
application, the Secretary of the
Treasury determines (taking into
account the application of this
paragraph) that there is a reasonable
likelihood that the employer will be
unable to make future required
contributions to the plan in a timely
manner.
``(D) Applicable plan year.--For purposes of this
paragraph--
``(i) In general.--The term `applicable
plan year' means any plan year beginning after
December 27, 2003, and before December 28,
2005, for which the employer elects the
application of this paragraph.
``(ii) Limitation on number of years which
may be elected.--An election may not be made
under this paragraph with respect to more than
2 plan years.
``(E) Notice requirements for plans electing
alternative deficit reduction contributions.--
``(i) In general.--If an employer elects an
alternative deficit reduction contribution
under this paragraph and section 412(l)(12) of
the Internal Revenue Code of 1986 for any year,
the employer shall provide, within 30 days (120
days in the case of an employer described in
subparagraph (C)(ii)) of filing the election
for such year, written notice of the election
to participants and beneficiaries and to the
Pension Benefit Guaranty Corporation.
``(ii) Notice to participants and
beneficiaries.--The notice under clause (i) to
participants and beneficiaries shall include
with respect to any election--
``(I) the due date of the
alternative deficit reduction
contribution and the amount by which
such contribution was reduced from the
amount which would have been owed if
the election were not made, and
``(II) a description of the
benefits under the plan which are
eligible to be guaranteed by the
Pension Benefit Guaranty Corporation
and an explanation of the limitations
on the guarantee and the circumstances
under which such limitations apply,
including the maximum guaranteed
monthly benefits which the Pension
Benefit Guaranty Corporation would pay
if the plan terminated while
underfunded.
``(iii) Notice to pbgc.--The notice under
clause (i) to the Pension Benefit Guaranty
Corporation shall include--
``(I) the information described in
clause (ii)(I),
``(II) the number of years it will
take to restore the plan to full
funding if the employer only makes the
required contributions, and
``(III) information as to how the
amount by which the plan is underfunded
compares with the capitalization of the
employer making the election.
``(F) Election.--An election under this paragraph
shall be made at such time and in such manner as the
Secretary of the Treasury may prescribe.''
(c) Effect of Election.--An election under section 412(l)(12) of
the Internal Revenue Code of 1986 or section 302(d)(12) of the Employee
Retirement Income Security Act of 1974 (as added by this section) with
respect to a plan shall not invalidate any obligation (pursuant to a
collective bargaining agreement in effect on the date of the election)
to provide benefits, to change the accrual of benefits, or to change
the rate at which benefits become nonforfeitable under the plan .
(d) Penalty for Failing To Provide Notice.--Section 502(c)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1132(c)(3)) is amended by inserting ``or who fails to meet the
requirements of section 302(d)(12)(E) with respect to any participant
or beneficiary'' after ``101(e)(2)''.
SEC. 4. MULTIEMPLOYER PLAN FUNDING NOTICES.
(a) In General.--Section 104 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 104) is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c)
the following new subsection:
``(d) Multiemployer Defined Benefit Plan Funding Notices.--
``(1) In general.--The administrator of a defined benefit
plan which is a multiemployer plan shall for each plan year
provide a plan funding notice to each plan participant and
beneficiary, to each labor organization representing such
participants or beneficiaries, and to each employer that has an
obligation to contribute under the plan.
``(2) Information contained in notices.--
``(A) Identifying information.--Each notice
required under paragraph (1) shall contain identifying
information, including the name of the plan, the
address and phone number of the plan administrator and
the plan's principal administrative officer, each plan
sponsor's employer identification number, and the plan
number of the plan.
``(B) Specific information.--A plan funding notice
under paragraph (1) shall include--
``(i) a statement as to whether the plan's
funded current liability percentage (as defined
in section 302(d)(8)(B)) for the plan year to
which the notice relates is at least 100
percent (and, if not, the actual percentage);
``(ii) a statement of the value of the
plan's assets, the amount of benefit payments,
and the ratio of the assets to the payments for
the plan year to which the report relates;
``(iii) a summary of the rules governing
insolvent multiemployer plans, including the
limitations on benefit payments and any
potential benefit reductions and suspensions
(and the potential effects of such limitations,
reductions, and suspensions on the plan); and
``(iv) a general description of the
benefits under the plan which are eligible to
be guaranteed by the Pension Benefit Guaranty
Corporation, along with an explanation of the
limitations on the guarantee and the
circumstances under which such limitations
apply.
``(C) Other information.--Each notice under
paragraph (1) shall include any additional information
which the plan administrator elects to include to the
extent not inconsistent with regulations prescribed by
the Secretary.
``(3) Time for providing notice.--Any notice under
paragraph (1) shall be provided no later than two months after
the deadline (including extensions) for filing the annual
report for the plan year to which the notice relates.
``(4) Form and manner.--Any notice under paragraph (1)--
``(A) shall be provided in a form and manner
prescribed in regulations of the Secretary,
``(B) shall be written in a manner so as to be
understood by the average plan participant, and
``(C) may be provided in written, electronic, or
other appropriate form to the extent such form is
reasonably accessible to persons to whom the notice is
required to be provided.''
(b) Penalties.--Section 502(c)(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(c)(1)) is amended by striking ``or
section 101(e)(1)'' and inserting ``, section 101(e)(1), or section
104(d)''.
(c) Regulations and Model Notice.--The Secretary of Labor shall,
not later than 1 year after the date of the enactment of this Act,
issue regulations (including a model notice) necessary to implement the
amendments made by this section.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2004.
SEC. 5. AMORTIZATION HIATUS FOR NET EXPERIENCE LOSSES IN MULTIEMPLOYER
PLANS.
(a) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 302(b)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.1082(b)(7)) is
amended by adding at the end the following new subparagraph:
``(F)(i) If a multiemployer plan has a net experience loss
for any plan year beginning after June 30, 2002, and before
July 1, 2006--
``(I) the plan may elect to have the 15-year
amortization period under paragraph (2)(B)(iv) with
respect to the loss begin in any plan year selected by
the plan from among the 3 immediately succeeding plan
years, and
``(II) if the plan makes an election under
subclause (I) for any plan year, the net experience
loss for the year shall, for purposes of determining
any charge to the funding standard account, or
interest, with respect to the loss, be treated in the
same manner as if it were a net experience loss
occurring in the year selected by the plan under
subclause (I) (without regard to any net experience
loss or gain otherwise determined for such year).
Notwithstanding the preceding sentence, a plan may elect to
have this subparagraph apply to net experience losses for only
2 plan years beginning after June 30, 2002, and before July 1,
2006.
``(ii) An amendment which increases the liabilities of the
plan by reason of any increase in benefits, any change in the
accrual of benefits, or any change in the rate at which
benefits become nonforfeitable under the plan shall not take
effect for any plan year in the hiatus period, unless--
``(I) the funded current liability percentage (as
defined in subsection (d)(8)(B)) as of the end of the
plan year is projected (taking into account the effect
of the amendment) to be at least 75 percent,
``(II) the plan's actuary certifies that, due to an
increase in contribution rates, the normal cost
attributable to the benefit increase or other change is
expected to be fully funded in the year following the
year the increase or other change takes effect, and any
increase in the plan's accrued liabilities attributable
to the benefit increase or other change is expected to
be fully funded by the end of the third plan year
following the end of the last hiatus period of the
plan, or
``(III) the plan amendment is otherwise described
in subparagraph (A) or (C) of section 304(b)(2).
``(iii) Clause (ii) shall not apply to an increase in
benefits for a group of participants resulting solely from a
collectively bargained increase in the contributions made on
their behalf.
``(iv) For purposes of this subparagraph, the term `hiatus
period' means any period during which the amortization of a net
experience loss is suspended by reason of this subparagraph.
``(v) Interest accrued on any net experience loss during a
hiatus period shall be charged to a reconciliation account and
not to the funding standard account.
``(vi) If a plan elects an amortization hiatus under this
subparagraph and section 412(b)(7)(F) of the Internal Revenue
Code of 1986 for any plan year, the plan administrator shall
provide, within 30 days of filing the election for such year,
written notice of the election to participants and
beneficiaries, to each labor organization representing such
participants or beneficiaries, and to each employer that has an
obligation to contribute under the plan. Such notice shall
include with respect to any election the amount of the net
experience loss to be deferred and the period of the deferral.
Such notice shall also include the maximum guaranteed monthly
benefits which the Pension Benefit Guaranty Corporation would
pay if the plan terminated while underfunded.
``(vii) An election under this subparagraph shall be made
at such time and in such manner as the Secretary, after
consultation with the Secretary of the Treasury, may
prescribe.''
(2) Penalty.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended to read as follows:
``(4) The Secretary may assess a civil penalty of not more
than $1,000 a day for each violation by any person of section
302(b)(7)(F)(vi).''
(b) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Section 412(b)(7) of the Internal Revenue
Code of 1986 (relating to special rules for multiemployer
plans) is amended by adding at the end the following new
subparagraph:
``(F) Amortization hiatus.--
``(i) In general.--If a multiemployer plan
has a net experience loss for any plan year
beginning after June 30, 2002, and before July
1, 2006--
``(I) the plan may elect to have
the 15-year amortization period under
paragraph (2)(B)(iv) with respect to
the loss begin in any plan year
selected by the plan from among the 3
immediately succeeding plan years, and
``(II) if the plan makes an
election under subclause (I) for any
plan year, the net experience loss for
the year shall, for purposes of
determining any charge to the funding
standard account, or interest, with
respect to the loss, be treated in the
same manner as if it were a net
experience loss occurring in the year
selected by the plan under subclause
(I) (without regard to any net
experience loss or gain otherwise
determined for such year).
Notwithstanding the preceding sentence, a plan
may elect to have this subparagraph apply to
net experience losses for only 2 plan years
beginning after June 30, 2002, and before July
1, 2006.
``(ii) Restrictions on benefit increases.--
An amendment which increases the liabilities of
the plan by reason of any increase in benefits,
any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan shall not take
effect for any plan year in the hiatus period,
unless--
``(I) the funded current liability
percentage (as defined in subsection
(l)(8)(B)) as of the end of the plan
year is projected (taking into account
the effect of the amendment) to be at
least 75 percent,
``(II) the plan's actuary certifies
that, due to an increase in
contribution rates, the normal cost
attributable to the benefit increase or
other change is expected to be fully
funded in the year following the year
in which the increase or other change
takes effect, and any increase in the
plan's accrued liabilities attributable
to the benefit increase or other change
is expected to be fully funded by the
end of the third plan year following
the end of the last hiatus period of
the plan, or
``(III) the plan amendment is
otherwise described in subparagraph (A)
or (C) of subsection (f)(2).
``(iii) Collectively bargained increases in
contributions.--Clause (ii) shall not apply to
an increase in benefits for a group of
participants resulting solely from a
collectively bargained increase in the
contributions made on their behalf.
``(iv) Hiatus period defined.--For purposes
of this subparagraph, the term `hiatus period'
means any period during which the amortization
of a net experience loss is suspended by reason
of this subparagraph.
``(v) Interest accrued during hiatus.--
Interest accrued on any net experience loss
during a hiatus period shall be charged to a
reconciliation account and not to the funding
standard account.
``(vi) Election.--An election under this
subparagraph shall be made at such time and in
such manner as the Secretary of Labor, after
consultation with the Secretary, may
prescribe.''
(2) Qualification requirement.--Section 401(a) of such Code
is amended by inserting after paragraph (34) the following new
paragraph:
``(35) Benefit increases in certain multiemployer plans.--A
trust which is part of a plan shall not constitute a qualified
trust under this section if the plan adopts an amendment during
a hiatus period (within the meaning of section
412(b)(7)(F)(iv)) which the plan is prohibited from adopting by
reason of section 412(b)(7)(F)(ii).''.
SEC. 6. 2-YEAR EXTENSION OF TRANSITION RULE TO PENSION FUNDING
REQUIREMENTS.
(a) In General.--Section 769(c) of the Retirement Protection Act of
1994, as added by section 1508 of the Taxpayer Relief Act of 1997, is
amended--
(1) by inserting ``except as provided in paragraph (3),''
before ``the transition rules'', and
(2) by adding at the end the following:
``(3) Special rules.--In the case of plan years beginning in 2004
and 2005, the following transition rules shall apply in lieu of the
transition rules described in paragraph (2):
``(A) For purposes of section 412(l)(9)(A) of the
Internal Revenue Code of 1986 and section 302(d)(9)(A)
of the Employee Retirement Income Security Act of 1974,
the funded current liability percentage for any plan
year shall be treated as not less than 90 percent.
``(B) For purposes of section 412(m) of the
Internal Revenue Code of 1986 and section 302(e) of the
Employee Retirement Income Security Act of 1974, the
funded current liability percentage for any plan year
shall be treated as not less than 100 percent.
``(C) For purposes of determining unfunded vested
benefits under section 4006(a)(3)(E)(iii) of the
Employee Retirement Income Security Act of 1974, the
mortality table shall be the mortality table used by
the plan.''
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2003.
SEC. 7. PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION PLAN
WITHDRAWAL LIABILITY.
(a) In General.--Section 4221 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the end
the following new subsection:
``(f) Procedures Applicable to Certain Disputes.--
``(1) In general.--If--
``(A) a plan sponsor of a plan determines that--
``(i) a complete or partial withdrawal of
an employer has occurred, or
``(ii) an employer is liable for withdrawal
liability payments with respect to the complete
or partial withdrawal of an employer from the
plan,
``(B) such determination is based in whole or in
part on a finding by the plan sponsor under section
4212(c) that a principal purpose of a transaction that
occurred before January 1, 1999, was to evade or avoid
withdrawal liability under this subtitle, and
``(C) such transaction occurred at least 5 years
before the date of the complete or partial withdrawal,
then the special rules under paragraph (2) shall be used in
applying subsections (a) and (d) of this section and section
4219(c) to the employer.
``(2) Special rules.--
``(A) Determination.--Notwithstanding subsection
(a)(3)--
``(i) a determination by the plan sponsor
under paragraph (1)(B) shall not be presumed to
be correct, and
``(ii) the plan sponsor shall have the
burden to establish, by a preponderance of the
evidence, the elements of the claim under
section 4212(c) that a principal purpose of the
transaction was to evade or avoid withdrawal
liability under this subtitle.
Nothing in this subparagraph shall affect the burden of
establishing any other element of a claim for
withdrawal liability under this subtitle.
``(B) Procedure.--Notwithstanding subsection (d)
and section 4219(c), if an employer contests the plan
sponsor's determination under paragraph (1) through an
arbitration proceeding pursuant to subsection (a), or
through a claim brought in a court of competent
jurisdiction, the employer shall not be obligated to
make any withdrawal liability payments until a final
decision in the arbitration proceeding, or in court,
upholds the plan sponsor's determination.''.
(b) Effective Date.--The amendments made by this section shall
apply to any employer that receives a notification under section
4219(b)(1) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1399(b)(1)) after October 31, 2003.
SEC. 8. SENSE OF THE SENATE ON STATUS OF PRIVATE PENSION PLANS.
(a) Findings.--Congress makes the following findings:-
(1) The private pension system is integral to the
retirement security of Americans, along with individual savings
and Social Security.
(2) The Pension Benefit Guaranty Corporation (PBGC) is
responsible for insuring the nation's private pension system,
and currently insures the pensions of 34,500,000 participants
in 29,500 single-employer plans, and 9,700,000 participants in
more than 1,600 multiemployer plans.
(3) The PBGC announced on January 15, 2004, that it
suffered a net loss in fiscal year 2003 of $7,600,000,000 for
single-employer pension plans, bringing the PBGC's deficit to
$11,200,000,000. This deficit is the PBGC's worst on record,
three times larger than the $3,600,000,000 deficit experienced
in fiscal year 2002.
(4) The PBGC also announced that the separate insurance
program for multiemployer pension plans sustained a net loss of
$419,000,000 in fiscal year 2003, resulting in a fiscal year-
end deficit of $261,000,000. The 2003 multiemployer plan
deficit is the first deficit in more than 20 years and is the
largest deficit on record.
(5) The PBGC estimates that the total underfunding in
multiemployer pension plans is roughly $100,000,000,000 and in
single-employer plans is approximately $400,000,000,000. This
underfunding is due in part to the recent decline in the stock
market and low interest rates, but is also due to demographic
changes. For example, in 1980, there were four active workers
for every one retiree in a multiemployer plan, but in 2002,
there was only one active worker for every one retiree.
(6) This pension plan underfunding is concentrated in
mature and often-declining industries, where plan liabilities
will come due sooner.
(7) Neither the Senate Committee on Finance nor the Senate
Committee on Health, Education, Labor and Pensions (HELP), the
committees of jurisdiction over pension matters, has held
hearings this Congress nor reported legislation addressing the
funding of multiemployer pension plans;
(8) The Senate is concerned about the current funding
status of the private pension system, both single and multi-
employer plans;
(9) The Senate is concerned about the potential liabilities
facing the PBGC and, as a result, the potential burdens facing
healthy pension plans and taxpayers;
(b) Sense of the Senate.--It is the sense of the Senate that the
Committee on Finance and the Committee on Health, Education, Labor and
Pensions should conduct hearings on the status of the multiemployer
pension plans, and should work in consultation with the Departments of
Labor and Treasury on permanent measures to strengthen the integrity of
the private pension system in order to protect the benefits of current
and future pension plan beneficiaries.
SEC. 9. EXTENSION OF TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE
HEALTH ACCOUNTS.
(a) Amendment of Internal Revenue Code of 1986.--Paragraph (5) of
section 420(b) of the Internal Revenue Code of 1986 (relating to
expiration) is amended by striking ``December 31, 2005'' and inserting
``December 31, 2013''.
(b) Amendments of ERISA.--
(1) Section 101(e)(3) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by
striking ``Tax Relief Extension Act of 1999'' and inserting
``Pension Stability Act''.
(2) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is
amended by striking ``Tax Relief Extension Act of 1999'' and
inserting ``Pension Stability Act''.
(3) Paragraph (13) of section 408(b) of such Act (29 U.S.C.
1108(b)(3)) is amended--
(A) by striking ``January 1, 2006'' and inserting
``January 1, 2014'', and
(B) by striking ``Tax Relief Extension Act of
1999'' and inserting ``Pension Stability Act''.
SEC. 10. CLARIFICATION OF EXEMPTION FROM TAX FOR SMALL PROPERTY AND
CASUALTY INSURANCE COMPANIES.
(a) In General.--Section 501(c)(15)(A) of the Internal Revenue Code
of 1986 is amended to read as follows:
``(A) Insurance companies (as defined in section
816(a)) other than life (including interinsurers and
reciprocal underwriters) if--
``(i) the gross receipts for the taxable
year do not exceed $600,000, and
``(ii) more than 50 percent of such gross
receipts consist of premiums.''.
(b) Controlled Group Rule.--Section 501(c)(15)(C) of the Internal
Revenue Code of 1986 is amended by inserting ``, except that in
applying section 1563 for purposes of section 831(b)(2)(B)(ii),
subparagraphs (B) and (C) of section 1563(b)(2) shall be disregarded''
before the period at the end.
(c) Conforming Amendment.--Clause (i) of section 831(b)(2)(A) of
the Internal Revenue Code of 1986 is amended by striking ``exceed
$350,000 but''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
SEC. 11. DEFINITION OF INSURANCE COMPANY FOR SECTION 831.
(a) In General.--Section 831 of the Internal Revenue Code of 1986
is amended by redesignating subsection (c) as subsection (d) and by
inserting after subsection (b) the following new subsection:
``(c) Insurance Company Defined.--For purposes of this section, the
term `insurance company' has the meaning given to such term by section
816(a)).''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2003.
SEC. 12. FUNDS FOR REBUILDING FISH STOCKS.
Section 105 of the Miscellaneous Appropriations and Offsets Act,
2004 (division H of the Consolidated appropriations Act, 2004) is
repealed.
Attest:
Secretary.
108th CONGRESS
2d Session
H. R. 3108
_______________________________________________________________________
AMENDMENT