[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3108 Enrolled Bill (ENR)]
H.R.3108
One Hundred Eighth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twentieth day of January, two thousand and four
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.
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 Funding Equity Act of
2004''.
TITLE I--PENSION FUNDING
SEC. 101. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.
(a) Employee Retirement Income Security Act of 1974.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 302(b)(5)(B) of the
Employee Retirement Income Security Act of 1974 is amended by
redesignating subclause (II) as subclause (III) and by
inserting after subclause (I) the following new subclause:
``(II) Special rule for years 2004 and 2005.--In the
case of plan years beginning after December 31, 2003, and
before January 1, 2006, 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 rates of
interest on amounts invested conservatively in long-term
investment grade corporate bonds during the 4-year period
ending on the last day before the beginning of the plan
year. Such rates shall be determined by the Secretary of
the Treasury on the basis of 2 or more indices that are
selected periodically by the Secretary of the Treasury and
that are in the top 3 quality levels available. The
Secretary of the Treasury shall make the permissible range,
and the indices and methodology used to determine the
average rate, publicly available.''.
(B) Secretarial authority.--Subclause (III) of section
302(b)(5)(B)(ii) of such Act, as redesignated by subparagraph
(A), is amended--
(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''.
(C) Conforming amendment.--Subclause (I) of section
302(b)(5)(B)(ii) of such Act is amended by inserting ``or
(III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of section
302(d)(7)(C) of such Act 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.--Paragraph (7) of section 302(e) of
such Act 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 for the preceding plan year shall be redetermined using
120 percent as the specified percentage determined under subsection
(d)(7)(C)(i)(II).''.
(4) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such Act is
amended by adding at the end the following new subclause:
``(V) In the case of plan years beginning after December 31,
2003, and before January 1, 2006, the annual yield taken into
account under subclause (II) shall be the annual rate of interest
determined by the Secretary of the Treasury on amounts invested
conservatively in long-term investment grade corporate bonds for
the month preceding the month in which the plan year begins. For
purposes of the preceding sentence, the Secretary of the Treasury
shall determine such rate of interest on the basis of 2 or more
indices that are selected periodically by the Secretary of the
Treasury and that are in the top 3 quality levels available. The
Secretary of the Treasury shall make the permissible range, and the
indices and methodology used to determine the rate, publicly
available.''.
(b) Internal Revenue Code of 1986.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 412(b)(5)(B) of the
Internal Revenue Code of 1986 is amended by redesignating
subclause (II) as subclause (III) and by inserting after
subclause (I) the following new subclause:
``(II) Special rule for years 2004 and 2005.--In
the case of plan years beginning after December 31,
2003, and before January 1, 2006, 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 rates of interest on amounts invested
conservatively in long-term investment grade corporate
bonds during the 4-year period ending on the last day
before the beginning of the plan year. Such rates shall
be determined by the Secretary on the basis of 2 or
more indices that are selected periodically by the
Secretary and that are in the top 3 quality levels
available. The Secretary shall make the permissible
range, and the indices and methodology used to
determine the average rate, publicly available.''.
(B) Secretarial authority.--Subclause (III) of section
412(b)(5)(B)(ii) of such Code, as redesignated by subparagraph
(A), is amended--
(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''.
(C) Conforming amendment.--Subclause (I) of section
412(b)(5)(B)(ii) of such Code is amended by inserting ``or
(III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of section
412(l)(7)(C) 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.--Paragraph (7) of section 412(m) 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 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)(IV) of section 412 solely for purposes of
determining the interest rate used in calculating the maximum
amount of the deduction allowable under this paragraph.''.
(c) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any plan or
annuity contract amendment--
(A) such plan or contract shall be treated as being
operated in accordance with the terms of the plan or contract
during the period described in paragraph (2)(B)(i), and
(B) except as provided by the Secretary of the Treasury,
such plan shall not fail to meet the requirements of section
411(d)(6) of the Internal Revenue Code of 1986 and section
204(g) of the Employee Retirement Income Security Act of 1974
by reason of such amendment.
(2) Amendments to which section applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or annuity contract which is made--
(i) pursuant to any amendment made by this section, and
(ii) on or before the last day of the first plan year
beginning on or after January 1, 2006.
(B) Conditions.--This subsection shall not apply to any
plan or annuity contract amendment unless--
(i) during the period beginning on the date the
amendment described in subparagraph (A)(i) takes effect and
ending on the date described in subparagraph (A)(ii) (or,
if earlier, the date the plan or contract amendment is
adopted), the plan or contract is operated as if such plan
or contract amendment were in effect; and
(ii) such plan or contract amendment applies
retroactively for such period.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraphs (2) and (3),
the amendments made by this section shall apply to plan years
beginning after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(d)(9)(B)(ii) and (e)(1) of section 302 of the Employee Retirement
Income Security Act of 1974 and subsections (l)(9)(B)(ii) and
(m)(1) of section 412 of the Internal Revenue Code of 1986 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 prior plan years. The Secretary of the Treasury may
prescribe simplified assumptions which may be used in applying the
amendments made by this section to such prior plan years.
(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(e)(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 (b)(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. 102. ELECTION OF ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION.
(a) 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) Election for certain plans.--
``(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 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 plan's enrolled actuary certifies (in such
form and manner prescribed by the Secretary of the
Treasury) that the amendment provides for an increase in
annual contributions which will exceed the increase in
annual charges to the funding standard account attributable
to such amendment, or
``(ii) the amendment is required by a collective
bargaining agreement which is in effect on the date of
enactment of this subparagraph.
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,
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 processing of
iron ore pellets, 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.
``(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 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.''.
(b) 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) Election for certain plans.--
``(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 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 plan's enrolled actuary certifies (in such
form and manner prescribed by the Secretary) that the
amendment provides for an increase in annual contributions
which will exceed the increase in annual charges to the
funding standard account attributable to such amendment, or
``(ii) the amendment is required by a collective
bargaining agreement which is in effect on the date of
enactment of this subparagraph.
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,
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 processing of
iron ore pellets, or
``(iii) an organization described in section 501(c)(5)
and which established the plan to which this paragraph
applies on June 30, 1955.
``(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.''.
(c) Effect of Election.--An election under section 302(d)(12) of
the Employee Retirement Income Security Act of 1974 or section
412(l)(12) of the Internal Revenue Code of 1986 (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 person''
after ``101(e)(2) with respect to any person''.
SEC. 103. MULTIEMPLOYER PLAN FUNDING NOTICES.
(a) In General.--Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021) is amended by inserting after
subsection (e) the following new subsection:
``(f) 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, to each employer that has an obligation to
contribute under the plan, and to the Pension Benefit Guaranty
Corporation.
``(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 notice
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
101(f)''.
(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. 104. ELECTION FOR DEFERRAL OF CHARGE FOR PORTION OF NET EXPERIENCE
LOSS.
(a) 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) Election for deferral of charge for portion of net
experience loss.--
``(i) In general.--With respect to the net experience
loss of an eligible multiemployer plan for the first plan
year beginning after December 31, 2001, the plan sponsor
may elect to defer up to 80 percent of the amount otherwise
required to be charged under paragraph (2)(B)(iv) for any
plan year beginning after June 30, 2003, and before July 1,
2005, to any plan year selected by the plan from either of
the 2 immediately succeeding plan years.
``(ii) Interest.--For the plan year to which a charge
is deferred pursuant to an election under clause (i), the
funding standard account shall be charged with interest on
the deferred charge for the period of deferral at the rate
determined under section 304(a) for multiemployer plans.
``(iii) 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 period for which a charge is deferred
pursuant to an election under clause (i), unless--
``(I) the plan's enrolled actuary certifies (in
such form and manner prescribed by the Secretary of the
Treasury) that the amendment provides for an increase
in annual contributions which will exceed the increase
in annual charges to the funding standard account
attributable to such amendment, or
``(II) the amendment is required by a collective
bargaining agreement which is in effect on the date of
enactment of this subparagraph.
If a plan is amended during any such plan year in violation
of the preceding sentence, any election under this
paragraph shall not apply to any such plan year ending on
or after the date on which such amendment is adopted.
``(iv) Eligible multiemployer plan.--For purposes of
this subparagraph, the term `eligible multiemployer plan'
means a multiemployer plan--
``(I) which had a net investment loss for the first
plan year beginning after December 31, 2001, of at
least 10 percent of the average fair market value of
the plan assets during the plan year, and
``(II) with respect to which the plan's enrolled
actuary certifies (not taking into account the
application of this subparagraph), on the basis of the
acutuarial assumptions used for the last plan year
ending before the date of the enactment of this
subparagraph, that the plan is projected to have an
accumulated funding deficiency (within the meaning of
subsection (a)(2)) for any plan year beginning after
June 30, 2003, and before July 1, 2006.
For purposes of subclause (I), a plan's net investment loss
shall be determined on the basis of the actual loss and not
under any actuarial method used under subsection (c)(2).
``(v) Exception to treatment of eligible multiemployer
plan.--In no event shall a plan be treated as an eligible
multiemployer plan under clause (iv) if--
``(I) for any taxable year beginning during the 10-
year period preceding the first plan year for which an
election is made under clause (i), any employer
required to contribute to the plan failed to timely pay
any excise tax imposed under section 4971 of the
Internal Revenue Code of 1986 with respect to the plan,
``(II) for any plan year beginning after June 30,
1993, and before the first plan year for which an
election is made under clause (i), the average
contribution required to be made by all employers to
the plan does not exceed 10 cents per hour or no
employer is required to make contributions to the plan,
or
``(III) with respect to any of the plan years
beginning after June 30, 1993, and before the first
plan year for which an election is made under clause
(i), a waiver was granted under section 303 of this Act
or section 412(d) of the Internal Revenue Code of 1986
with respect to the plan or an extension of an
amortization period was granted under section 304 of
this Act or section 412(e) of such Code with respect to
the plan.
``(vi) Notice.--If a plan sponsor makes an election
under this subparagraph or 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, to each
employer that has an obligation to contribute under the
plan, and to the Pension Benefit Guaranty Corporation. Such
notice shall include with respect to any election the
amount of any charge 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) Election.--An election under this subparagraph
shall be made at such time and in such manner as 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) Internal Revenue Code of 1986.--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) Election for deferral of charge for portion of net
experience loss.--
``(i) In general.--With respect to the net experience
loss of an eligible multiemployer plan for the first plan
year beginning after December 31, 2001, the plan sponsor
may elect to defer up to 80 percent of the amount otherwise
required to be charged under paragraph (2)(B)(iv) for any
plan year beginning after June 30, 2003, and before July 1,
2005, to any plan year selected by the plan from either of
the 2 immediately succeeding plan years.
``(ii) Interest.--For the plan year to which a charge
is deferred pursuant to an election under clause (i), the
funding standard account shall be charged with interest on
the deferred charge for the period of deferral at the rate
determined under subsection (d) for multiemployer plans.
``(iii) 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 period for which a charge is deferred
pursuant to an election under clause (i), unless--
``(I) the plan's enrolled actuary certifies (in
such form and manner prescribed by the Secretary) that
the amendment provides for an increase in annual
contributions which will exceed the increase in annual
charges to the funding standard account attributable to
such amendment, or
``(II) the amendment is required by a collective
bargaining agreement which is in effect on the date of
enactment of this subparagraph.
If a plan is amended during any such plan year in violation
of the preceding sentence, any election under this
paragraph shall not apply to any such plan year ending on
or after the date on which such amendment is adopted.
``(iv) Eligible multiemployer plan.--For purposes of
this subparagraph, the term `eligible multiemployer plan'
means a multiemployer plan--
``(I) which had a net investment loss for the first
plan year beginning after December 31, 2001, of at
least 10 percent of the average fair market value of
the plan assets during the plan year, and
``(II) with respect to which the plan's enrolled
actuary certifies (not taking into account the
application of this subparagraph), on the basis of the
acutuarial assumptions used for the last plan year
ending before the date of the enactment of this
subparagraph, that the plan is projected to have an
accumulated funding deficiency (within the meaning of
subsection (a)) for any plan year beginning after June
30, 2003, and before July 1, 2006.
For purposes of subclause (I), a plan's net investment loss
shall be determined on the basis of the actual loss and not
under any actuarial method used under subsection (c)(2).
``(v) Exception to treatment of eligible multiemployer
plan.--In no event shall a plan be treated as an eligible
multiemployer plan under clause (iv) if--
``(I) for any taxable year beginning during the 10-
year period preceding the first plan year for which an
election is made under clause (i), any employer
required to contribute to the plan failed to timely pay
any excise tax imposed under section 4971 with respect
to the plan,
``(II) for any plan year beginning after June 30,
1993, and before the first plan year for which an
election is made under clause (i), the average
contribution required to be made by all employers to
the plan does not exceed 10 cents per hour or no
employer is required to make contributions to the plan,
or
``(III) with respect to any of the plan years
beginning after June 30, 1993, and before the first
plan year for which an election is made under clause
(i), a waiver was granted under section 412(d) or
section 303 of the Employee Retirement Income Security
Act of 1974 with respect to the plan or an extension of
an amortization period was granted under subsection (e)
or section 304 of such Act with respect to the plan.
``(vi) Election.--An election under this subparagraph
shall be made at such time and in such manner as the
Secretary may prescribe.''.
TITLE II--OTHER PROVISIONS
SEC. 201. TWO-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. 202. 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. 203. SENSE OF CONGRESS REGARDING DEFINED BENEFIT PENSION SYSTEM
REFORM.
It is the sense of the Congress that the Congress must ensure the
financial health of the defined benefit pension system by working to
promptly implement--
(1) a permanent replacement for the pension discount rate used
for defined benefit pension plan calculations, and
(2) comprehensive funding reforms for all defined benefit
pension plans aimed at achieving accurate and sound pension funding
to enhance retirement security for workers who rely on defined
pension plan benefits, to reduce the volatility of contributions,
to provide plan sponsors with predictability for plan
contributions, and to ensure adequate disclosures for plan
participants in the case of underfunded pension plans.
SEC. 204. 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
Funding Equity Act of 2004''.
(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 Funding Equity Act of 2004''.
(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 Funding Equity Act of 2004''.
SEC. 205. REPEAL OF REDUCTION OF DEDUCTIONS FOR MUTUAL LIFE INSURANCE
COMPANIES.
(a) In General.--Section 809 of the Internal Revenue Code of 1986
(relating to reductions in certain deduction of mutual life insurance
companies) is hereby repealed.
(b) Conforming Amendments.--
(1) Subsections (a)(2)(B) and (b)(1)(B) of section 807 of such
Code are each amended by striking ``the sum of (i)'' and by
striking ``plus (ii) any excess described in section 809(a)(2) for
the taxable year,''.
(2)(A) The last sentence of section 807(d)(1) of such Code is
amended by striking ``section 809(b)(4)(B)'' and inserting
``paragraph (6)''.
(B) Subsection (d) of section 807 of such Code is amended by
adding at the end the following new paragraph:
``(6) Statutory reserves.--The term `statutory reserves' means
the aggregate amount set forth in the annual statement with respect
to items described in section 807(c). Such term shall not include
any reserve attributable to a deferred and uncollected premium if
the establishment of such reserve is not permitted under section
811(c).''.
(3) Subsection (c) of section 808 of such Code is amended to
read as follows:
``(c) Amount of Deduction.--The deduction for policyholder
dividends for any taxable year shall be an amount equal to the
policyholder dividends paid or accrued during the taxable year.''.
(4) Subparagraph (A) of section 812(b)(3) of such Code is
amended by striking ``sections 808 and 809'' and inserting
``section 808''.
(5) Subsection (c) of section 817 of such Code is amended by
striking ``(other than section 809)''.
(6) Subsection (c) of section 842 of such Code is amended by
striking paragraph (3) and by redesignating paragraph (4) as
paragraph (3).
(7) The table of sections for subpart C of part I of subchapter
L of chapter 1 of such Code is amended by striking the item
relating to section 809.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.
SEC. 206. 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)(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, or
``(ii) in the case of a mutual insurance company--
``(I) the gross receipts of which for the taxable year
do not exceed $150,000, and
``(II) more than 35 percent of such gross receipts
consist of premiums.
Clause (ii) shall not apply to a company if any employee of the
company, or a member of the employee's family (as defined in
section 2032A(e)(2)), is an employee of another company exempt from
taxation by reason of this paragraph (or would be so exempt but for
this sentence).''.
(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 831(b)(2)(B)(ii) for purposes of this subparagraph,
subparagraphs (B) and (C) of section 1563(b)(2) shall be disregarded''
before the period at the end.
(c) Definition of Insurance Company for Section 831.--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)).''.
(d) 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''.
(e) Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2003.
(2) Transition rule for companies in receivership or
liquidation.--In the case of a company or association which--
(A) for the taxable year which includes April 1, 2004,
meets the requirements of section 501(c)(15)(A) of the Internal
Revenue Code of 1986, as in effect for the last taxable year
beginning before January 1, 2004, and
(B) on April 1, 2004, is in a receivership, liquidation, or
similar proceeding under the supervision of a State court,
the amendments made by this section shall apply to taxable years
beginning after the earlier of the date such proceeding ends or
December 31, 2007.
SEC. 207. CONFIRMATION OF ANTITRUST STATUS OF GRADUATE MEDICAL RESIDENT
MATCHING PROGRAMS.
(a) Findings and Purposes.--
(1) Findings.--Congress makes the following findings:
(A) For over 50 years, most United States medical school
seniors and the large majority of graduate medical education
programs (popularly known as ``residency programs'') have
chosen to use a matching program to match medical students with
residency programs to which they have applied. These matching
programs have been an integral part of an educational system
that has produced the finest physicians and medical researchers
in the world.
(B) Before such matching programs were instituted, medical
students often felt pressure, at an unreasonably early stage of
their medical education, to seek admission to, and accept
offers from, residency programs. As a result, medical students
often made binding commitments before they were in a position
to make an informed decision about a medical specialty or a
residency program and before residency programs could make an
informed assessment of students' qualifications. This situation
was inefficient, chaotic, and unfair and it often led to
placements that did not serve the interests of either medical
students or residency programs.
(C) The original matching program, now operated by the
independent non-profit National Resident Matching Program and
popularly known as ``the Match'', was developed and implemented
more than 50 years ago in response to widespread student
complaints about the prior process. This Program includes on
its board of directors individuals nominated by medical student
organizations as well as by major medical education and
hospital associations.
(D) The Match uses a computerized mathematical algorithm,
as students had recommended, to analyze the preferences of
students and residency programs and match students with their
highest preferences from among the available positions in
residency programs that listed them. Students thus obtain a
residency position in the most highly ranked program on their
list that has ranked them sufficiently high among its
preferences. Each year, about 85 percent of participating
United States medical students secure a place in one of their
top 3 residency program choices.
(E) Antitrust lawsuits challenging the matching process,
regardless of their merit or lack thereof, have the potential
to undermine this highly efficient, pro-competitive, and long-
standing process. The costs of defending such litigation would
divert the scarce resources of our country's teaching hospitals
and medical schools from their crucial missions of patient
care, physician training, and medical research. In addition,
such costs may lead to abandonment of the matching process,
which has effectively served the interests of medical students,
teaching hospitals, and patients for over half a century.
(2) Purposes.--It is the purpose of this section to--
(A) confirm that the antitrust laws do not prohibit
sponsoring, conducting, or participating in a graduate medical
education residency matching program, or agreeing to do so; and
(B) ensure that those who sponsor, conduct or participate
in such matching programs are not subjected to the burden and
expense of defending against litigation that challenges such
matching programs under the antitrust laws.
(b) Application of Antitrust Laws to Graduate Medical Education
Residency Matching Programs.--
(1) Definitions.--In this subsection:
(A) Antitrust laws.--The term ``antitrust laws''--
(i) has the meaning given such term in subsection (a)
of the first section of the Clayton Act (15 U.S.C. 12(a)),
except that such term includes section 5 of the Federal
Trade Commission Act (15 U.S.C. 45) to the extent such
section 5 applies to unfair methods of competition; and
(ii) includes any State law similar to the laws
referred to in clause (i).
(B) Graduate medical education program.--The term
``graduate medical education program'' means--
(i) a residency program for the medical education and
training of individuals following graduation from medical
school;
(ii) a program, known as a specialty or subspecialty
fellowship program, that provides more advanced training;
and
(iii) an institution or organization that operates,
sponsors or participates in such a program.
(C) Graduate medical education residency matching
program.--The term ``graduate medical education residency
matching program'' means a program (such as those conducted by
the National Resident Matching Program) that, in connection
with the admission of students to graduate medical education
programs, uses an algorithm and matching rules to match
students in accordance with the preferences of students and the
preferences of graduate medical education programs.
(D) Student.--The term ``student'' means any individual who
seeks to be admitted to a graduate medical education program.
(2) Confirmation of antitrust status.--It shall not be unlawful
under the antitrust laws to sponsor, conduct, or participate in a
graduate medical education residency matching program, or to agree
to sponsor, conduct, or participate in such a program. Evidence of
any of the conduct described in the preceding sentence shall not be
admissible in Federal court to support any claim or action alleging
a violation of the antitrust laws.
(3) Applicability.--Nothing in this section shall be construed
to exempt from the antitrust laws any agreement on the part of 2 or
more graduate medical education programs to fix the amount of the
stipend or other benefits received by students participating in
such programs.
(c) Effective Date.--This section shall take effect on the date of
enactment of this Act, shall apply to conduct whether it occurs prior
to, on, or after such date of enactment, and shall apply to all
judicial and administrative actions or other proceedings pending on
such date of enactment.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.