1.Short
title; table of contents
(a)This Act may be cited
as the Pension Fairness and Full
Disclosure Act of 2005
.
(b)The table of contents is as follows:
Sec. 1. Short title; table of
contents.
Sec. 2. Findings and purpose.
Title I—Fairness in plan terminations and conversions
Sec. 101. Termination fairness standard for nonqualified
deferred compensation plans in connection with pension plan terminations based
on bankruptcy reorganization or in connection with conversions to cash balance
plans.
Sec. 102. Penalty on funding nonqualified deferred compensation
plans in the event of a pension plan termination based on bankruptcy
reorganization or a conversion of a pension plan to a cash balance
plan.
Title II—Fairness in funding
Sec. 201. Treatment under ERISA of employers that fund
nonqualified deferred compensation plans while maintaining underfunded defined
benefit plans.
Sec. 202. Penalty on funding nonqualified deferred compensation
plans while maintaining underfunded defined benefit plans.
Title III—Fairness in disclosure
Sec. 301. Disclosure with respect to benefits under
nonqualified deferred compensation plans.
2.
(a)The
Congress finds as follows:
(1)The pension system sponsored by private
employers is in a weakened state due to industry-wide crises, changing market
forces, and the pressures of globalization.
(2)Employers increasingly are terminating or
reducing the benefits provided under traditional defined benefit pension
plans.
(3)More than 44,000,000 workers, retirees, and
their families depend on defined benefit pension plans as a critical component
of their retirement security in addition to Social Security.
(4)Many defined benefit pension plans are
underfunded and the Pension Benefit Guaranty Corporation, the agency that
insures traditional pensions, has also gone into deficit.
(5)Congress in enacting the Employee
Retirement Income Security Act of 1974 intended employers to adequately fund
their pension plans and did not intend for the Pension Benefit Guaranty
Corporation to be used as a means for restructuring companies to escape their
unfunded pension liabilities, or circumvent collective bargaining
obligations.
(6)Cash balance pension plans often reduce
traditional defined benefit pension obligations and adequate standards do not
exist to adequately protect the pensions of pension plan participants,
particularly older participants.
(7)Corporate executives often preserve or
enhance executive pension and other benefits at the same time the benefits of
non-highly paid employees are reduced.
(b)It is the purpose of this Act to better
protect the retirement benefits afforded to workers and retirees by protecting
the solvency of the Pension Benefit Guaranty Corporation and ensuring equitable
treatment of corporate executives as compared to treatment provided to other
employees when restructuring employers shift unfunded pension liabilities onto
the Pension Benefit Guaranty Corporation or convert to cash balance pension
plans without adequately protecting the retirement security of older
workers.
<enum>I</enum><header>Fairness in plan
terminations and conversions</header>
<section id="H40858FF1FA954874BEC2F3A3F264BAAC"><enum>101.</enum><header>Termination
fairness standard for nonqualified deferred compensation plans in connection
with pension plan terminations based on bankruptcy reorganization or in
connection with conversions to cash balance plans</header>
<subsection id="H6AA4DD62AB5B497CB25F18C66C45D0A7"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 206 of the
<act-name parsable-cite="ERISA">Employee Retirement Income Security Act of
1974</act-name> (29 U.S.C. 1056) is amended by adding at the end the following
new subsection:</text>
<quoted-block act-name="Employee" id="H8CAE6C388DFC42F09245E6875BA63B31">
<subsection id="H726ADAF02702441E88D002AAA1AD285B"><enum>(g)</enum><header>Termination
fairness standard for nonqualified deferred compensation plans in connection
with pension plan terminations based on bankruptcy reorganization or in
connection with conversions to cash balance plans</header>
<paragraph id="H26DEDCD0807449CFA27370094F8BADA6"><enum>(1)</enum><header>In
general</header><text>In any case in which a corporation is a plan sponsor of a
defined benefit plan with respect to which a plan amendment is adopted that has
the effect of—</text>
<subparagraph id="H51606A4122954C9397AE77E2F034F0C4"><enum>(A)</enum><text>implementing a
distress termination of the plan under section 4041(c) based on bankruptcy
reorganization or a termination of the plan initiated by the Pension Benefit
Guaranty Corporation under section 4042 based on bankruptcy reorganization, in
any case in which the plan is not sufficient for guaranteed benefits (within
the meaning of section 4041(d)(2)) as of the proposed termination date;
or</text>
</subparagraph><subparagraph id="H84769BB8B97144019DA6C32706A826C8"><enum>(B)</enum><text>converting such
plan to a cash balance plan, in any case in which the amendment—</text>
<clause id="H030664AC069D41ACA5CF2985C79918E8"><enum>(i)</enum><text>results in a
significant reduction in the rate of future benefit accruals (within the
meaning of section 204(h)(1)) of participants with at least 10 years of service
under the plan; or</text>
</clause><clause id="H906E3F5B6F5B4C5A81B2252DD7933414"><enum>(ii)</enum><text>does not provide
for an election by affected participants with at least 10 years of service
under the plan (and their beneficiaries) to retain coverage under the terms of
the plan as in effect immediately prior to the amendment,</text>
</clause></subparagraph><continuation-text continuation-text-level="paragraph">any
covered deferred compensation plan established or maintained by such plan
sponsor after the date of the adoption of such plan amendment shall meet the
termination fairness standard of this subsection with respect to such plan
amendment.</continuation-text></paragraph><paragraph id="HF983B0A79B804CB4A41DA92C1EA2CAB1"><enum>(2)</enum><header>Termination
fairness standard</header><text display-inline="yes-display-inline">A covered
deferred compensation plan established or maintained by a plan sponsor
described in paragraph (1) meets the termination fairness standard of this
subsection with respect to a plan amendment described in paragraph (1) if,
during the 5-year period beginning on the date of the adoption of such plan
amendment—</text>
<subparagraph id="HD31C3AF478674BEEAC863D28F8483454"><enum>(A)</enum><text>no amount of
deferred compensation accrues to a disqualified individual under the terms of
such covered deferred compensation plan (irrespective of whether the accrual in
deferred compensation is expressed in the form of a promise, a guarantee, or
any other representation); and</text>
</subparagraph><subparagraph id="H45666900253A4F0C8E6C007FC7F8370"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of a covered deferred
compensation plan established during or after the 1-year period preceding the
notice date (or any amendment to a covered deferred compensation plan if such
amendment is adopted during or after such 1-year period), no distribution of
accrued deferred compensation is made under such plan (or such amendment) to a
disqualified individual.</text>
</subparagraph></paragraph><paragraph id="H4526F23D60BC444D8F02E4F3C400F919"><enum>(3)</enum><header>Definitions</header><text>For
purposes of this subsection—</text>
<subparagraph id="H6D2131CCC7B845C082D4737DB83812C8"><enum>(A)</enum><header>Cash balance
plan</header>
<clause id="HBC93044ED97F46E098A6D44188009585"><enum>(i)</enum><header>In
general</header><text>The term <term>cash balance plan</term> means a defined
benefit plan under which the accrued benefit is expressed to participants and
beneficiaries as an amount other than an annual benefit commencing at normal
retirement age.</text>
</clause><clause id="H686DFA4B4FA2440580B22FB9394C5D00"><enum>(ii)</enum><header>Regulations to
include similar or other hybrid plans</header><text>The Secretary shall issue
regulations which provide that a defined benefit plan (or any portion of such a
plan) which has an effect similar to a plan described in clause (i) shall be
treated as a cash balance plan. Such regulations may provide that if a plan
sponsor represents in communications to participants and beneficiaries that a
plan amendment results in a plan being described in the preceding sentence,
such plan shall be treated as a cash balance plan.</text>
</clause></subparagraph><subparagraph id="H387EB7E825A6454BBA3D90486E818169"><enum>(B)</enum><header>Notice
date</header><text>The term <term>notice date</term> means, with respect to an
amendment described in paragraph (1)—</text>
<clause id="H299F7208836441ACB17414A09807F2AE"><enum>(i)</enum><text>in
the case of a distress termination under section 4041(c), the date of the
advance notice of intent to terminate provided pursuant to section
4041(a)(2);</text>
</clause><clause id="H07FB1ADC41184A0EADADEB7CF0E0C2E7"><enum>(ii)</enum><text>in the case of a
termination initiated by the Pension Benefit Guaranty Corporation under section
4042, the date of the application to the court under section 4042(c);
and</text>
</clause><clause id="H66F51AA1BDCF4AE5A96717D09965BE78"><enum>(iii)</enum><text>in the case of a
conversion to a cash balance plan, the date of the adoption of the
amendment.</text>
</clause></subparagraph><subparagraph id="H70FE19D052644C7CA523CA8377C875D2"><enum>(C)</enum><header>Covered deferred
compensation plan</header>
<clause id="H7F1D851AE0384DD99990E9C5A83CA591"><enum>(i)</enum><header>In
general</header><text>The term <term>covered deferred compensation plan</term>
means any plan providing for the deferral of compensation of a disqualified
individual, whether or not—</text>
<subclause id="H449C1E175FA34474823943253FDCE2B2"><enum>(I)</enum><text>compensation of
the disqualified individual which is deferred under such plan is subject to
substantial risk of forfeiture;</text>
</subclause><subclause id="H3C3C3D66620A466A92436900DA968B4C"><enum>(II)</enum><text>the disqualified
individual’s rights to the compensation deferred under the plan are no greater
than the rights of a general creditor of the plan sponsor;</text>
</subclause><subclause id="H847E765963BD4A77A7A8389CAC708D3"><enum>(III)</enum><text>all amounts set
aside (directly or indirectly) for purposes of paying the deferred compensation
(including income), and all income attributable to such amounts, remain (until
made available to the disqualified individual or other beneficiary) solely the
property of the plan sponsor (without being restricted to the provision of
benefits under the plan);</text>
</subclause><subclause id="H6BF0D3670D8A4057AA8465AD13C47600"><enum>(IV)</enum><text>the amounts
referred to in subclause (III) are available to satisfy the claims of the plan
sponsor’s general creditors at all times (not merely after bankruptcy or
insolvency); and</text>
</subclause><subclause id="H277382408F8B4D12005E491F061BD84F"><enum>(V)</enum><text>some or all of the
compensation of the disqualified individual which is deferred under such plan
is guaranteed by an insurance company, insurance service, or other similar
organization.</text>
</subclause></clause><clause id="H9290BA36C19E476AB0C0814E8FBCFF2"><enum>(ii)</enum><header>Exception for
qualified plans</header><text>Such term shall not include a plan that
is—</text>
<subclause id="H49A239FFA39A4568B6ECC57900AFDCFF"><enum>(I)</enum><text>described in
section 219(g)(5)(A) of the Internal Revenue Code of 1986; or</text>
</subclause><subclause id="HF2F6FDBA595641FE84A8000743FABCC6"><enum>(II)</enum><text>an eligible
deferred compensation plan (as defined in section 457(b) of such Code) of an
eligible employer described in section 457(e)(1)(A) of such Code.</text>
</subclause></clause><clause id="H4F5E9C1875AE4BFF8ED5E06DD2236332"><enum>(iii)</enum><header>Plan includes
arrangements, etc</header><text>For purposes of this subparagraph, the term
<term>plan</term> includes any agreement or arrangement.</text>
</clause></subparagraph><subparagraph id="H008EEEF3757F4E4D9855F9EFAEB60D9"><enum>(D)</enum><header>Disqualified
individual</header><text>The term <term>disqualified individual</term> means a
director or executive officer of the plan sponsor.</text>
</subparagraph><subparagraph id="HC47D94A9D8CA468D8D5B80994C8FE0E5"><enum>(E)</enum><header>Termination
based on bankruptcy reorganization</header><text display-inline="yes-display-inline">A termination of a plan which is a distress
termination under section 4041(c) or a termination instituted by the Pension
Benefit Guaranty Corporation under section 4042 shall be treated as based on
bankruptcy reorganization if such termination is based in whole or in part on
the filing, by or against any person who is a contributing sponsor of such plan
or a member of such sponsor’s controlled group, of a petition seeking
reorganization in a case under title 11, United States Code, or under any
similar law of a State or political subdivision of a State (or such a case in
which liquidation is sought has been converted to a case in which
reorganization is sought).</text>
</subparagraph><subparagraph id="H05E9BDF2D51242499B19E5156071F449"><enum>(F)</enum><header>Title IV
terminology</header><text>Any term used in this subsection which is defined in
section 4001(a) shall have the meaning provided such term in section
4001(a).</text>
</subparagraph></paragraph><paragraph id="HD20D82B7452340A89EA4D29C91BC738"><enum>(4)</enum><header>Special
rules</header>
<subparagraph id="HBEA1197FA47D4DF2A4591CBF129C7AB"><enum>(A)</enum><header>Coordinated
benefits</header><text>If the benefits of 2 or more defined benefit plans
established or maintained by an employer are coordinated in such a manner as to
have the effect of the adoption of an amendment described in paragraph (1), the
sponsor of the defined benefit plan or plans providing for such coordination
shall be treated as having adopted such a plan amendment as of the date such
coordination begins.</text>
</subparagraph><subparagraph id="H8CE14D2C9472443089FA67AE0055EFF0"><enum>(B)</enum><header>Multiple
amendments</header><text>The Secretary shall issue regulations to prevent the
avoidance of the purposes of this subsection through the use of 2 or more plan
amendments rather than a single amendment.</text>
</subparagraph><subparagraph id="H4F753D420E364020862DD17CD21BB8"><enum>(C)</enum><header>Controlled groups,
etc</header><text>For purposes of this subsection, all persons treated as a
single employer under subsection (b), (c), (m), or (o) of section 414 of the
Internal Revenue Code of 1986 shall be treated as 1 employer.</text>
</subparagraph><subparagraph id="H33815933901F4D6BB12DCA3E45E9ADEB"><enum>(D)</enum><header>Treatment of
earnings</header><text>References to deferred compensation shall be treated as
including references to income attributable to such compensation or such
income.</text>
</subparagraph></paragraph><paragraph id="idF03A1263948B46709D452FD62E665650"><enum>(5)</enum><header>Waiver</header>
<subparagraph id="idCB5E351F32614E8DB511062AB52557B5"><enum>(A)</enum><header>In
general</header><text>In the case of any plan amendment having the effect of a
termination described in paragraph (1)(A), the Secretary may waive the
application of any requirement of the termination fairness standard of section
paragraph (2) with respect to any disqualified individual who first commences
service for the plan sponsor after the notice date with respect to such plan
amendment. The Secretary may grant any such waiver in the case of any such plan
amendment with respect to any such disqualified individual only after
consultation with the Pension Benefit Guaranty Corporation.</text>
</subparagraph><subparagraph id="id066FC000C83542AA8276DE2C90FE58BB"><enum>(B)</enum><header>Requirements
for waiver</header><text>A waiver may be granted under subparagraph (A)
only—</text>
<clause id="id80E5EF45E05F4CD687EA14448200CE2E"><enum>(i)</enum><text>upon the filing
with the Secretary by the plan sponsor of an application for such waiver, in
such form and manner as shall be prescribed in regulations of the
Secretary;</text>
</clause><clause id="id8D7550B249AE44A286CF391CE8F34473"><enum>(ii)</enum><text>upon a showing,
to the satisfaction of the Secretary, that such waiver is a business necessity
for the plan sponsor, as determined under such regulations, and is in the
interest of plan participants and beneficiaries, as determined under such
regulations; and</text>
</clause><clause id="id9830F0A1FFF24D56889B84D016B9438A"><enum>(iii)</enum><text>after the
participants, in such form and manner as shall be provided in such regulations,
have been notified of the filing of the application for the waiver and have
been provided a reasonable opportunity to provide in advance comments to the
Secretary regarding the proposed waiver.</text>
</clause></subparagraph></paragraph><paragraph id="H9FA6AF4842C84878A635803FFC773948"><enum>(6)</enum><header>Effect of waiver
granted by Secretary</header><text>To the extent that any requirement of the
termination fairness standard of this section is waived by the Secretary with
respect to any disqualified individual under paragraph (5) in the case of any
plan amendment having the effect of a termination described in paragraph
(1)(A), such requirement under the termination fairness standard of paragraph
(2) shall not apply with respect to such individual in the case of such plan
amendment.</text>
</paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H4297D2E7FC014E9E83E4743B45AA01A8"><enum>(b)</enum><header>Effective
date</header><text>The amendment made by this section shall apply to—</text>
<paragraph id="HFFB06EC0DB674E9A8842E10674D376B"><enum>(1)</enum><text>plan amendments
adopted on or after May 10, 2005; and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="H8D8F86EB71E04227B92B26053B4F3997"><enum>(2)</enum><text>plan amendments
adopted before such date implementing a plan termination as described in
section 206(g)(1) of the Employee Retirement Income Security Act of 1974 (as
added by this section) based on a bankruptcy reorganization in a case under
title 11 of the United States Code (or under any similar law of a State or a
political subdivision of a State) pending on such date.</text>
</paragraph></subsection></section><section id="H5EDE53FE15C042FDBF9D65A7CB6F4424"><enum>102.</enum><header>Penalty on
funding nonqualified deferred compensation plans in the event of a pension plan
termination based on bankruptcy reorganization or a conversion of a pension
plan to a cash balance plan</header>
<subsection id="H5D544096553C4A8E00025B9462DD845B"><enum>(a)</enum><header>In
general</header><text>Section 502 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1132) is amended—</text>
<paragraph id="id44C18F89A397407B91508AE1D51DE7E8"><enum>(1)</enum><text>in subsection
(a)—</text>
<subparagraph id="id69E2A4EE980743B58644E8EC6275A9BC"><enum>(A)</enum><text>in paragraph (8),
by striking <quote>; or</quote> and inserting a semicolon;</text>
</subparagraph><subparagraph id="id351517A4AFB24374A56D7F109490A039"><enum>(B)</enum><text>in paragraph (9),
by striking the period and inserting <quote>; or</quote>; and</text>
</subparagraph><subparagraph id="id39DFB7B464A546519FFA5FFE074625E4"><enum>(C)</enum><text>by adding at the
end the following:</text>
<quoted-block display-inline="no-display-inline" id="id08862A0372654496B9A2143D3ED88AC8" style="OLC">
<paragraph id="id3EB9F6C090DB4E6E95BDD02E2F68191D"><enum>(10)</enum><text>by a fiduciary
of a defined benefit plan described in section 206(g) to enjoin any act or
practice that violates such section and to obtain relief described under
subsection (c)(8).</text>
</paragraph><after-quoted-block>;
and</after-quoted-block></quoted-block>
</subparagraph></paragraph><paragraph id="idF6DBAD48D9FB427199126B802BCD4623"><enum>(2)</enum><text>in subsection
(c), by—</text>
<subparagraph id="idFD16082B017F46508C7C34691B2F0FCC"><enum>(A)</enum><text>redesignating
paragraph (8) as paragraph (9); and</text>
</subparagraph><subparagraph id="id392F0E5E636A4C60BCEECBA229789799"><enum>(B)</enum><text>inserting after
paragraph (7) the following:</text>
<quoted-block display-inline="no-display-inline" id="id9DD6A89C3E7647CEA223FD0254E5D736" style="OLC">
<paragraph id="idB72895E6D2164489928568BA9954BFE8"><enum>(8)</enum><text>In an action
pursuant to subsection (a)(10), if the court finds a violation of section
206(g), the court shall order the plan sponsor to pay to the defined benefit
plan an amount equal to the amount of the accrual described in section
206(g)(2)(A) comprising the failure or the amount of the distribution described
in section 206(g)(2)(B) comprising the failure, whichever is
applicable.</text>
</paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</subparagraph></paragraph></subsection><subsection id="H305A9B55F56745AAA3A0098FCDD28FF5"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply to—</text>
<paragraph id="id59905C8ABD464C9C9F0E74E278B5F0B9"><enum>(1)</enum><text>plan amendments
adopted on or after May 10, 2005; and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="idED74A27CCFA24ADD994BD9E92145AE79"><enum>(2)</enum><text>plan amendments
adopted before such date implementing a plan termination as described in
section 206(g)(1) of the Employee Retirement Income Security Act of 1974 (as
added by this section) based on a bankruptcy reorganization in a case under
title 11 of the United States Code (or under any similar law of a State or a
political subdivision of a State) pending on such date.</text>
</paragraph></subsection></section><enum>II</enum><header>Fairness in
funding</header>
<section id="H5ABFF30183C74E7B84349DF21CCB2146" section-type="subsequent-section"><enum>201.</enum><header>Prohibition under
ERISA against funding nonqualified deferred compensation plans while
maintaining underfunded defined benefit plans</header>
<subsection id="H59757EC4637C437994920000E69BCC2C"><enum>(a)</enum><header>In
general</header><text>Part 3 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 is amended—</text>
<paragraph id="HF3D6BB610686486E879BDC2DE31FCE6D"><enum>(1)</enum><text>by redesignating
section 308 as section 309; and</text>
</paragraph><paragraph id="H897666686A7B496999AEF956739C75A5"><enum>(2)</enum><text>by inserting after
section 307 the following new section:</text>
<quoted-block act-name="" display-inline="no-display-inline" id="HDCD5529EC5E2400CB19928AAA2B10206" style="OLC">
<section id="H3D7CD5E673B74CC8BFED6D5510D286A3"><enum>308.</enum><header>Funding
requirements with respect to underfunded single-employer defined benefit plan
violated by funding of covered deferred compensation plan</header>
<subsection id="idD190713AF7FF4FA2ADA9898819434E1A"><enum>(a)</enum><header>In
general</header><text>In any case in which, as of the valuation date for any
plan year of a defined benefit plan which is a single-employer plan, the funded
current liability percentage of such plan is less than 75 percent, during the
period beginning with such date and ending immediately before the valuation
date for the following plan year—</text>
<paragraph id="H86C58D9BDBAE4AD1A2229C46712D6250"><enum>(1)</enum><text>the plan sponsor
of such defined benefit plan (or any member of the plan sponsor’s controlled
group) may not contribute to a covered deferred compensation plan maintained by
the plan sponsor (or any such member); and</text>
</paragraph><paragraph id="HC837DE987C5C44FA8522E136D734C396"><enum>(2)</enum><text>a disqualified
individual may not accrue any amount of deferred compensation under the terms
of any covered deferred compensation plan maintained by the plan sponsor of
such defined benefit plan (or by any member of the plan sponsor’s controlled
group), irrespective of whether the accrual in deferred compensation is
expressed in the form of a promise, a guarantee, or any other
representation.</text>
</paragraph></subsection><subsection id="H8B45520623BF4F65AF70EAC50919DD00"><enum>(b)</enum><header>Definitions;
special rule</header><text>For purposes of this section—</text>
<paragraph id="H4A9CF2CA7F244C1FB717BDE497B07D50"><enum>(1)</enum><text>The term
<quote>funded current liability percentage</quote> has the meaning provided in
section 302(d)(8)(B).</text>
</paragraph><paragraph id="H56B8E764F162417A9242DDA324BF69"><enum>(2)</enum><text>The term
<quote>covered deferred compensation plan</quote> has the meaning provided in
section 206(g)(3)(C).</text>
</paragraph><paragraph id="HE62CC03C35D74E0DA5AB5CB688B6A392"><enum>(3)</enum><text>The term
<quote>disqualified individual</quote> has the meaning provided in section
206(g)(3)(D).</text>
</paragraph><paragraph id="H895C447C000C452EBFEE7B4FC29CA69E"><enum>(4)</enum><text>The term
<quote>controlled group</quote> has the meaning provided in section
302(c)(11)(B)(ii).</text>
</paragraph><paragraph id="id6522381F6F974A4AB474CD21358F9B6F"><enum>(5)</enum><text>Any reference to
deferred compensation shall be treated as including references to income
attributable to such compensation or income.</text>
</paragraph></subsection><subsection id="idD8BC70C43F154F70AE578F4F02B548DD"><enum>(c)</enum><header>Waiver</header>
<paragraph id="id2D63F449070848D0B9E6D1AE56580799"><enum>(1)</enum><header>In
general</header><text>The Secretary may waive the application of any
requirement with respect to any contribution described in subsection (a)(1) or
any accrual described in subsection (a)(2). The Secretary may grant such waiver
only after consultation with the Pension Benefit Guaranty Corporation.</text>
</paragraph><paragraph id="id91FDE07309924108AC5E79AC77590BC3"><enum>(2)</enum><header>Requirements
for waiver</header><text>A waiver may be granted under paragraph (1)
only—</text>
<subparagraph id="id3A91D55A0BE346F881F9C3854E532E48"><enum>(A)</enum><text>upon the filing
with the Secretary by the plan sponsor of an application for such waiver, in
such form and manner as shall be prescribed in regulations of the
Secretary;</text>
</subparagraph><subparagraph id="id15127A244205466181CBF332A7425699"><enum>(B)</enum><text>upon a showing,
to the satisfaction of the Secretary, that such waiver is a business necessity
for the plan sponsor, as determined under such regulations, and is in the
interest of plan participants and beneficiaries, as determined under such
regulations; and</text>
</subparagraph><subparagraph id="idFF10930EC8EB4C6688FE7B3DA2E45172"><enum>(C)</enum><text>after the
participants, in such form and manner as shall be provided in such regulations,
have been notified of the filing of the application for the waiver and have
been provided a reasonable opportunity to provide in advance comments to the
Secretary regarding the proposed waiver.</text>
</subparagraph></paragraph></subsection><subsection id="HC5EC1FC4F3924AD300ECCDAC9530B335"><enum>(d)</enum><header>Effect of
waiver</header><text>To the extent that a waiver is granted by the Secretary
under subsection (c) with respect to any contribution described in subsection
(a)(1) or any accrual described in subsection (a)(2), the requirements of
subsection (a) shall not apply with respect to such contribution or
accrual.</text>
</subsection></section><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H26CA3985986C42098E002753FBDC8D05"><enum>(b)</enum><header>Clerical
amendment</header><text>The table of contents in section 1 of such Act is
amended by striking the item relating to section 308 and inserting the
following new items:</text>
<quoted-block display-inline="no-display-inline" id="HCD3FE6D493864C6F9FBAF6BBC555E7D6" style="OLC">
<toc container-level="quoted-block-container" idref="HDCD5529EC5E2400CB19928AAA2B10206" lowest-bolded-level="division-lowest-bolded" lowest-level="section" quoted-block="no-quoted-block" regeneration="yes-regeneration">
<toc-entry idref="H3D7CD5E673B74CC8BFED6D5510D286A3" level="section">Sec. 308. Funding requirements with respect to underfunded
single-employer defined benefit plan violated by funding of covered deferred
compensation plan.</toc-entry>
<toc-entry level="section">Sec. 309. Effective
dates.</toc-entry>
</toc>
<after-quoted-block>.</after-quoted-block></quoted-block>
</subsection><subsection id="H05BB7C4252AF4643AA02FF3B99D2E9E0"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply with respect
to plan years beginning on or after January 1, 2006.</text>
</subsection></section><section display-inline="no-display-inline" id="HB5558140222C489CAFF6F4BBC7AA356" section-type="subsequent-section"><enum>202.</enum><header>Penalty on funding
nonqualified deferred compensation plans while maintaining underfunded defined
benefit plans</header>
<subsection id="H2E8F83D355AC4D898EBD84C997E6E329"><enum>(a)</enum><header>In
general</header><text>Subsection 502 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1132) is amended—</text>
<paragraph id="idAECEA18293AC4CB4A29FC00F9AE21EAB"><enum>(1)</enum><text>in subsection
(a)(10) (as added by section 101), by inserting <quote>or 308</quote> after
<quote>206(g)</quote>; and</text>
</paragraph><paragraph id="id164336B62B2E4F9DB8B6C9F9CBDCA3C9"><enum>(2)</enum><text>in subsection (c)
(as amended by section 101), by amending paragraph (8) to read as
follows:</text>
<quoted-block display-inline="no-display-inline" id="idFBC2C087872D4F1E97CFE7DF5B0B4740" style="OLC">
<paragraph id="idBB6CB8B0F37E485185A5EFEDB27BE8D8"><enum>(8)</enum><text>In an action
pursuant to subsection (a)(10), if the court finds a violation—</text>
<subparagraph id="id72DDC5C082C842029E19C85FB665AA09"><enum>(A)</enum><text>of section
206(g), the court shall order the plan sponsor to pay to the defined benefit
plan an amount equal to the amount of the accrual described in section
206(g)(2)(A) comprising the failure or the distribution described in section
206(g)(2)(B) comprising the failure, whichever is applicable; and</text>
</subparagraph><subparagraph id="idB334708E33024F70BB42314A8638D0CA"><enum>(B)</enum><text>of section 308,
the court shall order the plan sponsor to pay to the defined benefit plan an
amount equal to the amount of any deferred compensation accrued to a
disqualified individual in violation of such
section.</text>
</subparagraph></paragraph><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="HF1965099CF6842CF97C2F4A8002E2317"><enum>(b)</enum><header>Effective
date</header><text>The amendments made by this section shall apply with respect
to plan years beginning on or after January 1, 2006.</text>
</subsection></section><enum>III</enum><header>Fairness in
disclosure</header>
<section id="H1583EEDCFD89461AB688B2331263E1F9"><enum>301.</enum><header>Disclosure with
respect to benefits under nonqualified deferred compensation plans</header>
<subsection id="H9134C4F02DAA4BDD001DF6D48766C7B2"><enum>(a)</enum><header>In
general</header><text display-inline="yes-display-inline">Section 101 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021) is
amended—</text>
<paragraph id="H9EB8CEDA8F14472198E713DE52D9A1F6"><enum>(1)</enum><text>by redesignating
subsection (j) as subsection (k); and</text>
</paragraph><paragraph id="H56CADA0DB97349DC83738B712B8C00F"><enum>(2)</enum><text>by
inserting after subsection (i) the following new subsection:</text>
<quoted-block display-inline="no-display-inline" id="H2B92A761CB1B4CC8902263EE1145AE17" style="OLC">
<subsection id="H1005D831C19B40A599FC9EB3AA5981E4"><enum>(j)</enum><header>Disclosure with
respect to benefits under covered deferred compensation plans</header>
<paragraph id="HA90F14B3F18F4D8C9E76E4E886BE14B7"><enum>(1)</enum><header>In
general</header><text>In any case in which—</text>
<subparagraph id="H461D32AAB03747848339BFAF07CBA0F4"><enum>(A)</enum><text>an amendment to a
pension plan is adopted which has the effect of—</text>
<clause id="H0981F9DCC6814C16978B98FF505766C8"><enum>(i)</enum><text>eliminating future
benefit accruals under the plan;</text>
</clause><clause id="HE54DB2EECC5041B6A81C1070C0255BD3"><enum>(ii)</enum><text>converting the
plan to a cash balance plan in a case described in section 206(g)(1)(B);</text>
</clause><clause id="H1D8EAC5CBA9C4E7D913E47B7ED52C435"><enum>(iii)</enum><text>reducing the
rate of future benefit accruals under the plan (in the case of a defined
benefit plan); or</text>
</clause><clause id="H26A49EE26AD845EC93823F22364450E2"><enum>(iv)</enum><text>reducing future
employer contributions under the plan (in the case of a defined contribution
plan); or</text>
</clause></subparagraph><subparagraph id="HD65C67B6A90D4356BAE6F5288BC4CB0"><enum>(B)</enum><text>the plan
administrator of a pension plan has filed under section 4041(a)(2) a notice of
intent to terminate such plan in a distress termination under section 4041(c)
based on bankruptcy reorganization or, in advance of filing such a notice, has
filed a motion with the court in the proceedings relating to such bankruptcy
reorganization seeking approval to commence proceedings for such a distress
termination,</text>
</subparagraph><continuation-text continuation-text-level="paragraph">the plan
administrator shall provide to each plan participant and beneficiary a notice
under this subsection with respect to each covered deferred compensation plan
maintained by the plan sponsor of the pension plan (and each member of the plan
sponsor’s controlled group).</continuation-text></paragraph><paragraph id="H351C7F745FD94DD0A307442508786BFA"><enum>(2)</enum><header>Notice</header><text>A
notice required under this subsection with respect to a covered deferred
compensation plan shall set forth, in language calculated to be understood by
the average pension plan participant—</text>
<subparagraph id="H06A8E8A9B4074A96862B7B92F762AEA1"><enum>(A)</enum><text>a complete summary
description of the terms of the covered deferred compensation plan;</text>
</subparagraph><subparagraph id="HD3397B7957C84984002900A4D32D79B3"><enum>(B)</enum><text>the actuarial
present value of the benefit liabilities of the covered deferred compensation
plan, as of the most recent valuation date of such plan;</text>
</subparagraph><subparagraph id="H31FFBB199A3F4E669EFE96D9B0CA34BC"><enum>(C)</enum><text>any additional
cost to the plan sponsor (or to the member of the plan sponsor’s controlled
group), for the preceding plan year of such plan, of maintaining such covered
deferred compensation plan, including tax expenditures attributable to the
maintenance of such plan (or, if not known on the date of the notice, a
reasonable estimation thereof); and</text>
</subparagraph><subparagraph id="HE824513F194E4D10926B9B9953D6D00"><enum>(D)</enum><text>in any case
described in paragraph (1)(B)—</text>
<clause id="H74E379E6B9F04965861760EFD800A559"><enum>(i)</enum><text>a
statement that the notice of intent to terminate or motion has been filed;
and</text>
</clause><clause id="H9282E174715241EEBAAA86769EC6FC67"><enum>(ii)</enum><text>a
statement of the extent to which the actuarial present value of benefit
liabilities of the pension plan referred to in paragraph (1)(B) is expected to
be reduced by reason of the termination.</text>
</clause></subparagraph></paragraph><paragraph id="HCF5CBE91835E45AB908FF37FEBBC17B2"><enum>(3)</enum><header>Timing of
notice</header><text>A notice under this subsection shall be provided—</text>
<subparagraph id="HE00B01B34B6442CC8C621B74DF0458EB"><enum>(A)</enum><text>not later than 15
days after—</text>
<clause id="H269ABC8828EF4A8782604BC706E84517"><enum>(i)</enum><text>the date of the
adoption of the amendment described in paragraph (1)(A); or</text>
</clause><clause id="H8E7BF0128A9A4E43AF0071643E085821"><enum>(ii)</enum><text>the date of the
notice of intent to terminate described in paragraph (1)(B),</text>
</clause><continuation-text continuation-text-level="subparagraph">(as the
case may be), and</continuation-text></subparagraph><subparagraph id="H943C3BC2328D4815AC6C77B67DDD5736"><enum>(B)</enum><text>in the same manner
as is provided under section 104(b)(1) with respect to summary descriptions of
plan modifications or changes.</text>
</subparagraph></paragraph><paragraph id="HAA9A2F18ACB24A6BA5156993773006E5"><enum>(4)</enum><header>Definitions;
special rule</header><text>For purposes of this subsection—</text>
<subparagraph id="H67B94302D7E34F31A3B66EDF24F4F4E9"><enum>(A)</enum><text display-inline="yes-display-inline">The term <quote>cash balance plan</quote>
has the meaning provided in section 206(g)(3)(A).</text>
</subparagraph><subparagraph display-inline="no-display-inline" id="HDA05AE11FBE942918D12CCD47D1B70EC"><enum>(B)</enum><text>The term
<quote>covered deferred compensation plan</quote> has the meaning provided in
section 206(g)(3)(C).</text>
</subparagraph><subparagraph id="HBE6816CFCC8D4AD088D49FF23D556E9"><enum>(C)</enum><text>The term
<quote>controlled group</quote> has the meaning provided in section
302(c)(11)(B)(ii).</text>
</subparagraph><subparagraph id="H70538CAFDB524C8297398300616626F2"><enum>(D)</enum><text display-inline="yes-display-inline">Whether a termination of a plan which is a
distress termination under section 4041(c) is based on bankruptcy
reorganization shall be determined as provided in section
206(g)(3)(E).</text>
</subparagraph></paragraph></subsection><after-quoted-block>.</after-quoted-block></quoted-block>
</paragraph></subsection><subsection id="H082EF3768E6349DBB88431D2B9701FC7"><enum>(b)</enum><header>Enforcement</header><text>Section
502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is amended by striking <quote>or
section 101(e)(1)</quote> and inserting <quote>or subsection (e)(1) or (j)(1)
of section 101</quote>.</text>
</subsection><subsection commented="no" display-inline="no-display-inline" id="H8C2896EA3DFB4547A8407B00ACCF1FD"><enum>(c)</enum><header>Effective
date</header><text>The amendments made by this section shall apply with respect
to—</text>
<paragraph commented="no" display-inline="no-display-inline" id="id577A3B6BCA184C0B9FD14E68F1FE65BB"><enum>(1)</enum><text>plan amendments
adopted on or after January 1, 2006; and</text>
</paragraph><paragraph commented="no" display-inline="no-display-inline" id="id0FF133714ED9471297B95D80BBE9C640"><enum>(2)</enum><text>notices of intent
to terminate or motions (described in section 101(j)(1)(B) of the Employee
Retirement Income Security Act of 1974) (as added by this section) filed on or
after such date.</text>
</paragraph></subsection></section>