[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1631 Introduced in Senate (IS)]
114th CONGRESS
1st Session
S. 1631
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to modify certain provisions relating to
multiemployer pensions, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
June 18, 2015
Mr. Sanders (for himself, Mr. Brown, and Ms. Baldwin) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to modify certain provisions relating to
multiemployer pensions, 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 ``Keep Our Pension Promises Act''.
SEC. 2. RESTORING ANTI-CUTBACK PROVISIONS.
Section 201 of the Multiemployer Pension Reform Act of 2014
(division O of Public Law 113-235) and the amendments made by such
section are repealed, and the Employee Retirement Income Security Act
of 1974 and the Internal Revenue Code of 1986 shall be applied as if
such section and amendments had never been enacted.
SEC. 3. PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS.
(a) In General.--Section 4233 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1413), as amended by section 122 of the
Multiemployer Pension Reform Act of 2014 (division O of Public Law 113-
235), is amended to read as follows:
``SEC. 4233. PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS.
``(a)(1) Upon the application by the plan sponsor of an eligible
multiemployer plan for a partition of the plan, the corporation may
order a partition of the plan in accordance with this section. The
corporation shall make a determination regarding the application, in
accordance with regulations promulgated by the corporation, not later
than 270 days after--
``(A) the date such application was filed; or
``(B) if later, the date such application was completed.
``(2) At least 14 days before submitting an application for
partition of a plan under paragraph (1), the plan sponsor of the plan
shall notify all participants and beneficiaries of such application, in
the form and manner prescribed by regulations issued by the
corporation.
``(b) For purposes of this section, a multiemployer plan is an
eligible multiemployer plan if--
``(1) the plan is in critical status and is projected to
become insolvent within the meaning of section 4245--
``(A) during the current plan year or any of the 14
succeeding plan years; or
``(B) during the current plan year or any of the 19
succeeding plan years, if the plan has a ratio of
inactive participants to active participants that
exceeds 2 to 1 and the funded percentage of the plan is
less than 80 percent;
``(2) the corporation determines, after consultation with
the Participant and Plan Sponsor Advocate selected under
section 4004, that the plan sponsor has taken (or is taking
concurrently with an application for partition) all reasonable
measures described in section 432(e)(3)(A) of the Internal
Revenue Code of 1986, and has made (or is making) benefit
adjustments under section 432(e)(8) of such Code to reduce the
risk of insolvency;
``(3) 20 percent or more of the amount by which the
liabilities of the plan exceed the value of plan assets is
attributable to the service of participants whose employers--
``(A) withdrew from the plan prior to the date of
enactment of the Keep Our Pension Promises Act; and
``(B) failed to pay (or are delinquent with respect
to paying) the full amount of the employer's withdrawal
liability under section 4201(b)(1) or as otherwise
determined under an agreement with the plan;
``(4) the corporation reasonably expects that--
``(A) a partition of the plan will reduce the
corporation's expected long-term loss with respect to
the plan; and
``(B) a partition of the plan is necessary for the
plan to remain or become solvent; and
``(5) the corporation certifies to Congress that after
partition the corporation will continue to have the ability to
meet existing financial assistance obligations to other plans
(including any liabilities associated with multiemployer plans
that are insolvent or that are projected to become insolvent
within 10 years).
``(c)(1) A partition under this section shall consist of a transfer
to the plan created by the partition order of benefits to which
eligible participants and beneficiaries were entitled under the plan
that was partitioned, in an amount not to exceed the amount that would
be guaranteed under section 4022A if the plan were insolvent as of the
date of the partition order.
``(2) The corporation's partition order shall provide for an annual
transfer by the corporation to the plan created by the partition order
of an amount equal to the yearly benefits that would be guaranteed
under section 4022A to the eligible participants and beneficiaries if
the plan were insolvent as of the date of the partition order.
``(3)(A) Where practicable, the initial transfer in accordance with
paragraph (2) shall be completed at least 60 days prior to the plan
year that immediately follows the partition start date. The partition
order shall require that the initial transfer be sufficient to satisfy
the guaranteed benefits in the first plan year of the partitioned plan.
``(B) Subsequent transfers in accordance with paragraph (2) shall
be completed at least 60 days prior to the first day of each succeeding
plan year.
``(d)(1)(A) The plan created by the partition order is a successor
plan to which section 4022A applies.
``(B) At the discretion of the plan sponsor, the plan created by
the partition order may remain a part of the plan that was partitioned
or be maintained as a separate plan.
``(2)(A) The plan sponsor and the administrator of an eligible
multiemployer plan prior to the partition shall be the plan sponsor and
the administrator, respectively, of the plan created by the partition
order, and shall adopt reasonable procedures to reduce administrative
expenses and to coordinate benefit payments and communications with the
participants and beneficiaries in the plan created by the partition
order.
``(B) Benefit payments equal to the amount of an eligible
participant or beneficiary's guaranteed benefits shall be paid to such
participant or beneficiary and may be--
``(i) paid separately by the plan created by the partition
order; or
``(ii) paid in a single, monthly payment by the plan that
was partitioned.
``(3) In the event an employer withdraws from the plan that was
partitioned, withdrawal liability shall be computed under section 4201
with respect to both the plan that was partitioned and the plan created
by the partition order.
``(e) In addition to the payment of guaranteed benefits under
subsection (d)(2)(B), each eligible participant or beneficiary of the
plan created by the partition order shall receive a monthly benefit for
each month the benefit is in pay status in an amount that--
``(1) the corporation, in consultation with the Participant
and Plan Sponsor Advocate, determines to be fair to the plan,
the participant or beneficiary, the employers, and the
corporation; and
``(2) is at least equal to the lesser of--
``(A) the monthly nonforfeitable benefit for such
participant or beneficiary payable under the plan that
was partitioned; or
``(B) 80 percent of the maximum benefit commencing
at age 65 guaranteed under section 4022(a) for
participants and beneficiaries in terminated single
employer plans, unreduced for early retirement.
Such monthly benefit may be combined with the monthly payment under
subsection (d)(2)(B)(ii).
``(f)(1) The corporation shall establish a legacy fund for the
purposes of funding the administrative and benefit costs to the
corporation arising from partitions under this section, as described in
paragraph (2).
``(2) Any administrative and benefit costs to the corporation
arising from a partition ordered under this section in excess of
amounts available in such legacy fund shall be paid from the fund for
basic benefits guaranteed for multiemployer plans.
``(g) Only one partition order shall be issued with respect to each
eligible multiemployer plan.
``(h) For purposes of this subsection, the term `eligible
participant or beneficiary' means a participant or beneficiary of an
eligible multiemployer plan that is partitioned in accordance with a
petition order under this section, and who is an employee or
beneficiary of an employee of an employer that is described in
subsection (b)(3).
``(i) Not later than 14 days after the issuance of a partition
order under this section, the corporation shall provide notice of such
order to the Committee on Finance of the Senate, the Committee on
Health, Education, Labor, and Pensions of the Senate, the Committee on
Education and the Workforce of the House of Representatives, the
Committee on Ways and Means of the House of Representatives, and to all
eligible participants or beneficiaries whose guaranteed benefits will
be paid directly or indirectly by the plan created by the partition
order.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply with respect to plan years beginning after the date of enactment
of this Act.
(c) Transfers to Legacy Fund.--The Secretary of the Treasury shall
from time to time transfer from the general fund of the Treasury to the
legacy fund established under section 4233(f)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1413(f)(1)) (as
amended by subsection (a)) amounts equal to the increase in revenues to
the Treasury by reason of the amendments made by sections 6 and 7 of
this Act.
(d) Transfers Between Funds of the PBGC.--Section 4005 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1305) is
amended by adding at the end the following:
``(i)(1) An eighth fund is established under section 4233(f) and
credited with the amounts described in section 3(c) of the Keep Our
Pension Promises Act.
``(2) Notwithstanding subsection (g), the corporation may transfer
amounts into the legacy fund established under section 4233(f)(1) from
other funds established under this section, as the corporation
determines appropriate.''.
SEC. 4. EMPLOYER WITHDRAWALS RELATING TO MULTIEMPLOYER PLANS.
The matter preceding paragraph (1) of section 4225(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1405(b)) is
amended by inserting ``, including an employer undergoing liquidation
under chapter 7 of title 11, United States Code, or similar provisions
of State law,'' after ``dissolution,''.
SEC. 5. PRIORITIES OF CLAIMS IN BANKRUPTCY.
(a) In General.--Section 507(a) of title 11, United States Code is
amended--
(1) by redesignating paragraphs (1) through 10 as
paragraphs (2) through (11), respectively;
(2) by inserting before paragraph (2) (as redesignated) the
following:
``(1) First, withdrawal liability determined under part 1
of subtitle E of title IV of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1381 et seq.).''.
(3) in the matter preceding subparagraph (A) of paragraph
(2) (as redesignated), by striking ``First:'' and inserting
``Second:'';
(4) in paragraph (3) (as redesignated), by striking
``Second,'' and inserting ``Third,'';
(5) in paragraph (4) (as redesignated), by striking
``Third,'' and inserting ``Fourth,'';
(6) in the matter preceding subparagraph (A) of paragraph
(5) (as redesignated), by striking ``Fourth,'' and inserting
``Fifth,'';
(7) in the matter preceding subparagraph (A) of paragraph
(6) (as redesignated), by striking ``Fifth,'' and inserting
``Sixth,'';
(8) in the matter preceding subparagraph (A) of paragraph
(7) (as redesignated), by striking ``Sixth,'' and inserting
``Seventh,'';
(9) in paragraph (8) (as redesignated), by striking
``Seventh,'' and inserting ``Eighth,'';
(10) in the matter preceding subparagraph (A) of paragraph
(9) (as redesignated), by striking ``Eighth,'' and inserting
``Ninth,'';
(11) in paragraph (10) (as redesignated), by striking
``Ninth,'' and inserting ``Tenth,''; and
(12) in paragraph (11) (as redesignated), by striking
``Tenth,'' and inserting ``Eleventh,''.
(b) Technical and Conforming Amendments.--
(1) Section 502(i) of title 11, United States Code, is
amended by striking ``section 507(a)(8)'' and inserting
``section 507(a)(9)''.
(2) Section 503(b)(1)(B)(i) of title 11, United States
Code, is amended by striking ``section 507(a)(8)'' and
inserting ``section 507(a)(9)''.
(3) Section 507(d) of title 11, United States Code, is
amended by striking ``(a)(1), (a)(4), (a)(5), (a)(6), (a)(7),
(a)(8), or (a)(9)'' and inserting ``(a)(2), (a)(5), (a)(6),
(a)(7), (a)(8), (a)(9), or (a)(10)''.
(4) Section 523(A) of title 11, United States Code, is
amended by striking ``section 507(a)(3) or 507(a)(8)'' and
inserting ``section 507(a)(4) or 507(a)(9)''.
(5) Section 724 of title 11, United States Code, is
amended--
(A) in subsection (b)(2), by striking ``section
507(a)(1)(C) or 507(a)(2)'' and inserting ``section
507(a)(2)(C) or 507(a)(3)''; and
(B) in subsection (f)--
(i) in paragraph (1), by striking ``section
507(a)(4)'' and inserting ``section
507(a)(5)''; and
(ii) in paragraph (2), by striking
``section 507(a)(5)'' and inserting ``section
507(a)(6)''.
(6) Section 726(b) of title 11, United States Code, is
amended by striking ``paragraph (1), (2), (3), (4), (5), (6),
(7), (8), (9), or (10) of section 507(a)'' and inserting
``paragraphs (2) through (11) of section 507(a)''.
(7) Section 752(a) of title 11, United States Code, is
amended by striking ``section 507(a)(2)'' and inserting
``section 507(a)(3)''.
(8) Section 766 of title 11, United States Code, is
amended--
(A) in subsection (h), by striking ``section
507(a)(2)'' and inserting ``section 507(a)(3)''; and
(B) in subsection (i)--
(i) in paragraph (1), by striking ``section
507(a)(2)'' and inserting ``section
507(a)(3)''; and
(ii) in paragraph (2), by striking
``section 507(a)(2)'' and inserting ``section
507(a)(3)''.
(9) Section 901 of title 11, United States Code, is amended
by striking ``507(a)(2)'' and inserting ``507(a)(3)''.
(10) Section 943(b)(5) of title 11, United States Code, is
amended by striking ``section 507(a)(2)'' and inserting
``section 507(a)(3)''.
(11) Section 1123(a)(1) of title 11, United States Code, is
amended by striking ``section 507(a)(2), 507(a)(3), or
507(a)(8)'' and inserting ``section 507(a)(3), 507(a)(4), or
507(a)(9)''.
(12) Section 1129(a)(9) of title 11, United States Code, is
amended--
(A) in subparagraph (A), by striking ``section
507(a)(3) or 507(a)(4)'' and inserting ``section
507(a)(4) or 507(a)(5)'';
(B) in the matter preceding clause (i) of
subparagraph (B), by striking ``section 507(a)(1),
507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7)'' and
inserting ``section 507(a)(2), 507(a)(5), 507(a)(6),
507(a)(7), or 507(a)(8)'';
(C) in the matter preceding clause (i) of
subparagraph (C), by striking ``section 507(a)(8)'' and
inserting ``section 507(a)(9)''; and
(D) in subparagraph (D), by striking ``section
507(a)(8)'' and inserting ``section 507(a)(9)''.
(13) Section 1222(a)(4) of title 11, United States Code, is
amended by striking ``section 507(a)(1)(B)'' and inserting
``507(a)(2)(B)''.
(14) Section 1226(b)(1) of title 11, United States Code, is
amended by striking ``section 507(a)(2)'' and inserting
``section 507(a)(3)''.
(15) Section 1322(a)(4) of title 11, United States Code, is
amended by striking ``section 507(a)(1)(B)'' and inserting
``section 507(a)(2)(B)''.
(16) Section 1326(b)(1) of title 11, United States Code, is
amended by striking ``section 507(a)(2)'' and inserting
``section 507(a)(3)''.
(17) Section 1328(a)(2) of title 11, United States Code, is
amended by striking ``section 507(a)(8)(C)'' and inserting
``section 507(a)(9)(C)''.
SEC. 6. LIMITATION OF NONRECOGNITION OF LIKE-KIND EXCHANGES.
(a) In General.--Paragraph (2) of section 1031(a) of the Internal
Revenue Code of 1986 is amended--
(1) by redesignating subparagraphs (A), (B), (C), (D), (E),
and (F) as clauses (i), (ii), (iii), (iv), (v), and (vi), and
by moving such clauses 2 ems to the right,
(2) by moving the flush language after the first sentence 2
ems to the right,
(3) by striking ``(2) Exception.--This subsection'' and
inserting ``(2) Exceptions.--
``(A) Excluded property.--This subsection'', and
(4) by adding at the end the following new subparagraph:
``(B) Dollar limitation for exchanges of real
property.--
``(i) In general.--Paragraph (1) shall not
apply so much of the gain which, but for such
paragraph, would be recognized by the taxpayer
with respect to real property exchanged during
the taxable year as exceeds $1,000,000.
``(ii) Special rules for partnerships and
s-corporations.--In the case of a pass-through
entity, clause (i) shall be applied at both the
entity and at the partner or owner level.
``(iii) Aggregation rules.--For purposes of
this subparagraph--
``(I) Family members.--Individuals
who are spouses or who bear any of the
relationships described in section
152(d)(2) to each other shall be
treated as 1 taxpayer (without regard
to whether spouses file a joint
return).
``(II) Corporations and other
entities.--All persons treated as a
single employer under subsection (a) or
(b) of section 52 or subsection (m) or
(o) of section 414 shall be treated as
1 person.
``(iv) Adjustment for inflation.--In the
case of exchanges completed in a taxable year
beginning after December 31, 2016, the
$1,000,000 amount in clause (i) shall be
increased by an amount equal to--
``(I) such dollar amount,
multiplied by
``(II) the cost-of-living
adjustment determined under section
1(f)(3) for the calendar year in which
the taxable year begins, determined by
substituting `calendar year 2015' for
`calendar year 1992' in subparagraph
(B) thereof.
If any amount as adjusted under the preceding
sentence is not a multiple of $1,000, such
amount shall be rounded to the nearest multiple
of $1,000.''.
(b) Exclusion of Art and Collectibles.--Subparagraph (A) of section
1031(a)(2) of the Internal Revenue Code of 1986, as amended by
subsection (a), is amended--
(1) by striking ``or'' at the end of clause (v),
(2) by striking the period at the end of clause (vi) and
inserting ``, or'', and
(3) by inserting after clause (vi) the following new
clause:
``(vii) any collectible (within the meaning
of section 408(m), without regard to paragraph
(3) thereof).''.
(c) Regulatory Authority.--Subsection (f) of section 1031 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new paragraph:
``(5) Rules relating to dollar limitation.--The Secretary
shall prescribe such guidance as is necessary for applying
subsection (a)(2)(B)(i) in the case of the exchange of multiple
pieces of real property by related persons.''.
(d) Conforming Amendments.--
(1) Subsection (b) of section 1031 of the Internal Revenue
Code of 1986 is amended--
(A) by striking ``in Kind.--If an exchange'' and
inserting ``in Kind.--
``(1) In general.--If an exchange'', and
(B) by adding at the end the following new
paragraph:
``(2) Coordination with subsection (a)(2)(b).--In the case
of an exchange to which paragraph (1) applies--
``(A) paragraph (1) shall be applied before the
application of subsection (a)(2)(B), and
``(B) subsection (a)(2)(B) shall be applied--
``(i) as if such exchange were within the
provisions of subsection (a), and
``(ii) by increasing the basis of the
property disposed of by the taxpayer in such
exchange by the amount of any gain determined
under paragraph (1).''.
(2) Subsection (d) of section 1031 of such Code is amended
by striking ``in the amount of gain'' and inserting ``in the
amount of gain (including any gain recognized by reason of
subsection (a)(2)(B)(i))''.
(3) Subsection (i) of section 1031 of such Code is amended
by striking ``(a)(2)(B)'' and inserting ``(a)(2)(A)(ii)''.
(e) Effective Date.--The amendments made by this section shall
apply to exchanges completed in taxable years beginning after December
31, 2015.
SEC. 7. VALUATION RULES FOR CERTAIN TRANSFERS OF NONBUSINESS ASSETS;
LIMITATION ON MINORITY DISCOUNTS.
(a) In General.--Section 2031 of the Internal Revenue Code of 1986
is amended by redesignating subsection (d) as subsection (f) and by
inserting after subsection (c) the following new subsections:
``(d) Valuation Rules for Certain Transfers of Nonbusiness
Assets.--For purposes of this chapter and chapter 12--
``(1) In general.--In the case of the transfer of any
interest in an entity other than an interest which is actively
traded (within the meaning of section 1092)--
``(A) the value of any nonbusiness assets held by
the entity with respect to such interest shall be
determined as if the transferor had transferred such
assets directly to the transferee (and no valuation
discount shall be allowed with respect to such
nonbusiness assets), and
``(B) such nonbusiness assets shall not be taken
into account in determining the value of the interest
in the entity.
``(2) Nonbusiness assets.--For purposes of this
subsection--
``(A) In general.--The term `nonbusiness asset'
means any asset which is not used in the active conduct
of 1 or more trades or businesses.
``(B) Exception for certain passive assets.--Except
as provided in subparagraph (C), a passive asset shall
not be treated for purposes of subparagraph (A) as used
in the active conduct of a trade or business unless--
``(i) the asset is property described in
paragraph (1) or (4) of section 1221(a) or is a
hedge with respect to such property, or
``(ii) the asset is real property used in
the active conduct of 1 or more real property
trades or businesses (within the meaning of
section 469(c)(7)(C)) in which the transferor
materially participates and with respect to
which the transferor meets the requirements of
section 469(c)(7)(B)(ii).
For purposes of clause (ii), material participation
shall be determined under the rules of section 469(h),
except that section 469(h)(3) shall be applied without
regard to the limitation to farming activity.
``(C) Exception for working capital.--Any asset
(including a passive asset) which is held as a part of
the reasonably required working capital needs of a
trade or business shall be treated as used in the
active conduct of a trade or business.
``(3) Passive asset.--For purposes of this subsection, the
term `passive asset' means any--
``(A) cash or cash equivalents,
``(B) except to the extent provided by the
Secretary, stock in a corporation or any other equity,
profits, or capital interest in any entity,
``(C) evidence of indebtedness, option, forward or
futures contract, notional principal contract, or
derivative,
``(D) asset described in clause (iii), (iv), or (v)
of section 351(e)(1)(B),
``(E) annuity,
``(F) real property used in 1 or more real property
trades or businesses (as defined in section
469(c)(7)(C)),
``(G) asset (other than a patent, trademark, or
copyright) which produces royalty income,
``(H) commodity,
``(I) collectible (within the meaning of section
401(m)), or
``(J) any other asset specified in regulations
prescribed by the Secretary.
``(4) Look-thru rules.--
``(A) In general.--If a nonbusiness asset of an
entity consists of a 10-percent interest in any other
entity, this subsection shall be applied by
disregarding the 10-percent interest and by treating
the entity as holding directly its ratable share of the
assets of the other entity. This subparagraph shall be
applied successively to any 10-percent interest of such
other entity in any other entity.
``(B) 10-percent interest.--The term `10-percent
interest' means--
``(i) in the case of an interest in a
corporation, ownership of at least 10 percent
(by vote or value) of the stock in such
corporation,
``(ii) in the case of an interest in a
partnership, ownership of at least 10 percent
of the capital or profits interest in the
partnership, and
``(iii) in any other case, ownership of at
least 10 percent of the beneficial interests in
the entity.
``(5) Coordination with subsection (b).--Subsection (b)
shall apply after the application of this subsection.
``(e) Limitation on Minority Discounts.--For purposes of this
chapter and chapter 12, in the case of the transfer of any interest in
an entity other than an interest which is actively traded (within the
meaning of section 1092), no discount shall be allowed by reason of the
fact that the transferee does not have control of such entity if the
transferor, the transferee, and members of the family (as defined in
section 2032A(e)(2)) of the transferor and transferee--
``(1) have control of such entity, or
``(2) own the majority of the ownership interests (by
value) in such entity.''.
(b) Effective Date.--The amendments made by this section shall
apply to transfers after the date of the enactment of this Act.
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