[Congressional Record Volume 141, Number 90 (Monday, June 5, 1995)]
[Senate]
[Pages S7697-S7702]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


          STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS

      By Mrs. HUTCHISON:
  S. 880. A bill to enhance fairness in compensating owners of patents 
used by the United States; to the Committee on the Judiciary.


  LEGISLATION ENHANCING FAIRNESS IN THE COMPENSATION OF PATENT OWNERS

  Mrs. HUTCHISON. Mr. President, I am introducing a bill today to 
provide fairness to our Nation's inventors. As the law is now written, 
inventors whose patents are taken for use by the Federal Government 
have only one recourse to obtain compensation--they are compelled by 
statute to bring a lawsuit against the Government. Under court 
interpretations, they are forced to bear all costs of the lawsuit, even 
when they win their case. This bill would permit patent holders whose 
claims are upheld to be reimbursed, as well, for their reasonable 
costs.
  In 1982, when the U.S. Claims Court was created, the Congress made 
significant improvements in the existing law concerning claims against 
the Government. It did not, however, give consideration to the fairness 
of the existing statutes that require payment of compensation to 
persons whose patent rights are taken for national defense or other 
purposes. The Congress simply carried over the existing provisions of 
section 1498(a) of title 28, requiring ``reasonable and entire 
compensation'' for the taking of patent rights. Those provisions--fair 
on the surface--dated from the time of World War I. In the years since 
World War I, however, the statutory language has been applied by the 
courts in a manner that produces a serious inequity.
  The problem arises most frequently in cases involving an inventor 
whose rights have been infringed by a defense contractor. In such a 
case, the statute provides that the inventor's only remedy is an action 
in the U.S. Claims Court against the Government--the beneficiary of the 
defense contractor's infringement--on the theory that, indirectly, the 
Government has taken the patent rights for public use.
  The Government is authorized to take private property, for the 
benefit of the public, under the power of ``eminent domain.'' It may do 
so, however, only upon paying the ``just compensation'' required by the 
fifth amendment to the Constitution. The principle applies to the 
taking of intellectual property--like patents--as well as tangible 
property. Statutory application of this principle to the taking of 
patent rights is found in the part of section 1498(a) of Title 28 that 
provides:

       Whenever an invention . . . covered by a patent . . . is 
     used . . . by . . . the United States without a license of 
     the owner . . ., the owner's remedy shall be by action 
     against the United States in the United States Claims Court 
     for the recovery of his reasonable and entire compensation 
     for such use. . . .

  It might logically be supposed that the constitutional requirements 
of ``just compensation'' and the statutory requirements of ``reasonable 
and entire compensation'' would assure that an inventor will not suffer 
a loss when the Government takes his invention for public use. 
Unfortunately, logic and practice do not always keep pace with one 
another. The inventor does suffer loss--the costs of his lawsuit--and 
that loss can be significant.
  The current situation may be summarized as follows: In order to 
obtain any compensation at all under section 1498, an inventor must 
initiate a lawsuit against the Government. After succeeding in such a 
suit, he becomes entitled to receive ``reasonable and entire 
compensation.'' But the inventor then finds that, under current court 
interpretations, he cannot recover any of the expenses, including the 
witnesses' travel costs and reasonable attorneys' fees, that he 
incurred as a result of having to pursue the civil action. The expenses 
are, in effect, deducted from that sum established to be fair 
compensation. In short, Government requires the victim of its taking to 
sue to recover his losses, forces him personally to bear all his costs 
in undertaking the suit, and leaves him with compensation that 
represents less than the true value of the property taken. This result 
is less than ``just'' and certainly is less than ``reasonable and 
entire.''
  The courts have generally taken the position that if Congress had 
intended to include reimbursement of reasonable costs and attorneys' 
fees within the term ``reasonable and entire compensation'' it should 
have said so specifically.
  That is what this bill does--it says so specifically. It would 
authorize expressly the recovery of reasonable costs by an inventor who 
is forced by statute to litigate against the Government in order to 
obtain compensation. It would permit the inventor to recover all his 
reasonable costs--including witnesses' fees and travel costs, 
attorneys' fees, charges by accountants and other experts, costs of 
employee time in reviewing records and otherwise preparing for the 
suit, court costs, and all related expenditures incurred as a result of 
bringing the lawsuit. The costs in each case would be scrutinized by 
the Claims Courts to assure that they were reasonable, of course, but 
to the extent they were reasonable they could be recovered.
  This problem should have been corrected long ago--when it first 
became apparent that court interpretations would not permit inventors 
to obtain a complete recovery. To continue this inequity would be a 
serious disservice to some of our most productive inventors, and to 
some of our best companies in important industries. We need to be fair 
with those inventors and companies in order to encourage innovation and 
make our country more competitive. This bill would help assure the 
necessary fairness.
                                 ______

      By Mr. PRYOR (for himself and Mr. Grassley):
  S. 881. A bill to amend the Internal Revenue Code of 1986 to clarify 
provisions relating to church pension benefit plans, to modify certain 
provisions relating to participants in such plans, to reduce the 
complexity of and to bring workable consistency to the applicable 
rules, to promote retirement savings and benefits, and for other 
purposes; to the Committee on Finance.


             church retirement benefits simplification act

  Mr. PRYOR. Mr. President, I am pleased to introduce today the Church 
Retirement Benefits Simplification Act of 1995, legislation which I 
also introduced and held hearings on in the 101st, 102d, and 103d 
Congresses. This act provides much needed clarification of the rules 
that apply to church retirement and welfare benefit plans and brings 
consistency to those rules. In addition, the act resolves significant 
problems churches face in administering their retirement and welfare 
benefit programs under current law.
  In developing this important legislation, we have worked closely with 
leaders of the pension boards of 30 mainline Protestant and Jewish 
denominations and a Catholic religious order. The employee benefit 
programs of these mainline denominations and order are among the oldest 
programs in our country. Several date from the 1700's, and their median 
age is in excess of 50 years. These programs provide retirement and 
welfare benefits for several hundred thousand clergy and lay workers 
employed by thousands of churches and church ministry organizations 
serving the spiritual needs of literally millions of members.
  Church retirement benefits programs began in recognition of a 
denomination's mission to care for its church workers in their advanced 
years. Several church retirement and welfare benefit programs were 
initially formed to provide relief and benefits for retired, disabled, 
or impoverished ministers and families as particular cases of need were 
identified. As time passed, church denomination began to provide for 
the retirement needs of their ministers and lay workers on a current 
and [[Page S7698]] systematic basis. Today, church retirement and 
welfare benefit programs provide benefits for ministers and lay workers 
employed in all forms of pastoral, healing, teaching, and preaching 
ministries and missions, including, among others, local churches, 
seminaries, old-age homes, orphanages, mission societies, hospitals, 
universities, church camps and day care centers.
  Mr. President, the goal of the act is to clarify the rules that apply 
to church employee benefit plans. Under current law, these rules are 
generally lengthy and complex and are, for the most part, designed for 
for-profit, commercial employers. Most denominations are composed of 
thousands of work units, each having only a few employees, and the 
budgets of these work units are marginal at best. These organizations 
rely almost completely on contributions from the offering plate to 
support their missions, including the salaries and retirement and 
welfare benefits of their ministers and lay workers. Unlike for-profit 
business entities, churches cannot pass operating costs on to customers 
by raising prices.
  Churches are also much more loosely structured than most for-profit 
business organizations, and many denominations cannot impose 
requirements on their constituent parts. For example, hierarchically 
organized denominations may be able to control the provision of 
employee benefits to ministers and lay workers, while in congregational 
denominations, such control is typically more difficult.
  In addition, churches are tax-exempt and, unlike for-profit business 
organizations, have no need for tax deductions. Churches and church 
ministry organizations therefore lack the incentive of for-profit 
employers to maximize either the amount of the employer's
 tax deduction or the amount of income which the highly compensated 
employees who control a for-profit business can shelter from current 
taxation through plan contributions and tax-free fringe or welfare 
benefits.

  Mr. President, retirement and employee benefit tax laws do not always 
take the difference between churches and for-profit employers into 
account, with the result that churches have had to divert a significant 
amount of time and resources from their religious mission and 
ministries in attempting to identify and comply with rules that in many 
instances are unworkable or simply not needed for church employee 
benefit plans.
  If the act becomes law, the reduction in administrative burdens and 
consequent savings in related costs now imposed on churches and church 
ministry organizations will outweigh any possible gain from an employee 
benefits policy perspective. Unlike the for-profit sector where cost 
savings result in a better bottom line for shareholders, savings in the 
church sector will find their way into missions and ministries that 
help people who need help.
  A 1993 study by Independent Sector, a national membership 
organization composed of over 600 tax-exempt organizations and 
corporate philanthropy departments, indicated that approximately half 
the funds contributed to churches is used in service to others. 
Religious congregations are the primary voluntary service providers for 
neighborhoods. Ninety-two percent of religious congregations have one 
or more programs in human services. Three-fifths of religious 
congregations offer family counseling, and more than one-third--almost 
40 percent--give means or shelter to the poor. Some 74 percent donate 
for international relief or missionary activity, and almost 90 percent 
sponsor hospices, health programs, hospitals, or provide for the 
disabled, retarded, or people in crises. The Independent Sector study 
indicated that in 1991 religious congregations made $6.6 billion in 
direct grants to other groups and gave $15.9 billion for education, 
human services and health programs. These figures are well beyond the 
giving of all U.S. foundations and corporations combined.
  It is my view that the Congress should do everything possible to 
ensure that churches can continue to maximize their contributions 
toward these important missions and ministries, rather than paying for 
costs of complying with rules that are unworkable or not needed for 
church employee benefit plans.
  The cornerstone of the act is a recodification of the rules 
applicable to church retirement plans so that all of such rules in the 
Internal Revenue Code are identified, simplified, and separated from 
the rules that apply to for-profit employers. Retirement plan issues 
unique to churches will thus not be inadvertently affected when 
Congress is considering future Code changes which are applicable to 
for-profit employers but not appropriate for churches.
  The act would also ensure that church retirement plans, whether 
described in the new proposed section 401A--applicable only to those 
church section 401(a) plans that affirmatively decide to be subject to 
it--or section 403(b), are subject to the same coverage and related 
rules. In 1986, Congress determined that the section 403(b) plans of 
churches and so-called qualified church controlled organizations should 
not be subjected to coverage and related rules. The act would extend 
this same relief to church section 401(a) plans and would also 
eliminate the troublesome qualified church controlled organization
 approach in favor of a provision that only subjects church-related 
hospitals and universities to applicable coverage and related rules. 
The act, consistent with the law that now applies to church section 
401(a) plans, would also clarify that the coverage rules that will 
apply to the section 403(b) programs of church-related hospitals and 
universities are those that were applicable prior to the enactment of 
the Employee Retirement Income Security Act of 1974.

  The act also would resolve a number of other problems many church 
pension boards face under current law. For example, under present law 
there is a question as to whether self-employed ministers and chaplains 
who work for nonchurch employers are able to participate in their 
denomination's retirement and welfare benefit programs. The act would 
make it clear that such ministers may participate in such programs.
  The act would also:
  Make it clear that the portion of a retired minister's pension which 
is treated as parsonage allowance is not subject to Self Employment 
Contribution Act, or SECA, taxes;
  For the first time, subject church plans to definite, objective 
vesting schedules;
  Solve several church employer aggregation problems;
  Provide relief that will result in better retirement income for 
foreign missionaries;
  Simplify the required distribution rules that apply to church 
retirement plans;
  Eliminate an unworkable requirement under the so-called section 
403(b) catch-up contribution rules; and
  Make relief granted under section 457 consistent with coverage relief 
proposed for church retirement and welfare benefit plans.
  Mr. President, I ask unanimous consent that the bill be printed in 
the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 881
       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

       (a) Short Title.--This Act may be cited as the ``Church 
     Retirement Benefits Simplification Act of 1995''.
       (b) Amendment of 1986 Code.--Except as otherwise expressly 
     provided, whenever in this Act an amendment or repeal is 
     expressed in terms of an amendment to, or repeal of, a 
     section or other provision, the reference shall be considered 
     to be made to a section or other provision of the Internal 
     Revenue Code of 1986.

     SEC. 2. NEW QUALIFICATION PROVISION FOR CHURCH PLANS.

       (a) In General.--Subpart A of part I of subchapter D of 
     chapter 1 (relating to pension, profit-sharing, stock bonus 
     plans, etc.) is amended by adding after section 401 the 
     following new section:

     ``SEC. 401A. QUALIFIED CHURCH PLAN.

       ``(a) General Rule.--For purposes of all Federal laws, 
     including this title, a qualified church plan shall be 
     treated as satisfying the requirements of section 401(a), and 
     all references in (or pertaining to) this title and such laws 
     to a plan described in section 401(a) shall include a 
     qualified church plan. Except as otherwise provided in this 
     section, no paragraph of section 401(a) shall apply to a 
     qualified church plan.
       ``(b) Definition of Qualified Church Plan.--A plan is a 
     qualified church plan if such plan meets the following 
     requirements: [[Page S7699]] 
       ``(1) Church plan requirement.--The plan is a church plan 
     (within the meaning of section 414(e)), and the election 
     provided by section 410(d) has not been made with respect to 
     such plan.
       ``(2) Employee contributions are nonforfeitable.--An 
     employee's rights in the employee's accrued benefit derived 
     from the employee's own contributions are nonforfeitable.
       ``(3) Vesting requirements.--The plan satisfies the 
     requirements of subparagraph (A) or (B).
       ``(A) 10-year vesting.--A plan satisfies the requirements 
     of this paragraph if an employee who has at least 10 years of 
     service has a nonforfeitable right to 100 percent of the 
     employee's accrued benefit derived from employer 
     contributions.
       ``(B) 5- to 15-year vesting.--A plan satisfies the 
     requirements of this paragraph if an employee who has 
     completed at least 5 years of service has a nonforfeitable 
     right to a percentage of the employee's accrued benefit 
     derived from employer contributions which is not less than 
     the percentage determined under the following table:
                                                         Nonforfeitable
      ``Years of service                                     percentage
        5..........................................................25  
        6..........................................................30  
        7..........................................................35  
        8..........................................................40  
        9..........................................................45  
        10.........................................................50  
        11.........................................................60  
        12.........................................................70  
        13.........................................................80  
        14.........................................................90  
        15 or more...............................................100.  
       ``(C) Years of service.--For purposes of this paragraph, an 
     employee's years of service shall be determined in accordance 
     with any reasonable method selected by the plan 
     administrator.
       ``(4) Funding requirements.--The plan meets the funding 
     requirements of section 401(a)(7) as in effect on September 
     1, 1974.
       ``(5) Additional requirements.--
       ``(A) The plan meets the requirements of paragraphs (1), 
     (2), (8), (9), (16), (17), (25), (27), and (30) of section 
     401(a).
       ``(B) If the plan includes employees of an organization 
     which is not a church, the plan meets the requirements of 
     sections 401(a)(3) and 401(a)(6) (as in effect on September 
     1, 1974) and sections 401(a)(4), 401(a)(5), and 401(m).
     For purposes of subparagraph (B), the plan administrator may 
     elect to treat the portion of the plan maintained by any 
     organization (or organizations) described in subparagraph (B) 
     as a separate plan (or plans).
       ``(c) Definitions and Special Rules.--
       ``(1) Church.--For purposes of this section, the term 
     `church' means a church or a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(A) and an organization described in section 
     414(e)(3)(B)(ii), other than--
       ``(A) an organization described in section 170(b)(1)(A)(ii) 
     above the secondary school level (other than a school for 
     religious training), or
       ``(B) an organization described in section 
     170(b)(1)(A)(iii)--
       ``(i) which provides community service for inpatient 
     medical care of the sick or injured (including obstetrical 
     care); and
       ``(ii) not more than 50 percent of the total patient days 
     of which during any year are customarily assignable to the 
     categories of chronic convalescent and rest, drug and 
     alcoholic, epileptic, mentally deficient, mental, nervous and 
     mental, and tuberculosis, and care for the aged.
       ``(2) Satisfaction of trust provision.--A plan shall not 
     fail to be described in this section merely because such plan 
     is funded through an organization described in section 
     414(e)(3)(A) if--
       ``(A) such organization is subject to fiduciary 
     requirements under applicable State law;
       ``(B) such organization is separately incorporated from the 
     church or convention or association of churches which 
     controls it or with which it is associated;
       ``(C) the assets which equitably belong to the plan are 
     separately accounted for; and
       ``(D) under the plan, at any time prior to the satisfaction 
     of all liabilities with respect to participants and their 
     beneficiaries, such assets cannot be used for, or diverted 
     to, purposes other than for the exclusive benefit of 
     participants and their beneficiaries (except that this 
     paragraph shall not be construed to preclude the use of plan 
     assets to defray the reasonable costs associated with 
     administering the plan and informing employees and employers 
     of the availability of the plan).
       ``(3) Certain sections apply.--Section 401 (b), (c), and 
     (h) shall apply to a qualified church plan.
       ``(4) Failure of one organization maintaining plan not to 
     disqualify plan.--If one or more organizations maintaining a 
     church plan fail to satisfy the requirements of subsection 
     (b), such plan shall not be treated as failing to satisfy the 
     requirements of this section with respect to other 
     organizations maintaining such plan.
       ``(5) Certain employees not considered highly compensated 
     and excluded employees.--For purposes of this section, no 
     employee shall be considered an officer, person whose 
     principal duties consist in supervising the work of other 
     employees, or highly compensated employee if such employee 
     during the year or the preceding year received compensation 
     from the employer of less than $50,000. For purposes of this 
     section, there shall be excluded from consideration employees 
     described in section 410(b)(3)(A). The Secretary shall adjust 
     the $50,000 amount under this paragraph at the same time and 
     in the same manner as under section 415(d).
       ``(6) Time for determination of applicable law.--Except 
     where otherwise specified, the determination of whether a 
     plan meets the requirements of subsection (b) shall be made 
     in accordance with the provisions of this title as in effect 
     immediately following enactment of the Church Retirement 
     Benefits Simplification Act of 1995.''
       (b) Effect on Existing Plans.--A church plan (within the 
     meaning of section 414(e) of the Internal Revenue Code of 
     1986) which is otherwise subject to the applicable 
     requirements of section 401(a) of such Code and which has not 
     made the election provided by section 410(d) of such Code 
     shall not be subject to section 401A of such Code, and shall 
     remain subject to the applicable requirements of section 
     401(a) of such Code, unless the board of directors or 
     trustees of an organization described in section 414(e)(3)(A) 
     of such Code, or other appropriate governing body responsible 
     for maintaining the plan, adopts a resolution under which the 
     church plan is made subject to section 401A of such Code.
       (c) Effective Dates.--
       (1) In general.--The amendment made by this section shall 
     be effective for years beginning after December 31, 1994, 
     except that the provisions of section 401A(b)(3) of the 
     Internal Revenue Code of 1986 shall be effective for years 
     beginning after December 31, 1996. No regulation or ruling 
     under section 401(a) of such Code issued after December 31, 
     1994, shall apply to a qualified church plan described in 
     section 401A of such Code unless such regulation or ruling is 
     specifically made applicable by its terms to qualified church 
     plans.
       (2) Prior years.--A church plan (within the meaning of 
     section 414(e) of such Code) shall not be deemed to have 
     failed to satisfy the applicable requirements of section 
     401(a) of such Code for any year beginning prior to January 
     1, 1995.

     SEC. 3. RETIREMENT INCOME ACCOUNTS OF CHURCHES.

       (a) In General.--Section 403(b)(9) is amended to read as 
     follows:
       ``(9) Retirement income accounts provided by churches, 
     etc.--
       ``(A) Amounts paid treated as contributions.--For purposes 
     of this title--
       ``(i) a retirement income account shall be treated as an 
     annuity contract described in this subsection, and
       ``(ii) amounts paid by an employer described in paragraph 
     (1)(A) or by a church or a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(A) or 414(e)(3)(B)(ii), to a retirement income 
     account shall be treated as amounts contributed by the 
     employer for an annuity contract for the employee on whose 
     behalf such account is maintained.
       ``(B) Retirement income account.--For purposes of this 
     paragraph, the term `retirement income account' means a 
     program established or maintained by a church, a convention 
     or association of churches, including an organization 
     described in section 414(e)(3)(A), to provide benefits under 
     this subsection for an employee described in paragraph (1) or 
     an individual described in paragraph (13)(F), or their 
     beneficiaries.''
       (b) Effective Dates.--
       (1) In general.--The amendment made by this section shall 
     be effective for years beginning after December 31, 1994.
       (2) Prior years.--A church plan (within the meaning of 
     section 414(e)) shall not be deemed to have failed to satisfy 
     the applicable requirements of section 403(b) for any year 
     beginning prior to January 1, 1995.

     SEC. 4. CONTRACTS PURCHASED BY A CHURCH.

       (a) Clarification of Applicable Nondiscrimination 
     Requirements.--Subparagraph (D) of section 403(b)(1) is 
     amended to read as follows:
       ``(D) except in the case of a contract purchased by a 
     church, such contract is purchased under a plan which meets 
     the nondiscrimination requirements of paragraph (12)(A), 
     and''.
       (b) Certain Coverage Rules Apply.--Subparagraph (B) of 
     section 403(b)(12) is amended to read as follows:
       ``(B) Certain requirements.--If a contract purchased by a 
     church is purchased under a church plan (within the meaning 
     of section 414(e)) by--
       ``(i) an organization described in section 170(b)(1)(A)(ii) 
     above the secondary school level (other than a school for 
     religious training), or
       ``(ii) an organization described in section 
     170(b)(1)(A)(iii)--

       ``(I) which provides community service for inpatient 
     medical care of the sick or injured (including obstetrical 
     care), and
       ``(II) no more than 50 percent of the total patient days of 
     which during any year are customarily assignable to the 
     categories of chronic convalescent and rest, drug and 
     alcoholic, epileptic, mentally deficient, mental, nervous and 
     mental, and tuberculosis, and care for the aged,

     the plan meets the requirements of sections 401(a)(3) and 
     401(a)(6), as in effect on September 1, 1974, and sections 
     401(a)(4), 401(a)(5), 401(a)(17), and 401(m).
     For purposes of this subparagraph, the plan administrator may 
     elect to treat the portion of the plan maintained by any 
     organization (or organizations) described in this 
     subparagraph as a separate plan (or plans).''

[[Page S7700]]

       (c) Special Rules for Churches.--Section 403(b) is amended 
     by adding the following new paragraph at the end thereof:
       ``(13) Definitions and special rules.--
       ``(A) Contract purchased by a church.--For purposes of this 
     subsection, the term `contract purchased by a church' 
     includes an annuity described in section 403(b)(1), a 
     custodial account described in section 403(b)(7), and a 
     retirement income account described in section 403(b)(9).
       ``(B) Church.--For purposes of this subsection, the term 
     `church' means a church or a convention or association of 
     churches, including an organization described in section 
     414(e)(3)(A) or section 414(e)(3)(B)(ii).
       ``(C) Vesting.--In the case of a contract purchased by a 
     church under a church plan (within the meaning of section 
     414(e))--
       ``(i) sections 403(b)(1)(C) and 403(b)(6) shall not apply;
       ``(ii) such contract is not described in this subsection 
     unless an employee's rights in the employee's accrued benefit 
     under such contract which is attributable to contributions 
     made pursuant to a salary reduction agreement are 
     nonforfeitable; and
       ``(iii) such contract is not described in this subsection 
     unless the plan satisfies the requirements of either of the 
     following:

       ``(I) The plan provides that an employee who has at least 
     10 years of service has a nonforfeitable right to 100 percent 
     of the employee's accrued benefit derived from employer 
     contributions.
       ``(II) The plan provides that an employee who has completed 
     at least 5 years of service has a nonforfeitable right to a 
     percentage of the employee's accrued benefit derived from 
     employer contributions which percentage is not less than the 
     percentage determined under the following table:
                                                         Nonforfeitable
                                                     ``Years percentage
             5.....................................................25  
             6.....................................................30  
             7.....................................................35  
             8.....................................................40  
             9.....................................................45  
             10....................................................50  
             11....................................................60  
             12....................................................70  
             13....................................................80  
             14....................................................90  
             15 or more..........................................100.  
     For purposes of clause (iii), an employee's years of service 
     shall be determined in accordance with any reasonable method 
     selected by the plan administrator.
       ``(D) Failure of one organization maintaining plan not to 
     disqualify plan.--In the case of a contract purchased by a 
     church under a church plan (within the meaning of section 
     414(e)), if one or more organizations maintaining the church 
     plan fails to satisfy the requirements of this section, such 
     plan shall not be treated as failing to satisfy the 
     requirements of this section with respect to other 
     organizations maintaining such plan.
       ``(E) Certain employees not considered highly compensated 
     and excluded employees.--For purposes of this subsection, no 
     employee for whom a contract is purchased by a church shall 
     be considered an officer, person whose principal duties 
     consist in supervising the work of other employees, or highly 
     compensated employee if such employee during the year or the 
     preceding year received compensation from the employer of 
     less than $50,000. For purposes of this subsection, there 
     shall be excluded employees described in section 
     410(b)(3)(A). The Secretary shall adjust the $50,000 amount 
     under this subparagraph at the same time and in the same 
     manner as under section 415(d).
       ``(F) Certain ministers may participate.--For purposes of 
     this subsection--
       ``(i) In general.--The term `employee' shall include a duly 
     ordained, commissioned, or licensed minister of a church in 
     the exercise of his or her ministry who is a self-employed 
     individual (within the meaning of section 401(c)(1)(B)) or 
     any duly ordained, commissioned, or licensed minister of a 
     church in the exercise of his or her ministry who is employed 
     by an organization other than an organization described in 
     section 501(c)(3).
       ``(ii) Treatment as employer and employee.--A self-employed 
     minister described in clause (i) shall be treated as his or 
     her own employer which is an organization described in 
     section 501(c)(3) and which is exempt from tax under section 
     501(a). Such an employee who is employed by an organization 
     other than an organization described in section 501(c)(3) 
     shall be treated as employed by an organization described in 
     section 501(c)(3) and which is exempt from tax under section 
     501(a).
       ``(iii) Compensation.--In determining the compensation of a 
     self-employed minister described in clause (i), the earned 
     income (within the meaning of section 401(c)(2)) of such 
     minister shall be substituted for `the amount of compensation 
     which is received from the employer' under paragraph (3).
     In determining the years of service of a self-employed 
     minister described in clause (i), the years (and portions of 
     years) in which such minister was a self-employed individual 
     (within the meaning of section 401(c)(1)(B)) shall be 
     included for purposes of paragraph (4).
       ``(G) Time for determination of applicable law.--Except 
     where otherwise specified, the determination of whether a 
     contract purchased by a church meets the requirements of this 
     subsection shall be made in accordance with the provisions of 
     this title as in effect immediately following enactment of 
     the Church Retirement Benefits Simplification Act of 1993.''
       (d) Effective Dates.--
       (1) In general.--The amendments made by this section shall 
     be effective for years beginning after December 31, 1994, 
     except that the provisions of section 403(b)(13)(C)(iii) of 
     the Internal Revenue Code of 1986 shall be effective for 
     years beginning after December 31, 1996. No regulation or 
     ruling issued under section 401(a) or 403(b) of such Code 
     after December 31, 1994, shall apply to a contract purchased 
     by a church unless such regulation or ruling is specifically 
     made applicable by its terms to such contracts. For purposes 
     of applying the exclusion allowance of section 403(b)(2) of 
     such Code and the limitations of section 415 of such Code, 
     any contribution made after December 31, 1996, which is 
     forfeitable pursuant to section 403(b)(13)(C) of such Code 
     shall be treated as an amount contributed to the contract in 
     the year for which such contribution is made and not in the 
     year the contribution becomes nonforfeitable.
       (2) Prior years.--A church plan (within the meaning of 
     section 414(e) of such Code) shall not be deemed to have 
     failed to satisfy the applicable requirements of section 
     403(b) of such Code for any year beginning prior to January 
     1, 1995.

     SEC. 5. CHANGE IN DISTRIBUTION REQUIREMENT FOR RETIREMENT 
                   INCOME ACCOUNTS.

       (a) In General.--Subparagraph (A) of section 403(b)(11) is 
     amended by inserting ``or, in the case of a retirement income 
     account described in paragraph (9), within the meaning of 
     section 401(k)(2)'' after ``section 72(m)(7)''.
       (b) Effective Date.--The amendment made by this section 
     shall be effective for years beginning after December 31, 
     1988.

     SEC. 6. REQUIRED BEGINNING DATE FOR DISTRIBUTIONS UNDER 
                   CHURCH PLANS.

       (a) In General.--Subparagraph (C) of section 401(a)(9) is 
     amended by striking the last sentence and inserting the 
     following new sentence: ``For purposes of this subparagraph, 
     the term `church plan' has the meaning given such term by 
     section 414(e).''
       (b) Effective Date.--The amendment made by this section 
     shall be effective as if included in the provision of the Tax 
     Reform Act of 1986 to which such amendment relates.
     SEC. 7. PARTICIPATION OF MINISTERS IN CHURCH PLANS.

       (a) In General.--Section 414 is amended by adding the 
     following new subsection:
       ``(u) Special Rules for Ministers.--Notwithstanding any 
     other provision of this title, if a duly ordained, 
     commissioned, or licensed minister of a church in the 
     exercise of his or her ministry participates in a church plan 
     (within the meaning of section 414(e)), then--
       ``(1) such minister shall be excluded from consideration 
     for purposes of applying sections 401(a)(3), 401(a)(4), and 
     401(a)(5), as in effect on September 1, 1974, and sections 
     401(a)(4), 401(a)(5), 401(a)(26), 401(k)(3), 401(m), 
     403(b)(1)(D) (including section 403(b)(12)), and 410 to any 
     stock bonus, pension, profit-sharing, or annuity plan 
     (including an annuity described in section 403(b) or a 
     retirement income account described in section 403(b)(9)) 
     described in this part. For purposes of this part, the church 
     plan in which such minister participates shall be treated as 
     a plan or contract meeting the requirements of section 
     401(a), 401A, or 403(b) (including section 403(b)(9)) with 
     respect to such minister's participation; and
       ``(2) such minister shall be excluded from consideration 
     for purposes of applying an applicable section to any plan 
     providing benefits described in an applicable section.
     For purposes of paragraph (2), the term `applicable section' 
     means section 79(d), section 105(h), paragraphs (1), (2), and 
     (3) of section 120(c), section 125(b), section 127(b)(2), and 
     paragraphs (2), (3), and (8) of section 129(d).''
       (b) Effective Date.--The amendment made by this section 
     shall be effective for years beginning before, on, or after 
     December 31, 1995.
     SEC. 8. CERTAIN RULES AGGREGATING EMPLOYEES NOT TO APPLY TO 
                   CHURCHES, ETC.

       (a) In General.--Section 414 is amended by adding the 
     following new subsection:
       ``(v) Certain Rules Aggregating Employees Not To Apply to 
     Churches, Etc.--
       ``(1) In general.--If the election provided by paragraph 
     (3) is made, for purposes of sections 401(a)(3), 401(a)(4), 
     and 401(a)(5), as in effect on September 1, 1974, and 
     sections 401(a)(4), 401(a)(5), 401(a)(17), 401(a)(26), 
     401(h), 401(m), 410(b), 411(d)(1), and 416, subsections (b), 
     (c), (m), (o), and (t) of this section shall not apply to 
     treat the employees of church-related organizations as 
     employed by a single employer, except in the case of 
     employees of church-related organizations which are not 
     exempt from tax under section 501(a) and which have a common, 
     immediate parent.
       ``(2) Definition of church-related organization.--For 
     purposes of this subsection, the term `church-related 
     organization' means a church or a convention or association 
     of churches, an organization described in section 
     414(e)(3)(A), an organization described in section 
     414(e)(3)(B)(ii), or an organization the employees of which 
     would be aggregated with the employees of such organizations 
     but for the election provided by paragraph (3).
       ``(3) Election to disaggregate.--The provisions of this 
     subsection shall apply if a [[Page S7701]] church-related 
     organization makes an election for itself and other church-
     related organizations (in such form and manner as the 
     Secretary may by regulations prescribe) on or before the last 
     day of the first plan year beginning on or after January 1, 
     1998.''
       (b) Effective Date.--The amendment made by this section 
     shall be effective as if included in the provisions of Public 
     Law 93-406, Public Law 98-369, and Public Law 99-514 to which 
     such amendment relates.

     SEC. 9. SELF-EMPLOYED MINISTERS TREATED AS EMPLOYEES FOR 
                   PURPOSES OF CERTAIN WELFARE BENEFIT PLANS AND 
                   RETIREMENT INCOME ACCOUNTS.

       (a) In General.--Section 7701(a)(20) is amended to read as 
     follows:
       ``(20) Employee.--For the purpose of applying the 
     provisions of section 79 with respect to group-term life 
     insurance purchased for employees, for the purpose of 
     applying the provisions of sections 104, 105, and 106 with 
     respect to accident or health insurance or accident or health 
     plans, for the purpose of applying the provisions of section 
     101(b) with respect to employees' death benefits, for the 
     purpose of applying the provisions of subtitle A with respect 
     to contributions to or under a stock bonus, pension, profit-
     sharing, or annuity plan, and with respect to distributions 
     under such a plan, or by a trust forming part of such a plan, 
     and for purposes of applying section 125 with respect to 
     cafeteria plans, the term `employee' shall include a duly 
     ordained, commissioned, or licensed minister of a church in 
     the exercise of his or her ministry who is a self-employed 
     individual (within the meaning of section 401(c)(1)(B)) or a 
     full-time life insurance salesman who is considered an 
     employee for the purpose of chapter 21, or in the case of 
     services performed before January 1, 1951, who would be 
     considered an employee if his services were performed during 
     1951.''
       (b) Effective Date.--The amendment made by this section 
     shall be effective for years beginning before, on, or after 
     December 31, 1994.
     SEC. 10. DEDUCTIONS FOR CONTRIBUTIONS BY CERTAIN MINISTERS TO 
                   RETIREMENT INCOME ACCOUNTS.

       (a) In General.--Section 404(a) is amended by adding the 
     following new paragraph:
       ``(10) Contributions by certain ministers to retirement 
     income accounts.--In case contributions are made by a 
     minister described in section 403(b)(13)(F) to a retirement 
     income account described in section 403(b)(9) and not by a 
     person other than such minister, such contributions shall be 
     treated as made to a trust which is exempt from tax under 
     section 501(a) which is part of a plan which is described in 
     section 401(a) and shall be deductible under this subsection 
     to the extent such contributions do not exceed the exclusion 
     allowance of such minister, determined under section 
     403(b)(2).''
       (b) Effective Date.--The amendment made by this section 
     shall be effective for years beginning after December 31, 
     1994.
     SEC. 11. MODIFICATION FOR CHURCH PLANS OF RULES FOR PLANS 
                   MAINTAINED BY MORE THAN ONE EMPLOYER.

       (a) In General.--Section 413(c) is amended by adding the 
     following new paragraph:
       ``(8) Church plans maintained by more than one employer.--A 
     church plan (within the meaning of section 414(e)) maintained 
     by more than one employer, and with respect to which the 
     election provided by section 410(d) has not been made, which 
     commingles assets solely for purposes of investment and 
     pooling for mortality experience to provide to participants 
     annuities computed with reference to the balance in the 
     participants' accounts when such accounts become payable 
     shall not be treated as a single plan maintained by more than 
     one employer under this subsection. The rules provided by 
     this paragraph shall apply for purposes of applying section 
     403(b)(12) to such church plan.''
       (b) Effective Date.--The amendment made by this section 
     shall be effective for years beginning before, on, or after 
     December 31, 1994.

     SEC. 12. SECTION 457 NOT TO APPLY TO DEFERRED COMPENSATION OF 
                   A CHURCH.

       (a) In General.--Paragraph (13) of section 457(e) is 
     amended to read as follows:
       ``(13) Special rule for churches.--The term `eligible 
     employer' shall not include a church (within the meaning of 
     section 401A(c)(1)).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1978.

     SEC. 13. CHURCH PLAN MODIFICATION TO SEPARATE ACCOUNT 
                   REQUIREMENT OF SECTION 401(h).

       (a) Exception to Separate Account Requirement.--Section 
     401(h) is amended by adding the following new sentence at the 
     end thereof: ``Notwithstanding the preceding sentence, in the 
     case of a pension or annuity plan that is a church plan 
     (within the meaning of section 414(e)) which is maintained by 
     more than one employer, paragraph (6) shall not apply to an 
     employee who is a key employee for purposes of section 416 
     solely because such employee is described in section 
     416(i)(1)(A)(i) (relating to officers having an annual 
     compensation greater than 150 percent of the amount in effect 
     under section 415(c)(1)(A)).''
       (b) Application of Section 415(l).--Section 415(l)(1) is 
     amended to read as follows:
       ``(1) In general.--For purposes of this section, the 
     following shall be treated as an annual addition to a defined 
     contribution plan for purposes of subsection (c):
       ``(A) Contributions allocated to any individual medical 
     account which is part of a pension or annuity plan.
       ``(B) The actuarially determined amount of prefunding for 
     the insurance value of benefits which are--
       ``(i) described in section 401(h);
       ``(ii) paid under a pension or annuity plan that is a 
     church plan (within the meaning of section 414(e));
       ``(iii) paid under a plan maintained by more than one 
     employer; and
       ``(iv) payable solely to an employee who is a key employee 
     for purposes of section 415 solely because such employee is 
     described in section 416(i)(1)(A)(i) (relating to officers 
     having an annual compensation greater than 150 percent of the 
     amount in effect under section 415(c)(1)(A)), his spouse, or 
     his dependents.
     Subparagraph (B) of section (c)(1) shall not apply to any 
     amount treated as an annual addition under the preceding 
     sentence.''
       (c) Effective Date.--The amendment made by this section 
     shall apply to years beginning after March 31, 1984.

     SEC. 14. RULE RELATING TO INVESTMENT IN CONTRACT NOT TO APPLY 
                   TO FOREIGN MISSIONARIES.

       (a) In General.--The last sentence of section 72(f) is 
     amended to read as follows: ``The preceding sentence shall 
     not apply to amounts which were contributed by the employer, 
     as determined under regulations prescribed by the Secretary, 
     to provide pension or annuity credits, to the extent such 
     credits are attributable to services performed before January 
     1, 1963, and are provided pursuant to pension or annuity plan 
     provisions in existence on March 12, 1962, and on that date 
     applicable to such services, or to provide pension or annuity 
     credits for foreign missionaries (within the meaning of 
     section 403(b)(2)(D)(iii)).''
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     1994.
     SEC. 15. REPEAL OF ELECTIVE DEFERRAL CATCH-UP LIMITATION FOR 
                   RETIREMENT INCOME ACCOUNTS.

       (a) In General.--Clause (iii) of section 402(g)(8)(A) is 
     amended to read as follows:
       ``(iii) except in the case of elective deferrals under a 
     retirement income account described in section 403(b)(9), the 
     excess of $5,000 multiplied by the number of years of service 
     of the employee with the qualified organization over the 
     employer contributions described in paragraph (3) made by the 
     organization on behalf of such employee for prior taxable 
     years (determined in the manner prescribed by the 
     Secretary).''
       (b) Effective Date.--The amendment made by this section 
     shall be effective as if included in the provision of the Tax 
     Reform Act of 1986 to which such amendment relates.

     SEC. 16. CHURCH PLANS MAY ANNUITIZE BENEFITS.

       (a) In General.--A retirement income account described in 
     section 403(b)(9) of the Internal Revenue Code of 1986, a 
     church plan (within the meaning of section 414(e) of such 
     Code) that is a plan described in section 401(a) or 401A of 
     such Code, or an account which consists of qualifed voluntary 
     employee contributions described in section 219(e)(2) of such 
     Code (as in effect before the date of the enactment of the 
     Tax Reform Act of 1986) and earnings thereon, shall not fail 
     to be described in such sections merely because it pays 
     benefits to participants (and their beneficiaries) from a 
     pool of assets administered or funded by an organization 
     described in section 414(e)(3)(A) of such Code, rather than 
     through the purchase of annuities from an insurance company.
       (b) Effective Date.--This provision shall be effective for 
     years beginning before, on, or after December 31, 1994.

     SEC. 17. CHURCH PLANS MAY INCREASE BENEFIT PAYMENTS.

       (a) In General.--A retirement income account described in 
     section 403(b)(9) of the Internal Revenue Code of 1986, a 
     church plan (within the meaning of section 414(e) of such 
     Code) that is a plan described in section 401(a) or 401A of 
     such Code, or an account which consists of qualified 
     voluntary employee contributions described in section 
     219(e)(2) of such Code (as in effect before the date of the 
     enactment of the Tax Reform Act of 1986) and earnings 
     thereon, shall not fail to be described in such sections 
     merely because it provides benefit payments to participants 
     (and their beneficiaries)--
       (1) to take into account the investment performance of the 
     underlying assets or favorable interest or mortality 
     experience, or
       (2) that increase in an amount not in excess of 5 percent 
     per year.
       (b) Effective Date.--This provision shall be effective for 
     years beginning before, on, or after December 31, 1994.

     SEC. 18. RULES APPLICABLE TO SELF-INSURED MEDICAL 
                   REIMBURSEMENT PLANS NOT TO APPLY TO PLANS OF 
                   CHURCHES.

       (a) In General.--Section 105(h) is amended by adding the 
     following new paragraph:
       ``(11) Plans of churches.--This subsection shall not apply 
     to a plan maintained by a church (within the meaning of 
     section 401A(c)(1)).''
       (b) Effective Date.--The amendment made by this section 
     shall be effective for years beginning before, on, or after 
     December 31, 1994.

     SEC. 19. RETIREMENT BENEFITS OF MINISTERS NOT SUBJECT TO TAX 
                   ON NET EARNINGS FROM SELF-EMPLOYMENT.

       (a) In General.--Section 1402(a)(8) (defining net earning 
     from self-employment) is [[Page S7702]] amended by inserting 
     ``, but shall not include in such net earning from self-
     employment any retirement benefit received by such individual 
     from a church plan (as defined in section 414(e))'' before 
     the semicolon at the end.
       (b) Effective Date.--The amendments made by this section 
     shall apply to years beginning before, on, or after December 
     31, 1994.

      By Mr. PRESSLER (for himself and Mr. Daschle):
  S. 882. A bill to designate the Federal building at 1314 LeMay 
Boulevard, Ellsworth Air Force Base, SD, as the ``Cartney Koch McRaven 
Child Development Center'', and for other purposes; to the Committee on 
Environment and Public Works.


             cartney koch mcraven child development center

  Mr. PRESSLER. Mr. President, I am proud to introduce legislation 
today along with my South Dakota colleague, Senator Daschle to 
designate the child development center at Ellsworth Air Force Base in 
South Dakota as the Cartney Koch McRaven Child Development Center.
  It was just slightly more than a month ago that terrorist thugs 
bombed the Alfred P. Murrah Federal Building in Oklahoma City. Among 
the victims inside was Cartney Koch McRaven. Stationed at Tinker Air 
Force Base and having just been married the previous weekend, Cartney 
was in the Murrah Federal Building to register her new married name on 
Federal documents. Tragically, her life was cut short by the savagery 
of domestic terrorism.
  It is only fitting that we honor Cartney at Ellsworth Air Force Base. 
Spearfish was her home. And she chose to begin her adult life by 
joining the Air Force and serving her country. And serve she did, with 
honor, with devotion, with dignity.
  It is even more fitting that her name appear on the child development 
center at Ellsworth. Airman First Class Cartney Koch McRaven served in 
Haiti, where the stark poverty had an enormous impact on her. Cartney's 
heart went out to the children of Haiti. She devoted her time in Haiti 
to an orphanage, offering a warm smile and a kind, loving word to young 
faces. The mission of our Armed Forces in Haiti was to ensure peace and 
offer hope to the people of Haiti--young and old. Cartney took her 
mission to heart.
  Even her family honored Cartney's commitment to young people by 
urging that donations be made in Cartney's memory to the orphanage in 
Haiti.
  But we do more than honor a person. We honor the values she 
personified and practiced in her daily life. The values of service, of 
duty, of compassion and caring for the underprivileged young--values 
that are at the core of South Dakota and of America.
  It is my hope that by passing this legislation, Cartney Koch McRaven 
forever will be remembered as a symbol of these core values and an 
inspiration to the young people in South Dakota and America to honor 
and serve their family, community, and country.
  Mr. President, I ask unanimous consent that the text of this 
legislation introduced today by myself and Senator Daschle appear in 
the appropriate place in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. DESIGNATION OF CARTNEY KOCH MCRAVEN CHILD 
                   DEVELOPMENT CENTER.

       (a) In General.--The Federal building at 1314 LeMay 
     Boulevard, Ellsworth Air Force Base, South Dakota, shall be 
     known and designated as the ``Cartney Koch McRaven Child 
     Development Center''.
       (b) Replacement Building.--If, after the date of enactment 
     of this Act, a new Federal building is built at the location 
     described in subsection (a) to replace the building described 
     in the subsection, the new Federal building shall be known 
     and designated as the ``Cartney Koch McRaven Child 
     Development Center''.

     SEC. 2. REFERENCES.

       Any reference in a law, map, regulation, document, paper, 
     or other record of the United States to a Federal building 
     referred to in section 1 shall be deemed to be a reference to 
     the ``Cartney Koch McRaven Child Development Center''.
     

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