[Congressional Record Volume 144, Number 5 (Tuesday, February 3, 1998)]
[Senate]
[Page S322]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mrs. BOXER:
  S. 1600. A bill to amend the Internal Revenue Code of 1986 to waive 
in the case of multiemployer plans the section 415 limit on benefits to 
the participant's average compensation for his high 3 years; to the 
Committee on Finance.


                   INTERNAL REVENUE CODE LEGISLATION

  Mrs. BOXER. Madam President, section 415 of the Internal Revenue Code 
limits annual pension benefits from multiemployer plans to the average 
of the three highest consecutive years of income while a worker was 
covered by the plan. The bill I am introducing today will exempt 
multiemployer pension plans from the income-based limitations imposed 
by Section 415.
  Section 415 was enacted in an effort to prevent the ``gaming'' which 
occasionally occurred in single employer pension plans. Such gaming 
occurred when an employee's salary was significantly increased the year 
before retirement in order to increase that employee's retirement 
benefits. Single employer plans, unlike multiemployer plans, are 
generally based upon an employee's salary prior to retirement. 
Reportedly, from time-to-time, such gaming did occur in single employer 
plans.
  Multiemployer plans, conversely, are generally based on the number of 
years an employee has worked, plus the collectively-bargained-for 
dollar amount of contributions made into the plan. Therefore, such 
gaming generally did not occur in multiemployer plans. Section, 415, 
however, does not distinguish between multiemployer plans and single 
employer plans. Instead, section 415 assumes the salaries of all 
workers increase steadily over the course of their employment. In fact 
however, for many workers, particularly those that belong to 
multiemployer pension plans, there is no such steady increase in 
earnings. Rather, the salaries of these workers tend to fluctuate over 
the course of their employment. Because of these fluctuations, the 
three highest years of compensation for many multiemployer plan 
participants are not necessarily consecutive.
  Congress recognized this inequity and in 1996, as part of the Small 
Business and Jobs Protection Act (Pub. L. 104-188), exempted public 
employee pension plans from Section 415. This exemption, however, was 
not extended to private sector employees covered by multiemployer 
pension plans. The bill I have introduced today exempts multiemployer 
pension plans, single employer plans would still be subject to Section 
415 limitations.
  Congressman Peter J. Visclosky introduced similar legislation in 
April 1997 in the House of Representatives. His bill has bipartisan 
support in the House. I hope that my bill will receive similar support 
here in the Senate. Private sector employees, who are covered by 
multiemployer pension plans, should receive the same treatment as 
public sector employees. My bill will alleviate the disparity which now 
exists.
  Madam President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1600

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

     SECTION 1. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415 
                   LIMIT ON BENEFITS.

       Paragraph (11) of section 415(b) of the Internal Revenue 
     Code of 1986 (relating to special limitation rule for 
     governmental plans) is amended--
       (1) in the heading, by inserting ``and multiemployer 
     plans'' after ``governmental plans''; and
       (2) by inserting ``or a multiemployer plan (as defined in 
     section 414(f))'' after ``governmental plan (as defined in 
     section 414(d))''.

     SEC. 2. EFFECTIVE DATE.

       The amendments made by section 1 shall apply to plan years 
     beginning after December 31, 1997.
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