[Congressional Record Volume 146, Number 99 (Wednesday, July 26, 2000)]
[Extensions of Remarks]
[Page E1323]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        COMPREHENSIVE RETIREMENT SECURITY AND PENSION REFORM ACT

                                 ______
                                 

                               speech of

                           HON. JERRY WELLER

                              of illinois

                    in the house of representatives

                        Wednesday, July 19, 2000

  Mr. WELLER. Mr. Speaker, I submit for the record a letter written by 
the Joint Committee on Taxation (JCT) regarding a provision included in 
H.R. 4843, the Comprehensive Retirement Security and Pension Reform 
Act. This letter should help to clarify the provision which applies to 
the Section 415 limits for multiemployer pension plans.
  The JCT letter helps to clarify that, if the IRS follows the 
precedents it has established in the past, the individual multiemployer 
pension plans will be able to provide benefit increases for individuals 
who are already retired from their plan related employment if all of 
their benefits have not been previously distributed. This means that an 
employee who is currently retired from union employment can benefit 
from the Section 415 modifications included in H.R. 4843.
  I am particularly interested in this issue because of a family in my 
district who loses more than one-half of their annual pension because 
of the Section 415 limits. Larry Kohr is a retired union worker who 
lives with his family in my district in Illinois. Larry loses more than 
one-half of his annual benefits because of the 415 limits. The letter I 
am including into the record today clarifies that the IRS and the 
individual multiemployer pension plans will have the right and the 
ability, once the 415 changes are signed into law, to ensure that 
current retirees, such as the Kohr's, will be able to benefit from the 
changes in the Section 415 limits.
  Mr. Speaker, thank you for the opportunity to clarify this important 
issue.

                                    Congress of the United States,


                                  Joint Committee on Taxation,

                                    Washington, DC, July 19, 2000.
     Hon. Jerry Weller,
     House of Representatives,
     Washington, DC.
       Dear Mr. Weller: This is response to your request dated 
     July 18, 2000, regarding the provision in H.R. 4843, the 
     ``Comprehensive Retirement Security and Pension Reform Act,'' 
     as reported by the Committee on Ways and Means, modifying the 
     section 415 limits on benefits under multiemployer pension 
     plans. Specifically, you requested information concerning the 
     impact that the enactment of H.R. 4843 would have on the 
     authority and ability of multiemployer pension plans to 
     correct future benefits for retirees whose pension benefits 
     are reduced under present law by operation of the section 415 
     limits.
       H.R. 4843 would not require multiemployer pension plans to 
     increase pension benefits for retired participants or 
     participants who are currently employed. Section 415 provides 
     limits on the maximum benefits that may be paid from a 
     pension plan, not minimum benefit requirements. Therefore, a 
     modification of an applicable section 415 limit would not 
     automatically increase a participant's benefit. Rather, 
     whether an increase occurs would depend on the plan 
     provisions and any modification made to the plan to reflect 
     the increased limit.
       In order to determine the effect that H.R. 4843 would have 
     on the authority and ability of a multiemployer plan to 
     increase benefits for retirees, a useful analogy is the 
     repeal of the combined limitation on defined benefit and 
     defined contribution plans under former section 415(e) as a 
     result of the enactment of the Small Business Job Protection 
     Act of 1996. Prior to the effective date of the repeal of 
     section 415(e), the Internal Revenue Service (the ``IRS'') 
     issued Notice 99-44, in which the IRS provided guidance 
     concerning benefit increases that would be permitted upon the 
     repeal of the combined limitation on defined benefit and 
     defined contribution plans.
       In Notice 99-44, the IRS stated that if a plan is not 
     amended to take into account the repeal of section 415(e), 
     the effect on the benefits of plan participants will depend 
     on the plan's existing provisions for applying the 
     limitations of section 415(e) and any other relevant plan 
     provisions. According to the IRS, a plan's existing 
     provisions could result in automatic benefit increases for 
     participants as of the effective date of the repeal of 
     section 415(e). For example, the IRS stated, the repeal of 
     section 415(e) could result in automatic benefit increases 
     for participants in defined benefit plans that incorporate by 
     reference the limitations under section 415.
       In addition, the IRS stated in Notice 99-44 that a defined 
     benefit pension plan may provide for benefit increases to 
     reflect the repeal of section 415(e) for a current or former 
     employee who has commenced benefits under the plan prior to 
     the effective date of the repeal of section 415(e) for the 
     plan, but only if the employee or former employee has an 
     accrued benefit on that date. In other words, the IRS 
     determined that a plan may provide for benefit increases to 
     reflect the repeal of section 415(e) for a former employee 
     who has begun receiving benefit distributions prior to the 
     effective date of the repeal but whose benefits under the 
     plan have not been completely distributed prior to the 
     effective date of the repeal.
       If H.R. 4843 is enacted, the modifications to the section 
     415 limits affecting multiemployer pension plans would be 
     effective for years beginning after December 31, 2000. If, in 
     the implementation of these modifications, the IRS follows 
     the precedent that it has established with respect to the 
     repeal of section 415(e), a multiemployer plan would be 
     permitted to provide for benefit increases to reflect the 
     modifications of the section 415 limits for a former employee 
     who has commenced distributions prior to 2001 but whose 
     benefits have not been completely distributed prior to 2001. 
     In addition, the modification of the section 415 limits could 
     result in automatic benefit increases for participants in 
     defined benefit plans that incorporate by reference the 
     section 415 limits.
       I hope this information is helpful to you. If we can be of 
     further assistance in this matter, please let me know.
           Sincerely,
                                                   Lindy L. Paull.

     

                          ____________________