[Congressional Record Volume 147, Number 50 (Friday, April 6, 2001)]
[Senate]
[Pages S3711-S3761]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS--APRIL 6, 2001
By Mr. BOND (for himself and Mr. Breaux):
S. 724. A bill to amend title XXI of the Social Security Act to
provide for coverage of pregnancy-related assistance for targeted low-
income pregnant women; to the Committee on Finance.
Mr. BOND. Mr. President, I rise today to introduce a bill that I
believe is vitally important to the health care of children and
pregnancy women in America. The goal of this legislation is simply, to
make sure more pregnancy women and more children are covered by health
insurance so they have access to the health care services they6 need to
be healthy.
The need is great, on any given day, approximately 11 million
children and close to half a million pregnant women do not have health
insurance coverage. For many of these women and children, they or their
family simply can't afford insurance, and lack of insurance often means
inability to pay for care. The further tragedy is that quite a few are
actually eligible for a public program like Medicaid or the State
Children's Health Insurance Program, but many of those don't know they
are eligible and are not signed up.
Lack of health insurance can lead to numerous health problems, both
for children and for pregnant women. A child without health coverage is
much less likely to receive the health care services that are needed to
ensure the child is healthy, happy, and fully able to learn and grow.
An uninsured pregnant woman is much less likely to get critical
prenatal care that reduces the risk of health problems for both the
woman and the child. Babies whose mothers receive no prenatal care or
late prenatal care are at-risk for many health problems. including
birth defects, premature births, and low birth-weight.
The bill I am introducing deals with this insurance problem in two
ways.
First, it allows states to provide prenatal care for low-income
pregnant women under the State Children's Health Insurance Program--
also known as SCHIP--if the state chooses.
Through the joint federal-state SCHIP program, states are currently
expanding the availability of health insurance for low-income children.
However, federal law prevents states from using SCHIP funds to provide
prenatal care to low-income pregnant women over age 19, even though
babies born to many low-income women become eligible for SCHIP as soon
as they are born.
Approximately 41,000 additional women could be covered for prenatal
care. There are literally billions of dollars of SCHIP funds that
states have not used yet, so I would hope that most states would choose
this option. This provision will not impact federal SCHIP expenditures
because it does not change the existing federal spending caps for
SCHIP. Babies born to pregnant women covered by a state's SCHIP program
would be automatically enrolled and receive immediate coverage under
SCHIP themselves.
It is foolish to deny prenatal care to a pregnant mother and then,
only after the baby is born, provide the child with coverage under
SCHIP. Prenatal care can be just as important to a newborn baby as
postnatal care, and the prenatal care is of course important for the
mother as well.
We know that states will be interested. Two states have already gone
through the difficult Health Care Financing Administration waiver
process to get permission to cover pregnant women through their SCHIP
programs. But you shouldn't have to get a waiver to do something that
makes so much sense. This bill will make it an automatic option that
any state can do without the need of a waiver.
Second, the bill will help states reach out to women and children who
are eligible for, but are not enrolled in, Medicaid or SCHIP.
Approximately 340,000 pregnant women and several million children are
estimated to be eligible for but not enrolled in Medicaid. Millions of
additional children are eligible for but not yet enrolled in SCHIP. We
must reach out to these people to make sure they know they have options
which they are not using.
When Congress passed the welfare reform bill back in 1996, we created
a $500 million fund that states could tap into to make sure that all
Medicaid-eligible
[[Page S3712]]
people stayed in Medicaid. The problem is that only half of that fund
has been used. My bill would give states more flexibility to use this
fund to reach out to both Medicaid and SCHIP-eligible women and
children.
In addition, my bill tries to make greater use of what is known as
presumptive eligibility. Under presumptive eligibility, states are
allowed to temporarily enroll children whose family income appears to
be below Medicaid or SCHIP income standards, until a final
determination of eligibility is made. This is useful because it allows
people to get health care services at the same time that they are
waiting, sometimes for as much as a month or two, for a final
eligibility determination.
Without presumptive eligibility, experience has shown that fewer
people will fill out the applications forms, and fewer people will be
willing to wait until a final decision is made. When it comes to trying
to ensure that people get health care, we need to remove as many
barriers as possible. That is why presumptive eligibility is useful, it
removes a barrier.
Right now, states may grant presumptive eligibility for both pregnant
women in Medicaid and for children in Medicaid and in SCHIP. Because my
legislation would allow pregnant women to be covered through SCHIP for
the first time, my bill also extends presumptive eligibility for
pregnant women into the SCHIP program. In addition, in legislation
passed last December, Congress expanded the types of sites states can
use to grant presumptive eligibility for children to also include
schools and other entities that states think will be able to identify
people eligible for these programs. However, we failed to give states
the ability to use these additional entities as sites to enroll
pregnant women. My bill would correct that omission.
The bottom line is that this bill will help provide health care to
more pregnant women. With hundreds of thousands of pregnant women
lacking insurance, and with hundreds of thousands lacking adequate
prenatal care, we are compelled to focus on this issue.
I believe this is crucial legislation, and urge my colleagues to join
me in support of it so that we can pass this bill.
______
By Mr. GRASSLEY:
S. 725. A bill to amend the Internal Revenue Code of 1986 to codify
the authority of the Secretary of the Treasury, to issue regulations
covering the practices of enrolled agents before the Internal Revenue
Service; to the Committee on Finance.
Mr. GRASSLEY. Mr. President, today I rise to introduce the Enrolled
Agent Credentials Protection Act. This legislation would make it clear
that Enrolled Agents have the right to use their federally granted
credentials, by making it clear that states shall not restrict enrolled
agents from using the words ``Enrolled Agent'' or the abbreviations
``EA'' and ``E.A.''
A number of states have enacted laws that restrict the right of
Enrolled Agents to use their credentials or designations as Enrolled
Agents. The Supreme Court has held in similar situations that because
the Federal Government grants the license, restricting its use is an
unmerited exercise of state powers. This legislation is consistent with
the Uniform Accountancy Act, Third Edition, as drafted by the American
Institute of Certified Public Accountants and National Association of
State Accountancy Boards.
Enrolled Agents have been providing valuable services to taxpayers
since 1884. Since that time, the profession has evolved and now
includes preparing and advising on tax returns for individuals,
partnerships, corporations, estates, trusts and any entity with tax-
reporting requirements. They also provide affordable representation to
individuals and small businesses with disputes before the Internal
Revenue Service. At present, there are approximately 35,000 Enrolled
Agents in the country providing practical and affordable tax service to
taxpayers.
Enrolled Agents are highly qualified tax professionals. While
certified public accountants and licensed attorneys also represent
taxpayers before the Internal Revenue Service, only Enrolled Agents are
required to demonstrate to the IRS their technical competence in the
field of taxation. In order to maintain their status as Enrolled
Agents, they must take 72 hours of continuing professional education,
reported every three years to the IRS. Because Enrolled Agents focus on
federal taxes and tax administration, they are able to keep on the
forefront of current changes in the law and regulations.
The Enrolled Agent designation dates to the Enabling Act of 1884 and
the profession is regulated by Treasury Circular 230, the same body of
regulations that governs the practice of attorneys and certified public
accountants before the Internal Revenue.
This bill would restate the statutory validation that Enrolled Agents
hold and allow them the right to use their credentials as Enrolled
Agents. In doing so, this bill does not add to the powers that Enrolled
Agents currently maintain, nor would it affect the rules and
regulations provided for in Treasury Circular 230.
Section 10.30 of Circular 230 authorizes Enrolled Agents to advertise
and display their ability to practice before the IRS provided the
designation is not misleading or deceptive to the public. Neither
Congress nor the Treasury Department ever intended for states to
interfere with the right of Enrolled Agents to inform taxpayers that
they hold a license to practice before the Internal Revenue Service.
______
By Mr. BREAUX (for himself, Mr. Thompson, Mr. Miller, Mr.
Cleland, Ms. Landrieu, Mr. Shelby, Mr. Bunning, and Mr. Frist):
S. 726. A bill to amend the Internal Revenue Code of 1986 to provide
for the treatment of prepayments for natural gas; to the Committee on
Finance.
Mr. BREAUX. Mr. President, I am introducing legislation today to
address a problem that has prevented municipal gas systems from using
their tax exempt borrowing authority to obtain an assured, long-term
supply of competitively-priced natural gas. I am joined today by my
colleagues, Senators Thompson, Miller, Cleland, Landrieu, Shelby,
Bunning and Frist.
There are approximately 1,000 publicly owned gas distribution systems
in the United States, the vast majority of which are located in small
towns and rural communities across my home state of Louisiana and
across the country. In 1993, the Federal Energy Regulatory Commission,
FERC, restructured the natural gas industry so that municipal gas
systems could no longer purchase natural gas supplies on a reliable and
regulated basis from interstate natural gas pipelines. This fundamental
change in the marketplace meant that for the first time municipal gas
systems had to acquire reliable gas supplies and transport on their own
in a deregulated marketplace. In response, many formed joint action
agencies--as contemplated in the FERC restructuring, to acquire and
manage the delivery of gas.
In today's turbulent natural gas markets, long-term prepaid supply
arrangements are the most reliable means of obtaining an assured supply
of natural gas. To fund prepaid supply contracts, a municipality or a
joint action agency issues tax-exempt bonds. These contracts contain
stiff penalties if the supplier fails to fulfill its contract--making
this the most reliable gas supply that municipal gas agencies can
purchase. The seller discounts the price for several reasons including
the fact that a prepaid contract eliminates the normal credit risk
associated with selling gas to non-rated governmental entities.
Municipal gas systems are able to obtain these firm gas supplies at
more competitive prices. Until August of 1999, joint action agencies
entered into prepayment supply contracts with gas suppliers to obtain a
long-term, e.g., 10-year, supply of gas.
In August 1999, the IRS effectively prevented municipal gas systems
from using their tax-exempt borrowing authority to fund the purchase of
long-term, prepaid supplies of natural gas for their citizens. In a
statement on an unrelated matter, the IRS questioned whether the
purchase of a commodity, such as natural gas, under a prepaid contract
financed by tax-exempt bonds has a principal purpose of earning an
investment return. In this scenario, the bonds would run afoul of the
arbitrage rules of the Internal Revenue Code.
Confusion over the IRS' statement and fear of impending regulations
has
[[Page S3713]]
led to the effective elimination of an extremely effective method of
securing natural gas for local communities. The IRS has yet to issue
any clarification or guidance on this issue.
Under current law, tax-exempt bonds may not be used to raise proceeds
that are then used to acquire ``investment-type property'' having a
higher yield than the bonds. Governmental bonds that violate this
arbitrage restriction do not qualify for tax-exempt status. Treasury
regulations provide that investment-type property includes certain
prepayments for property or services ``if a principal purpose for
prepaying is to receive an investment return.'' But, ``a prepayment
does not give rise to investment-type property if . . . the prepayment
is made for a substantial business purpose other than investment return
and the issuer has no commercially reasonable alternative to the
prepayment. . . .'' A nearly identical standard is used to determine
whether a prepayment transaction is treated as a loan for purposes of
the private loan-financing test. If a transaction is considered a
private loan financing, the bonds are treated as private activity
bonds. Although municipal gas systems clearly have a ``substantial
business purpose'' for entering into prepayment transactions and ``no
commercially reasonable alternative,'' the lack of clarification on
this IRS language has hampered the most efficient tool available to
public gas systems to secure long-term supplies of natural gas.
The bill does not overturn current law or any IRS regulations. It
simply clarifies the law, both with respect to the arbitrage rules and
the private loan financing rules, to allow an effective and reasonably-
priced energy delivery system to continue unimpeded.
The United States is in the midst of an energy crisis. Natural gas
distribution systems are scrambling to obtain an assured supply of
natural gas, even while prices have skyrocketed in the last few months.
The ability of small communities to use their tax-exempt borrowing
authority to obtain a long-term, assured supply of competitively-priced
natural gas is essential. By clarifying current law, we provide a low-
cost natural gas option for millions of Americans across the country.
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. 726
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 ``Municipal Utility Natural
Gas Supply Act of 2001''.
SEC. 2. ARBITRAGE RULES NOT TO APPLY TO PREPAYMENTS FOR
NATURAL GAS.
(a) In General.--Subsection (b) of section 148 of the
Internal Revenue Code of 1986 (defining higher yielding
investments) is amended by adding at the end the following
new paragraph:
``(4) Exception for certain prepayments to ensure natural
gas supply.--The term `investment property' shall not include
any prepayment for the purpose of obtaining a supply of
natural gas reasonably expected to be used in a business of 1
or more utilities each of which is owned and operated by a
State or local government, any political subdivision or
instrumentality thereof, or any governmental unit acting for
or on behalf of such a utility.''.
(b) Effective Date.--The amendment made by this section
shall take effect as if included in the amendments made by
section 1301 of the Tax Reform Act of 1986.
SEC. 3. PRIVATE LOAN FINANCING TEST NOT TO APPLY TO
PREPAYMENTS FOR NATURAL GAS.
(a) In General.--Paragraph (2) of section 141(c) of the
Internal Revenue Code of 1986 (relating to exception for tax
assessment, etc., loans) is amended by striking ``or'' at the
end of subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, or'', and by adding at the
end the following new subparagraph:
``(C) arises from a transaction described in section
148(b)(4).''.
(b) Effective Date.--The amendments made by this section
shall take effect as if included in the amendments made by
section 1301 of the Tax Reform Act of 1986.
______
By Ms. COLLINS (for herself and Mr. Feingold):
S. 727. A bill to provide grants for cardiopulmonary resuscitation
(CPR) training in public schools; to the Committee on Health,
Education, Labor, and Pensions.
Ms. COLLINS. Mr. President, I am pleased to be joining with my
colleague from Wisconsin, Senator Russ Feingold, in introducing the
Teaching Children to Save Lives Act which will help train a generation
of potential lifesavers by providing funding for programs to teach
children the basic lifesaving skill of cardiopulmonary resuscitation,
or CPR.
Approximately 220,000 Americans die each year of sudden cardiac
arrest. The American Heart Association estimates that about 50,000 of
these lives could be saved each year if more people implemented what it
calls the ``Chain of Survival,'' which includes an immediate call to
911, early CPR and defibrillation, and early advanced life support. The
Teaching Children to Save Lives Act, which we are introducing today,
will help strengthen the second link in this chain by providing grants
to schools to implement CPR training programs. Schools could use these
funds to work in conjunction with community organizations such as local
fire and police departments, hospitals, parent-teacher associations and
others to provide CPR training. The legislation authorizes $30 million
over three years for the Department of Health and Human Services to
award grants to States to support these community partnerships and to
help schools train teachers and purchase materials such as mannequins.
Those schools that are fortunate enough to have CPR programs will be
able to apply for funding to help train students in the use of
automated external defibrillators, a life-saving device that shocks a
heart back to its normal rhythm when it stops beating.
We have all heard stories about situations where a school age child
or teenager has been the witness, perhaps the only witness, to a heart
attack or other health emergency. Many kids, and adults for that
matter, simply don't know what to do in the face of such an emergency.
Given the proper training, however, our young people are perfectly
capable of responding to calmly and appropriately to a life-threatening
situation.
For example, the Red Cross in Maine recently honored Sara Boyorak, a
student at Bangor High School, for her quick response when her 22-month
old nephew Blake, suddenly stopped breathing. Sara was riding in the
car with Blake and her parents to a family get-together. It was a
miserably hot day and Blake was suffering from a terrible ear
infection. Sara was entertaining Blake in his car seat when he suddenly
stopped responding to her. She then noticed that his face was turning a
bluish color. Evidently, the heat of the day combined with the fever
from his ear infection had caused Blake to stop breathing.
Sara had taken CPR in a Red Cross class at her school so she was
prepared and knew just what to do. She immediately leaped into action
and initiated the ``Chain of Survival.'' She directed her father to
stop the car and her mother to call 911 on the cell phone. She then
placed Blake on the back seat of the car, and, when she had determined
that he was not breathing and had no pulse, she started performing CPR,
just as she had learned in her class. As a consequence of her quick
action, Blake regained consciousness before the ambulance arrived, and
will soon be celebrating his third birthday, thanks to his Aunt Sara.
The Teaching Children to Save Lives Act will enable more school
children like Sara to learn the CPR skills they may need to save the
life of a family member or loved one. Moreover, teaching CPR to our
children and teens will not only improve their confidence in responding
to emergencies, but it will also encourage them to update and maintain
these skills into adulthood.
The Teaching Children to Save Lives Act is supported by coalition of
groups including the American Heart Association, the Red Cross, the
National Education Association, and the School Nurses Association, and
I urge all of my colleagues to join us in cosponsoring the legislation.
Mr. FEINGOLD. Mr. President, I rise today to join my friend and
colleague from Maine to introduce the ``Teaching Children to Save Lives
Act.'' This legislation will help schools in their efforts to provide
students with chain of survival training, including training in
cardiopulmonary resuscitation, CPR, and in the use of Automated
External Defibrillators, AEDs. It is vital that we support local and
community based efforts to equip younger generations
[[Page S3714]]
with the necessary skills to deal with life-threatening cardiac
emergencies.
Over two hundred twenty thousand Americans die each year of sudden
cardiac arrest. About 50,000 of these victims lives could be saved each
year if more people implemented the ``Chain of Survival,'' which
includes an immediate call to 911, early CPR and defibrillation, and
early advanced life support. The Teaching Children to Save Lives Act
will help strengthen the second link in the Chain by providing grants
to schools to implement CPR training programs and help some schools
train their students in AED use.
In Wisconsin, we've seen many examples where a school age child or
teenager is the first witness to a heart attack. Unfortunately, most
kids would not know what to do in the face of such an emergency. As a
matter of fact, many adults wouldn't know what to do either. In
response to this break in the chain of survival, a number of localities
have pushed for increased CPR training and public access to
defibrillation in schools.
In my home state of Wisconsin, a broad coalition including the
Children's Hospital of Wisconsin, the American Red Cross, the American
Heart Association and the Children's Hospital Foundation created
Project Adam in memory of a student who tragically collapsed and passed
away while playing competitive sports. This legislation follows the
lead of Project Adam, which fosters awareness of the potential for
sudden cardiac arrest in the adolescent population and facilitates
training of high school staff and students in CPR and in the use of
AEDs.
The Teaching Children to Save Lives Act builds on these efforts by
providing funding to teach the basics of the chain of survival and
provide funding for AED training devices. This legislation also has
sufficient flexibility to allow States and communities the ability to
address their local needs. For example, schools could either begin
their efforts to teach the Chain of Survival by starting a CPR training
program or build on existing efforts by applying for grants to train
students to use automatic external defibrillators. As a result of
Project Adam, at least one life has been saved so far and three other
children have survived episodes because of early defibrillation.
Many of our schools lack the resources they need for basic health
educational programs. This legislation would follow the lead of local
efforts such as Project Adam and demonstrate that the Federal
government wants to be a partner in these lifesaving efforts.
I want to especially thank my friend from Maine, Senator Collins, who
has worked with me to improve the chain of survival across the United
States. Without her leadership last year on our legislation to improve
access to defibrillators in rural areas, we would not have been able to
move forward with legislation that will improve cardiac survival rates
across rural communities.
I hope my colleagues will join us in our continued efforts to improve
cardiac arrest rates by working with us to pass this important
legislation to provide communities the support they need to effectively
teach CPR in the schools.
______
By Mr. KOHL (for himself, Mr. Dorgan, and Mr. Conrad):
S. 728. A bill to establish a demonstration project to waive certain
nurse aide training requirements for specially trained individuals who
perform certain specific tasks in nursing facilities participating in
the medicare or medicaid programs, and to conditionally authorize the
use of resident assistants in such nursing facilities; to the Committee
on Finance.
Mr. KOHL. Mr. President, I rise today to introduce the Medicare and
Medicaid Nursing Services Quality Improvement Act. I am pleased to work
with Senators Dorgan and Conrad in this important effort to improve the
quality of care in our nation's nursing homes.
This legislation serves two purposes. First, as part of an 8-State
demonstration project, it allows Wisconsin nursing homes to continue
utilizing Resident Assistants, or ``single task employees'' as they are
referred to in Wisconsin, to help provide care to residents. Second, it
provides for a thorough evaluation of Resident Assistants to assess
their impact on quality of care, as well as their impact on the
recruitment, retention, and salaries of other nursing staff.
For the past seven years, many nursing facilities in Wisconsin have
been utilizing single task employees to help provide care to residents.
Single task employees have helped primarily with feeding and hydration
services and have provided often-needed extra assistance during the
busier mealtime hours. All single task employees must go through a
training program. In many cases, those who perform these single tasks
are already on staff serving in other non-nursing capacities.
Last year, the Health Care Financing Administration, HCFA, notified
the State of Wisconsin that the use of single task employees in nursing
homes was not permissible under Federal law. In particular, HCFA noted
that only staff who have undergone the required training to become a
Certified Nurse Aide, CNA, may perform nursing-related tasks in
Medicaid facilities. Therefore, faced with no other recourse, Wisconsin
submitted and HCFA approved a plan to phase out the use of single task
employees by the end of 2001.
I am deeply concerned that the immediate removal of all single task
employees could worsen staffing shortages that many Wisconsin nursing
homes already face. A December, 2000 survey of 247 Wisconsin nursing
homes found that nearly 32 percent were currently suspending or
restricting admissions or had done so in the prior six months due to
inadequate staffing.
I recognize that there are many factors that have contributed to
staffing shortages in Wisconsin and across the nation. I believe that
we need to look for long-term solutions to strengthen training and
improve staffing in nursing homes, and I am committed to working in
that effort. We must all work together to find ways to attract greater
numbers of qualified people to become CNAs, and ensure they receive the
support, training and compensation they deserve for their hard work and
dedication.
In the meantime, this legislation provides a short-term solution to
address the staffing shortages Wisconsin nursing homes face today.
Under the bill, Wisconsin would be one of 8 demonstration States and
could continue to use single task workers, referred to in the
legislation as ``Resident Assistants'' to account for differences in
terminology between States. The information we obtain from these
Demonstration States will help us evaluate the impact of Resident
Assistants and provide us with valuable insight to improve the quality
of nursing home care.
Because this is a Demonstration Project, this bill provides
safeguards to closely monitor the use of Resident Assistants. Under the
bill, Resident Assistants would be limited to providing assistance with
feeding and hydration. All Resident Assistants would be required to go
through a training program approved by the State. They must be trained
in feeding and hydration skills, recognizing and alerting licensed
staff to the signs of malnutrition and dehydration, understanding the
aging and disease processes of the elderly, responding to choking
emergencies and alerting licensed staff to other emergencies, taking
precautions to prevent the spread of disease, and residents' rights. In
addition, all Resident Assistants must be supervised at all times by a
licensed health professional.
I also want to stress that this bill strictly prohibits nursing homes
from replacing certified nursing staff with Resident Assistants, and
Resident Assistants may not be counted toward any minimum staffing
requirements that nursing homes are or could be required to meet. Let
me be clear: Resident Assistants are not intended to serve as a
substitute for the specialized care that nurse aides provide. They are
intended to be utilized as supplemental help with feeding and hydration
services for residents, to provide an extra pair of hands at busier
mealtimes, and to provide some assistance to nurse aides who are
stretched so thin so they can focus on other critical nursing tasks.
Most importantly, let me reiterate that this is a time-limited
demonstration project. This legislation ensures that we collect
reliable data on the use of Resident Assistants, which will be
[[Page S3715]]
analyzed by an advisory panel made up of nursing home representatives,
Long-Term Ombudsmen, State and Federal officials, consumer groups, and
labor representatives.
The advisory panel will look at a variety of factors to determine the
impact of the project, including: the effect on quality of care
compared to non-demonstration States, the effect on staffing levels and
ratios in nursing homes, the effect on recruitment, retention and
salaries of nursing aides, and resident satisfaction with feeding and
hydration services.
The advisory panel will evaluate this data and submit recommendations
to the Secretary of the Department of Health and Human Services. The
Secretary will then submit a final report to Congress on the
demonstration. If the Secretary finds that the Demonstration project
resulted in diminished quality of feeding and hydration services, or if
recruitment, retention, or salaries of nursing staff decreased as a
direct result of the use of Resident Assistants, then the demonstration
project would end and all nursing homes must cease using Resident
Assistants. However, if the Secretary finds that the demonstration
projects were successful, only then may the Secretary expand the use of
Resident Assistants nationwide, but with the same safeguards as the
demonstration project. They would be limited to feeding and hydration
services, required to undergo comprehensive training and be supervised
by licensed health professionals, and be subject to the same
requirement that they may only augment, not replace nursing staff.
This legislation will not only help stave off an even greater
staffing problem in Wisconsin today. It will also give us the
opportunity to take a closer look at Resident Assistants so we can make
an informed determination as to whether they can help improve the
quality of care in our nation's nursing homes. Our nursing homes in
Wisconsin believe that Resident Assistants can be a valuable addition,
and this bill will allow us to keep an open mind and look at all of the
evidence in a thorough evaluation.
This legislation helps address the challenges we face today. At the
same time, let me reiterate that I am committed to working with my
colleagues to look for longer-term solutions to address staffing
shortages in order to ensure quality nursing home care far into the
future.
Mr. 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. 728
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 ``Medicare and Medicaid
Nursing Services Quality Improvement Act of 2001''.
SEC. 2. DEMONSTRATION PROJECT TO WAIVE CERTAIN NURSE AIDE
TRAINING REQUIREMENTS FOR SPECIALLY TRAINED
INDIVIDUALS WHO PERFORM CERTAIN COVERED TASKS
IN MEDICARE AND MEDICAID NURSING FACILITIES.
(a) Demonstration Project.--Not later than October 1, 2001,
the Secretary shall conduct a demonstration project under
which a resident assistant may perform a covered task for a
resident of a covered nursing facility in a demonstration
State.
(b) Requirements.--
(1) Minimum staffing requirements not affected.--A resident
assistant performing a covered task under this section--
(A) may augment, but not replace, existing staff of a
covered nursing facility; and
(B) shall not be counted toward meeting or complying with
any requirements for nursing care staff and functions of such
a facility, including any minimum nursing staffing
requirement imposed under section 1819 or 1919 of the Social
Security Act (42 U.S.C. 1395i-3, 1396r).
(2) Exclusion of participation.--
(A) Based on replacement of certified nursing staff.--
(i) In general.--Subject to clause (ii), the Secretary may
exclude from participation in the demonstration project any
covered facility that the Secretary determines (on the basis
of data submitted under subsection (c) or otherwise) has
replaced certified nurse assistants with resident assistants.
(ii) Limitation.--The Secretary may not exclude a facility
under clause (i) unless the Secretary has reviewed all
pertinent data that may reflect on a reduction of nursing
staff in the facility, including changes in resident
population and case mix.
(B) Based on poor treatment records or insufficient
licensed staff.--The Secretary may exclude from participation
in the demonstration project any covered nursing facility
that a State survey agency recommends be excluded because of
unsatisfactory treatment records or insufficient licensed
staff to provide supervision of resident assistants.
(c) Data Collection.--
(1) Data regarding initial workforce.--
(A) In general.--At the beginning of a covered nursing
facility's participation in the demonstration project, the
facility shall submit to the appropriate State agency of the
demonstration State independently verifiable data regarding
the composition of the facility's workforce at the time such
participation commences.
(B) Data regarding resident assistants.--Such data shall
include--
(i) the number of resident assistants in the facility hired
solely to perform covered tasks and the number of such
assistants performing additional tasks; and
(ii) the number of residents of the facility who are served
by such resident assistants.
(C) Transmittal of data to Secretary.--The State agency
shall forward such data to the Secretary.
(2) Data regarding performance of resident assistants.--
Each such facility shall submit to such State agency data, at
such times and in such manner as the Secretary may require,
regarding the performance of covered tasks by resident
assistants under the demonstration project.
(3) Transmission of data to the secretary.--The State
agency shall forward data collected under this subsection to
the Secretary. The Secretary shall compile data collected
under this section with data collected pursuant to sections
1819 and 1919 of the Social Security Act (42 U.S.C. 1395i-3,
1396r) for purposes of excluding a facility from
participation in the project under subsection (b)(2) and
performing the analysis under subsection (d)(2).
(d) Reports to Congress.--
(1) Annual reports.--Not later than December 1 of each of
2002 and 2003, the Secretary shall submit to Congress a
report on the project, and include an analysis that meets the
requirements of paragraph (3).
(2) Final report.--Not later than December 1, 2004, the
Secretary shall submit a report to Congress required under
section 3(c)(2)(B) that includes the recommendations of the
advisory panel convened under paragraph (4).
(3) Analysis requirements.--The analysis required under
paragraph (1) shall--
(A)(i) examine the effect of resident assistants on the
quality of resident care in facilities in demonstration
States, and
(ii) compare such quality of resident care with the quality
of resident care in facilities in other States,
by employing quality indicators determined by the Secretary,
including with regard to nutrition and hydration, nutrition
and hydration levels, unplanned weight loss or gain, and the
number of citations for nutrition-related violations relating
to such residents;
(B) examine the effect of resident assistants on staffing
levels and ratios in covered nursing facilities, including
staffing levels for duties performed by resident assistants
in other capacities in the facility (such as housekeeping or
claims processing);
(C) measure the effect that the presence of such resident
assistants has on certified nurse assistants, including--
(i) recruitment and retention within the certified nurse
assistant profession;
(ii) wage structures in effect for such certified nursing
assistants during the demonstration project and, in
particular, whether payment under such structures decreased
as a result of the use of resident assistants; and
(iii) instances of resident assistants being promoted to
certified nurse assistant positions; and
(D) examine resident satisfaction with respect to nutrition
and hydration services provided by resident assistants.
(4) Advisory panel.--
(A) Duties.--Not later than November 1, 2003, the Secretary
shall convene an advisory panel that shall--
(i) review and evaluate the data collected in accordance
with subsection (c); and
(ii) submit recommendations on the use or improvement of
resident assistants in covered nursing facilities.
(B) Membership.--The advisory panel convened under
subparagraph (A) shall consist of representatives of the
following:
(i) The Health Care Financing Administration of the
Department of Health and Human Services.
(ii) National and local organizations representing for-
profit and nonprofit covered nursing facilities.
(iii) Consumer groups.
(iv) State long-term care ombudsmen or other nursing
facility resident advocates of the State.
(v) Labor organizations.
(vi) State survey and licensure agencies.
(vii) Licensed health care providers.
(viii) Dietitians.
(ix) Speech therapists.
(x) Any other entities or individuals that the Secretary
deems appropriate.
(e) Authorization of Appropriations.--There is authorized
to be appropriated such sums as may be necessary to carry out
this section.
(f) Definitions.--In this section:
(1) Demonstration state.--The term ``demonstration State''
means--
[[Page S3716]]
(A) Wisconsin,
(B) North Dakota, and
(C) not more than 6 States (other than Wisconsin and North
Dakota) as selected by the Secretary which, as of the date of
enactment of this Act, have established or proposed a
project, program, or policy to permit individuals who do not
meet nurse aide training requirements to perform a covered
task.
(2) Covered nursing facility.--The term ``covered nursing
facility'' means--
(A) a skilled nursing facility (as that term is defined in
section 1819(a) of the Social Security Act (42 U.S.C. 1395i-
3(a))), and
(B) a nursing facility (as that term is defined in section
1919(a) of the Social Security Act (42 U.S.C. 1396r(a))).
(3) Resident assistant.--
(A) In general.--The term ``resident assistant'' means an
individual who does not meet nurse aide training requirements
(as defined in paragraph (5)) but who does meet the
requirements specified in subparagraph (B).
(B) Resident assistant requirements.--For purposes of
subparagraph (A), the requirements specified in this
subparagraph are the following:
(i) The individual has successfully completed an initial
training program administered by the facility that meets the
requirements of subparagraph (C) and subsequent competency
evaluations, as reviewed and approved by the demonstration
State (which, with respect to the training program, may be
during the facility's standard survey).
(ii) The individual is performing a covered task under the
onsite supervision (as defined in paragraph (6)) of a
licensed health professional (as defined in section
1819(b)(5)(G) of the Social Security Act (42 U.S.C. 1395i-
3(b)(5)(G))).
(iii) In the case of an individual performing a feeding and
hydration covered task, the determination of the residents
who may receive such a task from a resident assistant shall
be based on the needs and potential risks to the resident, as
observed and documented in the resident's written plan of
care and the comprehensive assessment of the resident's
functional capacity required under section 1818(b) or 1919(b)
of the Social Security Act (42 U.S.C. 1395i-3(b), 1396r(b)).
(iv) The individual complies with any other limitations on
performance of duties which may be established by the
demonstration State.
(C) Training program requirements.--For purposes of
subparagraph (B)(i), a training program shall--
(i) relate to the performance of the covered task to be
performed by the individual; and
(ii) include--
(I) feeding skills and assistance with eating;
(II) the importance of good nutrition and hydration,
including familiarity with signs of malnutrition and
dehydration;
(III) an overview of the aging and disease process, as it
relates to nutrition and hydration services;
(IV) how to respond to a choking emergency and alert
licensed staff to other health emergencies;
(V) universal precautions for the prevention of the spread
of communicable diseases; and
(VI) a statement of residents' rights.
(4) Covered task.--
(A) In general.--The term ``covered task'' means feeding
and hydration.
(B) Exclusions.--Such term does not include--
(i) administering medication,
(ii) providing direct medical care, including taking vital
signs, skin care, or wound care, or
(iii) performing range of motion or other therapeutic
exercises with residents.
(5) Nurse aide training requirements.--The term ``nurse
aide training requirements'' means the requirements of
sections 1819(b)(5)(F) and 1919(b)(5)(F) of the Social
Security Act (42 U.S.C. 1395i-3(b)(5)(F) and 1396r(b)(5)(F))
relating to nurse aides.
(6) Onsite supervision.--The term ``onsite supervision''
means that a licensed health professional referred to in
paragraph (3)(B)(ii) is in the unit or floor where services
are being provided, and is readily available to provide
assistance if necessary.
(7) Secretary.--The term ``Secretary'' means the Secretary
of Health and Human Services.
(8) Demonstration project.--The term ``demonstration
project'' means the demonstration project conducted under
this section.
(9) State.--The term ``State'' has the meaning given such
term for purposes of titles XVIII and XIX of the Social
Security Act (42 U.S.C. 1395 et seq., 1396 et seq.).
SEC. 3. AUTHORIZING THE USE OF RESIDENT ASSISTANTS IN NURSING
FACILITIES RECEIVING PAYMENTS UNDER THE
MEDICARE OR MEDICAID PROGRAM.
(a) In General.--Subsection (b) of sections 1819 and 1919
(42 U.S.C. 1395i-3, 1396r) of the Social Security Act, as
amended by section 941 of the Medicare, Medicaid, and SCHIP
Benefits Improvement and Protection Act of 2000, as enacted
into law by section 1(a)(6) of Public Law 106-554, are each
amended by adding at the end the following new paragraph:
``(9) Use of resident assistants.--
``(A) In general.--Subject to the succeeding provisions of
this paragraph, a skilled nursing facility may use a resident
assistant to perform a covered task for a resident of the
facility that would otherwise be performed by a nurse aide.
``(B) Definition.--The term `resident assistant' means an
individual--
``(i) who has successfully completed an initial training
program and competency evaluation, and subsequent competency
evaluations, approved by the State under subsection (e)(6);
and
``(ii) who is competent to perform a covered task.
``(C) Requirement for onsite supervision.--A resident
assistant may only perform a covered task under the
supervision of a licensed health professional (as defined in
paragraph (5)(G)) who is present in the unit or floor where
the covered task is performed and who is readily available to
provide assistance to the resident assistant.
``(D) Requirement for determination of appropriate
patients.--A resident assistant may only perform a covered
task for a resident who is approved for such purpose based on
the needs of, and potential risks to, the resident, as
observed and documented in the resident's written plan of
care and the comprehensive assessment of the resident's
functional capacity required under this subsection.
``(E) Additional requirements.--The individual complies
with any other limitations on performance of duties which may
be established by the State in which the covered task is
performed.
``(F) Minimum staffing requirements not affected.--A
resident assistant shall not be counted toward meeting or
complying with any requirement for nursing care staff and
functions of such facilities under this section, including
any minimum nursing staffing requirement.
``(G) Covered task defined.--For purposes of this section,
the term `covered task' means feeding and hydration.''.
(b) Specification of Training Program and Competency
Evaluation Standards.--
(1) Requirement for standards.--Subsection (e) of such
sections are each amended by adding at the end the following
new paragraph:
``(6) Specification and review of resident assistant
training programs and competency evaluation and of resident
assistant competency evaluations.--The State must--
``(A) specify those initial training programs and
competency evaluations, and those subsequent competency
evaluations, that the State approves for purposes of
subsection (b)(9) and that meet the requirements established
under subsection (f)(8), and
``(B) provide for the review and reapproval of such
evaluations, at a frequency and using a methodology
consistent with the requirements established under subsection
(f)(8).''.
(2) Specification of standards.--Subsection (f) of such
sections are each amended by adding at the end the following
new paragraph:
``(8) Requirements for resident assistant training programs
and competency evaluations and for resident assistant
competency evaluations.--
``(A) In general.--For purposes of subsections (b)(9) and
(e)(6), the Secretary shall establish requirements for the
approval of resident assistant training programs and
competency evaluations administered by the facility,
including--
``(i) requirements described in subparagraph (B),
``(ii) minimum hours of initial and ongoing training and
retraining,
``(iii) qualifications of instructors,
``(iv) procedures for determination of competency, and
``(v) the minimum frequency and methodology to be used by a
State in reviewing compliance with the requirements for such
evaluations.
``(B) Requirements described.--For purposes of subparagraph
(A), the requirements described in this subparagraph are the
following:
``(i) Feeding skills and assistance with eating.
``(ii) The importance of good nutrition and hydration,
including familiarity with signs of malnutrition and
dehydration.
``(iii) An overview of the aging and disease process, as it
relates to nutrition and hydration services.
``(iv) How to respond to a choking emergency and alert
licensed staff to other health emergencies.
``(v) Universal precautions for the prevention of the
spread of communicable diseases.
``(vi) Residents' rights.
``(C) Special rule for state demonstration participants.--
In the case of a State that was a demonstration State (as
that term is defined in subsection (f)(1) of section 2 of the
Medicare and Medicaid Nursing Services Quality Improvement
Act of 2001), to the extent that the demonstration State has
in effect any requirement for the approval of resident
assistant training programs and competency evaluations that
meets or exceeds the same requirement that the Secretary
establishes under this paragraph, notwithstanding subsection
(b)(9)(B)(i) resident assistants who performed the covered
task in facilities in that State under that demonstration
project--
``(i) do not have to complete the entire initial training
program and competency evaluation required under that
subsection; and
``(ii) shall only be required to meet those requirements
for such approval that the Secretary establishes under this
paragraph that the State does not have in effect.''.
[[Page S3717]]
(c) Contingent Effective Date.--(1) The amendments made by
this section shall become effective (if at all) in accordance
with paragraph (2).
(2)(A) Not later than December 1, 2004, the Secretary of
Health and Human Services (in this paragraph referred to as
the ``Secretary'') shall submit to Congress a report on the
results of the demonstration project established under
section 2 that analyzes the effect on resident care in
authorizing the use of resident assistants to furnish feeding
and hydration services to residents in skilled nursing
facilities under the medicare program and residents in
nursing facilities under the medicaid program in the
demonstration States.
(B) Such project shall be discontinued, and the amendments
made by this section shall become effective, on January 1,
2005, unless the Secretary includes in that report a finding,
on the basis of data collected under section 2(c) that--
(i) authorizing the use of such resident assistants to
furnish such services diminishes the quality of feeding and
hydration services furnished to residents of those
facilities; or
(ii) any decreased recruitment and retention of nursing
staff of those facilities and reduced salaries for such
nursing staff is directly attributable to the use of such
resident assistants to furnish such services.
______
By Mr. DeWINE:
S. 733. A bill to eliminate the duplicative intent requirement for
carjacking; to the Committee on the Judiciary.
Mr. DeWINE. Mr. 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. 733
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. CARJACKING OFFENSES.
Section 2119 of title 18, United States Code, is amended by
striking ``, with the intent to cause death or serious bodily
harm''.
______
By Mr. BOND (for himself and Mr. Kerry):
S. 734. A bill to amend the Foreign Service Buildings Act, 1926, to
expand eligibility for the award of construction contracts under that
Act to persons that have performed similar construction work at United
States diplomatic or consular establishments abroad under contracts
limited to $5,000,000; to the Committee on Foreign Relations.
Mr. BOND. Mr. President, today I am introducing a bill to improve
access for certain small businesses in competing for overseas
construction contracts for the Department of State. Small businesses
that have been able to participate in smaller construction projects
overseas, through one of the small business programs, would be able to
compete for larger construction contracts.
The effect of these changes is to enhance competition for these
contracts. Moreover, greater competition usually means reduced costs to
the taxpayer. Finally, these changes allow us to recoup the benefits
from the Government programs directed at small business. We ensure
that, after helping businesses grow and develop in our small business
programs, they are then able to compete in the open market for
Government construction contracts.
This is certainly the goal of these small business programs, but
unfortunately a technical glitch currently prevents this goal from
being realized in overseas State Department construction contracts.
This bill would correct that.
Specifically, these provisions would make a minor change to both the
Foreign Service Buildings Act, 1926, and the Omnibus Diplomatic
Security and Antiterrorism Act of 1986, both of which impose related
restrictions on the firms that may do construction of overseas State
Department facilities. Most of the restrictions are security-related
and have to do with ensuring the firms are American in their ownership,
control, and workforce. Some other provisions seek to ensure they have
the technical capacity actually to perform the work.
One provision directed at the ``technical capacity'' issue says the
firms must have performed work, comparable to the work they are
seeking, in the United States. The legislative history makes clear that
this particular restriction is in the law solely as an issue of past
performance, not as a security matter. Since these measures passed, a
small number of firms participating in small business programs have
done work exclusively overseas, including work on State Department
diplomatic and consular establishments. They therefore have a
demonstrated past performance ability to do the work, but the two laws
above currently exclude them from doing so in State Department
contracts over $5 million. (They were previously able to participate
because the sole source contracts under a couple of small business
programs are limited to $3 million, so the restrictions in these two
laws did not come into play.)
The bottom line here is that we have small business programs intended
to give firms the opportunity to show what they can do and to help
expand the Government's vendor base. However, once these firms move
beyond the small business program or seek to compete for larger
contracts, we have these two laws that exclude firms who have
demonstrated the ability to do overseas construction, simply because
they have not done work domestically. This is a waste of the
Government's investment in their business development. This bill would
allow overseas work done specifically at State Department installations
to count in showing their capacity to perform subsequent contracts.
This is a relatively simple change that will increase opportunity and
help the State Department maintain a strong contractor base to do this
important construction work. It should be noncontroversial, and I look
forward to working with the Chairman and Ranking Member of the Foreign
Relations Committee to make these changes happen.
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. 734
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. EXPANSION OF ELIGIBILITY FOR AWARD OF CERTAIN
CONSTRUCTION CONTRACTS.
(a) In General.--Section 11(b)(4)(A) of the Foreign Service
Buildings Act, 1926 (22 U.S.C. 302(b)(4)(A)) is amended by
inserting ``or at a United States diplomatic or consular
establishment abroad'' after ``United States''.
(b) Conforming Amendment.--Section 402(c)(2)(D) of the
Omnibus Diplomatic Security and Antiterrorism Act of 1986 (22
U.S.C. 4852(c)(2)(D)) is amended by inserting ``or at a
United States diplomatic or consular establishment abroad''
after ``United States''.
______
By Mr. DeWINE:
S. 735. A bill to amend title 18 of the United States Code to add a
general provision for criminal attempt; to the Committee on the
Judiciary.
Mr. DeWINE. Mr. 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. 735
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 ``General Attempt Provision
Act''.
SEC. 2. ESTABLISHMENT OF GENERAL ATTEMPT OFFENSE.
Chapter 19 of title 18, United States Code, is amended--
(1) in the chapter heading, by striking ``Conspiracy'' and
inserting ``Inchoate offenses''; and
(2) by adding at the end the following:
``Sec. 374. Attempt to commit offense
``(a) In General.--Whoever, acting with the state of mind
otherwise required for the commission of an offense described
in this title, intentionally engages in conduct that, in
fact, constitutes a substantial step toward the commission of
the offense, is guilty of an attempt and is subject to the
same penalties as those prescribed for the offense, the
commission of which was the object of the attempt, except
that the penalty of death shall not be imposed.
``(b) Inability To Commit Offense; Completion of Offense.--
It is not a defense to a prosecution under this section--
``(1) that it was factually impossible for the actor to
commit the offense, if the offense could have been committed
had the circumstances been as the actor believed them to be;
or
``(2) that the offense attempted was completed.
``(c) Exceptions.--This section does not apply--
``(1) to an offense consisting of conspiracy, attempt,
endeavor, or solicitation;
``(2) to an offense consisting of an omission, refusal,
failure of refraining to act;
[[Page S3718]]
``(3) to an offense involving negligent conduct; or
``(4) to an offense described in section 1118, 1120, 1121,
or 1153 of this title.
``(d) Affirmative Defense.--
``(1) In general.--It is an affirmative defense to a
prosecution under this section, on which the defendant bears
the burden of persuasion by a preponderance of the evidence,
that, under circumstances manifesting a voluntary and
complete renunciation of criminal intent, the defendant
prevented the commission of the offense.
``(2) Definition.--For purposes of this subsection, a
renunciation is not `voluntary and complete' if it is
motivated in whole or in part by circumstances that increase
the probability of detection or apprehension or that make it
more difficult to accomplish the offense, or by a decision to
postpone the offense until a more advantageous time or to
transfer the criminal effort to a similar objective or
victim.''.
(b) Technical and Conforming Amendment.--The analysis for
chapter 19 of title 18, United States Code, is amended by
adding at the end the following:
``374. Attempt to commit offense.''.
SEC. 3. RATIONALIZATION OF CONSPIRACY PENALTY AND CREATION OF
RENUNCIATION DEFENSE.
Section 371 of title 18, United States Code, is amended--
(1) by striking the second undesignated paragraph; and
(2) in the first undesignated paragraph--
(A) by striking ``If two or more'' and inserting the
following:
``(a) In General.--If 2 or more''; and
(B) by striking ``either to commit any offense against the
United States, or''; and
(3) by adding at the end the following:
``(b) Conspiracy.--If 2 or more persons conspire to commit
any offense against the United States, and 1 or more of such
persons do any act to effect the object of the conspiracy,
each shall be subject to the same penalties as those
prescribed for the most serious offense, the commission of
which was the object of the conspiracy, except that the
penalty of death shall not be imposed.''.
______
By Mr. REID (for himself and Mr. Ensign):
S. 737. A bill to designate the facility of the United States Postal
Service located at 811 South Main Street in Yerington, Nevada, as the
``Joseph E. Dini, Jr. Post Office''; to the Committee on Governmental
Affairs.
Mr. REID. Mr. President, I rise today along with my colleague from
Nevada, Senator Ensign, as well as the Nevada delegation in the House
of Representatives, to introduce legislation designating the United
States Post Office facility located at 811 Main Street in Yerington,
NV, as the ``Joseph E. Dini, Jr. Post Office.''
When the Nevada State Legislature opened its 71st session earlier
this year, something was very different. For the first time in more
than sixteen years, Joe Dini was not the Speaker of the Assembly. For
an unparalleled eight times, Joe Dini was elected Speaker by his peers
in the Nevada State Assembly. Now the Speaker Emeritus, Joe Dini is in
his eighteenth term representing his beloved home town of Yerington,
NV, and is the longest serving Member in the history of the Nevada
State Assembly.
Joe Dini was born and raised in the small town of Yerington, NV. Many
of my colleagues in the Senate have heard me talk about my hometown of
Searchlight at the southern tip of the State of Nevada. As much as I
love Searchlight, Joe Dini adores his beloved hometown of Yerington. A
native Nevada, Joe attended the University of Nevada in Reno and was
first elected to the Nevada State Assembly in 1966. As a freshman
elected to the Assembly in 1969, I had the pleasure to work with Joe
Dini, and I looked to him as a mentor and a friend. In 1973, he became
Speaker pro tempore of the Chamber, and in 1975 he was elected majority
leader. During his tenure, Joe became the leading authority in the
legislature on western water issues, a subject that is vitally
important to our state, especially in the many rural communities
throughout Nevada.
Joe is also an active participant with many community service
organizations in Yerington and throughout Nevada. He is a member of the
Yerington Rotary Club and the Yerington Volunteer Fire Department, and
has been recognized by a variety of groups such as the Nevada State
Firefighters Association, the Nevada Wildlife Federation, the Nevada
State Education Association and the Nevada Judges Association. The
Kiwanis Club in Yerington has also recognized Joe Dini as its Man of
the Year.
It is a pleasure and honor to join my colleagues from Nevada in
introducing this bill naming the post office on Main Street in his
beloved hometown of Yerington, Nevada, after Joseph E. Dini, Jr. By
recognizing his dedication to a career in public service, we are also
thanking Joe for a life-long commitment to the people and the State of
Nevada.
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. 737
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. JOSEPH E. DINI, JR. POST OFFICE.
(a) Designation.--The facility of the United States Postal
Service located at 811 South Main Street in Yerington,
Nevada, shall be known and designated as the ``Joseph E.
Dini, Jr. Post Office''.
(b) References.--Any reference in a law, map, regulation,
document, paper, or other record of the United States to the
facility referred to in subsection (a) shall be deemed to be
a reference to the Joseph E. Dini, Jr. Post Office.
Mr. ENSIGN. Mr. President, I rise today in order to join my colleague
Senator Reid and other members of the Nevada Delegation in introducing
a bill that would designate the U.S. Post Office facility located at
811 Main Street in Yerington, as the ``Joseph E. Dini, Jr. Post
Office.''
Jospeh Deni was born and raised in Yerington, Nevada. As a native
Nevadan, Joe has passionately served the interests of Western Nevadans
in the State Assembly for over thirty years. His tenure as the longest-
serving assemblyman in Nevada's history includes a record eight terms
as Speaker. In 1995, Joe was a co-Speaker over an evenly divided State
Assembly, and it was his effective leadership that allowed the
Legislature to maintain its productivity and pass sweeping reforms to
Nevada's criminal justice system.
In addition to his service to Nevada as a legislator, Joe has been
extremely active in a number of community service organizations.
Specifically, he serves as a member of the Yerington Rotary Club and
has been involved with the Yerington Volunteer Fire Department. Joe has
also received special recognition awards from such groups as the Nevada
State Firefighters Association, Nevada Farm Bureau, Nevada Judges
Association, Nevada Education Association and the Yerington Kiwanis
Club.
Joe embodies the best in public service and bipartisanship, and is
admired throughout Nevada as a valuable mentor and leader. Joe spent
the last three decades working tirelessly and behind the scenes for our
State. All Nevadans will be proud to have a post office named after a
man who has committed his life to public service.
______
By Mr. SMITH of New Hampshire:
S. 738. A bill to amend the Voting Rights Act of 1965 to protect the
voting rights of members of the Armed Forces; to the Committee on Rules
and Administration.
Mr. SMITH of New Hampshire. Mr. President, I rise to offer the Armed
Forces Voting Rights Act of 2001. There is a problem with federal law
that allowed members of the armed forces to be disenfranchised in
Florida in the most recent presidential election. My bill would stop
the discrimination.
Over time, federal law has recognized more and more rights for our
military personnel that serve overseas. Several federal laws have been
enacted since 1942 to enable those in the military and U.S. citizens
who live abroad to vote in federal elections. The Soldier Voting Act of
1942 was the first attempt to guarantee federal voting rights for
members of the armed forces and that law only applied during wartime.
Members of the armed forces were provided the use of a postage free,
federal post card application to request an absentee ballot. This law
expired once World War II ended and the law never actually was in
effect.
In 1955, Congress passed the Federal Voting Assistance Act which
recommended, but did not guarantee, absentee registration and voting
for members of the military, federal employees who lived outside the
U.S. and members of civilian service organization affiliated with the
armed forces.
Federal law was again amended in 1968 to include a more general
provision for U.S. citizens temporarily residing outside the U.S. Seven
years later,
[[Page S3719]]
the Overseas Citizens Voting Rights Act of 1975 guaranteed absentee
registration and voting rights for citizens outside the U.S., whether
or not they maintained a U.S. residence.
In 1986, President Reagan signed the Uniformed and Overseas Citizens
Voting Act which required States to permit absent uniformed services
voters, their spouses and dependents, and overseas voters who no longer
maintain a residence in the U.S. to register absentee and vote by
absentee ballot in all elections for federal office.
Federal law failed our military men and women in the last election,
because many of these military voters were disenfranchised by
canvassing boards throughout the State of Florida. My bill fixes
federal law to prevent discrimination against military voters stationed
overseas.
It was a disgrace to our military men and women the events in Florida
last fall. 1,500 overseas ballots were thrown out by Florida election
officials initially--1,500 ballots were challenged--that is disturbing.
Brave members of our armed forces spoke out in favor of having their
vote counted. In Tallahassee, FL, in November of 2000, Robert Ingram,
who was awarded a medal for heroism as a Navy corpsman serving with the
Marines in Vietnam, said about Florida elections boards, ``They need to
count the votes for service people abroad.'' It truly is an outrage
that the state of Florida allowed military ballots to be disqualified.
Morale is traditionally low for our servicemen and women stationed
overseas during the Christmas season. Gary Littrell a Medal of Honor
winner said, ``Can you imagine how low their moral will go when we tell
them their vote didn't count?'' According to the Miami Herald of
November 26, 2000, ``Many canvassing boards have said, however they
followed state law to the letter in disqualifying overseas ballots with
no signature, no witness, incorrect address, no postmark or date and a
variety of other problems.''
Note that the Miami Herald does not cite actual fraud to disqualify
1,500 votes, mere technicalities in state law. My bill will fix this
problem and not allow a ballot to be disqualified without ``evidence of
fraud.''
There were allegations that the Democrat party had a coordinated
effort to disenfranchise our military voters. Former Montana Governor
Mark Racicot said last fall, ``In an effort to win at any cost, the
vice president's lawyers launched a statewide effort to throw out as
many military ballots as they can.'' 40 percent of the 3,500 overseas
ballots in Florida were thrown out in November of 2000 for technical
reasons--that is 40 percent too much.
According to the Miami Herald, 39 felons illegally cast absentee
ballots in Broward and Miami Dade counties during the election, yet
1,500 military men and women had their votes challenged. These felons
convictions ranged from murder to rape and drunk driving. What crime
did our military personnel commit? Is it a crime for the members of the
military who chose to vote Republican? Is it a crime to volunteer to
serve in the military? I guess every vote must count except for our
military votes.
Military ballots in Florida were disqualified for two reasons--the
requirement that ballots must be postmarked by election day and failure
to either have a proper signature or date on the actual ballot. Neither
of these issues are currently addressed in the federal law. Federal law
leaves such details to the state, such as postmark requirements and
authentication of ballots.
I have a bill to amend the Voting Rights Act of 1965 to include
members of the armed forces who were targeted as a result of their
propensity to vote for Republicans.
My bill establishes voting rights for members of the armed forces to
insure that every military vote is counted. My bill makes it a
violation of the Voting Rights Act of 1965 for any person ``to
disqualify, refuse to count, or otherwise negate the absentee or
overseas vote of a member of the Armed Forces of the United States.''
A person could not disqualify a ballot because of ``circumstances
beyond the control of the serviceman,'' this definition includes a post
mark that may not be present on a military person's ballot. The
military frequently mail without postage and there is no necessity for
a post mark on military mail, therefore there is no evidence on the
face of an envelope to prove when a letter, or ballot in this case, is
mailed.
My bill further forbids the disqualification of any ballot without
``clear and convincing evidence of fraud in the preparation or casting
of the ballot by the voter'' deadlines for returning ballots vary by
state.
If you violate or conspire to violate the Armed Forces Voting Rights
Act of 2001, then you are treated similarly to individuals who violate
the Voting Rights Act of 1965--you are subject to fines and other
criminal penalties. My bill also empowers the Attorney General to make
rules consistent with this legislation.
I ask that voting rights be restored to our military voters--it is
the least that we can do for those who put their lives on the line so
we may live free, to allow our military men and women to have every
vote counted.
______
By Mr. WELLSTONE (for himself, Mrs. Murray, Mr. Dayton, Ms.
Stabenow, Mr. Dorgan, Mr. Kennedy, Mr. Durbin, Ms. Landrieu,
Mr. Daschle, Mr. Reid, and Mr. Johnson):
S. 739. A bill to amend title 38, United States Code, to improve
programs for homeless veterans, and for other purposes; to the
Committee on Veterans' Affairs.
Mr. WELLSTONE. Mr. President, I rise today to introduce the ``Heather
French Henry Homeless Veterans Assistance Act.'' It is a companion bill
to H.R. 936, introduced in the House of Representatives by
Representative Evans. I am pleased to have the support of the following
original cosponsors: Senators Murray, Dayton, Stabenow, Dorgan,
Kennedy, Durbin, Landrieu, Daschle, Reid, and Johnson.
The legislation is named to recognize and honor the outstanding
contributions of Heather French Henry, Miss America 2000. She has
helped lead the struggle to end homelessness affecting more than
300,000 of our nation's veterans. For more than a year, she has given
her time, talents and energy to call on Americans to do more to free
those who have served our country from homelessness. She has traveled
from coast-to-coast with the message that we as a nation are duty-bound
to assist homeless veterans again to become productive and contributing
members of society.
I recently met Ms. French Henry. I appreciate her work, as well as
her support for this bill. She has called it, ``a comprehensive package
of proposals that will lead to ending homelessness among our nation's
veterans so that they can once again be proud citizens.''
The bill establishes a national goal of ending homelessness among
veterans within a decade. We can and must meet this goal, but achieving
it will not be easy. According to the ``Independent Budget'' for Fiscal
Year 2002, more than 275,000 veterans are homeless on any given night.
The Independent Budget is a highly regarded analysis issued by four
respected veterans organizations, AMVETS, Disabled American Veterans,
Paralyzed Veterans of America, and Veterans of Foreign Wars. The
Independent Budget also found that, ``one out of three homeless males .
. . sleeping in a doorway, alley or box in our cities and rural
communities has put on a uniform and served our nation.'' Finally, it
stressed that two-thirds of homeless veterans served our nation for at
least three years. The vast majority of homeless veterans fully honored
their oath to defend and protect the United States. Unfortunately, we
haven't fully honored our obligation to rescue them from the
degradation and privations of life on the streets.
The causes of homelessness are complex. But the primary reason so
many veterans are homeless is simple. We have not done enough. Since
1987, the VA has run some worthwhile and effective programs for
homeless veterans, but they are too few, and they are too poorly
funded. In FY 2000, the VA spent about $150 million for homeless
programs, just $1.31 per homeless veteran per day. According to the
Independent Budget, federal funding for homeless veterans serves just
one in 10 of those in need.
The VA has reported that there were about 345,000 homeless veterans
during 1999. That is 34 percent higher than in
[[Page S3720]]
1998, a national scandal during a time of prosperity. If we fail to
pass this bill, imagine how many more homeless veterans will be
sleeping in doorways, in boxes and on grates in the cold? Who will care
for these veterans if we have a prolonged economic downturn?
Three ideas should be kept in mind regarding the bill. First, it does
not give homeless veterans a handout. It gives them a hand-up, a hand-
up they need to help restore dignity and self-worth. Second, ending
veterans homelessness is first and foremost a moral issue. What kind of
nation can fail to use the full arsenal of programs and tools available
to end pain and suffering among men and women who have served so much
and so well? Finally, homelessness among veterans is often tied to
those veterans' military service. It is frequently no less service-
connected than the loss of limb in battle. Post-Traumatic Stress
Disorder, PTSD, can afflict any combat veteran. It not only can cause
severe mental health problems, but is also linked to job loss, family
breakdown, substance abuse and, of course, homelessness.
The VA can't solve the problem of homelessness among veterans by
itself. That is why the bill creates a coordinated and cooperative
effort among the VA and other federal, state and local agencies, as
well as by community-based organizations.
The legislation includes both proven programs and innovations. It
expands programs that have superior track records in assisting homeless
veterans. It will increase to $50 million the annual authorization for
the Department of Labor's Homeless Veterans Reintegration Project
(HVRP). HVRP funds state or local governments, as well as nonprofit
organizations, which run highly effective job training and placement
programs. It is an exceptional program that has gone under-funded for
years. In FY 1999, HVRP placed almost 2,200 homeless veterans in jobs,
with an average cost per placement of only about $1,300.
Mental health professionals agree that placement in the community can
work, but only with careful monitoring and support of vulnerable
populations. The bill therefore also creates incentives for VA to make
such services, Mental Health Community Management programs, more widely
available.
Supportive, therapeutic housing is an essential component of a
homeless veteran's recovery from substance abuse. ``Safe havens''
provide an environment that facilitates the transition from
homelessness. Under the bill, many more veterans could receive
intensive medical and psychological treatment, as well as
rehabilitation, in such residential settings.
More VA Comprehensive Homeless Centers must be made available in the
country's major metropolitan areas. These unique centers provide a
continuum of care that includes outreach, medical care, compensated
work therapy, job counseling and other social services. Homeless
veterans not only can gain access to VA services, but also to services
provided by other federal agencies, state and local government
entities, and community-based organizations. The centers provide badly
needed ``one-stop shopping'' for services to homeless veterans.
The legislation will increase availability of residential treatment
facilities by requiring the VA to develop new domiciliary programs in
the 10 largest metropolitan areas without existing programs. At the
same time, it will remove the cap on VA Comprehensive Homeless Centers.
Today there are only eight, and the bill will require that centers be
available in no fewer than 20 metropolitan areas. Veterans in
Washington, D.C., for example, currently have neither a VA domiciliary
nor a Comprehensive Homeless Center. Both such facilities are needed
here in the Nation's Capital.
Community-based organizations play a pivotal role in addressing
veterans' homelessness. The bill authorizes additional funding for
their work through the VA's Homeless Grant and Per Diem Providers
program. That program provides critical support to community-based
organizations who furnish transitional services to homeless veterans
through grants that supplement local, state and private funding.
The bill also requires that the VA provide mental health services
wherever it provides primary care. Approximately 45 percent of homeless
veterans suffer from mental illness. More than 70 percent suffer from
alcohol or other substance abuse problems. It is vital that VA expand
access to mental health services.
Finally, the bill seeks to help some of the most vulnerable homeless
veterans and those most at risk of homelessness. Under the bill, VA and
community-based providers will be eligible for a new grant program that
addresses the special needs of homeless veterans who are women,
substance abusers, 50 years of age or older, persons with PTSD,
terminally ill, chronically mentally ill or who have dependents. It
will require VA to coordinate a multi-agency outreach plan and a
program for veterans at risk of homelessness, particularly veterans
being discharged from institutions. This includes people discharged
from inpatient psychiatric care, substance abuse treatment programs and
penal institutions.
It is a familiar principle among veterans of our armed forces not to
``leave our wounded behind.'' Yet, homeless veterans are in a sense our
wounded, and we are leaving them behind. It is past time to end this
neglect.
The bill is supported by the country's major veterans organizations.
It is endorsed by the National Coalition for Homeless Veterans and its
hundreds of affiliated organizations throughout the country who daily
furnish essential services to homeless veterans. I ask consent that
letters of support from the Paralyzed Veterans of America, the Veterans
of Foreign Wars, the Disabled American Veterans, and the National
Coalition for Homeless Veterans be printed in the Record.
Mr. President, I also 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. 739
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Heather
French Henry Homeless Veterans Assistance Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Findings; definitions.
Sec. 3. National goal to end homelessness among veterans.
Sec. 4. Advisory Committee on Homeless Veterans.
Sec. 5. Annual meeting requirement for Interagency Council on the
Homeless.
Sec. 6. Evaluation of homeless programs.
Sec. 7. Changes in veterans equitable resource allocation methodology.
Sec. 8. Per diem payments for furnishing services to homeless veterans.
Sec. 9. Grant program for homeless veterans with special needs.
Sec. 10. Coordination of outreach services for veterans at risk of
homelessness.
Sec. 11. Treatment trials in integrated mental health services
delivery.
Sec. 12. Dental care.
Sec. 13. Programmatic expansions.
Sec. 14. Various authorities.
Sec. 15. Life safety code for grant and per diem providers.
Sec. 16. Transitional assistance grants pilot program.
Sec. 17. Assistance for grant applications.
Sec. 18. Home loan program for manufactured housing.
Sec. 19. Extension of homeless veterans reintegration program.
Sec. 20. Use of real property.
SEC. 2. FINDINGS; DEFINITIONS.
(a) Findings.--Congress makes the following findings:
(1) On the field of battle, the members of the Armed Forces
who defend the Nation are honor-bound to leave no one behind
and, likewise, the Nation is honor-bound to leave no veteran
behind.
(2) The Department of Veterans Affairs report known as the
Community Homeless Assessment, Local Education, and
Networking Groups for Veterans (CHALENG) assessment, issued
in May 2000, reports that during 1999 there were an estimated
344,983 homeless veterans, an increase of 34 percent above
the 1998 estimate of 256,872 homeless veterans.
(3) Male veterans are more likely to be homeless than their
nonveteran peers. Although veterans constitute only 13
percent of the general male population, 23 percent of the
homeless male population are veterans.
(4) Homelessness among veterans is persistent despite
unprecedented economic growth and job creation and general
prosperity.
(5) While there are many effective programs that assist
homeless veterans to again become productive and self-
sufficient members of society, current resources provided to
such programs and other activities that assist homeless
veterans are inadequate to provide all needed essential
services, assistance, and support to homeless veterans.
[[Page S3721]]
(6) If current programs to assist homeless veterans are
fully maintained but not expanded, veterans will experience
as many as a billion nights of homelessness during the next
decade.
(7) The CHALENG assessment referred to in paragraph (2)
reports--
(A) that Department of Veterans Affairs and community
providers were responsible for establishing almost 500 beds
for homeless veterans during 2000, including emergency,
transitional, and permanent beds; and
(B) that there is a need for about 45,724 additional beds
to meet current needs of homeless veterans.
(8) As of February 28, 2001, the Congressional Budget
Office forecasts a Federal budget surplus of $313,000,000,000
for fiscal year 2002 and budget surpluses totaling more than
$5,610,000,000,000 over the next 10 years.
(9) At least $750,000,000 will be required to establish the
45,724 additional new beds now needed by homeless veterans,
according to an informal Department of Veterans Affairs cost
estimate.
(10) Even if the Department of Veterans Affairs and its
partners created 2,000 additional beds per year for homeless
veterans (roughly quadrupling the number of such beds they
currently plan to open annually), it would still take more
than two decades to provide the necessary additional beds to
meet the current needs of homeless veterans.
(11) Nearly four decades ago, the Nation established a goal
of sending a man to the moon and returning him safely to
earth within a decade and accomplished that goal, and the
Nation can do no less to end homelessness among the Nation's
veterans.
(b) Definitions.--For purposes of this Act:
(1) The term ``homeless veteran'' means a veteran who--
(A) lacks a fixed, regular, and adequate nighttime
residence; or
(B) has a primary nighttime residence that is--
(i) a supervised publicly or privately operated shelter
designed to provide temporary living accommodations
(including welfare hotels, congregate shelters, grant per
diem shelters and transitional housing for the mentally ill);
(ii) an institution that provides a temporary residence for
individuals intended to be institutionalized; or
(iii) a public or private place not designed for, or
ordinarily used as, a regular sleeping accommodation for
human beings.
(2) The term ``grant and per diem provider'' means an
entity in receipt of a grant under section 3 or 4 of the
Homeless Veterans Comprehensive Service Programs Act of 1992
(38 U.S.C. 7721 note).
SEC. 3. NATIONAL GOAL TO END HOMELESSNESS AMONG VETERANS.
(a) National Goal.--Congress hereby declares it to be a
national goal to end homelessness among veterans within a
decade.
(b) Cooperative Efforts Encouraged.--Congress hereby
encourages all departments and agencies of Federal, State,
and local governments, quasi-governmental organizations,
private and public sector entities, including community-based
organizations, and individuals to work cooperatively to end
homelessness among veterans within a decade.
SEC. 4. ADVISORY COMMITTEE ON HOMELESS VETERANS.
(a) In General.--Chapter 5 of title 38, United States Code,
is amended by adding at the end the following new section:
``Sec. 546. Advisory Committee on Homeless Veterans
``(a)(1) There is established in the Department the
Advisory Committee on Homeless Veterans (hereinafter in this
section referred to as the `Committee').
``(2) The Committee shall consist of not more than 15
members appointed by the Secretary from among the following:
``(A) Veterans service organizations.
``(B) Advocates of homeless veterans and other homeless
individuals.
``(C) Community-based providers of services to homeless
individuals.
``(D) Previously homeless veterans.
``(E) State veterans affairs officials.
``(F) Experts in the treatment of individuals with mental
illness.
``(G) Experts in the treatment of substance use disorders.
``(H) Experts in the development of permanent housing
alternatives for lower income populations.
``(I) Experts in vocational rehabilitation.
``(J) Such other organizations or groups as the Secretary
considers appropriate.
``(3) The Committee shall include, as ex officio members--
``(A) the Secretary of Labor (or a representative of the
Secretary selected after consultation with the Assistant
Secretary of Labor for Veterans' Employment and Training);
``(B) the Secretary of Defense (or a representative of the
Secretary);
``(C) the Secretary of Health and Human Services (or a
representative of the Secretary); and
``(D) the Secretary of Housing and Urban Development (or a
representative of the Secretary).
``(4) The Secretary shall determine the terms of service
and pay and allowances of the members of the Committee,
except that a term of service may not exceed three years. The
Secretary may reappoint any member for additional terms of
service.
``(b)(1) The Secretary shall, on a regular basis, consult
with and seek the advice of the Committee with respect to the
provision by the Department of benefits and services to
homeless veterans.
``(2)(A) In providing advice to the Secretary under this
subsection, the Committee shall--
``(i) assemble and review information relating to the needs
of homeless veterans;
``(ii) provide an on-going assessment of the effectiveness
of the policies, organizational structures, and services of
the Department in assisting homeless veterans; and
``(iii) provide on-going advice on the most appropriate
means of providing assistance to homeless veterans.
``(3) The Committee shall--
``(A) review the continuum of services provided by the
Department directly or by contract in order to define cross-
cutting issues and to improve coordination of all services in
the Department that address the special needs of homeless
veterans;
``(B) identify (through the annual assessments under
section 1774 of this title and other available resources)
gaps in programs of the Department in serving homeless
veterans, including identification of geographic areas with
unmet needs, and provide recommendations to address those
program gaps;
``(C) identify gaps in existing information systems on
homeless veterans, both within and outside the Department,
and provide recommendations about redressing problems in data
collection;
``(D) identify barriers under existing laws and policies to
effective coordination by the Department with other Federal
agencies and with State and local agencies addressing
homeless populations;
``(E) identify opportunities for enhanced liaison by the
Department with nongovernmental organizations and individual
groups addressing homeless populations;
``(F) with appropriate officials of the Department
designated by the Secretary, participate with the Interagency
Council on the Homeless under title II of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11311 et seq.);
``(G) recommend appropriate funding levels for specialized
programs for homeless veterans provided or funded by the
Department;
``(H) recommend appropriate placement options for veterans
who, because of advanced age, frailty, or severe mental
illness, may not be appropriate candidates for vocational
rehabilitation or independent living; and
``(I) perform such other functions as the Secretary may
direct.
``(c)(1) Not later than March 31 of each year, the
Committee shall submit to the Secretary a report on the
programs and activities of the Department that relate to
homeless veterans. Each such report shall include--
``(A) an assessment of the needs of homeless veterans;
``(B) a review of the programs and activities of the
Department designed to meet such needs;
``(C) a review of the activities of the Committee; and
``(D) such recommendations (including recommendations for
administrative and legislative action) as the Committee
considers appropriate.
``(2) Not later than 90 days after the receipt of a report
under paragraph (1), the Secretary shall transmit to the
Committees on Veterans' Affairs of the Senate and House of
Representatives a copy of the report, together with any
comments and recommendations concerning the report that the
Secretary considers appropriate.
``(3) The Committee may also submit to the Secretary such
other reports and recommendations as the Committee considers
appropriate.
``(4) The Secretary shall submit with each annual report
submitted to Congress pursuant to section 529 of this title a
summary of all reports and recommendations of the Committee
submitted to the Secretary since the previous annual report
of the Secretary submitted pursuant to that section.
``(d)(1) Except as provided in paragraph (2), the
provisions of the Federal Advisory Committee Act (5 U.S.C.
App.) shall apply to the activities of the Committee under
this section.
``(2) Section 14 of such Act shall not apply to the
Committee.''.
(b) Clerical Amendment.--The table of sections at the
beginning of such chapter is amended by adding at the end the
following new item:
``546. Advisory Committee on Homeless Veterans.''.
SEC. 5. MEETINGS OF INTERAGENCY COUNCIL ON THE HOMELESS.
Section 202(c) of the McKinney-Vento Homeless Assistance
Act (42 U.S.C. 11312(c)) is amended to read as follows:
``(c) Meetings.--The Council shall meet at the call of its
Chairperson or a majority of its members, but not less often
than annually.''.
SEC. 6. EVALUATION OF HOMELESS PROGRAMS.
(a) Evaluation Centers.--The Secretary of Veterans Affairs
shall support the continuation within the Department of
Veterans Affairs of at least one center for evaluation to
monitor the structure, process, and outcome of programs of
the Department of Veterans Affairs that address homeless
veterans.
(b) Annual Report on Health Care.--The Secretary shall
submit to Congress on an annual basis a report on programs of
the Department of Veterans Affairs addressing health care
needs of homeless veterans. The
[[Page S3722]]
Secretary shall include in each such report the following:
(1) Information about expenditures, costs, and workload
under the Department of Veterans Affairs program known as the
Health Care for Homeless Veterans program (HCHV).
(2) Information about the veterans contacted through that
program.
(3) Information about processes under that program.
(4) Information about program treatment outcomes under that
program.
(5) Information about supported housing programs.
(6) Information about the Department's grant and per diem
provider program.
(7) Other information the Secretary considers relevant in
assessing the program.
(c) Annual Program Assessment.--Section 1774(b) of title
38, United States Code, is amended--
(1) in paragraph (1), by inserting ``annual'' after ``to
make an''; and
(2) by adding at the end the following new paragraph:
``(6) The Secretary shall review each annual assessment
under this subsection, and shall consolidate the findings and
conclusions of those assessments into an annual report which
the Secretary shall submit to Congress.''.
SEC. 7. CHANGES IN VETERANS EQUITABLE RESOURCE ALLOCATION
METHODOLOGY.
(a) Allocation Categories.--The Secretary of Veterans
Affairs shall assign veterans receiving the following
services to the resource allocation category designated as
``complex care'' within the Veterans Equitable Resource
Allocation system:
(1) Care provided to veterans enrolled in the Department of
Veterans Affairs program for Mental Health Intensive
Community Case Management.
(2) Continuous care in homeless chronically mentally ill
veterans programs.
(3) Continuous care within specialized programs provided to
veterans who have been diagnosed with both serious chronic
mental illness and substance use disorders.
(4) Continuous therapy combined with sheltered housing
provided to veterans in specialized treatment for substance
use disorders.
(5) Specialized therapies provided to veterans with post-
traumatic stress disorders (PTSD), including therapies
provided by or under the following:
(A) Specialized outpatient PTSD programs.
(B) PTSD clinical teams.
(C) Women veterans stress disorder treatment teams.
(D) Substance abuse disorder PTSD teams.
(b) Treatment of Funds for New Programs for Homeless
Veterans.--The Secretary shall ensure that funds for any new
program for homeless veterans carried out through a
Department health care facility are designated for the first
three years of operation of that program as a special purpose
program for which funds are not allocated through the
Veterans Equitable Resource Allocation system.
SEC. 8. PER DIEM PAYMENTS FOR FURNISHING SERVICES TO HOMELESS
VETERANS.
(a) Increase in Rate of Per Diem Payments.--Section 4(a) of
the Homeless Veterans Comprehensive Service Programs Act of
1992 (38 U.S.C. 7721 note) is amended by striking ``at such
rates'' and all that follows through ``homeless veteran--''
and inserting the following: ``at the same rates as the rates
authorized for State homes for domiciliary care provided
under section 1741 of title 38, United States Code, for
services furnished to homeless veterans--''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on the first day of the first fiscal year
beginning after the date of the enactment of this Act.
SEC. 9. GRANT PROGRAM FOR HOMELESS VETERANS WITH SPECIAL
NEEDS.
(a) Establishment.--The Secretary of Veterans Affairs shall
carry out a program to make grants to health care facilities
of the Department of Veterans Affairs and to grant and per
diem providers in order to encourage development by those
facilities and providers of programs targeted at meeting
special needs within the population of homeless veterans.
(b) Homeless Veterans with Special Needs.--For purposes of
this section, homeless veterans with special needs include
homeless veterans who--
(1) are women;
(2) are 50 years of age or older;
(3) are substance abusers;
(4) are persons with post-traumatic stress disorder;
(5) are terminally ill;
(6) are chronically mentally ill; or
(7) have care of minor dependents or other family members.
(c) Study of Outcome Effectiveness.--The Secretary shall
conduct a study of the effectiveness of the grant program in
meeting the needs of homeless veterans. As part of the study,
the Secretary shall compare the results of programs carried
out in the grant program under this section in terms of
veterans' satisfaction, health status, reduction in addiction
severity, housing, and encouragement of productive activity
with results for similar veterans in programs of the
Department or of grant and per diem providers that are
designed to meet the general needs of homeless veterans.
(d) Funding.--From amounts appropriated to the Department
of Veterans Affairs for ``Medical Care'' for each of fiscal
years 2003, 2004, and 2005, $5,000,000 shall be available for
purposes of the program under this section. Grants under this
section to a health care facility of the Department or a
grant and per diem provider shall be treated in the manner
provided in section 7(b).
SEC. 10. COORDINATION OF OUTREACH SERVICES FOR VETERANS AT
RISK OF HOMELESSNESS.
(a) Outreach Plan.--The Secretary of Veterans Affairs,
acting through the Under Secretary for Health, shall provide
for appropriate officials of the Mental Health Service and
the Readjustment Counseling Service of the Veterans Health
Administration to initiate a coordinated plan for joint
outreach to veterans at risk of homelessness, including
particularly veterans who are being discharged from
institutions (including discharges from inpatient psychiatric
care, substance abuse treatment programs, and penal
institutions).
(b) Matters To Be Included.--The plan under subsection (a)
shall include the following:
(1) Strategies to identify and collaborate with external
entities used by veterans who have not traditionally used
Department of Veterans Affairs services to further outreach
efforts.
(2) Strategies to ensure that mentoring programs, recovery
support groups, and other appropriate support networks are
optimally available to veterans.
(3) Appropriate programs or referrals to family support
programs.
(4) Means to increase access to case management services.
(5) Plans for making additional employment services
accessible to veterans.
(6) Appropriate referral sources for mental health and
substance abuse services.
(c) Cooperative Relationships.--The plan under subsection
(a) shall identify strategies for the Department to enter
into formal cooperative relationships with entities outside
the Department of Veterans Affairs to facilitate making
services and resources optimally available to veterans.
(d) Review of Plan.--The Secretary shall submit the plan
under subsection (a) to the Advisory Committee on Homeless
Veterans for its review and consultation.
(e) Submission of Report.--Not later than two years after
the date of the enactment of this Act, the Secretary shall
submit to the Committees on Veterans' Affairs of the Senate
and House of Representatives a report on the Secretary's plan
under subsection (a), including goals and timelines for
implementation of the plan for particular facilities and
service networks.
(f) Outreach Program.--(1) The Secretary shall carry out an
outreach program to provide information to homeless veterans
and veterans at risk of homelessness. The program shall
include at a minimum--
(A) provision of information about benefits available to
eligible veterans from the Department; and
(B) contact information for local Department facilities,
including medical facilities, regional offices, and veterans
centers.
(2) In developing and carrying out the program under
paragraph (1), the Secretary shall, to the extent
practicable, consult with appropriate public and private
organizations, including the Bureau of Prisons, State social
service agencies, the Department of Defense, and mental
health, veterans, and homeless advocates--
(A) for assistance in identifying and contacting veterans
who are homeless or at risk of homelessness;
(B) to coordinate appropriate outreach activities with
those organizations; and
(C) to coordinate services provided to veterans with
services provided by those organizations.
SEC. 11. TREATMENT TRIALS IN INTEGRATED MENTAL HEALTH
SERVICES DELIVERY.
(a) Establishment.--The Secretary of Veterans Affairs shall
carry out two treatment trials in integrated mental health
services delivery. Each such trial shall be carried out at a
Department of Veterans Affairs medical center selected by the
Secretary for such purpose. The trials shall each be carried
out over the same one-year period.
(b) Definition.--For purposes of this section, the term
``integrated mental health services delivery'' means a
coordinated and standardized approach to evaluation between
mental health and primary health care professionals for
enrollment, treatment, and followup of patients who have both
mental health disorders (including substance use disorders)
and medical conditions.
(c) Site Selection Criteria.--In reviewing applications
from Department medical centers for selection as a site for a
treatment trial under this section, the Secretary shall
consider models that use the following:
(1) Standardized criteria for admission and enrollment as
participant or control.
(2) Focus on prevention and symptom reduction.
(3) Development of a comprehensive, integrated treatment
plan.
(4) Patient assignment to a team or teams.
(5) Management of polypharmacy.
(6) Use of evidence-based treatment protocols.
(7) Case management between visits.
(8) Referral and coordination of appropriate Department or
community-based services (including housing if necessary).
(9) Ability to maintain and provide outcomes for comparison
purposes on veterans with similar diagnoses and
characteristics who are not included in the trial, but who
are receiving traditional consultative services in the same
facility.
[[Page S3723]]
(d) Treatment Models To Be Tested.--The two treatment
trials shall each use one of the following models:
(1) Mental health primary care teams.
(2) Patient assignment to a mental health primary care team
that is linked with the patient's medical primary care team.
(e) Study of Effectiveness.--The Secretary shall compare
treatment outcomes (including such outcomes as veterans'
satisfaction, health status, treatment compliance, patient
functionality, reduction in addiction severity as well as
service utilization and treatment costs) of the different
treatment trials for chronically mentally ill veterans who
are provided treatment through integrated mental health
programs with treatment outcomes for similar chronically
mentally ill veterans provided treatment through
traditionally consultative relationships.
(f) Results.--Not later than 30 months after selection of
the two centers under this section, each selected center
shall complete measures of treatment outcomes under
subsection (e), as well as measures for matched controls.
(g) Mandatory Audit of Results.--The Department of Veterans
Affairs Medical Inspector General shall review medical
records of participants and controls for both trials to
ensure that results are accurate.
(h) Report and Dissemination of Results.--Not later than
two years after the date of the enactment of this Act, the
Secretary shall submit to Congress a report setting forth the
results of the comparison under subsection (e) and such
recommendations as the Secretary may have. Based upon the
Secretary's conclusions, the Secretary shall disseminate the
best practices for treatment of mentally ill veterans in such
manner as the Secretary determines appropriate on a
nationwide basis.
(i) Costs.--The Secretary may use up to $2,000,000 from
funds available to the Secretary for Medical Care for costs
for each of the treatment trials. Funds identified by the
Secretary for the trials shall remain available until
expended.
SEC. 12. DENTAL CARE.
(a) In General.--For purposes of section 1712(a)(1)(H) of
title 38, United States Code, outpatient dental services and
treatment of a dental condition or disability of a veteran
described in subsection (b) shall be considered to be
medically necessary if--
(1) the dental services and treatment are necessary for the
veteran to successfully gain or regain employment;
(2) the dental services and treatment are necessary to
alleviate pain; or
(3) the dental services and treatment are necessary for
treatment of moderate, severe, or severe and complicated
gingival and periodontal pathology.
(b) Eligible Veterans.--Subsection (a) applies to a veteran
who is--
(1) enrolled for care under section 1705(a) of title 38,
United States Code; and
(2) receiving care (directly or by contract) in any of the
following settings:
(A) A domiciliary under section 1710 of such title.
(B) A therapeutic residence under section 1772 of such
title.
(C) Community residential care coordinated by the Secretary
of Veterans Affairs under section 1730 of such title.
(D) A setting for which the Secretary provides funds for a
grant and per diem provider.
(E) Any program described in section 7 of this Act.
SEC. 13. PROGRAMMATIC EXPANSIONS.
(a) Access to Mental Health Services.--The Secretary of
Veterans Affairs shall develop standards to ensure that
mental health services are available to veterans in a manner
similar to the manner in which primary care is available to
veterans who require services by ensuring that each primary
care health care facility of the Department has a mental
health treatment capacity.
(b) Transitional Housing.--Effective October 1, 2001,
section 12 of the Homeless Veterans Comprehensive Service
Programs Act of 1992 (38 U.S.C. 7721 note) is amended to read
as follows:
``SEC. 12. FUNDING.
``(a) Amounts for Grant and Per Diem Programs.--From
amounts appropriated for `Medical Care' for any fiscal year,
the Secretary shall expend not less than $55,000,000 (as
adjusted from time to time under subsection (b)) to carry out
the transitional housing grant and per diem provider programs
under sections 3 and 4 of this Act.
``(b) Periodic Increases.--The amount in effect under
subsection (a) shall be increased for any fiscal year by the
overall percentage increase in the Medical Care account for
that fiscal year from the preceding fiscal year.''.
(c) Comprehensive Homeless Services Program.--(1) The
Secretary shall provide for the establishment of centers for
the provision of comprehensive services to homeless veterans
under section 1773(b) of title 38, United States Code, in at
least each of the 20 largest metropolitan statistical areas.
(2) Section 1773(b) of title 38, United States Code, is
amended by striking ``not fewer than eight''.
(d) Opioid Substitution Therapy.--The Secretary shall
ensure that opioid substitution therapy is available at each
Department of Veterans Affairs medical center.
(e) Program Expiration Extension.--Sections 1771(b) and
1773(d) of title 38, United States Code, are amended by
striking ``December 31, 2001'' and inserting ``December 31,
2006''.
SEC. 14. VARIOUS AUTHORITIES.
(a) Employment Programs.--The Secretary of Veterans Affairs
may authorize homeless veterans receiving care through
vocational rehabilitation programs to participate in the
compensated work therapy program.
(b) Supported Housing for Veterans Participating in
Compensated Work Therapies.--The Secretary may authorize
homeless veterans in the compensated work therapy program to
be provided housing through the therapeutic residence program
under section 1772 of title 38, United States Code, or
through grant and per diem providers.
(c) Staffing Requirement.--The Secretary shall ensure that
there is assigned at each Veterans Benefits Administration
regional office at least one employee assigned specifically
to oversee and coordinate homeless veterans programs in that
region, including the housing program for veterans supported
by the Department of Housing and Urban Development, housing
programs supported by the Department of Veterans Affairs, the
homeless veterans reintegration program of the Department of
Labor, the assessments required by section 1774 of title 38,
United States Code, Comprehensive Homeless Centers, and such
other duties relating to homeless veterans as may be
assigned. In any such regional office with at least 140
employees, there shall be at least one full-time employee
assigned to such functions.
(d) Coordination of Employment Services.--(1) Section
4103A(c) of title 38, United States Code, is amended by
adding at the end the following new paragraph:
``(11) Coordination of services provided to veterans with
training assistance provided to veterans by entities
receiving financial assistance under section 738 of the
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11448).''.
(2) Section 4104(b) of such title is amended--
(A) by striking ``and'' at the end of paragraph (11);
(B) by striking the period at the end of paragraph (12) and
inserting ``; and''; and
(C) by adding at the end the following new paragraph:
``(13) coordinate services provided to veterans with
training assistance for veterans provided by entities
receiving financial assistance under section 738 of the
McKinney-Vento Homeless Assistance Act (42 U.S.C. 11448).''.
SEC. 15. LIFE SAFETY CODE FOR GRANT AND PER DIEM PROVIDERS.
(a) New Grants.--Section 3(b)(5) of the Homeless Veterans
Comprehensive Service Programs Act of 1992 (38 U.S.C. 7721
note) is amended by striking ``, but fire and safety'' and
all that follows through ``in carrying out the grant'' and
inserting ``and the fire and safety requirements applicable
under the Life Safety Code of the National Fire Protection
Association''.
(b) Previous Grantees.--Section 4 of such Act is amended by
adding at the end the following new subsection:
``(e) Life Safety Code.--(1) Except as provided in
paragraph (2), a per diem payment (or in-kind assistance in
lieu of per diem payments) may not be provided under this
section to a grant recipient unless the facilities of the
grant recipient meet the fire and safety requirements
applicable under the Life Safety Code of the National Fire
Protection Association.
``(2) During the five-year period beginning on the date of
the enactment of the Heather French Henry Homeless Veterans
Assistance Act, paragraph (1) shall not apply to an entity
that received a grant under section 3 before that date if the
entity meets fire and safety requirements established by the
Secretary.
``(3) From amounts available for purposes of this section
pursuant to section 12, not less than $5,000,000 shall be
used only for grants to assist entities covered by paragraph
(2) in meeting the Life Safety Code of the National Fire
Protection Association.''.
SEC. 16. TRANSITIONAL ASSISTANCE GRANTS PILOT PROGRAM.
(a) Establishment of Program.--The Secretary of Veterans
Affairs shall carry out a three-year pilot program of
transitional assistance grants to eligible homeless veterans.
The pilot program shall be established at not less than three
nor more than six regional offices of the Department of
Veterans Affairs and shall include at least one regional
office located in a large urban area and at least one
regional office serving primarily rural veterans. The maximum
number of veterans who may participate in the pilot program
is 600.
(b) Eligible Veterans.--A veteran is eligible for a
transitional assistance grant under this section if the
veteran is physically present in the geographic area of a
regional office which is participating in the pilot program
and the veteran--
(1) is a veteran of a period of war or, if not a veteran of
a period of war, meets the minimum service requirements
specified in section 5303A of title 38, United States Code;
(2) is being released, or within the preceding 60 days was
released, from an institution, including a hospital, a penal
institution, a homeless shelter, or a facility of a grant and
per diem provider;
(3) is a homeless veteran or was a homeless veteran before
institutionalization; and
(4) had less than marginal income for the preceding three
months.
[[Page S3724]]
(c) Duration of Grant Assistance.--An eligible veteran may
be provided a transitional assistance grant under this
section for no more than three months.
(d) Exception to Limitation on Grant Assistance.--(1) A
veteran who receives transitional assistance under this
section and who while in receipt of such assistance has a
claim pending with the Secretary for service-connected
disability compensation or nonservice-connected pension
shall, notwithstanding subsection (c), continue to be
provided transitional assistance under this section after the
period prescribed in subsection (c) until the earlier of (A)
the date on which a decision on the claim is made by the
regional office, or (B) the end of the six-month period
beginning on the date of expiration of eligibility under
subsection (c).
(2) An extension of transitional assistance under paragraph
(1) shall be terminated if, as determined by the Secretary,
the veteran, without good cause, fails to cooperate in
establishing the pending claim or if the gross monthly income
of the veteran for a month exceeds twice the amount of
transitional assistance benefits payable to the veteran for
that month. The effective date of such a termination shall be
the last day of the month following the month in which the
extension under paragraph (1) is terminated under the
preceding sentence.
(3) Claims of veterans receiving benefits under this
subsection shall receive expedited consideration by the
regional office.
(e) Amount of Grant.--(1) The monthly amount of a grant
provided under this section to an eligible veteran shall be
the amount of monthly pension that would be payable to that
veteran under chapter 15 of title 38, United States Code, if
the veteran had a permanent and total nonservice-connected
disability.
(2) Once eligibility for a grant under this section has
been established, the amount of the grant shall be determined
without regard to the veteran's income, other than as
provided in subsection (d)(2).
(f) Coordination With Other Benefits.--If retroactive
benefits from the Department of Veterans Affairs are payable
to a veteran with respect to a month for which the veteran
received a transitional assistance grant under this section,
the amount of such retroactive benefit payable for such month
shall be reduced (but not below zero) by the amount of the
grant under this section paid for that month. No reduction
may be made by the Secretary from an amount otherwise due a
veteran for any other month to offset an amount paid under
this section for a previous month.
(g) Definitions.--For purposes of this section:
(1) The term ``veteran'' means a person who served in the
active military, naval, or air service (as defined in section
101 of title 38, United States Code) and who was discharged
or released from any such period of service under conditions
other than dishonorable.
(2) The term ``marginal income'', with respect to a
veteran, means income below the poverty standard (as
determined by the Bureau of the Census) for a family of the
size of the veteran's family.
SEC. 17. ASSISTANCE FOR GRANT APPLICATIONS.
(a) Grant Program.--The Secretary of Veterans Affairs shall
carry out a program to make technical assistance grants to
nonprofit community-based groups with experience in providing
assistance to homeless veterans in order to assist such
groups in applying for grants relating to addressing problems
of homeless veterans.
(b) Funding.--There is authorized to be appropriated to the
Secretary of Veterans Affairs for each of fiscal years 2002
through 2006, $750,000 to carry out the program under this
section.
SEC. 18. HOME LOAN PROGRAM FOR MANUFACTURED HOUSING.
Section 3712(a)(1) of title 38, United States Code, is
amended by adding at the end the following:
``With respect to a veteran who, as determined by the
Secretary, is homeless, the Secretary may waive any otherwise
applicable requirement under this chapter that a purchase of
a manufactured home include ownership or purchase of a lot by
the veteran to which the home is to be permanently
affixed.''.
SEC. 19. EXTENSION OF HOMELESS VETERANS REINTEGRATION
PROGRAM.
Section 4111(d)(1) of title 38, United States Code, is
amended by striking subparagraphs (C) and (D) and inserting
the following:
``(C) $50,000,000 for fiscal year 2002.
``(D) $50,000,000 for fiscal year 2003.
``(E) $50,000,000 for fiscal year 2004.
``(F) $50,000,000 for fiscal year 2005.
``(G) $50,000,000 for fiscal year 2006.''.
SEC. 20. USE OF REAL PROPERTY.
Section 8122(d) of title 38, United States Code, is amended
by inserting before the period at the end the following:
``and is not suitable for use for the provision of services
to homeless veterans by the Department or by another entity
under an enhanced-use lease of such property under section
8162 of this title''.
____
Disabled American Veterans,
Washington, DC, March 12, 2001.
Hon. Paul D. Wellstone,
U.S. Senate, Senate Hart Office Building,
Washington, DC.
Dear Senator Wellstone: On behalf of the more than one
million members of the Disabled American Veterans (DAV), I
urge you to co-sponsor and actively support the Heather
French Henry Homeless Veterans Assistance Act soon to be
introduced by Senator Paul Wellstone (D-MN).
This important legislation is aimed at ending homelessness
among veterans by encouraging alliances between federal,
state, and local governments, and private and public sector
entities to address the homeless issue and by providing
necessary resources to combat homelessness. Veterans who are
homeless deserve a better deal than they are currently
receiving from our government. This bill is an important key
to ending this national shame.
As an organization committed to service, one of the DAV's
top priorities is to help America's homeless veterans break
the cycle of poverty and isolation, and move from the streets
to self-sufficiency. Like any other problem, we can choose
whether we will allow former defenders of our nation to be
defeated by the tragedy of homelessness. Or we can decide to
do something about it, to combine our efforts and strengthen
our ability to assist these veterans. ``We Don't Leave our
Wounded Behind'' is more than a clever slogan. It is a
principle, a rule, and a promise we need to keep. This is the
time to tap our hidden resources and strengths.
I encourage you to co-sponsor and support this important
legislation. I appreciate your prompt attention to this
matter when Senator Wellstone calls upon you to co-sponsor
this legislation.
Sincerely,
Armando C. Albarran,
National Commander.
____
National Coalition for
Homeless Veterans,
Washington, DC, March 12, 2001.
Support Statement
As the first Miss America of the new millennium Heather
French Henry chose to do so as a bold spokesperson and
advocate for our nation's homeless veterans. She dedicated,
not just a year of service, but also her life to creating
unprecedented awareness surrounding this issue.
No single individual or group of individuals has been able
to bring the homeless veteran issue to the national forefront
like Heather French Henry. From the halls of Congress, to
homeless shelters, and to communities across America, Heather
has mobilized individuals to become involved on a single
goal, ending homelessness among America's veterans.
Her sincere dedication and can do attitude has touched
hundreds of lives literally and figuratively, as she has
spoken out to advocate for our nation's veterans.
The National Coalition for Homeless Veterans sincerely
appreciates Heather French Henry's continued commitment to
this issue, after the glow of the crown has started to fade.
We also commend the commitment Senator Paul Wellstone has
made for many years on the homeless veteran issue. He has
been a consistent, outspoken leader in developing and
implementing public laws that have brought more Federal
resources into community organizations serving homeless
veterans.
Senator Wellstone's introduction of the ``Heather French
Henry Homeless Veteran Assistance Act'', a companion to the
(H.R. 936) bill introduced in the House by representative
Lane Evans (D-IL), is timely because it takes advantage of
the unique information collection that was done by Ms. Henry
during her travels and visits with veterans and communities,
and applies it in the solutions outlined in the bill.
Our expectation is this bill will become the platform to
address homeless veteran issues in the 107th Congress and we
look forward to a continued active relationship with Ms.
Henry and Senator Wellstone towards the goal of ending
homelessness among our nation's veterans.
____
Veterans of Foreign Wars
of the United States,
Washington, DC, March 7, 2001.
Hon. Paul Wellstone,
U.S. Senate,
Washington, DC.
Dear Senator Wellstone: On behalf of the Veterans of
Foreign Wars of the United States, I would like to take this
opportunity to express our enthusiastic support of the
Heather French Henry Homeless Veterans Assistance Act.
With at least 275,000 veterans homeless on any given night
and more than 500,000 veterans homeless at some point during
the year, the obvious need for assistance and community-based
intervention is of paramount importance. Your bill recognizes
the need to expand existing programs, incorporate new
partnerships, and provide short-term assistance to the men
and women who have served our nation in uniform. It genuinely
embraces our shared goal of ending homelessness among our
nation's veterans.
Through your legislative efforts we can work together to
remedy this American tragedy.
Thank you for your service to America's veterans and please
do not hesitate to contact me if I can be of further
assistance.
Sincerely,
Robert E. Wallace,
Executive Director.
[[Page S3725]]
____
Paralyzed Veterans of America,
Washington, DC, March 13, 2001.
Hon. Paul Wellstone,
Hart Senate Office Building,
U.S. Senate, Washington, DC.
Dear Senator Wellstone: On behalf of the members of the
Paralyzed Veterans of America (PVA) I am writing to thank you
for your support of the many veterans who face the trauma of
homelessness. We applaud your planned introduction of the
``Heather French Henry Homeless Veterans Assistance Act'' to
help correct this horrible testament to one of the ongoing
ravages of war.
As you are aware, on any given night, an estimated 250,000
homeless veterans sleep in cardboard boxes, in alleys or on
subway grates. Many of these individuals suffer from Post-
Traumatic Stress Disorder and other illnesses that prevent
them from getting and keeping employment, often a precursor
to homelessness. We thank former Miss America Heather French
Henry for making ``help for homeless veterans'' her platform
and committing herself to insuring these veterans are not
forgotten.
Homelessness does not have an easy fix. Only through
dedicated efforts can it be reduced. Our veterans deserve
those efforts. PVA wholeheartedly supports your proposed
legislation. From sensible calculations of per diems to an
increased focus on women and special needs veterans, this
legislation will apply new approaches to caring for our
veterans.
We all have a moral obligation to provide care to those
veterans who are most vulnerable. Homelessness can be
reduced, and Senator Wellstone, your legislation will mark a
big step in the right direction.
Sincerely,
Joseph L. Fox, Sr.,
National President.
______
By Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Graham, Mr. Hatch,
Mr. Breaux, Mr. Murkowski, Mr. Kerry, Mr. Jeffords, Mr.
Torricelli, Mr. Kyl, Mrs. Lincoln, Mr. Hutchinson, Mr. Johnson,
Mr. Hagel, Mr. Durbin, Mr. Gregg, Mr. Schumer, Mrs. Hutchison,
Mr. Bayh, Mr. Chafee, and Mr. Reid):
S. 742. A bill to provide for pension reform, and for other purposes;
to the Committee on Finance.
Mr. GRASSLEY. Mr. President, I rise today along with Senators Baucus,
Graham, Hatch, Breaux, Murkowski, Kerry, Jeffords, Torricelli, Kyl,
Lincoln, Hutchinson, Johnson, Hagel, Durbin, Gregg, Schumer, Hutchison,
Bayh, Chafee, and Reid to introduce bipartisan legislation intended to
help Americans build a more secure retirement. Many of these members,
such as Senator Graham, Hatch, Breaux, and Jeffords have been engaged
in pension reform issues for many years. Others bring new energy to the
pension reform debate. I want to take a moment to thank them all for
their hard work and enthusiasm in this bipartisan effort.
For five years now, Senate Finance Committee has worked on this
comprehensive pension reform legislation. In the last Congress, we came
very close to enacting it into law. For example, the Finance Committee
unanimously reported out the bill in early September 2000. While our
bill was not considered on the floor, my colleagues and I are not
discouraged. We have built on the work from the last five years in
crafting the Retirement Security and Savings Act of 2001.
Many baby boomers will enter retirement ill prepared for the
potentially high costs of supporting themselves. Inflation alone can
siphon money from a fixed income, reducing a retiree's standard of
living. So it is important to have a considerable sum saved for one's
postemployment years. A fixed income for a worker who retires today
will have half the purchasing power 20 years from now, assuming the
historical average rate of inflation of 3.25 percent. Having adequate
retirement savings can protect against inflation and other unexpected
costs. Savings rates are at an historical low, but this bill will
provide the incentives individuals need to boost their savings rates.
The Retirement Security and Savings Act of 2001 has six titles:
individual retirement arrangements; expanding coverage; enhancing
fairness for women and families; increasing portability for
participants; strengthening pension security and enforcement; and
reducing regulatory burdens. Let me highlight a few provisions from
each title.
The limit on annual contributions to an IRA has not increased in
twenty years. If the contribution limit kept up with inflation,
individuals would now be able to contribute around $5000 to an IRA each
year. Our bill would increase the maximum contribution limit from $2000
to $5000 and adjust that limit for inflation.
The Retirement Security and Savings Act of 2001 would also eliminate
the marriage penalty applicable to contributions to a Roth IRA. The
income limits for contributing would now be increased so that the
applicable limit for married couples is twice the limit for single
taxpayers.
The Small Business Administration reports that, small businesses
employ 52 percent of the private sector labor force. An amazing 75
percent of new jobs are created by small businesses. Yet less than 20
percent of small business employees are covered by a retirement plan of
any kind. By contrast, approximately 70 percent of employees who work
for larger firms are offered a retirement plan. We work to address this
disparity in the bill by making pension plans more attractive to
business owners. The limitations on annual contributions to 401(k)
plans would increase from $10,500 to $15,000. The SIMPLE limit would
increase to $10,000. We know that pension plans are bought and not
sold. In a voluntary system such as ours, retirement plans must be
attractive to the business owner in order for him or her to establish a
plan in the first place and maintain it over many years. These higher
limits help to make qualified plans more attractive, relative to non-
qualified plans. When a business establishes a qualified plan, workers
benefit, as well as business owners.
The bill would also help defray the administrative costs of setting
up a retirement plan by offering a partial tax credit of the costs
associated with starting a plan. Furthermore, the bill would provide an
additional credit for small business employers who make an employer
contribution to the new retirement plan for the benefit of non-highly
compensated employees. These credits have the potential to expand
coverage among small businesses and we hope they will help us to
accomplish that objective.
This bill also encourages lower or middle income individuals, to save
for their retirement by establishing a retirement savings tax credit.
This non-refundable credit will be equal to 50 percent of up to $2000
in contributions for a married couple with an income up to $30,000, and
$15,000 for an individual taxpayer. Our goal with this provision is get
people, especially young people, in the habit of saving.
The Retirement Security and Savings Act of 2001 would encourage small
businesses to start a retirement plan for their employees by
eliminating unnecessary administrative complexity in the top heavy
rules. Top heavy rules that apply only to small businesses and,
according to an Employee Benefits Research Institute, EBRI, survey, are
the number one regulatory reason why small business owners do not start
a pension. While the language in this bill may not go as far as many
would like, the changes we have made are a step in the right direction.
Women tend to be somewhat more at risk of living in poverty as they
age. There are many causes for this trend. For example, women may have
breaks in service to care for young children or for elderly family
members. Consequently, we hope this legislation will help women workers
more saving options despite periodic departures from the paid
workforce.
The Retirement Security and Savings Act partially restores the
artificial limits on how much people can save in their employer's
pension plan. One of the most burdensome provisions in the Internal
Revenue Code is that 25 percent of compensation limitation contained
within section 451(c). Under section 415(c), total contributions by
employer and employee into a defined contribution plan are limited to
25 percent of compensation or $35,000, whichever is less.
But the retirement savings vehicle available for most private sector
workers is the 401(k) plan where the maximum amount a worker can save
is currently $10,500. Thus, a workers who makes $40,000 annually could
only save $10,000, but not the additional $500 allowed by the rules in
the Code. My colleagues and I see section 415(c) as an artificial
barrier to saving of ordinary Americans and believe the 415(c) limit
should be removed.
Our bill also allows catch-up contributions for contributions to
defined contribution plans and IRAs. The provision is applicable only
to individuals
[[Page S3726]]
age 50 and older--aiding many who may have started saving late in life
or after other major financial obligations were out of the way such as
paying down mortgages or sending children to college. It may also help
those who were not in the paid labor force while they took time off to
care for young children or ailing family members.
This provision is also important for those who save for retirement
only through an IRA. As I said a moment ago, the limits on IRAs have
not escalated for twenty years. IRA savers have lost out on twenty
years of contributions and earnings on those contributions that
presumably would have been made had the limits increased with inflation
as they do in other plans. Under current law, certain workers who save
in section 403(b) plans or 457 (or in some cases a 401(k)) deferred
compensation plans for state and local government employees are allowed
to make catch-up contributions for a period of time prior to their
retirement dates.
I know of no justification why catch-up contributions should not be
allowed for all types of defined contribution plans. One complaint that
plan administrators in the 403(b) and governmental (both 457 and
401(k)) plans have made is that the rules concerning when such catch-up
contributions can be and how they must be made are cumbersome. Those
plan experts advocate a greatly simplified framework for allowing
catch-up contributions such as the one in our bill.
Under current law, an employer may require up to five years of
service before an employee is entitled to employer's matching
contributions to its retirement savings plan. The legislation would
reduce the maximum number of years of service required to vest the
employer's matching contributions to only three years. A shorter
vesting requirement would ensure that more short-service workers will
have a vested right to their employers' matching contributions. Thus,
larger accounts will be available to be saved for retirement despite
frequent job changes.
The legislation also contains proposals which promote retirement
savings plan portability. The lack of portability among plans is one of
the weak links in our current retirement saving system. This is an
especially difficult problem for our public employees for whom current
law does not permit rollovers. A police officer or firefighter who
leaves public service at age 50 or 55 and begins another career in the
private sector, may not transfer savings to his or her new plan even if
the new employer's plan would accept them. Our bill would change this.
It removes unnecessary obstacles to portability for all types of plans
in the governmental, not-for-profit and the for-profit sectors of our
economy.
In addition, this bill allows public sector workers to take benefits
from a defined contribution plan and by service credit in their defined
benefit plan. For example, many school teachers who move from one
school district to another may not accrue sufficient years of service
in their defined benefit plan to obtain the maximum benefit they need
to retire. Yet many school teachers are good savers. They discipline
themselves and save regularly in their defined contribution plans. Our
bill will permit those employees who choose to do so, to ``purchase
service credit'' in the defined benefit plan offered by their employing
agency.
It is said that knowledge is power. Knowledge about an individual's
pension benefits gives him or her the power to plan for retirement and
correct errors before they enter retirement. The legislation would
require that plan sponsors provide benefit statements to their
participants on a periodic basis. For defined contribution plans, the
statement would be required annually. For defined benefits plans, a
statement would be required every three years. However, employers who
provide an annual notice to employees of the availability of a benefit
statement would not be required to provide automatic benefit statements
to all employees.
The bill also simplifies and repeals some of the legal requirements
that burden plans and increase costs for employers who sponsor pension
plans. For example, the legislation seeks to repeal the full-funding
limit that is imposed on defined benefit plans. This limit prevents
employers from funding their defined benefit plans based on the current
liability. This depressed funding level threatens the ability of
employers to pay benefits, especially as the Baby Boom begins to
retire.
This bill will also adjust the section 415 limits that have harmed
many participants in multiemployer pension plans over the years. It
will also provide a default option for a rollover to an IRA for certain
involuntary cash outs. This is our first look at ways to reduce plan
leakage.
In the case of a significant restructuring of a pension plan benefit
formula, the Retirement Security and Savings Act of 2001 would require
that affected recipients be given a benefit estimation tool kit. This
would allow pension plan participants to easily determine how their
individual benefits would be altered. The bill also directs the
Treasury Department to study on the long-term effects of the trend of
restructuring retirement plans.
To reduce the burdens of plan compliance, and to encourage voluntary
compliance, the legislation includes a number of proposals intended to
peel away at the layers of laws and regulations that add costs to plan
administration, but don't add many benefits. The legislation would
repeal unnecessary rules bogging down pension administration, such as
the multiple use test and the same desk rule. Moreover, mistakes made
in administering a pension plan are often inadvertent. The IRS would be
directed to simplify and expand its voluntary compliance resolution
system.
The Retirement Security and Savings Act of 2001 has considerable
bipartisan support. Furthermore, over the years that it has been
pending, this legislation has received the support of over 100
organizations. These organization include business groups and labor
unions; large companies and small companies; private sector
organizations and organizations representing government employees and
many individuals. Few bills in the Senate can claim the diversity of
support from organizations that traditionally don't agree on policy
that the Retirement Security and Savings Act of 2001 enjoys. I am proud
of this fact. I think it is the clearest signal that we need to enact
comprehensive pension reform this session.
I am happy to add one more organization to the list of organizations
supporting the Retirement Security and Savings Act of 2001. Horace
Deets, Executive Director of AARP sent a letter to me this week
expressing AARP's support for the legislation.
I will work to pass this critical piece of pension reform legislation
this Congress. I urge my colleagues who have not already done so, to
support the Retirement Security and Savings Act of 2001 and help
Americans build a more secure retirement.
I ask unanimous consent that the text of the Retirement Security and
Savings Act of 2001 be printed in the Record.
There being no objection, the bill S. 742 was ordered to be printed
in the Record, as follows:
S. 742
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Retirement
Security and Savings Act of 2001''.
(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.
(c) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; references; table of contents.
TITLE I--INDIVIDUAL RETIREMENT ACCOUNTS
Sec. 101. Modification of IRA contribution limits.
Sec. 102. Deemed IRAs under employer plans.
Sec. 103. Tax-free distributions from individual retirement accounts
for charitable purposes.
Sec. 104. Modification of AGI limits for Roth IRAs.
TITLE II--EXPANDING COVERAGE
Sec. 201. Increase in benefit and contribution limits.
Sec. 202. Plan loans for subchapter S owners, partners, and sole
proprietors.
Sec. 203. Modification of top-heavy rules.
Sec. 204. Elective deferrals not taken into account for purposes of
deduction limits.
[[Page S3727]]
Sec. 205. Repeal of coordination requirements for deferred compensation
plans of State and local governments and tax-exempt
organizations.
Sec. 206. Deduction limits.
Sec. 207. Option to treat elective deferrals as after-tax Roth
contributions.
Sec. 208. Nonrefundable credit to certain individuals for elective
deferrals and IRA contributions.
Sec. 209. Credit for qualified pension plan contributions of small
employers.
Sec. 210. Credit for pension plan startup costs of small employers.
Sec. 211. Elimination of user fee for requests to IRS regarding new
pension plans.
TITLE III--ENHANCING FAIRNESS FOR WOMEN
Sec. 301. Catch-up contributions for individuals age 50 or over.
Sec. 302. Equitable treatment for contributions of employees to defined
contribution plans.
Sec. 303. Faster vesting of certain employer matching contributions.
Sec. 304. Minimum distribution rules.
Sec. 305. Clarification of tax treatment of division of section 457
plan benefits upon divorce.
Sec. 306. Provisions relating to hardship distributions.
Sec. 307. Waiver of tax on nondeductible contributions for domestic or
similar workers.
TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS
Sec. 401. Rollovers allowed among various types of plans.
Sec. 402. Rollovers of IRAs into workplace retirement plans.
Sec. 403. Rollovers of after-tax contributions.
Sec. 404. Hardship exception to 60-day rule.
Sec. 405. Treatment of forms of distribution.
Sec. 406. Rationalization of restrictions on distributions.
Sec. 407. Purchase of service credit in governmental defined benefit
plans.
Sec. 408. Employers may disregard rollovers for purposes of cash-out
amounts.
Sec. 409. Minimum distribution and inclusion requirements for section
457 plans.
TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT
Subtitle A--General Provisions
Sec. 501. Repeal of 155 percent of current liability funding limit.
Sec. 502. Maximum contribution deduction rules modified and applied to
all defined benefit plans.
Sec. 503. Excise tax relief for sound pension funding.
Sec. 504. Treatment of multiemployer plans under section 415.
Sec. 505. Protection of investment of employee contributions to 401(k)
plans.
Sec. 506. Periodic pension benefits statements.
Sec. 507. Prohibited allocations of stock in S Corporation ESOP.
Sec. 508. Automatic rollovers of certain mandatory distributions.
Subtitle B--Treatment of Plan Amendments Reducing Future Benefit
Accruals
Sec. 521. Notice required for pension plan amendments having the effect
of significantly reducing future benefit accruals.
TITLE VI--REDUCING REGULATORY BURDENS
Sec. 601. Modification of timing of plan valuations.
Sec. 602. ESOP dividends may be reinvested without loss of dividend
deduction.
Sec. 603. Repeal of transition rule relating to certain highly
compensated employees.
Sec. 604. Employees of tax-exempt entities.
Sec. 605. Clarification of treatment of employer-provided retirement
advice.
Sec. 606. Reporting simplification.
Sec. 607. Improvement of employee plans compliance resolution system.
Sec. 608. Repeal of the multiple use test.
Sec. 609. Flexibility in nondiscrimination, coverage, and line of
business rules.
Sec. 610. Extension to all governmental plans of moratorium on
application of certain nondiscrimination rules applicable
to State and local plans.
Sec. 611. Notice and consent period regarding distributions.
Sec. 612. Annual report dissemination.
Sec. 613. Technical corrections to Saver Act.
Sec. 614. Studies.
TITLE VII--OTHER ERISA PROVISIONS
Sec. 701. Missing participants.
Sec. 702. Reduced PBGC premium for new plans of small employers.
Sec. 703. Reduction of additional PBGC premium for new and small plans.
Sec. 704. Authorization for PBGC to pay interest on premium overpayment
refunds.
Sec. 705. Substantial owner benefits in terminated plans.
Sec. 706. Civil penalties for breach of fiduciary responsibility.
Sec. 707. Benefit suspension notice.
TITLE VIII--PLAN AMENDMENTS
Sec. 801. Provisions relating to plan amendments.
TITLE I--INDIVIDUAL RETIREMENT ACCOUNTS
SEC. 101. MODIFICATION OF IRA CONTRIBUTION LIMITS.
(a) Increase in Contribution Limit.--
(1) In general.--Paragraph (1)(A) of section 219(b)
(relating to maximum amount of deduction) is amended by
striking ``$2,000'' and inserting ``the deductible amount''.
(2) Deductible amount.--Section 219(b) is amended by adding
at the end the following new paragraph:
``(5) Deductible amount.--For purposes of paragraph
(1)(A)--
``(A) In general.--The deductible amount shall be
determined in accordance with the following table:
``For taxable years beginning in: The deductible amount is:
2002..................................................$3,000 .
2003..................................................$4,000 .
2004 and thereafter...................................$5,000..
``(B) Catch-up contributions for individuals 50 or older.--
In the case of an individual who has attained the age of 50
before the close of the taxable year, the deductible amount
for such taxable year shall be an amount equal to 150 percent
of such amount determined without regard to this
subparagraph.
``(C) Cost-of-living adjustment.--
``(i) In general.--In the case of any taxable year
beginning in a calendar year after 2004, the $5,000 amount
under subparagraph (A) 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 2003'
for `calendar year 1992' in subparagraph (B) thereof.
``(ii) Rounding rules.--If any amount after adjustment
under clause (i) is not a multiple of $500, such amount shall
be rounded to the next lower multiple of $500.''.
(b) Increase in AGI Limits for Active Participants.--
(1) Joint returns.--The table in clause (i) of section
219(g)(3)(B) (relating to applicable dollar amount) is
amended to read as follows:
``For taxable years beginning in calendar The applicable dollar amount:
2002.....................................................$56,000
2003.....................................................$60,000
2004.....................................................$64,000
2005.....................................................$68,000
2006.....................................................$72,000
2007.....................................................$76,000
2008 or thereafter....................................$80,000.''.
(2) Other taxpayers.--Section 219(g)(3)(B) (relating to
applicable dollar amount) is amended by striking clauses (ii)
and (iii) and inserting the following:
``(ii) In the case of any other taxpayer:
``For taxable years beginning in calendar The applicable dollar amount:
2002.....................................................$36,000
2003.....................................................$40,000
2004.....................................................$44,000
2005.....................................................$48,000
2006 or thereafter....................................$50,000.''.
(c) Conforming Amendments.--
(1) Section 408(a)(1) is amended by striking ``in excess of
$2,000 on behalf of any individual'' and inserting ``on
behalf of any individual in excess of the amount in effect
for such taxable year under section 219(b)(1)(A)''.
(2) Section 408(b)(2)(B) is amended by striking ``$2,000''
and inserting ``the dollar amount in effect under section
219(b)(1)(A)''.
(3) Section 408(b) is amended by striking ``$2,000'' in the
matter following paragraph (4) and inserting ``the dollar
amount in effect under section 219(b)(1)(A)''.
(4) Section 408(j) is amended by striking ``$2,000''.
(5) Section 408(p)(8) is amended by striking ``$2,000'' and
inserting ``the dollar amount in effect under section
219(b)(1)(A)''.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 102. DEEMED IRAS UNDER EMPLOYER PLANS.
(a) In General.--Section 408 (relating to individual
retirement accounts) is amended by redesignating subsection
(q) as subsection (r) and by inserting after subsection (p)
the following new subsection:
``(q) Deemed IRAs Under Qualified Employer Plans.--
``(1) General rule.--If--
``(A) a qualified employer plan elects to allow employees
to make voluntary employee contributions to a separate
account or annuity established under the plan, and
``(B) under the terms of the qualified employer plan, such
account or annuity meets the applicable requirements of this
section or section 408A for an individual retirement account
or annuity,
then such account or annuity shall be treated for purposes of
this title in the same manner as an individual retirement
plan and not as a qualified employer plan (and contributions
to such account or annuity as contributions to an individual
retirement plan and not to the qualified employer plan). For
purposes of subparagraph (B), the requirements of subsection
(a)(5) shall not apply.
[[Page S3728]]
``(2) Special rules for qualified employer plans.--For
purposes of this title, a qualified employer plan shall not
fail to meet any requirement of this title solely by reason
of establishing and maintaining a program described in
paragraph (1).
``(3) Definitions.--For purposes of this subsection--
``(A) Qualified employer plan.--The term `qualified
employer plan' has the meaning given such term by section
72(p)(4); except such term shall only include an eligible
deferred compensation plan (as defined in section 457(b))
which is maintained by an eligible employer described in
section 457(e)(1)(A).
``(B) Voluntary employee contribution.--The term `voluntary
employee contribution' means any contribution (other than a
mandatory contribution within the meaning of section
411(c)(2)(C))--
``(i) which is made by an individual as an employee under a
qualified employer plan which allows employees to elect to
make contributions described in paragraph (1), and
``(ii) with respect to which the individual has designated
the contribution as a contribution to which this subsection
applies.''.
(b) Amendment of ERISA.--
(1) In general.--Section 4 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1003) is amended by
adding at the end the following new subsection:
``(c) If a pension plan allows an employee to elect to make
voluntary employee contributions to accounts and annuities as
provided in section 408(q) of the Internal Revenue Code of
1986, such accounts and annuities (and contributions thereto)
shall not be treated as part of such plan (or as a separate
pension plan) for purposes of any provision of this title
other than section 403(c), 404, or 405 (relating to exclusive
benefit, and fiduciary and co-fiduciary responsibilities).''.
(2) Conforming amendment.--Section 4(a) of such Act (29
U.S.C. 1003(a)) is amended by inserting ``or (c)'' after
``subsection (b)''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2002.
SEC. 103. TAX-FREE DISTRIBUTIONS FROM INDIVIDUAL RETIREMENT
ACCOUNTS FOR CHARITABLE PURPOSES.
(a) In General.--Subsection (d) of section 408 (relating to
individual retirement accounts) is amended by adding at the
end the following new paragraph:
``(8) Distributions for charitable purposes.--
``(A) In general.--In the case of a qualified charitable
distribution from an individual retirement account to an
organization described in section 170(c), no amount shall be
includible in the gross income of the account holder or
beneficiary.
``(B) Special rules relating to charitable remainder
trusts, pooled income funds, and charitable gift annuities.--
``(i) In general.--In the case of a qualified charitable
distribution from an individual retirement account--
``(I) to a charitable remainder annuity trust or a
charitable remainder unitrust (as such terms are defined in
section 664(d)),
``(II) to a pooled income fund (as defined in section
642(c)(5)), or
``(III) for the issuance of a charitable gift annuity (as
defined in section 501(m)(5)),
no amount shall be includible in gross income of the account
holder or beneficiary. The preceding sentence shall apply
only if no person holds any interest in the amounts in the
trust, fund, or annuity attributable to such distribution
other than one or more of the following: the individual for
whose benefit such account is maintained, the spouse of such
individual, or any organization described in section 170(c).
``(ii) Determination of inclusion of amounts distributed.--
In determining the amount includible in the gross income of
the distributee of a distribution from a trust described in
clause (i)(I) or an annuity described in clause (i)(III), the
portion of any qualified charitable distribution to such
trust or for such annuity which would (but for this
subparagraph) have been includible in gross income--
``(I) in the case of any such trust, shall be treated as
income described in section 664(b)(1), or
``(II) in the case of any such annuity, shall not be
treated as an investment in the contract.
``(iii) No inclusion for distribution to pooled income
fund.--No amount shall be includible in the gross income of a
pooled income fund (as so defined) by reason of a qualified
charitable distribution to such fund.
``(C) Qualified charitable distribution.--For purposes of
this paragraph, the term `qualified charitable distribution'
means any distribution from an individual retirement
account--
``(i) which is made on or after the date that the
individual for whose benefit the account is maintained has
attained age 70\1/2\, and
``(ii) which is a charitable contribution (as defined in
section 170(c)) made directly from the account to--
``(I) an organization described in section 170(c), or
``(II) a trust, fund, or annuity described in subparagraph
(B).
``(D) Denial of deduction.--The amount allowable as a
deduction to the taxpayer for the taxable year under section
170 (before the application of section 170(b)) for qualified
charitable distributions shall be reduced (but not below
zero) by the sum of the amounts of the qualified charitable
distributions during such year which (but for this paragraph)
would have been includible in the gross income of the
taxpayer for such year.''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to taxable years beginning after December 31,
2001.
SEC. 104. MODIFICATION OF AGI LIMITS FOR ROTH IRAS.
(a) Increase in AGI Limit for Roth IRA Contributions.--
(1) In general.--Section 408A(c)(3)(C)(ii) (relating to
limits based on modified adjusted gross income) is amended to
read as follows:
``(ii) the applicable dollar amount is--
``(I) in the case of a taxpayer filing a joint return,
$190,000, and
``(II) in the case of any other taxpayer, $95,000.''.
(2) Phaseout amount.--Clause (ii) of section 408A(c)(3)(A)
is amended to read as follows:
``(ii) $15,000 ($30,000 in the case of a joint return).''
(b) Increase in AGI Limit for Roth IRA Conversions.--
Section 408A(c)(3)(B) (relating to rollover from IRA) is
amended by striking ``relates'' and all that follows and
inserting ``relates, the taxpayer's adjusted gross income
exceeds $100,000 ($200,000 in the case of a joint return).''.
(c) Conforming Amendment.--Section 408A(c)(3) is amended by
striking subparagraph (D).
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
TITLE II--EXPANDING COVERAGE
SEC. 201. INCREASE IN BENEFIT AND CONTRIBUTION LIMITS.
(a) Defined Benefit Plans.--
(1) Dollar limit.--
(A) Subparagraph (A) of section 415(b)(1) (relating to
limitation for defined benefit plans) is amended by striking
``$90,000'' and inserting ``$160,000''.
(B) Subparagraphs (C) and (D) of section 415(b)(2) are each
amended by striking ``$90,000'' each place it appears in the
headings and the text and inserting ``$160,000''.
(C) Paragraph (7) of section 415(b) (relating to benefits
under certain collectively bargained plans) is amended by
striking ``the greater of $68,212 or one-half the amount
otherwise applicable for such year under paragraph (1)(A) for
`$90,000' '' and inserting ``one-half the amount otherwise
applicable for such year under paragraph (1)(A) for
`$160,000' ''.
(2) Limit reduced when benefit begins before age 62.--
Subparagraph (C) of section 415(b)(2) is amended by striking
``the social security retirement age'' each place it appears
in the heading and text and inserting ``age 62'' and by
striking the second sentence.
(3) Limit increased when benefit begins after age 65.--
Subparagraph (D) of section 415(b)(2) is amended by striking
``the social security retirement age'' each place it appears
in the heading and text and inserting ``age 65''.
(4) Cost-of-living adjustments.--Subsection (d) of section
415 (related to cost-of-living adjustments) is amended--
(A) by striking ``$90,000'' in paragraph (1)(A) and
inserting ``$160,000''; and
(B) in paragraph (3)(A)--
(i) by striking ``$90,000'' in the heading and inserting
``$160,000''; and
(ii) by striking ``October 1, 1986'' and inserting ``July
1, 2001''.
(5) Conforming amendments.--
(A) Section 415(b)(2) is amended by striking subparagraph
(F).
(B) Section 415(b)(9) is amended to read as follows:
``(9) Special rule for commercial airline pilots.--In the
case of any participant who is a commercial airline pilot,
if, as of the time of the participant's retirement,
regulations prescribed by the Federal Aviation Administration
require an individual to separate from service as a
commercial airline pilot after attaining any age occurring on
or after age 60 and before age 62, paragraph (2)(C) shall be
applied by substituting such age for age 62.''.
(C) Section 415(b)(10)(C)(i) is amended by striking
``applied without regard to paragraph (2)(F)''.
(b) Qualified Trusts.--
(1) Compensation limit.--Sections 401(a)(17), 404(l),
408(k), and 505(b)(7) are each amended by striking
``$150,000'' each place it appears and inserting
``$200,000''.
(2) Base period and rounding of cost-of-living
adjustment.--Subparagraph (B) of section 401(a)(17) is
amended--
(A) by striking ``October 1, 1993'' and inserting ``July 1,
2001''; and
(B) by striking ``$10,000'' both places it appears and
inserting ``$5,000''.
(c) Elective Deferrals.--
(1) In general.--Paragraph (1) of section 402(g) (relating
to limitation on exclusion for elective deferrals) is amended
to read as follows:
``(1) In general.--
``(A) Limitation.--Notwithstanding subsections (e)(3) and
(h)(1)(B), the elective deferrals of any individual for any
taxable year shall be included in such individual's gross
income to the extent the amount of such deferrals for the
taxable year exceeds the applicable dollar amount.
``(B) Applicable dollar amount.--For purposes of
subparagraph (A), the applicable dollar amount shall be the
amount determined in accordance with the following table:
[[Page S3729]]
``For taxable years beginning in calendar The applicable dollar amount:
2002.....................................................$11,000
2003.....................................................$12,000
2004.....................................................$13,000
2005.....................................................$14,000
2006 or thereafter....................................$15,000.''.
(2) Cost-of-living adjustment.--Paragraph (5) of section
402(g) is amended to read as follows:
``(5) Cost-of-living adjustment.--In the case of taxable
years beginning after December 31, 2006, the Secretary shall
adjust the $15,000 amount under paragraph (1)(B) at the same
time and in the same manner as under section 415(d), except
that the base period shall be the calendar quarter beginning
July 1, 2005, and any increase under this paragraph which is
not a multiple of $500 shall be rounded to the next lowest
multiple of $500.''.
(3) Conforming amendments.--
(A) Section 402(g) (relating to limitation on exclusion for
elective deferrals), as amended by paragraphs (1) and (2), is
further amended by striking paragraph (4) and redesignating
paragraphs (5), (6), (7), (8), and (9) as paragraphs (4),
(5), (6), (7), and (8), respectively.
(B) Paragraph (2) of section 457(c) is amended by striking
``402(g)(8)(A)(iii)'' and inserting ``402(g)(7)(A)(iii)''.
(C) Clause (iii) of section 501(c)(18)(D) is amended by
striking ``(other than paragraph (4) thereof)''.
(d) Deferred Compensation Plans of State and Local
Governments and Tax-Exempt Organizations.--
(1) In general.--Section 457 (relating to deferred
compensation plans of State and local governments and tax-
exempt organizations) is amended--
(A) in subsections (b)(2)(A) and (c)(1) by striking
``$7,500'' each place it appears and inserting ``the
applicable dollar amount''; and
(B) in subsection (b)(3)(A) by striking ``$15,000'' and
inserting ``twice the dollar amount in effect under
subsection (b)(2)(A)''.
(2) Applicable dollar amount; cost-of-living adjustment.--
Paragraph (15) of section 457(e) is amended to read as
follows:
``(15) Applicable dollar amount.--
``(A) In general.--The applicable dollar amount shall be
the amount determined in accordance with the following table:
``For taxable years beginning in calendar The applicable dollar amount:
2002.....................................................$11,000
2003.....................................................$12,000
2004.....................................................$13,000
2005.....................................................$14,000
2006 or thereafter.......................................$15,000.
``(B) Cost-of-living adjustments.--In the case of taxable
years beginning after December 31, 2006, the Secretary shall
adjust the $15,000 amount under subparagraph (A) at the same
time and in the same manner as under section 415(d), except
that the base period shall be the calendar quarter beginning
July 1, 2005, and any increase under this paragraph which is
not a multiple of $500 shall be rounded to the next lowest
multiple of $500.''.
(e) Simple Retirement Accounts.--
(1) Limitation.--Clause (ii) of section 408(p)(2)(A)
(relating to general rule for qualified salary reduction
arrangement) is amended by striking ``$6,000'' and inserting
``the applicable dollar amount''.
(2) Applicable dollar amount.--Subparagraph (E) of
408(p)(2) is amended to read as follows:
``(E) Applicable dollar amount; cost-of-living
adjustment.--
``(i) In general.--For purposes of subparagraph (A)(ii),
the applicable dollar amount shall be the amount determined
in accordance with the following table:
``For taxable years beginning in calendar The applicable dollar amount:
2002....................................................$7,000
2003....................................................$8,000
2004....................................................$9,000
2005 or thereafter.....................................$10,000.
``(ii) Cost-of-living adjustment.--In the case of a year
beginning after December 31, 2005, the Secretary shall adjust
the $10,000 amount under clause (i) at the same time and in
the same manner as under section 415(d), except that the base
period taken into account shall be the calendar quarter
beginning July 1, 2004, and any increase under this
subparagraph which is not a multiple of $500 shall be rounded
to the next lower multiple of $500.''.
(3) Conforming amendments.--
(A) Subclause (I) of section 401(k)(11)(B)(i) is amended by
striking ``$6,000'' and inserting ``the amount in effect
under section 408(p)(2)(A)(ii)''.
(B) Section 401(k)(11) is amended by striking subparagraph
(E).
(f) Rounding Rule Relating to Defined Benefit Plans and
Defined Contribution Plans.--Paragraph (4) of section 415(d)
is amended to read as follows:
``(4) Rounding.--
``(A) $160,000 amount.--Any increase under subparagraph (A)
of paragraph (1) which is not a multiple of $5,000 shall be
rounded to the next lowest multiple of $5,000.
``(B) $30,000 amount.--Any increase under subparagraph (C)
of paragraph (1) which is not a multiple of $1,000 shall be
rounded to the next lowest multiple of $1,000.''.
(g) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2001.
SEC. 202. PLAN LOANS FOR SUBCHAPTER S OWNERS, PARTNERS, AND
SOLE PROPRIETORS.
(a) In General.--Subparagraph (B) of section 4975(f)(6)
(relating to exemptions not to apply to certain transactions)
is amended by adding at the end the following new clause:
``(iii) Loan exception.--For purposes of subparagraph
(A)(i), the term `owner-employee' shall only include a person
described in subclause (II) or (III) of clause (i).''.
(b) Amendment of ERISA.--Section 408(d)(2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1108(d)(2))
is amended by adding at the end the following new
subparagraph:
``(C) For purposes of paragraph (1)(A), the term `owner-
employee' shall only include a person described in clause
(ii) or (iii) of subparagraph (A).''.
(c) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2001.
SEC. 203. MODIFICATION OF TOP-HEAVY RULES.
(a) Simplification of Definition of Key Employee.--
(1) In general.--Section 416(i)(1)(A) (defining key
employee) is amended--
(A) by striking ``or any of the 4 preceding plan years'' in
the matter preceding clause (i);
(B) by striking clause (i) and inserting the following:
``(i) an officer of the employer having an annual
compensation greater than the amount in effect under section
414(q)(1)(B)(i) for such plan year,'';
(C) by striking clause (ii) and redesignating clauses (iii)
and (iv) as clauses (ii) and (iii), respectively;
(D) by striking the second sentence in the matter following
clause (iii), as redesignated by subparagraph (C); and
(E) by adding at the end the following: ``For purposes of
this subparagraph, in the case of an employee who is not
employed during the preceding plan year or is employed for a
portion of such year, such employee shall be treated as a key
employee if it can be reasonably anticipated that such
employee will be described in 1 of the preceding clauses for
the current plan year.''.
(2) Conforming amendment.--Section 416(i)(1)(B)(iii) is
amended by striking ``and subparagraph (A)(ii)''.
(b) Matching Contributions Taken Into Account for Minimum
Contribution Requirements.--Section 416(c)(2)(A) (relating to
defined contribution plans) is amended by adding at the end
the following: ``Employer matching contributions (as defined
in section 401(m)(4)(A)) shall be taken into account for
purposes of this subparagraph.''.
(c) Distributions During Last Year Before Determination
Date Taken Into Account.--
(1) In general.--Paragraph (3) of section 416(g) is amended
to read as follows:
``(3) Distributions during last year before determination
date taken into account.--
``(A) In general.--For purposes of determining--
``(i) the present value of the cumulative accrued benefit
for any employee, or
``(ii) the amount of the account of any employee,
such present value or amount shall be increased by the
aggregate distributions made with respect to such employee
under the plan during the 1-year period ending on the
determination date. The preceding sentence shall also apply
to distributions under a terminated plan which if it had not
been terminated would have been required to be included in an
aggregation group.
``(B) 5-year period in case of in-service distribution.--In
the case of any distribution made for a reason other than
separation from service, death, or disability, subparagraph
(A) shall be applied by substituting `5-year period' for `1-
year period'.''.
(2) Benefits not taken into account.--Subparagraph (E) of
section 416(g)(4) is amended--
(A) by striking ``last 5 years'' in the heading and
inserting ``last year before determination date''; and
(B) by striking ``5-year period'' and inserting ``1-year
period''.
(d) Frozen Plan Exempt From Minimum Benefit Requirement.--
Subparagraph (C) of section 416(c)(1) (relating to defined
benefit plans) is amended--
(A) by striking ``clause (ii)'' in clause (i) and inserting
``clause (ii) or (iii)''; and
(B) by adding at the end the following:
``(iii) Exception for frozen plan.--For purposes of
determining an employee's years of service with the employer,
any service with the employer shall be disregarded to the
extent that such service occurs during a plan year when the
plan benefits (within the meaning of section 410(b)) no key
employee or former key employee.''.
(e) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2001.
SEC. 204. ELECTIVE DEFERRALS NOT TAKEN INTO ACCOUNT FOR
PURPOSES OF DEDUCTION LIMITS.
(a) In General.--Section 404 (relating to deduction for
contributions of an employer to an employees' trust or
annuity plan and compensation under a deferred payment plan)
is amended by adding at the end the following new subsection:
``(n) Elective Deferrals Not Taken Into Account for
Purposes of Deduction Limits.--Elective deferrals (as defined
in section
[[Page S3730]]
402(g)(3)) shall not be subject to any limitation contained
in paragraph (3), (7), or (9) of subsection (a), and such
elective deferrals shall not be taken into account in
applying any such limitation to any other contributions.''.
(b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2001.
SEC. 205. REPEAL OF COORDINATION REQUIREMENTS FOR DEFERRED
COMPENSATION PLANS OF STATE AND LOCAL
GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS.
(a) In General.--Subsection (c) of section 457 (relating to
deferred compensation plans of State and local governments
and tax-exempt organizations), as amended by section 201, is
amended to read as follows:
``(c) Limitation.--The maximum amount of the compensation
of any one individual which may be deferred under subsection
(a) during any taxable year shall not exceed the amount in
effect under subsection (b)(2)(A) (as modified by any
adjustment provided under subsection (b)(3)).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to years beginning after December 31, 2001.
SEC. 206. DEDUCTION LIMITS.
(a) Modification of Limits.--
(1) Stock bonus and profit sharing trusts.--
(A) In general.--Subclause (I) of section 404(a)(3)(A)(i)
(relating to stock bonus and profit sharing trusts) is
amended by striking ``15 percent'' and inserting ``25
percent''.
(B) Conforming amendment.--Subparagraph (C) of section
404(h)(1) is amended by striking ``15 percent'' each place it
appears and inserting ``25 percent''.
(2) Defined contribution plans.--
(A) In general.--Clause (v) of section 404(a)(3)(A)
(relating to stock bonus and profit sharing trusts) is
amended to read as follows:
``(v) Defined contribution plans subject to the funding
standards.--Except as provided by the Secretary, a defined
contribution plan which is subject to the funding standards
of section 412 shall be treated in the same manner as a stock
bonus or profit-sharing plan for purposes of this
subparagraph.''
(B) Conforming amendments.--
(i) Section 404(a)(1)(A) is amended by inserting ``(other
than a trust to which paragraph (3) applies)'' after
``pension trust''.
(ii) Section 404(h)(2) is amended by striking ``stock bonus
or profit-sharing trust'' and inserting ``trust subject to
subsection (a)(3)(A)''.
(iii) The heading of section 404(h)(2) is amended by
striking ``stock bonus and profit-sharing trust'' and
inserting ``certain trusts''.
(b) Compensation.--
(1) In general.--Section 404(a) (relating to general rule)
is amended by adding at the end the following:
``(12) Definition of compensation.--For purposes of
paragraphs (3), (7), (8), and (9), the term `compensation'
shall include amounts treated as `participant's compensation'
under subparagraph (C) or (D) of section 415(c)(3).''.
(2) Conforming amendments.--
(A) Subparagraph (B) of section 404(a)(3) is amended by
striking the last sentence thereof.
(B) Clause (i) of section 4972(c)(6)(B) is amended by
striking ``(within the meaning of section 404(a))'' and
inserting ``(within the meaning of section 404(a) and as
adjusted under section 404(a)(12))''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2001.
SEC. 207. OPTION TO TREAT ELECTIVE DEFERRALS AS AFTER-TAX
ROTH CONTRIBUTIONS.
(a) In General.--Subpart A of part I of subchapter D of
chapter 1 (relating to deferred compensation, etc.) is
amended by inserting after section 402 the following new
section:
``SEC. 402A. OPTIONAL TREATMENT OF ELECTIVE DEFERRALS AS ROTH
CONTRIBUTIONS.
``(a) General Rule.--If an applicable retirement plan
includes a qualified Roth contribution program--
``(1) any designated Roth contribution made by an employee
pursuant to the program shall be treated as an elective
deferral for purposes of this chapter, except that such
contribution shall not be excludable from gross income, and
``(2) such plan (and any arrangement which is part of such
plan) shall not be treated as failing to meet any requirement
of this chapter solely by reason of including such program.
``(b) Qualified Roth Contribution Program.--For purposes of
this section--
``(1) In general.--The term `qualified Roth contribution
program' means a program under which an employee may elect to
make designated Roth contributions in lieu of all or a
portion of elective deferrals the employee is otherwise
eligible to make under the applicable retirement plan.
``(2) Separate accounting required.--A program shall not be
treated as a qualified Roth contribution program unless the
applicable retirement plan--
``(A) establishes separate accounts (`designated Roth
accounts') for the designated Roth contributions of each
employee and any earnings properly allocable to the
contributions, and
``(B) maintains separate recordkeeping with respect to each
account.
``(c) Definitions and Rules Relating to Designated Roth
Contributions.--For purposes of this section--
``(1) Designated Roth contribution.--The term `designated
Roth contribution' means any elective deferral which--
``(A) is excludable from gross income of an employee
without regard to this section, and
``(B) the employee designates (at such time and in such
manner as the Secretary may prescribe) as not being so
excludable.
``(2) Designation limits.--The amount of elective deferrals
which an employee may designate under paragraph (1) shall not
exceed the excess (if any) of--
``(A) the maximum amount of elective deferrals excludable
from gross income of the employee for the taxable year
(without regard to this section), over
``(B) the aggregate amount of elective deferrals of the
employee for the taxable year which the employee does not
designate under paragraph (1).
``(3) Rollover contributions.--
``(A) In general.--A rollover contribution of any payment
or distribution from a designated Roth account which is
otherwise allowable under this chapter may be made only if
the contribution is to--
``(i) another designated Roth account of the individual
from whose account the payment or distribution was made, or
``(ii) a Roth IRA of such individual.
``(B) Coordination with limit.--Any rollover contribution
to a designated Roth account under subparagraph (A) shall not
be taken into account for purposes of paragraph (1).
``(d) Distribution Rules.--For purposes of this title--
``(1) Exclusion.--Any qualified distribution from a
designated Roth account shall not be includible in gross
income.
``(2) Qualified distribution.--For purposes of this
subsection--
``(A) In general.--The term `qualified distribution' has
the meaning given such term by section 408A(d)(2)(A) (without
regard to clause (iv) thereof).
``(B) Distributions within nonexclusion period.--A payment
or distribution from a designated Roth account shall not be
treated as a qualified distribution if such payment or
distribution is made within the 5-taxable-year period
beginning with the earlier of--
``(i) the first taxable year for which the individual made
a designated Roth contribution to any designated Roth account
established for such individual under the same applicable
retirement plan, or
``(ii) if a rollover contribution was made to such
designated Roth account from a designated Roth account
previously established for such individual under another
applicable retirement plan, the first taxable year for which
the individual made a designated Roth contribution to such
previously established account.
``(C) Distributions of excess deferrals and contributions
and earnings thereon.--The term `qualified distribution'
shall not include any distribution of any excess deferral
under section 402(g)(2) or any excess contribution under
section 401(k)(8), and any income on the excess deferral or
contribution.
``(3) Treatment of distributions of certain excess
deferrals.--Notwithstanding section 72, if any excess
deferral under section 402(g)(2) attributable to a designated
Roth contribution is not distributed on or before the 1st
April 15 following the close of the taxable year in which
such excess deferral is made, the amount of such excess
deferral shall--
``(A) not be treated as investment in the contract, and
``(B) be included in gross income for the taxable year in
which such excess is distributed.
``(4) Aggregation rules.--Section 72 shall be applied
separately with respect to distributions and payments from a
designated Roth account and other distributions and payments
from the plan.
``(e) Other Definitions.--For purposes of this section--
``(1) Applicable retirement plan.--The term `applicable
retirement plan' means--
``(A) an employees' trust described in section 401(a) which
is exempt from tax under section 501(a), and
``(B) a plan under which amounts are contributed by an
individual's employer for an annuity contract described in
section 403(b).
``(2) Elective deferral.--The term `elective deferral'
means any elective deferral described in subparagraph (A) or
(C) of section 402(g)(3).''.
(b) Excess Deferrals.--Section 402(g) (relating to
limitation on exclusion for elective deferrals) is amended--
(1) by adding at the end of paragraph (1)(A) (as added by
section 201(c)(1)) the following new sentence: ``The
preceding sentence shall not apply the portion of such excess
as does not exceed the designated Roth contributions of the
individual for the taxable year.''; and
(2) by inserting ``(or would be included but for the last
sentence thereof)'' after ``paragraph (1)'' in paragraph
(2)(A).
(c) Rollovers.--Subparagraph (B) of section 402(c)(8) is
amended by adding at the end the following:
``If any portion of an eligible rollover distribution is
attributable to payments or distributions from a designated
Roth account (as defined in section 402A), an eligible
retirement plan with respect to such portion shall include
only another designated Roth account and a Roth IRA.''.
[[Page S3731]]
(d) Reporting Requirements.--
(1) W-2 information.--Section 6051(a)(8) is amended by
inserting ``, including the amount of designated Roth
contributions (as defined in section 402A)'' before the comma
at the end.
(2) Information.--Section 6047 is amended by redesignating
subsection (f) as subsection (g) and by inserting after
subsection (e) the following new subsection:
``(f) Designated Roth Contributions.--The Secretary shall
require the plan administrator of each applicable retirement
plan (as defined in section 402A) to make such returns and
reports regarding designated Roth contributions (as defined
in section 402A) to the Secretary, participants and
beneficiaries of the plan, and such other persons as the
Secretary may prescribe.''.
(e) Conforming Amendments.--
(1) Section 408A(e) is amended by adding after the first
sentence the following new sentence: ``Such term includes a
rollover contribution described in section 402A(c)(3)(A).''.
(2) The table of sections for subpart A of part I of
subchapter D of chapter 1 is amended by inserting after the
item relating to section 402 the following new item:
``Sec. 402A. Optional treatment of elective deferrals as Roth
contributions.''.
(f) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 208. NONREFUNDABLE CREDIT TO CERTAIN INDIVIDUALS FOR
ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS.
(a) In General.--Subpart A of part IV of subchapter A of
chapter 1 (relating to nonrefundable personal credits) is
amended by inserting after section 25A the following new
section:
``SEC. 25B. ELECTIVE DEFERRALS AND IRA CONTRIBUTIONS BY
CERTAIN INDIVIDUALS.
``(a) Allowance of Credit.--In the case of an eligible
individual, there shall be allowed as a credit against the
tax imposed by this subtitle for the taxable year an amount
equal to the applicable percentage of so much of the
qualified retirement savings contributions of the eligible
individual for the taxable year as do not exceed $2,000.
``(b) Applicable Percentage.--For purposes of this section,
the applicable percentage is the percentage determined in
accordance with the following table:
------------------------------------------------------------------------
Adjusted Gross Income
-------------------------------------------------------------
Joint return Head of a All other cases Applicable
--------------------- household -------------------- percentage
--------------------
Over Not over Over Not over Over Not over
------------------------------------------------------------------------
$0 $30,000 $0 $22,500 $0 $15,000 50
30,000 32,500 22,500 24,375 15,000 16,250 20
32,500 50,000 24,375 37,500 16,250 25,000 10
50,000 ......... 37,500 ........ 25,000 ........ 0
------------------------------------------------------------------------
``(c) Eligible Individual.--For purposes of this section--
``(1) In general.--The term `eligible individual' means any
individual if such individual has attained the age of 18 as
of the close of the taxable year.
``(2) Dependents and full-time students not eligible.--The
term `eligible individual' shall not include--
``(A) any individual with respect to whom a deduction under
section 151 is allowed to another taxpayer for a taxable year
beginning in the calendar year in which such individual's
taxable year begins, and
``(B) any individual who is a student (as defined in
section 151(c)(4)).
``(d) Qualified Retirement Savings Contributions.--For
purposes of this section--
``(1) In general.--The term `qualified retirement savings
contributions' means, with respect to any taxable year, the
sum of--
``(A) the amount of the qualified retirement contributions
(as defined in section 219(e)) made by the eligible
individual,
``(B) the amount of--
``(i) any elective deferrals (as defined in section
402(g)(3)) of such individual, and
``(ii) any elective deferral of compensation by such
individual under an eligible deferred compensation plan (as
defined in section 457(b)) of an eligible employer described
in section 457(e)(1)(A), and
``(C) the amount of voluntary employee contributions by
such individual to any qualified retirement plan (as defined
in section 4974(c)).
``(2) Reduction for certain distributions.--
``(A) In general.--The qualified retirement savings
contributions determined under paragraph (1) shall be reduced
(but not below zero) by the sum of--
``(i) any distribution from a qualified retirement plan (as
defined in section 4974(c)), or from an eligible deferred
compensation plan (as defined in section 457(b)), received by
the individual during the testing period which is includible
in gross income, and
``(ii) any distribution from a Roth IRA received by the
individual during the testing period which is not a qualified
rollover contribution (as defined in section 408A(e)) to a
Roth IRA.
``(B) Testing period.--For purposes of subparagraph (A),
the testing period, with respect to a taxable year, is the
period which includes--
``(i) such taxable year,
``(ii) the 2 preceding taxable years, and
``(iii) the period after such taxable year and before the
due date (including extensions) for filing the return of tax
for such taxable year.
``(C) Excepted distributions.--There shall not be taken
into account under subparagraph (A)--
``(i) any distribution referred to in section 72(p),
401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4), and
``(ii) any distribution to which section 408A(d)(3)
applies.
``(D) Treatment of distributions received by spouse of
individual.--For purposes of determining distributions
received by an individual under subparagraph (A) for any
taxable year, any distribution received by the spouse of such
individual shall be treated as received by such individual if
such individual and spouse file a joint return for such
taxable year and for the taxable year during which the spouse
receives the distribution.
``(e) Adjusted Gross Income.--For purposes of this section,
adjusted gross income shall be determined without regard to
sections 911, 931, and 933.
``(f) Investment in the Contract.--Notwithstanding any
other provision of law, a qualified retirement savings
contribution shall not fail to be included in determining the
investment in the contract for purposes of section 72 by
reason of the credit under this section.''
(b) Credit Allowed Against Regular Tax and Alternative
Minimum Tax.--
(1) In general.--Subsection (a) of section 26 is amended by
inserting ``(other than the credit allowed by section 25B)''
after ``credits allowed by this subpart''.
(2) Conforming amendment.--Section 25B, as added by
subsection (a), is amended by inserting after subsection (f)
the following new subsection:
``(g) Limitation Based on Amount of Tax.--The aggregate
credit allowed by this section for the taxable year shall not
exceed the sum of--
``(1) the taxpayer's regular tax liability for the taxable
year reduced by the sum of the credits allowed by sections
21, 22, 23, 24, 25, and 25A, plus
``(2) the tax imposed by section 55 for such taxable
year.''
(c) Annual Report.--The Comptroller General of the United
States shall submit a report annually to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate regarding the number of
taxpayers receiving the credit allowed under section 25B of
the Internal Revenue Code of 1986, as added by subsection
(a).
(d) Conforming Amendment.--The table of sections for
subpart A of part IV of subchapter A of chapter 1 is amended
by inserting after the item relating to section 25A the
following new item:
``Sec. 25B. Elective deferrals and IRA contributions by certain
individuals.''
(e) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001, and before January 1, 2007.
SEC. 209. CREDIT FOR QUALIFIED PENSION PLAN CONTRIBUTIONS OF
SMALL EMPLOYERS.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits) is amended
by adding at the end the following new section:
``SEC. 45E. SMALL EMPLOYER PENSION PLAN CONTRIBUTIONS.
``(a) General Rule.--For purposes of section 38, in the
case of an eligible employer, the small employer pension plan
contribution credit determined under this section for any
taxable year is an amount equal to 50 percent of the amount
which would (but for subsection (f)(1)) be allowed as a
deduction under section 404 for such taxable year for
[[Page S3732]]
qualified employer contributions made to any qualified
retirement plan on behalf of any employee who is not a highly
compensated employee.
``(b) Credit Limited to 3 Years.--The credit allowable by
this section shall be allowed only with respect to the period
of 3 taxable years beginning with the first taxable year for
which a credit is allowable with respect to a plan under this
section.
``(c) Qualified Employer Contribution.--For purposes of
this section--
``(1) Defined contribution plans.--In the case of a defined
contribution plan, the term `qualified employer contribution'
means the amount of nonelective and matching contributions to
the plan made by the employer on behalf of any employee who
is not a highly compensated employee to the extent such
amount does not exceed 3 percent of such employee's
compensation from the employer for the year.
``(2) Defined benefit plans.--In the case of a defined
benefit plan, the term `qualified employer contribution'
means the amount of employer contributions to the plan made
on behalf of any employee who is not a highly compensated
employee to the extent that the accrued benefit of such
employee derived from employer contributions for the year
does not exceed the equivalent (as determined under
regulations prescribed by the Secretary and without regard to
contributions and benefits under the Social Security Act) of
3 percent of such employee's compensation from the employer
for the year.
``(d) Qualified Retirement Plan.--
``(1) In general.--The term `qualified retirement plan'
means any plan described in section 401(a) which includes a
trust exempt from tax under section 501(a) if the plan
meets--
``(A) the contribution requirements of paragraph (2),
``(B) the vesting requirements of paragraph (3), and
``(C) the distribution requirements of paragraph (4).
``(2) Contribution requirements.--
``(A) In general.--The requirements of this paragraph are
met if, under the plan--
``(i) the employer is required to make nonelective
contributions of at least 1 percent of compensation (or the
equivalent thereof in the case of a defined benefit plan) for
each employee who is not a highly compensated employee who is
eligible to participate in the plan, and
``(ii) allocations of nonelective employer contributions
are either in equal dollar amounts for all employees covered
by the plan or bear a uniform relationship to the total
compensation, or the basic or regular rate of compensation,
of the employees covered by the plan.
``(B) Compensation limitation.--The compensation taken into
account under subparagraph (A) for any year shall not exceed
the limitation in effect for such year under section
401(a)(17).
``(3) Vesting requirements.--The requirements of this
paragraph are met if the plan satisfies the requirements of
subparagraph (A) or (B).
``(A) 3-year vesting.--A plan satisfies the requirements of
this subparagraph if an employee who has completed at least 3
years of service has a nonforfeitable right to 100 percent of
the employee's accrued benefit derived from employer
contributions.
``(B) 5-year graded vesting.--A plan satisfies the
requirements of this subparagraph if an employee has a
nonforfeitable right to a percentage of the employee's
accrued benefit derived from employer contributions
determined under the following table:
``Years of service: The nonforfeitable percentage is:
1.............................................................20 ....
2.............................................................40 ....
3.............................................................60 ....
4.............................................................80 ....
5............................................................100.....
``(4) Distribution requirements.--In the case of a profit-
sharing or stock bonus plan, the requirements of this
paragraph are met if, under the plan, qualified employer
contributions are distributable only as provided in section
401(k)(2)(B).
``(e) Other Definitions.--For purposes of this section--
``(1) Eligible employer.--
``(A) In general.--The term `eligible employer' means, with
respect to any year, an employer which has no more than 50
employees who received at least $5,000 of compensation from
the employer for the preceding year.
``(B) Requirement for new qualified employer plans.--Such
term shall not include an employer if, during the 3-taxable
year period immediately preceding the 1st taxable year for
which the credit under this section is otherwise allowable
for a qualified employer plan of the employer, the employer
or any member of any controlled group including the employer
(or any predecessor of either) established or maintained a
qualified employer plan with respect to which contributions
were made, or benefits were accrued, for substantially the
same employees as are in the qualified employer plan.
``(2) Highly compensated employee.--The term `highly
compensated employee' has the meaning given such term by
section 414(q) (determined without regard to section
414(q)(1)(B)(ii)).
``(f) Special Rules.--
``(1) Disallowance of deduction.--No deduction shall be
allowed for that portion of the qualified employer
contributions paid or incurred for the taxable year which is
equal to the credit determined under subsection (a).
``(2) Election not to claim credit.--This section shall not
apply to a taxpayer for any taxable year if such taxpayer
elects to have this section not apply for such taxable year.
``(3) Aggregation rules.--All persons treated as a single
employer under subsection (a) or (b) of section 52, or
subsection (n) or (o) of section 414, shall be treated as one
person. All eligible employer plans shall be treated as 1
eligible employer plan.
``(g) Recapture of Credit on Forfeited Contributions.--
``(1) In general.--Except as provided in paragraph (2), if
any accrued benefit which is forfeitable by reason of
subsection (d)(3) is forfeited, the employer's tax imposed by
this chapter for the taxable year in which the forfeiture
occurs shall be increased by 35 percent of the employer
contributions from which such benefit is derived to the
extent such contributions were taken into account in
determining the credit under this section.
``(2) Reallocated contributions.--Paragraph (1) shall not
apply to any contribution which is reallocated by the
employer under the plan to employees who are not highly
compensated employees.''.
(b) Credit Allowed as Part of General Business Credit.--
Section 38(b) (defining current year business credit) is
amended by striking ``plus'' at the end of paragraph (12), by
striking the period at the end of paragraph (13) and
inserting ``, plus'', and by adding at the end the following
new paragraph:
``(14) in the case of an eligible employer (as defined in
section 45E(e)), the small employer pension plan contribution
credit determined under section 45E(a).''
(c) Conforming Amendments.--
(1) Section 39(d) is amended by adding at the end the
following new paragraph:
``(10) No carryback of small employer pension plan
contribution credit before january 1, 2002.--No portion of
the unused business credit for any taxable year which is
attributable to the small employer pension plan contribution
credit determined under section 45E may be carried back to a
taxable year beginning before January 1, 2002.''
(2) Subsection (c) of section 196 is amended by striking
``and'' at the end of paragraph (8), by striking the period
at the end of paragraph (9) and inserting ``, and'', and by
adding at the end the following new paragraph:
``(10) the small employer pension plan contribution credit
determined under section 45E(a).''
(3) The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:
``Sec. 45E. Small employer pension plan contributions.''
(d) Effective Date.--The amendments made by this section
shall apply to contributions paid or incurred in taxable
years beginning after December 31, 2001.
SEC. 210. CREDIT FOR PENSION PLAN STARTUP COSTS OF SMALL
EMPLOYERS.
(a) In General.--Subpart D of part IV of subchapter A of
chapter 1 (relating to business related credits), as amended
by section 209, is amended by adding at the end the following
new section:
``SEC. 45F. SMALL EMPLOYER PENSION PLAN STARTUP COSTS.
``(a) General Rule.--For purposes of section 38, in the
case of an eligible employer, the small employer pension plan
startup cost credit determined under this section for any
taxable year is an amount equal to 50 percent of the
qualified startup costs paid or incurred by the taxpayer
during the taxable year.
``(b) Dollar Limitation.--The amount of the credit
determined under this section for any taxable year shall not
exceed--
``(1) $500 for the first credit year and each of the 2
taxable years immediately following the first credit year,
and
``(2) zero for any other taxable year.
``(c) Eligible Employer.--For purposes of this section--
``(1) In general.--The term `eligible employer' has the
meaning given such term by section 408(p)(2)(C)(i).
``(2) Requirement for new qualified employer plans.--Such
term shall not include an employer if, during the 3-taxable
year period immediately preceding the 1st taxable year for
which the credit under this section is otherwise allowable
for a qualified employer plan of the employer, the employer
or any member of any controlled group including the employer
(or any predecessor of either) established or maintained a
qualified employer plan with respect to which contributions
were made, or benefits were accrued, for substantially the
same employees as are in the qualified employer plan.
``(d) Other Definitions.--For purposes of this section--
``(1) Qualified startup costs.--
``(A) In general.--The term `qualified startup costs' means
any ordinary and necessary expenses of an eligible employer
which are paid or incurred in connection with--
``(i) the establishment or administration of an eligible
employer plan, or
``(ii) the retirement-related education of employees with
respect to such plan.
``(B) Plan must have at least 1 participant.--Such term
shall not include any expense in connection with a plan that
does
[[Page S3733]]
not have at least 1 employee eligible to participate who is
not a highly compensated employee.
``(2) Eligible employer plan.--The term `eligible employer
plan' means a qualified employer plan within the meaning of
section 4972(d).
``(3) First credit year.--The term `first credit year'
means--
``(A) the taxable year which includes the date that the
eligible employer plan to which such costs relate becomes
effective, or
``(B) at the election of the eligible employer, the taxable
year preceding the taxable year referred to in subparagraph
(A).
``(e) Special Rules.--For purposes of this section--
``(1) Aggregation rules.--All persons treated as a single
employer under subsection (a) or (b) of section 52, or
subsection (n) or (o) of section 414, shall be treated as one
person. All eligible employer plans shall be treated as 1
eligible employer plan.
``(2) Disallowance of deduction.--No deduction shall be
allowed for that portion of the qualified startup costs paid
or incurred for the taxable year which is equal to the credit
determined under subsection (a).
``(3) Election not to claim credit.--This section shall not
apply to a taxpayer for any taxable year if such taxpayer
elects to have this section not apply for such taxable
year.''
(b) Credit Allowed as Part of General Business Credit.--
Section 38(b) (defining current year business credit), as
amended by section 209, is amended by striking ``plus'' at
the end of paragraph (13), by striking the period at the end
of paragraph (14) and inserting ``, plus'', and by adding at
the end the following new paragraph:
``(15) in the case of an eligible employer (as defined in
section 45E(c)), the small employer pension plan startup cost
credit determined under section 45F(a).''
(c) Conforming Amendments.--
(1) Section 39(d), as amended by section 209(c), is amended
by adding at the end the following new paragraph:
``(11) No carryback of small employer pension plan startup
cost credit before january 1, 2002.--No portion of the unused
business credit for any taxable year which is attributable to
the small employer pension plan startup cost credit
determined under section 45F may be carried back to a taxable
year beginning before January 1, 2002.''
(2) Subsection (c) of section 196, as amended by section
209(c), is amended by striking ``and'' at the end of
paragraph (9), by striking the period at the end of paragraph
(10) and inserting ``, and'', and by adding at the end the
following new paragraph:
``(11) the small employer pension plan startup cost credit
determined under section 45F(a).''
(3) The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by section 209(c), is
amended by adding at the end the following new item:
``Sec. 45F. Small employer pension plan startup costs.''
(d) Effective Date.--The amendments made by this section
shall apply to costs paid or incurred in taxable years
beginning after December 31, 2001, with respect to qualified
employer plans established after such date.
SEC. 211. ELIMINATION OF USER FEE FOR REQUESTS TO IRS
REGARDING NEW PENSION PLANS.
(a) Elimination of Certain User Fees.--The Secretary of the
Treasury or the Secretary's delegate shall not require
payment of user fees under the program established under
section 10511 of the Revenue Act of 1987 for requests to the
Internal Revenue Service for ruling letters, opinion letters,
and determination letters or similar requests with respect to
the qualified status of a new pension benefit plan or any
trust which is part of the plan.
(b) New Pension Benefit Plan.--For purposes of this
section--
(1) In general.--The term ``new pension benefit plan''
means a pension, profit-sharing, stock bonus, annuity, or
employee stock ownership plan which is maintained by one or
more eligible employers if such employer (or any predecessor
employer) has not made a prior request described in
subsection (a) for such plan (or any predecessor plan).
(2) Eligible employer.--The term ``eligible employer''
shall not include an employer if, during the 3-taxable year
period immediately preceding the taxable year in which the
request is made, the employer or any member of any controlled
group including the employer (or any predecessor of either)
established or maintained a qualified employer plan with
respect to which contributions were made, or benefits were
accrued for service, for substantially the same employees as
are in the qualified employer plan.
(c) Effective Date.--The provisions of this section shall
apply with respect to requests made after December 31, 2001.
TITLE III--ENHANCING FAIRNESS FOR WOMEN
SEC. 301. CATCH-UP CONTRIBUTIONS FOR INDIVIDUALS AGE 50 OR
OVER.
(a) In General.--Section 414 (relating to definitions and
special rules) is amended by adding at the end the following
new subsection:
``(v) Catch-up Contributions for Individuals Age 50 or
Over.--
``(1) In general.--An applicable employer plan shall not be
treated as failing to meet any requirement of this title
solely because the plan permits an eligible participant to
make additional elective deferrals in any plan year.
``(2) Limitation on amount of additional deferrals.--
``(A) In general.--A plan shall not permit additional
elective deferrals under paragraph (1) for any year in an
amount greater than the lesser of--
``(i) the applicable percentage of the applicable dollar
amount for such elective deferrals for such year, or
``(ii) the excess (if any) of--
``(I) the participant's compensation (as defined in section
415(c)(3)) for the year, over
``(II) any other elective deferrals of the participant for
such year which are made without regard to this subsection.
``(B) Applicable percentage.--For purposes of this
paragraph, the applicable percentage shall be determined in
accordance with the following table:
``For taxable years beginning in: The applicable percentage is:
2002..............................................................10
2003..............................................................20
2004..............................................................30
2005..............................................................40
2006 and thereafter...............................................50.
``(3) Treatment of contributions.--In the case of any
contribution to a plan under paragraph (1)--
``(A) such contribution shall not, with respect to the year
in which the contribution is made--
``(i) be subject to any otherwise applicable limitation
contained in section 402(g), 402(h), 403(b), 404(a), 404(h),
408(k), 408(p), 415, or 457, or
``(ii) be taken into account in applying such limitations
to other contributions or benefits under such plan or any
other such plan, and
``(B) such plan shall not be treated as failing to meet the
requirements of section 401(a)(4), 401(a)(26), 401(k)(3),
401(k)(11), 401(k)(12), 401(m), 403(b)(12), 408(k), 408(p),
408B, 410(b), or 416 by reason of the making of (or the right
to make) such contribution.
``(4) Eligible participant.--For purposes of this
subsection, the term `eligible participant' means, with
respect to any plan year, a participant in a plan--
``(A) who has attained the age of 50 before the close of
the plan year, and
``(B) with respect to whom no other elective deferrals may
(without regard to this subsection) be made to the plan for
the plan year by reason of the application of any limitation
or other restriction described in paragraph (3) or comparable
limitation or restriction contained in the terms of the plan.
``(5) Other definitions and rules.--For purposes of this
subsection--
``(A) Applicable dollar amount.--The term `applicable
dollar amount' means, with respect to any year, the amount in
effect under section 402(g)(1)(B), 408(p)(2)(E)(i), or
457(e)(15)(A), whichever is applicable to an applicable
employer plan, for such year.
``(B) Applicable employer plan.--The term `applicable
employer plan' means--
``(i) an employees' trust described in section 401(a) which
is exempt from tax under section 501(a),
``(ii) a plan under which amounts are contributed by an
individual's employer for an annuity contract described in
section 403(b),
``(iii) an eligible deferred compensation plan under
section 457 of an eligible employer described in section
457(e)(1)(A), and
``(iv) an arrangement meeting the requirements of section
408 (k) or (p).
``(C) Elective deferral.--The term `elective deferral' has
the meaning given such term by subsection (u)(2)(C).
``(D) Exception for section 457 plans.--This subsection
shall not apply to an applicable employer plan described in
subparagraph (B)(iii) for any year to which section 457(b)(3)
applies.''.
(b) Effective Date.--The amendment made by this section
shall apply to contributions in taxable years beginning after
December 31, 2001.
SEC. 302. EQUITABLE TREATMENT FOR CONTRIBUTIONS OF EMPLOYEES
TO DEFINED CONTRIBUTION PLANS.
(a) Equitable Treatment.--
(1) In general.--Subparagraph (B) of section 415(c)(1)
(relating to limitation for defined contribution plans) is
amended by striking ``25 percent'' and inserting ``100
percent''.
(2) Application to section 403(b).--Section 403(b) is
amended--
(A) by striking ``the exclusion allowance for such taxable
year'' in paragraph (1) and inserting ``the applicable limit
under section 415'';
(B) by striking paragraph (2); and
(C) by inserting ``or any amount received by a former
employee after the fifth taxable year following the taxable
year in which such employee was terminated'' before the
period at the end of the second sentence of paragraph (3).
(3) Conforming amendments.--
(A) Subsection (f) of section 72 is amended by striking
``section 403(b)(2)(D)(iii))'' and inserting ``section
403(b)(2)(D)(iii), as in effect before the enactment of the
Retirement Security and Savings Act of 2001)''.
(B) Section 404(a)(10)(B) is amended by striking ``, the
exclusion allowance under section 403(b)(2),''.
(C) Section 415(a)(2) is amended by striking ``, and the
amount of the contribution for such portion shall reduce the
exclusion allowance as provided in section 403(b)(2)''.
(D) Section 415(c)(3) is amended by adding at the end the
following new subparagraph:
[[Page S3734]]
``(E) Annuity contracts.--In the case of an annuity
contract described in section 403(b), the term `participant's
compensation' means the participant's includible compensation
determined under section 403(b)(3).''.
(E) Section 415(c) is amended by striking paragraph (4).
(F) Section 415(c)(7) is amended to read as follows:
``(7) Certain contributions by church plans not treated as
exceeding limit.--
``(A) In general.--Notwithstanding any other provision of
this subsection, at the election of a participant who is an
employee of a church or a convention or association of
churches, including an organization described in section
414(e)(3)(B)(ii), contributions and other additions for an
annuity contract or retirement income account described in
section 403(b) with respect to such participant, when
expressed as an annual addition to such participant's
account, shall be treated as not exceeding the limitation of
paragraph (1) if such annual addition is not in excess of
$10,000.
``(B) $40,000 aggregate limitation.--The total amount of
additions with respect to any participant which may be taken
into account for purposes of this subparagraph for all years
may not exceed $40,000.
``(C) Annual addition.--For purposes of this paragraph, the
term `annual addition' has the meaning given such term by
paragraph (2).''.
(G) Subparagraph (B) of section 402(g)(7) (as redesignated
by section 201(c)(3)) is amended by inserting before the
period at the end the following: ``(as in effect before the
enactment of the Retirement Security and Savings Act of
2001)''.
(H) Section 664(g) is amended--
(i) in paragraph (3)(E) by striking ``limitations under
section 415(c)'' and inserting ``applicable limitation under
paragraph (7)'', and
(ii) by adding at the end the following new paragraph:
``(7) Applicable limitation.--
``(A) In general.--For purposes of paragraph (3)(E), the
applicable limitation under this paragraph with respect to a
participant is an amount equal to the lesser of--
``(i) $30,000, or
``(ii) 25 percent of the participant's compensation (as
defined in section 415(c)(3)).
``(B) Cost-of-living adjustment.--The Secretary shall
adjust annually the $30,000 amount under subparagraph (A)(i)
at the same time and in the same manner as under section
415(d), except that the base period shall be the calendar
quarter beginning October 1, 1993, and any increase under
this subparagraph which is not a multiple of $5,000 shall be
rounded to the next lowest multiple of $5,000.''.
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2001.
(b) Special Rules for Sections 403(b) and 408.--
(1) In general.--Subsection (k) of section 415 is amended
by adding at the end the following new paragraph:
``(4) Special rules for sections 403(b) and 408.--For
purposes of this section, any annuity contract described in
section 403(b) for the benefit of a participant shall be
treated as a defined contribution plan maintained by each
employer with respect to which the participant has the
control required under subsection (b) or (c) of section 414
(as modified by subsection (h)). For purposes of this
section, any contribution by an employer to a simplified
employee pension plan for an individual for a taxable year
shall be treated as an employer contribution to a defined
contribution plan for such individual for such year.''.
(2) Effective date.--
(A) In general.--The amendment made by paragraph (1) shall
apply to limitation years beginning after December 31, 2000.
(B) Exclusion allowance.--Effective for limitation years
beginning in 2001, in the case of any annuity contract
described in section 403(b) of the Internal Revenue Code of
1986, the amount of the contribution disqualified by reason
of section 415(g) of such Code shall reduce the exclusion
allowance as provided in section 403(b)(2) of such Code.
(3) Modification of 403(b) exclusion allowance to conform
to 415 modification.--The Secretary of the Treasury shall
modify the regulations regarding the exclusion allowance
under section 403(b)(2) of the Internal Revenue Code of 1986
to render void the requirement that contributions to a
defined benefit pension plan be treated as previously
excluded amounts for purposes of the exclusion allowance. For
taxable years beginning after December 31, 2000, such
regulations shall be applied as if such requirement were
void.
(c) Deferred Compensation Plans of State and Local
Governments and Tax-Exempt Organizations.--
(1) In general.--Subparagraph (B) of section 457(b)(2)
(relating to salary limitation on eligible deferred
compensation plans) is amended by striking ``33\1/3\
percent'' and inserting ``100 percent''.
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning after December 31, 2001.
SEC. 303. FASTER VESTING OF CERTAIN EMPLOYER MATCHING
CONTRIBUTIONS.
(a) In General.--Section 411(a) (relating to minimum
vesting standards) is amended--
(1) in paragraph (2), by striking ``A plan'' and inserting
``Except as provided in paragraph (12), a plan''; and
(2) by adding at the end the following:
``(12) Faster vesting for matching contributions.--In the
case of matching contributions (as defined in section
401(m)(4)(A)), paragraph (2) shall be applied--
``(A) by substituting `3 years' for `5 years' in
subparagraph (A), and
``(B) by substituting the following table for the table
contained in subparagraph (B):
``Years of service: The nonforfeitable percentage is:
2............................................................20
3............................................................40
4............................................................60
5............................................................80
6.........................................................100.''.
(b) Amendment of ERISA.--Section 203(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)) is
amended--
(1) in paragraph (2), by striking ``A plan'' and inserting
``Except as provided in paragraph (4), a plan'', and
(2) by adding at the end the following:
``(4) In the case of matching contributions (as defined in
section 401(m)(4)(A) of the Internal Revenue Code of 1986),
paragraph (2) shall be applied--
``(A) by substituting `3 years' for `5 years' in
subparagraph (A), and
``(B) by substituting the following table for the table
contained in subparagraph (B):
``Years of service: The nonforfeitable percentage is:
2.................................................................20
3.................................................................40
4.................................................................60
5.................................................................80
6.............................................................100.''.
(c) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to contributions
for plan years beginning after December 31, 2001.
(2) Collective bargaining agreements.--In the case of a
plan maintained pursuant to one or more collective bargaining
agreements between employee representatives and one or more
employers ratified by the date of the enactment of this Act,
the amendments made by this section shall not apply to
contributions on behalf of employees covered by any such
agreement for plan years beginning before the earlier of--
(A) the later of--
(i) the date on which the last of such collective
bargaining agreements terminates (determined without regard
to any extension thereof on or after such date of the
enactment); or
(ii) January 1, 2002; or
(B) January 1, 2006.
(3) Service required.--With respect to any plan, the
amendments made by this section shall not apply to any
employee before the date that such employee has 1 hour of
service under such plan in any plan year to which the
amendments made by this section apply.
SEC. 304. MINIMUM DISTRIBUTION RULES.
(a) Repeal of Rule Where Distributions Had Begun Before
Death Occurs.--
(1) In general.--Subparagraph (B) of section 401(a)(9) is
amended by striking clause (i) and redesignating clauses
(ii), (iii), and (iv) as clauses (i), (ii), and (iii),
respectively.
(2) Conforming changes.--
(A) Clause (i) of section 401(a)(9)(B) (as so redesignated)
is amended--
(i) by striking ``for other cases'' in the heading; and
(ii) by striking ``the distribution of the employee's
interest has begun in accordance with subparagraph (A)(ii)''
and inserting ``his entire interest has been distributed to
him''.
(B) Clause (ii) of section 401(a)(9)(B) (as so
redesignated) is amended by striking ``clause (ii)'' and
inserting ``clause (i)''.
(C) Clause (iii) of section 401(a)(9)(B) (as so
redesignated) is amended--
(i) by striking ``clause (iii)(I)'' and inserting ``clause
(ii)(I)'';
(ii) by striking ``clause (iii)(III)'' in subclause (I) and
inserting ``clause (ii)(III)'';
(iii) by striking ``the date on which the employee would
have attained age 70\1/2\,'' in subclause (I) and inserting
``April 1 of the calendar year following the calendar year in
which the spouse attains 70\1/2\,''; and
(iv) by striking ``the distributions to such spouse
begin,'' in subclause (II) and inserting ``his entire
interest has been distributed to him,''.
(3) Effective date.--
(A) In general.--Except as provided in subparagraph (B),
the amendments made by this subsection shall apply to years
beginning after December 31, 2001.
(B) Distributions to surviving spouse.--
(i) In general.--In the case of an employee described in
clause (ii), distributions to the surviving spouse of the
employee shall not be required to commence prior to the date
on which such distributions would have been required to begin
under section 401(a)(9)(B) of the Internal Revenue Code of
1986 (as in effect on the day before the date of the
enactment of this Act).
(ii) Certain employees.--An employee is described in this
clause if such employee dies before--
(I) the date of the enactment of this Act, and
(II) the required beginning date (within the meaning of
section 401(a)(9)(C) of the Internal Revenue Code of 1986) of
the employee.
(b) Reduction in Excise Tax.--
(1) In general.--Subsection (a) of section 4974 is amended
by striking ``50 percent'' and inserting ``10 percent''.
[[Page S3735]]
(2) Effective date.--The amendment made by this subsection
shall apply to years beginning after December 31, 2001.
SEC. 305. CLARIFICATION OF TAX TREATMENT OF DIVISION OF
SECTION 457 PLAN BENEFITS UPON DIVORCE.
(a) In General.--Section 414(p)(11) (relating to
application of rules to governmental and church plans) is
amended--
(1) by inserting ``or an eligible deferred compensation
plan (within the meaning of section 457(b))'' after
``subsection (e))''; and
(2) in the heading, by striking ``governmental and church
plans'' and inserting ``certain other plans''.
(b) Waiver of Certain Distribution Requirements.--Paragraph
(10) of section 414(p) is amended by striking ``and section
409(d)'' and inserting ``section 409(d), and section
457(d)''.
(c) Tax Treatment of Payments From a Section 457 Plan.--
Subsection (p) of section 414 is amended by redesignating
paragraph (12) as paragraph (13) and inserting after
paragraph (11) the following new paragraph:
``(12) Tax treatment of payments from a section 457 plan.--
If a distribution or payment from an eligible deferred
compensation plan described in section 457(b) is made
pursuant to a qualified domestic relations order, rules
similar to the rules of section 402(e)(1)(A) shall apply to
such distribution or payment.''.
(d) Effective Date.--
(1) In general.--The amendment made by subsection (c) shall
apply to transfers, distributions, and payments made after
December 31, 2001.
(2) Amendments relating to assignments in divorce, etc.,
proceedings.--The amendments made by subsections (a) and (b)
shall take effect on January 1, 2002, except that in the case
of a domestic relations order entered before such date, the
plan administrator--
(A) shall treat such order as a qualified domestic
relations order if such administrator is paying benefits
pursuant to such order on such date, and
(B) may treat any other such order entered before such date
as a qualified domestic relations order even if such order
does not meet the requirements of such amendments.
SEC. 306. PROVISIONS RELATING TO HARDSHIP DISTRIBUTIONS.
(a) Safe Harbor Relief.--
(1) In general.--The Secretary of the Treasury shall revise
the regulations relating to hardship distributions under
section 401(k)(2)(B)(i)(IV) of the Internal Revenue Code of
1986 to provide that the period an employee is prohibited
from making elective and employee contributions in order for
a distribution to be deemed necessary to satisfy financial
need shall be equal to 6 months.
(2) Effective date.--The revised regulations under this
subsection shall apply to years beginning after December 31,
2001.
(b) Hardship Distributions Not Treated as Eligible Rollover
Distributions.--
(1) Modification of definition of eligible rollover.--
Section 402(c)(4)(C) (relating to eligible rollover
distribution) is amended by striking ``described in section
401(k)(2)(B)(i)(IV)'' and inserting ``under the terms of the
plan''.
(2) Effective date.--The amendment made by this subsection
shall apply to distributions made after December 31, 2002,
unless a plan administrator elects to apply such amendment to
distributions made after December 31, 2001.
SEC. 307. WAIVER OF TAX ON NONDEDUCTIBLE CONTRIBUTIONS FOR
DOMESTIC OR SIMILAR WORKERS.
(a) In General.--Section 4972(c)(6) (relating to exceptions
to nondeductible contributions), as amended by section 502,
is amended by striking ``or'' at the end of subparagraph (A),
by striking the period and inserting ``, or'' at the end of
subparagraph (B), and by inserting after subparagraph (B) the
following new subparagraph:
``(C) so much of the contributions to a simple retirement
account (within the meaning of section 408(p)) or a simple
plan (within the meaning of section 401(k)(11)) which are not
deductible when contributed solely because such contributions
are not made in connection with a trade or business of the
employer.''
(b) Exclusion of Certain Contributions.--Section
4972(c)(6), as amended by subsection (a), is amended by
adding at the end the following new sentence: ``Subparagraph
(C) shall not apply to contributions made on behalf of the
employer or a member of the employer's family (as defined in
section 447(e)(1)).''.
(c) No Inference.--Nothing in the amendments made by this
section shall be construed to infer the proper treatment of
nondeductible contributions under the laws in effect before
such amendments.
(d) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
TITLE IV--INCREASING PORTABILITY FOR PARTICIPANTS
SEC. 401. ROLLOVERS ALLOWED AMONG VARIOUS TYPES OF PLANS.
(a) Rollovers From and to Section 457 Plans.--
(1) Rollovers from section 457 plans.--
(A) In general.--Section 457(e) (relating to other
definitions and special rules) is amended by adding at the
end the following:
``(16) Rollover amounts.--
``(A) General rule.--In the case of an eligible deferred
compensation plan established and maintained by an employer
described in subsection (e)(1)(A), if--
``(i) any portion of the balance to the credit of an
employee in such plan is paid to such employee in an eligible
rollover distribution (within the meaning of section
402(c)(4) without regard to subparagraph (C) thereof),
``(ii) the employee transfers any portion of the property
such employee receives in such distribution to an eligible
retirement plan described in section 402(c)(8)(B), and
``(iii) in the case of a distribution of property other
than money, the amount so transferred consists of the
property distributed,
then such distribution (to the extent so transferred) shall
not be includible in gross income for the taxable year in
which paid.
``(B) Certain rules made applicable.--The rules of
paragraphs (2) through (7) and (9) of section 402(c) and
section 402(f) shall apply for purposes of subparagraph (A).
``(C) Reporting.--Rollovers under this paragraph shall be
reported to the Secretary in the same manner as rollovers
from qualified retirement plans (as defined in section
4974(c)).''.
(B) Deferral limit determined without regard to rollover
amounts.--Section 457(b)(2) (defining eligible deferred
compensation plan) is amended by inserting ``(other than
rollover amounts)'' after ``taxable year''.
(C) Direct rollover.--Paragraph (1) of section 457(d) is
amended by striking ``and'' at the end of subparagraph (A),
by striking the period at the end of subparagraph (B) and
inserting ``, and'', and by inserting after subparagraph (B)
the following:
``(C) in the case of a plan maintained by an employer
described in subsection (e)(1)(A), the plan meets
requirements similar to the requirements of section
401(a)(31).
Any amount transferred in a direct trustee-to-trustee
transfer in accordance with section 401(a)(31) shall not be
includible in gross income for the taxable year of
transfer.''.
(D) Withholding.--
(i) Paragraph (12) of section 3401(a) is amended by adding
at the end the following:
``(E) under or to an eligible deferred compensation plan
which, at the time of such payment, is a plan described in
section 457(b) which is maintained by an eligible employer
described in section 457(e)(1)(A), or''.
(ii) Paragraph (3) of section 3405(c) is amended to read as
follows:
``(3) Eligible rollover distribution.--For purposes of this
subsection, the term `eligible rollover distribution' has the
meaning given such term by section 402(f)(2)(A).''.
(iii) Liability for withholding.--Subparagraph (B) of
section 3405(d)(2) is amended by striking ``or'' at the end
of clause (ii), by striking the period at the end of clause
(iii) and inserting ``, or'', and by adding at the end the
following:
``(iv) section 457(b) and which is maintained by an
eligible employer described in section 457(e)(1)(A).''.
(2) Rollovers to section 457 plans.--
(A) In general.--Section 402(c)(8)(B) (defining eligible
retirement plan) is amended by striking ``and'' at the end of
clause (iii), by striking the period at the end of clause
(iv) and inserting ``, and'', and by inserting after clause
(iv) the following new clause:
``(v) an eligible deferred compensation plan described in
section 457(b) which is maintained by an eligible employer
described in section 457(e)(1)(A).''.
(B) Separate accounting.--Section 402(c) is amended by
adding at the end the following new paragraph:
``(11) Separate accounting.--Unless a plan described in
clause (v) of paragraph (8)(B) agrees to separately account
for amounts rolled into such plan from eligible retirement
plans not described in such clause, the plan described in
such clause may not accept transfers or rollovers from such
retirement plans.''.
(C) 10 percent additional tax.--Subsection (t) of section
72 (relating to 10-percent additional tax on early
distributions from qualified retirement plans) is amended by
adding at the end the following new paragraph:
``(9) Special rule for rollovers to section 457 plans.--For
purposes of this subsection, a distribution from an eligible
deferred compensation plan (as defined in section 457(b)) of
an eligible employer described in section 457(e)(1)(A) shall
be treated as a distribution from a qualified retirement plan
described in 4974(c)(1) to the extent that such distribution
is attributable to an amount transferred to an eligible
deferred compensation plan from a qualified retirement plan
(as defined in section 4974(c)).''.
(b) Allowance of Rollovers From and to 403(b) Plans.--
(1) Rollovers from section 403(b) plans.--Section
403(b)(8)(A)(ii) (relating to rollover amounts) is amended by
striking ``such distribution'' and all that follows and
inserting ``such distribution to an eligible retirement plan
described in section 402(c)(8)(B), and''.
(2) Rollovers to section 403(b) plans.--Section
402(c)(8)(B) (defining eligible retirement plan), as amended
by subsection (a), is amended by striking ``and'' at the end
of clause (iv), by striking the period at the end of clause
(v) and inserting ``, and'', and by inserting after clause
(v) the following new clause:
``(vi) an annuity contract described in section 403(b).''.
(c) Expanded Explanation to Recipients of Rollover
Distributions.--Paragraph (1) of section 402(f) (relating to
written explanation to recipients of distributions eligible
[[Page S3736]]
for rollover treatment) is amended by striking ``and'' at the
end of subparagraph (C), by striking the period at the end of
subparagraph (D) and inserting ``, and'', and by adding at
the end the following new subparagraph:
``(E) of the provisions under which distributions from the
eligible retirement plan receiving the distribution may be
subject to restrictions and tax consequences which are
different from those applicable to distributions from the
plan making such distribution.''.
(d) Spousal Rollovers.--Section 402(c)(9) (relating to
rollover where spouse receives distribution after death of
employee) is amended by striking ``; except that'' and all
that follows up to the end period.
(e) Conforming Amendments.--
(1) Section 72(o)(4) is amended by striking ``and
408(d)(3)'' and inserting ``403(b)(8), 408(d)(3), and
457(e)(16)''.
(2) Section 219(d)(2) is amended by striking ``or
408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
(3) Section 401(a)(31)(B) is amended by striking ``and
403(a)(4)'' and inserting ``, 403(a)(4), 403(b)(8), and
457(e)(16)''.
(4) Subparagraph (A) of section 402(f)(2) is amended by
striking ``or paragraph (4) of section 403(a)'' and inserting
``, paragraph (4) of section 403(a), subparagraph (A) of
section 403(b)(8), or subparagraph (A) of section
457(e)(16)''.
(5) Paragraph (1) of section 402(f) is amended by striking
``from an eligible retirement plan''.
(6) Subparagraphs (A) and (B) of section 402(f)(1) are
amended by striking ``another eligible retirement plan'' and
inserting ``an eligible retirement plan''.
(7) Subparagraph (B) of section 403(b)(8) is amended to
read as follows:
``(B) Certain rules made applicable.--The rules of
paragraphs (2) through (7) and (9) of section 402(c) and
section 402(f) shall apply for purposes of subparagraph (A),
except that section 402(f) shall be applied to the payor in
lieu of the plan administrator.''.
(8) Section 408(a)(1) is amended by striking ``or
403(b)(8),'' and inserting ``403(b)(8), or 457(e)(16)''.
(9) Subparagraphs (A) and (B) of section 415(b)(2) are each
amended by striking ``and 408(d)(3)'' and inserting
``403(b)(8), 408(d)(3), and 457(e)(16)''.
(10) Section 415(c)(2) is amended by striking ``and
408(d)(3)'' and inserting ``408(d)(3), and 457(e)(16)''.
(11) Section 4973(b)(1)(A) is amended by striking ``or
408(d)(3)'' and inserting ``408(d)(3), or 457(e)(16)''.
(f) Effective Date; Special Rule.--
(1) Effective date.--The amendments made by this section
shall apply to distributions after December 31, 2001.
(2) Special rule.--Notwithstanding any other provision of
law, subsections (h)(3) and (h)(5) of section 1122 of the Tax
Reform Act of 1986 shall not apply to any distribution from
an eligible retirement plan (as defined in clause (iii) or
(iv) of section 402(c)(8)(B) of the Internal Revenue Code of
1986) on behalf of an individual if there was a rollover to
such plan on behalf of such individual which is permitted
solely by reason of any amendment made by this section.
SEC. 402. ROLLOVERS OF IRAS INTO WORKPLACE RETIREMENT PLANS.
(a) In General.--Subparagraph (A) of section 408(d)(3)
(relating to rollover amounts) is amended by adding ``or'' at
the end of clause (i), by striking clauses (ii) and (iii),
and by adding at the end the following:
``(ii) the entire amount received (including money and any
other property) is paid into an eligible retirement plan for
the benefit of such individual not later than the 60th day
after the date on which the payment or distribution is
received, except that the maximum amount which may be paid
into such plan may not exceed the portion of the amount
received which is includible in gross income (determined
without regard to this paragraph).
For purposes of clause (ii), the term `eligible retirement
plan' means an eligible retirement plan described in clause
(iii), (iv), (v), or (vi) of section 402(c)(8)(B).''.
(b) Conforming Amendments.--
(1) Paragraph (1) of section 403(b) is amended by striking
``section 408(d)(3)(A)(iii)'' and inserting ``section
408(d)(3)(A)(ii)''.
(2) Clause (i) of section 408(d)(3)(D) is amended by
striking ``(i), (ii), or (iii)'' and inserting ``(i) or
(ii)''.
(3) Subparagraph (G) of section 408(d)(3) is amended to
read as follows:
``(G) Simple retirement accounts.--In the case of any
payment or distribution out of a simple retirement account
(as defined in subsection (p)) to which section 72(t)(6)
applies, this paragraph shall not apply unless such payment
or distribution is paid into another simple retirement
account.''.
(c) Effective Date; Special Rule.--
(1) Effective date.--The amendments made by this section
shall apply to distributions after December 31, 2001.
(2) Special rule.--Notwithstanding any other provision of
law, subsections (h)(3) and (h)(5) of section 1122 of the Tax
Reform Act of 1986 shall not apply to any distribution from
an eligible retirement plan (as defined in clause (iii) or
(iv) of section 402(c)(8)(B) of the Internal Revenue Code of
1986) on behalf of an individual if there was a rollover to
such plan on behalf of such individual which is permitted
solely by reason of the amendments made by this section.
SEC. 403. ROLLOVERS OF AFTER-TAX CONTRIBUTIONS.
(a) Rollovers From Exempt Trusts.--Paragraph (2) of section
402(c) (relating to maximum amount which may be rolled over)
is amended by adding at the end the following: ``The
preceding sentence shall not apply to such distribution to
the extent--
``(A) such portion is transferred in a direct trustee-to-
trustee transfer to a qualified trust which is part of a plan
which is a defined contribution plan and which agrees to
separately account for amounts so transferred, including
separately accounting for the portion of such distribution
which is includible in gross income and the portion of such
distribution which is not so includible, or
``(B) such portion is transferred to an eligible retirement
plan described in clause (i) or (ii) of paragraph (8)(B).''.
(b) Optional Direct Transfer of Eligible Rollover
Distributions.--Subparagraph (B) of section 401(a)(31)
(relating to limitation) is amended by adding at the end the
following: ``The preceding sentence shall not apply to such
distribution if the plan to which such distribution is
transferred--
``(i) agrees to separately account for amounts so
transferred, including separately accounting for the portion
of such distribution which is includible in gross income and
the portion of such distribution which is not so includible,
or
``(ii) is an eligible retirement plan described in clause
(i) or (ii) of section 402(c)(8)(B).''.
(c) Rules for Applying Section 72 to IRAs.--Paragraph (3)
of section 408(d) (relating to special rules for applying
section 72) is amended by inserting at the end the following:
``(H) Application of section 72.--
``(i) In general.--If--
``(I) a distribution is made from an individual retirement
plan, and
``(II) a rollover contribution is made to an eligible
retirement plan described in section 402(c)(8)(B)(iii), (iv),
(v), or (vi) with respect to all or part of such
distribution,
then, notwithstanding paragraph (2), the rules of clause (ii)
shall apply for purposes of applying section 72.
``(ii) Applicable rules.--In the case of a distribution
described in clause (i)--
``(I) section 72 shall be applied separately to such
distribution,
``(II) notwithstanding the pro rata allocation of income
on, and investment in, the contract to distributions under
section 72, the portion of such distribution rolled over to
an eligible retirement plan described in clause (i) shall be
treated as from income on the contract (to the extent of the
aggregate income on the contract from all individual
retirement plans of the distributee), and
``(III) appropriate adjustments shall be made in applying
section 72 to other distributions in such taxable year and
subsequent taxable years.''.
(d) Effective Date.--The amendments made by this section
shall apply to distributions made after December 31, 2001.
SEC. 404. HARDSHIP EXCEPTION TO 60-DAY RULE.
(a) Exempt Trusts.--Paragraph (3) of section 402(c)
(relating to transfer must be made within 60 days of receipt)
is amended to read as follows:
``(3) Transfer must be made within 60 days of receipt.--
``(A) In general.--Except as provided in subparagraph (B),
paragraph (1) shall not apply to any transfer of a
distribution made after the 60th day following the day on
which the distributee received the property distributed.
``(B) Hardship exception.--The Secretary may waive the 60-
day requirement under subparagraph (A) where the failure to
waive such requirement would be against equity or good
conscience, including casualty, disaster, or other events
beyond the reasonable control of the individual subject to
such requirement.''.
(b) IRAs.--Paragraph (3) of section 408(d) (relating to
rollover contributions), as amended by section 403, is
amended by adding after subparagraph (H) the following new
subparagraph:
``(I) Waiver of 60-day requirement.--The Secretary may
waive the 60-day requirement under subparagraphs (A) and (D)
where the failure to waive such requirement would be against
equity or good conscience, including casualty, disaster, or
other events beyond the reasonable control of the individual
subject to such requirement.''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2001.
SEC. 405. TREATMENT OF FORMS OF DISTRIBUTION.
(a) Plan Transfers.--
(1) Amendment of internal revenue code.--Paragraph (6) of
section 411(d) (relating to accrued benefit not to be
decreased by amendment) is amended by adding at the end the
following:
``(D) Plan transfers.--
``(i) In general.--A defined contribution plan (in this
subparagraph referred to as the `transferee plan') shall not
be treated as failing to meet the requirements of this
subsection merely because the transferee plan does not
provide some or all of the forms of distribution previously
available under another defined contribution plan (in this
subparagraph referred to as the `transferor plan') to the
extent that--
``(I) the forms of distribution previously available under
the transferor plan applied to the account of a participant
or beneficiary
[[Page S3737]]
under the transferor plan that was transferred from the
transferor plan to the transferee plan pursuant to a direct
transfer rather than pursuant to a distribution from the
transferor plan,
``(II) the terms of both the transferor plan and the
transferee plan authorize the transfer described in subclause
(I),
``(III) the transfer described in subclause (I) was made
pursuant to a voluntary election by the participant or
beneficiary whose account was transferred to the transferee
plan,
``(IV) the election described in subclause (III) was made
after the participant or beneficiary received a notice
describing the consequences of making the election, and
``(V) the transferee plan allows the participant or
beneficiary described in subclause (III) to receive any
distribution to which the participant or beneficiary is
entitled under the transferee plan in the form of a single
sum distribution.
``(ii) Special rule for mergers, etc.--Clause (i) shall
apply to plan mergers and other transactions having the
effect of a direct transfer, including consolidations of
benefits attributable to different employers within a
multiple employer plan.''.
(2) Amendment of erisa.--Section 204(g) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is
amended by adding at the end the following:
``(4)(A) A defined contribution plan (in this subparagraph
referred to as the `transferee plan') shall not be treated as
failing to meet the requirements of this subsection merely
because the transferee plan does not provide some or all of
the forms of distribution previously available under another
defined contribution plan (in this subparagraph referred to
as the `transferor plan') to the extent that--
``(i) the forms of distribution previously available under
the transferor plan applied to the account of a participant
or beneficiary under the transferor plan that was transferred
from the transferor plan to the transferee plan pursuant to a
direct transfer rather than pursuant to a distribution from
the transferor plan;
``(ii) the terms of both the transferor plan and the
transferee plan authorize the transfer described in clause
(i);
``(iii) the transfer described in clause (i) was made
pursuant to a voluntary election by the participant or
beneficiary whose account was transferred to the transferee
plan;
``(iv) the election described in clause (iii) was made
after the participant or beneficiary received a notice
describing the consequences of making the election; and
``(v) the transferee plan allows the participant or
beneficiary described in clause (iii) to receive any
distribution to which the participant or beneficiary is
entitled under the transferee plan in the form of a single
sum distribution.
``(B) Subparagraph (A) shall apply to plan mergers and
other transactions having the effect of a direct transfer,
including consolidations of benefits attributable to
different employers within a multiple employer plan.''.
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2001.
(b) Regulations.--
(1) Amendment of internal revenue code.--The last sentence
of paragraph (6)(B) of section 411(d) (relating to accrued
benefit not to be decreased by amendment) is amended to read
as follows: ``The Secretary shall by regulations provide that
this subparagraph shall not apply to any plan amendment which
reduces or eliminates benefits or subsidies which create
significant burdens or complexities for the plan and plan
participants, unless such amendment adversely affects the
rights of any participant in a more than de minimis
manner.''.
(2) Amendment of erisa.--The last sentence of section
204(g)(2) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows:
``The Secretary of the Treasury shall by regulations provide
that this paragraph shall not apply to any plan amendment
which reduces or eliminates benefits or subsidies which
create significant burdens or complexities for the plan and
plan participants, unless such amendment adversely affects
the rights of any participant in a more than de minimis
manner.''.
(3) Secretary directed.--Not later than December 31, 2002,
the Secretary of the Treasury is directed to issue
regulations under section 411(d)(6) of the Internal Revenue
Code of 1986 and section 204(g) of the Employee Retirement
Income Security Act of 1974, including the regulations
required by the amendment made by this subsection. Such
regulations shall apply to plan years beginning after
December 31, 2002, or such earlier date as is specified by
the Secretary of the Treasury.
SEC. 406. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS.
(a) Modification of Same Desk Exception.--
(1) Section 401(k).--
(A) Section 401(k)(2)(B)(i)(I) (relating to qualified cash
or deferred arrangements) is amended by striking ``separation
from service'' and inserting ``severance from employment''.
(B) Subparagraph (A) of section 401(k)(10) (relating to
distributions upon termination of plan or disposition of
assets or subsidiary) is amended to read as follows:
``(A) In general.--An event described in this subparagraph
is the termination of the plan without establishment or
maintenance of another defined contribution plan (other than
an employee stock ownership plan as defined in section
4975(e)(7)).''.
(C) Section 401(k)(10) is amended--
(i) in subparagraph (B)--
(I) by striking ``An event'' in clause (i) and inserting
``A termination''; and
(II) by striking ``the event'' in clause (i) and inserting
``the termination'';
(ii) by striking subparagraph (C); and
(iii) by striking ``or disposition of assets or
subsidiary'' in the heading.
(2) Section 403(b).--
(A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) are
each amended by striking ``separates from service'' and
inserting ``has a severance from employment''.
(B) The heading for paragraph (11) of section 403(b) is
amended by striking ``separation from service'' and inserting
``severance from employment''.
(3) Section 457.--Clause (ii) of section 457(d)(1)(A) is
amended by striking ``is separated from service'' and
inserting ``has a severance from employment''.
(b) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2001.
SEC. 407. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL DEFINED
BENEFIT PLANS.
(a) 403(b) Plans.--Subsection (b) of section 403 is amended
by adding at the end the following new paragraph:
``(13) Trustee-to-trustee transfers to purchase permissive
service credit.--No amount shall be includible in gross
income by reason of a direct trustee-to-trustee transfer to a
defined benefit governmental plan (as defined in section
414(d)) if such transfer is--
``(A) for the purchase of permissive service credit (as
defined in section 415(n)(3)(A)) under such plan, or
``(B) a repayment to which section 415 does not apply by
reason of subsection (k)(3) thereof.''.
(b) 457 Plans.--Subsection (e) of section 457, as amended
by section 401, is amended by adding after paragraph (16) the
following new paragraph:
``(17) Trustee-to-trustee transfers to purchase permissive
service credit.--No amount shall be includible in gross
income by reason of a direct trustee-to-trustee transfer to a
defined benefit governmental plan (as defined in section
414(d)) if such transfer is--
``(A) for the purchase of permissive service credit (as
defined in section 415(n)(3)(A)) under such plan, or
``(B) a repayment to which section 415 does not apply by
reason of subsection (k)(3) thereof.''.
(c) Effective Date.--The amendments made by this section
shall apply to trustee-to-trustee transfers after December
31, 2001.
SEC. 408. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES OF
CASH-OUT AMOUNTS.
(a) Qualified Plans.--
(1) Amendment of internal revenue code.--Section 411(a)(11)
(relating to restrictions on certain mandatory distributions)
is amended by adding at the end the following:
``(D) Special rule for rollover contributions.--A plan
shall not fail to meet the requirements of this paragraph if,
under the terms of the plan, the present value of the
nonforfeitable accrued benefit is determined without regard
to that portion of such benefit which is attributable to
rollover contributions (and earnings allocable thereto). For
purposes of this subparagraph, the term `rollover
contributions' means any rollover contribution under sections
402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and
457(e)(16).''.
(2) Amendment of erisa.--Section 203(e) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) is
amended by adding at the end the following:
``(4) A plan shall not fail to meet the requirements of
this subsection if, under the terms of the plan, the present
value of the nonforfeitable accrued benefit is determined
without regard to that portion of such benefit which is
attributable to rollover contributions (and earnings
allocable thereto). For purposes of this subparagraph, the
term `rollover contributions' means any rollover contribution
under sections 402(c), 403(a)(4), 403(b)(8),
408(d)(3)(A)(ii), and 457(e)(16) of the Internal Revenue Code
of 1986.''.
(b) Eligible Deferred Compensation Plans.--Clause (i) of
section 457(e)(9)(A) is amended by striking ``such amount''
and inserting ``the portion of such amount which is not
attributable to rollover contributions (as defined in section
411(a)(11)(D))''.
(c) Effective Date.--The amendments made by this section
shall apply to distributions after December 31, 2001.
SEC. 409. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS FOR
SECTION 457 PLANS.
(a) Minimum Distribution Requirements.--Paragraph (2) of
section 457(d) (relating to distribution requirements) is
amended to read as follows:
``(2) Minimum distribution requirements.--A plan meets the
minimum distribution requirements of this paragraph if such
plan meets the requirements of section 401(a)(9).''.
(b) Inclusion in Gross Income.--
(1) Year of inclusion.--Subsection (a) of section 457
(relating to year of inclusion in gross income) is amended to
read as follows:
``(a) Year of Inclusion in Gross Income.--
[[Page S3738]]
``(1) In general.--Any amount of compensation deferred
under an eligible deferred compensation plan, and any income
attributable to the amounts so deferred, shall be includible
in gross income only for the taxable year in which such
compensation or other income--
``(A) is paid to the participant or other beneficiary, in
the case of a plan of an eligible employer described in
subsection (e)(1)(A), and
``(B) is paid or otherwise made available to the
participant or other beneficiary, in the case of a plan of an
eligible employer described in subsection (e)(1)(B).
``(2) Special rule for rollover amounts.--To the extent
provided in section 72(t)(9), section 72(t) shall apply to
any amount includible in gross income under this
subsection.''.
(2) Conforming amendments.--
(A) So much of paragraph (9) of section 457(e) as precedes
subparagraph (A) is amended to read as follows:
``(9) Benefits of tax exempt organization plans not treated
as made available by reason of certain elections, etc.--In
the case of an eligible deferred compensation plan of an
employer described in subsection (e)(1)(B)--''.
(B) Section 457(d) is amended by adding at the end the
following new paragraph:
``(3) Special rule for government plan.--An eligible
deferred compensation plan of an employer described in
subsection (e)(1)(A) shall not be treated as failing to meet
the requirements of this subsection solely by reason of
making a distribution described in subsection (e)(9)(A).''.
(c) Modification of Transition Rules for Existing 457
Plans.--
(1) In general.--Section 1107(c)(3)(B) of the Tax Reform
Act of 1986 is amended by striking ``or'' at the end of
clause (i), by striking the period at the end of clause (ii)
and inserting ``, or'' and by inserting after clause (ii) the
following new clause:
``(iii) are deferred pursuant to an agreement with an
individual covered by an agreement described in clause (ii),
to the extent the annual amount under such agreement with the
individual does not exceed--
``(I) the amount described in clause (ii)(II), multiplied
by
``(II) the cumulative increase in the Consumer Price Index
(as published by the Bureau of Labor Statistics of the
Department of Labor).''.
(2) Conforming amendment.--The fourth sentence of section
1107(c)(3)(B) of the Tax Reform Act of 1986 is amended by
striking ``This subparagraph'' and inserting ``Clauses (i)
and (ii) of this subparagraph''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years ending after the date of the
enactment of this Act with respect to increases in the
Consumer Price Index after September 30, 1993.
(d) Effective Date.--The amendments made by subsections (a)
and (b) shall apply to distributions after December 31, 2001.
TITLE V--STRENGTHENING PENSION SECURITY AND ENFORCEMENT
Subtitle A--General Provisions
SEC. 501. REPEAL OF 155 PERCENT OF CURRENT LIABILITY FUNDING
LIMIT.
(a) Amendments to Internal Revenue Code.--Section 412(c)(7)
(relating to full-funding limitation) is amended--
(1) by striking ``the applicable percentage'' in
subparagraph (A)(i)(I) and inserting ``in the case of plan
years beginning before January 1, 2005, the applicable
percentage''; and
(2) by amending subparagraph (F) to read as follows:
``(F) Applicable percentage.--For purposes of subparagraph
(A)(i)(I), the applicable percentage shall be determined in
accordance with the following table:
``In the case of any plan year beginning The applicable percentage is--
2002..........................................................160
2003..........................................................165
2004........................................................170.''.
(b) Amendment of ERISA.--Section 302(c)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7))
is amended--
(1) by striking ``the applicable percentage'' in
subparagraph (A)(i)(I) and inserting ``in the case of plan
years beginning before January 1, 2005, the applicable
percentage'', and
(2) by amending subparagraph (F) to read as follows:
``(F) Applicable percentage.--For purposes of subparagraph
(A)(i)(I), the applicable percentage shall be determined in
accordance with the following table:
``In the case of any plan year beginning The applicable percentage is--
2002...........................................................160
2003...........................................................165
2004........................................................170.''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2001.
SEC. 502. MAXIMUM CONTRIBUTION DEDUCTION RULES MODIFIED AND
APPLIED TO ALL DEFINED BENEFIT PLANS.
(a) In General.--Subparagraph (D) of section 404(a)(1)
(relating to special rule in case of certain plans) is
amended to read as follows:
``(D) Special rule in case of certain plans.--
``(i) In general.--In the case of any defined benefit plan,
except as provided in regulations, the maximum amount
deductible under the limitations of this paragraph shall not
be less than the unfunded termination liability (determined
as if the proposed termination date referred to in section
4041(b)(2)(A)(i)(II) of the Employee Retirement Income
Security Act of 1974 were the last day of the plan year).
``(ii) Plans with less than 100 participants.--For purposes
of this subparagraph, in the case of a plan which has less
than 100 participants for the plan year, termination
liability shall not include the liability attributable to
benefit increases for highly compensated employees (as
defined in section 414(q)) resulting from a plan amendment
which is made or becomes effective, whichever is later,
within the last 2 years before the termination date.
``(iii) Rule for determining number of participants.--For
purposes of determining whether a plan has more than 100
participants, all defined benefit plans maintained by the
same employer (or any member of such employer's controlled
group (within the meaning of section 412(l)(8)(C))) shall be
treated as one plan, but only employees of such member or
employer shall be taken into account.
``(iv) Plans maintained by professional service
employers.--Clause (i) shall not apply to a plan described in
section 4021(b)(13) of the Employee Retirement Income
Security Act of 1974.''.
(b) Conforming Amendment.--Paragraph (6) of section 4972(c)
is amended to read as follows:
``(6) Exceptions.--In determining the amount of
nondeductible contributions for any taxable year, there shall
not be taken into account so much of the contributions to one
or more defined contribution plans which are not deductible
when contributed solely because of section 404(a)(7) as does
not exceed the greater of--
``(A) the amount of contributions not in excess of 6
percent of compensation (within the meaning of section
404(a)) paid or accrued (during the taxable year for which
the contributions were made) to beneficiaries under the
plans, or
``(B) the sum of--
``(i) the amount of contributions described in section
401(m)(4)(A), plus
``(ii) the amount of contributions described in section
402(g)(3)(A).
For purposes of this paragraph, the deductible limits under
section 404(a)(7) shall first be applied to amounts
contributed to a defined benefit plan and then to amounts
described in subparagraph (B).''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2001.
SEC. 503. EXCISE TAX RELIEF FOR SOUND PENSION FUNDING.
(a) In General.--Subsection (c) of section 4972 (relating
to nondeductible contributions) is amended by adding at the
end the following new paragraph:
``(7) Defined benefit plan exception.--In determining the
amount of nondeductible contributions for any taxable year,
an employer may elect for such year not to take into account
any contributions to a defined benefit plan except to the
extent that such contributions exceed the full-funding
limitation (as defined in section 412(c)(7), determined
without regard to subparagraph (A)(i)(I) thereof). For
purposes of this paragraph, the deductible limits under
section 404(a)(7) shall first be applied to amounts
contributed to defined contribution plans and then to amounts
described in this paragraph. If an employer makes an election
under this paragraph for a taxable year, paragraph (6) shall
not apply to such employer for such taxable year.''.
(b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2001.
SEC. 504. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415.
(a) Compensation Limit.--
(1) In general.--Paragraph (11) of section 415(b) (relating
to limitation for defined benefit plans) is amended to read
as follows:
``(11) Special limitation rule for governmental and
multiemployer plans.--In the case of a governmental plan (as
defined in section 414(d)) or a multiemployer plan (as
defined in section 414(f)), subparagraph (B) of paragraph (1)
shall not apply.''.
(2) Conforming amendment.--Section 415(b)(7) (relating to
benefits under certain collectively bargained plans) is
amended by inserting ``(other than a multiemployer plan)''
after ``defined benefit plan'' in the matter preceding
subparagraph (A).
(b) Combining and Aggregation of Plans.--
(1) Combining of plans.--Subsection (f) of section 415
(relating to combining of plans) is amended by adding at the
end the following:
``(3) Exception for multiemployer plans.--Notwithstanding
paragraph (1) and subsection (g), a multiemployer plan (as
defined in section 414(f)) shall not be combined or
aggregated with any other plan maintained by an employer for
purposes of applying subsection (b)(1)(B) to such plan or any
other such plan.''.
(2) Conforming amendment for aggregation of plans.--
Subsection (g) of section 415 (relating to aggregation of
plans) is amended by striking ``The Secretary'' and inserting
``Except as provided in subsection (f)(3), the Secretary''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2001.
[[Page S3739]]
SEC. 505. PROTECTION OF INVESTMENT OF EMPLOYEE CONTRIBUTIONS
TO 401(K) PLANS.
(a) In General.--Section 1524(b) of the Taxpayer Relief Act
of 1997 is amended to read as follows:
``(b) Effective Date.--
``(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to elective
deferrals for plan years beginning after December 31, 1998.
``(2) Nonapplication to previously acquired property.--The
amendments made by this section shall not apply to any
elective deferral which is invested in assets consisting of
qualifying employer securities, qualifying employer real
property, or both, if such assets were acquired before
January 1, 1999.''.
(b) Effective Date.--The amendment made by this section
shall apply as if included in the provision of the Taxpayer
Relief Act of 1997 to which it relates.
SEC. 506. PERIODIC PENSION BENEFITS STATEMENTS.
(a) In General.--Section 105(a) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1025 (a)) is amended
to read as follows:
``(a)(1) Except as provided in paragraph (2)--
``(A) the administrator of an individual account plan shall
furnish a pension benefit statement--
``(i) to a plan participant at least once annually, and
``(ii) to a plan beneficiary upon written request, and
``(B) the administrator of a defined benefit plan shall
furnish a pension benefit statement--
``(i) at least once every 3 years to each participant with
a nonforfeitable accrued benefit who is employed by the
employer maintaining the plan at the time the statement is
furnished to participants, and
``(ii) to a plan participant or plan beneficiary of the
plan upon written request.
``(2) Notwithstanding paragraph (1), the administrator of a
plan to which more than 1 unaffiliated employer is required
to contribute shall only be required to furnish a pension
benefit statement under paragraph (1) upon the written
request of a participant or beneficiary of the plan.
``(3) A pension benefit statement under paragraph (1)--
``(A) shall indicate, on the basis of the latest available
information--
``(i) the total benefits accrued, and
``(ii) the nonforfeitable pension benefits, if any, which
have accrued, or the earliest date on which benefits will
become nonforfeitable,
``(B) shall be written in a manner calculated to be
understood by the average plan participant, and
``(C) may be provided in written, electronic, telephonic,
or other appropriate form.
``(4)(A) In the case of a defined benefit plan, the
requirements of paragraph (1)(B)(i) shall be treated as met
with respect to a participant if the administrator provides
the participant at least once each year with notice of the
availability of the pension benefit statement and the ways in
which the participant may obtain such statement. Such notice
shall be provided in written, electronic, telephonic, or
other appropriate form, and may be included with other
communications to the participant if done in a manner
reasonably designed to attract the attention of the
participant.
``(B) The Secretary may provide that years in which no
employee or former employee benefits (within the meaning of
section 410(b) of the Internal Revenue Code of 1986) under
the plan need not be taken into account in determining the 3-
year period under paragraph (1)(B)(i).''.
(b) Conforming Amendments.--
(1) Section 105 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1025) is amended by striking
subsection (d).
(2) Section 105(b) of such Act (29 U.S.C. 1025(b)) is
amended to read as follows:
``(b) In no case shall a participant or beneficiary of a
plan be entitled to more than one statement described in
subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is
applicable, in any 12-month period.''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2001.
SEC. 507. PROHIBITED ALLOCATIONS OF STOCK IN S CORPORATION
ESOP.
(a) In General.--Section 409 (relating to qualifications
for tax credit employee stock ownership plans) is amended by
redesignating subsection (p) as subsection (q) and by
inserting after subsection (o) the following new subsection:
``(p) Prohibited Allocations of Securities in an S
Corporation.--
``(1) In general.--An employee stock ownership plan holding
employer securities consisting of stock in an S corporation
shall provide that no portion of the assets of the plan
attributable to (or allocable in lieu of) such employer
securities may, during a nonallocation year, accrue (or be
allocated directly or indirectly under any plan of the
employer meeting the requirements of section 401(a)) for the
benefit of any disqualified person.
``(2) Failure to meet requirements.--
``(A) In general.--If a plan fails to meet the requirements
of paragraph (1), the plan shall be treated as having
distributed to any disqualified person the amount allocated
to the account of such person in violation of paragraph (1)
at the time of such allocation.
``(B) Cross reference.--
``For excise tax relating to violations of paragraph (1) and
ownership of synthetic equity, see section 4979A.
``(3) Nonallocation year.--For purposes of this
subsection--
``(A) In general.--The term `nonallocation year' means any
plan year of an employee stock ownership plan if, at any time
during such plan year--
``(i) such plan holds employer securities consisting of
stock in an S corporation, and
``(ii) disqualified persons own at least 50 percent of the
number of shares of stock in the S corporation.
``(B) Attribution rules.--For purposes of subparagraph
(A)--
``(i) In general.--The rules of section 318(a) shall apply
for purposes of determining ownership, except that--
``(I) in applying paragraph (1) thereof, the members of an
individual's family shall include members of the family
described in paragraph (4)(D), and
``(II) paragraph (4) thereof shall not apply.
``(ii) Deemed-owned shares.--Notwithstanding the employee
trust exception in section 318(a)(2)(B)(i), an individual
shall be treated as owning deemed-owned shares of the
individual.
Solely for purposes of applying paragraph (5), this
subparagraph shall be applied after the attribution rules of
paragraph (5) have been applied.
``(4) Disqualified person.--For purposes of this
subsection--
``(A) In general.--The term `disqualified person' means any
person if--
``(i) the aggregate number of deemed-owned shares of such
person and the members of such person's family is at least 20
percent of the number of deemed-owned shares of stock in the
S corporation, or
``(ii) in the case of a person not described in clause (i),
the number of deemed-owned shares of such person is at least
10 percent of the number of deemed-owned shares of stock in
such corporation.
``(B) Treatment of family members.--In the case of a
disqualified person described in subparagraph (A)(i), any
member of such person's family with deemed-owned shares shall
be treated as a disqualified person if not otherwise treated
as a disqualified person under subparagraph (A).
``(C) Deemed-owned shares.--
``(i) In general.--The term `deemed-owned shares' means,
with respect to any person--
``(I) the stock in the S corporation constituting employer
securities of an employee stock ownership plan which is
allocated to such person under the plan, and
``(II) such person's share of the stock in such corporation
which is held by such plan but which is not allocated under
the plan to participants.
``(ii) Person's share of unallocated stock.--For purposes
of clause (i)(II), a person's share of unallocated S
corporation stock held by such plan is the amount of the
unallocated stock which would be allocated to such person if
the unallocated stock were allocated to all participants in
the same proportions as the most recent stock allocation
under the plan.
``(D) Member of family.--For purposes of this paragraph,
the term `member of the family' means, with respect to any
individual--
``(i) the spouse of the individual,
``(ii) an ancestor or lineal descendant of the individual
or the individual's spouse,
``(iii) a brother or sister of the individual or the
individual's spouse and any lineal descendant of the brother
or sister, and
``(iv) the spouse of any individual described in clause
(ii) or (iii).
A spouse of an individual who is legally separated from such
individual under a decree of divorce or separate maintenance
shall not be treated as such individual's spouse for purposes
of this subparagraph.
``(5) Treatment of synthetic equity.--For purposes of
paragraphs (3) and (4), in the case of a person who owns
synthetic equity in the S corporation, except to the extent
provided in regulations, the shares of stock in such
corporation on which such synthetic equity is based shall be
treated as outstanding stock in such corporation and deemed-
owned shares of such person if such treatment of synthetic
equity of 1 or more such persons results in--
``(A) the treatment of any person as a disqualified person,
or
``(B) the treatment of any year as a nonallocation year.
For purposes of this paragraph, synthetic equity shall be
treated as owned by a person in the same manner as stock is
treated as owned by a person under the rules of paragraphs
(2) and (3) of section 318(a). If, without regard to this
paragraph, a person is treated as a disqualified person or a
year is treated as a nonallocation year, this paragraph shall
not be construed to result in the person or year not being so
treated.
``(6) Definitions.--For purposes of this subsection--
``(A) Employee stock ownership plan.--The term `employee
stock ownership plan' has the meaning given such term by
section 4975(e)(7).
``(B) Employer securities.--The term `employer security'
has the meaning given such term by section 409(l).
``(C) Synthetic equity.--The term `synthetic equity' means
any stock option, warrant, restricted stock, deferred
issuance stock right, or similar interest or right that
[[Page S3740]]
gives the holder the right to acquire or receive stock of the
S corporation in the future. Except to the extent provided in
regulations, synthetic equity also includes a stock
appreciation right, phantom stock unit, or similar right to a
future cash payment based on the value of such stock or
appreciation in such value.
``(7) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection.''.
(b) Coordination With Section 4975(e)(7).--The last
sentence of section 4975(e)(7) (defining employee stock
ownership plan) is amended by inserting ``, section 409(p),''
after ``409(n)''.
(c) Excise Tax.--
(1) Application of tax.--Subsection (a) of section 4979A
(relating to tax on certain prohibited allocations of
employer securities) is amended--
(A) by striking ``or'' at the end of paragraph (1), and
(B) by striking all that follows paragraph (2) and
inserting the following:
``(3) there is any allocation of employer securities which
violates the provisions of section 409(p), or a nonallocation
year described in subsection (e)(2)(C) with respect to an
employee stock ownership plan, or
``(4) any synthetic equity is owned by a disqualified
person in any nonallocation year,
there is hereby imposed a tax on such allocation or ownership
equal to 50 percent of the amount involved.''.
(2) Liability.--Section 4979A(c) (defining liability for
tax) is amended to read as follows:
``(c) Liability for Tax.--The tax imposed by this section
shall be paid--
``(1) in the case of an allocation referred to in paragraph
(1) or (2) of subsection (a), by--
``(A) the employer sponsoring such plan, or
``(B) the eligible worker-owned cooperative,
which made the written statement described in section
664(g)(1)(E) or in section 1042(b)(3)(B) (as the case may
be), and
``(2) in the case of an allocation or ownership referred to
in paragraph (3) or (4) of subsection (a), by the S
corporation the stock in which was so allocated or owned.''.
(3) Definitions.--Section 4979A(e) (relating to
definitions) is amended to read as follows:
``(e) Definitions and Special Rules.--For purposes of this
section--
``(1) Definitions.--Except as provided in paragraph (2),
terms used in this section have the same respective meanings
as when used in sections 409 and 4978.
``(2) Special rules relating to tax imposed by reason of
paragraph (3) or (4) of subsection (a).--
``(A) Prohibited allocations.--The amount involved with
respect to any tax imposed by reason of subsection (a)(3) is
the amount allocated to the account of any person in
violation of section 409(p)(1).
``(B) Synthetic equity.--The amount involved with respect
to any tax imposed by reason of subsection (a)(4) is the
value of the shares on which the synthetic equity is based.
``(C) Special rule during first nonallocation year.--For
purposes of subparagraph (A), the amount involved for the
first nonallocation year of any employee stock ownership plan
shall be determined by taking into account the total value of
all the deemed-owned shares of all disqualified persons with
respect to such plan.
``(D) Statute of limitations.--The statutory period for the
assessment of any tax imposed by this section by reason of
paragraph (3) or (4) of subsection (a) shall not expire
before the date which is 3 years from the later of--
``(i) the allocation or ownership referred to in such
paragraph giving rise to such tax, or
``(ii) the date on which the Secretary is notified of such
allocation or ownership.''.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan years beginning after December 31, 2002.
(2) Exception for certain plans.--In the case of any--
(A) employee stock ownership plan established after July
11, 2000, or
(B) employee stock ownership plan established on or before
such date if employer securities held by the plan consist of
stock in a corporation with respect to which an election
under section 1362(a) of the Internal Revenue Code of 1986 is
not in effect on such date,
the amendments made by this section shall apply to plan years
ending after July 11, 2000.
SEC. 508. AUTOMATIC ROLLOVERS OF CERTAIN MANDATORY
DISTRIBUTIONS.
(a) Direct Transfers of Mandatory Distributions.--
(1) In general.--Section 401(a)(31) (relating to optional
direct transfer of eligible rollover distributions), as
amended by section 403, is amended by redesignating
subparagraphs (B), (C), and (D) as subparagraphs (C), (D),
and (E), respectively, and by inserting after subparagraph
(A) the following new subparagraph:
``(B) Certain mandatory distributions.--
``(i) In general.--In case of a trust which is part of an
eligible plan, such trust shall not constitute a qualified
trust under this section unless the plan of which such trust
is a part provides that if--
``(I) a distribution described in clause (ii) in excess of
$1,000 is made, and
``(II) the distributee does not make an election under
subparagraph (A) and does not elect to receive the
distribution directly,
the plan administrator shall make such transfer to an
individual retirement account or annuity of a designated
trustee or issuer and shall notify the distributee in writing
(either separately or as part of the notice under section
402(f)) that the distribution may be transferred without cost
or penalty to another individual account or annuity.
``(ii) Eligible plan.--For purposes of clause (i), the term
`eligible plan' means a plan which provides that any
nonforfeitable accrued benefit for which the present value
(as determined under section 411(a)(11)) does not exceed
$5,000 shall be immediately distributed to the
participant.''.
(2) Conforming amendments.--
(A) The heading of section 401(a)(31) is amended by
striking ``Optional direct'' and inserting ``Direct''.
(B) Section 401(a)(31)(C), as redesignated by paragraph
(1), is amended by striking ``Subparagraph (A)'' and
inserting ``Subparagraphs (A) and (B)''.
(b) Notice Requirement.--Section 402(f)(1) (relating to
written explanation to recipients of distributions eligible
for rollover treatment) is amended by striking ``and'' at the
end of subparagraph (C), by striking the period at the end of
subparagraph (D), and by adding at the end the following new
subparagraph:
``(E) if applicable, of the provision requiring a direct
trustee-to-trustee transfer of a distribution under section
401(a)(31)(B) unless the recipient elects otherwise.''.
(c) Fiduciary Rules.--Section 404(c) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1104(c)) is
amended by adding at the end the following new paragraph:
``(3) In the case of a pension plan which makes a transfer
to an individual retirement account or annuity of a
designated trustee or issuer under section 401(a)(31)(B) of
the Internal Revenue Code of 1986, the participant or
beneficiary shall, for purposes of paragraph (1), be treated
as exercising control over the assets in the account or
annuity upon the earlier of--
``(A) a rollover of all or a portion of the amount to
another individual retirement account or annuity; or
``(B) one year after the transfer is made.''.
(d) Effective Date.--The amendments made by this section
shall apply to distributions made after December 31, 2001.
Subtitle B--Treatment of Plan Amendments Reducing Future Benefit
Accruals
SEC. 521. NOTICE REQUIRED FOR PENSION PLAN AMENDMENTS HAVING
THE EFFECT OF SIGNIFICANTLY REDUCING FUTURE
BENEFIT ACCRUALS.
(a) Excise Tax.--
(1) In general.--Chapter 43 (relating to qualified pension,
etc., plans) is amended by adding at the end the following
new section:
``SEC. 4980F. FAILURE TO PROVIDE NOTICE OF PENSION PLAN
AMENDMENTS REDUCING BENEFIT ACCRUALS.
``(a) Imposition of Tax.--There is hereby imposed a tax on
the failure of an applicable pension plan to meet the
requirements of subsection (e) with respect to any applicable
individual.
``(b) Amount of Tax.--
``(1) In general.--The amount of the tax imposed by
subsection (a) on any failure with respect to any applicable
individual shall be $100 for each day in the noncompliance
period with respect to such failure.
``(2) Noncompliance period.--For purposes of this section,
the term `noncompliance period' means, with respect to any
failure, the period beginning on the date the failure first
occurs and ending on the date the notice to which the failure
relates is provided or the failure is otherwise corrected.
``(c) Limitations on Amount of Tax.--
``(1) Tax not to apply where failure not discovered and
reasonable diligence exercised.--No tax shall be imposed by
subsection (a) on any failure during any period for which it
is established to the satisfaction of the Secretary that any
person subject to liability for the tax under subsection (d)
did not know that the failure existed and exercised
reasonable diligence to meet the requirements of subsection
(e).
``(2) Tax not to apply to failures corrected within 30
days.--No tax shall be imposed by subsection (a) on any
failure if--
``(A) any person subject to liability for the tax under
subsection (d) exercised reasonable diligence to meet the
requirements of subsection (e), and
``(B) such person provides the notice described in
subsection (e) during the 30-day period beginning on the
first date such person knew, or exercising reasonable
diligence would have known, that such failure existed.
``(3) Overall limitation for unintentional failures.--
``(A) In general.--If the person subject to liability for
tax under subsection (d) exercised reasonable diligence to
meet the requirements of subsection (e), the tax imposed by
subsection (a) for failures during the taxable year of the
employer (or, in the case of a multiemployer plan, the
taxable year of the trust forming part of the plan) shall not
exceed $500,000. For purposes of the preceding sentence, all
multiemployer plans of which the same trust forms a part
shall be treated as 1 plan.
``(B) Taxable years in the case of certain controlled
groups.--For purposes of this paragraph, if all persons who
are treated as a single employer for purposes of this section
do not have the same taxable year, the taxable years taken
into account shall be determined under principles similar to
the principles of section 1561.
[[Page S3741]]
``(4) Waiver by secretary.--In the case of a failure which
is due to reasonable cause and not to willful neglect, the
Secretary may waive part or all of the tax imposed by
subsection (a) to the extent that the payment of such tax
would be excessive or otherwise inequitable relative to the
failure involved.
``(d) Liability for Tax.--The following shall be liable for
the tax imposed by subsection (a):
``(1) In the case of a plan other than a multiemployer
plan, the employer.
``(2) In the case of a multiemployer plan, the plan.
``(e) Notice Requirements for Plan Amendments Significantly
Reducing Benefit Accruals.--
``(1) In general.--If the sponsor of an applicable pension
plan adopts an amendment which has the effect of
significantly reducing the rate of future benefit accrual of
1 or more participants, the plan administrator shall, not
later than the 45th day before the effective date of the
amendment, provide written notice to each applicable
individual (and to each employee organization representing
applicable individuals) which--
``(A) sets forth a summary of the plan amendment and the
effective date of the amendment,
``(B) includes a statement that the plan amendment is
expected to significantly reduce the rate of future benefit
accrual,
``(C) includes a description of the classes of employees
reasonably expected to be affected by the reduction in the
rate of future benefit accrual,
``(D) sets forth examples illustrating how the plan will
change benefits for such classes of employees,
``(E) if paragraph (2) applies to the plan amendment,
includes a notice that the plan administrator will provide a
benefit estimation tool kit described in paragraph (2)(B) to
each applicable individual no later than the date required
under paragraph (2)(A), and
``(F) includes a notice of each applicable individual's
right under Federal law to receive, and of the procedures for
requesting, an annual benefit statement.
``(2) Requirement to provide benefit estimation tool kit.--
``(A) In general.--If a plan amendment results in the
significant restructuring of the plan benefit formula (as
determined under regulations prescribed by the Secretary),
the plan administrator shall, not later than the 15th day
before the effective date of the amendment, provide a benefit
estimation tool kit described in subparagraph (B) to each
applicable individual. If such plan amendment occurs within
12 months of an event described in section 410(b)(6)(C), the
plan administrator shall in no event be required to provide
the benefit estimation tool kit to applicable individuals
affected by the event before the date which is 12 months
after the date on which notice under paragraph (1) is given
to such applicable individuals.
``(B) Benefit estimation tool kit.--The benefit estimation
tool kit described in this subparagraph shall include the
following information:
``(i) Sufficient information to enable an applicable
individual to estimate the individual's projected benefits
under the terms of the plan in effect both before and after
the adoption of the amendment.
``(ii) The formulas and actuarial assumptions necessary to
estimate under both such plan terms a single life annuity at
appropriate ages, and, when available, a lump sum
distribution.
``(iii) The interest rate used to compute a lump sum
distribution and information as to whether the value of any
early retirement benefit or retirement-type subsidy (within
the meaning of section 411(d)(6)(B)(i)) is included in the
lump sum distribution.
``(3) Notice to designee.--Any notice under paragraph (1)
or (2) may be provided to a person designated, in writing, by
the person to which it would otherwise be provided.
``(4) Form of explanation.--The information required to be
provided under this subsection shall be provided in a manner
calculated to be reasonably understood by the average plan
participant.
``(f) Definitions and Special Rules.--For purposes of this
section--
``(1) Applicable individual.--
``(A) In general.--The term `applicable individual' means,
with respect to any plan amendment--
``(i) each participant in the plan, and
``(ii) any beneficiary who is an alternate payee (within
the meaning of section 414(p)(8)) under an applicable
qualified domestic relations order (within the meaning of
section 414(p)(1)(A)),
whose rate of future benefit accrual under the plan may
reasonably be expected to be significantly reduced by such
plan amendment.
``(B) Exception for participants with less than 1 year of
participation.--Such term shall not include a participant who
has less than 1 year of participation (within the meaning of
section 411(b)(4)) under the plan as of the effective date of
the plan amendment.
``(2) Applicable pension plan.--The term `applicable
pension plan' means--
``(A) a defined benefit plan, or
``(B) an individual account plan which is subject to the
funding standards of section 412.
Such term shall not include a governmental plan (within the
meaning of section 414(d)), a church plan (within the meaning
of section 414(e)) with respect to which an election under
section 410(d) has not been made, or any other plan to which
section 204(h) of the Employee Retirement Income Security Act
of 1974 does not apply.
``(3) Early retirement.--A plan amendment which eliminates
or significantly reduces any early retirement benefit or
retirement-type subsidy (within the meaning of section
411(d)(6)(B)(i)) shall be treated as having the effect of
significantly reducing the rate of future benefit accrual.
``(g) Regulations.--The Secretary shall, not later than 1
year after the date of the enactment of this section, issue--
``(1) the regulations described in subsection (e)(2)(A) and
section 204(h)(2)(A) of the Employee Retirement Income
Security Act of 1974, and
``(2) guidance for both of the examples described in
subsection (e)(1)(D) and section 204(h)(1)(D) of the Employee
Retirement Income Security Act of 1974 and the benefit
estimation tool kit described in subsection (e)(2)(B) and
section 204(h)(2)(B) of the Employee Retirement Income
Security Act of 1974.
``(h) New Technologies.--The Secretary may by regulation
allow any notice under paragraph (1) or (2) of subsection (e)
to be provided by using new technologies. Such regulations
shall ensure that at least one option for providing such
notice is not dependent on new technologies.''
(2) Conforming amendment.--The table of sections for
chapter 43 is amended by adding at the end the following new
item:
``Sec. 4980F. Failure to provide notice of pension plan amendments
reducing benefit accruals.''
(b) Amendment of ERISA.--Section 204(h) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1054(h)) is
amended to read as follows:
``(h)(1) If an applicable pension plan is amended so as to
provide a significant reduction in the rate of future benefit
accrual of 1 or more participants, the plan administrator
shall, not later than the 45th day before the effective date
of the amendment, provide written notice to each applicable
individual (and to each employee organization representing
applicable individuals) which--
``(A) sets forth a summary of the plan amendment and the
effective date of the amendment,
``(B) includes a statement that the plan amendment is
expected to significantly reduce the rate of future benefit
accrual,
``(C) includes a description of the classes of employees
reasonably expected to be affected by the reduction in the
rate of future benefit accrual,
``(D) sets forth examples illustrating how the plan will
change benefits for such classes of employees,
``(E) if paragraph (2) applies to the plan amendment,
includes a notice that the plan administrator will provide a
benefit estimation tool kit described in paragraph (2)(B) to
each applicable individual no later than the date required
under paragraph (2)(A), and
``(F) includes a notice of each applicable individual's
right under Federal law to receive, and of the procedures for
requesting, an annual benefit statement.
``(2)(A) If a plan amendment results in the significant
restructuring of the plan benefit formula (as determined
under regulations prescribed by the Secretary of the
Treasury), the plan administrator shall, not later than the
15th day before the effective date of the amendment, provide
a benefit estimation tool kit described in subparagraph (B)
to each applicable individual. If such plan amendment occurs
within 12 months of an event described in section
410(b)(6)(C) of the Internal Revenue Code of 1986, the plan
administrator shall in no event be required to provide the
benefit estimation tool kit to applicable individuals
affected by the event before the date which is 12 months
after the date on which notice under paragraph (1) is given
to such applicable individuals.
``(B) The benefit estimation tool kit described in this
subparagraph shall include the following information:
``(i) Sufficient information to enable an applicable
individual to estimate the individual's projected benefits
under the terms of the plan in effect both before and after
the adoption of the amendment.
``(ii) The formulas and actuarial assumptions necessary to
estimate under both such plan terms a single life annuity at
appropriate ages, and, when available, a lump sum
distribution.
``(iii) The interest rate used to compute a lump sum
distribution and information as to whether the value of any
early retirement benefit or retirement-type subsidy (within
the meaning of subsection (g)(2)(A)) is included in the lump
sum distribution.
``(3) Any notice under paragraph (1) or (2) may be provided
to a person designated, in writing, by the person to which it
would otherwise be provided.
``(4) The information required to be provided under this
subsection shall be provided in a manner calculated to be
reasonably understood by the average participant.
``(5)(A) In the case of any failure to exercise due
diligence in meeting any requirement of this subsection with
respect to any plan amendment, the provisions of the
applicable pension plan shall be applied as if such plan
amendment entitled all applicable individuals to the greater
of--
``(i) the benefits to which they would have been entitled
without regard to such amendment, or
``(ii) the benefits under the plan with regard to such
amendment.
[[Page S3742]]
``(B) For purposes of subparagraph (A), there is a failure
to exercise due diligence in meeting the requirements of this
subsection if such failure is within the control of the plan
sponsor and is--
``(i) an intentional failure (including any failure to
promptly provide the required notice or information after the
plan administrator discovers an unintentional failure to meet
the requirements of this subsection),
``(ii) a failure to provide most of the individuals with
most of the information they are entitled to receive under
this subsection, or
``(iii) a failure to exercise due diligence which is
determined under regulations prescribed by the Secretary of
the Treasury.
``(C) For excise tax on failure to meet requirements, see
section 4980F of the Internal Revenue Code of 1986.
``(5)(A) For purposes of this subsection, the term
`applicable individual' means, with respect to any plan
amendment--
``(i) each participant in the plan, and
``(ii) any beneficiary who is an alternate payee (within
the meaning of section 206(d)(3)(K)) under an applicable
qualified domestic relations order (within the meaning of
section 206(d)(3)(B)),
whose rate of future benefit accrual under the plan may
reasonably be expected to be significantly reduced by such
plan amendment.
``(B) Such term shall not include a participant who has
less than 1 year of participation (within the meaning of
subsection (b)(4)) under the plan as of the effective date of
the plan amendment.
``(6) For purposes of this subsection, the term `applicable
pension plan' means--
``(A) a defined benefit plan, or
``(B) an individual account plan which is subject to the
funding standards of section 302.
``(7) For purposes of this subsection, a plan amendment
which eliminates or significantly reduces any early
retirement benefit or retirement-type subsidy (within the
meaning of section 204(g)(2)(A)) shall be treated as having
the effect of significantly reducing the rate of future
benefit accrual.
``(8) The Secretary of the Treasury may by regulation allow
any notice under this subsection to be provided by using new
technologies. Such regulation shall ensure that at least one
option for providing such notice is not dependent on new
technologies.''
(c) Regulations Relating to Early Retirement Subsidies.--
The Secretary of the Treasury or the Secretary's delegate
shall, not later than 1 year after the date of the enactment
of this Act, issue regulations relating to early retirement
benefits or retirement-type subsidies described in section
411(d)(6)(B)(i) of the Internal Revenue Code of 1986 and
section 204(g)(2)(A) of the Employee Retirement Income
Security Act of 1974.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to plan amendments taking effect on or after the date
of the enactment of this Act.
(2) Transition.--Until such time as the Secretary of the
Treasury issues regulations under section 4980F(e)(2) of the
Internal Revenue Code of 1986 and section 204(h)(2) of the
Employee Retirement Income Security Act of 1974 (as added by
the amendments made by this section), a plan shall be treated
as meeting the requirements of such sections if it makes a
good faith effort to comply with such requirements.
(3) Special notice rules.--The period for providing any
notice required by the amendments made by this section shall
not end before the date which is 3 months after the date of
the enactment of this Act.
(d) Study.--The Secretary of the Treasury shall prepare a
report on the effects of significant restructurings of plan
benefit formulas of traditional defined benefit plans. Such
study shall examine the effects of such restructurings on
longer service participants, including the incidence and
effects of ``wear away'' provisions under which participants
earn no additional benefits for a period of time after
restructuring. As soon as practicable, but not later than one
year after the date of enactment of this Act, the Secretary
shall submit such report, together with recommendations
thereon, to the Committee on Ways and Means and the Committee
on Education and the Workforce of the House of
Representatives and the Committee on Finance and the
Committee on Health, Education, Labor, and Pensions of the
Senate.
TITLE VI--REDUCING REGULATORY BURDENS
SEC. 601. MODIFICATION OF TIMING OF PLAN VALUATIONS.
(a) In General.--Paragraph (9) of section 412(c) (relating
to annual valuation) is amended to read as follows:
``(9) Annual valuation.--
``(A) In general.--For purposes of this section, a
determination of experience gains and losses and a valuation
of the plan's liability shall be made not less frequently
than once every year, except that such determination shall be
made more frequently to the extent required in particular
cases under regulations prescribed by the Secretary.
``(B) Valuation date.--
``(i) Current year.--Except as provided in clause (ii), the
valuation referred to in subparagraph (A) shall be made as of
a date within the plan year to which the valuation refers or
within one month prior to the beginning of such year.
``(ii) Election to use prior year valuation.--The valuation
referred to in subparagraph (A) may be made as of a date
within the plan year prior to the year to which the valuation
refers if--
``(I) an election is in effect under this clause with
respect to the plan, and
``(II) as of such date, the value of the assets of the plan
are not less than 125 percent of the plan's current liability
(as defined in paragraph (7)(B)).
``(iii) Adjustments.--Information under clause (ii) shall,
in accordance with regulations, be actuarially adjusted to
reflect significant differences in participants.
``(iv) Election.--An election under clause (ii), once made,
shall be irrevocable without the consent of the Secretary.''.
(b) Amendment of ERISA.--Paragraph (9) of section 302(c) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1053(c)) is amended--
(1) by inserting ``(A)'' after ``(9)'', and
(2) by adding at the end the following:
``(B)(i) Except as provided in clause (ii), the valuation
referred to in subparagraph (A) shall be made as of a date
within the plan year to which the valuation refers or within
one month prior to the beginning of such year.
``(ii) The valuation referred to in subparagraph (A) may be
made as of a date within the plan year prior to the year to
which the valuation refers if--
``(I) an election is in effect under this clause with
respect to the plan, and
``(II) as of such date, the value of the assets of the plan
are not less than 125 percent of the plan's current liability
(as defined in paragraph (7)(B)).
``(iii) Information under clause (ii) shall, in accordance
with regulations, be actuarially adjusted to reflect
significant differences in participants.
``(iv) An election under clause (ii), once made, shall be
irrevocable without the consent of the Secretary of the
Treasury.''.
(c) Effective Date.--The amendments made by this section
shall apply to plan years beginning after December 31, 2001.
SEC. 602. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF
DIVIDEND DEDUCTION.
(a) In General.--Section 404(k)(2)(A) (defining applicable
dividends) is amended by striking ``or'' at the end of clause
(ii), by redesignating clause (iii) as clause (iv), and by
inserting after clause (ii) the following new clause:
``(iii) is, at the election of such participants or their
beneficiaries--
``(I) payable as provided in clause (i) or (ii), or
``(II) paid to the plan and reinvested in qualifying
employer securities, or''.
(b) Effective Date.--The amendments made by this section
shall apply to taxable years beginning after December 31,
2001.
SEC. 603. REPEAL OF TRANSITION RULE RELATING TO CERTAIN
HIGHLY COMPENSATED EMPLOYEES.
(a) In General.--Paragraph (4) of section 1114(c) of the
Tax Reform Act of 1986 is hereby repealed.
(b) Effective Date.--The repeal made by subsection (a)
shall apply to plan years beginning after December 31, 2001.
SEC. 604. EMPLOYEES OF TAX-EXEMPT ENTITIES.
(a) In General.--The Secretary of the Treasury shall modify
Treasury Regulations section 1.410(b)-6(g) to provide that
employees of an organization described in section
403(b)(1)(A)(i) of the Internal Revenue Code of 1986 who are
eligible to make contributions under section 403(b) of such
Code pursuant to a salary reduction agreement may be treated
as excludable with respect to a plan under section 401(k) or
(m) of such Code that is provided under the same general
arrangement as a plan under such section 401(k), if--
(1) no employee of an organization described in section
403(b)(1)(A)(i) of such Code is eligible to participate in
such section 401(k) plan or section 401(m) plan; and
(2) 95 percent of the employees who are not employees of an
organization described in section 403(b)(1)(A)(i) of such
Code are eligible to participate in such plan under such
section 401(k) or (m).
(b) Effective Date.--The modification required by
subsection (a) shall apply as of the same date set forth in
section 1426(b) of the Small Business Job Protection Act of
1996.
SEC. 605. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED
RETIREMENT ADVICE.
(a) In General.--Subsection (a) of section 132 (relating to
exclusion from gross income) is amended by striking ``or'' at
the end of paragraph (5), by striking the period at the end
of paragraph (6) and inserting ``, or'', and by adding at the
end the following new paragraph:
``(7) qualified retirement planning services.''.
(b) Qualified Retirement Planning Services Defined.--
Section 132 is amended by redesignating subsection (m) as
subsection (n) and by inserting after subsection (l) the
following:
``(m) Qualified Retirement Planning Services.--
``(1) In general.--For purposes of this section, the term
`qualified retirement planning services' means any retirement
planning advice or information provided to an employee and
his spouse by an employer maintaining a qualified employer
plan.
``(2) Nondiscrimination rule.--Subsection (a)(7) shall
apply in the case of highly compensated employees only if
such services are available on substantially the same terms
to each member of the group of employees normally provided
education and information
[[Page S3743]]
regarding the employer's qualified employer plan.
``(3) Qualified employer plan.--For purposes of this
subsection, the term `qualified employer plan' means a plan,
contract, pension, or account described in section
219(g)(5).''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2001.
SEC. 606. REPORTING SIMPLIFICATION.
(a) Simplified Annual Filing Requirement for Owners and
Their Spouses.--
(1) In general.--The Secretary of the Treasury shall modify
the requirements for filing annual returns with respect to
one-participant retirement plans to ensure that such plans
with assets of $250,000 or less as of the close of the plan
year need not file a return for that year.
(2) One-participant retirement plan defined.--For purposes
of this subsection, the term ``one-participant retirement
plan'' means a retirement plan that--
(A) on the first day of the plan year--
(i) covered only the employer (and the employer's spouse)
and the employer owned the entire business (whether or not
incorporated); or
(ii) covered only one or more partners (and their spouses)
in a business partnership (including partners in an S or C
corporation);
(B) meets the minimum coverage requirements of section
410(b) of the Internal Revenue Code of 1986 without being
combined with any other plan of the business that covers the
employees of the business;
(C) does not provide benefits to anyone except the employer
(and the employer's spouse) or the partners (and their
spouses);
(D) does not cover a business that is a member of an
affiliated service group, a controlled group of corporations,
or a group of businesses under common control; and
(E) does not cover a business that leases employees.
(3) Other definitions.--Terms used in paragraph (2) which
are also used in section 414 of the Internal Revenue Code of
1986 shall have the respective meanings given such terms by
such section.
(b) Effective Date.--The provisions of this section shall
take effect on January 1, 2002.
SEC. 607. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE RESOLUTION
SYSTEM.
The Secretary of the Treasury shall continue to update and
improve the Employee Plans Compliance Resolution System (or
any successor program) giving special attention to--
(1) increasing the awareness and knowledge of small
employers concerning the availability and use of the program;
(2) taking into account special concerns and circumstances
that small employers face with respect to compliance and
correction of compliance failures;
(3) extending the duration of the self-correction period
under the Administrative Policy Regarding Self-Correction for
significant compliance failures;
(4) expanding the availability to correct insignificant
compliance failures under the Administrative Policy Regarding
Self-Correction during audit; and
(5) assuring that any tax, penalty, or sanction that is
imposed by reason of a compliance failure is not excessive
and bears a reasonable relationship to the nature, extent,
and severity of the failure.
SEC. 608. REPEAL OF THE MULTIPLE USE TEST.
(a) In General.--Paragraph (9) of section 401(m) is amended
to read as follows:
``(9) Regulations.--The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes of
this subsection and subsection (k), including regulations
permitting appropriate aggregation of plans and
contributions.''.
(b) Effective Date.--The amendment made by this section
shall apply to years beginning after December 31, 2001.
SEC. 609. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE, AND
LINE OF BUSINESS RULES.
(a) Nondiscrimination.--
(1) In general.--The Secretary of the Treasury shall, by
regulation, provide that a plan shall be deemed to satisfy
the requirements of section 401(a)(4) of the Internal Revenue
Code of 1986 if such plan satisfies the facts and
circumstances test under section 401(a)(4) of such Code, as
in effect before January 1, 1994, but only if--
(A) the plan satisfies conditions prescribed by the
Secretary to appropriately limit the availability of such
test; and
(B) the plan is submitted to the Secretary for a
determination of whether it satisfies such test.
Subparagraph (B) shall only apply to the extent provided by
the Secretary.
(2) Effective dates.--
(A) Regulations.--The regulation required by paragraph (1)
shall apply to years beginning after December 31, 2001.
(B) Conditions of availability.--Any condition of
availability prescribed by the Secretary under paragraph
(1)(A) shall not apply before the first year beginning not
less than 120 days after the date on which such condition is
prescribed.
(b) Coverage Test.--
(1) In general.--Section 410(b)(1) (relating to minimum
coverage requirements) is amended by adding at the end the
following:
``(D) In the case that the plan fails to meet the
requirements of subparagraphs (A), (B) and (C), the plan--
``(i) satisfies subparagraph (B), as in effect immediately
before the enactment of the Tax Reform Act of 1986,
``(ii) is submitted to the Secretary for a determination of
whether it satisfies the requirement described in clause (i),
and
``(iii) satisfies conditions prescribed by the Secretary by
regulation that appropriately limit the availability of this
subparagraph.
Clause (ii) shall apply only to the extent provided by the
Secretary.''.
(2) Effective dates.--
(A) In general.--The amendment made by paragraph (1) shall
apply to years beginning after December 31, 2001.
(B) Conditions of availability.--Any condition of
availability prescribed by the Secretary under regulations
prescribed by the Secretary under section 410(b)(1)(D) of the
Internal Revenue Code of 1986 shall not apply before the
first year beginning not less than 120 days after the date on
which such condition is prescribed.
(c) Line of Business Rules.--The Secretary of the Treasury
shall, on or before December 31, 2001, modify the existing
regulations issued under section 414(r) of the Internal
Revenue Code of 1986 in order to expand (to the extent that
the Secretary determines appropriate) the ability of a
pension plan to demonstrate compliance with the line of
business requirements based upon the facts and circumstances
surrounding the design and operation of the plan, even though
the plan is unable to satisfy the mechanical tests currently
used to determine compliance.
SEC. 610. EXTENSION TO ALL GOVERNMENTAL PLANS OF MORATORIUM
ON APPLICATION OF CERTAIN NONDISCRIMINATION
RULES APPLICABLE TO STATE AND LOCAL PLANS.
(a) In General.--
(1) Subparagraph (G) of section 401(a)(5) and subparagraph
(H) of section 401(a)(26) are each amended by striking
``section 414(d))'' and all that follows and inserting
``section 414(d)).''.
(2) Subparagraph (G) of section 401(k)(3) and paragraph (2)
of section 1505(d) of the Taxpayer Relief Act of 1997 are
each amended by striking ``maintained by a State or local
government or political subdivision thereof (or agency or
instrumentality thereof)''.
(b) Conforming Amendments.--
(1) The heading for subparagraph (G) of section 401(a)(5)
is amended to read as follows: ``Governmental plans''.
(2) The heading for subparagraph (H) of section 401(a)(26)
is amended to read as follows: ``Exception for governmental
plans''.
(3) Subparagraph (G) of section 401(k)(3) is amended by
inserting ``Governmental plans.--'' after ``(G)''.
(c) Effective Date.--The amendments made by this section
shall apply to years beginning after December 31, 2001.
SEC. 611. NOTICE AND CONSENT PERIOD REGARDING DISTRIBUTIONS.
(a) Expansion of Period.--
(1) Amendment of Internal Revenue Code.--
(A) In general.--Subparagraph (A) of section 417(a)(6) is
amended by striking ``90-day'' and inserting ``180-day''.
(B) Modification of regulations.--The Secretary of the
Treasury shall modify the regulations under sections 402(f),
411(a)(11), and 417 of the Internal Revenue Code of 1986 to
substitute ``180 days'' for ``90 days'' each place it appears
in Treasury Regulations sections 1.402(f)-1, 1.411(a)-11(c),
and 1.417(e)-1(b).
(2) Amendment of erisa.--Section 205(c)(7)(A) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1055(c)(7)(A)) is amended by striking ``90-day'' and
inserting ``180-day''.
(3) Effective date.--The amendments made by paragraphs
(1)(A) and (2) and the modifications required by paragraph
(1)(B) shall apply to years beginning after December 31,
2001.
(b) Consent Regulation Inapplicable to Certain
Distributions.--
(1) In general.--The Secretary of the Treasury shall modify
the regulations under section 411(a)(11) of the Internal
Revenue Code of 1986 to provide that the description of a
participant's right, if any, to defer receipt of a
distribution shall also describe the consequences of failing
to defer such receipt.
(2) Effective date.--The modifications required by
paragraph (1) shall apply to years beginning after December
31, 2001.
(c) Disclosure of Optional Forms of Benefits.--
(1) Amendment of internal revenue code.--Section 417(a)(3)
(relating to plan to provide written explanation) is amended
by adding at the end the following:
``(C) Explanation of optional forms of benefits.--
``(i) In general.--If--
``(I) a plan provides optional forms of benefits, and
``(II) the present values of such forms of benefits are not
actuarially equivalent as of the annuity starting date,
then each written explanation required to be provided under
subparagraph (A) shall include the information described in
clause (ii).
``(ii) Information.--A plan to which this subparagraph
applies shall include sufficient information (as determined
in accordance with regulations prescribed by the Secretary)
to allow the participant to understand the differences in the
present values of the optional forms of benefits provided by
[[Page S3744]]
the plan and the effect the participant's election as to the
form of benefit will have on the value of the benefits
available under the plan. Any such information shall be
provided in a manner calculated to be reasonably understood
by the average plan participant.''
(2) Amendment of erisa.--Section 205(c)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)(3))
is amended by adding at the end the following:
``(C)(i) If--
``(I) a plan provides optional forms of benefits, and
``(II) the present values of such forms of benefits are not
actuarially equivalent as of the annuity starting date,
then such plan shall include the information described in
clause (ii) with each written explanation required to be
provided under subparagraph (A).
``(ii) A plan to which this subparagraph applies shall
include sufficient information (as determined in accordance
with regulations prescribed by the Secretary of the Treasury)
to allow the participant to understand the differences in the
present values of the optional forms of benefits provided by
the plan and the effect the participant's election as to the
form of benefit will have on the value of the benefits
available under the plan. Any such information shall be
provided in a manner calculated to be reasonably understood
by the average plan participant.''
(3) Effective date.--The amendments made by this subsection
shall apply to years beginning after December 31, 2001.
SEC. 612. ANNUAL REPORT DISSEMINATION.
(a) In General.--Section 104(b)(3) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1024(b)(3))
is amended by striking ``shall furnish'' and inserting
``shall make available for examination (and, upon request,
shall furnish)''.
(b) Effective Date.--The amendment made by this section
shall apply to reports for years beginning after December 31,
2000.
SEC. 613. TECHNICAL CORRECTIONS TO SAVER ACT.
Section 517 of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1147) is amended--
(1) in subsection (a), by striking ``2001 and 2005 on or
after September 1 of each year involved'' and inserting
``2001, 2005, and 2009 in the month of September of each year
involved'';
(2) in subsection (b), by adding at the end the following
new sentence: ``To effectuate the purposes of this paragraph,
the Secretary may enter into a cooperative agreement,
pursuant to the Federal Grant and Cooperative Agreement Act
of 1977 (31 U.S.C. 6301 et seq.), with the American Savings
Education Council.'';
(3) in subsection (e)(2)--
(A) by striking ``Committee on Labor and Human Resources''
in subparagraph (D) and inserting ``Committee on Health,
Education, Labor, and Pensions'';
(B) by striking subparagraph (F) and inserting the
following:
``(F) the Chairman and Ranking Member of the Subcommittee
on Labor, Health and Human Services, and Education of the
Committee on Appropriations of the House of Representatives
and the Chairman and Ranking Member of the Subcommittee on
Labor, Health and Human Services, and Education of the
Committee on Appropriations of the Senate;'';
(C) by redesignating subparagraph (G) as subparagraph (J);
and
(D) by inserting after subparagraph (F) the following new
subparagraphs:
``(G) the Chairman and Ranking Member of the Committee on
Finance of the Senate;
``(H) the Chairman and Ranking Member of the Committee on
Ways and Means of the House of Representatives;
``(I) the Chairman and Ranking Member of the Subcommittee
on Employer-Employee Relations of the Committee on Education
and the Workforce of the House of Representatives; and'';
(4) in subsection (e)(3)(A)--
(A) by striking ``There shall be no more than 200
additional participants.'' and inserting ``The participants
in the National Summit shall also include additional
participants appointed under this subparagraph.'';
(B) by striking ``one-half shall be appointed by the
President,'' in clause (i) and inserting ``not more than 100
participants shall be appointed under this clause by the
President,'', and by striking ``and'' at the end of clause
(i);
(C) by striking ``one-half shall be appointed by the
elected leaders of Congress'' in clause (ii) and inserting
``not more than 100 participants shall be appointed under
this clause by the elected leaders of Congress'', and by
striking the period at the end of clause (ii) and inserting
``; and''; and
(D) by adding at the end the following new clause:
``(iii) The President, in consultation with the elected
leaders of Congress referred to in subsection (a), may
appoint under this clause additional participants to the
National Summit. The number of such additional participants
appointed under this clause may not exceed the lesser of 3
percent of the total number of all additional participants
appointed under this paragraph, or 10. Such additional
participants shall be appointed from persons nominated by the
organization referred to in subsection (b)(2) which is made
up of private sector businesses and associations partnered
with Government entities to promote long term financial
security in retirement through savings and with which the
Secretary is required thereunder to consult and cooperate and
shall not be Federal, State, or local government
employees.'';
(5) in subsection (e)(3)(B), by striking ``January 31,
1998'' in subparagraph (B) and inserting ``May 1, 2001, May
1, 2005, and May 1, 2009, for each of the subsequent summits,
respectively'';
(6) in subsection (f)(1)(C), by inserting ``, no later than
90 days prior to the date of the commencement of the National
Summit,'' after ``comment'' in paragraph (1)(C);
(7) in subsection (g), by inserting ``, in consultation
with the congressional leaders specified in subsection
(e)(2),'' after ``report'';
(8) in subsection (i)--
(A) by striking ``beginning on or after October 1, 1997''
in paragraph (1) and inserting ``2001, 2005, and 2009''; and
(B) by adding at the end the following new paragraph:
``(3) Reception and representation authority.--The
Secretary is hereby granted reception and representation
authority limited specifically to the events at the National
Summit. The Secretary shall use any private contributions
accepted in connection with the National Summit prior to
using funds appropriated for purposes of the National Summit
pursuant to this paragraph.''; and
(9) in subsection (k)--
(A) by striking ``shall enter into a contract on a sole-
source basis'' and inserting ``may enter into a contract on a
sole-source basis''; and
(B) by striking ``fiscal year 1998'' and inserting ``fiscal
years 2001, 2005, and 2009''.
SEC. 614. STUDIES.
(a) Report on Pension Coverage.--Not later than 5 years
after the date of the enactment of this Act, the Secretary of
the Treasury shall submit a report to the Committee on Ways
and Means of the House of Representatives and the Committee
on Finance of the Senate a report on the effect of the
provisions of the Retirement Security and Savings Act of 2001
on pension coverage, including--
(1) any expansion of coverage for low- and middle-income
workers;
(2) levels of pension benefits;
(3) quality of pension coverage;
(4) worker's access to and participation in plans; and
(5) retirement security.
(b) Study of Preretirement Use of Benefits.--
(1) In general.--The Secretary of the Treasury shall
conduct a study of--
(A) current tax provisions allowing individuals to access
individual retirement plans and qualified retirement plan
benefits of such individual prior to retirement, including an
analysis of--
(i) the extent of use of such current provisions by
individuals; and
(ii) the extent to which such provisions undermine the goal
of accumulating adequate resources for retirement; and
(B) the types of investment decisions made by individual
retirement plan beneficiaries and participants in self-
directed qualified retirement plans, including an analysis
of--
(i) current restrictions on investments; and
(ii) the extent to which additional restrictions on
investments would facilitate the accumulation of adequate
income for retirement.
(2) Report.--Not later than January 1, 2003, the Secretary
of the Treasury shall submit a report to the Committee on
Ways and Means of the House of Representatives and the
Committee on Finance of the Senate containing the results of
the study conducted under paragraph (1) and any
recommendations.
TITLE VII--OTHER ERISA PROVISIONS
SEC. 701. MISSING PARTICIPANTS.
(a) In General.--Section 4050 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1350) is amended by
redesignating subsection (c) as subsection (e) and by
inserting after subsection (b) the following new subsection:
``(c) Multiemployer Plans.--The corporation shall prescribe
rules similar to the rules in subsection (a) for
multiemployer plans covered by this title that terminate
under section 4041A.
``(d) Plans Not Otherwise Subject to Title.--
``(1) Transfer to corporation.--The plan administrator of a
plan described in paragraph (4) may elect to transfer a
missing participant's benefits to the corporation upon
termination of the plan.
``(2) Information to the corporation.--To the extent
provided in regulations, the plan administrator of a plan
described in paragraph (4) shall, upon termination of the
plan, provide the corporation information with respect to
benefits of a missing participant if the plan transfers such
benefits--
``(A) to the corporation, or
``(B) to an entity other than the corporation or a plan
described in paragraph (4)(B)(ii).
``(3) Payment by the corporation.--If benefits of a missing
participant were transferred to the corporation under
paragraph (1), the corporation shall, upon location of the
participant or beneficiary, pay to the participant or
beneficiary the amount transferred (or the appropriate
survivor benefit) either--
``(A) in a single sum (plus interest), or
``(B) in such other form as is specified in regulations of
the corporation.
[[Page S3745]]
``(4) Plans described.--A plan is described in this
paragraph if--
``(A) the plan is a pension plan (within the meaning of
section 3(2))--
``(i) to which the provisions of this section do not apply
(without regard to this subsection), and
``(ii) which is not a plan described in paragraphs (2)
through (11) of section 4021(b), and
``(B) at the time the assets are to be distributed upon
termination, the plan--
``(i) has missing participants, and
``(ii) has not provided for the transfer of assets to pay
the benefits of all missing participants to another pension
plan (within the meaning of section 3(2)).
``(5) Certain provisions not to apply.--Subsections (a)(1)
and (a)(3) shall not apply to a plan described in paragraph
(4).''.
(b) Effective Date.--The amendment made by this section
shall apply to distributions made after final regulations
implementing subsections (c) and (d) of section 4050 of the
Employee Retirement Income Security Act of 1974 (as added by
subsection (a)), respectively, are prescribed.
SEC. 702. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL
EMPLOYERS.
(a) In General.--Subparagraph (A) of section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1306(a)(3)(A)) is amended--
(1) in clause (i), by inserting ``other than a new single-
employer plan (as defined in subparagraph (F)) maintained by
a small employer (as so defined),'' after ``single-employer
plan,'',
(2) in clause (iii), by striking the period at the end and
inserting ``, and'', and
(3) by adding at the end the following new clause:
``(iv) in the case of a new single-employer plan (as
defined in subparagraph (F)) maintained by a small employer
(as so defined) for the plan year, $5 for each individual who
is a participant in such plan during the plan year.''.
(b) Definition of New Single-Employer Plan.--Section
4006(a)(3) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end
the following new subparagraph:
``(F)(i) For purposes of this paragraph, a single-employer
plan maintained by a contributing sponsor shall be treated as
a new single-employer plan for each of its first 5 plan years
if, during the 36-month period ending on the date of the
adoption of such plan, the sponsor or any member of such
sponsor's controlled group (or any predecessor of either)
did not establish or maintain a plan to which this title
applies with respect to which benefits were accrued for
substantially the same employees as are in the new single-
employer plan.
``(ii)(I) For purposes of this paragraph, the term `small
employer' means an employer which on the first day of any
plan year has, in aggregation with all members of the
controlled group of such employer, 100 or fewer employees.
``(II) In the case of a plan maintained by two or more
contributing sponsors that are not part of the same
controlled group, the employees of all contributing sponsors
and controlled groups of such sponsors shall be aggregated
for purposes of determining whether any contributing sponsor
is a small employer.''.
(c) Effective Date.--The amendments made by this section
shall apply to plans established after December 31, 2001.
SEC. 703. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND
SMALL PLANS.
(a) New Plans.--Subparagraph (E) of section 4006(a)(3) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1306(a)(3)(E)) is amended by adding at the end the
following new clause:
``(v) In the case of a new defined benefit plan, the amount
determined under clause (ii) for any plan year shall be an
amount equal to the product of the amount determined under
clause (ii) and the applicable percentage. For purposes of
this clause, the term `applicable percentage' means--
``(I) 0 percent, for the first plan year.
``(II) 20 percent, for the second plan year.
``(III) 40 percent, for the third plan year.
``(IV) 60 percent, for the fourth plan year.
``(V) 80 percent, for the fifth plan year.
For purposes of this clause, a defined benefit plan (as
defined in section 3(35)) maintained by a contributing
sponsor shall be treated as a new defined benefit plan for
each of its first 5 plan years if, during the 36-month period
ending on the date of the adoption of the plan, the sponsor
and each member of any controlled group including the sponsor
(or any predecessor of either) did not establish or maintain
a plan to which this title applies with respect to which
benefits were accrued for substantially the same employees as
are in the new plan.''.
(b) Small Plans.--Paragraph (3) of section 4006(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1306(a)), as amended by section 702(b), is amended--
(1) by striking ``The'' in subparagraph (E)(i) and
inserting ``Except as provided in subparagraph (G), the'',
and
(2) by inserting after subparagraph (F) the following new
subparagraph:
``(G)(i) In the case of an employer who has 25 or fewer
employees on the first day of the plan year, the additional
premium determined under subparagraph (E) for each
participant shall not exceed $5 multiplied by the number of
participants in the plan as of the close of the preceding
plan year.
``(ii) For purposes of clause (i), whether an employer has
25 or fewer employees on the first day of the plan year is
determined taking into consideration all of the employees of
all members of the contributing sponsor's controlled group.
In the case of a plan maintained by two or more contributing
sponsors, the employees of all contributing sponsors and
their controlled groups shall be aggregated for purposes of
determining whether the 25-or-fewer-employees limitation has
been satisfied.''.
(c) Effective Dates.--
(1) Subsection (a).--The amendments made by subsection (a)
shall apply to plans established after December 31, 2001.
(2) Subsection (b).--The amendments made by subsection (b)
shall apply to plan years beginning after December 31, 2001.
SEC. 704. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM
OVERPAYMENT REFUNDS.
(a) In General.--Section 4007(b) of the Employment
Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is
amended--
(1) by striking ``(b)'' and inserting ``(b)(1)'', and
(2) by inserting at the end the following new paragraph:
``(2) The corporation is authorized to pay, subject to
regulations prescribed by the corporation, interest on the
amount of any overpayment of premium refunded to a designated
payor. Interest under this paragraph shall be calculated at
the same rate and in the same manner as interest is
calculated for underpayments under paragraph (1).''.
(b) Effective Date.--The amendment made by subsection (a)
shall apply to interest accruing for periods beginning not
earlier than the date of the enactment of this Act.
SEC. 705. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.
(a) Modification of Phase-In of Guarantee.--Section
4022(b)(5) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:
``(5)(A) For purposes of this paragraph, the term `majority
owner' means an individual who, at any time during the 60-
month period ending on the date the determination is being
made--
``(i) owns the entire interest in an unincorporated trade
or business,
``(ii) in the case of a partnership, is a partner who owns,
directly or indirectly, 50 percent or more of either the
capital interest or the profits interest in such partnership,
or
``(iii) in the case of a corporation, owns, directly or
indirectly, 50 percent or more in value of either the voting
stock of that corporation or all the stock of that
corporation.
For purposes of clause (iii), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986
shall apply (determined without regard to section
1563(e)(3)(C)).
``(B) In the case of a participant who is a majority owner,
the amount of benefits guaranteed under this section shall
equal the product of--
``(i) a fraction (not to exceed 1) the numerator of which
is the number of years from the later of the effective date
or the adoption date of the plan to the termination date, and
the denominator of which is 10, and
``(ii) the amount of benefits that would be guaranteed
under this section if the participant were not a majority
owner.''.
(b) Modification of Allocation of Assets.--
(1) Section 4044(a)(4)(B) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by
striking ``section 4022(b)(5)'' and inserting ``section
4022(b)(5)(B)''.
(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is
amended--
(A) by striking ``(5)'' in paragraph (2) and inserting
``(4), (5),'', and
(B) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively, and by inserting
after paragraph (2) the following new paragraph:
``(3) If assets available for allocation under paragraph
(4) of subsection (a) are insufficient to satisfy in full the
benefits of all individuals who are described in that
paragraph, the assets shall be allocated first to benefits
described in subparagraph (A) of that paragraph. Any
remaining assets shall then be allocated to benefits
described in subparagraph (B) of that paragraph. If assets
allocated to such subparagraph (B) are insufficient to
satisfy in full the benefits described in that subparagraph,
the assets shall be allocated pro rata among individuals on
the basis of the present value (as of the termination date)
of their respective benefits described in that
subparagraph.''.
(c) Conforming Amendments.--
(1) Section 4021 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1321) is amended--
(A) in subsection (b)(9), by striking ``as defined in
section 4022(b)(6)'', and
(B) by adding at the end the following new subsection:
``(d) For purposes of subsection (b)(9), the term
`substantial owner' means an individual who, at any time
during the 60-month period ending on the date the
determination is being made--
``(1) owns the entire interest in an unincorporated trade
or business,
``(2) in the case of a partnership, is a partner who owns,
directly or indirectly, more than 10 percent of either the
capital interest or the profits interest in such partnership,
or
``(3) in the case of a corporation, owns, directly or
indirectly, more than 10 percent in
[[Page S3746]]
value of either the voting stock of that corporation or all
the stock of that corporation.
For purposes of paragraph (3), the constructive ownership
rules of section 1563(e) of the Internal Revenue Code of 1986
shall apply (determined without regard to section
1563(e)(3)(C)).''.
(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7))
is amended by striking ``section 4022(b)(6)'' and inserting
``section 4021(d)''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to plan
terminations--
(A) under section 4041(c) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1341(c)) with respect to
which notices of intent to terminate are provided under
section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after
December 31, 2001, and
(B) under section 4042 of such Act (29 U.S.C. 1342) with
respect to which proceedings are instituted by the
corporation after such date.
(2) Conforming amendments.--The amendments made by
subsection (c) shall take effect on January 1, 2002.
SEC. 706. CIVIL PENALTIES FOR BREACH OF FIDUCIARY
RESPONSIBILITY.
(a) Imposition and Amount of Penalty Made Discretionary.--
Section 502(l)(1) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1132(l)(1)) is amended--
(1) by striking ``shall'' and inserting ``may'', and
(2) by striking ``equal to'' and inserting ``not greater
than''.
(b) Applicable Recovery Amount.--Section 502(l)(2) of such
Act (29 U.S.C. 1132(l)(2)) is amended to read as follows:
``(2) For purposes of paragraph (1), the term `applicable
recovery amount' means any amount which is recovered from any
fiduciary or other person (or from any other person on behalf
of any such fiduciary or other person) with respect to a
breach or violation described in paragraph (1) on or after
the 30th day following receipt by such fiduciary or other
person of written notice from the Secretary of the violation,
whether paid voluntarily or by order of a court in a judicial
proceeding instituted by the Secretary under paragraph (2) or
(5) of subsection (a). The Secretary may, in the Secretary's
sole discretion, extend the 30-day period described in the
preceding sentence.''.
(c) Other Rules.--Section 502(l) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1132(l)) is amended by
adding at the end the following new paragraph:
``(5) A person shall be jointly and severally liable for
the penalty described in paragraph (1) to the same extent
that such person is jointly and severally liable for the
applicable recovery amount on which the penalty is based.
``(6) No penalty shall be assessed under this subsection
unless the person against whom the penalty is assessed is
given notice and opportunity for a hearing with respect to
the violation and applicable recovery amount.''.
(d) Effective Dates.--
(1) In general.--The amendments made by this section shall
apply to any breach of fiduciary responsibility or other
violation of part 4 of subtitle B of title I of the Employee
Retirement Income Security Act of 1974 occurring on or after
the date of enactment of this Act.
(2) Transition rule.--In applying the amendment made by
subsection (b) (relating to applicable recovery amount), a
breach or other violation occurring before the date of
enactment of this Act which continues after the 180th day
after such date (and which may have been discontinued at any
time during its existence) shall be treated as having
occurred after such date of enactment.
SEC. 707. BENEFIT SUSPENSION NOTICE.
(a) Modification of Regulation.--The Secretary of Labor
shall modify the regulation under section 203(a)(3)(B) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(a)(3)(B)) to provide that the notification required by
such regulation--
(1) in the case of an employee who returns to work for a
former employer after commencement of payment of benefits
under the plan shall--
(A) be made during the first calendar month or payroll
period in which the plan withholds payments, and
(B) if a reduced rate of future benefit accruals will apply
to the returning employee (as of the first date of
participation in the plan by the employee after returning to
work), include a statement that the rate of future benefit
accruals will be reduced, and
(2) in the case of any employee who is not described in
paragraph (1)--
(A) may be included in the summary plan description for the
plan furnished in accordance with section 104(b) of such Act
(29 U.S.C. 1024(b)), rather than in a separate notice, and
(B) need not include a copy of the relevant plan
provisions.
(b) Effective Date.--The modification made under this
section shall apply to plan years beginning after December
31, 2001.
TITLE VIII--PLAN AMENDMENTS
SEC. 801. PROVISIONS RELATING TO PLAN AMENDMENTS.
(a) In General.--If this section applies to any plan or
contract amendment--
(1) such plan or contract shall be treated as being
operated in accordance with the terms of the plan during the
period described in subsection (b)(2)(A), and
(2) except as provided by the Secretary of the Treasury,
such plan shall not fail to meet the requirements of section
411(d)(6) of the Internal Revenue Code of 1986 or section
204(g) of the Employee Retirement Income Security Act of 1974
by reason of such amendment.
(b) Amendments to Which Section Applies.--
(1) In general.--This section shall apply to any amendment
to any plan or annuity contract which is made--
(A) pursuant to any amendment made by this Act, or pursuant
to any regulation issued under this Act, and
(B) on or before the last day of the first plan year
beginning on or after January 1, 2005.
In the case of a governmental plan (as defined in section
414(d) of the Internal Revenue Code of 1986), this paragraph
shall be applied by substituting ``2007'' for ``2005''.
(2) Conditions.--This section shall not apply to any
amendment unless--
(A) during the period--
(i) beginning on the date the legislative or regulatory
amendment described in paragraph (1)(A) takes effect (or in
the case of a plan or contract amendment not required by such
legislative or regulatory amendment, the effective date
specified by the plan); and
(ii) ending on the date described in paragraph (1)(B) (or,
if earlier, the date the plan or contract amendment is
adopted),
the plan or contract is operated as if such plan or contract
amendment were in effect; and
(B) such plan or contract amendment applies retroactively
for such period.
Mr. BAUCUS. Mr. President, I am very pleased to be joining my
chairman, Senator Grassley, to introduce this bill today. I also want
to express my particular appreciation to Senator Bob Graham and Senator
Jeffords, without whose tireless work on pension issues this bill would
not have been possible.
We all know that our nation is facing a demographic shift of
tremendous proportions in the coming decades. There are over 35 million
people over the age of 65 today. By 2050, the number of people aged 65
and older is estimated to rise above 81 million.
Yet we have watched the oncoming wave of retirements without
adequately preparing for them, either as a nation, or as individuals.
About three in every four workers say they have personally begun
saving for retirement outside the Social Security system. But the
amounts accumulated by workers as a whole are unimpressive. Most have
accumulated less than $50,000 in their retirement accounts. One-half of
all 401(k) accounts have balances of less than $10,000. Now some of
these small amounts, not surprisingly, belong to younger workers who
have more time for those assets to grow. But only one-fourth of those
aged 35 and older have saved more than $100,000.
Americans can already expect to live about a quarter of their lives
in retirement. As advances in medicine conquer more and more life
threatening diseases such as cancer and stroke, more of us will live to
see our second century--spending a full one-third of our lives in
retirement. Every dollar we save will need to be stretched further as
we live longer. Our ability and willingness to save now will define
whether those retirement years are spent in comfort or poverty.
The American people have many wonderful qualities. But, these days,
unfortunately, thrift isn't one of them.
During the last twenty years, personal savings rates have
consistently declined, from a peak of just under 11 percent of GDP in
the 1970's and 1980's to today's absymal numbers. Personal saving as a
percentage of disposable income have been in negative territory since
last July, and the preliminary estimate for February is a negative 1.3
percent, the same as in January.
What does this matter? A low savings rate means that people aren't
putting their own money away for retirement. That makes them more
dependent on Social Security.
Sixteen percent of today's retirees rely exclusively on Social
Security benefits for their retirement income, and two-thirds of all
retirees rely on Social Security for over one-half of their retirement
income. Yet Social Security only replaces an average of 40 percent of a
worker's income, because the program was never designed to be a
retiree's sole source of support. If retirees continue to rely so
heavily on Social Security, there will still be far too many Americans
spending their retirement years one step away from poverty.
On top of that, a low savings rate means that less capital is
available for
[[Page S3747]]
new investments today. Increased capital for investment is an essential
element to our international competitiveness, and critical in a time of
slow economic growth such as we have now. Helping more Americans save
for their retirement will be a long-term economic stimulus for our
country.
The bill we are introducing here today represents a bi-partisan
effort to reverse this trend. It will expand savings opportunities for
those who are not saving enough, and provide incentives for those who
are not saving at all. It is endorsed by a broad cross-section of
groups representing the pension community, from the Retirement Savings
Network to the AARP.
The bill reforms the tax rules for pension plans. It makes pensions
more portable, to make it easier for workers to take their pensions
with them when they change jobs. It strengthens pensions security and
enforcement. It expands coverage for small businesses. It enhances
pension fairness of women. And it encourages retirement education.
The bill also increases the contribution limits for Individual
Retirement Accounts. IRAs have proven to be a very popular way for
millions of workers to save for retirement, particularly for those who
don't have pension plans available through their employers. The IRA
limits haven't been increased since they were created almost two
decades ago. They are long overdue for an increase. In addition to the
IRA provisions, the bill increases contribution limits for employer-
sponsored pension plans such as 401(k) plans.
These are positive changes. However, by and large, they reinforce the
conventional approach to retirement incentives. That approach can best
be described as a ``top down'' approach. We create incentives for
people with higher incomes, hoping that the so-called nondiscrimination
rules will give the higher paid folks an incentive to encourage more
participation by others, such as through employer matching programs.
I don't have a problem with this approach, as far as it goes. But it
doesn't do enough to reach out to middle and lower income workers.
That's why I am particularly pleased that the bill goes further, by
creating two new savings incentives. One creates new incentives to
encourage small businesses to establish pension plans for their
employees. The other creates a new matching program to help workers
save their own money for retirement.
Let me discuss each in turn.
First, the incentives for small businesses. Unlike larger companies,
most small business owners don't offer pension plans. While three out
of every four workers at large companies are participating in some form
of pension plan, only one out of every three employees of small
businesses have pensions. This leaves over 30 million workers without a
pension plan.
It's not that small businesses don't want to provide pension plans.
They simply can't afford to. In a recent survey of small employers by
the Employee Benefit Research Institute, 65 percent of all small
business owners said tax credits for start-up costs would be strong
incentives for starting retirement plans. They said tax credits are
second only to an increase in business profits as a motivation to small
employers to offer a pension plan to their employees.
The Grassley-Baucus bill provides this motivation by creating two new
tax credits.
The first is a tax credit of up to $500 to help defray the
administrative costs of starting a new plan.
The second is a tax credit to help employers contribute to a new plan
on behalf of their lower paid employees. In effect, it is a match of
amounts employers in small firms put into new retirement plans for
their employees, up to a limit of 3% of the salaries of these workers.
Taken together, these new incentives will make it easier for small
businesses to reach out to their employees and provide them with a
pension.
In addition, the bill creates a new tax credit that's aimed primarily
at workers who do not have a pension plan available to them, to
encourage them to save for themselves.
Only one-third of families with incomes under $25,000 are saving for
retirement either through a pension plan or in an IRA. This compares
with 85 percent of families with incomes over $50,000 who are saving
for retirement.
We clearly need to provide an incentive for those families who aren't
saving right now, and the individual savings credit included in the
Grassley-Baucus bill will provide that incentive.
Here's how it works. A couple with a joint income of $30,000 is
eligible for a 50% tax credit for the amount that they save each year,
for savings of up to $2000. People with higher incomes get a smaller
match, up to a joint income of $50,000.
According to the Joint Tax Committee, over 8 million families will be
eligible for the individual savings credit. This will provide a strong
incentive for these families to begin setting aside money for their
retirement.
I understand pension incentives are not currently part of the
President's tax plan. But I strongly believe this period of surpluses
gives us a unique opportunity to help millions of individual Americans
save for the future--an opportunity that we shouldn't pass up. Enacting
the Grassley-Baucus bill also will help our economy grow by reducing
the cost of capital, providing a long-term stimulus to economic growth.
This bill will help those who are already thrifty and need the
government to loosen limits on saving. But it will also help the many
people who have been left behind. Good people, who are working hard to
make ends meet, but having trouble also saving for a rainy day.
This bill reaches out to all of them. It is a bipartisan effort to
give every working person in this country a real stake in the American
Dream.
I urge my colleagues to join us as cosponsors.
Mr. GRAHAM. Mr. President, I rise today along with Senators Grassley
and Baucus to introduce the Retirement Security and Savings Act of
2001. I am honored to be here today, in a bipartisan group, and
especially with my colleague Senator Grassley, who has put a tremendous
effort into crafting many parts of this bill. He and I recognize that
for our nation to solve what will be one of this generation's greatest
challenges, building retirement security for today's workers, we need
to move in a common sense, bipartisan fashion.
Many of the original cosponsors have dedicated their years in the
Senate to crafting key sections of this legislation. Senator Grassley's
efforts have expanded fairness for women and families, and highlighted
the benefits of retirement education. Senator Baucus has also been a
prime contributor to this legislation, fostering the proposals to
expand pension coverage and ease the administrative burdens on
America's small businesses.
We have come here today, from both sides of the aisle, to ensure that
future generations have a strong and viable retirement security system.
Retirement today is a much different prospect than it was a
generation ago. Retirees can expect to live much longer. Their health
care needs are different and they are much more likely to need long-
term care.
Planning for retirement has also changed. Thirty years ago retirement
planning consisted of picking an employer with a good pension plan and
sticking with that company for 30 years.
Traditional pensions, with their clockwork monthly checks in return
for a defined term of service, are becoming nostalgic memories.
Increasingly, employers are turning to defined contribution plans--
401(k)s and the like.
For example, twenty-five years ago nearly 31 million American workers
were covered by a pension plan. Of those, 87 percent had a defined
benefit plan, according to the Department of Labor. Today, less than
one-half of workers covered by a retirement plan have a defined benefit
plan, while 54 percent are covered by a defined contribution plan.
An employee with a 401(k) account can count on getting only one thing
each month--a statement tracking account investments that rise and fall
with financial markets. The burden of ensuring that there are
sufficient assets in their 401(k) plans falls upon them.
And these are the lucky workers. Many employers--small businesses in
[[Page S3748]]
particular--do not offer any kind of employer-sponsored retirement
plan. Workers at these businesses are left to fend for themselves.
Recent statistics from the Social Security Administration illustrate
the importance of each component of retirement income. 38 percent of
retirees' income came from Social Security, 19 percent from employer-
sponsored savings plans or pensions, and 19 percent from savings. The
rest was unidentified income or earnings from work.
Clearly, Social Security alone is not sufficient basis for a solid
retirement plan. Adequate retirement security these days involves
planning and coordinating three principal sources of income: Social
Security, employer-based pensions and personal savings.
Pensions and personal savings will make up an ever-increasing part of
retirement security. Today, if a worker retires with no savings and no
pension, nearly 40 percent of his/her retirement income is lost. Even
as retirees are becoming more heavily reliant on pensions, statistics
show that 45 million working Americans are still not covered by any
type of retirement plan.
There are a number of reasons why fewer and fewer working Americans
are earning retirement benefits. First, job tenure has fallen. Today's
workers no longer dedicate their entire working life to one company.
Now, the average worker will have had 7 employers in a 40-year work
career. The mobility of working Americans, and the necessity of
businesses to restructure their workforce, can create tremendous
obstacles in ever being able to fully vest, and obtain retirement
benefits.
Second, small businesses, the most dynamic part of our economy, are
the least able to offer their workers retirement benefits. Studies
indicate that small businesses are responsible for a large portion of
the country's job growth, and that this trend will accelerate in the
future.
Third, our economy has shifted away from manufacturing jobs, which
tend to offer pensions, to service and retail jobs, which tend to have
shorter job tenure, more part-time workers, and less likelihood of
providing pension and retirement benefits.
And finally, there are fewer union workers. Collective bargaining
agreements are the most likely to contain retirement benefits. There
are fewer union workers than 20 years ago, and the number is still
declining. Therefore, less people will have important lifetime
retirement security.
It is imperative that Congress take action to improve the private
side of retirement security and encourage personal savings. Our bill,
the Retirement Security and Savings Act, will help hard-working
Americans build personal retirement savings through 401(k)s and IRAs.
To achieve this goal, we focused on six areas: simplification,
portability, expanded coverage for small business, pension security and
enforcement, women's equity issues, and expanding retirement planning
and education opportunities.
This legislation benefits both employers and workers. Employers get
simpler pension systems with less administrative burden, and more loyal
employees. And workers build secure retirement and watch their savings
accumulate over years of work.
A large section of this legislation deals with expanded coverage for
small businesses. It's such an important component of this bill because
small businesses have the greatest difficulty achieving retirement
security.
The problem: statistics indicate that only a small percentage of
workers in firms of less than 100 employees have access to a retirement
plan. We take a step forward in eliminating one of the first hurdles
that a small business faces when it establishes a pension plan. On one
hand, the federal government encourages these businesses to establish
pension plans. Yet on the other hand, we turn around and charge the
small business, at times, up to one thousand dollars to register their
plan with the Internal Revenue Service.
The solution: our bill eliminates this fee for small businesses. We
need to encourage small businesses to start plans, not discourage them
with high registration fees.
This legislation also addresses the inadequacy of retirement security
for women and families. Generally speaking, women live longer than men,
and therefore, need greater savings for retirement. Yet our pension and
retirement laws do not reflect this. Women are more mobile than men,
moving in and out of the workforce due to family responsibilities;
thus, they have less of a chance to become vested. Our legislation
offers a solution--shrinking the five-year vesting cycle to a three-
year cycle.
As I mentioned earlier, the current U.S. worker will have seven
different employers over their lifetime. We have the possibility of
creating a generation of American workers who will retire with many
small accounts--creating a complex maze of statements and features,
different for each account. This is a problem--pensions should be
portable from job to job.
Unfortunately, our tax laws contain barriers to retirement-account
portability and so the major benefit of defined-contribution plans are
often rendered unusable. Workers changing jobs are often given their
savings back in a lump sum that doesn't always make it back into an
Individual Retirement Account or their new employer's 401(k). The
result is that retirement savings get spent before retirement.
Our bill provides a solution to this problem. It allows employees to
roll one retirement account into another as they move from job to job
so that when they retire, they will have one retirement account. It's
easier to monitor, less complicated to keep track of, and builds a more
secure retirement for the worker.
Portability is important, but we must also reduce the red tape. The
main obstacle that companies face in establishing retirement programs
is the administrative burden. For example: for small plans, it costs
$228 per person per year just to comply with all the forms, tests and
regulations.
We have a common sense remedy to one of the most vexing problems in
pension administration: figuring out how much money to contribute to
the company's plan. It's a complex formula of facts, statistics and
assumptions. We want to be able to say to plans that have no problem
with underfunding: to help make these calculations, you can use the
prior year's data to help make the proper contribution. You don't have
to re-sort through the numbers each and every year. Companies will be
able to calculate, and then budget accordingly--and not wait until
figures and rates out of their control are released by outside sources.
I have said time and time again that Americans are not saving. But
those who are oftentimes hit limits on the amounts they can save. The
problem is that most of these limits were established more than 20
years ago. Currently, for example, in a 401(k) plan the IRS limits the
amount an employee can contribute to $10,500 a year.
Our solution is to raise that limit to $15,000, along with raising
many other limits that affect savings in order to build a more secure
retirement for working Americans.
Building retirement security will also take some education. One of
the principal reasons Americans do not prepare for retirement is that
they don't understand the benefits that are available to them.
One solution to this dilemma is regular and easy to read benefit
statements from employers reminding workers early in their career of
the importance of retirement savings. These statements would clarify
what benefits workers are accruing. With this information each American
will more easily be able to determine the personal savings they need in
order to build a sound retirement.
The new retirement paradigm requires Congress and individual workers
to rededicate themselves to the goal of retirement security. If we
fail, the consequences will be harsh. That's particularly true in
Florida, a popular retirement destination that could be devastated by
an influx of seniors inadequately prepared for their retirement.
While Florida would be hit first, the nation as a whole will
eventually feel the pain as the population ages faster than the
workforce. To those who would suggest this is the distant future,
remember how far high school seemed when you were in the sixth grade,
how 30 once loomed eons from 25, and how we once thought our parents
would be young and healthy forever.
With the introduction of this legislation today it is my goal to
ensure that
[[Page S3749]]
each American who works hard for thirty or forty years has gotten every
opportunity for a secure and comfortable retirement.
I thank my colleagues who have worked so hard with me on this
measure, and ask for the support of those in this Chamber on this
important legislation.
Mr. HATCH. Mr. President, I rise today to express my support for the
Retirement Security and Savings Act of 2001, and I am pleased to once
again join my colleagues as an original cosponsor of this important
legislation. Enactment of this bill would encourage more businesses to
offer pension plans to their employees by simplifying the complex and
burdensome pension rules they face and would also make it easier for
employees to save for their own retirement.
I want to congratulate my colleague, the chairman of the Finance
Committee, Senator Grassley, for his effective and persistent
leadership on this issue. Senators Grassley, Baucus, Graham, and
Jeffords, along with myself and several other Senators, have been
working on enactment of a bipartisan pension simplification and
retirement savings enhancement bill for several years now. These
efforts led to the successful passage of a bipartisan package of such
provisions in the Taxpayer Refund and Reform Act of 1999, which was
unfortunately vetoed by President Clinton. We again came close to the
goal line last year when the Finance Committee reported out a bill
containing similar provisions. The ultimate objective of enactment has
been elusive, however. Introduction of this legislation today is the
first step of what I hope will be the successful completion to this
long quest.
However, I have some serious concerns with some changes that were
made to the bill being introduced today, compared with earlier
versions. Specifically, important changes to the top-heavy rules that
affect small businesses have been left out. Let me explain.
Today's pension laws are complicated and cumbersome and a deterrent
to small businesses wanting to establish a retirement plan. In 1996,
Congress began the job of pension simplification when it passed the
Small Business Job Protection Act. This Act contained important changes
to our pension laws, including two simplification provisions important
to small and family-owned businesses--an exemption from costly
nondiscrimination testing for 401(k) plans that meet certain safe
harbors, such as providing a minimum level of benefits to non-highly
paid employees, and the elimination of complex and duplicative family
aggregation rules.
Unfortunately, these changes did not apply to the top-heavy rules.
The top-heavy rules are additional testing and minimum benefit
requirements aimed at ensuring that owner-dominated plans do not
discriminate against lower-paid workers. Due to their design, top-heavy
rules generally only affect business with fewer than 100 employees.
I recognize the need to protect lower-paid employees from
discrimination in the design of retirement plans. However, the top-
heavy rules can be duplicative and especially harmful in that they
discourage small employers from establishing pension plans because they
add to the cost and administrative burden of sponsoring a plan. In the
end, rules like these that were designed to protect employees can end
up harming them by leaving them with no employer-provided retirement
coverage. Moreover, the general nondiscrimination rules have been
strengthened over the years since the enactment of the top-heavy rules,
and are further strengthened by the provisions of the bill being
introduced today. Therefore, eliminating these duplicative top-heavy
rules would not leave workers unprotected. It would, however, remove a
disincentive for small employers to sponsor a retirement plan.
H.R. 1102, the pension simplification bill that passed the House of
Representatives and the Finance Committee last year with broad
bipartisan support, as well as H.R. 10, this year's version of the so-
called Portman-Cardin bill recently introduced in the House, contain
two important provisions that were left out of the bill being
introduced today. These two omitted provisions would exempt safe-harbor
401(k) plans from the top-heavy rules and remove the family aggregation
requirement from the top-heavy rules.
First, the 401(k) safe harbor provides exactly what the top-heavy
rules attempt to do--guarantee that non-highly paid workers get a
minimum level of benefits and are not discriminated against. In return,
employers can avoid costly nondiscrimination testing. Congress provided
the safe-harbors to encourage small employers to create new pension
plans and provide more generous benefits to employees. However, because
qualification for the safe harbor does not exclude a plan from the top-
heavy rules, the fear of costly testing can be a serious deterrent to
businesses wishing to take advantage of the safe harbor, even if the
plan satisfies the minimum benefit requirements. Thus, in order to
provide certainty and encouragement to small businesses, 401(k) plans
that meet the safe harbor rules should also be exempt from top-heavy
testing.
Second, as was noted by Congress in 1996, the family aggregation
rules are complex and unnecessary in light of the numerous other
provisions that protect against pension plans disproportionately
favoring high-paid workers. Moreover, requiring the aggregation of
family members when testing pension plans imposes undue restrictions on
the ability of a family-owned business to provide adequate retirement
benefits for all members of the family working for the business.
Therefore, Congress should complete the task of easing this burden on
family-owned businesses by removing the family aggregation requirement
from the top-heavy rules.
On the whole I support the legislation we are introducing today. It
would go a long way toward increasing the retirement security for
millions of Americans. However, I am disappointed that these two
provisions, along with several others, were dropped from the bill.
These two provisions are particularly important tools in our effort to
expand employee retirement coverage by encouraging small businesses to
establish pension plans. As pension reform legislation makes its way
through the legislative process, I will work to try to restore these
provisions so that small family-owned businesses will have more
certainty and confidence and fewer unnecessary burdens and costs when
establishing pension plans for their workers.
______
By Mr. REED (for himself, Mrs. Clinton, and Mr. Schumer):
S. 743. A bill to establish a medical education trust fund, and for
other purposes; to the Committee on Finance.
Mr. REED. Mr. President, today I am introducing legislation along
with my colleague Senator Clinton, that establishes a Medical Education
Trust Fund to support America's 144 medical schools and 1,250 graduate
medical education, GME, teaching institutions. These institutions are
national treasures, they are the very best in the world and deserve
explicit and dedicated funding to guarantee that the United States
continues to lead the world in the quality of its medical education and
its health care delivery system.
The Medical Education Trust Fund Act, METFA, of 2001 recognizes the
need to begin moving away from existing medical education payment
policies. The primary and immediate purpose of the legislation is to
establish as Federal policy that medical education is a public good
that all sectors of the health care system must support. This bill
ensures that public and private insurers share the burden of financing
medical education equitably. As such, METFA will be funded through
three sources: a 1.5 percent assessment on health insurance premiums,
Medicare, and Medicaid. The relative contribution from each of these
sources is in rough proportion to the medical education costs
attributable to their respective covered populations.
GME is increasingly becoming hostage to fights over larger questions
about the solvency and design of the Medicare system. The very
commission entrusted to protect the integrity of the Medicare program,
MedPAC, itself has succumbed to political and idelogical pressures by
recommending that the GME program be removed from the Health Insurance
Trust Fund and thrown into the appropriations process. I cannot stress
strongly
[[Page S3750]]
enough how important it is to reject this recommendation. To subject
GME to the annual appropriations process does nothing more than to put
a vital program in direct competition with many other important federal
priorities in a budget that the Bush Administration is already severely
constraining. We have seen this first hand in working through the 2002
budget, where the current Administration has proposed to cut a large
portion of the Pediatric GME program to fund other programs. Leaving
this program unprotected, will incite the same type of particularized
special interest advocacy that we see emerging in other areas of health
care. I urge my colleagues to reject this dangerous notion and instead
call on all of you to support the concept embodied in this bill.
This legislation, METFA, is not my innovation. It is an idea,
pioneered by our former colleague, Senator Moynihan. This bill
recognizes that medical education is the responsibility of all who
benefit from it and must therefore share in the responsibility to
support it. As Senator Moynihan once said ``medical education is one of
America's most precious public resources.'' He understood that despite
the increasingly competitive health care system of our time, that
medical education was a public good, that is, ``a good from which
everyone benefits but for which no one is willing to pay.''
Some health reformers argue that in fact, GME does not meet the
requirements of a public good and that therefore, an all-payer system
is nothing more than a form of taxation. I beg to differ. Health care
is not a commodity. While we can and should rely on competition to hold
down costs in much of the health system, we must not allow it to bring
a premature end to this great age of medical discovery, an age made
possible by this country's exceptionally well trained health
professionals and superior medical schools and teaching hospitals.
Indeed, through the NIH and the tax code we have successfully and
robustly, subsidized the development of new wonder drugs, and I
certainly don't think anyone is suggesting that we change this policy,
my legislation complements a competitive health market by providing
tax-supported funding for the public services provided by teaching
hospitals and medical schools.
The legislation we introduce today is only the beginning. It
establishes the principle that, as a public good, medical education
should be supported by a stable, dedicated, long-term source of
funding. To ensure that the United States continues to lead the world
in the quality of its medical education and its health system as a
whole, the legislation would also create a Medical Education Advisory
Commission to conduct a thorough study and make recommendations,
including the potential use of demonstration projects, regarding the
following: alternative and additional sources of medical education
financing; alternative methodologies for financing medical education;
policies designed to maintain superior research and educational
capacities in an increasingly competitive health system; the
appropriate role of medical schools in graduate medical education;
polices designed to expand eligibility for graduate medical education
payments to institutions other than teaching hospitals, including
children's hospital.
The services provided by our nation's teaching hospitals and medical
schools, groundbreaking research, highly skilled medical care, and the
training of tomorrow's physicians, are vitally important and must be
protected in this time of intense economic competition in the health
system.
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. 743
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Medical
Education Trust Fund Act of 2001''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Medical Education Trust Fund.
Sec. 3. Amendments to medicare program.
Sec. 4. Amendments to medicaid program.
Sec. 5. Assessments on insured and self-insured health plans.
Sec. 6. Medical Education Advisory Commission.
Sec. 7. Demonstration projects.
SEC. 2. MEDICAL EDUCATION TRUST FUND.
The Social Security Act (42 U.S.C. 300 et seq.) is amended
by adding after title XXI the following new title:
``TITLE XXII--MEDICAL EDUCATION TRUST FUND
``table of contents of title
``Sec. 2201. Establishment of Trust Fund.
``Sec. 2202. Payments to medical schools.
``Sec. 2203. Payments to teaching hospitals.
``SEC. 2201. ESTABLISHMENT OF TRUST FUND.
``(a) In General.--There is established in the Treasury of
the United States a fund to be known as the Medical Education
Trust Fund (in this title referred to as the `Trust Fund'),
consisting of the following accounts:
``(1) The Medical School Account.
``(2) The Medicare Teaching Hospital Indirect Account.
``(3) The Medicare Teaching Hospital Direct Account.
``(4) The Non-Medicare Teaching Hospital Indirect Account.
``(5) The Non-Medicare Teaching Hospital Direct Account.
Each such account shall consist of such amounts as are
allocated and transferred to such account under this section,
sections 1886(m) and 1936, and section 4503 of the Internal
Revenue Code of 1986. Amounts in the accounts of the Trust
Fund shall remain available until expended.
``(b) Expenditures From Trust Fund.--Amounts in the
accounts of the Trust Fund are available to the Secretary for
making payments under sections 2202 and 2203.
``(c) Investment.--
``(1) In general.--The Secretary of the Treasury shall
invest amounts in the accounts of the Trust Fund which the
Secretary determines are not required to meet current
withdrawals from the Trust Fund. Such investments may be made
only in interest-bearing obligations of the United States.
For such purpose, such obligations may be acquired on
original issue at the issue price, or by purchase of
outstanding obligations at the market price.
``(2) Sale of obligations.--The Secretary of the Treasury
may sell at market price any obligation acquired under
paragraph (1).
``(3) Availability of income.--Any interest derived from
obligations held in each such account, and proceeds from any
sale or redemption of such obligations, are hereby
appropriated to such account.
``(d) Monetary Gifts to Trust Fund.--There are appropriated
to the Trust Fund such amounts as may be unconditionally
donated to the Federal Government as gifts to the Trust Fund.
Such amounts shall be allocated and transferred to the
accounts described in subsection (a) in the same proportion
as the amounts in each of the accounts bears to the total
amount in all the accounts of the Trust Fund.
``SEC. 2202. PAYMENTS TO MEDICAL SCHOOLS.
``(a) Federal Payments to Medical Schools for Certain
Costs.--
``(1) In general.--In the case of a medical school that in
accordance with paragraph (2) submits to the Secretary an
application for fiscal year 2002 or any subsequent fiscal
year, the Secretary shall make payments for such year to the
medical school for the purpose specified in paragraph (3).
The Secretary shall make such payments from the Medical
School Account in an amount determined in accordance with
subsection (b), and may administer the payments as a
contract, grant, or cooperative agreement.
``(2) Application for payments.--For purposes of paragraph
(1), an application for payments under such paragraph for a
fiscal year is in accordance with this paragraph if--
``(A) the medical school involved submits the application
not later than the date specified by the Secretary; and
``(B) the application is in such form, is made in such
manner, and contains such agreements, assurances, and
information as the Secretary determines to be necessary to
carry out this section.
``(3) Purpose of payments.--The purpose of payments under
paragraph (1) is to assist medical schools in maintaining and
developing quality educational programs in an increasingly
competitive health care system.
``(b) Availability of Trust Fund for Payments; Annual
Amount of Payments.--
``(1) Availability of trust fund for payments.--For making
payments under subsection (a) from the amount allocated and
transferred to the Medical School Account under sections
1886(m), 1936, 2201(c)(3), and 2201(d), and section 4503 of
the Internal Revenue Code of 1986, amounts for a fiscal year
shall be available as follows:
``(A) In the case of fiscal year 2002, $200,000,000.
``(B) In the case of fiscal year 2003, $300,000,000.
``(C) In the case of fiscal year 2004, $400,000,000.
``(D) In the case of fiscal year 2005, $500,000,000.
``(E) In the case of fiscal year 2006, $600,000,000.
``(F) In the case of each subsequent fiscal year, the
amount determined under this paragraph for the previous
fiscal year updated through the midpoint of such previous
fiscal year by the estimated percentage
[[Page S3751]]
change in the general health care inflation factor (as
defined in subsection (d)) during the 12-month period ending
at that midpoint, with appropriate adjustments to reflect
previous underestimations or overestimations under this
subparagraph in the projected health care inflation factor.
``(2) Amount of payments for medical schools.--
``(A) In general.--Subject to the annual amount available
under paragraph (1) for a fiscal year, the amount of payments
required under subsection (a) to be made to a medical school
that submits to the Secretary an application for such year in
accordance with subsection (a)(2) is an amount equal to an
amount determined by the Secretary in accordance with
subparagraph (B).
``(B) Development of formula.--The Secretary shall develop
a formula for allocation of funds to medical schools under
this section consistent with the purpose described in
subsection (a)(3).
``(c) Medical School Defined.--For purposes of this
section, the term `medical school' means a school of medicine
(as defined in section 799 of the Public Health Service Act)
or a school of osteopathic medicine (as defined in such
section).
``(d) General Health Care Inflation Factor.--The term
`general health care inflation factor' means the Consumer
Price Index for Medical Services as determined by the Bureau
of Labor Statistics.
``SEC. 2203. PAYMENTS TO TEACHING HOSPITALS.
``(a) Formula Payments to Eligible Entities.--
``(1) In general.--In the case of any fiscal year beginning
after September 30, 2001, the Secretary shall make payments
to each eligible entity that, in accordance with paragraph
(2), submits to the Secretary an application for such fiscal
year. Such payments shall be made from the Trust Fund, and
the total of the payments to the eligible entity for the
fiscal year shall equal the sum of the amounts determined
under subsections (b), (c), (d), and (e) with respect to such
entity.
``(2) Application.--For purposes of paragraph (1), an
application shall contain such information as may be
necessary for the Secretary to make payments under such
paragraph to an eligible entity during a fiscal year. An
application shall be treated as submitted in accordance with
this paragraph if it is submitted not later than the date
specified by the Secretary, and is made in such form and
manner as the Secretary may require.
``(3) Periodic payments.--Payments under paragraph (1) to
an eligible entity for a fiscal year shall be made
periodically, at such intervals and in such amounts as the
Secretary determines to be appropriate (subject to applicable
Federal law regarding Federal payments).
``(4) Administrator of programs.--The Secretary shall carry
out responsibility under this title by acting through the
Administrator of the Health Care Financing Administration.
``(5) Eligible entity.--For purposes of this title, the
term `eligible entity', with respect to any fiscal year,
means--
``(A) for payment under subsections (b) and (c), an entity
which would be eligible to receive payments for such fiscal
year under--
``(i) section 1886(d)(5)(B), if such payments had not been
terminated for discharges occurring after September 30, 2001;
``(ii) section 1886(h), if such payments had not been
terminated for cost reporting periods beginning after
September 30, 2001; or
``(iii) both sections; or
``(B) for payment under subsections (d) and (e)--
``(i) an entity which meets the requirement of subparagraph
(A); or
``(ii) an entity which the Secretary determines should be
considered an eligible entity.
``(b) Determination of Amount From Medicare Teaching
Hospital Indirect Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Medicare Teaching Hospital
Indirect Account under section 1886(m)(1), and subsections
(c)(3) and (d) of section 2201 for such fiscal year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year is equal
to the percentage of the total payments which would have been
made to the eligible entity in such fiscal year under section
1886(d)(5)(B) if such payments had not been terminated for
discharges occurring after September 30, 2001.
``(c) Determination of Amount From Medicare Teaching
Hospital Direct Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Medicare Teaching Hospital
Direct Account under section 1886(m)(2), and subsections
(c)(3) and (d) of section 2201 for such fiscal year.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year is equal
to the percentage of the total payments which would have been
made to the eligible entity in such fiscal year under section
1886(h) if such payments had not been terminated for cost
reporting periods beginning after September 30, 2001.
``(d) Determination of Amount From Non-Medicare Teaching
Hospital Indirect Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Non-Medicare Teaching
Hospital Indirect Account for such fiscal year under section
1936, subsections (c)(3) and (d) of section 2201, and section
4503 of the Internal Revenue Code of 1986.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year for an
eligible entity is equal to the percentage of the total
payments which, as determined by the Secretary, would have
been made in such fiscal year under section 1886(d)(5)(B)
if--
``(A) such payments had not been terminated for discharges
occurring after September 30, 2001; and
``(B) such payments were computed in a manner that treated
each patient not eligible for benefits under title XVIII as
if such patient were eligible for such benefits.
``(e) Determination of Amount From Non-Medicare Teaching
Hospital Direct Account.--
``(1) In general.--The amount determined for an eligible
entity for a fiscal year under this subsection is the amount
equal to the applicable percentage of the total amount
allocated and transferred to the Non-Medicare Teaching
Hospital Direct Account for such fiscal year under section
1936, subsections (c)(3) and (d) of section 2201, and section
4503 of the Internal Revenue Code of 1986.
``(2) Applicable percentage.--For purposes of paragraph
(1), the applicable percentage for any fiscal year for an
eligible entity is equal to the percentage of the total
payments which, as determined by the Secretary, would have
been made in such fiscal year under section 1886(h) if--
``(A) such payments had not been terminated for cost
reporting periods beginning after September 30, 2001; and
``(B) such payments were computed in a manner that treated
each patient not eligible for benefits under part A of title
XVIII as if such patient were eligible for such benefits.''.
SEC. 3. AMENDMENTS TO MEDICARE PROGRAM.
Section 1886 of the Social Security Act (42 U.S.C. 1395ww)
is amended--
(1) in subsection (d)(5)(B), in the matter preceding clause
(i), by striking ``The Secretary shall provide'' and
inserting the following: ``For discharges occurring before
October 1, 2001, the Secretary shall provide'';
(2) in subsection (d)(11)(C), by inserting after
``paragraph (5)(B)'' the following: ``(notwithstanding that
payments under paragraph (5)(B) are terminated for discharges
occurring after September 30, 2001)'';
(3) in subsection (h)--
(A) in paragraph (1), in the first sentence, by striking
``the Secretary shall provide'' and inserting ``the Secretary
shall, subject to paragraph (7), provide''; and
(B) by adding at the end the following:
``(7) Limitation.--
``(A) In general.--The authority to make payments under
this subsection (other than payments made under paragraphs
(3)(D) and (6)) shall not apply with respect to--
``(i) cost reporting periods beginning after September 30,
2001; and
``(ii) any portion of a cost reporting period beginning on
or before such date which occurs after such date.
``(B) Rule of construction.--This paragraph may not be
construed as authorizing any payment under section 1861(v)
with respect to graduate medical education.''; and
(4) by adding at the end the following:
``(m) Transfers to Medical Education Trust Fund.--
``(1) Indirect costs of medical education.--
``(A) Transfer.--
``(i) In general.--From the Federal Hospital Insurance
Trust Fund, the Secretary shall, for fiscal year 2002 and
each subsequent fiscal year, transfer to the Medical
Education Trust Fund an amount equal to the amount estimated
by the Secretary under subparagraph (B).
``(ii) Allocation.--Of the amount transferred under clause
(i)--
``(I) there shall be allocated and transferred to the
Medical School Account of such Trust Fund an amount which
bears the same ratio to the total amount available under
section 2202(b)(1) for the fiscal year (reduced by the
balance in such account at the end of the preceding fiscal
year) as the amount transferred under clause (i) bears to the
total amounts transferred to such Trust Fund under title XXII
(excluding amounts transferred under subsections (c)(3) and
(d) of section 2201) for such fiscal year; and
``(II) the remainder shall be allocated and transferred to
the Medicare Teaching Hospital Indirect Account of such Trust
Fund.
``(B) Determination of amounts.--The Secretary shall make
an estimate for each fiscal year involved of the nationwide
total of the amounts that would have been paid under
subsection (d)(5)(B) to hospitals during the fiscal year if
such payments had not been terminated for discharges
occurring after September 30, 2001.
``(2) Direct costs of medical education.--
``(A) Transfer.--
``(i) In general.--From the Federal Hospital Insurance
Trust Fund and the Federal Supplementary Medical Insurance
Trust Fund, the Secretary shall, for fiscal year 2002 and
each subsequent fiscal year, transfer to the Medical
Education Trust Fund an
[[Page S3752]]
amount equal to the amount estimated by the Secretary under
subparagraph (B).
``(ii) Allocation.--Of the amount transferred under clause
(i)--
``(I) there shall be allocated and transferred to the
Medical School Account of such Trust Fund an amount which
bears the same ratio to the total amount available under
section 2202(b)(1) for the fiscal year (reduced by the
balance in such account at the end of the preceding fiscal
year) as the amount transferred under clause (i) bears to the
total amounts transferred to such Trust Fund under title XXII
(excluding amounts transferred under subsections (c)(3) and
(d) of section 2201) for such fiscal year; and
``(II) the remainder shall be allocated and transferred to
the Medicare Teaching Hospital Direct Account of such Trust
Fund.
``(B) Determination of amounts.--For each hospital, the
Secretary shall make an estimate for the fiscal year involved
of the amount that would have been paid under subsection (h)
to the hospital during the fiscal year if such payments had
not been terminated for cost reporting periods beginning
after September 30, 2001.
``(C) Allocation between funds.--In providing for a
transfer under subparagraph (A) for a fiscal year, the
Secretary shall provide for an allocation of the amounts
involved between part A and part B (and the trust funds
established under the respective parts) as reasonably
reflects the proportion of direct graduate medical education
costs of hospitals associated with the provision of services
under each respective part.''.
SEC. 4. AMENDMENTS TO MEDICAID PROGRAM.
(a) In General.--Title XIX of the Social Security Act (42
U.S.C. 1396 et seq.) is amended by adding at the end the
following:
``transfer of funds to accounts
``Sec. 1936. (a) Transfer of Funds.--
``(1) In general.--For fiscal year 2002 and each subsequent
fiscal year, the Secretary shall transfer to the Medical
Education Trust Fund established under title XXII an amount
equal to the amount determined under subsection (b).
``(2) Allocation.--Of the amount transferred under
paragraph (1)--
``(A) there shall be allocated and transferred to the
Medical School Account of such Trust Fund an amount which
bears the same ratio to the total amount available under
section 2202(b)(1) for the fiscal year (reduced by the
balance in such account at the end of the preceding fiscal
year) as the amount transferred under paragraph (1) bears to
the total amounts transferred to such Trust Fund (excluding
amounts transferred under subsections (c)(3) and (d) of
section 2201) for such fiscal year; and
``(B) the remainder shall be allocated and transferred to
the Non-Medicare Teaching Hospital Indirect Account and the
Non-Medicare Teaching Hospital Direct Account of such Trust
Fund, in the same proportion as the amounts transferred to
each account under section 1886(m) relate to the total
amounts transferred under such section for such fiscal year.
``(b) Amount Determined.--
``(1) Outlays for acute medical services during preceding
fiscal year.--Beginning with fiscal year 2002, the Secretary
shall determine 5 percent of the total amount of Federal
outlays made under this title for acute medical services, as
defined in paragraph (2), for the preceding fiscal year.
``(2) Acute medical services defined.--The term `acute
medical services' means items and services described in
section 1905(a) other than the following:
``(A) Nursing facility services (as defined in section
1905(f)).
``(B) Services provided by an intermediate care facility
for the mentally retarded (as defined in section 1905(d)).
``(C) Personal care services described in section
1905(a)(24).
``(D) Private duty nursing services referred to in section
1905(a)(8).
``(E) Home or community-based services and other services
furnished under a waiver granted under subsection (c), (d),
or (e) of section 1915.
``(F) Home and community care furnished to functionally
disabled elderly individuals under section 1929.
``(G) Community supported living arrangements services
under section 1930.
``(H) Case-management services described in section
1915(g)(2).
``(I) Home health care services referred to in section
1905(a)(7), clinic services, and rehabilitation services that
are furnished to an individual who has a condition or
disability that qualifies the individual to receive any of
the services described in a previous subparagraph.
``(J) Services furnished in an institution for mental
diseases (as defined in section 1905(i)).
``(c) Entitlement.--This section constitutes budget
authority in advance of appropriations Acts and represents
the obligation of the Federal Government to provide for the
payment to the Non-Medicare Teaching Hospital Indirect
Account, the Non-Medicare Teaching Hospital Direct Account,
and the Medical School Account of amounts determined in
accordance with subsections (a) and (b).''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on October 1, 2001.
SEC. 5. ASSESSMENTS ON INSURED AND SELF-INSURED HEALTH PLANS.
(a) General Rule.--Subtitle D of the Internal Revenue Code
of 1986 (relating to miscellaneous excise taxes) is amended
by adding after chapter 36 the following new chapter:
``CHAPTER 37--HEALTH RELATED ASSESSMENTS
``Subchapter A. Insured and self-insured health plans.
``Subchapter A--Insured and Self-Insured Health Plans
``Sec. 4501. Health insurance and health-related administrative
services.
``Sec. 4502. Self-insured health plans.
``Sec. 4503. Transfer to accounts.
``Sec. 4504. Definitions and special rules.
``SEC. 4501. HEALTH INSURANCE AND HEALTH-RELATED
ADMINISTRATIVE SERVICES.
``(a) Imposition of Tax.--There is hereby imposed--
``(1) on each taxable health insurance policy, a tax equal
to 1.5 percent of the premiums received under such policy,
and
``(2) on each amount received for health-related
administrative services, a tax equal to 1.5 percent of the
amount so received.
``(b) Liability for Tax.--
``(1) Health insurance.--The tax imposed by subsection
(a)(1) shall be paid by the issuer of the policy.
``(2) Health-related administrative services.--The tax
imposed by subsection (a)(2) shall be paid by the person
providing the health-related administrative services.
``(c) Taxable Health Insurance Policy.--For purposes of
this section--
``(1) In general.--Except as otherwise provided in this
section, the term `taxable health insurance policy' means any
insurance policy providing accident or health insurance with
respect to individuals residing in the United States.
``(2) Exemption of certain policies.--The term `taxable
health insurance policy' does not include any insurance
policy if substantially all of the coverage provided under
such policy relates to--
``(A) liabilities incurred under workers' compensation
laws,
``(B) tort liabilities,
``(C) liabilities relating to ownership or use of property,
``(D) credit insurance, or
``(E) such other similar liabilities as the Secretary may
specify by regulations.
``(3) Special rule where policy provides other coverage.--
In the case of any taxable health insurance policy under
which amounts are payable other than for accident or health
coverage, in determining the amount of the tax imposed by
subsection (a)(1) on any premium paid under such policy,
there shall be excluded the amount of the charge for the
nonaccident or nonhealth coverage if--
``(A) the charge for such nonaccident or nonhealth coverage
is either separately stated in the policy, or furnished to
the policyholder in a separate statement, and
``(B) such charge is reasonable in relation to the total
charges under the policy.
In any other case, the entire amount of the premium paid
under such policy shall be subject to tax under subsection
(a)(1).
``(4) Treatment of prepaid health coverage arrangements.--
``(A) In general.--In the case of any arrangement described
in subparagraph (B)--
``(i) such arrangement shall be treated as a taxable health
insurance policy,
``(ii) the payments or premiums referred to in subparagraph
(B)(i) shall be treated as premiums received for a taxable
health insurance policy, and
``(iii) the person referred to in subparagraph (B)(i) shall
be treated as the issuer.
``(B) Description of arrangements.--An arrangement is
described in this subparagraph if under such arrangement--
``(i) fixed payments or premiums are received as
consideration for any person's agreement to provide or
arrange for the provision of accident or health coverage to
residents of the United States, regardless of how such
coverage is provided or arranged to be provided, and
``(ii) substantially all of the risks of the rates of
utilization of services is assumed by such person or the
provider of such services.
``(d) Health-Related Administrative Services.--For purposes
of this section, the term `health-related administrative
services' means--
``(1) the processing of claims or performance of other
administrative services in connection with accident or health
coverage under a taxable health insurance policy if the
charge for such services is not included in the premiums
under such policy, and
``(2) processing claims, arranging for provision of
accident or health coverage, or performing other
administrative services in connection with an applicable
self-insured health plan (as defined in section 4502(c))
established or maintained by a person other than the person
performing the services.
For purposes of paragraph (1), rules similar to the rules of
subsection (c)(3) shall apply.
``SEC. 4502. SELF-INSURED HEALTH PLANS.
``(a) Imposition of Tax.--In the case of any applicable
self-insured health plan, there is hereby imposed a tax for
each month equal to 1.5 percent of the sum of--
``(1) the accident or health coverage expenditures for such
month under such plan, and
``(2) the administrative expenditures for such month under
such plan to the extent such expenditures are not subject to
tax under section 4501.
[[Page S3753]]
In determining the amount of expenditures under paragraph
(2), rules similar to the rules of subsection (d)(3) apply.
``(b) Liability for Tax.--
``(1) In general.--The tax imposed by subsection (a) shall
be paid by the plan sponsor.
``(2) Plan sponsor.--For purposes of paragraph (1), the
term `plan sponsor' means--
``(A) the employer in the case of a plan established or
maintained by a single employer,
``(B) the employee organization in the case of a plan
established or maintained by an employee organization, or
``(C) in the case of--
``(i) a plan established or maintained by 2 or more
employers or jointly by 1 or more employers and 1 or more
employee organizations,
``(ii) a voluntary employees' beneficiary association under
section 501(c)(9), or
``(iii) any other association plan,
the association, committee, joint board of trustees, or other
similar group of representatives of the parties who establish
or maintain the plan.
``(c) Applicable Self-Insured Health Plan.--For purposes of
this section, the term `applicable self-insured health plan'
means any plan for providing accident or health coverage if
any portion of such coverage is provided other than through
an insurance policy.
``(d) Accident or Health Coverage Expenditures.--For
purposes of this section--
``(1) In general.--The accident or health coverage
expenditures of any applicable self-insured health plan for
any month are the aggregate expenditures paid in such month
for accident or health coverage provided under such plan to
the extent such expenditures are not subject to tax under
section 4501.
``(2) Treatment of reimbursements.--In determining accident
or health coverage expenditures during any month of any
applicable self-insured health plan, reimbursements (by
insurance or otherwise) received during such month shall be
taken into account as a reduction in accident or health
coverage expenditures.
``(3) Certain expenditures disregarded.--Paragraph (1)
shall not apply to any expenditure for the acquisition or
improvement of land or for the acquisition or improvement of
any property to be used in connection with the provision of
accident or health coverage which is subject to the allowance
under section 167, except that, for purposes of paragraph
(1), allowances under section 167 shall be considered as
expenditures.
``SEC. 4503. TRANSFER TO ACCOUNTS.
``For fiscal year 2002 and each subsequent fiscal year,
there are hereby appropriated and transferred to the Medical
Education Trust Fund under title XXII of the Social Security
Act amounts equivalent to taxes received in the Treasury
under sections 4501 and 4502, of which--
``(1) there shall be allocated and transferred to the
Medical School Account of such Trust Fund an amount which
bears the same ratio to the total amount available under
section 2202(b)(1) of such Act for the fiscal year (reduced
by the balance in such account at the end of the preceding
fiscal year) as the amount transferred to such Trust Fund
under this section bears to the total amounts transferred to
such Trust Fund (excluding amounts transferred under
subsections (c)(3) and (d) of section 2201 of such Act) for
such fiscal year; and
``(2) the remainder shall be allocated and transferred to
the Non-Medicare Teaching Hospital Indirect Account and the
Non-Medicare Teaching Hospital Direct Account of such Trust
Fund, in the same proportion as the amounts transferred to
such account under section 1886(m) of such Act relate to the
total amounts transferred under such section for such fiscal
year.
Such amounts shall be transferred in the same manner as under
section 9601.
``SEC. 4504. DEFINITIONS AND SPECIAL RULES.
``(a) Definitions.--For purposes of this subchapter--
``(1) Accident or health coverage.--The term `accident or
health coverage' means any coverage which, if provided by an
insurance policy, would cause such policy to be a taxable
health insurance policy (as defined in section 4501(c)).
``(2) Insurance policy.--The term `insurance policy' means
any policy or other instrument whereby a contract of
insurance is issued, renewed, or extended.
``(3) Premium.--The term `premium' means the gross amount
of premiums and other consideration (including advance
premiums, deposits, fees, and assessments) arising from
policies issued by a person acting as the primary insurer,
adjusted for any return or additional premiums paid as a
result of endorsements, cancellations, audits, or
retrospective rating. Amounts returned where the amount is
not fixed in the contract but depends on the experience of
the insurer or the discretion of management shall not be
included in return premiums.
``(4) United states.--The term `United States' includes any
possession of the United States.
``(b) Treatment of Governmental Entities.--
``(1) In general.--For purposes of this subchapter--
``(A) the term `person' includes any governmental entity,
and
``(B) notwithstanding any other law or rule of law,
governmental entities shall not be exempt from the taxes
imposed by this subchapter except as provided in paragraph
(2).
``(2) Exempt governmental programs.--
``(A) In general.--In the case of an exempt governmental
program--
``(i) no tax shall be imposed under section 4501 on any
premium received pursuant to such program or on any amount
received for health-related administrative services pursuant
to such program, and
``(ii) no tax shall be imposed under section 4502 on any
expenditures pursuant to such program.
``(B) Exempt governmental program.--For purposes of this
paragraph, the term `exempt governmental program' means--
``(i) the insurance programs established by parts A and B
of title XVIII of the Social Security Act,
``(ii) the medical assistance program established by title
XIX of the Social Security Act,
``(iii) any program established by Federal law for
providing medical care (other than through insurance
policies) to individuals (or the spouses and dependents
thereof) by reason of such individuals being--
``(I) members of the Armed Forces of the United States, or
``(II) veterans, and
``(iv) any program established by Federal law for providing
medical care (other than through insurance policies) to
members of Indian tribes (as defined in section 4(d) of the
Indian Health Care Improvement Act).
``(c) No Cover Over to Possessions.--Notwithstanding any
other provision of law, no amount collected under this
subchapter shall be covered over to any possession of the
United States.''.
(b) Clerical Amendment.--The table of chapters for subtitle
D of the Internal Revenue Code of 1986 is amended by
inserting after the item relating to chapter 36 the following
new item:
``Chapter 37. Health related assessments.''
(c) Effective Date.--The amendments made by this section
shall apply with respect to premiums received, and expenses
incurred, with respect to coverage for periods after
September 30, 2001.
SEC. 6. MEDICAL EDUCATION ADVISORY COMMISSION.
(a) Establishment.--There is hereby established an advisory
commission to be known as the Medical Education Advisory
Commission (in this section referred to as the ``Advisory
Commission'').
(b) Duties.--
(1) In general.--The Advisory Commission shall--
(A) conduct a thorough study of all matters relating to--
(i) the operation of the Medical Education Trust Fund
established under section 2201 of the Social Security Act (as
added by section 2);
(ii) alternative and additional sources of graduate medical
education funding;
(iii) alternative methodologies for compensating teaching
hospitals for graduate medical education;
(iv) policies designed to maintain superior research and
educational capacities in an increasing competitive health
system;
(v) the role of medical schools in graduate medical
education;
(vi) policies designed to expand eligibility for graduate
medical education payments to children's hospitals that
operate graduate medical education programs; and
(vii) policies designed to expand eligibility for graduate
medical education payments to institutions other than
teaching hospitals;
(B) develop recommendations, including the use of
demonstration projects, on the matters studied under
subparagraph (A) in consultation with the Secretary of Health
and Human Services and the entities described in paragraph
(2);
(C) not later than January 2003, submit an interim report
to the Committee on Finance of the Senate, the Committee on
Ways and Means of the House of Representatives, and the
Secretary of Health and Human Services; and
(D) not later than January 2005, submit a final report to
the Committee on Finance of the Senate, the Committee on Ways
and Means of the House of Representatives, and the Secretary
of Health and Human Services.
(2) Entities described.--The entities described in this
paragraph are--
(A) other advisory groups, including the Council on
Graduate Medical Education and the Medicare Payment Advisory
Commission;
(B) interested parties, including the Association of
American Medical Colleges, the Association of Academic Health
Centers, and the American Medical Association;
(C) health care insurers, including managed care entities;
and
(D) other entities as determined by the Secretary of Health
and Human Services.
(c) Number and Appointment.--The membership of the Advisory
Commission shall include 9 individuals who are appointed to
the Advisory Commission from among individuals who are not
officers or employees of the United States. Such individuals
shall be appointed by the Secretary of Health and Human
Services, and shall include individuals from each of the
following categories:
(1) Physicians who are faculty members of medical schools.
(2) Officers or employees of teaching hospitals.
(3) Officers or employees of health plans.
(4) Deans of medical schools.
[[Page S3754]]
(5) Such other individuals as the Secretary determines to
be appropriate.
(d) Terms.--
(1) In general.--Except as provided in paragraph (2),
members of the Advisory Commission shall serve for the lesser
of the life of the Advisory Commission, or 4 years.
(2) Service beyond term.--A member of the Advisory
Commission may continue to serve after the expiration of the
term of the member until a successor is appointed.
(e) Vacancies.--If a member of the Advisory Commission does
not serve the full term applicable under subsection (d), the
individual appointed to fill the resulting vacancy shall be
appointed for the remainder of the term of the predecessor of
the individual.
(f) Chair.--The Secretary of Health and Human Services
shall designate an individual to serve as the Chair of the
Advisory Commission.
(g) Meetings.--The Advisory Commission shall meet not less
than once during each 4-month period and shall otherwise meet
at the call of the Secretary of Health and Human Services or
the Chair.
(h) Compensation and Reimbursement of Expenses.--Members of
the Advisory Commission shall receive compensation for each
day (including travel time) engaged in carrying out the
duties of the Advisory Commission. Such compensation may not
be in an amount in excess of the maximum rate of basic pay
payable for level IV of the Executive Schedule under section
5315 of title 5, United States Code.
(i) Staff.--
(1) Staff director.--The Advisory Commission shall, without
regard to the provisions of title 5, United States Code,
relating to competitive service, appoint a Staff Director who
shall be paid at a rate equivalent to a rate established for
the Senior Executive Service under 5382 of title 5, United
States Code.
(2) Additional staff.--The Secretary of Health and Human
Services shall provide to the Advisory Commission such
additional staff, information, and other assistance as may be
necessary to carry out the duties of the Advisory Commission.
(j) Termination of the Advisory Commission.--The Advisory
Commission shall terminate 90 days after the date on which
the Advisory Commission submits its final report under
subsection (b)(1)(D).
(k) Authorization of Appropriations.--There are authorized
to be appropriated such sums as may be necessary to carry out
the purposes of this section.
SEC. 7. DEMONSTRATION PROJECTS.
(a) Establishment.--The Secretary of Health and Human
Services (in this section referred to as the ``Secretary'')
shall establish, by regulation, guidelines for the
establishment and operation of demonstration projects which
the Medical Education Advisory Commission recommends under
section 6(b)(1)(B).
(b) Funding.--
(1) In general.--For any fiscal year after 2001, amounts in
the Medical Education Trust Fund under title XXII of the
Social Security Act shall be available for use by the
Secretary in the establishment and operation of demonstration
projects described in subsection (a).
(2) Funds available.--
(A) Limitation.--Not more than \1/10\ of 1 percent of the
funds in such Trust Fund shall be available for the purposes
of paragraph (1).
(B) Allocation.--Amounts under paragraph (1) shall be paid
from the accounts established under paragraphs (2) through
(5) of section 2201(a) of the Social Security Act, in the
same proportion as the amounts transferred to such accounts
bears to the total of amounts transferred to all 4 such
accounts for such fiscal year.
(c) Limitation.--Nothing in this section shall be construed
to authorize any change in the payment methodology for
teaching hospitals and medical schools established by the
amendments made by this Act.
Mrs. CLINTON. Mr. President, I rise today to ask my colleagues to
join me in ensuring that we maintain a steady stream of funding for the
crown jewels of our health care system, out Nation's teaching
hospitals. I deeply appreciate Senator Reed's leadership on this issue
and I am proud to join him and other colleagues as an original
cosponsor of this important legislation.
Teaching hospitals play a vital role in our Nation's health care
system, both in treatment and research, helping to make our system one
of the finest in the world. New York City, for example, leads the world
in the number and quality of academic health centers, teaching
hospitals, and related medical institutions.
I have long supported academic health center and teaching hospitals,
because their work is so essential to our communities. We rely on them
to train physicians and nurses, care for the sickest of the sick and
the poorest of the poor, and engage in research and clinical trials.
Thanks to the research, for example, at Memorial Sloan-Kettering,
cancer patients will suffer less while receiving chemotherapy because
of a drug that was developed there. And a drug that allows balloon
angiplasty to save lives was developed at SUNY Stony Brook.
As my predecessor and friend, Senator Daniel Patrick Moynihan, who I
am so honored to be following in the footsteps of, put it so well a few
years ago, ``We are in the midst of a great era of discovery in the
medical science. It is certainly not a time to close medical schools.
This great era of medical discovery is occurring right here in the
United States, not in Europe like past ages in scientific discovery.
And it is centered in New York City.''
But our Nation's teaching hospitals are at risk. Cuts to Medicare
have lowered reimbursements for teaching hospitals and another
reduction, which I will work with my colleagues to prevent, is
scheduled to take place next year. Teaching hospitals have higher costs
not only because of the training functions they perform, but also
because they treat patients who require some of the most costly
procedures and require longer hospital stays. In addition, the use of
advanced technology and presence of experts in various fields also add
to teaching hospitals' expenses.
All of us, who rely on the expertise of our doctors, and have access
to new technologies, as well as the state-of-the-art services academic
medical centers and teaching hospitals offer, benefit from the creation
of a trust fund to ensure a steady stream of funds dedicated for these
purposes. Some states, including mine, have sought to address these
funding needs themselves. However, as Senator Moynihan also pointed
out, New York State's GME fund was created as a temporary solution
until a Federal fund could be created.
I urge my colleagues in joining me with their support for this
critical investment in our teaching hospitals so that they can continue
to lead the world in training highly-qualified medical professionals,
and generating the state-of-the-art research and treatment that enables
our Nation's health care system to flourish.
______
By Mrs. HUTCHISON (for herself, Mr. Lieberman, and Mr. Feingold):
S. 744. A bill to amend section 527 of the Internal Revenue Code of
1986 to eliminate notification and return requirements for State and
local candidate committees and avoid duplicate reporting by certain
State and local political committees of information required to be
reported and made publicly available under State law; to the Committee
on Finance.
Mrs. HUTCHISON. Mr. President, I am pleased to introduce today a bill
with Senators Lieberman and Feingold that would address a concern that
has been raised by state legislators in Texas and across the country.
Last year Congress enacted the Full and Fair Political Activities
Disclosure Act of 2000, Public Law 106-230, a law that imposed new IRS
reporting requirements on political organizations claiming tax-exempt
status under section 527 of the Internal Revenue Code. The purpose of
this law was to uncover so-called ``stealth PACs,'' tax-exempt groups
which, prior to the enactment of this law, did not have to disclose any
contributions or expenditures and were free to influence elections in
virtual anonymity.
While Public Law 106-230 was intended to target ``stealth PACs,'' it
has had the unintended consequence of imposing burdensome and
duplicative reporting requirements on state and local candidates who
are not involved in any Federal election activities. In many states
like Texas, State and local candidates already file detailed reports
with their state election officials.
To correct this problem, I am introducing legislation that would
exempt state and local candidates from the IRS reporting requirements
of Public Law 106-230. This bill is the product of an agreement that
was worked out among Senator Lieberman, Senator Feingold, Senator Dodd,
Senator McCain, Senator McConnell, and myself.
I originally intended to offer this legislation as an amendment to S.
27, the McCain-Feingold campaign finance bill. Unfortunately, since
this particular legislation impacts the Internal Revenue Code, I was
unable to offer it at that time without the possibility of invoking a
blue slip from the Ways and Means Committee.
Last week, I spoke with the chairman of the Ways and Means Committee
[[Page S3755]]
about this issue, and he assured me that he would seek to address this
issue in his committee. In this vein, I would like to ask the Senator
from Iowa, the chairman of the Finance Committee, if he also will work
with me to address this problem in the context of the tax bill this
year.
Mr. GRASSLEY. Yes, I would be pleased to work with the Senator from
Texas on this matter, and pledge my good faith to give serious
consideration to including language that meets her concerns in an
appropriate tax bill in the near future.
Mrs. HUTCHISON. I'd like to thank the distinguished chairman of the
Finance Committee, and I look forward to working with him.
Mr. LIEBERMAN. Mr. President, I am pleased to cosponsor this bill,
and I thank my colleague, the Senator from Texas, for working with me
to draft this bill in a manner that achieves its purpose, but does not
open any loopholes in the original section 527 reform law.
Last year, Congress passed the first significant campaign finance
reform measure in a quarter of a century. The so-called section 527
reform bill dealt with a truly troubling development, one whereby
organizations that received tax-exempt status by telling the IRS that
they existed to influence elections denied the very same thing to the
FEC. As a result, these self-proclaimed election organizations engaged
in election activity without complying with any aspect of the election
laws, influencing our elections without the American public having any
idea who, or what, was behind them.
Our law put a stop to that, by requiring organizations claiming tax-
exempt status under section 527 of the Internal Revenue Code to do
three things: 1. give notice of their intent to claim that status; 2.
disclose information about their large contributors and their big
expenditures; and 3. file annual informational returns along the lines
of those filed by virtually all other tax-exempt organizations.
During the nine months or so that the 527 reform law has been in
effect, that law has blasted sunshine onto the previously shadowy
operations of a multitude of election-related organizations. Through
the filings mandated by that law, the American public has learned a
great deal about who is financing many of these organizations and how
these organizations are spending their money.
But the law has had another impact, and that is to impose new
reporting requirements on a group of organizations that already fully
disclose to the public all of the activities covered by the 527 reform
law. This bill gives relief to those organizations. In particular it
grants relief from the 527 reform law to two categories of
organizations that are involved exclusively in State and local
elections and that already fully disclose their activities. I thank my
colleague from Texas for working with me to ensure that we accomplish
that goal without opening up any loopholes in the 527 reform law that
will allow undisclosed money to reenter our election system.
First, the bill provides new exemptions for State and local candidate
committees. Under the reform law, committees of candidates for State or
local office have to notify the IRS of their intent to claim section
527 status, and they have to file annual informational returns if they
have over $25,000 in gross receipts. Since the reform law went into
effect, we have become convinced that the burden these requirements
impose on State and local candidate committees outweigh the public
purpose served by requiring them to comply with these mandates.
In contrast to other types of political committees, State and local
candidate committees often are not permanent organizations. They often
crop up a few months before an election and then cease to exist shortly
after the election. They are often staffed by volunteers and run on a
shoe string budget. Any new paperwork requirement--regardless of how
reasonable it may be in other contexts--can put a significant burden on
these minimally staffed and often short-lived committees.
At the same time, State and local candidate committees do not pose
the threats the 527 law intended to address. In contrast to other
political committees, there is never any doubt as to who is running the
candidate committee and as to whose agenda the candidate committee aims
to promote. Just as importantly, State laws regulate and require
disclosure from all candidate committees.
We therefore have concluded that even though we do not believe the
527 reform law's mandates to be particularly burdensome in general,
State and local candidate committees present a special case, one that
warrants exempting them from the reform law's requirements to file a
notice of intent to claim section 527 status and to file an annual
return even if the organization does not have taxable income. I note,
though, that these organizations still will have to file and make
public annual returns if they have taxable income.
The second group to which we are granting a lesser degree of relief
is a very carefully defined group of so-called State and local PACs. In
granting this relief, we have walked a very fine line. On one hand, we
want to recognize the fact that every State requires disclosure from
political committees involved in that State's elections and that many
State and local PACs covered by the 527 reform law therefore are
already disclosing the information the 527 law seeks to State agencies.
On the other hand, we still believe that there is a strong public
interest in knowing how the federal tax-exemption under section 527 is
being used by these organizations, and we most decidedly do not want to
exempt from the law's disclosure requirements any State or local PAC
that does not otherwise publicly disclose all of its activities.
To exempt a State or local PAC merely because it claims that it is
involved only in State elections and files information about some of
its activities with a State agency would risk creating a massive
loophole that could undermine the 527 reform law. That is because just
as prior to the passage of the 527 reform law, some 527 groups were
claiming that they were trying to influence elections for the purposes
of the tax code, but not for the purposes of the election laws, a broad
exemption for State or local PACs could lead some groups to claim that
they are influencing State elections for the purposes of section 527
but not for the purposes of the State disclosure laws.
So, we have reached the following compromise. First, we are not
exempting any of these organizations from the section 527(i) notice
requirements. Unlike candidate committees, PACs generally are not
transient, volunteer-staffed organizations, and it is not always clear
to the public who is behind these groups. Moreover, because we are not
completely exempting these groups from the law's other disclosure
requirements, the notice requirement will be critical in helping the
IRS and outside groups monitor compliance with the law's other
mandates. In light of that, we believe the minimal effort required to
file the 527(i) notice is worth the tremendous value of giving the
public some basic information about these groups.
Second, we are granting an exemption from the section 527(j)
contribution and expenditure reporting requirements to some of these
organizations, but only if they can meet certain strict requirements.
The group's so-called exempt function activity must focus exclusively
on State or local elections. The group must file with a State agency
information on every contribution and expenditure it would otherwise be
required to disclose to the IRS. In addition, these State filings must
be pursuant to a State law that requires these groups to file the State
reports; this requirement seeks to prevent organizations from hiding
truly federal activity by voluntarily reporting to a State where
reports may not be as readily accessible as are federal reports.
Moreover, no group will be able to take advantage of this exemption if
the State reports its files are not publicly available both from the
State agency with which the report is filed and from the group itself.
Finally, this exemption also is not available to any organization in
which a candidate for federal office or someone who holds elected
federal office plays a role--whether through helping to run the
organization, soliciting money for the organization or deciding how the
organization spends its money. In short, this bill exempts from 527(j)
reporting obligations only those groups that truly and legitimately
engage in exclusively State and
[[Page S3756]]
local activity and only when they already report publicly on all of the
information the 527 law seeks.
Finally, the bill makes a small change to these State and local
groups' obligation to file an annual information return when they do
not have taxable income. Under the current law, they must file such
returns when they have $25,000 in annual receipts; the bill increases
that trigger to $100,000. Like all other 527 organizations, though,
they still will have to file such returns if they have taxable income.
Again, let me thank Senator Hutchison for her efforts on this bill. I
believe we have worked out a good compromise, one that grants relief
where it is warranted, but does not in any way threaten to open up a
loophole in the law. I thank her for that, and I yield the floor.
Mr. FEINGOLD. Mr. President, I am pleased to join Senators Hutchinson
and Lieberman in cosponsoring this bill.
Our enactment of the 527 disclosure legislation last year was an
important step toward breaking the logjam on campaign finance reform.
It showed that we could come together to pass commonsense reforms that
give the public more information about and more confidence in the
political process. Since that law went into effect, we have heard
legitimate complaints from state and local candidates and PACs, which
are in fact exempt from taxation under section 527 of the Internal
Revenue Code, about the burden of complying with the notification and
reporting requirements of the law.
Senator Hutchinson brought this issue to the fore by offering an
amendment to the campaign finance bill that we passed on Monday. I very
much appreciate her willingness to withdraw that amendment so we could
work out the details together and avoid creating a blue-slip problem
with the House that might delay the overall campaign finance bill.
The challenge was to address the legitimate concerns raised by state
candidates and PACs without opening new loopholes in the law so soon
after its enactment. Particularly as we stand poised to enact even more
far reaching reforms in the McCain-Feingold bill, it is extremely
important that we not weaken existing law in a way that might be
exploited by groups wanting to avoid the sunshine that the 527
disclosure law provided. I believe that the Senator from Texas and the
Senator from Connecticut have successfully negotiated this difficult
terrain. I am proud to support this bill, and I hope it will be quickly
enacted.
______
By Mr. LEAHY (for himself, Mr. Jeffords, Mr. Feingold, Mr.
Bingaman, and Mr. Dodd):
S. 745. A bill to amend the Child Nutrition Act of 1966 to promote
better nutrition among school children participating in the school
breakfast and lunch programs; to the Committee on Agriculture,
Nutrition, and Forestry.
Mr. LEAHY. Mr. President, I am today introducing a simple, yet
forceful, bill designed to address a growing problem among school
children. I am tired of major soft drink companies trying to take
school lunch money away from children.
It is one thing for the school bully to take lunch money from school
kids, it is another for Coca-Cola or Pepsi to take it. In some areas,
school scoreboards and school uniforms are now plastered with soda ads
under exclusive contracts with vending machines all over the place.
According to a report issued by the Center for Science in the Public
Interest, 20 years ago boys consumed more than twice as much milk as
soda, and girls 50 percent more; now boys and girls consume twice as
much soft drink as they do milk.
I had a huge battle with Coca-Cola in 1994 when they tried to derail
my child nutrition bill--``The Better Nutrition and Health for Children
Act'' because I wanted schools to know they had the right to ban soda
vending machines if they chose.
That 1994 controversy began when Coca-Cola sent out letters to school
authorities around the country misrepresenting my bill. They were
resorting to scare tactics instead of honest debate. The letter sent by
Coca-Cola made numerous false allegations including that soft drinks
are USDA-approved. That was not, and is still not true.
The controversy now is over exclusive contracts with soda
manufacturers so they get to blanket schools with soda vending machines
and signs advertising their products. Also, in some schools sodas are
actually being given away to children during lunch.
For schools participating in the national school lunch program I want
the vending machines turned off during lunch on all school grounds--it
is that simple. During lunch, I do not want sodas sold to school
children by the school. And the Secretary of Agriculture should
carefully consider, based on sound nutritional science, whether to turn
off the soda vending machines and stop soft drink sales before lunch.
You don't have to be a scientist to know that eating habits learned
in childhood translate into a longer and healthier life. Leaving the
vending machines on during lunch sets a bad example, and tempts
children to spend their lunch money.
Soft drinks are a $60 billion a year industry. The fancy commercials
and big-time advertising rake in huge profits for the soda
manufacturers.
Children don't vote, children don't hand out large sums of PAC money,
children don't hire expensive lobbyists. But I have always put the
welfare of children ahead of corporate profits, and I always will.
Coca-Cola recently announced that they will encourage other soda
manufacturers to stop the practice of negotiating exclusive soda
contracts with schools. That does not solve the program. The issue is
not which company is selling the sodas, but whether the sodas should be
sold at all, before and during lunch. Doing away with exclusive
contracts could just mean more soda vending machines in schools.
This is not the way for schools to raise money.
My bill would ban the sale of soda and ``pure-sugar'' candies such as
cotton candy, gum balls, licorice, and the like, to school children in
school during the lunch period and during breakfast. It would also
prohibit the practice in some schools of giving away soda during lunch.
For the period after breakfast and before lunch, the bill would
mandate that the Secretary of Agriculture take into account the
nutritional health of children and design a rule based on ``sound
nutritional science'' that could ban the sale (or donation) of sodas
and similar high-sugar foods, throughout school property or on some
portions of school property. The bill would permit the Secretary to
leave the current approach intact--which would allow such sales if the
school wanted.
In this nutritional health analysis, the Secretary would have to
consider what foods, such as milk or juices, are most likely to be
displaced by the consumption of sodas before and during lunch. The
Secretary would also have to weigh the low nutritional value of sodas
as compared to soda substitutes such as juice or milk.
A recent study published in The Lancet concluded that for each glass
of sugar-sweetened drink consumed by a child, their risk of becoming
obese increased 1.6 times. It was also recently reported that soda
consumption negatively impacts the ability of a child to meet their
daily requirements for calcium, vitamin A, and magnesium. Variations in
the amount of calcium consumed during childhood can result in decreased
bone mass which may lead to a 50 percent greater risk of hip fracture
in later years.
I recently heard from one of my constituents on this issue while
Jenny Dorman is only in 6th grade, she has a great deal of wisdom for
her age. Her letter gets right to the point on this important issue of
how soda consumption impacts health. I ask unanimous consent that her
letter be included in the Record.
The PRESIDING OFFICER. Without objection, it is so ordered.
Dear Senator Leahy, I was getting ready for school when my mom told
me to look at your article. I want to tell you that I'm with you 100
percent. I used to be a soda addict, and would drink nothing else. Last
year in health class the teacher taught us what soda does to your
bones. There is 2 percent of calcium in your bones, 1 percent in your
teeth, the other 1 percent is in your blood. Soda robs your bones of
calcium. If there isn't enough calcium in your blood, your body goes to
your bones, where
[[Page S3757]]
lots of calcium is found. If the soda and your body keeps taking
calcium, your bones will get really brittle and easy to break. When
you're old you can be very liable to have osteoporosis. Once I learned
that, I stopped drinking soda altogether. Now I only drink water, milk,
and once in a while juice. I'm in 6th grade now and I haven't had soda
for over a year! I haven't had it in so long that even if I get a tiny
bit of soda I get a sick feeling inside. Now I'm desperately trying to
get the rest of my family off it by switching Sprite with water. Ha Ha!
Jenny Dorman,
Stockbridge School.
______
By Mr. AKAKA (for himself and Mr. Inouye):
S. 746. A bill to express the policy of the United States regarding
the United States relationship with Native Hawaiians and to provide a
process for the recognition by the United States of the Native Hawaiian
governing entity, and for other purposes; to the Committee on Indian
Affairs.
Mr. AKAKA. Mr. President, I rise today to introduce a bill with my
friend and colleague, the senior Senator from Hawaii, Mr. Inouye which
would clarify the political relationship between Native Hawaiians and
the United States. This measure would extend the federal policy of
self-determination and self-governance to Hawaii's indigenous, native
peoples, Native Hawaiians, thereby establishing parity in federal
policies towards Native Hawaiians, Alaska Natives and American Indians.
The bill we introduce today is a modified version of legislation we
introduced on January 22, 2001. This modified version improves upon our
efforts to clarify the political relationship between Native Hawaiians
and the United States. Federal policy towards Native Hawaiians has
closely paralleled that of our indigenous brothers and sisters, the
Alaska Natives and American Indians. This bill provides a process for
federal recognition of the Native Hawaiian governing entity for a
government-to-government relationship with the United States.
This bill does three things. First it provides a process for federal
recognition of the Native Hawaiian governing entity. Second, it
establishes an office within the Department of the Interior to focus on
Native Hawaiian issues and to serve as a liaison between Native
Hawaiians and the Federal government. Finally, it establishes an
interagency coordinating group to be composed of representatives of
federal agencies which administer programs and implement policies
impacting Native Hawaiians.
This measure does not establish entitlements or special treatment for
Native Hawaiians based on race. This measure focuses on the political
relationship afforded to Native Hawaiians based on the United States'
recognition of Native Hawaiians as the aboriginal, indigenous peoples
of Hawaii. As we all know, the United States' history with its
indigenous peoples has been dismal. In recent decades, however, the
United States has engaged in a policy of self-determination and self-
governance with its indigenous peoples. Government-to-government
relationships provide indigenous peoples with the opportunity to work
directly with the federal government on policies affecting their lands,
natural resources and many other aspects of their well-being. While
federal policies towards Native Hawaiians have paralleled that of
Native American Indians and Alaska Natives, the federal policy of self-
determination and self-governance, has not yet been extended to Native
Hawaiians. This measure extends this policy to Native Hawaiians, thus
furthering the process of reconciliation between Native Hawaiians and
the United States.
This measure does not impact program funding for American Indians and
Alaska Natives. Federal programs for Native Hawaiian health, education
and housing are already administered by the Departments of Health and
Human Services, Education, and Housing the Urban Development. The bill
I introduce today contains a provision which makes clear that this
bill does not authorize eligibility for participation in any programs
and services provided by the Bureau of Indian Affairs.
This bill does not authorize gaming in Hawaii. In fact, it clearly
states that the Indian Gaming Regulatory Act, IGRA, does not apply to
the Native Hawaiian governing entity. Hawaii is one of two states in
the Union which criminally prohibits all forms of gaming. Therefore, I
want to make clear that this bill would not authorize the Native
Hawaiian governing entity to conduct any type of gaming in Hawaii.
Finally, this measure does not preclude Native Hawaiians from seeking
alternatives in the international arena. This measure focuses on self-
determination within the framework of federal law and seeks to
establish equality in the federal policies extended towards American
Indians, Alaska Natives and Native Hawaiians.
We introduced similar legislation during the 106th Congress. While
the bill was passed by the House of Representatives, the Senate failed
to consider it prior to the adjournment of the 106th Congress. The
legislation was widely supported by our indigenous brethren, American
Indians and Alaska Natives. It was also supported by the Hawaii State
Legislature which passed a resolution supporting a government-to-
government relationship between Native Hawaiians and the United States.
Similar resolutions were passed by the Japanese American Citizens'
League and the National Education Association.
Mr. President, when most people think of Hawaii, they think of
paradise. I agree, it is paradise. However, the essence of Hawaii is
captured not by the physical beauty of its islands, but by the beauty
of its people. Those who have lived in Hawaii have a unique demeanor
and attitude which is appropriately described as the ``Aloha'' spirit.
The people of Hawaii demonstrate the Aloha spirit through their
actions--through their generosity, through their appreciation of the
environment and natural resources, through their willingness to care
for each other, through their genuine friendliness.
The people of Hawaii share many ethnic backgrounds and cultures. This
mix of culture and tradition is based on the unique history of Hawaii.
The Aloha spirit is generated from the pride we all share in the
culture and tradition of Hawaii's indigenous, native peoples, the
Native Hawaiians. Hawaii's state motto, ``Ua mau ke'ea `o ka `aina i ka
pono,'' which means ``the life of the land is perpetuated in
righteousness,'' captures the culture of Native Hawaiians. Prior to
western contact, Native Hawaiians lived in an advanced society, in
distinct and structured communities steeped in science. The Native
Hawaiians honored their aina, land, and environment, and therefore
developed methods of irrigation, agriculture, aquaculture, navigation,
medicine, fishing and other forms of subsistence whereby the land and
sea were efficiently used without waste or damage. Respect for the
environment formed the basis of their culture and tradition. It is from
this culture and tradition that the Aloha spirit, which is demonstrated
throughout Hawaii, by all of its people, has endured and flourished.
In 1978, the people of Hawaii acted to preserve Native Hawaiian
culture and tradition by amending Hawaii's state constitution to
establish the Office of Hawaiian Affairs to give expression to the
right of self-determination and self-governance at the state level for
Hawaii's indigenous peoples, Native Hawaiians. Starting with statehood,
Hawaii endeavored to address and protect the rights and concerns of
Hawaii's indigenous peoples in accordance with authority delegated
under federal policy. The constraints of this approach are evident.
This bill extends the federal policy of self-determination and self-
governance to Native Hawaiians at the federal level through a
government-to-government relationship with the Native Hawaiian
governing entity.
This measure is not being introduced to circumvent the 1999 United
States Supreme Court decision in the case of Rice v. Cayetano. The Rice
case was a voting rights case whereby the Supreme Court held that the
State of Hawaii must allow all citizens of Hawaii to vote for the Board
of Trustees of a quasi-state agency, the Office of Hawaiian Affairs.
The Office of Hawaiian Affairs was established by citizens of the
State of Hawaii as part of the 1978 State of Hawaii Constitutional
Convention. The Office of Hawaiian Affairs administers
[[Page S3758]]
programs and services for Native Hawaiians. The State constitution
provided for nine trustees who were Native Hawaiian to be elected by
Native Hawaiians. Following the Supreme Court's ruling in Rice v.
Cayetano, the elections were not only open to all citizens in the State
of Hawaii, but non-Hawaiians were deemed eligible to serve on the Board
of Trustees. Whereas the Rice case dealt with voting rights and the
State of Hawaii, the measure we introduce today addresses the federal
policy of self-determination and self-governance and does not involve
the Office of Hawaiian Affairs.
This measure is critical to the people of Hawaii as it begins a
process to address many longstanding issues facing Hawaii's indigenous
peoples and the State of Hawaii. By addressing and resolving these
matters, we begin a process of healing, a process of reconciliation not
only within the United States, but within the State of Hawaii. The time
has come for us to be able to address these deeply rooted issues in
order for us to be able to move forward as one.
I cannot emphasize how important this measure is for the people of
Hawaii. While Hawaii will always be known for its physical beauty, its
true essence is in its people. The time has come to provide Hawaii's
indigenous peoples with the opportunity to engage in a government-to-
government relationship with the United States. I look forward to
working with my colleagues to enact this critical measure.
______
By Mrs. BOXER:
S. 747. A bill to authorize the Attorney General to make grants to
local educational agencies to carry out school violence prevention and
school safety activities in secondary schools; to the Committee on the
Judiciary.
Mrs. BOXER. Mr. President, we have seen three shootings and watched
three young children lose their lives in the past four weeks. Two of
these were in my state of California; the latest shooting was in my
colleagues' state of Indiana. These shootings have been terrifying for
all of us, children, parents, community members, and the nation as a
whole. We must stop these acts of violence, now. We cannot wait for
another young life to slip through our hands.
These incidents have reminded us that no place is safe from gun
violence. Principals think about the safety of their schools every day;
parents worry about the safety of their children's classrooms every
day; and children walk to school unsure of their own safety every day.
This is sad, but this is the reality.
Today I am proposing to change this reality. My bill reaffirms our
commitment to school safety by creating a permanent School Safety Fund.
This Fund will allow the Attorney General to provide grants to school
districts so that they can create their own comprehensive school safety
strategies, incorporating both violence prevention and school safety
activities.
What might be included in these safety strategies?
Schools could establish hotlines and tiplines, so that students could
anonymously report potentially dangerous situations. They could hire
more community police officers and purchase security equipment. I would
argue that all schools could use more counselors, psychologists, and
school social workers, these funds will help hire them. Schools could
use the funds to train teachers and administrators to identify the
early warning signs of troubled youth. They could also use the funds to
teach our students conflict resolution programs, and to set up a
mentoring program for students.
The bottom line is clear: each school needs to decide the extent of
its problem, and decide what solution would be best for its community.
My bill gives school districts the leeway they need to deal with school
safety, providing federal funds to attack school violence where it
happens: in the schools.
This approach, in and of itself, is not a novel idea. Since 1999, the
federal government has funded a program called ``Safe Schools
Initiative.'' A collaboration between the Department of Justice, the
Department of Education, and the Department of Health and Human
Services, Safe Schools provides grants to school districts to do the
activities I outlined above. In fact, 77 school districts have already
been awarded funds. Why, then, is my bill necessary?
My bill does two important things. One, it writes this program into
law. Currently, the Appropriations Committee decides year-to-year
whether to fund this initiative. This program is important--important
enough to warrant an authorization. My amendment codifies these grants
through fiscal year 2006.
Second, and perhaps most important, my bill speaks to how these
grants are funded. All funding would come directly from the Violent
Crime Reduction Trust Fund. And rather than set a specific
authorization level--rather than pull a number out of thin air and
declare that number the ``need'', my bill would give discretion to the
Attorney General to decide how many grants should be awarded, and how
much money each grantee should receive.
For example, if a crisis arises, the Attorney General has the
flexibility to distribute grants as he sees fit. He does not have to
wait for Congress to act, or watch as Congress fails to act. He can
identify the need, and address it immediately. On the flip side, if
school safety problems improve, as all of us hope, then the Attorney
General can spend less on school safety. Again, it is up to his
discretion.
You know as well as I do that school safety is a serious problem. We
cannot simply stand by the wayside and allow violence to continue
disrupting the lives of students and communities. My bill recognizes
the widespread reach of these violent outbreaks, and tells communities
that the federal government will not fail them. Communities are eager
to protect their schoolchildren, and this bill will give them an
opportunity to do so.
______
By Mrs. BOXER:
S. 748. A bill to make schools safer by waiving the local matching
requirement under the Community Policing program for the placement of
law enforcement officers in local schools; to the Committee on the
Judiciary.
Mrs. BOXER. Mr. President, last month there were two school shootings
in my state. A mere seventeen days and six miles away from each other,
they claimed the lives of two students and wounded eighteen others.
These shootings were terrible tragedies for their communities, and a
painful reminder of the fragile security of our nation's schools.
To combat these tragic acts of violence, many schools employ safety
strategies that protect the millions of children, teenagers and adults
that attend them every single day. The federal government plays a role
in many of these programs. My amendment speaks to one of them: COPS In
Schools.
Although we passed the COPS program in 1994, it was not until 1998
that the Department of Justice created a specific COPS In Schools
program. Since then, nearly 3,800 police officers have been placed in
1,800 school districts across the nation. California alone has put 270
new police officers in schools across the state.
Unfortunately, not all schools are so lucky. At the time of last
month's shooting at Santana High School in Santee, California, the
school happened by pure luck to have two law enforcement officials near
campus. The shooting spree at Santana High School lasted a mere six
minutes. In this time, more than 30 rounds were shot, two teenagers
were killed, and 13 people were wounded. It is dreadful to imagine what
might have happened if the police had not responded so quickly.
An even more poignant situation, which underscored the absolutely
vital role police officers play in our nation's schools, was the school
shooting in El Cajon, California. This time, there were no deaths. A
police officer--who had been stationed at Granite Hills High School
after the Santana High School shooting occurred--responded immediately
after hearing gunshots and managed to stop the shooter from claiming
innocent lives. Had a police officer not been on campus, we may have
been counting fatalities instead of injuries.
Make no mistake, the police officers put in schools by the COPS In
Schools program are not there to simply patrol the hallways, nor are
they there to make schools feel like prisons. Police officers in
schools serve an important purpose: they work with school staff to
develop anti-crime policies on campus,
[[Page S3759]]
implement procedures to ensure a safer school environment, and reassure
parents that a police officer is there to deal with those students that
might cause problems.
Local governments are required to provide 25 percent of the funding
to hire these police officers, unless the Attorney General grants them
a waiver. Under Attorney General Janet Reno, communities routinely
received federal funding to hire police officers for schools without
having to contribute matching funds. This was extremely generous, and I
am hopeful that this policy will continue.
To ensure that it does, my bill permanently waives the local matching
fund requirement for placing a police officer in a school. No child,
teenager or adult attending one of America's public schools should be
put in danger simply because of a lack of funding. Communities should
be able to put police officers in their schools, period. My bill will
allow them to do just that.
We know that having police officers in schools works. They help
ensure the safety of our schools, our schoolchildren and our faculty
every single day. I encourage my colleagues to show their commitment to
our students by supporting this bill.
______
By Mr. FITZGERALD (for himself, Mr. Schumer, Mr. Jeffords, Mr.
Bingaman, Mr. DeWine, Mrs. Clinton, Ms. Collins, Mr. Lieberman,
Mr. McCain, Mr. Kerry, Mrs. Feinstein, Ms. Snowe, Mrs. Boxer,
Mr. Smith of Oregon, and Mr. Torricelli):
S. 749. A bill to provide that no Federal income tax shall be imposed
on amounts received by victims of the Nazi regime or their heirs or
estates, and for other purposes; to the Committee on Finance.
Mr. FITZGERALD. Mr. President, today I am introducing the Holocaust
Survivors Tax Fairness Act of 2001. This important legislation would
prevent the federal government from imposing the federal income tax on
Holocaust restitution or compensation payments that victims of their
heirs may receive.
More than 50 years after the end of World War II, many banks and
companies in Europe are beginning to return stolen assets to survivors
of the Holocaust and their heirs. In August of 1998, two of the largest
banks in Switzerland agreed to distribute $1.25 billion as restitution
for assets wrongfully withheld during the Nazi reign. And in February
of 1999, the German government agreed to establish a fund to compensate
victims of the Holocaust. The legislation I am introducing ensures that
the beneficiaries of these settlements and other Holocaust restitution
or compensation arrangements can exclude the proceeds from taxable
income on their federal income tax forms.
Holocast survivors and their families have lived through unspeakable
tragedies. While the restitution settlements pale in comparison to what
they have lost, this measure ensures that survivors can keep all of
what was returned to them without being unnecessarily burdened by
taxes.
The Congress must send a clear message that to allow the federal
government to tax away any reparations obtained by Holocaust survivors
or their families because of their persecution by the Nazis or their
sympathizers is simply unacceptable. Given that the average age of
Holocaust survivors now exceeds 80 years of age, we believe it is
imperative that the Congress act now to prevent the federal government
from attempting to tax this money.
Similar legislation was agreed to by the Senate as an amendment to
the Taxpayer Refund Act of 1999. The provision was retained in
conference and included in the Taxpayer Refund and Relief Act of 1999.
The final bill was vetoed, however, preventing this important provision
regarding Holocaust reparations from becoming law.
After over 50 years of injustice, Holocaust survivors and their
families are reclaiming what is rightfully theirs. Even as we support
these efforts to reclaim stolen property, we must do our part in
protecting the proceeds.
______
By Mr. BIDEN:
S. 750. A bill to amend the Internal Revenue Code of 1986 to provide
the same tax treatment for danger pay allowance as for combat pay; to
the Committee on Finance.
Mr. BIDEN. Mr. President, today I introduce a bill which would right
a wrong, a small wrong, but a wrong nevertheless. It affects a handful
of our nation's diplomats who serve in the world's most dangerous
places: places like Bosnia and Lebanon. Our diplomats serve in some
pretty difficult places, often in harm's way, just as our soldiers do.
These diplomats who serve in the most dangerous places receive a
special allowance, which is aptly called ``danger pay.'' This allowance
is not unlike that paid to our military when they are in combat. In
fact, in some places where our military and diplomatic personnel serve
side by side, both receive a special allowance for their sacrifices.
The military justifiably receives this benefit tax-free. But our
diplomatic personnel do not. Through an oversight in the Internal
Revenue code, diplomats are taxed on their danger pay, even though they
often face similar hardships and dangers. I think that's wrong.
The bill I introduce today, I have a bill which would right this
wrong. It affects just a handful of people. But to them it will serve
as recognition of the sacrifice they make when they represent the
American people in dangerous places overseas.
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. 750
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. TREATMENT OF DANGER PAY ALLOWANCE.
(a) In General.--Subchapter C of chapter 80 of the Internal
Revenue Code of 1986 (relating to provisions affecting more
than one subtitle) is amended by adding at the end the
following:
``SEC. 7874. TREATMENT OF DANGER PAY ALLOWANCE.
``(a) General Rule.--For purposes of the following
provisions, a danger pay allowance area shall be treated in
the same manner as if it were a combat zone (as determined
under section 112):
``(1) Section 2(a)(3) (relating to special rule where
deceased spouse was in missing status).
``(2) Section 112 (relating to the exclusion of certain
combat pay of members of the Armed Forces).
``(3) Section 692 (relating to income taxes of members of
Armed Forces on death).
``(4) Section 2201 (relating to members of the Armed Forces
dying in combat zone or by reason of combat-zone-incurred
wounds, etc.).
``(5) Section 3401(a)(1) (defining wages relating to combat
pay for members of the Armed Forces).
``(6) Section 4253(d) (relating to the taxation of phone
service originating from a combat zone from members of the
Armed Forces).
``(7) Section 6013(f)(1) (relating to joint return where
individual is in missing status).
``(8) Section 7508 (relating to time for performing certain
acts postponed by reason of service in combat zone).
``(b) Danger Pay Allowance Area.--For purposes of this
section, the term `danger pay allowance area' means any area
in which an individual receives a danger pay allowance under
section 5928 of title 5, United States Code, for services
performed in such area.''
(b) Conforming Amendment.--The table of sections for
subchapter C of chapter 80 of the Internal Revenue Code of
1986 is amended by adding at the end the following:
``Sec. 7874. Treatment of danger pay allowance.''
(c) Effective Date.--The amendments made by this section
shall apply to remuneration paid in taxable years ending
after the date of the enactment of this Act.
______
By Mrs. CLINTON:
S. 751. A bill to express the sense of the Senate concerning a new
drinking water standard for arsenic; to the Committee on Environment
and Public Works.
Mrs. CLINTON. Mr. President, when Americans turn on their taps, they
expect the water that comes out to be clean and safe. Unfortunately,
that is not always the case.
I rise today to ask my colleagues to join me in expressing our
support for the new health and science-based standard for arsenic in
drinking water. The stronger standard can protect millions of Americans
from a known carcinogen. A 1999 National Academy of Sciences report
concluded that chronic ingestion of arsenic causes bladder, lung, and
skin cancer. The Administration's proposal to withdraw this new
standard puts the public health at risk.
The science is clear. The National Academy of Sciences has concluded
[[Page S3760]]
that the current standard, which has not been revised in nearly 60
years, does not meet EPA's goal of public-health protection and has
urged that it be revised as quickly as possible.
The new, more protective arsenic standard of 10 parts per billion
would put our national drinking water standard for arsenic in line with
drinking water standards set at the state level, as well as
international standards. The World Health Organization has established
a guideline for arsenic in drinking water of 10 parts per billion,
indicating that the value would be even lower if it were based on
health concerns alone, without consideration for the technological and
financial capabilities of certain countries.
Withdrawing this important new drinking water standard for arsenic
also creates uncertainty for communities across the country that will
ultimately need to construct or upgrade water treatment facilities to
meet the new standard. These communities need and deserve as much time
as is possible to come into compliance with the new standard.
This bill that I am introducing today expresses the Sense of the
Senate that to provide maximum protection for public health and a
maximum amount of time for communities to accommodate a new drinking
water standard for arsenic, the new standard for arsenic in drinking
water should be set no later than the statutory deadline of June 22,
2001.
Rather than rolling back science-based, public health standards for
our nation's drinking water, we should be rolling up our sleeves and
investing in our water infrastructure so that America's families can
rest assured that their drinking water is clean and safe.
______
By Mr. BURNS:
S. 752. A bill to amend the Internal Revenue Code of 1986 to
reclassify computer equipment as 3-year property for purposes of
depreciation; to the Committee on Finance.
Mr. BURNS. Mr. President, I rise today, to introduce the Technology
Depreciation Reform Act of 2001. This bill will update the U.S. Tax
Code to reflect the evolution of the computer and other high-tech
industries.
High-tech hardware is subjected to an outdated tax code. Currently,
businesses must depreciate their computer equipment over a five year
period. I believe this five year depreciation life for tax purposes is
clearly outdated. Many companies today must update their computers as
quickly as every 14 months in order to stay current technologically.
Depreciation schedules for technology assets have not been reformed
since 1986. This legislation will amend the U.S. Tax Code by reducing
the depreciation schedule for high-tech equipment from five years to
three years.
I believe it is time to update an outdated tax code to reflect the
realities of today's technology-based workplace. A five year
depreciation schedule for business computers is no longer realistic.
The Computer Depreciation Reform Act allows every company, from the
neighborhood real estate office, to the local hospital, to the local
bank to depreciate their computer equipment on a three year schedule.
As a result, these companies will no longer be forced to pay for their
high-tech equipment long after its useful life has become obsolete.
In short, the tax code is outdated for high-tech hardware. The five
year schedule for technology assets is particularly outdated. In fact,
this is an ice age for computer technologies. As the chairman of the
Communications Subcommittee, I am very award of the impact this is
having on small businesses. Congress has not addressed this issue since
1986. However, the industry has evolved dramatically since that time.
I look forward to working with my colleagues on both sides of the
aisle to update the tax code to reflect the realities of today's
technological workplace.
______
By Mr. BREAUX (for himself, Mr. Craig, Mr. Dorgan, Mr. Burns, Mr.
Conrad, Mr. Enzi, Ms. Landrieu, Mr. Thomas, Mr. Graham, Mr.
Crapo, Mr. Baucus, Mr. Nelson of Nebraska, Mr. Dayton, Mr.
Inouye, Mr. Akaka, Mr. Allard, and Mr. Harkin):
S. 753. A bill to amend the Harmonized Tariff Schedule of the United
States to prevent circumvention of the sugar tariff-rate quotas; to the
Committee on Finance.
Mr. BREAUX, Mr. President, unfair trade practices cannot and will not
be tolerated. American jobs are hurt, industry suffers, and the economy
loses.
Importing stuffed molasses into the United States is a classic
example of an unfair trade practice being conducted in this country.
Its importation circumvents the United States' GATT-legal sugar import
tariff rate quota. It's time to end this scheme because our domestic
sugar industry is being hurt by it.
As a trade practice, importing stuffed molasses is a crafty, refined
scheme.
Stuffed molasses, as a product, consists of refined sugar being mixed
with water and molasses for the purpose of disguising the refined sugar
so it can evade the United States' GATT-legal tariff rate quota.
In its disguised state, stuffed molasses has no legitimate commercial
use. It does, however, circumvent our legitimate sugar import tariff
rate quota.
Once stuffed molasses is brought into the United States, the refined
sugar is extracted from the water and molasses and sold in the United
States' refined liquid sugar market. Once imported and extracted, it
displaces legitimately-produced United States' sugar and legitimately-
imported sugar from the 40 countries which export sugar to this country
under the tariff rate quota.
The United States company which imports stuffed molasses into this
country, a subsidiary of an international conglomerate, brings it in
through a tariff category for certain molasses products for which there
is little or no tariff.
Senator Larry Craig and I, as Co-Chairmen of the Senate Sweetener
Caucus, are introducing today a bipartisan bill which would require the
same tariff to be applied to stuffed molasses as is applicable
currently to refined sugar imports.
We are pleased that 15 other senators have joined us in introducing
the bill. We deeply appreciate their interest and support.
In January of this year, USDA issued a sugar and sweetener report
which included the department's analysis of the stuffed molasses
situation. For the period 1995/1996 to 1999/2000, USDA's report says
stuffed molasses imports escalated from 8,056 short tons raw value to
118,105 short tons raw value, an increase approaching 1400 percent.
USDA's report also says stuffed molasses imports for 1999/2000 were
the equivalent of 10.5 percent of imports under the raw and refined
sugar tariff rate quotas for that period.
The USDA report forecasts Fiscal Year 2001 imports of stuffed
molasses to increase to 125,000 short tons raw value. It also says the
sugar used to make this disguised product originates in such countries
as Australia and Brazil and is processed into stuffed molasses in
Canada, from where it enters the United States.
Our bipartisan legislation makes it clear that its purpose is to stop
an unfair trade practice by applying a legitimate tariff to a concocted
product which is circumventing our GATT-legal tariff rate quota. It
does not affect any other legitimately-traded molasses or molasses
product which has been traded historically and has legitimate
commercial uses.
This unfair trade practice, is completely unacceptable. It is a total
rejection of all that is fair in trade. It must be stopped. Our
legislation is designed to do just that. I join with Senator Craig and
all of the bill's original cosponsors to invite all other Senators who
oppose unfair trade practices to join us in cosponsoring the bill and
voting for its passage.
______
By Mr. LEAHY (for himself, Mr. Kohl, Mr. Schumer, and Mr.
Durbin):
S. 754. A bill to enhance competition for prescription drugs by
increasing the ability of the Department of Justice and Federal Trade
Commission to enforce existing antitrust laws regarding brand name
drugs and generic drugs; to the Committee on the Judiciary.
Mr. LEAHY. Mr. President, in the last Congress I introduced a bill,
S.
[[Page S3761]]
2993, with Senator Kohl to give the Federal Trade Commission, FTC, and
the Department of Justice, DOJ, the ability to effectively enforce
antitrust laws concerning contract and payment arrangements between
drug companies which could hurt consumers.
Unfortunately, no action was taken on that Leahy-Kohl bill, and the
newspapers are now full of articles about allegations that Shering-
Plough paid $90 million to generic drug manufacturers to delay sales of
a low-cost generic drug taken by heart patients.
While these allegations have yet to be resolved for those particular
companies, this story highlights the need to pass legislation to
prevent this type of problem from happening in the future.
If Dante were writing The Inferno today, he might well have reserved
a special place for those who engage in these anti-consumer
conspiracies.
The Federal Trade Commission deserves credit for exposing this
problem, during last Congress and this Congress. Under the bill we are
introducing today, companies are required to give the FTC and the
Justice Department the information they need to prevent manufacturers
of patented drugs--often brand-name drugs--from simply paying generic
drug companies to keep lower-cost products off the market.
These deals which prevent competition hurt senior citizens, hurt
families, and cheat healthcare providers.
These pharmaceutical giants and their generic partners then share the
profits gained from cheating American families.
The companies have been able to get away with this by signing secret
deals with each other not to compete. Our bill, the ``Drug Competition
Act of 2001'', will expose these deals and subject them to immediate
investigation and appropriate action by the Federal Trade Commission or
the Justice Department.
This solves the most difficult problem faced by federal
investigators: finding out about the improper deals. This bill does not
change the so-called Hatch-Waxman Act, it does not amend FDA law, and
it does not slow down the drug approval process. It allows existing
antitrust laws to be enforced by ensuring that the enforcement agencies
have information about no-compete deals. The same confidentiality
requirements will still apply to the FTC and to DOJ, as under current
law.
The issue of making deals which prevent competition was addressed in
a New York Times editorial titled, ``Driving Up Drug Prices,''
published on July 26, 2000. The editorial noted that even though the
FTC ``is taking aggressive action to curb the practice. It needs help
from Congress to close loopholes in federal law.''
This bill is that help, and the bill slams the door shut on would-be
violators by exposing the deals to our competition enforcement
agencies.
Under current law, manufacturers of generic drugs are encouraged to
challenge weak or invalid patents on brand-name drugs so that consumers
can enjoy lower generic drug prices.
Current law grants these generic companies a temporary protection
from competition to the first manufacturer that gets permission to sell
a generic drug before the patent on the brand-name drug expires.
This approach then gives the generic drug manufacturer a 180-day head
start on other generic companies.
That was a good idea. The unfortunate loophole that has been open to
exploitation is the fact that secret deals can be made that allow the
manufacturer of the generic drug to claim the 180-day grace period, to
block other generic drugs from entering the market, while, at the same
time, getting paid by the brand-name manufacturer for not selling the
lower-cost generic drug.
The bill we are introducing today will shut this loophole down for
companies who want to cheat the public, but keeps the system the same
for companies engaged in true competition with each other. This bill
would give the FTC or the Justice Department the information they need
to take quick and decisive action against companies driven more by
greed than by good sense.
It is important for Congress not to overreact to these outrages by
throwing out the good with the bad. Most generic companies want to take
advantage of this 180-day provision and deliver quality generic drugs
at much lower costs for consumers. We should not eliminate the
incentive for them to do that.
Instead, we should let the FTC and DOJ look at every single deal that
could lead to abuse so that only the deals that are consistent with the
intent of that law will be allowed to stand.
We look forward to suggestions from other Members on this matter and
from brand-name and generic manufacturers who will work with us to make
sure this loophole is closed. .
We are pleased that Congressman Waxman will introduce a companion
bill in the House of Representatives. I look forward to working with
him and with the other cosponsors in this effort.
I ask unanimous consent that a brief summary of the Drug Competition
Act be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Summary of the Drug Competition Act of 2001
The bill facilitates Federal Trade Commission and
Department of Justice confidential review of agreements
between brand-name drug manufacturers and potential generic
competitors so that they can more efficiently enforce
existing antitrust laws.
The bill covers brand-name drug manufacturers and generic
manufacturers that enter into agreements regarding the sale
or manufacture of a potentially competing generic equivalent
(of any particular brand-name drug).
In cases where those agreements could have the effect of
limiting sales of that generic-equivalent drug, or could
limit the research or development of that competing generic,
both (or all) companies are required to file the texts of
those agreements with the Federal Trade Commission and with
the Attorney General within 10 business days after the
agreement is executed.
Failure to file may result in a civil penalty of not more
that $20,000, per day. The Act would take effect 90 days
after enactment.
No existing time limits, requirements, or patent or drug
approval systems are affected by this limited filing
requirement. The bill does not amend the Sherman Act, other
antitrust laws, the Federal Trade Commission Act, the Hatch-
Waxman Act or other generic drug laws, the Federal Food, Drug
and Cosmetic Act, or any patent or drug safety law.
____________________