[Congressional Record Volume 149, Number 170 (Friday, November 21, 2003)]
[Senate]
[Pages S15408-S15411]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. JEFFORDS (for himself, Ms. Snowe, and Mr. Hatch):
  S. 1912. A bill to amend the Internal Revenue Code of 1986 to expand 
pension coverage and savings opportunities and to provide other pension 
reforms; to the Committee on Finance.
  Mr. JEFFORDS. Mr. President, today, together with Senators Hatch and 
Snowe, I am introducing, the Retirement Account Portability and 
Improvement Act of 2003. This legislation improves the portability of 
retirement savings by eliminating unnecessary complexities and barriers 
in the retirement savings system, and helps preserve retirement savings 
by giving American workers tools that will help them consolidate their 
retirement savings into one easily managed account.
  In brief, this bill will make a number of improvements in the 
retirement savings system to help families preserve retirement assets. 
It will, for example, enhance the portability of retirement savings by 
expanding rollover options in traditional IRAs, Roth IRAs, and SIMPLE 
Plans. The bill also clarifies that when employees are permitted to 
make after-tax contributions to retirement plans, those after-tax 
amounts may be rolled over into other retirement plans eligible to 
receive such rollovers. This clarification will make it easier for 
workers to move all elements of their 401(k) of 403(b) savings when 
they change jobs and move between private sector and the tax-exempt 
sector.
  In addition, the bill builds on defined contribution plan reforms 
enacted in 2001 by requiring a shortened vesting schedule for employer 
non-elective contributions, such as profit-sharing contributions, to 
defined contribution plans. As a result, employer contributions will 
become employee property more quickly, helping workers to build more 
meaningful retirement benefits. This new vesting schedule corresponds 
to rules for 401(k) matching contributions enacted in 2001.
  Another provision in the bill would end an unfair tax penalty faced 
by non-spouse beneficiaries. Today, when an employee dies, the benefits 
in that employee's retirement account are paid out to a non-spouse 
beneficiary in one payment. The beneficiary must pay tax on the entire 
amount, and is often forced into a higher tax bracket as a result of 
the payment. A provision in this bill would allow non-spouse 
beneficiaries--siblings, children, domestic partners, parents--to roll 
over the money from the plan to an IRA. This will prevent an immediate 
tax bite to grieving beneficiaries and allow them to withdraw the money 
from their IRA over five years or over their own life expectancy.
  The bill also helps preserve retirement savings by allowing plans to 
designate default IRAs or annuity contracts to which employee rollovers 
may be directed. Employers should be more willing to establish default 
IRA and annuity rollover options as a result, making it easier for 
employees to keep savings in the retirement system when they change 
jobs.
  For workers who leave a job without claiming their retirement 
benefits, the bill improves on the automatic rollover provisions 
enacted in 2001, by allowing certain small distributions from 
retirement plans to be sent to the Pension Benefit Guaranty Corporation 
(PBGC), ensuring that participants are ultimately reunited with their 
earned benefits. The bill also expands the scope of the PBGC's 
successful Missing Participants program that matches workers with lost 
pension benefits.
  Employees of state and local governments, including teachers, will 
benefit from a number of this bill's technical corrections that will 
facilitate the purchase of service credits in public pension programs, 
allowing state and local employees to more easily attain a full pension 
in the jurisdiction where they conclude their career. The bill also 
contains provisions that would clarify eligibility rights of certain 
state and local employees who participate in a Section 457 deferred 
compensation plan.
  Congress must take every opportunity to encourage American workers 
not only to save for retirement, but also to preserve those hard-earned 
retirement savings. These portability improvements offer one set of 
tools for making it easier to navigate the retirement savings system 
and reach retirement with an adequate nest egg. There are many pressing 
and complex retirement issues that demand attention, but I am hopeful 
that this legislation, narrowly focused on portability, can be 
considered quickly and on its own merits.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1912

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

     SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF 
                   CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Retirement 
     Acount Portability Act of 2003''.
       (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.

[[Page S15409]]

       (c) Table of Contents.--The table of contents of this Act 
     is as follows:

Sec. 1. Short title; amendment of 1986 Code; table of contents.

   TITLE I--BUILDING AND PRESERVING RETIREMENT ASSETS AND ENHANCING 
                              PORTABILITY

Sec. 101. Allow rollovers by nonspouse beneficiaries of certain 
              retirement plan distributions.
Sec. 102. Facilitation under fiduciary rules of certain rollovers and 
              annuity distributions.
Sec. 103. Faster vesting of employer nonelective contributions.
Sec. 104. Allow rollover of after-tax amounts in annuity contracts.

  TITLE II--EXPANDING RETIREMENT PLAN COVERAGE TO EMPLOYEES OF SMALL 
                               BUSINESSES

Sec. 201. Elimination of higher penalty on certain Simple 
              distributions.
Sec. 202. Simple plan portability.

TITLE III--EXPANDING RETIREMENT SAVINGS FOR TAX-EXEMPT ORGANIZATION AND 
                          GOVERNMENT EMPLOYEES

Sec. 301. Clarifications regarding purchase of permissive service 
              credit.
Sec. 302. Eligibility for participation in retirement plans.

                  TITLE IV--SIMPLIFICATION AND EQUITY

Sec. 401. Allow direct rollovers from retirement plans to Roth IRAs.
Sec. 402. Transfers to the PBGC.

   TITLE I--BUILDING AND PRESERVING RETIREMENT ASSETS AND ENHANCING 
                              PORTABILITY

     SEC. 101. ALLOW ROLLOVERS BY NONSPOUSE BENEFICIARIES OF 
                   CERTAIN RETIREMENT PLAN DISTRIBUTIONS.

       (a) In General.--
       (1) Qualified plans.--Section 402(c) (relating to rollovers 
     from exempt trusts) is amended by adding at the end the 
     following new paragraph:
       ``(11) Distributions to inherited individual retirement 
     plan of nonspouse beneficiary.--
       ``(A) In general.--If, with respect to any portion of a 
     distribution from an eligible retirement plan of a deceased 
     employee, a direct trustee-to-trustee transfer is made to an 
     individual retirement plan described in clause (i) or (ii) of 
     paragraph (8)(B) established for the purposes of receiving 
     the distribution on behalf of an individual who is a 
     designated beneficiary (as defined by section 401(a)(9)(E)) 
     of the employee and who is not the surviving spouse of the 
     employee--
       ``(i) the transfer shall be treated as an eligible rollover 
     distribution for purposes of this subsection,
       ``(ii) the individual retirement plan shall be treated as 
     an inherited individual retirement account or individual 
     retirement annuity (within the meaning of section 
     408(d)(3)(C)) for purposes of this title, and
       ``(iii) section 401(a)(9)(B) (other than clause (iv) 
     thereof) shall apply to such plan.
       ``(B) Certain trusts treated as beneficiaries.--For 
     purposes of this paragraph, to the extent provided in rules 
     prescribed by the Secretary, a trust maintained for the 
     benefit of one or more designated beneficiaries shall be 
     treated in the same manner as a trust designated 
     beneficiary.''.
       (2) Section 403(a) plans.--Subparagraph (B) of section 
     403(a)(4) (relating to rollover amounts) is amended by 
     inserting ``and (11)'' after ``(7)''.
       (3) Section 403(b) plans.--Subparagraph (B) of section 
     403(b)(8) (relating to rollover amounts) is amended by 
     striking ``and (9)'' and inserting ``, (9), and (11)''.
       (4) Section 457 plans.--Subparagraph (B) of section 
     457(e)(16) (relating to rollover amounts) is amended by 
     striking ``and (9)'' and inserting ``, (9), and (11)''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2003.

     SEC. 102. FACILITATION UNDER FIDUCIARY RULES OF CERTAIN 
                   ROLLOVERS AND ANNUITY DISTRIBUTIONS.

       (a) In General.--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:
       ``(4)(A) In the case of a pension plan which makes a 
     transfer under section 401(a)(31)(A) of the Internal Revenue 
     Code of 1986 to an individual retirement plan (as defined in 
     section 7701(a)(37) of such Code) in connection with a 
     participant or beneficiary or makes a distribution to a 
     participant or beneficiary of an annuity contract described 
     in subparagraph (B), the participant or beneficiary shall, 
     for purposes of paragraph (1), be treated as exercising 
     control over the transfer or distribution if--
       ``(i) the participant or beneficiary elected such transfer 
     or distribution, and
       ``(ii) in connection with such election, the participant or 
     beneficiary was given an opportunity to elect any other 
     individual retirement plan (in the case of a transfer) or any 
     other annuity contract described in subparagraph (B) (in the 
     case of a distribution).
       ``(B) An annuity contract is described in this subparagraph 
     if it provides, either on an immediate or deferred basis, a 
     series of substantially equal periodic payments (not less 
     frequently than annually) for the life of the participant or 
     beneficiary or the joint lives of the participant or 
     beneficiary and such individual's designated beneficiary. 
     Annuity payments shall not fail to be treated as part of a 
     series of substantially equal periodic payments because the 
     amount of the periodic payments may vary in accordance with 
     investment experience, reallocations among investment 
     options, actuarial gains or losses, cost of living indices, 
     or similar fluctuating criteria. The availability of a 
     commutation benefit, a minimum period of payments certain, or 
     a minimum amount to be paid in any event shall not affect the 
     treatment of an annuity contract as an annuity contract 
     described in this subparagraph.
       ``(C) Under regulations prescribed by the Secretary, this 
     paragraph shall apply without regard to whether the 
     particular individual retirement plan receiving the transfer 
     or the particular annuity contract being distributed is 
     specifically identified by the pension plan as available to 
     the participant or beneficiary.
       ``(D) Notwithstanding the preceding provisions of this 
     paragraph, paragraph (1)(B) shall not apply with respect to 
     liability under section 406 in connection with the specific 
     identification of any individual retirement plan or annuity 
     contract as being available to the participant or 
     beneficiary.''.
       (b) Effective Date and Related Rules.--
       (1) Effective date.--The amendment made by this section 
     shall take effect on the date of the enactment of this Act.
       (2) Issuance of final regulations.--Final regulations under 
     section 404(c)(4) of the Employee Retirement Income Security 
     Act of 1974 (added by this section) shall be issued no later 
     than 1 year after the date of the enactment of this Act.

     SEC. 103. FASTER VESTING OF EMPLOYER NONELECTIVE 
                   CONTRIBUTIONS.

       (a) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Paragraph (2) of section 411(a) (relating 
     to employer contributions) is amended to read as follows:
       ``(2) Employer contributions.--
       ``(A) Defined benefit plans.--
       ``(i) In general.--In the case of a defined benefit plan, a 
     plan satisfies the requirements of this paragraph if it 
     satisfies the requirements of clause (ii) or (iii).
       ``(ii) 5-year vesting.--A plan satisfies the requirements 
     of this clause if an employee who has completed at least 5 
     years of service has a nonforfeitable right to 100 percent of 
     the employee's accrued benefit derived from employer 
     contributions.
       ``(iii) 3 to 7 year vesting.--A plan satisfies the 
     requirements of this clause 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:

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      3.............................................................20 
      4.............................................................40 
      5.............................................................60 
      6.............................................................80 
      7 or more....................................................100.

       ``(B) Defined contribution plans.--
       ``(i) In general.--In the case of a defined contribution 
     plan, a plan satisfies the requirements of this paragraph if 
     it satisfies the requirements of clause (ii) or (iii).
       ``(ii) 3-year vesting.--A plan satisfies the requirements 
     of this clause 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.
       ``(iii) 2 to 6 year vesting.--A plan satisfies the 
     requirements of this clause 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:

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      2.............................................................20 
      3.............................................................40 
      4.............................................................60 
      5.............................................................80 
      6.........................................................100.''.

       (2) Conforming amendment.--Section 411(a) (relating to 
     general rule for minimum vesting standards) is amended by 
     striking paragraph (12).
       (b) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Paragraph (2) of section 203(a) of the 
     Employee Retirement Income Security Act of 1974 (29 U.S.C. 
     1053(a)(2)) is amended to read as follows:
       ``(2)(A)(i) In the case of a defined benefit plan, a plan 
     satisfies the requirements of this paragraph if it satisfies 
     the requirements of clause (ii) or (iii).
       ``(ii) A plan satisfies the requirements of this clause if 
     an employee who has completed at least 5 years of service has 
     a nonforfeitable right to 100 percent of the employee's 
     accrued benefit derived from employer contributions.
       ``(iii) A plan satisfies the requirements of this clause 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:

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      3.............................................................20 
      4.............................................................40 
      5.............................................................60 
      6.............................................................80 
      7 or more....................................................100.

       ``(B)(i) In the case of an individual account plan, a plan 
     satisfies the requirements of this paragraph if it satisfies 
     the requirements of clause (ii) or (iii).
       ``(ii) A plan satisfies the requirements of this clause 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.

[[Page S15410]]

       ``(iii) A plan satisfies the requirements of this clause 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:

                                                     The nonforfeitable
    ``Years of service:                                percentage is:  
      2.............................................................20 
      3.............................................................40 
      4.............................................................60 
      5.............................................................80 
      6.........................................................100.''.

       (2) Conforming amendment.--Section 203(a) of such Act is 
     amended by striking paragraph (4).
       (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, 2003.
       (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 before 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, 2004; 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. 104. ALLOW ROLLOVER OF AFTER-TAX AMOUNTS IN ANNUITY 
                   CONTRACTS.

       (a) In General.--Subparagraph (A) of section 402(c)(2) 
     (maximum amount which may be rolled over) is amended by 
     striking ``and which'' and inserting ``or to an annuity 
     contract described in section 403(b) and such plan or 
     contract''.
       (b) Effective Date.--The amendment made by subsection (a) 
     shall apply to taxable years beginning after December 31, 
     2003.

  TITLE II--EXPANDING RETIREMENT PLAN COVERAGE TO EMPLOYEES OF SMALL 
                               BUSINESSES

     SEC. 201. ELIMINATION OF HIGHER PENALTY ON CERTAIN SIMPLE 
                   DISTRIBUTIONS.

       (a) In General.--Subsection (t) of section 72 (relating to 
     10-percent additional tax on early distributions from 
     qualified retirement plans) is amended by striking paragraph 
     (6) and redesignating paragraphs (7), (8), and (9) as 
     paragraphs (6), (7), and (8), respectively.
       (b) Conforming Amendments.--
       (1) Section 72(t)(2)(E) is amended by striking ``paragraph 
     (7)'' and inserting ``paragraph (6)''.
       (2) Section 72(t)(2)(F) is amended by striking ``paragraph 
     (8)'' and inserting ``paragraph (7)''.
       (3) Section 408(d)(3)(G) is amended by striking ``applies'' 
     and inserting ``applied on the day before the date of the 
     enactment of the Retirement Account Portability Act of 
     2003)''.
       (4) Section 457(a)(2) is amended by striking ``section 
     72(t)(9)'' and inserting ``section 72(t)(8)''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to years beginning after December 31, 2003.

     SEC. 202. SIMPLE PLAN PORTABILITY.

       (a) Repeal of Limitation.--Paragraph (3) of section 408(d) 
     (relating to rollover contributions), as amended by this Act, 
     is amended by striking subparagraph (G) and redesignating 
     subparagraph (H) as subparagraph (G).
       (b) Section 402(c)(8)(B) is amended by adding at the end 
     the following new sentence: ``Individual retirement accounts 
     and individual retirement annuities described in clauses (i) 
     and (ii) shall be treated as eligible retirement plans 
     without regard to whether they are part of a simplified 
     employee pension (within the meaning of section 408(k)) or a 
     simplified retirement account (within the meaning of section 
     408(p)).''.
       (c) Effective Date.--The amendment made by this section 
     shall apply to years beginning after December 31, 2003.

TITLE III--EXPANDING RETIREMENT SAVINGS FOR TAX-EXEMPT ORGANIZATION AND 
                          GOVERNMENT EMPLOYEES

     SEC. 301. CLARIFICATIONS REGARDING PURCHASE OF PERMISSIVE 
                   SERVICE CREDIT.

       (a) In General.--Subparagraph (A) of section 457(e)(17) 
     (relating to trustee-to-trustee transfers to purchase 
     permissive service credit), and subparagraph (A) of section 
     403(b)(13) (relating to trustee-to-trustee transfers to 
     purchase permissive service credit), are both amended by 
     striking ``section 415(n)(3)(A)'' and inserting ``section 
     415(n)(3) (without regard to subparagraphs (B) and (C) 
     thereof)''.
       (b) Distribution Requirements.--Section 457(e)(17) and 
     section 403(b)(13) are both amended by adding at the end the 
     following sentence: ``Amounts transferred under this 
     paragraph shall be distributed solely in accordance with 
     section 401(a) as applicable to such defined benefit plan.''.
       (c) Service Credit.--Clause (ii) of section 415(n)(3)(A) is 
     amended to read as follows:
       ``(ii) which relates to benefits with respect to which such 
     -participant is not otherwise entitled, and''.
       (d) Effective Date.--The amendments made by this section 
     shall take effect as if included in the amendments made by 
     section 647 of the Economic Growth and Tax Relief 
     Reconciliation Act of 2001.

     SEC. 302. ELIGIBILITY FOR PARTICIPATION IN RETIREMENT PLANS.

       An individual shall not be precluded from participating in 
     an eligible deferred compensation plan by reason of having 
     received a distribution under section 457(e)(9) of the 
     Internal Revenue Code of 1986, as in effect prior to the 
     enactment of the Small Business Job Protection Act of 1996.

                  TITLE IV--SIMPLIFICATION AND EQUITY

     SEC. 401. ALLOW DIRECT ROLLOVERS FROM RETIREMENT PLANS TO 
                   ROTH IRAS.

       (a) In General.--Subsection (e) of section 408A (defining 
     qualified rollover contribution) is amended to read as 
     follows:
       ``(e) Qualified Rollover Contribution.--For purposes of 
     this section, the term `qualified rollover contribution' 
     means a rollover contribution--
       ``(1) to a Roth IRA from another such account,
       ``(2) from an eligible retirement plan, but only if--
       ``(A) in the case of an individual retirement plan, such 
     rollover contribution meets the requirements of section 
     408(d)(3), and
       ``(B) in the case of any eligible retirement plan (as 
     defined in section 402(c)(8)(B) other than clauses (i) and 
     (ii) thereof), such rollover contribution meets the 
     requirements of section 402(c), 403(b)(8), or 457(e)(16), as 
     applicable.

     For purposes of section 408(d)(3)(B), there shall be 
     disregarded any qualified rollover contribution from an 
     individual retirement plan (other than a Roth IRA) to a Roth 
     IRA.''.
       (b) Conforming Amendments.--
       (1) Section 408A(c)(3)(B) is amended--
       (A) in the text by striking ``individual retirement plan'' 
     and inserting ``an eligible retirement plan (as defined by 
     section 402(c)(8)(B))'', and
       (B) in the heading by striking ``IRA'' and inserting 
     ``eligible retirement plan''.
       (2) Section 408A(d)(3) is amended--
       (A) in subparagraph (A) by striking ``section 408(d)(3)'' 
     inserting ``sections 402(c), 403(b)(8), 408(d)(3), and 
     457(e)(16)'',
       (B) in subparagraph (B) by striking ``individual retirement 
     plan'' and inserting ``eligible retirement plan (as defined 
     by section 402(c)(8)(B))'',
       (C) in subparagraph (D) by striking ``or 6047'' after 
     ``408(i)'',
       (D) in subparagraph (D) by striking ``or both'' and 
     inserting ``persons subject to section 6047(d)(1), or all of 
     the foregoing persons'', and
       (E) in the heading by striking ``IRA'' and inserting 
     ``eligible retirement plan''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to distributions after December 31, 2003.

     SEC. 402. TRANSFERS TO THE PBGC.

       (a) Mandatory Distributions to PBGC.--Clause (i) of section 
     401(a)(31)(B) (relating to general rule for certain mandatory 
     distributions) is amended by inserting ``to the Pension 
     Benefit Guaranty Corporation in accordance with section 
     4050(e) of the Employee Retirement Income Security Act of 
     1974 or'' after ``such transfer''.
       (b) Tax Treatment of Distributions.--Subparagraph (B) of 
     section 401(a)(31) is amended by adding at the end the 
     following new clause:
       ``(iii) Income tax treatment of transfers to pbgc.--For 
     purposes of determining the income tax treatment relating to 
     transfers to the Pension Benefit Guaranty Corporation under 
     clause (i)--

       ``(I) the transfer of amounts to the Pension Benefit 
     Guaranty Corporation pursuant to clause (i) shall be treated 
     as a transfer to an individual retirement plan under such 
     clause, and
       ``(II) the distribution of such amounts from the Pension 
     Benefit Guaranty Corporation shall be treated as a 
     distribution from an individual retirement plan.''.

       (c) Missing participants and beneficiaries.--
       (1) 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 (f) and by 
     inserting after subsection (b) the following new subsections:
       ``(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 the 
     benefits of a missing participant or beneficiary 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 or beneficiary 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).

[[Page S15411]]

       ``(3) Payment by the corporation.--If benefits of a missing 
     participant or beneficiary 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.
       ``(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 one or more missing participants or 
     beneficiaries, and
       ``(ii) has not provided for the transfer of assets to pay 
     the benefits of all missing participants and beneficiaries 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).
       ``(e) Involuntary Cashouts.--
       ``(1) Payment by the corporation.--If benefits under a plan 
     described in paragraph (2) were transferred to the 
     corporation under section 401(a)(31)(B) of the Internal 
     Revenue Code of 1986, the corporation shall, upon application 
     filed by the participant or beneficiary with the corporation 
     in such form and manner as may be prescribed in regulations 
     of the corporation, 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.
       ``(2) Information to the corporation.--To the extent 
     provided in regulations, the plan administrator of a plan 
     described in paragraph (3) shall, upon transferred to the 
     corporation under section 401(a)(31)(B) of such Code, provide 
     the corporation information with respect to benefits of the 
     participant or beneficiary so transferred.
       ``(3) Plans described.--A plan is described in this 
     paragraph if the plan is a pension plan (within the meaning 
     of section 3(2))--
       ``(A) which provides for mandatory distributions under 
     section 401(a)(31)(B) of the Internal Revenue Code of 1986, 
     and
       ``(B) which is not a plan described in paragraphs (2) 
     through (11) of section 4021(b).
       ``(4) Certain provisions not to apply.--Subsections (a)(1) 
     and (a)(3) shall not apply to a plan described in paragraph 
     (2).''.
       (2) Conforming amendments.--Section 206(f) of such Act (29 
     U.S.C. 1056(f)) is amended--
       (A) by striking ``title IV'' and inserting ``section 
     4050''; and
       (B) by striking ``the plan shall provide that,''.
       (d) Effective Date.--
       (1) Internal revenue code of 1986 provisions.--The 
     amendments made by subsections (a) and (b) shall take effect 
     as if included in the amendments made by section 657 of the 
     Economic Growth and Tax Relief Reconciliation Act of 2001.
       (2) Employee retirement income security act of 1974 
     provisions.--The amendments made by subsection (c) shall 
     apply to distributions made after final regulations 
     implementing subsections (c), (d), and (e) of section 4050 of 
     the Employee Retirement Income Security Act of 1974 (as added 
     by subsection (c)), respectively, are prescribed.
       (3) Regulations.--The Pension Benefit Guaranty Corporation 
     shall issue regulations necessary to carry out the amendments 
     made by subsection (c) not later than December 31, 2004.
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