[Congressional Record Volume 171, Number 113 (Monday, June 30, 2025)]
[Senate]
[Pages S4089-S4091]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2658. Mr. SCOTT of South Carolina submitted an amendment intended
to be proposed to amendment SA 2360 proposed by Mr. Thune (for Mr.
Graham) to the bill H.R. 1, to provide for reconciliation pursuant to
title II of H. Con. Res. 14; which was ordered to lie on the table; as
follows:
At the appropriate place in title VII, insert the
following:
SEC. _____. TREATMENT OF CERTAIN EXCESS PLAN ASSETS.
(a) Transfer of Excess Health Assets for Funding Active
Employee Benefits.--
(1) In general.--Section 420 is amended by adding at the
end the following new subsection:
``(h) Transfer of Excess Health Assets for Funding Active
Employee Benefits.--
``(1) In general.--In the case of a pension plan with
excess health assets for a fiscal year--
``(A) an amount equal to such excess health assets may be
transferred in accordance with paragraph (3) from a health
benefits account established under section 401(h),
``(B) a trust which is part of such plan shall not be
treated as failing to meet the requirements of subsection (a)
or (h) of section 401 solely by reason of such transfer (or
any other action authorized under this subsection),
``(C) no amount shall be includible in the gross income of
the employer maintaining the plan solely by reason of such
transfer,
``(D) such transfer shall not be treated--
``(i) as an employer reversion for purposes of section
4980, or
``(ii) as a prohibited transaction for purposes of section
4975, and
``(E) the limitations of paragraph (4) shall apply to the
employer.
``(2) Excess health assets.--For purposes of this
subsection--
``(A) In general.--The term `excess health assets' means
the amount by which the applicable assets with respect to a
retiree health plan exceed an amount equal to 125 percent of
the total liability of the employer for benefits for all
participants under the retiree health plan, determined in
accordance with applicable accounting standards.
``(B) Limitation.--In determining excess health assets,
there shall not be taken into account--
``(i) amounts attributable to contributions (other than
transfers under any other subsection of this section, or
contributions made pursuant to a legally binding commitment
entered into before January 1, 2024) made after December 31,
2023, to any health benefits account established under
section 401(h) with respect to the retiree health plan, or
``(ii) any reduction in the liability of the employer
described in subparagraph (A) due to a reduction in benefits
pursuant to an amendment to the retiree health plan adopted
after December 31, 2023.
``(C) Terminating plans.--In the case of a terminating
pension plan which includes a health benefits account under
section 401(h), all assets in such health benefits account
shall be treated as excess health assets.
``(D) Applicable assets.--For purposes of subparagraph (A),
the term `applicable assets' means all assets with respect to
a retiree health benefits plan of an employer--
``(i) in a health benefits account established under
section 401(h), or
``(ii) held by a voluntary employees' beneficiary
association (as defined in section 501(c)(9)).
``(3) Transfers permitted.--
``(A) In general.--A transfer under this paragraph is a
transfer--
``(i) of excess health assets, in the fiscal year
immediately succeeding the fiscal year with respect to which
such excess health assets are determined--
``(I) to the pension plan under which a health benefits
account pursuant to section 401(h) was established, or
``(II) as provided in subparagraph (B)(ii), to a voluntary
employees' beneficiary association (as defined in section
501(c)(9)),
``(ii) which does not contravene any other provision of
law,
``(iii) with respect to which the use requirements of
subparagraphs (B) and (C) and the minimum cost and benefit
requirements of paragraph (4)(B) are met, and
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``(iv) with respect to which the vesting requirements of
subsection (c)(2) are met (determined by treating such
transfer as a qualified transfer).
``(B) Use for active benefits.--
``(i) In general.--Except as provided in clause (ii), a
transfer of excess health assets for purposes of this
subsection shall be used only to fund the pension plan.
``(ii) Transfer to voluntary employees' beneficiary
association.--A transfer described in subparagraph (A)(i)(II)
may be made only--
``(I) in the case of a defined benefit plan, to the extent
a transfer to such plan as provided in subparagraph (A)(i)(I)
would cause the plan to have a funding excess or increase the
funding excess of the plan or, if the transfer is made in
connection with the termination of the defined benefit plan,
to the extent a transfer to such plan would exceed the amount
necessary to satisfy the pension liabilities of the
terminating plan, or
``(II) in the case of a pension plan which is not a defined
benefit plan.
Any transfer under the preceding sentence to a voluntary
employees' benefit association (as defined in section
501(c)(9)) shall be used only to pay any benefits permitted
to be paid by such association to any members of such
association (other than key employees not taken into account
under subsection (e)(1)(E)).
``(iii) Funding excess.--For purposes of clause (ii), the
term `funding excess' with respect to a plan year means the
excess, if any, of--
``(I) the fair market value of the assets of the defined
benefit plan (other than applicable assets, as defined in
paragraph (2)(D)), over
``(II) 110 percent of the present value of all pension
benefits earned or accrued under the plan, as determined for
purposes of determining the adjusted funding target
attainment percentage pursuant to section 436(j).
``(C) Only 1 transfer per year.--No more than 1 transfer
with respect to any plan may be made under subparagraph (A)
during a taxable year. For purposes of the preceding
sentence, any transfer portions of which are described in
both subclauses (I) and (II) of subparagraph (A)(i) shall be
treated as 1 transfer.
``(4) Limitations on employer.--
``(A) Deduction limitations.--For purposes of this title,
no deduction shall be allowed--
``(i) for the transfer of any amount under paragraph
(3)(A),
``(ii) for benefits paid out of the assets (and income) so
transferred, or
``(iii) for any amounts to which clause (ii) does not apply
and which are paid for benefits described in paragraph
(3)(B)(ii) for the taxable year to the extent such amounts
are not greater than the excess (if any) of--
``(I) the amount determined under clause (i) (and income
allocable thereto), over
``(II) the amount determined under clause (ii).
``(B) Minimum cost and benefit requirements.--Each plan or
arrangement under which benefits funded as described in
paragraph (3)(B)(ii) are provided shall provide that--
``(i) the applicable employer cost for each of the 5
taxable years beginning with the year of the transfer under
paragraph (3)(A) shall not be materially less than the higher
of the applicable employer costs for the year of the 2
taxable years immediately preceding the taxable year of such
transfer, or
``(ii) benefits provided under the plan or arrangement
shall not be materially reduced during the 5 year period
described in clause (i).
For purposes of clause (i), the term `applicable employer
cost' shall be determined under rules similar to the rules of
subparagraphs (B) and (C) of subsection (c)(3), as applicable
to the benefit being provided under such plan or arrangement.
``(5) Coordination with sections 430 and 433.--In the case
of any assets transferred to a pension plan pursuant to
paragraph (3), such assets shall, for purposes of this
section and sections 430 and 433, be treated as assets in the
plan.''.
(2) Conforming amendments.--
(A) Subsection (h) of section 401 is amended by adding at
the end the following: ``Nothing in this subsection or this
section shall prevent a plan from transferring amounts from
an account established under this subsection pursuant to the
provisions of section 420(h).''.
(B) Subparagraph (B) of section 420(c)(1) is amended by
adding at the end the following new clause:
``(iii) Coordination with transfers of excess health
assets.--Clauses (i) and (ii) shall not apply to the amount
of any excess health assets transferred from a health
benefits account to the plan pursuant to subsection
(h)(3)(A).''.
(C) Subsection (e) of section 420 is amended by adding at
the end the following new paragraph:
``(8) Coordination with transfers of excess health
assets.--
``(A) In general.--A qualified transfer or portion thereof
shall not be subject to the limitations of subsections
(b)(3), (c)(1), (f)(2)(C), or (f)(2)(E) to the extent an
amount equal to such transfer (or portion) is transferred
during the same taxable year under subsection (h).
``(B) Minimum cost and benefit requirements.--The
requirements of subsection (h)(4)(B) shall apply in lieu of
subsections (c)(3) and (f)(2)(D) in the case of a transfer or
portion thereof to which subparagraph (A) applies.''.
(D) Subsection (l) of section 430 is amended by adding at
the end the following: ``Notwithstanding the preceding
sentence, any assets transferred to the plan pursuant to
section 420(h) shall be treated as assets in the plan.''.
(E) 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:
``(d) Transfers of Excess Health Assets.--A pension plan
shall not be treated as failing to meet the requirements of
this subchapter solely by reason of any transfer made as
permitted by section 420(h) of the Internal Revenue Code of
1986.''.
(F) Section 303(l) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1083(l)) is amended by adding
at the end the following: ``Notwithstanding the preceding
sentence, any assets transferred to the plan pursuant to
section 420(h) of such Code shall be treated as assets in the
plan.''.
(G) Section 408(b)(13) of such Act (29 U.S.C. 1108(b)(13))
is amended by striking the period at the end and inserting
``, or any transfer of excess health assets permitted under
section 420(h) of such Code (as in effect on the date of the
enactment of the Strengthening Benefit Plans Act of 2025).''.
(3) Notice requirements.--Section 101(e) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021(e)) is
amended by adding at the end the following new paragraph:
``(4) Transfers of excess health assets.--
``(A) Notice to participants.--Not later than 60 days
before the date of a transfer by an employee pension benefit
plan of excess health assets pursuant to section 420(h)(1) of
the Internal Revenue Code of 1986, the administrator of the
plan shall provide notice (in such manner as the Secretary
may prescribe) of such transfer to each participant and
beneficiary eligible to receive benefits paid from the health
benefits account under section 401(h) of such Code from which
the transfer is to be made. Such notice shall include
information with respect to the amount of excess health
assets to be transferred, the plan or voluntary employees'
beneficiary association to which the transfer is to be made,
and the amount of pension benefits of the participant which
will be nonforfeitable immediately after the transfer.
``(B) Notice to secretaries, etc.--Rules similar to the
rules of paragraph (2) shall apply for purposes of this
paragraph.''.
(4) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31,
2024.
(b) Transfer of Surplus Defined Benefit Plan Assets to
Defined Contribution Plan.--
(1) In general.--Section 401 is amended by redesignating
subsection (p) as subsection (q) and by inserting after
subsection (o) the following new subsection:
``(p) Transfer of Surplus Defined Benefit Plan Assets to
Defined Contribution Plan.--
``(1) In general.--
``(A) Transfer permitted.--If an employer maintaining a
defined benefit plan establishes or maintains a defined
contribution plan which would be a qualified replacement plan
(as defined in section 4980(d)(2)) with respect to the
defined benefit plan but for the fact that the defined
benefit plan is not terminated, subject to the requirements
of paragraphs (3) and (4), any surplus assets of the defined
benefit plan may be transferred to the defined contribution
plan.
``(B) Treatment of amount transferred.--In the case of the
transfer of any amount under subparagraph (A)--
``(i) such amount shall not be includible in the gross
income of the employer,
``(ii) no deduction shall be allowable with respect to such
transfer, and
``(iii) such transfer shall not be treated as an employer
reversion for purposes of section 4980.
``(2) Surplus assets.--For purposes of this subsection, the
term `surplus assets' means the excess of assets of the
defined benefit plan over an amount equal to 110 percent of
the value of plan liabilities used to determine premiums
imposed under title IV of the Employee Retirement Income
Security Act of 1974 for the plan year of the transfer.
``(3) Vesting of benefits.--The requirements of this
paragraph are met if all benefits under the defined benefit
plan become nonforfeitable in the same manner which would be
required if the plan had terminated immediately before the
transfer (or in the case of a participant who separated
during the 1-year period ending on the date of the transfer,
immediately before such separation).
``(4) No reduction in benefits.--The requirements of this
paragraph are met if, during the period beginning with the
year of the transfer and ending 4 plan years after the last
plan year during which the replacement plan is funded by the
transfer, no benefits under the replacement plan are
reduced.''.
(2) Conforming amendments.--
(A) Section 4 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1003), as amended by subsection (a),
is further amended by adding at the end the following new
subsection:
``(e) Transfers of Surplus Defined Benefit Plan Assets.--A
pension plan shall not be treated as failing to meet the
requirements of this subchapter solely by reason of
[[Page S4091]]
any transfer made as permitted by section 401(p) of the
Internal Revenue Code of 1986.''.
(B) Section 408(b)(13) of such Act (29 U.S.C. 1108(b)(13)),
as amended by subsection (a), is further amended by inserting
``or of surplus defined benefit plan assets permitted under
section 401(p) of such Code (as so in effect)'' before the
period at the end.
(3) Notice requirements.--Section 101(e) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1021(e)),
as amended by subsection (a), is further amended by adding at
the end the following new paragraph:
``(5) Transfers of surplus defined benefit plan assets.--
Rules similar to the rules of paragraph (4) shall apply in
the case of any transfer by an employee pension benefit plan
of surplus defined benefit plan assets pursuant to section
401(p) of the Internal Revenue Code of 1986.''.
(4) Effective date.--The amendments made by this subsection
shall apply to plan years beginning after December 31, 2025.
______