[Congressional Record (Bound Edition), Volume 147 (2001), Part 4]
[Senate]
[Pages 5912-5964]
[From the U.S. 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 
pregnant 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 they 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 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

[[Page 5913]]

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 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,

[[Page 5914]]



     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 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 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

[[Page 5915]]

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 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

[[Page 5916]]

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--
       (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

[[Page 5917]]

     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.''.
       (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.

[[Page 5918]]

  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;
       ``(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--

[[Page 5919]]

       (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, 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

[[Page 5920]]

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 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-

[[Page 5921]]

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.
       (6) If current programs to assist homeless veterans are 
     fully maintained but not expanded, veterans will experience 
     as many as

[[Page 5922]]

     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.

[[Page 5923]]

       (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 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.

[[Page 5924]]

       (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.
       (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

[[Page 5925]]

     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.
       (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.

[[Page 5926]]

     
                                  ____
                                          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.
                                  ____



                                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,

[[Page 5927]]

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 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 organizations 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.

[[Page 5928]]

  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.
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 

[[Page 5929]]

      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.
       ``(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

[[Page 5930]]

     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:

``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;

[[Page 5931]]

       (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 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

[[Page 5932]]

       ``(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.''.
       (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)),

[[Page 5933]]

     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 
     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.

[[Page 5934]]

       ``(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 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.--

[[Page 5935]]

       ``(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:
       ``(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.

[[Page 5936]]



     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''.
       (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.

[[Page 5937]]

       (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 
     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)''.

[[Page 5938]]

       (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 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

[[Page 5939]]

     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.--
       ``(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

[[Page 5940]]

     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.

     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

[[Page 5941]]

     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 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).--

[[Page 5942]]

       ``(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.
       ``(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

[[Page 5943]]

     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.
       ``(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.

[[Page 5944]]

       ``(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 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);

[[Page 5945]]

       (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 a 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 
     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)

[[Page 5946]]

     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.
       ``(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

[[Page 5947]]

       ``(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 value of either the 
     voting stock of that corporation or all the stock of that 
     corporation.


[[Page 5948]]


     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

[[Page 5949]]

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 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

[[Page 5950]]

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 
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

[[Page 5951]]

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 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

[[Page 5952]]

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 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

[[Page 5953]]

     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 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

[[Page 5954]]

       (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 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

[[Page 5955]]

     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.
     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.

[[Page 5956]]



     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.
       (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

[[Page 5957]]

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 
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

[[Page 5958]]

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 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

[[Page 5959]]

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 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.

[[Page 5960]]

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 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?

[[Page 5961]]

  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, 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.

[[Page 5962]]


                                 ______
                                 
      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 
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 aware of the impact this is 
having on small businesses. Congress has not addressed this

[[Page 5963]]

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. 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

[[Page 5964]]

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.

                          ____________________