[Congressional Record (Bound Edition), Volume 150 (2004), Part 1]
[Senate]
[Pages 331-334]
[From the U.S. Government Publishing Office, www.gpo.gov]




                           TEXT OF AMENDMENTS

  SA 2233. Mr. GRASSLEY (for himself, Mr. Baucus, Mr. Gregg, and Mr. 
Kennedy) proposed an amendment to the bill H.R. 3108, to amend the 
Employee Retirement Income Security Act of 1974 and the Internal 
Revenue Code of 1986 to temporarily replace the 30-year Treasury rate 
with a rate based on long-term corporate bonds for certain pension plan 
funding requirements and other provisons, and for other purposes; as 
follows:

       Strike all after the first word, and insert:

     1. SHORT TITLE.

       This Act may be cited as the ``Pension Stability Act''.

     SEC. 2. TEMPORARY REPLACEMENT OF INTEREST RATE ON 30-YEAR 
                   TREASURY SECURITIES WITH INTEREST RATE ON 
                   CONSERVATIVELY INVESTED LONG-TERM CORPORATE 
                   BONDS.

       (a) Internal Revenue Code of 1986.--
       (1) Determination of permissible range.--
       (A) In general.--Section 412(b)(5)(B)(ii) of the Internal 
     Revenue Code of 1986 is amended--
       (i) in subclause (I), by inserting ``or (III)'' after 
     ``subclause (II)'';
       (ii) by redesignating subclause (II) as subclause (III);
       (iii) by inserting after subclause (I) the following new 
     subclause:

       ``(II) Special rule for 2004 and 2005.--In the case of plan 
     years beginning in 2004 or 2005, the term `permissible range' 
     means a rate of interest which is not above, and not more 
     than 10 percent below, the weighted average of the 
     conservative long-term corporate bond rates during the 4-year 
     period ending on the last day before the beginning of the 
     plan year. The Secretary shall, by regulation, prescribe a 
     method for periodically determining conservative long-term 
     bond rates for purposes of this paragraph. Such rates shall 
     reflect the rates of interest on amounts invested 
     conservatively in long-term corporate bonds and shall be 
     based on the use of 2 or more indices that are in the top 2 
     quality levels available reflecting average maturities of 20 
     years or more.''; and

       (iv) in subclause (III), as so redesignated--

       (I) by inserting ``or (II)'' after ``subclause (I)'' the 
     first place it appears; and
       (II) by striking ``subclause (I)'' the second place it 
     appears and inserting ``such subclause''.

       (2) Determination of current liability.--Section 
     412(l)(7)(C)(i) of such Code is amended by adding at the end 
     the following new subclause:

       ``(IV) Special rule for 2004 and 2005.--For plan years 
     beginning in 2004 or 2005, notwithstanding subclause (I), the 
     rate of interest used to determine current liability under 
     this subsection shall be the rate of interest under 
     subsection (b)(5).''.

       (3) Conforming amendment.--Section 412(m)(7) of such Code 
     is amended to read as follows:
       ``(7) Special rule for 2002.--In any case in which the 
     interest rate used to determine current liability is 
     determined under subsection (l)(7)(C)(i)(III), for purposes 
     of applying paragraphs (1) and (4)(B)(ii) for plan years 
     beginning in 2002, the current liability of the plan for the 
     preceding plan year shall be redetermined using 120 percent 
     as the specified percentage determined under subsection 
     (l)(7)(C)(i)(II).''.
       (4) Limitation on certain assumptions.--Section 
     415(b)(2)(E)(ii) of such Code is amended by inserting ``, 
     except that in the case of plan years beginning in 2004 or 
     2005, `5.5 percent' shall be substituted for `5 percent' in 
     clause (i)'' before the period at the end.
       (5) Election to disregard modification for deduction 
     purposes.--Section 404(a)(1) of such Code is amended by 
     adding at the end the following new subparagraph:
       ``(F) Election to disregard modified interest rate.--An 
     employer may elect to disregard subsections (b)(5)(B)(ii)(II) 
     and (l)(7)(C)(i) of section 412 solely for purposes of 
     determining the interest rate used in calculating the maximum 
     amount of the deduction allowable under this section for 
     contributions to a plan to which such subsections apply.''
       (b) Employee Retirement Income Security Act of 1974.--
       (1) Determination of permissible range.--
       (A) In general.--Section 302(b)(5)(B)(ii) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 
     1082(b)(5)(B)(ii)) is amended--
       (i) in subclause (I), by inserting ``or (III)'' after 
     ``subclause (II)'';
       (ii) by redesignating subclause (II) as subclause (III);
       (iii) by inserting after subclause (I) the following new 
     subclause:
       ``(II) Special rule for years 2004 and 2005.--In the case 
     of plan years beginning in 2004 or 2005, the term 
     `permissible range' means a rate of interest which is not 
     above, and not more than 10 percent below, the weighted 
     average of the conservative long-term corporate bond rates 
     (as determined under section 412(b)(5)(B)(ii)(II) of the 
     Internal Revenue Code of 1986) during the 4-year period 
     ending on the last day before the beginning of the plan 
     year.''; and
       (iv) in subclause (III), as so redesignated--

       (I) by inserting ``or (II)'' after ``subclause (I)'' the 
     first place it appears; and
       (II) by striking ``subclause (I)'' the second place it 
     appears and inserting ``such subclause''.

       (2) Determination of current liability.--Section 
     302(d)(7)(C)(i) of such Act (29 U.S.C. 1082(d)(7)(C)(i)) is 
     amended by adding at the end the following new subclause:

       ``(IV) Special rule for 2004 and 2005.--For plan years 
     beginning in 2004 or 2005, notwithstanding subclause (I), the 
     rate of interest used to determine current liability under 
     this subsection shall be the rate of interest under 
     subsection (b)(5).''.

       (3) Conforming amendment.--Section 302(e)(7) of such Act 
     (29 U.S.C. 1082(e)(7)) is amended to read as follows:
       ``(7) Special rule for 2002.--In any case in which the 
     interest rate used to determine current liability is 
     determined under subsection (d)(7)(C)(i)(III), for purposes 
     of applying paragraphs (1) and (4)(B)(ii) for plan years 
     beginning in 2002, the current liability of the plan for the 
     preceding plan year shall be redetermined using 120 as the 
     specified percentage determined under subsection 
     (d)(7)(C)(i)(II).''.
       (4) PBGC.--Section 4006(a)(3)(E)(iii) of such Act (29 
     U.S.C. 1306(a)(3)(E)(iii)) is amended by adding at the end 
     the following new subclause:
       ``(V) In the case of plan years beginning in 2004 or 2005, 
     the annual yield taken into account under subclause (II) 
     shall be the annual yield computed by using the conservative 
     long-term corporate bond rate (as determined under section 
     412(b)(5)(B)(ii)(II) of the Internal Revenue Code of 1986) 
     for the month preceding the month in which the plan year 
     begins.''
       (c) Effective Dates.--
       (1) In general.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to plan years 
     beginning after December 31, 2003.
       (2) Lookback rules.--For purposes of applying subsections 
     (l)(9)(B)(ii) and (m)(1) of section 412 of the Internal 
     Revenue Code of 1986, and subsections (d)(9)(B)(ii) and 
     (e)(1) of section 302 of the Employee Retirement Income 
     Security Act of 1974 to plan years beginning after December 
     31, 2003, the amendments made by this section may be applied 
     as if such amendments had been in effect for all years 
     beginning before such date.
       (3) Transition rule for section 415 limitation.--In the 
     case of any participant or beneficiary receiving a 
     distribution after December 31, 2003 and before January 1, 
     2005, the amount payable under any form of benefit subject to 
     section 417(b)(3) of the Internal Revenue Code of 1986 and 
     subject to adjustment under section 415(b)(2)(B) of such Code 
     shall not, solely by reason of the amendment made by 
     subsection (a)(4), be less than the amount that would have 
     been so payable had the amount payable been determined using 
     the applicable interest rate in effect as of the last day of 
     the last plan year beginning before January 1, 2004.

     SEC. 3. ELECTION OF ALTERNATIVE DEFICIT REDUCTION 
                   CONTRIBUTION.

       (a) Amendment of 1986 Code.--Section 412(l) of the Internal 
     Revenue Code of 1986 (relating to applicability of 
     subsection) is amended by adding at the end the following new 
     paragraph:
       ``(12) Alternative increase for certain plans meeting 
     requirements in 2000.--
       ``(A) In general.--In the case of a defined benefit plan 
     established and maintained by an applicable employer, if this 
     subsection did not apply to the plan for the plan year 
     beginning in 2000 (determined without regard to paragraph 
     (6)), then, at the election of the employer, the increased 
     amount under paragraph (1) for any applicable plan year shall 
     be the greater of--
       ``(i) 20 percent (40 percent in the case of an applicable 
     plan year beginning after December 27, 2004) of the increased 
     amount under paragraph (1) determined without regard to this 
     paragraph, or
       ``(ii) the increased amount which would be determined under 
     paragraph (1) if the deficit reduction contribution under 
     paragraph (2) for the applicable plan year were determined 
     without regard to subparagraphs (A), (B), and (D) of 
     paragraph (2).

[[Page 332]]

       ``(B) Restrictions on benefit increases.--No amendment 
     which increases the liabilities of the plan by reason of any 
     increase in benefits, any change in the accrual of benefits, 
     or any change in the rate at which benefits become 
     nonforfeitable shall be adopted during any applicable plan 
     year, unless--
       ``(i) the funded current liability percentage (as defined 
     in paragraph (8)(B)) as of the end of such plan year is 
     projected (taking into account the effect of the amendment) 
     to be at least 75 percent,
       ``(ii) the amendment provides for an increase in benefits 
     under a formula which is not based on a participant's 
     compensation, but only if the rate of such increase is not in 
     excess of the contemporaneous rate of increase in average 
     wages of participants covered by the amendment,
       ``(iii) the amendment is required by a collective 
     bargaining agreement which is in effect on the date of 
     enactment of this subparagraph, or
       ``(iv) the amendment is otherwise described in subparagraph 
     (A) or (C) of subsection (f)(2).

     If a plan is amended during any applicable plan year in 
     violation of the preceding sentence, any election under this 
     paragraph shall not apply to any applicable plan year ending 
     on or after the date on which such amendment is adopted.
       ``(C) Applicable employer.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable employer' means an 
     employer which is--

       ``(I) a commercial passenger airline,
       ``(II) primarily engaged in the production or manufacture 
     of a steel mill product, or
       ``(III) an organization described in section 501(c)(5) and 
     which established the plan to which this paragraph applies on 
     June 30, 1955.

       ``(ii) Other employers may apply for relief.--

       ``(I) In general.--Except as provided in subclause (II), an 
     employer other than an employer described in clause (i) shall 
     be treated as an applicable employer if the employer files an 
     application (at such time and in such manner as the Secretary 
     may prescribe) to be treated as an applicable employer for 
     purposes of this paragraph.
       ``(II) Exception.--Subclause (I) shall not apply to an 
     employer if, within 90 days of the filing of the application, 
     the Secretary determines (taking into account the application 
     of this paragraph) that there is a reasonable likelihood that 
     the employer will be unable to make future required 
     contributions to the plan in a timely manner.

       ``(D) Applicable plan year.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable plan year' means 
     any plan year beginning after December 27, 2003, and before 
     December 28, 2005, for which the employer elects the 
     application of this paragraph.
       ``(ii) Limitation on number of years which may be 
     elected.--An election may not be made under this paragraph 
     with respect to more than 2 plan years.
       ``(E) Election.--An election under this paragraph shall be 
     made at such time and in such manner as the Secretary may 
     prescribe.''
       (b) Amendment of ERISA.--Section 302(d) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1082(d)) is 
     amended by adding at the end the following new paragraph:
       ``(12) Alternative increase for certain plans meeting 
     requirements in 2000.--
       ``(A) In general.--In the case of a defined benefit plan 
     established and maintained by an applicable employer, if this 
     subsection did not apply to the plan for the plan year 
     beginning in 2000 (determined without regard to paragraph 
     (6)), then, at the election of the employer, the increased 
     amount under paragraph (1) for any applicable plan year shall 
     be the greater of--
       ``(i) 20 percent (40 percent in the case of an applicable 
     plan year beginning after December 27, 2004) of the increased 
     amount under paragraph (1) determined without regard to this 
     paragraph, or
       ``(ii) the increased amount which would be determined under 
     paragraph (1) if the deficit reduction contribution under 
     paragraph (2) for the applicable plan year were determined 
     without regard to subparagraphs (A), (B), and (D) of 
     paragraph (2).
       ``(B) Restrictions on benefit increases.--No amendment 
     which increases the liabilities of the plan by reason of any 
     increase in benefits, any change in the accrual of benefits, 
     or any change in the rate at which benefits become 
     nonforfeitable under the plan shall be adopted during any 
     applicable plan year, unless--
       ``(i) the funded current liability percentage (as defined 
     in paragraph (8)(B)) as of the end of such plan year is 
     projected (taking into account the effect of the amendment) 
     to be at least 75 percent,
       ``(ii) the amendment provides for an increase in benefits 
     under a formula which is not based on a participant's 
     compensation, but only if the rate of such increase is not in 
     excess of the contemporaneous rate of increase in average 
     wages of participants covered by the amendment,
       ``(iii) the amendment is required by a collective 
     bargaining agreement which is in effect on the date of 
     enactment of this subparagraph, or
       ``(iv) the amendment is otherwise described in subparagraph 
     (A) or (C) of section 304(b)(2).

     If a plan is amended during any applicable plan year in 
     violation of the preceding sentence, any election under this 
     paragraph shall not apply to any applicable plan year ending 
     on or after the date on which such amendment is adopted.
       ``(C) Applicable employer.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable employer' means an 
     employer which is--

       ``(I) a commercial passenger airline,
       ``(II) primarily engaged in the production or manufacture 
     of a steel mill product, or
       ``(III) an organization described in section 501(c)(5) of 
     the Internal Revenue Code of 1986 and which established the 
     plan to which this paragraph applies on June 30, 1955.

       ``(ii) Other employers may apply for relief.--

       ``(I) In general.--Except as provided in subclause (II), an 
     employer other than an employer described in clause (i) shall 
     be treated as an applicable employer if the employer files an 
     application (at such time and in such manner as the Secretary 
     of the Treasury may prescribe) to be treated as an applicable 
     employer for purposes of this paragraph.
       ``(II) Exception.--Subclause (I) shall not apply to an 
     employer if, within 90 days of the filing of the application, 
     the Secretary of the Treasury determines (taking into account 
     the application of this paragraph) that there is a reasonable 
     likelihood that the employer will be unable to make future 
     required contributions to the plan in a timely manner.

       ``(D) Applicable plan year.--For purposes of this 
     paragraph--
       ``(i) In general.--The term `applicable plan year' means 
     any plan year beginning after December 27, 2003, and before 
     December 28, 2005, for which the employer elects the 
     application of this paragraph.
       ``(ii) Limitation on number of years which may be 
     elected.--An election may not be made under this paragraph 
     with respect to more than 2 plan years.
       ``(E) Notice requirements for plans electing alternative 
     deficit reduction contributions.--
       ``(i) In general.--If an employer elects an alternative 
     deficit reduction contribution under this paragraph and 
     section 412(l)(12) of the Internal Revenue Code of 1986 for 
     any year, the employer shall provide, within 30 days (120 
     days in the case of an employer described in subparagraph 
     (C)(ii)) of filing the election for such year, written notice 
     of the election to participants and beneficiaries and to the 
     Pension Benefit Guaranty Corporation.
       ``(ii) Notice to participants and beneficiaries.--The 
     notice under clause (i) to participants and beneficiaries 
     shall include with respect to any election--

       ``(I) the due date of the alternative deficit reduction 
     contribution and the amount by which such contribution was 
     reduced from the amount which would have been owed if the 
     election were not made, and
       ``(II) a description of the benefits under the plan which 
     are eligible to be guaranteed by the Pension Benefit Guaranty 
     Corporation and an explanation of the limitations on the 
     guarantee and the circumstances under which such limitations 
     apply, including the maximum guaranteed monthly benefits 
     which the Pension Benefit Guaranty Corporation would pay if 
     the plan terminated while underfunded.

       ``(iii) Notice to pbgc.--The notice under clause (i) to the 
     Pension Benefit Guaranty Corporation shall include--

       ``(I) the information described in clause (ii)(I),
       ``(II) the number of years it will take to restore the plan 
     to full funding if the employer only makes the required 
     contributions, and
       ``(III) information as to how the amount by which the plan 
     is underfunded compares with the capitalization of the 
     employer making the election.

       ``(F) Election.--An election under this paragraph shall be 
     made at such time and in such manner as the Secretary of the 
     Treasury may prescribe.''
       (c) Effect of Election.--An election under section 
     412(l)(12) of the Internal Revenue Code of 1986 or section 
     302(d)(12) of the Employee Retirement Income Security Act of 
     1974 (as added by this section) with respect to a plan shall 
     not invalidate any obligation (pursuant to a collective 
     bargaining agreement in effect on the date of the election) 
     to provide benefits, to change the accrual of benefits, or to 
     change the rate at which benefits become nonforfeitable under 
     the plan .
       (d) Penalty for Failing To Provide Notice.--Section 
     502(c)(3) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1132(c)(3)) is amended by inserting ``or who 
     fails to meet the requirements of section 302(d)(12)(E) with 
     respect to any participant or beneficiary'' after 
     ``101(e)(2)''.

     SEC. 4. MULTIEMPLOYER PLAN FUNDING NOTICES.

       (a) In General.--Section 104 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 104) is amended by 
     redesignating subsection (d) as subsection (e) and by

[[Page 333]]

     inserting after subsection (c) the following new subsection:
       ``(d) Multiemployer Defined Benefit Plan Funding Notices.--
       ``(1) In general.--The administrator of a defined benefit 
     plan which is a multiemployer plan shall for each plan year 
     provide a plan funding notice to each plan participant and 
     beneficiary, to each labor organization representing such 
     participants or beneficiaries, and to each employer that has 
     an obligation to contribute under the plan.
       ``(2) Information contained in notices.--
       ``(A) Identifying information.--Each notice required under 
     paragraph (1) shall contain identifying information, 
     including the name of the plan, the address and phone number 
     of the plan administrator and the plan's principal 
     administrative officer, each plan sponsor's employer 
     identification number, and the plan number of the plan.
       ``(B) Specific information.--A plan funding notice under 
     paragraph (1) shall include--
       ``(i) a statement as to whether the plan's funded current 
     liability percentage (as defined in section 302(d)(8)(B)) for 
     the plan year to which the notice relates is at least 100 
     percent (and, if not, the actual percentage);
       ``(ii) a statement of the value of the plan's assets, the 
     amount of benefit payments, and the ratio of the assets to 
     the payments for the plan year to which the report relates;
       ``(iii) a summary of the rules governing insolvent 
     multiemployer plans, including the limitations on benefit 
     payments and any potential benefit reductions and suspensions 
     (and the potential effects of such limitations, reductions, 
     and suspensions on the plan); and
       ``(iv) a general description of the benefits under the plan 
     which are eligible to be guaranteed by the Pension Benefit 
     Guaranty Corporation, along with an explanation of the 
     limitations on the guarantee and the circumstances under 
     which such limitations apply.
       ``(C) Other information.--Each notice under paragraph (1) 
     shall include any additional information which the plan 
     administrator elects to include to the extent not 
     inconsistent with regulations prescribed by the Secretary.
       ``(3) Time for providing notice.--Any notice under 
     paragraph (1) shall be provided no later than two months 
     after the deadline (including extensions) for filing the 
     annual report for the plan year to which the notice relates.
       ``(4) Form and manner.--Any notice under paragraph (1)--
       ``(A) shall be provided in a form and manner prescribed in 
     regulations of the Secretary,
       ``(B) shall be written in a manner so as to be understood 
     by the average plan participant, and
       ``(C) may be provided in written, electronic, or other 
     appropriate form to the extent such form is reasonably 
     accessible to persons to whom the notice is required to be 
     provided.''
       (b) Penalties.--Section 502(c)(1) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C. 1132(c)(1)) 
     is amended by striking ``or section 101(e)(1)'' and inserting 
     ``, section 101(e)(1), or section 104(d)''.
       (c) Regulations and Model Notice.--The Secretary of Labor 
     shall, not later than 1 year after the date of the enactment 
     of this Act, issue regulations (including a model notice) 
     necessary to implement the amendments made by this section.
       (d) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2004.

     SEC. 5. AMORTIZATION HIATUS FOR NET EXPERIENCE LOSSES IN 
                   MULTIEMPLOYER PLANS.

       (a) Amendments to the Employee Retirement Income Security 
     Act of 1974.--
       (1) In general.--Section 302(b)(7) of the Employee 
     Retirement Income Security Act of 1974 (29 U.S.C.1082(b)(7)) 
     is amended by adding at the end the following new 
     subparagraph:
       ``(F)(i) If a multiemployer plan has a net experience loss 
     for any plan year beginning after June 30, 2002, and before 
     July 1, 2006--
       ``(I) the plan may elect to have the 15-year amortization 
     period under paragraph (2)(B)(iv) with respect to the loss 
     begin in any plan year selected by the plan from among the 3 
     immediately succeeding plan years, and
       ``(II) if the plan makes an election under subclause (I) 
     for any plan year, the net experience loss for the year 
     shall, for purposes of determining any charge to the funding 
     standard account, or interest, with respect to the loss, be 
     treated in the same manner as if it were a net experience 
     loss occurring in the year selected by the plan under 
     subclause (I) (without regard to any net experience loss or 
     gain otherwise determined for such year).

     Notwithstanding the preceding sentence, a plan may elect to 
     have this subparagraph apply to net experience losses for 
     only 2 plan years beginning after June 30, 2002, and before 
     July 1, 2006.
       ``(ii) An amendment which increases the liabilities of the 
     plan by reason of any increase in benefits, any change in the 
     accrual of benefits, or any change in the rate at which 
     benefits become nonforfeitable under the plan shall not take 
     effect for any plan year in the hiatus period, unless--
       ``(I) the funded current liability percentage (as defined 
     in subsection (d)(8)(B)) as of the end of the plan year is 
     projected (taking into account the effect of the amendment) 
     to be at least 75 percent,
       ``(II) the plan's actuary certifies that, due to an 
     increase in contribution rates, the normal cost attributable 
     to the benefit increase or other change is expected to be 
     fully funded in the year following the year the increase or 
     other change takes effect, and any increase in the plan's 
     accrued liabilities attributable to the benefit increase or 
     other change is expected to be fully funded by the end of the 
     third plan year following the end of the last hiatus period 
     of the plan, or
       ``(III) the plan amendment is otherwise described in 
     subparagraph (A) or (C) of section 304(b)(2).
       ``(iii) Clause (ii) shall not apply to an increase in 
     benefits for a group of participants resulting solely from a 
     collectively bargained increase in the contributions made on 
     their behalf.
       ``(iv) For purposes of this subparagraph, the term `hiatus 
     period' means any period during which the amortization of a 
     net experience loss is suspended by reason of this 
     subparagraph.
       ``(v) Interest accrued on any net experience loss during a 
     hiatus period shall be charged to a reconciliation account 
     and not to the funding standard account.
       ``(vi) If a plan elects an amortization hiatus under this 
     subparagraph and section 412(b)(7)(F) of the Internal Revenue 
     Code of 1986 for any plan year, the plan administrator shall 
     provide, within 30 days of filing the election for such year, 
     written notice of the election to participants and 
     beneficiaries, to each labor organization representing such 
     participants or beneficiaries, and to each employer that has 
     an obligation to contribute under the plan. Such notice shall 
     include with respect to any election the amount of the net 
     experience loss to be deferred and the period of the 
     deferral. Such notice shall also include the maximum 
     guaranteed monthly benefits which the Pension Benefit 
     Guaranty Corporation would pay if the plan terminated while 
     underfunded.
       ``(vii) An election under this subparagraph shall be made 
     at such time and in such manner as the Secretary, after 
     consultation with the Secretary of the Treasury, may 
     prescribe.''
       (2) Penalty.--Section 502(c)(4) of such Act (29 U.S.C. 
     1132(c)(4)) is amended to read as follows:
       ``(4) The Secretary may assess a civil penalty of not more 
     than $1,000 a day for each violation by any person of section 
     302(b)(7)(F)(vi).''
       (b) Amendments to the Internal Revenue Code of 1986.--
       (1) In general.--Section 412(b)(7) of the Internal Revenue 
     Code of 1986 (relating to special rules for multiemployer 
     plans) is amended by adding at the end the following new 
     subparagraph:
       ``(F) Amortization hiatus.--
       ``(i) In general.--If a multiemployer plan has a net 
     experience loss for any plan year beginning after June 30, 
     2002, and before July 1, 2006--

       ``(I) the plan may elect to have the 15-year amortization 
     period under paragraph (2)(B)(iv) with respect to the loss 
     begin in any plan year selected by the plan from among the 3 
     immediately succeeding plan years, and
       ``(II) if the plan makes an election under subclause (I) 
     for any plan year, the net experience loss for the year 
     shall, for purposes of determining any charge to the funding 
     standard account, or interest, with respect to the loss, be 
     treated in the same manner as if it were a net experience 
     loss occurring in the year selected by the plan under 
     subclause (I) (without regard to any net experience loss or 
     gain otherwise determined for such year).

     Notwithstanding the preceding sentence, a plan may elect to 
     have this subparagraph apply to net experience losses for 
     only 2 plan years beginning after June 30, 2002, and before 
     July 1, 2006.
       ``(ii) Restrictions on benefit increases.--An amendment 
     which increases the liabilities of the plan by reason of any 
     increase in benefits, any change in the accrual of benefits, 
     or any change in the rate at which benefits become 
     nonforfeitable under the plan shall not take effect for any 
     plan year in the hiatus period, unless--

       ``(I) the funded current liability percentage (as defined 
     in subsection (l)(8)(B)) as of the end of the plan year is 
     projected (taking into account the effect of the amendment) 
     to be at least 75 percent,
       ``(II) the plan's actuary certifies that, due to an 
     increase in contribution rates, the normal cost attributable 
     to the benefit increase or other change is expected to be 
     fully funded in the year following the year in which the 
     increase or other change takes effect, and any increase in 
     the plan's accrued liabilities attributable to the benefit 
     increase or other change is expected to be fully funded by 
     the end of the third plan year following the end of the last 
     hiatus period of the plan, or

[[Page 334]]

       ``(III) the plan amendment is otherwise described in 
     subparagraph (A) or (C) of subsection (f)(2).

       ``(iii) Collectively bargained increases in 
     contributions.--Clause (ii) shall not apply to an increase in 
     benefits for a group of participants resulting solely from a 
     collectively bargained increase in the contributions made on 
     their behalf.
       ``(iv) Hiatus period defined.--For purposes of this 
     subparagraph, the term `hiatus period' means any period 
     during which the amortization of a net experience loss is 
     suspended by reason of this subparagraph.
       ``(v) Interest accrued during hiatus.--Interest accrued on 
     any net experience loss during a hiatus period shall be 
     charged to a reconciliation account and not to the funding 
     standard account.
       ``(vi) Election.--An election under this subparagraph shall 
     be made at such time and in such manner as the Secretary of 
     Labor, after consultation with the Secretary, may 
     prescribe.''
       (2) Qualification requirement.--Section 401(a) of such Code 
     is amended by inserting after paragraph (34) the following 
     new paragraph:
       ``(35) Benefit increases in certain multiemployer plans.--A 
     trust which is part of a plan shall not constitute a 
     qualified trust under this section if the plan adopts an 
     amendment during a hiatus period (within the meaning of 
     section 412(b)(7)(F)(iv)) which the plan is prohibited from 
     adopting by reason of section 412(b)(7)(F)(ii).''.

     SEC. 6. 2-YEAR EXTENSION OF TRANSITION RULE TO PENSION 
                   FUNDING REQUIREMENTS.

       (a) In General.--Section 769(c) of the Retirement 
     Protection Act of 1994, as added by section 1508 of the 
     Taxpayer Relief Act of 1997, is amended--
       (1) by inserting ``except as provided in paragraph (3),'' 
     before ``the transition rules'', and
       (2) by adding at the end the following:
       ``(3) Special rules.--In the case of plan years beginning 
     in 2004 and 2005, the following transition rules shall apply 
     in lieu of the transition rules described in paragraph (2):
       ``(A) For purposes of section 412(l)(9)(A) of the Internal 
     Revenue Code of 1986 and section 302(d)(9)(A) of the Employee 
     Retirement Income Security Act of 1974, the funded current 
     liability percentage for any plan year shall be treated as 
     not less than 90 percent.
       ``(B) For purposes of section 412(m) of the Internal 
     Revenue Code of 1986 and section 302(e) of the Employee 
     Retirement Income Security Act of 1974, the funded current 
     liability percentage for any plan year shall be treated as 
     not less than 100 percent.
       ``(C) For purposes of determining unfunded vested benefits 
     under section 4006(a)(3)(E)(iii) of the Employee Retirement 
     Income Security Act of 1974, the mortality table shall be the 
     mortality table used by the plan.''
       (b) Effective Date.--The amendments made by this section 
     shall apply to plan years beginning after December 31, 2003.

     SEC. 7. PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION 
                   PLAN WITHDRAWAL LIABILITY.

       (a) In General.--Section 4221 of the Employee Retirement 
     Income Security Act of 1974 (29 U.S.C. 1401) is amended by 
     adding at the end the following new subsection:
       ``(f) Procedures Applicable to Certain Disputes.--
       ``(1) In general.--If--
       ``(A) a plan sponsor of a plan determines that--
       ``(i) a complete or partial withdrawal of an employer has 
     occurred, or
       ``(ii) an employer is liable for withdrawal liability 
     payments with respect to the complete or partial withdrawal 
     of an employer from the plan,
       ``(B) such determination is based in whole or in part on a 
     finding by the plan sponsor under section 4212(c) that a 
     principal purpose of a transaction that occurred before 
     January 1, 1999, was to evade or avoid withdrawal liability 
     under this subtitle, and
       ``(C) such transaction occurred at least 5 years before the 
     date of the complete or partial withdrawal,

     then the special rules under paragraph (2) shall be used in 
     applying subsections (a) and (d) of this section and section 
     4219(c) to the employer.
       ``(2) Special rules.--
       ``(A) Determination.--Notwithstanding subsection (a)(3)--
       ``(i) a determination by the plan sponsor under paragraph 
     (1)(B) shall not be presumed to be correct, and
       ``(ii) the plan sponsor shall have the burden to establish, 
     by a preponderance of the evidence, the elements of the claim 
     under section 4212(c) that a principal purpose of the 
     transaction was to evade or avoid withdrawal liability under 
     this subtitle.

     Nothing in this subparagraph shall affect the burden of 
     establishing any other element of a claim for withdrawal 
     liability under this subtitle.
       ``(B) Procedure.--Notwithstanding subsection (d) and 
     section 4219(c), if an employer contests the plan sponsor's 
     determination under paragraph (1) through an arbitration 
     proceeding pursuant to subsection (a), or through a claim 
     brought in a court of competent jurisdiction, the employer 
     shall not be obligated to make any withdrawal liability 
     payments until a final decision in the arbitration 
     proceeding, or in court, upholds the plan sponsor's 
     determination.''.
       (b) Effective Date.--The amendments made by this section 
     shall apply to any employer that receives a notification 
     under section 4219(b)(1) of the Employee Retirement Income 
     Security Act of 1974 (29 U.S.C. 1399(b)(1)) after October 31, 
     2003.
                                 ______
                                 
  SA 2234. Mr. KYL proposed an amendment to amendment SA 2233 proposed 
by Mr. Grassley (for himself, Mr. Baucus, Mr. Gregg, and Mr. Kennedy) 
to the bill H.R. 3108, to amend the Employee Retirement Income Security 
Act of 1974 and the Internal Revenue Code of 1986 to temporarily 
replace the 30-year Treasury rate with a rate based on long-term 
corporate bonds for certain pension plan funding requirements and other 
provisions, and for other purposes; as follows:

       At the end of section 3, insert:
       (__) Limitations on PBGC Liability for Plans to Which 
     Alternative Deficit Reduction Contribution Applies.--
       (1) In general.--If a plan with respect to which an 
     election under section 412(l)(12) of the Internal Revenue 
     Code or section 302(d)(12) of the Employee Retirement Income 
     Security Act of 1974 (as added by this section) is made 
     terminates during the applicable period, the maximum 
     guarantee limitation under section 4022(b)(3) of such Act, 
     and the phase-in rate of benefit increases under paragraph 
     (5) or (7) of section 4022(b) of such Act, shall be the 
     limitation and rates determined as if the plan terminated on 
     the day before the first day of the applicable period.
       (2) Applicable period.--For purposes of paragraph (1), the 
     term ``applicable period'' means, with respect to any plan, 
     the period--
       (A) beginning on the first day of the first applicable plan 
     year with respect to the plan, and
       (B) ending on the last day of the second plan year 
     following the last applicable plan year with respect to the 
     plan.

     For purposes of this paragraph, the term ``applicable plan 
     year'' has the meaning given such term by section 412(l)(12) 
     of the Internal Revenue Code of 1986 and section 302(d)(12) 
     of the Employee Retirement Income Security Act of 1974 (as 
     added by this section).

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