To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to protect pension benefits of employees in defined benefit plans and to direct the Secretary of the Treasury to enforce the age discrimination requirements of the Internal Revenue Code of 1986.

Summary: Pension Benefits Protection Act of 2005 - Amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code with respect to pension benefits of employees in defined benefit plans. 
 
 Directs the Secretary of the Treasury to apply Code provisions regarding continued accrual of benefits beyond normal retirement age under a defined benefit plan, which prohibit certain discrimination based on age, without regard to the portion of the preamble to a specified Treasury Decision which relates to allocation of interest adjustments through normal retirement age under a cash balance plan. 
 Prohibits forced conversions of certain defined benefit plan participants to cash balance plans, and other such plans that are hybrids of defined benefit and defined contribution plans, by plan amendments which: (1) change the way the accrued benefits to participants or beneficiaries are expressed; and (2) reduce the rate of future benefit accrual of one or more participants. Requires employers, at the time such amendment takes effect, to provide employees who have attained 40 years of age or 10 years of service with certain notices and an election upon retirement to receive benefits as determined either under the plan in effect at time of retirement or under the plan in effect immediately before the plan amendment. Sets forth a formula to determine when a plan amendment adopted by a large (100 or more participants) defined benefit plan shall be treated as wearing away accrued benefits.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pension Benefits Protection Act of 
2005''.

SEC. 2. PROPER ADMINISTRATION OF INTERNAL REVENUE LAWS AND 
              NONDISCRIMINATION REQUIREMENTS.

    (a) In General.--The Secretary of the Treasury shall take no action 
in contravention of section 204(b)(1)(G), 204(b)(1)(H)(i), or 204(g) of 
the Employee Retirement Income Security Act of 1974, section 
411(b)(1)(G), 411(b)(1)(H)(i), or 411(d)(6) of the Internal Revenue 
Code of 1986, or section 4(i)(1)(A) of the Age Discrimination in 
Employment Act of 1967.
    (b) Directive.--The Secretary of the Treasury shall apply section 
411(b)(1)(H) of the Internal Revenue Code of 1986 without regard to the 
portion of the preamble to Treasury Decision 8360 (56 Fed. Reg. 47524-
47603, September 19, 1991) which relates to the allocation of interest 
adjustments through normal retirement age under a cash balance plan, as 
such preamble is and has been since its adoption without the force of 
law.

SEC. 3. PROTECTION OF PARTICIPANTS FROM CONVERSIONS TO HYBRID DEFINED 
              BENEFIT PLANS.

    (a) Election to Maintain Rate of Accrual in Effect Before Plan 
Amendment.--
            (1) Amendment to erisa.--Section 204(b)(1) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1054(b)(1)) 
        is amended by adding at the end the following new subparagraph:
    ``(I)(i) Notwithstanding the preceding subparagraphs, in the case 
of a plan amendment to a defined benefit plan--
            ``(I) which has the effect of converting the plan to a plan 
        under which the accrued benefit is expressed to participants 
        and beneficiaries as an amount other than an annual benefit 
        commencing at normal retirement age (or which has a similar 
        effect as determined under regulations issued under clause 
        (iv)), and
            ``(II) which has the effect of reducing the rate of future 
        benefit accrual of 1 or more participants, such plan shall be 
        treated as not satisfying the requirements of this paragraph 
        unless such plan meets the requirements of clause (ii).
    ``(ii) A plan meets the requirements of this clause if the plan 
provides each participant who has attained 40 years of age or 10 years 
of service (as determined under section 203) under the plan at the time 
such amendment takes effect with--
            ``(I) notice of the plan amendment indicating that it has 
        such effect, including a comparison of the present and 
        projected values of the accrued benefit determined both with 
        and without regard to the plan amendment, and
            ``(II) an election upon retirement to either receive 
        benefits under the terms of the plan as in effect at the time 
        of retirement or to receive benefits under the terms of the 
        plan as in effect immediately before the effective date of such 
        plan amendment (taking into account all benefit accruals under 
        such terms since such date).
    ``(iii) For purposes of clause (i), an accrued benefit shall 
include any early retirement benefit or retirement-type subsidy (within 
the meaning of subsection (g)(2)(A)), but only with respect to a 
participant who satisfies (either before or after the effective date of 
the amendment) the conditions for the benefit or subsidy under the 
terms of the plan as in effect immediately before such date.
    ``(iv) The Secretary shall issue regulations under which any plan 
amendment which has an effect similar to the effect described in clause 
(i)(I) shall be treated as a plan amendment described in clause (i)(I). 
Such regulations may provide that if a plan sponsor represents in 
communications to participants and beneficiaries that a plan amendment 
has an effect described in the preceding sentence, such plan amendment 
shall be treated as a plan amendment described in clause (i)(I).''.
            (2) Amendment to internal revenue code.--Section 411(b)(1) 
        of the Internal Revenue Code of 1986 (relating to accrued 
        benefit requirements for defined benefit plans) is amended by 
        adding at the end the following new subparagraph:
                    ``(I) Election to maintain rate of accrual in 
                effect before certain plan amendments.--
                            ``(i) In general.--Notwithstanding the 
                        preceding subparagraphs, in the case of a plan 
                        amendment to a defined benefit plan--
                                    ``(I) which has the effect of 
                                converting the plan to a plan under 
                                which the accrued benefit is expressed 
                                to participants and beneficiaries as an 
                                amount other than an annual benefit 
                                commencing at normal retirement age (or 
                                which has a similar effect as 
                                determined under regulations issued 
                                under clause (iv)), and
                                    ``(II) which has the effect of 
                                reducing the rate of future benefit 
                                accrual of 1 or more participants, such 
                                plan shall be treated as not satisfying 
                                the requirements of this paragraph 
                                unless such plan meets the requirements 
                                of clause (ii).
                            ``(ii) Requirements.--A plan meets the 
                        requirements of this clause if the plan 
                        provides each participant who has attained 40 
                        years of age or 10 years of service (as 
                        determined under subsection (a)) under the plan 
                        at the time such amendment takes effect with--
                                    ``(I) notice of the plan amendment 
                                indicating that it has such effect, 
                                including a comparison of the present 
                                and projected values of the accrued 
                                benefit determined both with and 
                                without regard to the plan amendment, 
                                and
                                    ``(II) an election upon retirement 
                                to either receive benefits under the 
                                terms of the plan as in effect at the 
                                time of retirement or to receive 
                                benefits under the terms of the plan as 
                                in effect immediately before the 
                                effective date of such plan amendment 
                                (taking into account all benefit 
                                accruals under such terms since such 
                                date).
                            ``(iii) Treatment of early retirement 
                        benefits and retirement-type subsidies.--For 
                        purposes of clause (i), an accrued benefit 
                        shall include any early retirement benefit or 
                        retirement-type subsidy (within the meaning of 
                        subsection (d)(6)(B)(i)), but only with respect 
                        to a participant who satisfies (either before 
                        or after the effective date of the amendment) 
                        the conditions for the benefit or subsidy under 
                        the terms of the plan as in effect immediately 
                        before such date.
                            ``(iv) Regulations.--The Secretary shall 
                        issue regulations under which any plan 
                        amendment which has an effect similar to the 
                        effect described in clause (i)(I) shall be 
                        treated as a plan amendment described in clause 
                        (i)(I). Such regulations may provide that if a 
                        plan sponsor represents in communications to 
                        participants and beneficiaries that a plan 
                        amendment has an effect described in the 
                        preceding sentence, such plan amendment shall 
                        be treated as a plan amendment described in 
                        clause (i)(I).''.
    (b) Effective Date and Related Rules.--
            (1) In general.--The amendments made by this section apply 
        to plan amendments taking effect before, on, or after the date 
        of the enactment of this Act.
            (2) Special rule.--In the case of a plan amendment taking 
        effect before 90 days after the date of the enactment of this 
        Act, the requirements of section 204(b)(1)(I) of the Employee 
        Retirement Income Security Act of 1974 (as added by this 
        section) and section 411(b)(1)(I) of the Internal Revenue Code 
        of 1986 (as added by this section) shall be treated as 
        satisfied in connection with such plan amendment, in the case 
        of any participant described in such sections 204(b)(1)(I) and 
        411(b)(1)(I) in connection with such plan amendment, if, as of 
        the end of such 90-day period--
                    (A) the notice described in clause (i)(I) of such 
                section 204(b)(1)(I) and clause (i)(I) of such section 
                411(b)(1)(I) in connection with such plan amendment has 
                been provided to such participant, and
                    (B) the plan provides for the election described in 
                clause (i)(II) of such section 204(b)(1)(I) and clause 
                (i)(II) of such section 411(b)(1)(I) in connection with 
                such participant's retirement under the plan.

SEC. 4. PREVENTION OF WEARING AWAY OF EMPLOYEE'S ACCRUED BENEFIT.

    (a) Amendment to 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 new paragraph:
    ``(6)(A) For purposes of paragraph (1), an applicable plan 
amendment adopted by a large defined benefit plan shall be treated as 
reducing accrued benefits of a participant if, under the terms of the 
plan after the adoption of the amendment, the accrued benefit of the 
participant may at any time be less than the sum of--
            ``(i) the participant's accrued benefit for years of 
        service before the effective date of the amendment, determined 
        under the terms of the plan as in effect immediately before the 
        effective date, plus
            ``(ii) the participant's accrued benefit determined under 
        the formula applicable to benefit accruals under the current 
        plan as applied to years of service after such effective date.
    ``(B) For purposes of this paragraph--
            ``(i) The term `applicable plan amendment' means a plan 
        amendment which has the effect of converting the plan to a plan 
        under which the accrued benefit is expressed to participants 
        and beneficiaries as an amount other than an annual benefit 
        commencing at normal retirement age (or which has a similar 
        effect as determined under regulations of the Secretary).
            ``(ii) The term `large defined benefit plan' means any 
        defined benefit plan which had 100 or more participants who had 
        accrued a benefit under the plan (whether or not vested) as of 
        the last day of the plan year preceding the plan year in which 
        the plan amendment becomes effective.
            ``(iii) An accrued benefit shall include any early 
        retirement benefit or retirement-type subsidy (within the 
        meaning of paragraph (2)(A)), but only with respect to a 
        participant who satisfies (either before or after the effective 
        date of the amendment) the conditions for the benefit or 
        subsidy under the terms of the plan as in effect immediately 
        before such date.''.
    (b) Amendment to Internal Revenue Code.--Section 411(d)(6) of the 
Internal Revenue Code of 1986 (relating to accrued benefit may not be 
decreased by amendment) is amended by adding at the end the following 
new subparagraph:
                    ``(F) Treatment of plan amendments wearing away 
                accrued benefit.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), an applicable plan amendment 
                        adopted by a large defined benefit plan shall 
                        be treated as reducing accrued benefits of a 
                        participant if, under the terms of the plan 
                        after the adoption of the amendment, the 
                        accrued benefit of the participant may at any 
                        time be less than the sum of--
                                    ``(I) the participant's accrued 
                                benefit for years of service before the 
                                effective date of the amendment, 
                                determined under the terms of the plan 
                                as in effect immediately before the 
                                effective date, plus
                                    ``(II) the participant's accrued 
                                benefit determined under the formula 
                                applicable to benefit accruals under 
                                the current plan as applied to years of 
                                service after such effective date.
                            ``(ii) Definitions.--For purposes of this 
                        subparagraph--
                                    ``(I) Applicable plan amendment.--
                                The term `applicable plan amendment' 
                                means a plan amendment which has the 
                                effect of converting the plan to a plan 
                                under which the accrued benefit is 
                                expressed to participants and 
                                beneficiaries as an amount other than 
                                an annual benefit commencing at normal 
                                retirement age (or which has a similar 
                                effect as determined under regulations 
                                of the Secretary).
                                    ``(II) Large defined benefit 
                                plan.--The term `large defined benefit 
                                plan' means any defined benefit plan 
                                which had 100 or more participants who 
                                had accrued a benefit under the plan 
                                (whether or not vested) as of the last 
                                day of the plan year preceding the plan 
                                year in which the plan amendment 
                                becomes effective.
                                    ``(III) Protected accrued 
                                benefit.--An accrued benefit shall 
                                include any early retirement benefit or 
                                retirement-type subsidy (within the 
                                meaning of subparagraph (B)(i)), but 
                                only with respect to a participant who 
                                satisfies (either before or after the 
                                effective date of the amendment) the 
                                conditions for the benefit or subsidy 
                                under the terms of the plan as in 
                                effect immediately before such date.''.
    (c) Effective Date and Related Rules.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section apply to plan amendments taking 
        effect before, on, or after the date of the enactment of this 
        Act.
            (2) Special rule.--Notwithstanding paragraph (1), the 
        amendments made by this section shall not apply in connection 
        with any participant with respect to any plan amendment which 
        has taken effect before 90 days after the date of the enactment 
        of this Act if, as of the end of such 90-day period, the plan 
        provides that the participant's accrued benefit shall at no 
        time be less than the sum described in section 204(g)(6)(A) of 
        the Employee Retirement Income Security Act of 1974 (as added 
        by this section) or section 411(d)(6)(F)(i) of the Internal 
        Revenue Code of 1986 (as added by this section) in connection 
        with such plan amendment.