Multiemployer Retirees Medical Equity Benefits Act of 1993

Summary: Multiemployer Retirees Medical Equity Benefits Act of 1993 - Amends the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 to provide for the use of multiemployer plan contributions for retiree health benefits.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Multiemployer Retirees Medical 
Equity Benefits Act of 1993''.

SEC. 2. USE OF MULTIEMPLOYER PLAN CONTRIBUTIONS AND ASSETS FOR RETIREE 
              HEALTH BENEFITS.

    (a) General Rule.--Section 401 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (o) as subsection (p) and by 
inserting after subsection (n) the following new subsection:
    ``(o) Use of Multiemployer Plan Contributions for Retiree Health 
Benefits.--
            ``(1) In general.--Amounts contributed to a multiemployer 
        pension plan shall be treated for all purposes of this title as 
        if they had been contributed directly by the contributing 
        employers, pursuant to the designation of such employers, to a 
        related retiree medical benefits plan if--
                    ``(A) the trustees of the multiemployer pension 
                plan elect to transfer such amounts to such related 
                retiree medical benefit plan;
                    ``(B) such transfer is effected within 1 year after 
                the close of the transfer year;
                    ``(C) the amount transferred does not exceed the 
                permissible amount; and
                    ``(D) the amounts transferred in accordance with 
                this subsection are used exclusively to provide health 
                benefits for individuals (and their beneficiaries) who 
                have begun receiving benefits under the related pension 
                plan.
            ``(2) Definitions.--For the purpose of this subsection--
                    ``(A) Permissible amount.--The term `permissible 
                amount' means the excess of the amount of contributions 
                made to the pension plan for the transfer year, over 
                the amount of contributions required to avoid a funding 
                deficiency for the transfer year under section 412.
                    ``(B) Retiree medical benefit plan.--The term 
                `retiree medical benefit plan' means either--
                            ``(i) a trust described in section 
                        501(c)(9) at least a portion of the benefits of 
                        which are provided with respect to retired 
                        participants, or
                            ``(ii) a section 401(h) account.
                    ``(C) Related.--A retiree medical benefit plan is 
                related to a pension plan if at least 75 percent of 
                those it covers are persons who have begun receiving 
                benefits under the pension plan or are beneficiaries of 
                such persons.
                    ``(D) Multiemployer plan.--The term `multiemployer 
                plan' has the meaning given such term by section 
                414(f).
                    ``(E) Transfer year.--The term `transfer year' 
                means the plan year for which the transferred 
                contributions were made to the multiemployer pension 
                plan.''
    (b) Modifications to Section 420.--
            (1) Section 420(a) of such Code is amended to read as 
        follows:
    ``(a) General Rule.--If there is a qualified transfer of any excess 
pension assets of a defined benefit plan to a health benefits account 
which is part of such plan--
            ``(1) a trust which is part of such plan shall not be 
        treated as failing to meet the requirements of subsection (a) 
        or (h) of section 401 solely by reason of such transfer or any 
        other action authorized under this section;
            ``(2) no amount shall be includible in the gross income of 
        an employer maintaining the plan solely by reason of such 
        transfer;
            ``(3) such transfer shall not be treated--
                    ``(A) as an employer reversion for purposes of 
                section 4980, or
                    ``(B) as a prohibited transaction for purposes of 
                section 4975 or section 406 of the Employee Retirement 
                Income Security Act, and
            ``(4) the limitations of subsection (d) shall apply to an 
        employer maintaining the plan.''
            (2) Section 420(b)(3) of such Code is amended to read as 
        follows:
            ``(3) Limitation on amount transferred.--The amount of 
        excess pension assets which may be transferred in a qualified 
        transfer shall not exceed the amount which is reasonably 
        estimated to be required to be paid (whether directly or 
        through reimbursement) during the taxable year of the transfer 
        for qualified current retiree health liabilities.''
            (3) Section 420(c)(1)(B)(ii)(II) of such Code is amended to 
        read as follows:
                                    ``(II) shall be treated as an 
                                employer reversion for purposes of 
                                section 4980 (without regard to 
                                subsection (d) thereof) to the extent 
                                the original transfer satisfied 
                                obligations of an employer to provide 
                                retiree health benefits (whether 
                                directly or through an employer welfare 
                                benefit plan sponsored by the 
                                employer).''
            (4) Section 420(c)(3) of such Code is amended by adding at 
        the end thereof the following new subparagraph:
                    ``(E) Special rule for plans maintained by more 
                than 1 employer.--For the purposes of this section, in 
                the case of a plan maintained by more than 1 employer 
                (as defined in section 414(b) or (c)), the term 
                `employer' shall include an employee welfare benefit 
                plan providing retiree medical benefits and employers 
                not subject to income tax for purposes of subsections 
                (c)(3) and (e)(1)(A). For purposes of subsections 
                (b)(3), (b)(5), (c)(3), (d)(1), and (e)(1), the term 
                `taxable year' shall also include the plan year of an 
                employee welfare benefit plan providing medical 
                benefits and, subject to regulations of the Secretary 
                based upon section 413(b), (c), and 404, the taxable 
                year of any employer contribution to such a plan.''
            (5) Section 420(d)(2) of such Code is amended to read as 
        follows:
            ``(2) No contributions allowed.--An employer may not 
        contribute after December 31, 1991, any amount to a health 
        benefits account with respect to qualified retiree health 
        liabilities for which transferred assets are required to be 
        used under subsection (c)(1). An employer may not contribute 
        after December 31, 1990, to any welfare benefit plan (as 
        defined in section 419(e)(1)) with respect to qualified current 
        retiree health liabilities for which transferred assets are 
        required to be used under subsection (c)(1). For purposes of 
        this section, a contribution to a welfare benefit plan (as 
        defined in section 419(e)(1) which is not allocated to specific 
        benefits shall be allocated to current benefits for employees 
        who have not retired, to reserves to the extent allowed under 
        section 419, and then to qualified retiree health 
        liabilities.''
            (6) Section 420(e)(1)(A) of such Code is amended to read as 
        follows:
                    ``(A) In general.--The term `qualified current 
                retiree health liabilities' means, with respect to any 
                taxable year, the aggregate amounts (including 
                administrative expenses) which would have been 
                allowable as a deduction to the employer (whether or 
                not subject to income tax) for such taxable year with 
                respect to applicable health benefits provided during 
                the taxable year if--
                            ``(i) such benefits were provided directly 
                        by the employer, and
                            ``(ii) the employer used the cash receipts 
                        and disbursements method of accounting.''
    (c) Amendment to ERISA.--Section 403 of the Employee Retirement 
Income Security Act of 1974 is amended by adding at the end thereof the 
following new subsection:
    ``(d) Use of Multiemployer Plan Contributions for Retirees Health 
Benefits.--
            ``(1) In general.--Amounts contributed to a multiemployer 
        pension plan shall be treated for all purposes as if they had 
        been contributed directly by the contributing employers, 
        pursuant to the designation of such employers, to a related 
        retiree medical benefit plan if--
                    ``(A) the trustees of the multiemployer pension 
                plan elect to transfer such amounts to such related 
                retiree medical benefit plan;
                    ``(B) such transfer is effected within 1 year after 
                the close of the transfer year;
                    ``(C) the amount transferred does not exceed the 
                permissible amount; and
                    ``(D) amounts transferred in accordance with this 
                section are used exclusively to provide health benefits 
                for individuals (and their beneficiaries) who have 
                begun receiving benefits under the related pension 
                plan.
            ``(2) Definitions.--For the purposes of this subsection--
                    ``(A) Permissible amount.--The term `permissible 
                amount' means the excess of the amount of contributions 
                made to the pension plan for the transfer year over the 
                amount of contributions required to avoid a funding 
                deficiency for the transfer year under section 412 of 
                the Internal Revenue Code of 1986.
                    ``(B) Retiree medical benefit plan.--The term 
                `retiree medical benefit plan' means either--
                            ``(i) a trust described in section 
                        501(c)(9) of such Code at least a portion of 
                        the benefits of which are provided with respect 
                        to retired participants, or
                            ``(ii) an Internal Revenue Code section 
                        401(h) account.
                    ``(C) Related.--A retiree medical benefit plan is 
                related to a pension plan if at least 75 percent of 
                those it covers are persons who have begun receiving 
                benefits under the pension plan or are beneficiaries of 
                such persons.
                    ``(D) Multiemployer.--The term `multiemployer plan' 
                has the meaning given such term by section 3(37).
                    ``(E) Transfer year.--The term `transfer year' 
                means the plan year for which the transferred 
                contributions were made to the multiemployer pension 
                plan.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginnning after December 31, 1992.