II

106TH CONGRESS

1ST SESSION S. 1300

To amend the Internal Revenue Code of 1986 and the Employee Retirement

Income Security Act of 1974 to prevent the wearing away of an employee’s accrued benefit under a defined benefit plan by the adoption of

a plan amendment reducing future accruals under the plan.

IN THE SENATE OF THE UNITED STATES

JUNE 29, 1999

Mr. HARKIN introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to prevent the wearing away of an employee’s accrued benefit

under a defined benefit plan by the adoption of a plan

amendment reducing future accruals under the plan.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Older Workers Pension

5 Protection Act of 1999’’.
2

•S 1300 IS

1 SEC. 2. PREVENTION OF WEARING AWAY OF EMPLOYEE’S

2 ACCRUED BENEFIT.

3 (a) AMENDMENT TO INTERNAL REVENUE CODE.—

4 Section 411(d)(6) of the Internal Revenue Code of 1986

5 (relating to accrued benefit may not be decreased by

6 amendment) is amended by adding at the end the fol7 lowing new subparagraph:

8 ‘‘(D) TREATMENT OF PLAN AMENDMENTS

9 WEARING AWAY ACCRUED BENEFIT.—

10 ‘‘(i) IN GENERAL.—For purposes of

11 subparagraph (A), a plan amendment

12 adopted by a large defined benefit plan

13 shall be treated as reducing accrued bene14 fits of a participant if, under the terms of

15 the plan after the adoption of the amend16 ment, the accrued benefit of the partici17 pant may at any time be less than the sum

18 of—

19 ‘‘(I) the participant’s accrued

20 benefit for years of service before the

21 effective date of the amendment, de22 termined under the terms of the plan

23 as in effect immediately before the ef24 fective date, plus

25 ‘‘(II) the participant’s accrued

26 benefit determined under the formula
3

•S 1300 IS

1 applicable to benefit accruals under

2 the current plan as applied to years of

3 service after such effective date.

4 ‘‘(ii) LARGE DEFINED BENEFIT

5 PLAN.—For purposes of this subpara6 graph, the term ‘large defined benefit plan’

7 means any defined benefit plan which had

8 100 or more participants who had accrued

9 a benefit under the plan (whether or not

10 vested) as of the last day of the plan year

11 preceding the plan year in which the plan

12 amendment becomes effective.

13 ‘‘(iii) PROTECTED ACCRUED BEN14 EFIT.—For purposes of this subparagraph,

15 an accrued benefit shall include any early

16 retirement benefit or retirement-type sub17 sidy (within the meaning of subparagraph

18 (B)(i)), but only with respect to a partici19 pant who satisfies (either before or after

20 the effective date of the amendment) the

21 conditions for the benefit or subsidy under

22 the terms of the plan as in effect imme23 diately before such date.’’

24 (b) AMENDMENT OF ERISA.—Section 204(g) of the

25 Employee Retirement Income Security Act of 1974 is
4

•S 1300 IS

1 amended by adding at the end the following new para2 graph:

3 ‘‘(4)(A) For purposes of paragraph (1), a plan

4 amendment adopted by a large defined benefit plan shall

5 be treated as reducing accrued benefits of a participant

6 if, under the terms of the plan after the adoption of the

7 amendment, the accrued benefit of the participant may at

8 any time be less than the sum of—

9 ‘‘(i) the participant’s accrued benefit for years

10 of service before the effective date of the amend11 ment, determined under the terms of the plan as in

12 effect immediately before the effective date, plus

13 ‘‘(ii) the participant’s accrued benefit deter14 mined under the formula applicable to benefit accru15 als under the current plan as applied to years of

16 service after such effective date.

17 ‘‘(B) For purposes of this paragraph, the term ‘large

18 defined benefit plan’ means any defined benefit plan which

19 had 100 or more participants who had accrued a benefit

20 under the plan (whether or not vested) as of the last day

21 of the plan year preceding the plan year in which the plan

22 amendment becomes effective.

23 ‘‘(C) For purposes of this paragraph, an accrued ben24 efit shall include any early retirement benefit or retire25 ment-type subsidy (within the meaning of paragraph
5

•S 1300 IS

1 (2)(A)), but only with respect to a participant who satis2 fies (either before or after the effective date of the amend3 ment) the conditions for the benefit or subsidy under the

4 terms of the plan as in effect immediately before such

5 date.’’

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall apply to plan amendments adopted after

8 June 29, 1999.

Æ