I 

108TH CONGRESS 

1ST SESSION H. R. 1677

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. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 8, 2003

Mr. SANDERS (for himself, Mr. GEORGE MILLER of California, Mr. VISCLOSKY, Mr. EMANUEL, Mr. SERRANO, Mr. ENGEL, Mr. GRIJALVA, Mr. 

ORTIZ, Mr. BROWN of Ohio, Mr. PETRI, Mr. OBERSTAR, Mr. TAYLOR of 

Mississippi, Mr. HINCHEY, Mr. TOWNS, Mr. ROSS, Mr. DELAHUNT, Mr. 

OLVER, Mr. PAYNE, Mr. ANDREWS, Mr. WYNN, Ms. SCHAKOWSKY, Mr. 

STRICKLAND, Mr. GUTIERREZ, Ms. NORTON, Ms. SOLIS, Mr. WEXLER, 

Mr. SCHIFF, Ms. SLAUGHTER, Mr. MEEHAN, Mr. NADLER, Mr. RAHALL, 

Mr. GOODE, Mr. BACA, Mr. KUCINICH, Mr. COSTELLO, Mr. MARKEY, 

Ms. KILPATRICK, Ms. LEE, Mr. OBEY, Mr. GREEN of Texas, Mr. 

DEUTSCH, Mr. MICHAUD, Mrs. JONES of Ohio, Mr. UDALL of New Mexico, Mr. WEINER, Mr. DEFAZIO, Mr. PALLONE, Mr. MCGOVERN, Mrs. 

NAPOLITANO, Mr. THOMPSON of Mississippi, Mr. JEFFERSON, Mr. 

REYES, Mr. CUMMINGS, Mr. OWENS, Ms. HOOLEY of Oregon, Ms. 

MILLENDER-MCDONALD, Mr. DOGGETT, Ms. WOOLSEY, Mr. PASCRELL, 

Ms. BALDWIN, Ms. BORDALLO, Mr. RYAN of Ohio, Ms. DELAURO, Mr. 

FRANK of Massachusetts, Mr. ABERCROMBIE, Mr. RODRIGUEZ, Ms. 

JACKSON-LEE of Texas, Ms. CARSON of Indiana, Mr. DAVIS of Illinois, 

Mr. FILNER, Mr. HOEFFEL, Mr. LANGEVIN, Mr. LYNCH, Mr. HASTINGS

of Florida, Mr. SCOTT of Georgia, Mr. CAPUANO, Mr. BISHOP of New 

York, Mr. DINGELL, Ms. MCCOLLUM, Mr. TIERNEY, Mr. KENNEDY of 

Rhode Island, Mr. RUSH, Mr. SPRATT, Mr. KILDEE, Mr. BERRY, Mr. 

LAMPSON, Mr. SCOTT of Virginia, Ms. KAPTUR, Mr. CROWLEY, Ms. 

ESHOO, Mrs. MALONEY, Mr. UDALL of Colorado, Mrs. MCCARTHY of 

New York, Mr. INSLEE, Mr. CONYERS, Mr. LANTOS, Mr. MCINTYRE, Mr. 

HOLT, Mr. BLUMENAUER, Mr. MEEK of Florida, Mr. BOEHLERT, Mr. 

FARR, Mr. HOLDEN, Mr. ACKERMAN, Ms. LINDA T. SA ́NCHEZ of California, Mrs. CHRISTENSEN, Mr. ROTHMAN, Mr. MURTHA, Ms. MCCARTHY of Missouri, Mrs. DAVIS of California, Ms. VELA ́ZQUEZ, Mrs. CAPPS, 

Mr. DOYLE, Mr. MENENDEZ, Mr. CASE, Mr. ALLEN, and Mr. BERMAN) 

introduced the following bill; which was referred to the Committee on 
2

•HR 1677 IH 

Education and the Workforce, and in addition to the Committee on Ways 

and Means, for a period to be subsequently determined by the Speaker, 

in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

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.

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 ‘‘Pension Benefits Pro5 tection Act of 2003’’. 

6 SEC. 2. PROPER ADMINISTRATION OF INTERNAL REVENUE 

7 LAWS AND NONDISCRIMINATION REQUIRE8 MENTS. 

9 (a) IN GENERAL.—The Employee Retirement Income 

10 Security Act of 1974, the Internal Revenue Code of 1986, 

11 and the Age Discrimination in Employment Act of 1967 

12 shall be applied and administered without regard to pro13 posed regulations of the Secretary of the Treasury, in14 cluded in proposed regulations published in the Federal 

15 Register on December 11, 2002 (relating to reductions of 
3

•HR 1677 IH 

1 accruals and allocations because of the attainment of any 

2 age; application of nondiscrimination cross-testing rules to 

3 cash balance plans) (67 FR 76123), which pertain to plan 

4 amendments adopting a cash balance formula, and with5 out regard to any other regulation which reaches the same 

6 or a similar result. The Secretary of the Treasury shall 

7 take no action in contravention of section 204(b)(1)(G), 

8 204(b)(1)(H)(i), or 204(g) of the Employee Retirement 

9 Income Security Act of 1974, section 411(b)(1)(G), 

10 411(b)(1)(H)(i), or 411(d)(6) of the Internal Revenue 

11 Code of 1986, or section 4(i)(1)(A) of the Age Discrimina12 tion in Employment Act of 1967. 

13 (b) DIRECTIVE.—The Secretary of the Treasury shall 

14 apply section 411(b)(1)(H) of the Internal Revenue Code 

15 of 1986 without regard to the portion of the preamble to 

16 Treasury Decision 8360 (56 Fed. Reg. 47524–47603, 

17 September 19, 1991) which relates to the allocation of in18 terest adjustments through normal retirement age under 

19 a cash balance plan, as such preamble is and has been 

20 since its adoption without the force of law. 

21 SEC. 3. PROTECTION OF PARTICIPANTS FROM CONVER22 SIONS TO HYBRID DEFINED BENEFIT PLANS. 

23 (a) ELECTION TO MAINTAIN RATE OF ACCRUAL IN

24 EFFECT BEFORE PLAN AMENDMENT.—
4

•HR 1677 IH 

1 (1) AMENDMENT TO ERISA.—Section 

2 204(b)(1) of the Employee Retirement Income Secu3 rity Act of 1974 (29 U.S.C. 1054(b)(1)) is amended 

4 by adding at the end the following new subpara5 graph: 

6 ‘‘(I)(i) Notwithstanding the preceding subpara7 graphs, in the case of a plan amendment to a defined ben8 efit plan—

9 ‘‘(I) which has the effect of converting the plan 

10 to a plan under which the accrued benefit is ex11 pressed to participants and beneficiaries as an 

12 amount other than an annual benefit commencing at 

13 normal retirement age (or which has a similar effect 

14 as determined under regulations issued under clause 

15 (iv)), and 

16 ‘‘(II) which has the effect of reducing the rate 

17 of future benefit accrual of 1 or more participants, 

18 such plan shall be treated as not satisfying the require19 ments of this paragraph unless such plan meets the re20 quirements of clause (ii). 

21 ‘‘(ii) A plan meets the requirements of this clause if 

22 the plan provides each participant who has attained 40 

23 years of age or 10 years of service (as determined under 

24 section 203) under the plan at the time such amendment 

25 takes effect with—
5

•HR 1677 IH 

1 ‘‘(I) notice of the plan amendment indicating 

2 that it has such effect, including a comparison of the 

3 present and projected values of the accrued benefit 

4 determined both with and without regard to the plan 

5 amendment, and 

6 ‘‘(II) an election upon retirement to either re7 ceive benefits under the terms of the plan as in ef8 fect at the time of retirement or to receive benefits 

9 under the terms of the plan as in effect immediately 

10 before the effective date of such plan amendment 

11 (taking into account all benefit accruals under such 

12 terms since such date).

13 ‘‘(iii) For purposes of clause (i), an accrued benefit 

14 shall include any early retirement benefit or retirement15 type subsidy (within the meaning of subsection (g)(2)(A)), 

16 but only with respect to a participant who satisfies (either 

17 before or after the effective date of the amendment) the 

18 conditions for the benefit or subsidy under the terms of 

19 the plan as in effect immediately before such date. 

20 ‘‘(iv) The Secretary shall issue regulations under 

21 which any plan amendment which has an effect similar 

22 to the effect described in clause (i)(I) shall be treated as 

23 a plan amendment described in clause (i)(I). Such regula24 tions may provide that if a plan sponsor represents in com25 munications to participants and beneficiaries that a plan 
6

•HR 1677 IH 

1 amendment has an effect described in the preceding sen2 tence, such plan amendment shall be treated as a plan 

3 amendment described in clause (i)(I).’’. 

4 (2) AMENDMENT TO INTERNAL REVENUE

5 CODE.—Section 411(b)(1) of the Internal Revenue 

6 Code of 1986 (relating to accrued benefit require7 ments for defined benefit plans) is amended by add8 ing at the end the following new subparagraph: 

9 ‘‘(I) ELECTION TO MAINTAIN RATE OF AC10 CRUAL IN EFFECT BEFORE CERTAIN PLAN

11 AMENDMENTS.—

12 ‘‘(i) IN GENERAL.—Notwithstanding 

13 the preceding subparagraphs, in the case 

14 of a plan amendment to a defined benefit 

15 plan—

16 ‘‘(I) which has the effect of con17 verting the plan to a plan under which 

18 the accrued benefit is expressed to 

19 participants and beneficiaries as an 

20 amount other than an annual benefit 

21 commencing at normal retirement age 

22 (or which has a similar effect as de23 termined under regulations issued 

24 under clause (iv)), and 
7

•HR 1677 IH 

1 ‘‘(II) which has the effect of re2 ducing the rate of future benefit ac3 crual of 1 or more participants, 

4 such plan shall be treated as not satisfying 

5 the requirements of this paragraph unless 

6 such plan meets the requirements of clause 

7 (ii). 

8 ‘‘(ii) REQUIREMENTS.—A plan meets 

9 the requirements of this clause if the plan 

10 provides each participant who has attained 

11 40 years of age or 10 years of service (as 

12 determined under subsection (a)) under 

13 the plan at the time such amendment 

14 takes effect with—

15 ‘‘(I) notice of the plan amend16 ment indicating that it has such ef17 fect, including a comparison of the 

18 present and projected values of the 

19 accrued benefit determined both with 

20 and without regard to the plan 

21 amendment, and 

22 ‘‘(II) an election upon retirement 

23 to either receive benefits under the 

24 terms of the plan as in effect at the 

25 time of retirement or to receive bene-
8

•HR 1677 IH 

1 fits under the terms of the plan as in 

2 effect immediately before the effective 

3 date of such plan amendment (taking 

4 into account all benefit accruals under 

5 such terms since such date). 

6 ‘‘(iii) TREATMENT OF EARLY RETIRE7 MENT BENEFITS AND RETIREMENT-TYPE

8 SUBSIDIES.—For purposes of clause (i), an 

9 accrued benefit shall include any early re10 tirement benefit or retirement-type subsidy 

11 (within the meaning of subsection 

12 (d)(6)(B)(i)), but only with respect to a 

13 participant who satisfies (either before or 

14 after the effective date of the amendment) 

15 the conditions for the benefit or subsidy 

16 under the terms of the plan as in effect 

17 immediately before such date. 

18 ‘‘(iv) REGULATIONS.—The Secretary 

19 shall issue regulations under which any 

20 plan amendment which has an effect simi21 lar to the effect described in clause (i)(I) 

22 shall be treated as a plan amendment de23 scribed in clause (i)(I). Such regulations 

24 may provide that if a plan sponsor rep25 resents in communications to participants 
9

•HR 1677 IH 

1 and beneficiaries that a plan amendment 

2 has an effect described in the preceding 

3 sentence, such plan amendment shall be 

4 treated as a plan amendment described in 

5 clause (i)(I).’’. 

6 (b) EFFECTIVE DATE AND RELATED RULES.—

7 (1) IN GENERAL.—The amendments made by 

8 this section apply to plan amendments taking effect 

9 before, on, or after the date of the enactment of this 

10 Act. 

11 (2) SPECIAL RULE.—In the case of a plan 

12 amendment taking effect before 90 days after the 

13 date of the enactment of this Act, the requirements 

14 of section 204(b)(1)(I) of the Employee Retirement 

15 Income Security Act of 1974 (as added by this sec16 tion) and section 411(b)(1)(I) of the Internal Rev17 enue Code of 1986 (as added by this section) shall 

18 be treated as satisfied in connection with such plan 

19 amendment, in the case of any participant described 

20 in such sections 204(b)(1)(I) and 411(b)(1)(I) in 

21 connection with such plan amendment, if, as of the 

22 end of such 90-day period—

23 (A) the notice described in clause (i)(I) of 

24 such section 204(b)(1)(I) and clause (i)(I) of 

25 such section 411(b)(1)(I) in connection with 
10

•HR 1677 IH 

1 such plan amendment has been provided to 

2 such participant, and 

3 (B) the plan provides for the election de4 scribed in clause (i)(II) of such section 

5 204(b)(1)(I) and clause (i)(II) of such section 

6 411(b)(1)(I) in connection with such partici7 pant’s retirement under the plan. 

8 SEC. 4. PREVENTION OF WEARING AWAY OF EMPLOYEE’S 

9 ACCRUED BENEFIT. 

10 (a) AMENDMENT TO ERISA.—Section 204(g) of the 

11 Employee Retirement Income Security Act of 1974 (29

12 U.S.C. 1054(g)) is amended by adding at the end the fol13 lowing new paragraph: 

14 ‘‘(6)(A) For purposes of paragraph (1), an applicable 

15 plan amendment adopted by a large defined benefit plan 

16 shall be treated as reducing accrued benefits of a partici17 pant if, under the terms of the plan after the adoption 

18 of the amendment, the accrued benefit of the participant 

19 may at any time be less than the sum of—

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

21 of service before the effective date of the amend22 ment, determined under the terms of the plan as in 

23 effect immediately before the effective date, plus 

24 ‘‘(ii) the participant’s accrued benefit deter25 mined under the formula applicable to benefit accru-
11

•HR 1677 IH 

1 als under the current plan as applied to years of 

2 service after such effective date. 

3 ‘‘(B) For purposes of this paragraph—

4 ‘‘(i) The term ‘applicable plan amendment’ 

5 means a plan amendment which has the effect of 

6 converting the plan to a plan under which the ac7 crued benefit is expressed to participants and bene8 ficiaries as an amount other than an annual benefit 

9 commencing at normal retirement age (or which has 

10 a similar effect as determined under regulations of 

11 the Secretary). 

12 ‘‘(ii) The term ‘large defined benefit plan’ 

13 means any defined benefit plan which had 100 or 

14 more participants who had accrued a benefit under 

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

16 of the plan year preceding the plan year in which 

17 the plan amendment becomes effective. 

18 ‘‘(iii) An accrued benefit shall include any early 

19 retirement benefit or retirement-type subsidy (within 

20 the meaning of paragraph (2)(A)), but only with re21 spect to a participant who satisfies (either before or 

22 after the effective date of the amendment) the condi23 tions for the benefit or subsidy under the terms of 

24 the plan as in effect immediately before such date.’’. 
12

•HR 1677 IH 

1 (b) AMENDMENT TO INTERNAL REVENUE CODE.—

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

3 (relating to accrued benefit may not be decreased by 

4 amendment) is amended by adding at the end the fol5 lowing new subparagraph: 

6 ‘‘(F) TREATMENT OF PLAN AMENDMENTS

7 WEARING AWAY ACCRUED BENEFIT.—

8 ‘‘(i) IN GENERAL.—For purposes of 

9 subparagraph (A), an applicable plan 

10 amendment adopted by a large defined 

11 benefit plan shall be treated as reducing 

12 accrued benefits of a participant if, under 

13 the terms of the plan after the adoption of 

14 the amendment, the accrued benefit of the 

15 participant may at any time be less than 

16 the sum of—

17 ‘‘(I) the participant’s accrued 

18 benefit for years of service before the 

19 effective date of the amendment, de20 termined under the terms of the plan 

21 as in effect immediately before the ef22 fective date, plus 

23 ‘‘(II) the participant’s accrued 

24 benefit determined under the formula 

25 applicable to benefit accruals under 
13

•HR 1677 IH 

1 the current plan as applied to years of 

2 service after such effective date. 

3 ‘‘(ii) DEFINITIONS.—For purposes of 

4 this subparagraph—

5 ‘‘(I) APPLICABLE PLAN AMEND6 MENT.—The term ‘applicable plan 

7 amendment’ means a plan amendment 

8 which has the effect of converting the 

9 plan to a plan under which the ac10 crued benefit is expressed to partici11 pants and beneficiaries as an amount 

12 other than an annual benefit com13 mencing at normal retirement age (or 

14 which has a similar effect as deter15 mined under regulations of the Sec16 retary). 

17 ‘‘(II) LARGE DEFINED BENEFIT

18 PLAN.—The term ‘large defined ben19 efit plan’ means any defined benefit 

20 plan which had 100 or more partici21 pants who had accrued a benefit 

22 under the plan (whether or not vest23 ed) as of the last day of the plan year 

24 preceding the plan year in which the 

25 plan amendment becomes effective. 
14

•HR 1677 IH 

1 ‘‘(III) PROTECTED ACCRUED

2 BENEFIT.—An accrued benefit shall 

3 include any early retirement benefit or 

4 retirement-type subsidy (within the 

5 meaning of subparagraph (B)(i)), but 

6 only with respect to a participant who 

7 satisfies (either before or after the ef8 fective date of the amendment) the 

9 conditions for the benefit or subsidy 

10 under the terms of the plan as in ef11 fect immediately before such date.’’. 

12 (c) EFFECTIVE DATE AND RELATED RULES.—

13 (1) IN GENERAL.—Except as provided in para14 graph (2), the amendments made by this section 

15 apply to plan amendments taking effect before, on, 

16 or after the date of the enactment of this Act. 

17 (2) SPECIAL RULE.—Notwithstanding para18 graph (1), the amendments made by this section 

19 shall not apply in connection with any participant 

20 with respect to any plan amendment which has 

21 taken effect before 90 days after the date of the en22 actment of this Act if, as of the end of such 90-day 

23 period, the plan provides that the participant’s ac24 crued benefit shall at no time be less than the sum 

25 described in section 204(g)(6)(A) of the Employee 
15

•HR 1677 IH 

1 Retirement Income Security Act of 1974 (as added 

2 by this section) or section 411(d)(6)(F)(i) of the In3 ternal Revenue Code of 1986 (as added by this sec4 tion) in connection with such plan amendment.

Æ