I 

108TH CONGRESS 

1ST SESSION H. R. 2222

To amend title I of the Employee Retirement Income Security Act and 

the Internal Revenue Code to allow for alienation of benefits to satisfy 

court judgments, decrees, or orders requiring restitution for embezzlement of State or local government funds. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 22, 2003

Mr. BUYER introduced the following bill; which was referred to the Committee 

on 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 title I of the Employee Retirement Income Security Act and the Internal Revenue Code to allow for 

alienation of benefits to satisfy court judgments, decrees, 

or orders requiring restitution for embezzlement of State 

or local government funds.

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 ‘‘Public Employer’s Res5 titution Act of 2003’’ . 
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1 SEC. 2. ALIENATION OF PENSION PLAN BENEFITS TO SAT2 ISFY COURT JUDGMENTS, DECREES, OR OR3 DERS REQUIRING RESTITUTION FOR EMBEZ4 ZLEMENT OF STATE OR LOCAL GOVERNMENT 

5 FUNDS. 

6 (a) AMENDMENT TO THE EMPLOYEE RETIREMENT

7 INCOME SECURITY ACT OF 1974.—

8 (1) IN GENERAL.—Section 206(d) of the Em9 ployee Retirement Income Security Act of 1974 (29 

10 U.S.C. 1056(d)) is amended by adding at the end 

11 the following new paragraph: 

12 ‘‘(6)(A) Paragraph (1) shall apply to the creation, as13 signment, or recognition of a right to any benefit payable 

14 with respect to a participant pursuant to an embezzlement 

15 restitution order, except that paragraph (1) shall not 

16 apply if the order is determined to be a qualified embezzle17 ment restitution order. Each pension plan shall provide 

18 for the payment of benefits in accordance with the applica19 ble requirements of any qualified embezzlement restitution 

20 order. 

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

22 ‘‘(i) the term ‘qualified embezzlement restitu23 tion order’ means an embezzlement restitution 

24 order—

25 ‘‘(I) which creates or recognizes the exist26 ence of an aggrieved State or local govern-
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1 ment’s right to, or assigns to an aggrieved 

2 State or local government the right to, receive 

3 all or a portion of the benefits payable with re4 spect to a participant under a plan, and 

5 ‘‘(II) with respect to which the require6 ments of subparagraphs (C) and (D) are met, 

7 and 

8 ‘‘(ii) the term ‘embezzlement restitution order’ 

9 means an order arising under a judgment of convic10 tion of an individual by a court of competent juris11 diction of the crime of embezzlement in violation of 

12 the applicable laws of the United States or of any 

13 State or political subdivision thereof, which provides 

14 for restitution to the government of any State or po15 litical subdivision thereof of losses sustained by such 

16 government in connection with embezzlement of the 

17 funds of such government by such individual. 

18 ‘‘(C) A qualified embezzlement restitution order 

19 meets the requirements of this subparagraph only if such 

20 order clearly specifies—

21 ‘‘(i) the name and the last known mailing ad22 dress (if any) of the participant and the name and 

23 mailing address of each aggrieved State or local gov24 ernment covered by the order, 
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1 ‘‘(ii) the amount or percentage of the partici2 pant’s benefits to be paid by the plan to each such 

3 aggrieved State or local government, or the manner 

4 in which such amount or percentage is to be deter5 mined, 

6 ‘‘(iii) the number of payments or period to 

7 which such order applies, and 

8 ‘‘(iv) each plan to which such order applies. 

9 ‘‘(D) A qualified embezzlement restitution order 

10 meets the requirements of this subparagraph only if such 

11 order—

12 ‘‘(i) does not require a plan to provide any type 

13 or form of benefit, or any option, not otherwise pro14 vided under the plan, 

15 ‘‘(ii) does not require the plan to provide in16 creased benefits (determined on the basis of actu17 arial value), and 

18 ‘‘(iii) does not require the payment of benefits 

19 to the government of any State or political subdivi20 sion thereof which are required to be paid to any 

21 other entity—

22 ‘‘(I) as an aggrieved State or local govern23 ment under another order previously deter24 mined to be a qualified embezzlement restitu25 tion order, or 
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1 ‘‘(II) as an alternate payee under an order 

2 previously determined to be a qualified domestic 

3 relations order (as defined in paragraph 

4 (3)(B)(i)). 

5 ‘‘(E) The provisions of subparagraphs (E), (G), (H), 

6 (I), and (M) of paragraph (3) shall apply for purposes of 

7 this paragraph in the same manner and to the same extent 

8 as such subparagraphs apply for purposes of paragraph 

9 (3), except that—

10 ‘‘(i) any reference to a ‘qualified domestic rela11 tions order‘ or a ‘domestic relations order’ shall be 

12 deemed a reference to a qualified embezzlement res13 titution order or an embezzlement restitution order, 

14 respectively, and 

15 ‘‘(ii) any reference to an ‘alternate payee’ shall 

16 be deemed a reference to an aggrieved State or local 

17 government. 

18 ‘‘(F) Notwithstanding subparagraph (A), paragraph 

19 (1) shall apply with respect to the creation, assignment, 

20 or recognition of a right to any benefit payable with re21 spect to a participant pursuant to any embezzlement res22 titution order if the requirements of paragraph (4)(C) are 

23 met with respect to the plan. In applying paragraph (4)(C) 

24 and paragraph (5) for purposes of this subparagraph—
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1 ‘‘(i) any reference to an ‘offset’ shall be deemed 

2 a reference to the creation, assignment, or recogni3 tion of a right to any benefit payable with respect 

4 to the participant pursuant to an embezzlement res5 titution order, 

6 ‘‘(ii) any reference to a ‘judgment, order, de7 cree, or settlement’ to pay an amount to the plan 

8 shall be deemed a reference to the embezzlement res9 titution order, and 

10 ‘‘(iii) any reference to a ‘violation of part 4’ of 

11 subtitle B shall be deemed a reference to embezzle12 ment in violation of the applicable laws of the 

13 United States or of any State or political subdivision 

14 thereof. 

15 ‘‘(G) For purposes of this paragraph, the term ‘ag16 grieved State or local government’ means, with respect to 

17 any plan participant, the government of a State or a polit18 ical subdivision thereof that is recognized by an embezzle19 ment restitution order as having a right to receive as res20 titution all, or a portion of, the benefits payable under the 

21 plan with respect to such participant. 

22 ‘‘(H) This paragraph shall not apply to any plan to 

23 which paragraph (1) does not apply. 
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1 ‘‘(I) In prescribing regulations under this paragraph, 

2 the Secretary shall consult with the Secretary of the 

3 Treasury.’’. 

4 (2) CLARIFICATION OF PREEMPTION PROVI5 SION.—Paragraph (7) of section 514(b) of such Act 

6 (29 U.S.C. 1144(b)(7)) is amended by inserting 

7 ‘‘qualified embezzlement restitution orders (within 

8 the meaning of section 206(d)(6)(B)(i)),’’ after ‘‘sec9 tion 206(d)(3)(B)(i)),’’. 

10 (b) AMENDMENTS TO THE INTERNAL REVENUE

11 CODE OF 1986.—

12 (1) IN GENERAL.—Paragraph (13) of section 

13 401(a) of the Internal Revenue Code of 1986 (relat14 ing to assignment and alienation) is amended by 

15 adding at the end the following new subparagraph: 

16 ‘‘(E) SPECIAL RULES FOR QUALIFIED EM17 BEZZLEMENT RESTITUTION ORDERS.—Sub18 paragraph (A) shall not apply with respect to 

19 the creation, assignment, or recognition of a 

20 right to any benefit payable with respect to a 

21 participant pursuant to an embezzlement res22 titution order, except that subparagraph (A) 

23 shall not apply if the order is determined to be 

24 a qualified embezzlement restitution order.’’. 
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1 (2) QUALIFIED EMBEZZLEMENT RESTITUTION

2 ORDER DEFINED.—Section 414 of such Code (relat3 ing to definitions and special rules) is amended by 

4 adding at the end the following new subsection: 

5 ‘‘(w) QUALIFIED EMBEZZLEMENT RESTITUTION

6 ORDER DEFINED.—For purposes of this subsection and 

7 section 401(a)(13)—

8 ‘‘(1) IN GENERAL.—

9 ‘‘(A) QUALIFIED EMBEZZLEMENT RES10 TITUTION ORDER.—The term ‘qualified embez11 zlement restitution order’ means an embezzle12 ment restitution order—

13 ‘‘(i) which creates or recognizes the 

14 existence of an aggrieved State or local 

15 government’s right to, or assigns to an ag16 grieved State or local government the right 

17 to, receive all or a portion of the benefits 

18 payable with respect to a participant under 

19 a plan, and 

20 ‘‘(ii) with respect to which the re21 quirements of paragraphs (2) and (3) are 

22 met. 

23 ‘‘(B) EMBEZZLEMENT RESTITUTION

24 ORDER.—The term ‘embezzlement restitution 

25 order’ means an order arising under a judg-
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1 ment of conviction of an individual by a court 

2 of competent jurisdiction of the crime of embez3 zlement in violation of the applicable laws of the 

4 United States or of any State or political sub5 division thereof, which provides for restitution 

6 to the government of any State or political sub7 division thereof of losses sustained by such gov8 ernment in connection with the embezzlement of 

9 the funds of such government by such indi10 vidual. 

11 ‘‘(2) ORDER MUST CLEARLY SPECIFY CERTAIN

12 FACTS.—A qualified embezzlement restitution order 

13 meets the requirements of this paragraph only if 

14 such order clearly specifies—

15 ‘‘(A) the name and the last known mailing 

16 address (if any) of the participant and the 

17 name and mailing address of each aggrieved 

18 State or local government covered by the order, 

19 ‘‘(B) the amount or percentage of the par20 ticipant’s benefits to be paid by the plan to 

21 each such aggrieved State or local government, 

22 or the manner in which such amount or per23 centage is to be determined, 

24 ‘‘(C) the number of payments or period to 

25 which such order applies, and 
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1 ‘‘(D) each plan to which such order ap2 plies. 

3 ‘‘(3) ORDER MAY NOT ALTER AMOUNT, FORM, 

4 ETC., OF BENEFITS.—A qualified embezzlement res5 titution order meets the requirements of this para6 graph only if such order—

7 ‘‘(A) does not require a plan to provide 

8 any type or form of benefit, or any option, not 

9 otherwise provided under the plan, 

10 ‘‘(B) does not require the plan to provide 

11 increased benefits (determined on the basis of 

12 actuarial value), and 

13 ‘‘(C) does not require the payment of bene14 fits to the government of any State or political 

15 subdivision thereof which are required to be 

16 paid to any other entity—

17 ‘‘(i) as an aggrieved State or local 

18 government under another order previously 

19 determined to be a qualified embezzlement 

20 restitution order, or 

21 ‘‘(ii) as an alternate payee under an 

22 order previously determined to be a quali23 fied domestic relations order (as defined in 

24 subsection (p)(1)(A)). 
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1 ‘‘(4) APPLICATION OF CERTAIN PROVISIONS.—

2 The provisions of paragraphs (4), (6), (7), (10), 

3 (11), and (12) of subsection (p) shall apply for pur4 poses of this subsection and section 401(a)(13) in 

5 the same manner and to the same extent as such 

6 paragraphs apply for purposes of subsection (p) and 

7 section 401(a)(13), except that—

8 ‘‘(A) any reference to a ‘qualified domestic 

9 relations order‘ or a ‘domestic relations order’ 

10 shall be deemed a reference to a qualified em11 bezzlement restitution order or an embezzle12 ment restitution order, respectively, and 

13 ‘‘(B) any reference to an ‘alternate payee’ 

14 shall be deemed a reference to an aggrieved 

15 State or local government. 

16 ‘‘(5) INAPPLICABILITY OF EMBEZZLEMENT RES17 TITUTION ORDERS IN THE CASE OF CERTAIN SUR18 VIVOR ANNUITY REQUIREMENTS APPLICABLE TO

19 SPOUSE.—Notwithstanding section 401(a)(13)(E), 

20 section 401(a)(13)(A) shall apply with respect to the 

21 creation, assignment, or recognition of a right to any 

22 benefit payable with respect to a participant pursu23 ant to any embezzlement restitution order if the re24 quirements of section 401(a)(13)(C)(iii) are met 

25 with respect to the plan. In applying subparagraphs 
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1 (C)(iii) and (D) of section 401(a)(13) for purposes 

2 of this paragraph—

3 ‘‘(A) any reference to an ‘offset’ shall be 

4 deemed a reference to the creation, assignment, 

5 or recognition of a right to any benefit payable 

6 with respect to the participant pursuant to an 

7 embezzlement restitution order, 

8 ‘‘(B) to pay an amount to the plan shall be 

9 deemed a reference to the embezzlement restitu10 tion order, and 

11 ‘‘(C) any reference to a ‘violation of part 

12 4’ of subtitle B of title I of the Employee Re13 tirement Income Security Act of 1974 shall be 

14 deemed a reference to embezzlement in violation 

15 of the applicable laws of the United States or 

16 of any State or political subdivision thereof. 

17 ‘‘(6) AGGRIEVED STATE OR LOCAL GOVERN18 MENT.—The term ‘aggrieved State or local govern19 ment’ means, with respect to any plan participant, 

20 the government of any State or political subdivision 

21 thereof that is recognized by an embezzlement res22 titution order as having a right to receive as restitu23 tion all, or a portion of, the benefits payable under 

24 the plan with respect to such participant. 
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1 ‘‘(7) SUBSECTION NOT TO APPLY TO PLANS TO

2 WHICH SECTION 401(a)(13) DOES NOT APPLY.—This 

3 subsection shall not apply to any plan to which sec4 tion 401(a)(13) does not apply. For purposes of this 

5 title, except as provided in regulations, any distribu6 tion from an annuity contract under section 403(b) 

7 pursuant to a qualified embezzlement restitution 

8 order shall be treated in the same manner as a dis9 tribution from a plan to which section 401(a)(13) 

10 applies. 

11 ‘‘(8) CONSULTATION WITH THE SECRETARY.—

12 In prescribing regulations under this subsection and 

13 section 401(a)(13), the Secretary of Labor shall con14 sult with the Secretary.’’. 

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

16 this Act shall take effect January 1, 2004.

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