I 

109TH CONGRESS 

1ST SESSION H. R. 2831 

To amend title I of the Employee Retirement Income Security Act of 1974 

and the Internal Revenue Code of 1986 to make improvements in benefit 

accrual standards. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 9, 2005 

Mr. BOEHNER 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 of 1974 and the Internal Revenue Code of 

1986 to make improvements in benefit accrual standards. 

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 Preservation 

5 and Portability Act of 2005’’. 

6 SEC. 2. IMPROVEMENTS IN BENEFIT ACCRUAL STANDARDS. 

7 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

8 INCOME SECURITY ACT OF 1974.— 
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1 (1) RULES RELATING TO REDUCTION IN AC2 CRUED BENEFITS BECAUSE OF ATTAINMENT OF ANY

3 AGE.—Section 204(b)(1)(H) of the Employee Retire4 ment Income Security Act of 1974 (29 U.S.C. 

5 1054(b)(1)(H)) is amended by adding at the end the 

6 following new clauses: 

7 ‘‘(vii)(I) A plan complies with clause (i) if a partici8 pant’s entire accrued benefit, as determined as of any date 

9 under the formula for determining benefits as set forth 

10 in the text of the plan documents, would be equal to or 

11 greater than that of any similarly situated, younger indi12 vidual. 

13 ‘‘(II) For purposes of this clause, an individual is 

14 similarly situated to a participant if such individual is 

15 identical to such participant in every respect (including pe16 riod of service, compensation, position, date of hire, work 

17 history, and any other respect) except for age. 

18 ‘‘(III) In determining the entire accrued benefit for 

19 purposes of this clause, the subsidized portion of any early 

20 retirement benefit (including any early retirement subsidy 

21 that is fully or partially included or reflected in an employ22 ee’s opening balance or other transition benefits) shall be 

23 disregarded. 

24 ‘‘(viii) A plan shall not be treated as failing to meet 

25 the requirements of this subparagraph solely because the 
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1 plan provides allowable offsets against those benefits 

2 under the plan which are attributable to employer con3 tributions, based on benefits which are provided under 

4 title II of the Social Security Act, the Railroad Retirement 

5 Act of 1974, or under any retirement program for officers 

6 or employees of the Federal Government or of the govern7 ment of any State or political subdivision thereof. For pur8 poses of this clause, allowable offsets based on such bene9 fits consist of offsets equal to all or part of the actual 

10 benefit payment amounts, reasonable projections or esti11 mations of such benefit payment amounts, or actuarial 

12 equivalents of such actual benefit payment amounts, pro13 jections, or estimations (determined on the basis of rea14 sonable actuarial assumptions). 

15 ‘‘(ix) A plan shall not be treated as failing to meet 

16 the requirements of this subparagraph solely because the 

17 plan provides a disparity in contributions or benefits with 

18 respect to which the requirements of section 401(l) of the 

19 Internal Revenue Code of 1986 are met. 

20 ‘‘(x)(I) A plan shall not be treated as failing to meet 

21 the requirements of this subparagraph solely because the 

22 plan provides for pre-retirement indexing of accrued bene23 fits under the plan. 

24 ‘‘(II) For purposes of this clause, the term ‘pre-re25 tirement indexing’ means, in connection with an accrued 
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1 benefit, the periodic adjustment of the accrued benefit by 

2 means of the application of a recognized index or method3 ology so as to protect the economic value of the benefit 

4 against inflation prior to distribution.’’. 

5 (2) DETERMINATIONS OF ACCRUED BENEFIT AS

6 BALANCE OF BENEFIT ACCOUNT.—Section 203 of 

7 such Act (29 U.S.C. 1053) is amended by adding at 

8 the end the following new subsection: 

9 ‘‘(f)(1) A defined benefit plan under which the ac10 crued benefit payable under the plan upon distribution (or 

11 any portion thereof) is expressed as the balance of an ac12 count maintained for the participant shall not be treated 

13 as failing to meet the requirements of subsection (a)(2) 

14 and section 205(g) solely because of the amount actually 

15 made available for such distribution under the terms of 

16 the plan, in any case in which— 

17 ‘‘(A) the applicable interest rate that would be 

18 required to discount the participant’s accrued benefit 

19 projected under the terms of the plan to normal re20 tirement age to a present value equal to the amount 

21 actually made available for distribution under the 

22 plan is not greater than 

23 ‘‘(B) a market rate of return. 

24 ‘‘(2) The Secretary of the Treasury may provide by 

25 regulation for rules governing the calculation of a market 
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1 rate of return for purposes of paragraph (1) and for per2 missible methods of crediting interest to the account (in3 cluding variable interest rates) resulting in effective rates 

4 of return meeting the requirements of paragraph (1).’’. 

5 (b) AMENDMENTS TO THE INTERNAL REVENUE

6 CODE OF 1986.— 

7 (1) RULES RELATING TO REDUCTION IN AC8 CRUED BENEFITS BECAUSE OF ATTAINMENT OF ANY

9 AGE.—Subparagraph (H) of section 411(b)(1) of the 

10 Internal Revenue Code of 1986 (relating to contin11 ued accrual beyond normal retirement age) is 

12 amended— 

13 (A) by striking the heading and inserting 

14 the following: ‘‘RULES RELATING TO REDUC15 TION IN ACCRUED BENEFITS BECAUSE OF AT16 TAINMENT OF ANY AGE.—’’; and 

17 (B) by adding at the end the following: 

18 ‘‘(vi) COMPARISON TO SIMILARLY SIT19 UATED, YOUNGER INDIVIDUALS.— 

20 ‘‘(I) IN GENERAL.—A plan shall 

21 not be treated as failing to meet the 

22 requirements of clause (i) if, as of any 

23 applicable date, a participant’s entire 

24 accrued benefit, as determined under 

25 the formula for determining benefits 
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1 as set forth in the text of the plan 

2 documents, would be equal to or 

3 greater than that of any similarly sit4 uated, younger individual. 

5 ‘‘(II) SIMILARLY SITUATED INDI6 VIDUAL.—For purposes of this clause, 

7 an individual is similarly situated to a 

8 participant if such individual is iden9 tical to such participant in every re10 spect (including period of service, 

11 compensation, position, date of hire, 

12 work history, and any other respect) 

13 except for age. 

14 ‘‘(III) SUBSIDIZED PORTION OF

15 EARLY RETIREMENT BENEFIT DIS16 REGARDED.—In determining the en17 tire accrued benefit for purposes of 

18 this clause, the subsidized portion of 

19 any early retirement benefit shall be 

20 disregarded. 

21 ‘‘(vii) ALLOWABLE OFFSETS.—A plan 

22 shall not be treated as failing to meet the 

23 requirements of this subparagraph solely 

24 because the plan provides allowable offsets 

25 against those benefits under the plan 
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1 which are attributable to employer con2 tributions, based on benefits which are pro3 vided— 

4 ‘‘(I) under title II of the Social 

5 Security Act, the Railroad Retirement 

6 Act of 1974, or under any retirement 

7 program for officers or employees of 

8 the Federal Government or of the gov9 ernment of any State or political sub10 division thereof, or 

11 ‘‘(II) under another defined ben12 efit plan which meets the require13 ments of this subparagraph or a de14 fined contribution plan which meets 

15 the requirements of paragraph (2), if 

16 such offset is determined under a for17 mula which does not provide for the 

18 commencement of, or any increase in, 

19 the offset upon the attainment of any 

20 specified age of the participant. 

21 For purposes of this clause, allowable off22 sets based on such benefits consist of off23 sets equal to the actual benefit payment 

24 amounts, reasonable projections or esti25 mations of such benefit payment amounts, 
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1 or actuarial equivalents of such actual ben2 efit payment amounts, projections, or esti3 mations (determined on the basis of rea4 sonable actuarial assumptions). 

5 ‘‘(viii) COMPLIANCE WITH RULES PER6 MITTING DISPARITY IN PLAN CONTRIBU7 TIONS OR BENEFITS.—A plan shall not be 

8 treated as failing to meet the requirements 

9 of this subparagraph solely because the 

10 plan provides a disparity in contributions 

11 or benefits with respect to which the re12 quirements of section 401(l) are met. 

13 ‘‘(ix) PRE-RETIREMENT INDEXING.— 

14 ‘‘(I) IN GENERAL.—A plan shall 

15 not be treated as failing to meet the 

16 requirements of this subparagraph 

17 solely because the plan provides for 

18 pre-retirement indexing of accrued 

19 benefits under the plan. 

20 ‘‘(II) DEFINITION.—For pur21 poses of this clause, the term ‘pre-re22 tirement indexing’ means, in connec23 tion with an accrued benefit, the peri24 odic adjustment of the accrued benefit 

25 by means of the application of a rec-
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1 ognized index or methodology so as to 

2 protect the economic value of the ben3 efit against inflation prior to distribu4 tion.’’. 

5 (2) DETERMINATIONS OF ACCRUED BENEFIT AS

6 BALANCE OF BENEFIT ACCOUNT.—Subsection (a) of 

7 section 411 of such Code (relating to minimum vest8 ing standards) is amended by adding at the end the 

9 following new paragraph: 

10 ‘‘(13) MAINTENANCE OF NONFORFEITABILITY

11 OF BENEFITS EXPRESSED AS ACCOUNT BALANCE.— 

12 ‘‘(A) IN GENERAL.—A defined benefit plan 

13 under which the accrued benefit payable under 

14 the plan upon distribution (or any portion 

15 thereof) is expressed as the balance of an ac16 count maintained for the participant shall not 

17 be treated as failing to meet the requirements 

18 of paragraph (2) or 417(e) solely because of the 

19 amount actually made available for such dis20 tribution under the terms of the plan, in any 

21 case in which— 

22 ‘‘(i) the applicable interest rate that 

23 would be required to discount the partici24 pant’s accrued benefit projected under the 

25 terms of the plan to normal retirement age 
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1 to a present value equal to the amount ac2 tually made available for distribution under 

3 the plan is not greater than 

4 ‘‘(ii) a market rate of return. 

5 ‘‘(B) REGULATIONS.—The Secretary may 

6 provide by regulation for rules governing the 

7 calculation of a market rate of return for pur8 poses of subparagraph (A) and for permissible 

9 methods of crediting interest to the account (in10 cluding variable interest rates) resulting in ef11 fective rates of return meeting the requirements 

12 of subparagraph (A).’’. 

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

14 this section shall apply to plan years beginning before, on, 

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

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