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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3108 Enrolled Bill (ENR)]

        H.R.3108

                       One Hundred Eighth Congress

                                 of the

                        United States of America

                          AT THE SECOND SESSION

          Begun and held at the City of Washington on Tuesday,
           the twentieth day of January, two thousand and four

                                 An Act

 
  To amend the Employee Retirement Income Security Act of 1974 and the 
    Internal Revenue Code of 1986 to temporarily replace the 30-year 
Treasury rate with a rate based on long-term corporate bonds for certain 
 pension plan funding requirements and other provisions, and for other 
                                purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pension Funding Equity Act of 
2004''.

                        TITLE I--PENSION FUNDING

SEC. 101. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.

    (a) Employee Retirement Income Security Act of 1974.--
        (1) Determination of permissible range.--
            (A) In general.--Clause (ii) of section 302(b)(5)(B) of the 
        Employee Retirement Income Security Act of 1974 is amended by 
        redesignating subclause (II) as subclause (III) and by 
        inserting after subclause (I) the following new subclause:
                ``(II) Special rule for years 2004 and 2005.--In the 
            case of plan years beginning after December 31, 2003, and 
            before January 1, 2006, the term `permissible range' means 
            a rate of interest which is not above, and not more than 10 
            percent below, the weighted average of the rates of 
            interest on amounts invested conservatively in long-term 
            investment grade corporate bonds during the 4-year period 
            ending on the last day before the beginning of the plan 
            year. Such rates shall be determined by the Secretary of 
            the Treasury on the basis of 2 or more indices that are 
            selected periodically by the Secretary of the Treasury and 
            that are in the top 3 quality levels available. The 
            Secretary of the Treasury shall make the permissible range, 
            and the indices and methodology used to determine the 
            average rate, publicly available.''.
            (B) Secretarial authority.--Subclause (III) of section 
        302(b)(5)(B)(ii) of such Act, as redesignated by subparagraph 
        (A), is amended--
                (i) by inserting ``or (II)'' after ``subclause (I)'' 
            the first place it appears, and
                (ii) by striking ``subclause (I)'' the second place it 
            appears and inserting ``such subclause''.
            (C) Conforming amendment.--Subclause (I) of section 
        302(b)(5)(B)(ii) of such Act is amended by inserting ``or 
        (III)'' after ``subclause (II)''.
        (2) Determination of current liability.--Clause (i) of section 
    302(d)(7)(C) of such Act is amended by adding at the end the 
    following new subclause:

                    ``(IV) Special rule for 2004 and 2005.--For plan 
                years beginning in 2004 or 2005, notwithstanding 
                subclause (I), the rate of interest used to determine 
                current liability under this subsection shall be the 
                rate of interest under subsection (b)(5).''.

        (3) Conforming amendment.--Paragraph (7) of section 302(e) of 
    such Act is amended to read as follows:
        ``(7) Special rule for 2002.--In any case in which the interest 
    rate used to determine current liability is determined under 
    subsection (d)(7)(C)(i)(III), for purposes of applying paragraphs 
    (1) and (4)(B)(ii) for plan years beginning in 2002, the current 
    liability for the preceding plan year shall be redetermined using 
    120 percent as the specified percentage determined under subsection 
    (d)(7)(C)(i)(II).''.
        (4) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such Act is 
    amended by adding at the end the following new subclause:
        ``(V) In the case of plan years beginning after December 31, 
    2003, and before January 1, 2006, the annual yield taken into 
    account under subclause (II) shall be the annual rate of interest 
    determined by the Secretary of the Treasury on amounts invested 
    conservatively in long-term investment grade corporate bonds for 
    the month preceding the month in which the plan year begins. For 
    purposes of the preceding sentence, the Secretary of the Treasury 
    shall determine such rate of interest on the basis of 2 or more 
    indices that are selected periodically by the Secretary of the 
    Treasury and that are in the top 3 quality levels available. The 
    Secretary of the Treasury shall make the permissible range, and the 
    indices and methodology used to determine the rate, publicly 
    available.''.
    (b) Internal Revenue Code of 1986.--
        (1) Determination of permissible range.--
            (A) In general.--Clause (ii) of section 412(b)(5)(B) of the 
        Internal Revenue Code of 1986 is amended by redesignating 
        subclause (II) as subclause (III) and by inserting after 
        subclause (I) the following new subclause:

                    ``(II) Special rule for years 2004 and 2005.--In 
                the case of plan years beginning after December 31, 
                2003, and before January 1, 2006, the term `permissible 
                range' means a rate of interest which is not above, and 
                not more than 10 percent below, the weighted average of 
                the rates of interest on amounts invested 
                conservatively in long-term investment grade corporate 
                bonds during the 4-year period ending on the last day 
                before the beginning of the plan year. Such rates shall 
                be determined by the Secretary on the basis of 2 or 
                more indices that are selected periodically by the 
                Secretary and that are in the top 3 quality levels 
                available. The Secretary shall make the permissible 
                range, and the indices and methodology used to 
                determine the average rate, publicly available.''.

            (B) Secretarial authority.--Subclause (III) of section 
        412(b)(5)(B)(ii) of such Code, as redesignated by subparagraph 
        (A), is amended--
                (i) by inserting ``or (II)'' after ``subclause (I)'' 
            the first place it appears, and
                (ii) by striking ``subclause (I)'' the second place it 
            appears and inserting ``such subclause''.
            (C) Conforming amendment.--Subclause (I) of section 
        412(b)(5)(B)(ii) of such Code is amended by inserting ``or 
        (III)'' after ``subclause (II)''.
        (2) Determination of current liability.--Clause (i) of section 
    412(l)(7)(C) of such Code is amended by adding at the end the 
    following new subclause:

                    ``(IV) Special rule for 2004 and 2005.--For plan 
                years beginning in 2004 or 2005, notwithstanding 
                subclause (I), the rate of interest used to determine 
                current liability under this subsection shall be the 
                rate of interest under subsection (b)(5).''.

        (3) Conforming amendment.--Paragraph (7) of section 412(m) of 
    such Code is amended to read as follows:
        ``(7) Special rule for 2002.--In any case in which the interest 
    rate used to determine current liability is determined under 
    subsection (l)(7)(C)(i)(III), for purposes of applying paragraphs 
    (1) and (4)(B)(ii) for plan years beginning in 2002, the current 
    liability for the preceding plan year shall be redetermined using 
    120 percent as the specified percentage determined under subsection 
    (l)(7)(C)(i)(II).''.
        (4) Limitation on certain assumptions.--Section 
    415(b)(2)(E)(ii) of such Code is amended by inserting ``, except 
    that in the case of plan years beginning in 2004 or 2005, `5.5 
    percent' shall be substituted for `5 percent' in clause (i)'' 
    before the period at the end.
        (5) Election to disregard modification for deduction 
    purposes.--Section 404(a)(1) of such Code is amended by adding at 
    the end the following new subparagraph:
            ``(F) Election to disregard modified interest rate.--An 
        employer may elect to disregard subsections (b)(5)(B)(ii)(II) 
        and (l)(7)(C)(i)(IV) of section 412 solely for purposes of 
        determining the interest rate used in calculating the maximum 
        amount of the deduction allowable under this paragraph.''.
    (c) Provisions Relating to Plan Amendments.--
        (1) In general.--If this subsection applies to any plan or 
    annuity contract amendment--
            (A) such plan or contract shall be treated as being 
        operated in accordance with the terms of the plan or contract 
        during the period described in paragraph (2)(B)(i), and
            (B) except as provided by the Secretary of the Treasury, 
        such plan shall not fail to meet the requirements of section 
        411(d)(6) of the Internal Revenue Code of 1986 and section 
        204(g) of the Employee Retirement Income Security Act of 1974 
        by reason of such amendment.
        (2) Amendments to which section applies.--
            (A) In general.--This subsection shall apply to any 
        amendment to any plan or annuity contract which is made--
                (i) pursuant to any amendment made by this section, and
                (ii) on or before the last day of the first plan year 
            beginning on or after January 1, 2006.
            (B) Conditions.--This subsection shall not apply to any 
        plan or annuity contract amendment unless--
                (i) during the period beginning on the date the 
            amendment described in subparagraph (A)(i) takes effect and 
            ending on the date described in subparagraph (A)(ii) (or, 
            if earlier, the date the plan or contract amendment is 
            adopted), the plan or contract is operated as if such plan 
            or contract amendment were in effect; and
                (ii) such plan or contract amendment applies 
            retroactively for such period.
    (d) Effective Dates.--
        (1) In general.--Except as provided in paragraphs (2) and (3), 
    the amendments made by this section shall apply to plan years 
    beginning after December 31, 2003.
        (2) Lookback rules.--For purposes of applying subsections 
    (d)(9)(B)(ii) and (e)(1) of section 302 of the Employee Retirement 
    Income Security Act of 1974 and subsections (l)(9)(B)(ii) and 
    (m)(1) of section 412 of the Internal Revenue Code of 1986 to plan 
    years beginning after December 31, 2003, the amendments made by 
    this section may be applied as if such amendments had been in 
    effect for all prior plan years. The Secretary of the Treasury may 
    prescribe simplified assumptions which may be used in applying the 
    amendments made by this section to such prior plan years.
        (3) Transition rule for section 415 limitation.--In the case of 
    any participant or beneficiary receiving a distribution after 
    December 31, 2003 and before January 1, 2005, the amount payable 
    under any form of benefit subject to section 417(e)(3) of the 
    Internal Revenue Code of 1986 and subject to adjustment under 
    section 415(b)(2)(B) of such Code shall not, solely by reason of 
    the amendment made by subsection (b)(4), be less than the amount 
    that would have been so payable had the amount payable been 
    determined using the applicable interest rate in effect as of the 
    last day of the last plan year beginning before January 1, 2004.

SEC. 102. ELECTION OF ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION.

    (a) Amendment of ERISA.--Section 302(d) of the Employee Retirement 
Income Security Act of 1974 (29 U.S.C. 1082(d)) is amended by adding at 
the end the following new paragraph:
        ``(12) Election for certain plans.--
            ``(A) In general.--In the case of a defined benefit plan 
        established and maintained by an applicable employer, if this 
        subsection did not apply to the plan for the plan year 
        beginning in 2000 (determined without regard to paragraph (6)), 
        then, at the election of the employer, the increased amount 
        under paragraph (1) for any applicable plan year shall be the 
        greater of--
                ``(i) 20 percent of the increased amount under 
            paragraph (1) determined without regard to this paragraph, 
            or
                ``(ii) the increased amount which would be determined 
            under paragraph (1) if the deficit reduction contribution 
            under paragraph (2) for the applicable plan year were 
            determined without regard to subparagraphs (A), (B), and 
            (D) of paragraph (2).
            ``(B) Restrictions on benefit increases.--No amendment 
        which increases the liabilities of the plan by reason of any 
        increase in benefits, any change in the accrual of benefits, or 
        any change in the rate at which benefits become nonforfeitable 
        under the plan shall be adopted during any applicable plan 
        year, unless--
                ``(i) the plan's enrolled actuary certifies (in such 
            form and manner prescribed by the Secretary of the 
            Treasury) that the amendment provides for an increase in 
            annual contributions which will exceed the increase in 
            annual charges to the funding standard account attributable 
            to such amendment, or
                ``(ii) the amendment is required by a collective 
            bargaining agreement which is in effect on the date of 
            enactment of this subparagraph.
        If a plan is amended during any applicable plan year in 
        violation of the preceding sentence, any election under this 
        paragraph shall not apply to any applicable plan year ending on 
        or after the date on which such amendment is adopted.
            ``(C) Applicable employer.--For purposes of this paragraph, 
        the term `applicable employer' means an employer which is--
                ``(i) a commercial passenger airline,
                ``(ii) primarily engaged in the production or 
            manufacture of a steel mill product or the processing of 
            iron ore pellets, or
                ``(iii) an organization described in section 501(c)(5) 
            of the Internal Revenue Code of 1986 and which established 
            the plan to which this paragraph applies on June 30, 1955.
            ``(D) Applicable plan year.--For purposes of this 
        paragraph--
                ``(i) In general.--The term `applicable plan year' 
            means any plan year beginning after December 27, 2003, and 
            before December 28, 2005, for which the employer elects the 
            application of this paragraph.
                ``(ii) Limitation on number of years which may be 
            elected.--An election may not be made under this paragraph 
            with respect to more than 2 plan years.
            ``(E) Notice requirements for plans electing alternative 
        deficit reduction contributions.--
                ``(i) In general.--If an employer elects an alternative 
            deficit reduction contribution under this paragraph and 
            section 412(l)(12) of the Internal Revenue Code of 1986 for 
            any year, the employer shall provide, within 30 days of 
            filing the election for such year, written notice of the 
            election to participants and beneficiaries and to the 
            Pension Benefit Guaranty Corporation.
                ``(ii) Notice to participants and beneficiaries.--The 
            notice under clause (i) to participants and beneficiaries 
            shall include with respect to any election--

                    ``(I) the due date of the alternative deficit 
                reduction contribution and the amount by which such 
                contribution was reduced from the amount which would 
                have been owed if the election were not made, and
                    ``(II) a description of the benefits under the plan 
                which are eligible to be guaranteed by the Pension 
                Benefit Guaranty Corporation and an explanation of the 
                limitations on the guarantee and the circumstances 
                under which such limitations apply, including the 
                maximum guaranteed monthly benefits which the Pension 
                Benefit Guaranty Corporation would pay if the plan 
                terminated while underfunded.

                ``(iii) Notice to pbgc.--The notice under clause (i) to 
            the Pension Benefit Guaranty Corporation shall include--

                    ``(I) the information described in clause (ii)(I),
                    ``(II) the number of years it will take to restore 
                the plan to full funding if the employer only makes the 
                required contributions, and
                    ``(III) information as to how the amount by which 
                the plan is underfunded compares with the 
                capitalization of the employer making the election.

            ``(F) Election.--An election under this paragraph shall be 
        made at such time and in such manner as the Secretary of the 
        Treasury may prescribe.''.
    (b) Amendment of 1986 Code.--Section 412(l) of the Internal Revenue 
Code of 1986 (relating to applicability of subsection) is amended by 
adding at the end the following new paragraph:
        ``(12) Election for certain plans.--
            ``(A) In general.--In the case of a defined benefit plan 
        established and maintained by an applicable employer, if this 
        subsection did not apply to the plan for the plan year 
        beginning in 2000 (determined without regard to paragraph (6)), 
        then, at the election of the employer, the increased amount 
        under paragraph (1) for any applicable plan year shall be the 
        greater of--
                ``(i) 20 percent of the increased amount under 
            paragraph (1) determined without regard to this paragraph, 
            or
                ``(ii) the increased amount which would be determined 
            under paragraph (1) if the deficit reduction contribution 
            under paragraph (2) for the applicable plan year were 
            determined without regard to subparagraphs (A), (B), and 
            (D) of paragraph (2).
            ``(B) Restrictions on benefit increases.--No amendment 
        which increases the liabilities of the plan by reason of any 
        increase in benefits, any change in the accrual of benefits, or 
        any change in the rate at which benefits become nonforfeitable 
        under the plan shall be adopted during any applicable plan 
        year, unless--
                ``(i) the plan's enrolled actuary certifies (in such 
            form and manner prescribed by the Secretary) that the 
            amendment provides for an increase in annual contributions 
            which will exceed the increase in annual charges to the 
            funding standard account attributable to such amendment, or
                ``(ii) the amendment is required by a collective 
            bargaining agreement which is in effect on the date of 
            enactment of this subparagraph.
        If a plan is amended during any applicable plan year in 
        violation of the preceding sentence, any election under this 
        paragraph shall not apply to any applicable plan year ending on 
        or after the date on which such amendment is adopted.
            ``(C) Applicable employer.--For purposes of this paragraph, 
        the term `applicable employer' means an employer which is--
                ``(i) a commercial passenger airline,
                ``(ii) primarily engaged in the production or 
            manufacture of a steel mill product or the processing of 
            iron ore pellets, or
                ``(iii) an organization described in section 501(c)(5) 
            and which established the plan to which this paragraph 
            applies on June 30, 1955.
            ``(D) Applicable plan year.--For purposes of this 
        paragraph--
                ``(i) In general.--The term `applicable plan year' 
            means any plan year beginning after December 27, 2003, and 
            before December 28, 2005, for which the employer elects the 
            application of this paragraph.
                ``(ii) Limitation on number of years which may be 
            elected.--An election may not be made under this paragraph 
            with respect to more than 2 plan years.
            ``(E) Election.--An election under this paragraph shall be 
        made at such time and in such manner as the Secretary may 
        prescribe.''.
    (c) Effect of Election.--An election under section 302(d)(12) of 
the Employee Retirement Income Security Act of 1974 or section 
412(l)(12) of the Internal Revenue Code of 1986 (as added by this 
section) with respect to a plan shall not invalidate any obligation 
(pursuant to a collective bargaining agreement in effect on the date of 
the election) to provide benefits, to change the accrual of benefits, 
or to change the rate at which benefits become nonforfeitable under the 
plan.
    (d) Penalty for Failing To Provide Notice.--Section 502(c)(3) of 
the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1132(c)(3)) is amended by inserting ``or who fails to meet the 
requirements of section 302(d)(12)(E) with respect to any person'' 
after ``101(e)(2) with respect to any person''.

SEC. 103. MULTIEMPLOYER PLAN FUNDING NOTICES.

    (a) In General.--Section 101 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1021) is amended by inserting after 
subsection (e) the following new subsection:
    ``(f) Multiemployer Defined Benefit Plan Funding Notices.--
        ``(1) In general.--The administrator of a defined benefit plan 
    which is a multiemployer plan shall for each plan year provide a 
    plan funding notice to each plan participant and beneficiary, to 
    each labor organization representing such participants or 
    beneficiaries, to each employer that has an obligation to 
    contribute under the plan, and to the Pension Benefit Guaranty 
    Corporation.
        ``(2) Information contained in notices.--
            ``(A) Identifying information.--Each notice required under 
        paragraph (1) shall contain identifying information, including 
        the name of the plan, the address and phone number of the plan 
        administrator and the plan's principal administrative officer, 
        each plan sponsor's employer identification number, and the 
        plan number of the plan.
            ``(B) Specific information.--A plan funding notice under 
        paragraph (1) shall include--
                ``(i) a statement as to whether the plan's funded 
            current liability percentage (as defined in section 
            302(d)(8)(B)) for the plan year to which the notice relates 
            is at least 100 percent (and, if not, the actual 
            percentage);
                ``(ii) a statement of the value of the plan's assets, 
            the amount of benefit payments, and the ratio of the assets 
            to the payments for the plan year to which the notice 
            relates;
                ``(iii) a summary of the rules governing insolvent 
            multiemployer plans, including the limitations on benefit 
            payments and any potential benefit reductions and 
            suspensions (and the potential effects of such limitations, 
            reductions, and suspensions on the plan); and
                ``(iv) a general description of the benefits under the 
            plan which are eligible to be guaranteed by the Pension 
            Benefit Guaranty Corporation, along with an explanation of 
            the limitations on the guarantee and the circumstances 
            under which such limitations apply.
            ``(C) Other information.--Each notice under paragraph (1) 
        shall include any additional information which the plan 
        administrator elects to include to the extent not inconsistent 
        with regulations prescribed by the Secretary.
        ``(3) Time for providing notice.--Any notice under paragraph 
    (1) shall be provided no later than two months after the deadline 
    (including extensions) for filing the annual report for the plan 
    year to which the notice relates.
        ``(4) Form and manner.--Any notice under paragraph (1)--
            ``(A) shall be provided in a form and manner prescribed in 
        regulations of the Secretary,
            ``(B) shall be written in a manner so as to be understood 
        by the average plan participant, and
            ``(C) may be provided in written, electronic, or other 
        appropriate form to the extent such form is reasonably 
        accessible to persons to whom the notice is required to be 
        provided.''.
    (b) Penalties.--Section 502(c)(1) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1132(c)(1)) is amended by striking ``or 
section 101(e)(1)'' and inserting ``, section 101(e)(1), or section 
101(f)''.
    (c) Regulations and Model Notice.--The Secretary of Labor shall, 
not later than 1 year after the date of the enactment of this Act, 
issue regulations (including a model notice) necessary to implement the 
amendments made by this section.
    (d) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2004.

SEC. 104. ELECTION FOR DEFERRAL OF CHARGE FOR PORTION OF NET EXPERIENCE 
              LOSS.

    (a) Employee Retirement Income Security Act of 1974.--
        (1) In general.--Section 302(b)(7) of the Employee Retirement 
    Income Security Act of 1974 (29 U.S.C. 1082(b)(7)) is amended by 
    adding at the end the following new subparagraph:
            ``(F) Election for deferral of charge for portion of net 
        experience loss.--
                ``(i) In general.--With respect to the net experience 
            loss of an eligible multiemployer plan for the first plan 
            year beginning after December 31, 2001, the plan sponsor 
            may elect to defer up to 80 percent of the amount otherwise 
            required to be charged under paragraph (2)(B)(iv) for any 
            plan year beginning after June 30, 2003, and before July 1, 
            2005, to any plan year selected by the plan from either of 
            the 2 immediately succeeding plan years.
                ``(ii) Interest.--For the plan year to which a charge 
            is deferred pursuant to an election under clause (i), the 
            funding standard account shall be charged with interest on 
            the deferred charge for the period of deferral at the rate 
            determined under section 304(a) for multiemployer plans.
                ``(iii) Restrictions on benefit increases.--No 
            amendment which increases the liabilities of the plan by 
            reason of any increase in benefits, any change in the 
            accrual of benefits, or any change in the rate at which 
            benefits become nonforfeitable under the plan shall be 
            adopted during any period for which a charge is deferred 
            pursuant to an election under clause (i), unless--

                    ``(I) the plan's enrolled actuary certifies (in 
                such form and manner prescribed by the Secretary of the 
                Treasury) that the amendment provides for an increase 
                in annual contributions which will exceed the increase 
                in annual charges to the funding standard account 
                attributable to such amendment, or
                    ``(II) the amendment is required by a collective 
                bargaining agreement which is in effect on the date of 
                enactment of this subparagraph.

            If a plan is amended during any such plan year in violation 
            of the preceding sentence, any election under this 
            paragraph shall not apply to any such plan year ending on 
            or after the date on which such amendment is adopted.
                ``(iv) Eligible multiemployer plan.--For purposes of 
            this subparagraph, the term `eligible multiemployer plan' 
            means a multiemployer plan--

                    ``(I) which had a net investment loss for the first 
                plan year beginning after December 31, 2001, of at 
                least 10 percent of the average fair market value of 
                the plan assets during the plan year, and
                    ``(II) with respect to which the plan's enrolled 
                actuary certifies (not taking into account the 
                application of this subparagraph), on the basis of the 
                acutuarial assumptions used for the last plan year 
                ending before the date of the enactment of this 
                subparagraph, that the plan is projected to have an 
                accumulated funding deficiency (within the meaning of 
                subsection (a)(2)) for any plan year beginning after 
                June 30, 2003, and before July 1, 2006.

            For purposes of subclause (I), a plan's net investment loss 
            shall be determined on the basis of the actual loss and not 
            under any actuarial method used under subsection (c)(2).
                ``(v) Exception to treatment of eligible multiemployer 
            plan.--In no event shall a plan be treated as an eligible 
            multiemployer plan under clause (iv) if--

                    ``(I) for any taxable year beginning during the 10-
                year period preceding the first plan year for which an 
                election is made under clause (i), any employer 
                required to contribute to the plan failed to timely pay 
                any excise tax imposed under section 4971 of the 
                Internal Revenue Code of 1986 with respect to the plan,
                    ``(II) for any plan year beginning after June 30, 
                1993, and before the first plan year for which an 
                election is made under clause (i), the average 
                contribution required to be made by all employers to 
                the plan does not exceed 10 cents per hour or no 
                employer is required to make contributions to the plan, 
                or
                    ``(III) with respect to any of the plan years 
                beginning after June 30, 1993, and before the first 
                plan year for which an election is made under clause 
                (i), a waiver was granted under section 303 of this Act 
                or section 412(d) of the Internal Revenue Code of 1986 
                with respect to the plan or an extension of an 
                amortization period was granted under section 304 of 
                this Act or section 412(e) of such Code with respect to 
                the plan.

                ``(vi) Notice.--If a plan sponsor makes an election 
            under this subparagraph or section 412(b)(7)(F) of the 
            Internal Revenue Code of 1986 for any plan year, the plan 
            administrator shall provide, within 30 days of filing the 
            election for such year, written notice of the election to 
            participants and beneficiaries, to each labor organization 
            representing such participants or beneficiaries, to each 
            employer that has an obligation to contribute under the 
            plan, and to the Pension Benefit Guaranty Corporation. Such 
            notice shall include with respect to any election the 
            amount of any charge to be deferred and the period of the 
            deferral. Such notice shall also include the maximum 
            guaranteed monthly benefits which the Pension Benefit 
            Guaranty Corporation would pay if the plan terminated while 
            underfunded.
                ``(vii) Election.--An election under this subparagraph 
            shall be made at such time and in such manner as the 
            Secretary of the Treasury may prescribe.''.
        (2) Penalty.--Section 502(c)(4) of such Act (29 U.S.C. 
    1132(c)(4)) is amended to read as follows:
        ``(4) The Secretary may assess a civil penalty of not more than 
    $1,000 a day for each violation by any person of section 
    302(b)(7)(F)(vi).''.
    (b) Internal Revenue Code of 1986.--Section 412(b)(7) of the 
Internal Revenue Code of 1986 (relating to special rules for 
multiemployer plans) is amended by adding at the end the following new 
subparagraph:
            ``(F) Election for deferral of charge for portion of net 
        experience loss.--
                ``(i) In general.--With respect to the net experience 
            loss of an eligible multiemployer plan for the first plan 
            year beginning after December 31, 2001, the plan sponsor 
            may elect to defer up to 80 percent of the amount otherwise 
            required to be charged under paragraph (2)(B)(iv) for any 
            plan year beginning after June 30, 2003, and before July 1, 
            2005, to any plan year selected by the plan from either of 
            the 2 immediately succeeding plan years.
                ``(ii) Interest.--For the plan year to which a charge 
            is deferred pursuant to an election under clause (i), the 
            funding standard account shall be charged with interest on 
            the deferred charge for the period of deferral at the rate 
            determined under subsection (d) for multiemployer plans.
                ``(iii) Restrictions on benefit increases.--No 
            amendment which increases the liabilities of the plan by 
            reason of any increase in benefits, any change in the 
            accrual of benefits, or any change in the rate at which 
            benefits become nonforfeitable under the plan shall be 
            adopted during any period for which a charge is deferred 
            pursuant to an election under clause (i), unless--

                    ``(I) the plan's enrolled actuary certifies (in 
                such form and manner prescribed by the Secretary) that 
                the amendment provides for an increase in annual 
                contributions which will exceed the increase in annual 
                charges to the funding standard account attributable to 
                such amendment, or
                    ``(II) the amendment is required by a collective 
                bargaining agreement which is in effect on the date of 
                enactment of this subparagraph.

            If a plan is amended during any such plan year in violation 
            of the preceding sentence, any election under this 
            paragraph shall not apply to any such plan year ending on 
            or after the date on which such amendment is adopted.
                ``(iv) Eligible multiemployer plan.--For purposes of 
            this subparagraph, the term `eligible multiemployer plan' 
            means a multiemployer plan--

                    ``(I) which had a net investment loss for the first 
                plan year beginning after December 31, 2001, of at 
                least 10 percent of the average fair market value of 
                the plan assets during the plan year, and
                    ``(II) with respect to which the plan's enrolled 
                actuary certifies (not taking into account the 
                application of this subparagraph), on the basis of the 
                acutuarial assumptions used for the last plan year 
                ending before the date of the enactment of this 
                subparagraph, that the plan is projected to have an 
                accumulated funding deficiency (within the meaning of 
                subsection (a)) for any plan year beginning after June 
                30, 2003, and before July 1, 2006.

            For purposes of subclause (I), a plan's net investment loss 
            shall be determined on the basis of the actual loss and not 
            under any actuarial method used under subsection (c)(2).
                ``(v) Exception to treatment of eligible multiemployer 
            plan.--In no event shall a plan be treated as an eligible 
            multiemployer plan under clause (iv) if--

                    ``(I) for any taxable year beginning during the 10-
                year period preceding the first plan year for which an 
                election is made under clause (i), any employer 
                required to contribute to the plan failed to timely pay 
                any excise tax imposed under section 4971 with respect 
                to the plan,
                    ``(II) for any plan year beginning after June 30, 
                1993, and before the first plan year for which an 
                election is made under clause (i), the average 
                contribution required to be made by all employers to 
                the plan does not exceed 10 cents per hour or no 
                employer is required to make contributions to the plan, 
                or
                    ``(III) with respect to any of the plan years 
                beginning after June 30, 1993, and before the first 
                plan year for which an election is made under clause 
                (i), a waiver was granted under section 412(d) or 
                section 303 of the Employee Retirement Income Security 
                Act of 1974 with respect to the plan or an extension of 
                an amortization period was granted under subsection (e) 
                or section 304 of such Act with respect to the plan.

                ``(vi) Election.--An election under this subparagraph 
            shall be made at such time and in such manner as the 
            Secretary may prescribe.''.

                       TITLE II--OTHER PROVISIONS

SEC. 201. TWO-YEAR EXTENSION OF TRANSITION RULE TO PENSION FUNDING 
              REQUIREMENTS.

    (a) In General.--Section 769(c) of the Retirement Protection Act of 
1994, as added by section 1508 of the Taxpayer Relief Act of 1997, is 
amended--
        (1) by inserting ``except as provided in paragraph (3),'' 
    before ``the transition rules'', and
        (2) by adding at the end the following:
        ``(3) Special rules.--In the case of plan years beginning in 
    2004 and 2005, the following transition rules shall apply in lieu 
    of the transition rules described in paragraph (2):
            ``(A) For purposes of section 412(l)(9)(A) of the Internal 
        Revenue Code of 1986 and section 302(d)(9)(A) of the Employee 
        Retirement Income Security Act of 1974, the funded current 
        liability percentage for any plan year shall be treated as not 
        less than 90 percent.
            ``(B) For purposes of section 412(m) of the Internal 
        Revenue Code of 1986 and section 302(e) of the Employee 
        Retirement Income Security Act of 1974, the funded current 
        liability percentage for any plan year shall be treated as not 
        less than 100 percent.
            ``(C) For purposes of determining unfunded vested benefits 
        under section 4006(a)(3)(E)(iii) of the Employee Retirement 
        Income Security Act of 1974, the mortality table shall be the 
        mortality table used by the plan.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to plan years beginning after December 31, 2003.

SEC. 202. PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION PLAN 
              WITHDRAWAL LIABILITY.

    (a) In General.--Section 4221 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the end 
the following new subsection:
    ``(f) Procedures Applicable to Certain Disputes.--
        ``(1) In general.--If--
            ``(A) a plan sponsor of a plan determines that--
                ``(i) a complete or partial withdrawal of an employer 
            has occurred, or
                ``(ii) an employer is liable for withdrawal liability 
            payments with respect to the complete or partial withdrawal 
            of an employer from the plan,
            ``(B) such determination is based in whole or in part on a 
        finding by the plan sponsor under section 4212(c) that a 
        principal purpose of a transaction that occurred before January 
        1, 1999, was to evade or avoid withdrawal liability under this 
        subtitle, and
            ``(C) such transaction occurred at least 5 years before the 
        date of the complete or partial withdrawal,
    then the special rules under paragraph (2) shall be used in 
    applying subsections (a) and (d) of this section and section 
    4219(c) to the employer.
        ``(2) Special rules.--
            ``(A) Determination.--Notwithstanding subsection (a)(3)--
                ``(i) a determination by the plan sponsor under 
            paragraph (1)(B) shall not be presumed to be correct, and
                ``(ii) the plan sponsor shall have the burden to 
            establish, by a preponderance of the evidence, the elements 
            of the claim under section 4212(c) that a principal purpose 
            of the transaction was to evade or avoid withdrawal 
            liability under this subtitle.
        Nothing in this subparagraph shall affect the burden of 
        establishing any other element of a claim for withdrawal 
        liability under this subtitle.
            ``(B) Procedure.--Notwithstanding subsection (d) and 
        section 4219(c), if an employer contests the plan sponsor's 
        determination under paragraph (1) through an arbitration 
        proceeding pursuant to subsection (a), or through a claim 
        brought in a court of competent jurisdiction, the employer 
        shall not be obligated to make any withdrawal liability 
        payments until a final decision in the arbitration proceeding, 
        or in court, upholds the plan sponsor's determination.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to any employer that receives a notification under section 
4219(b)(1) of the Employee Retirement Income Security Act of 1974 (29 
U.S.C. 1399(b)(1)) after October 31, 2003.

SEC. 203. SENSE OF CONGRESS REGARDING DEFINED BENEFIT PENSION SYSTEM 
              REFORM.

    It is the sense of the Congress that the Congress must ensure the 
financial health of the defined benefit pension system by working to 
promptly implement--
        (1) a permanent replacement for the pension discount rate used 
    for defined benefit pension plan calculations, and
        (2) comprehensive funding reforms for all defined benefit 
    pension plans aimed at achieving accurate and sound pension funding 
    to enhance retirement security for workers who rely on defined 
    pension plan benefits, to reduce the volatility of contributions, 
    to provide plan sponsors with predictability for plan 
    contributions, and to ensure adequate disclosures for plan 
    participants in the case of underfunded pension plans.

SEC. 204. EXTENSION OF TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE 
              HEALTH ACCOUNTS.

    (a) Amendment of Internal Revenue Code of 1986.--Paragraph (5) of 
section 420(b) of the Internal Revenue Code of 1986 (relating to 
expiration) is amended by striking ``December 31, 2005'' and inserting 
``December 31, 2013''.
    (b) Amendments of ERISA.--
        (1) Section 101(e)(3) of the Employee Retirement Income 
    Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by striking 
    ``Tax Relief Extension Act of 1999'' and inserting ``Pension 
    Funding Equity Act of 2004''.
        (2) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is 
    amended by striking ``Tax Relief Extension Act of 1999'' and 
    inserting ``Pension Funding Equity Act of 2004''.
        (3) Paragraph (13) of section 408(b) of such Act (29 U.S.C. 
    1108(b)(3)) is amended--
            (A) by striking ``January 1, 2006'' and inserting ``January 
        1, 2014'', and
            (B) by striking ``Tax Relief Extension Act of 1999'' and 
        inserting ``Pension Funding Equity Act of 2004''.

SEC. 205. REPEAL OF REDUCTION OF DEDUCTIONS FOR MUTUAL LIFE INSURANCE 
              COMPANIES.

    (a) In General.--Section 809 of the Internal Revenue Code of 1986 
(relating to reductions in certain deduction of mutual life insurance 
companies) is hereby repealed.
    (b) Conforming Amendments.--
        (1) Subsections (a)(2)(B) and (b)(1)(B) of section 807 of such 
    Code are each amended by striking ``the sum of (i)'' and by 
    striking ``plus (ii) any excess described in section 809(a)(2) for 
    the taxable year,''.
        (2)(A) The last sentence of section 807(d)(1) of such Code is 
    amended by striking ``section 809(b)(4)(B)'' and inserting 
    ``paragraph (6)''.
        (B) Subsection (d) of section 807 of such Code is amended by 
    adding at the end the following new paragraph:
        ``(6) Statutory reserves.--The term `statutory reserves' means 
    the aggregate amount set forth in the annual statement with respect 
    to items described in section 807(c). Such term shall not include 
    any reserve attributable to a deferred and uncollected premium if 
    the establishment of such reserve is not permitted under section 
    811(c).''.
        (3) Subsection (c) of section 808 of such Code is amended to 
    read as follows:
    ``(c) Amount of Deduction.--The deduction for policyholder 
dividends for any taxable year shall be an amount equal to the 
policyholder dividends paid or accrued during the taxable year.''.
        (4) Subparagraph (A) of section 812(b)(3) of such Code is 
    amended by striking ``sections 808 and 809'' and inserting 
    ``section 808''.
        (5) Subsection (c) of section 817 of such Code is amended by 
    striking ``(other than section 809)''.
        (6) Subsection (c) of section 842 of such Code is amended by 
    striking paragraph (3) and by redesignating paragraph (4) as 
    paragraph (3).
        (7) The table of sections for subpart C of part I of subchapter 
    L of chapter 1 of such Code is amended by striking the item 
    relating to section 809.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2004.

SEC. 206. CLARIFICATION OF EXEMPTION FROM TAX FOR SMALL PROPERTY AND 
              CASUALTY INSURANCE COMPANIES.

    (a) In General.--Section 501(c)(15)(A) of the Internal Revenue Code 
of 1986 is amended to read as follows:
        ``(A) Insurance companies (as defined in section 816(a)) other 
    than life (including interinsurers and reciprocal underwriters) 
    if--
            ``(i)(I) the gross receipts for the taxable year do not 
        exceed $600,000, and
            ``(II) more than 50 percent of such gross receipts consist 
        of premiums, or
            ``(ii) in the case of a mutual insurance company--
                ``(I) the gross receipts of which for the taxable year 
            do not exceed $150,000, and
                ``(II) more than 35 percent of such gross receipts 
            consist of premiums.
    Clause (ii) shall not apply to a company if any employee of the 
    company, or a member of the employee's family (as defined in 
    section 2032A(e)(2)), is an employee of another company exempt from 
    taxation by reason of this paragraph (or would be so exempt but for 
    this sentence).''.
    (b) Controlled Group Rule.--Section 501(c)(15)(C) of the Internal 
Revenue Code of 1986 is amended by inserting ``, except that in 
applying section 831(b)(2)(B)(ii) for purposes of this subparagraph, 
subparagraphs (B) and (C) of section 1563(b)(2) shall be disregarded'' 
before the period at the end.
    (c) Definition of Insurance Company for Section 831.--Section 831 
of the Internal Revenue Code of 1986 is amended by redesignating 
subsection (c) as subsection (d) and by inserting after subsection (b) 
the following new subsection:
    ``(c) Insurance Company Defined.--For purposes of this section, the 
term `insurance company' has the meaning given to such term by section 
816(a)).''.
    (d) Conforming Amendment.--Clause (i) of section 831(b)(2)(A) of 
the Internal Revenue Code of 1986 is amended by striking ``exceed 
$350,000 but''.
    (e) Effective Date.--
        (1) In general.--Except as provided in paragraph (2), the 
    amendments made by this section shall apply to taxable years 
    beginning after December 31, 2003.
        (2) Transition rule for companies in receivership or 
    liquidation.--In the case of a company or association which--
            (A) for the taxable year which includes April 1, 2004, 
        meets the requirements of section 501(c)(15)(A) of the Internal 
        Revenue Code of 1986, as in effect for the last taxable year 
        beginning before January 1, 2004, and
            (B) on April 1, 2004, is in a receivership, liquidation, or 
        similar proceeding under the supervision of a State court,
    the amendments made by this section shall apply to taxable years 
    beginning after the earlier of the date such proceeding ends or 
    December 31, 2007.

SEC. 207. CONFIRMATION OF ANTITRUST STATUS OF GRADUATE MEDICAL RESIDENT 
              MATCHING PROGRAMS.

    (a) Findings and Purposes.--
        (1) Findings.--Congress makes the following findings:
            (A) For over 50 years, most United States medical school 
        seniors and the large majority of graduate medical education 
        programs (popularly known as ``residency programs'') have 
        chosen to use a matching program to match medical students with 
        residency programs to which they have applied. These matching 
        programs have been an integral part of an educational system 
        that has produced the finest physicians and medical researchers 
        in the world.
            (B) Before such matching programs were instituted, medical 
        students often felt pressure, at an unreasonably early stage of 
        their medical education, to seek admission to, and accept 
        offers from, residency programs. As a result, medical students 
        often made binding commitments before they were in a position 
        to make an informed decision about a medical specialty or a 
        residency program and before residency programs could make an 
        informed assessment of students' qualifications. This situation 
        was inefficient, chaotic, and unfair and it often led to 
        placements that did not serve the interests of either medical 
        students or residency programs.
            (C) The original matching program, now operated by the 
        independent non-profit National Resident Matching Program and 
        popularly known as ``the Match'', was developed and implemented 
        more than 50 years ago in response to widespread student 
        complaints about the prior process. This Program includes on 
        its board of directors individuals nominated by medical student 
        organizations as well as by major medical education and 
        hospital associations.
            (D) The Match uses a computerized mathematical algorithm, 
        as students had recommended, to analyze the preferences of 
        students and residency programs and match students with their 
        highest preferences from among the available positions in 
        residency programs that listed them. Students thus obtain a 
        residency position in the most highly ranked program on their 
        list that has ranked them sufficiently high among its 
        preferences. Each year, about 85 percent of participating 
        United States medical students secure a place in one of their 
        top 3 residency program choices.
            (E) Antitrust lawsuits challenging the matching process, 
        regardless of their merit or lack thereof, have the potential 
        to undermine this highly efficient, pro-competitive, and long-
        standing process. The costs of defending such litigation would 
        divert the scarce resources of our country's teaching hospitals 
        and medical schools from their crucial missions of patient 
        care, physician training, and medical research. In addition, 
        such costs may lead to abandonment of the matching process, 
        which has effectively served the interests of medical students, 
        teaching hospitals, and patients for over half a century.
        (2) Purposes.--It is the purpose of this section to--
            (A) confirm that the antitrust laws do not prohibit 
        sponsoring, conducting, or participating in a graduate medical 
        education residency matching program, or agreeing to do so; and
            (B) ensure that those who sponsor, conduct or participate 
        in such matching programs are not subjected to the burden and 
        expense of defending against litigation that challenges such 
        matching programs under the antitrust laws.
    (b) Application of Antitrust Laws to Graduate Medical Education 
Residency Matching Programs.--
        (1) Definitions.--In this subsection:
            (A) Antitrust laws.--The term ``antitrust laws''--
                (i) has the meaning given such term in subsection (a) 
            of the first section of the Clayton Act (15 U.S.C. 12(a)), 
            except that such term includes section 5 of the Federal 
            Trade Commission Act (15 U.S.C. 45) to the extent such 
            section 5 applies to unfair methods of competition; and
                (ii) includes any State law similar to the laws 
            referred to in clause (i).
            (B) Graduate medical education program.--The term 
        ``graduate medical education program'' means--
                (i) a residency program for the medical education and 
            training of individuals following graduation from medical 
            school;
                (ii) a program, known as a specialty or subspecialty 
            fellowship program, that provides more advanced training; 
            and
                (iii) an institution or organization that operates, 
            sponsors or participates in such a program.
            (C) Graduate medical education residency matching 
        program.--The term ``graduate medical education residency 
        matching program'' means a program (such as those conducted by 
        the National Resident Matching Program) that, in connection 
        with the admission of students to graduate medical education 
        programs, uses an algorithm and matching rules to match 
        students in accordance with the preferences of students and the 
        preferences of graduate medical education programs.
            (D) Student.--The term ``student'' means any individual who 
        seeks to be admitted to a graduate medical education program.
        (2) Confirmation of antitrust status.--It shall not be unlawful 
    under the antitrust laws to sponsor, conduct, or participate in a 
    graduate medical education residency matching program, or to agree 
    to sponsor, conduct, or participate in such a program. Evidence of 
    any of the conduct described in the preceding sentence shall not be 
    admissible in Federal court to support any claim or action alleging 
    a violation of the antitrust laws.
        (3) Applicability.--Nothing in this section shall be construed 
    to exempt from the antitrust laws any agreement on the part of 2 or 
    more graduate medical education programs to fix the amount of the 
    stipend or other benefits received by students participating in 
    such programs.
    (c) Effective Date.--This section shall take effect on the date of 
enactment of this Act, shall apply to conduct whether it occurs prior 
to, on, or after such date of enactment, and shall apply to all 
judicial and administrative actions or other proceedings pending on 
such date of enactment.

                               Speaker of the House of Representatives.

                            Vice President of the United States and    
                                               President of the Senate.
```