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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3108 Engrossed Amendment Senate (EAS)]

  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

                  In the Senate of the United States,

                                                      January 28, 2004.
    Resolved, That the bill from the House of Representatives (H.R. 
3108) entitled ``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.'', do pass with the 
following

                               AMENDMENT:

    Page 2, line 3, strike out all after ``section'' and insert:

 1. SHORT TITLE.

    This Act may be cited as the ``Pension Stability Act''.

SEC. 2. TEMPORARY REPLACEMENT OF INTEREST RATE ON 30-YEAR TREASURY 
              SECURITIES WITH INTEREST RATE ON CONSERVATIVELY INVESTED 
              LONG-TERM CORPORATE BONDS.

    (a) Internal Revenue Code of 1986.--
            (1) Determination of permissible range.--
                    (A) In general.--Section 412(b)(5)(B)(ii) of the 
                Internal Revenue Code of 1986 is amended--
                            (i) in subclause (I), by inserting ``or 
                        (III)'' after ``subclause (II)'';
                            (ii) by redesignating subclause (II) as 
                        subclause (III);
                            (iii) by inserting after subclause (I) the 
                        following new subclause:
                                    ``(II) Special rule for 2004 and 
                                2005.--In the case of plan years 
                                beginning in 2004 or 2005, 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 conservative 
                                long-term corporate bond rates during 
                                the 4-year period ending on the last 
                                day before the beginning of the plan 
                                year. The Secretary shall, by 
                                regulation, prescribe a method for 
                                periodically determining conservative 
                                long-term bond rates for purposes of 
                                this paragraph. Such rates shall 
                                reflect the rates of interest on 
                                amounts invested conservatively in 
                                long-term corporate bonds and shall be 
                                based on the use of 2 or more indices 
                                that are in the top 2 quality levels 
                                available reflecting average maturities 
                                of 20 years or more.''; and
                            (iv) in subclause (III), as so 
                        redesignated--
                                    (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''.
            (2) Determination of current liability.--Section 
        412(l)(7)(C)(i) 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.--Section 412(m)(7) 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 of the plan 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) of section 412 
                solely for purposes of determining the interest rate 
                used in calculating the maximum amount of the deduction 
                allowable under this section for contributions to a 
                plan to which such subsections apply.''
    (b) Employee Retirement Income Security Act of 1974.--
            (1) Determination of permissible range.--
                    (A) In general.--Section 302(b)(5)(B)(ii) of the 
                Employee Retirement Income Security Act of 1974 (29 
                U.S.C. 1082(b)(5)(B)(ii)) is amended--
                            (i) in subclause (I), by inserting ``or 
                        (III)'' after ``subclause (II)'';
                            (ii) by redesignating subclause (II) as 
                        subclause (III);
                            (iii) by inserting after subclause (I) the 
                        following new subclause:
                            ``(II) Special rule for years 2004 and 
                        2005.--In the case of plan years beginning in 
                        2004 or 2005, 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 conservative long-term 
                        corporate bond rates (as determined under 
                        section 412(b)(5)(B)(ii)(II) of the Internal 
                        Revenue Code of 1986) during the 4-year period 
                        ending on the last day before the beginning of 
                        the plan year.''; and
                            (iv) in subclause (III), as so 
                        redesignated--
                                    (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''.
            (2) Determination of current liability.--Section 
        302(d)(7)(C)(i) of such Act (29 U.S.C. 1082(d)(7)(C)(i)) 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.--Section 302(e)(7) of such Act 
        (29 U.S.C. 1082(e)(7)) 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 of the plan for the preceding plan year 
        shall be redetermined using 120 as the specified percentage 
        determined under subsection (d)(7)(C)(i)(II).''.
            (4) PBGC.--Section 4006(a)(3)(E)(iii) of such Act (29 
        U.S.C. 1306(a)(3)(E)(iii)) is amended by adding at the end the 
        following new subclause:
            ``(V) In the case of plan years beginning in 2004 or 2005, 
        the annual yield taken into account under subclause (II) shall 
        be the annual yield computed by using the conservative long-
        term corporate bond rate (as determined under section 
        412(b)(5)(B)(ii)(II) of the Internal Revenue Code of 1986) for 
        the month preceding the month in which the plan year begins.''
    (c) Effective Dates.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to plan years 
        beginning after December 31, 2003.
            (2) Lookback rules.--For purposes of applying subsections 
        (l)(9)(B)(ii) and (m)(1) of section 412 of the Internal Revenue 
        Code of 1986, and subsections (d)(9)(B)(ii) and (e)(1) of 
        section 302 of the Employee Retirement Income Security Act of 
        1974 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 years beginning before 
        such date.
            (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(b)(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 (a)(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. 3. ELECTION OF ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION.

    (a) 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) Alternative increase for certain plans meeting 
        requirements in 2000.--
                    ``(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 (40 percent in the case of 
                        an applicable plan year beginning after 
                        December 27, 2004) 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 shall be adopted 
                during any applicable plan year, unless--
                            ``(i) the funded current liability 
                        percentage (as defined in paragraph (8)(B)) as 
                        of the end of such plan year is projected 
                        (taking into account the effect of the 
                        amendment) to be at least 75 percent,
                            ``(ii) the amendment provides for an 
                        increase in benefits under a formula which is 
                        not based on a participant's compensation, but 
                        only if the rate of such increase is not in 
                        excess of the contemporaneous rate of increase 
                        in average wages of participants covered by the 
                        amendment,
                            ``(iii) the amendment is required by a 
                        collective bargaining agreement which is in 
                        effect on the date of enactment of this 
                        subparagraph, or
                            ``(iv) the amendment is otherwise described 
                        in subparagraph (A) or (C) of subsection 
                        (f)(2).
                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--
                            ``(i) In general.--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 mining or 
                                processing of iron ore or beneficiated 
                                iron ore products, or
                                    ``(III) an organization described 
                                in section 501(c)(5) and which 
                                established the plan to which this 
                                paragraph applies on June 30, 1955.
                            ``(ii) Other employers may apply for 
                        relief.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), an employer 
                                other than an employer described in 
                                clause (i) shall be treated as an 
                                applicable employer if the employer 
                                files an application (at such time and 
                                in such manner as the Secretary may 
                                prescribe) to be treated as an 
                                applicable employer for purposes of 
                                this paragraph.
                                    ``(II) Exception.--Subclause (I) 
                                shall not apply to an employer if, 
                                within 90 days of the filing of the 
                                application, the Secretary determines 
                                (taking into account the application of 
                                this paragraph) that there is a 
                                reasonable likelihood that the employer 
                                will be unable to make future required 
                                contributions to the plan in a timely 
                                manner.
                    ``(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.''
    (b) 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) Alternative increase for certain plans meeting 
        requirements in 2000.--
                    ``(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 (40 percent in the case of 
                        an applicable plan year beginning after 
                        December 27, 2004) 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 funded current liability 
                        percentage (as defined in paragraph (8)(B)) as 
                        of the end of such plan year is projected 
                        (taking into account the effect of the 
                        amendment) to be at least 75 percent,
                            ``(ii) the amendment provides for an 
                        increase in benefits under a formula which is 
                        not based on a participant's compensation, but 
                        only if the rate of such increase is not in 
                        excess of the contemporaneous rate of increase 
                        in average wages of participants covered by the 
                        amendment,
                            ``(iii) the amendment is required by a 
                        collective bargaining agreement which is in 
                        effect on the date of enactment of this 
                        subparagraph, or
                            ``(iv) the amendment is otherwise described 
                        in subparagraph (A) or (C) of section 
                        304(b)(2).
                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--
                            ``(i) In general.--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 mining or 
                                processing of iron ore or beneficiated 
                                iron ore products, 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.
                            ``(ii) Other employers may apply for 
                        relief.--
                                    ``(I) In general.--Except as 
                                provided in subclause (II), an employer 
                                other than an employer described in 
                                clause (i) shall be treated as an 
                                applicable employer if the employer 
                                files an application (at such time and 
                                in such manner as the Secretary of the 
                                Treasury may prescribe) to be treated 
                                as an applicable employer for purposes 
                                of this paragraph.
                                    ``(II) Exception.--Subclause (I) 
                                shall not apply to an employer if, 
                                within 90 days of the filing of the 
                                application, the Secretary of the 
                                Treasury determines (taking into 
                                account the application of this 
                                paragraph) that there is a reasonable 
                                likelihood that the employer will be 
                                unable to make future required 
                                contributions to the plan in a timely 
                                manner.
                    ``(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 (120 
                        days in the case of an employer described in 
                        subparagraph (C)(ii)) 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.''
    (c) Effect of Election.--An election under section 412(l)(12) of 
the Internal Revenue Code of 1986 or section 302(d)(12) of the Employee 
Retirement Income Security Act of 1974 (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 participant 
or beneficiary'' after ``101(e)(2)''.

SEC. 4. MULTIEMPLOYER PLAN FUNDING NOTICES.

    (a) In General.--Section 104 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 104) is amended by redesignating 
subsection (d) as subsection (e) and by inserting after subsection (c) 
the following new subsection:
    ``(d) 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, and to each employer that has an 
        obligation to contribute under the plan.
            ``(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 report 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 
104(d)''.
    (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. 5. AMORTIZATION HIATUS FOR NET EXPERIENCE LOSSES IN MULTIEMPLOYER 
              PLANS.

    (a) Amendments to the 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)(i) If a multiemployer plan has a net experience loss 
        for any plan year beginning after June 30, 2002, and before 
        July 1, 2006--
                    ``(I) the plan may elect to have the 15-year 
                amortization period under paragraph (2)(B)(iv) with 
                respect to the loss begin in any plan year selected by 
                the plan from among the 3 immediately succeeding plan 
                years, and
                    ``(II) if the plan makes an election under 
                subclause (I) for any plan year, the net experience 
                loss for the year shall, for purposes of determining 
                any charge to the funding standard account, or 
                interest, with respect to the loss, be treated in the 
                same manner as if it were a net experience loss 
                occurring in the year selected by the plan under 
                subclause (I) (without regard to any net experience 
                loss or gain otherwise determined for such year).
        Notwithstanding the preceding sentence, a plan may elect to 
        have this subparagraph apply to net experience losses for only 
        2 plan years beginning after June 30, 2002, and before July 1, 
        2006.
            ``(ii) An 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 not take 
        effect for any plan year in the hiatus period, unless--
                    ``(I) the funded current liability percentage (as 
                defined in subsection (d)(8)(B)) as of the end of the 
                plan year is projected (taking into account the effect 
                of the amendment) to be at least 75 percent,
                    ``(II) the plan's actuary certifies that, due to an 
                increase in contribution rates, the normal cost 
                attributable to the benefit increase or other change is 
                expected to be fully funded in the year following the 
                year the increase or other change takes effect, and any 
                increase in the plan's accrued liabilities attributable 
                to the benefit increase or other change is expected to 
                be fully funded by the end of the third plan year 
                following the end of the last hiatus period of the 
                plan, or
                    ``(III) the plan amendment is otherwise described 
                in subparagraph (A) or (C) of section 304(b)(2).
            ``(iii) Clause (ii) shall not apply to an increase in 
        benefits for a group of participants resulting solely from a 
        collectively bargained increase in the contributions made on 
        their behalf.
            ``(iv) For purposes of this subparagraph, the term `hiatus 
        period' means any period during which the amortization of a net 
        experience loss is suspended by reason of this subparagraph.
            ``(v) Interest accrued on any net experience loss during a 
        hiatus period shall be charged to a reconciliation account and 
        not to the funding standard account.
            ``(vi) If a plan elects an amortization hiatus under this 
        subparagraph and 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, and to each employer that has an 
        obligation to contribute under the plan. Such notice shall 
        include with respect to any election the amount of the net 
        experience loss 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) An election under this subparagraph shall be made 
        at such time and in such manner as the Secretary, after 
        consultation with 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) Amendments to the Internal Revenue Code of 1986.--
            (1) In general.--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) Amortization hiatus.--
                            ``(i) In general.--If a multiemployer plan 
                        has a net experience loss for any plan year 
                        beginning after June 30, 2002, and before July 
                        1, 2006--
                                    ``(I) the plan may elect to have 
                                the 15-year amortization period under 
                                paragraph (2)(B)(iv) with respect to 
                                the loss begin in any plan year 
                                selected by the plan from among the 3 
                                immediately succeeding plan years, and
                                    ``(II) if the plan makes an 
                                election under subclause (I) for any 
                                plan year, the net experience loss for 
                                the year shall, for purposes of 
                                determining any charge to the funding 
                                standard account, or interest, with 
                                respect to the loss, be treated in the 
                                same manner as if it were a net 
                                experience loss occurring in the year 
                                selected by the plan under subclause 
                                (I) (without regard to any net 
                                experience loss or gain otherwise 
                                determined for such year).
                        Notwithstanding the preceding sentence, a plan 
                        may elect to have this subparagraph apply to 
                        net experience losses for only 2 plan years 
                        beginning after June 30, 2002, and before July 
                        1, 2006.
                            ``(ii) Restrictions on benefit increases.--
                        An 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 not take 
                        effect for any plan year in the hiatus period, 
                        unless--
                                    ``(I) the funded current liability 
                                percentage (as defined in subsection 
                                (l)(8)(B)) as of the end of the plan 
                                year is projected (taking into account 
                                the effect of the amendment) to be at 
                                least 75 percent,
                                    ``(II) the plan's actuary certifies 
                                that, due to an increase in 
                                contribution rates, the normal cost 
                                attributable to the benefit increase or 
                                other change is expected to be fully 
                                funded in the year following the year 
                                in which the increase or other change 
                                takes effect, and any increase in the 
                                plan's accrued liabilities attributable 
                                to the benefit increase or other change 
                                is expected to be fully funded by the 
                                end of the third plan year following 
                                the end of the last hiatus period of 
                                the plan, or
                                    ``(III) the plan amendment is 
                                otherwise described in subparagraph (A) 
                                or (C) of subsection (f)(2).
                            ``(iii) Collectively bargained increases in 
                        contributions.--Clause (ii) shall not apply to 
                        an increase in benefits for a group of 
                        participants resulting solely from a 
                        collectively bargained increase in the 
                        contributions made on their behalf.
                            ``(iv) Hiatus period defined.--For purposes 
                        of this subparagraph, the term `hiatus period' 
                        means any period during which the amortization 
                        of a net experience loss is suspended by reason 
                        of this subparagraph.
                            ``(v) Interest accrued during hiatus.--
                        Interest accrued on any net experience loss 
                        during a hiatus period shall be charged to a 
                        reconciliation account and not to the funding 
                        standard account.
                            ``(vi) Election.--An election under this 
                        subparagraph shall be made at such time and in 
                        such manner as the Secretary of Labor, after 
                        consultation with the Secretary, may 
                        prescribe.''
            (2) Qualification requirement.--Section 401(a) of such Code 
        is amended by inserting after paragraph (34) the following new 
        paragraph:
            ``(35) Benefit increases in certain multiemployer plans.--A 
        trust which is part of a plan shall not constitute a qualified 
        trust under this section if the plan adopts an amendment during 
        a hiatus period (within the meaning of section 
        412(b)(7)(F)(iv)) which the plan is prohibited from adopting by 
        reason of section 412(b)(7)(F)(ii).''.

SEC. 6. 2-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. 7. 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. 8. SENSE OF THE SENATE ON STATUS OF PRIVATE PENSION PLANS.

    (a) Findings.--Congress makes the following findings:-
            (1) The private pension system is integral to the 
        retirement security of Americans, along with individual savings 
        and Social Security.
            (2) The Pension Benefit Guaranty Corporation (PBGC) is 
        responsible for insuring the nation's private pension system, 
        and currently insures the pensions of 34,500,000 participants 
        in 29,500 single-employer plans, and 9,700,000 participants in 
        more than 1,600 multiemployer plans.
            (3) The PBGC announced on January 15, 2004, that it 
        suffered a net loss in fiscal year 2003 of $7,600,000,000 for 
        single-employer pension plans, bringing the PBGC's deficit to 
        $11,200,000,000. This deficit is the PBGC's worst on record, 
        three times larger than the $3,600,000,000 deficit experienced 
        in fiscal year 2002.
            (4) The PBGC also announced that the separate insurance 
        program for multiemployer pension plans sustained a net loss of 
        $419,000,000 in fiscal year 2003, resulting in a fiscal year-
        end deficit of $261,000,000. The 2003 multiemployer plan 
        deficit is the first deficit in more than 20 years and is the 
        largest deficit on record.
            (5) The PBGC estimates that the total underfunding in 
        multiemployer pension plans is roughly $100,000,000,000 and in 
        single-employer plans is approximately $400,000,000,000. This 
        underfunding is due in part to the recent decline in the stock 
        market and low interest rates, but is also due to demographic 
        changes. For example, in 1980, there were four active workers 
        for every one retiree in a multiemployer plan, but in 2002, 
        there was only one active worker for every one retiree.
            (6) This pension plan underfunding is concentrated in 
        mature and often-declining industries, where plan liabilities 
        will come due sooner.
            (7) Neither the Senate Committee on Finance nor the Senate 
        Committee on Health, Education, Labor and Pensions (HELP), the 
        committees of jurisdiction over pension matters, has held 
        hearings this Congress nor reported legislation addressing the 
        funding of multiemployer pension plans;
            (8) The Senate is concerned about the current funding 
        status of the private pension system, both single and multi-
        employer plans;
            (9) The Senate is concerned about the potential liabilities 
        facing the PBGC and, as a result, the potential burdens facing 
        healthy pension plans and taxpayers;
    (b) Sense of the Senate.--It is the sense of the Senate that the 
Committee on Finance and the Committee on Health, Education, Labor and 
Pensions should conduct hearings on the status of the multiemployer 
pension plans, and should work in consultation with the Departments of 
Labor and Treasury on permanent measures to strengthen the integrity of 
the private pension system in order to protect the benefits of current 
and future pension plan beneficiaries.

SEC. 9. 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 Stability Act''.
            (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 Stability Act''.
            (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 Stability Act''.

SEC. 10. 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) 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.''.
    (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 1563 for purposes of section 831(b)(2)(B)(ii), 
subparagraphs (B) and (C) of section 1563(b)(2) shall be disregarded'' 
before the period at the end.
    (c) 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''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2003.

SEC. 11. DEFINITION OF INSURANCE COMPANY FOR SECTION 831.

    (a) In General.--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)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2003.

SEC. 12. FUNDS FOR REBUILDING FISH STOCKS.

    Section 105 of the Miscellaneous Appropriations and Offsets Act, 
2004 (division H of the Consolidated appropriations Act, 2004) is 
repealed.

            Attest:

                                                             Secretary.
108th CONGRESS

  2d Session

                               H. R. 3108

_______________________________________________________________________

                               AMENDMENT
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