I

106TH CONGRESS

2D SESSION H. R. 5466

To amend the Internal Revenue Code of 1986 to provide for the payment

of fellowship benefits to pension plan participants.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 12, 2000

Mr. MATSUI introduced the following bill; which was referred to the

Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to provide

for the payment of fellowship benefits to pension plan

participants.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. QUALIFIED FELLOWSHIP BENEFITS.

4 (a) IN GENERAL.—Section 401(a) of the Internal

5 Revenue Code of 1986 (26 U.S.C. 401(a)) is amended by

6 adding after paragraph (34) a new paragraph to read as

7 follows:

8 ‘‘(35) QUALIFIED FELLOWSHIP BENEFITS.—

9 ‘‘(A) IN GENERAL.—A trust forming part

10 of a defined benefit pension plan shall not be
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1 treated as failing to constitute a qualified trust

2 under this section merely because such plan

3 provides for the payment of qualified fellowship

4 benefits to participants in such plan.

5 ‘‘(B) QUALIFIED FELLOWSHIP BENEFITS

6 DEFINED.—Except as otherwise provided by

7 this paragraph, the term ‘qualified fellowship

8 benefits’ means any amounts payable to a par9 ticipant under a plan referred to in subpara10 graph (A) if—

11 ‘‘(i) such amounts are payable only

12 after such participant has terminated em13 ployment with the employer maintaining

14 such plan on or after attaining the age of

15 55,

16 ‘‘(ii) such amounts are payable only if

17 such participant renders substantial volun18 teer services for any organization described

19 in section 501(c)(3) (other than a private

20 foundation within the meaning of section

21 509(a)(1) or the employer maintaining the

22 plan) and exempt from tax under section

23 501(a), and

24 ‘‘(iii) after taking into account the

25 payment of such amounts to such partici-
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1 pant, the value of the assets of such plan

2 is not less than 125 percent of the value

3 of the current liability (within the meaning

4 of section 412(c)(7)(B)) of such plan.

5 ‘‘(C) LIMITATIONS ON QUALIFIED FEL6 LOWSHIP BENEFITS.—No amount otherwise de7 scribed in subparagraph (B) that is payable to

8 a participant shall be considered a qualified fel9 lowship benefit under this paragraph to the ex10 tent that—

11 ‘‘(i) such amount is payable with re12 spect to services described in clause (ii) of

13 subparagraph (B) that are rendered more

14 than 4 years after such participant has

15 terminated employment with the employer

16 maintaining the plan, and

17 ‘‘(ii) such amount, when added to all

18 other amounts described in subparagraph

19 (B) that are payable to any other partici20 pant under the plan during a single plan

21 year, exceeds 1 percent of the value of

22 such plan’s assets.

23 ‘‘(D) STATUS OF QUALIFIED FELLOWSHIP

24 BENEFITS.—
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1 ‘‘(i) All qualified fellowship benefits

2 under this paragraph shall be treated as

3 ancillary benefits for all purposes under

4 this part.

5 ‘‘(ii) All qualified fellowship benefits

6 under this paragraph shall be deemed to

7 satisfy the requirements of subsection

8 (a)(4) if such benefits are available on sub9 stantially the same terms to all partici10 pants under a plan who satisfy the condi11 tions of clause (i) of subparagraph (B).’’.

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to plan years beginning after De14 cember 31, 2000.

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