II 

109TH CONGRESS 

1ST SESSION S. 1304 

To amend the Employee Retirement Income Security Act of 1974 and the 

Internal Revenue Code of 1986 to protect pension benefits of employees 

in defined benefit plans and to direct the Secretary of the Treasury 

to enforce the age discrimination requirements of the Internal Revenue 

Code of 1986. 

IN THE SENATE OF THE UNITED STATES 

JUNE 23, 2005 

Mr. HARKIN (for himself, Mr. KENNEDY, Mr. DURBIN, Mr. FEINGOLD, Mrs. 

BOXER, and Mr. DAYTON) introduced the following bill; which was read 

twice and referred to the Committee on Health, Education, Labor, and 

Pensions 

A BILL

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

protect pension benefits of employees in defined benefit 

plans and to direct the Secretary of the Treasury to 

enforce the age discrimination requirements of the Internal Revenue Code of 1986.

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Pension Benefits Pro5 tection Act of 2005’’. 
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1 SEC. 2. PROPER ADMINISTRATION OF INTERNAL REVENUE 

2 LAWS AND NONDISCRIMINATION REQUIRE3 MENTS. 

4 The Secretary of the Treasury shall apply section 

5 411(b)(1)(H) of the Internal Revenue Code of 1986 with6 out regard to the portion of the preamble to Treasury De7 cision 8360 (56 Fed. Reg. 47524–47603, September 19, 

8 1991) which relates to the allocation of interest adjust9 ments through normal retirement age under a cash bal10 ance plan, as such preamble is and has been since its 

11 adoption without the force of law. 

12 SEC. 3. PROTECTION OF PARTICIPANTS FROM CONVER13 SIONS TO HYBRID DEFINED BENEFIT PLANS. 

14 (a) ELECTION TO MAINTAIN RATE OF ACCRUAL IN

15 EFFECT BEFORE PLAN AMENDMENT.— 

16 (1) AMENDMENT TO ERISA.—Section 204(b)(1) 

17 of the Employee Retirement Income Security Act of 

18 1974 (29 U.S.C. 1054(b)(1)) is amended by adding 

19 at the end the following new subparagraph: 

20 ‘‘(I)(i) Notwithstanding the preceding subpara21 graphs, in the case of a plan amendment to a defined ben22 efit plan— 

23 ‘‘(I) which has the effect of converting the plan 

24 to a plan under which the accrued benefit is ex25 pressed to participants and beneficiaries as an 

26 amount other than an annual benefit commencing at 
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1 normal retirement age (or which has a similar effect 

2 as determined under regulations issued under clause 

3 (iv)), and 

4 ‘‘(II) which has the effect of reducing the rate 

5 of future benefit accrual of 1 or more participants, 

6 such plan shall be treated as not satisfying the require7 ments of this paragraph unless such plan meets the re8 quirements of clause (ii). 

9 ‘‘(ii) A plan meets the requirements of this clause if 

10 the plan provides each participant who has attained 40 

11 years of age or 10 years of service (as determined under 

12 section 203) under the plan at the time such amendment 

13 takes effect with— 

14 ‘‘(I) notice of the plan amendment indicating 

15 that it has such effect, including a comparison of the 

16 present and projected values of the accrued benefit 

17 determined both with and without regard to the plan 

18 amendment, and 

19 ‘‘(II) an election upon retirement to either re20 ceive benefits under the terms of the plan as in ef21 fect at the time of retirement or to receive benefits 

22 under the terms of the plan as in effect immediately 

23 before the effective date of such plan amendment 

24 (taking into account all benefit accruals under such 

25 terms since such date). 
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1 ‘‘(iii) For purposes of clause (i), an accrued benefit 

2 shall include any early retirement benefit or retirement3 type subsidy (within the meaning of subsection (g)(2)(A)), 

4 but only with respect to a participant who satisfies (either 

5 before or after the effective date of the amendment) the 

6 conditions for the benefit or subsidy under the terms of 

7 the plan as in effect immediately before such date. 

8 ‘‘(iv) The Secretary of the Treasury shall issue regu9 lations under which any plan amendment which has an 

10 effect similar to the effect described in clause (i)(I) shall 

11 be treated as a plan amendment described in clause (i)(I). 

12 Such regulations may provide that if a plan sponsor rep13 resents in communications to participants and bene14 ficiaries that a plan amendment has an effect described 

15 in the preceding sentence, such plan amendment shall be 

16 treated as a plan amendment described in clause (i)(I).’’. 

17 (2) AMENDMENT TO INTERNAL REVENUE

18 CODE.—Section 411(b)(1) of the Internal Revenue 

19 Code of 1986 (relating to accrued benefit require20 ments for defined benefit plans) is amended by add21 ing at the end the following new subparagraph: 

22 ‘‘(I) ELECTION TO MAINTAIN RATE OF AC23 CRUAL IN EFFECT BEFORE CERTAIN PLAN

24 AMENDMENTS.— 
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1 ‘‘(i) IN GENERAL.—Notwithstanding 

2 the preceding subparagraphs, in the case 

3 of a plan amendment to a defined benefit 

4 plan— 

5 ‘‘(I) which has the effect of con6 verting the plan to a plan under which 

7 the accrued benefit is expressed to 

8 participants and beneficiaries as an 

9 amount other than an annual benefit 

10 commencing at normal retirement age 

11 (or which has a similar effect as de12 termined under regulations issued 

13 under clause (iv)), and 

14 ‘‘(II) which has the effect of re15 ducing the rate of future benefit ac16 crual of 1 or more participants, 

17 such plan shall be treated as not satisfying 

18 the requirements of this paragraph unless 

19 such plan meets the requirements of clause 

20 (ii). 

21 ‘‘(ii) REQUIREMENTS.—A plan meets 

22 the requirements of this clause if the plan 

23 provides each participant who has attained 

24 40 years of age or 10 years of service (as 

25 determined under subsection (a)) under 
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1 the plan at the time such amendment 

2 takes effect with— 

3 ‘‘(I) notice of the plan amend4 ment indicating that it has such ef5 fect, including a comparison of the 

6 present and projected values of the 

7 accrued benefit determined both with 

8 and without regard to the plan 

9 amendment, and 

10 ‘‘(II) an election upon retirement 

11 to either receive benefits under the 

12 terms of the plan as in effect at the 

13 time of retirement or to receive bene14 fits under the terms of the plan as in 

15 effect immediately before the effective 

16 date of such plan amendment (taking 

17 into account all benefit accruals under 

18 such terms since such date). 

19 ‘‘(iii) TREATMENT OF EARLY RETIRE20 MENT BENEFITS AND RETIREMENT-TYPE

21 SUBSIDIES.—For purposes of clause (i), an 

22 accrued benefit shall include any early re23 tirement benefit or retirement-type subsidy 

24 (within the meaning of subsection 

25 (d)(6)(B)(i)), but only with respect to a 
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1 participant who satisfies (either before or 

2 after the effective date of the amendment) 

3 the conditions for the benefit or subsidy 

4 under the terms of the plan as in effect 

5 immediately before such date. 

6 ‘‘(iv) REGULATIONS.—The Secretary 

7 shall issue regulations under which any 

8 plan amendment which has an effect simi9 lar to the effect described in clause (i)(I) 

10 shall be treated as a plan amendment de11 scribed in clause (i)(I). Such regulations 

12 may provide that if a plan sponsor rep13 resents in communications to participants 

14 and beneficiaries that a plan amendment 

15 has an effect described in the preceding 

16 sentence, such plan amendment shall be 

17 treated as a plan amendment described in 

18 clause (i)(I).’’. 

19 (b) EFFECTIVE DATE AND RELATED RULES.— 

20 (1) IN GENERAL.—The amendments made by 

21 this section apply to plan amendments taking effect 

22 before, on, or after the date of the enactment of this 

23 Act, except that such amendments shall not apply to 

24 a plan amendment if the Internal Revenue Service 

25 has issued on or before June 23, 2005, a determina-
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1 tion letter which has the effect of approving the plan 

2 amendment. 

3 (2) SPECIAL RULE.—In the case of a plan 

4 amendment taking effect before 90 days after the 

5 date of the enactment of this Act, the requirements 

6 of section 204(b)(1)(I) of the Employee Retirement 

7 Income Security Act of 1974 (as added by this sec8 tion) and section 411(b)(1)(I) of the Internal Rev9 enue Code of 1986 (as added by this section) shall 

10 be treated as satisfied in connection with such plan 

11 amendment, in the case of any participant described 

12 in such sections 204(b)(1)(I) and 411(b)(1)(I) in 

13 connection with such plan amendment, if, as of the 

14 end of such 90-day period— 

15 (A) the notice described in clause (i)(I) of 

16 such section 204(b)(1)(I) and clause (i)(I) of 

17 such section 411(b)(1)(I) in connection with 

18 such plan amendment has been provided to 

19 such participant, and 

20 (B) the plan provides for the election de21 scribed in clause (i)(II) of such section 

22 204(b)(1)(I) and clause (i)(II) of such section 

23 411(b)(1)(I) in connection with such partici24 pant’s retirement under the plan. 
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1 SEC. 4. PREVENTION OF WEARING AWAY OF EMPLOYEE’S 

2 ACCRUED BENEFIT. 

3 (a) AMENDMENT TO ERISA.—Section 204(g) of the 

4 Employee Retirement Income Security Act of 1974 (29 

5 U.S.C. 1054(g)) is amended by adding at the end the fol6 lowing new paragraph: 

7 ‘‘(6)(A) For purposes of paragraph (1), an applicable 

8 plan amendment adopted by a large defined benefit plan 

9 shall be treated as reducing accrued benefits of a partici10 pant if, under the terms of the plan after the adoption 

11 of the amendment, the accrued benefit of the participant 

12 may at any time be less than the sum of— 

13 ‘‘(i) the participant’s accrued benefit for years 

14 of service before the effective date of the amend15 ment, determined under the terms of the plan as in 

16 effect immediately before the effective date, plus 

17 ‘‘(ii) the participant’s accrued benefit deter18 mined under the formula applicable to benefit accru19 als under the current plan as applied to years of 

20 service after such effective date. 

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

22 ‘‘(i) The term ‘applicable plan amendment’ 

23 means a plan amendment which has the effect of 

24 converting the plan to a plan under which the ac25 crued benefit is expressed to participants and bene26 ficiaries as an amount other than an annual benefit 
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1 commencing at normal retirement age (or which has 

2 a similar effect as determined under regulations of 

3 the Secretary of the Treasury under subsection 

4 (b)(1)(I)(iv)). 

5 ‘‘(ii) The term ‘large defined benefit plan’ 

6 means any defined benefit plan which had 100 or 

7 more participants who had accrued a benefit under 

8 the plan (whether or not vested) as of the last day 

9 of the plan year preceding the plan year in which 

10 the plan amendment becomes effective. 

11 ‘‘(iii) An accrued benefit shall include any early 

12 retirement benefit or retirement-type subsidy (within 

13 the meaning of paragraph (2)(A)), but only with re14 spect to a participant who satisfies (either before or 

15 after the effective date of the amendment) the condi16 tions for the benefit or subsidy under the terms of 

17 the plan as in effect immediately before such date.’’. 

18 (b) AMENDMENT TO INTERNAL REVENUE CODE.—

19 Section 411(d)(6) of the Internal Revenue Code of 1986 

20 (relating to accrued benefit may not be decreased by 

21 amendment) is amended by adding at the end the fol22 lowing new subparagraph: 

23 ‘‘(F) TREATMENT OF PLAN AMENDMENTS

24 WEARING AWAY ACCRUED BENEFIT.— 
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1 ‘‘(i) IN GENERAL.—For purposes of 

2 subparagraph (A), an applicable plan 

3 amendment adopted by a large defined 

4 benefit plan shall be treated as reducing 

5 accrued benefits of a participant if, under 

6 the terms of the plan after the adoption of 

7 the amendment, the accrued benefit of the 

8 participant may at any time be less than 

9 the sum of— 

10 ‘‘(I) the participant’s accrued 

11 benefit for years of service before the 

12 effective date of the amendment, de13 termined under the terms of the plan 

14 as in effect immediately before the ef15 fective date, plus 

16 ‘‘(II) the participant’s accrued 

17 benefit determined under the formula 

18 applicable to benefit accruals under 

19 the current plan as applied to years of 

20 service after such effective date. 

21 ‘‘(ii) DEFINITIONS.—For purposes of 

22 this subparagraph— 

23 ‘‘(I) APPLICABLE PLAN AMEND24 MENT.—The term ‘applicable plan 

25 amendment’ means a plan amendment 
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1 which has the effect of converting the 

2 plan to a plan under which the ac3 crued benefit is expressed to partici4 pants and beneficiaries as an amount 

5 other than an annual benefit com6 mencing at normal retirement age (or 

7 which has a similar effect as deter8 mined under regulations of the Sec9 retary under subsection (b)(1)(I)(iv)). 

10 ‘‘(II) LARGE DEFINED BENEFIT

11 PLAN.—The term ‘large defined ben12 efit plan’ means any defined benefit 

13 plan which had 100 or more partici14 pants who had accrued a benefit 

15 under the plan (whether or not vest16 ed) as of the last day of the plan year 

17 preceding the plan year in which the 

18 plan amendment becomes effective. 

19 ‘‘(III) PROTECTED ACCRUED

20 BENEFIT.—An accrued benefit shall 

21 include any early retirement benefit or 

22 retirement-type subsidy (within the 

23 meaning of subparagraph (B)(i)), but 

24 only with respect to a participant who 

25 satisfies (either before or after the ef-
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1 fective date of the amendment) the 

2 conditions for the benefit or subsidy 

3 under the terms of the plan as in ef4 fect immediately before such date.’’. 

5 (c) EFFECTIVE DATE AND RELATED RULES.— 

6 (1) IN GENERAL.—Except as provided in para7 graph (2), the amendments made by this section 

8 apply to plan amendments taking effect before, on, 

9 or after the date of the enactment of this Act, except 

10 that such amendments shall not apply to a plan 

11 amendment if the Internal Revenue Service has 

12 issued on or before June 23, 2005, a determination 

13 letter which has the effect of approving the plan 

14 amendment. 

15 (2) SPECIAL RULE.—Notwithstanding para16 graph (1), the amendments made by this section 

17 shall not apply in connection with any participant 

18 with respect to any plan amendment which has 

19 taken effect before 90 days after the date of the en20 actment of this Act if, as of the end of such 90-day 

21 period, the plan provides that the participant’s ac22 crued benefit shall at no time be less than the sum 

23 described in section 204(g)(6)(A) of the Employee 

24 Retirement Income Security Act of 1974 (as added 

25 by this section) or section 411(d)(6)(F)(i) of the In-
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1 ternal Revenue Code of 1986 (as added by this sec2 tion) in connection with such plan amendment.

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