Union Calendar No. 391

103D CONGRESS

2D SESSION H. R. 3396

[Report No. 103–632, Parts I and II]

A BILL

To amend the Employee Retirement Income Secuother purposes. plan termination insurance program, and for surance exposure, to protect the single-employer prove pension plan funding, to limit growth in in- of 1986 to provide security for workers, to im- rity Act of 1974 and the Internal Revenue Code

AUGUST 26, 1994

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 391

103D CONGRESS

2D SESSION H. R. 3396

[Report No. 103–632, Parts I and II]

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

Internal Revenue Code of 1986 to provide security for workers, to improve pension plan funding, to limit growth in insurance exposure, to

protect the single-employer plan termination insurance program, and

for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 28, 1993

Mr. FORD of Michigan (for himself and Mr. ROSTENKOWSKI) (both by request) introduced the following bill; which was referred jointly to the

Committees on Education and Labor and Ways and Means

JULY 19, 1994

Additional sponsors: Mr. PICKLE, Mr. HOUGHTON, and Mr. ZELIFF

JULY 29, 1994

Reported from the Committee on Ways and Means with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

AUGUST 26, 1994

Reported from the Committee on Education and Labor with an amendment,

committed to the Committee of the Whole House on the State of the

Union, and ordered to be printed

[Strike out all after the enacting clause and insert the part printed in bold face roman]

[For text of introduced bill, see copy of bill as introduced on October 28, 1993]

A BILL

To amend the Employee Retirement Income Security Act

of 1974 and the Internal Revenue Code of 1986 to

provide security for workers, to improve pension plan
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funding, to limit growth in insurance exposure, to protect

the single-employer plan termination insurance program,

and for other purposes.

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 AND TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Retirement Protection Act of 1994’’.

6 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

TITLE I—PENSION PLAN FUNDING

SUBTITLE A—AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

Sec. 101. Minimum funding requirements.

Sec. 102. Limitation on changes in current liability assumptions.

Sec. 103. Anticipation of bargained benefit increases.

Sec. 104. Modification of quarterly contribution requirement.

Sec. 105. Exceptions to excise tax on nondeductible contributions.

SUBTITLE B—AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME

SECURITY ACT OF 1974

Sec. 121. Minimum funding requirements.

Sec. 122. Limitation on changes in current liability assumptions.

Sec. 123. Anticipation of bargained benefit increases.

Sec. 124. Modification of quarterly contribution requirement.

TITLE II—AMENDMENTS RELATED TO TITLE IV OF THE EMPLOYEE

RETIREMENT INCOME SECURITY ACT OF 1974

Sec. 201. Reportable events.

Sec. 202. Alternative to involuntary termination.

Sec. 203. Certain information required to be furnished to PBGC.

Sec. 204. Liability upon liquidation of contributing sponsor or controlled group

member where plan remains ongoing.

Sec. 205. Enforcement of minimum funding requirements.

Sec. 206. Remedies for noncompliance with requirements for standard termination.

Sec. 207. Prohibition on benefit increases where plan sponsor is in bankruptcy.

Sec. 208. Substantial owner benefits.

Sec. 209. Phase-out of variable rate premium cap.
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TITLE III—PARTICIPANT SERVICES

Sec. 301. Disclosure to participants.

Sec. 302. Missing participants.

Sec. 303. Modification of maximum guarantee for disability benefits.

TITLE IV—MISCELLANEOUS AMENDMENTS

Sec. 401. ERISA citation.

Sec. 402. Definition of contributing sponsor.

Sec. 403. Distress termination criteria for banking institutions.

Sec. 404. Single sum distributions.

Sec. 405. Adjustments to lien for missed minimum funding contributions.

Sec. 406. Rounding rules for cost-of-living adjustments.

Sec. 407. Funding of restored plans.

Sec. 408. Study of funding status of Federal, State, and local government pension

plans.

TITLE V—EFFECTIVE DATES

Sec. 501. Effective dates.

1 TITLE I—PENSION PLAN

2 FUNDING

3 Subtitle A—Amendments to the

4 Internal Revenue Code of 1986

5 SEC. 101. MINIMUM FUNDING REQUIREMENTS.

6 (a) AMENDMENTS TO ADDITIONAL FUNDING REQUIRE7 MENTS FOR SINGLE-EMPLOYER PLANS.—

8 (1) LIMITATION OF ADDITIONAL FUNDING RE9 QUIREMENT TO PLANS HAVING A FUNDED CURRENT

10 LIABILITY PERCENTAGE OF LESS THAN 90 PERCENT.—

11 Paragraph (1) of section 412(l) of the Internal Reve12 nue Code of 1986 (relating to additional funding re13 quirements for plans which are not multiemployer

14 plans) is amended by striking ‘‘which has an un15 funded current liability’’ and inserting ‘‘which has a
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1 funded current liability percentage of less than 90

2 percent’’.

3 (2) RELATIONSHIP OF ADDITIONAL FUNDING RE4 QUIREMENT TO FUNDING STANDARD ACCOUNT

5 CHARGES AND CREDITS.—

6 (A) Clause (ii) of section 412(l)(1)(A) of

7 such Code is amended to read as follows:

8 ‘‘(ii) the sum of the charges for such

9 plan year under subsection (b)(2), reduced

10 by the sum of the credits for such plan year

11 under subparagraph (B) of subsection

12 (b)(3), plus’’.

13 (B) The last sentence in section 412(l)(1) of

14 such Code is amended to read as follows:

15 ‘‘Such increase shall not exceed the amount which,

16 after taking into account charges (other than the ad17 ditional charge under this subsection) and credits

18 under subsection (b), is necessary to increase the

19 funded current liability percentage (taking into ac20 count the expected increase in current liability due to

21 benefits accruing during the plan year) to 100 per22 cent.’’

23 (3) AMENDMENT TO DEFICIT REDUCTION CON24 TRIBUTION.—Paragraph (2) of section 412(l) of such

25 Code is amended—
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1 (A) by striking ‘‘plus’’ at the end of sub2 paragraph (A),

3 (B) by striking the period at the end of sub4 paragraph (B) and inserting ‘‘, plus’’; and

5 (C) by adding at the end the following new

6 subparagraph:

7 ‘‘(C) the expected increase in current liabil8 ity due to benefits accruing during the plan

9 year.’’

10 (4) INCREASE IN CURRENT LIABILITY DUE TO

11 CHANGE IN REQUIRED ASSUMPTIONS.—

12 (A) Paragraph (3) of section 412(l) of such

13 Code is amended by adding at the end the follow14 ing new subparagraph:

15 ‘‘(D) SPECIAL RULE FOR REQUIRED

16 CHANGES IN ACTUARIAL ASSUMPTIONS.—

17 ‘‘(i) IN GENERAL.—The unfunded old

18 liability amount with respect to any plan

19 for any plan year shall be increased by the

20 amount necessary to amortize the amount of

21 additional unfunded old liability under the

22 plan in equal annual installments over a

23 period of 12 plan years (beginning with the

24 first plan year beginning after December

25 31, 1994).
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1 ‘‘(ii) ADDITIONAL UNFUNDED OLD LI2 ABILITY.—For purposes of clause (i), the

3 term ‘additional unfunded old liability’

4 means the amount (if any) by which—

5 ‘‘(I) the current liability of the

6 plan as of the beginning of the first

7 plan year beginning after December

8 31, 1994, valued using the assumptions

9 required by paragraph (7)(C) as in ef10 fect for plan years beginning after De11 cember 31, 1994, exceeds

12 ‘‘(II) the current liability of the

13 plan as of the beginning of such first

14 plan year, valued using the same as15 sumptions used under subclause (I)

16 (other than the assumptions required

17 by paragraph (7)(C)), using the prior

18 interest rate, and using such mortality

19 assumptions as were used to determine

20 current liability for the first plan year

21 beginning after December 31, 1992.

22 ‘‘(iii) PRIOR INTEREST RATE.—For

23 purposes of clause (ii), the term ‘prior in24 terest rate’ means the rate of interest that is

25 the same percentage of the weighted average
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1 under subsection (b)(5)(B)(ii)(I) for the

2 first plan year beginning after December

3 31, 1994, as the rate of interest used by the

4 plan to determine current liability for the

5 first plan year beginning after December

6 31, 1992, is of the weighted average under

7 subsection (b)(5)(B)(ii)(I) for such first

8 plan year beginning after December 31,

9 1992.’’

10 (5) APPLICABLE PERCENTAGE FOR DETERMINING

11 UNFUNDED NEW LIABILITY AMOUNT.—Subparagraph

12 (C) of section 412(l)(4) of such Code is amended—

13 (A) by striking ‘‘.25’’ and inserting ‘‘.40’’,

14 and

15 (B) by striking ‘‘35’’ and inserting ‘‘60’’.

16 (6) UNPREDICTABLE CONTINGENT EVENT

17 AMOUNT.—

18 (A) Subparagraph (A) of section 412(l)(5)

19 of such Code is amended—

20 (i) by striking ‘‘greater of’’ and insert21 ing ‘‘greatest of’’ before clause (i);

22 (ii) by striking ‘‘or’’ at the end of

23 clause (i);

24 (iii) by striking the period at the end

25 of clause (ii) and inserting ‘‘, or’’; and
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1 (iv) by adding after clause (ii) the fol2 lowing new clause:

3 ‘‘(iii) the additional amount that

4 would be determined under paragraph

5 (4)(A) if the unpredictable contingent event

6 benefit liabilities were included in unfunded

7 new liability notwithstanding paragraph

8 (4)(B)(ii).’’

9 (B) Paragraph (5) of section 412(l) of such

10 Code is amended by adding at the end the follow11 ing new subparagraph:

12 ‘‘(E) LIMITATION.—The present value of the

13 amounts described in subparagraph (A) with re14 spect to any one event shall not exceed the unpre15 dictable contingent event benefit liabilities at16 tributable to that event.’’

17 (C) Clause (ii) of section 412(m)(4)(D) of

18 such Code is amended—

19 (i) by striking ‘‘greater of’’ and insert20 ing ‘‘greatest of’’ before subclause (I);

21 (ii) by striking ‘‘or’’ at the end of

22 subclause (I);

23 (iii) by striking the period at the end

24 of subclause (II) and inserting ‘‘, or’’; and
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1 (iv) by adding after subclause (II) the

2 following new clause:

3 ‘‘(III) 25 percent of the amount

4 determined under subsection

5 (l)(5)(A)(iii) for the plan year.’’

6 (7) REQUIRED INTEREST RATE AND MORTALITY

7 ASSUMPTIONS FOR DETERMINING CURRENT LIABIL8 ITY.—Subparagraph (C) of section 412(l)(7) of such

9 Code is amended to read as follows:

10 ‘‘(C) INTEREST RATE AND MORTALITY AS11 SUMPTIONS USED.—Effective for plan years be12 ginning after December 31, 1994—

13 ‘‘(i) the rate of interest used to deter14 mine current liability under this subsection

15 shall be the rate of interest used under sub16 section (b)(5), except that the highest rate in

17 the permissible range under subparagraph

18 (B)(ii) thereof shall not exceed 100 percent

19 of the weighted average referred to in such

20 subparagraph, and

21 ‘‘(ii) the mortality table used to deter22 mine current liability under this subsection

23 shall be the table prescribed by the Sec24 retary.
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1 The table prescribed under clause (ii) shall be

2 based on the prevailing commissioners’ standard

3 table (described in section 807(d)(5)(A)) used to

4 determine reserves for group annuity contracts

5 issued on the date as of which current liability

6 is determined (without regard to any other sub7 paragraph of section 807(d)(5)).’’

8 (8) TRANSITION RULE.—Section 412(l) of such

9 Code is amended by adding at the end the following

10 new paragraph:

11 ‘‘(9) PHASEIN OF INCREASES IN FUNDING RE12 QUIRED BY RETIREMENT PROTECTION ACT OF 1994.—

13 ‘‘(A) IN GENERAL.—For any applicable

14 plan year, at the election of the employer, the in15 crease under paragraph (1) shall not exceed the

16 greater of—

17 ‘‘(i) the increase that would be required

18 under paragraph (1) if the provisions of

19 this title as in effect for plan years begin20 ning before January 1, 1995, had remained

21 in effect, or

22 ‘‘(ii) the amount which, after taking

23 into account charges (other than the addi24 tional charge under this subsection) and

25 credits under subsection (b), is necessary to
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1 increase the funded current liability per2 centage (taking into account the expected

3 increase in current liability due to benefits

4 accruing during the plan year) for the ap5 plicable plan year to a percentage equal to

6 the sum of the initial funded current liabil7 ity percentage of the plan plus the applica8 ble number of percentage points for such ap9 plicable plan year.

10 ‘‘(B) APPLICABLE NUMBER OF PERCENTAGE

11 POINTS.—

12 ‘‘(i) INITIAL FUNDED CURRENT LIABIL13 ITY PERCENTAGE OF 75 PERCENT OR

14 LESS.—Except as provided in clause (ii),

15 for plans with an initial funded current li16 ability percentage of 75 percent or less, the

17 applicable number of percentage points for

18 the applicable plan year is:

‘‘In the case The applicable

of applicable number of

plan years percentage

beginning in: points is:

1995 .......................................................... 3

1996 .......................................................... 6

1997 .......................................................... 9

1998 .......................................................... 12

1999 .......................................................... 15

2000 .......................................................... 19

2001 .......................................................... 24.

19 ‘‘(ii) OTHER CASES.—In the case of a

20 plan to which this clause applies, the appli-
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1 cable number of percentage points for any

2 such applicable plan year is the sum of—

3 ‘‘(I) 2 percentage points;

4 ‘‘(II) the applicable number of

5 percentage points (if any) under this

6 clause for the preceding applicable

7 plan year;

8 ‘‘(III) the product of .10 multi9 plied by the excess (if any) of (a) 85

10 percentage points over (b) the sum of

11 the initial funded current liability per12 centage and the number determined

13 under subclause (II);

14 ‘‘(IV) for applicable plan years

15 beginning in 2000, 1 percentage point;

16 and

17 ‘‘(V) for applicable plan years be18 ginning in 2001, 2 percentage points.

19 ‘‘(iii) PLANS TO WHICH CLAUSE (ii)

20 APPLIES.—

21 ‘‘(I) IN GENERAL.—Clause (ii)

22 shall apply to a plan for an applicable

23 plan year if the initial funded current

24 liability percentage of such plan is

25 more than 75 percent.
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1 ‘‘(II) PLANS INITIALLY UNDER

2 CLAUSE (i).—In the case of a plan

3 which (but for this subclause) has an

4 initial funded current liability per5 centage of 75 percent or less, clause (ii)

6 (and not clause (i)) shall apply to such

7 plan with respect to applicable plan

8 years beginning after the first applica9 ble plan year for which the sum of the

10 initial funded current liability per11 centage and the applicable number of

12 percentage points (determined under

13 clause (i)) exceeds 75 percent. For pur14 poses of applying clause (ii) to such a

15 plan, the initial funded current liabil16 ity percentage of such plan shall be

17 treated as being the sum referred to in

18 the preceding sentence.

19 ‘‘(C) DEFINITIONS.—For purposes of this

20 paragraph—

21 ‘‘(i) The term ‘applicable plan year’

22 means a plan year beginning after Decem23 ber 31, 1994, and before January 1, 2002.

24 ‘‘(ii) The term ‘initial funded current

25 liability percentage’ means the funded cur-
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1 rent liability percentage as of the first day

2 of the first plan year beginning after De3 cember 31, 1994.’’

4 (9) LIQUIDITY REQUIREMENT.—

5 (A) Section 412(m) of such Code is amend6 ed by redesignating paragraph (5) as paragraph

7 (6) and by inserting after paragraph (4) the fol8 lowing new paragraph:

9 ‘‘(5) LIQUIDITY REQUIREMENT.—

10 ‘‘(A) IN GENERAL.—A plan to which this

11 paragraph applies shall be treated as failing to

12 pay the full amount of any required installment

13 to the extent that the value of the liquid assets

14 paid in such installment is less than the liquid15 ity shortfall (whether or not such liquidity short16 fall exceeds the amount of such installment re17 quired to be paid but for this paragraph).

18 ‘‘(B) PLANS TO WHICH PARAGRAPH AP19 PLIES.—This paragraph shall apply to a defined

20 benefit plan to which subsection (l) applies and

21 which—

22 ‘‘(i) is required to pay installments

23 under this subsection for a plan year, and

24 ‘‘(ii) has a liquidity shortfall for any

25 quarter during such plan year.
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1 ‘‘(C) PERIOD OF UNDERPAYMENT.—For

2 purposes of paragraph (1), any portion of an in3 stallment that is treated as not paid under sub4 paragraph (A) shall continue to be treated as

5 unpaid until the close of the quarter in which the

6 due date for such installment occurs.

7 ‘‘(D) LIMITATION ON INCREASE.—If the

8 amount of any required installment is increased

9 by reason of subparagraph (A), in no event shall

10 such increase exceed the amount which, when

11 added to prior installments for the plan year, is

12 necessary to increase the funded current liability

13 percentage (taking into account the expected in14 crease in current liability due to benefits accru15 ing during the plan year) to 100 percent.

16 ‘‘(E) DEFINITIONS.—For purposes of this

17 paragraph—

18 ‘‘(i) LIQUIDITY SHORTFALL.—The term

19 ‘liquidity shortfall’ means, with respect to

20 any required installment, an amount equal

21 to the excess (as of the last day of the quar22 ter for which such installment is made) of

23 the base amount with respect to such quar24 ter over the value (as of such last day) of

25 the plan’s liquid assets.
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1 ‘‘(ii) BASE AMOUNT.—

2 ‘‘(I) IN GENERAL.—The term ‘base

3 amount’ means, with respect to any

4 quarter, an amount equal to 3 times

5 the sum of the adjusted disbursements

6 from the plan for the 12 months ending

7 on the last day of such quarter.

8 ‘‘(II) SPECIAL RULE.—If the

9 amount determined under clause (i)

10 exceeds an amount equal to 2 times the

11 sum of the adjusted disbursements from

12 the plan for the 36 months ending on

13 the last day of the quarter and an en14 rolled actuary certifies to the Secretary

15 that such excess is the result of non16 recurring circumstances, the base

17 amount with respect to such quarter

18 shall be determined without regard to

19 amounts related to those nonrecurring

20 circumstances.

21 ‘‘(iii) DISBURSEMENTS FROM THE

22 PLAN.—The term ‘disbursements from the

23 plan’ means all disbursements from the

24 trust, including purchases of annuities,
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1 payments of single sums and other benefits,

2 and administrative expenses.

3 ‘‘(iv) ADJUSTED DISBURSEMENTS.—

4 The term ‘adjusted disbursements’ means

5 disbursements from the plan reduced by the

6 product of—

7 ‘‘(I) the plan’s funded current li8 ability percentage (as defined in sub9 section (l)(8)) for the plan year, and

10 ‘‘(II) the sum of the purchases of

11 annuities, payments of single sums,

12 and such other disbursements as the

13 Secretary shall provide in regulations.

14 ‘‘(v) LIQUID ASSETS.—The term ‘liq15 uid assets’ means cash, marketable securi16 ties and such other assets as specified by the

17 Secretary in regulations.

18 ‘‘(vi) QUARTER.—The term ‘quarter’

19 means, with respect to any required install20 ment, the 3-month period preceding the

21 month in which the due date for such in22 stallment occurs.

23 ‘‘(F) REGULATIONS.—The Secretary may

24 prescribe such regulations as are necessary to

25 carry out this paragraph.’’
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1 (B) EXCISE TAX ON UNPAID LIQUIDITY

2 SHORTFALL.—

3 (i) Subsection (e) of section 4971 of

4 such Code is amended by striking ‘‘(a) or

5 (b)’’ wherever it appears and replacing it

6 with ‘‘(a), (b) or (f)’’.

7 (ii) Section 4971 of such Code is

8 amended by redesignating subsection (f) as

9 subsection (g) and adding a new subsection

10 (f) to read as follows:

11 ‘‘(f) FAILURE TO PAY LIQUIDITY SHORTFALL.—

12 ‘‘(1) IN GENERAL.—In the case of a plan to

13 which section 412(m)(5) applies, there is hereby im14 posed a tax of 10 percent of the excess (if any) of—

15 ‘‘(A) the amount of the liquidity shortfall

16 for any quarter, over

17 ‘‘(B) the amount of such shortfall which is

18 paid by the required installment under section

19 412(m) for such quarter (but only if such install20 ment is paid on or before the due date for such

21 installment).

22 ‘‘(2) ADDITIONAL TAX.—If the plan has a liquid23 ity shortfall as of the close of any quarter and as of

24 the close of each of the following 4 quarters, there is

25 hereby imposed a tax equal to 100 percent of the
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1 amount on which tax was imposed by paragraph (1)

2 for such first quarter.

3 ‘‘(3) DEFINITIONS AND SPECIAL RULE.—

4 ‘‘(A) LIQUIDITY SHORTFALL; QUARTER.—

5 For purposes of this subsection, the terms ‘liquid6 ity shortfall’ and ‘quarter’ have the respective

7 meanings given such terms by section 412(m)(5).

8 ‘‘(B) SPECIAL RULE.—If the tax imposed by

9 paragraph (2) is paid with respect to any li10 quidity shortfall for any quarter, no further tax

11 shall be imposed by this subsection on such short12 fall for such quarter.’’

13 (C) TREATMENT OF FAILURE TO MAKE CER14 TAIN PAYMENTS IF PLAN HAS LIQUIDITY SHORT15 FALL.—Section 401(a) of such Code is amended

16 by adding at the end the following new para17 graph:

18 ‘‘(32) TREATMENT OF FAILURE TO MAKE CER19 TAIN PAYMENTS IF PLAN HAS LIQUIDITY SHORT20 FALL.—

21 ‘‘(A) IN GENERAL.—A trust forming part of

22 a pension plan to which section 412(m)(5) ap23 plies shall not be treated as failing to constitute

24 a qualified trust under this section merely be25 cause such plan ceases to make any payment de-
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1 scribed in subparagraph (B) during any period

2 that such plan has a liquidity shortfall (as de3 fined in section 412(m)(5)).

4 ‘‘(B) PAYMENTS DESCRIBED.—A payment

5 is described in this subparagraph if such pay6 ment is—

7 ‘‘(i) any payment, in excess of the

8 monthly amount paid under a single life

9 annuity (plus any social security supple10 ments described in the last sentence of sec11 tion 411(a)(9)), to a participant or bene12 ficiary whose annuity starting date (as de13 fined in section 417(f)(2)) occurs during the

14 period referred to in subparagraph (A),

15 ‘‘(ii) any payment for the purchase of

16 an irrevocable commitment from an insurer

17 to pay benefits, and

18 ‘‘(iii) any other payment specified by

19 the Secretary by regulations.

20 ‘‘(C) PERIOD OF SHORTFALL.—For pur21 poses of this paragraph, a plan has a liquidity

22 shortfall during the period that there is an

23 underpayment of an installment under section

24 412(m) by reason of paragraph (5)(A) thereof.’’
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1 (10) AMENDMENT TO DEFINITION OF FULL

2 FUNDING LIMITATION.—

3 (A) Subparagraph (A) of section 412(c)(7)

4 of such Code is amended—

5 (i) by inserting ‘‘(including the ex6 pected increase in current liability due to

7 benefits accruing during the plan year)’’

8 after ‘‘current liability’’ in clause (i), and

9 (ii) by adding at the end the following

10 flush sentences:

11 ‘‘In no event shall the excess described in the pre12 ceding sentence for any plan year be less than

13 the unfunded current liability (if any) of the

14 plan. For purposes of the preceding sentence, the

15 term ‘unfunded current liability’ has the mean16 ing given such term by subsection (l)(8) (deter17 mined without regard to subsection (l)(7)(D)).’’

18 (B) Subparagraph (B) of section 412(c)(7)

19 of such Code is amended to read as follows:

20 ‘‘(B) CURRENT LIABILITY.—For purposes of

21 subparagraph (D) and subclause (I) of subpara22 graph (A)(i), the term ‘current liability’ has the

23 meaning given such term by subsection (l)(7)

24 (without regard to subparagraphs (C) and (D)
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1 thereof) and using the rate of interest used under

2 subsection (b)(5)(B).’’

3 (b) EFFECTIVE DATE.—The amendments made by this

4 section shall apply to plan years beginning after December

5 31, 1994.

6 SEC. 102. LIMITATION ON CHANGES IN CURRENT LIABILITY

7 ASSUMPTIONS.

8 (a) IN GENERAL.—Paragraph (5) of section 412(c) of

9 the Internal Revenue Code of 1986 is amended—

10 (1) by striking ‘‘If the funding method’’ and in11 serting the following:

12 ‘‘(A) IN GENERAL.—If the funding method’’,

13 and

14 (2) by adding at the end the following new sub15 paragraph:

16 ‘‘(B) APPROVAL REQUIRED FOR CERTAIN

17 CHANGES IN ASSUMPTIONS BY CERTAIN SINGLE

18 EMPLOYER PLANS SUBJECT TO ADDITIONAL

19 FUNDING REQUIREMENT.—

20 ‘‘(i) IN GENERAL.—No actuarial as21 sumption (other than the assumptions de22 scribed in subsection (l)(7)(C)) used to de23 termine the current liability for a plan to

24 which this subparagraph applies may be
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1 changed without the approval of the Sec2 retary.

3 ‘‘(ii) PLANS TO WHICH SUBPARAGRAPH

4 APPLIES.—This subparagraph shall apply

5 to a plan only if—

6 ‘‘(I) subsection (l) applies to the

7 plan;

8 ‘‘(II) the employer (within the

9 meaning of section 412(c)(11) (without

10 regard to subparagraph (B) thereof))

11 maintaining such plan is described in

12 section 4043(b)(1) of the Employee Re13 tirement Income Security Act of 1974;

14 and

15 ‘‘(III) the change in assumptions

16 (determined after taking into account

17 any changes in interest rate and mor18 tality table) results in a decrease in the

19 unfunded current liability of the plan

20 for the current plan year that is

21 $50,000,000 or greater, or that is

22 $5,000,000 or greater and that is 5

23 percent or more of the current liability

24 of the plan before such change.’’

25 (b) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—The amendment made by this

2 section shall apply to changes in assumptions for

3 plan years beginning after October 28, 1993.

4 (2) CERTAIN CHANGES CEASE TO BE EFFEC5 TIVE.—In the case of changes in assumptions for plan

6 years beginning after December 31, 1992, and on or

7 before October 28, 1993, such changes shall cease to be

8 effective for plan years beginning after December 31,

9 1994, if—

10 (A) such change would have required the

11 approval of the Secretary of the Treasury had

12 such amendment applied to such change, and

13 (B) such change is not so approved.

14 SEC. 103. ANTICIPATION OF BARGAINED BENEFIT IN15 CREASES.

16 (a) IN GENERAL.—Section 412(c) of the Internal Reve17 nue Code of 1986 is amended by adding at the end the fol18 lowing new paragraph:

19 ‘‘(12) ANTICIPATION OF BENEFIT INCREASES EF20 FECTIVE IN THE FUTURE.—In determining projected

21 benefits, the funding method of a collectively bar22 gained plan described in section 413(a) (other than a

23 multiemployer plan) shall anticipate benefit increases

24 scheduled to take effect during the term of the collec25 tive bargaining agreement applicable to the plan.’’
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1 (b) EFFECTIVE DATE.—The amendment made by this

2 section shall apply to plan years beginning after December

3 31, 1994, with respect to collective bargaining agreements

4 in effect on or after January 1, 1995.

5 SEC. 104. MODIFICATION OF QUARTERLY CONTRIBUTION

6 REQUIREMENT.

7 (a) IN GENERAL.—Paragraph (1) of section 412(m) of

8 the Internal Revenue Code of 1986 is amended—

9 (1) by inserting ‘‘which has a funded current li10 ability percentage (as defined in subsection (l)(8)) for

11 the preceding plan year of less than 100 percent’’ be12 fore ‘‘fails’’, and

13 (2) by striking ‘‘any plan year’’ and inserting

14 ‘‘the plan year’’.

15 (b) EFFECTIVE DATE.—The amendment made by this

16 section shall apply to plan years beginning after the date

17 of enactment of this Act.

18 SEC. 105. EXCEPTIONS TO EXCISE TAX ON NONDEDUCTIBLE

19 CONTRIBUTIONS.

20 (a) IN GENERAL.—Section 4972(c) of the Internal

21 Revenue Code of 1986 is amended by adding at the end

22 the following new paragraph:

23 ‘‘(6) EXCEPTIONS.—In determining the amount

24 of nondeductible contributions for any taxable year,

25 there shall not be taken into account—
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1 ‘‘(A) contributions that would be deductible

2 under section 404(a)(1)(D) if the plan had more

3 than 100 participants if—

4 ‘‘(i) the plan is covered under section

5 4021 of the Employee Retirement Income

6 Security Act of 1974, and

7 ‘‘(ii) the plan is terminated under sec8 tion 4041(b) of such Act on or before the

9 last day of the taxable year, and

10 ‘‘(B) contributions described in section

11 401(m)(4)(A) or 402(g)(3)(A) which—

12 ‘‘(i) do not exceed 6 percent of com13 pensation (within the meaning of section

14 404(a)(7)(A)(i)) paid or accrued (during

15 the taxable year for which the contributions

16 were made) to beneficiaries under the plan,

17 and

18 ‘‘(ii) are not deductible when contrib19 uted solely because of section 404(a)(7).

20 Subparagraph (B) shall apply to a defined bene21 fit plan only if such plan is described in section

22 404(a)(1)(D). For purposes of subparagraph (B),

23 the deductible limits under section 404(a)(7)

24 shall first be applied to amounts contributed to
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1 a defined benefit plan and then to amounts de2 scribed in subparagraph (B).’’

3 (b) EFFECTIVE DATE.—

4 (1) SECTION 4972(c)(6)(A).—Section 4972(c)(6)(A)

5 of the Internal Revenue Code of 1986 (as added by

6 this section) shall apply to taxable years ending on

7 or after the date of enactment of this Act.

8 (2) SECTION 4972(c)(6)(B).—Section 4972(c)(6)(B)

9 of such Code (as added by this section) shall apply to

10 taxable years ending on or after December 31, 1992.

11 Subtitle B—Amendments to the Em12 ployee Retirement Income Secu13 rity Act of 1974

14 SEC. 121. MINIMUM FUNDING REQUIREMENTS.

15 (a) AMENDMENTS TO ADDITIONAL FUNDING REQUIRE16 MENTS FOR SINGLE-EMPLOYER PLANS.—

17 (1) LIMITATION OF ADDITIONAL FUNDING RE18 QUIREMENT TO PLANS HAVING A FUNDED CURRENT

19 LIABILITY PERCENTAGE OF LESS THAN 90 PERCENT.—

20 Paragraph (1) of section 302(d) of the Employee Re21 tirement Income Security Act of 1974 (29 U.S.C.

22 1082(d)) is amended by striking ‘‘which has an un23 funded current liability’’ and inserting ‘‘which has a

24 funded current liability percentage of less than 90

25 percent’’.
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1 (2) RELATIONSHIP OF ADDITIONAL FUNDING RE2 QUIREMENT TO FUNDING STANDARD ACCOUNT

3 CHARGES AND CREDITS.—

4 (A) Clause (ii) of section 302(d)(1)(A) of

5 such Act is amended to read as follows:

6 ‘‘(ii) the sum of the charges for such

7 plan year under subsection (b)(2), reduced

8 by the sum of the credits for such plan year

9 under subparagraph (B) of subsection

10 (b)(3), plus’’.

11 (B) The last sentence in section 302(d)(1) of

12 such Act is amended to read as follows:

13 ‘‘Such increase shall not exceed the amount which,

14 after taking into account charges (other than the ad15 ditional charge under this subsection) and credits

16 under subsection (b), is necessary to increase the

17 funded current liability percentage (taking into ac18 count the expected increase in current liability due to

19 benefits accruing during the plan year) to 100 per20 cent.’’

21 (3) AMENDMENT TO DEFICIT REDUCTION CON22 TRIBUTION.—Paragraph (2) of section 302(d) of such

23 Act is amended—

24 (A) by striking ‘‘plus’’ at the end of sub25 paragraph (A);
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1 (B) by striking the period at the end of sub2 paragraph (B) and inserting ‘‘, plus’’; and

3 (C) by adding at the end the following new

4 subparagraph:

5 ‘‘(C) the expected increase in current liabil6 ity due to benefits accruing during the plan

7 year.’’

8 (4) INCREASE IN CURRENT LIABILITY DUE TO

9 CHANGE IN REQUIRED ASSUMPTIONS.—

10 (A) Paragraph (3) of section 302(d) of such

11 Act is amended by adding at the end the follow12 ing new subparagraph:

13 ‘‘(D) SPECIAL RULE FOR REQUIRED

14 CHANGES IN ACTUARIAL ASSUMPTIONS.—

15 ‘‘(i) IN GENERAL.—The unfunded old

16 liability amount with respect to any plan

17 for any plan year shall be increased by the

18 amount necessary to amortize the amount of

19 additional unfunded old liability under the

20 plan in equal annual installments over a

21 period of 12 plan years (beginning with the

22 first plan year beginning after December

23 31, 1994).

24 ‘‘(ii) ADDITIONAL UNFUNDED OLD LI25 ABILITY.—For purposes of clause (i), the
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1 term ‘additional unfunded old liability’

2 means the amount (if any) by which—

3 ‘‘(I) the current liability of the

4 plan as of the beginning of the first

5 plan year beginning after December

6 31, 1994, valued using the assumptions

7 required by paragraph (7)(C) as in ef8 fect for plan years beginning after De9 cember 31, 1994, exceeds

10 ‘‘(II) the current liability of the

11 plan as of the beginning of such first

12 plan year, valued using the same as13 sumptions used under subclause (I)

14 (other than the assumptions required

15 by paragraph (7)(C)), using the prior

16 interest rate, and using such mortality

17 assumptions as were used to determine

18 current liability for the first plan year

19 beginning after December 31, 1992.

20 ‘‘(iii) PRIOR INTEREST RATE.—For

21 purposes of clause (ii), the term ‘prior in22 terest rate’ means the rate of interest that is

23 the same percentage of the weighted average

24 under subsection (b)(5)(B)(ii)(I) for the

25 first plan year beginning after December
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1 31, 1994, as the rate of interest used by the

2 plan to determine current liability for the

3 first plan year beginning after December

4 31, 1992, is of the weighted average under

5 subsection (b)(5)(B)(ii)(I) for such first

6 plan year beginning after December 31,

7 1992.’’

8 (5) APPLICABLE PERCENTAGE FOR DETERMINING

9 UNFUNDED NEW LIABILITY AMOUNT.—Subparagraph

10 (C) of section 302(d)(4) of such Act is amended—

11 (A) by striking ‘‘.25’’ and inserting ‘‘.40’’,

12 and

13 (B) by striking ‘‘35’’ and inserting ‘‘60’’.

14 (6) UNPREDICTABLE CONTINGENT EVENT

15 AMOUNT.—

16 (A) Subparagraph (A) of section 302(d)(5)

17 of such Act is amended—

18 (i) by striking ‘‘greater of’’ and insert19 ing ‘‘greatest of’’ before clause (i);

20 (ii) by striking ‘‘or’’ at the end of

21 clause (i);

22 (iii) by striking the period at the end

23 of clause (ii) and inserting ‘‘, or’’; and

24 (iv) by adding after clause (ii) the fol25 lowing new clause:
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1 ‘‘(iii) the additional amount that

2 would be determined under paragraph

3 (4)(A) if the unpredictable contingent event

4 benefit liabilities were included in unfunded

5 new liability notwithstanding paragraph

6 (4)(B)(ii).’’

7 (B) Paragraph (5) of section 302(d) of such

8 Act is amended by adding at the end the follow9 ing new subparagraph:

10 ‘‘(E) LIMITATION.—The present value of the

11 amounts described in subparagraph (A) with re12 spect to any one event shall not exceed the unpre13 dictable contingent event benefit liabilities at14 tributable to that event.’’

15 (C) Clause (ii) of section 302(e)(4)(D) of

16 such Act is amended—

17 (i) by striking ‘‘greater of’’ and insert18 ing ‘‘greatest of’’ before subclause (I);

19 (ii) by striking ‘‘or’’ at the end of

20 subclause (I);

21 (iii) by striking the period at the end

22 of subclause (II) and inserting ‘‘, or’’; and

23 (iv) by adding after subclause (II) the

24 following new clause:
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1 ‘‘(III) 25 percent of the amount

2 determined under subsection

3 (d)(5)(A)(iii) for the plan year.’’

4 (7) REQUIRED INTEREST RATE AND MORTALITY

5 ASSUMPTIONS FOR DETERMINING CURRENT LIABIL6 ITY.—Subparagraph (C) of section 302(d)(7) of such

7 Act is amended to read as follows:

8 ‘‘(C) INTEREST RATE AND MORTALITY AS9 SUMPTIONS USED.—Effective for plan years be10 ginning after December 31, 1994—

11 ‘‘(i) the rate of interest used to deter12 mine current liability under this subsection

13 shall be the rate of interest used under sub14 section (b)(5), except that the highest rate in

15 the permissible range under subparagraph

16 (B)(ii) thereof shall not exceed 100 percent

17 of the weighted average referred to in such

18 subparagraph, and

19 ‘‘(ii) the mortality table used to deter20 mine current liability under this subsection

21 shall be the table prescribed by the Sec22 retary of the Treasury.

23 The table prescribed under clause (ii) shall be

24 based on the prevailing commissioners’ standard

25 table (described in section 807(d)(5)(A) of the In-
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1 ternal Revenue Code of 1986) used to determine

2 reserves for group annuity contracts issued on

3 the date as of which current liability is deter4 mined (without regard to any other subpara5 graph of section 807(d)(5) of such Code).’’

6 (8) TRANSITION RULE.—Section 302(d) of such

7 Act is amended by adding at the end the following

8 new paragraph:

9 ‘‘(9) PHASEIN OF INCREASES IN FUNDING RE10 QUIRED BY RETIREMENT PROTECTION ACT OF 1994.—

11 ‘‘(A) IN GENERAL.—For any applicable

12 plan year, at the election of the employer, the in13 crease under paragraph (1) shall not exceed the

14 greater of—

15 ‘‘(i) the increase that would be required

16 under paragraph (1) if the provisions of

17 this title as in effect for plan years begin18 ning before January 1, 1995, had remained

19 in effect, or

20 ‘‘(ii) the amount which, after taking

21 into account charges (other than the addi22 tional charge under this subsection) and

23 credits under subsection (b), is necessary to

24 increase the funded current liability per25 centage (taking into account the expected
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1 increase in current liability due to benefits

2 accruing during the plan year) for the ap3 plicable plan year to a percentage equal to

4 the sum of the initial funded current liabil5 ity percentage of the plan plus the applica6 ble number of percentage points for such ap7 plicable plan year.

8 ‘‘(B) APPLICABLE NUMBER OF PERCENTAGE

9 POINTS.—

10 ‘‘(i) INITIAL FUNDED CURRENT LIABIL11 ITY PERCENTAGE OF 75 PERCENT OR

12 LESS.—Except as provided in clause (ii),

13 for plans with an initial funded current li14 ability percentage of 75 percent or less, the

15 applicable number of percentage points for

16 the applicable plan year is:

‘‘In the case The applicable

of applicable number of

plan years percentage

beginning in: points is:

1995 .......................................................... 3

1996 .......................................................... 6

1997 .......................................................... 9

1998 .......................................................... 12

1999 .......................................................... 15

2000 .......................................................... 19

2001 .......................................................... 24.

17 ‘‘(ii) OTHER CASES.—In the case of a plan

18 to which this clause applies, the applicable num19 ber of percentage points for any such applicable

20 plan year is the sum of—
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1 ‘‘(I) 2 percentage points;

2 ‘‘(II) the applicable number of

3 percentage points (if any) under this

4 clause for the preceding applicable

5 plan year;

6 ‘‘(III) the product of .10 multi7 plied by the excess (if any) of (a) 85

8 percentage points over (b) the sum of

9 the initial funded current liability per10 centage and the number determined

11 under subclause (II);

12 ‘‘(IV) for applicable plan years

13 beginning in 2000, 1 percentage point;

14 and

15 ‘‘(V) for applicable plan years be16 ginning in 2001, 2 percentage points.

17 ‘‘(iii) PLANS TO WHICH CLAUSE (ii)

18 APPLIES.—

19 ‘‘(I) IN GENERAL.—Clause (ii)

20 shall apply to a plan for an applicable

21 plan year if the initial funded current

22 liability percentage of such plan is

23 more than 75 percent.

24 ‘‘(II) PLANS INITIALLY UNDER

25 CLAUSE (i).—In the case of a plan
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1 which (but for this subclause) has an

2 initial funded current liability per3 centage of 75 percent or less, clause (ii)

4 (and not clause (i)) shall apply to such

5 plan with respect to applicable plan

6 years beginning after the first applica7 ble plan year for which the sum of the

8 initial funded current liability per9 centage and the applicable number of

10 percentage points (determined under

11 clause (i)) exceeds 75 percent. For pur12 poses of applying clause (ii) to such a

13 plan, the initial funded current liabil14 ity percentage of such plan shall be

15 treated as being the sum referred to in

16 the preceding sentence.

17 ‘‘(C) DEFINITIONS.—For purposes of this

18 paragraph—

19 ‘‘(i) The term ‘applicable plan year’

20 means a plan year beginning after Decem21 ber 31, 1994, and before January 1, 2002.

22 ‘‘(ii) The term ‘initial funded current

23 liability percentage’ means the funded cur24 rent liability percentage as of the first day
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1 of the first plan year beginning after De2 cember 31, 1994.’’

3 (9) LIQUIDITY REQUIREMENT.—

4 (A) Section 302(e) of such Act is amended

5 by redesignating paragraph (5) as paragraph

6 (6) and by inserting after paragraph (4) the fol7 lowing new paragraph:

8 ‘‘(5) LIQUIDITY REQUIREMENT.—

9 ‘‘(A) IN GENERAL.—A plan to which this

10 paragraph applies shall be treated as failing to

11 pay the full amount of any required installment

12 to the extent that the value of the liquid assets

13 paid in such installment is less than the liquid14 ity shortfall (whether or not such liquidity short15 fall exceeds the amount of such installment re16 quired to be paid but for this paragraph).

17 ‘‘(B) PLANS TO WHICH PARAGRAPH AP18 PLIES.—This paragraph shall apply to a defined

19 benefit plan to which subsection (d) applies and

20 which—

21 ‘‘(i) is required to pay installments

22 under this subsection for a plan year, and

23 ‘‘(ii) has a liquidity shortfall for any

24 quarter during such plan year.
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1 ‘‘(C) PERIOD OF UNDERPAYMENT.—For

2 purposes of paragraph (1), any portion of an in3 stallment that is treated as not paid under sub4 paragraph (A) shall continue to be treated as

5 unpaid until the close of the quarter in which the

6 due date for such installment occurs.

7 ‘‘(D) LIMITATION ON INCREASE.—If the

8 amount of any required installment is increased

9 by reason of subparagraph (A), in no event shall

10 such increase exceed the amount which, when

11 added to prior installments for the plan year, is

12 necessary to increase the funded current liability

13 percentage (taking into account the expected in14 crease in current liability due to benefits accru15 ing during the plan year) to 100 percent.

16 ‘‘(E) DEFINITIONS.—For purposes of this

17 paragraph—

18 ‘‘(i) LIQUIDITY SHORTFALL.—The term

19 ‘liquidity shortfall’ means, with respect to

20 any required installment, an amount equal

21 to the excess (as of the last day of the quar22 ter for which such installment is made) of

23 the base amount with respect to such quar24 ter over the value (as of such last day) of

25 the plan’s liquid assets.
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1 ‘‘(ii) BASE AMOUNT.—

2 ‘‘(I) IN GENERAL.—The term ‘base

3 amount’ means, with respect to any

4 quarter, an amount equal to 3 times

5 the sum of the adjusted disbursements

6 from the plan for the 12 months ending

7 on the last day of such quarter.

8 ‘‘(II) SPECIAL RULE.—If the

9 amount determined under clause (i)

10 exceeds an amount equal to 2 times the

11 sum of the adjusted disbursements from

12 the plan for the 36 months ending on

13 the last day of the quarter and an en14 rolled actuary certifies to the Secretary

15 of the Treasury that such excess is the

16 result of nonrecurring circumstances,

17 the base amount with respect to such

18 quarter shall be determined without re19 gard to amounts related to those non20 recurring circumstances.

21 ‘‘(iii) DISBURSEMENTS FROM THE

22 PLAN.—The term ‘disbursements from the

23 plan’ means all disbursements from the

24 trust, including purchases of annuities,
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1 payments of single sums and other benefits,

2 and administrative expenses.

3 ‘‘(iv) ADJUSTED DISBURSEMENTS.—

4 The term ‘adjusted disbursements’ means

5 disbursements from the plan reduced by the

6 product of—

7 ‘‘(I) the plan’s funded current li8 ability percentage (as defined in sub9 section (d)(8)) for the plan year, and

10 ‘‘(II) the sum of the purchases of

11 annuities, payments of single sums,

12 and such other disbursements as the

13 Secretary of the Treasury shall provide

14 in regulations.

15 ‘‘(v) LIQUID ASSETS.—The term ‘liq16 uid assets’ means cash, marketable securi17 ties and such other assets as specified by the

18 Secretary of the Treasury in regulations.

19 ‘‘(vi) QUARTER.—The term ‘quarter’

20 means, with respect to any required install21 ment, the 3-month period preceding the

22 month in which the due date for such in23 stallment occurs.
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1 ‘‘(F) REGULATIONS.—The Secretary of the

2 Treasury may prescribe such regulations as are

3 necessary to carry out this paragraph.’’

4 (B) LIMITATION ON DISTRIBUTIONS OTHER

5 THAN LIFE ANNUITIES PAID BY THE PLAN.—

6 (i) Section 204 of the Employee Retire7 ment Income Security Act of 1974 (29

8 U.S.C. 1054) is amended by redesignating

9 subsection (i) as (j) and inserting a new

10 subsection (i) to read as follows:

11 ‘‘(i) LIMITATION ON DISTRIBUTIONS OTHER THAN

12 LIFE ANNUITIES PAID BY THE PLAN.—

13 ‘‘(1) IN GENERAL.—Notwithstanding any other

14 provision of this Part, the fiduciary of a pension plan

15 that is subject to the additional funding requirements

16 of section 302(d) shall not permit a prohibited pay17 ment to be made from a plan during a period in

18 which such plan has a liquidity shortfall (as defined

19 in section 302(e)(5)).

20 ‘‘(2) PROHIBITED PAYMENT.—For purposes of

21 paragraph (1), the term ‘prohibited payment’

22 means—

23 ‘‘(A) any payment, in excess of the monthly

24 amount paid under a single life annuity (plus

25 any social security supplements described in the
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1 last sentence of section 204(b)(1)(G)), to a par2 ticipant or beneficiary whose annuity starting

3 date (as defined in section 205(h)(2)), that oc4 curs during the period referred to in paragraph

5 (1),

6 ‘‘(B) any payment for the purchase of an

7 irrevocable commitment from an insurer to pay

8 benefits, and

9 ‘‘(C) any other payment specified by the

10 Secretary of the Treasury by regulations.

11 ‘‘(3) PERIOD OF SHORTFALL.—For purposes of

12 this subsection, a plan has a liquidity shortfall dur13 ing the period that there is an underpayment of an

14 installment under section 302(e) by reason of para15 graph (5)(A) thereof.

16 ‘‘(4) COORDINATION WITH OTHER PROVISIONS.—

17 Compliance with this subsection shall not constitute a

18 violation of any other provision of this Act.’’

19 (ii) Section 502 of such Act is amended

20 by adding at the end thereof a new sub21 section (m) to read as follows:

22 ‘‘(m) In the case of a distribution to a pension plan

23 participant or beneficiary in violation of section 204(i) by

24 a plan fiduciary, the Secretary shall assess a penalty

25 against such fiduciary in an amount equal to the value of
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1 the distribution. Such penalty shall not exceed $10,000 for

2 each such distribution.’’

3 (10) AMENDMENT TO DEFINITION OF FULL

4 FUNDING LIMITATION.—

5 (A) Subparagraph (A) of section 302(c)(7)

6 of such Act is amended—

7 (i) by inserting ‘‘(including the ex8 pected increase in current liability due to

9 benefits accruing during the plan year)’’

10 after ‘‘current liability’’ in clause (i), and

11 (ii) by adding at the end the following

12 flush sentences:

13 ‘‘In no event shall the excess described in the pre14 ceding sentence for any plan year be less than

15 the unfunded current liability (if any) of the

16 plan. For purposes of the preceding sentence, the

17 term ‘unfunded current liability’ has the mean18 ing given such term by subsection (d)(8) (deter19 mined without regard to subsection (d)(7)(D)).’’

20 (B) Subparagraph (B) of section 302(c)(7)

21 of such Act is amended to read as follows:

22 ‘‘(B) CURRENT LIABILITY.—For purposes of

23 subparagraph (D) and subclause (I) of subpara24 graph (A)(i), the term ‘current liability’ has the

25 meaning given such term by subsection (d)(7)
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1 (without regard to subparagraphs (C) and (D)

2 thereof) and using the rate of interest used under

3 subsection (b)(5)(B).’’

4 (b) EFFECTIVE DATE.—The amendments made by this

5 section shall apply to plan years beginning after December

6 31, 1994.

7 SEC. 122. LIMITATION ON CHANGES IN CURRENT LIABILITY

8 ASSUMPTIONS.

9 (a) Paragraph (5) of section 302(c) of the Employee

10 Retirement Income Security Act of 1974 (29 U.S.C.

11 1082(c)(5)) is amended—

12 (1) by striking ‘‘If the funding method’’ and in13 serting the following:

14 ‘‘(A) IN GENERAL.—If the funding method’’,

15 and

16 (2) by adding at the end the following new sub17 paragraph:

18 ‘‘(B) APPROVAL REQUIRED FOR CERTAIN

19 CHANGES IN ASSUMPTIONS BY CERTAIN SINGLE

20 EMPLOYER PLANS SUBJECT TO ADDITIONAL

21 FUNDING REQUIREMENT.—

22 ‘‘(i) IN GENERAL.—No actuarial as23 sumption (other than the assumptions de24 scribed in subsection (d)(7)(C)) used to de25 termine the current liability for a plan to
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1 which this subparagraph applies may be

2 changed without the approval of the Sec3 retary of the Treasury.

4 ‘‘(ii) PLANS TO WHICH SUBPARAGRAPH

5 APPLIES.—This subparagraph shall apply

6 to a plan only if—

7 ‘‘(I) subsection (d) applies to the

8 plan;

9 ‘‘(II) the employer (within the

10 meaning of section 302(c)(11) (without

11 regard to subparagraph (B) thereof))

12 maintaining such plan is described in

13 section 4043(b)(1); and

14 ‘‘(III) the change in assumptions

15 (determined after taking into account

16 any changes in interest rate and mor17 tality table) results in a decrease in the

18 unfunded current liability of the plan

19 for the current plan year that is

20 $50,000,000 or greater, or that is

21 $5,000,000 or greater and that is 5

22 percent or more of the current liability

23 of the plan before such change.’’

24 (b) EFFECTIVE DATE.—
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1 (1) IN GENERAL.—The amendment made by this

2 section shall apply to changes in assumptions for

3 plan years beginning after October 28, 1993.

4 (2) CERTAIN CHANGES CEASE TO BE EFFEC5 TIVE.—In the case of changes in assumptions for plan

6 years beginning after December 31, 1992, and on or

7 before October 28, 1993, such changes shall cease to be

8 effective for plan years beginning after December 31,

9 1994, if—

10 (A) such change would have required the

11 approval of the Secretary of the Treasury had

12 such amendment applied to such change, and

13 (B) such change is not so approved.

14 SEC. 123. ANTICIPATION OF BARGAINED BENEFIT IN15 CREASES.

16 (a) IN GENERAL.—Section 302(c) of the Employee Re17 tirement Income Security Act of 1974 (29 U.S.C. 1082(c))

18 is amended by adding at the end the following new para19 graph:

20 ‘‘(12) ANTICIPATION OF BENEFIT INCREASES EF21 FECTIVE IN THE FUTURE.—In determining projected

22 benefits, the funding method of a collectively bar23 gained plan described in section 413(a) of the Inter24 nal Revenue Code of 1986 (other than a multiem25 ployer plan) shall anticipate benefit increases sched-
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1 uled to take effect during the term of the collective

2 bargaining agreement applicable to the plan.’’

3 (b) EFFECTIVE DATE.—The amendments made by this

4 section shall apply to plan years beginning after December

5 31, 1994 with respect to collective bargaining agreements

6 in effect on or after January 1, 1995.

7 SEC. 124. MODIFICATION OF QUARTERLY CONTRIBUTION

8 REQUIREMENT.

9 (a) IN GENERAL.—Paragraph (1) of section 302(e) of

10 the Employee Retirement Income Security Act of 1974 (29

11 U.S.C. 1082(e)) is amended—

12 (1) by inserting ‘‘which has a funded current li13 ability percentage (as defined in subsection (d)(8)) for

14 the preceding plan year of less than 100 percent’’ be15 fore ‘‘fails’’, and

16 (2) by striking ‘‘any plan year’’ and inserting

17 ‘‘the plan year’’.

18 (b) EFFECTIVE DATE.—The amendment made by this

19 section shall apply to plan years beginning after the date

20 of enactment of this Act.
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1 TITLE II—AMENDMENTS RELAT2 ED TO TITLE IV OF THE EM3 PLOYEE RETIREMENT IN4 COME SECURITY ACT OF 1974

5 SEC. 201. REPORTABLE EVENTS.

6 (a) RESPONSIBILITY FOR REPORTABLE EVENTS RE7 PORTING.—Section 4043(a) of the Employee Retirement In8 come Security Act of 1974 (29 U.S.C. 1343(a)) is amend9 ed—

10 (1) in the first sentence, by inserting ‘‘or the con11 tributing sponsor’’ before ‘‘knows or has reason to

12 know’’;

13 (2) in the first sentence, by inserting ‘‘, unless a

14 notice otherwise required under this subsection has al15 ready been provided with respect to such event’’ before

16 the period at the end; and

17 (3) by striking the last sentence.

18 (b) NOTIFICATION THAT EVENT IS ABOUT TO

19 OCCUR.—Section 4043 of such Act is amended by redesig20 nating subsections (b), (c), and (d) as (c), (d), and (e), re21 spectively, and by inserting after subsection (a) the follow22 ing new subsection:

23 ‘‘(b)(1) The requirements of this subsection shall be ap24 plicable to a contributing sponsor only if the aggregate un25 funded vested benefits at the close of the preceding plan year
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1 (as determined under section 4006(a)(3)(E)(iii)) of plans

2 maintained by such sponsor and the members of such spon3 sor’s controlled group that are covered by this title (taking

4 into account only those plans with unfunded vested benefits)

5 exceed $50,000,000.

6 ‘‘(2) No later than 30 days prior to the effective date

7 of an event described in paragraph (9), (10), (11), (12),

8 or (13) of subsection (c), a contributing sponsor to which

9 the requirements of this subsection apply shall notify the

10 corporation that the event is about to occur.

11 ‘‘(3) The corporation may waive the requirement of

12 this subsection with respect to any or all reportable events

13 with respect to any contributing sponsor.’’

14 (c) NEW REPORTABLE EVENTS.—Subsection (c) of sec15 tion 4043 of such Act (as redesignated by subsection (b))

16 is amended—

17 (1) by striking the ‘‘or’’ at the end of paragraph

18 (8);

19 (2) by striking paragraph (9); and

20 (3) by inserting after paragraph (8) the follow21 ing new paragraphs:

22 ‘‘(9) when, as a result of an event, a person

23 ceases to be a member of the controlled group;

24 ‘‘(10) when a contributing sponsor or a member

25 of a contributing sponsor’s controlled group liquidates
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1 in a case under title 11, United States Code, or under

2 any similar Federal law or law of a State or political

3 subdivision of a State;

4 ‘‘(11) when a contributing sponsor or a member

5 of a contributing sponsor’s controlled group declares

6 an extraordinary dividend (as defined in section

7 1059(c) of the Internal Revenue Code of 1986) or re8 deems, in any 12-month period, an aggregate of 10

9 percent or more of the total combined voting power of

10 all classes of stock entitled to vote, or an aggregate of

11 10 percent of more of the total value of shares of all

12 classes of stock, of a contributing sponsor and all

13 members of its controlled group;

14 ‘‘(12) when, in any 12-month period, an aggre15 gate of 3 percent or more of the benefit liabilities of

16 a plan covered by this title and maintained by a con17 tributing sponsor or a member of its controlled group

18 are transferred to a person that is not a member of

19 the controlled group or to a plan or plans maintained

20 by a person or persons that are not such a contribut21 ing sponsor or a member of its controlled group; or

22 ‘‘(13) when any other event occurs that may be

23 indicative of a need to terminate the plan and that

24 is prescribed by the corporation in regulations.’’
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1 (d) DISCLOSURE EXEMPTION.—Section 4043 of such

2 Act is amended by adding at the end the following new sub3 section:

4 ‘‘(f) Any information or documentary material sub5 mitted to the corporation pursuant to subsection (c) or sub6 section 4050(c)(2) shall be exempt from disclosure under

7 section 552 of title 5, United States Code, and no such in8 formation or documentary material may be made public,

9 except as may be relevant to any administrative or judicial

10 action or proceeding. Nothing in this section is intended

11 to prevent disclosure to either body of Congress or to any

12 duly authorized committee or subcommittee of the Con13 gress.’’

14 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

15 (1) Subsection (a) of section 4043 of such Act,

16 and subsections (d) and (e) of such section 4043 (as

17 redesignated by subsection (b)) are amended by strik18 ing ‘‘subsection (b)’’ each place it appears and insert19 ing ‘‘subsection (c)’’.

20 (2) Section 4042(a)(3) of such Act is amended by

21 striking ‘‘4043(b)(7)’’ and inserting ‘‘4043(c)(7)’’.

22 (f) EFFECTIVE DATE.—The amendments made by this

23 section shall be effective for events occurring 60 days or

24 more after the date of enactment of this Act.
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1 SEC. 202. ALTERNATIVE TO INVOLUNTARY TERMINATION.

2 (a) IN GENERAL.—Subtitle C of title IV of the Em3 ployee Retirement Income Security Act of 1974 (29 U.S.C.

4 1341 et seq.) is amended by adding at the end the following

5 new section:

6 ‘‘SEC. 4050. JUDICIAL RELIEF OTHER THAN INVOLUNTARY

7 TERMINATION.

8 ‘‘(a) INSTITUTION OF PROCEEDINGS.—

9 ‘‘(1) IN GENERAL.—Whenever the corporation de10 termines (without regard to the potential availability

11 of relief under this section) that, upon the occurrence

12 of an event described in paragraph (9), (10), (11),

13 (12), or (13) of section 4043(c), the possible long-run

14 loss of the corporation with respect to a plan may

15 reasonably be expected to increase unreasonably if the

16 plan is not terminated, the corporation may, in its

17 discretion, institute proceedings under this section as

18 an alternative to instituting proceedings under sec19 tion 4042 to terminate the plan.

20 ‘‘(2) LIMITATION.—In the case of an event de21 scribed in paragraph (9) or (13) of section 4043(c),

22 this section shall apply only if, immediately after the

23 effective date of the event, the total revenues, the total

24 operating income, or the total assets of a contributing

25 sponsor and all members of its controlled group would

26 be less than 90 percent of the total revenues, the total
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1 operating income, or the total assets, respectively, of

2 a contributing sponsor and all members of its con3 trolled group immediately before the effective date of

4 the event. For purposes of this paragraph, all events

5 occurring in any 12-month period shall be treated as

6 a single event.

7 ‘‘(b) Whenever the corporation makes a determination

8 under subsection (a), it may, upon notice to a contributing

9 sponsor, apply to the appropriate United States district

10 court for such legal or equitable relief as the corporation

11 deems appropriate and consistent with its duties under this

12 title. The court shall consider the interests of both the par13 ticipants and the corporation, and shall grant such relief,

14 if any, as it determines is necessary to protect those inter15 ests without interfering unreasonably with the business of

16 the contributing sponsor or members of its controlled group.

17 ‘‘(c)(1) In any case in which the corporation is pro18 vided with a notice required by subsection 4043(b) within

19 the time specified in that subsection, the corporation may

20 bring an action under this section no later than 30 days

21 after the date such notice is received. Notwithstanding the

22 preceding sentence, the corporation may, no later than 30

23 days after the date such notice is received, require the sub24 mission of additional information or documentary mate25 rial, in which case an action under this section may be
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1 brought no later than 20 days after the corporation receives

2 all the information and documentary material it had re3 quired.

4 ‘‘(2) A person who has provided a notice as described

5 in paragraph (1) may elect, upon further notice to the cor6 poration, to proceed with an event prior to the expiration

7 of the time periods described in paragraph (1). In the case

8 of such an election, an action under this section may be

9 brought at any time within the period specified in sub10 section 4003(e)(6).

11 ‘‘(3) In any case in which the corporation is not pro12 vided with a notice required by subsection (b) of section

13 4043 by the time specified in that subsection, in any case

14 in which a person fails or refuses to provide the additional

15 information or documentary material required by the cor16 poration under paragraph (1), or in any case in which a

17 person proceeds with an event without providing the cor18 poration with the further notice required under paragraph

19 (2) with respect to such event, an action under this section

20 may be brought at any time within the time period speci21 fied in subsection 4003(e)(6).

22 ‘‘(4) Except as provided in paragraph (1), (2), or (3),

23 an action under this section may not be brought after the

24 effective date of the event giving rise to the transaction.
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1 ‘‘(5) For purposes of applying subsection 4003(e)(6)

2 to paragraphs (2) and (3), a cause of action shall be deemed

3 to arise on the effective date of the event.

4 ‘‘(d) Nothing in this section shall limit the authority

5 of the corporation to initiate proceedings to terminate a

6 plan under section 4042, or to initiate proceedings or to

7 seek relief under any other provision of this title or any

8 other law.’’

9 (b) CONFORMING AMENDMENT.—Section 4042(a) of

10 such Act (29 U.S.C. 1342(a)) is amended by inserting, after

11 ‘‘determines’’ the first place it appears, the following:

12 ‘‘(without regard to the potential availability of relief under

13 section 4050)’’.

14 (c) CLERICAL AMENDMENT.—The table of contents

15 contained in section 1 of such Act is amended by inserting

16 after the item relating to section 4049 the following new

17 item:

‘‘Sec. 4050. Judicial relief other than involuntary termination.’’

18 (d) EFFECTIVE DATE.—The amendments made by this

19 section shall be effective for events occurring 60 days or

20 more after the date of the enactment of this Act.

21 SEC. 203. CERTAIN INFORMATION REQUIRED TO BE FUR22 NISHED TO PBGC.

23 (a) GENERAL RULE.—Subtitle A of title IV of the Em24 ployee Retirement Income Security Act of 1974 (29 U.S.C.
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1 1301 et seq.) is amended by adding at the end the following

2 new section:

3 ‘‘SEC. 4010. AUTHORITY TO REQUIRE CERTAIN INFORMA4 TION.

5 ‘‘(a) INFORMATION REQUIRED.—Each person de6 scribed in subsection (b) shall provide the corporation an7 nually, on or before a date specified by the corporation in

8 regulations, with—

9 ‘‘(1) such records, documents, or other informa10 tion that the corporation specifies in regulations as

11 necessary to determine the liabilities and assets of

12 plans covered by this title; and

13 ‘‘(2) copies of such person’s audited (or, if un14 available, unaudited) financial statements, and such

15 other financial information as the corporation may

16 prescribe in regulations.

17 ‘‘(b) PERSONS REQUIRED TO PROVIDE INFORMA18 TION.—The persons covered by subsection (a) are each con19 tributing sponsor, and each member of a contributing spon20 sor’s controlled group, of a single-employer plan covered by

21 this title, if—

22 ‘‘(1) the aggregate unfunded vested benefits at the

23 end of the preceding plan year (as determined under

24 section 4006(a)(3)(E)(iii)) of plans maintained by

25 the contributing sponsor and the members of its con-
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1 trolled group exceed $50,000,000 (taking into account

2 only those plans of the contributing sponsor and its

3 controlled group with unfunded vested benefits);

4 ‘‘(2) the conditions for imposition of a lien de5 scribed in section 302(f)(1)(A) and (B) of this Act or

6 section 412(n)(1)(A) and (B) of the Internal Revenue

7 Code of 1986 have been met with respect to any plan

8 maintained by the contributing sponsor or any mem9 ber of its controlled group; or

10 ‘‘(3) minimum funding waivers in excess of

11 $1,000,000 have been granted with respect to any

12 plan maintained by the contributing sponsor or any

13 member of its controlled group, and any portion

14 thereof is still outstanding.

15 ‘‘(c) INFORMATION EXEMPT FROM DISCLOSURE RE16 QUIREMENTS.—Any information or documentary material

17 submitted to the corporation pursuant to this section shall

18 be exempt from disclosure under section 552 of title 5,

19 United States Code, and no such information or documen20 tary material may be made public, except as may be rel21 evant to any administrative or judicial action or proceed22 ing. Nothing in this section is intended to prevent disclosure

23 to either body of Congress or to any duly authorized com24 mittee or subcommittee of the Congress.’’
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1 (b) CLERICAL AMENDMENT.—The table of contents

2 contained in section 1 of such Act is amended by inserting

3 after the item relating to section 4009 the following new

4 item:

‘‘Sec. 4010. Authority to require certain information.’’

5 (c) EFFECTIVE DATE.—The amendments made by this

6 section shall be effective on the date of enactment of this

7 Act.

8 SEC. 204. LIABILITY UPON LIQUIDATION OF CONTRIBUTING

9 SPONSOR OR CONTROLLED GROUP MEMBER

10 WHERE PLAN REMAINS ONGOING.

11 (a) IN GENERAL.—Section 4062 of the Employee Re12 tirement Income Security Act of 1974 (29 U.S.C. 1362) is

13 amended by adding at the end the following new subsection:

14 ‘‘(f) LIABILITY ON LIQUIDATION OF CONTRIBUTING

15 SPONSOR OR CONTROLLED GROUP MEMBER.—

16 ‘‘(1) IN GENERAL.—In any case in which all or

17 substantially all of the assets of a person who is a

18 contributing sponsor of a single-employer plan, or a

19 member of a controlled group of a contributing spon20 sor of a single-employer plan, are liquidated in a case

21 under title 11, United States Code, or under any

22 similar Federal law or law of a State or political sub23 division of a State, but the plan is not terminated,

24 such person shall be deemed liable under subsection

25 (b) as if the plan had terminated under section
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1 4041(c) in the course of such liquidation and as if the

2 termination date were the date determined by the cor3 poration as the date on which the liquidation was

4 initiated.

5 ‘‘(2) LIMITED JOINT AND SEVERAL LIABILITY.—

6 The liability under this subsection shall be joint and

7 several only among the members of the controlled

8 group (including, where applicable, the contributing

9 sponsor) who are liquidating as described in para10 graph (1).

11 ‘‘(3) APPLICABILITY OF OTHER PROVISIONS.—

12 Except as provided in paragraph (2), any provision

13 of this Act or any other provision of law that applies

14 to liability under the preceding subsections of this sec15 tion upon termination of a plan shall apply in the

16 same manner and to the same extent to the liability

17 established under this subsection. For purposes of this

18 paragraph, the date referred to in paragraph (1) shall

19 be deemed the termination date.

20 ‘‘(4) LIABILITY OWED TO PLAN; TRANSFER OF LI21 ABILITY PAYMENTS TO THE ONGOING PLAN WHERE

22 COLLECTED BY THE CORPORATION.—The liability es23 tablished under this subsection shall be owed to the

24 plan, and may be collected by either the plan or the

25 corporation. The corporation shall pay to the plan
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1 any amounts collected by the corporation in satisfac2 tion of the liability established under this subsection

3 in connection with such plan.

4 ‘‘(5) REGULATIONS.—The corporation may pre5 scribe regulations under this subsection, including—

6 ‘‘(A) rules governing—

7 ‘‘(i) the determination of whether and

8 when a liquidation referred to in this sub9 section has occurred, and

10 ‘‘(ii) the assignment of the plan’s or

11 corporation’s claim to liability payments

12 under this subsection to other members of

13 the controlled group as a means of collecting

14 such payments, subject to the transfer of

15 such payments to the plan, and

16 ‘‘(B) rules providing alternative arrange17 ments for making liability payments under this

18 subsection.’’

19 (b) CONFORMING AMENDMENT.—Section 4062(a) of

20 such Act is amended—

21 (1) in paragraph (1), by striking ‘‘and’’ after

22 ‘‘subsection (b),’’;

23 (2) in paragraph (2), by striking the period after

24 ‘‘subsection (c)’’ and inserting ’’, and’’; and
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1 (3) by adding at the end the following new para2 graph:

3 ‘‘(3) liability to the plan, to the extent provided

4 in subsection (f).’’

5 (c) COORDINATION WITH MINIMUM FUNDING

6 RULES.—

7 (1) 1986 CODE.—Section 412(c) of the Internal

8 Revenue Code of 1986 is amended by adding at the

9 end the following new paragraph:

10 ‘‘(13) TREATMENT OF LIABILITY ON LIQUIDATION

11 OF EMPLOYER.—Any amount paid to a plan pursu12 ant to section 4062(f) of the Employee Retirement In13 come Security Act of 1974—

14 ‘‘(A) shall be treated as not contributed by

15 the employer for purposes of subsection (b)(3)(A),

16 and

17 ‘‘(B) shall be treated as a net experience

18 gain of the plan under subsection (b)(3)(B)(ii).’’

19 (2) ERISA.—Section 302(c) of the Employee Re20 tirement Income Security Act of 1974 is amended by

21 adding at the end the following new paragraph:

22 ‘‘(13) TREATMENT OF LIABILITY ON LIQUIDATION

23 OF EMPLOYER.—Any amount paid to a plan pursu24 ant to section 4062(f)—
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1 ‘‘(A) shall be treated as not contributed by

2 the employer for purposes of subsection (b)(3)(A),

3 and

4 ‘‘(B) shall be treated as a net experience

5 gain of the plan under subsection (b)(3)(B)(ii).’’

6 (d) EFFECTIVE DATE.—The amendments made by this

7 section shall be effective for liquidations initiated on or

8 after the date of enactment of this Act.

9 SEC. 205. ENFORCEMENT OF MINIMUM FUNDING REQUIRE10 MENTS.

11 (a) IN GENERAL.—Paragraph (1) of section 4003(e)

12 of the Employee Retirement Income Security Act of 1974

13 (29 U.S.C. 1303(e)(1)) is amended—

14 (1) by inserting ‘‘(A)’’ after ‘‘enforce’’; and

15 (2) by striking the period after ‘‘title’’ and in16 serting ‘‘, and (B) in the case of a plan which is cov17 ered under this title (other than a multiemployer

18 plan) and for which the conditions for imposition of

19 a lien described in section 302(f)(1)(A) and (B) of

20 this Act or section 412(n)(1)(A) and (B) of the Inter21 nal Revenue Code of 1986 have been met, section 302

22 of this Act and section 412 of such Code.’’

23 (b) EFFECTIVE DATE.—The amendments made by this

24 section shall be effective for installments and other pay25 ments required under section 302 of the Employee Retire-
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1 ment Income Security Act of 1974 or section 412 of the In2 ternal Revenue Code of 1986 that become due on or after

3 the date of the enactment of this Act.

4 SEC. 206. REMEDIES FOR NONCOMPLIANCE WITH REQUIRE5 MENTS FOR STANDARD TERMINATION.

6 (a) NOTICE OF NONCOMPLIANCE.—Section

7 4041(b)(2)(C)(i) of the Employee Retirement Income Secu8 rity Act of 1974 (29 U.S.C. 1341(b)(2)(C)(i)) is amended—

9 (1) by striking subclause (I) and inserting the

10 following new subclause:

11 ‘‘(I) it determines, based on the

12 notice sent under paragraph (2)(A) of

13 subsection (b), that there is reason to

14 believe that the plan is not sufficient

15 for benefit liabilities, or’’;

16 (2) by striking the period at the end of subclause

17 (II) and inserting ‘‘, or’’; and

18 (3) by adding at the end the following new

19 subclause:

20 ‘‘(III) it determines that any

21 other requirement of subparagraph (A)

22 or (B) of this paragraph or of sub23 section (a)(2) has not been met, unless

24 it further determines that the issuance

25 of such notice would be inconsistent
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1 with the interests of participants and

2 beneficiaries.’’

3 (b) EFFECTIVE DATE.—The amendments made by this

4 section shall apply to any plan termination under section

5 4041(b) of the Employee Retirement Income Security Act

6 of 1974 with respect to which the Pension Benefit Guaranty

7 Corporation has not, as of the date of enactment of this

8 Act, issued a notice of noncompliance that has become final,

9 or otherwise issued a final determination that the plan ter10 mination is nullified.

11 SEC. 207. PROHIBITION ON BENEFIT INCREASES WHERE

12 PLAN SPONSOR IS IN BANKRUPTCY.

13 (a) AMENDMENT TO THE EMPLOYEE RETIREMENT IN14 COME SECURITY ACT OF 1974.—Section 204 of the Em15 ployee Retirement Income Security Act of 1974 (29 U.S.C.

16 1054), as amended by section 121 of this Act, is further

17 amended by redesignating subsection (j) as (k) and insert18 ing a new subsection (j) to read as follows:

19 ‘‘(j)(1) In the case of a plan described in paragraph

20 (3) which is maintained by an employer that is a debtor

21 in a case under title 11, United States Code, or similar

22 Federal or State law, no amendment of the plan which in23 creases the liabilities of the plan by reason of—

24 ‘‘(A) any increase in benefits,

25 ‘‘(B) any change in the accrual of benefits, or
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1 ‘‘(C) any change in the rate at which benefits be2 come nonforfeitable under the plan,

3 with respect to employees of the debtor, shall be effective

4 prior to the effective date of such employer’s plan of reorga5 nization.

6 ‘‘(2) Paragraph (1) shall not apply to any plan

7 amendment that—

8 ‘‘(A) the Secretary of the Treasury determines to

9 be reasonable and that provides for only de minimis

10 increases in the liabilities of the plan with respect to

11 employees of the debtor,

12 ‘‘(B) only repeals an amendment described in

13 section 302(c)(8),

14 ‘‘(C) is required as a condition of qualification

15 under part I of subchapter D, of chapter 1, of the In16 ternal Revenue Code of 1986, or

17 ‘‘(D) was adopted prior to, or pursuant to a col18 lective bargaining agreement entered into prior to, the

19 date on which the employer became a debtor in a case

20 under title 11, United States Code, or similar Federal

21 or State law.

22 ‘‘(3) This subsection shall apply only to plans (other

23 than multiemployer plans) covered under section 4021 of

24 this Act for which the funded current liability percentage

25 (within the meaning of section 302(d)(8) of this Act) is less
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1 than 100 percent after taking into account the effect of the

2 amendment.

3 ‘‘(4) For purposes of this subsection, ‘employer’ has the

4 meaning set forth in section 302(c)(11)(A), without regard

5 to section 302(c)(11)(B).’’

6 (b) AMENDMENT TO INTERNAL REVENUE CODE OF

7 1986.—Section 401(a) of the Internal Revenue Code of

8 1986, as amended by section 101 of this Act, is further

9 amended by adding at the end the following new paragraph:

10 ‘‘(33) PROHIBITION ON BENEFIT INCREASES

11 WHILE SPONSOR IS IN BANKRUPTCY.—

12 ‘‘(A) IN GENERAL.—A trust which is part of

13 a plan to which this paragraph applies shall not

14 constitute a qualified trust under this section if

15 an amendment to such plan is adopted while the

16 employer is a debtor in a case under title 11,

17 United States Code, or similar Federal or State

18 law, if such amendment increases liabilities of

19 the plan by reason of—

20 ‘‘(i) any increase in benefits,

21 ‘‘(ii) any change in the accrual of ben22 efits, or

23 ‘‘(iii) any change in the rate at which

24 benefits become nonforfeitable under the

25 plan,
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1 with respect to employees of the debtor, and such

2 amendment is effective prior to the effective date

3 of such employer’s plan of reorganization.

4 ‘‘(B) EXCEPTIONS.—This paragraph shall

5 not apply to any plan amendment if—

6 ‘‘(i) the plan, were such amendment to

7 take effect, would have a funded current li8 ability percentage (as defined in section

9 412(l)(8)) of 100 percent or more,

10 ‘‘(ii) the Secretary determines that

11 such amendment is reasonable and provides

12 for only de minimis increases in the liabil13 ities of the plan with respect to employees

14 of the debtor,

15 ‘‘(iii) such amendment only repeals an

16 amendment described in subsection

17 412(c)(8), or

18 ‘‘(iv) such amendment is required as a

19 condition of qualification under this part.

20 ‘‘(C) PLANS TO WHICH THIS PARAGRAPH

21 APPLIES.—This paragraph shall apply only to

22 plans (other than multiemployer plans) covered

23 under section 4021 of the Employee Retirement

24 Income Security Act of 1974.
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1 ‘‘(D) EMPLOYER.—For purposes of this

2 paragraph, the term ‘employer’ means the em3 ployer referred to in section 412(c)(11) (without

4 regard to subparagraph (B) thereof).’’

5 (c) EFFECTIVE DATE.—The amendments made by this

6 section shall apply to plan amendments adopted on or after

7 the date of enactment of this Act.

8 SEC. 208. SUBSTANTIAL OWNER BENEFITS.

9 (a) MODIFICATION OF PHASE-IN OF GUARANTEE.—

10 Section 4022(b)(5) of the Employee Retirement Income Se11 curity Act of 1974 is amended by striking subparagraphs

12 (B) and (C) and inserting the following new subpara13 graphs:

14 ‘‘(B) For purposes of this title, the term ‘majority

15 owner’ has the same meaning as the term ‘substantial

16 owner’, if ‘50 percent or more’ is substituted for ‘more than

17 10 percent’ wherever such phrase appears in subparagraph

18 (A) of this paragraph.

19 ‘‘(C) In the case of a participant who is a majority

20 owner, the amount of benefits guaranteed under this section

21 shall not exceed the product of—

22 ‘‘(i) a fraction (not to exceed 1) the numerator

23 of which is the number of years from the later of the

24 effective date or the adoption date of the plan, and the

25 denominator of which is 30, and
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1 ‘‘(ii) the amount of the majority owner’s month2 ly benefits guaranteed under subsection (a) (as lim3 ited by paragraph (3) of this subsection).’’

4 (b) MODIFICATION OF ALLOCATION OF ASSETS.—

5 (1) Section 4044(a)(4)(B) of such Act (29 U.S.C.

6 1344(a)(4)(B)) is amended by adding ‘‘(C)’’ at the

7 end of ‘‘section 4022(b)(5)’’.

8 (2) Section 4044(b) of such Act is amended—

9 (A) in paragraph (2), by inserting ‘‘(4),’’

10 before ‘‘(5)’’, and by inserting a comma after

11 ‘‘(5)’’;

12 (B) by redesignating paragraphs (3)

13 through (6) as paragraphs (4) through (7), re14 spectively; and

15 (C) by inserting a new paragraph (3) to

16 read as follows:

17 ‘‘(3) If assets available for allocation under

18 paragraph (4) of subsection (a) are insufficient to sat19 isfy in full the benefits of all individuals who are de20 scribed in that paragraph, the assets shall be allocated

21 first to benefits described in subparagraph (A) of that

22 paragraph. Any remaining assets shall then be allo23 cated to subparagraph (B). If assets allocated to sub24 paragraph (B) are insufficient to satisfy in full the

25 benefits in that subparagraph, the assets shall be allo-
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1 cated pro rata among individuals on the basis of the

2 present value (as of the termination date) of their re3 spective benefits described in that subparagraph.’’.

4 (c) EFFECTIVE DATE.—The amendments made by this

5 section shall be effective for plan terminations under section

6 4041(c) of the Employee Retirement Income Security Act

7 of 1974 with respect to which notices of intent to terminate

8 are provided under section 4041(a)(2) of such Act, or under

9 section 4042 of such Act with respect to which proceedings

10 are instituted by the corporation, on or after the date of

11 enactment of this Act.

12 SEC. 209. PHASE-OUT OF VARIABLE RATE PREMIUM CAP.

13 (a) IN GENERAL.—Subparagraph (E) of section

14 4006(a)(3) of the Employee Retirement Income Security

15 Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is amended by strik16 ing clause (iv), and by redesignating clause (v) as clause

17 (iv).

18 (b) EFFECTIVE DATE.—The amendments made by this

19 section shall be effective on the date of enactment of this

20 Act, except that, for plan years beginning on or after July

21 1, 1994 and before July 1, 1996, the additional premium

22 payable with respect to any participant by reason of this

23 amendment shall not exceed the sum of—

24 (1) $53, and

25 (2) the product derived by multiplying—
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1 (A) the excess (if any) of—

2 (i) the amount determined under

3 clause (ii) of section 4006(a)(3)(E) of the

4 Employee Retirement Income Security Act

5 of 1974, over

6 (ii) $53, by

7 (B) the applicable percentage.

8 For purposes of this subsection, the applicable per9 centage shall be the percentage specified in the follow10 ing table:

For the plan year beginning: The applicable percentage

on or after but before is:

July 1, 1994 ........................... July 1, 1995 .......................... 20 percent

July 1, 1995 ........................... July 1, 1996 .......................... 60 percent

11 TITLE III—PARTICIPANT

12 SERVICES

13 SEC. 301. DISCLOSURE TO PARTICIPANTS.

14 (a) PARTICIPANT NOTICE REQUIREMENT.—Subtitle A

15 of title IV of the Employee Retirement Income Security Act

16 of 1974 (as amended by section 203 of this Act) is further

17 amended by adding at the end the following new section:

18 ‘‘SEC. 4011. NOTICE TO PARTICIPANTS.

19 ‘‘(a) IN GENERAL.—The plan administrator of a plan

20 subject to the additional premium under section

21 4006(a)(3)(E) shall provide, in a form and manner and

22 at such time as prescribed in regulations of the corporation,
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1 notice to plan participants and beneficiaries of the plan’s

2 funding status and the limits on the corporation’s guaranty

3 should the plan terminate while underfunded. Such notice

4 shall be written in a manner so as to be understood by the

5 average plan participant.

6 ‘‘(b) EXCEPTION.—Subsection (a) shall not apply to

7 any plan which for the plan year has a funded current li8 ability percentage (as defined in section 302(d)(8) without

9 regard to subparagraph (E) thereof) of at least 90 percent.’’

10 (b) CLERICAL AMENDMENT.—The table of contents

11 contained in section 1 of such Act is amended by inserting

12 after the item relating to section 4010 (as added by section

13 203 of this Act) the following new item:

‘‘Sec. 4011. Notice to participants.’’

14 (c) EFFECTIVE DATE.—The amendment made by this

15 section shall be effective for plan years beginning after the

16 date of enactment of this Act.

17 SEC. 302. MISSING PARTICIPANTS.

18 (a) IN GENERAL.—Subtitle C of title IV of the Em19 ployee Retirement Income Security Act of 1974 (29 U.S.C.

20 1341 et seq.) is amended by adding at the end the following

21 new section:

22 ‘‘SEC. 4051. MISSING PARTICIPANTS.

23 ‘‘(a) GENERAL RULE.—

24 ‘‘(1) PAYMENT TO THE CORPORATION.—A plan

25 administrator satisfies section 4041(b)(3)(A) in the
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1 case of a missing participant only if the plan admin2 istrator—

3 ‘‘(A) transfers the participant’s designated

4 benefit to the corporation or purchases an irrev5 ocable commitment from an insurer in accord6 ance with clause (i) of section 4041(b)(3)(A),

7 and

8 ‘‘(B) provides the corporation such informa9 tion and certifications with respect to such des10 ignated benefits or irrevocable commitments as

11 the corporation shall specify.

12 ‘‘(2) TREATMENT OF TRANSFERRED ASSETS.—A

13 transfer to the corporation under this section shall be

14 treated as a transfer of assets from a terminated plan

15 to the corporation as trustee, and shall be held with

16 assets of terminated plans for which the corporation

17 is trustee under section 4042, subject to the rules set

18 forth in that section.

19 ‘‘(3) PAYMENT BY THE CORPORATION.—After a

20 missing participant whose designated benefit was

21 transferred to the corporation is located—

22 ‘‘(A) in any case in which the plan could

23 have distributed the benefit of the missing partic24 ipant in a single sum without participant or

25 spousal consent under section 205(g), the cor-
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1 poration shall pay the participant or beneficiary

2 a single sum benefit equal to the designated bene3 fit paid the corporation plus interest as specified

4 by the corporation, and

5 ‘‘(B) in any other case, the corporation

6 shall pay a benefit based on the designated bene7 fit and the assumptions prescribed by the cor8 poration at the time that the corporation re9 ceived the designated benefit.

10 The corporation shall make payments under subpara11 graph (B) available in the same forms and at the

12 same times as a guaranteed benefit under section

13 4022 would be available to be paid, except that the

14 corporation may make a benefit available in the form

15 of a single sum if the plan provided a single sum ben16 efit (other than a single sum described in subsection

17 (b)(2)(A)).

18 ‘‘(b) DEFINITIONS.—For purposes of this section—

19 ‘‘(1) MISSING PARTICIPANT.—The term ‘missing

20 participant’ means a participant or beneficiary

21 under a terminating plan whom the plan adminis22 trator cannot locate after a diligent search.

23 ‘‘(2) DESIGNATED BENEFIT.—The term ‘des24 ignated benefit’ means the single sum benefit the par25 ticipant would receive—
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1 ‘‘(A) under the plan’s assumptions, in the

2 case of a distribution that can be made without

3 participant or spousal consent under section

4 205(g);

5 ‘‘(B) under the assumptions of the corpora6 tion in effect on the date that the designated ben7 efit is transferred to the corporation, in the case

8 of a plan that does not pay any single sums

9 other than those described in subparagraph (A);

10 or

11 ‘‘(C) under the assumptions of the corpora12 tion or of the plan, whichever provides the higher

13 single sum, in the case of a plan that pays a sin14 gle sum other than those described in subpara15 graph (A).

16 ‘‘(c) REGULATORY AUTHORITY.—The corporation shall

17 prescribe such regulations as are necessary to carry out the

18 purposes of this section, including rules relating to what

19 will be considered a diligent search, the amount payable

20 to the corporation, and the amount to be paid by the cor21 poration.’’

22 (b) CONFORMING TITLE IV AMENDMENTS.—

23 (1) AMENDMENT TO SECTION 4003.—Section

24 4003(a) of such Act (29 U.S.C. 1303(a)) is amended

25 in the second sentence by inserting before the period
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1 the following: ‘‘and whether section 4051(a) has been

2 satisfied’’.

3 (2) AMENDMENT TO SECTION 4005.—Section

4 4005(b)(2)(A) of such Act (29 U.S.C. 1305(b)(2)(A))

5 is amended by inserting ‘‘or benefits payable under

6 section 4051’’ after ‘‘section 4022A’’.

7 (3) AMENDMENT TO SECTION 4041.—Section

8 4041(b)(3)(A)(ii) of such Act (29 U.S.C.

9 1341(b)(3)(A)(ii)) is amended by adding at the end

10 the following new sentence: ‘‘A transfer of assets to the

11 corporation in accordance with section 4051 on behalf

12 of a missing participant shall satisfy this subpara13 graph with respect to such participant.’’

14 (c) CONFORMING ERISA AMENDMENTS.—

15 (1) The table of contents contained in section 1

16 of the Employee Retirement Income Security Act of

17 1974 is amended by inserting after the item related

18 to section 4050 (as added by section 202 of this Act)

19 the following new item:

‘‘Sec. 4051. Missing participants.’’

20 (2) Section 206 of such Act (29 U.S.C. 1056) is

21 amended by adding at the end the following new sub22 section:

23 ‘‘(e) MISSING PARTICIPANTS IN TERMINATED

24 PLANS.—In the case of a plan covered by title IV, the plan

25 shall provide that, upon termination of the plan, benefits
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1 of missing participants shall be treated in accordance with

2 section 4051.’’

3 (d) CONFORMING INTERNAL REVENUE CODE AMEND4 MENTS.—Section 401(a) of the Internal Revenue Code of

5 1986, as amended by section 207 of this Act, is further

6 amended by inserting after paragraph (33) the following

7 new paragraph:

8 ‘‘(34) BENEFITS OF MISSING PARTICIPANTS ON

9 PLAN TERMINATION.—In the case of a plan covered by

10 title IV of the Employee Retirement Income Security

11 Act of 1974, a trust forming part of such plan shall

12 not be treated as failing to constitute a qualified trust

13 under this section merely because the pension plan of

14 which such trust is a part, upon its termination,

15 transfers benefits of missing participants to the Pen16 sion Benefit Guaranty Corporation in accordance

17 with section 4051 of such Act.’’

18 (e) EFFECTIVE DATE.—The provisions of this section

19 shall be effective with respect to distributions that occur in

20 plan years commencing after final regulations implement21 ing these provisions are prescribed by the Pension Benefit

22 Guaranty Corporation.
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1 SEC. 303. MODIFICATION OF MAXIMUM GUARANTEE FOR

2 DISABILITY BENEFITS.

3 (a) IN GENERAL.—Section 4022(b)(3) of the Employee

4 Retirement Income Security Act of 1974 (29 U.S.C.

5 1322(b)(3)) is amended by adding at the end the following

6 new sentences: ‘‘The maximum guaranteed monthly benefit

7 shall not be reduced solely on account of the age of a partici8 pant in the case of a benefit payable by reason of disability,

9 if the participant satisfies the definition of disability under

10 titles II and XVI of the Social Security Act, and the regula11 tions thereunder. If a benefit payable by reason of disability

12 is converted to an early or normal retirement benefit for

13 reasons other than a change in the health of the participant,

14 such early or normal retirement benefit shall be treated as

15 a continuation of the benefit payable by reason of disability

16 and this subparagraph shall continue to apply.’’

17 (b) EFFECTIVE DATE.—The amendment made by this

18 section shall be effective for plan terminations under section

19 4041(c) of the Employee Retirement Income Security Act

20 of 1974 with respect to which notices of intent to terminate

21 are provided under section 4041(a)(2) of such Act, or under

22 section 4042 of such Act with respect to which proceedings

23 are instituted by the corporation, on or after the date of

24 enactment of this Act.
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1 TITLE IV—MISCELLANEOUS

2 AMENDMENTS

3 SEC. 401. ERISA CITATION.

4 (a) IN GENERAL.—Section 404(g)(4) of the Internal

5 Revenue Code of 1986 is amended by striking ‘‘the Single

6 Employer Pension Plan Amendments Act of 1986’’ and in7 serting ‘‘the Retirement Protection Act of 1994’’.

8 (b) EFFECTIVE DATE.—The amendment made by this

9 section shall be effective on the date of enactment of this

10 Act.

11 SEC. 402. DEFINITION OF CONTRIBUTING SPONSOR.

12 (a) IN GENERAL.—Paragraph (13) of section 4001(a)

13 of the Employee Retirement Income Security Act of 1974

14 (29 U.S.C. 1301(a)(13)) is amended by striking ‘‘means a

15 person—’’ and all that follows and inserting ‘‘means a per16 son described in section 302(c)(11)(A) of this Act (without

17 regard to section 302(c)(11)(B) of this Act) or section

18 412(c)(11)(A) of the Internal Revenue Code of 1986 (with19 out regard to section 412(c)(11)(B) of such Code).’’

20 (b) EFFECTIVE DATE.—The amendment made by this

21 section shall be effective as if included in the Pension Pro22 tection Act.
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1 SEC. 403. DISTRESS TERMINATION CRITERIA FOR BANKING

2 INSTITUTIONS.

3 (a) CLARIFICATION OF DISTRESS CRITERION.—

4 Subclause (I) of section 4041(c)(2)(B)(i) of the Employee

5 Retirement Income Security Act of 1974 (29 U.S.C.

6 1341(c)(2)(B)(i)) is amended by inserting after ‘‘under any

7 similar’’ the following: ‘‘Federal law or’’.

8 (b) EFFECTIVE DATE.—The amendment made by this

9 section shall be effective as if included in the Single-Em10 ployer Pension Plan Amendments Act of 1986.

11 SEC. 404. SINGLE SUM DISTRIBUTIONS.

12 (a) AMENDMENTS TO INTERNAL REVENUE CODE OF

13 1986 RELATING TO MINIMUM BENEFITS.—

14 (1) DETERMINATION OF PRESENT VALUE FOR

15 PURPOSES OF RESTRICTIONS ON MANDATORY DIS16 TRIBUTIONS.—Subparagraph (B) of section

17 411(a)(11) of the Internal Revenue Code of 1986 is

18 amended to read as follows:

19 ‘‘(B) DETERMINATION OF PRESENT

20 VALUE.—For purposes of subparagraph (A), the

21 present value shall be calculated in accordance

22 with section 417(e)(3).’’

23 (2) DETERMINATION OF PRESENT VALUE FOR

24 PURPOSES OF RESTRICTIONS ON CASH-OUTS.—Para25 graph (3) of section 417(e) of such Code is amended

26 to read as follows:
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1 ‘‘(3) DETERMINATION OF PRESENT VALUE.—

2 ‘‘(A) IN GENERAL.—

3 ‘‘(i) PRESENT VALUE.—Except as pro4 vided in subparagraph (B), for purposes of

5 paragraphs (1) and (2), the present value

6 shall not be less than the present value cal7 culated by using the applicable mortality

8 table and the applicable interest rate.

9 ‘‘(ii) DEFINITIONS.—For purposes of

10 clause (i)—

11 ‘‘(I) APPLICABLE MORTALITY

12 TABLE.—The term ‘applicable mortal13 ity table’ means the table prescribed by

14 the Secretary. Such table shall be based

15 on the prevailing commissioners’

16 standard table (described in section

17 807(d)(5)(A)) used to determine re18 serves for group annuity contracts is19 sued on the date as of which present

20 value is being determined (without re21 gard to any other subparagraph of sec22 tion 807(d)(5)).

23 ‘‘(II) APPLICABLE INTEREST

24 RATE.—The term ‘applicable interest

25 rate’ means the annual rate of interest
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1 on 30-year Treasury securities for the

2 month before the date of distribution or

3 such other time as the Secretary may

4 by regulations prescribe.

5 ‘‘(B) EXCEPTION.—In the case of a dis6 tribution from a plan that was adopted and in

7 effect before the date of the enactment of the Re8 tirement Protection Act of 1994, the present

9 value of any distribution made before the earlier

10 of—

11 ‘‘(i) the later of the date a plan amend12 ment applying subparagraph (A) is adopted

13 or made effective, or

14 ‘‘(ii) the first day of the first plan year

15 beginning after December 31, 1999,

16 shall be calculated, for purposes of paragraphs

17 (1) and (2), using the interest rate determined

18 under the regulations of the Pension Benefit

19 Guaranty Corporation for determining the

20 present value of a lump sum distribution on

21 plan termination that were in effect on Septem22 ber 1, 1993, and using the provisions of the plan

23 as in effect on the day before such date of enact24 ment; but only if such provisions of the plan met
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1 the requirements of section 417(e)(3) as in effect

2 on the day before such date of enactment.’’

3 (b) AMENDMENTS TO INTERNAL REVENUE CODE OF

4 1986 RELATING TO MAXIMUM BENEFITS.—Subparagraph

5 (E) of section 415(b)(2) of such Code is amended—

6 (1) by redesignating clauses (ii) and (iii) as

7 clauses (iii) and (iv), respectively,

8 (2) by striking clause (i) and inserting the fol9 lowing new clauses:

10 ‘‘(i) Except as provided in clause (ii),

11 for purposes of adjusting any benefit or lim12 itation under subparagraph (B) or (C), the

13 interest rate assumption shall not be less

14 than the greater of 5 percent or the rate

15 specified in the plan.

16 ‘‘(ii) For purposes of adjusting the ben17 efit or limitation of any form of benefit sub18 ject to section 417(e)(3), the applicable in19 terest rate (as defined in section 417(e)(3))

20 shall be substituted for ‘5 percent’ in clause

21 (i).’’, and

22 (3) by adding at the end the following new

23 clause:

24 ‘‘(v) For purposes of adjusting any

25 benefit or limitation under subparagraph
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1 (B), (C), or (D), the mortality table used

2 shall be the table prescribed by the Sec3 retary. Such table shall be based on the pre4 vailing commissioners’ standard table (de5 scribed in section 807(d)(5)(A)) used to de6 termine reserves for group annuity con7 tracts issued on the date the adjustment is

8 being made (without regard to any other

9 subparagraph of section 807(d)(5)).’’

10 (c) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME

11 SECURITY ACT OF 1974.—

12 (1) DETERMINATION OF PRESENT VALUE FOR

13 PURPOSES OF RESTRICTIONS ON MANDATORY DIS14 TRIBUTIONS.—Section 203(e)(2) of the Employee Re15 tirement Income Security Act of 1974 (29 U.S.C.

16 1053(e)(2)) is amended to read as follows:

17 ‘‘(2) For purposes of paragraph (1), the present value

18 shall be calculated in accordance with section 205(g)(3).’’

19 (2) DETERMINATION OF PRESENT VALUE FOR

20 PURPOSES OF RESTRICTIONS ON CASH-OUTS.—Section

21 205(g)(3) of such Act (29 U.S.C. 1055(g)(3)) is

22 amended to read as follows:

23 ‘‘(3) DETERMINATION OF PRESENT VALUE.—

24 ‘‘(A) IN GENERAL.—
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1 ‘‘(i) PRESENT VALUE.—Except as pro2 vided in subparagraph (B), for purposes of

3 paragraphs (1) and (2), the present value

4 shall not be less than the present value cal5 culated by using the applicable mortality

6 table and the applicable interest rate.

7 ‘‘(ii) DEFINITIONS.—For purposes of

8 clause (i)—

9 ‘‘(I) APPLICABLE MORTALITY

10 TABLE.—The term ‘applicable mortal11 ity table’ means the table prescribed by

12 the Secretary of the Treasury. Such

13 table shall be based on the prevailing

14 commissioners’ standard table (de15 scribed in section 807(d)(5)(A) of the

16 Internal Revenue Code of 1986) used to

17 determine reserves for group annuity

18 contracts issued on the date as of

19 which present value is being deter20 mined (without regard to any other

21 subparagraph of section 807(d)(5) of

22 such Code).

23 ‘‘(II) APPLICABLE INTEREST

24 RATE.—The term ‘applicable interest

25 rate’ means the annual rate of interest
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1 on 30-year Treasury securities for the

2 month before the date of distribution or

3 such other time as the Secretary of the

4 Treasury may by regulations prescribe.

5 ‘‘(B) EXCEPTION.—In the case of a dis6 tribution from a plan that was adopted and in

7 effect prior to the date of the enactment of the

8 Retirement Protection Act of 1994, the present

9 value of any distribution made before the earlier

10 of—

11 ‘‘(i) the later of when a plan amend12 ment applying subparagraph (A) is adopted

13 or made effective, or

14 ‘‘(ii) the first day of the first plan year

15 beginning after December 31, 1999,

16 shall be calculated, for purposes of paragraphs

17 (1) and (2), using the interest rate determined

18 under the regulations of the Pension Benefit

19 Guaranty Corporation for determining the

20 present value of a lump sum distribution on

21 plan termination that were in effect on Septem22 ber 1, 1993, and using the provisions of the plan

23 as in effect on the day before such date of enact24 ment; but only if such provisions of the plan met
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1 the requirements of section 205(g)(3) as in effect

2 on the day before such date of enactment.’’

3 (d) EFFECTIVE DATE.—

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

5 this section shall apply to plan years and limitation

6 years beginning after December 31, 1994; except that

7 an employer may elect to treat the amendments made

8 by this section as being effective on or after the date

9 of enactment.

10 (2) NO REDUCTION IN ACCRUED BENEFITS.—A

11 participant’s accrued benefit shall not be considered

12 to be reduced in violation of section 411(d)(6) of the

13 Internal Revenue Code of 1986 or section 204(g) of

14 the Employee Retirement Income Security Act of

15 1974 merely because (A) the benefit is determined in

16 accordance with section 417(e)(3)(A) of such Code, as

17 amended by this Act, or section 205(g)(3) of the Em18 ployee Retirement Income Security Act of 1974, as

19 amended by this Act, or (B) the plan applies section

20 415(b)(2)(E) of such Code, as amended by this Act.

21 (3) SECTION 415.—

22 (A) NO REDUCTION REQUIRED.—An ac23 crued benefit shall not be required to be reduced

24 below the accrued benefit as of the last day of the

25 last plan year beginning before January 1, 1995,
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1 merely because of the amendments made by sub2 section (b).

3 (B) TIMING OF PLAN AMENDMENT.—A plan

4 that operates in accordance with the amend5 ments made by subsection (b) shall not be treated

6 as failing to satisfy section 401(a) of the Inter7 nal Revenue Code of 1986 or as not being oper8 ated in accordance with the provisions of the

9 plan until such date as the Secretary of the

10 Treasury provides merely because the plan has

11 not been amended to include the amendments

12 made by subsection (b).

13 SEC. 405. ADJUSTMENTS TO LIEN FOR MISSED MINIMUM

14 FUNDING CONTRIBUTIONS.

15 (a) AMENDMENTS TO THE INTERNAL REVENUE CODE

16 OF 1986.—

17 (1) CLARIFICATION OF APPLICABILITY OF PROVI18 SION.—Paragraph (2) of section 412(n) of the Inter19 nal Revenue Code of 1986 is amended by adding at

20 the end the following new sentence: ‘‘This subsection

21 shall not apply to any plan to which section 4021 of

22 the Employee Retirement Income Security Act of

23 1974 does not apply (as such section is in effect on

24 the date of the enactment of the Retirement Protection

25 Act of 1994).’’.
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1 (2) REPEAL OF $1,000,000 OFFSET.—Paragraph

2 (3) of section 412(n) of such Code is amended to read

3 as follows:

4 ‘‘(3) AMOUNT OF LIEN.—For purposes of para5 graph (1), the amount of the lien shall be equal to the

6 aggregate unpaid balance of required installments

7 and other payments required under this section (in8 cluding interest)—

9 ‘‘(A) for plan years beginning after 1987,

10 and

11 ‘‘(B) for which payment has not been made

12 before the due date.’’

13 (3) REPEAL OF 60-DAY DELAY.—Section

14 412(n)(4)(B) of such Code is amended by striking

15 ‘‘60th day following the’’.

16 (b) AMENDMENTS TO THE EMPLOYEE RETIREMENT

17 INCOME SECURITY ACT OF 1974.—

18 (1) CLARIFICATION OF APPLICABILITY OF PROVI19 SION.—Section 302(f)(1) of the Employee Retirement

20 Income Security Act of 1974 (29 U.S.C. 1082(f)(1))

21 is amended by striking ‘‘to which this section applies’’

22 and inserting ‘‘covered under section 4021 of this

23 Act’’.
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1 (2) REPEAL OF $1,000,000 OFFSET.—Paragraph

2 (3) of section 302(f) of such Act is amended to read

3 as follows:

4 ‘‘(3) AMOUNT OF LIEN.—For purposes of para5 graph (1), the amount of the lien shall be equal to the

6 aggregate unpaid balance of required installments

7 and other payments required under this section (in8 cluding interest)—

9 ‘‘(A) for plan years beginning after 1987,

10 and

11 ‘‘(B) for which payment has not been made

12 before the due date.’’

13 (3) REPEAL OF 60-DAY DELAY.—Section

14 302(f)(4)(B) of such Act is amended by striking ‘‘60th

15 day following the’’.

16 (c) EFFECTIVE DATE.—The amendments made by this

17 section shall be effective for installments and other pay18 ments required under section 412 of the Internal Revenue

19 Code of 1986 or under part 3 of subtitle B of the Employee

20 Retirement Income Security Act of 1974 that become due

21 on or after the date of enactment.
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1 SEC. 406. ROUNDING RULES FOR COST-OF-LIVING ADJUST2 MENTS.

3 (a) COST-OF-LIVING ADJUSTMENT FOR COMPENSA4 TION LIMIT.—Section 401(a)(17)(B) of the Internal Reve5 nue Code of 1986 is revised to read as follows:

6 ‘‘(B) COST-OF-LIVING ADJUSTMENT.—The

7 Secretary shall adjust annually the $150,000

8 amount in subparagraph (A) for increases in the

9 cost-of-living at the same time and in the same

10 manner as adjustments under section 415(d); ex11 cept that the base period shall be the calendar

12 quarter beginning October 1, 1993, and any in13 crease which is not a multiple of $10,000 shall

14 be rounded to the next lowest multiple of

15 $10,000.’’

16 (b) COST-OF-LIVING ADJUSTMENT FOR MAXIMUM DE17 FINED BENEFIT AMOUNT AND MAXIMUM ANNUAL ADDI18 TION.—

19 (1) IN GENERAL.—Section 415(d) of such Code is

20 amended to read as follows:

21 ‘‘(d) COST-OF-LIVING ADJUSTMENTS.—

22 ‘‘(1) IN GENERAL.—The Secretary shall adjust

23 annually—

24 ‘‘(A) the $90,000 amount in subsection

25 (b)(1)(A),
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1 ‘‘(B) in the case of a participant who sepa2 rated from service, the amount taken into ac3 count under subsection (b)(1)(B), and

4 ‘‘(C) the $30,000 amount in subsection

5 (c)(1)(A),

6 for increases in the cost-of-living in accordance with

7 regulations prescribed by the Secretary.

8 ‘‘(2) METHOD.—The regulations prescribed

9 under paragraph (1) shall provide for—

10 ‘‘(A) an adjustment with respect to any cal11 endar year based on the increase in the applica12 ble index for the calendar quarter ending Sep13 tember 30 of the preceding calendar year over

14 such index for the base period, and

15 ‘‘(B) adjustment procedures which are simi16 lar to the procedures used to adjust benefit

17 amounts under section 215(i)(2)(A) of the Social

18 Security Act.

19 ‘‘(3) BASE PERIOD.—For purposes of paragraph

20 (2)—

21 ‘‘(A) $90,000 AMOUNT.—The base period

22 taken into account for purposes of paragraph

23 (1)(A) is the calendar quarter beginning October

24 1, 1986.
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1 ‘‘(B) SEPARATIONS AFTER DECEMBER 31,

2 1994.—The base period taken into account for

3 purposes of paragraph (1)(B) with respect to in4 dividuals separating from service with the em5 ployer after December 31, 1994, is the calendar

6 quarter beginning July 1 of the calendar year

7 preceding the calendar year in which such sepa8 ration occurs.

9 ‘‘(C) SEPARATIONS BEFORE JANUARY 1,

10 1995.—The base period taken into account for

11 purposes of paragraph (1)(B) with respect to in12 dividuals separating from service with the em13 ployer before January 1, 1995, is the calendar

14 quarter beginning October 1 of the calendar year

15 preceding the calendar year in which such sepa16 ration occurs.

17 ‘‘(D) $30,000 AMOUNT.—The base period

18 taken into account for purposes of paragraph

19 (1)(C) is the calendar quarter beginning October

20 1, 1993.’’

21 ‘‘(4) ROUNDING.—Any increase under subpara22 graph (A) or (C) of paragraph (1) which is not a

23 multiple of $5,000 shall be rounded to the next lowest

24 multiple of $5,000.’’
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1 (2) CONFORMING AMENDMENT.—Section

2 415(c)(1)(A) of such Code is amended by striking

‘‘(or, if greater, 1 3 ⁄4 of the dollar limitation in effect

4 under subsection (b)(1)(A))’’.

5 (c) COST-OF-LIVING ADJUSTMENT FOR MAXIMUM SAL6 ARY DEFERRAL.—Section 402(g)(5) of such Code is amend7 ed by inserting before the period ‘‘; except that any increase

8 under this paragraph which is not a multiple of $500 shall

9 be rounded to the next lowest multiple of $500’’.

10 (d) COST-OF-LIVING ADJUSTMENT FOR ELIGIBILITY

11 FOR SIMPLIFIED EMPLOYEE PENSIONS.—Section 408(k)(8)

12 of such Code is amended by inserting before the period ‘‘;

13 except that any increase in the $300 amount which is not

14 a multiple of $50 shall be rounded to the next lowest mul15 tiple of $50’’.

16 (e) EFFECTIVE DATE.—The amendments made by this

17 section shall apply to years beginning after December 31,

18 1994.

19 SEC. 407. FUNDING OF RESTORED PLANS.

20 Any changes made by this Act to section 412 of the

21 Internal Revenue Code of 1986 or to part 3 of subtitle B

22 of title I of the Employee Retirement Income Security Act

23 of 1974 shall not apply to a plan which is, on the date

24 of enactment of this Act, subject to a restoration payment

25 schedule order issued by the Pension Benefit Guaranty Cor-
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1 poration that meets the requirements of section 1.412(c)(1)–

2 3 of the Treasury Regulations.

3 SEC. 408. STUDY OF FUNDING STATUS OF FEDERAL, STATE,

4 AND LOCAL GOVERNMENT PENSION PLANS.

5 (a) IN GENERAL.—The Comptroller General shall con6 duct a study of the underfunding of Federal, State, and

7 local government pension plans. Such study shall address

8 the causes and implications of such underfunding, as well

9 as the feasibility of requiring such plans to comply with

10 funding, reporting, and disclosure requirements imposed by

11 Federal law on private pension plans.

12 (b) REPORT.—The report of such study shall be sub13 mitted not later than April 1, 1995, to the Committee on

14 Ways and Means of the House of Representatives and the

15 Committee on Finance of the Senate.

16 TITLE V—EFFECTIVE DATES

17 SEC. 501. EFFECTIVE DATES.

18 Except as otherwise provided in this Act, the amend19 ments made by this Act shall be effective on the date of en20 actment of this Act.

21 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

22 (a) SHORT TITLE.—This Act may be cited

23 as the ‘‘Retirement Protection Act of 1994’’.

24 (b) TABLE OF CONTENTS.—

Sec. 1. Short title and table of contents.

TITLE I—PENSION PLAN FUNDING
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SUBTITLE A—AMENDMENTS TO THE EMPLOYEE RETIREMENT

INCOME SECURITY ACT OF 1974

Sec. 101. Minimum funding requirements.

Sec. 102. Limitation on changes in current liability assumptions.

Sec. 103. Anticipation of bargained benefit increases.

Sec. 104. Modification of quarterly contribution requirement.

SUBTITLE B—AMENDMENTS TO THE INTERNAL REVENUE CODE OF

1986

Sec. 121. Minimum funding requirements.

Sec. 122. Limitation on changes in current liability assumptions.

Sec. 123. Anticipation of bargained benefit increases.

Sec. 124. Modification of quarterly contribution requirement.

Sec. 125. Exceptions to excise tax on nondeductible contributions.

TITLE II—AMENDMENTS RELATED TO TITLE IV OF THE

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

Sec. 201. Reportable events.

Sec. 202. Alternative to involuntary termination.

Sec. 203. Certain information required to be furnished to pbgc.

Sec. 204. Liability upon liquidation of contributing sponsor or

controlled group member if plan remains ongoing.

Sec. 205. Enforcement of minimum funding requirements.

Sec. 206. Remedies for noncompliance with requirements for

standard termination.

Sec. 207. Prohibition on benefit increases where plan sponsor

is in bankruptcy.

Sec. 208. Substantial owner benefits.

Sec. 209. Phase-out of variable rate premium cap.

TITLE III—PARTICIPANT SERVICES

Sec. 301. Disclosure to participants.

Sec. 302. Missing participants.

Sec. 303. Modification of maximum guarantee for disability

benefits.

TITLE IV—MISCELLANEOUS AMENDMENTS

Sec. 401. ERISA citation.

Sec. 402. Definition of contributing sponsor.

Sec. 403. Technical corrections.

Sec. 404. Distress termination criteria for banking institutions.

Sec. 405. Single sum distributions.

Sec. 406. Adjustments to lien for missed minimum funding contributions.

Sec. 407. Rounding rules for cost-of-living adjustments.

Sec. 408. Funding of restored plans.

Sec. 409. Study of funding status of federal, State, and local

government pension plans.
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TITLE V—EFFECTIVE DATES AND RELATED RULES

Sec. 501. Effective dates.

Sec. 502. Delay in changes to prevailing commissioners’ table.

1 TITLE I—PENSION PLAN

2 FUNDING

3 Subtitle A—Amendments to the

4 Employee Retirement Income

5 Security Act of 1974

6 SEC. 101. MINIMUM FUNDING REQUIREMENTS.

7 (a) AMENDMENTS TO ADDITIONAL FUNDING

8 REQUIREMENTS FOR SINGLE-EMPLOYER PLANS.—

9 (1) LIMITATION OF ADDITIONAL FUNDING

10 REQUIREMENT TO PLANS HAVING A FUNDED

11 CURRENT LIABILITY PERCENTAGE OF LESS

12 THAN 90 PERCENT.—Paragraph (1) of sec13 tion 302(d) of the Employee Retirement

14 Income Security Act of 1974 (29 U.S.C.

15 1082(d)) is amended by striking ‘‘which

16 has an unfunded current liability’’ and

17 inserting ‘‘which has a funded current li18 ability percentage of less than 90 percent

19 (determined without regard to paragraph

20 (8)(E))’’.

21 (2) RELATIONSHIP OF ADDITIONAL FUND22 ING REQUIREMENT TO FUNDING STANDARD

23 ACCOUNT CHARGES AND CREDITS.—
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1 (A) Clause (ii) of section

2 302(d)(1)(A) of such Act is amended to

3 read as follows:

4 ‘‘(ii)(I) for plan years begin5 ning prior to January 1, 2000, the

6 sum of the charges under sub7 section (b)(2) (other than 5 per8 cent of the charges established

9 prior to January 1, 1995, under

10 clauses (iv) and (v) of subsection

11 (b)(2)(B)), reduced by the sum of

12 the credits under subsection

13 (b)(3) (other than 5 percent of the

14 credits established prior to Janu15 ary 1, 1995, under clauses (ii) and

16 (iii) of subsection (b)(3)(B)), or

17 ‘‘(II) for plan years beginning

18 after December 31, 1999, the sum

19 of the charges under subsection

20 (b)(2), reduced by the sum of the

21 credits under subparagraph (B) of

22 subsection (b)(3), plus’’.

23 (B) The last sentence in section

24 302(d)(1) of such Act is amended to

25 read as follows:
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1 ‘‘Such increase shall not exceed the

2 amount which, after taking into account

3 charges (other than the additional charge

4 under this subsection) and credits under

5 subsection (b), is necessary to increase

6 the funded current liability percentage

7 (taking into account the expected in8 crease in current liability due to benefits

9 accruing during the plan year) to 100 per10 cent.’’

11 (3) AMENDMENT TO DEFICIT REDUCTION

12 CONTRIBUTION.—Paragraph (2) of section

13 302(d) of such Act is amended—

14 (A) by striking ‘‘plus’’ at the end

15 of subparagraph (A);

16 (B) by striking the period at the

17 end of subparagraph (B) and insert18 ing ‘‘, and’’; and

19 (C) by adding at the end the fol20 lowing new subparagraph:

21 ‘‘(C) the expected increase in cur22 rent liability due to benefits accruing

23 during the plan year.’’

24 (4) INCREASE IN UNFUNDED OLD LIABIL25 ITY.—
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1 (A) Paragraph (3) of section

2 302(d) of such Act is amended by add3 ing at the end the following new sub4 paragraphs:

5 ‘‘(D) SPECIAL RULE FOR REQUIRED

6 CHANGES IN ACTUARIAL ASSUMPTIONS.—

7 ‘‘(i) IN GENERAL.—The un8 funded old liability amount with

9 respect to any plan for any plan

10 year shall be increased by the

11 amount necessary to amortize the

12 amount of additional unfunded

13 old liability under the plan in

14 equal annual installments over a

15 period of 12 plan years (beginning

16 with the first plan year beginning

17 after December 31, 1994).

18 ‘‘(ii) ADDITIONAL UNFUNDED OLD

19 LIABILITY.—For purposes of clause

20 (i), the term ‘additional unfunded

21 old liability’ means the amount (if

22 any) by which—

23 ‘‘(I) the current liability of

24 the plan as of the beginning

25 of the first plan year begin-
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1 ning after December 31, 1994,

2 valued using the assumptions

3 required by paragraph (7)(C)

4 as in effect for plan years be5 ginning after December 31,

6 1994, exceeds

7 ‘‘(II) the current liability

8 of the plan as of the begin9 ning of such first plan year,

10 valued using the same as11 sumptions used under

12 subclause (I) (other than the

13 assumptions required by

14 paragraph (7)(C)), using the

15 prior interest rate, and using

16 such mortality assumptions as

17 were used to determine cur18 rent liability for the first plan

19 year beginning after Decem20 ber 31, 1992.

21 ‘‘(iii) PRIOR INTEREST RATE.—

22 For purposes of clause (ii), the

23 term ‘prior interest rate’ means

24 the rate of interest that is the

25 same percentage of the weighted
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1 average under subsection

2 (b)(5)(B)(ii)(I) for the first plan

3 year beginning after December

4 31, 1994, as the rate of interest

5 used by the plan to determine

6 current liability for the first plan

7 year beginning after December

8 31, 1992, is of the weighted aver9 age under subsection

10 (b)(5)(B)(ii)(I) for such first plan

11 year beginning after December

12 31, 1992.

13 ‘‘(E) OPTIONAL RULE FOR ADDI14 TIONAL UNFUNDED OLD LIABILITY.—

15 ‘‘(i) IN GENERAL.—If an election

16 is made under clause (ii), the

17 term ‘additional unfunded old li18 ability’ means (in lieu of the addi19 tional unfunded old liability de20 scribed in clause (ii) of subpara21 graph (D)), the amount (if any) by

22 which—

23 ‘‘(I) the unfunded current

24 liability of the plan as of the

25 beginning of the first plan
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1 year beginning after Decem2 ber 31, 1994, valued using the

3 assumptions required by

4 paragraph (7)(C) as in effect

5 for plan years beginning after

6 December 31, 1994, exceeds

7 ‘‘(II) the unamortized por8 tion of the unfunded old li9 ability under the plan as of

10 the beginning of the first plan

11 year beginning after Decem12 ber 31, 1994.

13 ‘‘(ii) ELECTION.—

14 ‘‘(I) An employer may ir15 revocably elect, at such time

16 and in such manner as shall

17 be prescribed by the Sec18 retary of the Treasury, to

19 apply the provisions of this

20 subparagraph as of the begin21 ning of the first plan year be22 ginning after December 31,

23 1994.

24 ‘‘(II) If an election is made

25 under this clause, the in-
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1 crease under paragraph (1)

2 for any plan year beginning

3 after December 31, 1994, and

4 before January 1, 2002, shall

5 not be less than the increase

6 that would be required under

7 paragraph (1) if the provi8 sions of this title as in effect

9 for plan years beginning be10 fore January 1, 1995, had re11 mained in effect.’’

12 (5) APPLICABLE PERCENTAGE FOR DE13 TERMINING UNFUNDED NEW LIABILITY

14 AMOUNT.—Subparagraph (C) of section

15 302(d)(4) of such Act is amended—

16 (A) by striking ‘‘.25’’ and inserting

17 ‘‘.40’’, and

18 (B) by striking ‘‘35’’ and inserting

19 ‘‘60’’.

20 (6) UNPREDICTABLE CONTINGENT EVENT

21 AMOUNT.—

22 (A) Subparagraph (A) of section

23 302(d)(5) of such Act is amended—
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1 (i) by striking ‘‘greater of’’ and

2 inserting ‘‘greatest of’’ before

3 clause (i);

4 (ii) by striking ‘‘or’’ at the end

5 of clause (i);

6 (iii) by striking the period at

7 the end of clause (ii) and insert8 ing ‘‘, or’’; and

9 (iv) by adding after clause (ii)

10 the following new clause:

11 ‘‘(iii) the additional amount

12 that would be determined under

13 paragraph (4)(A) if the unpredict14 able contingent event benefit li15 abilities were included in un16 funded new liability notwith17 standing paragraph (4)(B)(ii).’’

18 (B) Paragraph (5) of section

19 302(d) of such Act is amended by add20 ing at the end the following new sub21 paragraph:

22 ‘‘(E) LIMITATION.—The present

23 value of the amounts described in

24 subparagraph (A) with respect to any

25 one event shall not exceed the unpre-
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1 dictable contingent event benefit li2 abilities attributable to that event.’’

3 (C) Clause (ii) of section

4 302(e)(4)(D) of such Act is amended—

5 (i) by striking ‘‘greater of’’ and

6 inserting ‘‘greatest of’’ before

7 subclause (I);

8 (ii) by striking ‘‘or’’ at the end

9 of subclause (I);

10 (iii) by striking the period at

11 the end of subclause (II) and in12 serting ‘‘, or’’; and

13 (iv) by adding after subclause

14 (II) the following new clause:

15 ‘‘(III) 25 percent of the

16 amount determined under

17 subsection (d)(5)(A)(iii) for the

18 plan year.’’

19 (7) REQUIRED INTEREST RATE AND MOR20 TALITY ASSUMPTIONS FOR DETERMINING CUR21 RENT LIABILITY.—Subparagraph (C) of sec22 tion 302(d)(7) of such Act is amended to

23 read as follows:

24 ‘‘(C) INTEREST RATE AND MORTALITY

25 ASSUMPTIONS USED.—Effective for plan
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1 years beginning after December 31,

2 1994—

3 ‘‘(i) the rate of interest used to

4 determine current liability under

5 this subsection shall be the rate

6 of interest used under subsection

7 (b)(5), except that the highest rate

8 in the permissible range under

9 subparagraph (B)(ii) thereof shall

10 not exceed 105 percent of the

11 weighted average referred to in

12 such subparagraph, and

13 ‘‘(ii) the mortality table used

14 to determine current liability

15 under this subsection shall be the

16 table prescribed by the Secretary

17 of the Treasury.

18 The table prescribed under clause (ii)

19 shall be based on the prevailing com20 missioners’ standard table (described

21 in section 807(d)(5)(A) of the Internal

22 Revenue Code of 1986) used to deter23 mine reserves for group annuity con24 tracts issued on the date as of which

25 current liability is determined (with-
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1 out regard to any other subparagraph

2 of section 807(d)(5) of such Code). The

3 Secretary shall prescribe separate ta4 bles, which may be used instead of

5 the table described in the preceding

6 sentence, to calculate mortality rates

7 for participants who satisfy the defi8 nition of disability under titles II and

9 XVI of the Social Security Act and the

10 regulations thereunder.’’

11 (8) TRANSITION RULE.—Section 302(d)

12 of such Act is amended by adding at the

13 end the following new paragraph:

14 ‘‘(9) PHASE-IN OF INCREASES IN FUNDING

15 REQUIRED BY RETIREMENT PROTECTION ACT

16 OF 1994.—

17 ‘‘(A) IN GENERAL.—For any appli18 cable plan year, at the election of the

19 employer, the increase under para20 graph (1) shall not exceed the greater

21 of—

22 ‘‘(i) the increase that would be

23 required under paragraph (1) if

24 the provisions of this title as in

25 effect for plan years beginning be-
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1 fore January 1, 1995, had re2 mained in effect, or

3 ‘‘(ii) the amount which, after

4 taking into account charges

5 (other than the additional charge

6 under this subsection) and credits

7 under subsection (b), is necessary

8 to increase the funded current li9 ability percentage (taking into ac10 count the expected increase in

11 current liability due to benefits

12 accruing during the plan year) for

13 the applicable plan year to a per14 centage equal to the sum of the

15 initial funded current liability

16 percentage of the plan plus the

17 applicable number of percentage

18 points for such applicable plan

19 year.

20 ‘‘(B) APPLICABLE NUMBER OF PER21 CENTAGE POINTS.—

22 ‘‘(i) INITIAL FUNDED CURRENT

23 LIABILITY PERCENTAGE OF 75 PER24 CENT OR LESS.—Except as pro25 vided in clause (ii), for plans with
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1 an initial funded current liability

2 percentage of 75 percent or less,

3 the applicable number of percent4 age points for the applicable plan

5 year is as follows:

‘‘In the case of applicable The applicable number of

plan years beginning in: percentage points is:

1995 ...................................................... 3

1996 ...................................................... 6

1997 ...................................................... 9

1998 ...................................................... 12

1999 ...................................................... 15

2000 ...................................................... 19

2001 ...................................................... 24.

6 ‘‘(ii) OTHER CASES.—In the case

7 of a plan to which this clause ap8 plies, the applicable number of

9 percentage points for any such

10 applicable plan year is the sum

11 of—

12 ‘‘(I) 2 percentage points;

13 ‘‘(II) the applicable num14 ber of percentage points (if

15 any) under this clause for the

16 preceding applicable plan

17 year;

18 ‘‘(III) the product of .10

19 multiplied by the excess (if

20 any) of (a) 85 percentage

21 points over (b) the sum of the
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1 initial funded current liability

2 percentage and the number

3 determined under subclause

4 (II);

5 ‘‘(IV) for applicable plan

6 years beginning in 2000, 1 per7 centage point; and

8 ‘‘(V) for applicable plan

9 years beginning in 2001, 2 per10 centage points.

11 ‘‘(iii) PLANS TO WHICH CLAUSE

12 (ii) APPLIES.—

13 ‘‘(I) IN GENERAL.—Clause

14 (ii) shall apply to a plan for

15 an applicable plan year if the

16 initial funded current liability

17 percentage of such plan is

18 more than 75 percent.

19 ‘‘(II) PLANS INITIALLY

20 UNDER CLAUSE (i).—In the case

21 of a plan which (but for this

22 subclause) has an initial fund23 ed current liability percent24 age of 75 percent or less,

25 clause (ii) (and not clause (i))
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1 shall apply to such plan with

2 respect to applicable plan

3 years beginning after the first

4 applicable plan year for

5 which the sum of the initial

6 funded current liability per7 centage and the applicable

8 number of percentage points

9 (determined under clause (i))

10 exceeds 75 percent. For pur11 poses of applying clause (ii) to

12 such a plan, the initial funded

13 current liability percentage of

14 such plan shall be treated as

15 being the sum referred to in

16 the preceding sentence.

17 ‘‘(C) DEFINITIONS.—For purposes

18 of this paragraph—

19 ‘‘(i) The term ‘applicable plan

20 year’ means a plan year begin21 ning after December 31, 1994, and

22 before January 1, 2002.

23 ‘‘(ii) The term ‘initial funded

24 current liability percentage’

25 means the funded current liabil-
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1 ity percentage as of the first day

2 of the first plan year beginning

3 after December 31, 1994.’’

4 (9) LIQUIDITY REQUIREMENT.—

5 (A) Section 302(e) of such Act is

6 amended by redesignating paragraph

7 (5) as paragraph (6) and by inserting

8 after paragraph (4) the following new

9 paragraph:

10 ‘‘(5) LIQUIDITY REQUIREMENT.—

11 ‘‘(A) IN GENERAL.—A plan to which

12 this paragraph applies shall be treat13 ed as failing to pay the full amount of

14 any required installment to the ex15 tent that the value of the liquid assets

16 paid in such installment is less than

17 the liquidity shortfall (whether or not

18 such liquidity shortfall exceeds the

19 amount of such installment required

20 to be paid but for this paragraph).

21 ‘‘(B) PLANS TO WHICH PARAGRAPH

22 APPLIES.—This paragraph shall apply

23 to a defined benefit plan to which

24 subsection (d) applies and which—
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1 ‘‘(i) is required to pay install2 ments under this subsection for a

3 plan year, and

4 ‘‘(ii) has a liquidity shortfall

5 for any quarter during such plan

6 year.

7 ‘‘(C) PERIOD OF UNDERPAYMENT.—

8 For purposes of paragraph (1), any

9 portion of an installment that is

10 treated as not paid under subpara11 graph (A) shall continue to be treated

12 as unpaid until the close of the quar13 ter in which the due date for such in14 stallment occurs.

15 ‘‘(D) LIMITATION ON INCREASE.—If

16 the amount of any required install17 ment is increased by reason of sub18 paragraph (A), in no event shall such

19 increase exceed the amount which,

20 when added to prior installments for

21 the plan year, is necessary to increase

22 the funded current liability percent23 age (taking into account the expected

24 increase in current liability due to
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1 benefits accruing during the plan

2 year) to 100 percent.

3 ‘‘(E) DEFINITIONS.—For purposes

4 of this paragraph—

5 ‘‘(i) LIQUIDITY SHORTFALL.—The

6 term ‘liquidity shortfall’ means,

7 with respect to any required in8 stallment, an amount equal to the

9 excess (as of the last day of the

10 quarter for which such install11 ment is made) of the base amount

12 with respect to such quarter over

13 the value (as of such last day) of

14 the plan’s liquid assets.

15 ‘‘(ii) BASE AMOUNT.—

16 ‘‘(I) IN GENERAL.—The term

17 ‘base amount’ means, with re18 spect to any quarter, an

19 amount equal to 3 times the

20 sum of the adjusted disburse21 ments from the plan for the 12

22 months ending on the last day

23 of such quarter.

24 ‘‘(II) SPECIAL RULE.—If the

25 amount determined under
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1 clause (i) exceeds an amount

2 equal to 2 times the sum of

3 the adjusted disbursements

4 from the plan for the 36

5 months ending on the last day

6 of the quarter and an enrolled

7 actuary certifies to the Sec8 retary of the Treasury that

9 such excess is the result of

10 nonrecurring circumstances,

11 the base amount with respect

12 to such quarter shall be deter13 mined without regard to

14 amounts related to those non15 recurring circumstances.

16 ‘‘(iii) DISBURSEMENTS FROM THE

17 PLAN.—The term ‘disbursements

18 from the plan’ means all disburse19 ments from the trust, including

20 purchases of annuities, payments

21 of single sums and other benefits,

22 and administrative expenses.

23 ‘‘(iv) ADJUSTED DISBURSE24 MENTS.—The term ‘adjusted dis25 bursements’ means disbursements
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1 from the plan reduced by the

2 product of—

3 ‘‘(I) the plan’s funded cur4 rent liability percentage (as

5 defined in subsection (d)(8))

6 for the plan year, and

7 ‘‘(II) the sum of the pur8 chases of annuities, payments

9 of single sums, and such other

10 disbursements as the Sec11 retary of the Treasury shall

12 provide in regulations.

13 ‘‘(v) LIQUID ASSETS.—The term

14 ‘liquid assets’ means cash, mar15 ketable securities and such other

16 assets as specified by the Sec17 retary of the Treasury in regula18 tions.

19 ‘‘(vi) QUARTER.—The term

20 ‘quarter’ means, with respect to

21 any required installment, the 3-

22 month period preceding the

23 month in which the due date for

24 such installment occurs.
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1 ‘‘(F) REGULATIONS.—The Secretary

2 of the Treasury may prescribe such

3 regulations as are necessary to carry

4 out this paragraph.’’

5 (B) LIMITATION ON DISTRIBUTIONS

6 OTHER THAN LIFE ANNUITIES PAID BY

7 THE PLAN.—

8 (i) Section 206 of the Em9 ployee Retirement Income Secu10 rity Act of 1974 (29 U.S.C. 1056) is

11 amended by adding at the end the

12 following new subsection:

13 ‘‘(e) LIMITATION ON DISTRIBUTIONS OTHER

14 THAN LIFE ANNUITIES PAID BY THE PLAN.—

15 ‘‘(1) IN GENERAL.—Notwithstanding

16 any other provision of this part, the fidu17 ciary of a pension plan that is subject to

18 the additional funding requirements of

19 section 302(d) shall not permit a prohib20 ited payment to be made from a plan dur21 ing a period in which such plan has a li22 quidity shortfall (as defined in section

23 302(e)(5)).
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1 ‘‘(2) PROHIBITED PAYMENT.—For pur2 poses of paragraph (1), the term ‘prohib3 ited payment’ means—

4 ‘‘(A) any payment, in excess of the

5 monthly amount paid under a single

6 life annuity (plus any social security

7 supplements described in the last

8 sentence of section 204(b)(1)(G)), to a

9 participant or beneficiary whose an10 nuity starting date (as defined in sec11 tion 205(h)(2)), that occurs during the

12 period referred to in paragraph (1),

13 ‘‘(B) any payment for the pur14 chase of an irrevocable commitment

15 from an insurer to pay benefits, and

16 ‘‘(C) any other payment specified

17 by the Secretary of the Treasury by

18 regulations.

19 ‘‘(3) PERIOD OF SHORTFALL.—For pur20 poses of this subsection, a plan has a li21 quidity shortfall during the period that

22 there is an underpayment of an install23 ment under section 302(e) by reason of

24 paragraph (5)(A) thereof.
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1 ‘‘(4) COORDINATION WITH OTHER PROVI2 SIONS.—Compliance with this subsection

3 shall not constitute a violation of any

4 other provision of this Act.’’

5 (ii) Section 502 of such Act is

6 amended by adding at the end

7 thereof a new subsection (m) to

8 read as follows:

9 ‘‘(m) In the case of a distribution to a pen10 sion plan participant or beneficiary in viola11 tion of section 206(e) by a plan fiduciary, the

12 Secretary shall assess a penalty against such

13 fiduciary in an amount equal to the value of

14 the distribution. Such penalty shall not ex15 ceed $10,000 for each such distribution.’’

16 (10) AMENDMENT TO DEFINITION OF

17 FULL FUNDING LIMITATION.—

18 (A) Subparagraph (A) of section

19 302(c)(7) of such Act is amended—

20 (i) by inserting ‘‘(including

21 the expected increase in current

22 liability due to benefits accruing

23 during the plan year)’’ after ‘‘cur24 rent liability’’ in clause (i), and
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1 (ii) by adding at the end the

2 following flush sentences:

3 ‘‘In no event shall the excess de4 scribed in the preceding sentence for

5 any plan year be less than the excess

6 (if any) of 90 percent of the current li7 ability of the plan (including the ex8 pected increase in current liability

9 due to benefits accruing during the

10 plan year) over the value of the plan’s

11 assets determined under paragraph

12 (2). For purposes of the preceding

13 sentence, the term ‘current liability’

14 has the meaning given such term by

15 subsection (d)(7) (determined without

16 regard to subsection (d)(7)(D)), and

17 assets shall not be reduced by any

18 credit balance in the funding stand19 ard account.’’.

20 (B) Subparagraph (B) of section

21 302(c)(7) of such Act is amended to

22 read as follows:

23 ‘‘(B) CURRENT LIABILITY.—For pur24 poses of subparagraph (D) and subclause

25 (I) of subparagraph (A)(i), the term ‘cur-
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1 rent liability’ has the meaning given such

2 term by subsection (d)(7) (without regard

3 to subparagraphs (C) and (D) thereof)

4 and using the rate of interest used under

5 subsection (b)(5)(B).’’

6 (b) EFFECTIVE DATE.—

7 (1) IN GENERAL.—The amendments

8 made by this section shall apply to plan

9 years beginning after December 31, 1994.

10 (2) DELAY IN EFFECTIVE DATE FOR DIS11 ABLED LIVES.—For plan years beginning

12 before January 1, 1996, current liability

13 may be determined using a plan’s own

14 mortality assumptions for purposes of

15 calculating the mortality rates of dis16 abled lives.

17 SEC. 102. LIMITATION ON CHANGES IN CURRENT LIABILITY

18 ASSUMPTIONS.

19 (a) Paragraph (5) of section 302(c) of the

20 Employee Retirement Income Security Act of

21 1974 (29 U.S.C. 1082(c)(5)) is amended—

22 (1) by striking ‘‘If the funding meth23 od’’ and inserting the following:

24 ‘‘(A) IN GENERAL.—If the funding

25 method’’, and
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1 (2) by adding at the end the following

2 new subparagraph:

3 ‘‘(B) APPROVAL REQUIRED FOR CER4 TAIN CHANGES IN ASSUMPTIONS BY CER5 TAIN SINGLE EMPLOYER PLANS SUBJECT

6 TO ADDITIONAL FUNDING REQUIRE7 MENT.—

8 ‘‘(i) IN GENERAL.—No actuarial

9 assumption (other than the as10 sumptions described in sub11 section (d)(7)(C)) used to deter12 mine the current liability for a

13 plan to which this subparagraph

14 applies may be changed without

15 the approval of the Secretary of

16 the Treasury.

17 ‘‘(ii) PLANS TO WHICH SUBPARA18 GRAPH APPLIES.—This subpara19 graph shall apply to a plan only

20 if—

21 ‘‘(I) subsection (d) applies

22 to the plan;

23 ‘‘(II) the employer (within

24 the meaning of section

25 302(c)(11) (without regard to
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1 subparagraph (B) thereof))

2 maintaining such plan is de3 scribed in section 4043(b)(1);

4 and

5 ‘‘(III) the change in as6 sumptions (determined after

7 taking into account any

8 changes in interest rate and

9 mortality table) results in a

10 decrease in the unfunded cur11 rent liability of the plan for

12 the current plan year that is

13 $50,000,000 or greater, or that

14 is $5,000,000 or greater and

15 that is 5 percent or more of

16 the current liability of the

17 plan before such change.’’

18 (b) EFFECTIVE DATE.—

19 (1) IN GENERAL.—The amendment

20 made by this section shall apply to

21 changes in assumptions for plan years be22 ginning after October 28, 1993.

23 (2) CERTAIN CHANGES CEASE TO BE EF24 FECTIVE.—In the case of changes in as25 sumptions for plan years beginning after
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1 December 31, 1992, and on or before Oc2 tober 28, 1993, such changes shall cease

3 to be effective for plan years beginning

4 after December 31, 1994, if—

5 (A) such change would have re6 quired the approval of the Secretary

7 of the Treasury had such amendment

8 applied to such change, and

9 (B) such change is not so ap10 proved.

11 SEC. 103. ANTICIPATION OF BARGAINED BENEFIT IN12 CREASES.

13 (a) IN GENERAL.—Section 302(c) of the Em14 ployee Retirement Income Security Act of

15 1974 (29 U.S.C. 1082(c)) is amended by adding

16 at the end the following new paragraph:

17 ‘‘(12) ANTICIPATION OF BENEFIT INCREASES

18 EFFECTIVE IN THE FUTURE.—In determining

19 projected benefits, the funding method of a

20 collectively bargained plan described in sec21 tion 413(a) of the Internal Revenue Code of

22 1986 (other than a multiemployer plan) shall

23 anticipate benefit increases scheduled to take

24 effect during the term of the collective bar25 gaining agreement applicable to the plan.’’
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1 (b) EFFECTIVE DATE.—The amendments

2 made by this section shall apply to plan years

3 beginning after December 31, 1994 with re4 spect to collective bargaining agreements in

5 effect on or after January 1, 1995.

6 SEC. 104. MODIFICATION OF QUARTERLY CONTRIBUTION

7 REQUIREMENT.

8 (a) IN GENERAL.—Paragraph (1) of section

9 302(e) of the Employee Retirement Income Se10 curity Act of 1974 (29 U.S.C. 1082(e)) is amend11 ed—

12 (1) by inserting ‘‘which has a funded

13 current liability percentage (as defined in

14 subsection (d)(8)) for the preceding plan

15 year of less than 100 percent’’ before

16 ‘‘fails’’, and

17 (2) by striking ‘‘any plan year’’ and in18 serting ‘‘the plan year’’.

19 (b) EFFECTIVE DATE.—The amendment

20 made by this section shall apply to plan years

21 beginning after the date of enactment of this

22 Act.
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1 Subtitle B—Amendments to the

2 Internal Revenue Code of 1986

3 SEC. 121. MINIMUM FUNDING REQUIREMENTS.

4 (a) AMENDMENTS TO ADDITIONAL FUNDING

5 REQUIREMENTS FOR SINGLE-EMPLOYER PLANS.—

6 (1) LIMITATION OF ADDITIONAL FUNDING

7 REQUIREMENT TO PLANS HAVING A FUNDED

8 CURRENT LIABILITY PERCENTAGE OF LESS

9 THAN 90 PERCENT.—Paragraph (1) of sec10 tion 412(l) of the Internal Revenue Code

11 of 1986 (relating to additional funding re12 quirements for plans which are not multi13 employer plans) is amended by striking

14 ‘‘which has an unfunded current liability’’

15 and inserting ‘‘which has a funded cur16 rent liability percentage of less than 90

17 percent (determined without regard to

18 paragraph (8)(E))’’.

19 (2) RELATIONSHIP OF ADDITIONAL FUND20 ING REQUIREMENT TO FUNDING STANDARD

21 ACCOUNT CHARGES AND CREDITS.—

22 (A) Clause (ii) of section

23 412(l)(1)(A) of such Code is amended

24 to read as follows:
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1 ‘‘(ii)(I) for plan years begin2 ning prior to January 1, 2000, the

3 sum of the charges under sub4 section (b)(2) (other than 5 per5 cent of the charges established

6 prior to January 1, 1995, under

7 clauses (iv) and (v) of subsection

8 (b)(2)(B)), reduced by the sum of

9 the credits under subsection

10 (b)(3) (other than 5 percent of the

11 credits established prior to Janu12 ary 1, 1995, under clauses (ii) and

13 (iii) of subsection (b)(3)(B)), or

14 ‘‘(II) for plan years beginning

15 after December 31, 1999, the sum

16 of the charges under subsection

17 (b)(2), reduced by the sum of the

18 credits under subparagraph (B) of

19 subsection (b)(3), plus’’.

20 (B) The last sentence in section

21 412(l)(1) of such Code is amended to

22 read as follows:

23 ‘‘Such increase shall not exceed the

24 amount which, after taking into account

25 charges (other than the additional charge
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1 under this subsection) and credits under

2 subsection (b), is necessary to increase

3 the funded current liability percentage

4 (taking into account the expected in5 crease in current liability due to benefits

6 accruing during the plan year) to 100 per7 cent.’’

8 (3) AMENDMENT TO DEFICIT REDUCTION

9 CONTRIBUTION.—Paragraph (2) of section

10 412(l) of such Code is amended—

11 (A) by striking ‘‘plus’’ at the end

12 of subparagraph (A),

13 (B) by striking the period at the

14 end of subparagraph (B) and insert15 ing ‘‘, and’’; and

16 (C) by adding at the end the fol17 lowing new subparagraph:

18 ‘‘(C) the expected increase in cur19 rent liability due to benefits accruing

20 during the plan year.’’

21 (4) INCREASE IN UNFUNDED OLD LIABIL22 ITY.—

23 (A) Paragraph (3) of section 412(l)

24 of such Code is amended by adding at
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1 the end the following new subpara2 graphs:

3 ‘‘(D) SPECIAL RULE FOR REQUIRED

4 CHANGES IN ACTUARIAL ASSUMPTIONS.—

5 ‘‘(i) IN GENERAL.—The un6 funded old liability amount with

7 respect to any plan for any plan

8 year shall be increased by the

9 amount necessary to amortize the

10 amount of additional unfunded

11 old liability under the plan in

12 equal annual installments over a

13 period of 12 plan years (beginning

14 with the first plan year beginning

15 after December 31, 1994).

16 ‘‘(ii) ADDITIONAL UNFUNDED OLD

17 LIABILITY.—For purposes of clause

18 (i), the term ‘additional unfunded

19 old liability’ means the amount (if

20 any) by which—

21 ‘‘(I) the current liability of

22 the plan as of the beginning

23 of the first plan year begin24 ning after December 31, 1994,

25 valued using the assumptions
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1 required by paragraph (7)(C)

2 as in effect for plan years be3 ginning after December 31,

4 1994, exceeds

5 ‘‘(II) the current liability

6 of the plan as of the begin7 ning of such first plan year,

8 valued using the same as9 sumptions used under

10 subclause (I) (other than the

11 assumptions required by

12 paragraph (7)(C)), using the

13 prior interest rate, and using

14 such mortality assumptions as

15 were used to determine cur16 rent liability for the first plan

17 year beginning after Decem18 ber 31, 1992.

19 ‘‘(iii) PRIOR INTEREST RATE.—

20 For purposes of clause (ii), the

21 term ‘prior interest rate’ means

22 the rate of interest that is the

23 same percentage of the weighted

24 average under subsection

25 (b)(5)(B)(ii)(I) for the first plan
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1 year beginning after December

2 31, 1994, as the rate of interest

3 used by the plan to determine

4 current liability for the first plan

5 year beginning after December

6 31, 1992, is of the weighted aver7 age under subsection

8 (b)(5)(B)(ii)(I) for such first plan

9 year beginning after December

10 31, 1992.

11 ‘‘(E) OPTIONAL RULE FOR ADDI12 TIONAL UNFUNDED OLD LIABILITY.—

13 ‘‘(i) IN GENERAL.—If an election

14 is made under clause (ii), the

15 term ‘additional unfunded old li16 ability’ means (in lieu of the addi17 tional unfunded old liability de18 scribed in clause (ii) of subpara19 graph (D)), the amount (if any) by

20 which—

21 ‘‘(I) the unfunded current

22 liability of the plan as of the

23 beginning of the first plan

24 year beginning after Decem25 ber 31, 1994, valued using the
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1 assumptions required by

2 paragraph (7)(C) as in effect

3 for plan years beginning after

4 December 31, 1994, exceeds

5 ‘‘(II) the unamortized por6 tion of the unfunded old li7 ability under the plan as of

8 the beginning of the first plan

9 year beginning after Decem10 ber 31, 1994.

11 ‘‘(ii) ELECTION.—

12 ‘‘(I) An employer may ir13 revocably elect, at such time

14 and in such manner as shall

15 be prescribed by the Sec16 retary, to apply the provisions

17 of this subparagraph as of the

18 beginning of the first plan

19 year beginning after Decem20 ber 31, 1994.

21 ‘‘(II) If an election is made

22 under this clause, the in23 crease under paragraph (1)

24 for any plan year beginning

25 after December 31, 1994, and
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1 before January 1, 2002, shall

2 not be less than the increase

3 that would be required under

4 paragraph (1) if the provi5 sions of this title as in effect

6 for plan years beginning be7 fore January 1, 1995, had re8 mained in effect.’’

9 (5) APPLICABLE PERCENTAGE FOR DE10 TERMINING UNFUNDED NEW LIABILITY

11 AMOUNT.—Subparagraph (C) of section

12 412(l)(4) of such Code is amended—

13 (A) by striking ‘‘.25’’ and inserting

14 ‘‘.40’’, and

15 (B) by striking ‘‘35’’ and inserting

16 ‘‘60’’.

17 (6) UNPREDICTABLE CONTINGENT EVENT

18 AMOUNT.—

19 (A) Subparagraph (A) of section

20 412(l)(5) of such Code is amended—

21 (i) by striking ‘‘greater of’’ and

22 inserting ‘‘greatest of’’ before

23 clause (i);

24 (ii) by striking ‘‘or’’ at the end

25 of clause (i);
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1 (iii) by striking the period at

2 the end of clause (ii) and insert3 ing ‘‘, or’’; and

4 (iv) by adding after clause (ii)

5 the following new clause:

6 ‘‘(iii) the additional amount

7 that would be determined under

8 paragraph (4)(A) if the unpredict9 able contingent event benefit li10 abilities were included in un11 funded new liability notwith12 standing paragraph (4)(B)(ii).’’

13 (B) Paragraph (5) of section 412(l)

14 of such Code is amended by adding at

15 the end the following new subpara16 graph:

17 ‘‘(E) LIMITATION.—The present

18 value of the amounts described in

19 subparagraph (A) with respect to any

20 one event shall not exceed the unpre21 dictable contingent event benefit li22 abilities attributable to that event.’’

23 (C) Clause (ii) of section

24 412(m)(4)(D) of such Code is amend25 ed—
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1 (i) by striking ‘‘greater of’’ and

2 inserting ‘‘greatest of’’ before

3 subclause (I);

4 (ii) by striking ‘‘or’’ at the end

5 of subclause (I);

6 (iii) by striking the period at

7 the end of subclause (II) and in8 serting ‘‘, or’’; and

9 (iv) by adding after subclause

10 (II) the following new subclause:

11 ‘‘(III) 25 percent of the

12 amount determined under

13 subsection (l)(5)(A)(iii) for the

14 plan year.’’

15 (7) REQUIRED INTEREST RATE AND MOR16 TALITY ASSUMPTIONS FOR DETERMINING CUR17 RENT LIABILITY.—Subparagraph (C) of sec18 tion 412(l)(7) of such Code is amended to

19 read as follows:

20 ‘‘(C) INTEREST RATE AND MORTALITY

21 ASSUMPTIONS USED.—Effective for plan

22 years beginning after December 31,

23 1994—

24 ‘‘(i) the rate of interest used to

25 determine current liability under
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1 this subsection shall be the rate

2 of interest used under subsection

3 (b)(5), except that the highest rate

4 in the permissible range under

5 subparagraph (B)(ii) thereof shall

6 not exceed 105 percent of the

7 weighted average referred to in

8 such subparagraph, and

9 ‘‘(ii) the mortality table used

10 to determine current liability

11 under this subsection shall be the

12 table prescribed by the Secretary.

13 The table prescribed under clause (ii)

14 shall be based on the prevailing com15 missioners’ standard table (described

16 in section 807(d)(5)(A)) used to deter17 mine reserves for group annuity con18 tracts issued on the date as of which

19 current liability is determined (with20 out regard to any other subparagraph

21 of section 807(d)(5)). The Secretary

22 shall prescribe separate tables, which

23 may be used instead of the table de24 scribed in the preceding sentence, to

25 calculate mortality rates for partici-
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1 pants who satisfy the definition of

2 disability under titles II and XVI of

3 the Social Security Act and the regu4 lations thereunder.’’

5 (8) TRANSITION RULE.—Section 412(l) of

6 such Code is amended by adding at the

7 end the following new paragraph:

8 ‘‘(9) PHASE-IN OF INCREASES IN FUNDING

9 REQUIRED BY RETIREMENT PROTECTION ACT

10 OF 1994.—

11 ‘‘(A) IN GENERAL.—For any appli12 cable plan year, at the election of the

13 employer, the increase under para14 graph (1) shall not exceed the greater

15 of—

16 ‘‘(i) the increase that would be

17 required under paragraph (1) if

18 the provisions of this title as in

19 effect for plan years beginning be20 fore January 1, 1995, had re21 mained in effect, or

22 ‘‘(ii) the amount which, after

23 taking into account charges

24 (other than the additional charge

25 under this subsection) and credits
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1 under subsection (b), is necessary

2 to increase the funded current li3 ability percentage (taking into ac4 count the expected increase in

5 current liability due to benefits

6 accruing during the plan year) for

7 the applicable plan year to a per8 centage equal to the sum of the

9 initial funded current liability

10 percentage of the plan plus the

11 applicable number of percentage

12 points for such applicable plan

13 year.

14 ‘‘(B) APPLICABLE NUMBER OF PER15 CENTAGE POINTS.—

16 ‘‘(i) INITIAL FUNDED CURRENT

17 LIABILITY PERCENTAGE OF 75 PER18 CENT OR LESS.—Except as pro19 vided in clause (ii), for plans with

20 an initial funded current liability

21 percentage of 75 percent or less,

22 the applicable number of percent23 age points for the applicable plan

24 year is as follows:

‘‘In the case of applicable The applicable number of

plan years beginning in: percentage points is:

1995 ...................................................... 3
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1996 ...................................................... 6

1997 ...................................................... 9

1998 ...................................................... 12

1999 ...................................................... 15

2000 ...................................................... 19

2001 ...................................................... 24.

1 ‘‘(ii) OTHER CASES.—In the case

2 of a plan to which this clause ap3 plies, the applicable number of

4 percentage points for any such

5 applicable plan year is the sum

6 of—

7 ‘‘(I) 2 percentage points;

8 ‘‘(II) the applicable num9 ber of percentage points (if

10 any) under this clause for the

11 preceding applicable plan

12 year;

13 ‘‘(III) the product of .10

14 multiplied by the excess (if

15 any) of (a) 85 percentage

16 points over (b) the sum of the

17 initial funded current liability

18 percentage and the number

19 determined under subclause

20 (II);
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1 ‘‘(IV) for applicable plan

2 years beginning in 2000, 1 per3 centage point; and

4 ‘‘(V) for applicable plan

5 years beginning in 2001, 2 per6 centage points.

7 ‘‘(iii) PLANS TO WHICH CLAUSE

8 (ii) APPLIES.—

9 ‘‘(I) IN GENERAL.—Clause

10 (ii) shall apply to a plan for

11 an applicable plan year if the

12 initial funded current liability

13 percentage of such plan is

14 more than 75 percent.

15 ‘‘(II) PLANS INITIALLY

16 UNDER CLAUSE (i).—In the case

17 of a plan which (but for this

18 subclause) has an initial fund19 ed current liability percent20 age of 75 percent or less,

21 clause (ii) (and not clause (i))

22 shall apply to such plan with

23 respect to applicable plan

24 years beginning after the first

25 applicable plan year for
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1 which the sum of the initial

2 funded current liability per3 centage and the applicable

4 number of percentage points

5 (determined under clause (i))

6 exceeds 75 percent. For pur7 poses of applying clause (ii) to

8 such a plan, the initial funded

9 current liability percentage of

10 such plan shall be treated as

11 being the sum referred to in

12 the preceding sentence.

13 ‘‘(C) DEFINITIONS.—For purposes

14 of this paragraph—

15 ‘‘(i) The term ‘applicable plan

16 year’ means a plan year begin17 ning after December 31, 1994, and

18 before January 1, 2002.

19 ‘‘(ii) The term ‘initial funded

20 current liability percentage’

21 means the funded current liabil22 ity percentage as of the first day

23 of the first plan year beginning

24 after December 31, 1994.’’

25 (9) LIQUIDITY REQUIREMENT.—
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1 (A) Section 412(m) of such Code is

2 amended by redesignating paragraph

3 (5) as paragraph (6) and by inserting

4 after paragraph (4) the following new

5 paragraph:

6 ‘‘(5) LIQUIDITY REQUIREMENT.—

7 ‘‘(A) IN GENERAL.—A plan to which

8 this paragraph applies shall be treat9 ed as failing to pay the full amount of

10 any required installment to the ex11 tent that the value of the liquid assets

12 paid in such installment is less than

13 the liquidity shortfall (whether or not

14 such liquidity shortfall exceeds the

15 amount of such installment required

16 to be paid but for this paragraph).

17 ‘‘(B) PLANS TO WHICH PARAGRAPH

18 APPLIES.—This paragraph shall apply

19 to a defined benefit plan to which

20 subsection (l) applies and which—

21 ‘‘(i) is required to pay install22 ments under this subsection for a

23 plan year, and
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1 ‘‘(ii) has a liquidity shortfall

2 for any quarter during such plan

3 year.

4 ‘‘(C) PERIOD OF UNDERPAYMENT.—

5 For purposes of paragraph (1), any

6 portion of an installment that is

7 treated as not paid under subpara8 graph (A) shall continue to be treated

9 as unpaid until the close of the quar10 ter in which the due date for such in11 stallment occurs.

12 ‘‘(D) LIMITATION ON INCREASE.—If

13 the amount of any required install14 ment is increased by reason of sub15 paragraph (A), in no event shall such

16 increase exceed the amount which,

17 when added to prior installments for

18 the plan year, is necessary to increase

19 the funded current liability percent20 age (taking into account the expected

21 increase in current liability due to

22 benefits accruing during the plan

23 year) to 100 percent.

24 ‘‘(E) DEFINITIONS.—For purposes

25 of this paragraph—
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1 ‘‘(i) LIQUIDITY SHORTFALL.—The

2 term ‘liquidity shortfall’ means,

3 with respect to any required in4 stallment, an amount equal to the

5 excess (as of the last day of the

6 quarter for which such install7 ment is made) of the base amount

8 with respect to such quarter over

9 the value (as of such last day) of

10 the plan’s liquid assets.

11 ‘‘(ii) BASE AMOUNT.—

12 ‘‘(I) IN GENERAL.—The term

13 ‘base amount’ means, with re14 spect to any quarter, an

15 amount equal to 3 times the

16 sum of the adjusted disburse17 ments from the plan for the 12

18 months ending on the last day

19 of such quarter.

20 ‘‘(II) SPECIAL RULE.—If the

21 amount determined under

22 clause (i) exceeds an amount

23 equal to 2 times the sum of

24 the adjusted disbursements

25 from the plan for the 36
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1 months ending on the last day

2 of the quarter and an enrolled

3 actuary certifies to the Sec4 retary that such excess is the

5 result of nonrecurring cir6 cumstances, the base amount

7 with respect to such quarter

8 shall be determined without

9 regard to amounts related to

10 those nonrecurring cir11 cumstances.

12 ‘‘(iii) DISBURSEMENTS FROM THE

13 PLAN.—The term ‘disbursements

14 from the plan’ means all disburse15 ments from the trust, including

16 purchases of annuities, payments

17 of single sums and other benefits,

18 and administrative expenses.

19 ‘‘(iv) ADJUSTED DISBURSE20 MENTS.—The term ‘adjusted dis21 bursements’ means disbursements

22 from the plan reduced by the

23 product of—

24 ‘‘(I) the plan’s funded cur25 rent liability percentage (as
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1 defined in subsection (l)(8))

2 for the plan year, and

3 ‘‘(II) the sum of the pur4 chases of annuities, payments

5 of single sums, and such other

6 disbursements as the Sec7 retary shall provide in regula8 tions.

9 ‘‘(v) LIQUID ASSETS.—The term

10 ‘liquid assets’ means cash, mar11 ketable securities and such other

12 assets as specified by the Sec13 retary in regulations.

14 ‘‘(vi) QUARTER.—The term

15 ‘quarter’ means, with respect to

16 any required installment, the 3-

17 month period preceding the

18 month in which the due date for

19 such installment occurs.

20 ‘‘(F) REGULATIONS.—The Secretary

21 may prescribe such regulations as are

22 necessary to carry out this para23 graph.’’

24 (B) EXCISE TAX ON UNPAID LIQUID25 ITY SHORTFALL.—
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1 (i) Subsection (e) of section

2 4971 of such Code is amended by

3 striking ‘‘(a) or (b)’’ wherever it

4 appears and replacing it with

5 ‘‘(a), (b) or (f)’’.

6 (ii) Section 4971 of such Code

7 is amended by redesignating sub8 section (f) as subsection (g) and

9 adding a new subsection (f) to

10 read as follows:

11 ‘‘(f) FAILURE TO PAY LIQUIDITY SHORT12 FALL.—

13 ‘‘(1) IN GENERAL.—In the case of a plan

14 to which section 412(m)(5) applies, there

15 is hereby imposed a tax of 10 percent of

16 the excess (if any) of—

17 ‘‘(A) the amount of the liquidity

18 shortfall for any quarter, over

19 ‘‘(B) the amount of such shortfall

20 which is paid by the required install21 ment under section 412(m) for such

22 quarter (but only if such installment

23 is paid on or before the due date for

24 such installment).
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1 ‘‘(2) ADDITIONAL TAX.—If the plan has a

2 liquidity shortfall as of the close of any

3 quarter and as of the close of each of the

4 following 4 quarters, there is hereby im5 posed a tax equal to 100 percent of the

6 amount on which tax was imposed by

7 paragraph (1) for such first quarter.

8 ‘‘(3) DEFINITIONS AND SPECIAL RULE.—

9 ‘‘(A) LIQUIDITY SHORTFALL; QUAR10 TER.—For purposes of this subsection,

11 the terms ‘liquidity shortfall’ and

12 ‘quarter’ have the respective mean13 ings given such terms by section

14 412(m)(5).

15 ‘‘(B) SPECIAL RULE.—If the tax im16 posed by paragraph (2) is paid with

17 respect to any liquidity shortfall for

18 any quarter, no further tax shall be

19 imposed by this subsection on such

20 shortfall for such quarter.’’

21 (C) TREATMENT OF FAILURE TO

22 MAKE CERTAIN PAYMENTS IF PLAN HAS

23 LIQUIDITY SHORTFALL.—Section 401(a)

24 of such Code is amended by adding at

25 the end the following new paragraph:
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1 ‘‘(32) TREATMENT OF FAILURE TO MAKE

2 CERTAIN PAYMENTS IF PLAN HAS LIQUIDITY

3 SHORTFALL.—

4 ‘‘(A) IN GENERAL.—A trust forming

5 part of a pension plan to which sec6 tion 412(m)(5) applies shall not be

7 treated as failing to constitute a

8 qualified trust under this section

9 merely because such plan ceases to

10 make any payment described in sub11 paragraph (B) during any period that

12 such plan has a liquidity shortfall (as

13 defined in section 412(m)(5)).

14 ‘‘(B) PAYMENTS DESCRIBED.—A pay15 ment is described in this subpara16 graph if such payment is—

17 ‘‘(i) any payment, in excess of

18 the monthly amount paid under a

19 single life annuity (plus any social

20 security supplements described in

21 the last sentence of section

22 411(a)(9)), to a participant or ben23 eficiary whose annuity starting

24 date (as defined in section

25 417(f)(2)) occurs during the pe-
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1 riod referred to in subparagraph

2 (A),

3 ‘‘(ii) any payment for the pur4 chase of an irrevocable commit5 ment from an insurer to pay bene6 fits, and

7 ‘‘(iii) any other payment speci8 fied by the Secretary by regula9 tions.

10 ‘‘(C) PERIOD OF SHORTFALL.—For

11 purposes of this paragraph, a plan

12 has a liquidity shortfall during the

13 period that there is an underpayment

14 of an installment under section

15 412(m) by reason of paragraph (5)(A)

16 thereof.’’

17 (10) AMENDMENT TO DEFINITION OF

18 FULL FUNDING LIMITATION.—

19 (A) Subparagraph (A) of section

20 412(c)(7) of such Code is amended—

21 (i) by inserting ‘‘(including

22 the expected increase in current

23 liability due to benefits accruing

24 during the plan year)’’ after ‘‘cur25 rent liability’’ in clause (i), and
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1 (ii) by adding at the end the

2 following flush sentences:

3 ‘‘In no event shall the excess de4 scribed in the preceding sentence for

5 any plan year be less than the excess

6 (if any) of 90 percent of the current li7 ability of the plan (including the ex8 pected increase in current liability

9 due to benefits accruing during the

10 plan year) over the value of the plan’s

11 assets determined under paragraph

12 (2). For purposes of the preceding

13 sentence, the term ‘current liability’

14 has the meaning given such term by

15 subsection (l)(7) (determined without

16 regard to subsection (l)(7)(D)), and as17 sets shall not be reduced by any cred18 it balance in the funding standard ac19 count.’’.

20 (B) Subparagraph (B) of section

21 412(c)(7) of such Code is amended to

22 read as follows:

23 ‘‘(B) CURRENT LIABILITY.—For pur24 poses of subparagraph (D) and

25 subclause (I) of subparagraph (A)(i),
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1 the term ‘current liability’ has the

2 meaning given such term by sub3 section (l)(7) (without regard to sub4 paragraphs (C) and (D) thereof) and

5 using the rate of interest used under

6 subsection (b)(5)(B).’’

7 (b) EFFECTIVE DATE.—

8 (1) IN GENERAL.—The amendments

9 made by this section shall apply to plan

10 years beginning after December 31, 1994.

11 (2) DELAY IN EFFECTIVE DATE FOR DIS12 ABLED LIVES.—For plan years beginning

13 before January 1, 1996, current liability

14 may be determined using a plan’s own

15 mortality assumptions for purposes of

16 calculating the mortality rates of dis17 abled lives.

18 SEC. 122. LIMITATION ON CHANGES IN CURRENT LIABILITY

19 ASSUMPTIONS.

20 (a) IN GENERAL.—Paragraph (5) of section

21 412(c) of the Internal Revenue Code of 1986 is

22 amended—

23 (1) by striking ‘‘If the funding meth24 od’’ and inserting the following:
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1 ‘‘(A) IN GENERAL.—If the funding

2 method’’, and

3 (2) by adding at the end the following

4 new subparagraph:

5 ‘‘(B) APPROVAL REQUIRED FOR CERTAIN

6 CHANGES IN ASSUMPTIONS BY CERTAIN SIN7 GLE EMPLOYER PLANS SUBJECT TO ADDI8 TIONAL FUNDING REQUIREMENT.—

9 ‘‘(i) IN GENERAL.—No actuarial as10 sumption (other than the assump11 tions described in subsection

12 (l)(7)(C)) used to determine the cur13 rent liability for a plan to which this

14 subparagraph applies may be

15 changed without the approval of the

16 Secretary.

17 ‘‘(ii) PLANS TO WHICH SUBPARA18 GRAPH APPLIES.—This subparagraph

19 shall apply to a plan only if—

20 ‘‘(I) subsection (l) applies to

21 the plan;

22 ‘‘(II) the employer (within the

23 meaning of section 412(c)(11)

24 (without regard to subparagraph

25 (B) thereof)) maintaining such
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1 plan is described in section

2 4043(b)(1) of the Employee Retire3 ment Income Security Act of 1974;

4 and

5 ‘‘(III) the change in assump6 tions (determined after taking

7 into account any changes in inter8 est rate and mortality table) re9 sults in a decrease in the un10 funded current liability of the

11 plan for the current plan year

12 that is $50,000,000 or greater, or

13 that is $5,000,000 or greater and

14 that is 5 percent or more of the

15 current liability of the plan be16 fore such change.’’

17 (b) EFFECTIVE DATE.—

18 (1) IN GENERAL.—The amendment

19 made by this section shall apply to

20 changes in assumptions for plan years be21 ginning after October 28, 1993.

22 (2) CERTAIN CHANGES CEASE TO BE EF23 FECTIVE.—In the case of changes in as24 sumptions for plan years beginning after

25 December 31, 1992, and on or before Oc-
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1 tober 28, 1993, such changes shall cease

2 to be effective for plan years beginning

3 after December 31, 1994, if—

4 (A) such change would have re5 quired the approval of the Secretary

6 of the Treasury had such amendment

7 applied to such change, and

8 (B) such change is not so ap9 proved.

10 SEC. 123. ANTICIPATION OF BARGAINED BENEFIT IN11 CREASES.

12 (a) IN GENERAL.—Section 412(c) of the In13 ternal Revenue Code of 1986 is amended by

14 adding at the end the following new para15 graph:

16 ‘‘(12) ANTICIPATION OF BENEFIT IN17 CREASES EFFECTIVE IN THE FUTURE.—In de18 termining projected benefits, the funding

19 method of a collectively bargained plan

20 described in section 413(a) (other than a

21 multiemployer plan) shall anticipate ben22 efit increases scheduled to take effect

23 during the term of the collective bargain24 ing agreement applicable to the plan.’’
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1 (b) EFFECTIVE DATE.—The amendment

2 made by this section shall apply to plan years

3 beginning after December 31, 1994, with re4 spect to collective bargaining agreements in

5 effect on or after January 1, 1995.

6 SEC. 124. MODIFICATION OF QUARTERLY CONTRIBUTION

7 REQUIREMENT.

8 (a) IN GENERAL.—Paragraph (1) of section

9 412(m) of the Internal Revenue Code of 1986

10 is amended—

11 (1) by inserting ‘‘which has a funded

12 current liability percentage (as defined in

13 subsection (l)(8)) for the preceding plan

14 year of less than 100 percent’’ before

15 ‘‘fails’’, and

16 (2) by striking ‘‘any plan year’’ and in17 serting ‘‘the plan year’’.

18 (b) EFFECTIVE DATE.—The amendment

19 made by this section shall apply to plan years

20 beginning after the date of enactment of this

21 Act.

22 SEC. 125. EXCEPTIONS TO EXCISE TAX ON NONDEDUCTIBLE

23 CONTRIBUTIONS.

24 (a) IN GENERAL.—Section 4972(c) of the In25 ternal Revenue Code of 1986 is amended by
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1 adding at the end the following new para2 graph:

3 ‘‘(6) EXCEPTIONS.—In determining the

4 amount of nondeductible contributions

5 for any taxable year, there shall not be

6 taken into account—

7 ‘‘(A) contributions that would be

8 deductible under section 404(a)(1)(D)

9 if the plan had more than 100 partici10 pants if—

11 ‘‘(i) the plan is covered under

12 section 4021 of the Employee Re13 tirement Income Security Act of

14 1974, and

15 ‘‘(ii) the plan is terminated

16 under section 4041(b) of such Act

17 on or before the last day of the

18 taxable year, and

19 ‘‘(B) contributions to a defined

20 contribution plan which—

21 ‘‘(i) do not exceed 6 percent of

22 compensation (within the mean23 ing of section 404(a)(7)(A)(i)) paid

24 or accrued (during the taxable

25 year for which the contributions
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1 were made) to beneficiaries under

2 the plan, and

3 ‘‘(ii) are not deductible when

4 contributed solely because of sec5 tion 404(a)(7).

6 If one or more defined benefit plans were

7 taken into account in determining the

8 amount allowable as a deduction under

9 section 404 for contributions to any de10 fined contribution plan, subparagraph

11 (B) shall apply only if all such defined

12 benefit plans are described in section

13 404(a)(1)(D). For purposes of subpara14 graph (B), the deductible limits under

15 section 404(a)(7) shall first be applied to

16 amounts contributed to a defined benefit

17 plan and then to amounts described in

18 subparagraph (B).’’

19 (b) EFFECTIVE DATE.—

20 (1) SECTION 4972(c)(6)(A).—Section

21 4972(c)(6)(A) of the Internal Revenue

22 Code of 1986 (as added by this section)

23 shall apply to taxable years ending on or

24 after the date of enactment of this Act.
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1 (2) SECTION 4972(c)(6)(B).—Section

2 4972(c)(6)(B) of such Code (as added by

3 this section) shall apply to taxable years

4 ending on or after December 31, 1992.

5 TITLE II—AMENDMENTS RELAT6 ED TO TITLE IV OF THE EM7 PLOYEE RETIREMENT IN8 COME SECURITY ACT OF 1974

9 SEC. 201. REPORTABLE EVENTS.

10 (a) RESPONSIBILITY FOR REPORTABLE

11 EVENTS REPORTING.—Section 4043(a) of the

12 Employee Retirement Income Security Act of

13 1974 (29 U.S.C. 1343(a)) is amended—

14 (1) in the first sentence, by inserting

15 ‘‘or the contributing sponsor’’ before

16 ‘‘knows or has reason to know’’;

17 (2) in the first sentence, by inserting

18 ‘‘, unless a notice otherwise required

19 under this subsection has already been

20 provided with respect to such event’’ be21 fore the period at the end; and

22 (3) by striking the last sentence.

23 (b) NOTIFICATION THAT EVENT IS ABOUT TO

24 OCCUR.—Section 4043 of such Act is amended

25 by redesignating subsections (b), (c), and (d)
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1 as (c), (d), and (e), respectively, and by insert2 ing after subsection (a) the following new sub3 section:

4 ‘‘(b)(1) The requirements of this sub5 section shall be applicable to a contributing

6 sponsor only if the aggregate unfunded vested

7 benefits at the end of the preceding plan year

8 (as determined under section

9 4006(a)(3)(E)(iii)) of plans which are main10 tained by such sponsor and the members of

11 such sponsor’s controlled group and are cov12 ered by this title exceed $50,000,000 (taking

13 into account only those plans with unfunded

14 vested benefits).

15 ‘‘(2) No later than 30 days prior to the ef16 fective date of an event described in para17 graph (9), (10), (11), (12), or (13) of subsection

18 (c), a contributing sponsor to which the re19 quirements of this subsection apply shall no20 tify the corporation that the event is about to

21 occur.

22 ‘‘(3) The corporation may waive the re23 quirement of this subsection with respect to

24 any or all reportable events with respect to

25 any contributing sponsor.’’
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1 (c) NEW REPORTABLE EVENTS.—Subsection

2 (c) of section 4043 of such Act (as redesignated

3 by subsection (b)) is amended—

4 (1) by striking the ‘‘or’’ at the end of

5 paragraph (8);

6 (2) by striking paragraph (9); and

7 (3) by inserting after paragraph (8)

8 the following new paragraphs:

9 ‘‘(9) when, as a result of an event, a

10 person ceases to be a member of the con11 trolled group;

12 ‘‘(10) when a contributing sponsor or

13 a member of a contributing sponsor’s

14 controlled group liquidates in a case

15 under title 11, United States Code, or

16 under any similar Federal law or law of

17 a State or political subdivision of a State;

18 ‘‘(11) when a contributing sponsor or

19 a member of a contributing sponsor’s

20 controlled group declares an extraor21 dinary dividend (as defined in section

22 1059(c) of the Internal Revenue Code of

23 1986) or redeems, in any 12-month period,

24 an aggregate of 10 percent or more of the

25 total combined voting power of all classes
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1 of stock entitled to vote, or an aggregate

2 of 10 percent of more of the total value of

3 shares of all classes of stock, of a contrib4 uting sponsor and all members of its con5 trolled group;

6 ‘‘(12) when, in any 12-month period,

7 an aggregate of 3 percent or more of the

8 benefit liabilities of a plan covered by

9 this title and maintained by a contribut10 ing sponsor or a member of its controlled

11 group are transferred to a person that is

12 not a member of the controlled group or

13 to a plan or plans maintained by a person

14 or persons that are not such a contribut15 ing sponsor or a member of its controlled

16 group; or

17 ‘‘(13) when any other event occurs

18 that may be indicative of a need to termi19 nate the plan and that is prescribed by

20 the corporation in regulations.’’

21 (d) DISCLOSURE EXEMPTION.—Section 4043

22 of such Act is amended by adding at the end

23 the following new subsection:

24 ‘‘(f) Any information or documentary ma25 terial submitted to the corporation pursuant
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1 to this section or section 4050(c) shall be ex2 empt from disclosure under section 552 of

3 title 5, United States Code, and no such infor4 mation or documentary material may be made

5 public, except as may be relevant to any ad6 ministrative or judicial action or proceeding.

7 Nothing in this section is intended to prevent

8 disclosure to either body of Congress or to

9 any duly authorized committee or subcommit10 tee of the Congress.’’

11 (e) TECHNICAL AND CONFORMING AMEND12 MENTS.—

13 (1) Subsection (a) of section 4043 of

14 such Act, and subsections (d) and (e) of

15 such section 4043 (as redesignated by

16 subsection (b)) are amended by striking

17 ‘‘subsection (b)’’ each place it appears

18 and inserting ‘‘subsection (c)’’.

19 (2) Section 4042(a)(3) of such Act is

20 amended by striking ‘‘4043(b)(7)’’ and in21 serting ‘‘4043(c)(7)’’.

22 (f) EFFECTIVE DATE.—The amendments

23 made by this section shall be effective for

24 events occurring 60 days or more after the

25 date of enactment of this Act.
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1 SEC. 202. ALTERNATIVE TO INVOLUNTARY TERMINATION.

2 (a) IN GENERAL.—Subtitle C of title IV of

3 the Employee Retirement Income Security

4 Act of 1974 (29 U.S.C. 1341 et seq.) is amended

5 by adding at the end the following new sec6 tion:

7 ‘‘JUDICIAL RELIEF OTHER THAN INVOLUNTARY

8 TERMINATION

9 ‘‘SEC. 4050. (a) INSTITUTION OF PROCEED10 INGS.—

11 ‘‘(1) IN GENERAL.—Whenever the cor12 poration determines (without regard to

13 the potential availability of relief under

14 this section) that, upon the occurrence of

15 an event described in paragraph (9), (10),

16 (11), (12), or (13) of section 4043(c), the

17 possible long-run loss of the corporation

18 with respect to a plan may reasonably be

19 expected to increase unreasonably if the

20 plan is not terminated, the corporation

21 may, in its discretion, institute proceed22 ings under this section as an alternative

23 to instituting proceedings under section

24 4042 to terminate the plan.

25 ‘‘(2) LIMITATION.—In the case of an

26 event described in paragraph (9) or (13)
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1 of section 4043(c), this section shall apply

2 only if, immediately after the effective

3 date of the event, the total revenues, the

4 total operating income, or the total assets

5 of a contributing sponsor and all mem6 bers of its controlled group would be less

7 than 90 percent of the total revenues, the

8 total operating income, or the total as9 sets, respectively, of a contributing spon10 sor and all members of its controlled

11 group immediately before the effective

12 date of the event. For purposes of this

13 paragraph, all events occurring in any 12-

14 month period shall be treated as a single

15 event.

16 ‘‘(b) Whenever the corporation makes a

17 determination under subsection (a), it may,

18 upon notice to a contributing sponsor, apply

19 to the appropriate United States district court

20 for such legal or equitable relief as the cor21 poration deems appropriate and consistent

22 with its duties under this title. The court shall

23 grant such relief as it determines necessary to

24 protect the interests of the participants or to

25 avoid any unreasonable deterioration of the
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1 financial condition of the plan or any unrea2 sonable increase in the liability of the fund,

3 without interfering unreasonably with the

4 business of the contributing sponsor or mem5 bers of its controlled group.

6 ‘‘(c)(1) In any case in which the corpora7 tion is provided with a notice required by

8 subsection 4043(b) within the time specified

9 in that subsection, the corporation may bring

10 an action under this section no later than 30

11 days after the date such notice is received.

12 Notwithstanding the preceding sentence, the

13 corporation may, no later than 30 days after

14 the date such notice is received, require the

15 submission of additional information or docu16 mentary material, in which case an action

17 under this section may be brought no later

18 than 20 days after the corporation receives all

19 the information and documentary material it

20 had required.

21 ‘‘(2) After a notice described in paragraph

22 (1) is provided to the corporation, a person

23 may elect, upon further notice to the corpora24 tion, to proceed with an event prior to the ex25 piration of the time periods described in para-
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1 graph (1). In the case of such an election, an

2 action under this section may be brought at

3 any time within the period specified in sub4 section 4003(e)(6).

5 ‘‘(3) In any case in which the corporation

6 is not provided with a notice required by sub7 section (b) of section 4043 by the time speci8 fied in that subsection, in any case in which

9 a person fails or refuses to provide the addi10 tional information or documentary material

11 required by the corporation under paragraph

12 (1), or in any case in which a person proceeds

13 with an event without providing the corpora14 tion with the further notice required under

15 paragraph (2) with respect to such event, an

16 action under this section may be brought at

17 any time within the time period specified in

18 subsection 4003(e)(6).

19 ‘‘(4) Except as provided in paragraph (1),

20 (2), or (3), an action under this section may

21 not be brought after the effective date of the

22 event giving rise to the transaction.

23 ‘‘(5) For purposes of applying subsection

24 4003(e)(6) to paragraphs (2) and (3), a cause of
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1 action shall be deemed to arise on the effec2 tive date of the event.

3 ‘‘(d) Nothing in this section shall limit the

4 authority of the corporation to initiate pro5 ceedings to terminate a plan under section

6 4042, or to initiate proceedings or to seek re7 lief under any other provision of this title or

8 any other law.’’

9 (b) CONFORMING AMENDMENT.—Section

10 4042(a) of such Act (29 U.S.C. 1342(a)) is

11 amended by inserting, after ‘‘determines’’ the

12 first place it appears, the following: ‘‘(without

13 regard to the potential availability of relief

14 under section 4050)’’.

15 (c) CLERICAL AMENDMENT.—The table of

16 contents contained in section 1 of such Act is

17 amended by inserting after the item relating

18 to section 4048 the following new item:

‘‘Sec. 4050. Judicial relief other than involuntary termination.’’

19 (d) EFFECTIVE DATE.—The amendments

20 made by this section shall be effective for

21 events occurring 60 days or more after the

22 date of the enactment of this Act.
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1 SEC. 203. CERTAIN INFORMATION REQUIRED TO BE FUR2 NISHED TO PBGC.

3 (a) GENERAL RULE.—Subtitle A of title IV

4 of the Employee Retirement Income Security

5 Act of 1974 (29 U.S.C. 1301 et seq.) is amended

6 by adding at the end the following new sec7 tion:

8 ‘‘SEC. 4010. AUTHORITY TO REQUIRE CERTAIN INFORMA9 TION.

10 ‘‘(a) INFORMATION REQUIRED.—Each person

11 described in subsection (b) shall provide the

12 corporation annually, on or before a date

13 specified by the corporation in regulations,

14 with—

15 ‘‘(1) such records, documents, or

16 other information that the corporation

17 specifies in regulations as necessary to

18 determine the liabilities and assets of

19 plans covered by this title; and

20 ‘‘(2) copies of such person’s audited

21 (or, if unavailable, unaudited) financial

22 statements, and such other financial in23 formation as the corporation may pre24 scribe in regulations.

25 ‘‘(b) PERSONS REQUIRED TO PROVIDE INFOR26 MATION.—The persons covered by subsection
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1 (a) are each contributing sponsor, and each

2 member of a contributing sponsor’s controlled

3 group, of a single-employer plan covered by

4 this title, if—

5 ‘‘(1) the aggregate unfunded vested

6 benefits at the end of the preceding plan

7 year (as determined under section

8 4006(a)(3)(E)(iii)) of plans which are

9 maintained by the contributing sponsor

10 and the members of its controlled group

11 and are covered by this title exceed

12 $50,000,000 (taking into account only

13 those plans of the contributing sponsor

14 and its controlled group with unfunded

15 vested benefits); or

16 ‘‘(2) the conditions for imposition of a

17 lien described in section 302(f)(1)(A) and

18 (B) of this Act or section 412(n)(1)(A) and

19 (B) of the Internal Revenue Code of 1986

20 have been met with respect to any plan

21 maintained by the contributing sponsor

22 or any member of its controlled group; or

23 ‘‘(3) minimum funding waivers in ex24 cess of $1,000,000 have been granted with

25 respect to any plan maintained by the
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1 contributing sponsor or any member of

2 its controlled group, and any portion

3 thereof is still outstanding.

4 ‘‘(c) INFORMATION EXEMPT FROM DISCLO5 SURE REQUIREMENTS.—Any information or doc6 umentary material submitted to the corpora7 tion pursuant to this section shall be exempt

8 from disclosure under section 552 of title 5,

9 United States Code, and no such information

10 or documentary material may be made public,

11 except as may be relevant to any administra12 tive or judicial action or proceeding. Nothing

13 in this section is intended to prevent disclo14 sure to either body of Congress or to any duly

15 authorized committee or subcommittee of the

16 Congress.’’

17 (b) CLERICAL AMENDMENT.—The table of

18 contents contained in section 1 of such Act is

19 amended by inserting after the item relating

20 to section 4009 the following new item:

‘‘Sec. 4010. Authority to require certain information.’’

21 (c) EFFECTIVE DATE.—The amendments

22 made by this section shall be effective on the

23 date of enactment of this Act.
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1 SEC. 204. LIABILITY UPON LIQUIDATION OF CONTRIBUTING

2 SPONSOR OR CONTROLLED GROUP MEMBER

3 IF PLAN REMAINS ONGOING.

4 (a) IN GENERAL.—Section 4062 of the Em5 ployee Retirement Income Security Act of

6 1974 (29 U.S.C. 1362) is amended by adding at

7 the end the following new subsection:

8 ‘‘(f) LIABILITY ON LIQUIDATION OF CONTRIB9 UTING SPONSOR OR CONTROLLED GROUP MEM10 BER.—

11 ‘‘(1) IN GENERAL.—In any case in

12 which—

13 ‘‘(A) all or substantially all of the

14 assets of a person who is a contribut15 ing sponsor of a single-employer plan,

16 or a member of a controlled group of

17 a contributing sponsor of a single-em18 ployer plan, are liquidated—

19 ‘‘(i) in a case under chapter 7

20 of title 11, United States Code,

21 ‘‘(ii) in a case under chapter

22 11 of such title 11 in which—

23 ‘‘(I) the plan confirmed

24 under such chapter 11 pro25 vides for the liquidation of all
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1 or substantially all of the

2 property of the estate, and

3 ‘‘(II) the debtor does not

4 engage in business after the

5 confirmation of such plan, or

6 ‘‘(iii) under any similar Fed7 eral law or law of a State or polit8 ical subdivision of a State, and

9 ‘‘(B) the single-employer plan is

10 not terminated,

11 such person shall be deemed liable under

12 subsection (b) as if the single-employer

13 plan had terminated under section

14 4041(c) in the course of such liquidation

15 and as if the termination date were the

16 date determined by the corporation as

17 the date on which the liquidation was ini18 tiated.

19 ‘‘(2) LIMITED JOINT AND SEVERAL LIABIL20 ITY.—The liability under this subsection

21 shall be joint and several only among the

22 members of the controlled group (includ23 ing, where applicable, the contributing

24 sponsor) who are liquidating as described

25 in paragraph (1).
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1 ‘‘(3) APPLICABILITY OF OTHER PROVI2 SIONS.—Except as provided in paragraph

3 (2), any provision of this Act or any other

4 provision of law that applies to liability

5 under the preceding subsections of this

6 section upon termination of a plan shall

7 apply in the same manner and to the

8 same extent to the liability established

9 under this subsection. For purposes of

10 this paragraph, the date referred to in

11 paragraph (1) shall be deemed the termi12 nation date.

13 ‘‘(4) LIABILITY OWED TO PLAN; TRANSFER

14 OF LIABILITY PAYMENTS TO THE ONGOING

15 PLAN WHERE COLLECTED BY THE CORPORA16 TION.—The liability established under this

17 subsection shall be owed to the plan, and

18 may be collected by either the plan or the

19 corporation. The corporation shall pay to

20 the plan any amounts collected by the

21 corporation in satisfaction of the liability

22 established under this subsection in con23 nection with such plan.
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1 ‘‘(5) REGULATIONS.—The corporation

2 may prescribe regulations under this sub3 section, including—

4 ‘‘(A) rules governing—

5 ‘‘(i) the determination of

6 whether and when a liquidation

7 referred to in this subsection has

8 occurred, and

9 ‘‘(ii) the assignment of the

10 plan’s or corporation’s claim to li11 ability payments under this sub12 section to other members of the

13 controlled group as a means of

14 collecting such payments, subject

15 to the transfer of such payments

16 to the plan, and

17 ‘‘(B) rules providing alternative

18 arrangements for making liability

19 payments under this subsection.’’

20 (b) CONFORMING AMENDMENT.—Section

21 4062(a) of such Act is amended—

22 (1) in paragraph (1), by striking ‘‘and’’

23 after ‘‘subsection (b),’’;
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1 (2) in paragraph (2), by striking the

2 period after ‘‘subsection (c)’’ and insert3 ing ’’, and’’; and

4 (3) by adding at the end the following

5 new paragraph:

6 ‘‘(3) liability to the plan, to the extent

7 provided in subsection (f).’’

8 (c) COORDINATION WITH MINIMUM FUNDING

9 RULES.—

10 (1) ERISA.—Section 302(c) of the Em11 ployee Retirement Income Security Act of

12 1974 is amended by adding at the end the

13 following new paragraph:

14 ‘‘(13) TREATMENT OF LIABILITY ON LIQUIDA15 TION OF EMPLOYER.—Any amount paid to a

16 plan pursuant to section 4062(f)—

17 ‘‘(A) shall be treated as not contrib18 uted by the employer for purposes of sub19 section (b)(3)(A), and

20 ‘‘(B) shall be treated as a net experi21 ence gain of the plan under subsection

22 (b)(3)(B)(ii).’’

23 (2) 1986 CODE.—Section 412(c) of the

24 Internal Revenue Code of 1986 is amend-
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1 ed by adding at the end the following

2 new paragraph:

3 ‘‘(13) TREATMENT OF LIABILITY ON LIQ4 UIDATION OF EMPLOYER.—Any amount paid

5 to a plan pursuant to section 4062(f) of

6 the Employee Retirement Income Secu7 rity Act of 1974—

8 ‘‘(A) shall be treated as not con9 tributed by the employer for pur10 poses of subsection (b)(3)(A), and

11 ‘‘(B) shall be treated as a net ex12 perience gain of the plan under sub13 section (b)(3)(B)(ii).’’

14 (d) EFFECTIVE DATE.—The amendments

15 made by this section shall be effective for liq16 uidations initiated on or after the date of en17 actment of this Act.

18 SEC. 205. ENFORCEMENT OF MINIMUM FUNDING REQUIRE19 MENTS.

20 (a) IN GENERAL.—Paragraph (1) of section

21 4003(e) of the Employee Retirement Income

22 Security Act of 1974 (29 U.S.C. 1303(e)(1)) is

23 amended—

24 (1) by inserting ‘‘(A)’’ after ‘‘enforce’’;

25 and
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1 (2) by striking the period after ‘‘title’’

2 and inserting ‘‘, and (B) in the case of a

3 plan which is covered under this title

4 (other than a multiemployer plan) and

5 for which the conditions for imposition of

6 a lien described in section 302(f)(1)(A)

7 and (B) of this Act or section 412(n)(1)(A)

8 and (B) of the Internal Revenue Code of

9 1986 have been met, section 302 of this

10 Act and section 412 of such Code.’’

11 (b) EFFECTIVE DATE.—The amendments

12 made by this section shall be effective for in13 stallments and other payments required

14 under section 302 of the Employee Retirement

15 Income Security Act of 1974 or section 412 of

16 the Internal Revenue Code of 1986 that be17 come due on or after the date of the enact18 ment of this Act.

19 SEC. 206. REMEDIES FOR NONCOMPLIANCE WITH REQUIRE20 MENTS FOR STANDARD TERMINATION.

21 (a) NOTICE OF NONCOMPLIANCE.—Section

22 4041(b)(2)(C)(i) of the Employee Retirement

23 Income Security Act of 1974 (29 U.S.C.

24 1341(b)(2)(C)(i)) is amended—
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1 (1) by striking subclause (I) and in2 serting the following new subclause:

3 ‘‘(I) it determines, based

4 on the notice sent under para5 graph (2)(A) of subsection (b),

6 that there is reason to believe

7 that the plan is not sufficient

8 for benefit liabilities,’’;

9 (2) by striking the period at the end

10 of subclause (II) and inserting ‘‘, or’’; and

11 (3) by adding at the end the following

12 new subclause:

13 ‘‘(III) it determines that

14 any other requirement of sub15 paragraph (A) or (B) of this

16 paragraph or of subsection

17 (a)(2) has not been met, unless

18 it further determines that the

19 issuance of such notice would

20 be inconsistent with the inter21 ests of participants and bene22 ficiaries.’’

23 (b) EFFECTIVE DATE.—The amendments

24 made by this section shall apply to any plan

25 termination under section 4041(b) of the Em-
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1 ployee Retirement Income Security Act of

2 1974 with respect to which the Pension Bene3 fit Guaranty Corporation has not, as of the

4 date of enactment of this Act, issued a notice

5 of noncompliance that has become final, or

6 otherwise issued a final determination that

7 the plan termination is nullified.

8 SEC. 207. PROHIBITION ON BENEFIT INCREASES WHERE

9 PLAN SPONSOR IS IN BANKRUPTCY.

10 (a) AMENDMENT TO THE EMPLOYEE RETIRE11 MENT INCOME SECURITY ACT OF 1974.—Section

12 204 of the Employee Retirement Income Secu13 rity Act of 1974 (29 U.S.C. 1054) is amended by

14 redesignating subsections (i) and (j) as sub15 sections (j) and (k), respectively, and by in16 serting after subsection (h) the following new

17 subsection:

18 ‘‘(i)(1) In the case of a plan described in

19 paragraph (3) which is maintained by an em20 ployer that is a debtor in a case under title

21 11, United States Code, or similar Federal or

22 State law, no amendment of the plan which

23 increases the liabilities of the plan by reason

24 of—

25 ‘‘(A) any increase in benefits,
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1 ‘‘(B) any change in the accrual of ben2 efits, or

3 ‘‘(C) any change in the rate at which

4 benefits become nonforfeitable under the

5 plan,

6 with respect to employees of the debtor, shall

7 be effective prior to the effective date of such

8 employer’s plan of reorganization.

9 ‘‘(2) Paragraph (1) shall not apply to any

10 plan amendment that—

11 ‘‘(A) the Secretary of the Treasury de12 termines to be reasonable and that pro13 vides for only de minimis increases in the

14 liabilities of the plan with respect to em15 ployees of the debtor,

16 ‘‘(B) only repeals an amendment de17 scribed in section 302(c)(8),

18 ‘‘(C) is required as a condition of

19 qualification under part I of subchapter

20 D, of chapter 1, of the Internal Revenue

21 Code of 1986, or

22 ‘‘(D) was adopted prior to, or pursu23 ant to a collective bargaining agreement

24 entered into prior to, the date on which

25 the employer became a debtor in a case
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1 under title 11, United States Code, or

2 similar Federal or State law.

3 ‘‘(3) This subsection shall apply only to

4 plans (other than multiemployer plans) cov5 ered under section 4021 of this Act for which

6 the funded current liability percentage (with7 in the meaning of section 302(d)(8) of this Act)

8 is less than 100 percent after taking into ac9 count the effect of the amendment.

10 ‘‘(4) For purposes of this subsection, ‘em11 ployer’ has the meaning set forth in section

12 302(c)(11)(A), without regard to section

13 302(c)(11)(B).’’

14 (b) AMENDMENT TO INTERNAL REVENUE

15 CODE OF 1986.—Section 401(a) of the Internal

16 Revenue Code of 1986, as amended by section

17 121 of this Act, is further amended by adding

18 at the end the following new paragraph:

19 ‘‘(33) PROHIBITION ON BENEFIT IN20 CREASES WHILE SPONSOR IS IN BANK21 RUPTCY.—

22 ‘‘(A) IN GENERAL.—A trust which is

23 part of a plan to which this para24 graph applies shall not constitute a

25 qualified trust under this section if
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1 an amendment to such plan is adopt2 ed while the employer is a debtor in

3 a case under title 11, United States

4 Code, or similar Federal or State law,

5 if such amendment increases liabil6 ities of the plan by reason of—

7 ‘‘(i) any increase in benefits,

8 ‘‘(ii) any change in the accrual

9 of benefits, or

10 ‘‘(iii) any change in the rate at

11 which benefits become nonforfeit12 able under the plan,

13 with respect to employees of the debt14 or, and such amendment is effective

15 prior to the effective date of such em16 ployer’s plan of reorganization.

17 ‘‘(B) EXCEPTIONS.—This paragraph

18 shall not apply to any plan amend19 ment if—

20 ‘‘(i) the plan, were such

21 amendment to take effect, would

22 have a funded current liability

23 percentage (as defined in section

24 412(l)(8)) of 100 percent or more,
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1 ‘‘(ii) the Secretary determines

2 that such amendment is reason3 able and provides for only de

4 minimis increases in the liabil5 ities of the plan with respect to

6 employees of the debtor,

7 ‘‘(iii) such amendment only re8 peals an amendment described in

9 subsection 412(c)(8), or

10 ‘‘(iv) such amendment is re11 quired as a condition of qualifica12 tion under this part.

13 ‘‘(C) PLANS TO WHICH THIS PARA14 GRAPH APPLIES.—This paragraph shall

15 apply only to plans (other than multi16 employer plans) covered under sec17 tion 4021 of the Employee Retirement

18 Income Security Act of 1974.

19 ‘‘(D) EMPLOYER.—For purposes of

20 this paragraph, the term ‘employer’

21 means the employer referred to in

22 section 412(c)(11) (without regard to

23 subparagraph (B) thereof).’’

24 (c) EFFECTIVE DATE OF PLAN AMENDMENT.—

25 Section 4022 of the Employee Retirement In-
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1 come Security Act of 1974 (29 U.S.C. 1322) is

2 amended by inserting at the end the following

3 new subsection:

4 ‘‘(f) For purposes of this section, the effec5 tive date of a plan amendment described in

6 section 204(i)(1) shall be the effective date of

7 the plan of reorganization of the employer de8 scribed in section 204(i)(1) or, if later, the ef9 fective date stated in such amendment.’’.

10 (d) EFFECTIVE DATE.—The amendments

11 made by this section shall apply to plan

12 amendments adopted on or after the date of

13 enactment of this Act.

14 SEC. 208. SUBSTANTIAL OWNER BENEFITS.

15 (a) MODIFICATION OF PHASE-IN OF GUARAN16 TEE.—Section 4022(b)(5) of the Employee Re17 tirement Income Security Act of 1974 is

18 amended by striking subparagraphs (B) and

19 (C) and inserting the following new subpara20 graphs:

21 ‘‘(B) For purposes of this title, the term

22 ‘majority owner’ has the same meaning as the

23 term ‘substantial owner’, if ‘50 percent or

24 more’ is substituted for ‘more than 10 percent’
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1 wherever such phrase appears in subpara2 graph (A) of this paragraph.

3 ‘‘(C) In the case of a participant who is a

4 majority owner, the amount of benefits guar5 anteed under this section shall not exceed the

6 lesser of—

7 ‘‘(i) the amount otherwise determined

8 under this subsection, or

9 ‘‘(ii) the product of—

10 ‘‘(I) a fraction (not to exceed 1)

11 the numerator of which is the num12 ber of years from the later of the ef13 fective date or the adoption date of

14 the plan, and the denominator of

15 which is 30, and

16 ‘‘(II) the amount of the majority

17 owner’s monthly benefits guaranteed

18 under subsection (a) (as limited by

19 paragraph (3) of this subsection).’’

20 (b) MODIFICATION OF ALLOCATION OF AS21 SETS.—

22 (1) Section 4044(a)(4)(B) of such Act

23 (29 U.S.C. 1344(a)(4)(B)) is amended by in24 serting ‘‘(C)’’ after ‘‘section 4022(b)(5)’’.
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1 (2) Section 4044(b) of such Act is

2 amended—

3 (A) in paragraph (2), by inserting

4 ‘‘(4),’’ before ‘‘(5)’’, and by inserting a

5 comma after ‘‘(5)’’;

6 (B) by redesignating paragraphs

7 (3) through (6) as paragraphs (4)

8 through (7), respectively; and

9 (C) by inserting a new paragraph

10 (3) to read as follows:

11 ‘‘(3) If assets available for allocation

12 under paragraph (4) of subsection (a) are

13 insufficient to satisfy in full the benefits

14 of all individuals who are described in

15 that paragraph, the assets shall be allo16 cated first to benefits described in sub17 paragraph (A) of that paragraph. Any re18 maining assets shall then be allocated to

19 subparagraph (B). If assets allocated to

20 subparagraph (B) are insufficient to sat21 isfy in full the benefits in that subpara22 graph, the assets shall be allocated pro

23 rata among individuals on the basis of

24 the present value (as of the termination
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1 date) of their respective benefits de2 scribed in that subparagraph.’’.

3 (c) EFFECTIVE DATE.—The amendments

4 made by this section shall be effective for plan

5 terminations under section 4041(c) of the Em6 ployee Retirement Income Security Act of

7 1974 with respect to which notices of intent

8 to terminate are provided under section

9 4041(a)(2) of such Act, or under section 4042

10 of such Act with respect to which proceedings

11 are instituted by the corporation, on or after

12 the date of enactment of this Act.

13 SEC. 209. PHASE-OUT OF VARIABLE RATE PREMIUM CAP.

14 (a) IN GENERAL.—Subparagraph (E) of sec15 tion 4006(a)(3) of the Employee Retirement In16 come Security Act of 1974 (29 U.S.C.

17 1306(a)(3)(E)) is amended by striking clause

18 (iv), and by redesignating clause (v) as clause

19 (iv).

20 (b) EFFECTIVE DATE.—The amendments

21 made by this section shall be effective on the

22 date of enactment of this Act, except that, for

23 plan years beginning on or after July 1, 1994

24 and before July 1, 1996, the additional pre25 mium payable with respect to any participant
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1 by reason of this amendment shall not exceed

2 the sum of—

3 (1) $53, and

4 (2) the product derived by multiply5 ing—

6 (A) the excess (if any) of—

7 (i) the amount determined

8 under clause (i) of section

9 4006(a)(3)(E) of the Employee Re10 tirement Income Security Act of

11 1974, over

12 (ii) $53, by

13 (B) the applicable percentage.

14 For purposes of this subsection, the ap15 plicable percentage shall be the percent16 age specified in the following table:

For the plan year beginning: The applicable percenton or after but before age is:

July 1, 1994 .................. July 1, 1995 ................. 20 percent

July 1, 1995 .................. July 1, 1996 ................. 60 percent

17 TITLE III—PARTICIPANT

18 SERVICES

19 SEC. 301. DISCLOSURE TO PARTICIPANTS.

20 (a) PARTICIPANT NOTICE REQUIREMENT.—

21 Subtitle A of title IV of the Employee Retire22 ment Income Security Act of 1974 (as amend-
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1 ed by section 203 of this Act) is further

2 amended by adding at the end the following

3 new section:

4 ‘‘SEC. 4011. NOTICE TO PARTICIPANTS.

5 ‘‘(a) IN GENERAL.—The plan administrator

6 of a plan subject to the additional premium

7 under section 4006(a)(3)(E) shall provide, in a

8 form and manner and at such time as pre9 scribed in regulations of the corporation, no10 tice to plan participants and beneficiaries and

11 each employee organization representing par12 ticipants in the plan of the plan’s funding sta13 tus and the limits on the corporation’s guar14 anty under section 4022(b) should the plan

15 terminate while underfunded. Such notice

16 shall be written in a manner so as to be under17 stood by the average plan participant.

18 ‘‘(b) EXCEPTION.—Subsection (a) shall not

19 apply to any plan which for the plan year has

20 a funded current liability percentage (as de21 fined in section 302(d)(8) without regard to

22 subparagraph (E) thereof) of at least 90 per23 cent.’’

24 (b) CONFORMING AMENDMENTS.—
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1 (1) INFORMATION INCLUDED IN ANNUAL

2 REPORT.—Section 103(d)(11) of such Act

3 (29 U.S.C. 1023(d)(11)) is amended to read

4 as follows:

5 ‘‘(11) In the case of a plan which must

6 notify participants and beneficiaries

7 under section 4011, the funded current li8 ability percentage, as determined for pur9 poses of such section.’’

10 (2) INFORMATION FURNISHED TO PAR11 TICIPANTS.—Section 104(b)(3) of such Act

12 (29 U.S.C. 1024(b)(3)) is amended by strik13 ing ‘‘(including the percentage deter14 mined under section 103(d)(11))’’.

15 (c) CLERICAL AMENDMENT.—The table of

16 contents contained in section 1 of such Act is

17 amended by inserting after the item relating

18 to section 4010 (as added by section 203 of this

19 Act) the following new item:

‘‘Sec. 4011. Notice to participants.’’

20 (d) EFFECTIVE DATE.—The amendment

21 made by this section shall be effective for plan

22 years beginning after the date of enactment of

23 this Act.
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1 SEC. 302. MISSING PARTICIPANTS.

2 (a) IN GENERAL.—Subtitle C of title IV of

3 the Employee Retirement Income Security

4 Act of 1974 (29 U.S.C. 1341 et seq.) (as amend5 ed by section 202(a) of this Act) is further

6 amended by adding at the end the following

7 new section:

8 ‘‘MISSING PARTICIPANTS

9 ‘‘SEC. 4051. (a) GENERAL RULE.—

10 ‘‘(1) PAYMENT TO THE CORPORATION.—A

11 plan administrator satisfies section

12 4041(b)(3)(A) in the case of a missing par13 ticipant only if the plan administrator—

14 ‘‘(A) transfers the participant’s

15 designated benefit to the corporation

16 or purchases an irrevocable commit17 ment from an insurer in accordance

18 with clause (i) of section

19 4041(b)(3)(A), and

20 ‘‘(B) provides the corporation

21 such information and certifications

22 with respect to such designated bene23 fits or irrevocable commitments as

24 the corporation shall specify.

25 ‘‘(2) TREATMENT OF TRANSFERRED AS26 SETS.—A transfer to the corporation
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1 under this section shall be treated as a

2 transfer of assets from a terminated plan

3 to the corporation as trustee, and shall be

4 held with assets of terminated plans for

5 which the corporation is trustee under

6 section 4042, subject to the rules set forth

7 in that section.

8 ‘‘(3) PAYMENT BY THE CORPORATION.—

9 After a missing participant whose des10 ignated benefit was transferred to the

11 corporation is located—

12 ‘‘(A) in any case in which the plan

13 could have distributed the benefit of

14 the missing participant in a single

15 sum without participant or spousal

16 consent under section 205(g), the cor17 poration shall pay the participant or

18 beneficiary a single sum benefit equal

19 to the designated benefit paid the

20 corporation plus interest as specified

21 by the corporation, and

22 ‘‘(B) in any other case, the cor23 poration shall pay a benefit based on

24 the designated benefit and the as25 sumptions prescribed by the corpora-
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1 tion at the time that the corporation

2 received the designated benefit.

3 The corporation shall make payments

4 under subparagraph (B) available in the

5 same forms and at the same times as a

6 guaranteed benefit under section 4022

7 would be available to be paid, except that

8 the corporation may make a benefit

9 available in the form of a single sum if

10 the plan provided a single sum benefit

11 (other than a single sum described in

12 subsection (b)(2)(A)).

13 ‘‘(b) DEFINITIONS.—For purposes of this

14 section—

15 ‘‘(1) MISSING PARTICIPANT.—The term

16 ‘missing participant’ means a participant

17 or beneficiary under a terminating plan

18 whom the plan administrator cannot lo19 cate after a diligent search.

20 ‘‘(2) DESIGNATED BENEFIT.—The term

21 ‘designated benefit’ means the single sum

22 benefit the participant would receive—

23 ‘‘(A) under the plan’s assump24 tions, in the case of a distribution

25 that can be made without participant
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1 or spousal consent under section

2 205(g);

3 ‘‘(B) under the assumptions of the

4 corporation in effect on the date that

5 the designated benefit is transferred

6 to the corporation, in the case of a

7 plan that does not pay any single

8 sums other than those described in

9 subparagraph (A); or

10 ‘‘(C) under the assumptions of the

11 corporation or of the plan, whichever

12 provides the higher single sum, in the

13 case of a plan that pays a single sum

14 other than those described in sub15 paragraph (A).

16 ‘‘(c) REGULATORY AUTHORITY.—The cor17 poration shall prescribe such regulations as

18 are necessary to carry out the purposes of this

19 section, including rules relating to what will

20 be considered a diligent search, the amount

21 payable to the corporation, and the amount to

22 be paid by the corporation.’’

23 (b) CONFORMING TITLE IV AMENDMENTS.—

24 (1) AMENDMENT TO SECTION 4003.—Sec25 tion 4003(a) of such Act (29 U.S.C. 1303(a))
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1 is amended in the second sentence by in2 serting before the period the following:

3 ‘‘and whether section 4051(a) has been

4 satisfied’’.

5 (2) AMENDMENT TO SECTION 4005.—Sec6 tion 4005(b)(2)(A) of such Act (29 U.S.C.

7 1305(b)(2)(A)) is amended by inserting ‘‘or

8 benefits payable under section 4051’’

9 after ‘‘section 4022A’’.

10 (3) AMENDMENT TO SECTION 4041.—Sec11 tion 4041(b)(3)(A)(ii) of such Act (29

12 U.S.C. 1341(b)(3)(A)(ii)) is amended by

13 adding at the end the following new sen14 tence: ‘‘A transfer of assets to the cor15 poration in accordance with section 4051

16 on behalf of a missing participant shall

17 satisfy this subparagraph with respect to

18 such participant.’’

19 (c) CONFORMING ERISA AMENDMENTS.—

20 (1) The table of contents contained in

21 section 1 of the Employee Retirement In22 come Security Act of 1974 is amended by

23 inserting after the item related to section

24 4050 (as added by section 202 of this Act)

25 the following new item:

‘‘Sec. 4051. Missing participants.’’
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1 (2) Section 206 of such Act (29 U.S.C.

2 1056) (as amended by section

3 101(a)(9)(B)(i) of this Act) is further

4 amended by adding at the end the follow5 ing new subsection:

6 ‘‘(f) MISSING PARTICIPANTS IN TERMINATED

7 PLANS.—In the case of a plan covered by title

8 IV, the plan shall provide that, upon termi9 nation of the plan, benefits of missing partici10 pants shall be treated in accordance with sec11 tion 4051.’’

12 (d) CONFORMING INTERNAL REVENUE CODE

13 AMENDMENTS.—Section 401(a) of the Internal

14 Revenue Code of 1986, as amended by section

15 207 of this Act, is further amended by insert16 ing after paragraph (33) the following new

17 paragraph:

18 ‘‘(34) BENEFITS OF MISSING PARTICI19 PANTS ON PLAN TERMINATION.—In the case

20 of a plan covered by title IV of the Em21 ployee Retirement Income Security Act of

22 1974, a trust forming part of such plan

23 shall not be treated as failing to con24 stitute a qualified trust under this sec25 tion merely because the pension plan of
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1 which such trust is a part, upon its termi2 nation, transfers benefits of missing par3 ticipants to the Pension Benefit Guaranty

4 Corporation in accordance with section

5 4051 of such Act.’’

6 (e) EFFECTIVE DATE.—The provisions of

7 this section shall be effective with respect to

8 distributions that occur in plan years com9 mencing after final regulations implementing

10 these provisions are prescribed by the Pen11 sion Benefit Guaranty Corporation.

12 SEC. 303. MODIFICATION OF MAXIMUM GUARANTEE FOR

13 DISABILITY BENEFITS.

14 (a) IN GENERAL.—Section 4022(b)(3) of the

15 Employee Retirement Income Security Act of

16 1974 (29 U.S.C. 1322(b)(3)) is amended by add17 ing at the end the following new sentences:

18 ‘‘The maximum guaranteed monthly benefit

19 shall not be reduced solely on account of the

20 age of a participant in the case of a benefit

21 payable by reason of disability that occurred

22 on or before the termination date, if the par23 ticipant demonstrates to the satisfaction of

24 the corporation that the Social Security Ad25 ministration has determined that the partici-
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1 pant satisfies the definition of disability

2 under titles II and XVI of the Social Security

3 Act, and the regulations thereunder. If a bene4 fit payable by reason of disability is converted

5 to an early or normal retirement benefit for

6 reasons other than a change in the health of

7 the participant, such early or normal retire8 ment benefit shall be treated as a continu9 ation of the benefit payable by reason of dis10 ability and this subparagraph shall continue

11 to apply.’’

12 (b) EFFECTIVE DATE.—The amendment

13 made by this section shall be effective for plan

14 terminations under section 4041(c) of the Em15 ployee Retirement Income Security Act of

16 1974 with respect to which notices of intent

17 to terminate are provided under section

18 4041(a)(2) of such Act, or under section 4042

19 of such Act with respect to which proceedings

20 are instituted by the corporation, on or after

21 the date of enactment of this Act.
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1 TITLE IV—MISCELLANEOUS

2 AMENDMENTS

3 SEC. 401. ERISA CITATION.

4 (a) IN GENERAL.—Section 404(g)(4) of the

5 Internal Revenue Code of 1986 is amended by

6 striking ‘‘the Single Employer Pension Plan

7 Amendments Act of 1986’’ and inserting ‘‘the

8 Retirement Protection Act of 1994’’.

9 (b) EFFECTIVE DATE.—The amendment

10 made by this section shall be effective on the

11 date of enactment of this Act.

12 SEC. 402. DEFINITION OF CONTRIBUTING SPONSOR.

13 (a) IN GENERAL.—Paragraph (13) of section

14 4001(a) of the Employee Retirement Income

15 Security Act of 1974 (29 U.S.C. 1301(a)(13)) is

16 amended by striking ‘‘means a person—’’ and

17 all that follows and inserting ‘‘means a person

18 described in section 302(c)(11)(A) of this Act

19 (without regard to section 302(c)(11)(B) of this

20 Act) or section 412(c)(11)(A) of the Internal

21 Revenue Code of 1986 (without regard to sec22 tion 412(c)(11)(B) of such Code);’’

23 (b) EFFECTIVE DATE.—The amendment

24 made by this section shall be effective as if in25 cluded in the Pension Protection Act.
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1 SEC. 403. TECHNICAL CORRECTIONS.

2 (a) PRIOR PLAN TERMINATIONS TAKEN INTO

3 ACCOUNT IN APPLYING RECOVERY RATIO.—Sec4 tion 4022(c)(3)(B)(ii) of the Employee Retire5 ment Income Security Act of 1974 (29 U.S.C.

6 1322(c)(3)(B)(ii)) is amended to read as fol7 lows:

8 ‘‘(ii) notices of intent to terminate

9 were provided, or proceedings were insti10 tuted under section 4042, after December

11 17, 1987, and during the first 5 fiscal

12 years of the 7-fiscal-year period ending

13 with the fiscal year preceding the fiscal

14 year for which the recovery ratio is being

15 determined.’’

16 (b) CLARIFICATION UNDER DISTRESS TERMI17 NATION RULES OF DATE FOR DETERMINATIONS

18 RELATING TO SUBSEQUENT INSUFFICIENCY.—Sec19 tion 4022(c) of such Act (29 U.S.C. 1322(c)) is

20 amended by adding at the end the following

21 new subsection:

22 ‘‘(5) For purposes of this subsection, in the

23 case of a plan described in section

24 4041(c)(3)(C)(ii), the outstanding amount of

25 benefit liabilities and the value of the recover26 ies of the corporation under section 4062,
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1 4063, or 4064 in connection with such plan

2 shall be determined as of the date described

3 in section 4062(b)(1)(B).’’.

4 (c) INCLUSION OF TERMINATION PROCEED5 INGS INSTITUTED BY CORPORATION IN TRANSI6 TIONAL RULE.—Section 9312(b)(3)(B)(i) of the

7 Omnibus Budget Reconciliation Act of 1987

8 (101 Stat. 1330–363) is amended by inserting

9 after ‘‘notices of intent to terminate were pro10 vided’’ the following: ‘‘, or proceedings were

11 instituted under section 4042 of ERISA,’’.

12 (d) CLARIFICATION OF PERIOD.—Section

13 4044(c) of the Employee Retirement Income

14 Security Act of 1974 (29 U.S.C. 1344(c)) is

15 amended in the first sentence—

16 (1) by striking ‘‘the later of (1)’’;

17 (2) by striking ‘‘or (2)’’ and inserting

18 ‘‘and ending on’’;

19 (3) by striking ‘‘is to be’’ and inserting

20 ‘‘shall be’’; and

21 (4) by striking ‘‘in any other case’’

22 and inserting ‘‘(in any other case)’’.

23 (e) EFFECTIVE DATE.—The amendments

24 made by this section shall be effective as if in-
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1 cluded in section 9312 of the Pension Protec2 tion Act (101 Stat. 1330–361).

3 SEC. 404. DISTRESS TERMINATION CRITERIA FOR BANKING

4 INSTITUTIONS.

5 (a) CLARIFICATION OF DISTRESS CRI6 TERION.—Subclause (I) of section

7 4041(c)(2)(B)(i) of the Employee Retirement

8 Income Security Act of 1974 (29 U.S.C.

9 1341(c)(2)(B)(i)(I)) is amended by inserting

10 after ‘‘under any similar’’ the following: ‘‘Fed11 eral law or’’.

12 (b) EFFECTIVE DATE.—The amendment

13 made by this section shall be effective as if in14 cluded in the Single Employer Pension Plan

15 Amendments Act of 1986.

16 SEC. 405. SINGLE SUM DISTRIBUTIONS.

17 (a) AMENDMENTS TO EMPLOYEE RETIREMENT

18 INCOME SECURITY ACT OF 1974.—

19 (1) DETERMINATION OF PRESENT VALUE

20 FOR PURPOSES OF RESTRICTIONS ON MANDA21 TORY DISTRIBUTIONS.—Section 203(e)(2) of

22 the Employee Retirement Income Secu23 rity Act of 1974 (29 U.S.C. 1053(e)(2)) is

24 amended to read as follows:
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1 ‘‘(2) For purposes of paragraph (1),

2 the present value shall be calculated in

3 accordance with section 205(g)(3).’’

4 (2) DETERMINATION OF PRESENT VALUE

5 FOR PURPOSES OF RESTRICTIONS ON CASH6 OUTS.—Section 205(g)(3) of such Act (29

7 U.S.C. 1055(g)(3)) is amended to read as

8 follows:

9 ‘‘(3) DETERMINATION OF PRESENT VALUE.—

10 ‘‘(A) IN GENERAL.—

11 ‘‘(i) PRESENT VALUE.—Except as

12 provided in subparagraph (B), for

13 purposes of paragraphs (1) and (2),

14 the present value shall not be less

15 than the present value calculated by

16 using the applicable mortality table

17 and the applicable interest rate.

18 ‘‘(ii) DEFINITIONS.—For purposes

19 of clause (i)—

20 ‘‘(I) APPLICABLE MORTALITY

21 TABLE.—The term ‘applicable mor22 tality table’ means the table pre23 scribed by the Secretary of the

24 Treasury. Such table shall be

25 based on the prevailing commis-
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1 sioners’ standard table (described

2 in section 807(d)(5)(A) of the In3 ternal Revenue Code of 1986)

4 used to determine reserves for

5 group annuity contracts issued on

6 the date as of which present

7 value is being determined (with8 out regard to any other subpara9 graph of section 807(d)(5) of such

10 Code).

11 ‘‘(II) APPLICABLE INTEREST

12 RATE.—The term ‘applicable inter13 est rate’ means the annual rate of

14 interest on 30-year Treasury secu15 rities for the month before the

16 date of distribution or such other

17 time as the Secretary of the

18 Treasury may by regulations pre19 scribe.

20 ‘‘(B) EXCEPTION.—In the case of a dis21 tribution from a plan that was adopted

22 and in effect prior to the date of the en23 actment of the Retirement Protection Act

24 of 1994, the present value of any distribu25 tion made before the earlier of—
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1 ‘‘(i) the later of when a plan

2 amendment applying subparagraph

3 (A) is adopted or made effective, or

4 ‘‘(ii) the first day of the first plan

5 year beginning after December 31,

6 1999,

7 shall be calculated, for purposes of para8 graphs (1) and (2), using the interest

9 rates determined under the regulations

10 of the Pension Benefit Guaranty Corpora11 tion for determining the present value of

12 a lump sum distribution on plan termi13 nation that were in effect on September

14 1, 1993, and using the provisions of the

15 plan as in effect on the day before the

16 date of the enactment of the Retirement

17 Protection Act of 1994; but only if such

18 provisions of the plan met the require19 ments of section 205(g)(3) as in effect on

20 the day before such date of enactment.’’

21 (b) AMENDMENTS TO INTERNAL REVENUE

22 CODE OF 1986 RELATING TO MINIMUM BENE23 FITS.—

24 (1) DETERMINATION OF PRESENT VALUE

25 FOR PURPOSES OF RESTRICTIONS ON MANDA-
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1 TORY DISTRIBUTIONS.—Subparagraph (B)

2 of section 411(a)(11) of the Internal Reve3 nue Code of 1986 is amended to read as

4 follows:

5 ‘‘(B) DETERMINATION OF PRESENT

6 VALUE.—For purposes of subpara7 graph (A), the present value shall be

8 calculated in accordance with section

9 417(e)(3).’’

10 (2) DETERMINATION OF PRESENT VALUE

11 FOR PURPOSES OF RESTRICTIONS ON CASH12 OUTS.—Paragraph (3) of section 417(e) of

13 such Code is amended to read as follows:

14 ‘‘(3) DETERMINATION OF PRESENT

15 VALUE.—

16 ‘‘(A) IN GENERAL.—

17 ‘‘(i) PRESENT VALUE.—Except

18 as provided in subparagraph (B),

19 for purposes of paragraphs (1)

20 and (2), the present value shall

21 not be less than the present value

22 calculated by using the applicable

23 mortality table and the applicable

24 interest rate.
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1 ‘‘(ii) DEFINITIONS.—For pur2 poses of clause (i)—

3 ‘‘(I) APPLICABLE MORTALITY

4 TABLE.—The term ‘applicable

5 mortality table’ means the

6 table prescribed by the Sec7 retary. Such table shall be

8 based on the prevailing com9 missioners’ standard table

10 (described in section

11 807(d)(5)(A)) used to deter12 mine reserves for group annu13 ity contracts issued on the

14 date as of which present value

15 is being determined (without

16 regard to any other subpara17 graph of section 807(d)(5)).

18 ‘‘(II) APPLICABLE INTEREST

19 RATE.—The term ‘applicable

20 interest rate’ means the an21 nual rate of interest on 30-

22 year Treasury securities for

23 the month before the date of

24 distribution or such other
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1 time as the Secretary may by

2 regulations prescribe.

3 ‘‘(B) EXCEPTION.—In the case of a

4 distribution from a plan that was

5 adopted and in effect before the date

6 of the enactment of the Retirement

7 Protection Act of 1994, the present

8 value of any distribution made before

9 the earlier of—

10 ‘‘(i) the later of the date a plan

11 amendment applying subpara12 graph (A) is adopted or made ef13 fective, or

14 ‘‘(ii) the first day of the first

15 plan year beginning after Decem16 ber 31, 1999,

17 shall be calculated, for purposes of

18 paragraphs (1) and (2), using the in19 terest rates determined under the

20 regulations of the Pension Benefit

21 Guaranty Corporation for determin22 ing the present value of a lump sum

23 distribution on plan termination that

24 were in effect on September 1, 1993,

25 and using the provisions of the plan
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1 as in effect on the day before the date

2 of the enactment of the Retirement

3 Protection Act of 1994; but only if

4 such provisions of the plan met the

5 requirements of section 417(e)(3) as in

6 effect on the day before such date of

7 enactment.’’

8 (c) AMENDMENTS TO INTERNAL REVENUE

9 CODE OF 1986 RELATING TO MAXIMUM BENE10 FITS.—Subparagraph (E) of section 415(b)(2) of

11 such Code is amended—

12 (1) by redesignating clauses (ii) and

13 (iii) as clauses (iii) and (iv), respectively,

14 (2) by striking clause (i) and inserting

15 the following new clauses:

16 ‘‘(i) Except as provided in

17 clause (ii), for purposes of adjust18 ing any benefit or limitation

19 under subparagraph (B) or (C),

20 the interest rate assumption shall

21 not be less than the greater of 5

22 percent or the rate specified in

23 the plan.

24 ‘‘(ii) For purposes of adjusting

25 the benefit or limitation of any
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1 form of benefit subject to section

2 417(e)(3), the applicable interest

3 rate (as defined in section

4 417(e)(3)) shall be substituted for

5 ‘5 percent’ in clause (i).’’, and

6 (3) by adding at the end the following

7 new clause:

8 ‘‘(v) For purposes of adjusting

9 any benefit or limitation under

10 subparagraph (B), (C), or (D), the

11 mortality table used shall be the

12 table prescribed by the Secretary.

13 Such table shall be based on the

14 prevailing commissioners’ stand15 ard table (described in section

16 807(d)(5)(A)) used to determine

17 reserves for group annuity con18 tracts issued on the date the ad19 justment is being made (without

20 regard to any other subparagraph

21 of section 807(d)(5)).’’

22 (d) EFFECTIVE DATE.—

23 (1) IN GENERAL.—The amendments

24 made by this section shall apply to plan

25 years and limitation years beginning
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1 after December 31, 1994; except that an

2 employer may elect to treat the amend3 ments made by this section as being ef4 fective on or after the date of enactment.

5 (2) NO REDUCTION IN ACCRUED BENE6 FITS.—A participant’s accrued benefit

7 shall not be considered to be reduced in

8 violation of section 411(d)(6) of the Inter9 nal Revenue Code of 1986 or section

10 204(g) of the Employee Retirement In11 come Security Act of 1974 merely because

12 (A) the benefit is determined in accord13 ance with section 417(e)(3)(A) of such

14 Code, as amended by this Act, or section

15 205(g)(3) of the Employee Retirement In16 come Security Act of 1974, as amended by

17 this Act, or (B) the plan applies section

18 415(b)(2)(E) of such Code, as amended by

19 this Act.

20 (3) SECTION 415.—

21 (A) NO REDUCTION REQUIRED.—An

22 accrued benefit shall not be required

23 to be reduced below the accrued ben24 efit as of the last day of the last plan

25 year beginning before January 1,
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1 1995, merely because of the amend2 ments made by subsection (b).

3 (B) TIMING OF PLAN AMENDMENT.—

4 A plan that operates in accordance

5 with the amendments made by sub6 section (b) shall not be treated as fail7 ing to satisfy section 401(a) of the In8 ternal Revenue Code of 1986 or as not

9 being operated in accordance with

10 the provisions of the plan until such

11 date as the Secretary of the Treasury

12 provides merely because the plan has

13 not been amended to include the

14 amendments made by subsection (b).

15 SEC. 406. ADJUSTMENTS TO LIEN FOR MISSED MINIMUM

16 FUNDING CONTRIBUTIONS.

17 (a) AMENDMENTS TO THE EMPLOYEE RETIRE18 MENT INCOME SECURITY ACT OF 1974.—

19 (1) CLARIFICATION OF APPLICABILITY OF

20 PROVISION.—Section 302(f)(1) of the Em21 ployee Retirement Income Security Act of

22 1974 (29 U.S.C. 1082(f)(1)) is amended by

23 striking ‘‘to which this section applies’’

24 and inserting ‘‘covered under section

25 4021 of this Act’’.
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1 (2) REPEAL OF $1,000,000 OFFSET.—Para2 graph (3) of section 302(f) of such Act is

3 amended to read as follows:

4 ‘‘(3) AMOUNT OF LIEN.—For purposes of

5 paragraph (1), the amount of the lien

6 shall be equal to the aggregate unpaid

7 balance of required installments and

8 other payments required under this sec9 tion (including interest)—

10 ‘‘(A) for plan years beginning

11 after 1987, and

12 ‘‘(B) for which payment has not

13 been made before the due date.’’

14 (3) REPEAL OF 60-DAY DELAY.—Section

15 302(f)(4)(B) of such Act is amended by

16 striking ‘‘60th day following the’’.

17 (b) AMENDMENTS TO THE INTERNAL REVENUE

18 CODE OF 1986.—

19 (1) CLARIFICATION OF APPLICABILITY OF

20 PROVISION.—Paragraph (2) of section

21 412(n) of the Internal Revenue Code of

22 1986 is amended by adding at the end the

23 following new sentence: ‘‘This subsection

24 shall not apply to any plan to which sec25 tion 4021 of the Employee Retirement In-
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1 come Security Act of 1974 does not apply

2 (as such section is in effect on the date of

3 the enactment of the Retirement Protec4 tion Act of 1994).’’.

5 (2) REPEAL OF $1,000,000 OFFSET.—Para6 graph (3) of section 412(n) of such Code is

7 amended to read as follows:

8 ‘‘(3) AMOUNT OF LIEN.—For purposes of

9 paragraph (1), the amount of the lien

10 shall be equal to the aggregate unpaid

11 balance of required installments and

12 other payments required under this sec13 tion (including interest)—

14 ‘‘(A) for plan years beginning

15 after 1987, and

16 ‘‘(B) for which payment has not

17 been made before the due date.’’

18 (3) REPEAL OF 60-DAY DELAY.—Section

19 412(n)(4)(B) of such Code is amended by

20 striking ‘‘60th day following the’’.

21 (c) EFFECTIVE DATE.—The amendments

22 made by this section shall be effective for in23 stallments and other payments required

24 under section 412 of the Internal Revenue

25 Code of 1986 or under part 3 of subtitle B of
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1 title I of the Employee Retirement Income Se2 curity Act of 1974 that become due on or after

3 the date of enactment.

4 SEC. 407. ROUNDING RULES FOR COST-OF-LIVING ADJUST5 MENTS.

6 (a) COST-OF-LIVING ADJUSTMENT FOR COM7 PENSATION LIMIT.—Section 401(a)(17)(B) of the

8 Internal Revenue Code of 1986 is amended to

9 read as follows:

10 ‘‘(B) COST-OF-LIVING ADJUSTMENT.—

11 The Secretary shall adjust annually

12 the $150,000 amount in subparagraph

13 (A) for increases in the cost-of-living

14 at the same time and in the same

15 manner as adjustments under section

16 415(d); except that the base period

17 shall be the calendar quarter begin18 ning October 1, 1993, and any in19 crease which is not a multiple of

20 $10,000 shall be rounded to the next

21 lowest multiple of $10,000.’’

22 (b) COST-OF-LIVING ADJUSTMENT FOR MAXI23 MUM DEFINED BENEFIT AMOUNT AND MAXIMUM

24 ANNUAL ADDITION.—
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1 (1) IN GENERAL.—Section 415(d) of

2 such Code is amended to read as follows:

3 ‘‘(d) COST-OF-LIVING ADJUSTMENTS.—

4 ‘‘(1) IN GENERAL.—The Secretary shall

5 adjust annually—

6 ‘‘(A) the $90,000 amount in sub7 section (b)(1)(A),

8 ‘‘(B) in the case of a participant

9 who separated from service, the

10 amount taken into account under

11 subsection (b)(1)(B), and

12 ‘‘(C) the $30,000 amount in sub13 section (c)(1)(A),

14 for increases in the cost-of-living in ac15 cordance with regulations prescribed by

16 the Secretary.

17 ‘‘(2) METHOD.—The regulations pre18 scribed under paragraph (1) shall provide

19 for—

20 ‘‘(A) an adjustment with respect

21 to any calendar year based on the in22 crease in the applicable index for the

23 calendar quarter ending September

24 30 of the preceding calendar year
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1 over such index for the base period,

2 and

3 ‘‘(B) adjustment procedures which

4 are similar to the procedures used to

5 adjust benefit amounts under section

6 215(i)(2)(A) of the Social Security Act.

7 ‘‘(3) BASE PERIOD.—For purposes of

8 paragraph (2)—

9 ‘‘(A) $90,000 AMOUNT.—The base

10 period taken into account for pur11 poses of paragraph (1)(A) is the cal12 endar quarter beginning October 1,

13 1986.

14 ‘‘(B) SEPARATIONS AFTER DECEMBER

15 31, 1994.—The base period taken into

16 account for purposes of paragraph

17 (1)(B) with respect to individuals sep18 arating from service with the em19 ployer after December 31, 1994, is the

20 calendar quarter beginning July 1 of

21 the calendar year preceding the cal22 endar year in which such separation

23 occurs.

24 ‘‘(C) SEPARATIONS BEFORE JANUARY

25 1, 1995.—The base period taken into
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1 account for purposes of paragraph

2 (1)(B) with respect to individuals sep3 arating from service with the em4 ployer before January 1, 1995, is the

5 calendar quarter beginning October 1

6 of the calendar year preceding the

7 calendar year in which such separa8 tion occurs.

9 ‘‘(D) $30,000 AMOUNT.—The base

10 period taken into account for pur11 poses of paragraph (1)(C) is the cal12 endar quarter beginning October 1,

13 1993.

14 ‘‘(4) ROUNDING.—Any increase under

15 subparagraph (A) or (C) of paragraph (1)

16 which is not a multiple of $5,000 shall be

17 rounded to the next lowest multiple of

18 $5,000.’’

19 (2) CONFORMING AMENDMENT.—Section

20 415(c)(1)(A) of such Code is amended by

striking ‘‘(or, if greater, 1 21 ⁄4 of the dollar

22 limitation in effect under subsection

23 (b)(1)(A))’’.

24 (c) COST-OF-LIVING ADJUSTMENT FOR MAXI25 MUM SALARY DEFERRAL.—Section 402(g)(5) of
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1 such Code is amended by inserting before the

2 period ‘‘; except that any increase under this

3 paragraph which is not a multiple of $500

4 shall be rounded to the next lowest multiple

5 of $500’’.

6 (d) COST-OF-LIVING ADJUSTMENT FOR ELIGI7 BILITY FOR SIMPLIFIED EMPLOYEE PENSIONS.—

8 Section 408(k)(8) of such Code is amended by

9 inserting before the period ‘‘; except that any

10 increase in the $300 amount which is not a

11 multiple of $50 shall be rounded to the next

12 lowest multiple of $50’’.

13 (e) EFFECTIVE DATE.—The amendments

14 made by this section shall apply to years be15 ginning after December 31, 1994.

16 SEC. 408. FUNDING OF RESTORED PLANS.

17 Any changes made by this Act to section

18 412 of the Internal Revenue Code of 1986 or

19 to part 3 of subtitle B of title I of the Employee

20 Retirement Income Security Act of 1974 shall

21 not apply to a plan which is, on the date of

22 enactment of this Act, subject to a restoration

23 payment schedule order issued by the Pen24 sion Benefit Guaranty Corporation that meets
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1 the requirements of section 1.412(c)(1)–3 of

2 the Treasury Regulations.

3 SEC. 409. STUDY OF FUNDING STATUS OF FEDERAL, STATE,

4 AND LOCAL GOVERNMENT PENSION PLANS.

5 (a) IN GENERAL.—The Comptroller General

6 shall conduct a study of the underfunding of

7 Federal, State, and local government pension

8 plans. Such study shall address the causes

9 and implications of such underfunding, as

10 well as the feasibility of requiring such plans

11 to comply with funding, reporting, and disclo12 sure requirements imposed by Federal law on

13 private pension plans.

14 (b) REPORT.—The report of such study

15 shall be submitted not later than one year

16 after the date of the enactment of this Act to

17 the Committee on Education and Labor, the

18 Committee on Post Office and Civil Service,

19 and the Committee on Ways and Means of the

20 House of Representatives and the Committee

21 on Labor and Human Resources, the Commit22 tee on Government Affairs, and the Commit23 tee on Finance of the Senate.
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1 TITLE V—EFFECTIVE DATES

2 AND RELATED RULES

3 SEC. 501. EFFECTIVE DATES.

4 Except as otherwise provided in this Act,

5 the amendments made by this Act shall be ef6 fective on the date of enactment of this Act.

7 SEC. 502. DELAY IN CHANGES TO PREVAILING COMMIS8 SIONERS’ TABLE.

9 For purposes of sections 205(g)(3) and

10 302(d)(7)(C) of the Employee Retirement In11 come Security Act of 1974 and sections

12 412(l)(7)(C), 415(b), and 417(e)(3) of the Inter13 nal Revenue Code of 1986, any change in the

14 prevailing commissioners’ standard table de15 scribed in section 807(d)(5)(A) of such Code

16 shall be appropriate for pension plans and

17 apply to plan years beginning on or after the

18 later of—

19 (1) January 1, 2000, or

20 (2) a date, as prescribed by the Sec21 retary of the Treasury, after the date of

22 the issuance by the Secretary of a revised

23 table based on the prevailing commis24 sioners’ standard table.
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1 Any such revised table shall be issued by reg2 ulation. In issuing such regulations, the Sec3 retary shall take into account the results of

4 available independent studies with respect to

5 the appropriate bases for such a table and

6 after opportunity for public comment regard7 ing such studies.

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