II

104TH CONGRESS

2D SESSION S. 2132

To amend the Internal Revenue Code of 1986 to provide comprehensive

pension protection for women.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 26, 1996

Ms. MOSELEY-BRAUN introduced the following bill; which was read twice and

referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to provide

comprehensive pension protection for women.

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

3 SECTION 1. SHORT TITLE.

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

5 ‘‘Comprehensive Women’s Pension Protection Act of

6 1996’’.

7 (b) TABLE OF CONTENTS.—

Sec. 1. Short title.

TITLE I—PENSION REFORM

Sec. 101. Pension integration rules.

Sec. 102. Application of minimum coverage requirements with respect to separate lines of business.
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Sec. 103. Division of pension benefits upon divorce.

Sec. 104. Clarification of continued availability of remedies relating to matters

treated in domestic relations orders entered before 1985.

Sec. 105. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee.

Sec. 106. Effective dates.

TITLE II—PROTECTION OF RIGHTS OF FORMER SPOUSES TO

PENSION BENEFITS UNDER CERTAIN GOVERNMENT AND GOVERNMENT-SPONSORED RETIREMENT PROGRAMS

Sec. 201. Extension of tier II railroad retirement benefits to surviving former

spouses pursuant to divorce agreements.

Sec. 202. Survivor annuities for widows, widowers, and former spouses of Federal employees who die before attaining age for deferred annuity under civil service retirement system.

Sec. 203. Court orders relating to Federal retirement benefits for former

spouses of Federal employees.

Sec. 204. Prevention of circumvention of court order by waiver of retired pay

to enhance civil service retirement annuity.

TITLE III—REFORMS RELATED TO 401(K) PLANS

Sec. 301. 401(k) plans prohibited from investing in collectibles.

Sec. 302. Requirement of annual, detailed investment reports applied to certain

401(k) plans.

Sec. 303. 10-percent limitation on acquisition and holding of employer securities and employer real property applied to 401(k) plans.

TITLE IV—MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY

REQUIREMENTS

Sec. 401. Modifications of joint and survivor annuity requirements.

TITLE V—SPOUSAL CONSENT REQUIRED FOR DISTRIBUTIONS

FROM SECTION 401(K) PLANS

Sec. 501. Spousal consent required for distributions from section 401(k) plans.

TITLE VI—WOMEN’S PENSION TOLL-FREE PHONE NUMBER

Sec. 601. Women’s pension toll-free phone number.

TITLE VII—ANNUAL PENSION BENEFITS STATEMENTS

Sec. 701. Annual pension benefits statements.

1 TITLE I—PENSION REFORM

2 SEC. 101. PENSION INTEGRATION RULES.

3 (a) APPLICABILITY OF NEW INTEGRATION RULES

4 EXTENDED TO ALL EXISTING ACCRUED BENEFITS.—

5 Notwithstanding subsection (c)(1) of section 1111 of the
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1 Tax Reform Act of 1986 (relating to effective date of ap2 plication of nondiscrimination rules to integrated plans)

3 (100 Stat. 2440), effective for plan years beginning after

4 the date of the enactment of this Act, the amendments

5 made by subsection (a) of such section 1111 shall also

6 apply to benefits attributable to plan years beginning on

7 or before December 31, 1988.

8 (b) INTEGRATION DISALLOWED FOR SIMPLIFIED

9 EMPLOYEE PENSIONS.—

10 (1) IN GENERAL.—Subparagraph (D) of section

11 408(k)(3) of the Internal Revenue Code of 1986 (re12 lating to permitted disparity under rules limiting

13 discrimination under simplified employee pensions)

14 is repealed.

15 (2) CONFORMING AMENDMENT.—Subparagraph

16 (C) of such section 408(k)(3) is amended by striking

17 ‘‘and except as provided in subparagraph (D),’’.

18 (3) EFFECTIVE DATE.—The amendments made

19 by this subsection shall apply with respect to taxable

20 years beginning on or after January 1, 1996.

21 (c) EVENTUAL REPEAL OF INTEGRATION RULES.—

22 Effective for plan years beginning on or after January 1,

23 2003—

24 (1) subparagraphs (C) and (D) of section

25 401(a)(5) of the Internal Revenue Code of 1986 (re-
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1 lating to pension integration exceptions under non2 discrimination requirements for qualification) are re3 pealed, and subparagraph (E) of such section

4 401(a)(5) is redesignated as subparagraph (C); and

5 (2) subsection (l) of section 401 of such Code

6 (relating to nondiscriminatory coordination of de7 fined contribution plans with OASDI) is repealed.

8 SEC. 102. APPLICATION OF MINIMUM COVERAGE REQUIRE9 MENTS WITH RESPECT TO SEPARATE LINES

10 OF BUSINESS.

11 (a) IN GENERAL.—Subsection (b) of section 410 of

12 the Internal Revenue Code of 1986 (relating to minimum

13 coverage requirements) is amended—

14 (1) in paragraph (1), by striking ‘‘A trust’’ and

15 inserting ‘‘In any case in which the employer with

16 respect to a plan is treated, under section 414(r), as

17 operating separate lines of business for a plan year,

18 a trust’’, and by inserting ‘‘for such plan year’’ after

19 ‘‘requirements’’; and

20 (2) by redesignating paragraphs (3) through

21 (6) as paragraphs (4) through (7), respectively and

22 by inserting after paragraph (2) the following new

23 paragraph:

24 ‘‘(3) SPECIAL RULE WHERE EMPLOYER OPER25 ATES SINGLE LINE OF BUSINESS.—In any case in
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1 which the employer with respect to a plan is not

2 treated, under section 414(r), as operating separate

3 lines of business for a plan year, a trust shall not

4 constitute a qualified trust under section 401(a) un5 less such trust is designated by the employer as part

6 of a plan which benefits all employees of the em7 ployer.’’.

8 (b) LIMITATION ON LINE OF BUSINESS EXCEP9 TION.—Paragraph (6) of section 410(b) of such Code (as

10 redesignated by subsection (a)(2) of this section) is

11 amended by inserting ‘‘other than paragraph (1)(A)’’ after

12 ‘‘this subsection’’.

13 SEC. 103. DIVISION OF PENSION BENEFITS UPON DIVORCE.

14 (a) AMENDMENTS TO THE INTERNAL REVENUE

15 CODE OF 1986.—

16 (1) IN GENERAL.—Subsection (a) of section

17 401 of the Internal Revenue Code of 1986 (relating

18 to requirements for qualification) is amended—

19 (A) by inserting after paragraph (31) the

20 following new paragraph:

21 ‘‘(32) DIVISION OF PENSION BENEFITS UPON

22 DIVORCE.—

23 ‘‘(A) IN GENERAL.—In the case of a di24 vorce of a participant in a pension plan from a

25 spouse who is, immediately before the divorce,
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1 a beneficiary under the plan, a trust forming a

2 part of such plan shall not constitute a quali3 fied trust under this section unless the plan

4 provides that at least 50 percent of the marital

5 share of the accrued benefit of the participant

6 under the plan ceases to be an accrued benefit

7 of such participant and becomes an accrued

8 benefit of such divorced spouse, determined and

9 payable upon the earlier of the retirement of

10 the participant, the participant’s death, or the

11 termination of the plan, except to the extent

12 that a qualified domestic relations order in con13 nection with such divorce provides otherwise.

14 ‘‘(B) LIMITATION.—Subparagraph (A)

15 shall not be construed—

16 ‘‘(i) to require a plan to provide any

17 type or form of benefit, or any option, not

18 otherwise provided under the plan,

19 ‘‘(ii) to require the plan to provide in20 creased benefits (determined on the basis

21 of actuarial value),

22 ‘‘(iii) to require the payment of bene23 fits to the divorced spouse which are re24 quired to be paid to another individual in

25 accordance with this paragraph or pursu-
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1 ant to a domestic relations order previously

2 determined to be a qualified domestic rela3 tions order, or

4 ‘‘(iv) to require payment of benefits to

5 the divorced spouse in the form of a quali6 fied joint and survivor annuity to the di7 vorced spouse and his or her subsequent

8 spouse.

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

10 paragraph—

11 ‘‘(i) DOMESTIC RELATIONS ORDER;

12 QUALIFIED DOMESTIC RELATIONS

13 ORDER.—The terms ‘domestic relations

14 order’ and ‘qualified domestic relations

15 order’ shall have the meanings provided in

16 section 414(p).

17 ‘‘(ii) MARITAL SHARE.—The term

18 ‘marital share’ means, in connection with

19 an accrued benefit under a pension plan,

20 the product derived by multiplying—

21 ‘‘(I) the actuarial present value

22 of the accrued benefit, by

23 ‘‘(II) a fraction, the numerator of

24 which is the period of time, during the

25 marriage between the spouse and the
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1 participant in the plan, which con2 stitutes creditable service by the par3 ticipant under the plan, and the de4 nominator of which is the total period

5 of time which constitutes creditable

6 service by the participant under the

7 plan.

8 ‘‘(iii) QUALIFIED JOINT AND SURVI9 VOR ANNUITY.—The term ‘qualified joint

10 and survivor annuity’ has the meaning pro11 vided in section 417(b).

12 ‘‘(D) REGULATIONS.—In prescribing regu13 lations under this paragraph, the Secretary

14 shall consult with the Secretary of Labor.’’; and

15 (B) in the last sentence, by striking ‘‘and

16 (20)’’ and inserting ‘‘(20), and (32)’’.

17 (2) CONFORMING AMENDMENTS.—

18 (A) Subparagraph (B) of section

19 401(a)(13) of such Code (relating to special

20 rules for domestic relations orders) is amended

21 by inserting ‘‘or if such creation, assignment, or

22 recognition pursuant to such order is necessary

23 for compliance with the requirements of para24 graph (32)’’ before the period.
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1 (B) Subsection (p) of section 414 of such

2 Code (defining qualified domestic relations or3 ders) is amended—

4 (i) in paragraph (3)(C), by inserting

5 ‘‘or to a divorced spouse of the participant

6 in connection with a previously occurring

7 divorce as required under section

8 401(a)(32)’’ before the period; and

9 (ii) in paragraph (7)(C), by striking

10 ‘‘if there had been no order’’ and inserting

11 ‘‘in accordance with section 401(a)(32) as

12 if there had been no qualified domestic re13 lations order’’.

14 (b) AMENDMENTS TO THE EMPLOYEE RETIREMENT

15 INCOME SECURITY ACT OF 1974.—

16 (1) IN GENERAL.—Section 206 of Employee

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

18 1056) is amended by adding at the end the following

19 new subsection:

20 ‘‘(e)(1) In the case of a divorce of a participant in

21 a pension plan from a spouse who is, immediately before

22 the divorce, a beneficiary under the plan, the plan shall

23 provide that at least 50 percent of the marital share of

24 the accrued benefit of the participant under the plan

25 ceases to be an accrued benefit of such participant and
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1 becomes an accrued benefit of such divorced spouse, deter2 mined and payable upon the earlier of the retirement of

3 the participant, the participant’s death, or the termination

4 of the plan, except to the extent that a qualified domestic

5 relations order in connection with such divorce provides

6 otherwise.

7 ‘‘(2) Paragraph (1) shall not be construed—

8 ‘‘(A) to require a plan to provide any type or

9 form of benefit, or any option, not otherwise pro10 vided under the plan,

11 ‘‘(B) to require the plan to provide increased

12 benefits (determined on the basis of actuarial value),

13 ‘‘(C) to require the payment of benefits to the

14 divorced spouse which are required to be paid to an15 other individual in accordance with this subsection

16 or pursuant to a domestic relation order previously

17 determined to be a qualified domestic relations

18 order, or

19 ‘‘(D) to require payment of benefits to the di20 vorced spouse in the form of a joint and survivor an21 nuity to the divorced spouse and his or her subse22 quent spouse.

23 ‘‘(3) For purposes of this subsection—
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1 ‘‘(A) The terms ‘domestic relations order’ and

2 ‘qualified domestic relations order’ shall have the

3 meanings provided in subsection (d)(3)(B).

4 ‘‘(B) The term ‘marital share’ means, in con5 nection with an accrued benefit under a pension

6 plan, the product derived by multiplying—

7 ‘‘(i) the actuarial present value of the ac8 crued benefit, by

9 ‘‘(ii) a fraction—

10 ‘‘(I) the numerator of which is the pe11 riod of time, during the marriage between

12 the spouse and the participant in the plan,

13 which constitutes creditable service by the

14 participant under the plan, and

15 ‘‘(II) the denominator of which is the

16 total period of time which constitutes cred17 itable service by the participant under the

18 plan.

19 ‘‘(C) The term ‘qualified joint and survivor an20 nuity’ shall have the meaning provided in section

21 205(d).

22 ‘‘(4) In prescribing regulations under this subsection,

23 the Secretary shall consult with the Secretary of the

24 Treasury.’’.
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1 (2) CONFORMING AMENDMENTS.—Section

2 206(d) of such Act (29 U.S.C. 1056(d)) is amend3 ed—

4 (A) in the first sentence of paragraph

5 (3)(A), by inserting ‘‘or if such creation, assign6 ment, or recognition pursuant to such order is

7 necessary for compliance with the requirements

8 of subsection (e)’’ before the period;

9 (B) in paragraph (3)(D)(iii), by inserting

10 ‘‘or to a divorced spouse of the participant in

11 connection with a previously occurring divorce

12 as required under subsection (e)’’ before the pe13 riod; and

14 (C) in paragraph (3)(H)(iii), by striking

15 ‘‘if there had been no order’’ and inserting ‘‘in

16 accordance with subsection (e) as if there had

17 been no qualified domestic relations order’’.

18 SEC. 104. CLARIFICATION OF CONTINUED AVAILABILITY OF

19 REMEDIES RELATING TO MATTERS TREATED

20 IN DOMESTIC RELATIONS ORDERS ENTERED

21 BEFORE 1985.

22 (a) IN GENERAL.—In any case in which—

23 (1) under a prior domestic relations order en24 tered before January 1, 1985, in an action for di25 vorce—
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1 (A) the right of a spouse under a pension

2 plan to an accrued benefit under such plan was

3 not divided between spouses,

4 (B) any right of a spouse with respect to

5 such an accrued benefit was waived without the

6 informed consent of such spouse, or

7 (C) the right of a spouse as a participant

8 under a pension plan to an accrued benefit

9 under such plan was divided so that the other

10 spouse received less than such other spouse’s

11 pro rata share of the accrued benefit under the

12 plan, or

13 (2) a court of competent jurisdiction determines

14 that any further action is appropriate with respect

15 to any matter to which a prior domestic relations

16 order entered before such date applies,

17 nothing in the provisions of section 104, 204, or 303 of

18 the Retirement Equity Act of 1984 (Public Law 98–397)

19 or the amendments made thereby shall be construed to

20 require or permit the treatment, for purposes of such pro21 visions, of a domestic relations order, which is entered on

22 or after the date of the enactment of this Act and which

23 supersedes, amends the terms of, or otherwise affects such

24 prior domestic relations order, as other than a qualified
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1 domestic relations order solely because such prior domestic

2 relations order was entered before January 1, 1985.

3 (b) DEFINITIONS.—For purposes of this section—

4 (1) IN GENERAL.—Terms used in this section

5 which are defined in section 3 of the Employee Re6 tirement Income Security Act of 1974 (29 U.S.C.

7 1002) shall have the meanings provided such terms

8 by such section.

9 (2) PRO RATA SHARE.—The term ‘‘pro rata

10 share’’ of a spouse means, in connection with an ac11 crued benefit under a pension plan, 50 percent of

12 the product derived by multiplying—

13 (A) the actuarial present value of the ac14 crued benefit, by

15 (B) a fraction—

16 (i) the numerator of which is the pe17 riod of time, during the marriage between

18 the spouse and the participant in the plan,

19 which constitutes creditable service by the

20 participant under the plan, and

21 (ii) the denominator of which is the

22 total period of time which constitutes cred23 itable service by the participant under the

24 plan.
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1 (3) PLAN.—All pension plans in which a person

2 has been a participant shall be treated as one plan

3 with respect to such person.

4 SEC. 105. ENTITLEMENT OF DIVORCED SPOUSES TO RAIL5 ROAD RETIREMENT ANNUITIES INDEPEND6 ENT OF ACTUAL ENTITLEMENT OF EM7 PLOYEE.

8 Section 2 of the Railroad Retirement Act of 1974 (45

9 U.S.C. 231a) is amended—

10 (1) in subsection (c)(4)(i), by striking ‘‘(A) is

11 entitled to an annuity under subsection (a)(1) and

12 (B)’’; and

13 (2) in subsection (e)(5), by striking ‘‘or di14 vorced wife’’ the second place it appears.

15 SEC. 106. EFFECTIVE DATES.

16 (a) IN GENERAL.—Except as provided in subsection

17 (b), the amendments made by this title, other than section

18 101, shall apply with respect to plan years beginning on

19 or after January 1, 1996, and the amendments made by

20 section 103 shall apply only with respect to divorces be21 coming final in such plan years.

22 (b) SPECIAL RULE FOR COLLECTIVELY BARGAINED

23 PLANS.—In the case of a plan maintained pursuant to 1

24 or more collective bargaining agreements between em25 ployee representatives and 1 or more employers ratified
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1 on or before the date of the enactment of this Act, sub2 section (a) shall be applied to benefits pursuant to, and

3 individuals covered by, any such agreement by substituting

4 for ‘‘January 1, 1996’’ the date of the commencement of

5 the first plan year beginning on or after the earlier of—

6 (1) the later of—

7 (A) January 1, 1996, or

8 (B) the date on which the last of such col9 lective bargaining agreements terminates (de10 termined without regard to any extension there11 of after the date of the enactment of this Act),

12 or

13 (2) January 1, 1999.

14 (c) PLAN AMENDMENTS.—If any amendment made

15 by this title requires an amendment to any plan, such plan

16 amendment shall not be required to be made before the

17 first plan year beginning on or after January 1, 1996, if—

18 (1) during the period after such amendment

19 made by this title takes effect and before such first

20 plan year, the plan is operated in accordance with

21 the requirements of such amendment made by this

22 title, and

23 (2) such plan amendment applies retroactively

24 to the period after such amendment made by this

25 title takes effect and such first plan year.
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1 A plan shall not be treated as failing to provide definitely

2 determinable benefits or contributions, or to be operated

3 in accordance with the provisions of the plan, merely be4 cause it operates in accordance with this subsection.

5 TITLE II—PROTECTION OF

6 RIGHTS OF FORMER SPOUSES

7 TO PENSION BENEFITS

8 UNDER CERTAIN GOVERN9 MENT AND GOVERNMENT10 SPONSORED RETIREMENT

11 PROGRAMS

12 SEC. 201. EXTENSION OF TIER II RAILROAD RETIREMENT

13 BENEFITS TO SURVIVING FORMER SPOUSES

14 PURSUANT TO DIVORCE AGREEMENTS.

15 (a) IN GENERAL.—Section 5 of the Railroad Retire16 ment Act of 1974 (45 U.S.C. 231d) is amended by adding

17 at the end the following new subsection:

18 ‘‘(d) Notwithstanding any other provision of law, the

19 payment of any portion of an annuity computed under sec20 tion 3(b) to a surviving former spouse in accordance with

21 a court decree of divorce, annulment, or legal separation

22 or the terms of any court-approved property settlement

23 incident to any such court decree shall not be terminated

24 upon the death of the individual who performed the service

25 with respect to which such annuity is so computed unless
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1 such termination is otherwise required by the terms of

2 such court decree.’’.

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

4 this section shall take effect on the date of the enactment

5 of this Act.

6 SEC. 202. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS,

7 AND FORMER SPOUSES OF FEDERAL EM8 PLOYEES WHO DIE BEFORE ATTAINING AGE

9 FOR DEFERRED ANNUITY UNDER CIVIL

10 SERVICE RETIREMENT SYSTEM.

11 (a) BENEFITS FOR WIDOW OR WIDOWER.—Section

12 8341(f) of title 5, United States Code, is amended—

13 (1) in the matter preceding paragraph (1) by—

14 (A) by inserting ‘‘a former employee sepa15 rated from the service with title to deferred an16 nuity from the Fund dies before having estab17 lished a valid claim for annuity and is survived

18 by a spouse, or if’’ before ‘‘a Member’’; and

19 (B) by inserting ‘‘of such former employee

20 or Member’’ after ‘‘the surviving spouse’’;

21 (2) in paragraph (1)—

22 (A) by inserting ‘‘former employee or’’ be23 fore ‘‘Member commencing’’; and

24 (B) by inserting ‘‘former employee or’’ be25 fore ‘‘Member dies’’; and
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1 (3) in the undesignated sentence following para2 graph (2)—

3 (A) in the matter preceding subparagraph

4 (A) by inserting ‘‘former employee or’’ before

5 ‘‘Member’’; and

6 (B) in subparagraph (B) by inserting

7 ‘‘former employee or’’ before ‘‘Member’’.

8 (b) BENEFITS FOR FORMER SPOUSE.—Section

9 8341(h) of title 5, United States Code, is amended—

10 (1) in paragraph (1) by adding after the first

11 sentence ‘‘Subject to paragraphs (2) through (5) of

12 this subsection, a former spouse of a former em13 ployee who dies after having separated from the

14 service with title to a deferred annuity under section

15 8338(a) but before having established a valid claim

16 for annuity is entitled to a survivor annuity under

17 this subsection, if and to the extent expressly pro18 vided for in an election under section 8339(j)(3) of

19 this title, or in the terms of any decree of divorce

20 or annulment or any court order or court-approved

21 property settlement agreement incident to such de22 cree.’’; and

23 (2) in paragraph (2)—
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1 (A) in subparagraph (A)(ii) by striking ‘‘or

2 annuitant,’’ and inserting ‘‘annuitant, or former

3 employee’’; and

4 (B) in subparagraph (B)(iii) by inserting

5 ‘‘former employee or’’ before ‘‘Member’’.

6 (c) PROTECTION OF SURVIVOR BENEFIT RIGHTS.—

7 Section 8339(j)(3) of title 5, United States Code, is

8 amended by inserting at the end the following:

9 ‘‘The Office shall provide by regulation for the appli10 cation of this subsection to the widow, widower, or surviv11 ing former spouse of a former employee who dies after

12 having separated from the service with title to a deferred

13 annuity under section 8338(a) but before having estab14 lished a valid claim for annuity.’’.

15 (d) EFFECTIVE DATE.—The amendments made by

16 this section shall take effect on the date of the enactment

17 of this Act and shall apply only in the case of a former

18 employee who dies on or after such date.

19 SEC. 203. COURT ORDERS RELATING TO FEDERAL RETIRE20 MENT BENEFITS FOR FORMER SPOUSES OF

21 FEDERAL EMPLOYEES.

22 (a) CIVIL SERVICE RETIREMENT SYSTEM.—

23 (1) IN GENERAL.—Section 8345(j) of title 5,

24 United States Code, is amended—
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1 (A) by redesignating paragraph (3) as

2 paragraph (4); and

3 (B) by inserting after paragraph (2) the

4 following new paragraph:

5 ‘‘(3) Payment to a person under a court decree, court

6 order, property settlement, or similar process referred to

7 under paragraph (1) shall include payment to a former

8 spouse of the employee, Member, or annuitant.’’.

9 (2) LUMP-SUM BENEFITS.—Section 8342 of

10 title 5, United States Code, is amended—

11 (A) in subsection (c) by striking ‘‘Lump12 sum benefits’’ and inserting ‘‘Subject to sub13 section (j), lump-sum benefits’’; and

14 (B) in subsection (j)(1) by striking ‘‘the

15 lump-sum credit under subsection (a) of this

16 section’’ and inserting ‘‘any lump-sum credit or

17 lump-sum benefit under this section’’.

18 (b) FEDERAL EMPLOYEES RETIREMENT SYSTEM.—

19 Section 8467 of title 5, United States Code, is amended—

20 (1) by redesignating subsection (c) as sub21 section (d); and

22 (2) by inserting after subsection (b) the follow23 ing new subsection:

24 ‘‘(c) Payment to a person under a court decree, court

25 order, property settlement, or similar process referred to
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1 under subsection (a) shall include payment to a former

2 spouse of the employee, Member, or annuitant.’’.

3 (c) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect on the date of the enactment

5 of this Act.

6 SEC. 204. PREVENTION OF CIRCUMVENTION OF COURT

7 ORDER BY WAIVER OF RETIRED PAY TO EN8 HANCE CIVIL SERVICE RETIREMENT ANNU9 ITY.

10 (a) CIVIL SERVICE RETIREMENT AND DISABILITY

11 SYSTEM.—

12 (1) IN GENERAL.—Subsection (c) of section

13 8332 of title 5, United States Code, is amended by

14 adding at the end the following:

15 ‘‘(4) If an employee or Member waives retired pay

16 that is subject to a court order for which there has been

17 effective service on the Secretary concerned for purposes

18 of section 1408 of title 10, the military service on which

19 the retired pay is based may be credited as service for

20 purposes of this subchapter only if, in accordance with

21 regulations prescribed by the Director of the Office of Per22 sonnel Management, the employee or Member authorizes

23 the Director to deduct and withhold from the annuity pay24 able to the employee or Member under this subchapter,

25 and to pay to the former spouse covered by the court
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1 order, the same amount that would have been deducted

2 and withheld from the employee’s or Member’s retired pay

3 and paid to that former spouse under such section 1408.’’.

4 (2) CONFORMING AMENDMENT.—Paragraph (1)

5 of such subsection is amended by striking out ‘‘Ex6 cept as provided in paragraph (2)’’ and inserting

7 ‘‘Except as provided in paragraphs (2) and (4)’’.

8 (b) FEDERAL EMPLOYEES’ RETIREMENT SYSTEM.—

9 (1) IN GENERAL.—Subsection (c) of section

10 8411 of title 5, United States Code, is amended by

11 adding at the end the following:

12 ‘‘(5) If an employee or Member waives retired pay

13 that is subject to a court order for which there has been

14 effective service on the Secretary concerned for purposes

15 of section 1408 of title 10, the military service on which

16 the retired pay is based may be credited as service for

17 purposes of this chapter only if, in accordance with regula18 tions prescribed by the Director of the Office of Personnel

19 Management, the employee or Member authorizes the Di20 rector to deduct and withhold from the annuity payable

21 to the employee or Member under this subchapter, and

22 to pay to the former spouse covered by the court order,

23 the same amount that would have been deducted and with24 held from the employee’s or Member’s retired pay and

25 paid to that former spouse under such section 1408.’’.
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1 (2) CONFORMING AMENDMENT.—Paragraph (1)

2 of such subsection is amended by striking out ‘‘Ex3 cept as provided in paragraph (2) or (3)’’ and in4 serting ‘‘Except as provided in paragraphs (2), (3),

5 and (5)’’.

6 (c) EFFECTIVE DATE.—The amendments made by

7 this section shall take effect on January 1, 1997.

8 TITLE III—REFORMS RELATED

9 TO 401(K) PLANS

10 SEC. 301. 401(k) PLANS PROHIBITED FROM INVESTING IN

11 COLLECTIBLES.

12 (a) IN GENERAL.—Paragraph (4) of section 401(k)

13 of the Internal Revenue Code of 1986 (relating to cash

14 or deferred arrangements) is amended by adding at the

15 end the following new subparagraph:

16 ‘‘(D) INVESTMENT IN COLLECTIBLES

17 TREATED AS DISTRIBUTIONS.—The rules of

18 section 408(m) shall apply to a cash or deferred

19 arrangement of any employer.’’

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

21 subsection (a) shall apply to plan years beginning after

22 the date of the enactment of this Act.
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1 SEC. 302. REQUIREMENT OF ANNUAL, DETAILED INVEST2 MENT REPORTS APPLIED TO CERTAIN 401(k)

3 PLANS.

4 (a) IN GENERAL.—Paragraph (4) of section 401(k)

5 of the Internal Revenue Code of 1986 (relating to cash

6 or deferred arrangements), as amended by section 1, is

7 amended by adding at the end the following new subpara8 graph:

9 ‘‘(E) ANNUAL, DETAILED INVESTMENT RE10 PORTS REQUIRED.—

11 ‘‘(i) IN GENERAL.—A cash or deferred

12 arrangement of any employer with less

13 than 100 participants shall not be treated

14 as a qualified cash or deferred arrange15 ment unless the plan of which it is a part

16 provides to each participant an annual in17 vestment report detailing the name of each

18 investment acquired during such plan year

19 and the date and cost of such acquisition,

20 the name of each investment sold during

21 such year and the date and net proceeds of

22 such sale, and the overall rate of return for

23 all investments for such year.

24 ‘‘(ii) EXCEPTION.—Clause (i) shall

25 not apply with respect to any participant

26 described in section 404(c) of the Em-
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1 ployee Retirement Income Security Act of

2 1974 (29 U.S.C. 1104(c)).’’

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

4 subsection (a) shall apply to plan years beginning after

5 the date of the enactment of this Act.

6 SEC. 303. 10-PERCENT LIMITATION ON ACQUISITION AND

7 HOLDING OF EMPLOYER SECURITIES AND

8 EMPLOYER REAL PROPERTY APPLIED TO

9 401(K) PLANS.

10 (a) IN GENERAL.—Subparagraph (A) of section

11 407(d)(3) of the Employee Retirement Income Security

12 Act of 1974 (29 U.S.C. 1107(d)(3)) is amended by adding

13 at the end the following new sentence: ‘‘Such term also

14 excludes an individual account plan that includes a quali15 fied cash or deferred arrangement described in section

16 401(k) of the Internal Revenue Code of 1986, if such plan,

17 together with all other individual account plans main18 tained by the employer, owns more than 10 percent of the

19 assets owned by all pension plans maintained by the em20 ployer. For purposes of the preceding sentence, the assets

21 of such plan subject to participant control (within the

22 meaning of section 404(c)) shall not be taken into ac23 count.’’.

24 (b) EFFECTIVE DATE; TRANSITION RULE.—
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1 (1) EFFECTIVE DATE.—Except as provided in

2 paragraph (2), the amendment made by this section

3 shall apply to plans on and after the date of the en4 actment of this Act.

5 (2) TRANSITION RULE FOR PLANS HOLDING

6 EXCESS SECURITIES OR PROPERTY.—In the case of

7 a plan which on the date of the enactment of this

8 Act has holdings of employer securities and employer

9 real property (as defined in section 407(d) of the

10 Employee Retirement Income Security Act of 1974

11 (29 U.S.C. 1107(d)) in excess of the amount speci12 fied in such section 407, the amendment made by

13 this section shall apply to any acquisition of such se14 curities and property on or after such date of enact15 ment, but shall not apply to the specific holdings

16 which constitute such excess during the period of

17 such excess.

18 TITLE IV—MODIFICATIONS OF

19 JOINT AND SURVIVOR ANNU20 ITY REQUIREMENTS

21 SEC. 401. MODIFICATIONS OF JOINT AND SURVIVOR ANNU22 ITY REQUIREMENTS.

23 (a) AMENDMENTS TO ERISA.—

24 (1) AMOUNT OF ANNUITY.—
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1 (A) IN GENERAL.—Paragraph (1) of sec2 tion 205(a) of the Employee Retirement Income

3 Security Act of 1974 (29 U.S.C. 1055(a)) is

4 amended by inserting ‘‘or, at the election of the

5 participant, shall be provided in the form of a

6 qualified joint and two-thirds survivor annuity’’

7 after ‘‘survivor annuity,’’.

8 (B) DEFINITION.—Subsection (d) of sec9 tion 205 of such Act (29 U.S.C. 1055) is

10 amended—

11 (i) by redesignating paragraphs (1)

12 and (2) as subparagraphs (A) and (B), re13 spectively,

14 (ii) by inserting ‘‘(1)’’ after ‘‘(d)’’,

15 and

16 (iii) by adding at the end the follow17 ing new paragraph:

18 ‘‘(2) For purposes of this section, the term ‘‘qualified

19 joint and two-thirds survivor annuity’’ means an annu20 ity—

21 ‘‘(A) for the participant while both the partici22 pant and the spouse are alive with a survivor annu23 ity for the life of the surviving individual (either the

participant or the spouse) equal to 662 24 ⁄3 percent of

25 the amount of the annuity which is payable to the
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1 participant while both the participant and the

2 spouse are alive,

3 ‘‘(B) which is the actuarial equivalent of a sin4 gle annuity for the life of the participant, and

5 ‘‘(C) which, for all other purposes of this Act,

6 is treated as a qualified joint and survivor annuity.’’.

7 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

8 of section 205(c)(3)(A) of such Act (29 U.S.C.

9 1055(c)(3)(A)) is amended to read as follows:

10 ‘‘(i) the terms and conditions of each qualified

11 joint and survivor annuity and qualified joint and

12 two-thirds survivor annuity offered, accompanied by

13 an illustration of the benefits under each such annu14 ity for the particular participant and spouse and an

15 acknowledgement form to be signed by the partici16 pant and the spouse that they have read and consid17 ered the illustration before any form of retirement

18 benefit is chosen,’’.

19 (b) AMENDMENTS TO INTERNAL REVENUE CODE.—

20 (1) AMOUNT OF ANNUITY.—

21 (A) IN GENERAL.—Clause (i) of section

22 401(a)(11)(A) of the Internal Revenue Code of

23 1986 (relating to requirement of joint and sur24 vivor annuity and preretirement survivor annu25 ity) is amended by inserting ‘‘or, at the election
30

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1 of the participant, shall be provided in the form

2 of a qualified joint and two-thirds survivor an3 nuity’’ after ‘‘survivor annuity,’’.

4 (B) DEFINITION.—Section 417 of such

5 Code (relating to definitions and special rules

6 for purposes of minimum survivor annuity re7 quirements) is amended by redesignating sub8 section (f) as subsection (g) and by inserting

9 after subsection (e) the following new sub10 section:

11 ‘‘(f) DEFINITION OF QUALIFIED JOINT AND TWO12 THIRDS SURVIVOR ANNUITY.—For purposes of this sec13 tion and section 401(a)(11), the term ‘‘qualified joint and

14 two-thirds survivor annuity’’ means an annuity—

15 ‘‘(1) for the participant while both the partici16 pant and the spouse are alive with a survivor annu17 ity for the life of the surviving individual (either the

participant or the spouse) equal to 662 18 ⁄3 percent of

19 the amount of the annuity which is payable to the

20 participant while both the participant and the

21 spouse are alive,

22 ‘‘(2) which is the actuarial equivalent of a sin23 gle annuity for the life of the participant, and

24 ‘‘(3) which, for all other purposes of this title,

25 is treated as a qualified joint and survivor annuity.’’.
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1 (2) ILLUSTRATION REQUIREMENT.—Clause (i)

2 of section 417(a)(3)(A) of such Code (relating to ex3 planation of joint and survivor annuity) is amended

4 to read as follows:

5 ‘‘(i) the terms and conditions of each

6 qualified joint and survivor annuity and

7 qualified joint and two-thirds survivor an8 nuity offered, accompanied by an illustra9 tion of the benefits under each such annu10 ity for the particular participant and

11 spouse and an acknowledgement form to

12 be signed by the participant and the

13 spouse that they have read and considered

14 the illustration before any form of retire15 ment benefit is chosen,’’.

16 (c) EFFECTIVE DATES.—

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

18 this section shall apply to plan years beginning after

19 December 31, 1996.

20 (2) SPECIAL RULE FOR COLLECTIVELY BAR21 GAINED PLANS.—In the case of a plan maintained

22 pursuant to one or more collective bargaining agree23 ments between employee representatives and one or

24 more employers ratified on or before the date of the

25 enactment of this Act, the amendments made by this
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1 section shall apply to the first plan year beginning

2 on or after the earlier of—

3 (A) the later of—

4 (i) January 1, 1997, or

5 (ii) the date on which the last of such

6 collective bargaining agreements termi7 nates (determined without regard to any

8 extension thereof after the date of the en9 actment of this Act), or

10 (B) January 1, 1998.

11 (3) PLAN AMENDMENTS.—If any amendment

12 made by this section requires an amendment to any

13 plan, such plan amendment shall not be required to

14 be made before the first plan year beginning on or

15 after January 1, 1998, if—

16 (A) during the period after such amend17 ment made by this section takes effect and be18 fore such first plan year, the plan is operated

19 in accordance with the requirements of such

20 amendment made by this section, and

21 (B) such plan amendment applies retro22 actively to the period after such amendment

23 made by this section takes effect and such first

24 plan year.
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1 A plan shall not be treated as failing to provide defi2 nitely determinable benefits or contributions, or to

3 be operated in accordance with the provisions of the

4 plan, merely because it operates in accordance with

5 this paragraph.

6 TITLE V—SPOUSAL CONSENT

7 REQUIRED FOR DISTRIBU8 TIONS FROM SECTION 401(k)

9 PLANS

10 SEC. 501. SPOUSAL CONSENT REQUIRED FOR DISTRIBU11 TIONS FROM SECTION 401(k) PLANS.

12 (a) IN GENERAL.—Paragraph (2) of section 401(k)

13 of the Internal Revenue Code of 1986 (defining qualified

14 cash or deferred arrangement) is amended by striking

15 ‘‘and’’ at the end of subparagraph (C), by striking the pe16 riod at the end of subparagraph (D) and inserting ‘‘, and’’,

17 and by adding at the end the following new subparagraph:

18 ‘‘(E) which provides that no distribution

19 may be made unless—

20 ‘‘(i) the spouse of the employee (if

21 any) consents in writing (during the 90-

22 day period ending on the date of the dis23 tribution) to such distribution, and
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1 ‘‘(ii) requirements comparable to the

2 requirements of section 417(a)(2) are met

3 with respect to such consent.’’

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

5 this section shall apply to distributions in plan years be6 ginning after December 31, 1996.

7 TITLE VI—WOMEN’S PENSION

8 TOLL-FREE PHONE NUMBER

9 SEC. 601. WOMEN’S PENSION TOLL-FREE PHONE NUMBER.

10 (a) IN GENERAL.—The Secretary of Labor shall con11 tract with an independent organization to create a wom12 en’s pension toll-free telephone number and contact to

13 serve as—

14 (1) a resource for women on pension questions

15 and issues;

16 (2) a source for referrals to appropriate agen17 cies; and

18 (3) a source for printed information.

19 (b) AUTHORIZATION OF APPROPRIATIONS.—There

20 are authorized to be appropriated $500,000 for each of

21 the fiscal years 1997, 1998, 1999, and 2000 to carry out

22 subsection (a).
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1 TITLE VII—ANNUAL PENSION

2 BENEFITS STATEMENTS

3 SEC. 701. ANNUAL PENSION BENEFITS STATEMENTS.

4 (a) IN GENERAL.—Subsection (a) of section 105 of

5 Employee Retirement Income Security Act of 1974 (29

6 U.S.C. 1025) is amended by striking ‘‘shall furnish to any

7 plan participant or beneficiary who so requests in writ8 ing,’’ and inserting ‘‘shall annually furnish to any plan

9 participant and shall furnish to any plan beneficiary who

10 so requests,’’.

11 (b) CONFORMING AMENDMENT.—Subsection (a) of

12 section 105 of such Act (29 U.S.C. 1025) is amended by

13 striking ‘‘participant or’’.

14 (c) EFFECTIVE DATE.—The amendments made by

15 this section shall apply to plan years beginning after De16 cember 31, 1996.

Æ