II

103D CONGRESS

1ST SESSION S. 1780

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 SENATE OF THE UNITED STATES

NOVEMBER 23, 1993

Mr. MOYNIHAN (by request) introduced the following bill; which was read

twice and referred to the Committee on Finance

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

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 1993’’.

6 (b) TABLE OF CONTENTS.—
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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. Recognition of already 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. Recognition of already 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.

TITLE III—PARTICIPANT SERVICES

Sec. 301. Disclosure to participants.

Sec. 302. Missing participants.

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

TITLE IV—MISCELLANEOUS AMENDMENTS

Sec. 401. ERISA citation.

Sec. 402. Definition of contributing sponsor.

Sec. 403. Recovery ratio under ERISA section 4022(c).

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. Limitation on cross-testing in defined contribution plans.

Sec. 409. Funding of restored plans.

TITLE V—EFFECTIVE DATES

Sec. 501. Effective dates.
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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 RE7 QUIREMENTS FOR SINGLE-EMPLOYER PLANS.—

8 (1) RELATIONSHIP OF ADDITIONAL FUNDING

9 REQUIREMENT TO FUNDING STANDARD ACCOUNT

10 CHARGES AND CREDITS.—

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

12 the Internal Revenue Code of 1986 is amended

13 to read as follows:

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

15 plan years under subsection (b)(2), re16 duced by the sum of the credits for such

17 plan year under subparagraph (B) of sub18 section (b)(3), and’’.

19 (B) The last sentence in section 412(l)(1)

20 is amended to read as follows: ‘‘Such increase

21 shall not exceed the amount necessary to in22 crease the funded current liability percentage

23 (taking into account the expected increase in

24 current liability due to benefits accruing during

25 the plan year) to 100 percent, reduced by the
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1 amount described in clause (ii) of paragraph

2 (A).’’

3 (2) AMENDMENT TO DEFICIT REDUCTION CON4 TRIBUTION.—Paragraph (2) of section 412(l) of the

5 Code is amended—

6 (A) by striking the period and inserting ‘‘,

7 and’’ at the end of subparagraph (B); and

8 (B) by adding at the end thereof a new

9 subparagraph (C) to read as follows:

10 ‘‘(C) the expected increase in current li11 ability due to benefits accruing during the plan

12 year.’’

13 (3) INCREASE IN CURRENT LIABILITY DUE TO

14 CHANGE IN REQUIRED ASSUMPTIONS.—Paragraph

15 (3) of section 412(l) of the Code is amended by add16 ing at the end thereof a new subparagraph to read

17 as follows:

18 ‘‘(D) SPECIAL RULE FOR REQUIRED

19 CHANGES IN ACTUARIAL ASSUMPTIONS.—

20 ‘‘(i) The unfunded old liability amount

21 with respect to any plan for any plan year

22 shall be increased by the amount necessary

23 to amortize the amount of additional un24 funded old liability under the plan, deter25 mined under clause (ii), in equal annual in-
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1 stallments over a period of 12 plan years

2 (beginning with the first plan year begin3 ning after December 31, 1994).

4 ‘‘(ii) The term ‘additional unfunded

5 old liability’ means the amount (if any) by

6 which—

7 ‘‘(I) the current liability of the

8 plan as of the beginning of the first

9 plan year beginning after December

10 31, 1994, valued using the assump11 tions required in paragraph (7)(C) of

12 this subsection as in effect for plan

13 years beginning after December 31,

14 1994, exceeds

15 ‘‘(II) the current liability of the

16 plan as of the beginning of the first

17 plan year beginning after December

18 31, 1994, valued using the prior inter19 est rate and using such mortality as20 sumptions as were used to determine

21 current liability for the first plan year

22 beginning after December 31, 1992.

23 ‘‘(iii) For purposes of clause (ii), the

24 term ‘prior interest rate’ means the rate of

25 interest that is the same percentage of the
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1 weighted average under paragraph (5) of

2 subsection (b) for the first plan year begin3 ning after December 31, 1994, as the rate

4 of interest that was used by the plan to de5 termine current liability for the first plan

6 year beginning after December 31, 1992,

7 was of the weighted average under such

8 paragraph (5) of subsection (b) for such

9 first plan year beginning after December

10 31, 1992. With the exception of assump11 tions concerning the rate of interest and

12 mortality, the assumptions used for deter13 mining current liability under subclause (I)

14 of clause (ii) shall also be used to deter15 mine current liability under subclause (II)

16 of clause (ii).’’

17 (4) APPLICABLE PERCENTAGE FOR DETERMIN18 ING UNFUNDED NEW LIABILITY AMOUNT.—Clause

19 (ii) of section 412(l)(4)(C) of the Code is amended

20 by replacing ‘‘35’’ with ‘‘60’’.

21 (5) UNPREDICTABLE CONTINGENT EVENT

22 AMOUNT.—

23 (A) Paragraph (5)(A) of section 412(l) of

24 the Code is amended—
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1 (i) by inserting ‘‘greatest of’’ for

2 ‘‘greater of’’ before clause (i);

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

4 clause (i);

5 (iii) by striking the period at the end

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

7 (iv) by adding a new clause (iii) to

8 read as follows:

9 ‘‘(iii) the additional amount that

10 would be determined under paragraph

11 (4)(A) if the unpredictable contingent

12 event benefit liabilities were included in

13 unfunded new liability notwithstanding

14 paragraph (4)(B)(ii).’’

15 (B) Paragraph (5) of section 412(l) of the

16 Code is amended by adding a new subpara17 graph (E) to read as follows:

18 ‘‘(E) LIMITATION.—The present value of

19 the amounts described in subparagraph (A)

20 with respect to any one event shall not exceed

21 the unpredictable contingent event benefit li22 abilities attributable to that event.’’

23 (6) REQUIRED INTEREST RATE AND MORTALITY

24 ASSUMPTIONS FOR DETERMINING CURRENT LIABIL-
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1 ITY.—Paragraph (7)(C) of section 412(l) of the

2 Code is amended to read as follows:

3 ‘‘(C) INTEREST RATE AND MORTALITY AS4 SUMPTIONS USED.—Effective for plan years be5 ginning after December 31, 1994—

6 ‘‘(i) the rate of interest used to deter7 mine current liability under this subsection

8 shall be the rate of interest used under

9 subsection (b)(5), except the permissible

10 range under subparagraph (B)(ii) of such

11 subsection (b)(5) shall not exceed 100 per12 cent of the weighted average referred to in

13 such subparagraph, and

14 ‘‘(ii) the mortality table used to deter15 mine current liability under this subsection

16 shall be the prevailing commissioners’

17 standard table (described in section

18 807(d)(5)(A)) that would be used to deter19 mine reserves for group annuity contracts

20 issued on the date as of which current li21 ability is determined (without regard to

22 any other subparagraph of section

23 807(d)(5)).’’
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1 (7) TRANSITION RULE.—Section 412(l) of the

2 Code is amended by adding at the end thereof a new

3 paragraph (9) to read as follows:

4 ‘‘(9) ADDITIONAL LIMITATIONS.—

5 ‘‘(A) For any applicable plan year, at the

6 election of the employer (in such manner as is

7 prescribed by the Secretary), the increase under

8 paragraph (1) shall not exceed the greater of—

9 ‘‘(i) the increase that would have been

10 required under the provisions of such para11 graph (1) as in effect for plan years begin12 ning before January 1, 1995 if such provi13 sions had remained in effect for the appli14 cable plan year, or

15 ‘‘(ii) the amount necessary to increase

16 the funded current liability percentage

17 (taking into account the expected increase

18 in current liability due to benefits accruing

19 during the plan year) for the applicable

20 plan year to a funded current liability per21 centage equal to the sum of the initial

22 funded current liability percentage of the

23 plan plus the applicable number of percent24 age points for such applicable plan year,
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1 reduced by the amount determined under

2 paragraph (1)(A)(ii).

3 ‘‘(B)(i) Except as provided in clause (iii),

4 for plans with an initial funded current liability

5 percentage that is equal to or less than 75 per6 cent, the applicable number of percentage

7 points for the applicable plan year is—

‘‘In the case of The applicable number

applicable plan years of percentage

beginning in: points is:

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

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

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

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

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

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

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

8 ‘‘(ii) For plans with an initial funded cur9 rent liability percentage that is equal to or

10 greater than 85 percent, the applicable number

11 of percentage points for the applicable plan

12 year is—

‘‘In the case of The applicable number

applicable plan years of percentage

beginning in: points is:

1995 ........................................................... 2

1996 ........................................................... 4

1997 ........................................................... 6

1998 ........................................................... 8

1999 ........................................................... 10

2000 ........................................................... 13

2001 ........................................................... 15

13 ‘‘(iii) For plans with an initial funded cur14 rent liability percentage that is greater than 75

15 percent but less than 85 percent, or for plans
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1 with an initial funded current liability percent2 age equal to or less than 75 percent for which,

3 as of a later applicable plan year, the sum of

4 the initial funded current liability percentage

5 and the applicable number of percentage points

6 attributable to the previous applicable plan year

7 exceed 75 percent, the applicable number of

8 percentage points for any such applicable plan

9 year is the sum of—

10 ‘‘(I) 2 percentage points;

11 ‘‘(II) the applicable number of per12 centage points attributable to the previous

13 applicable plan year (except that such

14 number for the applicable plan year begin15 ning in 1995 is zero);

16 ‘‘(III) the product of .10 multiplied by

17 the excess, if any, of (a) 85 percent over

18 (b) the sum of the initial funded current li19 ability percentage and the number under

20 subclause (II);

21 ‘‘(IV) for applicable plan years begin22 ning in 2000, 1 percentage point; and

23 ‘‘(V) for applicable plan years begin24 ning in 2001, 2 percentage points.
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1 ‘‘(C) DEFINITIONS.—For purposes of this

2 paragraph—

3 ‘‘(i) ‘applicable plan year’ means a

4 plan year beginning after December 31,

5 1994, and before January 1, 2002; and

6 ‘‘(ii) ‘initial funded current liability

7 percentage’ means the funded current li8 ability percentage as of the first day of the

9 first plan year beginning after December

10 31, 1994.’’

11 (8) THREE-YEAR SOLVENCY REQUIREMENT.—

12 (A) Section 412(m) of such Code is

13 amended by adding at the end thereof a new

14 paragraph (6) to read as follows:

15 ‘‘(6) THREE-YEAR SOLVENCY REQUIREMENT.—

16 ‘‘(A) IN GENERAL.—This paragraph ap17 plies to a defined benefit plan that—

18 ‘‘(i) is required to make quarterly con19 tributions under this subsection for a plan

20 year, and

21 ‘‘(ii) has liquid assets as of the last

22 day of the last month preceding the quar23 terly installment date that are less than

24 the base amount for the quarter.
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1 ‘‘(B) AMOUNT OF QUARTERLY CONTRIBU2 TION.—The amount of the required installment

3 that is due for any quarter under this sub4 section is the greater of the amount under this

5 subsection (without regard to this paragraph)

6 or the quarterly solvency payment. Such

7 amount, when added to prior installments for

8 the plan year, shall not exceed the amount nec9 essary to increase the funded current liability

10 percentage (taking into account the expected in11 crease in current liability due to benefits accru12 ing during the plan year) to 100 percent.

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

14 paragraph:

15 ‘‘(i) BASE AMOUNT.—‘Base amount’

16 means an amount that is the product of

17 three multiplied by the sum of the adjusted

18 disbursements from the plan for the 12

19 months ending on the last day of the last

20 month preceding the quarterly installment

21 due date. If the amount computed under

22 the previous sentence exceeds the product

23 of two multiplied by the sum of adjusted

24 disbursements for the 36 months ending

25 on the last day of the last month preceding
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1 the quarterly installment due date, and an

2 enrolled actuary certifies to the Secretary

3 that the excess is the result of non4 recurring circumstances, the base amount

5 shall exclude amounts related to those non6 recurring circumstances.

7 ‘‘(ii) DISBURSEMENTS FROM THE

8 PLAN.—The term ‘disbursements from the

9 plan’ means all disbursements from the

10 trust, including purchases of annuities,

11 payment of single sums and other benefit

12 payments, and administrative expenses.

13 ‘‘(iii) ADJUSTED DISBURSEMENTS.—

14 ‘Adjusted disbursements’ means the

15 amount of disbursements reduced by the

16 product of the plan’s funded current liabil17 ity percentage (as defined in subsection

18 (1)(8)(B)) for the plan year multiplied by

19 the sum of annuity purchases, single sum

20 distributions, and such other disburse21 ments as the Secretary shall provide in

22 regulations.

23 ‘‘(iv) LIQUID ASSETS.—‘Liquid assets’

24 means cash, marketable securities and
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1 such other assets as specified by the Sec2 retary.

3 ‘‘(v) QUARTERLY SOLVENCY PAY4 MENT.—‘Quarterly solvency payment’

5 means an amount of liquid assets equal to

6 the difference between the plan’s liquid as7 sets and the base amount, as of the last

8 day of a quarter.

9 ‘‘(D) EFFECT OF SOLVENCY CONTRIBU10 TION.—

11 ‘‘(i) A quarterly solvency payment

12 shall be treated in the same manner as a

13 quarterly required installment, except that

14 paragraph (2)(C) shall be applied by ap15 plying contributions to the latest outstand16 ing quarterly solvency payment. For pur17 poses of paragraph (2)(B), a quarterly sol18 vency payment that is not paid timely shall

19 not be considered paid until the earlier of

20 the last day of a later quarter for which ei21 ther (I) the plan does to have a quarterly

22 solvency payment required, or (II) the sol23 vency payment for such later quarter is

24 paid timely.
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1 ‘‘(ii) The Secretary shall provide such

2 rule as are necessary to avoid duplication

3 or omission of any factors in the deter4 mination and application of this require5 ment.’’

6 (B) EXCISE TAX ON UNPAID QUARTERLY

7 SOLVENCY PAYMENTS.—

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

9 the Code is amended by striking ‘‘(a) or

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

11 with ‘‘(a), (b) or (f)’’.

12 (ii) Section 4971 of the Code is

13 amended by redesignating subsection (f) as

14 subsection (g) and adding a new subsection

15 (f) to read as follows:

16 ‘‘(f)(1) For each quarter of the plan year of a plan

17 to which section 412 applies, there is imposed a tax of

18 10 percent of the amount of any outstanding quarterly

19 solvency payments as described in section 412(m)(6). A

20 quarterly solvency payment shall no longer be considered

21 outstanding on the earlier of the last day of a later quarter

22 for which either (A) the plan does not have a quarterly

23 solvency payment required, or (B) the solvency payment

24 for such later quarter is paid timely.
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1 ‘‘(2) If by the end of the fourth quarter following the

2 quarter for which a quarterly solvency payment was due,

3 either the plan has a quarterly solvency payment due, or

4 the solvency payment for such later quarter was not paid

5 timely, (A) there is hereby imposed a tax equal to 100

6 percent of the unpaid solvency payment for such earlier

7 quarter, and (B) the quarterly solvency payment for such

8 earlier quarter shall to longer be considered outstanding.’’

9 (C) OUTSTANDING QUARTERLY SOLVENCY

10 PAYMENTS.—Section 401(a) of such Code is

11 amended by adding a new paragraph (32) at

12 the end thereof to read as follows:

13 ‘‘(32) OUTSTANDING QUARTERLY SOLVENCY

14 PAYMENTS.—A trust forming part of a pension plan

15 shall not be treated as failing to constitute a quali16 fied trust under this section merely because the pen17 sion plan of which such trust is a part ceases to

18 make prohibited payments during a period in which

19 a quarterly solvency payment, as defined in section

20 412(m)(6), is outstanding. A prohibited payment is

21 any payment, in excess of the monthly amount paid

22 under a single life annuity (plus any social security

23 supplements, within the meaning of section

24 411(a)(9)), to a participant or beneficiary whose an25 nuity starting date, as defined in section 417(f)(2),
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1 occurs during the period in which there are out2 standing quarterly solvency payments, any purchase

3 during such period of an irrevocable commitment

4 from an insurer to pay benefits, and such other pay5 ments as provided by the Secretary. For purposes of

6 this subsection, a quarterly solvency payment shall

7 no longer be considered outstanding on the earlier of

8 the last day of a later quarter for which either (A)

9 the plan does not have a quarterly solvency payment

10 required, or (B) the solvency payment for such later

11 quarter is paid timely.’’

12 (9) AMENDMENT TO FULL FUNDING DEFINI13 TION.—

14 (A) Subclause (I) of subsection

15 412(c)(7)(A)(i) is amended by inserting ‘‘(in16 cluding the expected increase in current liability

17 due to benefits accruing during the plan year)’’

18 after ‘‘current liability’’.

19 (B) Section 412(c)(7) is further amended

20 by inserting in flush language after subpara21 graph (A), a sentence to read as follows:

22 ‘‘In any plan year in which a plan has unfunded cur23 rent liability under subsection (l)(8), the amount in

24 this subparagraph (A) shall not be less than such

25 unfunded current liability.’’
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1 (C) Subparagraph (B) of subsection

2 412(c)(7) is amended to read as follows:

3 ‘‘(B) CURRENT LIABILITY.—For purposes

4 of subparagraph (D) and subclause (I) of sub5 paragraph (A)(i), the term ‘current liability’

6 has the meaning given such term by subsection

7 (l)(7) (without regard to the interest rate and

8 mortality assumptions required therein, and

9 without regard to subparagraph (D) thereof).’’

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

11 this section shall be effective for plan years beginning after

12 December 31, 1994.

13 SEC. 102. LIMITATION ON CHANGES IN CURRENT LIABILITY

14 ASSUMPTIONS.

15 (a) Section 412(c) is amended by redesignating para16 graph (5) as subparagraph (5)(A), and by adding a new

17 subparagraph (5)(B) to read as follows:

18 ‘‘(B)(i) CHANGE IN ASSUMPTIONS RE19 QUIRES APPROVAL.—If the actuarial assump20 tions (other than the assumptions described in

21 subsection (l)(7)(C)) used to determine the cur22 rent liability for a plan are changed, the new

23 actuarial assumptions shall become the actuar24 ial assumptions used to determine current li-
20

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1 ability for the plan only if the change is ap2 proved by the Secretary.

3 ‘‘(ii) Clause (i) shall not apply unless—

4 ‘‘(I) the plan is subject to the require5 ments of subsection (l);

6 ‘‘(II) the requirements of section

7 4043(b)(1) of the Employee Retirement

8 Income Security Act of 1974 are met; and

9 ‘‘(III) the change in assumptions (de10 termined after taking into account any

11 changes in interest rate and mortality

12 table) results in a decrease in the un13 funded current liability of the plan for the

14 current plan year that is $50,000,000 or

15 greater, or that is $5,000,000 or greater

16 and that is 5 percent or more of the cur17 rent liability of the plan before such

18 change.’’

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

20 this section shall be effective with respect to assumption

21 changes in plan years beginning after November 23, 1993.

22 Assumption changes made in plan years beginning after

23 December 31, 1992 that would have required approval

24 under this amended section had it been in effect at the

25 time of such changes, shall not be effective for plan years
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1 beginning after December 31, 1994 unless approved by

2 the Secretary.

3 SEC. 103. RECOGNITION OF ALREADY BARGAINED

4 CHANGES IN LIABILITY.

5 (a) Section 412(c) is amended by adding a new para6 graph (12) at the end thereof to read as follows:

7 ‘‘(12) PLAN LIABILITIES ARISING FROM

8 AMENDMENTS EFFECTIVE IN THE FUTURE.—A col9 lectively bargained plan described in section 413(a)

10 shall anticipate benefit increases scheduled to take

11 effect during the term of the collective bargaining

12 agreement applicable to the plan at the same time

13 and in the same manner as if the plan amendment

14 implementing the provision of the collective bargain15 ing agreement were adopted by the parties when the

16 parties entered into the collective bargaining agree17 ment.’’

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

19 this section shall be effective for plan years beginning after

20 December 31, 1994 with respect to collective bargaining

21 agreements in effect on or after January 1, 1995.

22 SEC. 104. MODIFICATION OF QUARTERLY CONTRIBUTION

23 REQUIREMENT.

24 (a) Section 412(m) of the Internal Revenue Code of

25 1986, as amended by section 101 of this Act, is further
22

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1 amended by adding at the end thereof a new paragraph

2 (7) to read as follows:

3 ‘‘(7) APPLICABILITY OF THIS SUBSECTION.—

4 This subsection applies only with respect to a plan

5 year for which the funded current liability percent6 age of such plan (within the meaning of subsection

7 (l)(8)(B)) for the preceding plan year is less than

8 100 percent.’’

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

10 this section shall be effective for plan years beginning after

11 the date of enactment of this Act.

12 SEC. 105. EXCEPTIONS TO EXCISE TAX ON NONDEDUCTIBLE

13 CONTRIBUTIONS.

14 (a) Section 4972(c) of the Internal Revenue Code of

15 1986 is amended by adding a new paragraph (6) to read

16 as follows:

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

18 of nondeductible contributions for any taxable year,

19 there shall not be taken into account—

20 ‘‘(A) Any contributions that would be de21 ductible under section 404(a)(1)(D) if the plan

22 had more than 100 participants provided that

23 (i) the plan is covered under section 4021 of

24 the Employment Retirement Income Security

25 Act of 1974, and (ii) the plan is terminated
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1 under section 4041(a)(2) of such Act during

2 the plan year ending with or within the taxable

3 year or during a previous plan year.

4 ‘‘(B) Any contributions described in sec5 tion 401(m)(4)(A) or 402(g)(3)(A) that do not

6 exceed 6 percent of compensation, as defined in

7 section 404(a)(7)(A)(i), that are not deductible

8 merely because of section 404(a)(7). For pur9 poses of the preceding sentence, the deductible

10 limits under section 404(a)(7) shall first be ap11 plied to amounts contributed to a defined bene12 fit plan and then to amounts described in the

13 preceding sentence. This subparagraph shall

14 apply only if the defined benefit plan is a plan

15 with more than 100 participants, as described

16 in section 404(a)(1)(D).’’

17 (b) Section 4972(c)(6)(A) as added by this section

18 shall be effective for taxable years ending on or after the

19 date of enactment of this Act. Section 4972(c)(6)(B) as

20 added by this section shall apply for taxable years ending

21 on or after December 31, 1992.
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1 Subtitle B—Amendments to the

2 Employee Retirement Income

3 Security Act of 1974

4 SEC. 121. MINIMUM FUNDING REQUIREMENTS.

5 (a) AMENDMENTS TO ADDITIONAL FUNDING RE6 QUIREMENTS FOR SINGLE-EMPLOYER PLANS.——

7 (1) RELATIONSHIP OF ADDITIONAL FUNDING

8 REQUIREMENT TO FUNDING STANDARD ACCOUNT

9 CHARGES AND CREDITS.—

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

11 the Employee Retirement Income Security Act

12 of 1974 (29 U.S.C. 1082(d)) is amended to

13 read as follows:

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

15 plan years under subsection (b)(2), re16 duced by the sum of the credits for such

17 plan years under subparagraph (B) of sub18 section (b)(3), and’’

19 (B) The last sentence in section 302(d)(1)

20 is amended to read as follows: ‘‘Such increase

21 shall not exceed the amount necessary to in22 crease the funded current liability percentage

23 (taking into account the expected increase in

24 current liability due to benefits accruing during

25 the plan year) to 100 percent, reduced by the
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1 amount described in clause (ii) of paragraph

2 (A).’’

3 (2) AMENDMENT TO DEFICIT REDUCTION CON4 TRIBUTION.—Paragraph (2) of section 302(d) of

5 such Act is amended—

6 (A) by striking the period and inserting ‘‘,

7 and’’ at the end of subparagraph (B); and

8 (B) by adding at the end thereof a new

9 subparagraph (C) to read as follows:

10 ‘‘(C) the expected increase in current li11 ability due to benefits accruing during the plan

12 year.’’

13 (3) INCREASE IN CURRENT LIABILITY DUE TO

14 CHANGE IN REQUIRED ASSUMPTIONS.—

15 (A) Paragraph (3) of section 302(d) of

16 such Act is amended by adding at the end

17 thereof a new subparagraph to read as follows:

18 ‘‘(D) Special rule for required changes in

19 actuarial assumptions.—

20 ‘‘(i) The unfunded old liability amount

21 with respect to any plan for any plan year

22 shall be increased by the amount necessary

23 to amortize the amount of additional un24 funded old liability under the plan, deter25 mined under clause (ii), in equal annual in-
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1 stallments over a period of 12 plan years

2 (beginning with the first plan year begin3 ning after December 31, 1994).

4 ‘‘(ii) the term ‘additional unfunded

5 old liability’ means the amount (if any) by

6 which—

7 ‘‘(I) the current liability of the

8 plan as of the beginning of the first

9 plan year beginning after December

10 31, 1994 valued using the assump11 tions required in paragraph (7)(C) of

12 this subsection as in effect for plan

13 years beginning after December 31,

14 1994, exceeds

15 ‘‘(II) the current liability of the

16 plan as of the beginning of the first

17 plan year beginning after December

18 31, 1994, valued using the prior inter19 est rate and using such mortality as20 sumptions as were used to determine

21 current liability for the first plan year

22 beginning after December 31, 1992.

23 ‘‘(iii) For purposes of clause (ii), the

24 term ‘prior interest rate’ means the rate of

25 interest that is the same percentage of the
27

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1 weighted average under paragraph (5) of

2 subsection (b) for the first plan year begin3 ning after December 31, 1994 as the rate

4 of interest that was used by the plan to de5 termine current liability for the first plan

6 year beginning after December 31, 1992

7 was of the weighted average under such

8 paragraph (5) of subsection (b) for such

9 first plan year beginning after December

10 31, 1992. With the exception of assump11 tions concerning the rate of interest and

12 mortality, the assumptions used for deter13 mining current liability under subclause (I)

14 of clause (ii) shall also be used to deter15 mine current liability under subclause (II)

16 of clause (ii).’’

17 (4) APPLICABLE PERCENTAGE FOR DETERMIN18 ING UNFUNDED NEW LIABILITY AMOUNT.—Clause

19 (ii) of section 302(d)(4)(C) of such Act is amended

20 by replacing ‘‘35’’ with ‘‘60’’.

21 (5) UNPREDICTABLE CONTINGENT EVENT

22 AMOUNT.—

23 (A) Paragraph (5)(A) of section 302(d) of

24 such Act is amended—
28

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1 (i) by inserting ‘‘greatest of’’ for

2 ‘‘greater of’’ before clause (i);

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

4 clause (i);

5 (iii) by striking the period at the end

6 of clause (ii) and inserting ’’, or’’; and

7 (iv) by adding a new clause (iii) to

8 read as follows:

9 ‘‘(iii) the additional amount that

10 would be determined under paragraph

11 (4)(A) if the unpredictable contingent

12 event benefit liabilities were included in

13 unfunded new liability notwithstanding

14 paragraph (4)(B)(ii).’’

15 (B) Paragraph (5) of section 302(d) of

16 such Act is amended by adding a new subpara17 graph (E) to read as follows:

18 ‘‘(E) LIMITATION.—The present value of

19 the amounts described in subparagraph (A)

20 with respect to any one event shall not exceed

21 the unpredictable contingent event benefit li22 abilities attributable to that event.’’

23 (6) REQUIRED INTEREST RATE AND MORTALITY

24 ASSUMPTIONS FOR DETERMINING CURRENT LIABIL-
29

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1 ITY.—Paragraph (7)(C) of section 302(d) of such

2 Act is amended to read as follows:

3 ‘‘(C) INTEREST RATE AND MORTALITY AS4 SUMPTIONS USED.—Effective for plan years be5 ginning after December 31, 1994—

6 ‘‘(i) the rate of interest used to deter7 mine current liability under this subsection

8 shall be the rate of interest used under

9 subsection (b)(5), except the permissible

10 range under subparagraph (B)(ii) of such

11 subsection (b)(5) shall not exceed 100 per12 cent of the weighted average referred to in

13 such subparagraph, and

14 ‘‘(ii) the mortality table used to deter15 mine current liability under this subsection

16 shall be the prevailing commissioners’

17 standard table (described in section

18 807(d)(5)(A) of the Internal Revenue Code

19 of 1986) that would be used to determine

20 reserves for group annuity contracts issued

21 on the date as of which current liability is

22 determined (without regard to any other

23 subparagraph of section 807(d)(5) of the

24 Internal Revenue Code of 1986).’’
30

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1 (7) TRANSITION RULE.—Section 302(d) of such

2 Act is amended by adding at the end thereof a new

3 paragraph (9) to read as follows:

4 ‘‘(9) ADDITIONAL LIMITATIONS.—

5 ‘‘(A) For any applicable plan year, at the

6 election of the employer (in such manner as is

7 prescribed by the Secretary of the Treasury),

8 the increase under paragraph (1) shall not ex9 ceed the greater of—

10 ‘‘(i) the increase that would have been

11 required under the provisions of such para12 graph (1) as in effect for plan years begin13 ning before January 1, 1995, if such provi14 sions had remained in effect for the appli15 cable plan year, or

16 ‘‘(ii) the amount necessary to increase

17 the funded current liability percentage

18 (taking into account the expected increase

19 in current liability due to benefits accruing

20 during the plan year) for the applicable

21 plan year to a funded current liability per22 centage equal to the sum of the initial

23 funded current liability percentage of the

24 plan plus the applicable number of percent25 age points for such applicable plan year,
31

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1 reduced by the amount determined under

2 paragraph (1)(A)(ii).

3 ‘‘(B)(i) Except as provided in clause (iii),

4 for plans with an initial funded current liability

5 percentage that is equal to or less than 75 per6 cent, the applicable number of percentage

7 points for the applicable plan year is—

‘‘In the case of The applicable number

applicable plan years of percentage

beginning in: points is:

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

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

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

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

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

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

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

8 ‘‘(ii) For plans with an initial funded cur9 rent liability percentage that is equal to or

10 greater than 85 percent, the applicable number

11 of percentage points for the applicable plan

12 year is—

‘‘In the case of The applicable number

applicable plan years of percentage

beginning in: points is:

1995 ........................................................... 2

1996 ........................................................... 4

1997 ........................................................... 6

1998 ........................................................... 8

1999 ........................................................... 10

2000 ........................................................... 13

2001 ........................................................... 15

13 ‘‘(iii) For plans with an initial funded cur14 rent liability percentage that is greater than 75

15 percent but less than 85 percent, or for plans
32

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1 with an initial funded current liability percent2 age equal to or less than 75 percent for which,

3 as of a later applicable plan year, the sum of

4 the initial funded current liability percentage

5 and the applicable number of percentage points

6 attributable to the previous applicable plan year

7 exceed 75 percent, the applicable number of

8 percentage points for any such applicable plan

9 year is the sum of—

10 ‘‘(I) 2 percentage points;

11 ‘‘(II) the applicable number of per12 centage points attributable to the previous

13 applicable plan year (except that such

14 number for the applicable plan year begin15 ning in 1995 is zero);

16 ‘‘(III) the product of .10 multiplied by

17 the excess, if any, of (a) 85 percent over

18 (b) the sum of the initial funded current li19 ability percentage and the number under

20 subclause (II);

21 ‘‘(IV) for applicable plan years begin22 ning in 2000, 1 percentage point; and

23 ‘‘(V) for applicable plan years begin24 ning in 2001, 2 percentage points.
33

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1 ‘‘(D) DEFINITIONS.—For purposes of this

2 paragraph—

3 ‘‘(i) ‘applicable plan year’ means a

4 plan year beginning after December 31,

5 1994, and before January 1, 2002; and

6 ‘‘(ii) ‘initial funded current liability

7 percentage’ means the funded current li8 ability percentage as of the first day of the

9 first plan year beginning after December

10 31, 1994.’’

11 (8) THREE-YEAR SOLVENCY REQUIREMENT.—

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

13 by adding at the end thereof a new paragraph

14 (6) to read as follows:

15 ‘‘(6) THREE-YEAR SOLVENCY REQUIREMENT.—

16 ‘‘(A) IN GENERAL.—This paragraph ap17 plies to a defined benefit plan that—

18 ‘‘(i) is required to make quarterly con19 tributions under this subsection for a plan

20 year, and

21 ‘‘(ii) has liquid assets as of the last

22 day of the last month preceding the quar23 terly installment date that are less than

24 the base amount for the quarter.
34

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1 ‘‘(B) AMOUNT OF QUARTERLY CONTRIBU2 TION.—The amount of the required installment

3 that is due for any quarter under this sub4 section is the greater of the amount under this

5 subsection (without regard to this paragraph)

6 or the quarterly solvency payment. Such

7 amount, when added to prior installments for

8 the plan year, shall not exceed the amount nec9 essary to increase the funded current liability

10 percentage (taking into account the expected in11 crease in current liability due to benefits accru12 ing during the plan year) to 100 percent.

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

14 paragraph:

15 ‘‘(i) BASE AMOUNT.—‘Base amount’

16 means an amount that is the product of

17 three multiplied by the sum of the adjusted

18 disbursements from the plan for the 12

19 months ending on the last day of the last

20 month preceding the quarterly installment

21 due date. If the amount computed under

22 the previous sentence exceeds the product

23 of two multiplied by the sum of adjusted

24 disbursements for the 36 months ending

25 on the last day of the last month preceding
35

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1 the quarterly installment date, and an en2 rolled actuary certifies to the Secretary of

3 the Treasury that the excess is the result

4 of nonrecurring circumstances, the base

5 amount shall exclude amounts related to

6 those nonrecurring circumstances.

7 ‘‘(ii) DISBURSEMENTS FROM THE

8 PLAN.—The term ‘disbursements from the

9 plan’ means all disbursements from the

10 trust, including purchases of annuities,

11 payment of single sums and other benefit

12 payments, and administrative expenses.

13 ‘‘(iii) ADJUSTED DISBURSEMENTS.—

14 ‘Adjusted disbursements’ means the

15 amount of disbursements reduced by the

16 product of the plan’s funded current liabil17 ity percentage (as defined in subsection

18 (d)(8)(B)) for the plan year multiplied by

19 the sum of annuity purchases, single sum

20 distributions, and such other disburse21 ments as the Secretary of the Treasury

22 shall provide in regulations.

23 ‘‘(iv) LIQUID ASSETS.—‘Liquid assets’

24 means cash, marketable securities and
36

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1 such other assets as specified by the Sec2 retary of the Treasury.

3 ‘‘(v) QUARTERLY SOLVENCY PAY4 MENT.—‘Quarterly solvency payment’

5 means an amount of liquid assets equal to

6 the difference between the plan’s liquid as7 sets and the base amount, as of the last

8 day of a quarter.

9 ‘‘(D) EFFECT OF SOLVENCY CONTRIBU10 TION.—

11 ‘‘(i) A quarterly solvency payment

12 shall be treated in the same manner as a

13 quarterly required installment, except that

14 paragraph (2)(C) shall be applied by ap15 plying contributions to the latest outstand16 ing quarterly solvency payment. For pur17 poses of paragraph (2)(B), a quarterly sol18 vency payment that is not paid timely shall

19 not be considered paid until the earlier of

20 the last day of a later quarter for which (I)

21 the plan does not have a quarterly solvency

22 payment required, or (II) the solvency pay23 ment for such later quarter is paid timely.

24 ‘‘(ii) The Secretary of the Treasury

25 shall provide such rules as are necessary to
37

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1 avoid duplication or omission of any fac2 tors in the determination and application

3 of this requirement.’’

4 (B) LIMITATION ON DISTRIBUTIONS

5 OTHER THAN LIFE ANNUITIES PAID BY THE

6 PLAN.—

7 (i) Section 204 of the Employee Re8 tirement Income Security Act of 1974 (29

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

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

11 subsection (i) to read as follows:

12 ‘‘(i) Notwithstanding any other provi13 sion of this part, the fiduciary of a pension

14 plan that is subject to the additional fund15 ing requirements of section 302(d) shall

16 not permit a prohibited payment to be

17 made from a plan during a period in which

18 a quarterly solvency payment, as defined in

19 section 302(e)(6), is outstanding. A pro20 hibited payment is any payment, in excess

21 of the monthly amount paid under a single

22 life annuity (plus any social security sup23 plements, within the meaning of section

24 204(b)(1)(G)), to a participant or bene25 ficiary whose annuity starting date, as de-
38

S 1780 IS

1 fined in section 205(h)(2), occurs during

2 the period in which there are outstanding

3 quarterly solvency payments, any purchase

4 during such period of an irrevocable com5 mitment from an insurer to pay benefits,

6 and such other payments as provided by

7 the Secretary of the Treasury. For pur8 poses of this subsection, a quarterly sol9 vency payment shall no longer be consid10 ered outstanding on the earlier of the last

11 day of a later quarter for which either (I)

12 the plan does not have a quarterly solvency

13 payment required, or (II) the solvency pay14 ment for such later quarter is paid timely.

15 Compliance with this subsection shall not

16 constitute a violation of any other provi17 sion of this Act.’’

18 (ii) Section 502 of such Act is amend19 ed by adding at the end thereof a new sub20 section (m) to read as follows:

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

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

23 a plan fiduciary, the Secretary shall assess a penalty

24 against such fiduciary in an amount equal to the value
39

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1 of the distribution. Such penalty shall not exceed $10,000

2 for each such distribution.’’

3 (9) AMENDMENT TO FULL FUNDING DEFINI4 TION.—

5 (A) Subclause (I) of subsection

6 302(c)(7)(A)(i) of such Act is amended by in7 serting ‘‘(including the expected increase in cur8 rent liability due to benefits accruing during the

9 plan year)’’ after ‘‘current liability’’.

10 (B) Section 302(c)(7) is further amended

11 by inserting in flush language after subpara12 graph (A), a new sentence to read as follows:

13 ‘‘In any plan year in which a plan has unfunded

14 current liability under subsection (d)(8), the

15 amount in this subparagraph (A) shall not be

16 less than such unfunded current liability.’’

17 (C) Subparagraph (B) of subsection

18 302(c)(7) is amended to read as follows:

19 ‘‘(B) CURRENT LIABILITY.—For purposes

20 of subparagraph (D) and subclause (I) of sub21 paragraph (A)(i), the term ‘current liability’

22 has the meaning given such term by subsection

23 (d)(7) (without regard to the interest rate and

24 mortality assumptions required therein, and

25 without regard to subparagraph (D) thereof).’’
40

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

2 this section shall be effective for plan years beginning after

3 December 31, 1994.

4 SEC. 122. LIMITATION ON CHANGES IN CURRENT LIABILITY

5 ASSUMPTIONS.

6 (a) Section 302(c) of the Employee Retirement In7 come Security Act of 1974 (29 U.S.C. 1082(c)) is amend8 ed by redesignating paragraph (5) as subparagraph

9 (5)(A), and adding a new subparagraph (5)(B) to read

10 as follows:

11 ‘‘(B)(i) CHANGE IN ASSUMPTIONS REQUIRES

12 APPROVAL.—If the actuarial assumptions (other

13 than the assumptions described in subsection

14 (d)(7)(C)) used to determine the current liability for

15 a plan are changed, the new actuarial assumptions

16 shall become the actuarial assumptions used to de17 termine current liability for the plan only if the

18 change is approved by the Secretary of the Treas19 ury.

20 ‘‘(ii) Clause (i) shall not apply unless—

21 ‘‘(I) the plan is subject to the requirements

22 of subsection (d);

23 ‘‘(II) the requirements of section

24 4043(b)(1) are met; and
41

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1 ‘‘(III) the change in assumptions (deter2 mined after taking into account any changes in

3 interest rate and mortality table) results in a

4 decrease in the unfunded current liability of the

5 plan for the current plan year that is

6 $50,000,000 or greater, or that is $5,000,000

7 or greater and that is 5 percent or more of the

8 current liability of the plan before such

9 change.’’

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

11 this section shall be effective with respect to assumption

12 changes in plan years beginning after November 23, 1993.

13 Assumption changes made in plan years beginning after

14 December 31, 1992, that would have required approval

15 under this amended section had it been in effect at the

16 time of such changes, shall not be effective for plan years

17 beginning after December 31, 1994, unless approved by

18 the Secretary of the Treasury.

19 SEC. 123. RECOGNITION OF ALREADY BARGAINED

20 CHANGES IN LIABILITY.

21 (a) Section 302(c) of the Employee Retirement In22 come Security Act of 1974 (29 U.S.C. 1082(c)) is amend23 ed by adding a new paragraph (12) at the end thereof

24 to read as follows:
42

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1 ‘‘(12) PLAN LIABILITIES ARISING FROM

2 AMENDMENTS EFFECTIVE IN THE FUTURE.—A col3 lectively bargained plan described in section 413(a)

4 of the Internal Revenue Code of 1986 shall antici5 pate benefit increases scheduled to take effect during

6 the term of the collective bargaining agreement ap7 plicable to the plan at the same time and in the

8 same manner as if the plan amendment implement9 ing the provision of the collective bargaining agree10 ment were adopted by the parties when the parties

11 entered into the collective bargaining agreement.’’

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

13 this section shall be effective for plan years beginning after

14 December 31, 1994, with respect to collective bargaining

15 agreements in effect on or after January 1, 1995.

16 SEC. 124. MODIFICATION OF QUARTERLY CONTRIBUTION

17 REQUIREMENT.

18 (a) Section 302(e) of the Employee Retirement In19 come Security Act of 1974 (29 U.S.C. 1082(e)), as

20 amended by section 121 of this Act, is further amended

21 by adding at the end thereof a new paragraph (7) to read

22 as follows:

23 ‘‘(7) APPLICABILITY OF THIS SUBSECTION.—

24 This subsection applies only with respect to a plan

25 year for which the funded current liability percent-
43

S 1780 IS

1 age of such plan (within the meaning of subsection

2 (d)(8)(B)) for the preceding plan year is less than

3 100 percent.’’

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

5 this section shall be effective for plan years beginning after

6 the date of enactment of this Act.

7 TITLE II—AMENDMENTS RELAT8 ED TO TITLE IV OF THE EM9 PLOYEE RETIREMENT IN10 COME SECURITY ACT OF 1974

11 SEC. 201. REPORTABLE EVENTS.

12 (a) RESPONSIBILITY FOR REPORTABLE EVENTS RE13 PORTING.—Section 4043(a) of the Employee Retirement

14 Income Security Act of 1974 [29 U.S.C. § 1343(a)] is

15 amended—

16 (1) by inserting ‘‘, unless a notice has already

17 been provided with respect to such event’’ before the

18 period at the end of the first sentence;

19 (2) by inserting ‘‘or the contributing sponsor’’

20 before ‘‘knows or has reason to know’’; and

21 (3) by striking the last sentence.

22 (b) NOTIFICATION THAT EVENT IS ABOUT TO

23 OCCUR.—Section 4043 of such Act is amended by redesig24 nating subsections (b), (c) and (d) as (c), (d) and (e), re-
44

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1 spectively, and by inserting a new subsection (b) to read

2 as follows:

3 ‘‘(b)(1) The requirement of this subsection shall be

4 applicable to a contributing sponsor only if the aggregate

5 unfunded vested benefits at the close of the preceding plan

6 year (as determined under section 4006(a)(3)(E)(iii)) of

7 plans maintained by such sponsor and the members of

8 such sponsor’s controlled group that are covered by this

9 title (taking into account only those plans with unfunded

10 vested benefits) exceed $50,000,000.

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

12 of an event described in paragraphs (9) through (13) of

13 subsection (c) of this section, a contributing sponsor de14 scribed in paragraph (1) of this subsection shall notify the

15 corporation that the event is about to occur.

16 ‘‘(3) The corporation is authorized to waive the re17 quirement of this subsection with respect to any or all re18 portable events with respect to any contributing sponsor.’’

19 (c) NEW REPORTABLE EVENTS.—Subsection

20 4043(c), as redesignated, is amended—

21 (1) by striking the ‘‘or’’ at the end of para22 graph (8); and

23 (2) by striking paragraph (9) and inserting,

24 after paragraph (8), new paragraphs (9) through

25 (13) to read as follows:
45

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

2 ceases to be a member of the controlled group;

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

4 of a contributing sponsor’s controlled group

5 liquidates in a case under title 11, United States

6 Code, or under any similar Federal law or law of a

7 State or political subdivision of a State;

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

9 of a contributing sponsor’s controlled group declares

10 an extraordinary dividend (as defined in section

11 1059(c) of the Internal Revenue Code of 1986) or

12 redeems, in any 12-month period, an aggregate of

13 10 percent or more of the total combined voting

14 power of all classes of stock entitled to vote, or an

15 aggregate of 10 percent or more of the total value

16 of shares of all classes of stock, of a contributing

17 sponsor and all members of its controlled group;

18 ‘‘(12) when, in any 12-month period, an aggre19 gate of 3 percent or more of the benefit liabilities of

20 a plan covered by this title and maintained by a con21 tributing sponsor or a member of its controlled

22 group are transferred to a person that is not a mem23 ber of the controlled group or to a plan or plans

24 maintained by a person or persons that are not such
46

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1 contributing sponsor or a member of its controlled

2 group; or

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

4 indicative of a need to terminate the plan and that

5 is prescribed by the corporation in regulations.’’

6 (d) DISCLOSURE EXEMPTION.—Section 4043 of such

7 Act is amended by adding at the end a new subsection

8 (f) to read as follows—

9 ‘‘(f) Any information or documentary material sub10 mitted to the corporation pursuant to subsection (c) or

11 subsection 4050(c)(2) shall be exempt from disclosure

12 under section 552 of title 5, United States Code, and no

13 such information or documentary material may be made

14 public, except as may be relevant to any administrative

15 or judicial action or proceeding. Nothing in this section

16 is intended to prevent disclosure to either body of Con17 gress or to any duly authorized committee or subcommit18 tee of the Congress.’’

19 (e) TECHNICAL AND CONFORMING AMENDMENTS.—

20 Subsection (a) of section 4043 of such Act, and sub21 sections (d) and (e) of such section 4043, as redesignated

22 by this Act, are amended by replacing ‘‘subsection (b)’’

23 each time it appears with ‘‘subsection (c)’’. Section

24 4042(a)(3) of such Act is amended by replacing

25 ‘‘4043(b)(7)’’ with ‘‘4043(c)(7)’’.
47

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1 (f) EFFECTIVE DATE.—The amendments made by

2 this section shall be effective for events occurring 60 days

3 or more after the date of enactment of this Act.

4 SEC. 202. ALTERNATIVE TO INVOLUNTARY TERMINATION.

5 (a) GENERAL RULE.—Subtitle C of title IV of the

6 Employee Retirement Income Security Act of 1974 is

7 amended by adding at the end thereof a new section 4050

8 to read as follows:

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

10 TERMINATION.

11 ‘‘(a)(1) Whenever the corporation determines (with12 out regard to the potential availability of relief under this

13 section) that, upon the occurrence of an event described

14 in section 4043(c) (9) through (13), the possible long-run

15 loss of the corporation with respect to a plan may reason16 ably be expected to increase unreasonably if the plan is

17 not terminated, the corporation may, in its discretion, in18 stitute proceedings under this section as an alternative to

19 instituting proceedings under section 4042 to terminate

20 the plan.

21 ‘‘(2) In the case of an event described in section

22 4043(c) (9) or (13), this section shall apply only if, imme23 diately after the effective date of the event, the total reve24 nues, the total operating income, or the total assets of a

25 contributing sponsor and all members of its controlled
48

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1 group would be less than 90 percent of the total revenues,

2 the total operating income, or the total assets, respec3 tively, of a contributing sponsor and all members of its

4 controlled group immediately before the effective date of

5 the event. For purposes of this paragraph, all events oc6 curring in any 12-month period shall be treated as a single

7 event.

8 ‘‘(b) Whenever the corporation makes a determina9 tion under subsection (a), it may, upon notice to a contrib10 uting sponsor, apply to the appropriate United States dis11 trict court for such legal or equitable relief as the corpora12 tion deems appropriate and consistent with its duties

13 under this title. The court shall consider the interests of

14 both the participants and the corporation, and shall grant

15 such relief, if any, as it determines is necessary to protect

16 those interests without interfering unreasonably with the

17 business of the contributing sponsor or members of its

18 controlled group.

19 ‘‘(c)(1) In any case in which the corporation is pro20 vided with a notice required by subsection 4043(b) within

21 the time specified in that subsection, the corporation may

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

23 after the date such notice is received. Notwithstanding the

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

25 days after the date such notice is received, require the sub-
49

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1 mission of additional information or documentary mate2 rial, in which case an action under this section may be

3 brought no later than 20 days after the corporation re4 ceives all the information and documentary material it had

5 required.

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

7 in paragraph (1) may elect, upon further notice to the cor8 poration, to proceed with an event prior to the expiration

9 of the time periods described in paragraph (1). In that

10 event, an action under this section may be brought at any

11 time within the period specified in subsection 4003(e)(6).

12 ‘‘(3) In any case in which the corporation is not pro13 vided with a notice required by subsection 4043(b) by the

14 time specified in that subsection, where a person fails or

15 refuses to provide the additional information or documen16 tary material required by the corporation under paragraph

17 (1), or where a person proceeds with the event without

18 providing the corporation with the further notice required

19 under paragraph (2), an action under this section may be

20 brought at any time within the time period specified in

21 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.
50

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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

3 deemed 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,

11 after ‘‘determines’’ the first time it appears, the following:

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

13 under 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 4048 the following new

17 item:

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

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

19 this section shall be effective for events occurring on or

20 after 60 days after 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

24 Employee Retirement Income Security Act of 1974 is
51

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1 amended by adding at the end thereof a new section 4010

2 to read as follows:

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

5 ‘‘(a) Each person described in subsection (b) shall

6 provide the corporation annually, on or before a date spec7 ified by the corporation in regulations, with—

8 ‘‘(1) such records, documents, or other informa9 tion that the corporation specifies in regulations as

10 necessary to determine the liabilities and assets of

11 plans covered by this title; and

12 ‘‘(2) copies of such person’s audited (or, if un13 available, unaudited) financial statements, and such

14 other financial information as the corporation may

15 prescribe in regulations.

16 ‘‘(b) The persons covered by subsection (a) are each

17 contributing sponsor, and each member of a contributing

18 sponsor’s controlled group, of a single-employer plan cov19 ered by this title, where—

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

21 the end of the preceding plan year (as determined

22 under section 4006(a)(3)(E)(iii)) of plans main23 tained by the contributing sponsor and the members

24 of its controlled group (taking into account only

25 those plans of the contributing sponsor and its con-
52

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1 trolled group with unfunded vested benefits) exceed

2 $50,000,000; or

3 ‘‘(2) the conditions for imposition of a lien de4 scribed in section 302(f)(1)(A) and (B) or section

5 412(n)(1)(A) and (B) of the Internal Revenue Code

6 of 1986 have been met with respect to any such

7 plan; or

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

9 $1,000,000 have been granted with respect to any

10 such plan, and any portion thereof is still outstand11 ing.

12 ‘‘(c) Any information or documentary material sub13 mitted to the corporation pursuant to this section shall

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

15 United States Code, and no such information or documen16 tary material may be made public, except as may be rel17 evant to any administrative or judicial action or proceed18 ing. Nothing in this section is intended to prevent disclo19 sure to either body of Congress or to any duly authorized

20 committee or subcommittee of the Congress.’’

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

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

23 after the items relating to section 4009 the following new

24 item:

‘‘Sec. 4010. Authority to require certain information.’’
53

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

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

3 this Act.

4 SEC. 204. LIABILITY UPON LIQUIDATION OF CONTRIBUTING

5 SPONSOR OR CONTROLLED GROUP MEMBER

6 WHERE PLAN REMAINS ONGOING.

7 (a) IN GENERAL.—Section 4062 of the Employee Re8 tirement Income Security Act of 1974 [29 U.S.C. § 1362]

9 is amended by adding at the end thereof a new subsection

10 (f) to read as follows:

11 ‘‘(f) LIABILITY ON LIQUIDATION OF CONTRIBUTING

12 SPONSOR OR CONTROLLED GROUP MEMBER.—

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

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

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

16 member of a controlled group of a contributing

17 sponsor of a single-employer plan, are liquidated in

18 a case under title 11, United States Code, or under

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

20 subdivision of State, but the plan is not terminated,

21 such person shall be deemed liable under subsection

22 (b) as if the plan had terminated under section

23 4041(c) in the course of such liquidation and as if

24 the termination date were the date determined by
54

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1 the corporation as the date on which the liquidation

2 was initiated.

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

4 The liability under this subsection shall be joint and

5 several only among the members of the controlled

6 group (including, where applicable, the contributing

7 sponsor) who are liquidating as described in para8 graph (1). Subject to that exception, any provision

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

10 to liability under this section upon termination of a

11 plan shall apply in the same manner and to the

12 same extent to the liability established under this

13 subsection. For purposes of this paragraph, the date

14 referred to in paragraph (1) shall be deemed the ter15 mination date.

16 ‘‘(3) LIABILITY OWED TO PLAN; TRANSFER OF

17 LIABILITY PAYMENTS TO THE ONGOING PLAN

18 WHERE COLLECTED BY THE CORPORATION.—The li19 ability established under this subsection shall be

20 owed to the plan, and may be collected by either the

21 plan or the corporation. The corporation shall pay to

22 the plan any amounts collected by the corporation in

23 satisfaction of the liability established under this

24 subsection in connection with such plan.
55

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1 ‘‘(4) REGULATIONS.—The corporation may pre2 scribe regulations under this section, including—

3 ‘‘(A) rules governing—

4 ‘‘(i) the determination of whether and

5 when a liquidation referred to in this sub6 section has occurred, and

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

8 corporation’s claim to liability payments

9 under this subsection to other members of

10 the controlled group as a means of collect11 ing such payments, subject to the transfer

12 of such payments to the plan, and

13 ‘‘(B) rules providing alternative arrange14 ments for making liability payments under this

15 subsection.’’

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

17 such Act is amended—

18 (1) by striking ‘‘and’’ after ‘‘subsection (b),’’;

19 (2) by striking the period after ‘‘subsection (c)’’

20 and inserting ‘‘, and’’; and

21 (3) by adding a new paragraph (3) at the end

22 thereof to read as follows:

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

24 in subsection (f).’’
56

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

2 this section shall be effective for liquidations initiated on

3 or after the date of enactment of this Act.

4 SEC. 205. ENFORCEMENT OF MINIMUM FUNDING REQUIRE5 MENTS.

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

7 of the Employee Retirement Income Security Act of 1974

8 (29 U.S.C. 1303(e)(1)) is amended by inserting ‘‘(i)’’ after

9 ‘‘enforce’’ and by striking the period after ‘‘title’’ and in10 serting ‘‘, and (ii) in the case of a plan covered under this

11 title (other than a multiemployer plan) and for which the

12 conditions for imposition of a lien described in section

13 302(f)(1) (A) and (B) or section 412(n)(1)(A) and (B)

14 of the Internal Revenue Code of 1986 have been met, sec15 tion 302 of this Act and section 412 of the Internal Reve16 nue Code of 1986.’’

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

18 this section shall be effective for installments and other

19 payments required under section 302 of the Employee Re20 tirement Income Security Act of 1974 or section 412 of

21 the Internal Revenue Code of 1986 that become due on

22 or after the date of the enactment of this Act.
57

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1 SEC. 206. REMEDIES FOR NONCOMPLIANCE WITH REQUIRE2 MENTS FOR STANDARD TERMINATION.

3 (a) NOTICE OF NONCOMPLIANCE.—Section

4 4041(b)(2)(C)(i) of the Employee Retirement Income Se5 curity Act of 1974 (29 U.S.C. 1341(b)(2)(C)(i)) is amend6 ed—

7 (1) by revising subclause (I) to read as follows:

8 ‘‘(I) it determines, based on the

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

10 subsection (b), that there is reason to

11 believe that the plan is not sufficient

12 for benefit liabilities, or’’;

13 (2) by striking the period that follows subclause

14 (II), and inserting ‘‘, or’’; and

15 (3) by adding a new subclause (III) to read as

16 follows:

17 ‘‘(III) it determines that any

18 other requirement of subparagraph

19 (A) or (B) of this paragraph or of

20 subsection (a)(2) has not been met,

21 unless it further determines that the

22 issuance of such notice would be in23 consistent with the interests of par24 ticipants and beneficiaries.’’

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

26 this section shall apply to any plan termination under sec-
58

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1 tion 4041(b) of the Employee Retirement Income Security

2 Act of 1974 with respect to which the Pension Benefit

3 Guaranty Corporation has not, as of the date of enactment

4 of this Act, issued a notice of noncompliance that has be5 come final, or otherwise issued a final determination that

6 the plan termination is nullified.

7 SEC. 207. PROHIBITION ON BENEFIT INCREASES WHERE

8 PLAN SPONSOR IS IN BANKRUPTCY.

9 (a) Section 204 of the Employee Retirement Income

10 Security Act of 1974 (29 U.S.C. 1054) as amended by

11 section 121(b) of this Act, is further amended by redesig12 nating subsection (j) as (k) and inserting a new subsection

13 (j) to read as follows:

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

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

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

17 Federal or State law, no amendment of the plan which

18 increases the liabilities of the plan by reason of any in19 crease in benefits, any change in the accrual of benefits,

20 or any change in the rate at which benefits become non21 forfeitable under the plan, with respect to employees of

22 the debtor, shall be effective prior to the effective date of

23 such employer’s plan of reorganization.

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

25 amendment that—
59

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1 ‘‘(A) the Secretary of the Treasury determines

2 to be reasonable and that provides for only de

3 minimis increases in the liabilities of the plan with

4 respect to employees of the debtor,

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

6 section 302(c)(8),

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

8 under part I of subchapter D, of chapter 1, of the

9 Internal Revenue Code of 1986, or

10 ‘‘(D) was adopted prior to, or pursuant to a col11 lective bargaining agreement entered into prior to,

12 the date on which the employer became a debtor in

13 a case under title 11, United States Code, or similar

14 federal or state law.

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

16 than multiemployer plans) covered under section 4021 of

17 this Act for which the funded current liability percentage

18 (within the meaning of section 302(d)(8)(B) of this Act)

19 is less than 100 percent after taking into account the ef20 fect of the amendment.

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

22 the meaning set forth in section 302(c)(11)(A), without

23 regard to section 302(c)(11)(B).’’

24 (b) Section 401(a) of the Internal Revenue Code of

25 1986, as amended by section 101(b) of this Act, is further
60

S 1780 IS

1 amended by adding at the end thereof a new paragraph

2 (33) to read as follows:

3 ‘‘(33) PROHIBITION ON BENEFIT INCREASES

4 WHILE SPONSOR IS IN BANKRUPTCY.—

5 ‘‘(A) IN GENERAL.—A trust shall not con6 stitute a qualified trust under this section if the

7 plan of which such trust is a part is amended

8 while the employer is a debtor in a case under

9 title 11, United States Code, or similar Federal

10 or State law, where such amendment increases

11 liabilities of the plan by reason of any increase

12 in benefits, any change in the accrual of bene13 fits, or any change in the rate at which benefits

14 become nonforfietable under the plan, with re15 spect to employees of the debtor, and is effec16 tive prior to the effective date of such employ17 er’s plan of reorganization.

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

19 not apply to any plan amendment that—

20 ‘‘(i) the Secretary determines to be

21 reasonable and that provides for only de

22 minimis increases in the liabilities of the

23 plan with respect to employees of the debt24 or,
61

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1 ‘‘(ii) only repeals an amendment de2 scribed in subsection 412(c)(8),

3 ‘‘(iii) is required as a condition of

4 qualification under this part, or

5 ‘‘(iv) was adopted prior to the date on

6 which the employer became a debtor in a

7 case under title 11, United Stated Code, or

8 similar Federal or State law.

9 ‘‘(C) PLANS TO WHICH THIS PARAGRAPH

10 APPLIES.—This paragraph shall apply only to

11 plans (other than multiemployer plans) covered

12 under Section 4021 of the Employee Retire13 ment Income Security Act of 1974 for which

14 the funded current liability percentage (within

15 the meaning of section 412(l)(8)(B)) is less

16 than 100 percent after taking into account the

17 effect of the amendment.

18 ‘‘(D) DEFINITIONS.—For purposes of this

19 paragraph, ‘employer’ has the meaning set

20 forth in section 412(c)(11)(A), without regard

21 to section 412(c)(11)(B).’’

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

23 this section shall be effective with respect to plan amend24 ments adopted on or after the date of enactment of this

25 Act.
62

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1 SEC. 208. SUBSTANTIAL OWNER BENEFITS.

2 (A) MODIFICATION OF PHASE IN OF GUARANTEE.—

3 Section 4022(b)(5) is amended by revising subparagraphs

4 (B) and (C) to read as follows:

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

6 ‘majority owner’ has the same meaning as the

7 term ‘substantial owner’, except that ‘50 per8 cent or more’ shall be substituted for ‘more

9 than 10 percent’ wherever such phrase appears

10 in subparagraph (A) of this paragraph.

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

12 majority owner, the amount of benefits guaran13 teed under this section shall not exceed the

14 product of—

15 ‘‘(i) a fraction (not to exceed 1) the

16 numerator of which is the number of years

17 from the later of the effective date or the

18 adoption date of the plan, and the denomi19 nator of which is 30, and

20 ‘‘(ii) the amount of the majority own21 er’s monthly benefits guaranteed under

22 subsection (a) (as limited by paragraph (3)

23 of this subsection).’’

24 (b) MODIFICATION OF ALLOCATION OF ASSETS.—

25 (1) Section 4044(a)(4)(B) is revised by adding

26 ‘‘(C)’’ after ‘‘section 4022(b)(5)’’.
63

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1 (2) Section 4044(b) is revised—

2 (A) by adding ‘‘(4),’’ before ‘‘(5)’’ in para3 graph (2), and

4 (B) by renumbering paragraphs (3)

5 through (6) as (4) through (7), respectively,

6 and inserting a new paragraph (3) to read as

7 follows:

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

9 paragraph (4) of subsection (a) are insufficient to

10 satisfy in full the benefits of all individuals who are

11 described in that paragraph, the assets shall be allo12 cated first to benefits described in subparagraph (A)

13 of that paragraph. Any remaining assets shall then

14 be allocated to subparagraph (B). If assets allocated

15 to subparagraph (B) are insufficient to satisfy in full

16 the benefits in that subparagraph, the assets shall

17 be allocated pro rata among individuals on the basis

18 of the present value (as of the termination date) of

19 their respective benefits described in that subpara20 graph.’’

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

22 this section shall be effective for plan terminations under

23 section 4041(c) with respect to which notices of intent to

24 terminate are provided under section 4041(a)(2), or under

25 section 4042 with respect to which proceedings are insti-
64

S 1780 IS

1 tuted by the corporation, on or after the date of enactment

2 of this Act.

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

4 (a) Subparagraph (E) of section 4006(a)(3) of the

5 Employees Retirement Income Security Act of 1974 is

6 amended by deleting clause (iv) and redesignating clause

7 (v) as clause (iv).

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

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

10 this Act, except that, for plan years beginning on or after

11 July 1, 1994 and before July 1, 1996, the additional pre12 mium payable with respect to any participant by reason

13 of this amendment shall not exceed the sum of—

14 (1) $53, and

15 (2) the excess (if any) of the amount deter16 mined under clause (ii) of section 4006(a)(3)(E) of

17 the Employee Retirement Income Security Act of

18 1974 over $53 multiplied by the applicable percent19 age. For purposes of this clause, the applicable per20 centage shall be as follows:

Plan year beginning: The applicable peron or after but before centage is:

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

July 1, 1995 ...................... July 1, 1996 .................... 60
65

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1 TITLE III—PARTICIPANT

2 SERVICES

3 SEC. 301. DISCLOSURE TO PARTICIPANTS.

4 (a) PARTICIPANT NOTICE REQUIREMENT.—Subtitle

5 A of title IV of the Employee Retirement Income Security

6 Act of 1974, as amended by section 203 of this Act, is

7 further amended by adding at the end thereof a new sec8 tion 4011 to read as follows:

9 ‘‘SEC. 4011. NOTICE TO PARTICIPANTS.

10 ‘‘The plan administrator of a plan subject to the ad11 ditional premium under section 4006(a)(3)(E) shall pro12 vide, in a form and manner and at such time as prescribed

13 in regulations of the corporation, notice to plan partici14 pants and beneficiaries of the plan’s funding status and

15 the limits on the corporation’s guaranty should the plan

16 terminate while underfunded. Such notice shall be written

17 in a manner so as to be understood by the average plan

18 participant.’’

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

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

21 after the term relating to section 4010 (as added by sec22 tion 203 of this Act) the following new item:
66

S 1780 IS

1 ‘‘SEC. 4011. NOTICE TO PARTICIPANTS.’’

2 (c) EFFECTIVE DATE.—The amendment made by

3 this section shall be effective for plan years beginning after

4 the date of enactment of this Act.

5 SEC. 302. MISSING PARTICIPANTS.

6 (a) Subtitle B of title IV of the Employee Retirement

7 Income Security Act of 1974 is amended by adding a new

8 section 4031 at the end thereof to read as follows:

9 ‘‘SEC. 4031. MISSING PARTICIPANTS.

10 ‘‘(a) GENERAL RULE.—

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

12 administrator satisfies section 4041(b)(3)(A) in the

13 case of a missing participant only if the plan admin14 istrator—

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

16 benefit to the corporation or purchaser an irrev17 ocable commitment from an insurer in accord18 ance with clause (i) of section 4041(b)(3)(A),

19 and

20 ‘‘(B) provides the corporation such infor21 mation and certifications with respect to such

22 designated benefits or irrevocable commitments

23 as the corporation shall specify.

24 ‘‘(2) TREATMENT OF TRANSFERRED ASSETS.—

25 A transfer to the PBGC under this section shall be

26 treated as a transfer of assets from a terminated
67

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1 plan to the corporation as trustee, and shall be held

2 with assets of terminated plans for which the cor3 poration is trustee under section 4042, subject to

4 the rules set out in that section.

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

6 missing participant whose designated benefit was

7 transferred to the corporation is located—

8 ‘‘(A) if the plan could have distributed the

9 benefit of a missing participant in a single sum

10 without participant or spousal consent under

11 section 205(g), the corporation shall pay the

12 participant or beneficiary a single sum benefit

13 equal to the designated benefit paid the cor14 poration plus interest as specified by the cor15 poration.

16 ‘‘(B) in the case of any other missing par17 ticipant, the corporation shall pay a benefit

18 based on the designated benefit and the as19 sumptions prescribed by the corporation at the

20 time that the corporation received the des21 ignated benefit. The corporation shall make

22 such payments available in the same forms and

23 at the same times as a guaranteed benefit

24 under section 4022 would be available to be

25 paid, except that the corporation may make a
68

S 1780 IS

1 benefit available in the form of a single sum if

2 the plan provided a single sum benefit (other

3 than a single sum described in subsection

4 (b)(2)(A)).

5 ‘‘(b) DEFINITIONS.—

6 ‘‘(1) A ‘missing participant’ means a partici7 pant or beneficiary under a terminating plan whom

8 the plan administrator cannot locate after a diligent

9 search.

10 ‘‘(2) A ‘designated benefit’ means the single

11 sum benefit the participant would receive—

12 ‘‘(A) under the plan’s assumptions, in the

13 case of a distribution that can be made without

14 participant or spousal consent under section

15 205(g);

16 ‘‘(B) under the assumptions of the cor17 poration in effect on the date that the des18 ignated benefit is transferred to the corpora19 tion, in the case of a plan that does not pay any

20 single sums other than those described in sub21 paragraph (A); or

22 ‘‘(C) under the assumptions of the cor23 poration or of the plan, whichever provides the

24 higher single sum, in the case of a plan that
69

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1 does pay a single sum other than those de2 scribed in subparagraph (A).

3 ‘‘(c) REGULATORY AUTHORITY.—The corporation

4 shall prescribe such regulations as are necessary to carry

5 out the purposes of this section, including rules as to what

6 will be considered a diligent search, the amount payable

7 to the corporation, and the amount to be paid by the cor8 poration.’’

9 (b) CONFORMING TITLE IV AMENDMENTS.—

10 (1) AMENDMENT TO SECTION 4003.—Section

11 4003(a) of such Act is amended by adding ‘‘and

12 whether section 4031(a) has been satisfied’’ at the

13 end of the second sentence.

14 (2) AMENDMENT TO SECTION 4005.—Section

15 4005(b)(2)(A) of such Act is amended by adding ‘‘or

16 benefits payable under section 4031’’ after ‘‘section

17 4022A’’.

18 (3) AMENDMENT TO SECTION 4041.—Section

19 4041(b)(3)(A)(ii) of such Act is amended by adding

20 a sentence at the end thereof to read as follows: ‘‘A

21 transfer of assets to the corporation in accordance

22 with section 4031 on behalf of a missing participant

23 shall satisfy this subparagraph with respect to such

24 participant.’’

25 (c) CONFORMING ERISA AMENDMENTS.—
70

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1 (1) The table of contents contained in section

2 1 of the Employee Retirement Income Security Act

3 of 1974 is amended by inserting after the item relat4 ed to section 4030 the following new item:

5 ‘‘SEC. 4031. MISSING PARTICIPANTS.’’

6 (2) Section 206 of such Act is amended by add7 ing at the end thereof a new subsection (e) to read

8 as follows:

9 ‘‘(e) MISSING PARTICIPANTS IN TERMINATED

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

11 Employee Retirement Income Security Act of 1974, the

12 plan shall provide that, upon termination of the plan, ben13 efits of missing participants shall be treated in accordance

14 with section 4031 of such Act.’’

15 (d) CONFORMING INTERNAL REVENUE CODE

16 AMENDMENTS.—Section 401(a) of the Internal Revenue

17 Code of 1986, as amended by section 207 of this Act, is

18 further amended by adding at the end thereof a new para19 graph (34) to read as follows:

20 ‘‘(34) In the case of a plan covered by title IV

21 of the Employee Retirement Income Security Act of

22 1974, a trust forming part of such plan shall not be

23 treated as failing to constitute a qualified trust

24 under this section merely because the pension plan

25 of which such trust is a part, upon its termination,
71

S 1780 IS

1 transfers benefits of missing participants to the Pen2 sion Benefit Guaranty Corporation in accordance

3 with section 4031 of such Act.’’

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

5 shall be effective with respect to distributions that occur

6 in plan years commencing after final regulations imple7 menting these provisions are adopted by the Pension Ben8 efit Guaranty Corporation.

9 SEC. 303. MODIFICATION OF MAXIMUM GUARANTEE FOR

10 DISABILITY BENEFITS.

11 (a) Section 4022(b)(3) of the Employee Retirement

12 Income Security Act of 1974 (29 U.S.C. § 1322(b)(3)) is

13 amended by adding at the end thereof two new sentences

14 to read as follows: ‘‘The maximum guaranteed monthly

15 benefit shall not be reduced solely on account of the age

16 of a participant in the case of a benefit payable by reason

17 of disability, provided that the participant satisfies the

18 definition of disability under titles II and XVI of the So19 cial Security Act, as amended, and the regulations there20 under. If a benefit payable by reason of disability is con21 verted to an early or normal retirement benefit for reasons

22 other than a change in the health of the participant, such

23 early or normal retirement benefit shall be treated as a

24 continuation of the benefit payable by reason of disability

25 and this subparagraph shall continue to apply.’’
72

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

2 this section shall be effective for plan terminations under

3 section 4041(c) with respect to which notices of intent to

4 terminate are provided under section 4041(a)(2), or under

5 section 4042 with respect to which proceedings are insti6 tuted by the corporation, on or after the date of enactment

7 of this Act.

8 TITLE IV—MISCELLANEOUS

9 AMENDMENTS

10 SEC. 401. ERISA CITATION.

11 (a) Section 404(g)(4) of the Internal Revenue Code

12 of 1986 is amended by striking ‘‘the Single Employer Pen13 sion Plan Amendments Act of 1986’’ and inserting ‘‘the

14 Retirement Protection Act of 1993’’.

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

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

17 this Act.

18 SEC. 402. DEFINITION OF CONTRIBUTING SPONSOR.

19 (a) Paragraph (13) of section 4001(a) of the Em20 ployee Retirement Income Security Act of 1974 (29

21 U.S.C. 1301(a)) is amended by deleting ‘‘means a per22 son—’’ and all that follows and inserting in lieu thereof

23 ‘‘means a person described in section 302(c)(11)(A) (with24 out regard to section 302(c)(11)(B)) of this Act of section
73

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1 412(c)(11(A) (without regard to section 412(c)(11)(B)) of

2 the Internal Revenue Code of 1986.’’

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

4 this section shall be effective as if included in the Pension

5 Protection Act.

6 SEC. 403. RECOVERY RATIO UNDER ERISA SECTION 4022.

7 (a) Section 4022(c)(3) of the Employee Retirement

8 Income Security Act of 1974 (29 U.S.C. 1322(c)(3)) is

9 amended by deleting subparagraphs (A) and (B), and

10 amending subparagraph (C)—

11 (1) by deleting ‘‘(C)’’ and all that precedes

12 clause (i) and inserting in its place: ‘‘For purposes

13 of this section, the term ‘recovery ratio’ means, with

14 respect to the termination of such plan, the ratio

15 of—’’; and

16 (2) by renumbering clauses (i) and (ii) as sub17 paragraphs (A) and (B), respectively.

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

19 this section shall be effective as if included in the Pension

20 Protection Act.

21 SEC. 404. DISTRESS TERMINATION CRITERIA FOR BANKING

22 INSTITUTIONS.

23 (a) CLARIFICATION OF DISTRESS CRITERION.—

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

25 Retirement Income Security Act of 1974 (29 U.S.C.
74

S 1780 IS

1 1341(c)(2)(B)(i)) is amended by inserting after ‘‘under

2 any similar’’ the words ‘‘Federal law or’’.

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

4 this section shall be effective as if included in the Single5 Employer Pension Plan Amendments Act of 1986.

6 SEC. 405. SINGLE SUM DISTRIBUTIONS.

7 (a) MINIMUM BENEFITS.—

8 (1) Section 411(a)(11) of the Internal Revenue

9 Code of 1986 is amended by revising subparagraph

10 (B) to read as follows:

11 ‘‘(B) DETERMINATION OF PRESENT

12 VALUE.—For purposes of subparagraph (A),

13 the present value shall be calculated in accord14 ance with section 417(e)(3).’’

15 (2) Section 417(e) of the Code is amended by

16 revising paragraph (3) to read as follows:

17 ‘‘(3) DETERMINATION OF PRESENT VALUE.—

18 ‘‘(A) IN GENERAL.—

19 ‘‘(i) PRESENT VALUE.—Except as

20 provided in subparagraph (B), for pur21 poses of paragraphs (1) and (2), the

22 present value shall not be less than the

23 present value calculated by using the appli24 cable mortality table and the applicable in25 terest rate.
75

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1 ‘‘(ii) DEFINITIONS.—For purposes of

2 clause (i), the term ‘applicable mortality

3 table’ means the prevailing Commissioner’s

4 standard table (described in section

5 807(d)(5)(A)) that would be used to deter6 mine reserves for group annuity contracts

7 issued on the date as of which present

8 value is being determined (without regard

9 to any other subparagraph of section

10 807(d)(5)), and the term ‘applicable inter11 est rate’ means the rate of interest on a

12 30-year Treasury security (as of the date

13 of distribution).

14 ‘‘(B) EXCEPTION.—In the case of a dis15 tribution from a plan that was adopted and in

16 effect prior to the enactment of the Retirement

17 Protection Act of 1993, the present value of

18 any distribution made before the earlier of (i)

19 and the later of when a plan amendment apply20 ing subparagraph (A) is adopted or made effec21 tive or (ii) the first day of the first plan year

22 beginning after December 31, 1999 shall be cal23 culated, for purposes of paragraphs (1) and (2),

24 using the interest rate determined under the

25 regulations of the Pension Benefit Guaranty
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1 Corporation for determining the present value

2 of a lump sum distribution on plan termination

3 that were in effect on September 1, 1993 and

4 under the provisions of the plan and the Code

5 that were in effect immediately before such en6 actment: Provided, That such plan provisions

7 satisfied section 417(e)(3) as in effect at such

8 time.’’

9 (b) MAXIMUM BENEFITS.—Section 415(b)(2)(E) of

10 the Code is amended—

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

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

13 (2) by revising clause (i) and adding a new

14 clause (ii) to read as follows:

15 ‘‘(i) For purposes of adjusting any

16 benefit or limitation under subparagraph

17 (B), the interest rate assumption shall not

18 be less than the greater of 5 percent or the

19 rate specified in the plan: Provided, That

20 for purposes of adjusting the benefit or

21 limitation of any form of benefit subject to

22 section 417(e)(3), the ‘applicable interest

23 rate under section 417(e)(3)’ shall be sub24 stituted for ‘5 percent’.
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1 ‘‘(ii) For purposes of adjusting any

2 benefit or limitation under subparagraph

3 (C), the interest rate assumption shall not

4 be less than the greater of 5 percent or the

5 rate specified in the plan.’’, and

6 (3) by adding a new clause (v) to read as fol7 lows:

8 ‘‘(v) For purposes of adjusting any

9 benefit or limitation under subparagraphs

10 (B), (C), or (D), the prevailing Commis11 sioner’s standard table (described in sec12 tion 807(d)(5)(A)) that would be used to

13 determine reserves for group annuity con14 tracts issued on the date as of which the

15 determination is being made (without re16 gard to any other subparagraph of section

17 807(d)(5)) shall be applied.’’

18 (c)(1) Section 203(e) of the Employee Retirement In19 come Security Act of 1974 (29 U.S.C. 1053(e)) is amend20 ed by revising paragraph (2) to read as follows:

21 ‘‘(2) For purposes of paragraph (1), the present

22 value shall be calculated in accordance with section

23 205(g)(3).’’

24 (2) Section 205(g) of such Act (29 U.S.C. 1055(g))

25 is amended by revising paragraph (3) to read as follows:
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1 ‘‘(3) DETERMINATION OF PRESENT VALUE.—

2 ‘‘(A) IN GENERAL.—

3 ‘‘(i) PRESENT VALUE.—Except as

4 provided in subparagraph (B), for pur5 poses of paragraphs (1) and (2), the

6 present value shall not be less than the

7 present value calculated by using the appli8 cable mortality table and the applicable in9 terest rate.

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

11 clause (i), the term ‘applicable mortality

12 table’ means the prevailing Commissioner’s

13 standard table (described in section

14 807(d)(5)(A) of the Internal Revenue Code

15 of 1986) that would be used to determine

16 reserves for group annuity contracts issued

17 on the date as of which present value is

18 being determined (without regard to any

19 other subparagraph of section 807(d)(5) of

20 the Internal Revenue Code of 1986), and

21 the term ‘applicable interest rate’ means

22 the rate of interest on a 30-year Treasury

23 security (as of the date of distribution).

24 ‘‘(B) EXCEPTION.—In the case of a dis25 tribution from a plan that was adopted and in
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1 effect prior to the enactment of the Retirement

2 Protection Act of 1993, the present value of

3 any distribution made before the earlier of (i)

4 the later of when a plan amendment applying

5 subparagraph (A) is adopted or made effective

6 or (ii) the first day of the first plan year begin7 ning after December 31, 1999 shall be cal8 culated, for purposes of paragraphs (1) and (2),

9 using the interest rate determined under the

10 regulations of the Pension Benefit Guaranty

11 Corporation for determining the present value

12 of a lump sum distribution on plan termination

13 that were in effect on September 1, 1993 and

14 under the provisions of the plan and this Act

15 that were in effect immediately before such en16 actment, Provided, That such plan provisions

17 satisfied section 205(g)(3) as in effect at such

18 time.’’

19 (d) EFFECTIVE DATE.—

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

21 this section shall apply to plan years and limitation

22 years beginning after December 31, 1994, except

23 that an employer may elect to treat the amendments

24 made by this section as being effective on or after

25 the date of enactment.
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1 (2) NO REDUCTION IN ACCRUED BENEFITS.—A

2 participant’s accrued benefit shall not be considered

3 to be reduced in violation of section 411(d)(6) of the

4 Internal Revenue Code of 1986 or section 204(g) of

5 the Employee Retirement Income Security Act of

6 1974 merely because (A) the benefit is determined

7 in accordance with section 417(e)(3)(A) of such

8 Code, as amended by this Act, or section 205(g)(3)

9 of the Employee Retirement Income Security Act of

10 1974, as amended by this Act, or (B) the plan ap11 plies section 415(b)(2)(E) of such Code, as amended

12 by this Act.

13 (3) SECTION 415.—

14 (A) NO REDUCTION REQUIRED.—An ac15 crued benefit shall not be required to be re16 duced below the accrued benefit as of the last

17 day of the last plan year beginning before Jan18 uary 1, 1995, merely because of the amend19 ments made by subsection (b).

20 (B) TIMING OF PLAN AMENDMENT.—A

21 plan that operates in accordance with the

22 amendments made by subsection (b) shall not

23 be treated as failing to satisfy section 401(a) of

24 the Internal Revenue Code of 1986 or as not

25 being operated in accordance with the provi-
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1 sions of the plan until such date as the Sec2 retary provides merely because the plan has not

3 been amended to include the amendments made

4 by subsection (b).

5 SEC. 406. ADJUSTMENTS TO LIEN FOR MISSED MINIMUM

6 FUNDING CONTRIBUTIONS.

7 (a) AMENDMENTS TO THE INTERNAL REVENUE

8 CODE OF 1986.—

9 (1) CLARIFICATION OF APPLICABILITY OF PRO10 VISION.—Section 412(n)(1) of the Internal Revenue

11 Code of 1986 is amended by striking ‘‘to which this

12 section applies’’ and inserting ‘‘covered under sec13 tion 4021 of the Employee Retirement Income Secu14 rity Act of 1974’’.

15 (2) REPEAL OF $1 MILLION OFFSET.—Section

16 412(n)(3) of such Code is amended by striking all

17 that follows ‘‘equal to’’ through and including ‘‘(B)’’.

18 (3) REPEAL OF 60-DAY DELAY.—Section

19 412(n)(4)(B) of such Code is amended by striking

20 ‘‘60th day following the’’.

21 (b) AMENDMENTS TO THE EMPLOYEE RETIREMENT

22 INCOME SECURITY ACT OF 1974.—

23 (1) CLARIFICATION OF APPLICABILITY OF PRO24 VISION.—Section 302(f)(1) of the Employee Retire25 ment Income Security Act of 1974 (29 U.S.C.
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1 1082(f)(1)) is amended by striking ‘‘to which this

2 section applies’’ and inserting ‘‘covered under sec3 tion 4021 of this Act’’.

4 (2) REPEAL OF $1 MILLION OFFSET.—Section

5 302(f)(3) of such Act is amended by striking all that

6 follows ‘‘equal to’’ through and including ‘‘(B)’’.

7 (3) REPEAL OF 60-DAY DELAY.—Section

8 302(f)(4)(B) of such Act is amended by striking

9 ‘‘60th day following the’’.

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

11 this section shall be effective for installments and other

12 payments required under section 412 of the Internal Reve13 nue Code of 1986 or under part 3 of subtitle B of the

14 Employee Retirement Income Security Act of 1974 that

15 become due on or after the date of enactment.

16 SEC. 407. ROUNDING RULES FOR COST-OF-LIVING ADJUST17 MENTS.

18 (a) COST-OF-LIVING ADJUSTMENT FOR COMPENSA19 TION LIMIT.—Section 401(a)(17)(B) of the Internal Reve20 nue Code of 1986 is revised to read as follows:

21 ‘‘(B) The Secretary shall adjust annually

22 the $150,000 amount in paragraph (A) for in23 creases in the cost of living at the same time

24 and in the same manner as adjustments under

25 section 415(d), except that the base period shall
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1 be the calendar quarter beginning October 1,

2 1993, and the adjusted value shall be rounded

3 down to the next lowest multiple of $10,000.’’

4 (b) COST-OF-LIVING ADJUSTMENT FOR MAXIMUM

5 DEFINED BENEFIT AMOUNT.—Section 415(d) of such

6 Code is amended to read as follows:

7 ‘‘(d) COST-OF-LIVING ADJUSTMENTS.—

8 ‘‘(1) IN GENERAL.—The Secretary shall adjust

9 annually—

10 ‘‘(A) the $90,000 amount in subsection

11 (b)(1)(A), and

12 ‘‘(B) in the case of a participant who sepa13 rated from service, the amount taken into ac14 count under subsection (b)(1)(B),

15 for increases in the cost-of-living in accordance with

16 regulations prescribed by the Secretary.

17 ‘‘(2) METHOD.—

18 ‘‘(A) IN GENERAL.—The regulations pre19 scribed under paragraph (1) shall provide for

20 adjustment procedures which are similar to the

21 procedures used to adjust benefit amounts

22 under section 215(i)(2)(A) of the Social Secu23 rity Act.
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1 ‘‘(B) PERIODS FOR ADJUSTMENT OF DOL2 LAR AMOUNT.—For purposes of paragraph

3 (1)(A)—

4 ‘‘(i) IN GENERAL.—The adjustment

5 with respect to any calendar year shall be

6 based on the increase in the applicable

7 index as of the close of the calendar quar8 ter ending September 30 of the preceding

9 calendar year over such index as of the

10 close of the base period.

11 ‘‘(ii) BASE PERIOD.—For purposes of

12 clause (i), the base period is the calendar

13 quarter beginning October 1, 1986.

14 ‘‘(C) BASE PERIOD FOR SEPARATIONS.—

15 For purposes of paragraph (1)(B), the base pe16 riod is the last calendar quarter of the calendar

17 year preceding the calendar year in which the

18 participant separated from service.

19 ‘‘(3) ROUNDING.—The adjusted value of the

20 $90,000 amount in subsection (b)(1)(A) for a year

21 rounded down to the next lowest multiple of

22 $5,000.’’

23 (c) COST-OF-LIVING ADJUSTMENT FOR MAXIMUM

24 ANNUAL ADDITION.—
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1 (1) Section 415(c) of such Code is amended by

2 adding a new paragraph (8) at the end thereof to

3 read as follows:

4 ‘‘(8) COST-OF-LIVING ADJUSTMENTS.—The

5 Secretary shall adjust annually the $30,000 amount

6 in paragraph (c)(1)(A) for increases in the cost of

7 living at the same time and in the same manner as

8 adjustments under subsection (d), except that the

9 base period is the calendar quarter beginning Octo10 ber 1, 1993.’’

11 (2) CONFORMING AMENDMENT.—Section

12 415(c)(1)(A) of such Code is amended by striking

‘‘(or, if greater 1 13 ⁄4 of the dollar limitation in effect

14 under subsection (b)(1)(A))’’ and inserting ‘‘or such

15 larger amount as provided under paragraph (8)’’.

16 (d) COST-OF-LIVING ADJUSTMENT FOR MAXIMUM

17 SALARY DEFERRAL.—Section 402(g)(5) of such Code is

18 amended by inserting before the period at the end of that

19 paragraph the phrase ‘‘, except that the adjusted value

20 shall be rounded down to the next lowest multiple of

21 $500’’.

22 (e) COST-OF-LIVING ADJUSTMENT FOR ELIGIBILITY

23 FOR SIMPLIFIED EMPLOYEE PENSIONS.—Section

24 408(k)(8) of such Code is amended by inserting before the

25 period at the end of that paragraph the phrase ‘‘, except
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1 that the adjusted value of the $300 amount shall be

2 rounded down to the next lowest multiple of $50’’.

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

4 this section shall be effective for years beginning after De5 cember 31, 1994.

6 SEC. 408. LIMITATION ON CROSS-TESTING IN DEFINED

7 CONTRIBUTION PLANS.

8 (a) Section 401(a)(5) of the Internal Revenue Code

9 of 1986 is amended by adding at the end thereof a new

10 subparagraph to read as follows:

11 ‘‘(F)(i) A defined contribution plan (other

12 than a target benefit plan that satisfies regula13 tions prescribed by the Secretary) shall be con14 sidered as satisfying the requirements of para15 graph (4) only if the contributions provided

16 under the plan satisfy the requirements of para17 graph (4).

18 ‘‘(ii) Two or more plans of an employer, at

19 least one of which is a defined contribution

20 plan, shall be considered as satisfying the re21 quirements of paragraph (4) when considered

22 as a single plan only if the contributions pro23 vided under the aggregated plans satisfy the re24 quirements of paragraph (4).’’
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1 (b)(1) Section 415(b)(6)(A) of such Code is amended

2 by inserting ‘‘that is a target benefit plan that satisfies

3 regulations prescribed by the Secretary’’ after ‘‘defined

4 contribution plan’’.

5 (2) Section 415(b)(6)(B) is amended by striking

6 ‘‘and’’.

7 (3) Subparagraph (C) of section 415(b)(6) is redesig8 nated as subparagraph (D), and a new subparagraph (C)

9 is inserted to read as follows:

10 ‘‘(C) employer-provided benefits under a defined

11 contribution plan, for purposes of section 410(b)(2),

12 and’’.

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

14 this section shall be effective for plan years beginning after

15 September 30, 1993: Provided, however, That for defined

16 contribution plans in existence on September 30, 1993,

17 the amendments shall be effective for plan years beginning

18 on or after January 1, 1995.

19 SEC. 409. 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

22 B of title I of the Employee Retirement Income Security

23 Act of 1974 shall not apply to a plan which is, on the

24 date of enactment of this Act, subject to a restoration pay25 ment schedule order issued by the Pension Benefit Guar-
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1 anty Corporation that meets the requirements of section

2 1.412(c)(1)–3 of the Treasury Regulations.

3 TITLE V—EFFECTIVE DATES

4 SEC. 501. EFFECTIVE DATES.

5 Except as otherwise provided in this Act, the amend6 ments made by this Act shall be effective on the date of

7 enactment of this Act.

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