II

106TH CONGRESS

1ST SESSION S. 1979

To amend the Internal Revenue Code of 1986 and the Employee Retirement

Income Security Act of 1974 to provide that restrictions on application

of State laws to pension benefits shall not apply to State laws prohibiting

individuals from benefiting from crimes involving the death of pension

plan participants.

IN THE SENATE OF THE UNITED STATES

NOVEMBER 19, 1999

Mr. CONRAD (for himself and Mr. MOYNIHAN) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to provide that restrictions on application of State laws to

pension benefits shall not apply to State laws prohibiting

individuals from benefiting from crimes involving the

death of pension plan participants.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,
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1 SECTION 1. PENSION PLANS SUBJECT TO STATE LAWS

2 PROHIBITING INDIVIDUALS FROM BENE3 FITING FROM CRIMES INVOLVING DEATH OF

4 A PARTICIPANT.

5 (a) AMENDMENT OF INTERNAL REVENUE CODE.—

6 (1) IN GENERAL.—Section 401 of the Internal

7 Revenue Code of 1986 (relating to qualified pension,

8 profit-sharing, and stock bonus plans) is amended by

9 redesignating subsection (o) as subsection (p) and

10 by inserting after subsection (n) the following new

11 subsection:

12 ‘‘(o) APPLICATION OF STATE LAWS PROHIBITING IN13 DIVIDUALS FROM BENEFITING FROM CRIMES INVOLVING

14 DEATH OF A PARTICIPANT.—

15 ‘‘(1) IN GENERAL.—If a State law provides that

16 benefits payable with respect to a participant under

17 a plan shall not be paid to a beneficiary if the bene18 ficiary has been convicted of a crime involving the

19 death of the participant, then—

20 ‘‘(A) the State law shall apply to payment

21 of benefits under the plan, and

22 ‘‘(B) notwithstanding paragraph (11) or

23 (13) of subsection (a), such benefits shall be

24 payable—

25 ‘‘(i) in accordance with the terms of a

26 qualified State order, or
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1 ‘‘(ii) if there is no such order, in the

2 same manner as such benefits would be

3 payable under the terms of the plan if the

4 beneficiary were deceased.

5 ‘‘(2) QUALIFIED STATE ORDER.—For purposes

6 of this subsection, the term ‘qualified State order’

7 means—

8 ‘‘(A) any State law which creates the right

9 of 1 or more individuals to receive all or part

10 of the benefits payable with respect to a partici11 pant under a plan if the beneficiary is convicted

12 of a crime involving the death of the partici13 pant, or

14 ‘‘(B) any qualified criminal restitution

15 order.

16 ‘‘(3) QUALIFIED CRIMINAL RESTITUTION

17 ORDER.—The term ‘qualified criminal restitution

18 order’ means a judgment, order, or decree—

19 ‘‘(A) which is issued by a State court in

20 connection with a criminal conviction of a bene21 ficiary under a plan involving the death of the

22 participant whose benefits are the subject of the

23 judgment, order, or decree,
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1 ‘‘(B)(i) which creates or recognizes a right

2 to attach all or a portion of the benefits payable

3 with respect to the participant under a plan, or

4 ‘‘(ii) which creates or recognizes the exist5 ence of a victim’s right to, or assigns to a vic6 tim the right to, receive all or a part of those

7 benefits, and

8 ‘‘(C) with respect to which the require9 ments of paragraphs (2) and (3) of section

10 414(p) are met (determined after application of

11 section 414(p)(4)), except that in applying such

12 paragraphs, the term ‘criminal restitution

13 order’ shall be substituted for the term ‘domes14 tic relations order’.

15 ‘‘(4) PLAN AND FIDUCIARY.—The provisions of

16 paragraphs (6) and (7) of section 414(p) shall apply

17 to any plan administrator or fiduciary of a plan to

18 which this paragraph applies.

19 ‘‘(5) SPECIAL RULES.—Rules similar to the

20 rules of paragraphs (9), (10), (11), and (12) of sec21 tion 414(p) shall apply for purposes of this sub22 section.’’

23 (2) TAX TREATMENT OF DISTRIBUTIONS.—
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1 (A) Section 402(e)(1) of such Code is

2 amended by adding at the end the following

3 new subparagraph:

4 ‘‘(C) CRIMINAL RESTITUTION ORDERS.—

5 Rules similar to the rules of subparagraphs (A)

6 and (B) shall apply to payments or distribu7 tions to individual pursuant to qualified State

8 orders described in section 401(o).’’

9 (B) Section 72(m)(10) of such Code is

10 amended—

11 (i) by adding at the end the following

12 new sentence: ‘‘The preceding sentence

13 shall also apply to payments or distribu14 tions made to individuals pursuant to a

15 qualified State order described in section

16 401(o).’’, and

17 (ii) by inserting ‘‘or qualified State or18 ders’’ after ‘‘orders’’ in the heading.

19 (C) Subparagraph (J) of section 402(d)(4)

20 of such Code is amended by adding at the end

21 the following new sentence: ‘‘This subparagraph

22 shall also apply to any distributions or pay23 ments to individuals pursuant to a qualified

24 State order described in section 401(o).’’
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1 (b) AMENDMENTS TO ERISA.—Section 514(b) of the

2 Employee Retirement Income Security Act of 1974 is

3 amended by redesignating paragraph (9) as paragraph

4 (10) and by adding at the end the following new para5 graph:

6 ‘‘(9)(A) If a State law provides that benefits payable

7 with respect to a participant under a plan shall not be

8 paid to a beneficiary if the beneficiary has been convicted

9 of a crime involving the death of the participant, then—

10 ‘‘(i) subsection (a) shall not apply to the State

11 law and such law shall apply to payment of benefits

12 under the plan, and

13 ‘‘(ii) notwithstanding section 205 or 206(d),

14 such benefits shall be payable—

15 ‘‘(I) in accordance with the terms of a

16 qualified State order, or

17 ‘‘(II) if there is no such order, in the same

18 manner as such benefits would be payable

19 under the terms of the plan if the beneficiary

20 were deceased.

21 ‘‘(B) For purposes of this paragraph, the term ‘quali22 fied State order’ means—

23 ‘‘(i) any State law which creates the right of 1

24 or more individuals to receive all or part of the bene25 fits payable with respect to a participant under a
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1 plan if the beneficiary is convicted of a crime involv2 ing the death of the participant, or

3 ‘‘(ii) any qualified criminal restitution order.

4 ‘‘(C) The term ‘qualified criminal restitution order’

5 means a judgment, order, or decree—

6 ‘‘(i) which is issued by a State court in connec7 tion with a criminal conviction of a beneficiary under

8 a plan involving the death of the participant whose

9 benefits are the subject of the judgment, order, or

10 decree,

11 ‘‘(ii)(I) which creates or recognizes a right to

12 attach all or a portion of the benefits payable with

13 respect to the participant under a plan, or

14 ‘‘(II) which creates or recognizes the existence

15 of a victim’s right to, or assigns to a victim the right

16 to, receive all or a part of those benefits, and

17 ‘‘(iii) with respect to which the requirements of

18 subparagraphs (C) and (D) of section 206(d)(3) are

19 met (determined after application of section

20 206(d)(3)(E)), except that in applying such para21 graphs, the term ‘criminal restitution order’ shall be

22 substituted for the term ‘domestic relations order’.

23 ‘‘(D) The provisions of subparagraphs (G), (H), and

24 (I) of section 206(d)(3) shall apply to any plan adminis-
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1 trator or fiduciary of a plan to which this paragraph ap2 plies.

3 ‘‘(E) Rules similar to the rules of subparagraphs (J),

4 (M), and (N) of section 206(D)(3) shall apply for purposes

5 of this subsection.’’

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

7 this section shall apply on and after the date of the enact8 ment of this Act.

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