II 

109TH CONGRESS 

1ST SESSION S. 991 

To amend title I of the Employee Retirement Income Security Act of 1974 

to limit the availability of benefits under an employer’s nonqualified 

deferred compensation plans in the event that any of the employer’s 

defined benefit pension plans are subjected to a distress or PBGC termination in connection with bankruptcy reorganization or a conversion 

to a cash balance plan, to provide appropriate funding restrictions in 

connection with the maintenance of nonqualified deferred compensation 

plans, and to provide for appropriate disclosure with respect to nonqualified deferred compensation plans. 

IN THE SENATE OF THE UNITED STATES 

MAY 10, 2005 

Mr. KENNEDY (for himself, Mr. DURBIN, Mr. HARKIN, and Mr. AKAKA) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions 

A BILL

To amend title I of the Employee Retirement Income Security Act of 1974 to limit the availability of benefits 

under an employer’s nonqualified deferred compensation 

plans in the event that any of the employer’s defined 

benefit pension plans are subjected to a distress or 

PBGC termination in connection with bankruptcy reorganization or a conversion to a cash balance plan, to provide appropriate funding restrictions in connection with 

the maintenance of nonqualified deferred compensation 

plans, and to provide for appropriate disclosure with 

respect to nonqualified deferred compensation plans.
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•S 991 IS

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; TABLE OF CONTENTS. 

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

5 ‘‘Pension Fairness and Full Disclosure Act of 2005’’. 

6 (b) TABLE OF CONTENTS.—The table of contents is 

7 as follows:

Sec. 1. Short title; table of contents. 

Sec. 2. Findings and purpose. 

TITLE I—FAIRNESS IN PLAN TERMINATIONS AND CONVERSIONS 

Sec. 101. Termination fairness standard for nonqualified deferred compensation 

plans in connection with pension plan terminations based on 

bankruptcy reorganization or in connection with conversions to 

cash balance plans. 

Sec. 102. Penalty on funding nonqualified deferred compensation plans in the 

event of a pension plan termination based on bankruptcy reorganization or a conversion of a pension plan to a cash balance 

plan. 

TITLE II—FAIRNESS IN FUNDING 

Sec. 201. Treatment under ERISA of employers that fund nonqualified deferred compensation plans while maintaining underfunded defined benefit plans. 

Sec. 202. Penalty on funding nonqualified deferred compensation plans while 

maintaining underfunded defined benefit plans. 

TITLE III—FAIRNESS IN DISCLOSURE 

Sec. 301. Disclosure with respect to benefits under nonqualified deferred compensation plans.

8 SEC. 2. FINDINGS AND PURPOSE. 

9 (a) FINDINGS.—The Congress finds as follows: 

10 (1) The pension system sponsored by private 

11 employers is in a weakened state due to industry12 wide crises, changing market forces, and the pres13 sures of globalization. 
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1 (2) Employers increasingly are terminating or 

2 reducing the benefits provided under traditional de3 fined benefit pension plans. 

4 (3) More than 44,000,000 workers, retirees, 

5 and their families depend on defined benefit pension 

6 plans as a critical component of their retirement se7 curity in addition to Social Security. 

8 (4) Many defined benefit pension plans are un9 derfunded and the Pension Benefit Guaranty Cor10 poration, the agency that insures traditional pen11 sions, has also gone into deficit. 

12 (5) Congress in enacting the Employee Retire13 ment Income Security Act of 1974 intended employ14 ers to adequately fund their pension plans and did 

15 not intend for the Pension Benefit Guaranty Cor16 poration to be used as a means for restructuring 

17 companies to escape their unfunded pension liabil18 ities, or circumvent collective bargaining obligations. 

19 (6) Cash balance pension plans often reduce 

20 traditional defined benefit pension obligations and 

21 adequate standards do not exist to adequately pro22 tect the pensions of pension plan participants, par23 ticularly older participants. 

24 (7) Corporate executives often preserve or en25 hance executive pension and other benefits at the 
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1 same time the benefits of non-highly paid employees 

2 are reduced. 

3 (b) PURPOSE.—It is the purpose of this Act to better 

4 protect the retirement benefits afforded to workers and 

5 retirees by protecting the solvency of the Pension Benefit 

6 Guaranty Corporation and ensuring equitable treatment 

7 of corporate executives as compared to treatment provided 

8 to other employees when restructuring employers shift un9 funded pension liabilities onto the Pension Benefit Guar10 anty Corporation or convert to cash balance pension plans 

11 without adequately protecting the retirement security of 

12 older workers. 

13 TITLE I—FAIRNESS IN PLAN 

14 TERMINATIONS AND CONVER15 SIONS 

16 SEC. 101. TERMINATION FAIRNESS STANDARD FOR NON17 QUALIFIED DEFERRED COMPENSATION 

18 PLANS IN CONNECTION WITH PENSION PLAN 

19 TERMINATIONS BASED ON BANKRUPTCY RE20 ORGANIZATION OR IN CONNECTION WITH 

21 CONVERSIONS TO CASH BALANCE PLANS. 

22 (a) IN GENERAL.—Section 206 of the Employee Re23 tirement Income Security Act of 1974 (29 U.S.C. 1056) 

24 is amended by adding at the end the following new sub25 section: 
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1 ‘‘(g) TERMINATION FAIRNESS STANDARD FOR NON2 QUALIFIED DEFERRED COMPENSATION PLANS IN CON3 NECTION WITH PENSION PLAN TERMINATIONS BASED

4 ON BANKRUPTCY REORGANIZATION OR IN CONNECTION

5 WITH CONVERSIONS TO CASH BALANCE PLANS.— 

6 ‘‘(1) IN GENERAL.—In any case in which a cor7 poration is a plan sponsor of a defined benefit plan 

8 with respect to which a plan amendment is adopted 

9 that has the effect of— 

10 ‘‘(A) implementing a distress termination 

11 of the plan under section 4041(c) based on 

12 bankruptcy reorganization or a termination of 

13 the plan initiated by the Pension Benefit Guar14 anty Corporation under section 4042 based on 

15 bankruptcy reorganization, in any case in which 

16 the plan is not sufficient for guaranteed bene17 fits (within the meaning of section 4041(d)(2)) 

18 as of the proposed termination date; or 

19 ‘‘(B) converting such plan to a cash bal20 ance plan, in any case in which the amend21 ment— 

22 ‘‘(i) results in a significant reduction 

23 in the rate of future benefit accruals (with24 in the meaning of section 204(h)(1)) of 
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1 participants with at least 10 years of serv2 ice under the plan; or 

3 ‘‘(ii) does not provide for an election 

4 by affected participants with at least 10 

5 years of service under the plan (and their 

6 beneficiaries) to retain coverage under the 

7 terms of the plan as in effect immediately 

8 prior to the amendment, 

9 any covered deferred compensation plan established 

10 or maintained by such plan sponsor after the date 

11 of the adoption of such plan amendment shall meet 

12 the termination fairness standard of this subsection 

13 with respect to such plan amendment. 

14 ‘‘(2) TERMINATION FAIRNESS STANDARD.—A 

15 covered deferred compensation plan established or 

16 maintained by a plan sponsor described in para17 graph (1) meets the termination fairness standard of 

18 this subsection with respect to a plan amendment 

19 described in paragraph (1) if, during the 5-year pe20 riod beginning on the date of the adoption of such 

21 plan amendment— 

22 ‘‘(A) no amount of deferred compensation 

23 accrues to a disqualified individual under the 

24 terms of such covered deferred compensation 

25 plan (irrespective of whether the accrual in de-
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•S 991 IS

1 ferred compensation is expressed in the form of 

2 a promise, a guarantee, or any other represen3 tation); and 

4 ‘‘(B) in the case of a covered deferred com5 pensation plan established during or after the 

6 1-year period preceding the notice date (or any 

7 amendment to a covered deferred compensation 

8 plan if such amendment is adopted during or 

9 after such 1-year period), no distribution of ac10 crued deferred compensation is made under 

11 such plan (or such amendment) to a disquali12 fied individual. 

13 ‘‘(3) DEFINITIONS.—For purposes of this sub14 section— 

15 ‘‘(A) CASH BALANCE PLAN.— 

16 ‘‘(i) IN GENERAL.—The term ‘cash 

17 balance plan’ means a defined benefit plan 

18 under which the accrued benefit is ex19 pressed to participants and beneficiaries as 

20 an amount other than an annual benefit 

21 commencing at normal retirement age. 

22 ‘‘(ii) REGULATIONS TO INCLUDE SIMI23 LAR OR OTHER HYBRID PLANS.—The Sec24 retary shall issue regulations which provide 

25 that a defined benefit plan (or any portion 
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1 of such a plan) which has an effect similar 

2 to a plan described in clause (i) shall be 

3 treated as a cash balance plan. Such regu4 lations may provide that if a plan sponsor 

5 represents in communications to partici6 pants and beneficiaries that a plan amend7 ment results in a plan being described in 

8 the preceding sentence, such plan shall be 

9 treated as a cash balance plan. 

10 ‘‘(B) NOTICE DATE.—The term ‘notice 

11 date’ means, with respect to an amendment de12 scribed in paragraph (1)— 

13 ‘‘(i) in the case of a distress termi14 nation under section 4041(c), the date of 

15 the advance notice of intent to terminate 

16 provided pursuant to section 4041(a)(2); 

17 ‘‘(ii) in the case of a termination initi18 ated by the Pension Benefit Guaranty Cor19 poration under section 4042, the date of 

20 the application to the court under section 

21 4042(c); and 

22 ‘‘(iii) in the case of a conversion to a 

23 cash balance plan, the date of the adoption 

24 of the amendment. 
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1 ‘‘(C) COVERED DEFERRED COMPENSATION

2 PLAN.— 

3 ‘‘(i) IN GENERAL.—The term ‘covered 

4 deferred compensation plan’ means any 

5 plan providing for the deferral of com6 pensation of a disqualified individual, 

7 whether or not— 

8 ‘‘(I) compensation of the dis9 qualified individual which is deferred 

10 under such plan is subject to substan11 tial risk of forfeiture; 

12 ‘‘(II) the disqualified individual’s 

13 rights to the compensation deferred 

14 under the plan are no greater than 

15 the rights of a general creditor of the 

16 plan sponsor; 

17 ‘‘(III) all amounts set aside (di18 rectly or indirectly) for purposes of 

19 paying the deferred compensation (in20 cluding income), and all income at21 tributable to such amounts, remain 

22 (until made available to the disquali23 fied individual or other beneficiary) 

24 solely the property of the plan sponsor 
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1 (without being restricted to the provi2 sion of benefits under the plan); 

3 ‘‘(IV) the amounts referred to in 

4 subclause (III) are available to satisfy 

5 the claims of the plan sponsor’s gen6 eral creditors at all times (not merely 

7 after bankruptcy or insolvency); and 

8 ‘‘(V) some or all of the com9 pensation of the disqualified individual 

10 which is deferred under such plan is 

11 guaranteed by an insurance company, 

12 insurance service, or other similar or13 ganization. 

14 ‘‘(ii) EXCEPTION FOR QUALIFIED

15 PLANS.—Such term shall not include a 

16 plan that is— 

17 ‘‘(I) described in section 

18 219(g)(5)(A) of the Internal Revenue 

19 Code of 1986; or 

20 ‘‘(II) an eligible deferred com21 pensation plan (as defined in section 

22 457(b) of such Code) of an eligible 

23 employer described in section 

24 457(e)(1)(A) of such Code. 
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1 ‘‘(iii) PLAN INCLUDES ARRANGE2 MENTS, ETC.—For purposes of this sub3 paragraph, the term ‘plan’ includes any 

4 agreement or arrangement. 

5 ‘‘(D) DISQUALIFIED INDIVIDUAL.—The 

6 term ‘disqualified individual’ means a director 

7 or executive officer of the plan sponsor. 

8 ‘‘(E) TERMINATION BASED ON BANK9 RUPTCY REORGANIZATION.—A termination of a 

10 plan which is a distress termination under sec11 tion 4041(c) or a termination instituted by the 

12 Pension Benefit Guaranty Corporation under 

13 section 4042 shall be treated as based on bank14 ruptcy reorganization if such termination is 

15 based in whole or in part on the filing, by or 

16 against any person who is a contributing spon17 sor of such plan or a member of such sponsor’s 

18 controlled group, of a petition seeking reorga19 nization in a case under title 11, United States 

20 Code, or under any similar law of a State or po21 litical subdivision of a State (or such a case in 

22 which liquidation is sought has been converted 

23 to a case in which reorganization is sought). 

24 ‘‘(F) TITLE IV TERMINOLOGY.—Any term 

25 used in this subsection which is defined in sec-
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•S 991 IS

1 tion 4001(a) shall have the meaning provided 

2 such term in section 4001(a). 

3 ‘‘(4) SPECIAL RULES.— 

4 ‘‘(A) COORDINATED BENEFITS.—If the 

5 benefits of 2 or more defined benefit plans es6 tablished or maintained by an employer are co7 ordinated in such a manner as to have the ef8 fect of the adoption of an amendment described 

9 in paragraph (1), the sponsor of the defined 

10 benefit plan or plans providing for such coordi11 nation shall be treated as having adopted such 

12 a plan amendment as of the date such coordina13 tion begins. 

14 ‘‘(B) MULTIPLE AMENDMENTS.—The Sec15 retary shall issue regulations to prevent the 

16 avoidance of the purposes of this subsection 

17 through the use of 2 or more plan amendments 

18 rather than a single amendment. 

19 ‘‘(C) CONTROLLED GROUPS, ETC.—For 

20 purposes of this subsection, all persons treated 

21 as a single employer under subsection (b), (c), 

22 (m), or (o) of section 414 of the Internal Rev23 enue Code of 1986 shall be treated as 1 em24 ployer. 
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1 ‘‘(D) TREATMENT OF EARNINGS.—Ref2 erences to deferred compensation shall be treat3 ed as including references to income attrib4 utable to such compensation or such income. 

5 ‘‘(5) WAIVER.— 

6 ‘‘(A) IN GENERAL.—In the case of any 

7 plan amendment having the effect of a termi8 nation described in paragraph (1)(A), the Sec9 retary may waive the application of any require10 ment of the termination fairness standard of 

11 section paragraph (2) with respect to any dis12 qualified individual who first commences service 

13 for the plan sponsor after the notice date with 

14 respect to such plan amendment. The Secretary 

15 may grant any such waiver in the case of any 

16 such plan amendment with respect to any such 

17 disqualified individual only after consultation 

18 with the Pension Benefit Guaranty Corporation. 

19 ‘‘(B) REQUIREMENTS FOR WAIVER.—A 

20 waiver may be granted under subparagraph (A) 

21 only— 

22 ‘‘(i) upon the filing with the Secretary 

23 by the plan sponsor of an application for 

24 such waiver, in such form and manner as 
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1 shall be prescribed in regulations of the 

2 Secretary; 

3 ‘‘(ii) upon a showing, to the satisfac4 tion of the Secretary, that such waiver is 

5 a business necessity for the plan sponsor, 

6 as determined under such regulations, and 

7 is in the interest of plan participants and 

8 beneficiaries, as determined under such 

9 regulations; and 

10 ‘‘(iii) after the participants, in such 

11 form and manner as shall be provided in 

12 such regulations, have been notified of the 

13 filing of the application for the waiver and 

14 have been provided a reasonable oppor15 tunity to provide in advance comments to 

16 the Secretary regarding the proposed waiv17 er. 

18 ‘‘(6) EFFECT OF WAIVER GRANTED BY SEC19 RETARY.—To the extent that any requirement of the 

20 termination fairness standard of this section is 

21 waived by the Secretary with respect to any disquali22 fied individual under paragraph (5) in the case of 

23 any plan amendment having the effect of a termi24 nation described in paragraph (1)(A), such require25 ment under the termination fairness standard of 
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1 paragraph (2) shall not apply with respect to such 

2 individual in the case of such plan amendment.’’. 

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

4 this section shall apply to— 

5 (1) plan amendments adopted on or after May 

6 10, 2005; and 

7 (2) plan amendments adopted before such date 

8 implementing a plan termination as described in sec9 tion 206(g)(1) of the Employee Retirement Income 

10 Security Act of 1974 (as added by this section) 

11 based on a bankruptcy reorganization in a case 

12 under title 11 of the United States Code (or under 

13 any similar law of a State or a political subdivision 

14 of a State) pending on such date. 

15 SEC. 102. PENALTY ON FUNDING NONQUALIFIED DE16 FERRED COMPENSATION PLANS IN THE 

17 EVENT OF A PENSION PLAN TERMINATION 

18 BASED ON BANKRUPTCY REORGANIZATION 

19 OR A CONVERSION OF A PENSION PLAN TO A 

20 CASH BALANCE PLAN. 

21 (a) IN GENERAL.—Section 502 of the Employee Re22 tirement Income Security Act of 1974 (29 U.S.C. 1132) 

23 is amended— 

24 (1) in subsection (a)— 
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1 (A) in paragraph (8), by striking ‘‘; or’’ 

2 and inserting a semicolon; 

3 (B) in paragraph (9), by striking the pe4 riod and inserting ‘‘; or’’; and 

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

6 ‘‘(10) by a fiduciary of a defined benefit plan 

7 described in section 206(g) to enjoin any act or 

8 practice that violates such section and to obtain re9 lief described under subsection (c)(8).’’; and 

10 (2) in subsection (c), by— 

11 (A) redesignating paragraph (8) as para12 graph (9); and 

13 (B) inserting after paragraph (7) the fol14 lowing: 

15 ‘‘(8) In an action pursuant to subsection 

16 (a)(10), if the court finds a violation of section 

17 206(g), the court shall order the plan sponsor to pay 

18 to the defined benefit plan an amount equal to the 

19 amount of the accrual described in section 

20 206(g)(2)(A) comprising the failure or the amount 

21 of the distribution described in section 206(g)(2)(B) 

22 comprising the failure, whichever is applicable.’’. 

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

24 this section shall apply to— 
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1 (1) plan amendments adopted on or after May 

2 10, 2005; and 

3 (2) plan amendments adopted before such date 

4 implementing a plan termination as described in sec5 tion 206(g)(1) of the Employee Retirement Income 

6 Security Act of 1974 (as added by this section) 

7 based on a bankruptcy reorganization in a case 

8 under title 11 of the United States Code (or under 

9 any similar law of a State or a political subdivision 

10 of a State) pending on such date. 

11 TITLE II—FAIRNESS IN FUNDING 

12 SEC. 201. PROHIBITION UNDER ERISA AGAINST FUNDING 

13 NONQUALIFIED DEFERRED COMPENSATION 

14 PLANS WHILE MAINTAINING UNDERFUNDED 

15 DEFINED BENEFIT PLANS. 

16 (a) IN GENERAL.—Part 3 of subtitle B of title I of 

17 the Employee Retirement Income Security Act of 1974 is 

18 amended— 

19 (1) by redesignating section 308 as section 309; 

20 and 

21 (2) by inserting after section 307 the following 

22 new section: 
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1 ‘‘SEC. 308. FUNDING REQUIREMENTS WITH RESPECT TO 

2 UNDERFUNDED SINGLE-EMPLOYER DEFINED 

3 BENEFIT PLAN VIOLATED BY FUNDING OF 

4 COVERED DEFERRED COMPENSATION PLAN. 

5 ‘‘(a) IN GENERAL.—In any case in which, as of the 

6 valuation date for any plan year of a defined benefit plan 

7 which is a single-employer plan, the funded current liabil8 ity percentage of such plan is less than 75 percent, during 

9 the period beginning with such date and ending imme10 diately before the valuation date for the following plan 

11 year— 

12 ‘‘(1) the plan sponsor of such defined benefit 

13 plan (or any member of the plan sponsor’s controlled 

14 group) may not contribute to a covered deferred 

15 compensation plan maintained by the plan sponsor 

16 (or any such member); and 

17 ‘‘(2) a disqualified individual may not accrue 

18 any amount of deferred compensation under the 

19 terms of any covered deferred compensation plan 

20 maintained by the plan sponsor of such defined ben21 efit plan (or by any member of the plan sponsor’s 

22 controlled group), irrespective of whether the accrual 

23 in deferred compensation is expressed in the form of 

24 a promise, a guarantee, or any other representation. 

25 ‘‘(b) DEFINITIONS; SPECIAL RULE.—For purposes of 

26 this section— 
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1 ‘‘(1) The term ‘funded current liability percent2 age’ has the meaning provided in section 

3 302(d)(8)(B). 

4 ‘‘(2) The term ‘covered deferred compensation 

5 plan’ has the meaning provided in section 

6 206(g)(3)(C). 

7 ‘‘(3) The term ‘disqualified individual’ has the 

8 meaning provided in section 206(g)(3)(D). 

9 ‘‘(4) The term ‘controlled group’ has the mean10 ing provided in section 302(c)(11)(B)(ii). 

11 ‘‘(5) Any reference to deferred compensation 

12 shall be treated as including references to income at13 tributable to such compensation or income. 

14 ‘‘(c) WAIVER.— 

15 ‘‘(1) IN GENERAL.—The Secretary may waive 

16 the application of any requirement with respect to 

17 any contribution described in subsection (a)(1) or 

18 any accrual described in subsection (a)(2). The Sec19 retary may grant such waiver only after consultation 

20 with the Pension Benefit Guaranty Corporation. 

21 ‘‘(2) REQUIREMENTS FOR WAIVER.—A waiver 

22 may be granted under paragraph (1) only— 

23 ‘‘(A) upon the filing with the Secretary by 

24 the plan sponsor of an application for such 
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1 waiver, in such form and manner as shall be 

2 prescribed in regulations of the Secretary; 

3 ‘‘(B) upon a showing, to the satisfaction of 

4 the Secretary, that such waiver is a business 

5 necessity for the plan sponsor, as determined 

6 under such regulations, and is in the interest of 

7 plan participants and beneficiaries, as deter8 mined under such regulations; and 

9 ‘‘(C) after the participants, in such form 

10 and manner as shall be provided in such regula11 tions, have been notified of the filing of the ap12 plication for the waiver and have been provided 

13 a reasonable opportunity to provide in advance 

14 comments to the Secretary regarding the pro15 posed waiver. 

16 ‘‘(d) EFFECT OF WAIVER.—To the extent that a 

17 waiver is granted by the Secretary under subsection (c) 

18 with respect to any contribution described in subsection 

19 (a)(1) or any accrual described in subsection (a)(2), the 

20 requirements of subsection (a) shall not apply with respect 

21 to such contribution or accrual.’’. 

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

23 in section 1 of such Act is amended by striking the item 

24 relating to section 308 and inserting the following new 

25 items:
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‘‘Sec. 308. Funding requirements with respect to underfunded single-employer defined benefit plan violated by funding of covered 

deferred compensation plan. 

‘‘Sec. 309. Effective dates.’’.

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

2 this section shall apply with respect to plan years begin3 ning on or after January 1, 2006. 

4 SEC. 202. PENALTY ON FUNDING NONQUALIFIED DE5 FERRED COMPENSATION PLANS WHILE 

6 MAINTAINING UNDERFUNDED DEFINED BEN7 EFIT PLANS. 

8 (a) IN GENERAL.—Subsection 502 of the Employee 

9 Retirement Income Security Act of 1974 (29 U.S.C. 1132) 

10 is amended— 

11 (1) in subsection (a)(10) (as added by section 

12 101), by inserting ‘‘or 308’’ after ‘‘206(g)’’; and 

13 (2) in subsection (c) (as amended by section 

14 101), by amending paragraph (8) to read as follows: 

15 ‘‘(8) In an action pursuant to subsection 

16 (a)(10), if the court finds a violation— 

17 ‘‘(A) of section 206(g), the court shall 

18 order the plan sponsor to pay to the defined 

19 benefit plan an amount equal to the amount of 

20 the accrual described in section 206(g)(2)(A) 

21 comprising the failure or the distribution de22 scribed in section 206(g)(2)(B) comprising the 

23 failure, whichever is applicable; and 
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1 ‘‘(B) of section 308, the court shall order 

2 the plan sponsor to pay to the defined benefit 

3 plan an amount equal to the amount of any de4 ferred compensation accrued to a disqualified 

5 individual in violation of such section.’’. 

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

7 this section shall apply with respect to plan years begin8 ning on or after January 1, 2006. 

9 TITLE III—FAIRNESS IN 

10 DISCLOSURE 

11 SEC. 301. DISCLOSURE WITH RESPECT TO BENEFITS 

12 UNDER NONQUALIFIED DEFERRED COM13 PENSATION PLANS. 

14 (a) IN GENERAL.—Section 101 of the Employee Re15 tirement Income Security Act of 1974 (29 U.S.C. 1021) 

16 is amended— 

17 (1) by redesignating subsection (j) as sub18 section (k); and 

19 (2) by inserting after subsection (i) the fol20 lowing new subsection: 

21 ‘‘(j) DISCLOSURE WITH RESPECT TO BENEFITS

22 UNDER COVERED DEFERRED COMPENSATION PLANS.— 

23 ‘‘(1) IN GENERAL.—In any case in which— 

24 ‘‘(A) an amendment to a pension plan is 

25 adopted which has the effect of— 
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1 ‘‘(i) eliminating future benefit accru2 als under the plan; 

3 ‘‘(ii) converting the plan to a cash bal4 ance plan in a case described in section 

5 206(g)(1)(B); 

6 ‘‘(iii) reducing the rate of future ben7 efit accruals under the plan (in the case of 

8 a defined benefit plan); or 

9 ‘‘(iv) reducing future employer con10 tributions under the plan (in the case of a 

11 defined contribution plan); or 

12 ‘‘(B) the plan administrator of a pension 

13 plan has filed under section 4041(a)(2) a notice 

14 of intent to terminate such plan in a distress 

15 termination under section 4041(c) based on 

16 bankruptcy reorganization or, in advance of fil17 ing such a notice, has filed a motion with the 

18 court in the proceedings relating to such bank19 ruptcy reorganization seeking approval to com20 mence proceedings for such a distress termi21 nation, 

22 the plan administrator shall provide to each plan 

23 participant and beneficiary a notice under this sub24 section with respect to each covered deferred com25 pensation plan maintained by the plan sponsor of 
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1 the pension plan (and each member of the plan 

2 sponsor’s controlled group). 

3 ‘‘(2) NOTICE.—A notice required under this 

4 subsection with respect to a covered deferred com5 pensation plan shall set forth, in language calculated 

6 to be understood by the average pension plan partic7 ipant— 

8 ‘‘(A) a complete summary description of 

9 the terms of the covered deferred compensation 

10 plan; 

11 ‘‘(B) the actuarial present value of the 

12 benefit liabilities of the covered deferred com13 pensation plan, as of the most recent valuation 

14 date of such plan; 

15 ‘‘(C) any additional cost to the plan spon16 sor (or to the member of the plan sponsor’s 

17 controlled group), for the preceding plan year of 

18 such plan, of maintaining such covered deferred 

19 compensation plan, including tax expenditures 

20 attributable to the maintenance of such plan 

21 (or, if not known on the date of the notice, a 

22 reasonable estimation thereof); and 

23 ‘‘(D) in any case described in paragraph 

24 (1)(B)— 
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1 ‘‘(i) a statement that the notice of in2 tent to terminate or motion has been filed; 

3 and 

4 ‘‘(ii) a statement of the extent to 

5 which the actuarial present value of benefit 

6 liabilities of the pension plan referred to in 

7 paragraph (1)(B) is expected to be reduced 

8 by reason of the termination. 

9 ‘‘(3) TIMING OF NOTICE.—A notice under this 

10 subsection shall be provided— 

11 ‘‘(A) not later than 15 days after— 

12 ‘‘(i) the date of the adoption of the 

13 amendment described in paragraph (1)(A); 

14 or 

15 ‘‘(ii) the date of the notice of intent to 

16 terminate described in paragraph (1)(B), 

17 (as the case may be), and 

18 ‘‘(B) in the same manner as is provided 

19 under section 104(b)(1) with respect to sum20 mary descriptions of plan modifications or 

21 changes. 

22 ‘‘(4) DEFINITIONS; SPECIAL RULE.—For pur23 poses of this subsection— 

24 ‘‘(A) The term ‘cash balance plan’ has the 

25 meaning provided in section 206(g)(3)(A). 
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1 ‘‘(B) The term ‘covered deferred com2 pensation plan’ has the meaning provided in 

3 section 206(g)(3)(C). 

4 ‘‘(C) The term ‘controlled group’ has the 

5 meaning provided in section 302(c)(11)(B)(ii). 

6 ‘‘(D) Whether a termination of a plan 

7 which is a distress termination under section 

8 4041(c) is based on bankruptcy reorganization 

9 shall be determined as provided in section 

10 206(g)(3)(E).’’. 

11 (b) ENFORCEMENT.—Section 502(c)(1) of such Act 

12 (29 U.S.C. 1132(c)(1)) is amended by striking ‘‘or section 

13 101(e)(1)’’ and inserting ‘‘or subsection (e)(1) or (j)(1) 

14 of section 101’’. 

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

16 this section shall apply with respect to— 

17 (1) plan amendments adopted on or after Janu18 ary 1, 2006; and 

19 (2) notices of intent to terminate or motions 

20 (described in section 101(j)(1)(B) of the Employee 

21 Retirement Income Security Act of 1974) (as added 

22 by this section) filed on or after such date.

Æ