I
107TH CONGRESS
2D SESSION
H. R. 3918
To amend the Employee Retirement Income Security Act of 1974 to simplify
reporting and disclosure requirements, to provide Pension Benefit Guar-
antee Corporation premium relief, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 7, 2002
Mr. PORTMAN (for himself, Mr. CARDIN, Mr. BOEHNER, and Mr. POMEROY)
introduced the following bill; which was referred to the Committee on
Education and the Workforce, and in addition to the Committee on Ways
and Means, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the juris-
diction of the committee concerned
A BILL
To amend the Employee Retirement Income Security Act
of 1974 to simplify reporting and disclosure require-
ments, to provide Pension Benefit Guarantee Corporation
premium relief, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Pension Improvement Act of 2002’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title.
Sec. 2. Periodic pension benefits statements.
Sec. 3. Reporting simplification.
Sec. 4. Improvement of Employee Plans Compliance Resolution System.
Sec. 5. Flexibility in nondiscrimination, coverage, and line of business rules.
Sec. 6. Extension to all Governmental plans of moratorium on application of
certain nondiscrimination rules applicable to State and local
plans.
Sec. 7. Notice and consent period regarding distributions.
Sec. 8. Annual report dissemination.
Sec. 9. Technical corrections to Saver Act.
Sec. 10. Missing participants.
Sec. 11. Reduced PBGC premium for new plans of small employers.
Sec. 12. Reduction of additional PBGC premium for new and small plans.
Sec. 13. Authorization for PBGC to pay interest on premium overpayment re-
funds.
Sec. 14. Substantial owner benefits in terminated plans.
Sec. 15. Civil penalties for breach of fiduciary responsibility.
Sec. 16. Benefit suspension notice.
Sec. 17. Studies.
Sec. 18. Provisions relating to plan amendments.
SEC. 2. PERIODIC PENSION BENEFITS STATEMENTS.
(a) IN GENERAL.—Section 105(a) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1025
(a)) is amended to read as follows:
‘‘SEC. 105. (a)(1)(A) The administrator of an indi-
vidual account plan shall furnish a pension benefit
statement—
‘‘(i) to a plan participant at least once annually,
and
‘‘(ii) to a plan beneficiary upon written request.
‘‘(B) The administrator of a defined benefit plan
shall furnish a pension benefit statement—
‘‘(i) at least once every 3 years to each
participant with a nonforfeitable accrued ben-
efit who is employed by the employer maintain-
ing the plan at the time the statement is fur-
nished to participants, and
‘‘(ii) to a plan participant or plan bene-
ficiary of the plan upon written request.
‘‘(2) A pension benefit statement under paragraph
(1)—
‘‘(A) shall indicate, on the basis of the latest
available information—
‘‘(i) the total benefits accrued, and
‘‘(ii) the nonforfeitable pension benefits, if
any, which have accrued, or the earliest date on
which benefits will become nonforfeitable,
‘‘(B) shall be written in a manner calculated to
be understood by the average plan participant, and
‘‘(C) may be provided in written, electronic, or
other appropriate form.
‘‘(3)(A) In the case of a defined benefit plan, the re-
quirements of paragraph (1)(B)(i) shall be treated as met
with respect to a participant if the administrator provides
the participant at least once each year with notice of the
availability of the pension benefit statement and the ways
in which the participant may obtain such statement. Such
notice shall be provided in written, electronic, or other ap-
propriate form, and may be included with other commu-
nications to the participant if done in a manner reasonably
designed to attract the attention of the participant.
‘‘(B) The Secretary may provide that years in which
no employee or former employee benefits (within the
meaning of section 410(b) of the Internal Revenue Code
of 1986) under the plan need not be taken into account
in determining the 3-year period under paragraph
(1)(B)(i).’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 105 of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C. 1025) is
amended by striking subsection (d).
(2) Section 105(b) of such Act (29 U.S.C.
1025(b)) is amended to read as follows:
‘‘(b) In no case shall a participant or beneficiary of
a plan be entitled to more than one statement described
in subsection (a)(1)(A) or (a)(1)(B)(ii), whichever is appli-
cable, in any 12-month period.’’.
(c) MODEL STATEMENTS.—The Secretary of Labor
shall develop a model benefit statement, written in a man-
ner calculated to be understood by the average plan partic-
ipant, that may be used by plan administrators in com-
plying with the requirements of section 105 of the Em-
ployee Retirement Income Security Act of 1974.
(d) EFFECTIVE DATE.—The provisions of subsection
(a) shall take effect for plan years beginning on or after
January 1, 2003.
SEC. 3. REPORTING SIMPLIFICATION.
(a) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
OWNERS AND THEIR SPOUSES.—
(1) IN GENERAL.—The Secretary of the Treas-
ury and the Secretary of Labor shall modify the re-
quirements for filing annual returns with respect to
one-participant retirement plans to ensure that such
plans with assets of $250,000 or less as of the close
of the plan year need not file a return for that year.
(2) ONE-PARTICIPANT RETIREMENT PLAN DE-
FINED.—For purposes of this subsection, the term
‘‘one-participant retirement plan’’ means a retire-
ment plan that—
(A) on the first day of the plan year—
(i) covered only the employer (and the
employer’s spouse) and the employer
owned the entire business (whether or not
incorporated); or
(ii) covered only one or more partners
(and their spouses) in a business partner-
ship (including partners in an S or C cor-
poration);
(B) meets the minimum coverage require-
ments of section 410(b) of the Internal Revenue
Code of 1986 without being combined with any
other plan of the business that covers the em-
ployees of the business;
(C) does not provide benefits to anyone ex-
cept the employer (and the employer’s spouse)
or the partners (and their spouses);
(D) does not cover a business that is a
member of an affiliated service group, a con-
trolled group of corporations, or a group of
businesses under common control; and
(E) does not cover a business that leases
employees.
(3) OTHER DEFINITIONS.—Terms used in para-
graph (2) which are also used in section 414 of the
Internal Revenue Code of 1986 shall have the re-
spective meanings given such terms by such section.
(4) EFFECTIVE DATE.—The provisions of this
subsection shall apply to plan years beginning on or
after January 1, 2002.
(b) SIMPLIFIED ANNUAL FILING REQUIREMENT FOR
PLANS WITH FEWER THAN 25 EMPLOYEES.—In the case
of plan years beginning after December 31, 2003, the Sec-
retary of the Treasury and the Secretary of Labor shall
provide for the filing of a simplified annual return for any
retirement plan which covers less than 25 employees on
the first day of a plan year and which meets the require-
ments described in subparagraphs (B), (D), and (E) of
subsection (a)(2).
SEC. 4. IMPROVEMENT OF EMPLOYEE PLANS COMPLIANCE
RESOLUTION SYSTEM.
The Secretary of the Treasury shall continue to up-
date and improve the Employee Plans Compliance Resolu-
tion System (or any successor program) giving special at-
tention to—
(1) increasing the awareness and knowledge of
small employers concerning the availability and use
of the program;
(2) taking into account special concerns and
circumstances that small employers face with respect
to compliance and correction of compliance failures;
(3) extending the duration of the self-correction
period under the Self-Correction Program for signifi-
cant compliance failures;
(4) expanding the availability to correct insig-
nificant compliance failures under the Self-Correc-
tion Program during audit; and
(5) assuring that any tax, penalty, or sanction
that is imposed by reason of a compliance failure is
not excessive and bears a reasonable relationship to
the nature, extent, and severity of the failure.
The Secretary of the Treasury shall have full authority
to effectuate the foregoing with respect to the Employee
Plans Compliance Resolution System (or any successor
program) and any other employee plans correction poli-
cies, including the authority to waive income, excise, or
other taxes to ensure that any tax, penalty, or sanction
is not excessive and bears a reasonable relationship to the
nature, extent, and severity of the failure.
SEC. 5. FLEXIBILITY IN NONDISCRIMINATION, COVERAGE,
AND LINE OF BUSINESS RULES.
(a) NONDISCRIMINATION.—
(1) IN GENERAL.—The Secretary of the Treas-
ury shall, by regulation, provide that a plan shall be
deemed to satisfy the requirements of section
401(a)(4) of the Internal Revenue Code of 1986 if
such plan satisfies the facts and circumstances test
under section 401(a)(4) of such Code, as in effect
before January 1, 1994, but only if—
(A) the plan satisfies conditions prescribed
by the Secretary to appropriately limit the
availability of such test; and
(B) the plan is submitted to the Secretary
for a determination of whether it satisfies such
test.
Subparagraph (B) shall only apply to the extent pro-
vided by the Secretary.
(2) EFFECTIVE DATES.—
(A) REGULATIONS.—The regulation re-
quired by paragraph (1) shall apply to years be-
ginning after December 31, 2003.
(B) CONDITIONS OF AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under paragraph (1)(A) shall not apply
before the first year beginning not less than
120 days after the date on which such condition
is prescribed.
(b) COVERAGE TEST.—
(1) IN GENERAL.—Section 410(b)(1) of the In-
ternal Revenue Code of 1986 (relating to minimum
coverage requirements) is amended by adding at the
end the following:
‘‘(D) In the case that the plan fails to
meet the requirements of subparagraphs (A),
(B) and (C), the plan—
‘‘(i) satisfies subparagraph (B), as in
effect immediately before the enactment of
the Tax Reform Act of 1986,
‘‘(ii) is submitted to the Secretary for
a determination of whether it satisfies the
requirement described in clause (i), and
‘‘(iii) satisfies conditions prescribed by
the Secretary by regulation that appro-
priately limit the availability of this sub-
paragraph.
Clause (ii) shall apply only to the extent pro-
vided by the Secretary.’’.
(2) EFFECTIVE DATES.—
(A) IN GENERAL.—The amendment made
by paragraph (1) shall apply to years beginning
after December 31, 2003.
(B) CONDITIONS OF AVAILABILITY.—Any
condition of availability prescribed by the Sec-
retary under regulations prescribed by the Sec-
retary under section 410(b)(1)(D) of the Inter-
nal Revenue Code of 1986 shall not apply be-
fore the first year beginning not less than 120
days after the date on which such condition is
prescribed.
by inserting after ‘‘fiduciary or other person’’ the fol-
lowing: ‘‘(or from any other person on behalf of any such
fiduciary or other person)’’.
(c) OTHER RULES.—Section 502(l) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1132(l)) is amended by adding at the end the following
new paragraphs:
‘‘(5) A person shall be jointly and severally liable for
the penalty described in paragraph (1) to the same extent
that such person is jointly and severally liable for the ap-
plicable recovery amount on which the penalty is based.
‘‘(6) No penalty shall be assessed under this sub-
section unless the person against whom the penalty is as-
sessed is given notice and opportunity for a hearing with
respect to the violation and applicable recovery amount.’’.
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to any breach of fiduciary responsi-
bility or other violation of part 4 of subtitle B of title I
of the Employee Retirement Income Security Act of 1974
occurring on or after the date of the enactment of this
Act.
SEC. 16. BENEFIT SUSPENSION NOTICE.
(a) MODIFICATION OF REGULATION.—The Secretary
of Labor shall modify the regulation under subparagraph
(B) of section 203(a)(3) of the Employee Retirement In-