I
103D CONGRESS
1ST SESSION
H. R. 2584
To amend the Internal Revenue Code of 1986 to provide equity in medical
benefits for retirees in multiemployer plans.
IN THE HOUSE OF REPRESENTATIVES
JULY 1, 1993
Mr. FOGLIETTA (for himself and Mr. BORSKI) introduced the following bill;
which was referred jointly to the Committees on Ways and Means and
Education and Labor
A BILL
To amend the Internal Revenue Code of 1986 to provide
equity in medical benefits for retirees in multiemployer plans.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Multiemployer Retirees
Medical Equity Benefits Act of 1993’’.
SEC. 2. USE OF MULTIEMPLOYER PLAN CONTRIBUTIONS
AND ASSETS FOR RETIREE HEALTH BENE-
FITS.
(a) GENERAL RULE.—Section 401 of the Internal
Revenue Code of 1986 is amended by redesignating sub-
section (o) as subsection (p) and by inserting after sub-
section (n) the following new subsection:
‘‘(o) USE
OF MULTIEMPLOYER PLAN CONTRIBU-
TIONS FOR RETIREE HEALTH BENEFITS.—
‘‘(1) IN GENERAL.—Amounts contributed to a
multiemployer pension plan shall be treated for all
purposes of this title as if they had been contributed
directly by the contributing employers, pursuant to
the designation of such employers, to a related re-
tiree medical benefits plan if—
‘‘(A) the trustees of the multiemployer
pension plan elect to transfer such amounts to
such related retiree medical benefit plan;
‘‘(B) such transfer is effected within 1
year after the close of the transfer year;
‘‘(C) the amount transferred does not ex-
ceed the permissible amount; and
‘‘(D) the amounts transferred in accord-
ance with this subsection are used exclusively to
provide health benefits for individuals (and
their beneficiaries) who have begun receiving
benefits under the related pension plan.
‘‘(2) DEFINITIONS.—For the purpose of this
subsection—
‘‘(A) PERMISSIBLE
AMOUNT.—The term
‘permissible amount’ means the excess of the
amount of contributions made to the pension
plan for the transfer year, over the amount of
contributions required to avoid a funding defi-
ciency for the transfer year under section 412.
‘‘(B) RETIREE MEDICAL BENEFIT PLAN.—
The term ‘retiree medical benefit plan’ means
either—
‘‘(i) a trust described in section
501(c)(9) at least a portion of the benefits
of which are provided with respect to re-
tired participants, or
‘‘(ii) a section 401(h) account.
‘‘(C) RELATED.—A retiree medical benefit
plan is related to a pension plan if at least 75
percent of those it covers are persons who have
begun receiving benefits under the pension plan
or are beneficiaries of such persons.
‘‘(D) MULTIEMPLOYER PLAN.—The term
‘multiemployer plan’ has the meaning given
such term by section 414(f).
‘‘(E) TRANSFER YEAR.—The term ‘trans-
fer year’ means the plan year for which the
transferred contributions were made to the mul-
tiemployer pension plan.’’
(b) MODIFICATIONS TO SECTION 420.—
(1) Section 420(a) of such Code is amended to
read as follows:
‘‘(a) GENERAL RULE.—If there is a qualified trans-
fer of any excess pension assets of a defined benefit plan
to a health benefits account which is part of such plan—
‘‘(1) a trust which is part of such plan shall not
be treated as failing to meet the requirements of
subsection (a) or (h) of section 401 solely by reason
of such transfer or any other action authorized
under this section;
‘‘(2) no amount shall be includible in the gross
income of an employer maintaining the plan solely
by reason of such transfer;
‘‘(3) such transfer shall not be treated—
‘‘(A) as an employer reversion for purposes
of section 4980, or
‘‘(B) as a prohibited transaction for pur-
poses of section 4975 or section 406 of the Em-
ployee Retirement Income Security Act, and
‘‘(4) the limitations of subsection (d) shall
apply to an employer maintaining the plan.’’
(2) Section 420(b)(3) of such Code is amended
to read as follows:
‘‘(3) LIMITATION ON AMOUNT TRANSFERRED.—
The amount of excess pension assets which may be
transferred in a qualified transfer shall not exceed
the amount which is reasonably estimated to be re-
quired to be paid (whether directly or through reim-
bursement) during the taxable year of the transfer
for qualified current retiree health liabilities.’’
(3) Section 420(c)(1)(B)(ii)(II) of such Code is
amended to read as follows:
‘‘(II) shall be treated as an em-
ployer reversion for purposes of sec-
tion 4980 (without regard to sub-
section (d) thereof) to the extent the
original transfer satisfied obligations
of an employer to provide retiree
health benefits (whether directly or
through an employer welfare benefit
plan sponsored by the employer).’’
(4) Section 420(c)(3) of such Code is amended
by adding at the end thereof the following new sub-
paragraph:
‘‘(E) SPECIAL
RULE
FOR
PLANS
MAIN-
TAINED BY MORE THAN 1 EMPLOYER.—For the
purposes of this section, in the case of a plan
maintained by more than 1 employer (as de-
fined in section 414(b) or (c)), the term ‘em-
ployer’ shall include an employee welfare benefit
plan providing retiree medical benefits and em-
ployers not subject to income tax for purposes
of subsections (c)(3) and (e)(1)(A). For pur-
poses of subsections (b)(3), (b)(5), (c)(3),
(d)(1), and (e)(1), the term ‘taxable year’ shall
also include the plan year of an employee wel-
fare benefit plan providing medical benefits
and, subject to regulations of the Secretary
based upon section 413(b), (c), and 404, the
taxable year of any employer contribution to
such a plan.’’
(5) Section 420(d)(2) of such Code is amended
to read as follows:
‘‘(2) NO CONTRIBUTIONS ALLOWED.—An em-
ployer may not contribute after December 31, 1991,
any amount to a health benefits account with respect
to qualified retiree health liabilities for which trans-
ferred assets are required to be used under sub-
section (c)(1). An employer may not contribute after
December 31, 1990, to any welfare benefit plan (as
defined in section 419(e)(1)) with respect to quali-
fied current retiree health liabilities for which trans-
ferred assets are required to be used under sub-
section (c)(1). For purposes of this section, a con-
tribution to a welfare benefit plan (as defined in sec-
tion 419(e)(1) which is not allocated to specific ben-
efits shall be allocated to current benefits for em-
ployees who have not retired, to reserves to the ex-
tent allowed under section 419, and then to qualified
retiree health liabilities.’’
(6) Section 420(e)(1)(A) of such Code is
amended to read as follows:
‘‘(A) IN
GENERAL.—The term ‘qualified
current retiree health liabilities’ means, with re-
spect to any taxable year, the aggregate
amounts (including administrative expenses)
which would have been allowable as a deduction
to the employer (whether or not subject to in-
come tax) for such taxable year with respect to
applicable health benefits provided during the
taxable year if—
‘‘(i) such benefits were provided di-
rectly by the employer, and
‘‘(ii) the employer used the cash re-
ceipts and disbursements method of ac-
counting.’’
(c) AMENDMENT TO ERISA.—Section 403 of the
Employee Retirement Income Security Act of 1974 is
amended by adding at the end thereof the following new
subsection:
‘‘(d) USE
OF MULTIEMPLOYER PLAN CONTRIBU-
TIONS FOR RETIREES HEALTH BENEFITS.—
‘‘(1) IN GENERAL.—Amounts contributed to a
multiemployer pension plan shall be treated for all
purposes as if they had been contributed directly by
the contributing employers, pursuant to the designa-
tion of such employers, to a related retiree medical
benefit plan if—
‘‘(A) the trustees of the multiemployer
pension plan elect to transfer such amounts to
such related retiree medical benefit plan;
‘‘(B) such transfer is effected within 1
year after the close of the transfer year;
‘‘(C) the amount transferred does not ex-
ceed the permissible amount; and
‘‘(D) amounts transferred in accordance
with this section are used exclusively to provide
health benefits for individuals (and their bene-
ficiaries) who have begun receiving benefits
under the related pension plan.
‘‘(2) DEFINITIONS.—For the purposes of this
subsection—
‘‘(A) PERMISSIBLE
AMOUNT.—The term
‘permissible amount’ means the excess of the
amount of contributions made to the pension
plan for the transfer year over the amount of
contributions required to avoid a funding defi-
ciency for the transfer year under section 412
of the Internal Revenue Code of 1986.
‘‘(B) RETIREE MEDICAL BENEFIT PLAN.—
The term ‘retiree medical benefit plan’ means
either—
‘‘(i) a trust described in section
501(c)(9) of such Code at least a portion
of the benefits of which are provided with
respect to retired participants, or
‘‘(ii) an Internal Revenue Code sec-
tion 401(h) account.
‘‘(C) RELATED.—A retiree medical benefit
plan is related to a pension plan if at least 75
percent of those it covers are persons who have
begun receiving benefits under the pension plan
or are beneficiaries of such persons.
‘‘(D) MULTIEMPLOYER.—The term ‘multi-
employer plan’ has the meaning given such
term by section 3(37).
‘‘(E) TRANSFER YEAR.—The term ‘trans-
fer year’ means the plan year for which the
transferred contributions were made to the mul-
tiemployer pension plan.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to taxable years beginnning after
December 31, 1992.
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