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employer cost determined under subsection
(c)(3)(A) with respect to the transfer.
‘‘(ii) ELECTION
TO
MAINTAIN
BENE-
FITS.—An employer may elect, in lieu of
the requirements of clause (i), to meet the
requirements of subsection (c)(3) by meeting
the requirements of such subsection (as in
effect before the amendments made by sec-
tion 535 of the Tax Relief Extension Act of
1999) for each of the years described in the
period under clause (i).
‘‘(3) COORDINATION WITH OTHER TRANSFERS.—
In applying subsection (b)(3) to any subsequent
transfer during a taxable year in a transfer period,
qualified current retiree health liabilities shall be re-
duced by any such liabilities taken into account with
respect to the qualified future transfer to which such
period relates.
‘‘(4) TRANSFER PERIOD.—For purposes of this
subsection, the term ‘transfer period’ means, with re-
spect to any transfer, a period of consecutive taxable
years specified in the election under paragraph (1)
which begins and ends during the 10-taxable-year pe-
riod beginning with the taxable year of the transfer.’’.
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(b) EFFECTIVE DATE.—The amendments made by this
section shall apply to transfers after the date of the enact-
ment of this Act.
SEC. 1332. SPECIAL RULES FOR FUNDING OF COLLEC-
TIVELY BARGAINED RETIREE HEALTH BENE-
FITS.
(a) COLLECTIVELY BARGAINED TRANSFER TREATED
AS A QUALIFIED TRANSFER.—
(1) IN GENERAL.—Section 420(b) of the Internal
Revenue Code of 1986 (defining qualified transfer) is
amended by redesignating paragraph (5) as para-
graph (6) and by inserting after paragraph (4) the
following new paragraph:
‘‘(5) A collectively bargained transfer (as defined
in subsection (e)(5)) shall be treated as a qualified
transfer.’’.
(2) CONFORMING AMENDMENTS.—
(A) Subparagraph (B) of section 420(b)(2)
of such Code is amended by inserting ‘‘or a col-
lectively bargained transfer’’ after ‘‘paragraph
(4)’’.
(B) Paragraph (3) of section 420(b) of such
Code is amended to read as follows:
‘‘(3) LIMITATION ON AMOUNT TRANSFERRED.—
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‘‘(A) IN GENERAL.—The amount of excess
pension assets which may be transferred in a
qualified transfer (other than a collectively bar-
gained transfer) shall not exceed the amount
which is reasonably estimated to be the amount
the employer maintaining the plan will pay
(whether directly or through reimbursement) out
of such account during the taxable year of the
transfer for qualified current retiree health li-
abilities.
‘‘(B) EXCEPTION FOR COLLECTIVELY BAR-
GAINED TRANSFERS.—The amount of excess pen-
sion assets which may be transferred in a collec-
tively bargained transfer shall not exceed the
amount which is reasonably estimated, in ac-
cordance with the provisions of the collective bar-
gaining agreement and generally accepted ac-
counting principles, to be the amount the em-
ployer maintaining the plan will pay (whether
directly or through reimbursement) out of such
account during the collectively bargained cost
maintenance period for collectively bargained re-
tiree health liabilities.’’.
(b) REQUIREMENTS OF PLANS MAKING COLLECTIVELY
BARGAINED TRANSFERS.—
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(1) IN
GENERAL.—Paragraph (1) of section
420(c) of the Internal Revenue Code of 1986 (relating
to requirements of plan transferring assets) is amend-
ed to read as follows:
‘‘(1) USE OF TRANSFERRED ASSETS.—
‘‘(A) IN GENERAL.—Except in the case of a
collectively bargained transfer, any assets trans-
ferred to a health benefits account in a qualified
transfer (and any income allocable thereto) shall
be used only to pay qualified current retiree
health liabilities (other than liabilities of key em-
ployees not taken into account under subsection
(e)(1)(D)) for the taxable year of the transfer
(whether directly or through reimbursement).
‘‘(B) COLLECTIVELY
BARGAINED
TRANS-
FER.—Any assets transferred to a health benefits
account in a collectively bargained transfer (and
any income allocable thereto) shall be used only
to pay collectively bargained retiree health liabil-
ities (other than liabilities of key employees not
taken into account under subsection (e)(6)(D))
for the taxable year of the transfer or for any
subsequent taxable year during the collectively
bargained cost maintenance period (whether di-
rectly or through reimbursement).
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‘‘(C) AMOUNTS
NOT
USED
TO
PAY
FOR
HEALTH BENEFITS.—
‘‘(i) IN GENERAL.—Any assets trans-
ferred to a health benefits account in a
qualified transfer (and any income allocable
thereto) which are not used as provided in
subparagraph (A) (in the case of a qualified
transfer other than a collectively bargained
transfer) or cannot be used as provided in
subparagraph (B) (in the case of a collec-
tively bargained transfer) shall be trans-
ferred out of the account to the transferor
plan.
‘‘(ii) TAX TREATMENT OF AMOUNTS.—
Any amount transferred out of an account
under clause (i)—
‘‘(I) shall not be includible in the
gross income of the employer, but
‘‘(II) shall be treated as an em-
ployer reversion for purposes of section
4980 (without regard to subsection (d)
thereof).
‘‘(D) ORDERING
RULE.—For purposes of
this section, any amount paid out of a health
benefits account shall be treated as paid first out