I
107TH CONGRESS
1ST SESSION
H. R. 2370
To amend the Internal Revenue Code of 1986 to modify the exception from
the treatment of welfare benefit funds for 10-or-more employer plans.
IN THE HOUSE OF REPRESENTATIVES
JUNE 28, 2001
Mr. WELLER (for himself and Mr. NEAL of Massachusetts) introduced the
following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to modify
the exception from the treatment of welfare benefit funds
for 10-or-more employer 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 ‘‘Small Business Wel-
fare Benefits Protection Act’’.
SEC. 2. MODIFICATION OF EXCEPTION FOR 10-OR-MORE
EMPLOYER PLANS FROM TREATMENT OF
WELFARE BENEFIT FUNDS.
(a) IN GENERAL.—Paragraph (6) of section 419A(f)
of the Internal Revenue Code of 1986 (relating to excep-
tion for 10-or-more employer plans) is amended by adding
at the end the following new subparagraphs:
‘‘(C) 
EXPERIENCE-RATING
ARRANGE-
MENT.—For purposes of subparagraph (A), a
plan does not maintain an experience-rating ar-
rangement if it provides that, at all times, all
plan assets are available as a single, undivided
pool to provide benefits to the covered employ-
ees of all individual employers participating in
the plan.
‘‘(D) ANTIDISCRIMINATION
RULE.—Sub-
paragraph (A) shall not apply to a 10 or more
employer plan unless—
‘‘(i) benefits under the plan are avail-
able to all covered employees under the
same formula,
‘‘(ii) the plan benefits each employee
who has attained at least the age of 21,
who works 1,000 hours or more annually,
and who has completed at least 1 year of
service (as defined in section 410(a)(3)),
‘‘(iii) all benefit formulas under the
plan provide a uniform multiple of com-
pensation to all participants, except that
highly compensated employees can have a
lower benefit than the uniform multiple of
compensation provided,
‘‘(iv) upon employer termination from
the trust—
‘‘(I) all eligible employees are en-
titled to a pro rata share of the plan’s
assets, and
‘‘(II) benefit payments include
payment to all former eligible employ-
ees terminated 24 months or less
prior to employer termination from
the trust,
‘‘(v) for each employer group, there is
at least 1 employee participating in the
plan who is not an owner-employee for
every 2 owner-employees participating in
the plan, and
‘‘(vi) the trust maintains a ratio of
plan participants that is at least 3 employ-
ees who are not owner-employees to each
owner-employee.
For purposes of this subparagraph, the term
‘owner-employee’ has the meaning given to such
term by section 416(i).
‘‘(E) DISTRIBUTION
OF
BENEFITS
AND
PLAN
ASSETS.—Subparagraph (A) shall not
apply to a 10 or more employer plan unless—
‘‘(i) none of the assets of the plan
may revert to any employer,
‘‘(ii) no loan may be made under the
plan to any employee, and
‘‘(iii) upon termination of employer
participation in the trust—
‘‘(I) for plans without severance
benefits, an employer may terminate
participation in the trust only if all
employees of the employer receive a
pro rata share of the benefits,
‘‘(II) for plans with severance
benefits, plan assets used to fund sev-
erance benefits can be distributed only
for severance benefits which are lim-
ited to 200 percent of so much of the
annual compensation as does not ex-
ceed the limitation under section
401(a)(17), and payable over not
more than 24 months, or other bene-
fits as provided under the plan, and