skills if such program has been approved by the 
State agency; 
‘‘(7) the State agency may require an employer 
to continue to provide health benefits, and retire-
ment benefits under a defined benefit pension plan 
(as defined in section 414(j)) to any employee whose 
workweek is reduced pursuant to the program as 
though the workweek of such employee had not been 
reduced; and 
‘‘(8) the State agency may require an employer 
(or an employers’ association which is party to a col-
lective bargaining agreement) to submit a written 
plan describing the manner in which the require-
ments of this subsection will be implemented and 
containing such other information as the Secretary 
of Labor determines is appropriate.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on October 1, 2002. 
SEC. 504. METHOD OF VERIFYING CITIZENSHIP STATUS 
FOR UNEMPLOYMENT BENEFITS. 
Nothing in Federal law shall be construed to require 
State agencies administering State unemployment com-
pensation laws to require applicants for unemployment 
benefits to present proof of citizenship or alien status in 
person.
SEC. 505. USE OF NEW HIRE INFORMATION TO ASSIST IN 
ADMINISTRATION OF UNEMPLOYMENT COM-
PENSATION PROGRAMS. 
Section 453(j) of the Social Security Act (42 U.S.C. 
653(j)) is amended by adding at the end the following: 
‘‘(7) INFORMATION COMPARISONS AND DISCLO-
SURE TO ASSIST IN ADMINISTRATION OF UNEMPLOY-
MENT COMPENSATION PROGRAMS.—
‘‘(A) IN GENERAL.—If, for purposes of ad-
ministering an unemployment compensation 
program under Federal or State law, a State 
agency responsible for the administration of 
such program transmits to the Secretary the 
names and social security account numbers of 
individuals, the Secretary shall disclose to such 
State agency information on such individuals 
and their employers maintained in the National 
Directory of New Hires, subject to this para-
graph. 
‘‘(B) CONDITION ON DISCLOSURE BY THE 
SECRETARY.—The Secretary shall make a dis-
closure under subparagraph (A) only to the ex-
tent that the Secretary determines that the dis-
closure would not interfere with the effective 
operation of the program under this part.
‘‘(C) USE AND DISCLOSURE OF INFORMA-
TION BY STATE AGENCIES.—
‘‘(i) IN
GENERAL.—A State agency 
may not use or disclose information pro-
vided under this paragraph except for pur-
poses of administering a program referred 
to in subparagraph (A). 
‘‘(ii) INFORMATION
SECURITY.—The 
State agency shall have in effect data secu-
rity and control policies that the Secretary 
finds adequate to ensure the security of in-
formation obtained under this paragraph 
and to ensure that access to such informa-
tion is restricted to authorized persons for 
purposes of authorized uses and disclo-
sures. 
‘‘(iii) PENALTY FOR MISUSE OF IN-
FORMATION.—An officer or employee of 
the State agency who fails to comply with 
this subparagraph shall be subject to sanc-
tions under subsection (l)(2) to the same 
extent as if the officer or employee were an 
officer or employee of the United States. 
‘‘(D) 
PROCEDURAL
REQUIREMENTS.—
State agencies requesting information under
this paragraph shall adhere to uniform proce-
dures established by the Secretary governing in-
formation requests and data matching under 
this paragraph. 
‘‘(E) REIMBURSEMENT
OF
COSTS.—The 
State agency shall reimburse the Secretary, in 
accordance with subsection (k)(3), for the costs 
incurred by the Secretary in furnishing the in-
formation requested under this paragraph.’’. 
SEC. 506. REPEAL OF PROVISION LIMITING ELIGIBILITY OF 
CERTAIN FEDERAL EMPLOYEES. 
Section 8501(1) of title 5 of the United States Code 
is amended—
(1) by striking subparagraph (E); and 
(2) 
by 
redesignating 
subparagraphs 
(F) 
through (L) as subparagraphs (E) through (K), re-
spectively. 
SEC. 507. TREATMENT OF PENSION ROLLOVERS. 
(a) IN GENERAL.—Section 3304(a)(15) of the Inter-
nal Revenue Code of 1986 (26 U.S.C. 3304(a)(15) is 
amended to read as follows—
‘‘(15)(A) the amount of compensation payable 
to an individual for any week which begins after 
March 31, 1980, and which begins in a period with 
respect to which such individual is receiving a gov-
ernmental or other pension, retirement or retired 
pay, annuity, or any other similar periodic payment 
which is based on the previous work of such indi-
vidual shall be reduced (but not below zero) by an 
amount equal to the amount of such pension, retire-
ment or retired pay, annuity, or other payment, 
which is reasonably attributable to such week except 
that—
‘‘(i) the requirements of this paragraph 
shall apply to any pension, retirement or retired 
pay, annuity, or other similar periodic payment 
only if—
‘‘(I) such pension, retirement or re-
tired pay, annuity, or similar payment is 
under a plan maintained (or contributed 
to) by a base period employer or charge-
able employer (as determined under appli-
cable law); and 
‘‘(II) in the case of such payment not 
made under the Social Security Act or the 
Railroad Retirement Act of 1974 (or the 
corresponding provisions of prior law), 
services performed for such employer by 
the individual after the beginning of the 
base period (or remuneration for such
services) affect eligibility for, or increase 
the amount of, such pension, retirement or 
retired pay, annuity, or similar payment; 
and 
‘‘(ii) the State law may provide for limita-
tions on the amount of any such a reduction to 
take into account contributions made by the in-
dividual for the pension, retirement or retired 
pay, annuity, or other similar periodic payment; 
and 
‘‘(B) the amount of compensation shall not be 
reduced on account of any payments of retirement 
annuities, pensions or other such payments which 
are rolled over into other funds and which are in-
cludible in gross income;’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall be effective for weeks of unemploy-
ment beginning at least 1 year after the date of the enact-
ment of this Act, except that in the case of a State in 
which the legislature does not meet in a regularly sched-
uled session during calendar year 2003, the amendments 
made by subsection (a) shall apply to weeks of unemploy-
ment beginning at least 2 years after the date of the enact-
ment of this Act.