H. R. 2488—151 
‘‘(vi) the transferee plan allows the participant or bene-
ficiary described in clause (iii) to receive any distribution to 
which the participant or beneficiary is entitled under the trans-
feree plan in the form of a single sum distribution. 
‘‘(B) Subparagraph (A) shall apply to plan mergers and other 
transactions having the effect of a direct transfer, including consoli-
dations of benefits attributable to different employers within a 
multiple employer plan. 
‘‘(5) ELIMINATION OF FORM OF DISTRIBUTION.—Except to the 
extent provided in regulations, a defined contribution plan shall 
not be treated as failing to meet the requirements of this section 
merely because of the elimination of a form of distribution pre-
viously available thereunder. This paragraph shall not apply to 
the elimination of a form of distribution with respect to any partici-
pant unless— 
‘‘(A) a single sum payment is available to such participant 
at the same time or times as the form of distribution being 
eliminated; and 
‘‘(B) such single sum payment is based on the same or 
greater portion of the participant’s account as the form of 
distribution being eliminated.’’. 
(3) EFFECTIVE DATE.—The amendments made by this sub-
section shall apply to years beginning after December 31, 2000. 
(b) REGULATIONS.— 
(1) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 
The last sentence of paragraph (6)(B) of section 411(d) (relating 
to accrued benefit not to be decreased by amendment) is 
amended to read as follows: ‘‘The Secretary shall by regulations 
provide that this subparagraph shall not apply to any plan 
amendment that does not adversely affect the rights of partici-
pants in a material manner.’’. 
(2) AMENDMENT TO ERISA.—The last sentence of section 
204(g)(2) of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 1054(g)(2)) is amended to read as follows: 
‘‘The Secretary of the Treasury shall by regulations provide 
that this paragraph shall not apply to any plan amendment 
that does not adversely affect the rights of participants in 
a material manner.’’. 
(3) SECRETARY DIRECTED.—Not later than December 31, 
2001, the Secretary of the Treasury is directed to issue final 
regulations under section 411(d)(6) of the Internal Revenue 
Code of 1986 and section 204(g) of the Employee Retirement 
Income Security Act of 1974, including the regulations required 
by the amendments made by this subsection. Such regulations 
shall apply to plan years beginning after December 31, 2001, 
or such earlier date as is specified by the Secretary of the 
Treasury. 
SEC. 1236. RATIONALIZATION OF RESTRICTIONS ON DISTRIBUTIONS. 
(a) MODIFICATION OF SAME DESK EXCEPTION.— 
(1) SECTION 401(k).— 
(A) Section 401(k)(2)(B)(i)(I) (relating to qualified cash 
or deferred arrangements) is amended by striking ‘‘separa-
tion from service’’ and inserting ‘‘severance from employ-
ment’’. 
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H. R. 2488—152 
(B) Subparagraph (A) of section 401(k)(10) (relating 
to distributions upon termination of plan or disposition 
of assets or subsidiary) is amended to read as follows: 
‘‘(A) IN GENERAL.—An event described in this subpara-
graph is the termination of the plan without establishment 
or maintenance of another defined contribution plan (other 
than an employee stock ownership plan as defined in sec-
tion 4975(e)(7)).’’. 
(C) Section 401(k)(10) is amended— 
(i) in subparagraph (B)— 
(I) by striking ‘‘An event’’ in clause (i) and 
inserting ‘‘A termination’’, and 
(II) by striking ‘‘the event’’ in clause (i) and 
inserting ‘‘the termination’’, 
(ii) by striking subparagraph (C), and 
(iii) by striking ‘‘OR DISPOSITION OF ASSETS OR SUB-
SIDIARY’’ in the heading. 
(2) SECTION 403(b).— 
(A) Paragraphs (7)(A)(ii) and (11)(A) of section 403(b) 
are each amended by striking ‘‘separates from service’’ 
and inserting ‘‘has a severance from employment’’. 
(B) The heading for paragraph (11) of section 403(b) 
is amended by striking ‘‘SEPARATION FROM SERVICE’’ and 
inserting ‘‘SEVERANCE FROM EMPLOYMENT’’. 
(3) SECTION
457.—Clause (ii) of section 457(d)(1)(A) is 
amended by striking ‘‘is separated from service’’ and inserting 
‘‘has a severance from employment’’. 
(b) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after December 31, 2000. 
SEC. 1237. PURCHASE OF SERVICE CREDIT IN GOVERNMENTAL 
DEFINED BENEFIT PLANS. 
(a) 403(b) PLANS.—Subsection (b) of section 403 is amended 
by adding at the end the following new paragraph: 
‘‘(13) 
TRUSTEE-TO-TRUSTEE
TRANSFERS
TO
PURCHASE 
PERMISSIVE SERVICE CREDIT.—No amount shall be includible 
in gross income by reason of a direct trustee-to-trustee transfer 
to a defined benefit governmental plan (as defined in section 
414(d)) if such transfer is— 
‘‘(A) for the purchase of permissive service credit (as 
defined in section 415(n)(3)(A)) under such plan, or 
‘‘(B) a repayment to which section 415 does not apply 
by reason of subsection (k)(3) thereof.’’. 
(b) 457 PLANS.— 
(1) Subsection (e) of section 457 is amended by adding 
after paragraph (16) the following new paragraph: 
‘‘(17) 
TRUSTEE-TO-TRUSTEE
TRANSFERS
TO
PURCHASE 
PERMISSIVE SERVICE CREDIT.—No amount shall be includible 
in gross income by reason of a direct trustee-to-trustee transfer 
to a defined benefit governmental plan (as defined in section 
414(d)) if such transfer is— 
‘‘(A) for the purchase of permissive service credit (as 
defined in section 415(n)(3)(A)) under such plan, or 
‘‘(B) a repayment to which section 415 does not apply 
by reason of subsection (k)(3) thereof.’’. 
(2) Section 457(b)(2) is amended by striking ‘‘(other than 
rollover amounts)’’ and inserting ‘‘(other than rollover amounts 
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H. R. 2488—153 
and amounts received in a transfer referred to in subsection 
(e)(17))’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to trustee-to-trustee transfers after December 31, 2000. 
SEC. 1238. EMPLOYERS MAY DISREGARD ROLLOVERS FOR PURPOSES 
OF CASH-OUT AMOUNTS. 
(a) QUALIFIED PLANS.— 
(1) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.— 
Section 411(a)(11) (relating to restrictions on certain mandatory 
distributions) is amended by adding at the end the following: 
‘‘(D) SPECIAL RULE FOR ROLLOVER CONTRIBUTIONS.— 
A plan shall not fail to meet the requirements of this 
paragraph if, under the terms of the plan, the present 
value of the nonforfeitable accrued benefit is determined 
without regard to that portion of such benefit which is 
attributable to rollover contributions (and earnings allo-
cable thereto). For purposes of this subparagraph, the term 
‘rollover contributions’ means any rollover contribution 
under sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), 
and 457(e)(16).’’. 
(2) AMENDMENT TO ERISA.—Section 203(e) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1053(c)) 
is amended by adding at the end the following: 
‘‘(4) A plan shall not fail to meet the requirements of this 
subsection if, under the terms of the plan, the present value of 
the nonforfeitable accrued benefit is determined without regard 
to that portion of such benefit which is attributable to rollover 
contributions (and earnings allocable thereto). For purposes of this 
subparagraph, the term ‘rollover contributions’ means any rollover 
contribution 
under 
sections 
402(c), 
403(a)(4), 
403(b)(8), 
408(d)(3)(A)(ii), and 457(e)(16) of the Internal Revenue Code of 
1986.’’. 
(b) ELIGIBLE DEFERRED COMPENSATION PLANS.—Clause (i) of 
section 457(e)(9)(A) is amended by striking ‘‘such amount’’ and 
inserting ‘‘the portion of such amount which is not attributable 
to rollover contributions (as defined in section 411(a)(11)(D))’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after December 31, 2000. 
SEC. 1239. MINIMUM DISTRIBUTION AND INCLUSION REQUIREMENTS 
FOR SECTION 457 PLANS. 
(a) MINIMUM DISTRIBUTION REQUIREMENTS.—Paragraph (2) of 
section 457(d) (relating to distribution requirements) is amended 
to read as follows: 
‘‘(2) MINIMUM DISTRIBUTION REQUIREMENTS.—A plan meets 
the minimum distribution requirements of this paragraph if 
such plan meets the requirements of section 401(a)(9).’’. 
(b) INCLUSION IN GROSS INCOME.— 
(1) YEAR
OF
INCLUSION.—Subsection (a) of section 457 
(relating to year of inclusion in gross income) is amended to 
read as follows: 
‘‘(a) YEAR OF INCLUSION IN GROSS INCOME.— 
‘‘(1) IN GENERAL.—Any amount of compensation deferred 
under an eligible deferred compensation plan, and any income 
attributable to the amounts so deferred, shall be includible 
in gross income only for the taxable year in which such com-
pensation or other income— 
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H. R. 2488—154 
‘‘(A) is paid to the participant or other beneficiary, 
in the case of a plan of an eligible employer described 
in subsection (e)(1)(A), and 
‘‘(B) is paid or otherwise made available to the partici-
pant or other beneficiary, in the case of a plan of an 
eligible employer described in subsection (e)(1)(B). 
‘‘(2) SPECIAL RULE FOR ROLLOVER AMOUNTS.—To the extent 
provided in section 72(t)(9), section 72(t) shall apply to any 
amount includible in gross income under this subsection.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) So much of paragraph (9) of section 457(e) as 
precedes subparagraph (A) is amended to read as follows: 
‘‘(9) BENEFITS OF TAX EXEMPT ORGANIZATION PLANS NOT 
TREATED AS MADE AVAILABLE BY REASON OF CERTAIN ELECTIONS, 
ETC.—In the case of an eligible deferred compensation plan 
of an employer described in subsection (e)(1)(B)—’’. 
(B) Section 457(d) is amended by adding at the end 
the following new paragraph: 
‘‘(3) SPECIAL
RULE
FOR
GOVERNMENT
PLAN.—An eligible 
deferred compensation plan of an employer described in sub-
section (e)(1)(A) shall not be treated as failing to meet the 
requirements of this subsection solely by reason of making 
a distribution described in subsection (e)(9)(A).’’. 
(c) EFFECTIVE DATE.—The amendments made by this section 
shall apply to distributions after December 31, 2000. 
Subtitle D—Strengthening Pension 
Security and Enforcement 
SEC. 1241. REPEAL OF 150 PERCENT OF CURRENT LIABILITY FUNDING 
LIMIT. 
(a) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.—Section 
412(c)(7) (relating to full-funding limitation) is amended— 
(1) by striking ‘‘the applicable percentage’’ in subparagraph 
(A)(i)(I) and inserting ‘‘in the case of plan years beginning 
before January 1, 2004, the applicable percentage’’, and 
(2) by amending subparagraph (F) to read as follows: 
‘‘(F) 
APPLICABLE
PERCENTAGE.—For 
purposes 
of 
subparagraph (A)(i)(I), the applicable percentage shall be 
determined in accordance with the following table: 
‘‘In the case of any plan year 
The applicable 
beginning in— 
percentage is— 
2001 .............................................................................................
160
2002 .............................................................................................
165
2003 .............................................................................................
170.’’. 
(b) AMENDMENT TO ERISA.—Section 302(c)(7) of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)(7)) is 
amended— 
(1) by striking ‘‘the applicable percentage’’ in subparagraph 
(A)(i)(I) and inserting ‘‘in the case of plan years beginning 
before January 1, 2004, the applicable percentage’’, and 
(2) by amending subparagraph (F) to read as follows: 
‘‘(F) 
APPLICABLE
PERCENTAGE.—For 
purposes 
of 
subparagraph (A)(i)(I), the applicable percentage shall be 
determined in accordance with the following table: 
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