764
provide for the filing of a simplified annual return for any 
retirement plan which covers less than 25 participants on 
the first day of a plan year and which meets the require-
ments described in subparagraphs (B), (D), and (E) of 
subsection (a)(2). 
SEC. 1104. VOLUNTARY EARLY RETIREMENT INCENTIVE 
AND EMPLOYMENT RETENTION PLANS MAIN-
TAINED BY LOCAL EDUCATIONAL AGENCIES 
AND OTHER ENTITIES. 
(a) VOLUNTARY EARLY RETIREMENT INCENTIVE 
PLANS.—
(1) TREATMENT AS PLAN PROVIDING SEVER-
ANCE PAY.—Section 457(e)(11) of the Internal Rev-
enue Code of 1986 (relating to certain plans ex-
cluded) is amended by adding at the end the fol-
lowing new subparagraph: 
‘‘(D) CERTAIN VOLUNTARY EARLY RETIRE-
MENT INCENTIVE PLANS.—
‘‘(i) IN
GENERAL.—If an applicable 
voluntary early retirement incentive plan—
‘‘(I) makes payments or supple-
ments as an early retirement benefit, 
a retirement-type subsidy, or a benefit 
described in the last sentence of sec-
tion 411(a)(9), and
765
‘‘(II) such payments or supple-
ments are made in coordination with 
a defined benefit plan which is de-
scribed in section 401(a) and includes 
a trust exempt from tax under section 
501(a) and which is maintained by an 
eligible employer described in para-
graph (1)(A) or by an education asso-
ciation described in clause (ii)(II), 
such applicable plan shall be treated for 
purposes of subparagraph (A)(i) as a bona 
fide severance pay plan with respect to 
such payments or supplements to the ex-
tent such payments or supplements could 
otherwise have been provided under such 
defined benefit plan (determined as if sec-
tion 411 applied to such defined benefit 
plan). 
‘‘(ii) APPLICABLE VOLUNTARY EARLY 
RETIREMENT INCENTIVE PLAN.—For pur-
poses of this subparagraph, the term ‘ap-
plicable voluntary early retirement incen-
tive plan’ means a voluntary early retire-
ment incentive plan maintained by—
766
‘‘(I) a local educational agency 
(as defined in section 9101 of the Ele-
mentary and Secondary Education 
Act of 1965 (20 U.S.C. 7801)), or 
‘‘(II) an education association 
which principally represents employees 
of 1 or more agencies described in 
subclause (I) and which is described 
in section 501(c) (5) or (6) and ex-
empt from tax under section 501(a).’’
(2) AGE
DISCRIMINATION
IN
EMPLOYMENT 
ACT.—Section 4(l)(1) of the Age Discrimination in 
Employment Act of 1967 (29 U.S.C. 623(l)(1)) is 
amended—
(A) by inserting ‘‘(A)’’ after ‘‘(1)’’, 
(B) by redesignating subparagraphs (A) 
and (B) as clauses (i) and (ii), respectively, 
(C) by redesignating clauses (i) and (ii) of 
subparagraph (B) (as in effect before the 
amendments made by subparagraph (B)) as 
subclauses (I) and (II), respectively, and 
(D) by adding at the end the following: 
‘‘(B) A voluntary early retirement incentive 
plan that—
‘‘(i) is maintained by—
767
‘‘(I) a local educational agency (as de-
fined in section 9101 of the Elementary 
and Secondary Education Act of 1965 (20 
U.S.C. 7801), or 
‘‘(II) an education association which 
principally represents employees of 1 or 
more agencies described in subclause (I) 
and which is described in section 501(c) 
(5) or (6) of the Internal Revenue Code of 
1986 and exempt from taxation under sec-
tion 501(a) of such Code, and 
‘‘(ii) makes payments or supplements de-
scribed in subclauses (I) and (II) of subpara-
graph (A)(ii) in coordination with a defined 
benefit plan (as so defined) maintained by an 
eligible 
employer 
described 
in 
section 
457(e)(1)(A) of such Code or by an education 
association described in clause (i)(II), 
shall be treated solely for purposes of subparagraph 
(A)(ii) as if it were a part of the defined benefit plan 
with respect to such payments or supplements. Pay-
ments or supplements under such a voluntary early 
retirement incentive plan shall not constitute sever-
ance pay for purposes of paragraph (2).’’. 
(b) EMPLOYMENT RETENTION PLANS.—
768
(1) IN GENERAL.—Section 457(f)(2) of the In-
ternal Revenue Code of 1986 (relating to exceptions) 
is amended by striking ‘‘and’’ at the end of subpara-
graph (D), by striking the period at the end of sub-
paragraph (E) and inserting ‘‘, and’’, and by adding 
at the end the following: 
‘‘(F) that portion of any applicable employ-
ment retention plan described in paragraph (4) 
with respect to any participant.’’
(2) DEFINITIONS AND RULES RELATING TO EM-
PLOYMENT RETENTION PLANS.—Section 457(f) of 
such Code is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(4) EMPLOYMENT
RETENTION
PLANS.—For 
purposes of paragraph (2)(F)—
‘‘(A) IN GENERAL.—The portion of an ap-
plicable employment retention plan described in 
this paragraph with respect to any participant 
is that portion of the plan which provides bene-
fits payable to the participant not in excess of 
twice the applicable dollar limit determined 
under subsection (e)(15). 
‘‘(B) OTHER RULES.—
‘‘(i) LIMITATION.—Paragraph (2)(F) 
shall only apply to the portion of the plan
769
described in subparagraph (A) for years 
preceding the year in which such portion is 
paid or otherwise made available to the 
participant. 
‘‘(ii) TREATMENT.—A plan shall not 
be treated for purposes of this title as pro-
viding for the deferral of compensation for 
any year with respect to the portion of the 
plan described in subparagraph (A). 
‘‘(C) APPLICABLE
EMPLOYMENT
RETEN-
TION PLAN.—The term ‘applicable employment 
retention plan’ means an employment retention 
plan maintained by—
‘‘(i) a local educational agency (as de-
fined in section 9101 of the Elementary 
and Secondary Education Act of 1965 (20 
U.S.C. 7801), or 
‘‘(ii) an education association which 
principally represents employees of 1 or 
more agencies described in clause (i) and 
which is described in section 501(c) (5) or 
(6) and exempt from taxation under sec-
tion 501(a). 
‘‘(D) EMPLOYMENT
RETENTION
PLAN.—
The term ‘employment retention plan’ means a
770
plan to pay, upon termination of employment, 
compensation to an employee of a local edu-
cational agency or education association de-
scribed in subparagraph (C) for purposes of—
‘‘(i) retaining the services of the em-
ployee, or 
‘‘(ii) rewarding such employee for the 
employee’s service with 1 or more such 
agencies or associations.’’. 
(c) COORDINATION WITH ERISA.—Section 3(2)(B) 
of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1002(2)(B)) is amended by adding at the end 
the following: ‘‘An applicable voluntary early retirement 
incentive plan (as defined in section 457(e)(11)(D)(ii) of 
the Internal Revenue Code of 1986) making payments or 
supplements described in section 457(e)(11)(D)(i) of such 
Code, and an applicable employment retention plan (as de-
fined in section 457(f)(4)(C) of such Code) making pay-
ments of benefits described in section 457(f)(4)(A) of such 
Code, shall, for purposes of this title, be treated as a wel-
fare plan (and not a pension plan) with respect to such 
payments and supplements.’’
(d) EFFECTIVE DATES.—
771
(1) IN GENERAL.—The amendments made by 
this Act shall take effect on the date of the enact-
ment of this Act. 
(2) 
TAX
AMENDMENTS.—The 
amendments 
made by subsections (a)(1) and (b) shall apply to 
taxable years ending after the date of the enactment 
of this Act. 
(3) ERISA AMENDMENTS.—The amendment 
made by subsection (c) shall apply to plan years 
ending after the date of the enactment of this Act. 
(4) CONSTRUCTION.—Nothing in the amend-
ments made by this section shall alter or affect the 
construction of the Internal Revenue Code of 1986, 
the Employee Retirement Income Security Act of 
1974, or the Age Discrimination in Employment Act 
of 1967 as applied to any plan, arrangement, or con-
duct to which such amendments do not apply. 
SEC. 1105. NO REDUCTION IN UNEMPLOYMENT COMPENSA-
TION AS A RESULT OF PENSION ROLLOVERS. 
(a) IN GENERAL.—Section 3304(a) of the Internal 
Revenue Code of 1986 (relating to requirements for State 
unemployment laws) is amended by adding at the end the 
following new flush sentence: 
‘‘Compensation shall not be reduced under paragraph (15) 
for any pension, retirement or retired pay, annuity, or
772
similar payment which is not includible in gross income 
of the individual for the taxable year in which paid because 
it was part of a rollover distribution.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to weeks beginning on or after the 
date of the enactment of this Act. 
SEC. 1106. REVOCATION OF ELECTION RELATING TO 
TREATMENT AS MULTIEMPLOYER PLAN. 
(a) AMENDMENT TO ERISA.—Section 3(37) of the 
Employee Retirement Income Security Act of 1974 is 
amended by adding at the end the following new subpara-
graph (G): 
‘‘(G)(i) Within 1 year after the enactment of 
the Pension Protection Act of 2006—
‘‘(I) an election under subparagraph (E) 
may be revoked, pursuant to procedures pre-
scribed by the Pension Benefit Guaranty Cor-
poration, if, for each of the 3 plan years prior 
to the date of the enactment of that Act, the 
plan would have been a multiemployer plan but 
for the election under subparagraph (E), and 
‘‘(II) a plan that meets the criteria in 
clauses (i) and (ii) of subparagraph (A) of this 
paragraph or that is described in clause (vi) 
may, pursuant to procedures prescribed by the
773
Pension Benefit Guaranty Corporation, elect to 
be a multiemployer plan, if—
‘‘(aa) for each of the 3 plan years im-
mediately before the date of the enactment 
of the Pension Protection Act of 2006, the 
plan has met those criteria or is so de-
scribed, 
‘‘(bb) substantially all of the plan’s 
employer contributions for each of those 
plan years were made or required to be 
made by organizations that were exempt 
from tax under section 501 of the Internal 
Revenue Code of 1986, and 
‘‘(cc) the plan was established prior to 
September 2, 1974. 
‘‘(ii) An election under this paragraph shall be 
effective for all purposes under this Act and under 
the Internal Revenue Code of 1986, starting with 
the first plan year ending after the date of the en-
actment of the Pension Protection Act of 2006. 
‘‘(iii) Once made, an election under this para-
graph shall be irrevocable, except that a plan de-
scribed in subclause (i)(II) shall cease to be a multi-
employer plan as of the plan year beginning imme-
diately after the first plan year for which the major-
774
ity of its employer contributions were made or re-
quired to be made by organizations that were not ex-
empt from tax under section 501 of the Internal 
Revenue Code of 1986. 
‘‘(iv) The fact that a plan makes an election 
under clause (i)(II) does not imply that the plan was 
not a multiemployer plan prior to the date of the 
election or would not be a multiemployer plan with-
out regard to the election. 
‘‘(v)(I) No later than 30 days before an election 
is made under this paragraph, the plan adminis-
trator shall provide notice of the pending election to 
each plan participant and beneficiary, each labor or-
ganization representing such participants or bene-
ficiaries, and each employer that has an obligation 
to contribute to the plan, describing the principal 
differences between the guarantee programs under 
title IV and the benefit restrictions under this title 
for single employer and multiemployer plans, along 
with such other information as the plan adminis-
trator chooses to include. 
‘‘(II) Within 180 days after the date of enact-
ment of the Pension Protection Act of 2006, the 
Secretary shall prescribe a model notice under this 
subparagraph.
775
‘‘(III) A plan administrator’s failure to provide 
the notice required under this subparagraph shall be 
treated for purposes of section 502(c)(2) as a failure 
or refusal by the plan administrator to file the an-
nual report required to be filed with the Secretary 
under section 101(b)(4). 
‘‘(vi) A plan is described in this clause if it is 
a plan—
‘‘(I) that was established in Chicago, Illi-
nois, on August 12, 1881; and 
‘‘(II) sponsored by an organization de-
scribed in section 501(c)(5) of the Internal Rev-
enue Code of 1986 and exempt from tax under 
section 501(a) of such Code.’’. 
(b) AMENDMENT TO INTERNAL REVENUE CODE.—
Subsection (f) of section 414 of the Internal Revenue Code 
of 1986 is amended by adding at the end the following 
new paragraph (6): 
‘‘(6) ELECTION
WITH
REGARD
TO
MULTIEM-
PLOYER STATUS.—
‘‘(A) Within 1 year after the enactment of 
the Pension Protection Act of 2006—
‘‘(i) An election under paragraph (5) 
may be revoked, pursuant to procedures 
prescribed by the Pension Benefit Guar-