H. R. 1836—103
‘‘(h)(1) An applicable pension plan may not be amended so
as to provide for a significant reduction in the rate of future benefit
accrual unless the plan administrator provides the notice described
in paragraph (2) to each applicable individual (and to each employee
organization representing applicable individuals).
‘‘(2) The notice required by paragraph (1) shall be written
in a manner calculated to be understood by the average plan partici-
pant and shall provide sufficient information (as determined in
accordance with regulations prescribed by the Secretary of the
Treasury) to allow applicable individuals to understand the effect
of the plan amendment. The Secretary of the Treasury may provide
a simplified form of notice for, or exempt from any notice require-
ment, a plan—
‘‘(A) which has fewer than 100 participants who have
accrued a benefit under the plan, or
‘‘(B) which offers participants the option to choose between
the new benefit formula and the old benefit formula.
‘‘(3) Except as provided in regulations prescribed by the Sec-
retary of the Treasury, the notice required by paragraph (1) shall
be provided within a reasonable time before the effective date
of the plan amendment.
‘‘(4) Any notice under paragraph (1) may be provided to a
person designated, in writing, by the person to which it would
otherwise be provided.
‘‘(5) A plan shall not be treated as failing to meet the require-
ments of paragraph (1) merely because notice is provided before
the adoption of the plan amendment if no material modification
of the amendment occurs before the amendment is adopted.
‘‘(6)(A) In the case of any egregious failure to meet any require-
ment of this subsection with respect to any plan amendment, the
provisions of the applicable pension plan shall be applied as if
such plan amendment entitled all applicable individuals to the
greater of—
‘‘(i) the benefits to which they would have been entitled
without regard to such amendment, or
‘‘(ii) the benefits under the plan with regard to such amend-
ment.
‘‘(B) For purposes of subparagraph (A), there is an egregious
failure to meet the requirements of this subsection if such failure
is within the control of the plan sponsor and is—
‘‘(i) an intentional failure (including any failure to promptly
provide the required notice or information after the plan
administrator discovers an unintentional failure to meet the
requirements of this subsection),
‘‘(ii) a failure to provide most of the individuals with most
of the information they are entitled to receive under this sub-
section, or
‘‘(iii) a failure which is determined to be egregious under
regulations prescribed by the Secretary of the Treasury.
‘‘(7) The Secretary of the Treasury may by regulations allow
any notice under this subsection to be provided by using new
technologies.
‘‘(8) For purposes of this subsection—
‘‘(A) The term ‘applicable individual’ means, with respect
to any plan amendment—
‘‘(i) each participant in the plan; and
H. R. 1836—104
‘‘(ii) any beneficiary who is an alternate payee (within
the meaning of section 206(d)(3)(K)) under an applicable
qualified domestic relations order (within the meaning of
section 206(d)(3)(B)(i)),
whose rate of future benefit accrual under the plan may reason-
ably be expected to be significantly reduced by such plan
amendment.
‘‘(B) The term ‘applicable pension plan’ means—
‘‘(i) any defined benefit plan; or
‘‘(ii) an individual account plan which is subject to
the funding standards of section 412 of the Internal Rev-
enue Code of 1986.
‘‘(9) For purposes of this subsection, a plan amendment which
eliminates or significantly reduces any early retirement benefit
or retirement-type subsidy (within the meaning of subsection
(g)(2)(A)) shall be treated as having the effect of significantly
reducing the rate of future benefit accrual.’’.
(c) EFFECTIVE DATES.—
(1) IN GENERAL.—The amendments made by this section
shall apply to plan amendments taking effect on or after the
date of the enactment of this Act.
(2) TRANSITION.—Until such time as the Secretary of the
Treasury issues regulations under sections 4980F(e)(2) and (3)
of the Internal Revenue Code of 1986, and section 204(h) of
the Employee Retirement Income Security Act of 1974, as added
by the amendments made by this section, a plan shall be
treated as meeting the requirements of such sections if it makes
a good faith effort to comply with such requirements.
(3) SPECIAL NOTICE RULE.—
(A) IN GENERAL.—The period for providing any notice
required by the amendments made by this section shall
not end before the date which is 3 months after the date
of the enactment of this Act.
(B) REASONABLE NOTICE.—The amendments made by
this section shall not apply to any plan amendment taking
effect on or after the date of the enactment of this Act
if, before April 25, 2001, notice was provided to participants
and beneficiaries adversely affected by the plan amendment
(or their representatives) which was reasonably expected
to notify them of the nature and effective date of the
plan amendment.
Subtitle F—Reducing Regulatory Burdens
SEC. 661. MODIFICATION OF TIMING OF PLAN VALUATIONS.
(a) IN GENERAL.—Paragraph (9) of section 412(c) (relating to
annual valuation) is amended to read as follows:
‘‘(9) ANNUAL VALUATION.—
‘‘(A) IN GENERAL.—For purposes of this section, a deter-
mination of experience gains and losses and a valuation
of the plan’s liability shall be made not less frequently
than once every year, except that such determination shall
be made more frequently to the extent required in par-
ticular cases under regulations prescribed by the Secretary.
‘‘(B) VALUATION DATE.—
H. R. 1836—105
‘‘(i) CURRENT YEAR.—Except as provided in clause
(ii), the valuation referred to in subparagraph (A) shall
be made as of a date within the plan year to which
the valuation refers or within one month prior to the
beginning of such year.
‘‘(ii) USE OF PRIOR YEAR VALUATION.—The valu-
ation referred to in subparagraph (A) may be made
as of a date within the plan year prior to the year
to which the valuation refers if, as of such date, the
value of the assets of the plan are not less than 125
percent of the plan’s current liability (as defined in
paragraph (7)(B)).
‘‘(iii) ADJUSTMENTS.—Information under clause (ii)
shall, in accordance with regulations, be actuarially
adjusted to reflect significant differences in partici-
pants.’’.
(b) AMENDMENT OF ERISA.—Paragraph (9) of section 302(c)
of the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1053(c)) is amended—
(1) by inserting ‘‘(A)’’ after ‘‘(9)’’, and
(2) by adding at the end the following:
‘‘(B)(i) Except as provided in clause (ii), the valuation referred
to in subparagraph (A) shall be made as of a date within the
plan year to which the valuation refers or within one month prior
to the beginning of such year.
‘‘(ii) The valuation referred to in subparagraph (A) may be
made as of a date within the plan year prior to the year to which
the valuation refers if, as of such date, the value of the assets
of the plan are not less than 125 percent of the plan’s current
liability (as defined in paragraph (7)(B)).
‘‘(iii) Information under clause (ii) shall, in accordance with
regulations, be actuarially adjusted to reflect significant differences
in participants.’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to plan years beginning after December 31, 2001.
SEC. 662. ESOP DIVIDENDS MAY BE REINVESTED WITHOUT LOSS OF
DIVIDEND DEDUCTION.
(a) IN GENERAL.—Section 404(k)(2)(A) (defining applicable divi-
dends) is amended by striking ‘‘or’’ at the end of clause (ii), by
redesignating clause (iii) as clause (iv), and by inserting after clause
(ii) the following new clause:
‘‘(iii) is, at the election of such participants or
their beneficiaries—
‘‘(I) payable as provided in clause (i) or (ii),
or
‘‘(II) paid to the plan and reinvested in quali-
fying employer securities, or’’.
(b) STANDARDS
FOR
DISALLOWANCE.—Section 404(k)(5)(A)
(relating to disallowance of deduction) is amended by inserting
‘‘avoidance or’’ before ‘‘evasion’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to taxable years beginning after December 31, 2001.
SEC. 663. REPEAL OF TRANSITION RULE RELATING TO CERTAIN
HIGHLY COMPENSATED EMPLOYEES.
(a) IN GENERAL.—Paragraph (4) of section 1114(c) of the Tax
Reform Act of 1986 is hereby repealed.
H. R. 1836—106
(b) EFFECTIVE DATE.—The repeal made by subsection (a) shall
apply to plan years beginning after December 31, 2001.
SEC. 664. EMPLOYEES OF TAX-EXEMPT ENTITIES.
(a) IN GENERAL.—The Secretary of the Treasury shall modify
Treasury 
Regulations 
section 
1.410(b)–6(g) 
to 
provide 
that
employees of an organization described in section 403(b)(1)(A)(i)
of the Internal Revenue Code of 1986 who are eligible to make
contributions under section 403(b) of such Code pursuant to a
salary reduction agreement may be treated as excludable with
respect to a plan under section 401(k) or (m) of such Code that
is provided under the same general arrangement as a plan under
such section 401(k), if—
(1) no employee of an organization described in section
403(b)(1)(A)(i) of such Code is eligible to participate in such
section 401(k) plan or section 401(m) plan; and
(2) 95 percent of the employees who are not employees
of an organization described in section 403(b)(1)(A)(i) of such
Code are eligible to participate in such plan under such section
401(k) or (m).
(b) EFFECTIVE DATE.—The modification required by subsection
(a) shall apply as of the same date set forth in section 1426(b)
of the Small Business Job Protection Act of 1996.
SEC. 665. CLARIFICATION OF TREATMENT OF EMPLOYER-PROVIDED
RETIREMENT ADVICE.
(a) IN GENERAL.—Subsection (a) of section 132 (relating to
exclusion from gross income) is amended by striking ‘‘or’’ at the
end of paragraph (5), by striking the period at the end of paragraph
(6) and inserting ‘‘, or’’, and by adding at the end the following
new paragraph:
‘‘(7) qualified retirement planning services.’’.
(b) QUALIFIED RETIREMENT PLANNING SERVICES DEFINED.—Sec-
tion 132 is amended by redesignating subsection (m) as subsection
(n) and by inserting after subsection (l) the following:
‘‘(m) QUALIFIED RETIREMENT PLANNING SERVICES.—
‘‘(1) IN GENERAL.—For purposes of this section, the term
‘qualified retirement planning services’ means any retirement
planning advice or information provided to an employee and
his spouse by an employer maintaining a qualified employer
plan.
‘‘(2) NONDISCRIMINATION
RULE.—Subsection (a)(7) shall
apply in the case of highly compensated employees only if
such services are available on substantially the same terms
to each member of the group of employees normally provided
education and information regarding the employer’s qualified
employer plan.
‘‘(3) QUALIFIED EMPLOYER PLAN.—For purposes of this sub-
section, the term ‘qualified employer plan’ means a plan, con-
tract, pension, or account described in section 219(g)(5).’’.
(c) EFFECTIVE DATE.—The amendments made by this section
shall apply to years beginning after December 31, 2001.
SEC. 666. REPEAL OF THE MULTIPLE USE TEST.
(a) IN GENERAL.—Paragraph (9) of section 401(m) is amended
to read as follows:
‘‘(9) REGULATIONS.—The Secretary shall prescribe such
regulations as may be necessary to carry out the purposes