I
103D CONGRESS
1ST SESSION
H. R. 2502
To amend the Internal Revenue Code of 1986 and title I of the Employee
Retirement Income Security Act of 1974 with regard to pension integra-
tion, participation, and vesting requirements, to provide for division of
pension benefits upon divorce unless otherwise provided in qualified do-
mestic relations orders, to provide for studies relating to cost-of-living
adjustments and pension portability, and to clarify the continued avail-
ability, under provisions governing domestic relations orders, of remedies
relating to matters treated in such orders entered before 1985.
IN THE HOUSE OF REPRESENTATIVES
JUNE 23, 1993
Mrs. KENNELLY introduced the following bill; which was referred jointly to
the Committees on Ways and Means and Education and Labor
A BILL
To amend the Internal Revenue Code of 1986 and title
I of the Employee Retirement Income Security Act of
1974 with regard to pension integration, participation,
and vesting requirements, to provide for division of pen-
sion benefits upon divorce unless otherwise provided in
qualified domestic relations orders, to provide for studies
relating to cost-of-living adjustments and pension port-
ability, and to clarify the continued availability, under
provisions governing domestic relations orders, of rem-
edies relating to matters treated in such orders entered
before 1985.
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 ‘‘Pension Reform Act
of 1993’’.
SEC. 2. PENSION INTEGRATION RULES.
(a) APPLICABILITY OF NEW INTEGRATION RULES
EXTENDED TO ALL EXISTING ACCRUED BENEFITS.—
Notwithstanding subsection (c)(1) of section 1111 of the
Tax Reform Act of 1986 (relating to effective date of ap-
plication of nondiscrimination rules to integrated plans)
(100 Stat. 2440), effective for plan years beginning after
the date of the enactment of this Act, the amendments
made by subsection (a) of such section 1111 shall also
apply to benefits attributable to plan years beginning on
or before December 31, 1988.
(b) INTEGRATION DISALLOWED
FOR SIMPLIFIED
EMPLOYEE PENSIONS.—
(1) IN GENERAL.—Subparagraph (D) of section
408(k)(3) of the Internal Revenue Code of 1986 (re-
lating to permitted disparity under rules limiting
discrimination under simplified employee pensions)
is repealed.
(2) CONFORMING AMENDMENT.—Subparagraph
(C) of such section 408(k)(3) is amended by striking
‘‘and except as provided in subparagraph (D),’’.
(3) EFFECTIVE DATE.—The amendments made
by this subsection shall apply with respect to taxable
years beginning on or after January 1, 1993.
(c) EVENTUAL REPEAL OF INTEGRATION RULES.—
Effective for plan years beginning on or after January 1,
2002—
(1) subparagraphs (C) and (D) of section
401(a)(5) of the Internal Revenue Code of 1986 (re-
lating to pension integration exceptions under non-
discrimination requirements for qualification) are re-
pealed, and subparagraph (E) of such section
401(a)(5) is redesignated as subparagraph (C); and
(2) subsection (l) of section 401 of such Code
(relating to nondiscriminatory coordination of de-
fined contribution plans with OASDI) is repealed.
SEC. 3. APPLICATION OF MINIMUM COVERAGE REQUIRE-
MENTS WITH RESPECT TO SEPARATE LINES
OF BUSINESS.
(a) IN GENERAL.—Subsection (b) of section 410 of
the Internal Revenue Code of 1986 (relating to minimum
coverage requirements) is amended—
(1) in paragraph (1), by striking ‘‘A trust’’ and
inserting ‘‘In any case in which the employer with
respect to a plan is treated, under section 414(r), as
operating separate lines of business for a plan year,
a trust’’, and by inserting ‘‘for such plan year’’ after
‘‘requirements’’; and
(2) by redesignating paragraphs (3) through
(6) as paragraphs (4) through (7), respectively and
by inserting after paragraph (2) the following new
paragraph:
‘‘(3) SPECIAL RULE WHERE EMPLOYER OPER-
ATES SINGLE LINE OF BUSINESS.—In any case in
which the employer with respect to a plan is not
treated, under section 414(r), as operating separate
lines of business for a plan year, a trust shall not
constitute a qualified trust under section 401(a) un-
less such trust is designated by the employer as part
of a plan which benefits all employees of the em-
ployer.’’.
(b) LIMITATION
ON LINE
OF BUSINESS EXCEP-
TION.—Paragraph (6) of section 410(b) of such Code (as
redesignated by subsection (a)(2) of this section) is
amended by inserting ‘‘other than paragraph (1)(A)’’ after
‘‘this subsection’’.
SEC. 4. ELIMINATION OF SPECIAL VESTING RULE FOR MUL-
TIEMPLOYER PLANS.
(a) INTERNAL REVENUE CODE AMENDMENT.—Para-
graph (2) of section 411(a) of the Internal Revenue Code
of 1986 (relating to minimum vesting standards) is
amended—
(1) by striking ‘‘subparagraph (A), (B), or (C)’’
and inserting ‘‘subparagraph (A) or (B)’’; and
(2) by striking subparagraph (C).
(b) ERISA AMENDMENT.—Paragraph (2) of section
203(a)(2) of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1053(a)(2)) is amended—
(1) by striking ‘‘subparagraph (A), (B), or (C)’’
and inserting ‘‘subparagraph (A) or (B)’’; and
(2) by striking subparagraph (C).
SEC. 5. DIVISION OF PENSION BENEFITS UPON DIVORCE.
(a) AMENDMENTS
TO
THE INTERNAL REVENUE
CODE OF 1986.—
(1) IN
GENERAL.—Subsection (a) of section
401 of the Internal Revenue Code of 1986 (relating
to requirements for qualification) is amended—
(A) by inserting after paragraph (31) the
following new paragraph:
‘‘(32) DIVISION OF PENSION BENEFITS UPON
DIVORCE.—
‘‘(A) IN GENERAL.—In the case of a di-
vorce of a participant in a pension plan from a
spouse who is, immediately before the divorce,
a beneficiary under the plan, a trust forming a
part of such plan shall not constitute a quali-
fied trust under this section unless the plan
provides that at least 50 percent of the marital
share of the accrued benefit of the participant
under the plan ceases to be an accrued benefit
of such participant and becomes an accrued
benefit of such divorced spouse, determined and
payable upon the earlier of the retirement of
the participant, the participant’s death, or the
termination of the plan, except to the extent
that a qualified domestic relations order in con-
nection with such divorce provides otherwise.
‘‘(B) 
LIMITATION.—Subparagraph 
(A)
shall not be construed—
‘‘(i) to require a plan to provide any
type or form of benefit, or any option, not
otherwise provided under the plan,
‘‘(ii) to require the plan to provide in-
creased benefits (determined on the basis
of actuarial value),
‘‘(iii) to require the payment of bene-
fits to the divorced spouse which are re-
quired to be paid to another individual in
accordance with this paragraph or pursu-
ant to a domestic relations order previously
determined to be a qualified domestic rela-
tions order, or
‘‘(iv) to require payment of benefits to
the divorced spouse in the form of a quali-
fied joint and survivor annuity to the di-
vorced spouse and his or her subsequent
spouse.
‘‘(C) DEFINITIONS.—For purposes of this
paragraph—
‘‘(i) DOMESTIC
RELATIONS
ORDER;
QUALIFIED
DOMESTIC
RELATIONS
ORDER.—The terms ‘domestic relations
order’ and ‘qualified domestic relations
order’ shall have the meanings provided in
section 414(p).
‘‘(ii) MARITAL
SHARE.—The term
‘marital share’ means, in connection with
an accrued benefit under a pension plan,
the product derived by multiplying—
‘‘(I) the actuarial present value
of the accrued benefit, by
‘‘(II) a fraction, the numerator of
which is the period of time, during the
marriage between the spouse and the
participant in the plan, which con-
stitutes creditable service by the par-
ticipant under the plan, and the de-
nominator of which is the total period
of time which constitutes creditable
service by the participant under the
plan.
‘‘(iii) QUALIFIED JOINT AND SURVI-
VOR ANNUITY.—The term ‘qualified joint
and survivor annuity’ has the meaning pro-
vided in section 417(b).
‘‘(D) REGULATIONS.—In prescribing regu-
lations under this paragraph, the Secretary
shall consult with the Secretary of Labor.’’; and
(B) in the last sentence, by striking ‘‘and
(20)’’ and inserting ‘‘(20), and (32)’’.
(2) CONFORMING AMENDMENTS.—
(A) 
Subparagraph 
(B) 
of 
section
401(a)(13) of such Code (relating to special
rules for domestic relations orders) is amended
by inserting ‘‘or if such creation, assignment, or
recognition pursuant to such order is necessary
for compliance with the requirements of para-
graph (32)’’ before the period.
(B) Subsection (p) of section 414 of such
Code (defining qualified domestic relations or-
ders) is amended—
(i) in paragraph (3)(C), by inserting
‘‘or to a divorced spouse of the participant
in connection with a previously occurring
divorce 
as 
required 
under 
section
401(a)(32)’’ before the period; and
(ii) in paragraph (7)(C), by striking
‘‘if there had been no order’’ and inserting
‘‘in accordance with section 401(a)(32) as
if there had been no qualified domestic re-
lations order’’.
(b) AMENDMENTS TO THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974.—
(1) IN
GENERAL.—Section 206 of Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1056) is amended by adding at the end the following
new subsection:
‘‘(e)(1) In the case of a divorce of a participant in
a pension plan from a spouse who is, immediately before
the divorce, a beneficiary under the plan, the plan shall
provide that at least 50 percent of the marital share of
the accrued benefit of the participant under the plan
ceases to be an accrued benefit of such participant and
becomes an accrued benefit of such divorced spouse, deter-
mined and payable upon the earlier of the retirement of
the participant, the participant’s death, or the termination
of the plan, except to the extent that a qualified domestic
relations order in connection with such divorce provides
otherwise.
‘‘(2) Paragraph (1) shall not be construed—
‘‘(A) to require a plan to provide any type or
form of benefit, or any option, not otherwise pro-
vided under the plan,
‘‘(B) to require the plan to provide increased
benefits (determined on the basis of actuarial value),
‘‘(C) to require the payment of benefits to the
divorced spouse which are required to be paid to an-
other individual in accordance with this subsection
or pursuant to a domestic relation order previously
determined to be a qualified domestic relations
order, or
‘‘(D) to require payment of benefits to the di-
vorced spouse in the form of a joint and survivor an-
(4) the measures necessary to be taken to effec-
tively ensure that the joint and survivor annuity
form of benefit will be preserved,
(5) the existing rules under the Employee Re-
tirement Income Security Act of 1974, the Internal
Revenue Code of 1986, and other applicable provi-
sions of law which can be considered portability
mechanisms, their effectiveness, and the frequency
of their use, and
(6) the costs of establishing effective portability
mechanisms for both defined benefit plans and de-
fined contribution plans.
(c) REPORT.—Not later than 2 years after the date
of the enactment of this Act, the Comptroller General shall
submit to the Committee on Ways and Means and the
Committee on Education and Labor of the House of Rep-
resentatives and the Committee on Finance and the Com-
mittee on Labor and Human Resources of the Senate a
report of the findings of the study provided for by this
section, together with any recommendations the Comptrol-
ler General considers appropriate.
SEC. 9. CLARIFICATION OF CONTINUED AVAILABILITY OF
REMEDIES RELATING TO MATTERS TREATED
IN DOMESTIC RELATIONS ORDERS ENTERED
BEFORE 1985.
(a) IN GENERAL.—In any case in which—
(1) under a prior domestic relations order en-
tered before January 1, 1985, in an action for di-
vorce—
(A) the right of a spouse under a pension
plan to an accrued benefit under such plan was
not divided between spouses,
(B) any right of a spouse with respect to
such an accrued benefit was waived without the
informed consent of such spouse, or
(C) the right of a spouse as a participant
under a pension plan to an accrued benefit
under such plan was divided so that the other
spouse received less than such other spouse’s
pro rata share of the accrued benefit under the
plan, or
(2) a court of competent jurisdiction determines
that any further action is appropriate with respect
to any matter to which a prior domestic relations
order entered before such date applies,
nothing in the provisions of section 104, 204, or 303 of
the Retirement Equity Act of 1984 (Public Law 98–397)