To amend the Internal Revenue Code of 1986 to extend the period during which transfers of excess pension assets may be made to retiree health accounts and to provide for the transfer of such assets to retiree group term life insurance accounts.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Extension of Section 420 and Retiree 
Life Insurance Act of 2012''.

SEC. 2. EXTENSION FOR TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE 
              HEALTH ACCOUNTS.

    (a) In General.--Paragraph (5) of section 420(b) of the Internal 
Revenue Code of 1986 is amended by striking ``December 31, 2013'' and 
inserting ``December 31, 2021''.
    (b) Conforming ERISA Amendments.--
            (1) Sections 101(e)(3), 403(c)(1), and 408(b)(13) of the 
        Employee Retirement Income Security Act of 1974 are each 
        amended by striking ``Pension Protection Act of 2006'' and 
        inserting ``Extension of Section 420 and Retiree Life Insurance 
        Act of 2012''.
            (2) Section 408(b)(13) of such Act (29 U.S.C. 1108(b)(13)) 
        is amended by striking ``January 1, 2014'' and inserting 
        ``January 1, 2022''.
    (c) Effective Date.--The amendments made by this Act shall take 
effect on the date of the enactment of this Act.

SEC. 3. TRANSFER OF EXCESS PENSION ASSETS TO RETIREE GROUP TERM LIFE 
              INSURANCE ACCOUNTS.

    (a) In General.--Subsection (a) of section 420 of the Internal 
Revenue Code of 1986 is amended by inserting ``, or an applicable life 
insurance account,'' after ``health benefits account''.
    (b) Applicable Life Insurance Account Defined.--
            (1) In general.--Subsection (e) of section 420 of the 
        Internal Revenue Code of 1986 is amended by redesignating 
        paragraphs (4) and (5) as paragraphs (5) and (6), respectively, 
        and by inserting after paragraph (3) the following new 
        paragraph:
            ``(4) Applicable life insurance account.--The term 
        `applicable life insurance account' means a separate account 
        established and maintained for amounts transferred under this 
        section for qualified current retiree liabilities based on 
        premiums for applicable life insurance benefits.''.
            (2) Applicable life insurance benefits defined.--Paragraph 
        (1) of section 420(e) of such Code is amended by redesignating 
        subparagraph (D) as subparagraph (E) and by inserting after 
        subparagraph (C) the following new subparagraph:
                    ``(D) Applicable life insurance benefits.--The term 
                `applicable life insurance benefits' means group-term 
                life insurance coverage provided to retired employees 
                who, immediately before the qualified transfer, are 
                entitled to receive such coverage by reason of 
                retirement and who are entitled to pension benefits 
                under the plan, but only to the extent that such 
                coverage is provided under a policy for retired 
                employees and the cost of such coverage is excludable 
                from the retired employee's gross income under section 
                79.''.
            (3) Collectively bargained life insurance benefits 
        defined.--
                    (A) In general.--Paragraph (6) of section 420(f) of 
                such Code is amended by redesignating subparagraph (D) 
                as subparagraph (E) and by inserting after subparagraph 
                (C) the following new subparagraph:
                    ``(D) Collectively bargained life insurance 
                benefits.--The term `collectively bargained life 
                insurance benefits' means, with respect to any 
                collectively bargained transfer--
                            ``(i) applicable life insurance benefits 
                        which are provided to retired employees who, 
                        immediately before the transfer, are entitled 
                        to receive such benefits by reason of 
                        retirement, and
                            ``(ii) if specified by the provisions of 
                        the collective bargaining agreement governing 
                        the transfer, applicable life insurance 
                        benefits which will be provided at retirement 
                        to employees who are not retired employees at 
                        the time of the transfer.''.
                    (B) Conforming amendments.--
                            (i) Clause (i) of section 420(e)(1)(C) of 
                        such Code is amended by striking ``upon 
                        retirement'' and inserting ``by reason of 
                        retirement''.
                            (ii) Subparagraph (C) of section 420(f)(6) 
                        of such Code is amended--
                                    (I) by striking ``which are 
                                provided to'' in the matter preceding 
                                clause (i),
                                    (II) by inserting ``which are 
                                provided to'' before ``retired 
                                employees'' in clause (i),
                                    (III) by striking ``upon 
                                retirement'' in clause (i) and 
                                inserting ``by reason of retirement'', 
                                and
                                    (IV) by striking ``active employees 
                                who, following their retirement,'' and 
                                inserting ``which will be provided at 
                                retirement to employees who are not 
                                retired employees at the time of the 
                                transfer and who''.
    (c) Maintenance of Effort.--
            (1) In general.--Subparagraph (A) of section 420(c)(3) of 
        the Internal Revenue Code of 1986 is amended by inserting ``, 
        and each group-term life insurance plan under which applicable 
        life insurance benefits are provided,'' after ``health benefits 
        are provided''.
            (2) Conforming amendments.--
                    (A) Subparagraph (B) of section 420(c)(3) of such 
                Code is amended--
                            (i) by redesignating subclauses (I) and 
                        (II) of clause (i) as subclauses (II) and (III) 
                        of such clause, respectively, and by inserting 
                        before subclause (II) of such clause, as so 
                        redesignated, the following new subclause:
                                    ``(I) separately with respect to 
                                applicable health benefits and 
                                applicable life insurance benefits,'', 
                                and
                            (ii) by striking ``for applicable health 
                        benefits'' and all that follows in clause (ii) 
                        and inserting ``was provided during such 
                        taxable year for the benefits with respect to 
                        which the determination under clause (i) is 
                        made.''.
                    (B) Subparagraph (C) of section 420(c)(3) of such 
                Code is amended--
                            (i) by inserting ``for applicable health 
                        benefits'' after ``applied separately'', and
                            (ii) by inserting ``, and separately for 
                        applicable life insurance benefits with respect 
                        to individuals age 65 or older at any time 
                        during the taxable year and with respect to 
                        individuals under age 65 during the taxable 
                        year'' before the period.
                    (C) Subparagraph (E) of section 420(c)(3) of such 
                Code is amended--
                            (i) in clause (i), by inserting ``or 
                        retiree life insurance coverage, as the case 
                        may be,'' after ``retiree health coverage'',
                            (ii) in clause (ii), by inserting ``for 
                        retiree health coverage'' after ``cost 
                        reductions'' in the heading thereof, and
                            (iii) in clause (ii)(II), by inserting 
                        ``with respect to applicable health benefits'' 
                        after ``liabilities of the employer''.
                    (D) Paragraph (2) of section 420(f) of such Code is 
                amended by striking ``collectively bargained retiree 
                health liabilities'' each place it occurs and inserting 
                ``collectively bargained retiree liabilities''.
                    (E) Clause (i) of section 420(f)(2)(D) of such Code 
                is amended--
                            (i) by inserting ``, and each group-term 
                        life insurance plan or arrangement under which 
                        applicable life insurance benefits are 
                        provided,'' in subclause (I) after ``applicable 
                        health benefits are provided'',
                            (ii) by inserting ``or applicable life 
                        insurance benefits, as the case may be,'' in 
                        subclause (I) after ``provides applicable 
                        health benefits'',
                            (iii) by striking ``group health'' in 
                        subclause (II), and
                            (iv) by inserting ``or collectively 
                        bargained life insurance benefits'' in 
                        subclause (II) after ``collectively bargained 
                        health benefits''.
                    (F) Clause (ii) of section 420(f)(2)(D) of such 
                Code is amended--
                            (i) by inserting ``with respect to 
                        applicable health benefits or applicable life 
                        insurance benefits'' after ``requirements of 
                        subsection (c)(3)'', and
                            (ii) by adding at the end the following: 
                        ``Such election may be made separately with 
                        respect to applicable health benefits and 
                        applicable life insurance benefits. In the case 
                        of an election with respect to applicable life 
                        insurance benefits, the first sentence of this 
                        clause shall be applied as if subsection (c)(3) 
                        as in effect before the amendments made by such 
                        Act applied to such benefits.''.
                    (G) Clause (iii) of section 420(f)(2)(D) of such 
                Code is amended--
                            (i) by striking ``retiree'' each place it 
                        occurs, and
                            (ii) by inserting ``, collectively 
                        bargained life insurance benefits, or both, as 
                        the case may be,'' after ``health benefits'' 
                        each place it occurs.
    (d) Coordination With Section 79.--Section 79 of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subsection:
    ``(f) Exception for Life Insurance Purchased in Connection With 
Qualified Transfer of Excess Pension Assets.--Subsection (b)(3) and 
section 72(m)(3) shall not apply in the case of any cost paid (whether 
directly or indirectly) with assets held in an applicable life 
insurance account (as defined in section 420(e)(4)) under a defined 
benefit plan.''.
    (e) Conforming Amendments.--
            (1) Section 420 of the Internal Revenue Code of 1986 is 
        amended by striking ``qualified current retiree health 
        liabilities'' each place it appears and inserting ``qualified 
        current retiree liabilities''.
            (2) Section 420 of such Code is amended by inserting ``, or 
        an applicable life insurance account,'' after ``a health 
        benefits account'' each place it appears in subsection 
        (b)(1)(A), subparagraphs (A), (B)(i), and (C) of subsection 
        (c)(1), subsection (d)(1)(A), and subsection (f)(2)(E)(ii).
            (3) Section 420(b) of such Code is amended--
                    (A) by adding the following at the end of paragraph 
                (2)(A): ``If there is a transfer from a defined benefit 
                plan to both a health benefits account and an 
                applicable life insurance account during any taxable 
                year, such transfers shall be treated as 1 transfer for 
                purposes of this paragraph.'', and
                    (B) by inserting ``to an account'' after ``may be 
                transferred'' in paragraph (3).
            (4) The heading for section 420(c)(1)(B) of such Code is 
        amended by inserting ``or life insurance'' after ``health 
        benefits''.
            (5) Paragraph (1) of section 420(e) of such Code is 
        amended--
                    (A) by inserting ``and applicable life insurance 
                benefits'' in subparagraph (A) after ``applicable 
                health benefits'', and
                    (B) by striking ``health'' in the heading thereof.
            (6) Subparagraph (B) of section 420(e)(1) of such Code is 
        amended--
                    (A) in the matter preceding clause (i), by 
                inserting ``(determined separately for applicable 
                health benefits and applicable life insurance 
                benefits)'' after ``shall be reduced by the amount'',
                    (B) in clause (i), by inserting ``or applicable 
                life insurance accounts'' after ``health benefit 
                accounts'', and
                    (C) in clause (i), by striking ``qualified current 
                retiree health liability'' and inserting ``qualified 
                current retiree liability''.
            (7) The heading for subsection (f) of section 420 of such 
        Code is amended by striking ``Health'' each place it occurs.
            (8) Subclause (II) of section 420(f)(2)(B)(ii) of such Code 
        is amended by inserting ``or applicable life insurance account, 
        as the case may be,'' after ``health benefits account''.
            (9) Subclause (III) of section 420(f)(2)(E)(i) of such Code 
        is amended--
                    (A) by inserting ``defined benefit'' before ``plan 
                maintained by an employer'', and
                    (B) by inserting ``health'' before ``benefit plans 
                maintained by the employer''.
            (10) Paragraphs (4) and (6) of section 420(f) of such Code 
        are each amended by striking ``collectively bargained retiree 
        health liabilities'' each place it occurs and inserting 
        ``collectively bargained retiree liabilities''.
            (11) Subparagraph (A) of section 420(f)(6) of such Code is 
        amended--
                    (A) in clauses (i) and (ii), by inserting ``, in 
                the case of a transfer to a health benefits account,'' 
                before ``his covered spouse and dependents'', and
                    (B) in clause (ii), by striking ``health plan'' and 
                inserting ``plan''.
            (12) Subparagraph (B) of section 420(f)(6) of such Code is 
        amended--
                    (A) in clause (i), by inserting ``, and 
                collectively bargained life insurance benefits,'' after 
                ``collectively bargained health benefits'',
                    (B) in clause (ii)--
                            (i) by adding at the end the following: 
                        ``The preceding sentence shall be applied 
                        separately for collectively bargained health 
                        benefits and collectively bargained life 
                        insurance benefits.'', and
                            (ii) by inserting ``, applicable life 
                        insurance accounts,'' after ``health benefit 
                        accounts'', and
                    (C) by striking ``health'' in the heading thereof.
            (13) Subparagraph (E) of section 420(f)(6) of such Code, as 
        redesignated by subsection (b), is amended--
                    (A) by striking ``bargained health'' and inserting 
                ``bargained'',
                    (B) by inserting ``, or a group-term life insurance 
                plan or arrangement for retired employees,'' after 
                ``dependents'', and
                    (C) by striking ``health'' in the heading thereof.
            (14) Section 101(e) of the Employee Retirement Income 
        Security Act of 1974 (29 U.S.C. 1021(e)) is amended--
                    (A) in paragraphs (1) and (2), by inserting ``or 
                applicable life insurance account'' after ``health 
                benefits account'' each place it appears, and
                    (B) in paragraph (1), by inserting ``or applicable 
                life insurance benefit liabilities'' after ``health 
                benefits liabilities''.
    (f) Technical Correction.--Clause (iii) of section 420(f)(6)(B) is 
amended by striking ``416(I)(1)'' and inserting ``416(i)(1)''.
    (g) Repeal of Deadwood.--
            (1) Subparagraph (A) of section 420(b)(1) of the Internal 
        Revenue Code of 1986 is amended by striking ``in a taxable year 
        beginning after December 31, 1990''.
            (2) Subsection (b) of section 420 of such Code is amended 
        by striking paragraph (4) and by redesignating paragraph (5), 
        as amended by this Act, as paragraph (4).
            (3) Paragraph (2) of section 420(b) of such Code, as 
        amended by this section, is amended--
                    (A) by striking subparagraph (B), and
                    (B) by striking ``per year.--'' and all that 
                follows through ``No more than'' and inserting ``per 
                year.--No more than''.
            (4) Paragraph (2) of section 420(c) of such Code is 
        amended--
                    (A) by striking subparagraph (B),
                    (B) by moving subparagraph (A) two ems to the left, 
                and
                    (C) by striking ``before transfer.--'' and all that 
                follows through ``The requirements of this paragraph'' 
                and inserting the following: ``before transfer.--The 
                requirements of this paragraph''.
            (5) Paragraph (2) of section 420(d) of such Code is amended 
        by striking ``after December 31, 1990''.
    (h) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply to transfers made after the date of the enactment of this 
        Act.
            (2) Conforming amendments relating to pension protection 
        act.--The amendments made by subsections (b)(3)(B) and (f) 
        shall take effect as if included in the amendments made by 
        section 841(a) of the Pension Protection Act of 2006.

Summary: Extension of Section 420 and Retiree Life Insurance Act of 2012 - Amends the Internal Revenue Code to: (1) extend through 2021 the authority for transfers of excess pension assets of a defined benefit plan to a retiree health benefits account, and (2) allow the transfer of excess pension assets of a defined benefit plan to a retiree group term life insurance account.