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Q: SECTION 1. SHORT TITLE.

This Act may be cited as the ''Public Employer's Restitution Act
of 2003'' .

SEC. 2. ALIENATION OF PENSION PLAN BENEFITS TO SATISFY COURT JUDGMENTS,
DECREES, OR ORDERS REQUIRING RESTITUTION FOR EMBEZZLEMENT
OF STATE OR LOCAL GOVERNMENT FUNDS.

(a) Amendment to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 206(d) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1056(d)) is amended by
adding at the end the following new paragraph:
''(6)(A) Paragraph (1) shall apply to the creation, assignment, or
recognition of a right to any benefit payable with respect to a
participant pursuant to an embezzlement restitution order, except that
paragraph (1) shall not apply if the order is determined to be a
qualified embezzlement restitution order. Each pension plan shall
provide for the payment of benefits in accordance with the applicable
requirements of any qualified embezzlement restitution order.
''(B) For purposes of this paragraph--
''(i) the term 'qualified embezzlement restitution order'
means an embezzlement restitution order--
''(I) which creates or recognizes the existence of
an aggrieved State or local government's right to, or
assigns to an aggrieved State or local government the
right to, receive all or a portion of the benefits
payable with respect to a participant under a plan, and
''(II) with respect to which the requirements of
subparagraphs (C) and (D) are met, and
''(ii) the term 'embezzlement restitution order' means an
order arising under a judgment of conviction of an individual
by a court of competent jurisdiction of the crime of
embezzlement in violation of the applicable laws of the United
States or of any State or political subdivision thereof, which
provides for restitution to the government of any State or
political subdivision thereof of losses sustained by such
government in connection with embezzlement of the funds of such
government by such individual.
''(C) A qualified embezzlement restitution order meets the
requirements of this subparagraph only if such order clearly
specifies--
''(i) the name and the last known mailing address (if any)
of the participant and the name and mailing address of each
aggrieved State or local government covered by the order,
''(ii) the amount or percentage of the participant's
benefits to be paid by the plan to each such aggrieved State or
local government, or the manner in which such amount or
percentage is to be determined,
''(iii) the number of payments or period to which such
order applies, and
''(iv) each plan to which such order applies.
''(D) A qualified embezzlement restitution order meets the
requirements of this subparagraph only if such order--
''(i) does not require a plan to provide any type or form
of benefit, or any option, not otherwise provided under the
plan,
''(ii) does not require the plan to provide increased
benefits (determined on the basis of actuarial value), and
''(iii) does not require the payment of benefits to the
government of any State or political subdivision thereof which
are required to be paid to any other entity--
''(I) as an aggrieved State or local government
under another order previously determined to be a
qualified embezzlement restitution order, or
''(II) as an alternate payee under an order
previously determined to be a qualified domestic
relations order (as defined in paragraph (3)(B)(i)).
''(E) The provisions of subparagraphs (E), (G), (H), (I), and (M)
of paragraph (3) shall apply for purposes of this paragraph in the same
manner and to the same extent as such subparagraphs apply for purposes
of paragraph (3), except that--
''(i) any reference to a 'qualified domestic relations
order' or a 'domestic relations order' shall be deemed a
reference to a qualified embezzlement restitution order or an
embezzlement restitution order, respectively, and
''(ii) any reference to an 'alternate payee' shall be
deemed a reference to an aggrieved State or local government.
''(F) Notwithstanding subparagraph (A), paragraph (1) shall apply
with respect to the creation, assignment, or recognition of a right to
any benefit payable with respect to a participant pursuant to any
embezzlement restitution order if the requirements of paragraph (4)(C)
are met with respect to the plan. In applying paragraph (4)(C) and
paragraph (5) for purposes of this subparagraph--
''(i) any reference to an 'offset' shall be deemed a
reference to the creation, assignment, or recognition of a
right to any benefit payable with respect to the participant
pursuant to an embezzlement restitution order,
''(ii) any reference to a 'judgment, order, decree, or
settlement' to pay an amount to the plan shall be deemed a
reference to the embezzlement restitution order, and
''(iii) any reference to a 'violation of part 4' of
subtitle B shall be deemed a reference to embezzlement in
violation of the applicable laws of the United States or of any
State or political subdivision thereof.
''(G) For purposes of this paragraph, the term 'aggrieved State or
local government' means, with respect to any plan participant, the
government of a State or a political subdivision thereof that is
recognized by an embezzlement restitution order as having a right to
receive as restitution all, or a portion of, the benefits payable under
the plan with respect to such participant.
''(H) This paragraph shall not apply to any plan to which paragraph
(1) does not apply.
''(I) In prescribing regulations under this paragraph, the
Secretary shall consult with the Secretary of the Treasury.''.
(2) Clarification of preemption provision.--Paragraph (7)
of section 514(b) of such Act (29 U.S.C. 1144(b)(7)) is amended
by inserting ''qualified embezzlement restitution orders
(within the meaning of section 206(d)(6)(B)(i)),'' after
''section 206(d)(3)(B)(i)),''.
(b) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Paragraph (13) of section 401(a) of the
Internal Revenue Code of 1986 (relating to assignment and
alienation) is amended by adding at the end the following new
subparagraph:
''(E) Special rules for qualified embezzlement
restitution orders.--Subparagraph (A) shall not apply
with respect to the creation, assignment, or
recognition of a right to any benefit payable with
respect to a participant pursuant to an embezzlement
restitution order, except that subparagraph (A) shall
not apply if the order is determined to be a qualified
embezzlement restitution order.''.
(2) Qualified embezzlement restitution order defined.--
Section 414 of such Code (relating to definitions and special
rules) is amended by adding at the end the following new
subsection:
''(w) Qualified Embezzlement Restitution Order Defined.--For
purposes of this subsection and section 401(a)(13)--
''(1) In general.--
''(A) Qualified embezzlement restitution order.--
The term 'qualified embezzlement restitution order'
means an embezzlement restitution order--
''(i) which creates or recognizes the
existence of an aggrieved State or local
government's right to, or assigns to an
aggrieved State or local government the right
to, receive all or a portion of the benefits
payable with respect to a participant under a
plan, and
''(ii) with respect to which the
requirements of paragraphs (2) and (3) are met.
''(B) Embezzlement restitution order.--The term
'embezzlement restitution order' means an order arising
under a judgment of conviction of an individual by a
court of competent jurisdiction of the crime of
embezzlement in violation of the applicable laws of the
United States or of any State or political subdivision
thereof, which provides for restitution to the
government of any State or political subdivision
thereof of losses sustained by such government in
connection with the embezzlement of the funds of such
government by such individual.
''(2) Order must clearly specify certain facts.--A
qualified embezzlement restitution order meets the requirements
of this paragraph only if such order clearly specifies--
''(A) the name and the last known mailing address
(if any) of the participant and the name and mailing
address of each aggrieved State or local government
covered by the order,
''(B) the amount or percentage of the participant's
benefits to be paid by the plan to each such aggrieved
State or local government, or the manner in which such
amount or percentage is to be determined,
''(C) the number of payments or period to which
such order applies, and
''(D) each plan to which such order applies.
''(3) Order may not alter amount, form, etc., of
benefits.--A qualified embezzlement restitution order meets the
requirements of this paragraph only if such order--
''(A) does not require a plan to provide any type
or form of benefit, or any option, not otherwise
provided under the plan,
''(B) does not require the plan to provide
increased benefits (determined on the basis of
actuarial value), and
''(C) does not require the payment of benefits to
the government of any State or political subdivision
thereof which are required to be paid to any other
entity--
''(i) as an aggrieved State or local
government under another order previously
determined to be a qualified embezzlement
restitution order, or
''(ii) as an alternate payee under an order
previously determined to be a qualified
domestic relations order (as defined in
subsection (p)(1)(A)).
''(4) Application of certain provisions.--The provisions of
paragraphs (4), (6), (7), (10), (11), and (12) of subsection
(p) shall apply for purposes of this subsection and section
401(a)(13) in the same manner and to the same extent as such
paragraphs apply for purposes of subsection (p) and section
401(a)(13), except that--
''(A) any reference to a 'qualified domestic
relations order' or a 'domestic relations order' shall
be deemed a reference to a qualified embezzlement
restitution order or an embezzlement restitution order,
respectively, and
''(B) any reference to an 'alternate payee' shall
be deemed a reference to an aggrieved State or local
government.
''(5) Inapplicability of embezzlement restitution orders in
the case of certain survivor annuity requirements applicable to
spouse.--Notwithstanding section 401(a)(13)(E), section
401(a)(13)(A) shall apply with respect to the creation,
assignment, or recognition of a right to any benefit payable
with respect to a participant pursuant to any embezzlement
restitution order if the requirements of section
401(a)(13)(C)(iii) are met with respect to the plan. In
applying subparagraphs (C)(iii) and (D) of section 401(a)(13)
for purposes of this paragraph--
''(A) any reference to an 'offset' shall be deemed
a reference to the creation, assignment, or recognition
of a right to any benefit payable with respect to the
participant pursuant to an embezzlement restitution
order,
''(B) to pay an amount to the plan shall be deemed
a reference to the embezzlement restitution order, and
''(C) any reference to a 'violation of part 4' of
subtitle B of title I of the Employee Retirement Income
Security Act of 1974 shall be deemed a reference to
embezzlement in violation of the applicable laws of the
United States or of any State or political subdivision
thereof.
''(6) Aggrieved state or local government.--The term
'aggrieved State or local government' means, with respect to
any plan participant, the government of any State or political
subdivision thereof that is recognized by an embezzlement
restitution order as having a right to receive as restitution
all, or a portion of, the benefits payable under the plan with
respect to such participant.
''(7) Subsection not to apply to plans to which section
401(a)(13) does not apply.--This subsection shall not apply to
any plan to which section 401(a)(13) does not apply. For
purposes of this title, except as provided in regulations, any
distribution from an annuity contract under section 403(b)
pursuant to a qualified embezzlement restitution order shall be
treated in the same manner as a distribution from a plan to
which section 401(a)(13) applies.
''(8) Consultation with the secretary.--In prescribing
regulations under this subsection and section 401(a)(13), the
Secretary of Labor shall consult with the Secretary.''.
(c) Effective Date.--The amendments made by this Act shall take
effect January 1, 2004.
A:
Public Employer's Restitution Act of 2003 - Amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code to allow alienation of an individual's benefits under certain pension plans in order to satisfy, in part or whole, court judgments, decrees, or orders requiring restitution for embezzlement of State or local government funds (qualified embezzlement restitution orders).

Gives priority, before payment of such benefits to a State or local government under such an order, to their payment to any other aggrieved State or local government under a previously determined qualified: (1) embezzlement restitution order; or (2) domestic relations order that has such government as an alternate payee.