Fairness in Pension Stability Act - Amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code (Code) to temporarily replace (for plan years 2004 and 2005) the 30-year Treasury rate with a rate based on long-term corporate bonds for certain pension plan funding requirements.
Sets forth ERISA and Code provisions for: (1) election by certain plans of an alternative deficit reduction contribution; (2) multiemployer defined benefit plan funding notices; (3) an amortization hiatus for net experience losses in multiemployer plans; (3) procedures applicable to disputes involving pension plan withdrawal liability; and (4) an extension of transfers of excess pension assets to retiree health accounts.
Revises Code provisions relating to a tax exemption for small property and casualty insurance companies. Repeals Code provisions relating to reductions of certain tax deductions for mutual life insurance companies.
Amends the Retirement Protection Act of 1994 to set forth special transition rules relating to pension funding requirements under ERISA and the Code.
Confirms the antitrust status of graduate medical resident matching programs.
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 2282 Introduced in Senate (IS)]
108th CONGRESS
2d Session
S. 2282
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to temporarily replace the 30-year
Treasury rate with a rate based on long-term corporate bonds for
certain pension plan funding requirements and other provisions, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 5, 2004
Mr. Kennedy (for himself, Mr. Baucus, and Mr. Daschle) introduced the
following bill; which was read twice and referred to the Committee on
Finance
_______________________________________________________________________
A BILL
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to temporarily replace the 30-year
Treasury rate with a rate based on long-term corporate bonds for
certain pension plan funding requirements and other provisions, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fairness in Pension Stability Act''.
TITLE I--PENSION FUNDING
SEC. 101. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.
(a) Employee Retirement Income Security Act of 1974.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section
302(b)(5)(B) of the Employee Retirement Income Security
Act of 1974 is amended by redesignating subclause (II)
as subclause (III) and by inserting after subclause (I)
the following new subclause:
``(II) Special rule for years 2004 and
2005.--In the case of plan years beginning
after December 31, 2003, and before January 1,
2006, the term `permissible range' means a rate
of interest which is not above, and not more than 10 percent below, the
weighted average of the rates of interest on amounts invested
conservatively in long-term corporate bonds during the 4-year period
ending on the last day before the beginning of the plan year. Such
rates shall be determined by the Secretary of the Treasury on the basis
of 2 or more indices that are selected periodically by the Secretary of
the Treasury and that are in the top 3 quality levels available. The
Secretary of the Treasury shall make the permissible range, and the
indices and methodology used to determine the average rate, publicly
available.''.
(B) Secretarial authority.--Subclause (III) of
section 302(b)(5)(B)(ii) of such Act, as redesignated
by subparagraph (A), is amended--
(i) by inserting ``or (II)'' after
``subclause (I)'' the first place it appears,
and
(ii) by striking ``subclause (I)'' the
second place it appears and inserting ``such
subclause''.
(C) Conforming amendment.--Subclause (I) of section
302(b)(5)(B)(ii) of such Act is amended by inserting
``or (III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of
section 302(d)(7)(C) of such Act is amended by adding at the
end the following new subclause:
``(IV) Special rule for 2004 and
2005.--For plan years beginning in 2004
or 2005, notwithstanding subclause (I),
the rate of interest used to determine
current liability under this subsection
shall be the rate of interest under
subsection (b)(5).''.
(3) Conforming amendment.--Paragraph (7) of section 302(e)
of such Act is amended to read as follows:
``(7) Special rule for 2002.--In any case in which the
interest rate used to determine current liability is determined
under subsection (d)(7)(C)(i)(III), for purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability for the preceding plan year shall be
redetermined using 120 percent as the specified percentage
determined under subsection (d)(7)(C)(i)(II).''.
(4) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such
Act is amended by adding at the end the following new
subclause:
``(V) In the case of plan years beginning after December
31, 2003, and before January 1, 2006, the annual yield taken
into account under subclause (II) shall be the annual rate of
interest determined by the Secretary of the Treasury on amounts
invested conservatively in long-term corporate bonds for the
month preceding the month in which the plan year begins. For
purposes of the preceding sentence, the Secretary of the
Treasury shall determine such rate of interest on the basis of
2 or more indices that are selected periodically by the
Secretary of the Treasury and that are in the top 3 quality
levels available. The Secretary of the Treasury shall make the
permissible range, and the indices and methodology used to
determine the rate, publicly available.''.
(b) Internal Revenue Code of 1986.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section
412(b)(5)(B) of the Internal Revenue Code of 1986 is
amended by redesignating subclause (II) as subclause
(III) and by inserting after subclause (I) the
following new subclause:
``(II) Special rule for years 2004
and 2005.--In the case of plan years
beginning after December 31, 2003, and
before January 1, 2006, the term
`permissible range' means a rate of
interest which is not above, and not
more than 10 percent below, the
weighted average of the rates of
interest on amounts invested
conservatively in long-term corporate
bonds during the 4-year period ending
on the last day before the beginning of
the plan year. Such rates shall be
determined by the Secretary on the
basis of 2 or more indices that are
selected periodically by the Secretary
and that are in the top 3 quality
levels available. The Secretary shall
make the permissible range, and the
indices and methodology used to
determine the average rate, publicly
available.''.
(B) Secretarial authority.--Subclause (III) of
section 412(b)(5)(B)(ii) of such Code, as redesignated
by subparagraph (A), is amended--
(i) by inserting ``or (II)'' after
``subclause (I)'' the first place it appears,
and
(ii) by striking ``subclause (I)'' the
second place it appears and inserting ``such
subclause''.
(C) Conforming amendment.--Subclause (I) of section
412(b)(5)(B)(ii) of such Code is amended by inserting
``or (III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of
section 412(l)(7)(C) of such Code is amended by adding at the
end the following new subclause:
``(IV) Special rule for 2004 and
2005.--For plan years beginning in 2004
or 2005, notwithstanding subclause (I),
the rate of interest used to determine
current liability under this subsection
shall be the rate of interest under
subsection (b)(5).''.
(3) Conforming amendment.--Paragraph (7) of section 412(m)
of such Code is amended to read as follows:
``(7) Special rule for 2002.--In any case in which the
interest rate used to determine current liability is determined
under subsection (l)(7)(C)(i)(III), for purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability for the preceding plan year shall be
redetermined using 120 percent as the specified percentage
determined under subsection (l)(7)(C)(i)(II).''.
(4) Limitation on certain assumptions.--Section
415(b)(2)(E)(ii) of such Code is amended by inserting ``,
except that in the case of plan years beginning in 2004 or
2005, `5.5 percent' shall be substituted for `5 percent' in
clause (i)'' before the period at the end.
(5) Election to disregard modification for deduction
purposes.--Section 404(a)(1) of such Code is amended by adding
at the end the following new subparagraph:
``(F) Election to disregard modified interest
rate.--An employer may elect to disregard subsections
(b)(5)(B)(ii)(II) and (l)(7)(C)(i)(IV) of section 412
solely for purposes of determining the interest rate
used in calculating the maximum amount of the deduction
allowable under this section for contributions to a
plan to which this paragraph applies.''.
(c) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any plan or
annuity contract amendment--
(A) such plan or contract shall be treated as being
operated in accordance with the terms of the plan or
contract during the period described in paragraph
(2)(B)(i), and
(B) except as provided by the Secretary of the
Treasury, such plan shall not fail to meet the
requirements of section 411(d)(6) of the Internal
Revenue Code of 1986 and section 204(g) of the Employee
Retirement Income Security Act of 1974 by reason of
such amendment.
(2) Amendments to which section applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or annuity contract which is
made--
(i) pursuant to any amendment made by this
section, and
(ii) on or before the last day of the first
plan year beginning on or after January 1,
2006.
(B) Conditions.--This subsection shall not apply to
any plan or annuity contract amendment unless--
(i) during the period beginning on the date
the amendment described in subparagraph (A)(i)
takes effect and ending on the date described
in subparagraph (A)(ii) (or, if earlier, the
date the plan or contract amendment is
adopted), the plan or contract is operated as
if such plan or contract amendment were in
effect; and
(ii) such plan or contract amendment
applies retroactively for such period.
(d) Effective Date.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall apply to plan
years beginning after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(d)(9)(B)(ii) and (e)(1) of section 302 of the Employee
Retirement Income Security Act of 1974 and subsections
(l)(9)(B)(ii) and (m)(1) of section 412 of the Internal Revenue
Code of 1986 to plan years beginning after December 31, 2003,
the amendments made by this section may be applied as if such
amendments had been in effect for all prior plan years. The
Secretary of the Treasury may prescribe simplified assumptions
which may be used in applying the amendments made by this
section to such prior plan years.
(3) Transition rule for section 415 limitation.--In the
case of any participant or beneficiary receiving a distribution
after December 31, 2003 and before January 1, 2005, the amount
payable under any form of benefit subject to section 417(e)(3)
of the Internal Revenue Code of 1986 and subject to adjustment
under section 415(b)(2)(B) of such Code shall not, solely by
reason of the amendment made by subsection (b)(4), be less than
the amount that would have been so payable had the amount
payable been determined using the applicable interest rate in
effect as of the last day of the last plan year beginning
before January 1, 2004.
SEC. 102. ELECTION OF ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION.
(a) Amendment of ERISA.--Section 302(d) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1082(d)) is amended by adding at
the end the following new paragraph:
``(12) Election for certain plans.--
``(A) In general.--In the case of a defined benefit
plan established and maintained by an applicable
employer, if this subsection did not apply to the plan
for the plan year beginning in 2000 (determined without
regard to paragraph (6)), then, at the election of the
employer, the increased amount under paragraph (1) for
any applicable plan year shall be the greater of--
``(i) 20 percent of the increased amount
under paragraph (1) determined without regard
to this paragraph, or
``(ii) the increased amount which would be
determined under paragraph (1) if the deficit
reduction contribution under paragraph (2) for
the applicable plan year were determined
without regard to subparagraphs (A), (B), and
(D) of paragraph (2).
``(B) Restrictions on benefit increases.--No
amendment which increases the liabilities of the plan
by reason of any increase in benefits, any change in
the accrual of benefits, or any change in the rate at
which benefits become nonforfeitable under the plan
shall be adopted during any applicable plan year,
unless--
``(i) the funded current liability
percentage (as defined in paragraph (8)(B)) as
of the end of such plan year is projected
(taking into account the effect of the
amendment) to be at least 75 percent,
``(ii) the amendment provides for an
increase in benefits under a formula which is
not based on a participant's compensation, but
only if the rate of such increase is not in
excess of the contemporaneous rate of increase
in average wages of participants covered by the
amendment,
``(iii) the amendment is required by a
collective bargaining agreement which is in
effect on the date of enactment of this
subparagraph, or
``(iv) the amendment is otherwise described
in subparagraph (A) or (C) of section
304(b)(2).
If a plan is amended during any applicable plan year in
violation of the preceding sentence, any election under
this paragraph shall not apply to any applicable plan
year ending on or after the date on which such amendment is adopted.
``(C) Applicable employer.--For purposes of this
paragraph, the term `applicable employer' means an
employer which is--
``(i) a commercial passenger airline,
``(ii) primarily engaged in the production
or manufacture of a steel mill product or the
mining or processing of iron ore pellets, or
``(iii) an organization described in
section 501(c)(5) of the Internal Revenue Code
of 1986 and which established the plan to which
this paragraph applies on June 30, 1955.
``(D) Applicable plan year.--For purposes of this
paragraph--
``(i) In general.--The term `applicable
plan year' means any plan year beginning after
December 27, 2003, and before December 28,
2005, for which the employer elects the
application of this paragraph.
``(ii) Limitation on number of years which
may be elected.--An election may not be made
under this paragraph with respect to more than
2 plan years.
``(E) Notice requirements for plans electing
alternative deficit reduction contributions.--
``(i) In general.--If an employer elects an
alternative deficit reduction contribution
under this paragraph and section 412(l)(12) of
the Internal Revenue Code of 1986 for any year,
the employer shall provide, within 30 days (120
days in the case of an employer described in
subparagraph (C)(ii)) of filing the election
for such year, written notice of the election
to participants and beneficiaries and to the
Pension Benefit Guaranty Corporation.
``(ii) Notice to participants and
beneficiaries.--The notice under clause (i) to
participants and beneficiaries shall include
with respect to any election--
``(I) the due date of the
alternative deficit reduction
contribution and the amount by which
such contribution was reduced from the
amount which would have been owed if
the election were not made, and
``(II) a description of the
benefits under the plan which are
eligible to be guaranteed by the
Pension Benefit Guaranty Corporation
and an explanation of the limitations
on the guarantee and the circumstances
under which such limitations apply,
including the maximum guaranteed
monthly benefits which the Pension
Benefit Guaranty Corporation would pay
if the plan terminated while
underfunded.
``(iii) Notice to pbgc.--The notice under
clause (i) to the Pension Benefit Guaranty
Corporation shall include--
``(I) the information described in
clause (ii)(I),
``(II) the number of years it will
take to restore the plan to full
funding if the employer only makes the
required contributions, and
``(III) information as to how the
amount by which the plan is underfunded
compares with the capitalization of the
employer making the election.
``(F) Election.--An election under this paragraph
shall be made at such time and in such manner as the
Secretary of the Treasury may prescribe.''
(b) Amendment of 1986 Code.--Section 412(l) of the Internal Revenue
Code of 1986 (relating to applicability of subsection) is amended by
adding at the end the following new paragraph:
``(12) Election for certain plans.--
``(A) In general.--In the case of a defined benefit
plan established and maintained by an applicable
employer, if this subsection did not apply to the plan
for the plan year beginning in 2000 (determined without
regard to paragraph (6)), then/, at the election of the
employer, the increased amount under paragraph (1) for
any applicable plan year shall be the greater of--
``(i) 20 percent of the increased amount
under paragraph (1) determined without regard
to this paragraph, or
``(ii) the increased amount which would be
determined under paragraph (1) if the deficit
reduction contribution under paragraph (2) for
the applicable plan year were determined
without regard to subparagraphs (A), (B), and
(D) of paragraph (2).
``(B) Restrictions on benefit increases.--No
amendment which increases the liabilities of the plan
by reason of any increase in benefits, any change in
the accrual of benefits, or any change in the rate at
which benefits become nonforfeitable shall be adopted
during any applicable plan year, unless--
``(i) the funded current liability
percentage (as defined in paragraph (8)(B)) as
of the end of such plan year is projected
(taking into account the effect of the
amendment) to be at least 75 percent,
``(ii) the amendment provides for an
increase in benefits under a formula which is
not based on a participant's compensation, but
only if the rate of such increase is not in
excess of the contemporaneous rate of increase
in average wages of participants covered by the amendment,
``(iii) the amendment is required by a
collective bargaining agreement which is in
effect on the date of enactment of this
subparagraph, or
``(iv) the amendment is otherwise described
in subparagraph (A) or (C) of subsection
(f)(2).
If a plan is amended during any applicable plan year in
violation of the preceding sentence, any election under
this paragraph shall not apply to any applicable plan
year ending on or after the date on which such
amendment is adopted.
``(C) Applicable employer.--For purposes of this
paragraph, the term `applicable employer' means an
employer which is--
``(i) a commercial passenger airline,
``(ii) primarily engaged in the production
or manufacture of a steel mill product or the
mining or processing of iron ore pellets, or
``(iii) an organization described in
section 501(c)(5) and which established the
plan to which this paragraph applies on June
30, 1955.
``(D) Applicable plan year.--For purposes of this
paragraph--
``(i) In general.--The term `applicable
plan year' means any plan year beginning after
December 27, 2003, and before December 28,
2005, for which the employer elects the
application of this paragraph.
``(ii) Limitation on number of years which
may be elected.--An election may not be made
under this paragraph with respect to more than
2 plan years.
``(E) Election.--An election under this paragraph
shall be made at such time and in such manner as the
Secretary may prescribe.''
(c) Effect of Election.--An election under section 412(l)(12) of
the Internal Revenue Code of 1986 or section 302(d)(12) of the Employee
Retirement Income Security Act of 1974 (as added by this section) with
respect to a plan shall not invalidate any obligation (pursuant to a
collective bargaining agreement in effect on the date of the election)
to provide benefits, to change the accrual of benefits, or to change
the rate at which benefits become nonforfeitable under the plan .
(d) Penalty for Failing To Provide Notice.--Section 502(c)(3) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1132(c)(3)) is amended by inserting ``or who fails to meet the
requirements of section 302(d)(12)(E) with respect to any person''
after ``101(e)(2) with respect to any person''.
SEC. 103. MULTIEMPLOYER PLAN FUNDING NOTICES.
(a) In General.--Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021) is amended by inserting after
subsection (e) the following new subsection:
``(f) Multiemployer Defined Benefit Plan Funding Notices.--
``(1) In general.--The administrator of a defined benefit
plan which is a multiemployer plan shall for each plan year
provide a plan funding notice to each plan participant and
beneficiary, to each labor organization representing such
participants or beneficiaries, to each employer that has an
obligation to contribute under the plan, and to the Pension
Benefit Guaranty Corporation.
``(2) Information contained in notices.--
``(A) Identifying information.--Each notice
required under paragraph (1) shall contain identifying
information, including the name of the plan, the
address and phone number of the plan administrator and
the plan's principal administrative officer, each plan
sponsor's employer identification number, and the plan
number of the plan.
``(B) Specific information.--A plan funding notice
under paragraph (1) shall include--
``(i) a statement as to whether the plan's
funded current liability percentage (as defined
in section 302(d)(8)(B)) for the plan year to
which the notice relates is at least 100
percent (and, if not, the actual percentage);
``(ii) a statement of the value of the
plan's assets, the amount of benefit payments,
and the ratio of the assets to the payments for
the plan year to which the notice relates;
``(iii) a summary of the rules governing
insolvent multiemployer plans, including the
limitations on benefit payments and any
potential benefit reductions and suspensions
(and the potential effects of such limitations,
reductions, and suspensions on the plan); and
``(iv) a general description of the
benefits under the plan which are eligible to
be guaranteed by the Pension Benefit Guaranty
Corporation, along with an explanation of the
limitations on the guarantee and the
circumstances under which such limitations
apply.
``(C) Other information.--Each notice under
paragraph (1) shall include any additional information
which the plan administrator elects to include to the
extent not inconsistent with regulations prescribed by
the Secretary.
``(3) Time for providing notice.--Any notice under
paragraph (1) shall be provided no later than two months after
the deadline (including extensions) for filing the annual
report for the plan year to which the notice relates.
``(4) Form and manner.--Any notice under paragraph (1)--
``(A) shall be provided in a form and manner
prescribed in regulations of the Secretary,
``(B) shall be written in a manner so as to be
understood by the average plan participant, and
``(C) may be provided in written, electronic, or
other appropriate form to the extent such form is
reasonably accessible to persons to whom the notice is
required to be provided.''
(b) Penalties.--Section 502(c)(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(c)(1)) is amended by striking ``or
section 101(e)(1)'' and inserting ``, section 101(e)(1), or section
101(f)''.
(c) Regulations and Model Notice.--The Secretary of Labor shall,
not later than 1 year after the date of the enactment of this Act,
issue regulations (including a model notice) necessary to implement the
amendments made by this section.
(d) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2004.
SEC. 104. AMORTIZATION HIATUS FOR NET EXPERIENCE LOSSES IN
MULTIEMPLOYER PLANS.
(a) Employee Retirement Income Security Act of 1974.--
(1) In general.--Section 302(b)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.1082(b)(7)) is
amended by adding at the end the following new subparagraph:
``(F) Amortization hiatus.--
``(i) Election to amortize.--
``(I) In general.--If the 15-year
amortization period under paragraph
(2)(B)(iv) with respect to the net
experience loss of an eligible
multiemployer plan would, but for this
subparagraph, begin in any plan year
beginning after June 30, 2002, and
before July 1, 2006, the plan may
elect, with respect to 80 percent of
such net experience loss, to have such
period begin in any plan year selected
by the plan from either of the 2
immediately succeeding plan years.
``(II) Limitation.--Notwithstanding
clause (i), a plan may elect to have
this subparagraph apply to the
amortization of net experience losses
with respect to only 2 plan years
beginning after June 30, 2002, and
before July 1, 2006.
``(ii) Restrictions on benefit increases.--
An amendment which increases the liabilities of
the plan by reason of any increase in benefits,
any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan shall not take
effect for any plan year in the hiatus period.
The preceding sentence shall not apply to a
plan amendment described in subparagraph (A) or
(C) of section 304(b)(2).
``(iii) Benefit increases attributable to
increases in contributions.--Clause (ii) shall
not apply to an increase in benefits for a
group of participants resulting solely from an
increase in the contributions made on their
behalf (and not from any action taken to amend
the terms of the plan), but only if the plan's
actuary certifies that the amount of the
increase in contributions scheduled under the
terms of the plan for any year will in the
aggregate exceed the increase in the charges to
the funding standard account for such year
attributable to the corresponding scheduled
increase in benefits.
``(iv) Eligible multiemployer plan.--For
purposes of this subparagraph, the term
`eligible multiemployer plan' means a
multiemployer plan--
``(I) which had a net investment
loss for the last plan year of the plan
ending before April 1, 2003, of at
least 4 percent, and
``(II) with respect to which the
plan's actuary certifies (not taking
into account the application of this
subparagraph) that the plan is
projected to have an accumulated
funding deficiency (within the meaning
of subsection (a)(2)) for any plan year
beginning after December 31, 2002, and
on or before December 31, 2008.
For purposes of subclause (I), a plan's net
investment loss shall be determined in the
manner specified in guidance provided by the
Secretary of the Treasury on the basis of the
actual fair market value of the assets of the
plan. In making the projection under subclause
(II), the actuary shall use the actuarial
assumptions and methods used in the plan
valuation for the last plan year of the plan
ending before the date of the enactment of this
subparagraph, with the interest rate used in
such assumptions applied to the fair market
value of the assets, and take into account
contribution rates, benefit levels, and all
other relevant facts and circumstances in
effect as of the valuation date for such last
plan year.
``(v) Exception to treatment of eligible
multiemployer plan.--In no event shall a plan
be treated as an eligible multiemployer plan
under clause (iv) if--
``(I) for any taxable year
beginning during the 10-year period
preceding the first plan year for which
an election is made under clause (i),
any employer required to contribute to
the plan failed to timely pay any
excise tax imposed under section 4971
of the Internal Revenue Code of 1986
with respect to the plan, or
``(II) with respect to any of the
plan years beginning after June 30,
1993, and before the first plan year
for which an election is made under
clause (i), a waiver was granted under
section 303 of this Act or section
412(d) of the Internal Revenue Code of
1986 with respect to the plan or an
extension of an amortization period was
granted under section 304 of this Act
or section 412(e) of such Code with
respect to the plan.
``(vi) Hiatus period.--For purposes of this
subparagraph, the term `hiatus period' means
any period during which the amortization of a
net experience loss is suspended by reason of
this subparagraph.
``(vii) Interest accrued during hiatus.--
Interest shall accrue (at the rate specified
for multiemployer plans under section 304(a))
during a hiatus period on the portion of the
net experience loss the amortization of which
is suspended during such period by reason of
this subparagraph. Such interest shall be added
to the amount of such portion of the net
experience loss in determining the amount to be
amortized at the end of the hiatus period.
``(viii) Notice.--If a plan elects an
amortization hiatus under this subparagraph and
section 412(b)(7)(F) of the Internal Revenue
Code of 1986 for any plan year, the plan
administrator shall provide, within 30 days of
filing the election for such year, written
notice of the election to participants and
beneficiaries, to each labor organization
representing such participants or
beneficiaries, and to each employer that has an
obligation to contribute under the plan. Such
notice shall include with respect to any
election the amount of the net experience loss
to be deferred and the period of the deferral.
Such notice shall also include--
``(I) a description of the maximum
guaranteed monthly benefits for which
the Pension Benefit Guaranty
Corporation would provide financial
assistance if the plan became
insolvent, and
``(II) such other information as
the plan administrator elects to the
extent the inclusion of such
information is not inconsistent with
regulations prescribed by the
Secretary.
``(ix) Election.--An election under this
subparagraph shall be made at such time and in
such manner as the Secretary of the Treasury
may prescribe.''
(2) Penalty.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended to read as follows:
``(4) The Secretary may assess a civil penalty of not more
than $1,000 a day for each violation by any person of section
302(b)(7)(F)(viii).''
(b) Internal Revenue Code of 1986.--
(1) In general.--Section 412(b)(7) of the Internal Revenue
Code of 1986 (relating to special rules for multiemployer
plans) is amended by adding at the end the following new
subparagraph:
``(F) Amortization hiatus.--
``(i) Election to amortize.--
``(I) In general.--If the 15-year
amortization period under paragraph
(2)(B)(iv) with respect to the net
experience loss of an eligible
multiemployer plan would, but for this
subparagraph, begin in any plan year
beginning after June 30, 2002, and
before July 1, 2006, the plan may
elect, with respect to 80 percent of
such net experience loss, to have such
period begin in any plan year selected
by the plan from either of the 2
immediately succeeding plan years.
``(II) Limitation.--Notwithstanding
clause (i), a plan may elect to have
this subparagraph apply to the
amortization of net experience losses
with respect to only 2 plan years
beginning after June 30, 2002, and
before July 1, 2006.
``(ii) Restrictions on benefit increases.--
An amendment which increases the liabilities of
the plan by reason of any increase in benefits,
any change in the accrual of benefits, or any
change in the rate at which benefits become
nonforfeitable under the plan shall not take
effect for any plan year in the hiatus period.
The preceding sentence shall not apply to a
plan amendment described in subparagraph (A) or
(C) of subsection (f)(2).
``(iii) Benefit increases attributable to
increases in contributions.--Clause (ii) shall
not apply to an increase in benefits for a
group of participants resulting solely from an
increase in the contributions made on their
behalf (and not from any action taken to amend
the terms of the plan), but only if the plan's
actuary certifies that the amount of the
increase in contributions scheduled under the
terms of the plan for any year will in the
aggregate exceed the increase in the charges to
the funding standard account for such year
attributable to the corresponding scheduled
increase in benefits.
``(iv) Eligible multiemployer plan.--For
purposes of this subparagraph, the term
`eligible multiemployer plan' means a
multiemployer plan--
``(I) which had a net investment
loss for the last plan year of the
plan ending before April 1, 2003, of at least 4 percent, and
``(II) with respect to which the
plan's actuary certifies (not taking
into account the application of this
subparagraph) that the plan is
projected to have an accumulated
funding deficiency (within the meaning
of subsection (a)) for any plan year
beginning after December 31, 2002, and
on or before December 31, 2008.
For purposes of subclause (I), a plan's net
investment loss shall be determined in the
manner specified in guidance provided by the
Secretary of the Treasury on the basis of the
actual fair market value of the assets of the
plan. In making the projection under subclause
(II), the actuary shall use the actuarial
assumptions and methods used in the plan
valuation for the last plan year of the plan
ending before the date of the enactment of this
subparagraph, with the interest rate used in
such assumptions applied to the fair market
value of the assets, and take into account
contribution rates, benefit levels, and all
other relevant facts and circumstances in
effect as of the valuation date for such last
plan year.
``(v) Exception to treatment of eligible
multiemployer plan.--In no event shall a plan
be treated as an eligible multiemployer plan
under clause (iv) if--
``(I) for any taxable year
beginning during the 10-year period
preceding the first plan year for which
an election is made under clause (i),
any employer required to contribute to
the plan failed to timely pay any
excise tax imposed under section 4971
with respect to the plan, or
``(II) with respect to any of the
plan years beginning after June 30,
1993, and before the first plan year
for which an election is made under
clause (i), a waiver was granted under
section 412(d) or section 303 of the
Employee Retirement Income Security Act
of 1974 with respect to the plan or an
extension of an amortization period was
granted under subsection (e) or section
304 of such Act with respect to the
plan.
``(vi) Hiatus period.--For purposes of this
subparagraph, the term `hiatus period' means
any period during which the amortization of a
net experience loss is suspended by reason of
this subparagraph.
``(vii) Interest accrued during hiatus.--
Interest shall accrue (at the rate specified
for multiemployer plans under section 412(e))
during a hiatus period on the portion of the
net experience loss the amortization of which
is suspended during such period by reason of
this subparagraph. Such interest shall be added
to the amount of such portion of the net
experience loss in determining the amount to be
amortized at the end of the hiatus period.
``(viii) Election.--An election under this
subparagraph shall be made at such time and in
such manner as the Secretary may prescribe.''
(2) Qualification requirement.--Section 401(a) of such Code
is amended by inserting after paragraph (34) the following new
paragraph:
``(35) Benefit increases in certain multiemployer plans.--A
trust which is part of a plan shall not constitute a qualified
trust under this section if the plan adopts an amendment during
a hiatus period (within the meaning of section
412(b)(7)(F)(vi)) which the plan is prohibited from adopting by
reason of section 412(b)(7)(F)(ii).''.
TITLE II--OTHER PROVISIONS
SEC. 201. 2-YEAR EXTENSION OF TRANSITION RULE TO PENSION FUNDING
REQUIREMENTS.
(a) In General.--Section 769(c) of the Retirement Protection Act of
1994, as added by section 1508 of the Taxpayer Relief Act of 1997, is
amended--
(1) by inserting ``except as provided in paragraph (3),''
before ``the transition rules'', and
(2) by adding at the end the following:
``(3) Special rules.--In the case of plan years beginning in 2004
and 2005, the following transition rules shall apply in lieu of the
transition rules described in paragraph (2):
``(A) For purposes of section 412(l)(9)(A) of the
Internal Revenue Code of 1986 and section 302(d)(9)(A)
of the Employee Retirement Income Security Act of 1974,
the funded current liability percentage for any plan
year shall be treated as not less than 90 percent.
``(B) For purposes of section 412(m) of the
Internal Revenue Code of 1986 and section 302(e) of the
Employee Retirement Income Security Act of 1974, the
funded current liability percentage for any plan year
shall be treated as not less than 100 percent.
``(C) For purposes of determining unfunded vested
benefits under section 4006(a)(3)(E)(iii) of the
Employee Retirement Income Security Act of 1974, the
mortality table shall be the mortality table used by
the plan.''
(b) Effective Date.--The amendments made by this section shall
apply to plan years beginning after December 31, 2003.
SEC. 202. PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION PLAN
WITHDRAWAL LIABILITY.
(a) In General.--Section 4221 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the end
the following new subsection:
``(f) Procedures Applicable to Certain Disputes.--
``(1) In general.--If--
``(A) a plan sponsor of a plan determines that--
``(i) a complete or partial withdrawal of
an employer has occurred, or
``(ii) an employer is liable for withdrawal
liability payments with respect to the complete
or partial withdrawal of an employer from the
plan,
``(B) such determination is based in whole or in
part on a finding by the plan sponsor under section
4212(c) that a principal purpose of a transaction that
occurred before January 1, 1999, was to evade or avoid
withdrawal liability under this subtitle, and
``(C) such transaction occurred at least 5 years
before the date of the complete or partial withdrawal,
then the special rules under paragraph (2) shall be used in
applying subsections (a) and (d) of this section and section
4219(c) to the employer.
``(2) Special rules.--
``(A) Determination.--Notwithstanding subsection
(a)(3)--
``(i) a determination by the plan sponsor
under paragraph (1)(B) shall not be presumed to
be correct, and
``(ii) the plan sponsor shall have the
burden to establish, by a preponderance of the
evidence, the elements of the claim under
section 4212(c) that a principal purpose of the
transaction was to evade or avoid withdrawal
liability under this subtitle.
Nothing in this subparagraph shall affect the burden of
establishing any other element of a claim for
withdrawal liability under this subtitle.
``(B) Procedure.--Notwithstanding subsection (d)
and section 4219(c), if an employer contests the plan
sponsor's determination under paragraph (1) through an
arbitration proceeding pursuant to subsection (a), or
through a claim brought in a court of competent
jurisdiction, the employer shall not be obligated to
make any withdrawal liability payments until a final
decision in the arbitration proceeding, or in court,
upholds the plan sponsor's determination.''.
(b) Effective Date.--The amendments made by this section shall
apply to any employer that receives a notification under section
4219(b)(1) of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1399(b)(1)) after October 31, 2003.
SEC. 203. EXTENSION OF TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE
HEALTH ACCOUNTS.
(a) Amendment of Internal Revenue Code of 1986.--Paragraph (5) of
section 420(b) of the Internal Revenue Code of 1986 (relating to
expiration) is amended by striking ``December 31, 2005'' and inserting
``December 31, 2013''.
(b) Amendments of ERISA.--
(1) Section 101(e)(3) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by
striking ``Tax Relief Extension Act of 1999'' and inserting
``Fairness in Pension Stability Act''.
(2) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is
amended by striking ``Tax Relief Extension Act of 1999'' and
inserting ``Fairness in Pension Stability Act''.
(3) Paragraph (13) of section 408(b) of such Act (29 U.S.C.
1108(b)(3)) is amended--
(A) by striking ``January 1, 2006'' and inserting
``January 1, 2014'', and
(B) by striking ``Tax Relief Extension Act of
1999'' and inserting ``Fairness in Pension Stability
Act''.
SEC. 204. CLARIFICATION OF EXEMPTION FROM TAX FOR SMALL PROPERTY AND
CASUALTY INSURANCE COMPANIES.
(a) In General.--Section 501(c)(15)(A) of the Internal Revenue Code
of 1986 is amended to read as follows:
``(A) Insurance companies (as defined in section 816(a))
other than life (including interinsurers and reciprocal
underwriters) if--
``(i)(I) the gross receipts for the taxable year do
not exceed $600,000, and
``(II) more than 50 percent of such gross receipts
consist of premiums, or
``(ii) in the case of a mutual insurance company--
``(I) the gross receipts of which for the
taxable year do not exceed $150,000, and
``(II) more than 35 percent of such gross
receipts consist of premiums.
Clause (ii) shall not apply to a company if any employee of the
company, or a member of the employee's family (as defined in
section 2032A(e)(2)), is an employee of another company exempt
from taxation by reason of this paragraph (or would be so
exempt but for this sentence).''.
(b) Controlled Group Rule.--Section 501(c)(15)(C) of the Internal
Revenue Code of 1986 is amended by inserting ``, except that in
applying section 831(b)(2)(B)(ii) for purposes of this subparagraph,
subparagraphs (B) and (C) of section 1563(b)(2) shall be disregarded''
before the period at the end.
(c) Definition of Insurance Company for Section 831.--Section 831
of the Internal Revenue Code of 1986 is amended by redesignating
subsection (c) as subsection (d) and by inserting after subsection (b)
the following new subsection:
``(c) Insurance Company Defined.--For purposes of this section, the
term `insurance company' has the meaning given to such term by section
816(a)).''.
(d) Conforming Amendment.--Clause (i) of section 831(b)(2)(A) of
the Internal Revenue Code of 1986 is amended by striking ``exceed
$350,000 but''.
(e) Effective Date.--
(1) In general.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2003.
(2) Transition rule for companies in bankruptcy.--In the
case of a company or association which--
(A) for the taxable year which includes April 1,
2004, meets the requirements of section 501(c)(15)(A)
of the Internal Revenue Code of 1986, as in effect for
the taxable year beginning before January 1, 2004, and
(B) on April 1, 2004, is in a receivership,
foreclosure, or similar proceeding under the
supervision of a State court,
the amendments made by this section shall apply to taxable
years beginning after the earlier of the date such proceeding
ends or December 31, 2007.
SEC. 205. REPEAL OF REDUCTION OF DEDUCTIONS FOR MUTUAL LIFE INSURANCE
COMPANIES.
(a) In General.--Section 809 of the Internal Revenue Code of 1986
(relating to reductions in certain deduction of mutual life insurance
companies) is hereby repealed.
(b) Conforming Amendments.--
(1) Subsections (a)(2)(B) and (b)(1)(B) of section 807 of
such Code are each amended by striking ``the sum of (i)'' and
by striking ``plus (ii) any excess described in section
809(a)(2) for the taxable year,''.
(2)(A) The last sentence of section 807(d)(1) of such Code
is amended by striking ``section 809(b)(4)(B)'' and inserting
``paragraph (6)''.
(B) Subsection (d) of section 807 of such Code is amended
by adding at the end the following new paragraph:
``(6) Statutory reserves.--The term `statutory reserves'
means the aggregate amount set forth in the annual statement
with respect to items described in section 807(c). Such term
shall not include any reserve attributable to a deferred and
uncollected premium if the establishment of such reserve is not
permitted under section 811(c).''
(3) Subsection (c) of section 808 of such Code is amended
to read as follows:
``(c) Amount of Deduction.--The deduction for policyholder
dividends for any taxable year shall be an amount equal to the
policyholder dividends paid or accrued during the taxable year.''
(4) Subparagraph (A) of section 812(b)(3) of such Code is
amended by striking ``sections 808 and 809'' and inserting
``section 808''.
(5) Subsection (c) of section 817 of such Code is amended
by striking ``(other than section 809)''.
(6) Subsection (c) of section 842 of such Code is amended
by striking paragraph (3) and by redesignating paragraph (4) as
paragraph (3).
(7) The table of sections for subpart C of part I of
subchapter L of chapter 1 of such Code is amended by striking
the item relating to section 809.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2004.
SEC. 206. CONFIRMATION OF ANTITRUST STATUS OF GRADUATE MEDICAL RESIDENT
MATCHING PROGRAMS.
(a) Findings and Purposes.--
(1) Findings.--Congress makes the following findings:
(A) For over 50 years, most United States medical
school seniors and the large majority of graduate
medical education programs (popularly known as
``residency programs'') have chosen to use a matching
program to match medical students with residency
programs to which they have applied. These matching
programs have been an integral part of an educational
system that has produced the finest physicians and
medical researchers in the world.
(B) Before such matching programs were instituted,
medical students often felt pressure, at an
unreasonably early stage of their medical education, to
seek admission to, and accept offers from, residency
programs. As a result, medical students often made
binding commitments before they were in a position to
make an informed decision about a medical specialty or
a residency program and before residency programs could
make an informed assessment of students'
qualifications. This situation was inefficient,
chaotic, and unfair and it often led to placements that
did not serve the interests of either medical students
or residency programs.
(C) The original matching program, now operated by
the independent non-profit National Resident Matching
Program and popularly known as ``the Match,'' was
developed and implemented more than 50 years ago in
response to widespread student complaints about the
prior process. This Program includes on its board of
directors individuals nominated by medical student
organizations as well as by major medical education and
hospital associations.
(D) The Match uses a computerized mathematical
algorithm, as students had recommended, to analyze the
preferences of students and residency programs and
match students with their highest preferences from
among the available positions in residency programs
that listed them. Students thus obtain a residency
position in the most highly ranked program on their
list that has ranked them sufficiently high among its
preferences. Each year, about 85 percent of
participating United States medical students secure a
place in one of their top 3 residency program choices.
(E) Antitrust lawsuits challenging the matching
process, regardless of their merit or lack thereof,
have the potential to undermine this highly efficient,
pro-competitive, and long-standing process. The costs
of defending such litigation would divert the scarce
resources of our country's teaching hospitals and
medical schools from their crucial missions of patient care, physician
training, and medical research. In addition, such costs may lead to
abandonment of the matching process, which has effectively served the
interests of medical students, teaching hospitals, and patients for
over half a century.
(2) Purposes.--It is the purpose of this section to--
(A) confirm that the antitrust laws do not prohibit
sponsoring, conducting, or participating in a graduate
medical education residency matching program, or
agreeing to do so; and
(B) ensure that those who sponsor, conduct or
participate in such matching programs are not subjected
to the burden and expense of defending against
litigation that challenges such matching programs under
the antitrust laws.
(b) Application of Antitrust Laws to Graduate Medical Education
Residency Matching Programs.--
(1) Definitions.--In this subsection:
(A) Antitrust laws.--The term ``antitrust laws''--
(i) has the meaning given such term in
subsection (a) of the first section of the
Clayton Act (15 U.S.C. 12(a)), except that such
term includes section 5 of the Federal Trade
Commission Act (15 U.S.C. 45) to the extent
such section 5 applies to unfair methods of
competition; and
(ii) includes any State law similar to the
laws referred to in clause (i).
(B) Graduate medical education program.--The term
``graduate medical education program'' means--
(i) a residency program for the medical
education and training of individuals following
graduation from medical school;
(ii) a program, known as a specialty or
subspecialty fellowship program, that provides
more advanced training; and
(iii) an institution or organization that
operates, sponsors or participates in such a
program.
(C) Graduate medical education residency matching
program.--The term ``graduate medical education
residency matching program'' means a program (such as
those conducted by the National Resident Matching
Program) that, in connection with the admission of
students to graduate medical education programs, uses
an algorithm and matching rules to match students in
accordance with the preferences of students and the
preferences of graduate medical education programs.
(D) Student.--The term ``student'' means any
individual who seeks to be admitted to a graduate
medical education program.
(2) Confirmation of Antitrust Status.--It shall not be
unlawful under the antitrust laws to sponsor, conduct, or
participate in a graduate medical education residency matching
program, or to agree to sponsor, conduct, or participate in
such a program. Evidence of any of the conduct described in the
preceding sentence shall not be admissible in Federal court to
support any claim or action alleging a violation of the
antitrust laws.
(3) Applicability.--Nothing in this section shall be
construed to exempt from the antitrust laws any agreement on
the part of 2 or more graduate medical education programs to
fix the amount of the stipend or other benefits received by
students participating in such programs.
(c) Effective Date.--This section shall take effect on the date of
enactment of this Act, shall apply to conduct whether it occurs prior
to, on, or after such date of enactment, and shall apply to all
judicial and administrative actions or other proceedings pending on
such date of enactment.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
Llama 3.2 · runs locally in your browser
Ask anything about this bill. The AI reads the full text to answer.
Enter to send · Shift+Enter for new line