Employee Pension Preservation and Taxpayer Protection Act of 2005 - Amends the Internal Revenue Code and the Employee Retirement Income Security Act (ERISA) to permit commercial passenger airline pension plans to elect to restructure their unfunded plan liabilities over a 25-year period. Prohibits plans that elect restructuring to accrue future unfunded pension plan liabilities. Authorizes the Secretary of the Treasury to deny tax-exempt status to a successor of a plan restructured under this Act unless all benefit obligations of the restructured plan have been satisfied.
Amends ERISA to exempt the Pension Benefit Guaranty Corporation (PBGC) from liability for any unfunded pension plan liabilities incurred by commercial passenger airline pension plans after an election to restructure is made.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2106 Introduced in House (IH)]
109th CONGRESS
1st Session
H. R. 2106
To amend the Internal Revenue Code of 1986 to provide transition
funding rules for certain plans electing to cease future benefit
accruals, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 4, 2005
Mr. Price of Georgia (for himself, Mr. Linder, Mr. Baker, Mr. Chabot,
Mr. Davis of Kentucky, Mr. Deal of Georgia, Mr. Gingrey, Mr. Kingston,
Mr. Norwood, Mr. Westmoreland, Mr. Lewis of Georgia, and Mr. Scott of
Georgia) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Education and the Workforce, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide transition
funding rules for certain plans electing to cease future benefit
accruals, 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 ``Employee Pension Preservation and
Taxpayer Protection Act of 2005''.
SEC. 2. TRANSITION FUNDING RULES FOR CERTAIN PLANS THAT ARE AMENDED TO
CEASE FUTURE BENEFIT ACCRUALS.
(a) Amendment of 1986 Code.--Section 412 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subsection:
``(o) Transition Funding Standards for Certain Plans That Are
Amended to Permanently Cease Future Benefit Accruals.--
``(1) In general.--Notwithstanding any other provision of
this section, if an eligible plan elects to have this
subsection apply--
``(A) the plan shall maintain a transition funding
standard account for each applicable plan year,
``(B) the accumulated funding deficiency of the
plan for any applicable plan year for purposes of this
section and section 4971 shall be determined by using
the transition funding standard account rather than the
funding standard account used without regard to this
subsection, and
``(C) except as provided in paragraph (6), the
transition funding standard account shall be credited
and charged solely as provided in this subsection and
without regard to the requirements of subsection (b),
(d), (e), (f), (g), or (l).
``(2) Eligible plan.--For purposes of this subsection--
``(A) In general.--The term `eligible plan' means a
plan (other than multiemployer plan) to which this
section applies--
``(i) which is sponsored by an applicable
employer (as defined in subsection
(l)(12)(C)(i)), and
``(ii) with respect to which the
requirements of subparagraphs (B) and (C) are
met.
``(B) Accrual restrictions.--The requirements of
this subparagraph are met if, effective as of the first
day of the first applicable plan year and at all times
thereafter, the plan provides that, except to the
extent required under section 401(a) or as provided in
paragraph (4)(C), a participant will not receive any
credit for any purpose under the plan for service with,
or for compensation earned from, the employer (or any
member of the employer's controlled group (within the
meaning of subsection (l)(8)(C))) on or after such
first day.
``(C) Restriction on amendments increasing
liabilities.--The requirements of this subparagraph are
met if, at any time during the period beginning on the
date of the enactment of this subsection and ending on
the day before the first day of the first applicable
plan year, no amendment to the plan has been adopted
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. This
subparagraph shall not apply to any plan amendment
described in clause (i) or (ii) of subsection
(l)(12)(B).
``(3) Elections and related terms.--
``(A) In general.--A plan sponsor shall make the
election under paragraph (1) at such time and in such
manner as the Secretary may prescribe. Such election,
once made, is irrevocable without the consent of the
Secretary.
``(B) Years for which election made.--
``(i) In general.--The plan sponsor may
select the first plan year to which the
election under paragraph (1) applies from among
plan years ending after the date of the
election. The election shall apply to such plan
year and all subsequent years.
``(ii) Election of new plan year.--The plan
sponsor may specify a new plan year in the
election under paragraph (1) and the plan year
of the plan may be changed to such new plan
year without the approval of the Secretary.
``(C) Applicable plan year.--The term `applicable
plan year' means each plan year to which the election
under paragraph (1) applies under subparagraph (A).
``(4) Charges to the account.--
``(A) In general.--In the case of any applicable
plan year during the amortization period, the
transition funding standard account shall be charged
with the amount necessary to amortize the unfunded
liability of the plan, determined as of the first day
of the plan year, in equal annual installments (until
fully amortized) over the remainder of the amortization
period. Such charge shall be separately determined for
each applicable plan year.
``(B) Years after amortization period.--In the case
of an applicable plan year beginning after the
amortization period, the transition funding standard
account shall be charged with the unfunded liability
determined as of the first day of the plan year.
``(C) Current funding of otherwise prohibited
credits.--Notwithstanding paragraph (2)(C), a plan may
provide credit for any applicable plan year which is
otherwise prohibited under such paragraph, but the
transition funding standard account for the plan year
shall be charged with the entire amount of the expected
increase in unfunded accrued liability (determined
under the unit credit funding method) due to benefits
accruing during the plan year which are attributable to
such credit.
``(D) Definitions.--For purposes of this
subsection--
``(i) Unfunded liability.--The term
`unfunded liability' means the unfunded accrued
liability under the plan, determined under the
unit credit funding method.
``(ii) Amortization period.--The term
`amortization period' means the 25-plan year
period beginning with the first applicable plan
year.
``(5) Credit to account.--The transition funding standard
account for any applicable plan year shall be credited with the
amount considered contributed by the employer to or under the
plan for the plan year.
``(6) Other rules relating to transition funding standard
account.--In the case of any transition funding standard
account--
``(A) the provisions of subsection (c) (other than
paragraph (7)) shall apply,
``(B) interest on underpayments, if any, shall be
charged at the rate determined under subsection (b),
``(C) in determining credits and charges to the
transition funding standard account for the first
applicable plan year, all existing amortization bases
and any credit balances shall be reduced to zero, and
``(D) in determining credits and charges to the
transition funding standard account for any applicable
plan year, the value of plan assets shall be equal to
their fair market value.''
(b) Amendment of Employee Retirement Income Security Act of 1974.--
Section 302 of the Employee Retirement Income Security Act of 1974 is
amended by adding at the end the following new subsection:
``(i) Transition Funding Standards for Certain Plans That Are
Amended to Permanently Cease Future Benefit Accruals.--
``(1) In general.--Notwithstanding any other provision of
this section, if an eligible plan elects to have this
subsection apply--
``(A) the plan shall maintain a transition funding
standard account for each applicable plan year,
``(B) the accumulated funding deficiency of the
plan for any applicable plan year for purposes of this
section and section 4971 of the Internal Revenue Code
of 1986 shall be determined by using the transition
funding standard account rather than the funding
standard account used without regard to this
subsection, and
``(C) except as provided in paragraph (6), the
transition funding standard account shall be credited
and charged solely as provided in this subsection and
without regard to the requirements of subsection (b) or
(d) of this section or section 303, 304, 305, 306, or
307.
``(2) Eligible plan.--For purposes of this subsection--
``(A) In general.--The term `eligible plan' means a
plan (other than multiemployer plan) to which this
section applies--
``(i) which is sponsored by an applicable
employer (as defined in subsection
(d)(12)(C)(i)), and
``(ii) with respect to which the
requirements of subparagraphs (B) and (C) are
met.
``(B) Accrual restrictions.--The requirements of
this subparagraph are met if, effective as of the first
day of the first applicable plan year and at all times
thereafter, the plan provides that, except to the
extent required under part 2 or as provided in
paragraph (4)(C), a participant will not receive any
credit for any purpose under the plan for service with,
or for compensation earned from, the employer (or any
member of the employer's controlled group (within the
meaning of subsection (d)(8)(C))) on or after such
first day.
``(C) Restriction on amendments increasing
liabilities.--The requirements of this subparagraph are
met if, at any time during the period beginning on the
date of the enactment of this subsection and ending on
the day before the first day of the first applicable
plan year, no amendment to the plan has been adopted
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. This
subparagraph shall not apply to any plan amendment
described in clause (i) or (ii) of subsection
(d)(12)(B).
``(3) Elections and related terms.--
``(A) In general.--A plan sponsor shall make the
election under paragraph (1) at such time and in such
manner as the Secretary may prescribe. Such election,
once made, is irrevocable without the consent of the
Secretary of the Treasury.
``(B) Years for which election made.--
``(i) In general.--The plan sponsor may
select the first plan year to which the
election under paragraph (1) applies from among
plan years ending after the date of the
election. The election shall apply to such plan
year and all subsequent years.
``(ii) Election of new plan year.--The plan
sponsor may specify a new plan year in the
election under paragraph (1) and the plan year
of the plan may be changed to such new plan
year without the approval of the Secretary of
the Treasury.
``(C) Applicable plan year.--For purposes of this
subsection, the term `applicable plan year' means each
plan year to which the election under paragraph (1)
applies under subparagraph (A).
``(4) Charges to the account.--
``(A) In general.--In the case of any applicable
plan year during the amortization period, the
transition funding standard account shall be charged
with the amount necessary to amortize the unfunded
liability of the plan, determined as of the first day
of the plan year, in equal annual installments (until
fully amortized) over the remainder of the amortization
period. Such charge shall be separately determined for
each applicable plan year.
``(B) Years after amortization period.--In the case
of an applicable plan year beginning after the
amortization period, the transition funding standard
account shall be charged with the unfunded liability
determined as of the first day of the plan year.
``(C) Current funding of otherwise prohibited
credits.--Notwithstanding paragraph (2)(C), a plan may
provide credit for any applicable plan year which is
otherwise prohibited under such paragraph, but the
transition funding standard account for the plan year
shall be charged with the entire amount of the expected
increase in unfunded accrued liability (determined
under the unit credit funding method) due to benefits
accruing during the plan year which are attributable to
such credit.
``(D) Definitions.--For purposes of this
subsection--
``(i) Unfunded liability.--The term
`unfunded liability' means the unfunded accrued
liability under the plan, determined under the
unit credit funding method.
``(ii) Amortization period.--The term
`amortization period' means the 25-plan year
period beginning with the first applicable plan
year.
``(5) Credit to account.--The transition funding standard
account for any applicable plan year shall be credited with the
amount considered contributed by the employer to or under the
plan for the plan year.
``(6) Other rules relating to transition funding standard
account.--In the case of any transition funding standard
account--
``(A) the provisions of subsection (c) (other than
paragraph (7)) shall apply,
``(B) interest on underpayments, if any, shall be
charged at the rate determined under subsection (b),
``(C) in determining credits and charges to the
transition funding standard account for the first
applicable plan year, all existing amortization bases
and any credit balances shall be reduced to zero, and
``(D) in determining credits and charges to the
transition funding standard account for any applicable
plan year, the value of plan assets shall be equal to
their fair market value.''.
(c) Amendment to Qualification Rules.--Section 401(a) of the
Internal Revenue Code of 1986 is amended by inserting after paragraph
(34) the following new paragraph:
``(35) Successor plans to certain plans.--If a plan to
which section 412(o) applies is maintained by an employer that
establishes or maintains 1 or more other defined benefit plans,
and such other plans in combination provide benefit accruals to
any substantial number of successor employees, the Secretary
may, in the Secretary's discretion, determine that any trust of
which any other such plan is a part does not constitute a
qualified trust under this subsection unless all benefit
obligations of the plan to which section 412(o) applies have
been satisfied. For purposes of this paragraph, the term
`successor employee' means any employee who is or was covered
by the plan to which section 412(o) applies and any employee
who performs substantially the same type of work with respect
to the same business operations as an employee covered by such
plan.''
(d) PBGC Liability Limited.--Section 4022(b) of the Employee
Retirement Income Security Act of 1974 is amended by adding at the end
the following new paragraph:
``(8) For any plan that terminates at a time when the
special funding requirements under section 302(i) and section
412(o) of the Internal Revenue Code of 1986 apply to such plan,
paragraphs (1), (3), and (7) shall be applied as if the plan
had terminated on the first day of the first applicable plan
year described in such sections.''
(e) Limitation on Deductions Under Certain Plans.--
(1) Special rules.--Section 404(a)(1)(D) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new clause:
``(v) Plans to which section 412(o)
applies.--In the case of a plan to which
section 412(o) applies, the maximum amount
deductible under the limitations of this
paragraph shall be the amount paid into such
plan for such plan year.''
(2) Combined plans.--Section 404(a)(7)(C) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following new clause:
``(iii) Plans to which section 412(o)
applies.--Contributions to a plan to which
section 412(o) applies shall be disregarded in
applying this paragraph.''
(f) Notice.--In the case of a plan amendment adopted in order to
comply with section 412(o)(2)(B) of the Internal Revenue Code of 1986
and with section 302(i)(2)(B) of the Employee Retirement Income
Security Act of 1974, any notice required under section 4980F(e) of
such Code or section 204(h) of such Act shall be subject to the timing
rules applicable to multiemployer plans under Treasury Regulation
section 54.4980F-1 Q/A-9 (or any successor provision). This subsection
shall not apply to any plan unless such plan is--
(1) described in section 412(o) of such Code and section
302(i) of such Act, and
(2) maintained pursuant to one or more collective
bargaining agreements between employee representatives and one
or more employers.
(g) Effective Date.--The amendments made by this section shall
apply to plan years ending after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsor introductory remarks on measure. (CR H3117)
Referred to the Subcommittee on Employer-Employee Relations.
Sponsor introductory remarks on measure. (CR H4990-4991)
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