(This measure has not been amended since it was introduced. The expanded summary of the House passed version is repeated here.)
Cooperative and Small Employer Charity Pension Flexibility Act - (Sec. 2) Declares that: (1) defined benefit pension plans are a cost-effective way for cooperative associations and charities to provide their employees with economic security in retirement, (2) many cooperative associations and charitable organizations are only able to provide their employees with defined benefit pension plans because those organizations are able to pool their resources using the multiple employer plan structure, and (3) the pension funding rules should encourage cooperative associations and charities to continue to provide their employees with pension benefits.
(Sec. 3) Makes this Act generally applicable to years beginning after December 31, 2013.
Title I: Amendments to Employee Retirement Income Security Act of 1974 and Other Provisions - (Sec. 101) Amends the Employee Retirement Income Security Act of 1974 (ERISA) to define a "cooperative and small employer charity pension plan" (CSEC pension plan), for purposes of this Act, as an employee pension benefit plan that is a defined benefit pension plan: (1) to which certain provisions of the Pension Protection Act of 2006 apply; or (2) that, as of June 25, 2010, was maintained by more than one employer all of whom were tax-exempt charitable organizations.
(Sec. 102) Establishes minimum funding standards for CSEC pension plans. Allows a CSEC plan that uses a funding method that requires contributions in all years to maintain an alternative minimum funding standard account for any plan year.
Permits the Secretary of the Treasury to extend an amortization of any unfunded liability of a CSEC pension plan for up to 10 years if the Secretary determines that: (1) such extension would carry out the purposes of this Act and would provide adequate protection for plan participants and their beneficiaries, and (2) failure to permit such extension would result in a substantial risk to the voluntary continuation of the plan or a substantial curtailment of pension benefit levels or employee compensation.
Sets forth rules for valuation of CSEC pension plan assets, allowable contributions, and plan liquidity. Imposes a lien in favor of a CSEC plan for failure to make required contributions.
Authorizes the Secretary to prescribe mortality tables to determine current liability of CSEC plans.
Requires a CSEC plan sponsor to establish a written funding restoration plan within 180 days after receipt of a certification from the plan actuary that the plan is in funding restoration status for a plan year.
(Sec. 103) Allows a CSEC plan sponsor to elect not to treat such plan as a CSEC plan in plan years beginning after 2013.
Amends the Pension Protection Act of 2006 to allow a pension plan sponsor an election to cease treating a plan as an eligible charity plan for plan years beginning after 2013.
(Sec. 104) Requires notices to participants in a CSEC plan to include: (1) a statement that different rules apply to CSEC plans than apply to single-employer plans; (2) for the first two years beginning after December 31, 2013, a statement that, as a result of changes made by this Act, the contributions to the plan may have changed; and (3) a statement that a CSEC plan is in funding restoration status. Authorizes the Secretary of Labor to modify the model notice required by the Pension Protection Act of 2006 to include such statements.
Requires the annual report for employee benefit plans required by ERISA to include a list of participating employers and a good faith estimate of the percentage of total contributions made by such employers during the plan year.(Sec. 105) Requires the Participant and Plan Sponsor Advocate established by ERISA to make itself available to assist CSEC plan sponsors and participants.
Title II: Amendments to Internal Revenue Code of 1986 - Amends the Internal Revenue Code, with respect to CSEC plans, to set forth rules for such plans similar to those rules added to ERISA in title I of this Act.
[113th Congress Public Law 97]
[From the U.S. Government Publishing Office]
[[Page 128 STAT. 1101]]
Public Law 113-97
113th Congress
An Act
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to provide for cooperative and small
employer charity pension plans. <<NOTE: Apr. 7, 2014 - [H.R. 4275]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <<NOTE: Cooperative and
Small Employer Charity Pension Flexibility Act.>>
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) <<NOTE: 29 USC 1001 note.>> Short Title.--This Act may be cited
as the ``Cooperative and Small Employer Charity Pension Flexibility
Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings and declarations of policy.
Sec. 3. Effective date.
TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
AND OTHER PROVISIONS
Sec. 101. Definition of cooperative and small employer charity pension
plans.
Sec. 102. Funding rules applicable to cooperative and small employer
charity pension plans.
Sec. 103. Elections.
Sec. 104. Transparency.
Sec. 105. Sponsor education and assistance.
TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986
Sec. 201. Definition of cooperative and small employer charity pension
plans.
Sec. 202. Funding rules applicable to cooperative and small employer
charity pension plans.
Sec. 203. Election not to be treated as a CSEC plan.
SEC. 2. <<NOTE: 29 USC 1001 note.>> CONGRESSIONAL FINDINGS AND
DECLARATIONS OF POLICY.
Congress finds as follows:
(1) Defined benefit pension plans are a cost-effective way
for cooperative associations and charities to provide their
employees with economic security in retirement.
(2) Many cooperative associations and charitable
organizations are only able to provide their employees with
defined benefit pension plans because those organizations are
able to pool their resources using the multiple employer plan
structure.
(3) The pension funding rules should encourage cooperative
associations and charities to continue to provide their
employees with pension benefits.
SEC. <<NOTE: 29 USC 401 note.>> 3. EFFECTIVE DATE.
Unless <<NOTE: Applicability.>> otherwise specified in this Act,
the provisions of this Act shall apply to years beginning after December
31, 2013.
[[Page 128 STAT. 1102]]
TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
AND OTHER PROVISIONS
SEC. 101. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
PENSION PLANS.
Section 210 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1060) is amended by adding at the end the following new
subsection:
``(f) Cooperative and Small Employer Charity Pension Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is an employee pension
benefit plan (other than a multiemployer plan) that is a defined
benefit plan--
``(A) <<NOTE: Applicability.>> to which section 104
of the Pension Protection Act of 2006 applies, without
regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by
section 202(b) of the Preservation of Access to
Care for Medicare Beneficiaries and Pension Relief
Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of June 25, 2010, was maintained by
more than one employer and all of the employers were
organizations described in section 501(c)(3) of the
Internal Revenue Code of 1986.
``(2) Aggregation.--All employers that are treated as a
single employer under subsection (b) or (c) of section 414 of
the Internal Revenue Code of 1986 shall be treated as a single
employer for purposes of determining if a plan was maintained by
more than one employer under paragraph (1)(B).''.
SEC. 102. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
EMPLOYER CHARITY PENSION PLANS.
(a) In General.--Part 3 of title I of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1081 et seq.) is amended by adding at
the end the following new section:
``SEC. <<NOTE: 29 USC 1085a.>> 306. MINIMUM FUNDING STANDARDS.
``(a) General <<NOTE: Definition.>> Rule.--For purposes of section
302, the term `accumulated funding deficiency' for a CSEC plan means the
excess of the total charges to the funding standard account for all plan
years (beginning with the first plan year to which section 302 applies)
over the total credits to such account for such years or, if less, the
excess of the total charges to the alternative minimum funding standard
account for such plan years over the total credits to such account for
such years.
``(b) Funding Standard Account.--
``(1) Account required.--Each plan to which this section
applies shall establish and maintain a funding standard account.
Such account shall be credited and charged solely as provided in
this section.
``(2) Charges to account.--For a plan year, the funding
standard account shall be charged with the sum of--
``(A) the normal cost of the plan for the plan year,
[[Page 128 STAT. 1103]]
``(B) the amounts necessary to amortize in equal
annual installments (until fully amortized)--
``(i) in the case of a plan in existence on
January 1, 1974, the unfunded past service
liability under the plan on the first day of the
first plan year to which section 302 applies, over
a period of 40 plan years,
``(ii) in the case of a plan which comes into
existence after January 1, 1974, but before the
first day of the first plan year beginning after
December 31, 2013, the unfunded past service
liability under the plan on the first day of the
first plan year to which section 302 applies, over
a period of 30 plan years,
``(iii) separately, with respect to each plan
year, the net increase (if any) in unfunded past
service liability under the plan arising from plan
amendments adopted in such year, over a period of
15 plan years,
``(iv) separately, with respect to each plan
year, the net experience loss (if any) under the
plan, over a period of 5 plan years, and
``(v) separately, with respect to each plan
year, the net loss (if any) resulting from changes
in actuarial assumptions used under the plan, over
a period of 10 plan years,
``(C) the amount necessary to amortize each waived
funding deficiency (within the meaning of section
302(c)(3)) for each prior plan year in equal annual
installments (until fully amortized) over a period of 5
plan years,
``(D) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 5 plan years any amount credited to the
funding standard account under paragraph (3)(D), and
``(E) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 20 years the contributions which would be
required to be made under the plan but for the
provisions of section 302(c)(7)(A)(i)(I) (as in effect
on the day before the enactment of the Pension
Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the
employer to or under the plan for the plan year,
``(B) the amount necessary to amortize in equal
annual installments (until fully amortized)--
``(i) separately, with respect to each plan
year, the net decrease (if any) in unfunded past
service liability under the plan arising from plan
amendments adopted in such year, over a period of
15 plan years,
``(ii) separately, with respect to each plan
year, the net experience gain (if any) under the
plan, over a period of 5 plan years, and
``(iii) separately, with respect to each plan
year, the net gain (if any) resulting from changes
in actuarial assumptions used under the plan, over
a period of 10 plan years,
``(C) the amount of the waived funding deficiency
(within the meaning of section 302(c)(3)) for the plan
year, and
[[Page 128 STAT. 1104]]
``(D) in the case of a plan year for which the
accumulated funding deficiency is determined under the
funding standard account if such plan year follows a
plan year for which such deficiency was determined under
the alternative minimum funding standard, the excess (if
any) of any debit balance in the funding standard
account (determined without regard to this subparagraph)
over any debit balance in the alternative minimum
funding standard account.
``(4) Combining and offsetting amounts to be amortized.--
Under <<NOTE: Regulations.>> regulations prescribed by the
Secretary of the Treasury, amounts required to be amortized
under paragraph (2) or paragraph (3), as the case may be--
``(A) may be combined into one amount under such
paragraph to be amortized over a period determined on
the basis of the remaining amortization period for all
items entering into such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the
resulting amount to be amortized over a period
determined on the basis of the remaining amortization
periods for all items entering into whichever of the two
amounts being offset is the greater.
``(5) Interest.--
``(A) In general.--Except as provided in
subparagraph (B), the funding standard account (and
items therein) shall be charged or credited (as
determined under regulations prescribed by the Secretary
of the Treasury) with interest at the appropriate rate
consistent with the rate or rates of interest used under
the plan to determine costs.
``(B) Exception.--The interest rate used for
purposes of computing the amortization charge described
in subsection (b)(2)(C) or for purposes of any
arrangement under subsection (d) for any plan year shall
be the greater of--
``(i) 150 percent of the Federal mid-term rate
(as in effect under section 1274 of the Internal
Revenue Code of 1986 for the 1st month of such
plan year), or
``(ii) the rate of interest determined under
subparagraph (A).
``(6) Amortization schedules in effect.--Amortization
schedules for amounts described in paragraphs (2) and (3) that
are in effect as of the last day of the last plan year beginning
before January 1, 2014, by reason of section 104 of the Pension
Protection Act of 2006 shall remain in effect pursuant to their
terms and this section, except that such amounts shall not be
amortized again under this section.
``(c) Special Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this section, normal costs, accrued liability, past
service liabilities, and experience gains and losses shall be
determined under the funding method used to determine costs
under the plan.
``(2) Valuation of assets.--
``(A) <<NOTE: Regulations.>> In general.--For
purposes of this section, the value of the plan's assets
shall be determined on the basis of any reasonable
actuarial method of valuation which
[[Page 128 STAT. 1105]]
takes into account fair market value and which is
permitted under regulations prescribed by the Secretary
of the Treasury.
``(B) Dedicated bond portfolio.--The Secretary of
the Treasury may by regulations provide that the value
of any dedicated bond portfolio of a plan shall be
determined by using the interest rate under section
302(b)(5) (as in effect on the day before the enactment
of the Pension Protection Act of 2006).
``(3) <<NOTE: Determination.>> Actuarial assumptions must
be reasonable.--For purposes of this section, all costs,
liabilities, rates of interest, and other factors under the plan
shall be determined on the basis of actuarial assumptions and
methods--
``(A) each of which is reasonable (taking into
account the experience of the plan and reasonable
expectations), and
``(B) which, in combination, offer the actuary's
best estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social Security
Act or in other retirement benefits created under
Federal or State law, or
``(B) a change in the definition of the term `wages'
under section 3121 of the Internal Revenue Code of 1986
or a change in the amount of such wages taken into
account under regulations prescribed for purposes of
section 401(a)(5) of such Code,
results in an increase or decrease in accrued liability under a
plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Funding method and plan year.--
``(A) Funding methods available.--All funding
methods available to CSEC plans under section 302 (as in
effect on the day before the enactment of the Pension
Protection Act of 2006) shall continue to be available
under this section.
``(B) Changes.--If the funding method for a plan is
changed, the new funding method shall become the funding
method used to determine costs and liabilities under the
plan only if the change is approved by the Secretary of
the Treasury. If the plan year for a plan is changed,
the new plan year shall become the plan year for the
plan only if the change is approved by the Secretary of
the Treasury.
``(C) Approval required for certain changes in
assumptions by certain single-employer plans subject to
additional funding requirement.--
``(i) In general.--No actuarial assumption
(other than the assumptions described in
subsection (h)(3)) used to determine the current
liability for a plan to which this subparagraph
applies may be changed without the approval of the
Secretary of the Treasury.
``(ii) Plans to which subparagraph applies.--
This subparagraph shall apply to a plan only if--
``(I) the plan is a CSEC plan,
[[Page 128 STAT. 1106]]
``(II) the aggregate unfunded vested
benefits as of the close of the
preceding plan year (as determined under
section 4006(a)(3)(E)(iii)) of such plan
and all other plans maintained by the
contributing sponsors (as defined in
section 4001(a)(13)) and members of such
sponsors' controlled groups (as defined
in section 4001(a)(14)) which are
covered by title IV (disregarding plans
with no unfunded vested benefits) exceed
$50,000,000, and
``(III) the change in assumptions
(determined after taking into account
any changes in interest rate and
mortality table) results in a decrease
in the funding shortfall of the plan for
the current plan year that exceeds
$50,000,000, or that exceeds $5,000,000
and that is 5 percent or more of the
current liability of the plan before
such change.
``(6) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency (determined without regard to the
alternative minimum funding standard account permitted under
subsection (e)) in excess of the full funding limitation--
``(A) the funding standard account shall be credited
with the amount of such excess, and
``(B) all amounts described in paragraphs (2)(B),
(C), and (D) and (3)(B) of subsection (b) which are
required to be amortized shall be considered fully
amortized for purposes of such paragraphs.
``(7) Full-funding limitation.--For purposes of paragraph
(6), the term `full-funding limitation' means the excess (if
any) of--
``(A) the accrued liability (including normal cost)
under the plan (determined under the entry age normal
funding method if such accrued liability cannot be
directly calculated under the funding method used for
the plan), over
``(B) the lesser of--
``(i) the fair market value of the plan's
assets, or
``(ii) the value of such assets determined
under paragraph (2).
``(C) Minimum amount.--
``(i) In general.--In no event shall the full-
funding limitation determined under subparagraph
(A) be less than the excess (if any) of--
``(I) 90 percent of the current
liability (determined without regard to
paragraph (4) of subsection (h)) of the
plan (including the expected increase in
such current liability due to benefits
accruing during the plan year), over
``(II) the value of the plan's
assets determined under paragraph (2).
``(ii) Assets.--For purposes of clause (i),
assets shall not be reduced by any credit balance
in the funding standard account.
``(8) Annual valuation.--
``(A) <<NOTE: Regulations.>> In general.--For
purposes of this section, a determination of experience
gains and losses and a valuation of the plan's liability
shall be made not less frequently
[[Page 128 STAT. 1107]]
than once every year, except that such determination
shall be made more frequently to the extent required in
particular cases under regulations prescribed by the
Secretary of the Treasury.
``(B) Valuation date.--
``(i) Current year.--Except as provided in
clause (ii), the valuation referred to in
subparagraph (A) shall be made as of a date within
the plan year to which the valuation refers or
within one month prior to the beginning of such
year.
``(ii) Use of prior year valuation.--The
valuation referred to in subparagraph (A) may be
made as of a date within the plan year prior to
the year to which the valuation refers if, as of
such date, the value of the assets of the plan are
not less than 100 percent of the plan's current
liability.
``(iii) Adjustments.--Information under clause
(ii) shall, in accordance with regulations, be
actuarially adjusted to reflect significant
differences in participants.
``(iv) Limitation.--A change in funding method
to use a prior year valuation, as provided in
clause (ii), may not be made unless as of the
valuation date within the prior plan year, the
value of the assets of the plan are not less than
125 percent of the plan's current liability.
``(9) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year made
by an employer during the period--
``(A) beginning on the day after the last day of
such plan year, and
``(B) ending on the day which is 8\1/2\ months after
the close of the plan year,
shall be deemed to have been made on such last day.
``(10) Anticipation of benefit increases effective in the
future.--In determining projected benefits, the funding method
of a collectively bargained CSEC plan described in section
413(a) of the Internal Revenue Code of 1986 shall anticipate
benefit increases scheduled to take effect during the term of
the collective bargaining agreement applicable to the plan.
``(d) Extension of Amortization Periods.--The period of years
required to amortize any unfunded liability (described in any clause of
subsection (b)(2)(B)) of any plan may be extended by the Secretary of
the Treasury for a period of time (not in excess of 10 years) if such
Secretary determines that such extension would carry out the purposes of
this Act and provide adequate protection for participants under the plan
and their beneficiaries, and if such Secretary determines that the
failure to permit such extension would result in--
``(1) a substantial risk to the voluntary continuation of
the plan, or
``(2) a substantial curtailment of pension benefit levels or
employee compensation.
``(e) Alternative Minimum Funding Standard.--
``(1) In general.--A CSEC plan which uses a funding method
that requires contributions in all years not less than
[[Page 128 STAT. 1108]]
those required under the entry age normal funding method may
maintain an alternative minimum funding standard account for any
plan year. Such account shall be credited and charged solely as
provided in this subsection.
``(2) Charges and credits to account.--For a plan year the
alternative minimum funding standard account shall be--
``(A) charged with the sum of--
``(i) the lesser of normal cost under the
funding method used under the plan or normal cost
determined under the unit credit method,
``(ii) the excess, if any, of the present
value of accrued benefits under the plan over the
fair market value of the assets, and
``(iii) an amount equal to the excess (if any)
of credits to the alternative minimum standard
account for all prior plan years over charges to
such account for all such years, and
``(B) credited with the amount considered
contributed by the employer to or under the plan for the
plan year.
``(3) Interest.--The alternative minimum funding standard
account (and items therein) shall be charged or credited with
interest in the manner provided under subsection (b)(5) with
respect to the funding standard account.
``(f) Quarterly Contributions Required.--
``(1) In general.--If a CSEC plan which has a funded current
liability percentage for the preceding plan year of less than
100 percent fails to pay the full amount of a required
installment for the plan year, then the rate of interest charged
to the funding standard account under subsection (b)(5) with
respect to the amount of the underpayment for the period of the
underpayment shall be equal to the greater of--
``(A) 175 percent of the Federal mid-term rate (as
in effect under section 1274 of the Internal Revenue
Code of 1986 for the 1st month of such plan year), or
``(B) the rate of interest used under the plan in
determining costs.
``(2) Amount of underpayment, period of underpayment.--For
purposes of paragraph (1)--
``(A) Amount.--The amount of the underpayment shall
be the excess of--
``(i) the required installment, over
``(ii) the amount (if any) of the installment
contributed to or under the plan on or before the
due date for the installment.
``(B) Period of underpayment.--The period for which
interest is charged under this subsection with regard to
any portion of the underpayment shall run from the due
date for the installment to the date on which such
portion is contributed to or under the plan (determined
without regard to subsection (c)(9)).
``(C) Order of crediting contributions.--For
purposes of subparagraph (A)(ii), contributions shall be
credited against unpaid required installments in the
order in which such installments are required to be
paid.
``(3) Number of required installments; due dates.--For
purposes of this subsection--
[[Page 128 STAT. 1109]]
``(A) Payable in 4 installments.--There shall be 4
required installments for each plan year.
``(B) Time for payment of installments.--
``In the case of the following required
installments: The due date is:
1st.......................................... April 15
2nd.......................................... July 15
3rd.......................................... October 15
4th.......................................... January 15 of the following year.
``(4) Amount of required installment.--For purposes of this
subsection--
``(A) In general.--The amount of any required
installment shall be 25 percent of the required annual
payment.
``(B) Required annual payment.--For purposes of
subparagraph (A), the term `required annual payment'
means the lesser of--
``(i) 90 percent of the amount required to be
contributed to or under the plan by the employer
for the plan year under section 302 (without
regard to any waiver under subsection (c)
thereof), or
``(ii) 100 percent of the amount so required
for the preceding plan year.
Clause (ii) shall not apply if the preceding plan year
was not a year of 12 months.
``(5) Liquidity requirement.--
``(A) <<NOTE: Applicability.>> In general.--A plan
to which this paragraph applies shall be treated as
failing to pay the full amount of any required
installment to the extent that the value of the liquid
assets paid in such installment is less than the
liquidity shortfall (whether or not such liquidity
shortfall exceeds the amount of such installment
required to be paid but for this paragraph).
``(B) Plans to which paragraph applies.--This
paragraph shall apply to a CSEC plan other than a plan
described in section 302(d)(6)(A) (as in effect on the
day before the enactment of the Pension Protection Act
of 2006) which--
``(i) is required to pay installments under
this subsection for a plan year, and
``(ii) has a liquidity shortfall for any
quarter during such plan year.
``(C) Period of underpayment.--For purposes of
paragraph (1), any portion of an installment that is
treated as not paid under subparagraph (A) shall
continue to be treated as unpaid until the close of the
quarter in which the due date for such installment
occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of
subparagraph (A), in no event shall such increase exceed
the amount which, when added to prior installments for
the plan year, is necessary to increase the funded
current liability percentage (taking into account the
expected
[[Page 128 STAT. 1110]]
increase in current liability due to benefits accruing
during the plan year) to 100 percent.
``(E) Definitions.--For purposes of this paragraph--
``(i) Liquidity shortfall.--The term
`liquidity shortfall' means, with respect to any
required installment, an amount equal to the
excess (as of the last day of the quarter for
which such installment is made) of the base amount
with respect to such quarter over the value (as of
such last day) of the plan's liquid assets.
``(ii) Base amount.--
``(I) In general.--The term `base
amount' means, with respect to any
quarter, an amount equal to 3 times the
sum of the adjusted disbursements from
the plan for the 12 months ending on the
last day of such quarter.
``(II) <<NOTE: Certification. Determinati
on.>> Special rule.--If the amount
determined under subclause (I) exceeds
an amount equal to 2 times the sum of
the adjusted disbursements from the plan
for the 36 months ending on the last day
of the quarter and an enrolled actuary
certifies to the satisfaction of the
Secretary of the Treasury that such
excess is the result of nonrecurring
circumstances, the base amount with
respect to such quarter shall be
determined without regard to amounts
related to those nonrecurring
circumstances.
``(iii) Disbursements from the plan.--The term
`disbursements from the plan' means all
disbursements from the trust, including purchases
of annuities, payments of single sums and other
benefits, and administrative expenses.
``(iv) Adjusted disbursements.--The term
`adjusted disbursements' means disbursements from
the plan reduced by the product of--
``(I) the plan's funded current
liability percentage for the plan year,
and
``(II) the sum of the purchases of
annuities, payments of single sums, and
such other disbursements as the
Secretary of the Treasury shall provide
in regulations.
``(v) Liquid assets.--The term `liquid assets'
means cash, marketable securities and such other
assets as specified by the Secretary of the
Treasury in regulations.
``(vi) Quarter.--The term `quarter' means,
with respect to any required installment, the 3-
month period preceding the month in which the due
date for such installment occurs.
``(F) Regulations.--The Secretary of the Treasury
may prescribe such regulations as are necessary to carry
out this paragraph.
``(6) <<NOTE: Applicability.>> Fiscal years and short
years.--
``(A) Fiscal years.--In applying this subsection to
a plan year beginning on any date other than January 1,
there shall be substituted for the months specified in
this subsection, the months which correspond thereto.
[[Page 128 STAT. 1111]]
``(B) <<NOTE: Regulations.>> Short plan year.--This
subsection shall be applied to plan years of less than
12 months in accordance with regulations prescribed by
the Secretary of the Treasury.
``(g) Imposition of Lien Where Failure To Make Required
Contributions.--
``(1) <<NOTE: Applicability.>> In general.--In the case of
a plan to which this section applies, if--
``(A) any person fails to make a required
installment under subsection (f) or any other payment
required under this section before the due date for such
installment or other payment, and
``(B) the unpaid balance of such installment or
other payment (including interest), when added to the
aggregate unpaid balance of all preceding such
installments or other payments for which payment was not
made before the due date (including interest), exceeds
$1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights to
property, whether real or personal, belonging to such person and
any other person who is a member of the same controlled group of
which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a CSEC plan for any plan year for which the
funded current liability percentage of such plan is less than
100 percent. This subsection shall not apply to any plan to
which section 4021 does not apply (as such section is in effect
on the date of the enactment of the Retirement Protection Act of
1994).
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of required installments and other payments required
under this section (including interest)--
``(A) for plan years beginning after 1987, and
``(B) for which payment has not been made before the
due date.
``(4) Notice of failure; lien.--
``(A) Notice of failure.--A person committing a
failure described in paragraph (1) shall notify the
Pension Benefit Guaranty Corporation of such failure
within 10 days of the due date for the required
installment or other payment.
``(B) Period of lien.--The lien imposed by paragraph
(1) shall arise on the due date for the required
installment or other payment and shall continue until
the last day of the first plan year in which the plan
ceases to be described in paragraph (1)(B). Such lien
shall continue to run without regard to whether such
plan continues to be described in paragraph (2) during
the period referred to in the preceding sentence.
``(C) Certain rules to apply.--Any amount with
respect to which a lien is imposed under paragraph (1)
shall be treated as taxes due and owing the United
States and rules similar to the rules of subsections
(c), (d), and (e) of section 4068 shall apply with
respect to a lien imposed by subsection (a) and the
amount with respect to such lien.
[[Page 128 STAT. 1112]]
``(5) Enforcement.--Any lien created under paragraph (1) may
be perfected and enforced only by the Pension Benefit Guaranty
Corporation, or at the direction of the Pension Benefit Guaranty
Corporation, by any contributing employer (or any member of the
controlled group of the contributing employer).
``(6) Definitions.--For purposes of this subsection--
``(A) Due date; required installment.--The terms
`due date' and `required installment' have the meanings
given such terms by subsection (f), except that in the
case of a payment other than a required installment, the
due date shall be the date such payment is required to
be made under this section.
``(B) Controlled group.--The term `controlled group'
means any group treated as a single employer under
subsections (b), (c), (m), and (o) of section 414 of the
Internal Revenue Code of 1986.
``(h) Current Liability.--For purposes of this section--
``(1) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the plan.
``(2) Treatment of unpredictable contingent event
benefits.--
``(A) In general.--For purposes of paragraph (1),
any unpredictable contingent event benefit shall not be
taken into account until the event on which the benefit
is contingent occurs.
``(B) Unpredictable contingent event benefit.--The
term `unpredictable contingent event benefit' means any
benefit contingent on an event other than--
``(i) age, service, compensation, death, or
disability, or
``(ii) an event which is reasonably and
reliably predictable (as determined by the
Secretary of the Treasury).
``(3) Interest rate and mortality assumptions used.--
``(A) Interest rate.--The rate of interest used to
determine current liability under this section shall be
the third segment rate determined under section
303(h)(2)(C).
``(B) Mortality tables.--
``(i) Secretarial authority.--The Secretary of
the Treasury may by regulation prescribe mortality
tables to be used in determining current liability
under this subsection. Such tables shall be based
upon the actual experience of pension plans and
projected trends in such experience. In
prescribing such tables, the Secretary of the
Treasury shall take into account results of
available independent studies of mortality of
individuals covered by pension plans.
``(ii) <<NOTE: Regulations.>> Periodic
review.--The Secretary of the Treasury shall
periodically (at least every 5 years) review any
tables in effect under this subsection and shall,
to the extent the Secretary of the Treasury
determines necessary, by regulation update the
tables to reflect the actual experience of pension
plans and projected trends in such experience.
``(C) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (B)--
[[Page 128 STAT. 1113]]
``(i) In general.--In the case of plan years
beginning after December 31, 1995, the Secretary
of the Treasury shall establish mortality tables
which may be used (in lieu of the tables under
subparagraph (B)) to determine current liability
under this subsection for individuals who are
entitled to benefits under the plan on account of
disability. The Secretary of the Treasury shall
establish separate tables for individuals whose
disabilities occur in plan years beginning before
January 1, 1995, and for individuals whose
disabilities occur in plan years beginning on or
after such date.
``(ii) <<NOTE: Applicability.>> Special rule
for disabilities occurring after 1994.--In the
case of disabilities occurring in plan years
beginning after December 31, 1994, the tables
under clause (i) shall apply only with respect to
individuals described in such subclause who are
disabled within the meaning of title II of the
Social Security Act and the regulations
thereunder.
``(4) Certain service disregarded.--
``(A) <<NOTE: Applicability.>> In general.--In the
case of a participant to whom this paragraph applies,
only the applicable percentage of the years of service
before such individual became a participant shall be
taken into account in computing the current liability of
the plan.
``(B) Applicable percentage.--For purposes of this
subparagraph, the applicable percentage shall be
determined as follows:
``If the years of participation are: The applicable percentage is:
1....................................... 20
2....................................... 40
3....................................... 60
4....................................... 80
5 or more............................... 100.
``(C) Participants to whom paragraph applies.--This
subparagraph shall apply to any participant who, at the
time of becoming a participant--
``(i) has not accrued any other benefit under
any defined benefit plan (whether or not
terminated) maintained by the employer or a member
of the same controlled group of which the employer
is a member,
``(ii) who first becomes a participant under
the plan in a plan year beginning after December
31, 1987, and
``(iii) has years of service greater than the
minimum years of service necessary for eligibility
to participate in the plan.
``(D) Election.--An employer may elect not to have
this subparagraph apply. Such an election, once made,
may be revoked only with the consent of the Secretary of
the Treasury.
[[Page 128 STAT. 1114]]
``(i) <<NOTE: Definition.>> Funded Current Liability Percentage.--
For purposes of this section, the term `funded current liability
percentage' means, with respect to any plan year, the percentage which--
``(1) the value of the plan's assets determined under
subsection (c)(2), is of
``(2) the current liability under the plan.
``(j) Funding Restoration Status.--Notwithstanding any other
provisions of this section--
``(1) Normal cost payment.--
``(A) <<NOTE: Definitions.>> In general.--In the
case of a CSEC plan that is in funding restoration
status for a plan year, for purposes of section 302, the
term `accumulated funding deficiency' means, for such
plan year, the greater of--
``(i) the amount described in subsection (a),
or
``(ii) the excess of the normal cost of the
plan for the plan year over the amount actually
contributed to or under the plan for the plan
year.
``(B) Normal cost.--In the case of a CSEC plan that
uses a spread gain funding method, for purposes of this
subsection, the term `normal cost' means normal cost as
determined under the entry age normal funding method.
``(2) Plan amendments.--In the case of a CSEC plan that is
in funding restoration status for a plan year, no amendment to
such plan may take effect during such plan year if such
amendment has the effect of increasing liabilities of the plan
by means of increases in benefits, establishment of new
benefits, changing the rate of benefit accrual, or changing the
rate at which benefits become nonforfeitable. This paragraph
shall not apply to any plan amendment that is required to comply
with any applicable <<NOTE: Termination date.>> law. This
paragraph shall cease to apply with respect to any plan year,
effective as of the first day of the plan year (or if later, the
effective date of the amendment) upon payment by the plan
sponsor of a contribution to the plan (in addition to any
contribution required under this section without regard to this
paragraph) in an amount equal to the increase in the funding
liability of the plan attributable to the plan amendment.
``(3) <<NOTE: Deadline. Certification.>> Funding
restoration plan.--The sponsor of a CSEC plan shall establish a
written funding restoration plan within 180 days of the receipt
by the plan sponsor of a certification from the plan actuary
that the plan is in funding restoration status for a plan year.
Such funding restoration plan shall consist of actions that are
calculated, based on reasonably anticipated experience and
reasonable actuarial assumptions, to increase the plan's funded
percentage to 100 percent over a period that is not longer than
the greater of 7 years or the shortest amount of time
practicable. Such funding restoration plan shall take into
account contributions required under this section (without
regard to this paragraph). If a plan remains in funding
restoration status for 2 or more years, such funding restoration
plan shall be updated each year after the 1st such year within
180 days of receipt by the plan sponsor of a certification from
the plan actuary that the plan remains in funding restoration
status for the plan year.
``(4) <<NOTE: Deadline.>> Annual certification by plan
actuary.--Not later than the 90th day of each plan year of a
CSEC plan, the plan actuary shall certify to the plan sponsor
whether or not
[[Page 128 STAT. 1115]]
the plan is in funding restoration status for the plan year,
based on the plan's funded percentage as of the beginning of the
plan year. For this purpose, the actuary may conclusively rely
on an estimate of--
``(A) the plan's funding liability, based on the
funding liability of the plan for the preceding plan
year and on reasonable actuarial estimates, assumptions,
and methods, and
``(B) the amount of any contributions reasonably
anticipated to be made for the preceding plan year.
Contributions described in subparagraph (B) shall be taken into
account in determining the plan's funded percentage as of the
beginning of the plan year.
``(5) Definitions.--For purposes of this subsection--
``(A) Funding restoration status.--A CSEC plan shall
be treated as in funding restoration status for a plan
year if the plan's funded percentage as of the beginning
of such plan year is less than 80 percent.
``(B) Funded percentage.--The term `funded
percentage' means the ratio (expressed as a percentage)
which--
``(i) the value of plan assets (as determined
under subsection (c)(2)), bears to
``(ii) the plan's funding liability.
``(C) Funding liability.--The term `funding
liability' for a plan year means the present value of
all benefits accrued or earned under the plan as of the
beginning of the plan year, based on the assumptions
used by the plan pursuant to this section, including the
interest rate described in subsection (b)(5)(A) (without
regard to subsection (b)(5)(B)).
``(D) Spread gain funding method.--The term `spread
gain funding method' has the meaning given such term
under rules and forms issued by the Secretary of the
Treasury.''.
(b) Separate Rules for CSEC Plans.--
(1) In general.--Paragraph (2) of section 302(a) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1082(a)) is amended by striking ``and'' at the end of
subparagraph (B), by striking the period at the end of
subparagraph (C) and inserting ``, and'', and by inserting at
the end thereof the following new subparagraph:
``(D) in the case of a CSEC plan, the employers make
contributions to or under the plan for any plan year
which, in the aggregate, are sufficient to ensure that
the plan does not have an accumulated funding deficiency
under section 306 as of the end of the plan year.''.
(2) Conforming amendments.--Section 302 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082) is
amended--
(A) by striking ``multiemployer plan'' the first
place it appears in clause (i) of subsection (c)(1)(A)
and the last place it appears in paragraph (2) of
subsection (d), and inserting ``multiemployer plan or a
CSEC plan'',
(B) by striking ``303(j)'' in paragraph (1) of
subsection (b) and inserting ``303(j) or under section
306(f)'',
(C)(i) by striking ``and'' at the end of clause (i)
of subsection (c)(1)(B),
[[Page 128 STAT. 1116]]
(ii) by striking the period at the end of clause
(ii) of subsection (c)(1)(B), and inserting ``, and'',
and
(iii) by inserting the following new clause after
clause (ii) of subsection (c)(1)(B):
``(iii) in the case of a CSEC plan, the
funding standard account shall be credited under
section 306(b)(3)(C) with the amount of the waived
funding deficiency and such amount shall be
amortized as required under section
306(b)(2)(C).'',
(D) by striking ``under paragraph (1)'' in clause
(i) of subsection (c)(4)(A) and inserting ``under
paragraph (1) or for granting an extension under section
306(d)'',
(E) by striking ``waiver under this subsection'' in
subparagraph (B) of subsection (c)(4) and inserting
``waiver under this subsection or an extension under
306(d)'',
(F) by striking ``waiver or modification'' in
subclause (I) of subsection (c)(4)(B)(i) and inserting
``waiver, modification, or extension'',
(G) by striking ``waivers'' in the heading of
subsection (c)(4)(C) and of clause (ii) of subsection
(c)(4)(C) and inserting ``waivers or extensions'',
(H) by striking ``section 304(d)'' in subparagraph
(A) of subsection (c)(7) and in paragraph (2) of
subsection (d) and inserting ``section 304(d) or section
306(d)'',
(I) by striking ``and'' at the end of subclause (I)
of subsection (c)(4)(C)(i) and adding ``or the
accumulated funding deficiency under section 306,
whichever is applicable,'',
(J) by striking ``303(e)(2),'' in subclause (II) of
subsection (c)(4)(C)(i) and inserting ``303(e)(2) or
306(b)(2)(C), whichever is applicable, and'',
(K) by adding immediately after subclause (II) of
subsection (c)(4)(C)(i) the following new subclause:
``(III) the total amounts not paid
by reason of an extension in effect
under section 306(d),'',
(L) by striking ``for waivers of'' in clause (ii) of
subsection (c)(4)(C) and inserting ``for waivers or
extensions with respect to'', and
(M) by striking ``single-employer plan'' in
subparagraph (A) of subsection (a)(2) and in clause (i)
of subsection (c)(1)(B) and inserting ``single-employer
plan (other than a CSEC plan)''.
(3) Benefit restrictions.--Subsection (g) of section 206 of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1056) is amended by adding at the end thereof the following new
paragraph:
``(12) CSEC plans.--This subsection shall not apply to a
CSEC plan (as defined in section 210(f)).''.
(4) Benefit increases.--Paragraph (3) of section 204(i) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1054(i)) is amended by striking ``multiemployer plans'' and
inserting ``multiemployer plans or CSEC plans''.
(5) Section 103.--Subparagraph (B) of section 103(d)(8) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1023(d)(8)) is amended by striking ``303(h) and 304(c)(3)'' and
inserting ``303(h), 304(c)(3), and 306(c)(3)''.
[[Page 128 STAT. 1117]]
(6) Section 502.--Subsection (c) of section 502 of the
Employee Retirement Income Security Act of <<NOTE: 29 USC
1132.>> 1974 is amended--
(A) by redesignating the last paragraph as paragraph
(11), and
(B) by adding at the end the following new
paragraph:
``(12) The Secretary may assess a civil penalty against any
sponsor of a CSEC plan of up to $100 a day from the date of the
plan sponsor's failure to comply with the requirements of
section 306(j)(3) to establish or update a funding restoration
plan.''.
(7) Section 4003.--Subparagraph (B) of section 4003(e)(1) of
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
1303(e)(1)) is amended by striking ``303(k)(1)(A) and (B) of
this Act or section 430(k)(1)(A) and (B) of the Internal Revenue
Code of 1986'' and inserting ``303(k)(1)(A) and (B) or
306(g)(1)(A) and (B) of this Act or section 430(k)(1)(A) and (B)
or 433(g)(1)(A) and (B) of the Internal Revenue Code of 1986''.
(8) Section 4010.--Paragraph (2) of section 4010(b) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1310(b)) is amended by striking ``303(k)(1)(A) and (B) of this
Act or section 430(k)(1)(A) and (B) of the Internal Revenue Code
of 1986'' and inserting ``303(k)(1)(A) and (B) or 306(g)(1)(A)
and (B) of this Act or section 430(k)(1)(A) and (B) or
433(g)(1)(A) and (B) of the Internal Revenue Code of 1986''.
(9) Section 4071.--Section 4071 of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1371) is amended by
striking ``section 303(k)(4)'' and inserting ``section 303(k)(4)
or 306(g)(4)''.
SEC. 103. ELECTIONS.
(a) Election Not To Be Treated as a CSEC Plan.--Subsection (f) of
section 210 of the Employee Retirement Income Security Act of 1974, as
added by section 101, is amended by adding at the end the following new
paragraph:
``(3) Election.--
``(A) <<NOTE: Deadline.>> In general.--If a plan
falls within the definition of a CSEC plan under this
subsection (without regard to this paragraph), such plan
shall be a CSEC plan unless the plan sponsor elects not
later than the close of the first plan year of the plan
beginning after December 31, 2013, not to be treated as
a CSEC plan. An election under the preceding sentence
shall take effect for such plan year and, once made, may
be revoked only with the consent of the Secretary of the
Treasury.
``(B) Special rule.--If a plan described in
subparagraph (A) is treated as a CSEC plan, section 104
of the Pension Protection Act of 2006, as amended by the
Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010, shall
cease to apply to such plan as of the first date as of
which such plan is treated as a CSEC plan.''.
(b) Election To Cease To Be Treated as an Eligible Charity Plan.--
Subsection (d) of section 104 of the Pension Protection Act of 2006, as
added by section 202 of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of <<NOTE: 26 USC 401 note.>> 2010,
is amended--
[[Page 128 STAT. 1118]]
(1) by striking ``For purposes of'' and inserting ``(1) In
general.--For purposes of'', and
(2) by adding at the end the following:
``(2) Election not to be an eligible charity plan.--A plan
sponsor may elect for a plan to cease to be treated as an
eligible charity plan for plan years beginning after December
31, 2013. Such election shall be made at such time and in such
form and manner as shall be prescribed by the Secretary of the
Treasury. Any such election may be revoked only with the consent
of the Secretary of the Treasury.
``(3) Election to use funding options available to other
plan sponsors.--
``(A) A plan sponsor that makes the election
described in paragraph (2) may elect for a plan to apply
the rules described in subparagraphs (B), (C), and (D)
for plan years beginning after December 31, 2013. Such
election shall be made at such time and in such form and
manner as shall be prescribed by the Secretary of the
Treasury. Any such election may be revoked only with the
consent of the Secretary of the Treasury.
``(B) Under the rules described in this
subparagraph, for the first plan year beginning after
December 31, 2013, a plan has--
``(i) an 11-year shortfall amortization base,
``(ii) a 12-year shortfall amortization base,
and
``(iii) a 7-year shortfall amortization base.
``(C) <<NOTE: Applicability.>> Under the rules
described in this subparagraph, section 303(c)(2)(A) and
(B) of the Employee Retirement Income Security Act of
1974, and section 430(c)(2)(A) and (B) of the Internal
Revenue Code of 1986 shall be applied by--
``(i) in the case of an 11-year shortfall
amortization base, substituting `11-plan-year
period' for `7-plan-year period' wherever such
phrase appears, and
``(ii) in the case of a 12-year shortfall
amortization base, substituting `12-plan-year
period' for `7-plan-year period' wherever such
phrase appears.
``(D) <<NOTE: Applicability.>> Under the rules
described in this subparagraph, section 303(c)(7) of the
Employee Retirement Income Security Act of 1974 and
section 430(c)(7) of the Internal Revenue Code of 1986
shall apply to a plan for which an election has been
made under subparagraph (A). Such provisions shall apply
in the following manner:
``(i) The first plan year beginning after
December 31, 2013, shall be treated as an election
year, and no other plan years shall be so treated.
``(ii) All references in section 303(c)(7) of
such Act and section 430(c)(7) of such Code to
`February 28, 2010' or `March 1, 2010' shall be
treated as references to `February 28, 2013' or
`March 1, 2013', respectively.
``(E) For purposes of this paragraph, the 11-year
amortization base is an amount, determined for the first
plan year beginning after December 31, 2013, equal to
the unamortized principal amount of the shortfall
amortization base (as defined in section 303(c)(3) of
the Employee Retirement Income Security Act of 1974 and
section 430(c)(3) of the Internal Revenue Code of 1986)
that would
[[Page 128 STAT. 1119]]
have applied to the plan for the first plan beginning
after December 31, 2009, if--
``(i) the plan had never been an eligible
charity plan,
``(ii) <<NOTE: Applicability.>> the plan
sponsor had made the election described in section
303(c)(2)(D)(i) of the Employee Retirement Income
Security Act of 1974 and in section
430(c)(2)(D)(i) of the Internal Revenue Code of
1986 to have section 303(c)(2)(D)(i) of such Act
and section 430(c)(2)(D)(iii) of such Code apply
with respect to the shortfall amortization base
for the first plan year beginning after December
31, 2009, and
``(iii) no event had occurred under paragraph
(6) or (7) of section 303(c) of such Act or
paragraph (6) or (7) of section 430(c) of such
Code that, as of the first day of the first plan
year beginning after December 31, 2013, would have
modified the shortfall amortization base or the
shortfall amortization installments with respect
to the first plan year beginning after December
31, 2009.
``(F) <<NOTE: Applicability.>> For purposes of this
paragraph, the 12-year amortization base is an amount,
determined for the first plan year beginning after
December 31, 2013, equal to the unamortized principal
amount of the shortfall amortization base (as defined in
section 303(c)(3) of the Employee Retirement Income
Security Act of 1974 and section 430(c)(3) of the
Internal Revenue Code of 1986) that would have applied
to the plan for the first plan beginning after December
31, 2010, if--
``(i) the plan had never been an eligible
charity plan,
``(ii) the plan sponsor had made the election
described in section 303(c)(2)(D)(i) of the
Employee Retirement Income Security Act of 1974
and in section 430(c)(2)(D)(i) of the Internal
Revenue Code of 1986 to have section
303(c)(2)(D)(i) of such Act and section
430(c)(2)(D)(iii) of such Code apply with respect
to the shortfall amortization base for the first
plan year beginning after December 31, 2010, and
``(iii) no event had occurred under paragraph
(6) or (7) of section 303(c) of such Act or
paragraph (6) or (7) of section 430(c) of such
Code that, as of the first day of the first plan
year beginning after December 31, 2013, would have
modified the shortfall amortization base or the
shortfall amortization installments with respect
to the first plan year beginning after December
31, 2010.
``(G) For purposes of this paragraph, the 7-year
shortfall amortization base is an amount, determined for
the first plan year beginning after December 31, 2013,
equal to--
``(i) the shortfall amortization base for the
first plan year beginning after December 31, 2013,
without regard to this paragraph, minus
``(ii) the sum of the 11-year shortfall
amortization base and the 12-year shortfall
amortization base.
[[Page 128 STAT. 1120]]
``(4) <<NOTE: Deadline.>> Retroactive election.--Not later
than December 31, 2014, a plan sponsor may make a one-time,
irrevocable, retroactive election to not be treated as an
eligible charity plan. Such <<NOTE: Effective date.>> election
shall be effective for plan years beginning after December 31,
2007, and shall be made by providing reasonable notice to the
Secretary of the Treasury.''.
(c) <<NOTE: 26 USC 410 note.>> Deemed Election.--For purposes of
the Internal Revenue Code of 1986, sections 4(b)(2) and 4021(b)(3) of
the Employee Retirement Income Security Act of 1974, and all other
purposes, a plan shall be deemed to have made an irrevocable election
under section 410(d) of the Internal Revenue Code of 1986 if--
(1) the plan was established before January 1, 2014;
(2) the plan falls within the definition of a CSEC plan;
(3) the plan sponsor does not make an election under section
210(f)(3)(A) of the Employee Retirement Income Security Act of
1974 and section 414(y)(3)(A) of the Internal Revenue Code of
1986, as added by this Act; and
(4) the plan, plan sponsor, administrator, or fiduciary
remits one or more premium payments for the plan to the Pension
Benefit Guaranty Corporation for a plan year beginning after
December 31, 2013.
(d) <<NOTE: 26 USC 1060 note.>> Effective Date.--The amendments
made by this section shall apply as of the date of enactment of this
Act.
SEC. 104. TRANSPARENCY.
(a) Notice to Participants.--
(1) In general.--Paragraph (2) of section 101(f) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1021(f)) is amended by adding at the end the following new
subparagraph:
``(E) Effect of csec plan rules on plan funding.--In
the case of a CSEC plan, each notice under paragraph (1)
shall include--
``(i) a statement that different rules apply
to CSEC plans than apply to single-employer plans,
``(ii) for the first 2 plan years beginning
after December 31, 2013, a statement that, as a
result of changes in the law made by the
Cooperative and Small Employer Charity Pension
Flexibility Act, the contributions to the plan may
have changed, and
``(iii) in the case of a CSEC plan that is in
funding restoration status for the plan year, a
statement that the plan is in funding restoration
status for such plan year.
A copy of the statement required under clause (iii)
shall be provided to the Secretary, the Secretary of the
Treasury, and the Director of the Pension Benefit
Guaranty Corporation.''.
(2) <<NOTE: 29 USC 1021 note.>> Model notice.--The
Secretary of Labor may modify the model notice required to be
published under section 501(c) of the Pension Protection Act of
2006 to include the information described in section
101(f)(2)(E) of the Employee Retirement Income Security Act of
1974, as added by this subsection.
(b) Notice of Failure To Meet Minimum Funding Standards.--
(1) Pending waivers.--Paragraph (2) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (29
[[Page 128 STAT. 1121]]
U.S.C. 1021(d)) is amended by striking ``303'' and inserting
``303 or 306''.
(2) Definitions.--Paragraph (3) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (21 U.S.C.
1021(d)) is amended by striking ``303(j)'' and inserting
``303(j) or 306(f), whichever is applicable''.
(c) Additional Reporting Requirements.--Section 103 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1023) is amended by
adding at the end the following new subsection:
``(g) Additional Information With Respect to Multiple Employer
Plans.--With respect to any multiple employer plan, an annual report
under this section for a plan year shall include a list of participating
employers and a good faith estimate of the percentage of total
contributions made by such participating employers during the plan
year.''.
SEC. 105. <<NOTE: 29 USC 1304a.>> SPONSOR EDUCATION AND
ASSISTANCE.
(a) Definition.--In this section, the term ``CSEC plan'' has the
meaning given that term in subsection (f)(1) of section 210 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1060(f)(1))
(as added by this Act).
(b) Education.--The Participant and Plan Sponsor Advocate
established under section 4004 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1304) shall make itself available to
assist CSEC plan sponsors and participants as part of the duties it
performs under the general supervision of the Board of Directors under
section 4004(b) of such Act (29 U.S.C. 1304(b)).
TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986
SEC. 201. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY
PENSION PLANS.
Section 414 of the Internal Revenue Code of 1986 <<NOTE: 26 USC
414.>> is amended by adding at the end the following new subsection:
``(y) Cooperative and Small Employer Charity Pension Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is a defined benefit
plan (other than a multiemployer plan)--
``(A) <<NOTE: Applicability.>> to which section 104
of the Pension Protection Act of 2006 applies, without
regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by
section 202(b) of the Preservation of Access to
Care for Medicare Beneficiaries and Pension Relief
Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of June 25, 2010, was maintained by
more than one employer and all of the employers were
organizations described in section 501(c)(3).
``(2) Aggregation.--All employers that are treated as a
single employer under subsection (b) or (c) shall be treated as
a single employer for purposes of determining if a plan was
maintained by more than one employer under paragraph (1)(B).''.
[[Page 128 STAT. 1122]]
SEC. 202. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL
EMPLOYER CHARITY PENSION PLANS.
(a) In General.--Subpart A of part III of subchapter D of chapter 1
of subtitle A of the Internal Revenue Code of 1986 is amended by adding
at the end the following new section:
``SEC. <<NOTE: 26 USC 433.>> 433. MINIMUM FUNDING STANDARDS.
``(a) General Rule.--For purposes of section 412, the term
`accumulated funding deficiency' for a CSEC plan means the excess of the
total charges to the funding standard account for all plan years
(beginning with the first plan year to which section 412 applies) over
the total credits to such account for such years or, if less, the excess
of the total charges to the alternative minimum funding standard account
for such plan years over the total credits to such account for such
years.
``(b) Funding Standard Account.--
``(1) <<NOTE: Applicability.>> Account required.--Each plan
to which this section applies shall establish and maintain a
funding standard account. Such account shall be credited and
charged solely as provided in this section.
``(2) <<NOTE: Time period.>> Charges to account.--For a
plan year, the funding standard account shall be charged with
the sum of--
``(A) the normal cost of the plan for the plan year,
``(B) the amounts necessary to amortize in equal
annual installments (until fully amortized)--
``(i) in the case of a plan in existence on
January 1, 1974, the unfunded past service
liability under the plan on the first day of the
first plan year to which section 412 applies, over
a period of 40 plan years,
``(ii) in the case of a plan which comes into
existence after January 1, 1974, but before the
first day of the first plan year beginning after
December 31, 2013, the unfunded past service
liability under the plan on the first day of the
first plan year to which section 412 applies, over
a period of 30 plan years,
``(iii) separately, with respect to each plan
year, the net increase (if any) in unfunded past
service liability under the plan arising from plan
amendments adopted in such year, over a period of
15 plan years,
``(iv) separately, with respect to each plan
year, the net experience loss (if any) under the
plan, over a period of 5 plan years, and
``(v) separately, with respect to each plan
year, the net loss (if any) resulting from changes
in actuarial assumptions used under the plan, over
a period of 10 plan years,
``(C) the amount necessary to amortize each waived
funding deficiency (within the meaning of section
412(c)(3)) for each prior plan year in equal annual
installments (until fully amortized) over a period of 5
plan years,
``(D) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 5 plan years any amount credited to the
funding standard account under paragraph (3)(D), and
``(E) the amount necessary to amortize in equal
annual installments (until fully amortized) over a
period of 20 years the contributions which would be
required to be
[[Page 128 STAT. 1123]]
made under the plan but for the provisions of section
412(c)(7)(A)(i)(I) (as in effect on the day before the
enactment of the Pension Protection Act of 2006).
``(3) Credits to account.--For a plan year, the funding
standard account shall be credited with the sum of--
``(A) the amount considered contributed by the
employer to or under the plan for the plan year,
``(B) <<NOTE: Time periods.>> the amount necessary
to amortize in equal annual installments (until fully
amortized)--
``(i) separately, with respect to each plan
year, the net decrease (if any) in unfunded past
service liability under the plan arising from plan
amendments adopted in such year, over a period of
15 plan years,
``(ii) separately, with respect to each plan
year, the net experience gain (if any) under the
plan, over a period of 5 plan years, and
``(iii) separately, with respect to each plan
year, the net gain (if any) resulting from changes
in actuarial assumptions used under the plan, over
a period of 10 plan years,
``(C) the amount of the waived funding deficiency
(within the meaning of section 412(c)(3)) for the plan
year, and
``(D) in the case of a plan year for which the
accumulated funding deficiency is determined under the
funding standard account if such plan year follows a
plan year for which such deficiency was determined under
the alternative minimum funding standard, the excess (if
any) of any debit balance in the funding standard
account (determined without regard to this subparagraph)
over any debit balance in the alternative minimum
funding standard account.
``(4) Combining and offsetting amounts to be amortized.--
Under <<NOTE: Regulations.>> regulations prescribed by the
Secretary, amounts required to be amortized under paragraph (2)
or paragraph (3), as the case may be--
``(A) may be combined into one amount under such
paragraph to be amortized over a period determined on
the basis of the remaining amortization period for all
items entering into such combined amount, and
``(B) may be offset against amounts required to be
amortized under the other such paragraph, with the
resulting amount to be amortized over a period
determined on the basis of the remaining amortization
periods for all items entering into whichever of the two
amounts being offset is the greater.
``(5) Interest.--
``(A) <<NOTE: Regulations.>> In general.--Except as
provided in subparagraph (B), the funding standard
account (and items therein) shall be charged or credited
(as determined under regulations prescribed by the
Secretary) with interest at the appropriate rate
consistent with the rate or rates of interest used under
the plan to determine costs.
``(B) Exception.--The interest rate used for
purposes of computing the amortization charge described
in subsection (b)(2)(C) or for purposes of any
arrangement under subsection (d) for any plan year shall
be the greater of--
[[Page 128 STAT. 1124]]
``(i) 150 percent of the Federal mid-term rate
(as in effect under section 1274 for the 1st month
of such plan year), or
``(ii) the rate of interest determined under
subparagraph (A).
``(6) Amortization schedules in effect.--Amortization
schedules for amounts described in paragraphs (2) and (3) that
are in effect as of the last day of the last plan year beginning
before January 1, 2014, by reason of section 104 of the Pension
Protection Act of 2006 shall remain in effect pursuant to their
terms and this section, except that such amounts shall not be
amortized again under this section.
``(c) Special Rules.--
``(1) Determinations to be made under funding method.--For
purposes of this section, normal costs, accrued liability, past
service liabilities, and experience gains and losses shall be
determined under the funding method used to determine costs
under the plan.
``(2) Valuation of assets.--
``(A) In general.--For purposes of this section, the
value of the plan's assets shall be determined on the
basis of any reasonable actuarial method of valuation
which takes into account fair market value and which is
permitted under regulations prescribed by the Secretary.
``(B) Dedicated bond portfolio.--The Secretary may
by regulations provide that the value of any dedicated
bond portfolio of a plan shall be determined by using
the interest rate under section 412(b)(5) (as in effect
on the day before the enactment of the Pension
Protection Act of 2006).
``(3) Actuarial assumptions must be reasonable.--For
purposes of this section, all costs, liabilities, rates of
interest, and other factors under the plan shall be determined
on the basis of actuarial assumptions and methods--
``(A) each of which is reasonable (taking into
account the experience of the plan and reasonable
expectations), and
``(B) which, in combination, offer the actuary's
best estimate of anticipated experience under the plan.
``(4) Treatment of certain changes as experience gain or
loss.--For purposes of this section, if--
``(A) a change in benefits under the Social Security
Act or in other retirement benefits created under
Federal or State law, or
``(B) a change in the definition of the term `wages'
under section 3121 or a change in the amount of such
wages taken into account under regulations prescribed
for purposes of section 401(a)(5),
results in an increase or decrease in accrued liability under a
plan, such increase or decrease shall be treated as an
experience loss or gain.
``(5) Funding method and plan year.--
``(A) Funding methods available.--All funding
methods available to CSEC plans under section 412 (as in
effect on the day before the enactment of the Pension
Protection Act of 2006) shall continue to be available
under this section.
[[Page 128 STAT. 1125]]
``(B) Changes.--If the funding method for a plan is
changed, the new funding method shall become the funding
method used to determine costs and liabilities under the
plan only if the change is approved by the Secretary. If
the plan year for a plan is changed, the new plan year
shall become the plan year for the plan only if the
change is approved by the Secretary.
``(C) Approval required for certain changes in
assumptions by certain single-employer plans subject to
additional funding requirement.--
``(i) In general.--No actuarial assumption
(other than the assumptions described in
subsection (h)(3)) used to determine the current
liability for a plan to which this subparagraph
applies may be changed without the approval of the
Secretary.
``(ii) Plans to which subparagraph applies.--
This subparagraph shall apply to a plan only if--
``(I) the plan is a CSEC plan,
``(II) the aggregate unfunded vested
benefits as of the close of the
preceding plan year (as determined under
section 4006(a)(3)(E)(iii) of the
Employee Retirement Income Security Act
of 1974) of such plan and all other
plans maintained by the contributing
sponsors (as defined in section
4001(a)(13) of such Act) and members of
such sponsors' controlled groups (as
defined in section 4001(a)(14) of such
Act) which are covered by title IV
(disregarding plans with no unfunded
vested benefits) exceed $50,000,000, and
``(III) the change in assumptions
(determined after taking into account
any changes in interest rate and
mortality table) results in a decrease
in the funding shortfall of the plan for
the current plan year that exceeds
$50,000,000, or that exceeds $5,000,000
and that is 5 percent or more of the
current liability of the plan before
such change.
``(6) Full funding.--If, as of the close of a plan year, a
plan would (without regard to this paragraph) have an
accumulated funding deficiency (determined without regard to the
alternative minimum funding standard account permitted under
subsection (e)) in excess of the full funding limitation--
``(A) the funding standard account shall be credited
with the amount of such excess, and
``(B) all amounts described in paragraphs (2)(B),
(C), and (D) and (3)(B) of subsection (b) which are
required to be amortized shall be considered fully
amortized for purposes of such paragraphs.
``(7) Full-funding limitation.--For purposes of paragraph
(6), the term `full-funding limitation' means the excess (if
any) of--
``(A) the accrued liability (including normal cost)
under the plan (determined under the entry age normal
funding method if such accrued liability cannot be
directly calculated under the funding method used for
the plan), over
``(B) the lesser of--
``(i) the fair market value of the plan's
assets, or
[[Page 128 STAT. 1126]]
``(ii) the value of such assets determined
under paragraph (2).
``(C) Minimum amount.--
``(i) In general.--In no event shall the full-
funding limitation determined under subparagraph
(A) be less than the excess (if any) of--
``(I) 90 percent of the current
liability (determined without regard to
paragraph (4) of subsection (h)) of the
plan (including the expected increase in
such current liability due to benefits
accruing during the plan year), over
``(II) the value of the plan's
assets determined under paragraph (2).
``(ii) Assets.--For purposes of clause (i),
assets shall not be reduced by any credit balance
in the funding standard account.
``(8) Annual valuation.--
``(A) <<NOTE: Determination. Deadline.>> In
general.--For purposes of this section, a determination
of experience gains and losses and a valuation of the
plan's liability shall be made not less frequently than
once every year, except that such determination shall be
made more frequently to the extent required in
particular cases under regulations prescribed by the
Secretary.
``(B) Valuation date.--
``(i) Current year.--Except as provided in
clause (ii), the valuation referred to in
subparagraph (A) shall be made as of a date within
the plan year to which the valuation refers or
within one month prior to the beginning of such
year.
``(ii) Use of prior year valuation.--The
valuation referred to in subparagraph (A) may be
made as of a date within the plan year prior to
the year to which the valuation refers if, as of
such date, the value of the assets of the plan are
not less than 100 percent of the plan's current
liability.
``(iii) Adjustments.--Information under clause
(ii) shall, in accordance with regulations, be
actuarially adjusted to reflect significant
differences in participants.
``(iv) Limitation.--A change in funding method
to use a prior year valuation, as provided in
clause (ii), may not be made unless as of the
valuation date within the prior plan year, the
value of the assets of the plan are not less than
125 percent of the plan's current liability.
``(9) Time when certain contributions deemed made.--For
purposes of this section, any contributions for a plan year made
by an employer during the period--
``(A) beginning on the day after the last day of
such plan year, and
``(B) ending on the day which is 8\1/2\ months after
the close of the plan year,
shall be deemed to have been made on such last day.
``(10) Anticipation of benefit increases effective in the
future.--In determining projected benefits, the funding method
of a collectively bargained CSEC plan described in section
413(a) shall anticipate benefit increases scheduled to
[[Page 128 STAT. 1127]]
take effect during the term of the collective bargaining
agreement applicable to the plan.
``(d) <<NOTE: Determinations.>> Extension of Amortization
Periods.--The period of years required to amortize any unfunded
liability (described in any clause of subsection (b)(2)(B)) of any plan
may be extended by the Secretary for a period of time (not in excess of
10 years) if the Secretary determines that such extension would carry
out the purposes of the Employee Retirement Income Security Act of 1974
and provide adequate protection for participants under the plan and
their beneficiaries, and if the Secretary determines that the failure to
permit such extension would result in--
``(1) a substantial risk to the voluntary continuation of
the plan, or
``(2) a substantial curtailment of pension benefit levels or
employee compensation.
``(e) Alternative Minimum Funding Standard.--
``(1) In general.--A CSEC plan which uses a funding method
that requires contributions in all years not less than those
required under the entry age normal funding method may maintain
an alternative minimum funding standard account for any plan
year. Such account shall be credited and charged solely as
provided in this subsection.
``(2) Charges and credits to account.--For a plan year the
alternative minimum funding standard account shall be--
``(A) charged with the sum of--
``(i) the lesser of normal cost under the
funding method used under the plan or normal cost
determined under the unit credit method,
``(ii) the excess, if any, of the present
value of accrued benefits under the plan over the
fair market value of the assets, and
``(iii) an amount equal to the excess (if any)
of credits to the alternative minimum standard
account for all prior plan years over charges to
such account for all such years, and
``(B) credited with the amount considered
contributed by the employer to or under the plan for the
plan year.
``(3) Interest.--The alternative minimum funding standard
account (and items therein) shall be charged or credited with
interest in the manner provided under subsection (b)(5) with
respect to the funding standard account.
``(f) Quarterly Contributions Required.--
``(1) In general.--If a CSEC plan which has a funded current
liability percentage for the preceding plan year of less than
100 percent fails to pay the full amount of a required
installment for the plan year, then the rate of interest charged
to the funding standard account under subsection (b)(5) with
respect to the amount of the underpayment for the period of the
underpayment shall be equal to the greater of--
``(A) 175 percent of the Federal mid-term rate (as
in effect under section 1274 for the 1st month of such
plan year), or
``(B) the rate of interest used under the plan in
determining costs.
``(2) Amount of underpayment, period of underpayment.--For
purposes of paragraph (1)--
[[Page 128 STAT. 1128]]
``(A) Amount.--The amount of the underpayment shall
be the excess of--
``(i) the required installment, over
``(ii) the amount (if any) of the installment
contributed to or under the plan on or before the
due date for the installment.
``(B) Period of underpayment.--The period for which
interest is charged under this subsection with regard to
any portion of the underpayment shall run from the due
date for the installment to the date on which such
portion is contributed to or under the plan (determined
without regard to subsection (c)(9)).
``(C) Order of crediting contributions.--For
purposes of subparagraph (A)(ii), contributions shall be
credited against unpaid required installments in the
order in which such installments are required to be
paid.
``(3) Number of required installments; due dates.--For
purposes of this subsection--
``(A) Payable in 4 installments.--There shall be 4
required installments for each plan year.
``(B) Time for payment of installments.--
``In the case of the following required
installments: The due date is:
1st.......................................... April 15
2nd.......................................... July 15
3rd.......................................... October 15
4th.......................................... January 15 of the following year.
``(4) Amount of required installment.--For purposes of this
subsection--
``(A) In general.--The amount of any required
installment shall be 25 percent of the required annual
payment.
``(B) Required annual payment.--For purposes of
subparagraph (A), the term `required annual payment'
means the lesser of--
``(i) 90 percent of the amount required to be
contributed to or under the plan by the employer
for the plan year under section 412 (without
regard to any waiver under subsection (c)
thereof), or
``(ii) 100 percent of the amount so required
for the preceding plan year.
Clause (ii) shall not apply if the preceding plan year
was not a year of 12 months.
``(5) Liquidity requirement.--
``(A) In general.--A plan to which this paragraph
applies shall be treated as failing to pay the full
amount of any required installment to the extent that
the value of the liquid assets paid in such installment
is less than the liquidity shortfall (whether or not
such liquidity shortfall exceeds the amount of such
installment required to be paid but for this paragraph).
``(B) Plans to which paragraph applies.--This
paragraph shall apply to a CSEC plan other than a plan
[[Page 128 STAT. 1129]]
described in section 412(l)(6)(A) (as in effect on the
day before the enactment of the Pension Protection Act
of 2006) which--
``(i) is required to pay installments under
this subsection for a plan year, and
``(ii) has a liquidity shortfall for any
quarter during such plan year.
``(C) Period of underpayment.--For purposes of
paragraph (1), any portion of an installment that is
treated as not paid under subparagraph (A) shall
continue to be treated as unpaid until the close of the
quarter in which the due date for such installment
occurs.
``(D) Limitation on increase.--If the amount of any
required installment is increased by reason of
subparagraph (A), in no event shall such increase exceed
the amount which, when added to prior installments for
the plan year, is necessary to increase the funded
current liability percentage (taking into account the
expected increase in current liability due to benefits
accruing during the plan year) to 100 percent.
``(E) Definitions.--For purposes of this paragraph--
``(i) Liquidity shortfall.--The term
`liquidity shortfall' means, with respect to any
required installment, an amount equal to the
excess (as of the last day of the quarter for
which such installment is made) of the base amount
with respect to such quarter over the value (as of
such last day) of the plan's liquid assets.
``(ii) Base amount.--
``(I) In general.--The term `base
amount' means, with respect to any
quarter, an amount equal to 3 times the
sum of the adjusted disbursements from
the plan for the 12 months ending on the
last day of such quarter.
``(II) <<NOTE: Certification.>>
Special rule.--If the amount determined
under subclause (I) exceeds an amount
equal to 2 times the sum of the adjusted
disbursements from the plan for the 36
months ending on the last day of the
quarter and an enrolled actuary
certifies to the satisfaction of the
Secretary that such excess is the result
of nonrecurring circumstances, the base
amount with respect to such quarter
shall be determined without regard to
amounts related to those nonrecurring
circumstances.
``(iii) Disbursements from the plan.--The term
`disbursements from the plan' means all
disbursements from the trust, including purchases
of annuities, payments of single sums and other
benefits, and administrative expenses.
``(iv) Adjusted disbursements.--The term
`adjusted disbursements' means disbursements from
the plan reduced by the product of--
``(I) the plan's funded current
liability percentage for the plan year,
and
[[Page 128 STAT. 1130]]
``(II) the sum of the purchases of
annuities, payments of single sums, and
such other disbursements as the
Secretary shall provide in regulations.
``(v) Liquid assets.--The term `liquid assets'
means cash, marketable securities and such other
assets as specified by the Secretary in
regulations.
``(vi) Quarter.--The term `quarter' means,
with respect to any required installment, the 3-
month period preceding the month in which the due
date for such installment occurs.
``(F) Regulations.--The Secretary may prescribe such
regulations as are necessary to carry out this
paragraph.
``(6) Fiscal years and short years.--
``(A) <<NOTE: Applicability.>> Fiscal years.--In
applying this subsection to a plan year beginning on any
date other than January 1, there shall be substituted
for the months specified in this subsection, the months
which correspond thereto.
``(B) <<NOTE: Regulations.>> Short plan year.--This
subsection shall be applied to plan years of less than
12 months in accordance with regulations prescribed by
the Secretary.
``(g) Imposition of Lien Where Failure To Make Required
Contributions.--
``(1) <<NOTE: Applicability.>> In general.--In the case of
a plan to which this section applies, if--
``(A) any person fails to make a required
installment under subsection (f) or any other payment
required under this section before the due date for such
installment or other payment, and
``(B) the unpaid balance of such installment or
other payment (including interest), when added to the
aggregate unpaid balance of all preceding such
installments or other payments for which payment was not
made before the due date (including interest), exceeds
$1,000,000,
then there shall be a lien in favor of the plan in the amount
determined under paragraph (3) upon all property and rights to
property, whether real or personal, belonging to such person and
any other person who is a member of the same controlled group of
which such person is a member.
``(2) Plans to which subsection applies.--This subsection
shall apply to a CSEC plan for any plan year for which the
funded current liability percentage of such plan is less than
100 percent. This subsection shall not apply to any plan to
which section 4021 of the Employee Retirement Income Security
Act of 1974 does not apply (as such section is in effect on the
date of the enactment of the Retirement Protection Act of 1994).
``(3) Amount of lien.--For purposes of paragraph (1), the
amount of the lien shall be equal to the aggregate unpaid
balance of required installments and other payments required
under this section (including interest)--
``(A) for plan years beginning after 1987, and
``(B) for which payment has not been made before the
due date.
``(4) Notice of failure; lien.--
``(A) <<NOTE: Deadline.>> Notice of failure.--A
person committing a failure described in paragraph (1)
shall notify the Pension
[[Page 128 STAT. 1131]]
Benefit Guaranty Corporation of such failure within 10
days of the due date for the required installment or
other payment.
``(B) Period of lien.--The lien imposed by paragraph
(1) shall arise on the due date for the required
installment or other payment and shall continue until
the last day of the first plan year in which the plan
ceases to be described in paragraph (1)(B). Such lien
shall continue to run without regard to whether such
plan continues to be described in paragraph (2) during
the period referred to in the preceding sentence.
``(C) Certain rules to apply.--Any amount with
respect to which a lien is imposed under paragraph (1)
shall be treated as taxes due and owing the United
States and rules similar to the rules of subsections
(c), (d), and (e) of section 4068 of the Employee
Retirement Income Security Act of 1974 shall apply with
respect to a lien imposed by subsection (a) and the
amount with respect to such lien.
``(5) Enforcement.--Any lien created under paragraph (1) may
be perfected and enforced only by the Pension Benefit Guaranty
Corporation, or at the direction of the Pension Benefit Guaranty
Corporation, by any contributing employer (or any member of the
controlled group of the contributing employer).
``(6) Definitions.--For purposes of this subsection--
``(A) Due date; required installment.--The terms
`due date' and `required installment' have the meanings
given such terms by subsection (f), except that in the
case of a payment other than a required installment, the
due date shall be the date such payment is required to
be made under this section.
``(B) Controlled group.--The term `controlled group'
means any group treated as a single employer under
subsections (b), (c), (m), and (o) of section 414.
``(h) <<NOTE: Applicability.>> Current Liability.--For purposes of
this section--
``(1) In general.--The term `current liability' means all
liabilities to employees and their beneficiaries under the plan.
``(2) Treatment of unpredictable contingent event
benefits.--
``(A) In general.--For purposes of paragraph (1),
any unpredictable contingent event benefit shall not be
taken into account until the event on which the benefit
is contingent occurs.
``(B) Unpredictable contingent event benefit.--The
term `unpredictable contingent event benefit' means any
benefit contingent on an event other than--
``(i) age, service, compensation, death, or
disability, or
``(ii) an event which is reasonably and
reliably predictable (as determined by the
Secretary).
``(3) Interest rate and mortality assumptions used.--
``(A) Interest rate.--The rate of interest used to
determine current liability under this section shall be
the third segment rate determined under section
430(h)(2)(C).
``(B) Mortality tables.--
``(i) Secretarial authority.--The Secretary
may by regulation prescribe mortality tables to be
used
[[Page 128 STAT. 1132]]
in determining current liability under this
subsection. Such tables shall be based upon the
actual experience of pension plans and projected
trends in such experience. In prescribing such
tables, the Secretary shall take into account
results of available independent studies of
mortality of individuals covered by pension plans.
``(ii) <<NOTE: Regulations.>> Periodic
review.--The Secretary shall periodically (at
least every 5 years) review any tables in effect
under this subsection and shall, to the extent the
Secretary determines necessary, by regulation
update the tables to reflect the actual experience
of pension plans and projected trends in such
experience.
``(C) Separate mortality tables for the disabled.--
Notwithstanding subparagraph (B)--
``(i) In general.--In the case of plan years
beginning after December 31, 1995, the Secretary
shall establish mortality tables which may be used
(in lieu of the tables under subparagraph (B)) to
determine current liability under this subsection
for individuals who are entitled to benefits under
the plan on account of disability. The Secretary
shall establish separate tables for individuals
whose disabilities occur in plan years beginning
before January 1, 1995, and for individuals whose
disabilities occur in plan years beginning on or
after such date.
``(ii) Special rule for disabilities occurring
after <<NOTE: Applicability.>> 1994.--In the case
of disabilities occurring in plan years beginning
after December 31, 1994, the tables under clause
(i) shall apply only with respect to individuals
described in such subclause who are disabled
within the meaning of title II of the Social
Security Act and the regulations thereunder.
``(4) Certain service disregarded.--
``(A) In general.--In the case of a participant to
whom this paragraph applies, only the applicable
percentage of the years of service before such
individual became a participant shall be taken into
account in computing the current liability of the plan.
``(B) Applicable percentage.--For purposes of this
subparagraph, the applicable percentage shall be
determined as follows:
``If the years of participation are: The applicable percentage is:
1....................................... 20
2....................................... 40
3....................................... 60
4....................................... 80
5 or more............................... 100.
``(C) Participants to whom paragraph applies.--This
subparagraph shall apply to any participant who, at the
time of becoming a participant--
[[Page 128 STAT. 1133]]
``(i) has not accrued any other benefit under
any defined benefit plan (whether or not
terminated) maintained by the employer or a member
of the same controlled group of which the employer
is a member,
``(ii) who first becomes a participant under
the plan in a plan year beginning after December
31, 1987, and
``(iii) has years of service greater than the
minimum years of service necessary for eligibility
to participate in the plan.
``(D) Election.--An employer may elect not to have
this subparagraph apply. Such an election, once made,
may be revoked only with the consent of the Secretary.
``(i) <<NOTE: Definition.>> Funded Current Liability Percentage.--
For purposes of this section, the term `funded current liability
percentage' means, with respect to any plan year, the percentage which--
``(1) the value of the plan's assets determined under
subsection (c)(2), is of
``(2) the current liability under the plan.
``(j) Funding Restoration Status.--Notwithstanding any other
provisions of this section--
``(1) <<NOTE: Definitions.>> Normal cost payment.--
``(A) In general.--In the case of a CSEC plan that
is in funding restoration status for a plan year, for
purposes of section 412, the term `accumulated funding
deficiency' means, for such plan year, the greater of--
``(i) the amount described in subsection (a),
or
``(ii) the excess of the normal cost of the
plan for the plan year over the amount actually
contributed to or under the plan for the plan
year.
``(B) Normal cost.--In the case of a CSEC plan that
uses a spread gain funding method, for purposes of this
subsection, the term `normal cost' means normal cost as
determined under the entry age normal funding method.
``(2) Plan amendments.--In the case of a CSEC plan that is
in funding restoration status for a plan year, no amendment to
such plan may take effect during such plan year if such
amendment has the effect of increasing liabilities of the plan
by means of increases in benefits, establishment of new
benefits, changing the rate of benefit accrual, or changing the
rate at which benefits become nonforfeitable. This paragraph
shall not apply to any plan amendment that is required to comply
with any applicable <<NOTE: Effective date.>> law. This
paragraph shall cease to apply with respect to any plan year,
effective as of the first day of the plan year (or if later, the
effective date of the amendment) upon payment by the plan
sponsor of a contribution to the plan (in addition to any
contribution required under this section without regard to this
paragraph) in an amount equal to the increase in the funding
liability of the plan attributable to the plan amendment.
``(3) <<NOTE: Deadline.>> Funding restoration plan.--The
sponsor of a CSEC plan shall establish a written funding
restoration plan within 180 days of the receipt by the plan
sponsor of a certification from the plan actuary that the plan
is in funding restoration status for a plan year. Such funding
restoration plan shall consist of actions that are calculated,
based on reasonably anticipated experience and reasonable
actuarial assumptions,
[[Page 128 STAT. 1134]]
to increase the plan's funded percentage to 100 percent over a
period that is not longer than the greater of 7 years or the
shortest amount of time practicable. Such funding restoration
plan shall take into account contributions required under this
section (without regard to this
paragraph). <<NOTE: Deadline. Certification.>> If a plan
remains in funding restoration status for 2 or more years, such
funding restoration plan shall be updated each year after the
1st such year within 180 days of receipt by the plan sponsor of
a certification from the plan actuary that the plan remains in
funding restoration status for the plan year.
``(4) <<NOTE: Deadline.>> Annual certification by plan
actuary.--Not later than the 90th day of each plan year of a
CSEC plan, the plan actuary shall certify to the plan sponsor
whether or not the plan is in funding restoration status for the
plan year, based on the plan's funded percentage as of the
beginning of the plan year. For this purpose, the actuary may
conclusively rely on an estimate of--
``(A) the plan's funding liability, based on the
funding liability of the plan for the preceding plan
year and on reasonable actuarial estimates, assumptions,
and methods, and
``(B) the amount of any contributions reasonably
anticipated to be made for the preceding plan year.
Contributions described in subparagraph (B) shall be taken into
account in determining the plan's funded percentage as of the
beginning of the plan year.
``(5) Definitions.--For purposes of this subsection--
``(A) Funding restoration status.--A CSEC plan shall
be treated as in funding restoration status for a plan
year if the plan's funded percentage as of the beginning
of such plan year is less than 80 percent.
``(B) Funded percentage.--The term `funded
percentage' means the ratio (expressed as a percentage)
which--
``(i) the value of plan assets (as determined
under subsection (c)(2)), bears to
``(ii) the plan's funding liability.
``(C) Funding liability.--The term `funding
liability' for a plan year means the present value of
all benefits accrued or earned under the plan as of the
beginning of the plan year, based on the assumptions
used by the plan pursuant to this section, including the
interest rate described in subsection (b)(5)(A) (without
regard to subsection (b)(5)(B)).
``(D) Spread gain funding method.--The term `spread
gain funding method' has the meaning given such term
under rules and forms issued by the Secretary.
``(E) Plan sponsor.--The term `plan sponsor' means,
with respect to a CSEC plan, the association, committee,
joint board of trustees, or other similar group of
representatives of the parties who establish or maintain
the plan.''.
(b) CSEC Plans.--Section 413 of the Internal Revenue Code of
1986 <<NOTE: 26 USC 413.>> is amended by adding at the end the
following new subsection:
``(d) CSEC Plans.--Notwithstanding any other provision of this
section, in the case of a CSEC plan--
[[Page 128 STAT. 1135]]
``(1) Funding.--The requirements of section 412 shall be
determined as if all participants in the plan were employed by a
single employer.
``(2) Application of provisions.--Paragraphs (1), (2), (3),
and (5) of subsection (c) shall apply.
``(3) Deduction limitations.--Each applicable limitation
provided by section 404(a) shall be determined as if all
participants in the plan were employed by a single employer. The
amounts contributed to or under the plan by each employer who
maintains the plan (for the portion of the taxable year included
within a plan year) shall be considered not to exceed such
applicable limitation if the anticipated employer contributions
for such plan year of all employers (determined in a reasonable
manner not inconsistent with regulations prescribed by the
Secretary) do not exceed such limitation.
If <<NOTE: Determination. Regulations.>> such anticipated
contributions exceed such limitation, the portion of each such
employer's contributions which is not deductible under section
404 shall be determined in accordance with regulations
prescribed by the Secretary.
``(4) Allocations.--Allocations of amounts under paragraph
(3) and subsection (c)(5) among the employers maintaining the
plan shall not be inconsistent with the regulations prescribed
for this purpose by the Secretary.''.
(c) Separate Rules for CSEC Plans.--
(1) In general.--Paragraph (2) of section 412(a) of the
Internal Revenue Code of 1986 <<NOTE: 26 USC 412.>> is amended
by striking ``and'' at the end of subparagraph (B), by striking
the period at the end of subparagraph (C) and inserting ``,
and'', and by inserting at the end thereof the following new
subparagraph:
``(D) in the case of a CSEC plan, the employers make
contributions to or under the plan for any plan year
which, in the aggregate, are sufficient to ensure that
the plan does not have an accumulated funding deficiency
under section 433 as of the end of the plan year.''.
(2) Conforming amendments.--Section 412 of such Code is
amended--
(A) by striking ``multiemployer plan'' in paragraph
(A) of subsection (a)(2), in clause (i) of subsection
(c)(1)(B), the first place it appears in clause (i) of
subsection (c)(1)(A), and the last place it appears in
paragraph (2) of subsection (d), and inserting
``multiemployer plan or a CSEC plan'',
(B) by striking ``430(j)'' in paragraph (1) of
subsection (b) and inserting ``430(j) or under section
433(f)'',
(C)(i) by striking ``and'' at the end of clause (i)
of subsection (c)(1)(B),
(ii) by striking the period at the end of clause
(ii) of subsection (c)(1)(B) and inserting ``, and'',
and
(iii) by inserting the following new clause after
clause (ii) of subsection (c)(1)(B):
``(iii) in the case of a CSEC plan, the
funding standard account shall be credited under
section 433(b)(3)(C) with the amount of the waived
funding deficiency and such amount shall be
amortized as required under section
433(b)(2)(C).'',
(D) by striking ``under paragraph (1)'' in clause
(i) of subsection (c)(4)(A) and inserting ``under
paragraph (1) or for granting an extension under section
433(d)'',
[[Page 128 STAT. 1136]]
(E) by striking ``waiver under this subsection'' in
subparagraph (B) of subsection (c)(4) and inserting
``waiver under this subsection or an extension under
433(d)'',
(F) by striking ``waiver or modification'' in
subclause (I) of subsection (c)(4)(B)(i) and inserting
``waiver, modification, or extension'',
(G) by striking ``waivers'' in the heading of
subsection (c)(4)(C) and of clause (ii) of subsection
(c)(4)(C) and inserting ``waivers or extensions'',
(H) by striking ``section 431(d)'' in subparagraph
(A) of subsection (c)(7) and in paragraph (2) of
subsection (d) and inserting ``section 431(d) or section
433(d)'',
(I) by striking ``and'' at the end of subclause (I)
of subsection (c)(4)(C)(i) and inserting ``or the
accumulated funding deficiency under section 433,
whichever is applicable,'',
(J) by striking ``430(e)(2),'' in subclause (II) of
subsection (c)(4)(C)(i) and inserting ``430(e)(2) or
433(b)(2)(C), whichever is applicable, and'',
(K) by adding immediately after subclause (II) of
subsection (c)(4)(C)(i) the following new subclause:
``(III) the total amounts not paid
by reason of an extension in effect
under section 433(d),'', and
(L) by striking ``for waivers of'' in clause (ii) of
subsection (c)(4)(C) and inserting ``for waivers or
extensions with respect to''.
(3) Benefit restrictions.--
(A) In general.--Paragraph (29) of section 401(a) of
such Code <<NOTE: 26 USC 401.>> is amended by striking
``multiemployer plan'' and inserting ``multiemployer
plan or a CSEC plan''.
(B) Conforming change.--Subsection (a) of section
436 of such Code <<NOTE: 26 USC 436.>> is amended by
striking ``single-employer plan'' and inserting
``single-employer plan (other than a CSEC plan)''.
(4) Benefit increases.--Subparagraph (C) of section
401(a)(33) of such Code is amended by striking ``multiemployer
plans'' and inserting ``multiemployer plans or CSEC plans''.
(5) Liquidity shortfalls.--
(A) In general.--Subparagraph (A) of section
401(a)(32) of such Code is amended by striking
``430(j)(4)'' each place it appears and inserting
``430(j)(4) or 433(f)(5)''.
(B) Period of shortfall.--Subparagraph (C) of
section 401(a)(32) of such Code is amended by striking
``430(j)(3) by reason of section 430(j)(4)(A) thereof''
and inserting ``430(j)(3) or 433(f) by reason of section
430(j)(4)(A) or 433(f)(5), respectively''.
(6) Deduction limits.--Subsection (o) of section 404 of such
Code <<NOTE: 26 USC 404.>> is amended by adding at the end the
following new paragraph:
``(8) <<NOTE: Applicability.>> CSEC plans.--Solely for
purposes of this subsection, a CSEC plan shall be treated as
though section 430 applied to such plan and the minimum required
contribution for any plan year shall be the amount described in
section 412(a)(2)(D).''.
[[Page 128 STAT. 1137]]
(7) Section 420.--Paragraph (5) of section 420(e) of such
Code <<NOTE: 26 USC 420.>> is amended by striking ``section
430'' each place it appears and inserting ``sections 430 and
433''.
(8) Coordination with section 4971.--
(A) Subsection (a) of section 4971 of such
Code <<NOTE: 26 USC 4971.>> is amended by striking
``and'' at the end of paragraph (1), by striking the
period at the end of paragraph (2) and inserting ``,
and'', and by adding at the end thereof the following
new paragraph:
``(3) in the case of a CSEC plan, 10 percent of the CSEC
accumulated funding deficiency as of the end of the plan year
ending with or within the taxable year.''.
(B) Subsection (b) of section 4971 of such Code is
amended--
(i) by striking ``or'' at the end of paragraph
(1), by adding ``or'' at the end of paragraph (2),
and by inserting immediately after paragraph (2)
the following new paragraph:
``(3) a tax is imposed under subsection (a)(3) on any CSEC
accumulated funding deficiency and the CSEC accumulated funding
deficiency is not corrected within the taxable period,'', and
(ii) by striking ``minimum required
contributions or accumulated funding deficiency''
and inserting ``minimum required contribution,
accumulated funding deficiency, or CSEC
accumulated funding deficiency''.
(C) Subsection (c) of section 4971 of such Code is
amended--
(i) by striking ``accumulated funding
deficiency'' each place it appears in paragraph
(2) and inserting ``accumulated funding deficiency
or CSEC accumulated funding deficiency'',
(ii) by striking ``accumulated funding
deficiency or unpaid minimum required
contribution'' each place it appears in paragraph
(3) and inserting ``accumulated funding
deficiency, CSEC accumulated funding deficiency,
or unpaid minimum required contribution'', and
(iii) by adding at the end the following new
paragraph:
``(5) <<NOTE: Definition.>> CSEC accumulated funding
deficiency.--The term `CSEC accumulated funding deficiency'
means the accumulated funding deficiency determined under
section 433.''.
(D) Paragraph (1) of section 4971(d) of such Code is
amended by striking ``accumulated funding deficiency or
unpaid minimum required contribution'' and inserting
``accumulated funding deficiency, CSEC accumulated
funding deficiency, or unpaid minimum required
contribution''.
(E) Subsection (f) of section 4971 of such Code is
amended--
(i) by striking ``430(j)(4)'' in paragraph (1)
and inserting ``430(j)(4) or 433(f)'',
(ii) by striking ``430(j)'' in paragraph
(1)(B) and inserting ``430(j) or 433(f), whichever
is applicable'', and
(iii) by striking ``412(m)(5)'' in paragraph
(3)(A) and inserting ``430(j) or 433(f), whichever
is applicable''.
[[Page 128 STAT. 1138]]
(9) Excise tax on failure to adopt funding restoration
plan.--Section 4971 of such Code <<NOTE: 26 USC 4971.>> is
amended by redesignating subsection (h) as subsection (i), and
by inserting after subsection (g) the following new subsection:
``(h) Failure of a CSEC Plan Sponsor To Adopt Funding Restoration
Plan.--
``(1) <<NOTE: Taxes.>> In general.--In the case of a CSEC
plan that is in funding restoration status (within the meaning
of section 433(j)(5)(A)), there is hereby imposed a tax on the
failure of such plan to adopt a funding restoration plan within
the time prescribed under section 433(j)(3).
``(2) <<NOTE: Time periods.>> Amount of tax.--The amount of
the tax imposed under paragraph (1) with respect to any plan
sponsor for any taxable year shall be the amount equal to $100
multiplied by the number of days during the taxable year which
are included in the period beginning on the day following the
close of the 180-day period described in section 433(j)(3) and
ending on the day on which the funding restoration plan is
adopted.
``(3) Waiver by secretary.--In the case of a failure
described in paragraph (1) which the Secretary determines is due
to reasonable cause and not to willful neglect, the Secretary
may waive a portion or all of the tax imposed by such paragraph.
``(4) Liability for tax.--The tax imposed by paragraph (1)
shall be paid by the plan sponsor (within the meaning of section
433(j)(5)(E)).''.
(10) Reporting.--
(A) In general.--Paragraph (2) of section 6059(b) of
such Code <<NOTE: 26 USC 6059.>> is amended by striking
``430,'' and inserting ``430, the accumulated funding
deficiency under section 433,''.
(B) Assumptions.--Subparagraph (B) of section
6059(b)(3) of such Code is amended by striking
``430(h)(1) or 431(c)(3)'' and inserting ``430(h)(1),
431(c)(3), or 433(c)(3)''.
SEC. 203. ELECTION NOT TO BE TREATED AS A CSEC PLAN.
(a) In General.--Section 414(y) of the Internal Revenue Code of
1986, <<NOTE: 26 USC 414.>> as added by section 201, is amended by
adding at the end the following new paragraph:
``(3) Election.--
``(A) <<NOTE: Deadline.>> In general.--If a plan
falls within the definition of a CSEC plan under this
subsection (without regard to this paragraph), such plan
shall be a CSEC plan unless the plan sponsor elects not
later than the close of the first plan year of the plan
beginning after December 31, 2013, not to be treated as
a CSEC plan. An election under the preceding sentence
shall take effect for such plan year and, once made, may
be revoked only with the consent of the Secretary.
``(B) Special rule.--If a plan described in
subparagraph (A) is treated as a CSEC plan, section 104
of the Pension Protection Act of 2006, as amended by the
Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010, shall
cease to apply to such plan as of the first date as of
which such plan is treated as a CSEC plan.''.
[[Page 128 STAT. 1139]]
(b) <<NOTE: 26 USC 414 note.>> Effective Date.--The amendment made
by this section shall apply as of the date of enactment of this Act.
Approved April 7, 2014.
LEGISLATIVE HISTORY--H.R. 4275 (S. 1302):
---------------------------------------------------------------------------
CONGRESSIONAL RECORD, Vol. 160 (2014):
Mar. 24, considered and passed House.
Mar. 25, considered and passed Senate.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, 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 Education and the Workforce, and in addition to the Committee on Ways and Means, 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.
Mrs. Brooks (IN) moved to suspend the rules and pass the bill.
Considered under suspension of the rules. (consideration: CR H2577-2589)
DEBATE - The House proceeded with forty minutes of debate on H.R. 4275.
Passed/agreed to in House: On motion to suspend the rules and pass the bill Agreed to by voice vote.(text: CR H2577-2588)
On motion to suspend the rules and pass the bill Agreed to by voice vote. (text: CR H2577-2588)
Passed/agreed to in Senate: Received in the Senate, read twice, considered, read the third time, and passed, pursuant to the order of January 28, 2014, without amendment by Unanimous Consent.(consideration: CR S1710)
Enacted as Public Law 113-97
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Received in the Senate, read twice, considered, read the third time, and passed, pursuant to the order of January 28, 2014, without amendment by Unanimous Consent. (consideration: CR S1710)
See also S. 1302.
Message on Senate action sent to the House.
Presented to President.
Presented to President.
Signed by President.
Signed by President.
Became Public Law No: 113-97.
Became Public Law No: 113-97.