[108th Congress Public Law 218]
[From the U.S. Government Printing Office]
[DOCID: f:publ218.108]
[[Page 595]]
PENSION FUNDING EQUITY ACT OF 2004
[[Page 118 STAT. 596]]
Public Law 108-218
108th Congress
An Act
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to temporarily replace the 30-year
Treasury rate with a rate based on long-term corporate bonds for certain
pension plan funding requirements and other provisions, and for other
purposes. <<NOTE: Apr. 10, 2004 - [H.R. 3108]>>
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress <<NOTE: Pension Funding Equity Act
of 2004. 29 USC 1001 note.>> assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Pension Funding Equity Act of 2004''.
TITLE I--PENSION FUNDING
SEC. 101. TEMPORARY REPLACEMENT OF 30-YEAR TREASURY RATE.
(a) Employee Retirement Income Security Act of 1974.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 302(b)(5)(B)
of the Employee Retirement Income Security
Act <<NOTE: 29 USC 1082.>> of 1974 is amended by
redesignating subclause (II) as subclause (III) and by
inserting after subclause (I) the following new
subclause:
``(II) Special rule for years 2004 and 2005.--
In the case of plan years beginning after December
31, 2003, and before January 1, 2006, the term
`permissible range' means a rate of interest which
is not above, and not more than 10 percent below,
the weighted average of the rates of interest on
amounts invested conservatively in long-term
investment grade corporate bonds during the 4-year
period ending on the last day before the beginning
of the plan year. Such rates shall be determined
by the Secretary of the Treasury on the basis of 2
or more indices that are selected periodically by
the Secretary of the Treasury and that are in the
top 3 quality levels available. The <<NOTE: Public
information.>> Secretary of the Treasury shall
make the permissible range, and the indices and
methodology used to determine the average rate,
publicly available.''.
(B) Secretarial authority.--Subclause (III) of
section 302(b)(5)(B)(ii) of such Act, as redesignated by
subparagraph (A), is amended--
(i) by inserting ``or (II)'' after ``subclause
(I)'' the first place it appears, and
[[Page 118 STAT. 597]]
(ii) by striking ``subclause (I)'' the second
place it appears and inserting ``such subclause''.
(C) Conforming amendment.--Subclause (I) of section
302(b)(5)(B)(ii) of such Act <<NOTE: 29 USC 1082.>> is
amended by inserting ``or (III)'' after ``subclause
(II)''.
(2) Determination of current liability.--Clause (i) of
section 302(d)(7)(C) of such Act is amended by adding at the end
the following new subclause:
``(IV) Special rule for 2004 and
2005.--For plan years beginning in 2004
or 2005, notwithstanding subclause (I),
the rate of interest used to determine
current liability under this subsection
shall be the rate of interest under
subsection (b)(5).''.
(3) Conforming amendment.--Paragraph (7) of section 302(e)
of such Act is amended to read as follows:
``(7) Special rule for 2002.--In any case in which the
interest rate used to determine current liability is determined
under subsection (d)(7)(C)(i)(III), for purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability for the preceding plan year shall be
redetermined using 120 percent as the specified percentage
determined under subsection (d)(7)(C)(i)(II).''.
(4) PBGC.--Clause (iii) of section 4006(a)(3)(E) of such Act
is amended <<NOTE: 29 USC 1306.>> by adding at the end the
following new subclause:
``(V) In the case of plan years beginning after December 31,
2003, and before January 1, 2006, the annual yield taken into
account under subclause (II) shall be the annual rate of
interest determined by the Secretary of the Treasury on amounts
invested conservatively in long-term investment grade corporate
bonds for the month preceding the month in which the plan year
begins. For purposes of the preceding sentence, the Secretary of
the Treasury shall determine such rate of interest on the basis
of 2 or more indices that are selected periodically by the
Secretary of the Treasury and that are in the top 3 quality
levels available. <<NOTE: Public information.>> The Secretary of
the Treasury shall make the permissible range, and the indices
and methodology used to determine the rate, publicly
available.''.
(b) Internal Revenue Code of 1986.--
(1) Determination of permissible range.--
(A) In general.--Clause (ii) of section 412(b)(5)(B)
of the Internal Revenue Code of 1986 <<NOTE: 26 USC
412.>> is amended by redesignating subclause (II) as
subclause (III) and by inserting after subclause (I) the
following new subclause:
``(II) Special rule for years 2004
and 2005.--In the case of plan years
beginning after December 31, 2003, and
before January 1, 2006, the term
`permissible range' means a rate of
interest which is not above, and not
more than 10 percent below, the weighted
average of the rates of interest on
amounts invested conservatively in long-
term investment grade corporate bonds
during the 4-year period ending on the
last day before the beginning of the
plan year. Such rates shall be
determined by the Secretary on the basis
of 2 or more
[[Page 118 STAT. 598]]
indices that are selected periodically
by the Secretary and that are in the top
3 quality levels
available. <<NOTE: Public
information.>> The Secretary shall make
the permissible range, and the indices
and methodology used to determine the
average rate, publicly available.''.
(B) Secretarial authority.--Subclause (III) of
section 412(b)(5)(B)(ii) of such Code, as redesignated
by subparagraph (A), <<NOTE: 26 USC 412.>> is amended--
(i) by inserting ``or (II)'' after ``subclause
(I)'' the first place it appears, and
(ii) by striking ``subclause (I)'' the second
place it appears and inserting ``such subclause''.
(C) Conforming amendment.--Subclause (I) of section
412(b)(5)(B)(ii) of such Code is amended by inserting
``or (III)'' after ``subclause (II)''.
(2) Determination of current liability.--Clause (i) of
section 412(l)(7)(C) of such Code is amended by adding at the
end the following new subclause:
``(IV) Special rule for 2004 and
2005.--For plan years beginning in 2004
or 2005, notwithstanding subclause (I),
the rate of interest used to determine
current liability under this subsection
shall be the rate of interest under
subsection (b)(5).''.
(3) Conforming amendment.--Paragraph (7) of section 412(m)
of such Code is amended to read as follows:
``(7) Special rule for 2002.--In any case in which the
interest rate used to determine current liability is determined
under subsection (l)(7)(C)(i)(III), for purposes of applying
paragraphs (1) and (4)(B)(ii) for plan years beginning in 2002,
the current liability for the preceding plan year shall be
redetermined using 120 percent as the specified percentage
determined under subsection (l)(7)(C)(i)(II).''.
(4) Limitation on certain assumptions.--Section
415(b)(2)(E)(ii) of such Code <<NOTE: 26 USC 415.>> is amended
by inserting ``, except that in the case of plan years beginning
in 2004 or 2005, `5.5 percent' shall be substituted for `5
percent' in clause (i)'' before the period at the end.
(5) Election to disregard modification for deduction
purposes.--Section 404(a)(1) of such Code <<NOTE: 26 USC
404.>> is amended by adding at the end the following new
subparagraph:
``(F) Election to disregard modified interest
rate.--An employer may elect to disregard subsections
(b)(5)(B)(ii)(II) and (l)(7)(C)(i)(IV) of section 412
solely for purposes of determining the interest rate
used in calculating the maximum amount of the deduction
allowable under this paragraph.''.
(c) Provisions <<NOTE: 26 USC 411 note.>> Relating to Plan
Amendments.--
(1) In general.--If this subsection applies to any plan or
annuity contract amendment--
(A) such plan or contract shall be treated as being
operated in accordance with the terms of the plan or
contract during the period described in paragraph
(2)(B)(i), and
(B) except as provided by the Secretary of the
Treasury, such plan shall not fail to meet the
requirements of section 411(d)(6) of the Internal
Revenue Code of 1986 and section
[[Page 118 STAT. 599]]
204(g) of the Employee Retirement Income Security Act of
1974 by reason of such amendment.
(2) Amendments to which section applies.--
(A) In general.--This <<NOTE: Effective
date.>> subsection shall apply to any amendment to any
plan or annuity contract which is made--
(i) pursuant to any amendment made by this
section, and
(ii) on or before the last day of the first
plan year beginning on or after January 1, 2006.
(B) Conditions.--This subsection shall not apply to
any plan or annuity contract amendment unless--
(i) during the period beginning on the date
the amendment described in subparagraph (A)(i)
takes effect and ending on the date described in
subparagraph (A)(ii) (or, if earlier, the date the
plan or contract amendment is adopted), the plan
or contract is operated as if such plan or
contract amendment were in effect; and
(ii) such plan or contract amendment applies
retroactively for such period.
(d) Effective <<NOTE: 26 USC 404 note.>> Dates.--
(1) In general.--Except <<NOTE: Applicability.>> as provided
in paragraphs (2) and (3), the amendments made by this section
shall apply to plan years beginning after December 31, 2003.
(2) Lookback rules.--For purposes of applying subsections
(d)(9)(B)(ii) and (e)(1) of section 302 of the Employee
Retirement Income Security Act of 1974 and subsections
(l)(9)(B)(ii) and (m)(1) of section 412 of the Internal Revenue
Code of 1986 to plan years beginning after December 31, 2003,
the amendments made by this section may be applied as if such
amendments had been in effect for all prior plan years. The
Secretary of the Treasury may prescribe simplified assumptions
which may be used in applying the amendments made by this
section to such prior plan years.
(3) Transition rule for section 415 limitation.--In the case
of any participant or beneficiary receiving a distribution after
December 31, 2003 and before January 1, 2005, the amount payable
under any form of benefit subject to section 417(e)(3) of the
Internal Revenue Code of 1986 and subject to adjustment under
section 415(b)(2)(B) of such Code shall not, solely by reason of
the amendment made by subsection (b)(4), be less than the amount
that would have been so payable had the amount payable been
determined using the applicable interest rate in effect as of
the last day of the last plan year beginning before January 1,
2004.
SEC. 102. ELECTION OF ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION.
(a) Amendment of ERISA.--Section 302(d) of the Employee Retirement
Income Security Act of 1974 (29 U.S.C. 1082(d)) is amended by adding at
the end the following new paragraph:
``(12) Election for certain plans.--
``(A) In general.--In the case of a defined benefit
plan established and maintained by an applicable
employer, if this subsection did not apply to the plan
for the plan
[[Page 118 STAT. 600]]
year beginning in 2000 (determined without regard to
paragraph (6)), then, at the election of the employer,
the increased amount under paragraph (1) for any
applicable plan year shall be the greater of--
``(i) 20 percent of the increased amount under
paragraph (1) determined without regard to this
paragraph, or
``(ii) the increased amount which would be
determined under paragraph (1) if the deficit
reduction contribution under paragraph (2) for the
applicable plan year were determined without
regard to subparagraphs (A), (B), and (D) of
paragraph (2).
``(B) Restrictions on benefit increases.--No
amendment which increases the liabilities of the plan by
reason of any increase in benefits, any change in the
accrual of benefits, or any change in the rate at which
benefits become nonforfeitable under the plan shall be
adopted during any applicable plan year, unless--
``(i) the plan's enrolled actuary certifies
(in such form and manner prescribed by the
Secretary of the Treasury) that the amendment
provides for an increase in annual contributions
which will exceed the increase in annual charges
to the funding standard account attributable to
such amendment, or
``(ii) the amendment is required by a
collective bargaining agreement which is in effect
on the date of enactment of this subparagraph.
If a plan is amended during any applicable plan year in
violation of the preceding sentence, any election under
this paragraph shall not apply to any applicable plan
year ending on or after the date on which such amendment
is adopted.
``(C) Applicable employer.--For purposes of this
paragraph, the term `applicable employer' means an
employer which is--
``(i) a commercial passenger airline,
``(ii) primarily engaged in the production or
manufacture of a steel mill product or the
processing of iron ore pellets, or
``(iii) an organization described in section
501(c)(5) of the Internal Revenue Code of 1986 and
which established the plan to which this paragraph
applies on June 30, 1955.
``(D) Applicable plan year.--For purposes of this
paragraph--
``(i) In general.--The term `applicable plan
year' means any plan year beginning after December
27, 2003, and before December 28, 2005, for which
the employer elects the application of this
paragraph.
``(ii) Limitation on number of years which may
be elected.--An election may not be made under
this paragraph with respect to more than 2 plan
years.
``(E) Notice requirements for plans electing
alternative deficit reduction contributions.--
``(i) In general.--If
an <<NOTE: Deadline.>> employer elects an
alternative deficit reduction contribution under
this paragraph and section 412(l)(12) of the
Internal Revenue
[[Page 118 STAT. 601]]
Code of 1986 for any year, the employer shall
provide, within 30 days of filing the election for
such year, written notice of the election to
participants and beneficiaries and to the Pension
Benefit Guaranty Corporation.
``(ii) Notice to participants and
beneficiaries.--The notice under clause (i) to
participants and beneficiaries shall include with
respect to any election--
``(I) the due date of the
alternative deficit reduction
contribution and the amount by which
such contribution was reduced from the
amount which would have been owed if the
election were not made, and
``(II) a description of the benefits
under the plan which are eligible to be
guaranteed by the Pension Benefit
Guaranty Corporation and an explanation
of the limitations on the guarantee and
the circumstances under which such
limitations apply, including the maximum
guaranteed monthly benefits which the
Pension Benefit Guaranty Corporation
would pay if the plan terminated while
underfunded.
``(iii) Notice to pbgc.--The notice under
clause (i) to the Pension Benefit Guaranty
Corporation shall include--
``(I) the information described in
clause (ii)(I),
``(II) the number of years it will
take to restore the plan to full funding
if the employer only makes the required
contributions, and
``(III) information as to how the
amount by which the plan is underfunded
compares with the capitalization of the
employer making the election.
``(F) Election.--An election under this paragraph
shall be made at such time and in such manner as the
Secretary of the Treasury may prescribe.''.
(b) Amendment of 1986 Code.--Section 412(l) of the Internal Revenue
Code of 1986 <<NOTE: 26 USC 412.>> (relating to applicability of
subsection) is amended by adding at the end the following new paragraph:
``(12) Election for certain plans.--
``(A) In general.--In the case of a defined benefit
plan established and maintained by an applicable
employer, if this subsection did not apply to the plan
for the plan year beginning in 2000 (determined without
regard to paragraph (6)), then, at the election of the
employer, the increased amount under paragraph (1) for
any applicable plan year shall be the greater of--
``(i) 20 percent of the increased amount under
paragraph (1) determined without regard to this
paragraph, or
``(ii) the increased amount which would be
determined under paragraph (1) if the deficit
reduction contribution under paragraph (2) for the
applicable plan year were determined without
regard to subparagraphs (A), (B), and (D) of
paragraph (2).
``(B) Restrictions on benefit increases.--No
amendment which increases the liabilities of the plan by
reason of any increase in benefits, any change in the
accrual
[[Page 118 STAT. 602]]
of benefits, or any change in the rate at which benefits
become nonforfeitable under the plan shall be adopted
during any applicable plan year, unless--
``(i) the plan's enrolled actuary certifies
(in such form and manner prescribed by the
Secretary) that the amendment provides for an
increase in annual contributions which will exceed
the increase in annual charges to the funding
standard account attributable to such amendment,
or
``(ii) the amendment is required by a
collective bargaining agreement which is in effect
on the date of enactment of this subparagraph.
If a plan is amended during any applicable plan year in
violation of the preceding sentence, any election under
this paragraph shall not apply to any applicable plan
year ending on or after the date on which such amendment
is adopted.
``(C) Applicable employer.--For purposes of this
paragraph, the term `applicable employer' means an
employer which is--
``(i) a commercial passenger airline,
``(ii) primarily engaged in the production or
manufacture of a steel mill product or the
processing of iron ore pellets, or
``(iii) an organization described in section
501(c)(5) and which established the plan to which
this paragraph applies on June 30, 1955.
``(D) Applicable plan year.--For purposes of this
paragraph--
``(i) In general.--The term `applicable plan
year' means any plan year beginning after December
27, 2003, and before December 28, 2005, for which
the employer elects the application of this
paragraph.
``(ii) Limitation on number of years which may
be elected.--An election may not be made under
this paragraph with respect to more than 2 plan
years.
``(E) Election.--An election under this paragraph
shall be made at such time and in such manner as the
Secretary may prescribe.''.
(c) Effect of Election.--An election <<NOTE: 26 USC 412
note.>> under section 302(d)(12) of the Employee Retirement Income
Security Act of 1974 or section 412(l)(12) of the Internal Revenue Code
of 1986 (as added by this section) with respect to a plan shall not
invalidate any obligation (pursuant to a collective bargaining agreement
in effect on the date of the election) to provide benefits, to change
the accrual of benefits, or to change the rate at which benefits become
nonforfeitable under the plan.
(d) Penalty for Failing To Provide Notice.--Section 502(c)(3) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132(c)(3))
is amended by inserting ``or who fails to meet the requirements of
section 302(d)(12)(E) with respect to any person'' after ``101(e)(2)
with respect to any person''.
SEC. 103. MULTIEMPLOYER PLAN FUNDING NOTICES.
(a) In General.--Section 101 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021) is amended by inserting after
subsection (e) the following new subsection:
[[Page 118 STAT. 603]]
``(f) Multiemployer Defined Benefit Plan Funding Notices.--
``(1) In general.--The administrator of a defined benefit
plan which is a multiemployer plan shall for each plan year
provide a plan funding notice to each plan participant and
beneficiary, to each labor organization representing such
participants or beneficiaries, to each employer that has an
obligation to contribute under the plan, and to the Pension
Benefit Guaranty Corporation.
``(2) Information contained in notices.--
``(A) Identifying information.--Each notice required
under paragraph (1) shall contain identifying
information, including the name of the plan, the address
and phone number of the plan administrator and the
plan's principal administrative officer, each plan
sponsor's employer identification number, and the plan
number of the plan.
``(B) Specific information.--A plan funding notice
under paragraph (1) shall include--
``(i) a statement as to whether the plan's
funded current liability percentage (as defined in
section 302(d)(8)(B)) for the plan year to which
the notice relates is at least 100 percent (and,
if not, the actual percentage);
``(ii) a statement of the value of the plan's
assets, the amount of benefit payments, and the
ratio of the assets to the payments for the plan
year to which the notice relates;
``(iii) a summary of the rules governing
insolvent multiemployer plans, including the
limitations on benefit payments and any potential
benefit reductions and suspensions (and the
potential effects of such limitations, reductions,
and suspensions on the plan); and
``(iv) a general description of the benefits
under the plan which are eligible to be guaranteed
by the Pension Benefit Guaranty Corporation, along
with an explanation of the limitations on the
guarantee and the circumstances under which such
limitations apply.
``(C) Other information.--Each notice under
paragraph (1) shall include any additional information
which the plan administrator elects to include to the
extent not inconsistent with regulations prescribed by
the Secretary.
``(3) Time for providing notice.--
Any <<NOTE: Deadline.>> notice under paragraph (1) shall be
provided no later than two months after the deadline (including
extensions) for filing the annual report for the plan year to
which the notice relates.
``(4) Form and manner.--Any notice under paragraph (1)--
``(A) <<NOTE: Regulations.>> shall be provided in a
form and manner prescribed in regulations of the
Secretary,
``(B) shall be written in a manner so as to be
understood by the average plan participant, and
``(C) may be provided in written, electronic, or
other appropriate form to the extent such form is
reasonably accessible to persons to whom the notice is
required to be provided.''.
(b) Penalties.--Section 502(c)(1) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1132(c)(1)) is amended
[[Page 118 STAT. 604]]
by striking ``or section 101(e)(1)'' and inserting ``, section
101(e)(1), or section 101(f)''.
(c) Regulations and Model Notice.--The <<NOTE: Deadline. 29 USC 1021
note.>> Secretary of Labor shall, not later than 1 year after the date
of the enactment of this Act, issue regulations (including a model
notice) necessary to implement the amendments made by this section.
(d) Effective Date.--The <<NOTE: 29 USC 1021 note.>> amendments made
by this section shall apply to plan years beginning after December 31,
2004.
SEC. 104. ELECTION FOR DEFERRAL OF CHARGE FOR PORTION OF NET EXPERIENCE
LOSS.
(a) Employee Retirement Income Security Act of 1974.--
(1) In general.--Section 302(b)(7) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1082(b)(7)) is
amended by adding at the end the following new subparagraph:
``(F) Election for deferral of charge for portion of
net experience loss.--
``(i) In general.--With respect to the net
experience loss of an eligible multiemployer plan
for the first plan year beginning after December
31, 2001, the plan sponsor may elect to defer up
to 80 percent of the amount otherwise required to
be charged under paragraph (2)(B)(iv) for any plan
year beginning after June 30, 2003, and before
July 1, 2005, to any plan year selected by the
plan from either of the 2 immediately succeeding
plan years.
``(ii) Interest.--For the plan year to which a
charge is deferred pursuant to an election under
clause (i), the funding standard account shall be
charged with interest on the deferred charge for
the period of deferral at the rate determined
under section 304(a) for multiemployer plans.
``(iii) Restrictions on benefit increases.--No
amendment which increases the liabilities of the
plan by reason of any increase in benefits, any
change in the accrual of benefits, or any change
in the rate at which benefits become
nonforfeitable under the plan shall be adopted
during any period for which a charge is deferred
pursuant to an election under clause (i), unless--
``(I) the plan's enrolled actuary
certifies (in such form and manner
prescribed by the Secretary of the
Treasury) that the amendment provides
for an increase in annual contributions
which will exceed the increase in annual
charges to the funding standard account
attributable to such amendment, or
``(II) the amendment is required by
a collective bargaining agreement which
is in effect on the date of enactment of
this subparagraph.
If a plan is amended during any such plan year in
violation of the preceding sentence, any election
under this paragraph shall not apply to any such
plan year ending on or after the date on which
such amendment is adopted.
[[Page 118 STAT. 605]]
``(iv) Eligible multiemployer plan.--For
purposes of this subparagraph, the term `eligible
multiemployer plan' means a multiemployer plan--
``(I) which had a net investment
loss for the first plan year beginning
after December 31, 2001, of at least 10
percent of the average fair market value
of the plan assets during the plan year,
and
``(II) with respect to which the
plan's enrolled actuary certifies (not
taking into account the application of
this subparagraph), on the basis of the
acutuarial assumptions used for the last
plan year ending before the date of the
enactment of this subparagraph, that the
plan is projected to have an accumulated
funding deficiency (within the meaning
of subsection (a)(2)) for any plan year
beginning after June 30, 2003, and
before July 1, 2006.
For purposes of subclause (I), a plan's net
investment loss shall be determined on the basis
of the actual loss and not under any actuarial
method used under subsection (c)(2).
``(v) Exception to treatment of eligible
multiemployer plan.--In no event shall a plan be
treated as an eligible multiemployer plan under
clause (iv) if--
``(I) for any taxable year beginning
during the 10-year period preceding the
first plan year for which an election is
made under clause (i), any employer
required to contribute to the plan
failed to timely pay any excise tax
imposed under section 4971 of the
Internal Revenue Code of 1986 with
respect to the plan,
``(II) for any plan year beginning
after June 30, 1993, and before the
first plan year for which an election is
made under clause (i), the average
contribution required to be made by all
employers to the plan does not exceed 10
cents per hour or no employer is
required to make contributions to the
plan, or
``(III) with respect to any of the
plan years beginning after June 30,
1993, and before the first plan year for
which an election is made under clause
(i), a waiver was granted under section
303 of this Act or section 412(d) of the
Internal Revenue Code of 1986 with
respect to the plan or an extension of
an amortization period was granted under
section 304 of this Act or section
412(e) of such Code with respect to the
plan.
``(vi) Notice.--If <<NOTE: Deadline.>> a plan
sponsor makes an election under this subparagraph
or section 412(b)(7)(F) of the Internal Revenue
Code of 1986 for any plan year, the plan
administrator shall provide, within 30 days of
filing the election for such year, written notice
of the election to participants and beneficiaries,
to each labor organization representing such
participants or beneficiaries, to each employer
that has an obligation to
[[Page 118 STAT. 606]]
contribute under the plan, and to the Pension
Benefit Guaranty Corporation. Such notice shall
include with respect to any election the amount of
any charge to be deferred and the period of the
deferral. Such notice shall also include the
maximum guaranteed monthly benefits which the
Pension Benefit Guaranty Corporation would pay if
the plan terminated while underfunded.
``(vii) Election.--An election under this
subparagraph shall be made at such time and in
such manner as the Secretary of the Treasury may
prescribe.''.
(2) Penalty.--Section 502(c)(4) of such Act (29 U.S.C.
1132(c)(4)) is amended to read as follows:
``(4) The Secretary may assess a civil penalty of not more
than $1,000 a day for each violation by any person of section
302(b)(7)(F)(vi).''.
(b) Internal Revenue Code of 1986.--Section 412(b)(7) of the
Internal Revenue Code of 1986 <<NOTE: 26 USC 412.>> (relating to special
rules for multiemployer plans) is amended by adding at the end the
following new subparagraph:
``(F) Election for deferral of charge for portion of
net experience loss.--
``(i) In general.--With respect to the net
experience loss of an eligible multiemployer plan
for the first plan year beginning after December
31, 2001, the plan sponsor may elect to defer up
to 80 percent of the amount otherwise required to
be charged under paragraph (2)(B)(iv) for any plan
year beginning after June 30, 2003, and before
July 1, 2005, to any plan year selected by the
plan from either of the 2 immediately succeeding
plan years.
``(ii) Interest.--For the plan year to which a
charge is deferred pursuant to an election under
clause (i), the funding standard account shall be
charged with interest on the deferred charge for
the period of deferral at the rate determined
under subsection (d) for multiemployer plans.
``(iii) Restrictions on benefit increases.--No
amendment which increases the liabilities of the
plan by reason of any increase in benefits, any
change in the accrual of benefits, or any change
in the rate at which benefits become
nonforfeitable under the plan shall be adopted
during any period for which a charge is deferred
pursuant to an election under clause (i), unless--
``(I) the plan's enrolled actuary
certifies (in such form and manner
prescribed by the Secretary) that the
amendment provides for an increase in
annual contributions which will exceed
the increase in annual charges to the
funding standard account attributable to
such amendment, or
``(II) the amendment is required by
a collective bargaining agreement which
is in effect on the date of enactment of
this subparagraph.
If a plan is amended during any such plan year in
violation of the preceding sentence, any election
under this paragraph shall not apply to any such
plan year
[[Page 118 STAT. 607]]
ending on or after the date on which such
amendment is adopted.
``(iv) Eligible multiemployer plan.--For
purposes of this subparagraph, the term `eligible
multiemployer plan' means a multiemployer plan--
``(I) which had a net investment
loss for the first plan year beginning
after December 31, 2001, of at least 10
percent of the average fair market value
of the plan assets during the plan year,
and
``(II) with respect to which the
plan's enrolled actuary certifies (not
taking into account the application of
this subparagraph), on the basis of the
acutuarial assumptions used for the last
plan year ending before the date of the
enactment of this subparagraph, that the
plan is projected to have an accumulated
funding deficiency (within the meaning
of subsection (a)) for any plan year
beginning after June 30, 2003, and
before July 1, 2006.
For purposes of subclause (I), a plan's net
investment loss shall be determined on the basis
of the actual loss and not under any actuarial
method used under subsection (c)(2).
``(v) Exception to treatment of eligible
multiemployer plan.--In no event shall a plan be
treated as an eligible multiemployer plan under
clause (iv) if--
``(I) for any taxable year beginning
during the 10-year period preceding the
first plan year for which an election is
made under clause (i), any employer
required to contribute to the plan
failed to timely pay any excise tax
imposed under section 4971 with respect
to the plan,
``(II) for any plan year beginning
after June 30, 1993, and before the
first plan year for which an election is
made under clause (i), the average
contribution required to be made by all
employers to the plan does not exceed 10
cents per hour or no employer is
required to make contributions to the
plan, or
``(III) with respect to any of the
plan years beginning after June 30,
1993, and before the first plan year for
which an election is made under clause
(i), a waiver was granted under section
412(d) or section 303 of the Employee
Retirement Income Security Act of 1974
with respect to the plan or an extension
of an amortization period was granted
under subsection (e) or section 304 of
such Act with respect to the plan.
``(vi) Election.--An election under this
subparagraph shall be made at such time and in
such manner as the Secretary may prescribe.''.
[[Page 118 STAT. 608]]
TITLE II--OTHER PROVISIONS
SEC. 201. TWO-YEAR EXTENSION OF TRANSITION RULE TO PENSION FUNDING
REQUIREMENTS.
(a) In General.--Section 769(c) of the Retirement Protection Act of
1994, as added by section 1508 of the Taxpayer Relief Act of
1997, <<NOTE: 26 USC 412 note.>> is amended--
(1) by inserting ``except as provided in paragraph (3),''
before ``the transition rules'', and
(2) by adding at the end the following:
``(3) Special rules.--In <<NOTE: Applicability.>> the case
of plan years beginning in 2004 and 2005, the following
transition rules shall apply in lieu of the transition rules
described in paragraph (2):
``(A) For purposes of section 412(l)(9)(A) of the
Internal Revenue Code of 1986 and section 302(d)(9)(A)
of the Employee Retirement Income Security Act of 1974,
the funded current liability percentage for any plan
year shall be treated as not less than 90 percent.
``(B) For purposes of section 412(m) of the Internal
Revenue Code of 1986 and section 302(e) of the Employee
Retirement Income Security Act of 1974, the funded
current liability percentage for any plan year shall be
treated as not less than 100 percent.
``(C) For purposes of determining unfunded vested
benefits under section 4006(a)(3)(E)(iii) of the
Employee Retirement Income Security Act of 1974, the
mortality table shall be the mortality table used by the
plan.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 412
note.>> amendments made by this section shall apply to plan years
beginning after December 31, 2003.
SEC. 202. PROCEDURES APPLICABLE TO DISPUTES INVOLVING PENSION PLAN
WITHDRAWAL LIABILITY.
(a) In General.--Section 4221 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1401) is amended by adding at the end
the following new subsection:
``(f) Procedures Applicable to Certain Disputes.--
``(1) In general.--If--
``(A) a plan sponsor of a plan determines that--
``(i) a complete or partial withdrawal of an
employer has occurred, or
``(ii) an employer is liable for withdrawal
liability payments with respect to the complete or
partial withdrawal of an employer from the plan,
``(B) such determination is based in whole or in
part on a finding by the plan sponsor under section
4212(c) that a principal purpose of a transaction that
occurred before January 1, 1999, was to evade or avoid
withdrawal liability under this subtitle, and
``(C) such transaction occurred at least 5 years
before the date of the complete or partial withdrawal,
then the special rules under paragraph (2) shall be used in
applying subsections (a) and (d) of this section and section
4219(c) to the employer.
``(2) Special rules.--
``(A) Determination.--Notwithstanding subsection
(a)(3)--
[[Page 118 STAT. 609]]
``(i) a determination by the plan sponsor
under paragraph (1)(B) shall not be presumed to be
correct, and
``(ii) the plan sponsor shall have the burden
to establish, by a preponderance of the evidence,
the elements of the claim under section 4212(c)
that a principal purpose of the transaction was to
evade or avoid withdrawal liability under this
subtitle.
Nothing in this subparagraph shall affect the burden of
establishing any other element of a claim for withdrawal
liability under this subtitle.
``(B) Procedure.--Notwithstanding subsection (d) and
section 4219(c), if an employer contests the plan
sponsor's determination under paragraph (1) through an
arbitration proceeding pursuant to subsection (a), or
through a claim brought in a court of competent
jurisdiction, the employer shall not be obligated to
make any withdrawal liability payments until a final
decision in the arbitration proceeding, or in court,
upholds the plan sponsor's determination.''.
(b) Effective Date.--The <<NOTE: Applicability. 26 USC 1401
note.>> amendments made by this section shall apply to any employer that
receives a notification under section 4219(b)(1) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1399(b)(1)) after
October 31, 2003.
SEC. 203. SENSE OF CONGRESS REGARDING DEFINED BENEFIT PENSION SYSTEM
REFORM.
It is the sense of the Congress that the Congress must ensure the
financial health of the defined benefit pension system by working to
promptly implement--
(1) a permanent replacement for the pension discount rate
used for defined benefit pension plan calculations, and
(2) comprehensive funding reforms for all defined benefit
pension plans aimed at achieving accurate and sound pension
funding to enhance retirement security for workers who rely on
defined pension plan benefits, to reduce the volatility of
contributions, to provide plan sponsors with predictability for
plan contributions, and to ensure adequate disclosures for plan
participants in the case of underfunded pension plans.
SEC. 204. EXTENSION OF TRANSFERS OF EXCESS PENSION ASSETS TO RETIREE
HEALTH ACCOUNTS.
(a) Amendment of Internal Revenue Code of 1986.--Paragraph (5) of
section 420(b) of the Internal Revenue Code of 1986 (relating to
expiration) <<NOTE: 26 USC 420.>> is amended by striking ``December 31,
2005'' and inserting ``December 31, 2013''.
(b) Amendments of ERISA.--
(1) Section 101(e)(3) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1021(e)(3)) is amended by
striking ``Tax Relief Extension Act of 1999'' and inserting
``Pension Funding Equity Act of 2004''.
(2) Section 403(c)(1) of such Act (29 U.S.C. 1103(c)(1)) is
amended by striking ``Tax Relief Extension Act of 1999'' and
inserting ``Pension Funding Equity Act of 2004''.
(3) Paragraph (13) of section 408(b) of such Act (29 U.S.C.
1108(b)(3)) is amended--
(A) by striking ``January 1, 2006'' and inserting
``January 1, 2014'', and
[[Page 118 STAT. 610]]
(B) by striking ``Tax Relief Extension Act of 1999''
and inserting ``Pension Funding Equity Act of 2004''.
SEC. 205. REPEAL OF REDUCTION OF DEDUCTIONS FOR MUTUAL LIFE INSURANCE
COMPANIES.
(a) In General.--Section 809 of the Internal Revenue Code of
1986 <<NOTE: 26 USC 809.>> (relating to reductions in certain deduction
of mutual life insurance companies) is hereby repealed.
(b) Conforming Amendments.--
(1) Subsections (a)(2)(B) and (b)(1)(B) of section 807 of
such Code <<NOTE: 26 USC 807.>> are each amended by striking
``the sum of (i)'' and by striking ``plus (ii) any excess
described in section 809(a)(2) for the taxable year,''.
(2)(A) The last sentence of section 807(d)(1) of such Code
is amended by striking ``section 809(b)(4)(B)'' and inserting
``paragraph (6)''.
(B) Subsection (d) of section 807 of such Code is amended by
adding at the end the following new paragraph:
``(6) Statutory reserves.--The term `statutory reserves'
means the aggregate amount set forth in the annual statement
with respect to items described in section 807(c). Such term
shall not include any reserve attributable to a deferred and
uncollected premium if the establishment of such reserve is not
permitted under section 811(c).''.
(3) Subsection (c) of section 808 of such Code <<NOTE: 26
USC 808.>> is amended to read as follows:
``(c) Amount of Deduction.--The deduction for policyholder dividends
for any taxable year shall be an amount equal to the policyholder
dividends paid or accrued during the taxable year.''.
(4) Subparagraph (A) of section 812(b)(3) <<NOTE: 26 USC
812.>> of such Code is amended by striking ``sections 808 and
809'' and inserting ``section 808''.
(5) Subsection (c) of section 817 of such Code <<NOTE: 26
USC 817.>> is amended by striking ``(other than section 809)''.
(6) Subsection (c) of section 842 of such Code <<NOTE: 26
USC 842.>> is amended by striking paragraph (3) and by
redesignating paragraph (4) as paragraph (3).
(7) The table of sections for subpart C of part I of
subchapter L of chapter 1 of such Code is amended by striking
the item relating to section 809.
(c) Effective Date.--The <<NOTE: Applicability. 26 USC 807
note.>> amendments made by this section shall apply to taxable years
beginning after December 31, 2004.
SEC. 206. CLARIFICATION OF EXEMPTION FROM TAX FOR SMALL PROPERTY AND
CASUALTY INSURANCE COMPANIES.
(a) In General.--Section 501(c)(15)(A) of the Internal Revenue Code
of 1986 <<NOTE: 26 USC 501.>> is amended to read as follows:
``(A) Insurance companies (as defined in section 816(a))
other than life (including interinsurers and reciprocal
underwriters) if--
``(i)(I) the gross receipts for the taxable year do
not exceed $600,000, and
``(II) more than 50 percent of such gross receipts
consist of premiums, or
``(ii) in the case of a mutual insurance company--
``(I) the gross receipts of which for the
taxable year do not exceed $150,000, and
[[Page 118 STAT. 611]]
``(II) more than 35 percent of such gross
receipts consist of premiums.
Clause (ii) shall not apply to a company if any employee of the
company, or a member of the employee's family (as defined in
section 2032A(e)(2)), is an employee of another company exempt
from taxation by reason of this paragraph (or would be so exempt
but for this sentence).''.
(b) Controlled Group Rule.--Section 501(c)(15)(C) of the Internal
Revenue Code of 1986 <<NOTE: 26 USC 501.>> is amended by inserting ``,
except that in applying section 831(b)(2)(B)(ii) for purposes of this
subparagraph, subparagraphs (B) and (C) of section 1563(b)(2) shall be
disregarded'' before the period at the end.
(c) Definition of Insurance Company for Section 831.--Section 831 of
the Internal Revenue Code of 1986 <<NOTE: 26 USC 831.>> is amended by
redesignating subsection (c) as subsection (d) and by inserting after
subsection (b) the following new subsection:
``(c) Insurance Company Defined.--For purposes of this section, the
term `insurance company' has the meaning given to such term by section
816(a)).''.
(d) Conforming Amendment.--Clause (i) of section 831(b)(2)(A) of the
Internal Revenue Code of 1986 is amended by striking ``exceed $350,000
but''.
(e) <<NOTE: Applicability. 26 USC 501 note.>> Effective Date.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2003.
(2) Transition rule for companies in receivership or
liquidation.--In the case of a company or association which--
(A) for the taxable year which includes April 1,
2004, meets the requirements of section 501(c)(15)(A) of
the Internal Revenue Code of 1986, as in effect for the
last taxable year beginning before January 1, 2004, and
(B) on April 1, 2004, is in a receivership,
liquidation, or similar proceeding under the supervision
of a State court,
the amendments made by this section shall apply to taxable years
beginning after the earlier of the date such proceeding ends or
December 31, 2007.
SEC. 207. <<NOTE: 15 USC 37b.>> CONFIRMATION OF ANTITRUST STATUS OF
GRADUATE MEDICAL RESIDENT MATCHING PROGRAMS.
(a) Findings and Purposes.--
(1) Findings.--Congress makes the following findings:
(A) For over 50 years, most United States medical
school seniors and the large majority of graduate
medical education programs (popularly known as
``residency programs'') have chosen to use a matching
program to match medical students with residency
programs to which they have applied. These matching
programs have been an integral part of an educational
system that has produced the finest physicians and
medical researchers in the world.
(B) Before such matching programs were instituted,
medical students often felt pressure, at an unreasonably
early stage of their medical education, to seek
admission to, and accept offers from, residency
programs. As a result, medical students often made
binding commitments before they were in a position to
make an informed decision
[[Page 118 STAT. 612]]
about a medical specialty or a residency program and
before residency programs could make an informed
assessment of students' qualifications. This situation
was inefficient, chaotic, and unfair and it often led to
placements that did not serve the interests of either
medical students or residency programs.
(C) The original matching program, now operated by
the independent non-profit National Resident Matching
Program and popularly known as ``the Match'', was
developed and implemented more than 50 years ago in
response to widespread student complaints about the
prior process. This Program includes on its board of
directors individuals nominated by medical student
organizations as well as by major medical education and
hospital associations.
(D) The Match uses a computerized mathematical
algorithm, as students had recommended, to analyze the
preferences of students and residency programs and match
students with their highest preferences from among the
available positions in residency programs that listed
them. Students thus obtain a residency position in the
most highly ranked program on their list that has ranked
them sufficiently high among its preferences. Each year,
about 85 percent of participating United States medical
students secure a place in one of their top 3 residency
program choices.
(E) Antitrust lawsuits challenging the matching
process, regardless of their merit or lack thereof, have
the potential to undermine this highly efficient, pro-
competitive, and long-standing process. The costs of
defending such litigation would divert the scarce
resources of our country's teaching hospitals and
medical schools from their crucial missions of patient
care, physician training, and medical research. In
addition, such costs may lead to abandonment of the
matching process, which has effectively served the
interests of medical students, teaching hospitals, and
patients for over half a century.
(2) Purposes.--It is the purpose of this section to--
(A) confirm that the antitrust laws do not prohibit
sponsoring, conducting, or participating in a graduate
medical education residency matching program, or
agreeing to do so; and
(B) ensure that those who sponsor, conduct or
participate in such matching programs are not subjected
to the burden and expense of defending against
litigation that challenges such matching programs under
the antitrust laws.
(b) Application of Antitrust Laws to Graduate Medical Education
Residency Matching Programs.--
(1) Definitions.--In this subsection:
(A) Antitrust laws.--The term ``antitrust laws''--
(i) has the meaning given such term in
subsection (a) of the first section of the Clayton
Act (15 U.S.C. 12(a)), except that such term
includes section 5 of the Federal Trade Commission
Act (15 U.S.C. 45) to the extent such section 5
applies to unfair methods of competition; and
[[Page 118 STAT. 613]]
(ii) includes any State law similar to the
laws referred to in clause (i).
(B) Graduate medical education program.--The term
``graduate medical education program'' means--
(i) a residency program for the medical
education and training of individuals following
graduation from medical school;
(ii) a program, known as a specialty or
subspecialty fellowship program, that provides
more advanced training; and
(iii) an institution or organization that
operates, sponsors or participates in such a
program.
(C) Graduate medical education residency matching
program.--The term ``graduate medical education
residency matching program'' means a program (such as
those conducted by the National Resident Matching
Program) that, in connection with the admission of
students to graduate medical education programs, uses an
algorithm and matching rules to match students in
accordance with the preferences of students and the
preferences of graduate medical education programs.
(D) Student.--The term ``student'' means any
individual who seeks to be admitted to a graduate
medical education program.
(2) Confirmation of antitrust status.--It shall not be
unlawful under the antitrust laws to sponsor, conduct, or
participate in a graduate medical education residency matching
program, or to agree to sponsor, conduct, or participate in such
a program. Evidence of any of the conduct described in the
preceding sentence shall not be admissible in Federal court to
support any claim or action alleging a violation of the
antitrust laws.
(3) Applicability.--Nothing in this section shall be
construed to exempt from the antitrust laws any agreement on the
part of 2 or more graduate medical education programs to fix the
amount of the stipend or other benefits received by students
participating in such programs.
(c) Effective Date.--This <<NOTE: Applicability.>> section shall
take effect on the date of enactment of this Act, shall apply to conduct
whether it occurs prior to, on, or after such date of enactment, and
shall apply
[[Page 118 STAT. 614]]
to all judicial and administrative actions or other proceedings pending
on such date of enactment.
Approved April 10, 2004.
LEGISLATIVE HISTORY--H.R. 3108:
---------------------------------------------------------------------------
HOUSE REPORTS: No. 108-457 (Comm. of Conference).
CONGRESSIONAL RECORD:
Vol. 149 (2003):
Oct. 8, considered and passed House.
Vol. 150 (2004):
Jan. 22, 26-28, considered and
passed Senate, amended.
Apr. 2, House agreed to conference
report.
Apr. 8, Senate agreed to conference
report.
<all>