Comprehensive Retirement Security and Pension Reform Act of 2001

H.R. 10 ~ Comprehensive Retirement Security and Pension Reform Act of 2001 Part 9

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H.R.10

Comprehensive Retirement Security and Pension Reform Act of 2001 (Engrossed in House )

(5) in subsection (e)(3)(C) (as redesignated), by striking `January 31, 1998' and inserting `May 1, 2001, May 1, 2005, and May 1, 2009, for each of the subsequent summits, respectively';

(6) in subsection (f)(1)(C), by inserting `, no later than 90 days prior to the date of the commencement of the National Summit,' after `comment';

(7) in subsection (g), by inserting `, in consultation with the congressional leaders specified in subsection (e)(2),' after `report' the first place it appears;

(8) in subsection (i)--

(A) by striking `beginning on or after October 1, 1997' in paragraph (1) and inserting `2001, 2005, and 2009'; and

(B) by adding at the end the following new paragraph:

`(3) RECEPTION AND REPRESENTATION AUTHORITY- The Secretary is hereby granted reception and representation authority limited specifically to the events at the National Summit. The Secretary shall use any private contributions accepted in connection with the National Summit prior to using funds appropriated for purposes of the National Summit pursuant to this paragraph.'; and

(9) in subsection (k)--

(A) by striking `shall enter into a contract on a sole-source basis' and inserting `may enter into a contract on a sole-source basis'; and

(B) by striking `fiscal year 1998' and inserting `fiscal years 2001, 2005, and 2009'.

TITLE VII--OTHER ERISA PROVISIONS

SEC. 701. MISSING PARTICIPANTS.

(a) IN GENERAL- Section 4050 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1350) is amended by redesignating subsection (c) as subsection (e) and by inserting after subsection (b) the following new subsections:

`(c) MULTIEMPLOYER PLANS- The corporation shall prescribe rules similar to the rules in subsection (a) for multiemployer plans covered by this title that terminate under section 4041A.

`(d) PLANS NOT OTHERWISE SUBJECT TO TITLE-

`(1) TRANSFER TO CORPORATION- The plan administrator of a plan described in paragraph (4) may elect to transfer a missing participant's benefits to the corporation upon termination of the plan.

`(2) INFORMATION TO THE CORPORATION- To the extent provided in regulations, the plan administrator of a plan described in paragraph (4) shall, upon termination of the plan, provide the corporation information with respect to benefits of a missing participant if the plan transfers such benefits--

`(A) to the corporation, or

`(B) to an entity other than the corporation or a plan described in paragraph (4)(B)(ii).

`(3) PAYMENT BY THE CORPORATION- If benefits of a missing participant were transferred to the corporation under paragraph (1), the corporation shall, upon location of the participant or beneficiary, pay to the participant or beneficiary the amount transferred (or the appropriate survivor benefit) either--

`(A) in a single sum (plus interest), or

`(B) in such other form as is specified in regulations of the corporation.

`(4) PLANS DESCRIBED- A plan is described in this paragraph if--

`(A) the plan is a pension plan (within the meaning of section 3(2))--

`(i) to which the provisions of this section do not apply (without regard to this subsection), and

`(ii) which is not a plan described in paragraphs (2) through (11) of section 4021(b), and

`(B) at the time the assets are to be distributed upon termination, the plan--

`(i) has missing participants, and

`(ii) has not provided for the transfer of assets to pay the benefits of all missing participants to another pension plan (within the meaning of section 3(2)).

`(5) CERTAIN PROVISIONS NOT TO APPLY- Subsections (a)(1) and (a)(3) shall not apply to a plan described in paragraph (4).'.

(b) CONFORMING AMENDMENTS- Section 206(f) of such Act (29 U.S.C. 1056(f)) is amended--

(1) by striking `title IV' and inserting `section 4050'; and

(2) by striking `the plan shall provide that,'.

(c) EFFECTIVE DATE- The amendment made by this section shall apply to distributions made after final regulations implementing subsections (c) and (d) of section 4050 of the Employee Retirement Income Security Act of 1974 (as added by subsection (a)), respectively, are prescribed.

SEC. 702. REDUCED PBGC PREMIUM FOR NEW PLANS OF SMALL EMPLOYERS.

(a) IN GENERAL- Subparagraph (A) of section 4006(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(A)) is amended--

(1) in clause (i), by inserting `other than a new single-employer plan (as defined in subparagraph (F)) maintained by a small employer (as so defined),' after `single-employer plan,',

(2) in clause (iii), by striking the period at the end and inserting `, and', and

(3) by adding at the end the following new clause:

`(iv) in the case of a new single-employer plan (as defined in subparagraph (F)) maintained by a small employer (as so defined) for the plan year, $5 for each individual who is a participant in such plan during the plan year.'.

(b) DEFINITION OF NEW SINGLE-EMPLOYER PLAN- Section 4006(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)) is amended by adding at the end the following new subparagraph:

`(F)(i) For purposes of this paragraph, a single-employer plan maintained by a contributing sponsor shall be treated as a new single-employer plan for each of its first 5 plan years if, during the 36-month period ending on the date of the adoption of such plan, the sponsor or any member of such sponsor's controlled group (or any predecessor of either) did not establish or maintain a plan to which this title applies with respect to which benefits were accrued for substantially the same employees as are in the new single-employer plan.

`(ii)(I) For purposes of this paragraph, the term `small employer' means an employer which on the first day of any plan year has, in aggregation with all members of the controlled group of such employer, 100 or fewer employees.

`(II) In the case of a plan maintained by two or more contributing sponsors that are not part of the same controlled group, the employees of all contributing sponsors and controlled groups of such sponsors shall be aggregated for purposes of determining whether any contributing sponsor is a small employer.'.

SEC. 703. REDUCTION OF ADDITIONAL PBGC PREMIUM FOR NEW AND SMALL PLANS.

(a) NEW PLANS- Subparagraph (E) of section 4006(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)(3)(E)) is amended by adding at the end the following new clause:

`(v) In the case of a new defined benefit plan, the amount determined under clause (ii) for any plan year shall be an amount equal to the product of the amount determined under clause (ii) and the applicable percentage. For purposes of this clause, the term `applicable percentage' means--

`(I) 0 percent, for the first plan year.

`(II) 20 percent, for the second plan year.

`(III) 40 percent, for the third plan year.

`(IV) 60 percent, for the fourth plan year.

`(V) 80 percent, for the fifth plan year.

For purposes of this clause, a defined benefit plan (as defined in section 3(35)) maintained by a contributing sponsor shall be treated as a new defined benefit plan for each of its first 5 plan years if, during the 36-month period ending on the date of the adoption of the plan, the sponsor and each member of any controlled group including the sponsor (or any predecessor of either) did not establish or maintain a plan to which this title applies with respect to which benefits were accrued for substantially the same employees as are in the new plan.'.

(b) SMALL PLANS- Paragraph (3) of section 4006(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1306(a)), as amended by section 702(b), is amended--

(1) by striking `The' in subparagraph (E)(i) and inserting `Except as provided in subparagraph (G), the', and

(2) by inserting after subparagraph (F) the following new subparagraph:

`(G)(i) In the case of an employer who has 25 or fewer employees on the first day of the plan year, the additional premium determined under subparagraph (E) for each participant shall not exceed $5 multiplied by the number of participants in the plan as of the close of the preceding plan year.

`(ii) For purposes of clause (i), whether an employer has 25 or fewer employees on the first day of the plan year is determined taking into consideration all of the employees of all members of the contributing sponsor's controlled group. In the case of a plan maintained by two or more contributing sponsors, the employees of all contributing sponsors and their controlled groups shall be aggregated for purposes of determining whether the 25-or-fewer-employees limitation has been satisfied.'.

(1) SUBSECTION (a)- The amendments made by subsection (a) shall apply to plans established after December 31, 2001.

(2) SUBSECTION (b)- The amendments made by subsection (b) shall apply to plan years beginning after December 31, 2001.

SEC. 704. AUTHORIZATION FOR PBGC TO PAY INTEREST ON PREMIUM OVERPAYMENT REFUNDS.

(a) IN GENERAL- Section 4007(b) of the Employment Retirement Income Security Act of 1974 (29 U.S.C. 1307(b)) is amended--

(1) by striking `(b)' and inserting `(b)(1)', and

(2) by inserting at the end the following new paragraph:

`(2) The corporation is authorized to pay, subject to regulations prescribed by the corporation, interest on the amount of any overpayment of premium refunded to a designated payor. Interest under this paragraph shall be calculated at the same rate and in the same manner as interest is calculated for underpayments under paragraph (1).'.

(b) EFFECTIVE DATE- The amendment made by subsection (a) shall apply to interest accruing for periods beginning not earlier than the date of the enactment of this Act.

SEC. 705. SUBSTANTIAL OWNER BENEFITS IN TERMINATED PLANS.

(a) MODIFICATION OF PHASE-IN OF GUARANTEE- Section 4022(b)(5) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1322(b)(5)) is amended to read as follows:

`(5)(A) For purposes of this paragraph, the term `majority owner' means an individual who, at any time during the 60-month period ending on the date the determination is being made--

`(i) owns the entire interest in an unincorporated trade or business,

`(ii) in the case of a partnership, is a partner who owns, directly or indirectly, 50 percent or more of either the capital interest or the profits interest in such partnership, or

`(iii) in the case of a corporation, owns, directly or indirectly, 50 percent or more in value of either the voting stock of that corporation or all the stock of that corporation.

For purposes of clause (iii), the constructive ownership rules of section 1563(e) of the Internal Revenue Code of 1986 shall apply (determined without regard to section 1563(e)(3)(C)).

`(B) In the case of a participant who is a majority owner, the amount of benefits guaranteed under this section shall equal the product of--

`(i) a fraction (not to exceed 1) the numerator of which is the number of years from the later of the effective date or the adoption date of the plan to the termination date, and the denominator of which is 10, and

`(ii) the amount of benefits that would be guaranteed under this section if the participant were not a majority owner.'.

(b) MODIFICATION OF ALLOCATION OF ASSETS-

(1) Section 4044(a)(4)(B) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1344(a)(4)(B)) is amended by striking `section 4022(b)(5)' and inserting `section 4022(b)(5)(B)'.

(2) Section 4044(b) of such Act (29 U.S.C. 1344(b)) is amended--

(A) by striking `(5)' in paragraph (2) and inserting `(4), (5),', and

(B) by redesignating paragraphs (3) through (6) as paragraphs (4) through (7), respectively, and by inserting after paragraph (2) the following new paragraph:

`(3) If assets available for allocation under paragraph (4) of subsection (a) are insufficient to satisfy in full the benefits of all individuals who are described in that paragraph, the assets shall be allocated first to benefits described in subparagraph (A) of that paragraph. Any remaining assets shall then be allocated to benefits described in subparagraph (B) of that paragraph. If assets allocated to such subparagraph (B) are insufficient to satisfy in full the benefits described in that subparagraph, the assets shall be allocated pro rata among individuals on the basis of the present value (as of the termination date) of their respective benefits described in that subparagraph.'.

(1) Section 4021 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1321) is amended--

(A) in subsection (b)(9), by striking `as defined in section 4022(b)(6)', and

(B) by adding at the end the following new subsection:

`(d) For purposes of subsection (b)(9), the term `substantial owner' means an individual who, at any time during the 60-month period ending on the date the determination is being made--

`(1) owns the entire interest in an unincorporated trade or business,

`(2) in the case of a partnership, is a partner who owns, directly or indirectly, more than 10 percent of either the capital interest or the profits interest in such partnership, or

`(3) in the case of a corporation, owns, directly or indirectly, more than 10 percent in value of either the voting stock of that corporation or all the stock of that corporation.

For purposes of paragraph (3), the constructive ownership rules of section 1563(e) of the Internal Revenue Code of 1986 shall apply (determined without regard to section 1563(e)(3)(C)).'.

(2) Section 4043(c)(7) of such Act (29 U.S.C. 1343(c)(7)) is amended by striking `section 4022(b)(6)' and inserting `section 4021(d)'.

(d) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to plan terminations--

(A) under section 4041(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)) with respect to which notices of intent to terminate are provided under section 4041(a)(2) of such Act (29 U.S.C. 1341(a)(2)) after December 31, 2001, and

(B) under section 4042 of such Act (29 U.S.C. 1342) with respect to which proceedings are instituted by the corporation after such date.

(2) CONFORMING AMENDMENTS- The amendments made by subsection (c) shall take effect on January 1, 2002.

SEC. 706. CIVIL PENALTIES FOR BREACH OF FIDUCIARY RESPONSIBILITY.

(a) IMPOSITION AND AMOUNT OF PENALTY MADE DISCRETIONARY- Section 502(l)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132(l)(1)) is amended--

(1) by striking `shall' and inserting `may', and

(2) by striking `equal to' and inserting `not greater than'.

(b) APPLICABLE RECOVERY AMOUNT- Section 502(l)(2) of such Act (29 U.S.C. 1132(l)(2)) is amended by inserting after `fiduciary or other person' the following: `(or from any other person on behalf of any such fiduciary or other person)'.

(c) OTHER RULES- Section 502(l) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1132(l)) is amended by adding at the end the following new paragraphs:

`(5) A person shall be jointly and severally liable for the penalty described in paragraph (1) to the same extent that such person is jointly and severally liable for the applicable recovery amount on which the penalty is based.

`(6) No penalty shall be assessed under this subsection unless the person against whom the penalty is assessed is given notice and opportunity for a hearing with respect to the violation and applicable recovery amount.'.

(d) EFFECTIVE DATE- The amendments made by this section shall apply to any breach of fiduciary responsibility or other violation of part 4 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 occurring on or after the date of the enactment of this Act.

SEC. 707. BENEFIT SUSPENSION NOTICE.

(a) MODIFICATION OF REGULATION- The Secretary of Labor shall modify the regulation under subparagraph (B) of section 203(a)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(3)(B)) to provide that the notification required by such regulation in connection with any suspension of benefits described in such subparagraph--

(1) in the case of an employee who returns to service under the plan after commencement of payment of benefits under the plan--

(A) shall be made during the first calendar month or payroll period in which the plan withholds payments, and

(B) if a reduced rate of future benefit accrual will apply to the returning employee (as of the first date of participation in the plan by the employee after returning to work), shall include a statement that the rate of future benefit accrual will be reduced, and

(2) in the case of any employee who is not described in paragraph (1)--

(A) may be included in the summary plan description for the plan furnished in accordance with section 104(b) of such Act (29 U.S.C. 1024(b)), rather than in a separate notice, and

(B) need not include a copy of the relevant plan provisions.

(b) EFFECTIVE DATE- The modification made under this section shall apply to plan years beginning after December 31, 2001.

SEC. 708. STUDIES.

(a) MODEL SMALL EMPLOYER GROUP PLANS STUDY- As soon as practicable after the date of the enactment of this Act, the Secretary of Labor, in consultation with the Secretary of the Treasury, shall conduct a study to determine--

(1) the most appropriate form or forms of--

(A) employee pension benefit plans which would--

Solutions are dependent upon facts & circumstances, law and the objectives. These elements vary from one time to another, from one circumstance to another and from from person or entity to another

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