[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4367 Introduced in House (IH)]
103d CONGRESS
2d Session
H. R. 4367
To amend the Internal Revenue Code of 1986 and title I of the Employee
Retirement Income Security Act of 1974 with regard to pension
integration, participation, and vesting requirements, to provide for
division of pension benefits upon divorce unless otherwise provided in
qualified domestic relations orders, to provide for studies relating to
cost-of-living adjustments and pension portability, and to clarify the
continued availability, under provisions governing domestic relations
orders, of remedies relating to matters treated in such orders entered
before 1985.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 5, 1994
Mrs. Kennelly introduced the following bill; which was referred jointly
to the Committees on Ways and Means and Education and Labor
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 and title I of the Employee
Retirement Income Security Act of 1974 with regard to pension
integration, participation, and vesting requirements, to provide for
division of pension benefits upon divorce unless otherwise provided in
qualified domestic relations orders, to provide for studies relating to
cost-of-living adjustments and pension portability, and to clarify the
continued availability, under provisions governing domestic relations
orders, of remedies relating to matters treated in such orders entered
before 1985.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Pension Reform Act of 1993''.
SEC. 2. PENSION INTEGRATION RULES.
(a) Applicability of New Integration Rules Extended to All Existing
Accrued Benefits.--Notwithstanding subsection (c)(1) of section 1111 of
the Tax Reform Act of 1986 (relating to effective date of application
of nondiscrimination rules to integrated plans) (100 Stat. 2440),
effective for plan years beginning after the date of the enactment of
this Act, the amendments made by subsection (a) of such section 1111
shall also apply to benefits attributable to plan years beginning on or
before December 31, 1988.
(b) Integration Disallowed for Simplified Employee Pensions.--
(1) In general.--Subparagraph (D) of section 408(k)(3) of
the Internal Revenue Code of 1986 (relating to permitted
disparity under rules limiting discrimination under simplified
employee pensions) is repealed.
(2) Conforming amendment.--Subparagraph (C) of such section
408(k)(3) is amended by striking ``and except as provided in
subparagraph (D),''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to taxable years beginning on or after
January 1, 1994.
(c) Eventual Repeal of Integration Rules.--Effective for plan years
beginning on or after January 1, 2002--
(1) subparagraphs (C) and (D) of section 401(a)(5) of the
Internal Revenue Code of 1986 (relating to pension integration
exceptions under nondiscrimination requirements for
qualification) are repealed, and subparagraph (E) of such
section 401(a)(5) is redesignated as subparagraph (C); and
(2) subsection (l) of section 401 of such Code (relating to
nondiscriminatory coordination of defined contribution plans
with OASDI) is repealed.
SEC. 3. APPLICATION OF MINIMUM COVERAGE REQUIREMENTS WITH RESPECT TO
SEPARATE LINES OF BUSINESS.
(a) In General.--Subsection (b) of section 410 of the Internal
Revenue Code of 1986 (relating to minimum coverage requirements) is
amended--
(1) in paragraph (1), by striking ``A trust'' and inserting
``In any case in which the employer with respect to a plan is
treated, under section 414(r), as operating separate lines of
business for a plan year, a trust'', and by inserting ``for
such plan year'' after ``requirements''; and
(2) by redesignating paragraphs (3) through (6) as
paragraphs (4) through (7), respectively and by inserting after
paragraph (2) the following new paragraph:
``(3) Special rule where employer operates single line of
business.--In any case in which the employer with respect to a
plan is not treated, under section 414(r), as operating
separate lines of business for a plan year, a trust shall not
constitute a qualified trust under section 401(a) unless such
trust is designated by the employer as part of a plan which
benefits all employees of the employer.''.
(b) Limitation on Line of Business Exception.--Paragraph (6) of
section 410(b) of such Code (as redesignated by subsection (a)(2) of
this section) is amended by inserting ``other than paragraph (1)(A)''
after ``this subsection''.
SEC. 4. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER PLANS.
(a) Internal Revenue Code Amendment.--Paragraph (2) of section
411(a) of the Internal Revenue Code of 1986 (relating to minimum
vesting standards) is amended--
(1) by striking ``subparagraph (A), (B), or (C)'' and
inserting ``subparagraph (A) or (B)''; and
(2) by striking subparagraph (C).
(b) ERISA Amendment.--Paragraph (2) of section 203(a)(2) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(2))
is amended--
(1) by striking ``subparagraph (A), (B), or (C)'' and
inserting ``subparagraph (A) or (B)''; and
(2) by striking subparagraph (C).
SEC. 5. DIVISION OF PENSION BENEFITS UPON DIVORCE.
(a) Amendments to the Internal Revenue Code of 1986.--
(1) In general.--Subsection (a) of section 401 of the
Internal Revenue Code of 1986 (relating to requirements for
qualification) is amended--
(A) by inserting after paragraph (31) the following
new paragraph:
``(32) Division of pension benefits upon divorce.--
``(A) In general.--In the case of a divorce of a
participant in a pension plan from a spouse who is,
immediately before the divorce, a beneficiary under the
plan, a trust forming a part of such plan shall not
constitute a qualified trust under this section unless
the plan provides that at least 50 percent of the
marital share of the accrued benefit of the participant
under the plan ceases to be an accrued benefit of such
participant and becomes an accrued benefit of such
divorced spouse, determined and payable upon the
earlier of the retirement of the participant, the
participant's death, or the termination of the plan,
except to the extent that a qualified domestic
relations order in connection with such divorce
provides otherwise.
``(B) Limitation.--Subparagraph (A) shall not be
construed--
``(i) to require a plan to provide any type
or form of benefit, or any option, not
otherwise provided under the plan,
``(ii) to require the plan to provide
increased benefits (determined on the basis of
actuarial value),
``(iii) to require the payment of benefits
to the divorced spouse which are required to be
paid to another individual in accordance with
this paragraph or pursuant to a domestic
relations order previously determined to be a
qualified domestic relations order, or
``(iv) to require payment of benefits to
the divorced spouse in the form of a qualified
joint and survivor annuity to the divorced
spouse and his or her subsequent spouse.
``(C) Definitions.--For purposes of this
paragraph--
``(i) Domestic relations order; qualified
domestic relations order.--The terms `domestic
relations order' and `qualified domestic
relations order' shall have the meanings
provided in section 414(p).
``(ii) Marital share.--The term `marital
share' means, in connection with an accrued
benefit under a pension plan, the product
derived by multiplying--
``(I) the actuarial present value
of the accrued benefit, by
``(II) a fraction, the numerator of
which is the period of time, during the
marriage between the spouse and the
participant in the plan, which
constitutes creditable service by the
participant under the plan, and the
denominator of which is the total
period of time which constitutes
creditable service by the participant
under the plan.
``(iii) Qualified joint and survivor
annuity.--The term `qualified joint and
survivor annuity' has the meaning provided in
section 417(b).
``(D) Regulations.--In prescribing regulations
under this paragraph, the Secretary shall consult with
the Secretary of Labor.''; and
(B) in the last sentence, by striking ``and (20)''
and inserting ``(20), and (32)''.
(2) Conforming amendments.--
(A) Subparagraph (B) of section 401(a)(13) of such
Code (relating to special rules for domestic relations
orders) is amended by inserting ``or if such creation,
assignment, or recognition pursuant to such order is
necessary for compliance with the requirements of
paragraph (32)'' before the period.
(B) Subsection (p) of section 414 of such Code
(defining qualified domestic relations orders) is
amended--
(i) in paragraph (3)(C), by inserting ``or
to a divorced spouse of the participant in
connection with a previously occurring divorce
as required under section 401(a)(32)'' before
the period; and
(ii) in paragraph (7)(C), by striking ``if
there had been no order'' and inserting ``in
accordance with section 401(a)(32) as if there
had been no qualified domestic relations
order''.
(b) Amendments to the Employee Retirement Income Security Act of
1974.--
(1) In general.--Section 206 of Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1056) is amended by adding at
the end the following new subsection:
``(e)(1) In the case of a divorce of a participant in a pension
plan from a spouse who is, immediately before the divorce, a
beneficiary under the plan, the plan shall provide that at least 50
percent of the marital share of the accrued benefit of the participant
under the plan ceases to be an accrued benefit of such participant and
becomes an accrued benefit of such divorced spouse, determined and
payable upon the earlier of the retirement of the participant, the
participant's death, or the termination of the plan, except to the
extent that a qualified domestic relations order in connection with
such divorce provides otherwise.
``(2) Paragraph (1) shall not be construed--
``(A) to require a plan to provide any type or form of
benefit, or any option, not otherwise provided under the plan,
``(B) to require the plan to provide increased benefits
(determined on the basis of actuarial value),
``(C) to require the payment of benefits to the divorced
spouse which are required to be paid to another individual in
accordance with this subsection or pursuant to a domestic
relation order previously determined to be a qualified domestic
relations order, or
``(D) to require payment of benefits to the divorced spouse
in the form of a joint and survivor annuity to the divorced
spouse and his or her subsequent spouse.
``(3) For purposes of this subsection--
``(A) The terms `domestic relations order' and `qualified
domestic relations order' shall have the meanings provided in
subsection (d)(3)(B).
``(B) The term `marital share' means, in connection with an
accrued benefit under a pension plan, the product derived by
multiplying--
``(i) the actuarial present value of the accrued
benefit, by
``(ii) a fraction--
``(I) the numerator of which is the period
of time, during the marriage between the spouse
and the participant in the plan, which
constitutes creditable service by the
participant under the plan, and
``(II) the denominator of which is the
total period of time which constitutes
creditable service by the participant under the
plan.
``(C) The term `qualified joint and survivor annuity' shall
have the meaning provided in section 205(d).
``(4) In prescribing regulations under this subsection, the
Secretary shall consult with the Secretary of the Treasury.''.
(2) Conforming amendments.--Section 206(d) of such Act (29
U.S.C. 1056(d)) is amended--
(A) in the first sentence of paragraph (3), by
inserting ``or if such creation, assignment, or
recognition pursuant to such order is necessary for
compliance with the requirements of subsection (e)''
before the period;
(B) in paragraph (3)(D)(iii), by inserting ``or to
a divorced spouse of the participant in connection with
a previously occurring divorce as required under
subsection (e)'' before the period; and
(C) in paragraph (3)(H)(iii), by striking ``if
there had been no order'' and inserting ``in accordance
with subsection (e) as if there had been no qualified
domestic relations order''.
SEC. 6. EFFECTIVE DATES.
(a) In General.--Except as provided in subsection (b), the
amendments made by this Act, other than section 2, shall apply with
respect to plan years beginning on or after January 1, 1995, and the
amendments made by section 5 shall apply only with respect to divorces
becoming final in such plan years.
(b) Special Rule for Collectively Bargained Plans.--In the case of
a plan maintained pursuant to 1 or more collective bargaining
agreements between employee representatives and 1 or more employers
ratified on or before the date of the enactment of this Act, subsection
(a) shall be applied to benefits pursuant to, and individuals covered
by, any such agreement by substituting for ``January 1, 1995'' the date
of the commencement of the first plan year beginning on or after the
earlier of--
(1) the later of--
(A) January 1, 1995, or
(B) the date on which the last of such collective
bargaining agreements terminates (determined without
regard to any extension thereof after the date of the
enactment of this Act), or
(2) January 1, 1997.
(c) Plan Amendments.--If any amendment made by this Act requires an
amendment to any plan, such plan amendment shall not be required to be
made before the first plan year beginning on or after January 1, 1995,
if--
(1) during the period after such amendment made by this Act
takes effect and before such first plan year, the plan is
operated in accordance with the requirements of such amendment
made by this Act, and
(2) such plan amendment applies retroactively to the period
after such amendment made by this Act takes effect and such
first plan year.
A plan shall not be treated as failing to provide definitely
determinable benefits or contributions, or to be operated in accordance
with the provisions of the plan, merely because it operates in
accordance with this subsection.
SEC. 7. CLARIFICATION OF CONTINUED AVAILABILITY OF REMEDIES RELATING TO
MATTERS TREATED IN DOMESTIC RELATIONS ORDERS ENTERED
BEFORE 1985.
(a) In General.--In any case in which--
(1) under a prior domestic relations order entered before
January 1, 1985, in an action for divorce--
(A) the right of a spouse under a pension plan to
an accrued benefit under such plan was not divided
between spouses,
(B) any right of a spouse with respect to such an
accrued benefit was waived without the informed consent
of such spouse, or
(C) the right of a spouse as a participant under a
pension plan to an accrued benefit under such plan was
divided so that the other spouse received less than
such other spouse's pro rata share of the accrued
benefit under the plan, or
(2) a court of competent jurisdiction determines that any
further action is appropriate with respect to any matter to
which a prior domestic relations order entered before such date
applies,
nothing in the provisions of section 104, 204, or 303 of the Retirement
Equity Act of 1984 (Public Law 98-397) or the amendments made thereby
shall be construed to require or permit the treatment, for purposes of
such provisions, of a domestic relations order, which is entered on or
after the date of the enactment of this Act and which supercedes,
amends the terms of, or otherwise affects such prior domestic relations
order, as other than a qualified domestic relations order solely
because such prior domestic relations order was entered before January
1, 1985.
(b) Definitions.--For purposes of this section--
(1) In general.--Terms used in this section which are
defined in section 3 of the Employee Retirement Income Security
Act of 1974 (29 U.S.C. 1002) shall have the meanings provided
such terms by such section.
(2) Pro rata share.--The term ``pro rata share'' of a
spouse means, in connection with an accrued benefit under a
pension plan, 50 percent of the product derived by
multiplying--
(A) the actuarial present value of the accrued
benefit, by
(B) a fraction--
(i) the numerator of which is the period of
time, during the marriage between the spouse
and the participant in the plan, which
constitutes creditable service by the
participant under the plan, and
(ii) the denominator of which is the total
period of time which constitutes creditable
service by the participant under the plan.
(3) Plan.--All pension plans in which a person has been a
participant shall be treated as one plan with respect to such
person.
SEC. 8. SECTION 2 OF RAILROAD RETIREMENT ACT OF 1974 IS AMENDED--
(1) in subsection (c)(4), by striking ``(A) is entitled to an
annuity under subsection (a)(1) and (B)''
(2) in subsection (e)(5), by striking ``or divorced wife'' the
second place it appears.
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HR 4367 IH----2