S. 2424 (108th): National Employee Savings and Trust Equity Guarantee Act of 2004

Introduced:
May 14, 2004 (108th Congress, 2003–2004)
Sponsor:
Sen. Charles “Chuck” Grassley [R-IA]
Status:
Died (Reported by Committee)
See Instead:
This bill was re-introduced as S. 1953 (109th) on Nov 02, 2005.

The bill’s title was written by the bill’s sponsor. S. stands for Senate bill.

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Status

This bill was introduced on May 14, 2004, in a previous session of Congress, but was not enacted.

Progress
Introduced May 14, 2004
Reported by Committee May 14, 2004
Cosponsors
none
Committees

Senate Finance

The committee chair determines whether a bill will move past the committee stage.

Full Title

An original bill to amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to protect the retirement security of American workers by ensuring that pension assets are adequately diversified and by providing workers with adequate access to, and information about, their pension plans, and for other purposes.

Summary

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Text

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Last updated May 14, 2004.
288 pages

Primary Source

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GovTrack’s Bill Summary

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

5/14/2004--Reported to Senate without amendment. (This measure has not been amended since it was introduced. The summary has been expanded because action occurred on the measure.) National Employee Savings and Trust Equity Guarantee Act of 2004 -
Title I - Diversification of Pension Plan Assets
Section 101 -
Amends the Internal Revenue Code (IRC) and the Employee Retirement Income Security Act of 1974 (ERISA) to require a defined contribution plan (plan) holding publicly traded securities to provide employees with: (1) the opportunity to divest employer securities; and (2) at least three investment options other than employer securities.
Section 102 -
Requires plan administrators to notify plan participants or beneficiaries of such freedom to divest employer securities. Imposes a tax on a plan's failure to meet such notice requirement.
Title II - Information to Assist Pension Plan Participants
Section 201 -
Amends the IRC and ERISA to require periodic pension benefit statements. Imposes a tax on a plan's failure to provide such statements.
Section 202 -
Requires plans to provide to participants or beneficiaries basic guidelines for investing for retirement. Imposes a tax on a plan's failure to provide such guidelines. Directs the Secretary of the Treasury to develop a model form containing such guidelines.
Section 203 -
Requires a plan to ensure that each plan participant and beneficiary is provided with all material investment information regarding investment of his or her assets in employer securities.
Section 204 -
Relieves of liability any plan allowing a participant investment control if certain requirements are met by the plan's designated qualified investment advisor.
Section 205 -
Sets forth requirements relating to tax treatment of qualified retirement planning services.
Title III - Protection of Pension Plan Participants
Section 301 -
Imposes a tax on the failure of a pension plan to provide notice to employees of any blackout period (a transaction suspension period of three or more consecutive business days in which there is a significant restriction on the right of plan participants to direct investments in the plan, obtain loans from the plan, or obtain distributions from the plan). Sets forth exceptions to such notice requirements, and authorizes the Secretary of Labor to provide for additional exceptions upon determination that they are in the interests of participants and beneficiaries. Directs the Secretary of Labor to issue model notices.
Title IV - Other Provisions Relating to Pensions
Subtitle A - Provisions Relating to Pension Plan Funding
Part I - Replacement of Interest Rate of 30-Year Treasury Securities
Section 401 -
Replaces the interest rate on 30-year Treasury securities, used in determining current liability for pension plan funding purposes and premium rates charged by the Pension Benefit Guaranty Corporation (PBGC), by phasing in rates based on long-term corporate bonds through specified yield curve methods.
Section 402 -
Replaces the 30-year Treasury rate for purposes of calculating lump-sum distributions. Allows a plan amendment, under certain conditions, to change the interest rate used to determine certain optional forms of benefit.
Section 403 -
Revises an interest rate used to apply benefit limits to lump sums.
Part II - Other Provisions
Section 406 -
Provides that, if a plan was not subject to deficit reduction contribution rules for the plan year beginning in 2000, such rules do not apply to such plan for plan years beginning in 2004, 2005, or 2006.
Section 407 -
Revises the limit on deductions for contributions to a defined benefit pension plan to increase the maximum allowable deduction.
Section 408 -
Sets forth certain benefit limitations applicable to defined benefit pension plans, if such plans are: (1) subject to deficit reduction contribution rules; and (2) financially distressed for a plan year.
Section 409 -
Revises the overall limit on employer deductions for contributions to combinations of defined benefit and defined contribution plans. Provides for disregarding matching contributions to a defined contribution plan that are nondeductible solely because of the overall deduction limit, in determining the excise tax on nondeductible contributions.
Subtitle B - Improvements in Portability and Distribution Rules
Section 411 -
Revises requirements relating to purchase of permissive service credit. Provides that such credit relates to benefits to which the participant is not otherwise entitled under a governmental plan. Permits participants to purchase credit for periods regardless of whether service is performed, subject to limits on nonqualified service. Allows service as an employee of an educational organization providing elementary or secondary education to be determined under the law of the jurisdiction in which the service was performed. Sets forth special rules relating to permissive service credits and trustee-to-trustee transfers.
Section 412 -
Permits after-tax contributions to be rolled over from a defined contribution or a defined benefit plan (qualified retirement plan) to another qualified retirement plan or to a tax-sheltered annuity.
Section 413 -
Directs the Secretary of the Treasury to issue regulations under which a governmental plan shall be treated as complying with minimum distribution requirements if it complies with a reasonable good faith interpretation of such requirements.
Section 414 -
Waives the ten-percent early withdrawal penalty tax on certain distributions from governmental defined benefit pension plans for qualified State and local public safety employees (police, firefighters, emergency medical services providers) who separate from service after age 50 (currently age 55).
Section 415 -
Permits rollovers by nonspouse beneficiaries of certain retirement plan distributions.
Section 416 -
Provides for faster vesting of employer nonelective contributions to defined contribution plans, by applying the current vesting schedule for matching contributions to all employer contributions to such plans.
Section 417 -
Permits direct rollovers from eligible retirement plans to Roth individual retirement accounts (Roth IRAs). Allows distributions from tax-qualified retirement plans, tax-sheltered annuities, and governmental 457 plans to be rolled over directly into Roth IRAs, subject to current rules applicable to rollovers from a traditional IRA into a Roth IRA.
Section 418 -
Eliminates a higher early withdrawal tax on certain Savings Incentive Match Plan for Employees (SIMPLE) retirement plan distributions.
Section 419 -
Repeals a limitation on SIMPLE plan portability. Allows distribution rollovers between SIMPLE plans and other tax-favored retirement arrangements, such as IRAs, qualified retirement plans, tax-sheltered annuities, and governmental section 457 plans.
Section 420 -
Provides that individuals are not precluded from participating in eligible deferred compensation plans by reason of having received certain prior distributions under IRC section 457 provisions as in effect before the Small Business Job Protection Act of 1996. (Section 457 plans are eligible deferred compensation plans of State or local governments or tax-exempt employers).
Section 421 -
Allows a plan to provide for the transfer of any involuntary distribution that exceeds $1,000 to the PBGC, instead of to an IRA, unless the participant elects to have the distribution transferred to an IRA or a qualified retirement plan or to receive it directly.
Subtitle C - Administrative Provisions
Section 431 -
Grants the Secretary of the Treasury full authority to establish, implement, update, and improve the Employee Plans Compliance Resolution System and any other employee plans correction policies, including the authority to waive income, excise, or other taxes to ensure that any tax, penalty, or sanction is not excessive and bears a reasonable relationship to the nature, extent, and severity of the failure.
Section 432 -
Extends to all governmental plans the moratorium on application of certain nondiscrimination rules applicable to State and local plans.
Section 433 -
Increases from 90 to 180 days the notice and consent period required before a plan may commence certain distributions. Requires the notification to describe not only a participant's right (if any) to defer receipt of a distribution but also the consequences of failing to defer such receipt.
Section 434 -
Provides for simplification of annual filing annual requirements for: (1) one-participant retirement plans; and (2) retirement plans which cover fewer than 25 employees.
Section 435 -
Directs the PBGC to issue missing participant rules for multiemployer plans. Allows the transfer of missing participants' benefits to the PBGC upon plan termination in the case of certain plans not subject to the PBGC termination insurance program.
Section 436 -
Reduces PBGC premiums for new plans of small employers. Sets the flat-rate premium at five dollars per plan participant for the first five years of a new single-employer plan of an employer with 100 or fewer employees.
Section 437 -
Reduces PBGC additional premiums for new and small plans. Phases in, over a five-year period, the variable-rate premium for a new defined benefit plan. Limits, for a plan maintained by an employer with 25 or fewer employees, the variable-rate premium to no more than five dollars times the number of plan participants at the close of the preceding plan year.
Section 438 -
Authorizes the PBGC to pay interest on premium overpayment refunds.
Section 439 -
Revises rules for substantial owner benefits in terminated plans. Reduces the phase-in periods for guaranteed benefits for a ten-percent or more owner (substantial owner) in the case of plan termination. Applies the allocation of asset rules to a substantial owner with less than 50 percent ownership in the same manner as other participants.
Section 440 -
Amends the IRC, ERISA, and the Age Discrimination in Employment Act of 1967, with respect to certain voluntary early retirement incentive and employment retention plans of local educational agencies and of educational associations, to treat such plans as bona fide severance pay plans to the extent that payments as early retirement benefits could otherwise be made, subject to specified conditions.
Section 441 -
Provides for accelerated computation of benefits payable to participants and beneficiaries by the PBGC from recoveries of employer liability.
Section 442 -
Revises requirements for multiemployer plan funding and solvency notices.
Section 443 -
Prohibits reduction of unemployment compensation as a result of pension rollovers.
Section 444 -
Amends requirements of the Economic Growth and Tax Relief Reconciliation Act of 2001, as amended by the Job Creation and Worker Assistance Act of 2002, to set forth a transition rule relating to withholding on distributions from certain governmental plans.
Section 445 -
Permits employers to reduce retiree health coverage by certain insignificant amounts under specified conditions.
Subtitle D - Studies
Section 451 -
Directs the Secretary of the Treasury to study ways to revitalize interest in defined benefit plans among employers.
Section 452 -
Directs the PBGC to study and determine the number of floor-offset employee stock ownership plans (ESOPs) still in existence and the extent to which such plans pose a risk to plan participants or beneficiaries and to the PBGC.
Subtitle E - Other Provisions
Section 461 -
Allows eligible individuals to make additional catch-up contributions to IRAs, if they participated, at least six months before the employer filed for bankruptcy, in a section 401(k) plan under which at least 50 percent of the employee's contribution to the plan was matched by employer stock, if the employer or any other person was subject to an indictment or conviction resulting from business transactions related to the bankruptcy.
Section 462 -
Provides that an ESOP maintained by an S corporation (which, unlike a C corporation, is not subject to the corporate income tax) shall not be treated as violating IRC qualification requirements or as engaging in a prohibited transaction merely by reason of a distribution made with respect to S corporation stock which constitutes qualifying employer securities, if the distribution is used to make payments on a loan used to acquire the qualifying employer securities, whether or not allocated to participants.
Section 463 -
Permits qualified transfers of excess defined benefit pension plan assets to be made by any multiemployer defined benefit plan or successor plan primarily covering employees in the building and construction industry.
Subtitle F - Plan Amendments
Section 471 -
Sets forth provisions relating to the effective date of certain amendments to pension plans or annuity contracts.
Title V - Provisions Relating to Executives and Stock Options
Subtitle A - Provisions Relating to Executives
Section 501 -
Repeals the provision of the Revenue Act of 1978 which limits the Secretary of the Treasury's authority to determine the taxable year of inclusion in gross income of amounts under private deferred compensation plans.
Section 502 -
Prohibits from being subject to creditor's claims any assets located outside the United States that are designated for providing nonqualified deferred compensation .
Section 503 -
Prohibits deferral of gain from the exercise of stock options and restricted stock gains through deferred compensation arrangements.
Section 504 -
Subjects to withholding, at the highest income tax rate, any supplemental wage payment exceeding $1 million.
Subtitle B - Stock Options
Section 511 -
Amends the IRC and the Social Security Act to exclude from FICA and FUTA (employment taxes) wages incentive stock options and employee stock purchase plan options.
Section 512 -
Treats as satisfying statutory holding requirements, regardless of how long the stock was held, the sale of stock acquired pursuant to the exercise of a stock option if the stock was sold in order to comply with Federal conflict of interest requirements.
Title VI - Women's Pension Protection
Subtitle A - Study of Spousal Consent for Distributions from Defined Contribution Plans
Women's Pension Protection Act of 2004 -
Section 601 -
Amends ERISA and the IRC to require the spouse's consent for distributions from defined contribution plans (DCPs, which include individual account plans such as 401(k) plans). (Current law only requires such consent in the case of defined benefit plans.) Applies joint and survivor annuity rules to DCPs.
Subtitle B - Division of Pension Benefits Upon Divorce
Section 611 -
Prescribes requirements for division of pension benefits upon divorce. Directs the Secretary of Labor to issue regulations relating to the time and order of issuance of qualified domestic relations orders.
Subtitle C - Railroad Retirement
Section 621 -
Amends the Railroad Retirement Act of 1974 to entitle divorced spouses to railroad retirement annuities independent of the actual entitlement of the employees.
Section 622 -
Extends the payment of any portion of Tier II railroad retirement benefits to surviving former spouses pursuant to divorce agreements.
Subtitle D - Modifications of Joint and Survivor Annuity Requirements
Section 631 -
Requires pension plans to offer participants the option of a qualified joint and 3/4 survivor annuity (as an alternative to the current qualified joint and survivor annuity).
Title VII - Tax Court Pension and Compensation
Section 701 -
Permits annuity payments for the survivors of assassinated Tax Court judges with less than five years of service.
Section 702 -
Provides for Tax Court judge survivor annuity cost-of-living benefit increases based on Civil Service Retirement System increases.
Section 703 -
Provides for Federal employee life insurance coverage (FEGLI participation) for Tax Court judges.
Section 704 -
Authorizes payment of FEGLI premium increases for Tax Court judges over age 65.
Section 705 -
Entitles a judge employed by the Executive Branch before appointment to the Tax Court to a lump-sum payment for the balance of accrued annual leave on appointment to the Tax Court.
Section 706 -
Permits Tax Court judges to participate in the Thrift Savings Plan, but prohibits agency contributions.
Section 707 -
Exempts from outside earned income limitations any compensation to retired judges for qualified teaching activities.
Section 708 -
Revises provisions concerning special trial judges to permit the chief judge to appoint and reappoint magistrate judges (currently, special judges) of the Tax Court for eight year terms. Provides for removal, salary, and leave.
Section 709 -
Permits magistrate judges to elect to participate in the Tax Court survivor annuity plan.
Section 710 -
Establishes a retirement and annuity program for magistrate judges.
Section 711 -
Makes special retirement annuity requirements for incumbent magistrate judges.
Section 712 -
Establishes rules for the recall of retired magistrate judges.
Title VIII - Other Provisions
Subtitle A - General Provisions
Section 801 -
Amends the Internal Revenue Code to provide, for taxable year 2004, that postsecondary educational benefits provided to children of employees are excludable, up to $1,000, from the gross income of the employee. Provides that such exclusion does not apply for purposes of employment taxes.
Section 802 -
Excludes from gross income and employment taxes education loan repayments provided under the National Health Service Corps Loan Repayment Program or State programs eligible for funds under specified provisions of the Public Health Service Act.
Section 803 -
Restores an exclusion for employer-provided group legal services, for taxable years 2005 and 2006. Provides tax-exempt status for organizations which provide qualified group legal services, for taxable years 2005 and 2006.
Section 804 -
Directs the Secretary of the Treasury to transfer certain excess funds from black lung disability trusts to the United Mine Workers of America Combined Benefit Fund.
Subtitle B - Revenue Provisions
Section 811 -
Sets forth IRC requirements for the application of basis rules to nonresident aliens, under provisions relating to annuities and certain proceeds of endowment and life insurance contracts.
Section 812 -
Establishes IRC requirements relating to the treatment of death benefits from employer-owned life insurance contracts.
Section 813 -
Requires the acquiring corporation in any taxable acquisition to report specified information in a return to the Secretary of the Treasury and in statements to be furnished to shareholders.

House Republican Conference Summary

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United States Code

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Statutes at Large

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  • 116 Stat. 745 et seq.

Other Citations

  • 5 U.S.C. Chapter 63
  • 5 U.S.C. Chapter 84