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H.R. 3396 (103rd): Retirement Protection Act of 1994


The text of the bill below is as of Jul 19, 1994 (Introduced).


HR 3396 SC

103d CONGRESS

2d Session

H. R. 3396

To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide security for workers, to improve pension plan funding, to limit growth in insurance exposure, to protect the single-employer plan termination insurance program, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 28, 1993

Mr. FORD of Michigan (for himself and Mr. ROSTENKOWSKI) (both by request) introduced the following bill; which was referred jointly to the Committees on Education and Labor and Ways and Means

July 19, 1994

Additional sponsors: Mr. PICKLE, Mr. HOUGHTON, and Mr. Zeliff


A BILL

To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide security for workers, to improve pension plan funding, to limit growth in insurance exposure, to protect the single-employer plan termination insurance program, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE AND TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the ‘Retirement Protection Act of 1993’.

    (b) TABLE OF CONTENTS-

      Sec. 1. Short Title and Table of Contents.

TITLE I--PENSION PLAN FUNDING

Subtitle A--Amendments to the Internal Revenue Code of 1986

      Sec. 101. Minimum Funding Requirements.

      Sec. 102. Limitation on Changes in Current Liability Assumptions.

      Sec. 103. Recognition of Already Bargained Benefit Increases.

      Sec. 104. Modification of Quarterly Contribution Requirement.

      Sec. 105. Exceptions to Excise Tax on Nondeductible Contributions.

Subtitle B--Amendments to the Employee Retirement Income Security Act of 1974

      Sec. 121. Minimum Funding Requirements.

      Sec. 122. Limitation on Changes in Current Liability Assumptions.

      Sec. 123. Recognition of Already Bargained Benefit Increases.

      Sec. 124. Modification of Quarterly Contribution Requirement.

TITLE II--AMENDMENTS RELATED TO TITLE IV OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

      Sec. 201. Reportable Events.

      Sec. 202. Alternative to Involuntary Termination.

      Sec. 203. Certain Information Required to be Furnished to PBGC.

      Sec. 204. Liability upon Liquidation of Contributing Sponsor or Controlled Group Member Where Plan Remains Ongoing.

      Sec. 205. Enforcement of Minimum Funding Requirements.

      Sec. 206. Remedies for Noncompliance with Requirements for Standard Termination.

      Sec. 207. Prohibition on Benefit Increases Where Plan Sponsor is in Bankruptcy.

      Sec. 208. Substantial Owner Benefits.

      Sec. 209. Phase-Out of Variable Rate Premium Cap.

TITLE III--PARTICIPANT SERVICES

      Sec. 301. Disclosure to Participants.

      Sec. 302. Missing Participants.

      Sec. 303. Modification to Maximum Guarantee of Disability Benefits.

TITLE IV--MISCELLANEOUS AMENDMENTS

      Sec. 401. ERISA Citation.

      Sec. 402 Definition of Contributing Sponsor.

      Sec. 403. Recovery Ratio under ERISA Section 4022(c).

      Sec. 404. Distress Termination Criteria for Banking Institutions.

      Sec. 405. Single Sum Distributions.

      Sec. 406. Adjustments to Lien for Missed Minimum Funding Contributions.

      Sec. 407. Rounding Rules for Cost of Living Adjustments.

      Sec. 408. Limitation on Cross-Testing in Defined Contribution Plans.

      Sec. 409. Funding of Restored Plans.

TITLE V--EFFECTIVE DATES

      Sec. 501. Effective Dates.

TITLE I--PENSION PLAN FUNDING

Subtitle A--Amendments to the Internal Revenue Code of 1986

SEC. 101. MINIMUM FUNDING REQUIREMENTS.

    (a) Amendments to Additional Funding Requirements for Single-Employer Plans-

      (1) Relationship of additional funding requirement to funding standard account charges and credits-

        (A) Clause (ii) of section 412(l)(1)(A) of the Internal Revenue Code of 1986 is amended to read as follows:

          ‘(ii) the sum of the charges for such plan years under subsection (b)(2), reduced by the sum of the credits for such plan year under subparagraph (B) of subsection (b)(3), and’.

        (B) The last sentence in section 412(l)(1) is amended to read as follows: ‘Such increase shall not exceed the amount necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) to 100 percent, reduced by the amount described in clause (ii) of paragraph (A).’

      (2) AMENDMENT TO DEFICIT REDUCTION CONTRIBUTION- Paragraph (2) of section 412(l) of the Code is amended--

        (A) by striking the period and inserting ‘, and’ at the end of subparagraph (B); and

        (B) by adding at the end thereof a new subparagraph (C) to read as follows:

        ‘(C) the expected increase in current liability due to benefits accruing during the plan year.’

      (3) Increase in current liability due to change in required assumptions-

        (A) Paragraph (3) of section 412(l) of the Code is amended by adding at the end thereof a new subparagraph to read as follows:

        ‘(D) Special rule for required changes in actuarial assumptions-

          ‘(i) The unfunded old liability amount with respect to any plan for any plan year shall be increased by the amount necessary to amortize the amount of additional unfunded old liability under the plan, determined under clause (ii), in equal annual installments over a period of 12 plan years (beginning with the first plan year beginning after December 31, 1994).

          ‘(ii) the term ‘additional unfunded old liability’ means the amount (if any) by which--

            ‘(I) the current liability of the plan as of the beginning of the first plan year beginning after December 31, 1994 valued using the assumptions required in paragraph (7)(C) of this subsection as in effect for plan years beginning after December 31, 1994, exceeds

            ‘(II) the current liability of the plan as of the beginning of the first plan year beginning after December 31, 1994, valued using the prior interest rate and using such mortality assumptions as were used to determine current liability for the first plan year beginning after December 31, 1992.

          ‘(iii) For purposes of clause (ii), the term ‘prior interest rate’ means the rate of interest that is the same percentage of the weighted average under paragraph (5) of subsection (b) for the first plan year beginning after December 31, 1994 as the rate of interest that was used by the plan to determine current liability for the first plan year beginning after December 31, 1992 was of the weighted average under such paragraph (5) of subsection (b) for such first plan year beginning after December 31, 1992. With the exception of assumptions concerning the rate of interest and mortality, the assumptions used for determining current liability under subclause (I) of clause (ii) shall also be used to determine current liability under subclause (II) of clause (ii).’

      (4) APPLICABLE PERCENTAGE FOR DETERMINING UNFUNDED NEW LIABILITY AMOUNT- Clause (ii) of section 412(l)(4)(C) of the Code is amended by replacing ‘35’ with ‘60’.

      (5) UNPREDICTABLE CONTINGENT EVENT AMOUNT-

        (A) Paragraph (5)(A) of section 412(l) of the Code is amended--

          (i) by inserting ‘greatest of’ for ‘greater of’ before clause (i);

          (ii) by striking ‘or’ at the end of clause (i);

          (iii) by striking the period at the end of clause (ii) and inserting ‘, or’; and

          (iv) by adding a new clause (iii) to read as follows:

          ‘(iii) the additional amount that would be determined under paragraph (4)(A) if the unpredictable contingent event benefit liabilities were included in unfunded new liability notwithstanding paragraph (4)(B)(ii).’

        (B) Paragraph (5) of section 412(l) of the Code is amended by adding a new subparagraph (E) to read as follows:

        ‘(E) LIMITATION- The present value of the amounts described in subparagraph (A) with respect to any one event shall not exceed the unpredictable contingent event benefit liabilities attributable to that event.’

      (6) REQUIRED INTEREST RATE AND MORTALITY ASSUMPTIONS FOR DETERMINING CURRENT LIABILITY- Paragraph (7)(C) of section 412(l) of the Code is amended to read as follows:

        ‘(C) INTEREST RATE AND MORTALITY ASSUMPTIONS USED- Effective for plan years beginning after December 31, 1994--

          ‘(i) the rate of interest used to determine current liability under this subsection shall be the rate of interest used under subsection (b)(5), except the permissible range under subparagraph (B)(ii) of such subsection (b)(5) shall not exceed 100 percent of the weighted average referred to in such subparagraph, and

          ‘(ii) the mortality table used to determine current liability under this subsection shall be the prevailing commissioners’ standard table (described in section 807(d)(5)(A)) that would be used to determine reserves for group annuity contracts issued on the date as of which current liability is determined (without regard to any other subparagraph of section 807(d)(5)).’

      (7) TRANSITION RULE- Section 412(l) of the Code is amended by adding at the end thereof a new paragraph (9) to read as follows:

      ‘(9) ADDITIONAL LIMITATIONS-

        ‘(A) For any applicable plan year, at the election of the employer (in such manner as is prescribed by the Secretary), the increase under paragraph (1) shall not exceed the greater of--

          ‘(i) the increase that would have been required under the provisions of such paragraph (1) as in effect for plan years beginning before January 1, 1995 if such provisions had remained in effect for the applicable plan year, or

          ‘(ii) the amount necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) for the applicable plan year to a funded current liability percentage equal to the sum of the initial funded current liability percentage of the plan plus the applicable number of percentage points for such applicable plan year, reduced by the amount determined under paragraph (1)(A)(ii).

        ‘(B)(i) Except as provided in clause (iii), for plans with an initial funded current liability percentage that is equal to or less than 75 percent, the applicable number of percentage points for the applicable plan year is:

‘In the case of applicable plan years beginning in:

The applicable number of percent point is:

1995


3

1996


6

1997


9

1998


12

1999


15

2000


19

2001


24.

        ‘(ii) For plans with an initial funded current liability percentage that is equal to or greater than 85 percent, the applicable number of percentage points for the applicable plan year is:

‘In the case of applicable plan years beginning in:

The applicable number of percentage points is:

1995


2

1996


4

1997


6

1998


8

1999


10

2000


13

2001


15.

        ‘(iii) For plans with an initial funded current liability percentage that is greater than 75 percent but less than 85 percent, or for plans with an initial funded current liability percentage equal to or less than 75 percent for which, as of a later applicable plan year, the sum of the initial funded current liability percentage and the applicable number of percentage points attributable to the previous applicable plan year exceed 75 percent, the applicable number of percentage points for any such applicable plan year is the sum of--

          ‘(I) 2 percentage points;

          ‘(II) the applicable number of percentage points attributable to the previous applicable plan year (except that such number for the applicable plan year beginning in 1995 is zero);

          ‘(III) the product of .10 multiplied by the excess, if any, of (a) 85 percentage over (b) the sum of the initial funded current liability percentage and the number under subclause (II);

          ‘(IV) for applicable plan years beginning in 2000, 1 percentage point; and

          ‘(V) for applicable plan years beginning in 2001, 2 percentage points.

        ‘(D) DEFINITIONS- For purposes of this paragraph:

          ‘(i) ‘Applicable plan year’ means a plan year beginning after December 31, 1994, and before January 1, 2002.

          ‘(ii) ‘Initial funded current liability percentage’ means the funded current liability percentage as of the first day of the first plan year beginning after December 31, 1994.’

      (8) Three-year solvency requirement-

        (A) Section 412(m) of such Code is amended by adding at the end thereof a new paragraph (6) to read as follows:

      ‘(6) Three-year solvency requirement-

        ‘(A) IN GENERAL- This paragraph applies to a defined benefit plan that--

          ‘(i) is required to make quarterly contributions under this subsection for a plan year, and

          ‘(ii) has liquid assets as of the last day of the last month preceding the quarterly installment date that are less than the base amount for the quarter.

        ‘(B) AMOUNT OF QUARTERLY CONTRIBUTION- The amount of the required installment that is due for any quarter under this subsection is the greater of the amount under this subsection (without regard to this paragraph) or the quarterly solvency payment. Such amount, when added to prior installments for the plan year, shall not exceed the amount necessary to increase the funded currently liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) to 100 percent.

        ‘(C) DEFINITIONS- For purposes of this paragraph:

          ‘(i) BASE AMOUNT- ‘Base amount’ means an amount that is the product of three multiplied by the sum of the adjusted disbursements from the plan for the 12 months ending on the last day of the last month preceding the quarterly installment due date. If the amount computed under the previous sentence exceeds the product of two multiplied by the sum of adjusted disbursements for the 36 months ending on the last day of the last month preceding the quarterly installment due date, and an enrolled actuary certifies to the Secretary that the excess is the result of nonrecurring circumstances, the base amount shall exclude amounts related to those nonrecurring circumstances.

          ‘(ii) DISBURSEMENTS FROM THE PLAN- The term ‘disbursements from the plan’ means all disbursements from the trust, including purchases of annuities, payment of single sums and the benefit payments, and administrative expenses.

          ‘(iii) ADJUSTED DISBURSEMENTS- ‘Adjusted disbursements’ means the amount of disbursements reduced by the product of the plan’s funded current liability percentage (as defined in subsection (1)(8)(B)) for the plan year multiplied by the sum of annuity purchases, single sum distributions, and such other disbursements as the Secretary shall provide in regulations.

          ‘(iv) LIQUID ASSETS- ‘Liquid assets’ means cash, marketable securities and such other assets as specified by the Secretary.

          ‘(v) QUARTERLY SOLVENCY PAYMENT- ‘Quarterly solvency payment’ means an amount of liquid assets equal to the difference between the plan’s liquid assets and the base amount, as of the last day of a quarter.

        ‘(D) EFFECT OF SOLVENCY CONTRIBUTION-

          ‘(i) A quarterly solvency payment shall be treated in the same manner as a quarterly required installment, except that paragraph (2)(C) shall be applied by applying contributions to the latest outstanding quarterly solvency payment. For purposes of paragraph (2)(B), a quarterly solvency payment that is not paid timely shall not be considered paid until the earlier of the last day of a later quarter for which either (I) the plan does not have a quarterly solvency payment required, or (II) the solvency payment for such later quarter is paid timely.

          ‘(ii) The Secretary shall provide such rules as are necessary to avoid duplication or omission of any factors in the determination and application of this requirement.’

        (B) EXCISE TAX ON UNPAID QUARTERLY SOLVENCY PAYMENTS-

          (i) Subsection (e) of section 4971 of the Code is amended by striking ‘(a) or (b)’ wherever it appears and replacing it with ‘(a), (b) or (f)’.

          (ii) Section 4971 of the Code is amended by redesignating subsection (f) as subsection (g) and adding a new subsection (f) to read as follows:

    ‘(f)(1) For each quarter of the plan year of a plan to which section 412 applies, there is imposed a tax of 10 percent of the amount of any outstanding quarterly solvency payments, as described in section 412(m)(6). A quarterly solvency payment shall no longer be considered outstanding on the earlier of the last day of a later quarter for which either (A) the plan does not have a quarterly solvency payment required, or (B) the solvency payment for such later quarter is paid timely.

    ‘(2) If by the end of the fourth quarter following the quarter for which a quarterly solvency payment was due, either the plan has a quarterly solvency payment due, or the solvency payment for such later quarter was not paid timely, (A) there is hereby imposed a tax equal to 100 percent of the unpaid solvency payment for such earlier quarter, and (B) the quarterly solvency payment for such earlier quarter shall no longer be considered outstanding.’

        (C) OUTSTANDING QUARTERLY SOLVENCY PAYMENTS- Section 401(a) of such Code is amended by adding a new paragraph (32) at the end thereof to read as follows:

      ‘(32) OUTSTANDING QUARTERLY SOLVENCY PAYMENTS- A trust forming part of a pension plan shall not be treated as failing to constitute a qualified trust under this section merely because the pension plan of which such trust is a part ceases to make prohibited payments during a period in which a quarterly solvency payment, as defined in section 412(m)(6), is outstanding. A prohibited payment is any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements, within the meaning of section 411(a)(9)), to a participant or beneficiary whose annuity starting date, as defined in section 417(f)(2), occurs during the period in which there are outstanding quarterly solvency payments, any purchase during such period of an irrevocable commitment from an insurer to pay benefits, and such other payments as provided by the Secretary. For purposes of this subsection, a quarterly solvency payment shall no longer be considered outstanding on the earlier of the last day of a later quarter for which either (A) the plan does not have a quarterly solvency payment required, or (B) the solvency payment for such later quarter is paid timely.’

      (9) Amendment to full funding definition-

        (A) Subclause (I) of subsection 412(c)(7)(A)(i) is amended by inserting ‘(including the expected increase in current liability due to benefits accruing during the plan year)’ after ‘current liability’.

        (B) Section 412(c)(7) is further amended by inserting in flush language after subparagraph (A), a sentence to read as follows: ‘In any plan year in which a plan has unfunded current liability under subsection (l)(8), the amount in this subparagraph (A) shall not be less than such unfunded current liability.’

        (C) Subparagraph (B) of subsection 412(c)(7) is amended to read as follows:

        ‘(B) CURRENT LIABILITY- For purposes of subparagraph (D) and subclause (I) of subparagraph (A)(i), the term ‘current liability’ has the meaning given such term by subsection (l)(7) (without regard to the interest rate and mortality assumptions required therein, and without regard to subparagraph (D) thereof).’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective for plan years beginning after December 31, 1994.

SEC. 102. LIMITATION ON CHANGES IN CURRENT LIABILITY ASSUMPTIONS.

    (a) Section 412(c) is amended by redesignating paragraph (5) as subparagraph (5)(A), and by adding a new subparagraph (5)(B) to read as follows:

        ‘(B)(i) CHANGE IN ASSUMPTIONS REQUIRES APPROVAL- If the actuarial assumptions (other than the assumptions described in subsection (l)(7)(C)) used to determine the current liability for a plan are changed, the new actuarial assumptions shall become the actuarial assumptions used to determine current liability for the plan only if the change is approved by the Secretary.

        ‘(ii) Clause (i) shall not apply unless--

          ‘(I) the plan is subject to the requirements of subsection (l);

          ‘(II) the requirements of section 4043(b)(1) of the Employee Retirement Income Security Act of 1974 are met; and

          ‘(III) the change in assumptions (determined after taking into account any changes in interest rate and mortality table) results in a decrease in the unfunded current liability of the plan for the current plan year that is $50,000,000 or greater, or that is $5,000,000 or greater and that is 5 percent or more of the current liability of the plan before such change.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective with respect to assumption changes in plan years beginning after October 28, 1993. Assumption changes made in plan years beginning after December 31, 1992 that would have required approval under this amended section had it been in effect at the time of such changes, shall not be effective for plan years beginning after December 31, 1994 unless approved by the Secretary.

SEC. 103. RECOGNITION OF ALREADY BARGAINED CHANGES IN LIABILITY.

    (a) Section 412(c) is amended by adding a new paragraph (12) at the end thereof to read as follows:

      ‘(12) PLAN LIABILITIES ARISING FROM AMENDMENTS EFFECTIVE IN THE FUTURE- A collectively bargained plan described in section 413(a) shall anticipate benefit increases scheduled to take effect during the term of the collective bargaining agreement applicable to the plan at the same time and in the same manner as if the plan amendment implementing the provision of the collective bargaining agreement were adopted by the parties when the parties entered into the collective bargaining agreement.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective for plan years beginning after December 31, 1994 with respect to collective bargaining agreements in effect on or after January 1, 1995.

SEC. 104. MODIFICATION OF QUARTERLY CONTRIBUTION REQUIREMENT.

    (a) Section 412(m) of the Internal Revenue Code of 1986, as amended by section 101 of this Act, is further amended by adding at the end thereof a new paragraph (7) to read as follows:

      ‘(7) APPLICABILITY OF THIS SUBSECTION- This subsection applies only with respect to a plan year for which the funded current liability percentage of such plan (within the meaning of subsection (l)(8)(B)) for the preceding plan year is less than 100 percent.’

    (b) EFFECTIVE DATE- The amendment made by this section shall be effective for plan years beginning after the date of enactment of this Act.

SEC. 105. EXCEPTIONS TO EXCISE TAX ON NONDEDUCTIBLE CONTRIBUTIONS.

    (a) Section 4972(c) of the Internal Revenue Code of 1986 is amended by adding a new paragraph (6) to read as follows:

      ‘(6) EXCEPTIONS- In determining the amount of nondeductible contributions for any taxable year, there shall not be taken into account--

        ‘(A) Any contributions that would be deductible under section 404(a)(1)(D) if the plan had more than 100 participants provided that (i) the plan is covered under section 4021 of the Employee Retirement Income Security Act of 1974, and (ii) the plan is terminated under section 4041(a)(2) of such Act during the plan year ending with or within the taxable year or during a previous plan year.

        ‘(B) Any contributions described in section 401(m)(4)(A) or 402(g)(3)(A) that do not exceed 6 percent of compensation, as defined in section 404(a)(7)(A)(i), that are not deductible merely because of section 404(a)(7). For purposes of the preceding sentence, the deductible limits under section 404(a)(7) shall first be applied to amounts contributed to a defined benefit plan and then to amounts described in the preceding sentence. This subparagraph shall apply only if the defined benefit plan is a plan with more than 100 participants, as described in section 404(a)(1)(D).’

    (b) Section 4972(c)(6)(A) as added by this section shall be effective for taxable years ending on or after the date of enactment of this Act. Section 4972(c)(6)(B) as added by this section shall apply for taxable years ending on or after December 31, 1992.

Subtitle B--Amendments to the Employee Retirement Income Security Act of 1974

SEC. 121. MINIMUM FUNDING REQUIREMENTS.

    (a) AMENDMENTS TO ADDITIONAL FUNDING REQUIREMENTS FOR SINGLE-EMPLOYER PLANS-

      (1) RELATIONSHIP OF ADDITIONAL FUNDING REQUIREMENT TO FUNDING STANDARD ACCOUNT CHARGES AND CREDITS-

        (A) Clause (ii) of section 302(d)(1)(A) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(d)) is amended to read as follows:

          ‘(ii) the sum of the charges for such plan years under subsection (b)(2), reduced by the sum of the credits for such plan year under subparagraph (B) of subsection (b)(3), and’.

        (B) The last sentence in section 302(d)(1) is amended to read as follows: ‘Such increase shall not exceed the amount necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) to 100 percent, reduced by the amount described in clause (ii) of paragraph (A).’

      (2) AMENDMENT TO DEFICIT REDUCTION CONTRIBUTION- Paragraph (2) of section 302(d) of such Act is amended--

        (A) by striking the period and inserting ‘, and’ at the end of subparagraph (B); and

        (B) by adding at the end thereof a new subparagraph (C) to read as follows:

        ‘(C) the expected increase in current liability due to benefits accruing during the plan year.’

      (3) Increase in current liability due to change in required assumptions-

        (A) Paragraph (3) of section 302(d) of such Act is amended by adding at the end thereof a new subparagraph to read as follows:

        ‘(D) SPECIAL RULE FOR REQUIRED CHANGES IN ACTUARIAL ASSUMPTIONS-

          ‘(i) The unfunded old liability amount with respect to any plan for any plan year shall be increased by the amount necessary to amortize the amount of additional unfunded old liability under the plan, determined under clause (ii), in equal annual installments over a period of 12 plan years (beginning with the first plan year beginning after December 31, 1994).

          ‘(ii) The term ‘additional unfunded old liability’ means the amount (if any) by which--

            ‘(I) the current liability of the plan as of the beginning of the first plan year beginning after December 31, 1994 valued using the assumptions required in paragraph (7)(C) of this subsection as in effect for plan years beginning after December 31, 1994, exceeds

            ‘(II) the current liability of the plan as of the beginning of the first plan year beginning after December 31, 1994, valued using the prior interest rate and using such mortality assumptions as were used to determine current liability for the first plan year beginning after December 31, 1992.

          ‘(iii) For purposes of clause (ii), the term ‘prior interest rate’ means the rate of interest that is the same percentage of the weighted average under paragraph (5) of subsection (b) for the first plan year beginning after December 31, 1994 as the rate of interest that was used by the plan to determine current liability for the first plan year beginning after December 31, 1992 was of the weighted average under such paragraph (5) of subsection (b) for such first plan year beginning after December 31, 1992. With the exception of assumptions concerning the rate of interest and mortality, the assumptions used for determining current liability under subclause (I) of clause (ii) shall also be used to determine current liability under subclause (II) of clause (ii).’

      (4) APPLICABLE PERCENTAGE FOR DETERMINING UNFUNDED NEW LIABILITY AMOUNT- Clause (ii) of section 302(d)(4)(C) of such Act is amended by replacing ‘35’ with ‘60’.

      (5) UNPREDICTABLE CONTINGENT EVENT AMOUNT-

        (A) Paragraph (5)(A) of section 302(d) of such Act is amended--

          (i) by inserting ‘greatest of’ for ‘greater of’ before clause (i);

          (ii) by striking ‘or’ at the end of clause (i);

          (iii) by striking the period at the end of clause (ii) and inserting ‘, or’; and

          (iv) by adding a new clause (iii) to read as follows:

          ‘(iii) the additional amount that would be determined under paragraph (4)(A) if the unpredictable contingent event benefit liabilities were included in unfunded new liability notwithstanding paragraph (4)(B)(ii).’

        (B) Paragraph (5) of section 302(d) of such Act is amended by adding a new subparagraph (E) to read as follows:

        ‘(E) LIMITATION- The present value of the amounts described in subparagraph (A) with respect to any one event shall not exceed the unpredictable contingent event benefit liabilities attributable to that event.’

      (6) REQUIRED INTEREST RATE AND MORTALITY ASSUMPTIONS FOR DETERMINING CURRENT LIABILITY- Paragraph (7)(C) of section 302(d) of such Act is amended to read as follows:

        ‘(C) INTEREST RATE AND MORTALITY ASSUMPTIONS USED- Effective for plan years beginning after December 31, 1994--

          ‘(i) the rate of interest used to determine current liability under this subsection shall be the rate of interest used under subsection (b)(5), except the permissible range under subparagraph (B)(ii) of such subsection (b)(5) shall not exceed 100 percent of the weighted average referred to in such subparagraph, and

          ‘(ii) the mortality table used to determine current liability under this subsection shall be the prevailing commissioners’ standard table (described in section 807(d)(5)(A) of the Internal Revenue Code of 1986) that would be used to determine reserves for group annuity contracts issued on the date as of which current liability is determined (without regard to any other subparagraph of section 807(d)(5) of the Internal Revenue Code of 1986).’

      (7) TRANSITION RULE- Section 302(d) of such Act is amended by adding at the end thereof a new paragraph (9) to read as follows:

      ‘(9) ADDITIONAL LIMITATIONS-

        ‘(A) For any applicable plan year, at the election of the employer (in such manner as is prescribed by the Secretary of the Treasury), the increase under paragraph (1) shall not exceed the greater of--

          ‘(i) the increase that would have been required under the provisions of such paragraph (1) as in effect for plan years beginning before January 1, 1995 if such provisions had remained in effect for the applicable plan year, or

          ‘(ii) the amount necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) for the applicable plan year to a funded current liability percentage equal to the sum of the initial funded current liability percentage of the plan plus the applicable number of percentage points for such applicable plan year, reduced by the amount determined under paragraph (1)(A)(ii).

        ‘(B)(i) Except as provided in clause (iii), for plans with an initial funded current liability percentage that is equal to or less than 75 percent, the applicable number of percentage points for the applicable plan year is:

‘In the case of applicable plan years beginning in:

The applicable number of percentage points is:

1995


3

1996


6

1997


9

1998


12

1999


15

2000


19

2001


24.

        ‘(ii) For plans with an initial funded current liability percentage that is equal to or greater than 85 percent, the applicable number of percentage points for the applicable plan year is:

‘In the case of applicable plan years beginning in:

The applicable number of percentage points is:

1995


2

1996


4

1997


6

1998


8

1999


10

2000


13

2001


15.

        ‘(iii) For plans with an initial funded current liability percentage that is greater than 75 percent but less than 85 percent, or for plans with an initial funded current liability percentage equal to or less than 75 percent for which, as of a later applicable plan year, the sum of the initial funded current liability percentage and the applicable number of percentage points attributable to the previous applicable plan year exceed 75 percent, the applicable number of percentage points for any such applicable plan year is the sum of:

          ‘(I) 2 percentage points;

          ‘(II) the applicable number of percentage points attributable to the previous applicable plan year (except that such number for the applicable plan year beginning in 1995 is zero);

          ‘(III) the product of .10 multiplied by the excess, if any, of (a) 85 percent over (b) the sum of the initial funded current liability percentage and the number under subclause (II);

          ‘(IV) for applicable plan years beginning in 2000, 1 percentage point; and

          ‘(V) for applicable plan years beginning in 2001, 2 percentage points.

        ‘(D) DEFINITIONS- For purposes of this paragraph:

          ‘(i) ‘Applicable plan year’ means a plan year beginning after December 31, 1994, and before January 1, 2002.

          ‘(ii) ‘Initial funded current liability percentage’ means the funded current liability percentage as of the first day of the first plan year beginning after December 31, 1994.’

      (8) THREE-YEAR SOLVENCY REQUIREMENT-

        (A) Section 302(e) of such Act is amended by adding at the end thereof a new paragraph (6) to read as follows:

      ‘(6) THREE-YEAR SOLVENCY REQUIREMENT-

        ‘(A) IN GENERAL- This paragraph applies to a defined benefit plan that--

          ‘(i) is required to make quarterly contributions under this subsection for a plan year, and

          ‘(ii) has liquid assets as of the last day of the last month preceding the quarterly installment date that are less than the base amount for the quarter.

        ‘(B) AMOUNT OF QUARTERLY CONTRIBUTION- The amount of the required installment that is due for any quarter under this subsection is the greater of the amount under this subsection (without regard to this paragraph) or the quarterly solvency payment. Such amount, when added to prior installments for the plan year, shall not exceed the amount necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) to 100 percent.

        ‘(C) DEFINITIONS- For purposes of this paragraph:

          ‘(i) BASE AMOUNT- ‘Base amount’ means an amount that is the product of three multiplied by the sum of the adjusted disbursements from the plan for the 12 months ending on the last day of the last month preceding the quarterly installment due date. If the amount computed under the previous sentence exceeds the product of two multiplied by the sum of adjusted disbursements for the 36 months ending on the last day of the last month preceding the quarterly installment due date, and an enrolled actuary certifies to the Secretary of the Treasury that the excess is the result of nonrecurring circumstances, the base amount shall exclude amounts related to those nonrecurring circumstances.

          ‘(ii) DISBURSEMENTS FROM THE PLAN- The term ‘disbursements from the plan’ means all disbursements from the trust, including purchases of annuities, payment of single sums and other benefit payments, and administrative expenses.

          ‘(iii) ADJUSTED DISBURSEMENTS- ‘Adjusted disbursements’ means the amount of disbursements reduced by the product of the plan’s funded current liability percentage (as defined in subsection (d)(8)(B)) for the plan year multiplied by the sum of annuity purchases, single sum distributions, and such other disbursements as the Secretary of the Treasury shall provide in regulations.

          ‘(iv) LIQUID ASSETS- ‘Liquid assets’ means cash, marketable securities and such other assets as specified by the Secretary of the Treasury.

          ‘(v) QUARTERLY SOLVENCY PAYMENT- ‘Quarterly solvency payment’ means an amount of liquid assets equal to the difference between the plan’s liquid assets and the base amount, as of the last day of a quarter.

        ‘(D) Effect of solvency contribution-

          ‘(i) A quarterly solvency payment shall be treated in the same manner as a quarterly required installment, except that paragraph (2)(C) shall be applied by applying contributions to the latest outstanding quarterly solvency payment. For purposes of paragraph (2)(B), a quarterly solvency payment that is not paid timely shall not be considered paid until the earlier of the last day of a later quarter for which (I) the plan does not have a quarterly solvency payment required, or (II) the solvency payment for such later quarter is paid timely.

          ‘(ii) The Secretary of the Treasury shall provide such rules as are necessary to avoid duplication or omission of any factors in the determination and application of this requirement.’

        (B) Limitation on distributions other than life annuities paid by the plan-

          (i) Section 204 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054) is amended by redesignating subsection (i) as (j) and inserting a new subsection (i) to read as follows:

          ‘(i) Notwithstanding any other provision of this Part, the fiduciary of a pension plan that is subject to the additional funding requirements of section 302(d) shall not permit a prohibited payment to be made from a plan during a period in which a quarterly solvency payment, as defined in section 302(e)(6), is outstanding. A prohibited payment is any payment, in excess of the monthly amount paid under a single life annunity (plus any social security supplements, within the meaning of section 204(b)(1)(G)), to a participant or beneficiary whose annuity starting date, as defined in section 205(h)(2), occurs during the period in which there are outstanding quarterly solvency payments, any purchase during such period of an irrevocable commitment from an insurer to pay benefits, and such other payments as provided by the Secretary of the Treasury. For purposes of this subsection, a quarterly solvency payment shall no longer be considered outstanding on the earlier of the last day of a later quarter for which either (I) the plan does not have a quarterly solvency payment required, or (II) the solvency payment for such later quarter is paid timely. Compliance with this subsection shall not constitute a violation of any other provision of this Act.’

          (ii) Section 502 of such Act is amended by adding at the end thereof a new subsection (m) to read as follows:

    ‘(m) In the case of a distribution to a pension plan participant or beneficiary in violation of section 204(i) by a plan fiduciary, the Secretary shall assess a penalty against such fiduciary in an amount equal to the value of the distribution. Such penalty shall not exceed $10,000 for each such distribution.’

      (9) Amendment to full funding definition-

        (A) Subclause (I) of subsection 302(c)(7)(A)(i) of such Act is amended by inserting ‘(including the expected increase in current liability due to benefits accruing during the plan year)’ after ‘current liability’.

        (B) Section 302(c)(7) is further amended by inserting in flush language after subparagraph (A), a new sentence to read as follows: ‘In any plan year in which a plan has unfunded current liability under subsection (d)(8), the amount in this subparagraph (A) shall not be less than such unfunded current liability.’

        (C) Subparagraph (B) of subsection 302(c)(7) is amended to read as follows:

        ‘(B) CURRENT LIABILITY- For purposes of subparagraph (D) and subclause (I) of subparagraph (A)(i), the term ‘current liability’ has the meaning given such term by subsection (d)(7) (without regard to the interest rate and mortality assumptions required therein, and without regard to subparagraph (D) thereof).’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective for plan years beginning after December 31, 1994.

SEC. 122. LIMITATION ON CHANGES IN CURRENT LIABILITY ASSUMPTIONS.

    (a) Section 302(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)) is amended by redesignating paragraph (5) as subparagraph (5)(A), and adding a new subparagraph (5)(B) to read as follows:

        ‘(B)(i) CHANGE IN ASSUMPTIONS REQUIRES APPROVAL- If the actuarial assumptions (other than the assumptions described in subsection (d)(7)(C)) used to determine the current liability for a plan are changed, the new actuarial assumptions shall become the actuarial assumptions used to determine current liability for the plan only if the change is approved by the Secretary of the Treasury.

        ‘(ii) Clause (i) shall not apply unless--

          ‘(I) the plan is subject to the requirements of subsection (d);

          ‘(II) the requirements of section 4043(b)(1) are met; and

          ‘(III) the change in assumptions (determined after taking into account any changes in interest rate and mortality table) results in a decrease in the unfunded current liability of the plan for the current plan year that is $50,000,000 or greater, or that is $5,000,000 or greater and that is 5 percent or more of the current liability of the plan before such change.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective with respect to assumption changes in plan years beginning after October 28, 1993. Assumption changes made in plan years beginning after December 31, 1992 that would have required approval under this amended section had it been in effect at the time of such changes, shall not be effective for plan years beginning after December 31, 1994 unless approved by the Secretary of the Treasury.

SEC. 123. RECOGNITION OF ALREADY BARGAINED CHANGES IN LIABILITY.

    (a) Section 302(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(c)) is amended by adding a new paragraph (12) at the end thereof to read as follows:

      ‘(12) PLAN LIABILITIES ARISING FROM AMENDMENTS EFFECTIVE IN THE FUTURE- A collectively bargained plan described in section 413(a) of the Internal Revenue Code of 1986 shall anticipate benefit increases scheduled to take effect during the term of the collective bargaining agreement applicable to the plan at the same time and in the same manner as if the plan amendment implementing the provision of the collective bargaining agreement were adopted by the parties when the parties entered into the collective bargaining agreement.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective for plan years beginning after December 31, 1994 with respect to collective bargaining agreements in effect on or after January 1, 1995.

SEC. 124. MODIFICATION OF QUARTERLY CONTRIBUTION REQUIREMENT.

    (a) Section 302(e) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(e)), as amended by section 121 of this Act, is further amended by adding at the end thereof a new paragraph (7) to read as follows:

      ‘(7) APPLICABILITY OF THIS SUBSECTION- This subsection applies only with respect to a plan year for which the funded current liability percentage of such plan (within the meaning of subsection (d)(8)(B)) for the preceding plan year is less than 100 percent.’

    (b) EFFECTIVE DATE- The amendment made by this section shall be effective for plan years beginning after the date of enactment of this Act.

TITLE II--AMENDMENTS RELATED TO TITLE IV OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

SEC. 201. REPORTABLE EVENTS.

    (a) RESPONSIBILITY FOR REPORTABLE EVENTS REPORTING- Section 4043(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1343(a)) is amended--

      (1) by inserting ‘, unless a notice has already been provided with respect to such event’ before the period at the end of the first sentence;

      (2) by inserting ‘or the contributing sponsor’ before ‘knows or has reason to know’; and

      (3) by striking the last sentence.

    (b) NOTIFICATION THAT EVENT IS ABOUT TO OCCUR- Section 4043 of such Act is amended by redesignating subsections (b), (c) and (d) as (c), (d) and (e), respectively, and by inserting a new subsection (b) to read as follows:

    ‘(b)(1) The requirement of this subsection shall be applicable to a contributing sponsor only if the aggregate unfunded vested benefits at the close of the preceding plan year (as determined under section 4006(a)(3)(E)(iii)) of plans maintained by such sponsor and the members of such sponsor’s controlled group that are covered by this title (taking into account only those plans with unfunded vested benefits) exceed $50,000,000.

    ‘(2) No later than 30 days prior to the effective date of an event described in paragraphs (9) and (13) of subsection (c) of this section, a contributing sponsor described in paragraph (1) of this subsection shall notify the corporation that the event is about to occur.

    ‘(3) The corporation is authorized to waive the requirement of this subsection with respect to any or all reportable events with respect to any contributing sponsor.’

    (c) NEW REPORTABLE EVENTS- Subsection 4043(c), as redesignated, is amended--

      (1) by striking the ‘or’ at the end of paragraph (8); and

      (2) by striking paragraph (9) and inserting, after paragraph (8), new paragraphs (9) through (13) to read as follows:

      ‘(9) when, as a result of an event, a person ceases to be a member of the controlled group;

      ‘(10) when a contributing sponsor or a member of a contributing sponsor’s controlled group liquidates in a case under title 11, United States Code, or under any similar Federal law or law of a State or political subdivision of a State;

      ‘(11) when a contributing sponsor or a member of a contributing sponsor’s controlled group declares an extraordinary dividend (as defined in section 1059(c) of the Internal Revenue Code of 1986) or redeems, in any 12-month period, an aggregate of 10 percent or more of the total combined voting power of all classes of stock entitled to vote, or an aggregate of 10 percent of more of the total value of shares of all classes of stock, of a contributing sponsor and all members of its controlled group;

      ‘(12) when, in any 12-month period, an aggregate of 3 percent or more of the benefit liabilities of a plan covered by this title and maintained by a contributing sponsor or a member of its controlled group are transferred to a person that is not a member of the controlled group or to a plan or plans maintained by a person or persons that are not such contributing sponsor or a member of its controlled group; or

      ‘(13) when any other event occurs that may be indicative of a need to terminate the plan and that is prescribed by the corporation in regulations.’

    (d) DISCLOSURE EXEMPTION- Section 4043 of such Act is amended by adding at the end a new subsection (f) to read as follows:

    ‘(f) Any information or documentary material submitted to the corporation pursuant to subsection (c) or subsection 4050(c)(2) shall be exempt from disclosure under section 552 of title 5, United States Code, and no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding. Nothing in this section is intended to prevent disclosure to either body of Congress or to any duly authorized committee or subcommittee of the Congress.’

    (e) TECHNICAL AND CONFORMING AMENDMENTS- Subsection (a) of section 4043 of such Act, and subsections (d) and (e) of such section 4043, as redesignated by this Act, are amended by replacing ‘subsection (b)’ each time it appears with ‘subsection (c)’. Section 4042(a)(3) of such Act is amended by replacing ‘4043(b)(7)’ with ‘4043(c)(7)’.

    (f) EFFECTIVE DATE- The amendments made by this section shall be effective for events occurring 60 days or more after the date of enactment of this Act.

SEC. 202. ALTERNATIVE TO INVOLUNTARY TERMINATION.

    (a) GENERAL RULE- Subtitle C of title IV of the Employee Retirement Income Security Act of 1974 is amended by adding at the end thereof a new section 4050 to read as follows:

‘SEC. 4050. JUDICIAL RELIEF OTHER THAN INVOLUNTARY TERMINATION.

    ‘(a)(1) Whenever the corporation determines (without regard to the potential availability of relief under this section) that, upon the occurrence of an event described in section 4043(c) (9) through (13), the possible long-run loss of the corporation with respect to a plan may reasonably be expected to increase unreasonably if the plan is not terminated, the corporation may, in its discretion, institute proceedings under this section as an alternative to instituting proceedings under section 4042 to terminate the plan.

    ‘(2) In the case of an event described in section 4043(c) (9) or (13), this section shall apply only if, immediately after the effective date of the event, the total revenues, the total operating income, or the total assets of a contributing sponsor and all members of its controlled group would be less than 90 percent of the total revenues, the total operating income, or the total assets, respectively, of a contributing sponsor and all members of its controlled group immediately before the effective date of the event. For purposes of this paragraph, all events occurring in any 12-month period shall be treated as a single event.

    ‘(b) Whenever the corporation makes a determination under subsection (a), it may, upon notice to a contributing sponsor, apply to the appropriate United States district court for such legal or equitable relief as the corporation deems appropriate and consistent with its duties under this title. The court shall consider the interests of both the participants and the corporation, and shall grant such relief, if any, as it determines is necessary to protect those interests without interfering unreasonably with the business of the contributing sponsor or members of its controlled group.

    ‘(c)(1) In any case in which the corporation is provided with a notice required by subsection 4043(b) within the time specified in that subsection, the corporation may bring an action under this section no later than 30 days after the date such notice is received. Notwithstanding the preceding sentence, the corporation may, no later than 30 days after the date such notice is received, require the submission of additional information or documentary material, in which case an action under this section may be brought no later than 20 days after the corporation receives all the information and documentary material it had required.

    ‘(2) A person who has provided a notice as described in paragraph (1) may elect, upon further notice to the corporation, to proceed with an event prior to the expiration of the time periods described in paragraph (1). In that event, an action under this section may be brought at any time within the period specified in subsection 4003(e)(6).

    ‘(3) In any case in which the corporation is not provided with a notice required by subsection 4043(b) by the time specified in that subsection, where a person fails or refuses to provide the additional information or documentary material required by the corporation under paragraph (1), or where a person proceeds with the event without providing the corporation with the further notice required under paragraph (2), an action under this section may be brought at any time within the time period specified in subsection 4003(e)(6).

    ‘(4) Except as provided in paragraph (1), (2) or (3), an action under this section may not be brought after the effective date of the event giving rise to the transaction.

    ‘(5) For purposes of applying subsection 4003(e)(6) to paragraphs (2) and (3), a cause of action shall be deemed to arise on the effective date of the event.

    ‘(d) Nothing in this section shall limit the authority of the corporation to initiate proceedings to terminate a plan under section 4042, or to initiate proceedings or to seek relief under any other provision of this title or any other law.’

    (b) CONFORMING AMENDMENT- Section 4042(a) of such Act (29 U.S.C. 1342(a)) is amended by inserting, after ‘determines’ the first time it appears, the following: ‘(without regard to the potential availability of relief under section 4050)’.

    (c) CLERICAL AMENDMENT- The table of contents contained in section 1 of such Act is amended by inserting after the item relating to section 4048 the following new item:

      ‘Sec. 4050. Judicial relief other than involuntary termination.’

    (d) EFFECTIVE DATE- The amendments made by this section shall be effective for events occurring on or after 60 days after the enactment of this Act.

SEC. 203. CERTAIN INFORMATION REQUIRED TO BE FURNISHED TO PBGC.

    (a) GENERAL RULE- Subtitle A of title IV of the Employee Retirement Income Security Act of 1974 is amended by adding at the end thereof a new section 4010 to read as follows:

‘SEC. 4010. AUTHORITY TO REQUIRE CERTAIN INFORMATION.

    ‘(a) Each person described in subsection (b) shall provide the corporation annually, on or before a date specified by the corporation in regulations, with--

      ‘(1) such records, documents, or other information that the corporation specifies in regulations as necessary to determine the liabilities and assets of plans covered by this title; and

      ‘(2) copies of such person’s audited (or, if unavailable, unaudited) financial statements, and such other financial information as the corporation may prescribe in regulations.

    ‘(b) The persons covered by subsection (a) are each contributing sponsor, and each member of a contributing sponsor’s controlled group, of a single-employer plan covered by this title, where--

      ‘(1) the aggregate unfunded vested benefits at the end of the preceding plan year (as determined under section 4006(a)(3)(E)(iii)) of plans maintained by the contributing sponsor and the members of its controlled group (taking into account only those plans of the contributing sponsor and its controlled group with unfunded vested benefits) exceed $50,000,000; or

      ‘(2) the conditions for imposition of a lien described in section 302(f)(1)(A) and (B) or section 412(n)(1)(A) and (B) of the Internal Revenue Code of 1986 have been met with respect to any such plan; or

      ‘(3) minimum funding waivers in excess of $1,000,000 have been granted with respect to any such plan, and any portion thereof is still outstanding.

    ‘(c) Any information or documentary material submitted to the corporation pursuant to this section shall be exempt from disclosure under section 552 of title 5, United States Code, and no such information or documentary material may be made public, except as may be relevant to any administrative or judicial action or proceeding. Nothing in this section is intended to prevent disclosure to either body of Congress or to any duly authorized committee or subcommittee of the Congress.’

    (b) CLERICAL AMENDMENT- The table of contents contained in section 1 of such Act is amended by inserting after the item relating to section 4009 the following new item:

      ‘Sec. 4010. Authority to require certain information.’

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective on the date of enactment of this Act.

SEC. 204. LIABILITY UPON LIQUIDATION OF CONTRIBUTING SPONSOR OR CONTROLLED GROUP MEMBER WHERE PLAN REMAINS ONGOING.

    (a) IN GENERAL- Section 4062 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1362) is amended by adding at the end thereof a new subsection (f) to read as follows:

    ‘(f) Liability on Liquidation of Contributing Sponsor or Controlled Group Member-

      ‘(1) IN GENERAL- In any case in which all or substantially all of the assets of a person who is a contributing sponsor of a single-employer plan, or a member of a controlled group of a contributing sponsor of a single-employer plan, are liquidated in a case under title 11, United States Code, or under any similar Federal law or law of a State or political subdivision of a State, but the plan is not terminated, such person shall be deemed liable under subsection (b) as if the plan had terminated under section 4041(c) in the course of such liquidation and as if the termination date were the date determined by the corporation as the date on which the liquidation was initiated.

      ‘(2) APPLICABILITY OF OTHER PROVISIONS- The liability under this subsection shall be joint and several only among the members of the controlled group (including, where applicable, the contributing sponsor) who are liquidating as described in paragraph (1). Subject to that exception, any provision of this Act or any other provision of law that applies to liability under this section upon termination of a plan shall apply in the same manner and to the same extent to the liability established under this subsection. For purposes of this paragraph, the date referred to in paragraph (1) shall be deemed the termination date.

      ‘(3) LIABILITY OWED TO PLAN; TRANSFER OF LIABILITY PAYMENTS TO THE ONGOING PLAN WHERE COLLECTED BY THE CORPORATION- The liability established under this subsection shall be owed to the plan, and may be collected by either the plan or the corporation. The corporation shall pay to the plan any amounts collected by the corporation in satisfaction of the liability established under this subsection in connection with such plan.

      ‘(4) REGULATIONS- The corporation may prescribe regulations under this subsection, including--

        ‘(A) rules governing--

          ‘(i) the determination of whether and when a liquidation referred to in this subsection has occurred, and

          ‘(ii) the assignment of the plan’s or corporation’s claim to liability payments under this subsection to other members of the controlled group as a means of collecting such payments, subject to the transfer of such payments to the plan, and

        ‘(B) rules providing alternative arrangements for making liability payments under this subsection.’

    (b) CONFORMING AMENDMENT- Section 4062(a) of such Act is amended--

      (1) by striking ‘and’ after ‘subsection (b),’; and

      (2) by striking the period after ‘subsection (c)’ and inserting ’, and’; and

      (3) by adding a new paragraph (3) at the end thereof to read as follows:

      ‘(3) liability to the plan, to the extent provided in subsection (f).’

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective for liquidations initiated on or after the date of enactment of this Act.

SEC. 205. ENFORCEMENT OF MINIMUM FUNDING REQUIREMENTS.

    (a) IN GENERAL- Paragraph (1) of section 4003(e) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1303(e)(1)) is amended by inserting ‘(i)’ after ‘enforce’ and by striking the period after ‘title’ and inserting ‘, and (ii) in the case of a plan covered under this title (other than a multiemployer plan) and for which the conditions for imposition of a lien described in section 302(f)(1)(A) and (B) or section 412(n)(1)(A) and (B) of the Internal Revenue Code of 1986 have been met, section 302 of this Act and section 412 of the Internal Revenue Code of 1986.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective for installments and other payments required under section 302 of the Employee Retirement Income Security Act of 1974 or section 412 of the Internal Revenue Code of 1986 that become due on or after the date of the enactment of this Act.

SEC. 206. REMEDIES FOR NONCOMPLIANCE WITH REQUIREMENTS FOR STANDARD TERMINATION.

    (a) NOTICE OF NONCOMPLIANCE- Section 4041(b)(2)(C)(i) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1341(b)(2)(C)(i)) is amended--

      (1) by revising subclause (I) to read as follows:

            ‘(I) it determines, based on the notice sent under paragraph (2)(A) of subsection (b), that there is reason to believe that the plan is not sufficient for benefit liabilities, or’;

      (2) by striking the period that follows subclause (II), and inserting ‘, or’; and

      (3) by adding a new subclause (III) to read as follows:

            ‘(III) it determines that any other requirement of subparagraph (A) or (B) of this paragraph or of subsection (a)(2) has not been met, unless it further determines that the issuance of such notice would be inconsistent with the interests of participants and beneficiaries.’

    (b) EFFECTIVE DATE- The amendments made by this section shall apply to any plan termination under section 4041(b) of the Employee Retirement Income Security Act of 1974 with respect to which the Pension Benefit Guaranty Corporation has not, as of the date of enactment of this Act, issued a notice of noncompliance that has become final, or otherwise issued a final determination that the plan termination is nullified.

SEC. 207. PROHIBITION ON BENEFIT INCREASES WHERE PLAN SPONSOR IS IN BANKRUPTCY.

    (a) Section 204 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054), as amended by section 121(b) of this Act, is further amended by redesignating subsection (j) as (k) and inserting a new subsection (j) to read as follows:

    ‘(j)(1) In the case of a plan described in paragraph (3) which is maintained by an employer that is a debtor in a case under title 11, United States Code, or similar Federal or State law, no amendment of the plan 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, with respect to employees of the debtor, shall be effective prior to the effective date of such employer’s plan of reorganization.

    ‘(2) Paragraph (1) shall not apply to any plan amendment that--

      ‘(A) the Secretary of Treasury determines to be reasonable and that provides for only de minimis increases in the liabilities of the plan with respect to employees of the debtor,

      ‘(B) only repeals an amendment described in section 302(c)(8),

      ‘(C) is required as a condition of qualification under part I of subchapter D, of chapter 1, of the Internal Revenue Code of 1986, or

      ‘(D) was adopted prior to, or pursuant to a collective bargaining agreement entered into prior to, the date on which the employer became a debtor in a case under title 11, United States Code, or similar Federal or State law.

    ‘(3) This subsection shall apply only to plans (other than multiemployer plans) covered under section 4021 of this Act for which the funded current liability percentage (within the meaning of section 302(d)(8)(B) of this Act) is less than 100 percent after taking into account the effect of the amendment.

    ‘(4) For purposes of this subsection, ‘employer’ has the meaning set forth in section 302(c)(11)(A), without regard to section 302(c)(11)(B).’

    (b) Section 410(a) of the Internal Revenue Code of 1986, as amended by section 101(b) of this Act, is further amended by adding at the end thereof a new paragraph (33) to read as follows:

      ‘(33) Prohibition on benefit increases while sponsor is in bankruptcy-

        ‘(A) IN GENERAL- A trust shall not constitute a qualified trust under this section if the plan of which such trust is a part is amended while the employer is a debtor in a case under title 11, United States Code, or similar federal or state law, where such amendment increases 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, with respect to employees of the debtor, and is effective prior to the effective date of such employer’s plan of reorganization.

        ‘(B) EXCEPTIONS- This paragraph shall not apply to any plan amendment that--

          ‘(i) the Secretary determines to be reasonable and that provides for only de minimis increases in the liabilities of the plan with respect to employees of the debtor,

          ‘(ii) only repeals an amendment described in subsection 412(c)(8),

          ‘(iii) is required as a condition of qualification under this part, or

          ‘(iv) was adopted prior to the date on which the employer became a debtor in a case under title 11, United States Code, or similar federal or state law.

        ‘(C) PLANS TO WHICH THIS PARAGRAPH APPLIES- This paragraph shall apply only to plans (other than multiemployer plans) covered under section 4021 of the Employee Retirement Income Security Act of 1974 for which the funded current liability percentage (within the meaning of section 412(l)(8)(B)) is less than 100 percent after taking into account the effect of the amendment.

        ‘(D) DEFINITIONS- For purposes of this paragraph, ‘employer’ has the meaning set forth in section 412(c)(11)(A), without regard to section 412(c)(11)(B).’

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective with respect to plan amendments adopted on or after the date of enactment of this Act.

SEC. 208. SUBSTANTIAL OWNER BENEFITS.

    (a) MODIFICATION OF PHASE IN OF GUARANTEE- Section 4022(b)(5) is amended by revising subparagraphs (B) and (C) to read as follows:

        ‘(B) For purposes of this title, the term ‘majority owner’ has the same meaning as the term ‘substantial owner’, except that ‘50 percent or more’ shall be substituted for ‘more than 10 percent’ wherever such phrase appears in subparagraph (A) of this paragraph.

        ‘(C) In the case of a participant who is a majority owner, the amount of benefits guaranteed under this section shall not exceed 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, and the denominator of which is 30, and

          ‘(ii) the amount of the majority owner’s monthly benefits guaranteed under subsection (a) (as limited by paragraph (3) of this subsection).’

    (b) Modification of Allocation of Assets-

      (1) Section 4044(a)(4)(B) is revised by adding ‘(C)’ after ‘section 4022(b)(5)’.

      (2) Section 4044(b) is revised--

        (A) by adding ‘(4),’ before ‘(5)’ in paragraph (2), and

        (B) by renumbering paragraphs (3) through (6) as (4) through (7), respectively, and inserting a new paragraph (3) to read as follows:

      ‘(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 subparagraph (B). If assets allocated to subparagraph (B) are insufficient to satisfy in full the benefits 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.’

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective for plan terminations under section 4041(c) with respect to which notices of intent to terminate are provided under section 4041(a)(2), or under section 4042 with respect to which proceedings are instituted by the corporation, on or after the date of enactment of this Act.

SEC. 209. PHASE-OUT OF VARIABLE RATE PREMIUM CAP.

    (a) Subparagraph (E) of section 4006(a)(3) of the Employee Retirement Income Security Act of 1974 is amended by deleting clause (iv) and redesignating clause (v) as clause (iv).

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective on the date of enactment of this Act, except that, for plan years beginning on or after July 1, 1994 and before July 1, 1996, the additional premium payable with respect to any participant by reason of this amendment shall not exceed the sum of--

      (1) $53, and

      (2) the excess (if any) of the amount determined under clause (ii) of section 4006(a)(3)(E) of the Employee Retirement Income Security Act of 1974 over $53 multiplied by the applicable percentage. For purposes of this clause, the applicable percentage shall be as follows:

----------------------------------------------------------------
Plan year beginning:              The applicable percentage is: 
         on or after but before                                 
----------------------------------------------------------------
        July 1, 1994 July 1, 1995 20                            
        July 1, 1995 July 1, 1996 60                            
----------------------------------------------------------------

TITLE III--PARTICIPANT SERVICES

SEC. 301. DISCLOSURE TO PARTICIPANTS.

    (a) PARTICIPANT NOTICE REQUIREMENT- Subtitle A of Title IV of the Employee Retirement Income Security Act of 1974, as amended by section 203 of this Act, is further amended by adding at the end thereof a new section 4011 to read as follows:

‘SEC. 4011. NOTICE TO PARTICIPANTS.

    ‘The plan administrator of a plan subject to the additional premium under section 4006(a)(3)(E) shall provide, in a form and manner and at such time as prescribed in regulations of the corporation, notice to plan participants and beneficiaries of the plan’s funding status and the limits on the corporation’s guaranty should the plan terminate while underfunded. Such notice shall be written in a manner so as to be understood by the average plan participant.’

    (b) CLERICAL AMENDMENT- The table of contents contained in section 1 of such Act is amended by inserting after the item relating to section 4010 (as added by section 203 of this Act) the following new item:

      ‘Sec. 4011. Notice to participants.’

    (c) EFFECTIVE DATE- The amendment made by this section shall be effective for plan years beginning after the date of enactment of this Act.

SEC. 302. MISSING PARTICIPANTS.

    (a) Subtitle B of Title IV of the Employee Retirement Income Security Act of 1974 is amended by adding a new section 4031 at the end thereof to read as follows:

‘SEC. 4031. MISSING PARTICIPANTS.

    ‘(a) General Rule-

      ‘(1) PAYMENT TO THE CORPORATION- A plan administrator satisfies section 4041(b)(3)(A) in the case of a missing participant only if the plan administrator--

        ‘(A) transfers the participant’s designated benefit to the corporation or purchases an irrevocable commitment from an insurer in accordance with clause (i) of section 4041(b)(3)(A), and

        ‘(B) provides the corporation such information and certifications with respect to such designated benefits or irrevocable commitments as the corporation shall specify.

      ‘(2) TREATMENT OF TRANSFERRED ASSETS- A transfer to the PBGC under this section shall be treated as a transfer of assets from a terminated plan to the corporation as trustee, and shall be held with assets of terminated plans for which the corporation is trustee under section 4042, subject to the rules set out in that section.

      ‘(3) PAYMENT BY THE CORPORATION- After a missing participant whose designated benefit was transferred to the corporation is located--

        ‘(A) if the plan could have distributed the benefit of a missing participant in a single sum without participant or spousal consent under section 205(g), the corporation shall pay the participant or beneficiary a single sum benefit equal to the designated benefit paid the corporation plus interest as specified by the corporation.

        ‘(B) in the case of any other missing participant, the corporation shall pay a benefit based on the designated benefit and the assumptions prescribed by the corporation at the time that the corporation received the designated benefit. The corporation shall make such payments available in the same forms and at the same times as a guaranteed benefit under section 4022 would be available to be paid, except that the corporation may make a benefit available in the form of a single sum if the plan provided a single sum benefit (other than a single sum described in subsection (b)(2)(A)).

    ‘(b) Definitions-

      ‘(1) A ‘missing participant’ means a participant or beneficiary under a terminating plan whom the plan administrator cannot locate after a diligent search.

      ‘(2) A ‘designated benefit’ means the single sum benefit the participant would receive--

        ‘(A) under the plan’s assumptions, in the case of a distribution that can be made without participant or spousal consent under section 205(g);

        ‘(B) under the assumptions of the corporation in effect on the date that the designated benefit is transferred to the corporation, in the case of a plan that does not pay any single sums other than those described in subparagraph (A); or

        ‘(C) under the assumptions of the corporation or of the plan, whichever provides the higher single sum, in the case of a plan that does pay a single sum other than those described in subparagraph (A).

    ‘(c) REGULATORY AUTHORITY- The corporation shall prescribe such regulations as are necessary to carry out the purposes of this section, including rules as to what will be considered a diligent search, the amount payable to the corporation, and the amount to be paid by the corporation.’

    (b) Conforming Title IV Amendments-

      (1) AMENDMENT TO SECTION 4003- Section 4003(a) of such Act is amended by adding ‘and whether section 4031(a) has been satisfied’ at the end of the second sentence.

      (2) AMENDMENT TO SECTION 4005- Section 4005(b)(2)(A) of such Act is amended by adding ‘or benefits payable under section 4031’ after ‘section 4022A’.

      (3) AMENDMENT TO SECTION 4041- Section 4041(b)(3)(A)(ii) of such Act is amended by adding a sentence at the end thereof to read as follows: ‘A transfer of assets to the corporation in accordance with section 4031 on behalf of a missing participant shall satisfy this subparagraph with respect to such participant.’

    (c) Conforming ERISA Amendments-

      (1) The table of contents contained in section 1 of the Employee Retirement Income Security Act of 1974 is amended by inserting after the item related to section 4030 the following new item:

      ‘Sec. 4031. Missing Participants.’

      (2) Section 206 of such Act is amended by adding at the end thereof a new subsection (e) to read as follows:

    ‘(e) MISSING PARTICIPANTS IN TERMINATED PLANS- In the case of a plan covered by title IV of the Employee Retirement Income Security Act of 1974, the plan shall provide that, upon termination of the plan, benefits of missing participants shall be treated in accordance with section 4031 of such Act.’

    ‘(d) CONFORMING INTERNAL REVENUE CODE AMENDMENTS- Section 401(a) of the Internal Revenue Code of 1986, as amended by section 207 of this Act, is further amended by adding at the end thereof a new paragraph (34) to read as follows:

      ‘(34) In the case of a plan covered by title IV of the Employee Retirement Income Security Act of 1974, a trust forming part of such plan shall not be treated as failing to constitute a qualified trust under this section merely because the pension plan of which such trust is a part, upon its termination, transfers benefits of missing participants to the Pension Benefit Guaranty Corporation in accordance with section 4031 of such Act.’

    (e) EFFECTIVE DATE- The provisions of this section shall be effective with respect to distributions that occur in plan years commencing after final regulations implementing these provisions are adopted by the Pension Benefit Guaranty Corporation.

SEC. 303. MODIFICATION OF MAXIMUM GUARANTEE FOR DISABILITY BENEFITS.

    (a) Section 4022(b)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1322(b)(3)) is amended by adding at the end thereof two new sentences to read as follows: ‘The maximum guaranteed monthly benefit shall not be reduced solely on account of the age of a participant in the case of a benefit payable by reason of disability, provided that the participant satisfies the definition of disability under titles II and XVI of the Social Security Act, as amended, and the regulations thereunder. If a benefit payable by reason of disability is converted to an early or normal retirement benefit for reasons other than a change in the health of the participant, such early or normal retirement benefit shall be treated as a continuation of the benefit payable by reason of disability and this subparagraph shall continue to apply.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective for plan terminations under section 4041(c) with respect to which notices of intent to terminate are provided under section 4041(a)(2), or under section 4042 with respect to which proceedings are instituted by the corporation, on or after the date of enactment of this Act.

TITLE IV--MISCELLANEOUS AMENDMENTS

SEC. 401. ERISA CITATION.

    (a) Section 404(g)(4) of the Internal Revenue Code of 1986 is amended by striking ‘the Single Employer Pension Plan Amendments Act of 1986’ and inserting ‘the Retirement Protection Act of 1993’.

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective on the date of enactment of this Act.

SEC. 402. DEFINITION OF CONTRIBUTING SPONSOR.

    (a) Paragraph (13) of section 4001(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1301(a)) is amended by deleting ‘means a person--’ and all that follows and inserting in lieu thereof ‘means a person described in section 302(c)(11)(A) (without regard to section 302(c)(11)(B)) of this Act or section 412(c)(11)(A) (without regard to section 412(c)(11)(B)) of the Internal Revenue Code of 1986.’

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective as if included in the Pension Protection Act.

SEC. 403. RECOVERY RATIO UNDER ERISA SECTION 4022(c).

    (a) Sec. 4022(c)(3) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1322(c)(3)) is amended by deleting subparagraphs (A) and (B), and amending subparagraph (C)--

      (1) by deleting ‘(C)’ and all that precedes clause (i) and inserting in its place:

      ‘For purposes of this section, the term ‘recovery ratio’ means, with respect to the termination of such plan, the ratio of--’; and

      (2) by renumbering clauses (i) and (ii) as subparagraphs (A) and (B), respectively.

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective as if included in the Pension Protection Act.

SEC. 404. DISTRESS TERMINATION CRITERIA FOR BANKING INSTITUTIONS.

    (a) CLARIFICATION OF DISTRESS CRITERION- Subclause (I) of section 4041(c)(2)(B)(i) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1341(c)(2)(B)(i)) is amended by inserting after ‘under any similar’ the words ‘Federal law or’.

    (b) EFFECTIVE DATE- The amendments made by this section shall be effective as if included in the Single-Employer Pension Plan Amendments Act of 1986.

SEC. 405. SINGLE SUM DISTRIBUTIONS.

    (a) MINIMUM BENEFITS-

      (1) Section 411(a)(11) of the Internal Revenue Code of 1986 is amended by revising subparagraph (B) to read as follows:

        ‘(B) DETERMINATION OF PRESENT VALUE- For purposes of subparagraph (A), the present value shall be calculated in accordance with section 417(e)(3).’

      (2) Section 417(e) of the Code is amended by revising paragraph (3) to read as follows:

      ‘(3) DETERMINATION OF PRESENT VALUE-

        ‘(A) IN GENERAL-

          ‘(i) PRESENT VALUE- Except as provided in subparagraph (B), for purposes of paragraphs (1) and (2), the present value shall not be less than the present value calculated by using the applicable mortality table and the applicable interest rate.

          ‘(ii) DEFINITIONS- For purposes of clause (i), the term ‘applicable mortality table’ means the prevailing Commissioner’s standard table (described in section 807(d)(5)(A)) that would be used to determine reserves for group annuity contracts issued on the date as of which present value is being determined (without regard to any other subparagraph of section 807(d)(5)), and the term ‘applicable interest rate’ means the rate of interest on a 30-year Treasury security (as of the date of distribution).

        ‘(B) EXCEPTION- In the case of a distribution from a plan that was adopted and in effect prior to the enactment of the Retirement Protection Act of 1993, the present value of any distribution made before the earlier of (i) the later of when a plan amendment applying subparagraph (A) is adopted or made effective or (ii) the first day of the first plan year beginning after December 31, 1999 shall be calculated, for purposes of paragraphs (1) and (2), using the interest rate determined under the regulations of the Pension Benefit Guaranty Corporation for determining the present value of a lump sum distribution on plan termination that were in effect on September 1, 1993 and under the provisions of the plan and the Code that were in effect immediately before such enactment, provided that such plan provisions satisfied section 417(e)(3) as in effect at such time.’

    (b) MAXIMUM BENEFITS- Section 415(b)(2)(E) of the Code is amended--

      (1) by redesignating clauses (ii) and (iii) as clauses (iii) and (iv), respectively,

      (2) by revising clause (i) and adding a new clause (ii) to read as follows:

          ‘(i) For purposes of adjusting any benefit or limitation under subparagraph (B), the interest rate assumption shall not be less than the greater of 5 percent or the rate specified in the plan; provided that for purposes of adjusting the benefit or limitation of any form of benefit subject to section 417(e)(3), the ‘applicable interest rate under section 417(e)(3)’ shall be substituted for ‘5 percent’.

          ‘(ii) For purposes of adjusting any benefit or limitation under subparagraph (C), the interest rate assumption shall not be less than the greater of 5 percent or the rate specified in the plan.’

        and (3) by adding a new clause (v) to read as follows:

          ‘(v) For purposes of adjusting any benefit or limitation under subparagraphs (B), (C), or (D), the prevailing Commissioner’s standard table (described in section 807(d)(5)(A)) that would be used to determined reserves for group annuity contracts issued on the date as of which the determination is being made (without regard to any other subparagraph of section 807(d)(5)) shall be applied.’

    (c)(1) Section 203(e) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1053(e)) is amended by revising paragraph (2) to read as follows:

      ‘(2) For purposes of paragraph (1), the present value shall be calculated in accordance with section 205(g)(3).’

    (2) Section 205(g) of such Act (29 U.S.C. 1055(g)) is amended by revising paragraph (3) to read as follows:

      ‘(3) Determination of present value-

        ‘(A) In general-

          ‘(i) PRESENT VALUE- Except as provided in subparagraph (B), for purposes of paragraphs (1) and (2), the present value shall not be less than the present value calculated by using the applicable mortality table and the applicable interest rate.

          ‘(ii) DEFINITIONS- For purposes of clause (i), the term ‘applicable mortality table’ means the prevailing Commissioner’s standard table (described in section 807(d)(5)(A) of the Internal Revenue Code of 1986) that would be used to determine reserves for group annuity contracts issued on the date as of which present value is being determined (without regard to any other subparagraph of section 807(d)(5) of the Internal Revenue Code of 1986), and the term ‘applicable interest rate’ means the rate of interest on a 30-year Treasury security (as of the date of distribution).

        ‘(B) EXCEPTION- In the case of a distribution from a plan that was adopted and in effect prior to the enactment of the Retirement Protection Act of 1993, the present value of any distribution made before the earlier of (i) the later of when a plan amendment applying subparagraph (A) is adopted or made effective or (ii) the first day of the first plan year beginning after December 31, 1999 shall be calculated, for purposes of paragraphs (1) and (2), using the interest rate determined under the regulations of the Pension Benefit Guaranty Corporation for determining the present value of a lump sum distribution on plan termination that were in effect on September 1, 1993 and under the provisions of the plan and this Act that were in effect immediately before such enactment, provided that such plan provisions satisfied section 205(g)(3) as in effect at such time.’

    (d) Effective Date-

      (1) IN GENERAL- The amendments made by this section shall apply to plan years and limitation years beginning after December 31, 1994, except that an employer may elect to treat the amendments made by this section as being effective on or after the date of enactment.

      (2) NO REDUCTION IN ACCRUED BENEFITS- A participant’s accrued benefit shall not be considered to be reduced in violation of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of the Employee Retirement Income Security Act of 1974 merely because (A) the benefit is determined in accordance with section 417(e)(3)(A) of such Code, as amended by this Act, or section 205(g)(3) of the Employee Retirement Income Security Act of 1974, as amended by this Act, or (B) the plan applies section 415(b)(2)(E) of such Code, as amended by this Act.

      (3) Section 415-

        (A) NO REDUCTION REQUIRED- An accrued benefit shall not be required to be reduced below the accrued benefit as of the last day of the last plan year beginning before January 1, 1995 merely because of the amendments made by subsection (b).

        (B) TIMING OF PLAN AMENDMENT- A plan that operates in accordance with the amendments made by subsection (b) shall not be treated as failing to satisfy section 401(a) of the Internal Revenue Code of 1986 or as not being operated in accordance with the provisions of the plan until such date as the Secretary provides merely because the plan has not been amended to include the amendments made by subsection (b).

SEC. 406. ADJUSTMENTS TO LIEN FOR MISSED MINIMUM FUNDING CONTRIBUTIONS.

    (a) AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986-

      (1) CLARIFICATION OF APPLICABILITY OF PROVISION- Section 412(n)(1) of the Internal Revenue Code of 1986 is amended by striking ‘to which this section applies’ and inserting ‘covered under section 4021 of the Employee Retirement Income Security Act of 1974’.

      (2) REPEAL OF $1,000,000 OFFSET- Section 412(n)(3) of such Code is amended by striking all that follows ‘equal to’ through and including ‘(B)’.

      (3) REPEAL OF 60-DAY DELAY- Section 412(n)(4)(B) of such Code is amended by striking ‘60th day following the’.

    (b) AMENDMENTS TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974-

      (1) CLARIFICATION OF APPLICABILITY OF PROVISION- Section 302(f)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1082(f)(1)) is amended by striking ‘to which this section applies’ and inserting ‘covered under section 4021 of this Act’.

      (2) REPEAL OF $1,000,000 OFFSET- Section 302(f)(3) of such Act is amended by striking all that follows ‘equal to’ through and including ‘(B)’.

      (3) REPEAL OF 60-DAY DELAY- Section 302(f)(4)(B) of such Act is amended by striking ‘60th day following the’.

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective for installments and other payments required under section 412 of the Internal Revenue Code of 1986 or under Part 3 of Subtitle B of the Employee Retirement Income Security Act of 1974 that become due on or after the date of enactment.

SEC. 407. ROUNDING RULES FOR COST OF LIVING ADJUSTMENTS.

    (a) COST OF LIVING ADJUSTMENT FOR COMPENSATION LIMIT- Section 401(a)(17)(B) of the Internal Revenue Code of 1986 is revised to read as follows:

        ‘(B) The Secretary shall adjust annually the $150,000 amount in paragraph (A) for increases in the cost of living at the same time and in the same manner as adjustments under section 415(d), except that the base period shall be the calendar quarter beginning October 1, 1993 and the adjusted value shall be rounded down to the next lowest multiple of $10,000.’

    (b) COST OF LIVING ADJUSTMENT FOR MAXIMUM DEFINED BENEFIT AMOUNT- Section 415(d) of such Code is amended to read as follows:

    ‘(d) Cost of Living Adjustments-

      ‘(1) IN GENERAL- The Secretary shall adjust annually--

        ‘(A) the $90,000 amount in subsection (b)(1)(A), and

        ‘(B) in the case of a participant who separated from service, the amount taken into account under subsection (b)(1)(B),

      for increases in the cost-of-living in accordance with regulations prescribed by the Secretary.

      ‘(2) Method-

        ‘(A) IN GENERAL- The regulations prescribed under paragraph (1) shall provide for adjustment procedures which are similar to the procedures used to adjust benefit amounts under section 215(i)(2)(A) of the Social Security Act.

        ‘(B) PERIODS FOR ADJUSTMENT OF DOLLAR AMOUNT- For purposes of paragraph (1)(A)--

          ‘(i) IN GENERAL- The adjustment with respect to any calendar year shall be based on the increase in the applicable index as of the close of the calendar quarter ending September 30 of the preceding calendar year over such index as of the close of the base period.

          ‘(ii) BASE PERIOD- For purposes of clause (i), the base period is the calendar quarter beginning October 1, 1986.

        ‘(C) BASE PERIOD FOR SEPARATIONS- For purposes of paragraph (1)(B), the base period is the last calendar quarter of the calendar year preceding the calendar year in which the participant separated from service.

      ‘(3) ROUNDING- The adjusted value of the $90,000 amount in subsection (b)(1)(A) for a year rounded down to the next lowest multiple of $5,000.’

    (c) COST OF LIVING ADJUSTMENT FOR MAXIMUM ANNUAL ADDITION-

      (1) Section 415(c) of such Code is amended by adding a new paragraph (8) at the end thereof to read as follows:

      ‘(8) COST OF LIVING ADJUSTMENTS- The Secretary shall adjust annually the $30,000 amount in paragraph (c)(1)(A) for increases in the cost of living at the same time and in the same manner as adjustments under subsection (d), except that the base period is the calendar quarter beginning October 1, 1993.’

      (2) CONFORMING AMENDMENT- Section 415(c)(1)(A) of such Code is amended by striking ‘(or, if greater 1/4 of the dollar limitation in effect under subsection (b)(1)(A))’ and inserting ‘or such larger amount as provided under paragraph (8)’.

    (d) COST OF LIVING ADJUSTMENT FOR MAXIMUM SALARY DEFERRAL- Section 402(g)(5) of such Code is amended by inserting before the period at the end of that paragraph the phrase ‘, except that the adjusted value shall be rounded down to the next lowest multiple of $500’.

    (e) COST OF LIVING ADJUSTMENT FOR ELIGIBILITY FOR SIMPLIFIED EMPLOYEE PENSIONS- Section 408(k)(8) of such Code is amended by inserting before the period at the end of that paragraph the phrase ‘, except that the adjusted value of the $300 amount shall be rounded down to the next lowest multiple of $50’.

    (f) EFFECTIVE DATE- The amendments made by this section shall be effective for years beginning after December 31, 1994.

SEC. 408. LIMITATION ON CROSS-TESTING IN DEFINED CONTRIBUTION PLANS.

    (a) Section 401(a)(5) of the Internal Revenue Code of 1986 is amended by adding at the end thereof a new subparagraph to read as follows:

        ‘(F)(i) A defined contribution plan (other than a target benefit plan that satisfies regulations prescribed by the Secretary) shall be considered as satisfying the requirements of paragraph (4) only if the contributions provided under the plan satisfy the requirements of paragraph (4).

        ‘(ii) Two or more plans of an employer, at least one of which is a defined contribution plan, shall be considered as satisfying the requirements of paragraph (4) when considered as a single plan only if the contributions provided under the aggregated plans satisfy the requirements of paragraph (4).’

    (b)(1) Section 415(b)(6)(A) of such Code is amended by inserting ‘that is a target benefit plan that satisfies regulations prescribed by the Secretary’ after ‘defined contribution plan’.

    (2) Section 415(b)(6)(B) is amended by striking ‘and’.

    (3) Subparagraph (C) of section 415(b)(6) is redesignated as subparagraph (D), and a new subparagraph (C) is inserted to read as follows:

        ‘(C) employer-provided benefits under a defined contribution plan, for purposes of section 410(b)(2), and’.

    (c) EFFECTIVE DATE- The amendments made by this section shall be effective for plan years beginning after September 30, 1993; provided, however, that for defined contribution plans in existence on September 30, 1993, the amendments shall be effective for plan years beginning on or after January 1, 1995.

SEC. 409. FUNDING OF RESTORED PLANS.

    Any changes made by this Act to section 412 of the Internal Revenue Code of 1986 or to part 3 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 shall not apply to a plan which is, on the date of enactment of this Act, subject to a restoration payment schedule order issued by the Pension Benefit Guaranty Corporation that meets the requirements of section 1.412(c)(1)-3 of the Treasury Regulations.

TITLE V--EFFECTIVE DATES

SEC. 501. EFFECTIVE DATES.

    Except as otherwise provided in this Act, the amendments made by this Act shall be effective on the date of enactment of this Act.