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H.R. 4143 (112th): Extension of Section 420 and Retiree Life Insurance Act of 2012

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The text of the bill below is as of Mar 5, 2012 (Introduced).

I

112th CONGRESS

2d Session

H. R. 4143

IN THE HOUSE OF REPRESENTATIVES

March 5, 2012

(for himself and Mr. Pascrell) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 to extend the period during which transfers of excess pension assets may be made to retiree health accounts and to provide for the transfer of such assets to retiree group term life insurance accounts.

1.

Short title

This Act may be cited as the Extension of Section 420 and Retiree Life Insurance Act of 2012.

2.

Extension for transfers of excess pension assets to retiree health accounts

(a)

In general

Paragraph (5) of section 420(b) of the Internal Revenue Code of 1986 is amended by striking December 31, 2013 and inserting December 31, 2021.

(b)

Conforming ERISA amendments

(1)

Sections 101(e)(3), 403(c)(1), and 408(b)(13) of the Employee Retirement Income Security Act of 1974 are each amended by striking Pension Protection Act of 2006 and inserting Extension of Section 420 and Retiree Life Insurance Act of 2012 .

(2)

Section 408(b)(13) of such Act (29 U.S.C. 1108(b)(13)) is amended by striking January 1, 2014 and inserting January 1, 2022.

(c)

Effective date

The amendments made by this Act shall take effect on the date of the enactment of this Act.

3.

Transfer of excess pension assets to retiree group term life insurance accounts

(a)

In general

Subsection (a) of section 420 of the Internal Revenue Code of 1986 is amended by inserting , or an applicable life insurance account, after health benefits account.

(b)

Applicable life insurance account defined

(1)

In general

Subsection (e) of section 420 of the Internal Revenue Code of 1986 is amended by redesignating paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by inserting after paragraph (3) the following new paragraph:

(4)

Applicable life insurance account

The term applicable life insurance account means a separate account established and maintained for amounts transferred under this section for qualified current retiree liabilities based on premiums for applicable life insurance benefits.

.

(2)

Applicable life insurance benefits defined

Paragraph (1) of section 420(e) of such Code is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:

(D)

Applicable life insurance benefits

The term applicable life insurance benefits means group-term life insurance coverage provided to retired employees who, immediately before the qualified transfer, are entitled to receive such coverage by reason of retirement and who are entitled to pension benefits under the plan, but only to the extent that such coverage is provided under a policy for retired employees and the cost of such coverage is excludable from the retired employee’s gross income under section 79.

.

(3)

Collectively bargained life insurance benefits defined

(A)

In general

Paragraph (6) of section 420(f) of such Code is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:

(D)

Collectively bargained life insurance benefits

The term collectively bargained life insurance benefits means, with respect to any collectively bargained transfer—

(i)

applicable life insurance benefits which are provided to retired employees who, immediately before the transfer, are entitled to receive such benefits by reason of retirement, and

(ii)

if specified by the provisions of the collective bargaining agreement governing the transfer, applicable life insurance benefits which will be provided at retirement to employees who are not retired employees at the time of the transfer.

.

(B)

Conforming amendments

(i)

Clause (i) of section 420(e)(1)(C) of such Code is amended by striking upon retirement and inserting by reason of retirement.

(ii)

Subparagraph (C) of section 420(f)(6) of such Code is amended—

(I)

by striking which are provided to in the matter preceding clause (i),

(II)

by inserting which are provided to before retired employees in clause (i),

(III)

by striking upon retirement in clause (i) and inserting by reason of retirement, and

(IV)

by striking active employees who, following their retirement, and inserting which will be provided at retirement to employees who are not retired employees at the time of the transfer and who.

(c)

Maintenance of effort

(1)

In general

Subparagraph (A) of section 420(c)(3) of the Internal Revenue Code of 1986 is amended by inserting , and each group-term life insurance plan under which applicable life insurance benefits are provided, after health benefits are provided.

(2)

Conforming amendments

(A)

Subparagraph (B) of section 420(c)(3) of such Code is amended—

(i)

by redesignating subclauses (I) and (II) of clause (i) as subclauses (II) and (III) of such clause, respectively, and by inserting before subclause (II) of such clause, as so redesignated, the following new subclause:

(I)

separately with respect to applicable health benefits and applicable life insurance benefits,

, and

(ii)

by striking for applicable health benefits and all that follows in clause (ii) and inserting was provided during such taxable year for the benefits with respect to which the determination under clause (i) is made..

(B)

Subparagraph (C) of section 420(c)(3) of such Code is amended—

(i)

by inserting for applicable health benefits after applied separately, and

(ii)

by inserting , and separately for applicable life insurance benefits with respect to individuals age 65 or older at any time during the taxable year and with respect to individuals under age 65 during the taxable year before the period.

(C)

Subparagraph (E) of section 420(c)(3) of such Code is amended—

(i)

in clause (i), by inserting or retiree life insurance coverage, as the case may be, after retiree health coverage,

(ii)

in clause (ii), by inserting for retiree health coverage after cost reductions in the heading thereof, and

(iii)

in clause (ii)(II), by inserting with respect to applicable health benefits after liabilities of the employer.

(D)

Paragraph (2) of section 420(f) of such Code is amended by striking collectively bargained retiree health liabilities each place it occurs and inserting collectively bargained retiree liabilities.

(E)

Clause (i) of section 420(f)(2)(D) of such Code is amended—

(i)

by inserting , and each group-term life insurance plan or arrangement under which applicable life insurance benefits are provided, in subclause (I) after applicable health benefits are provided,

(ii)

by inserting or applicable life insurance benefits, as the case may be, in subclause (I) after provides applicable health benefits,

(iii)

by striking group health in subclause (II), and

(iv)

by inserting or collectively bargained life insurance benefits in subclause (II) after collectively bargained health benefits.

(F)

Clause (ii) of section 420(f)(2)(D) of such Code is amended—

(i)

by inserting with respect to applicable health benefits or applicable life insurance benefits after requirements of subsection (c)(3), and

(ii)

by adding at the end the following: Such election may be made separately with respect to applicable health benefits and applicable life insurance benefits. In the case of an election with respect to applicable life insurance benefits, the first sentence of this clause shall be applied as if subsection (c)(3) as in effect before the amendments made by such Act applied to such benefits..

(G)

Clause (iii) of section 420(f)(2)(D) of such Code is amended—

(i)

by striking retiree each place it occurs, and

(ii)

by inserting , collectively bargained life insurance benefits, or both, as the case may be, after health benefits each place it occurs.

(d)

Coordination with section 79

Section 79 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(f)

Exception for life insurance purchased in connection with qualified transfer of excess pension assets

Subsection (b)(3) and section 72(m)(3) shall not apply in the case of any cost paid (whether directly or indirectly) with assets held in an applicable life insurance account (as defined in section 420(e)(4)) under a defined benefit plan.

.

(e)

Conforming amendments

(1)

Section 420 of the Internal Revenue Code of 1986 is amended by striking qualified current retiree health liabilities each place it appears and inserting qualified current retiree liabilities.

(2)

Section 420 of such Code is amended by inserting , or an applicable life insurance account, after a health benefits account each place it appears in subsection (b)(1)(A), subparagraphs (A), (B)(i), and (C) of subsection (c)(1), subsection (d)(1)(A), and subsection (f)(2)(E)(ii).

(3)

Section 420(b) of such Code is amended—

(A)

by adding the following at the end of paragraph (2)(A): If there is a transfer from a defined benefit plan to both a health benefits account and an applicable life insurance account during any taxable year, such transfers shall be treated as 1 transfer for purposes of this paragraph., and

(B)

by inserting to an account after may be transferred in paragraph (3).

(4)

The heading for section 420(c)(1)(B) of such Code is amended by inserting or life insurance after health benefits.

(5)

Paragraph (1) of section 420(e) of such Code is amended—

(A)

by inserting and applicable life insurance benefits in subparagraph (A) after applicable health benefits, and

(B)

by striking health in the heading thereof.

(6)

Subparagraph (B) of section 420(e)(1) of such Code is amended—

(A)

in the matter preceding clause (i), by inserting (determined separately for applicable health benefits and applicable life insurance benefits) after shall be reduced by the amount,

(B)

in clause (i), by inserting or applicable life insurance accounts after health benefit accounts, and

(C)

in clause (i), by striking qualified current retiree health liability and inserting qualified current retiree liability.

(7)

The heading for subsection (f) of section 420 of such Code is amended by striking health each place it occurs.

(8)

Subclause (II) of section 420(f)(2)(B)(ii) of such Code is amended by inserting or applicable life insurance account, as the case may be, after health benefits account.

(9)

Subclause (III) of section 420(f)(2)(E)(i) of such Code is amended—

(A)

by inserting defined benefit before plan maintained by an employer, and

(B)

by inserting health before benefit plans maintained by the employer.

(10)

Paragraphs (4) and (6) of section 420(f) of such Code are each amended by striking collectively bargained retiree health liabilities each place it occurs and inserting collectively bargained retiree liabilities.

(11)

Subparagraph (A) of section 420(f)(6) of such Code is amended—

(A)

in clauses (i) and (ii), by inserting , in the case of a transfer to a health benefits account, before his covered spouse and dependents, and

(B)

in clause (ii), by striking health plan and inserting plan.

(12)

Subparagraph (B) of section 420(f)(6) of such Code is amended—

(A)

in clause (i), by inserting , and collectively bargained life insurance benefits, after collectively bargained health benefits,

(B)

in clause (ii)—

(i)

by adding at the end the following: The preceding sentence shall be applied separately for collectively bargained health benefits and collectively bargained life insurance benefits., and

(ii)

by inserting , applicable life insurance accounts, after health benefit accounts, and

(C)

by striking health in the heading thereof.

(13)

Subparagraph (E) of section 420(f)(6) of such Code, as redesignated by subsection (b), is amended—

(A)

by striking bargained health and inserting bargained,

(B)

by inserting , or a group-term life insurance plan or arrangement for retired employees, after dependents, and

(C)

by striking health in the heading thereof.

(14)

Section 101(e) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021(e)) is amended—

(A)

in paragraphs (1) and (2), by inserting or applicable life insurance account after health benefits account each place it appears, and

(B)

in paragraph (1), by inserting or applicable life insurance benefit liabilities after health benefits liabilities.

(f)

Technical correction

Clause (iii) of section 420(f)(6)(B) is amended by striking 416(I)(1) and inserting 416(i)(1).

(g)

Repeal of deadwood

(1)

Subparagraph (A) of section 420(b)(1) of the Internal Revenue Code of 1986 is amended by striking in a taxable year beginning after December 31, 1990.

(2)

Subsection (b) of section 420 of such Code is amended by striking paragraph (4) and by redesignating paragraph (5), as amended by this Act, as paragraph (4).

(3)

Paragraph (2) of section 420(b) of such Code, as amended by this section, is amended—

(A)

by striking subparagraph (B), and

(B)

by striking per year.— and all that follows through No more than and inserting per year.—No more than.

(4)

Paragraph (2) of section 420(c) of such Code is amended—

(A)

by striking subparagraph (B),

(B)

by moving subparagraph (A) two ems to the left, and

(C)

by striking before transfer.— and all that follows through The requirements of this paragraph and inserting the following: before transfer.—The requirements of this paragraph.

(5)

Paragraph (2) of section 420(d) of such Code is amended by striking after December 31, 1990.

(h)

Effective date

(1)

In general

The amendments made by this section shall apply to transfers made after the date of the enactment of this Act.

(2)

Conforming amendments relating to Pension Protection Act

The amendments made by subsections (b)(3)(B) and (f) shall take effect as if included in the amendments made by section 841(a) of the Pension Protection Act of 2006.