Retiree Health Benefits and Pension Preservation Act of 1989

Retiree Health Benefits and Pension Preservation Act of 1989 - Title I: Expansion of Post-Retirement Health Care and Long-Term Care Benefits Which May be Provided by Pension Plans - Amends the Internal Revenue Code (IRC) to allow pension plans to provide long-term care benefits for retired employees and their families. Includes among these benefits the costs of medically necessary non-emergency diagnostic, preventive, therapeutic, rehabilitative, maintenance, or personal care services. Requires that a medical expense benefits account and a long-term care expense benefits account be established for each employee.

Permits the treatment of any pension plan as a profit-sharing plan if the employer contributes to accounts funding retiree medical and long-term care benefits.

Amends the IRC and the Employee Retirement Income Security Act of 1974 to allow the transfer of surplus pension plan assets without plan termination if: (1) the amount withdrawn does not exceed the excess of 125 percent of current plan liability; (2) notice is given to the Secretary of the Treasury and to plan participants; and (3) the amount is immediately transferred to an account for retiree medical benefits.

Increases from 15 percent to 100 percent the tax on any employer reversion of qualified pension plan assets. Exempts reversion amounts transferred to accounts funding retiree medical and long-term care benefits. Prohibits transfers that would reduce plan assets below 125 percent of the plan's current liability.

Amends the Omnibus Budget Reconciliation Act of 1987 to repeal provisions defining the full-funding limitation for qualified pension plans as 150 percent of current liability.

Title II: Certain Employers Required to Offer Simplified Employee Pensions Funded by Salary Reduction Arrangements - Requires, with specified exceptions, any employer of five or more employees performing more than 1,000 hours of service during the calendar year to establish a qualified salary reduction simplified employee pension (SEP) for each employee who: (1) requests that one be established; (2) is at least 21 years old; and (3) has served the employer for at least one year. Prescribes conditions to be met by qualified SEPs. Exempts contributions from employment and unemployment taxes.

Imposes limitations on early distributions from qualified retirement plans. Lists exceptions, including cases of early retirement after attaining age 55.

Replaces the currently imposed ten percent additional tax on early distributions from qualified retirement plans with a 20 percent additional tax on distributions violating the applicable limitations.

Directs the Secretary of the Treasury to study and report to the Congress on the current rules governing transfers of assets between pension plans and between plans and individual retirement accounts when an employee separates from service.