H.R. 3306 — Pension Reform Act of 1989

 
HR 3306 IH
101st CONGRESS
1st Session
 H. R. 3306
To amend the Internal Revenue Code of 1986 and title I of the Employee
Retirement Income Security Act of 1974 with regard to pension integration,
participation, and vesting requirements, to provide for studies relating
to cost-of-living adjustments and pension portability, and to clarify the
continued availability, under provisions governing domestic relations orders,
of remedies relating to matters treated in such orders entered before 1985.
IN THE HOUSE OF REPRESENTATIVES
September 20, 1989
Mrs. KENNELLY introduced the following bill; which was referred jointly to
the Committees on Ways and Means and Education and Labor
A BILL
To amend the Internal Revenue Code of 1986 and title I of the Employee
Retirement Income Security Act of 1974 with regard to pension integration,
participation, and vesting requirements, to provide for studies relating
to cost-of-living adjustments and pension portability, and to clarify the
continued availability, under provisions governing domestic relations orders,
of remedies relating to matters treated in such orders entered before 1985.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Pension Reform Act of 1989'.
SEC. 2. PENSION INTEGRATION RULES.
  (a) APPLICABILITY OF NEW INTEGRATION RULES EXTENDED TO ALL EXISTING ACCRUED
  BENEFITS- Subsection (c)(1) of section 1111 of the Tax Reform Act of 1986
  (relating to effective date of application of nondiscrimination rules to
  integrated plans) is amended by striking `benefits attributable to'.
  (b) INTEGRATION DISALLOWED FOR SIMPLIFIED EMPLOYEE PENSIONS-
  (1) IN GENERAL- Subparagraph (D) of section 408(k)(3) of the Internal
  Revenue Code of 1986 (relating to permitted disparity under rules limiting
  discrimination under simplified employee pensions) is repealed.
  (2) CONFORMING AMENDMENT- Subparagraph (C) of such section 408(k)(3)
  is amended by striking `and except as provided in subparagraph (D),'.
  (3) EFFECTIVE DATE- The amendments made by this subsection shall apply
  with respect to taxable years beginning on or after January 1, 1989.
  (c) EVENTUAL REPEAL OF INTEGRATION RULES- Effective for plan years beginning
  on or after January 1, 2000--
  (1) subparagraphs (C) and (D) of section 401(a)(5) of the Internal
  Revenue Code of 1986 (relating to pension integration exceptions under
  nondiscrimination requirements for qualification) are repealed, and
  subparagraph (E) of such section 401(a)(5) is redesignated as subparagraph
  (C); and
  (2) subsection (1) of section 401 of such Code (relating to nondiscriminatory
  coordination of defined contribution plans with OASDI) is repealed.
SEC. 3. APPLICATION OF MINIMUM COVERAGE REQUIREMENTS WITH RESPECT TO SEPARATE
LINES OF BUSINESS.
  (a) IN GENERAL- Subsection (b) of section 410 of the Internal Revenue Code
  of 1986 (relating to minimum coverage requirements) is amended--
  (1) in paragraph (1), by striking `A trust' and inserting `In any case in
  which the employer with respect to a plan is treated, under section 414(r),
  as operating separate lines of business for a plan year, a trust', and by
  inserting `for such plan year' after `requirements'; and
  (2) by redesignating paragraphs (3) through (6) as paragraphs (4) through
  (7), respectively and by inserting after paragraph (2) the following
  new paragraph:
  `(3) SPECIAL RULE WHERE EMPLOYER OPERATES SINGLE LINE OF BUSINESS- In
  any case in which the employer with respect to a plan is not treated,
  under section 414(r), as operating separate lines of business for a plan
  year, a trust shall not constitute a qualified trust under section 401(a)
  unless such trust is designated by the employer as part of a plan which
  benefits all employees of the employer.'.
  (b) LIMITATION ON LINE OF BUSINESS EXCEPTION- Paragraph (6) of section 410(b)
  of such Code (as redesignated by subsection (a)(2) of this section) is
  amended by inserting `other than paragraph (1)(A)' after `this subsection'.
SEC. 4. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER PLANS.
  (a) INTERNAL REVENUE CODE AMENDMENT- Paragraph (2) of section 411(a) of
  the Internal Revenue Code of 1986 (relating to minimum vesting standards)
  is amended--
  (1) by striking `subparagraph (A), (B), or (C)' and inserting `subparagraph
  (A) or (B)'; and
  (2) by striking subparagraph (C).
  (b) ERISA AMENDMENT- Paragraph (2) of section 203(a)(2) of the Employee
  Retirement Income Security Act of 1974 (29 U.S.C. 1053(a)(2)) is amended--
  (1) by striking `subparagraph (A), (B), or (C)' and inserting `subparagraph
  (A) or (B)'; and
  (2) by striking subparagraph (C).
SEC. 5. EFFECTIVE DATES.
  (a) IN GENERAL- Except as provided in subsection (b), the amendments made
  by this Act, other than section 2, shall apply with respect to plan years
  beginning on or after January 1, 1990.
  (b) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS- In the case of a plan
  maintained pursuant to 1 or more collective bargaining agreements between
  employee representatives and 1 or more employers ratified on or before
  the date of the enactment of this Act, subsection (a) shall be applied
  to benefits pursuant to, and individuals covered by, any such agreement
  by substituting for `January 1, 1990' the date of the commencement of the
  first plan year beginning on or after the earlier of--
  (1) the later of--
  (A) January 1, 1990, or
  (B) the date on which the last of such collective bargaining agreements
  terminates (determined without regard to any extension thereof after the
  date of the enactment of this Act), or
  (2) January 1, 1992.
  (c) PLAN AMENDMENTS- If any amendment made by this Act requires an amendment
  to any plan, such plan amendment shall not be required to be made before
  the first plan year beginning on or after January 1, 1991, if--
  (1) during the period after such amendment made by this Act takes effect
  and before such first plan year, the plan is operated in accordance with
  the requirements of such amendment made by this Act, and
  (2) such plan amendment applies retroactively to the period after such
  amendment made by this Act takes effect and such first plan year.
A plan shall not be treated as failing to provide definitely determinable
benefits or contributions, or to be operated in accordance with the provisions
of the plan, merely because it operates in accordance with this subsection.
SEC. 6. STUDY ON COST-OF-LIVING ADJUSTMENTS UNDER PRIVATE PENSION PLANS.
  (a) STUDY BY GENERAL ACCOUNTING OFFICE- As soon as possible after the
  date of the enactment of this Act, the Comptroller General of the United
  States, in accordance with the authority provided under section 11016(d)
  of the Single-Employer Pension Plan Amendments Act of 1986 (100 Stat. 275),
  shall undertake a thorough study with respect to alternative methods of
  requiring employee pension benefit plans to provide cost-of-living and
  other adjustments to benefits payable under such plans.
  (b) MATTERS TO BE STUDIED- The Comptroller General, in carrying out the
  study provided for in this section, shall address, analyze, and report
  specifically on--
  (1) the effect inflation is having and may be expected to have on
  women receiving private pension benefits as either plan participants or
  beneficiaries,
  (2) the number of plans which provide for cost-of-living or other adjustments
  to benefits,
  (3) the manner in which plans providing for such adjustments determine when,
  and for whom, an adjustment will be made,
  (4) the frequency with which other plans make cost-of-living and other
  benefit adjustments, and how the determination to make such adjustments
  is made,
  (5) the possible application of funds currently available for employer
  reversions for cost-of-living and other benefit adjustments, and
  (6) the costs incurred in requiring such adjustments to benefits.
  (c) REPORT- Not later than 2 years after the date of the enactment
  of this Act, the Comptroller General shall submit to the Committee on
  Ways and Means and the Committee on Education and Labor of the House of
  Representatives and the Committee on Finance and the Committee on Labor
  and Human Resources of the Senate a report of the findings of the study
  provided for by this section, together with any recommendations the
  Comptroller General considers appropriate.
SEC. 7. STUDY ON PENSION PORTABILITY.
  (a) STUDY BY GENERAL ACCOUNTING OFFICE- As soon as possible after the date
  of the enactment of this Act, the Comptroller General of the United States,
  in accordance with the authority provided under section 11016(d) of the
  Single-Employer Pension Plan Amendments Act of 1986 (100 Stat. 275), shall
  undertake a thorough study with respect to alternative pension portability
  mechanisms, including mechanisms for promoting portability of benefits,
  credited service, and current values of cash distributions, for preserving
  and enhancing the real value of deferred vested pension benefits.
  (b) MATTERS TO BE STUDIED- The Comptroller General, in carrying out the
  study provided for in this section, shall address, analyze, and report
  specifically on--
  (1) the types of possible portability mechanisms for both defined benefit
  plans and defined contribution plans,
  (2) the manner in which, and extent to which, each mechanism would preserve
  and enhance the real value of deferred vested benefits,
  (3) the most effective ways to ensure that retirement money will be used
  for retirement,
  (4) the measures necessary to be taken to effectively ensure that the
  joint and survivor annuity form of benefit will be preserved,
  (5) the existing rules under the Employee Retirement Income Security Act
  of 1974, the Internal Revenue Code of 1986, and other applicable provisions
  of law which can be considered portability mechanisms, their effectiveness,
  and the frequency of their use, and
  (6) the costs of establishing effective portability mechanisms for both
  defined benefit plans and defined contribution plans.
  (c) REPORT- Not later than 2 years after the date of the enactment
  of this Act, the Comptroller General shall submit to the Committee on
  Ways and Means and the Committee on Education and Labor of the House of
  Representatives and the Committee on Finance and the Committee on Labor
  and Human Resources of the Senate a report of the findings of the study
  provided for by this section, together with any recommendations the
  Comptroller General considers appropriate.
SEC. 8. CLARIFICATION OF CONTINUED AVAILABILITY OF REMEDIES RELATING TO
MATTERS TREATED IN DOMESTIC RELATIONS ORDERS ENTERED BEFORE 1985.
  (a) IN GENERAL- In any case in which--
  (1) under a prior domestic relations order entered before January 1, 1985,
  in an action for divorce--
  (A) the right of a spouse under a pension plan to an accrued benefit under
  such plan was not divided between spouses,
  (B) any right of a spouse with respect to such an accrued benefit was
  waived without the informed consent of such spouse, or
  (C) the right of a spouse as a participant under a pension plan to an accrued
  benefit under such plan was divided so that the other spouse received less
  than such other spouse's pro rata share of the accrued benefit under the
  plan, or
  (2) a court of competent jurisdiction determines that any further action is
  appropriate with respect to any matter to which a prior domestic relations
  order entered before such date applies,
nothing in the provisions of section 104, 204, or 303 of the Retirement
Equity Act of 1984 (Public Law 98-397) or the amendments made thereby
shall be construed to require or permit the treatment, for purposes of such
provisions, of a domestic relations order, which is entered on or after the
date of the enactment of this Act and which supercedes, amends the terms of,
or otherwise affects such prior domestic relations order, as other than
a qualified domestic relations order solely because such prior domestic
relations order was entered before January 1, 1985.
  (b) DEFINITIONS- For purposes of this section--
  (1) IN GENERAL- Terms used in this section which are defined in section
  3 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002)
  shall have the meanings provided such terms by such section.
  (2) PRO RATA SHARE- The term `pro rata share' of a spouse means, in
  connection with an accrued benefit under a pension plan, 50 percent of
  the product derived by multiplying--
  (A) the actuarial present value of the accrued benefit, by
  (B) a fraction--
  (i) the numerator of which is the period of time, during the marriage
  between the spouse and the participant in the plan, which constitutes
  creditable service by the participant under the plan, and
  (ii) the denominator of which is the total period of time which constitutes
  creditable service by the participant under the plan.
  (3) PLAN- All pension plans in which a person has been a participant shall
  be treated as one plan with respect to such person.
Pension Reform Act of 1989

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