Home > 106th Congressional Bills > H.R. 5293 (ih) To amend the Immigration and Nationality Act to improve provisions relating to inadmissibility and detention of, and cancellation of removal for, aliens who have committed crimes, and for other purposes. [Introduced in House] ...H.R. 5293 (ih) To amend the Immigration and Nationality Act to improve provisions relating to inadmissibility and detention of, and cancellation of removal for, aliens who have committed crimes, and for other purposes. [Introduced in House] ...
108th CONGRESS
2d Session
H. R. 5292
To amend title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to limit the availability of
benefits under an employer's nonqualified deferred compensation plans
in the event that any of the employer's defined pension plans are
subjected to a distress or PBGC termination in connection with
bankruptcy reorganization or a conversion to a cash balance plan.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 8, 2004
Mr. George Miller of California (for himself, Mr. Hoeffel, Mr. Payne,
Mr. Grijalva, Mr. Owens, Mrs. McCarthy of New York, Mr. Doggett, Mr.
Bishop of New York, Mr. Davis of Illinois, Mr. Van Hollen, Mr. Andrews,
Mr. Kucinich, and Mr. Tierney) introduced the following bill; which was
referred to the Committee on Education and the Workforce, and in
addition to the Committee on Ways and Means, 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 title I of the Employee Retirement Income Security Act of 1974
and the Internal Revenue Code of 1986 to limit the availability of
benefits under an employer's nonqualified deferred compensation plans
in the event that any of the employer's defined pension plans are
subjected to a distress or PBGC termination in connection with
bankruptcy reorganization or a conversion to a cash balance plan.
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 Fairness Act of 2004''.
SEC. 1. FINDINGS AND PURPOSE.
(a) Findings.--The Congress finds as follows:
(1) The pension system sponsored by private employers is in
a weakened state due to economic recession and heightened
global competition.
(2) Employers increasingly are terminating or reducing the
benefits provided under traditional defined benefit pension
plans.
(3) Over 44,000,000 workers, retirees, and their families
depend on defined benefit pension plans as a critical component
of their retirement security in addition to Social Security.
(4) Defined benefit pension plans are currently estimated
to be underfunded up to a total of $400,000,000,000, and the
Pension Benefit Guaranty Corporation, the agency that insures
traditional pensions, had a 2003 deficit of over
$10,000,000,000.
(5) The Congress in enacting the Employee Retirement Income
Security Act of 1974 intended employers to adequately fund
their pension plans and did not intend for the Pension Benefit
Guaranty Corporation to be used as a means for restructuring
companies to escape their unfunded pension liabilities.
(6) Cash balance pension plans were created to reduce
traditional defined benefit pension obligations without
statutory authorization, and adequate standards do not exist to
adequately protect the pensions of pension plan participants,
particularly older participants.
(7) Corporate executives often preserve or enhance
executive pension and other employee benefits at the same time
the benefits of non-highly paid employees are reduced.
(b) Purpose.--It is the purpose of this Act to better protect the
retirement benefits afforded to workers and retirees by protecting the
solvency of the Pension Benefit Guaranty Corporation and ensuring
equitable treatment of corporate executives as compared to treatment
provided to other employees when restructuring employers shift unfunded
pension liabilities onto the Pension Benefit Guaranty Corporation or
convert to cash balance pension plans without adequately protecting the
retirement security of older workers.
SEC. 2. TERMINATION FAIRNESS STANDARD FOR NONQUALIFIED DEFERRED
COMPENSATION PLANS IN CONNECTION WITH A PENSION PLAN
TERMINATION BASED ON BANKRUPTCY REORGANIZATION OR IN
CONNECTION WITH A CONVERSION OF A PLAN TO A CASH BALANCE
PLAN.
Section 206 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1056) is amended by adding at the end the following new
subsection:
``(g) Termination Fairness Standard for Nonqualified Deferred
Compensation Plans in Connection With a Pension Plan Termination Based
on Bankruptcy Reorganization or in Connection With a Conversion of a
Pension Plan to a Cash Balance Plan.--
``(1) In general.--In any case in which a corporation is a
plan sponsor of a defined benefit plan with respect to which a
plan amendment is adopted that has the effect of--
``(A) implementing a distress termination of the
plan under section 4041(c) based on bankruptcy
reorganization or a termination of the plan initiated
by the Pension Benefit Guaranty Corporation under
section 4042 based on bankruptcy reorganization, in any
case in which the plan is not sufficient for guaranteed
benefits (within the meaning of section 4041(d)(2)) as
of the proposed termination date, or
``(B) converting such plan to a cash balance plan,
in any case in which the amendment--
``(i) results in a significant reduction in
the rate of future benefit accruals (within the
meaning of section 204(h)(1)) of participants
with at least 10 years of service under the
plan, or
``(ii) does not provide for an election by
affected participants with at least 10 years of
service under the plan (and their
beneficiaries) to retain coverage under the
terms of the plan as in effect immediately
prior to the amendment,
any covered deferred compensation plan established or
maintained by such plan sponsor after the date of the adoption
of such plan amendment shall meet the termination fairness
standard of this subsection with respect to such plan
amendment.
``(2) Termination fairness standard.--A covered deferred
compensation plan established or maintained by a plan sponsor
described in paragraph (1) meets the termination fairness
standard of this subsection with respect to a plan amendment
described in paragraph (1) if, during the 5-year period
beginning on the date of the adoption of such plan amendment--
``(A) no amount of deferred compensation accrues to
a disqualified individual under the terms of such
covered deferred compensation plan (irrespective of
whether the accrual in deferred compensation is
expressed in the form of a promise, a guarantee, or any
other representation), and
``(B) in the case of a covered deferred
compensation plan established during or after the 1-
year period preceding the notice date (or any amendment
to a covered deferred compensation plan if such
amendment is adopted during or after such 1-year
period), no distribution of accrued deferred
compensation is made under such plan (or such
amendment) to a disqualified individual.
``(3) Definitions.--For purposes of this subsection--
``(A) Cash balance plan.--
``(i) In general.--The term `cash balance
plan' means a defined benefit plan under which
the accrued benefit is expressed to
participants and beneficiaries as an amount
other than an annual benefit commencing at
normal retirement age.
``(ii) Regulations to include similar or
other hybrid plans.--The Secretary shall issue
regulations which provide that a defined
benefit plan (or any portion of such a plan)
which has an effect similar to a plan described
in clause (i) shall be treated as a cash
balance plan. Such regulations may provide that
if a plan sponsor represents in communications
to participants and beneficiaries that a plan
amendment results in a plan being described in
the preceding sentence, such plan shall be
treated as a cash balance plan.
``(B) Notice date.--The term `notice date' means,
with respect to an amendment described in paragraph
(1)--
``(i) in the case of a distress termination
under section 4041(d), the date of the advance
notice of intent to terminate provided pursuant
to section 4041(a)(2),
``(ii) in the case of a termination
initiated by the Pension Benefit Guaranty
Corporation under section 4042, the date of the
application to the court under section 4042(c),
and
``(iii) in the case of a conversion to a
cash balance plan, the date of the adoption of
the amendment.
``(C) Covered deferred compensation plan.--
``(i) In general.--The term `covered
deferred compensation plan' means any plan
providing for the deferral of compensation of a
disqualified individual, whether or not--
``(I) compensation of the
disqualified individual which is
deferred under such plan is subject to
substantial risk of forfeiture,
``(II) the disqualified
individual's rights to the compensation
deferred under the plan are no greater
than the rights of a general creditor
of the plan sponsor,
``(III) all amounts set aside
(directly or indirectly) for purposes
of paying the deferred compensation
(including income), and all income
attributable to such amounts, remain
(until made available to the
disqualified individual or other
beneficiary) solely the property of the
plan sponsor (without being restricted
to the provision of benefits under the
plan),
``(IV) the amounts referred to in
subclause (III) are available to
satisfy the claims of the plan
sponsor's general creditors at all
times (not merely after bankruptcy or
insolvency), and
``(V) some or all of the
compensation of the disqualified
individual which is deferred under such
plan is guaranteed by an insurance
company, insurance service, or other
similar organization.
``(ii) Exception for qualified plans.--Such
term shall not include a plan that is--
``(I) described in section
219(g)(5)(A) of the Internal Revenue
Code of 1986, or
``(II) an eligible deferred
compensation plan (as defined in
section 457(b) of such Code) of an
eligible employer described in section
457(e)(1)(A) of such Code.
``(iii) Plan includes arrangements, etc.--
For purposes of this subparagraph, the term
`plan' includes any agreement or arrangement.
``(D) Disqualified individual.--The term
`disqualified individual' means a director or executive
officer of the plan sponsor.
``(E) Termination based on bankruptcy
reorganization.--A termination of a plan which is a
distress termination under section 4041(c) or a
termination instituted by the Pension Benefit Guaranty
Corporation under section 4042 is `based on bankruptcy
reorganization' if such termination is based in whole
or in part on the filing, by or against any person who
is a contributing sponsor of such plan or a member of
such sponsor's controlled group, of a petition seeking
reorganization in a case under title 11, United States
Code, or under any similar law of a State or political
subdivision of a State (or such a case in which
liquidation is sought has been converted to a case in
which reorganization is sought).
``(F) Title iv terminology.--Any term used in this
subsection which is defined in section 4001(a) shall
have the meaning provided such term in section 4001(a).
``(4) Special rules.--
``(A) Coordinated benefits.--If the benefits of 2
or more defined benefit plans established or maintained
by an employer are coordinated in such a manner as to
have the effect of the adoption of an amendment
described in paragraph (1), the sponsor of the defined
benefit plan or plans providing for such coordination
shall be treated as having adopted such a plan
amendment as of the date such coordination begins.
``(B) Multiple amendments.--The Secretary shall
issue regulations to prevent the avoidance of the
purposes of this subsection through the use of 2 or
more plan amendments rather than a single amendment.
``(C) Controlled groups, etc.--For purposes of this
subsection, all persons treated as a single employer
under subsection (b), (c), (m), or (o) of section 414
of the Internal Revenue Code of 1986 shall be treated
as 1 employer.
``(D) Treatment of earnings.--References to
deferred compensation shall be treated as including
references to income attributable to such compensation
or such income.
``(5) Coordination.--The Secretary and the Secretary of the
Treasury shall ensure, through the execution of an interagency
memorandum of understanding among such Secretaries, that
regulations, rulings, and interpretations issued by such
Secretaries relating to the same matter over which both such
Secretaries have responsibility under this subsection and
section 4980H of the Internal Revenue Code of 1986 are
administered so as to have the same effect at all times.
``(6) Effect of waiver granted by secretary of the
treasury.--To the extent that any requirement of the
termination fairness standard of section 4980H(b) of the
Internal Revenue Code of 1986 is waived by the Secretary of the
Treasury with respect to any disqualified individual under
section 4980H(h) of such Code in the case of any plan amendment
having the effect of a termination described in paragraph
(1)(A) of this subsection, such requirement under the
termination fairness standard of paragraph (2) of this
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