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Page:United States Statutes at Large Volume 101 Part 2.djvu/1142

 101 STAT. 1330-348

PUBLIC LAW 100-203—DEC. 22, 1987

26 USC 4971.

(1) IN GENERAL.—Section 4971(a) of the 1986 Code (relating to

26 USC 4971 "0*^-

initial tax on failure to meet minimum funding standards) is amended by striking out "5 percent" and inserting in lieu thereof "10 percent (5 percent in the case of a multiemployer plan)". (2) EFFECTIVE DATE.—The amendments made by this subsection shall apply to plan years beginning after 1988. (d) REQUIREMENT OF NOTICE.—Section 101 of ERISA (relating to duty of disclosure and reporting) (29 U.S.C. 1021) is amended by redesignating subsection (d) as subsection (e) and by inserting after subsection (c) the following new subsection: "(d) NOTICE OF FAILURE TO MEET MINIMUM FUNDING ARDS.—

STAND-

"(1) IN GENERAL.—If an employer of a plan other than a

multiemployer plan fails to make a required installment or other payment required to meet the minimum funding standard under section 302 to a plan before the 60th day following the due date for such installment or other payment, the employer shall notify each participant and beneficiary (including an alternate payee as defined in section 206(d)(3)(K)) of such plan of such failure. Such notice shall be made at such time and in such manner as the Secretary may prescribe. "(2)

SUBSECTION NOT TO APPLY IF WAIVER PENDING.—This

subsection shall not apply to any failure if the employer has filed a waiver request under section 303 with respect to the plan year to which the required installment relates, except that if the waiver request is denied, notice under paragraph (1) shall be provided within 60 days after the date of such denial. "(3) DEFINITIONS.—For purposes of this subsection, the terms

'required installment' and 'due date' have the same meanings given such terms by section 302(e)." (e) IMPOSITION OF L I E N W H E R E F A I L U R E TO M A K E R E Q U I R E D C O N TRIBUTIONS.— (1) AMENDMENT TO 1986 CODE.—Section 412 of the 1986 Code

(as amended by this subtitle) is amended by adding a t the e n d thereof the following new subsection: "(n) IMPOSITION OF L I E N CONTRIBUTIONS.—

.,,,, -

,,.;;,.

W H E R E F A I L U R E TO M A K E R E Q U I R E D

"(1) IN GENERAL.—In the case of a plan to which this section applies, if— "(A) any person fails to m a k e a required installment under subsection (m) or any other payment required under this section before the d u e date for such installment or other payment, and "(B) the unpaid balance of such installment or other payment (including interest), w h e n added to the aggregate u n p a i d balance of all preceding such installments o r other payments for which payment w a s not m a d e before the d u e date (including interest), exceeds $1,000,000, the n the r e shall be a lien in favor of the plan in the a m o u n t determined under paragraph (3) upon all property and rights to property, w h e the r real or personal, belonging to such person and any other person w h o is a m e m b e r of the s a m e controlled group of which such person is a member. "(2) P L A N S TO W H I C H SUBSECTION APPLIES.—This
 * sj£

subsection

shall apply to a defined benefit p l a n (other than a multiemployer plan) for any p l a n year for which the funded c u r r e n t liability percentage (within the m e a n i n g of subsection (1)(8)(B)) of such p l a n is less than 100 percent.

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1143

 PUBLIC LAW 100-203—DEC. 22, 1987 ,

101 STAT. 1330-349

"(3) AMOUNT OF LIEN.—For purposes of paragraph (1), the

amount of the lien shall be equal to the lesser of— "(A) the amount by which the unpaid balances described in paragraph (1)(B) (including interest) exceed $1,000,000, or, "(B) the aggregate unpaid balance of required install, ments and other payments required under this section (including interest)— , _,:, "(i) for plan years beginning after 1987, and "(ii) for which payment has not been made before the due date. "(4) NOTICE OF FAILURE; LIEN.— "(A) NOTICE OF FAILURE.—A

person committing a failure described in paragraph (1) shall notify the Pension Benefit Guaranty Corporation of such failure within 10 days of the due date for the required installment or other payment. "(B) PERIOD OF LIEN.—The lien imposed by paragraph (1) shall arise on the 60th day following the due date for the •'- - required installment or other payment and shall continue until the last day of the first plan year in which the plan ceases to be described in paragraph (1)(B). Such lien shall continue to run without regard to whether such plan continues to be described in paragraph (2) during the period referred to in the preceding sentence. "(C) CERTAIN RULES TO APPLY.—Any amount with respect to which a lien is imposed under paragraph (1) shall be treated as taxes due and owing the United States and rules ,^i similar to the rules of subsections (c), (d), and (e) of section 4068 of the Employee Retirement Income Security Act of 1974 shall apply with respect to a lien imposed by subsection (a) and the amount with respect to such lien. "(5) ENFORCEMENT.—Any lien created under paragraph (1) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direction of the Pension Benefit Guaranty Corporation, by the contributing sponsor (or any member of the controlled group of the contributing sponsor). "(6) DEFINITIONS.—For purposes of this subsection— "(A) DUE DATE; REQUIRED INSTALLMENT.—The terms 'due i date' and 'required installment' have the meanings given such terms by subsection (m), except that in the case of a payment other than a required installment, the due date shall be the date such payment is required to be made under this section. ^'' "(B) CONTROLLED GROUP.—The term 'controlled group' means any group treated as a single employer under subsections (b), (c), (m), and (o) of section 414." (2) AMENDMENT TO ERISA.—Section 302 of ERISA (as amended by this subtitle) (29 U.S.C. 1082) is amended by redesignating subsection (f) as subsection (g) and by adding after subsection (e) the following new subsection: "(f) IMPOSITION OF LIEN WHERE FAILURE TO MAKE REQUIRED CONTRIBUTIONS.—

"(1) IN GENERAL.—In the case of a plan to which this section applies, if— " Copy read "section." ".

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license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/


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Page:United States Statutes at Large Volume 101 Part 2.djvu/1144

 101 STAT. 1330-350

PUBLIC LAW 100-203—DEC. 22, 1987

"(A) any person fails to make a required installment J., under subsection (e) or any other payment required under this section before the due date for such installment or other payment, and "(B) the unpaid balance of such installment or other payment (including interest), when added to the aggregate unpaid balance of all preceding such installments or other payments for which payment was not made before the due date (including interest), exceeds $1,000,000, then there shall be a lien in favor of the plan in the amount determined under paragraph (3) upon all property and rights to property, whether real or personal, belonging to such person and any other person who is a member of the same controlled group of which such person is a member. "(2) PLANS TO WHICH SUBSECTION APPLIES.—This subsection shall apply to a defined benefit plan (other than a multiemployer plan) for any plan year for which the funded current liability percentage (within the meaning of subsection (d)(8)(B)) of such plan is less than 100 percent. "(3) AMOUNT OF LIEN.—For purposes of paragraph (1), the

amount of the lien shall be equal to the lesser of— "(A) the amount by which the unpaid balances described in paragraph (1)(B) (including interest) exceed $1,000,000, or "(B) the aggregate unpaid balance of required installments and other payments required under this section (including interest)— "(i) for plan years beginning after 1987, and "(ii) for which payment has not been made before the due date. "(4) NOTICE OF FAILURE; LIEN.— "(A) NOTICE OF FAILURE.—A

person committing a failure described in paragraph (1) shall notify the Pension Benefit Guaranty Corporation of such failure within 10 days of the due date for the required installment or other payment. "(B) PERIOD OF LIEN.—The lien imposed by paragraph (1) shall arise on the 60th day following the due date for the required installment or other payment and shall continue until the last day of the first plan year in which the plan ceases to be described in paragraph (1)(B). Such lien shall continue to run without regard to whether such plan continues to be described in paragraph (2) during the period -"' referred to in the preceding sentence. "(C) CERTAIN RULES TO APPLY.—Any amount with respect to which a lien is imposed under paragraph (1) shall be treated as taxes due and owing the United States and rules similar to the rules of subsections vc), (d), and (e) of section 4068 shall apply with respect to a lien imposed by subsection (a) and the amount with respect to such lien. "(5) ENFORCEMENT.—Any lien created under paragraph (1) may be perfected and enforced only by the Pension Benefit Guaranty Corporation, or at the direction of the Pension Benefit Guaranty Corporation, by the contributing sponsor (or any member of the controlled group of the contributing sponsor). "(6) DEFINITIONS.—For purposes of this subsection— "(A) DUE DATE; REQUIRED INSTALLMENT.—The terms 'due date' and 'required installment' have the meanings given such terms by subsection (e), except that in the case of a

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1145

 PUBLIC LAW 100-203—DEC. 22, 1987

101 STAT. 1330-351

payment other than a required installment, the d u e date shall be the date such payment is required to be m a d e under this section." "(B) CONTROLLED G R O U P. — The term

'controlled

group'

means any group t r e a t e d as a single employer under subsections (b), (c), (m), and (o) of section 414 of the I n t e r n a l Revenue Code of 1986." (3) EFFECTIVE DATE.—The amendments m a d e by this subsection shall apply to plan years beginning after December 3 1, 1987.

26 USC 412 note.

SEC. 9305. LIABILITY OF MEMBERS OF CONTROLLED GROUP FOR TAXES ON FAILURE TO MEET MINIMUM FUNDING STANDARDS AND TO MAKE MINIMUM FUNDING CONTRIBUTIONS. (a) EXCISE T A X. —

(1) IN GENERAL.—Section 4971 of the 1986 Code (relating to taxes on failure to meet minimum funding standards) is amended by redesignating subsection (e) a s subsection (f) and by inserting after subsection (d) the following new subsection:

26 USC 4971.

"(e) LIABILITY FOR T A X. —

"(1) IN GENERAL.—Except a s provided in paragraph (2), the tax imposed by subsection (a) or (b) shall be paid by the employer responsible for contributing to or under the plan the a m o u n t described in section 412(b)(3)(A). "(2) JOINT AND SEVERAL LIABILITY WHERE EMPLOYER MEMBER OF CONTROLLED G R O U P. —

i 1

"(A) IN GENERAL.—In the case of a plan other than a multiemployer plan, if the employer referred to in paragraph (1) is a m e m b e r of a controlled group, each m e m b e r of such group shall be jointly and severally liable for the tax imposed by subsection (a) or (b). "(B) CONTROLLED G R O U P. — For purposes of subparagraph

(A), the term 'controlled group' means any group treated a s a single employer under subsection (b), (c), (m), or (o) of section 414." (2) T E C H N I C A L AMENDMENTS. —

(A) Subsection (a) of section amended by striking o u t the last (B) Subsection (b) of section amended by striking out the last

4971 of the 1986 Coae is sentence. 4971 of the 1986 Code is sentence.

(b) MINIMUM F U N D I N G CONTRIBUTIONS.— (1) AMENDMENT TO 1986 CODE.—Section 412(c) of the 1986 Code

is amended by adding a t the end thereof the following new paragraph: "(11) LlABILITY FOR CONTRIBUTIONS.—

. 4

"(A) IN GENERAL.—Except as provided in subparagraph (B), the a m o u n t of any contribution required by this section and any required installments under subsection (m) shall be paid by the employer responsible for contributing to or under the plan the a m o u n t described in subsection (b)(3)(A). "(B) JOINT A N D SEVERAL LIABILITY MEMBER OF CONTROLLED GROUP.—

WHERE

EMPLOYER

"(i) IN GENERAL.—In the case of a plan other than a multiemployer plan, if the employer referred to in subparagraph (A) is a m e m b e r of a controlled group, each m e m b e r of such group shall be jointly and sever-

" ", ^

- ,

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1146

 101 STAT. 1330-352

PUBLIC LAW 100-203—DEC. 22, 1987 ally liable for payment of such contribution or required installment.

'

"(ii) CONTROLLED GROUP.—For purposes of clause (i),

. v^L •

! -^

the term 'controlled group'means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414.' (2) AMENDMENT TO ERISA.—Section 302(c) of ERISA (29 U.S.C. 1082(c)) is amended by adding at the end thereof the following new paragraph: ,./;iv,5^o >!.

'

"(11) LIABILITY FOR CONTRIBUTIONS.—

"(A) IN GENERAL.—Except as provided in subparagraph (B), the amount of any contribution required by this section and any required installments under subsection (e) shall be paid by the employer responsible for contributing to or under the plan the amount described in subsection (b)(3)(A).

v.; '>8U f '

•'-

'

"(B) JOINT AND SEVERAL LIABILITY M E M B E R OF CONTROLLED GROUP.—

V

WHERE EMPLOYER

"(i) IN GENERAL.—In the case of a plan other than a multiemployer plan, if the employer referred to in subparagraph (A) is a member of a controlled group, each member of such group shall be jointly and severally liable for payment of such contribution or required installment,

^n-

"(ii) CONTROLLED GROUP.—For purposes of clause (i),

ir^HMar

^^® term 'controlled group' means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986." ^* 26 USC 414. (c) CONFORMING AMENDMENT.—Section 4140)) of the 1986 Code is amended by striking out "the minimum funding standard of section 412, the tax imposed by section 4971, and". 26 USC 412 note. (d) EFFECTIVE DATE.—The amendments made by this section shall apply with respect to plan years beginning after December 31, 1987. SEC. 9306. FUNDING WAIVERS. (a) REQUIREMENTS FOR WAIVERS.— (1) AMENDMENTS TO 1986 CODE.— (A) APPLICATION MUST BE SUBMITTED BEFORE DATE 2V2

^•' ^ ^' -

MONTHS AFTER CLOSE OF YEAR.—Subsection (d) of section 412 of the 1986 Code (relating to variance from minimum funding standard) is amended by adding at the end thereof the following new paragraph: "(4) APPLICATION MUST BE SUBMITTED BEFORE DATE 2y2 MONTHS

AFTER CLOSE OF YEAR.—In the case of a plan other than a multiemployer plan, no waiver may be granted under this subsection with respect to any plan for any plan year unless an application therefor is submitted to the Secretary not later than the 15th day of the 3rd month beginning after the close of such plan year." (B) WAIVER ALLOWED ONLY FOR TEMPORARY HARDSHIP.—

Subsection (d) of section 412 of the 1986 Code is amended— (i) by striking out "substantial business hardship" in paragraphs (1) and (2) and inserting in lieu thereof temporary substantial business hardship (substantial .^:,;1; -i business hardship in the case of a multiemployer plan)", and •• Indention on paragraphs " '(11)", " '(A)", " '(B)", " '(i)", and " '(ii)", incorrect.

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1147

 PUBLIC LAW 100-203—DEC. 22, 1987 li -r b

101 STAT. 1330-353

(ii) by striking o u t "SUBSTANTIAL" in the headings of paragraph s (1) and (2).

(C) H A R D S H I P MUST ALSO EXIST AT CONTROLLED GROUP

LEVEL.—Subsection (d) of section 412 of the 1986 Code is amended by adding a t the e n d thereof the following new paragraph:

26 USC 412.

"(5) SPECIAL RULE I F EMPLOYER IS MEMBER O F CONTROLLED GROUP.—

'

"(A) IN GENERAL.—In the case of a plan other than a multiemployer plan, if a n employer is a m e m b e r of a controlled group, the temporary substantial business hardship requirements of paragraph (1) shall be treated as m e t only if such requirements a r e met— "(i) with respect to such employer, and "(ii) w i t h respect to the controlled group of which such employer is a m e m b e r (determined by t r e a t i n g all m e m b e r s of such group as a single employer). The Secretary may provide that a n analysis of a trade o r business or i n d u s t r y of a m e m b e r need not be conducted if the Secretary determine s such analysis is not necessary because the taking into account of such m e m b e r would not significantly affect the determination under this subsection. "(B) CONTROLLED G R O U P. — For purposes of subparagraph

(A), the term 'controlled group' means any group t r e a t e d a s a single employer under subsection (b), (c), (m), or (o) of section 414." (2) AMENDMENTS TO ERISA.— (A) APPLICATION MUST BE SUBMITTED BEFORE DATE 2 ¥2

MONTHS AFTER CLOSE OF YEAR.—SectioD 303 of ERISA (relating to v a r i a n c e from minimum funding standard) (29 U.S.C. 1083) is amended by redesignating subsection (d) as subsection (f) and by inserting after subsection (c) the following new subsection: '(d) SPECIAL RULES. — "(1) APPLICATION MUST BE SUBMITTED BEFORE DATE 2 ¥2 MONTHS AFTER CLOSE O F YEAR.—In the case of a p l a n other than a

multiemployer plan, no waiver may be g r a n t e d under this section w i t h respect to any plan for any plan year unless a n application therefor is submitted to the Secretary of the Treasury not l a t e r than the 15th d a y of the 3rd month beginning after the close of such plan year." (B) W A IV E R ALLOWED ONLY FOR TEMPORARY HARDSHIP.—

Section 303 of ERISA (29 U.S.C. 1083) is amended by striking o u t "substantial business h a r d s h i p " in subsections (a) and (b) and inserting in lieu thereof " temporary s u b s t a n t i a l business h a r d s h i p (substantial business h a r d s h i p in the case of a multiemployer plan)". (C) H A R D S H I P MUST ALSO EXIST AT CONTROLLED GROUP

LEVEL.—Subsection (d) of section 303 of ERISA (as amended by subparagraph (A)) (29 U.S.C. 1083) is amended by adding a t the end thereof the following new paragraph: "(2) SPECIAL RULE I F EMPLOYER IS MEMBER O F CONTROLLED GROUP.—

"(A) IN GENERAL.—In the case of a plan other than a multiemployer plan, if a n employer is a m e m b e r of a controlled group, the temporary substantial business hard-

•'"

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1148

 101 STAT. 1330-354

u^: g I

,

PUBLIC LAW 100-203—DEC. 22, 1987 ship requirements of subsection (a) shall be treated as met only if such requirements are met— "(i) with respect to such employer, and "(ii) with respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer). The Secretary of the Treasury may provide that an analysis of a trade or business or industry of a member need not be conducted if the Secretary of the Treasury determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this subsection. "(B) CONTROLLED GROUP.—For purposes of subparagraph

ft

(A), the term 'controlled group' means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986."

(b) FREQUENCY OF WAIVERS.— (1) AMENDMENTS TO 1986 CODE.—The second sentence of sec-

26 USC 412.

tion 412(d)(1) of the 1986 Code is amended by striking out "more than 5 of any 15" and inserting in lieu thereof "more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan)". (2) AMENDMENTS TO ERISA.—The second sentence of section

303(a) of ERISA (29 U.S.C. 1083(a)) is amended by striking out "more than 5 of any 15" and inserting in lieu thereof "more than 3 of any 15 (5 of any 15 in the case of a multiemployer plan)". (c) INTEREST ON REPAYMENT OF WAIVED CONTRIBUTIONS.— ^•i (1) AMENDMENTS TO 1986 CODE.—

^ )l -

(A) Paragraph (1) of section 412(d) of the 1986 Code is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: "The interest rate used for purposes of computing the amortization charge described in subsection (b)(2)(C) for any plan year shall be— "(A) in the case of a plan other than a multiemployer plan, the greater of (i) 150 percent of the Federal midterm rate (as in effect under section 1274 for the 1st month of such plan year), or (ii) the rate of interest used under the plan in determining costs, and "(B) in the case of a multiemployer plan, the rate determined under section 6621(b). ' (B) Subsection (e) of section 412 of the 1986 Code is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: "In the case of a plan other than a multiemployer plan, the interest rate applicable for any plan year under any arrangement entered into by the Secretary in connection with an extension granted under this subsection shall be the greater of (A) 150 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of such plan year), or (B) the rate of interest used under the plan in determining costs. In the case of a multiemployer plan, such rate shall be the rate determined under section 6621(b)."

 * •' * (2) AMENDMENTS TO ERISA.—

• "•^'

(A) Subsection (a) of section 303 of ERISA (29 U.S.C. 1083(a)) is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: "The interest rate used for purposes of computing the amortiza-

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1149

 PUBLIC LAW 100-203—DEC. 22, 1987

101 STAT. 1330-355

tion charge described in subsection 03X2)(C) for any plan year shall be— "(A) in the case of a plan other than a multiemployer plan, the greater of (i) 150 percent of the Federal midterm rate (as in effect under section 1274 of the Internal Revenue Code of 1986 for the 1st month of such plan year), or (ii) the rate of interest used under the plan in determining costs, and "(B) in the case of a multiemployer plan, the rate determined under section 6621(b)." (B) Subsection (a) of section 304 of ERISA (29 U.S.C. 1084(a)) is amended by striking out the last sentence and inserting in lieu thereof the following new sentence: "In the case of a plan other than a multiemployer plan, the interest rate applicable for any plan year under any arrangement entered into by the Secretary in connection with an extension granted under this subsection shall be the greater of (A) 150 percent of the Federal mid-term rate (as in effect under section 1274 of the Internal Revenue Code of 1986 for the 1st month of such plan year), or (B) the rate of interest used under the plan in determining costs. In the case of a multiemployer plan, such rate shall be the rate determined under section 6621(b) of such Code." (d) NOTICE TO PARTICIPANTS OF APPLICATION FOR FUNDING WAIVERS.— (1) AMENDMENT TO 1986 CODE.—Section 412 (fK4)(A) of the 1986

Code (relating to advance notice) is amended by striking out 26 USC 412. "plan." and inserting in lieu thereof "plan, and each participant, beneficiary, and alternate payee (within the meaning of section 414(p)(8)). Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV of such Act and the benefit liabilities.". (2) AMENDMENT TO ERISA.—Section 303(e)(l) of ERISA (relating to advance notice) (29 U.S.C. 1083(e)(l)) is amended by striking out "plan." and inserting in lieu thereof "plan, and each affected party (as defined in section 4001(a)(21)) other than the Pension Benefit Guaranty Corporation. Such notice shall include a description of the extent to which the plan is funded for benefits which are guaranteed under title IV and the benefit liabilities.". (e) DECREASE IN AMOUNT OF DEFICIENCIES REQUIRED BEFORE SECURITY REQUIRED.— (1) AMENDMENT TO 1986 CODE.—Subparagraph (C) of section

412 (0(3) is amended by striking out "$2,000,000" and inserting in lieu thereof "$1,000,000". (2) AMENDMENT TO ERISA.—Section 306(c)(l) of ERISA (29 U.S.C. 1085a(c)(l)) is amended by striking out "$2,000,000" and inserting in lieu thereof "$1,000,000". (f) EFFECTIVE DATES.— (1) IN GENERAL.—Except as provided in this subsection, the amendments made by this section shall apply in the case of— (A) any application submitted after December 17, 1987, and (B) any waiver granted pursuant to such an application. (2) SPECIAL RULE FOR APPLICATION REQUIREMENT.—

26 USC 412 note.

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 101 STAT. 1330-356 . J

PUBLIC LAW 100-203—DEC. 22, 1987 (A) IN GENERAL.—The amendments made by subsections (a)(1)(A) and (a)(2)(A) shall apply to plan years beginning after December 31, 1987. (B) TRANSITIONAL RULE FOR YEARS BEGINNING IN 1988.—In

the case of any plan year beginning during calendar 1988, section 412(d)(4) of the 1986 Code and section 303(d)(1) of ERISA (as added by subsection (a)(1)) shall be applied by substituting "6th month" for "3rd month". (3) FREQUENCY OF WAIVERS.—In applying the second sentence of section 412(d) of the 1986 Code and section 303(a) of ERISA to plans other than multiemployer plans, the number of waivers which may be granted pursuant to applications submitted after December 17, 1987, shall be determined without regard to waivers granted with respect to plan years beginning before January 1, 1988. (4) SUBSECTION (d).—The amendments made by subsection (d) shall apply to applications submitted more than 90 days after the date of the enactment of this Act.

,.

SEC. 9307. OTHER FUNDING CHANGES. (a) AMORTIZATION P E R I O D S. —

,.

• «

'; '

-*•

(1) AMENDMENTS TO 1986 CODE.—

26 USC 412. .ftu>n:

o? i •<: ti

(A) Paragraphs (2)(B)(iv), (2)(C), and (3)(B)(ii) of section 4120t>) of the 1986 Code are each amended by striking out "15 plan years" and inserting in lieu thereof "5 plan years (15 plan years in the case of a multiemployer plan)". (B) Paragraphs (2)(B)(v) and (3)(B)(iii) of section 412(b) of the 1986 Code are each amended by striking out "30 plan years" and inserting in lieu thereof "10 plan years (30 plan years in the case of a multiemployer plan)". (2) AMENDMENTS TO ERISA.—

(A) Paragraphs (2)(B)(iv), (2)(C), and (3)(B)(ii) of section 302(b) of ERISA (29 U.S.C. 1082(b)) are each amended by striking out "15 plan years" and inserting in lieu thereof "5 plan years (15 plan years in the case of a multiemployer plan)". (B) Paragraphs (2)(B)(v) and (3)(B)(iii) of section 3020)) of ERISA (29 U.S.C. 1082(b)) are each amended by striking out "30 plan years" and inserting in lieu thereof' 10 plan years (30 plan years in the case of a multiemployer plan)".

Ob) ACTUARIAL ASSUMPTIONS MUST B E REASONABLE.— (1) AMENDMENT TO 1986 CODE.—Paragraph (3) of section 412(c)

. • !,r 5 i

of the 1986 Code is amended to read as follows: "(3) ACTUARIAL ASSUMPTIONS MUST BE REASONABLE.—For purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods— -"(A) in the case of— ^'' "(i) a plan other than a multiemployer plan, each of which is reasonable (taking into account the experience of the plan and reasonable expectations) or which, in . •• the aggregate, result in a total contribution equivalent to that which would be determined if each such, ' assumption and method were reasonable, or "(ii) a multiemployer plan, which, in the aggregate, are reasonable (taking into account the experiences of the plan and reasonable expectations), and
 * ii •;-•';:.'

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 PUBLIC LAW 100-203—DEC. 22, 1987

101 STAT. 1330-357

'(B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan." (2) AMENDMENT TO ERISA.—Paragraph (3) of section 302(c) of ERISA (29 U.S.C. 1082(c)(3)) is amended to read as follows: "(3) For purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods— "(A) in the case of— "(i) a plan other than a multiemployer plan, each of which is reasonable (taking into account the experience of the plan and reasonable expectations) or which, in the aggregate, result in a total contribution equivalent to that which would be determined if each such assumption and method were reasonable, or " "(ii) a multiemployer plan, which, in the aggregate, are reasonable (taking into account the experiences of the plan and reasonable expectations), and "(B) which, in combination, offer the actuary's best estimate of anticipated experience under the plan.' (c) LIMITATION ON DEDUCTION FOR CONTRIBUTIONS TO CERTAIN PLANS NOT LESS THAN UNFUNDED CURRENT LIABILITY.—Paragraph

(1) of section 404(a) of the 1986 Code is amended by redesignating 26 USC 404. subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph: "(D) SPECIAL RULE IN CASE OF CERTAIN PLANS.—In the case of any defined benefit plan (other than a multiemployer ^^'^ plan) which has more than 100 participants for the plan year, except as provided in regulations, the maximum [ amount deductible under the limitations of this paragraph shall not be less than the unfunded current liability determined under section 412(1) (without regard to any reduction by the credit balance in the funding standard account). For purposes of this subparagraph, all defined benefit plans maintained by the same employer (or any member of such ,f. employer's controlled group (within the meaning of section ' 412(l)(8)(c))) shall be treated as 1 plan, but only employees of such member or employer shall be taken into account." (d) LIMITATION ON AMORTIZATION OF PAST SERVICE CREDITS.—

Clause (iii) of section 404(a)(l)(A) of the 1986 Code (relating to pension trusts) is amended by striking out "to amortize such credits" and inserting in lieu thereof "to amortize the unfunded costs attributable to such credits". (e) LIMITATION ON INTEREST RATE.— (1) AMENDMENT TO 1986 CODE.—Paragraph (5) of section 4120t>)

of the 1986 Code (relating to interest) is amended to read as follows: "(5) INTEREST.—

.Si' •:

"(A) IN GENERAL.—The funding standard account (and Regulations. items therein) shall be charged or credited (as determined under regulations prescribed by the Secretary) with interest at the appropriate rate consistent with the rate or rates of interest used under the plan to determine costs. "(B) REQUIRED CHANGE OF INTEREST RATE.—For purposes

'in ^

of determining a plan's current liability and for purposes of determining a plan's required contribution under section 412(1) for any plan year—

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 101 STAT. 1330-358

o

,

icn

Regulations.

PUBLIC LAW 100-203—DEC. 22, 1987 "(i) IN GENERAL.—If any rate of interest used under the plan to determine cost is not within the permissible range, the plan shall establish a new rate of interest within the permissible range. "(ii) PERMISSIBLE RANGE.—For purposes of this subparagraph— "(I) IN GENERAL.—Except as provided in subclause (II), the term 'permissible range' means a rate of interest which is not more than 10 percent above, and not more than 10 percent below, the weighted average of the rates of interest on 30year Treasury securities during the 4-year period ending on the last day before the beginning of the plan year. "(II) SECRETARIAL AUTHORITY.—If the Secretary

finds that the lowest rate of interest permissible under subclause (I) is unreasonably high, the Secj;. ^... retary may prescribe a lower rate of interest, except that such rate may not be less than 80 percent of the average rate determined under subclause (I). "(iii) ASSUMPTIONS.—Notwithstanding subsection (c)(3)(A)(i), for purposes of this section and for purposes of determining current liability, the interest rate used, under the plan shall be— 1/ "(I) determined without taking into account the experience of the plan and reasonable expectations, but "(II) consistent with the assumptions which reflect the purchase rates which would be used by insurance companies to satisfy the liabilities under the plan.". (2) AMENDMENT TO ERISA.—Paragraph (5) of section 3O20t>) of ERISA (relating to interest) (29 U.S.C. 1082(b)(5)) is amended to read as follows: "(5) INTEREST.—For purposes of determining a plan's current liability and for purposes of determining a plan's required contribution under section 412(1) for any plan year— "(A) IN GENERAL.—The funding standard account (and items therein) shall be charged or credited (as determined under regulations prescribed by the Secretary of the Treasury) with interest at the appropriate rate consistent with the rate or rates of interest used under the plan to determine costs. "(B) R E Q U I R E D CHANGE OF INTEREST RATE.—

.1

"(i) IN GENERAL.—If any rate of interest used under the plan to determine cost is not within the permissible range, the plan shall establish a new rate of interest within the permissible range. "(ii) PERMISSIBLE RANGE.—For purposes of this subparagraph— "(I) IN GENERAL.—Except as provided in subclause (II), the term 'permissible range' means a rate of interest which is not more than 10 percent above, and not more than 10 percent below, the average rate of interest on 30-year Treasury securities during the 4-year period ending on the last day before the beginning of the plan year.

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101 STAT. 1330-359

"(II) SECRETARIAL AUTHORITY.—If the Secretary finds that the lowest rate of interest permissible under subclause (I) is unreasonably high, the Secretary may prescribe a lower rate of interest, except that such rate may not be less than 80 percent of the average rate determined under subclause (I). "(iii) ASSUMPTIONS.—Notwithstanding subsection (c)(3)(A)(i), for purposes of this section and for purposes of determining current liability, the interest rate used under the plan shall be— "(I) determined without taking into account the experience of the plan and reasonable expectations, but "(11) consistent with the assumptions which reflect the purchase rates which would be used by insurance companies to satisfy the liabilities under the plan.".'** (f) EFFECTIVE DATE.—The amendments made by this section shall apply to years beginning after December 31, 1987.

26 USC 404 note,

Subpart B—Plan Terminations SEC. 9311. LIMITATIONS ON TERMINATION.

EMPLOYER

REVERSIONS

UPON

PLAN

(a) RESTRICTIONS ON REVERSIONS PURSUANT TO RECENTLY AMENDED PLANS.—

(1) IN GENERAL.—Section 4044(d) of ERISA (29 U.S.C. 1344(d)) is amended— (A) by redesignating paragraph (2) as paragraph (3); and (B) by inserting after paragraph (1) the following new paragraph: "(2)(A) In determining the extent to which a plan provides for the distribution of plan assets to the employer for purposes of paragraph (1)(C), any such provision, and any amendment increasing the amount which may be distributed to the employer, shall not be treated as effective before the end of the fifth calendar year following the date of the adoption of such provision or amendment. "(B) A distribution to the employer from a plan shall not be treated as failing to satisfy the requirements of this paragraph if the plan has been in effect for fewer than 5 years and the plan has provided for such a distribution since the effective date of the plan. "(C) Except as otherwise provided in regulations of the Secretary Regulations. of the Treasury, in any case in which a transaction described in section 208 occurs, subparagraph (A) shall continue to apply separately with respect to the amount of any assets transferred in such transaction. "(D) For purposes of this subsection, the term 'employer' includes any member of the controlled group of which the employer is a member. For purposes of the preceding sentence, the term 'controlled group' means any group treated as a single employer under subsection (b), (c), (m) or (o) of section 414 of the Internal Revenue Code of 1986." (2) TRANSITIONAL RULE.—The amendments made by para- 29 USC 1344 graph (1) shall apply, in the case of plans which, as of note. December 17, 1987, have no provision relating to the distribution of plan assets to the employer for purposes of section 4044(d)(l)(C) of the Employee Retirement Income Security Act of 1974, only with respect to plan amendments providing for the "•Copy read "plan."

91-194 O - 90 - 37: QL.3 Part 2

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PUBLIC LAW 100-203—DEC. 22, 1987

distribution of plan assets to the employer which are adopted after 1 year after the effective date of such amendments made by paragraph (1). Such amendment shall not apply to any provision of the plan adopted on or before December 17, 1987, which provides for the distribution of plan assets to the employer. (b) DISTRIBUTION OF ASSETS ATTRIBUTABLE TO EMPLOYEE CONTRIBU-

TIONS.—Section 4044(d) of ERISA (29 U.S.C. 1344(d)) is amended— (1) in paragraph (1), by striking "Any" and inserting "Subject to paragraph (3), any"; and (2) by striking paragraph (3) (as redesignated by subsection (c)(1)) and inserting the following new paragraph: "(3)(A) Before any distribution from a plan pursuant to paragraph (1), if any assets of the plan attributable to employee contributions 0;fcii f;i 0'; 5 remain after satisfaction of all liabilities described in subsection (a), such remaining assets shall be equitably distributed to the participants who made such contributions or their beneficiaries (including alternate payees, within the meaning of section 206(d)(3)(K)). "(B) For purposes of subparagraph (A), the portion of the remaining assets which are attributable to employee contributions shall be an amount equal to the product derived by multiplying— "(i) the market value of the total remaining assets, by "(ii) a fraction— «lijV^ "(I) the numerator of which is the present value of all portions of the accrued benefits with respect to participants which are derived from participants' mandatory contribu,^. "j tions (referred to in subsection (a)(2)), and "(II) the denominator of which is the present value of all ^,:; benefits with respect to which assets are allocated under paragraphs (2) through (6) of subsection (a). "(C) For purposes of this paragraph, each person who is, as of the termination date— "(i) a participant under the plan, or "(ii) an individual who has received, during the 3-year period ending with the termination date, a distribution from the plan of such individual's entire nonforfeitable benefit in the form of a single sum distribution in accordance with section 203(e) or in the form of irrevocable commitments purchased by the plan oiJElyati^; from an insurer to provide such nonforfeitable benefit, shall be treated as a participant with respect to the termination, if all or part of the nonforfeitable benefit with respect to such person is or was attributable to participants' mandatory contributions (referred to in subsection (a)(2))." (c) TECHNICAL AMENDMENT.—Section 404405X4) of ERISA (29 U.S.C. 1344(b)(4)) is amended by striking "section 401(a), 403(a), or 405(a)" and inserting "section 401(a) or 403(a)". 29 USC 1344 (d) EFFECTIVE DATE.—The amendments made by this section shall note. apply with respect to— (1) plan terminations under section 4041(c) of ERISA with under section 4041(a)(2) of ERISA after December 17, 1987, and (2) plan terminations with respect to which proceedings are instituted by the Pension Benefit Guaranty Corporation under section 4042 of ERISA after December 17, 1987.
 * 5 g; 7 |>Crespect to which notices of intent to terminate are provided

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101 STAT. 1330-361

SEC. 9312. ELIMINATION OF SECTION 4049 TRUST: INCREASE IN LIABILITY TO PENSION BENEFIT GUARANTY CORPORATION AND IN PAYMENTS BY CORPORATION TO PARTICIPANTS AND BENEFICIARIES.
 * c

(a) REPEAL.—Section 4049 of ERISA (29 U.S.C. 1349) is repealed. (b) CONFORMING AMENDMENTS.— (1) ELIMINATION OF EMPLOYER LIABILITY TO SECTION
 * TRUST.—

4049

(A) REPEAL.—Subsection (c) of section 4062 of ERISA (29 U.S.C. 1362(c)) is repealed. (B) CONFORMING AMENDMENTS.—Section 4062 of ERISA is further amended by redesignating subsections (d), (e), and (f) as subsections (c), (d), and (e), respectively.

f '•*• " *

(2) INCREASE IN EMPLOYER LIABILITY TO THE CORPORATION.—

-j^*

(A) IN GENERAL.—Subparagraph (A) of section 4062(b)(1) of ERISA (29 U.S.C. 1362(b)(l)(A)) is amended to read as w»i; •' follows: "(A) IN GENERAL.—Exccpt as provided in subparagraph Regulations. '' (B), the liability to the corporation of a person described in subsection (a) shall be the total amount of the unfunded benefit liabilities (as of the termination date) to all participants and beneficiaries under the plan, together with interest (at a reasonable rate) calculated from the termination date in accordance with regulations prescribed by the corporation." JUMC »

"^^ '^ ^^ m'm^ ^ ' «' fl;

^*

(B) L I E N LIMITED TO 30 PERCENT OF NET WORTH.—

(i) Subsection (a) of section 4068 of ERISA (29 U.S.C. 1368(a)) is amended by striking out "to the extent of an amount equal to the unpaid amount described in section 4062(b)(l)(A)(i)" each place it appears and inserting in lieu thereof "to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)". (ii) Title IV of ERISA (29 U.S.C. 4001 et seq.) is amended by transferring subsection (e) of section 4062 of ERISA (29 U.S.C. 1362(e)) to the end of section 4068 of ERISA (29 U.S.C. 1368) and by redesignating such subsection as subsection (f). (C) TREATMENT OF MULTIPLE CONTROLLED GROUPS.—

(i) IN GENERAL.—So much of section 4064(b) of ERISA (29 U.S.C. 13640t))) as precedes the second sentence is "" ""' amended to read as follows: "(b) The corporation shall determine the liability with respect to each contributing sponsor and each member of its controlled group in a manner consistent with section 4062, except that the amount of liability determined under section 4062(bKl) with respect to the entire plan shall be allocated to each controlled group by multiplying such amount by a fraction— "(1) the numerator of which is the amount required to be contributed to the plan for the last 5 plan years ending prior to the termination date by persons in such controlled group as "'' contributing sponsors, and "(2) the denominator of which is the total amount required to ^ be contributed to the plan for such last 5 plan years by all persons as contributing sponsors,

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 101 STAT. 1330-362

PUBLIC LAW 100-203—DEC. 22, 1987

and clauses (i)(II) and (ii) of section 4062(b)(l)(A) shall be applied separately with respect to each controlled group." (ii) CONFORMING AMENDMENTS.—Section 4068(a) of

,,^,.

.,^..j,. ^ >, • •

^

_^

ERISA (29 U.S.C. 1368(a)) is amended by adding at the end thereof the following new sentence: "The preceding pj.QyjgjQjjg Qf ^jjjg subsection shall be applied in a manner consistent with the provisions of section 4064(d) relating to treatment of multiple controlled groups."

(3) PAYMENT BY CORPORATION TO PARTICIPANTS AND BENEFICIARIES OF RECOVERY PERCENTAGE OF OUTSTANDING AMOUNT OF BENKFIT LIABILITIES '

(A) IN GENERAL.—Section 4022 of ERISA (29 U.S.C. 1322) is amended— (i) by redesignating subsections (c) and (d) as subsections (d) and (e); and (ii) by inserting after subsection 0)) the following new subsection: "(c)(1) In addition to benefits paid under the preceding provisions of this section with respect to a terminated plan, the corporation shall pay the portion of the amount determined under paragraph (2) which is allocated with respect to each participant under section 4044(a), to such participant or (in the case of a deceased participant) to such participant's beneficiaries (including alternate payees, within the meaning of section 206(d)(3)(K)). "(2) The amount determined under this paragraph is an amount equal to the product derived by multiplying— "(A) the outstanding amount of benefit liabilities under the plan (including interest calculated from the termination date), by "(B) the applicable recovery ratio. "(3)(A) Except as provided in subparagraph (C), for purposes of this subsection, the term 'recovery ratio' means the average ratio, with respect to prior plan terminations described in subparagraph (B),of"(i) the value of the recovery of the corporation under section 4062, 4063, or 4064 in connection with such prior terminations, to "(ii) the amount of unfunded benefit liabilities under such plans as of the termination date in connection with such prior terminations. "(B) A plan termination described in this subparagraph is a termination with respect to which— "(i) the corporation has determined the value of recoveries under section 4062, 4063, or 4064, and "(ii) notices of intent to terminate were provided after December 17, 1987. "(C) In the case of a terminated plan with respect to which the outstanding amount of benefit liabilities exceeds $20,000,000, for purposes of this section, the term 'recovery ratio' means, with respect to the termination of such plan, the ratio of— "(i) the value of the recoveries of the corporation under y section 4062, 4063, or 4064 in connection with such plan, to I "(ii) the amount of unfunded benefit liabilities under such plan as of the termination date. ^, v...,,,

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101 STAT. 1330-363

"(4) Determinations under this subsection shall be made by the corporation. Such determinations shall be binding unless shown by clear and convincing evidence to be unreasonable.' (B) TRANSITIONAL RULE.—

^;»ftfi ^u:'*'••

29 USC 1322

(i) IN GENERAL.—In the case of any plan termination "ote. to which the amendments made by this section apply and with respect to which notices of intent to terminate were provided on or before December 17, 1990— (I) subparagraph (A) of section 4022(c)(1) of ERISA (as amended by this paragraph) shall not apply, and (II) subparagraph (B) of section 4022(c)(1) of ERISA (as so amended) shall apply irrespective of the outstanding amount of benefit liabilities under the plan, (ii) LIMITATION.—Clause (i) shall not apply in the case of any plan termination referred to in clause (i) with respect to which the recovery ratio is not finally determined under section 4022(c)(1)(B) of ERISA (as so amended) as of December 17, 1990.

(4) BENEFIT LIABIUTIES.—Paragraph (16) of section 4001(a) of

ERISA (29 U.S.C. 1301(a)(16)) is amended to read as follows: "(16) 'benefit liabilities' means the benefits of employees and their beneficiaries under the plan (within the meaning of section 401(a)(2) of the Internal Revenue Code of 1986);". (5) OUTSTANDING AMOUNT OF BENEFIT LIABILITIES.—Paragraph

(19) of section 4001(a) of ERISA (29 U.S.C. 1301(a)(19)) is amended to read as follows: "(19) 'outstanding amount of benefit liabilities' means, with respect to any plan, the excess (if any) of— "(A) the value of the benefit liabilities under the plan (determined as of the termination date on the basis of assumptions prescribed by the corporation for purposes of section 4044), over "(B) the value of the benefit liabilities which would be so determined by only taking into account benefits which are guaranteed under section 4022 or to which assets of the plan are allocated under section 4044;". (c) ADDITIONAL CONFORMING AMENDMENTS.—

(1) Section 4041(c)(3)(B)(ii) of ERISA (29 U.S.C. 1341(c)(3)(B)(ii)) is amended— (A) by striking subclause (II); (B) by striking "plan, and" at the end of subclause (I) and inserting "plan.'; and ^ (C) by striking "available to it—" and all that follows « • through "the plan administrator" and inserting "available to it, the plan administrator". (2) Section 4041(c)(3)(B)(iii) of ERISA (29 U.S.C. 1341(c)(3)(B)(iii)) is amended— (A) by striking subclause (II); (B) by striking "section 4042, and" at the end of subclause (I) and inserting "section 4042."; and (C) by striking "available to it—" and all that follows through "the corporation" in subclause (I) and inserting "available to it, the corporation". (3) Subsection (i) of section 4042 of ERISA (29 U.S.C. 1342(i)) is repealed.

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PUBLIC LAW 100-203—DEC. 22, 1987

.^^: (4) Section 4005(g) of ERISA (29 U.S.C. 1305(g)) is amended by t?f striking out "or fiduciaries with respect to trusts to which the requirements of section 4049 apply", (d) EFFECTIVE DATE.—

29 USC 1301 "o**-

,.

(1) IN GENERAL.—The amendments made by this section shall apply with respect to— ->j,. (A) plan terminations under section 4041(c) of ERISA with respect to which notices of intent to terminate are ). ' provided under section 4041(a)(2) of ERISA after (B) plan terminations with respect to which proceedings v^ are instituted by the Pension Benefit Guaranty Corporation under section 4042 of ERISA after December 17, 1987.
 * ... December 17, 1987, and

Regulations.

^

29 USC 1349.

TERMINATIONS.—Section 4049(a) of ERISA (as effective under ^; paragraph (1)), is amended by adding at the end thereof the ^ following new sentence: "Reasonable administrative expenses .., incurred in carrying out the responsibilities under this section ->,, prior to the receipt of any liability payments under section 4062(c) shall be paid by the persons described in section 4062(a) li in accordance with procedures which shall be prescribed by the . corporation by regulation, and the amount of the liability deterf mined under section 4062(c) shall be reduced by the amount of, such expenses so paid."

(2) SECTION 4049

ADMINISTRATIVE EXPENSES UNDER PRIOR

SEC. 9313. STANDARDS FOR TERMINATION.

'

'

-* ~ ' ' ^'

(a) STANDARD TERMINATION PROCEDURES AVAILABLE ONLY WHEN ASSETS SUFFICIENT TO MEET BENEFIT LIABILITIES.—

(1) IN GENERAL.—Subparagraph (D) of section 4041(b)(1) of ERISA (29 U.S.C. 1341(b)(1)(D)) is amended to read as follows: "(D) when the final distribution of assets occurs, the plan % is sufficient for benefit liabilities (determined as of the . termination date)." (2) TECHNICAL AMENDMENTS.—

(A) Paragraphs (2)(A), (2)(C), (2)(D), and (3) of section ij, 4041(b) of ERISA (29 U.S.C. 1341(b)(2)(A), (2)(C), (2)(D), (3)) ,^j are each amended by striking out "benefit commitments" each place it appears and inserting in lieu thereof "benefit liabilities". ,,Vi. (B) Subparagraph (B) of section 4041(b)(2) of ERISA (29 • ' U.S.C. 134ia))(2)(B)) is amended— (i) by striking out "the amount of such person's . f. benefit commitments (if any)" and inserting in lieu thereof "the amount of the benefit liabilities (if any) ,^, ^ - attributable to such person"; and f ' (ii) by striking out "such benefit commitments" and inserting in lieu thereof "such benefit liabilities". -^ (C)(i) Subparagraph (A) of section 4041(b)(3) of ERISA (29 U.S.C. 1341(b)(3)(A)) is amended by striking out clauses (i) and (ii) and inserting in lieu thereof the following: vo^' "(i) purchase irrevocable commitments from an insurer to provide all benefit liabilities under the plan, or "(ii) in accordance with the provisions of the plan and any applicable regulations, otherwise fully provide all benefit liabilities under the plan." ,j-.;iv (ii) Subparagraph (B) of section 4041(b)(3) of ERISA (29 U.S.C. 1341(b)(3)) is amended by striking out "so as to pay"

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101 STAT. 1330-365

and all that follows and inserting in lieu thereof "so as to pay all benefit liabilities under the plan". (D) Paragraphs (2) and (3) of section 4041(c) of ERISA (29 U.S.C. 1341(c)(2), (3)) are each amended by striking out "benefit commitments" each place it appears (including in any heading) and inserting in lieu thereof "benefit liabilities". (E) Paragraph (1) of section 4041(d) of ERISA (29 U.S.C. 1341(d)) is amended— • (i) by striking out "no amount of unfunded benefit ,; commitments" and inserting in lieu thereof "no amount of unfunded benefit liabilities", and r,

•,

(ii) by striking out "BENEFIT COMMITMENTS" in

paragraph heading and inserting in lieu thereof

the

"BENE-

FIT u ABILITIES".

(F) Paragraph (18) of section 4001(a) of ERISA (29 U.S.C. 1301(a)(18)) is amended to read as follows: "(18) 'amount of unfunded benefit liabilities' means, as of any date, the excess (if any) of^ "(A) the value of the benefit liabilities under the plan (determined as of such date on the basis of assumptions prescribed by the corporation for purposes of section 4044), over "(B) the current value (as of such date) of the assets of the plan;". (b) CRITERIA FOR DISTRESS TERMINATION.— (1) APPLICABILITY TO ALL MEMBERS OF CONTROLLED GROUP.—

Section 4041(c)(2) of ERISA (29 U.S.C. 1341(c)(2)) is amended— (A) in subparagraph (B), by striking "a substantial tJ member" in the matter preceding clause (i) and inserting "a member"; and (B) by striking subparagraph (C) and by redesignating subparagraph (D) as subparagraph (C). (2) REQUIREMENT OF ADDITIONAL FINDINGS TO QUALIFY FOR DISTRESS TERMINATION BASED ON REORGANIZATION I N BANK-

RUPTCY.—Section

4041(c)(2)(B)(iiXIII)

of

ERISA

(29

U.S.C.

1341(c)(2)(B)(iiXIII)) is amended by striking "approves the termination" and inserting "determines that, unless the plan is terminated, such person will be unable to pay all its debts pursuant to a plan of reorganization and will be unable to continue in business outside the chapter 11 reorganization process and approves the termination". (3) CLARIFICATION OF DATE AS OF WHICH EMPLOYER MUST BE IN A BANKRUPTCY PROCEEDING TO QUALIFY FOR DISTRESS TERMI-

NATION.—ClaUSeS (i) and (ii) of section 4041(c)(2)(B) of ERISA (29 U.S.C. 1341(c)(2)(B)(i) and (ii)) are each amended by inserting "proposed" before "termination date". (4) TREATMENT UNDER DISTRESS TESTS OF CASES CONVERTED TO

UQuiDATiON.—Section 4041(c)(2)(B)(i)(I) of ERISA (29 U.S.C. 1341(c)(2)(B)(i)(I)) is amended by inserting before the comma at the end the following: "(or a case described in clause (ii) filed by or against such person has been converted, as of such date, to a case in which liquidation is sought)". (5) NOTICE TO CORPORATION UNDER REORGANIZATION

TEST.—Section 4041(c)(2)(B)(ii) of ERISA (29 1341(c)(2)(B)(ii)) is amended— (A) in subclause (II), by striking "and" at the end;

DISTRESS

U.S.C

j,

.

t t^,:

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 101 STAT. 1330-366

PUBLIC LAW 100-203—DEC. 22, 1987

(B) by redesignating subclause (III) as subclause (IV); (C) by inserting after subclause (II) the following new " subclause: "(III) such person timely submits to the corpora* tion any request for the approval of the bankr 'f ruptcy court (or other appropriate court in a case under such similar law of a State or political sul>division) of the plan termination, and"; and (D) in subclause (IV) (as redesignated), by striking "(or < • other" and all that follows through "subdivision) and >" inserting "(or such other appropriate court)". (6) ARRANGEMENTS FOR PAYMENT OF LIABILITY BY CONTROLLED

GROUPS.—Section 4067 of ERISA (29 U.S.C. 1367) is amended by striking "controlled groups who are" and inserting "controlled groups who are or may become". 29 USC 1301 (c) EFFECTIVE DATE.—The amendments made by this section shall note. apply with respect to plan terminations under section 4041 of ERISA with respect to which notices of intent to terminate are provided under section 4041(a)(2) of ERISA after December 17, 1987. SEC. 9314. ADDITIONAL AMENDMENTS RELATING TO PLAN TERMINATION. (a) CERTAIN INFORMATION NOT REQUIRED FROM CERTAIN INSURANCE CONTRACT PLANS.— (1) STANDARD TERMINATION.—Section 4041(b)(2)(A) of ERISA

(29 U.S.C. 1341(b)(2)(A)) is amended— (A) by striking clause (iii) and inserting the following: "(iii) certification by the plan administrator that— a "(I) the information on which the enrolled actuary based the certification under clause (i) is accurate and complete, and jii'^ "(II) the information provided to the corporation under clause (ii) is accurate and complete."; and (B) by adding at the end thereof the following: "Clause (i) and clause (iii)(I) shall not apply to a plan described in section 412(i) of the Internal Revenue Code of 1986.". (2) DISTRESS TERMINATION.—Section 4041(c)(2)(A) of ERISA (29 U.S.C. 1341(c)(2)(A)) is amended— (A) by striking clause (iv) and inserting the following: "(iv) certification by the plan administrator that— "(I) the information on which the enrolled actuary based the certifications under clause (ii) is t: accurate and complete, and "(II) the information provided to the corporation under clauses (i) and (iii) is accurate and comvtf plete."; and (B) by adding at the end the following: "Clause (ii) and clause (iv)(I) shall not apply to a plan described in section 412(i) of the Internal Revenue Code of 1986.". (b) CLARIFICATION OF EXISTING AUTHORITY TO POOL ASSETS OF TERMINATED PLANS.—Section 4042 of ERISA (29 U.S.C. 1342(a)) is amended

by striking the third sentence and inserting the following: "Notwithstanding any other provision of this title, the corporation is authorized to pool assets of terminated plans for purposes of administration, investment, payment of liabilities of all such terminated plans, and such other purposes as it determines to be appropriate in the administration of this title.".

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101 STAT. 1330-367

(b) SUBMISSION OF PLAN DATA IN INVOLUNTARY TERMINATION.—

Section 4042(c) of ERISA (29 U.S.C. 1342(c)) is amended by adding at the end the following new paragraph: "(3) In the case of a proceeding initiated under this section, the plan administrator shall provide the corporation, upon the request of the corporation, the information described in clauses (ii), (iii), and (iv) of section 4041(c)(2)(A).". (c) CIVIL PENALTIES FOR FAILURE TO TIMELY PROVIDE REQUIRED INFORMATION RELATING TO SINGLE-EMPLOYER PLANS.—

(1) IN GENERAL.—Subtitle D of ERISA (29 U.S.C. 1361 et seq.) is amended by adding at the end the following new section: "PENALTY FOR FAILURE TO TIMELY PROVIDE REQUIRED INFORMATION

"SEC. 4071. The corporation may assess a penalty, payable to the 29 USC 1371. corporation, against any person who fails to provide any notice or other material information required under this subtitle or subtitle A, B, or C, or any regulations prescribed under any such subtitle, within the applicable time limit specified therein. Such penalty shall not exceed $1,000 for each day for which such failure continues.". (2) CLERICAL AMENDMENTS.—The table of contents in section 1 of ERISA (29 U.S.C. 1001 note) is amended by adding after the item relating to section 4070 the following new item: "Sec. 4071. Penalty for failure to timely provide required information.".

Subpart C—Increase in Premium Rates SEC. 9331. INCREASE IN PREMIUM RATES.

(a) GENERAL RULE.—Clause (i) of section 4006(a)(3)(A) of ERISA (29 U.S.C. 1306(a)(3)(A)) is amended by striking out "for plan years beginning after December 31, 1985, an amount equal to $8.50" and inserting in lieu thereof "for plan years beginning after December 31, 1987, an amount equal to the sum of $16 plus the additional premium (if any) determined under subparagraph (E)". (b) DETERMINATION OF ADDITIONAL PREMIUM.—Paragraph (3) of

section 4006(a) of ERISA (29 U.S.C. 1306(a)(3)) is amended by adding at the end thereof the following new subparagraph: "(E)(i) The additional premium determined under this subparagraph with respect to any plan for any plan year shall be an amount equal to the amount determined under clause (ii) divided by the number of participants in such plan as of the close of the preceding plan year. "(ii) The amount determined under this clause for any plan year shall be an amount equal to $6.00 for each $1,000 (or fraction thereof) of unfunded vested benefits under the plan as of the close of the preceding plan year. "(iii) For purposes of clause (ii)— "(I) Except as provided in subclause (II), the term 'unfunded vested benefits' means the amount which would be the unfunded current liability (within the meaning of section 302(d)(8)(A)) if only vested benefits were taken into account. "(II) The interest rate used in valuing vested benefits for purposes of subclause (I) shall be equal to 80 percent of the annual yield on 30-year Treasury securities for the month preceding the month in which the plan year begins.

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"(iv)(I) Except as provided in this clause, the aggregate increase in the premium payable with respect to any participant by reason of this subparagraph shall not exceed $34. "(II) If an employer made contributions to a plan during 1 or more of the 5 plan years preceding the 1st plan year to which this subparagraph applies in an amount not less than the maximum amount allowable as a deduction with respect to such contributions under section 404 of such Code, the dollar amount in effect under subclause (I) for the 1st 5 plan years to which this subparagraph applies shall be reduced by $3 for each plan year for which such contributions were made in such amount. (c) LIABILITY FOR PREMIUM.—

cv,!

(1) IN GENERAL.—Section 4007 of ERISA (29 U.S.C. 1307) is amended by striking out "plan administrator" each place it J •*; > appears and inserting in lieu thereof "designated payor". '^\ (2) DESIGNATED PAYOR.—Section 4007 of ERISA (29 U.S.C. ^ 1307) is amended by adding at the end thereof the following new subsection: "(e)(1) For purposes of this section, the term 'designated payor' means— "(A) the contributing sponsor or plan administrator in the '• case of a single-employer plan, and '> "(B) the plan administrator in the case of a multiemployer plan. "(2) If the contributing sponsor of any single-employer plan is a member of a controlled group, each member of such group shall be jointly and severally liable for any premiums required to be paid by such contributing sponsor. For purposes of the preceding sentence, the term 'controlled group' means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986." (d) DEPOSIT OF PREMIUMS INTO SEPARATE REVOLVING FUND.—

Section 4005 of ERISA (relating to establishment of Pension Benefit Guaranty funds) (29 U.S.C. 1305) is amended by redesignating subsections (f) and (g) as subsections (g) and (h) and by inserting after subsection (e) the following new subsection: ''(f)(1) A seventh fund shall be established and credited with— "(A) premiums, penalties, and interest charges collected under section 4006(a)(3)(A)(i) (not described in subparagraph (B)) ' to the extent attributable to the amount of the premium in excess of $8.50, » "(B) premiums, penalties, and interest charges collected under section 4006(a)(3)(E), and "(C) earnings on investments of the fund or on assets credited to the fund. "(2) Amounts in the fund shall be available for transfer to other funds established under this section with respect to a singleemployer plan but shall not be available to pay— > "(A) administrative costs of the corporation, or & "(B) benefits under any plan which was terminated before October 1, 1988, unless no other amounts are available for such payment. "(3) The corporation may invest amounts of the fund in such obligations as the corporation considers appropriate." (e) CONFORMING AMENDMENTS.—Section 4006(c)(l)(A) of ERISA (29 U.S.C. 1306(c)(l)(A)) is amended by striking out "and" at the end of clause (i), by inserting "and before January 1, 1986," after "after

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December 31, 1977,", and by adding at the end thereof the following new clause: "(iii) with respect to each plan year beginning after December 31, 1985, and before January 1, 1988, an amount equal to $8.50 for each individual who was a participant in such plan during the plan year, and". (f) EFFECTIVE DATE.—

(1) IN GENERAL.—The amendments made by this section shall K.^t apply to plan years beginning after December 31, 1987. (2) SEPARATE ACCOUNTING.—The amendments made by subsection (d) shall apply to fiscal years beginning after September 30, 1988.

Subpart D—Miscellaneous Provisions

29 USC 1305

^°^-

a M iw ^ sM

SEC. 9341. SECURITY REQUIRED UPON ADOPTION OF PLAN AMENDMENT RESULTING IN SIGNIFICANT UNDERFUNDING. (a) AMENDMENTS TO 1986 CODE,—^® Subsection (a) of section 401 of the 1986 Code (relating to requirements for qualification) is 26 USC 401. amended by inserting after paragraph (28) the following new paragraph: 100 "(29) SECURITY REQUIRED UPON ADOPTION OF PLAN AMENDMENT RESULTING IN SIGNIFICANT UNDERFUNDING.— "(A) IN GENERAL.—If—

"(i) a defined benefit plan (other than a multiemployer plan) adopts an amendment an effect of which is ,^ to increase current liability under the plan for a plan -.i'.GLiW-'-' year, and "(ii) the funded current liability percentage of the "'' plan for the plan year in which the amendment takes effect is less than 60 percent, including the amount of the unfunded current liability under the plan attrib, ^•„ „ utable to the plan amendment, V the trust of which such plan is a part shall not constitute a qualified trust under this subsection unless such amendment does not take effect until the contributing sponsor (or any member of the controlled group of the contributing sponsor) provides security to the plan. "(B) FORM OF SECURITY.—The security required under

.^,

subparagraph (A) shall consist of— "(i) a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412 of the Employee Retirement Income Security Act of 1974, ,.^ gj * "(ii) cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar ... financial institution, or - gt,.:, "(iii) such other form of security as is satisfactory to the Secretary and the parties involved. ^^ "(C) AMOUNT OF SECURITY.—The security shall be in an amount equal to the excess of— h. J. •.,.- "(i) the lesser of— "(I) the amount of additional plan assets which would be necessary to increase the funded current •• Copy read "CODE—". »oo Copy read "paragraph:—".

.,,,,.

 * M[I-^1;

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cQ'

Regulations.

29 USC 1086.

PUBLIC LAW 100-203—DEC. 22, 1987

liability percentage under the plan to 60 percent, including the amount of the unfunded current li' ability under the plan attributable to the plan amendment, or "(II) the amount of the increase in current liability under the plan attributable to the plan amendment, over i-' •" "(ii) $10,000,000. -'^ " 1 "(D) RELEASE OF SECURITY.—Thesecurity shall be released (and any amounts thereunder shall be refunded together ' •; with any interest accrued thereon) at the end of the first plan year which ends after the provision of the security and for which the funded current liability percentage under the plan is not less than 60 percent. The Secretary may prescribe regulations for partial releases of the security by ^''; reason of increases in the funded current liability percentage. n "(E) DEFINITIONS.—For purposes of this paragraph, the terms 'current liability', 'funded current liability percentage', and 'unfunded current liability' shall have the meanings given such terms by section 412(1), except that in computing unfunded current liability there shall not be taken into account any unamortized portion of the unfunded old liability amount as of the close of the plan year." (b) AMENDMENTS TO ERISA.—Part 3 of subtitle B of title I of ERISA (29 U.S.C. 1081 et seq.) is amended— (1) by redesignating section 307 as section 308; and (2) by inserting after section 306 the following new section: "SECURITY REQUIRED UPON ADOPTION OF PLAN AMENDMENT RESULTING IN SIGNIFICANT UNDERFUNDING

29 USC 1085b.

"SEC. 307. (a) IN GENERAL.—If—

"(1) a defined benefit plan (other than a multiemployer plan) adopts an amendment an effect of which is to increase current liability under the plan for a plan year, and "(2) the funded current liability percentage of the plan for the plan year in which the amendment takes effect is less than 60 percent, including the amount of the unfunded current liability under the plan attributable to the plan amendment, the contributing sponsor (or any member of the controlled group of the contributing sponsor) shall provide security to the plan. "(b) FORM OF SECURITY.—The security required under subsection

(a) shall consist of— "(1) a bond issued by a corporate surety company that is an acceptable surety for purposes of section 412, "(2) cash, or United States obligations which mature in 3 years or less, held in escrow by a bank or similar financial institution, or "(3) such other form of security as is satisfactory to the Secretary of the Treasury and the parties involved. "(c) AMOUNT OF SECURITY.—The security shall be in an amount equal to the excess of— "(1) the lesser of— "(A) the amount of additional plan assets which would be necessary to increase the funded current liability percentage under the plan to 60 percent, including the amount of

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/

the unfunded current liability under the plan attributable to the plan amendment, or "(B) the amount of the increase in current liability under the plan attributable to the plan amendment, over "(2) $10,000,000. "(d) RELEASE OF SECURITY.—The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at the end of the first plan year which ends after the provision of the security and for which the funded current liability percentage under the plan is not less than 60 percent. The Regulations. Secretary may prescribe regulations for partial releases of the security by reason of increases in the funded current liability percentage. "(e) DEFINITIONS.—For purposes of this section, the terms 'current liability', 'funded current liability percentage', and 'unfunded current liability' shall have the meanings given such terms by section 302(d), except that in computing unfunded current liability there shall not be taken into account any unamortized portion of the unfunded old liability amount as of the close of the plan year." (b) CLERICAL AMENDMENT.—The table of contents in section 1 of ERISA (29 U.S.C. 1001 note) is amended by striking out the item relating to section 307 and inserting in lieu thereof the following new items: "Sec. 307. Security required upon adoption of plan amendment resulting in significant underfunding. "Sec. 308. Effective dates." (c) EFFECTIVE DATE.—

(1) IN GENERAL.—Except sis provided in this subsection, the amendments made by this section shall apply to plan amendments adopted after the date of the enactment of this Act. (2) COLLECTIVE BARGAINING AGREEMENTS.—In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan amendments adopted pursuant to collective bargaining agreements ratified before the date of enactment. SEC. 9342. REPORTING REQUIREMENTS. (a) FUNDED PERCENTAGE REQUIRED TO B E SHOWN IN ANNUAL REPORT " ^

(i) Subsection (d) of section 103 of ERISA (29 U.S.C. 1023(d)) is amended by redesignating paragraphs (11) and (12) as paragraphs (12) and (13), respectively, and by inserting after paragraph (10) the following new paragraph: "(11) If the current value of the assets of the plan is less than 60 percent of the current liability under the plan (within the meaning of section 302(d)(7)), such percentage." (2) Paragraph (3) of section 1040t)) of ERISA (29 U.S.C. 1024(b)(3)) is amended by striking out "such other material" and inserting in lieu thereof "such other material (including the percentage determined under section 103(d)(ll))". (b) AMENDMENT OF STATUTE OF LIMITATIONS WITH RESPECT TO CERTAIN REPORTS.—Section 413(a)(2) of ERISA (29 U.S.C. 1113(a)(2))

is amended by striking "(A)" and by striking "or (B)" and all that follows through "title".

'

"

"'

26 USC 40i note.

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PUBLIC LAW 100-203—DEC. 22, 1987

(c) PENALTY FOR FAILURE TO PROVIDE ANNUAL REPORT IN COM-

PLETE FORM.—Section 502(c) of ERISA (29 U.S.C. 1132(c)) is amended— (1) by inserting "(1)" after "(c)", and by striking "(1) who" and "(2) who" and inserting "(A) who" and "(B) who", respectively; and (2) by adding at the end the following new paragraph: "(2) The Secretary may assess a civil penalty of up to $1,000 a day from the date of a plan administrator's failure or refusal to file the f6*Me^.r;as- annual report required to be filed with the Secretary under section 101(b)(4). For purposes of this paragraph, an annual report that has been rejected under section 104(a)(4) for failure to provide material information shall not be treated as having been filed with the Secretary.". 29 USC 1132 note. Reports.

(d) EFFECTIVE DATE.—

? f i "

(1) IN GENERAL.—The amendments made by this section shall apply with respect to reports required to be filed after December 31, 1987. (2) REGULATIONS.—The Secretary of Labor shall issue the regulations required to carry out the amendments made by subsection (c) not later than January 1, 1989.

SEC. 9343. COORDINATION OF PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986 WITH PROVISIONS OF THE EMPLOYEE RETIRE'fl^my MENT INCOME SECURITY ACT OF 1974."" 26 USC 401 note.

(a) INTERPRETATION OF INTERNAL REVENUE CODE.—Except to the

extent specifically provided in the Internal Revenue Code of 1986 or as determined by the Secretary of the Treasury, titles I and IV of the Employee Retirement Income Security Act of 1974 are not applicable in interpreting such Code. (b) CLARIFICATION REGARDING EFFECT OF DETERMINATION LETTER B THE INTERNAL REVENUE SERVICE ON ENFORCEMENT BY THE Y DEPARTMENT OF LABOR OF FIDUCIARY STANDARDS UNDER ^°^

ERISA.—Section 3001(d) of ERISA (29 U.S.C. 1201(d)) is amended by adding after the second sentence the following: "The determination of the Secretary of the Treasury shall not be prima facie evidence on issues relating solely to part 4 of subtitle B of title I.". (c) CLARIFICATION REGARDING RETURNS OF CONTRIBUTIONS UPON RECEIPT OF ADVERSE DETERMINATION LETTERS.—

(1) IN GENERAL.—Subparagraph (B) of section 403(c)(2) of ERISA (29 U.S.C. 1103(c)(2)(B)) is amended to read as follows: "(B) If a contribution is conditioned on initial qualification of the plan under section 401 or 403(a) of the Internal Revenue Code of 1986, and if the plan receives an adverse determination with respect to its initial qualification, then paragraph (1) shall not prohibit the return of such contribution to the employer within one year after such determination, but only if the application for the determination is made by the time prescribed by law for filing the employer's return for the taxable year in which such plan was adopted, or such later date as the Secretary of the Treasury may prescribe.". (2) CONFORMING AMENDMENT.—Paragraph (3) of section 403(c) of ERISA (29 U.S.C. 1103(c)(3)) is amended by striking out "49720^) of the Internal Revenue Code of 1954" and inserting in lieu thereof "4979(c) of the Internal Revenue Code of 1986" " " Copy read "1974". '"^ Copy read "UNDER".

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SEC. 9344. CLARIFICATION REGARDING THE IMPOSITION OF AN ANNUAL SANCTION FOR PROHIBITED TRANSACTIONS WHICH ARE CONTINUING IN NATURE.

Section 502(i) of ERISA (29 U.S.C. 1132(i)) is amended by striking the second sentence and inserting the following: "The amount of Regulations. such penalty may not exceed 5 percent of the amount involved in each such transaction (as defined in section 4975(f)(4) of the Internal Revenue Code of 1986) for each year or part thereof during which the prohibited transaction continues, except that, if the transaction is not corrected (in such manner as the Secretary shall prescribe ^°^ in regulations which shall be consistent with section 4975(f)(5) of such Code) within 90 days after notice from the Secretary (or such longer period as the Secretary may permit), such penalty may be in an amount not more than 100 percent of the amount involved.". SEC. 9345. ADDITIONAL LIMITATIONS ON INVESTMENT BY AN INDIVIDUAL ACCOUNT PLAN FORMING PART OF A FLOOR-OFFSET ARRANGEMENT AND ON INVESTMENT BY AN INDIVIDUAL ACCOUNT PLAN IN EMPLOYER STOCK. (a) TREATMENT OF INDIVIDUAL ACCOUNT PORTIONS OF FLOOROFFSET ARRANGEMENTS.—
 * in,<;

" !

(1) IN GENERAL.—Section 407(d)(3) of ERISA (29 U.S.C. 1107(d)(3)) is amended by adding at the end the following new subparagraph: "(C) The term 'eligible individual account plan' does not include any individual account plan the benefits of which are taken into account in determining the benefits payable to a participant under any defined benefit plan."

ai^nil* 2

(2) TREATMENT OF FLOOR-OFFSET ARRANGEMENT AS SINGLE

PLAN.—Section 407(d) of ERISA (29 U.S.C. 1107(d)) is amended by adding at the end the following new paragraph: "(9) For purposes of this section, an arrangement which consists of a defined benefit plan and an individual account plan shall be treated as 1 plan if the benefits of such arrangement are taken into ^^^ „, es account in determining the benefits payable under such defined benefit plan." (3) EFFECTIVE DATE.—The amendments made by this subsec- 29 USC 1107 tion shall apply with respect to arrangements established after "o*®December 17, 1987. Ob) RESTRICTIONS ON TREATMENT OF STOCK AS QUALIFYING EMPLOYER SECURITY.—Section 407 of ERISA (29 U.S.C. 1107) is

amended— (1) in subsection (d)(5), by adding at the end the following new sentence: "After December 17, 1987, in the case of a plan other than an eligible individual account plan, stock shall be considered a qualifying employer security only if such stock satisfies the requirements of subsection (f)(1)."; and (2) by adding at the end the following new subsection: "(f)(1) Stock satisfies the requirements of this subsection if— "(A) no more than 25 percent of the aggregate amount of stock of the same class issued and outstanding at the time of acquisition is held by the plan, and "(B) at least 50 percent of the aggregate amount referred to in subparagraph (A) is held by persons independent of the issuer. •03 Copy read "presribe".

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Contracts. Contracts.

PUBLIC LAW 100-203—DEC. 22, 1987

"(2) Until January 1, 1993, a plan shall not be treated as violating subsection (a) solely by holding stock which fails to satisfy the requirements of paragraph (1) if such stock— "(A) has been so held since December 17, 1987, or "(B) was acquired after December 17, 1987, pursuant to a legally binding contract in effect on December 17, 1987, and has been so held at all times after the acquisition. "(3) After December 17, 1987, no plan may acquire stock which does not satisfy the requirements of paragraph (1) unless the acquisition is made pursuant to a legally binding contract in effect on such date.". SEC. 9346. INTEREST RATE ON ACCUMULATED CONTRIBUTIONS.

26 USC 411.

29 USC 1054 note.

(a) AMENDMENTS TO ERISA.—Section 204(c)(2) of ERISA (29 U.S.C. 1054(c)(2)) is amended— (1) in subparagraph (C)(iii), by striking "5 percent per annum" and inserting "120 percent of the Federal mid-term rate (as in effect under section 1274 of the Internal Revenue Code of 1986 for the 1st month of a plan year)"; and >!;; (2) in subparagraph (D)— (A) in the first sentence, by striking ", the rate of interest described in clause (iii) of subparagraph (C), or both,"; and (B) by striking the second sentence. (b) AMENDMENTS TO 1986 CODE.—Section 411(c)(2) of the 1986 Code (relating to accrued benefit derived from employee contributions) is amended— (1) in subparagraph (C)(iii), by striking "5 percent per annum" and inserting "120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year)"; and (2) in subparagraph (D)— (A) in the first sentence, by striking ", the rate of interest described in clause (iii) of subparagraph (C), or both,"; and (B) by striking the second sentence. (c) EFFECTIVE D A T E. —

(1) IN GENERAL.—The amendments made by this section shall apply to plan years beginning after December 31, 1987. (2)

PLAN

AMENDMENTS NOT REQUIRED UNTIL J A N U A R Y

i,

1989.—If any amendment m a d e by t h i s section requires a n amendment to any plan, such plan amendment shall not be required to be m a d e before the first plan year beginning on or after January 1, 1989, if— (A) during the period after such amendments m a d e by this section t a k e effect and before such first plan year, the plan is operated in accordance with the requirements of ,, such amendments or in accordance w i than amendment prescribed by the Secretary of the Treasury and adopted by the plan, and rv (B) such plan amendment applies retroactively to the period after such amendments t a k e effect and such first plan year. A plan shall not be t r e a t e d as failing to provide definitely d e term i n a b l e benefits or contributions, or to be operated in accordance with the provisions of the plan, merely because it operates in accordance with this subsection.

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Subtitle E—Miscellaneous Provisions SEC. 9401. RESTORATION OF TRUST FUNDS FOR 1987. (a) IN GENERAL.— (1) OBLIGATIONS ISSUED.—Except

as provided in subsection (b), within 30 days after the expiration of any debt issuance suspension period to which this section applies, the Secretary of the Treasury shall issue to each Federal fund obligations under chapter 31 of title 31, United States Code, which bear such issue dates, interest rates, and maturity dates as are necessary to ensure that, after such obligations are issued, the holdings of such Federal fund will replicate to the maximum extent practicable the obligations that would have been held by such Federal fund if any— (A) failure to invest amounts in such Federal fund (or any disinvestment) resulting from the limitation of section 3101(b) of title 31, United States Code, had not occurred, and (B) issuance of such obligations had occurred immediately on the expiration of the debt issuance suspension period. (2) INTEREST CREDITED.—On the first normal interest payment date or within 30 days after the expiration of any debt issuance suspension period (whichever is later) to which this section applies, the Secretary of the Treasury shall credit to each Federal fund an amount determined by the Secretary, after taking into account the actions taken pursuant to paragraph (1), to be equal to the income lost by such Federal fund by reason of any failure to invest amounts in such Federal fund (or any disinvestment) resulting from the limitation of such section 3101(b), including any income lost between the expiration of the debt issuance suspension period and the date of the credit. (b) INTEREST ON MARKET-BASED OBLIGATIONS.—With respect to any Federal fund which invests in market-based special obligations, on the expiration of a debt issuance suspension period to which this section applies, the Secretary of the Treasury shall immediately credit to such fund an amount equal to the interest that would have been earned by such fund during the debt issuance suspension period if the daily balance in such fund that the Secretary was unable to invest by reason of the limitation of such section 3101(b) had been invested each day during such period, overnight, in obligations under chapter 31 of title 31, United States Code, earning interest at a rate determined by the Secretary in accordance with the standard practice of the Department of the Treasury.

^ r,^

(c) INTEREST ON STATE AND LOCAL GOVERNMENT SERIES.—On the

expiration of any debt issuance suspension period to which this section applies, the Secretary of the Treasury shall (as of the close of such period) credit to each holder of any obligation which is part of the State and Local Government Series and which is in the nature of a demand deposit an amount equal to the income lost by such holder by reason of not being able to reinvest the principal of, and interest on, such obligation during such period. (d)

DEBT

ISSUANCE SUSPENSION PERIODS TO WHICH SECTION

APPLIES.—This section shall apply to debt issuance suspension periods beginning on or after July 18, 1987, and ending before January 1, 1988.

,,,, ^ ^,; . '

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PUBLIC LAW 100-203—DEC. 22, 1987

(e) CREDITED AMOUNTS TREATED AS INTEREST.—'°'' All amounts credited under this section shall be treated as interest on obligations issued under chapter 31 of title 31, United States Code, for all purposes of Federal law. (f) DEFINITIONS.—For purposes of this section— (1) DEBT ISSUANCE SUSPENSION PERIOD.—The term "debt issuance suspension period" means any period for which the Secretary of the Treasury determines that the issuance of obligations of the United States sufficient to conduct the orderly financial operations of the United States may not be made without exceeding the limitation imposed by section 3101(b) of title 31, United States Code. (2) FEDERAL FUND.—The term "Federal fund" means any ' Federal trust fund or Government account established pursuant to Federal law to which the Secretary of the Treasury has issued or is expressly authorized by law directly to issue obligations under chapter 31 of title 31, United States Code, in respect of public money, money otherwise required to be deposited in the Treasury, or amounts appropriated; except that such term shall not include the Civil Service Retirement and Disability Fund or the Thrift Savings Fund of the Federal Employees' Retirement System. (g) SPECIAL RULES.—In the case of any debt suspension period beginning on or after July 18, 1987, and ending before the date of the enactment of this Act— (1) for purposes of determining the date on which the Secretary of the Treasury is required to take the actions described in subsections (a), (b), and (c), such period shall be treated as having ended on such date of enactment, and (2) the amount required to be credited under subsection (c) shall include any income lost because the credit was not made upon the expiration of such period. SEC. 9402. 6-MONTH EXTENSION OF PROVISIONS RELATING TO COLLECTION OF NON-TAX DEBTS OWED TO FEDERAL AGENCIES. 26 USC 6402 note. 26 USC 6402 note.

Regulations. 26 USC 6402 note.

(a) GENERAL RULE.—Subsection (c) of section 2653 of the Deficit Reduction Act of 1984 is amended by striking out "January 1, 1988" and inserting in lieu thereof "July 1, 1988". OJ) CLARIFICATION OF CONGRESSIONAL INTENT AS TO SCOPE OF PROVISION.—

(1) Nothing in the amendments made by section 2653 of the Deficit Reduction Act of 1984 shall be construed as exempting, debts of corporations or any other category of persons from the application of such amendments. (2) It is the intent of the Congress that, to the extent practicable, the amendments made by section 2653 of the Deficit Reduction Act of 1984 shall extend to all Federal agencies (as ' defined in the amendments made by such section). (3) The Secretary of the Treasury shall issue regulations to carry out the purposes of this subsection. (c) STUDY BY THE GENERAL ACCOUNTING OFFICE.—The Comptroller General of the United States, in consultation with the Secretary of the Treasury or his delegate, shall conduct a study of the operation and effectiveness of the amendments made by section 2653 of the Deficit Reduction Act of 1984. The study shall compile and evaluate ^'^•^I ' °* Copy read "AMOUNTS TREATED AS INTEREST.-

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information on the effect of those amendments on voluntary compliance with the income tax laws. Not later than April 1, 1989, the Reports. Comptroller General shall submit to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate a report of the study conducted under this subsection, together with such recommendations as he may deem advisable. SEC. 9403. INCREASE IN LIMIT ON LONG-TERM BONDS.

The last sentence of section 3102(a) of title 31, United States Code, is amended by striking out "$250,000,000,000" and inserting in lieu thereof "$270,000,000,000".

Subtitle F—Customs User Fees; Trade and Customs Agency Authorizations SEC. 9501. CUSTOMS USER FEES. (a) AMENDMENTS TO CUSTOMS USER FEES PROGRAM.—Section 13031

of the Consolidated Budget Reconciliation Act of 1985 (19 U.S.C. 58c) is amended as follows: (1) M E R C H A N D I S E PROCESSING FEE IMPOSED ON FOREIGN CONTENT OF CERTAIN SCHEDULE 8 ARTICLES.—

(A) Subsection (a)(9)(A) is amended to read as follows: -ii':; "(A) provided for under any item in schedule 8 of the Tariff Schedules of the United States except item 806.30 or licfi 807.00,". JB? (B) Subsection (b)(8)(A) is amended— (i) by striking out "and" at the end of clause (i); (ii) by striking out the period at the end of clause (ii) ^ and inserting a semicolon; and (iii) by adding at the end thereof the following: "(iii) in the case of merchandise classified under item 806.30 of the Tariff Schedules of the United States, be applied to the value of the foreign repairs or alterations to the merchandise; and "(iv) in the case of merchandise classified under item 807.00 of such Schedules, be applied to the full value of the merchandise, less the cost or value of the component United States products. With respect to merchandise that is classified under item 806.30 or 807.00 of such Schedules and is duty-free, the Secretary may collect the fee charged on the processing of the merchandise under subsection (a)(9) or (10) on the basis of aggregate data derived from financial and manufacturing reports used by the importer in the normal course of business, rather than on the basis of entry-by-entry accounting.". (2)

PROVISION

OF

CUSTOMS

SERVICES.—Subsection

(e)

is

amended— (A) by redesignating paragraph (4) as paragraph (6); (B) by inserting after paragraph (3) the following new •u « paragraphs: "(4) Notwithstanding any other provision of law, all customs services (including, but not limited to, normal and overtime clearance and preclearance services) shall be adequately provided, when requested, for—

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1172

 101 STAT. 1330-378

PUBLIC LAW 100-203—DEC. 22, 1987

"(A) the clearance of any commercial vessel, vehicle, or airaj jof'. craft or its passengers, crew, stores, material, or cargo arriving, departing, or transiting the United States; '(B) the preclearance at any customs facility outside the United States of any commercial vessel, vehicle or aircraft or its peissengers, crew, stores, material, or cargo; and "(C) the inspection or release of commercial cargo or other commercial shipments being entered into, or withdrawn from, the customs territory of the United States. "(5) For purposes of this subsection, customs services shall be treated as being 'adequately provided' if such of those services that are necessary to meet the needs of parties subject to customs inspection are provided in a timely manner taking into account factors such as— "(A) the unavoidability of weather, mechanical, and other delays; "(B) the necessity for prompt and efficient passenger and baggage clearance; (C) the perishability of cargo; "(D) the desirability or unavoidability of late night and early morning arrivals from various time zones; "(E) the availability (in accordance with regulations prescribed under subsection (g)(2)) of customs personnel and resources; and "(F) the need for specific enforcement checks."; and (C) by amending paragraph (6) (as redesignated by subparagraph (A)) to read as follows: "(6) Notwithstanding any other provision of law except paragraph (2), during any period when fees are authorized under subsection (a), no charges, other than such fees, may be collected— "(A) for any— "(i) cargo inspection, clearance, or other customs activity, expense, or service performed (regardless whether periiitw formed outside of normal business hours on an overtime basis), or "(ii) customs personnel provided, in connection with the arrival or departure of any commercial vessel, vehicle, or aircraft, or its passengers, crew, stores, material, or cargo, in the United States; "(B) for any preclearance or other customs activity, expense, or service performed, and any customs personnel provided, outside the United States in connection with the departure of any commercial vessel, vehicle, or aircraft, or its passengers, crew, stores, material, or cargo, for the United States; or "(C) in connection with— "(i) the activation or operation (including Customs Serv«f»j ice supervision) of any foreign trade zone or subzone established under the Act of June 18, 1934 (commonly know as .8'. the Foreign Trade Zones Act, 19 U.S.C. 81a et seq.), or "(ii) the designation or operation (including Customs Service supervision) of any bonded warehouse under section 555 of the Tariff Act of 1930 (19 U.S.C. 1555).". (3) DISPOSITION OF FEES.—Subsection (f) is amended by striking out paragraphs (1), (2), and (3) and inserting the following: "(f) DISPOSITION OF F E E S. - - (1) There is established in the general fund of the Treasury a separate account which shall be known as the 'Customs User Fee Account'. Notwithstanding section 524 of the Tariff Act of 1930 (19 U.S.C. 1524), there shall be deposited as offsetting receipts into the Customs User Fee Account all fees

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Page:United States Statutes at Large Volume 101 Part 2.djvu/1173

 PUBLIC LAW 100-203—DEC. 22, 1987

101 STAT. 1330-379

collected under subsection (a) except that portion of such fees that is required under paragraph (3) for the direct reimbursement of appropriations. "(2) All funds in the Customs User Fee Account shall be available, to the extent provided for in appropriations Acts, to pay the costs (other than costs for which direct reimbursement under paragraph (3) is required) incurred by the United States Customs Service in conducting commercial operations, including, but not limited to, all costs associated with commercial passenger, vessel, vehicle, aircraft, and cargo processing. So long as there is a surplus of funds in the Customs User Fee Account, the Secretary of the Treasury may not reduce personnel staffing levels for providing commercial clearance and preclearance services. "(3) The Secretary of the Treasury, in accordance with such section 524 and without regard to apportionment or any other administrative practice or limitation, shall directly reimburse, from the fees collected under subsection (a), each appropriation for the amount paid out of that appropriation for the costs incurred by the Secretary in providing— "(A) inspectional overtime services; and "(B) all preclearance services; for which the recipients of such services are not required to reimburse the Secretary of the Treasury. Reimbursement under this paragraph shall apply with respect to each fiscal year occurring after September 30, 1987, and shall be made at least quarterly. To the extent necessary, reimbursement of appropriations under this paragraph may be made on the basis of estimates made by the Secretary of the Treeisury of the costs for inspectional overtime and preclearance services, and adjustments shall oe made in subsequent reimbursements to the extent that the estimates were in excess of, or less than, the amounts required to be reimbursed.". (4) REGULATIONS.—Subsection (g) is amended— (A) by striking out "(g) REGULATIONS.—The" and inserting "(g) REGULATIONS.—(1) In addition to the regulations required under paragraph (2), the "; and (B) by inserting at the end thereof the following new paragraph: "(2) The Secretary of the Treasury shall prescribe regulations governing the work shifts of customs personnel at airports. Such regulations shall provide, among such other factors considered appropriate by the Secretary, that— "(A) the work shifts will be adjusted, as necessary, to meet cyclical and seasonal demands and to minimize the use of overtime; "(B) the work shifts will not be arbitrarily reduced or compressed; and "(C) consultation with the Advisory Committee on Commercial Operations of the United States Customs Service (established under section 9501(c) of the Omnibus Budget Reconciliation Act of 1987) will be carried out before adjustments are made in the work shifts.".

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(5) EXTENSION OF CUSTOMS USER FEES PROGRAM.—Subsection

(j)(3) is amended by striking out "1989" and inserting "1990". (b) ADDITIONAL PERIOD To CLAIM CERTAIN REFUNDS.—Section

1893(g)(2) of the Tax Reform Act of 1986 is amended by striking out 19 USC 58c note. "90 days after the date of enactment of this Act" and inserting "90 dayff after the date of the enactment of the Omnibus Budget Reconciliation Act of 1987".

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