Pension Funding Equity Act of 2004

04/06;2004

I n t e r n a l Rer-enue Service

09:16 FA9 2 0 2 233 9 5 2 3

1

1. SHORT TITLE.

This Act may be cited as the "Pension fimditlg Eq-

2

3 uity Act. of 2004".
4

TITLE I-PENSION FUNDING

5

SEC. 101. TEMPORARY REPLACEMENT OF 30-YEAR T m S

7

lo
1I

(a) E a r ~ ~ u mK EE T T R E ~ ~ Y
I;~'co~,IE
T
S ~ c r r ~ rACT
m

lx~v(>-E.-

(A) IN G E Y E ~ . - C I ~ ~ I I S (i.i'!
C c ~ f section

17--

302 (b)(5) (B)of the E.tnp1oye.e Ket,iremeut

In

13

come Sec.urity A c t of 1974 is amended by

ye-

14

des,ig~atiizgs ~ ~ bause
c I (XI)

15

~12d by

as

-

s t ~ l ~ c lea ~(In)
~s

in.sel?.ii~gai%er subclause (I) t,It.llc. fol-

XTU-D ~ o Q ~ . - - ~ the
I ~ CBSC of plan years be-

ghuling aftw Dcccmber 31, 2003, and befrwe Jznualy 1, 2006, the terrn 'penni,ssible range' means a rate of interest which

is llot above, c1n.d not more thari 10 percent
below, the weighted average of the r-a.tes of

intcrcst on amounts in~estedc.onse17-ativdy
in long-texm irrvestment grade crjrporate

bonds during the 4-year period enclin.g on
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10
of section 41.2 of the Internal Revenue Code of 1986

t o plan years heginning

afizfter December 81, 2003,

the ;mlendments made by this section may be applied as if n-ch arnendvllents had been in effect for
all prior plan years. The Srcsetaqv of the T l ~ e a s z q

may prescribe simplified assun~ption,~
tx~hichrnkhy- be

used

a.ppl-ying; the anlendments made by this sec-

tlon to sue11 prior plan years.
-

( 3 ) TE_%K,~ITI~~N
RKLE FCjR

SECTTUX 415 LINT-

T..~TION.-In the c,ise of any participant o r bellefieiaq- r.ecei\+lg

~ ls jt ~ i l ~ l - l tafter
i ~ ) ~D
~ ~ c e m l ~ e3rI,

2003 and hefijrr: January 1. 2U!35, the amolint payahle under any f ~ r r ~cifi Ixrlefil: s11Fj;jcct t o section
417(e)i3)

clf

the Tilrc.:.n:ll rlt.rver~ur:c:urlr:

of 1 9 S 6 aucl

sul3je~tto 8cljn~tlllellt~ l l l i hS P C ~ ~ O 41
T I ~ ( I I(2)
) (B)of

16

s~.ichCodc shall not,, 501cly

17

ment made 11-y subsectinn (b)i4), bc lcss than the

IS

a a l o m t that t~roulcl have been so payable hacl the

19

anlo~u~t
pay~cblebeen determined using t31c applica-

20

ble interest rate in effect as of tll?c last clay of the

21

l ast plan year bcgillning before January 1, 2 004.

13)-

renson

rlf

the anlend-

22 SEC. 102. ELECTION OF ALTERNATZVE DEFICIT REDUCTION

23
24

c ONTRIEUTION.

(a) ,UENDR~~NT
OF ERISA.-Seci'jon

3 02((1) of the

25 Employee Refire~nentIncome Security Act of 1974 (29

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Aprll 1,2004 (4'52 PM)

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11
1 U.S.C. 1082(d)) is amended by udding at the end the fol-

2 I ox~plic~l~le
plan

13

g~eater.of-

13
14

"(i) 20 percent

yc3.Y

s h ~ l ll ~ ethe

of the increased

a n l o ~ m tunder pili-agi-:~phII ) clcterlni~~ed

~vit.haritregard t o t_hsparag~'al~h,
or

(

i 1 - 1 jxrcrcascd

amount srrhich

would be determined under paragraph (1)
if the deficit red~~ccion
contribiltiun under

parag~aph(2) for the applicable plan ycar
20

mere determined without rcparcl to sub-

-

21

paragraphs (A), (61, and (Dl of paragraph

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22

(2)-

23

(

24

CEEASES.--NO amendment r*-l~chi n ~ r c a s ~the
s

n

25

liabilities of the plan by reason of any increase

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s
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April 1.2004 ( 4 5 2 PM)

)

RESTRICT TO^:^

OX'

EEXEFIT

1bT-

Internal Kevenne Serrlce

in hen-efits, any change in the accrual oaf bene-

fits, or any change in the rate at which benefits
become nonforfeitable under the plan shall be
adopted

r1111ing ally applicable plan year,

unless-

"(i)
the plan's enrolled actt~aq-certifies (in such form u,,d lvlanner prescribed

by the S(:crcta.v of t.he Treasl'rq) that the
-

arnendlnel~tproxides for an increase in annual contributions ~vllichwill exceed the in -

crease in anut~a.lcharges t o the J?undirlg

s ~ a n d a r d account

attl,ihuta,blc to such

eollectivcl: bru.paj~~ing
agreement which is in

effect on the date nf enactment of this snb] X L ~ ~ ~ ~ T ~ ~ ~ ~ I -

If a plan is amended dnring an;). applicable plan
year in violution of the preceding scnt,ence, any-

election ~ ~ n d this
e r p u x g ~ a p hshall not apply t o

any agplica,ble plan yew enhng on or tfter. the
date on which such amendnlent is ~dopted.

"(C) APPLIC-~J~LEEMPLOEXB.--FO~

pur-

poses of this p s r a g ~ p h ,the term 'applic~ble
employer' m e m an employer which is-

F - \ V B \ ~ t C I 4 \ 0 4 D55
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04/OB/2UO4

30:18

I n t e r n ~ LRevenue S e n i c e

FAI 2 0 2 253 9 5 2 5

1:3
:' (i) a conmercial passenger airline,

'' (1;)

ptimarily engaged in the produc-

tion o r ~ ~ ~ u r n f a c t ~
oft w
a esteel mill procluct-

or the processillg of iron ore peletts, or
"

(iiij an organization descrillcd in

sec-

tion 5Ol(cj(5) of the hntcrnal B e ~ e n u e
Code of 19SG and

est,ablished the

TT~I~C?~

plan to which t,lGs parag,raph applies

t>n

,June 3 0 , 1955.

''(D) L
pses

r,i

P

~PIJXK ~YE~U<.
~
--For ~pur- 2

this paragraplli.

(i:l 1: c;zfir~rtl~.--Theterm 'applica-

ble plan year' means

i;njly

pla.11

yea,^*

be-gin-

njng at't.cr Dccc~nber2'7, 30113, and before

Dcccnzber 2,$, 2005, f o r which the em-

ployer sleets the application of this paragrLqd1.
"jii)
E'E:,?iRS

LrbnrsTIolu

N U J ~ E ROF

ON

i m C E NAY BE ELECTED.--ihl

elec-

tion n1ay not be made uncler this ptwa-

g a p h with respect t o more than 2 plan
ye u s .

"(E) NOTICE R

;

E

ETLECTTNG ALTBRNATRE

CONTRIBUTIONS.-

~

L

~

~FOR
~ r
Nw
T s~

DEFICIT REDTJCTION

~

~

~

Internal Revenue S e r v i c e

14
"(i) Ir\; GENLPU~~L.-I£
8A1 emnplopr

elects an n1tcma.tive deficit r e d ~ ~ c t i oconn

tribution undv this piwrzgraph and section
41211) (1.2) of the Interrial &trenue Code of

1956 for anp year, the en1ploye.r sh~lllprovide, ~vitllin30 days of filing the eleet,i.ion

for sucil ycar, tvritt,en notice of the clectiun
t o pa-r-ticipants and beneficia,ries and t o the

Perlsion. Bcncfit Guaranty Corporation.
"(ii) NOTICE TO P,%ETTC.IPANTS

AVL)

B E N E F I C L ~ ~ S . -n.0tic.e
T ~ ~ under clause
(i) t o pnrtJicipznts and beneficiaries shall
include with respect to any electiorl6L

(I) t h e due datc o.f th: alter-

n a t i ~ e (It.6ci t rcd~~ctioncontribution
and thc anzount by tvhich s u c l ~(!OI~tribution

was

recllzced

from

the

a.rnount which mrodd have been owed
if the electiun were not made, and

"(11) a description of the benefits

mlde13the plan which m e eligil~let o be

gnuranteed by the Pension Benefit
Cruasa~tyC o ~ ~ o r a t i o,and
n
an expla-

nat,ioa of the limitations on the gnarantee and the cil-c~mstunces under

F:\VB\D40104\040104.165
April 1.2004 (4.52 Ph4)

Mclrns. o r ?

Internal Revenue Service

15

~ v h i c lsuch
~
Ilmit,at,ions a.pply, incllacling the mx_ximum slamranteedniont,l~'ly

bene-fits which the Pelxion Benefit
Guaranty Cory omtion t~?~tdcl
pay if'
the plan ternlinated ~~yhilsnnder-

fimded"

(iii) ~\Jo'~TcE TO PBGC.--T~~notice

under- clause (i) to the Pensioll Benefit

C+~~aran.t;tr
Corporation sb all inPlnde-

''(1) t,he i~lforrnationdescribed in
clause (ii)(I1,

"(U)tilt:

1111111Le1.

take i o r~stilreLhe

o i years it, will

p l i ~ l l ti)

fill1 fiulcl-

ing if tl-li: c ~ n p l n y t ro n l y 111alies the req11iret.i r:onrril~utior~s,;-unJ,

''(DI? i l l h m i ~ t . i o l ras to I I ~ I T tlie
a~,noun.t.ljy tvl~ich tlic rrlan is underfi-~ndedcompares w l t h th.e capitaliza-

tion of

tI1.c

employer making the elec-

tion.

"(F) ELECTION-h~election undell this
paragrap11 shall be made at such time and in
such manner as t,he Secretary of the Treast~ry

mav prescribe. "

F~V8\D40104\040fW.165
Aprll I.
2004 14 52 PM)

Inrernal Revenue Service

04.'DIi. 2 0 0 4 0 9 : 17 FriY 2 0 2 2 8 3 0 5 2 5

F:\EW\E~.S25

16
1

(h) &mrnh.mx~OF 1986 CODE.--Section 412 (1) of

2 the Internal R c ~ r e n ~Code
~ e o.E 1986 (relating t o applica-

3 bility of snbsection) is mendcd by adding at t l ~ cend the

4 follovring new phrag~aph:
5

"(1 2 ) ELECTIOS
FQR CERTAIN FLAYS.-

6

"(A) IN G ' E K X I L L L L . - ~ the ease of a de-

7

fined benefit plim establi shed ancl maint:2ined.

8

by an applicable employer, if this subsection did

9

n o t appl,~to the plczrl f o r thc plan y2ar begin-

10

ilii~g ill '2000 (determined without regard t o

11

paragraph (G;)'I, then, at the election of the em-

12

plop-er, the increased arno~~tlt
undw pa.rapaph

13

(1) f o r an)- :~ppliei:~blepian ycea. shall be t,he

14

gqhcat,t,crof-

15

i

16

20 percent of t .

jII(:~-c~sc~

amwult under paragapl~.(I) deternlintyl

'

the increased m o u n t which

m0111d bc dctermirled uncier p,zrxg~*aph(1)
if the deficit reductjrm contribntion un.dcr

paragraph (2 j for the applic.able plan year

wcrc determined without regard to s ~ i b ~ ~ a . i - a g n p(A):
h s (B), and

(2).

F:\V3~040104\0401
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Aprll 1.2004 i452 PM)

(D)o f parig~apll

I n t e r n a l Revenue Service

' I 3 RESTRICTIONSON BENEFIT
CREASES. -Yo

IX-

amendment which irlcreases the

liabilities of the plan by reason of any increase

in benefits, m y change ill the. accrual of benefits, or any chauqe in the rat .tc at xvhch benefits

become nonforfeitabIe ~ ~ l c i cthe
r plan shall bc

ador~tecl during any applicable plan year?
unless-

"(i) t l ~ cp1amnJsenrolled a c : t x ~ ~cert~
tifies (in sneh form and manner presc~ibecl

11y the Secretary)tha,t the a m e n h e i ~ plbnt

vides For an increase in tznnnal cr>ntril~-ulions xvllich mill exceed the inel-ease in annual rharges t o the h~nclingstandard

:LC-

c o ~ u l ~nttribur,a,blc
t
t,o such :~merld,rnct-tt,or
"(ii) the al~~eii~lnierll
is reclnired by

tl

colieeti~-ebargaining agl-cement which is

in

effect

oli

t l ~ edate of enactment of t h i s suh-

paragraph,

If a plan is ,unc.ndcd during any applicable plan
p a . r in violation of the preceding sentence, any
election under this paraggap11 shdl not apply t o
any a,r,pl.ica.bleplan year ending on or t~fi.ert l ~ c

date on which such an~er~clment
is adopted.

F.:~~B\~~oIo~\MoI
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April 1.2004 (4:52 PM)

I n t e r n ~ lRevenue Service

18
'' (C)

APPLICABLE

EMFLo~R.-Fo~
par-

poses of this paragraph, the t e r m 'applicable
employer' means an employer which ist

c

li) rt c o m ~ e r c i a passenger
l
airline,
I I (ii) prinlarily engagcrl in t,he produc-

tion or. ~na~~lfrir:t~wr=
of a steel mill 11rodl11c.i;
o r the processsing of
"

li-(ji~
01-e

pellets! 01:

(iii) all orgau;ac?tion descril~edin

see-

tion 50 1(c) ( 5 ) and w~lxieh established tb.e

plan t o u+hich t,hls paragap11 applies on
.June 30, 1955.

"(D)

&PL.ICt'.i13LE

PLLY

YE,=.--Fol.

pur-

po:;e:; of t h p~~ r 8 g ~ a p h -

'i ( i) INC+ENERAT~--T~~
term 'xl.2plieable plan pear' means any plan yeat. 1~egi11-

njng after Decelllhcr. 2 7 , 2003: and before

Decc~nber 25, 2,005, for which the employer elects the application of this paragTap11.
1

A

T

ON

h i E R

YXUB WHICH BIAS R E ETJECTED.-A~

OF

elec-

tion may not be made under this para~ n p hwith respect t o more than 3 p1a.n

E

ve a,rs.

F:\VB\OSO 104\040 104. Im
April 1, 2004 (452PMj

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