Bill Summary
The Rehabilitation for Multiemployer Pensions Act of 2019 aims to provide financial assistance and loan programs to multiemployer defined benefit plans that are facing financial challenges, in order to prevent insolvency and benefit suspensions for participants. The legislation outlines the requirements and process for applying for a loan or financial assistance from the Pension Rehabilitation Administration and the Pension Benefit Guaranty Corporation. It also includes provisions for coordinating with withdrawal liability and funding rules, reporting requirements for plans, and modifications to required distribution rules for designated beneficiaries. Additionally, the legislation includes amendments to the Internal Revenue Code of 1986 to increase information sharing for administering excise taxes.
Possible Impacts
1. The legislation will affect people by providing a loan program through the Pension Rehabilitation Administration for multiemployer plans that are in critical and declining status, insolvent, or have a modified funded percentage of less than 40%. This will help these plans avoid insolvency or emerge from it, potentially protecting the retirement benefits of employees who participate in these plans.
2. Individuals who are designated beneficiaries of employees who pass away before receiving their full distribution from a retirement plan will be affected by the legislation. The rules for required distributions will be modified, potentially increasing the distribution period from 5 years to 10 years and limiting the exception for eligible designated beneficiaries. This may impact the amount and timing of retirement benefits received by these beneficiaries.
3. The legislation will also affect taxpayers by increasing penalties for noncompliance with retirement plan returns, statements, and notifications. This may impact plan sponsors, administrators, and participants who are responsible for filing these required documents. Additionally, the legislation will allow officers and employees of United States Customs and Border Protection to access returns and return information for taxes imposed by section 4481, potentially impacting individuals who are subject to these taxes.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 397 Placed on Calendar Senate (PCS)]
<DOC>
Calendar No. 390
116th CONGRESS
1st Session
H. R. 397
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 25, 2019
Received
December 18, 2019
Read the first time
December 19, 2019
Read the second time and placed on the calendar
_______________________________________________________________________
AN ACT
To amend the Internal Revenue Code of 1986 to create a Pension
Rehabilitation Trust Fund, to establish a Pension Rehabilitation
Administration within the Department of the Treasury to make loans to
multiemployer defined benefit plans, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Rehabilitation for Multiemployer
Pensions Act of 2019''.
SEC. 2. PENSION REHABILITATION ADMINISTRATION; ESTABLISHMENT; POWERS.
(a) Establishment.--There is established in the Department of the
Treasury an agency to be known as the ``Pension Rehabilitation
Administration''.
(b) Director.--
(1) Establishment of position.--There shall be at the head
of the Pension Rehabilitation Administration a Director, who
shall be appointed by the President.
(2) Term.--
(A) In general.--The term of office of the Director
shall be 5 years.
(B) Service until appointment of successor.--An
individual serving as Director at the expiration of a
term may continue to serve until a successor is
appointed.
(3) Powers.--
(A) Appointment of deputy directors, officers, and
employees.--The Director may appoint Deputy Directors,
officers, and employees, including attorneys, in
accordance with chapter 51 and subchapter III of
chapter 53 of title 5, United States Code.
(B) Contracting.--
(i) In general.--The Director may contract
for financial and administrative services
(including those related to budget and
accounting, financial reporting, personnel, and
procurement) with the General Services
Administration, or such other Federal agency as
the Director determines appropriate, for which
payment shall be made in advance, or by
reimbursement, from funds of the Pension
Rehabilitation Administration in such amounts
as may be agreed upon by the Director and the
head of the Federal agency providing the
services.
(ii) Subject to appropriations.--Contract
authority under clause (i) shall be effective
for any fiscal year only to the extent that
appropriations are available for that purpose.
SEC. 3. PENSION REHABILITATION TRUST FUND.
(a) In General.--Subchapter A of chapter 98 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 9512. PENSION REHABILITATION TRUST FUND.
``(a) Creation of Trust Fund.--There is established in the Treasury
of the United States a trust fund to be known as the `Pension
Rehabilitation Trust Fund' (hereafter in this section referred to as
the `Fund'), consisting of such amounts as may be appropriated or
credited to the Fund as provided in this section and section 9602(b).
``(b) Transfers to Fund.--
``(1) Amounts attributable to treasury bonds.--There shall
be credited to the Fund the amounts transferred under section 6
of the Rehabilitation for Multiemployer Pensions Act of 2019.
``(2) Loan interest and principal.--
``(A) In general.--The Director of the Pension
Rehabilitation Administration established under section
2 of the Rehabilitation for Multiemployer Pensions Act
of 2019 shall deposit in the Fund any amounts received
from a plan as payment of interest or principal on a
loan under section 4 of such Act.
``(B) Interest.--For purposes of subparagraph (A),
the term `interest' includes points and other similar
amounts.
``(3) Availability of funds.--Amounts credited to or
deposited in the Fund shall remain available until expended.
``(c) Expenditures From Fund.--Amounts in the Fund are available
without further appropriation to the Pension Rehabilitation
Administration--
``(1) for the purpose of making the loans described in
section 4 of the Rehabilitation for Multiemployer Pensions Act
of 2019,
``(2) for the payment of principal and interest on
obligations issued under section 6 of such Act, and
``(3) for administrative and operating expenses of such
Administration.''.
(b) Clerical Amendment.--The table of sections for subchapter A of
chapter 98 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:
``Sec. 9512. Pension Rehabilitation Trust Fund.''.
SEC. 4. LOAN PROGRAM FOR MULTIEMPLOYER DEFINED BENEFIT PLANS.
(a) Loan Authority.--
(1) In general.--The Pension Rehabilitation Administration
established under section 2 is authorized--
(A) to make loans to multiemployer plans (as
defined in section 414(f) of the Internal Revenue Code
of 1986) which are defined benefit plans (as defined in
section 414(j) of such Code) and which--
(i) are in critical and declining status
(within the meaning of section 432(b)(6) of
such Code and section 305(b)(6) of the Employee
Retirement and Income Security Act) as of the
date of the enactment of this section, or with
respect to which a suspension of benefits has
been approved under section 432(e)(9) of such
Code and section 305(e)(9) of such Act as of
such date;
(ii) as of such date of enactment, are in
critical status (within the meaning of section
432(b)(2) of such Code and section 305(b)(2) of
such Act), have a modified funded percentage of
less than 40 percent, and have a ratio of
active to inactive participants which is less
than 2 to 5; or
(iii) are insolvent for purposes of section
418E of such Code as of such date of enactment,
if they became insolvent after December 16,
2014, and have not been terminated; and
(B) subject to subsection (b), to establish
appropriate terms for such loans.
For purposes of subparagraph (A)(ii), the term ``modified
funded percentage'' means the percentage equal to a fraction
the numerator of which is current value of plan assets (as
defined in section 3(26) of such Act) and the denominator of
which is current liabilities (as defined in section
431(c)(6)(D) of such Code and section 304(c)(6)(D) of such
Act).
(2) Consultation.--The Director of the Pension
Rehabilitation Administration shall consult with the Secretary
of the Treasury, the Secretary of Labor, and the Director of
the Pension Benefit Guaranty Corporation before making any loan
under paragraph (1), and shall share with such persons the
application and plan information with respect to each such
loan.
(3) Establishment of loan program.--
(A) In general.--A program to make the loans
authorized under this section shall be established not
later than September 30, 2019, with guidance regarding
such program to be promulgated by the Director of the
Pension Rehabilitation Administration, in consultation
with the Director of the Pension Benefit Guaranty
Corporation, the Secretary of the Treasury, and the
Secretary of Labor, not later than December 31, 2019.
(B) Loans authorized before program date.--Without
regard to whether the program under subparagraph (A)
has been established, a plan may apply for a loan under
this section before either date described in such
subparagraph, and the Pension Rehabilitation
Administration shall approve the application and make
the loan before establishment of the program if
necessary to avoid any suspension of the accrued
benefits of participants.
(b) Loan Terms.--
(1) In general.--The terms of any loan made under
subsection (a) shall state that--
(A) the plan shall make payments of interest on the
loan for a period of 29 years beginning on the date of
the loan (or 19 years in the case of a plan making the
election under subsection (c)(5));
(B) final payment of interest and principal shall
be due in the 30th year after the date of the loan
(except as provided in an election under subsection
(c)(5)); and
(C) as a condition of the loan, the plan sponsor
stipulates that--
(i) except as provided in clause (ii), the
plan will not increase benefits, allow any
employer participating in the plan to reduce
its contributions, or accept any collective
bargaining agreement which provides for reduced
contribution rates, during the 30-year period
described in subparagraphs (A) and (B);
(ii) in the case of a plan with respect to
which a suspension of benefits has been
approved under section 432(e)(9) of the
Internal Revenue Code of 1986 and section
305(e)(9) of the Employee Retirement Income
Security Act of 1974, or under section 418E of
such Code, before the loan, the plan will
reinstate the suspended benefits (or will not
carry out any suspension which has been
approved but not yet implemented);
(iii) the plan sponsor will comply with the
requirements of section 6059A of the Internal
Revenue Code of 1986;
(iv) the plan will continue to pay all
premiums due under section 4007 of the Employee
Retirement Income Security Act of 1974; and
(v) the plan and plan administrator will
meet such other requirements as the Director of
the Pension Rehabilitation Administration
provides in the loan terms.
The terms of the loan shall not make reference to
whether the plan is receiving financial assistance
under section 4261(d) of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1431(d)) or to any
adjustment of the loan amount under subsection
(d)(2)(A)(ii).
(2) Interest rate.--Except as provided in the second
sentence of this paragraph and subsection (c)(5), loans made
under subsection (a) shall have as low an interest rate as is
feasible. Such rate shall be determined by the Pension
Rehabilitation Administration and shall--
(A) not be lower than the rate of interest on 30-
year Treasury securities on the first day of the
calendar year in which the loan is issued; and
(B) not exceed the greater of--
(i) a rate 0.2 percentage points higher
than such rate of interest on such date; or
(ii) the rate necessary to collect revenues
sufficient to administer the program under this
section.
(c) Loan Application.--
(1) In general.--In applying for a loan under subsection
(a), the plan sponsor shall--
(A) demonstrate that, except as provided in
subparagraph (C)--
(i) the loan will enable the plan to avoid
insolvency for at least the 30-year period
described in subparagraphs (A) and (B) of
subsection (b)(1) or, in the case of a plan
which is already insolvent, to emerge from
insolvency within and avoid insolvency for the
remainder of such period; and
(ii) the plan is reasonably expected to be
able to pay benefits and the interest on the
loan during such period and to accumulate
sufficient funds to repay the principal when
due;
(B) provide the plan's most recently filed Form
5500 as of the date of application and any other
information necessary to determine the loan amount
under subsection (d);
(C) stipulate whether the plan is also applying for
financial assistance under section 4261(d) of the
Employee Retirement Income Security Act of 1974 (29
U.S.C. 1431(d)) in combination with the loan to enable
the plan to avoid insolvency and to pay benefits, or is
already receiving such financial assistance as a result
of a previous application;
(D) state in what manner the loan proceeds will be
invested pursuant to subsection (d), the person from
whom any annuity contracts under such subsection will
be purchased, and the person who will be the investment
manager for any portfolio implemented under such
subsection; and
(E) include such other information and
certifications as the Director of the Pension
Rehabilitation Administration shall require.
(2) Standard for accepting actuarial and plan sponsor
determinations and demonstrations in the application.--In
evaluating the plan sponsor's application, the Director of the
Pension Rehabilitation Administration shall accept the
determinations and demonstrations in the application unless the
Director, in consultation with the Director of the Pension
Benefit Guaranty Corporation, the Secretary of the Treasury,
and the Secretary of Labor, concludes that any such
determinations or demonstrations in the application (or any
underlying assumptions) are unreasonable or are inconsistent
with any rules issued by the Director pursuant to subsection
(g).
(3) Required actions; deemed approval.--The Director of the
Pension Rehabilitation Administration shall approve or deny any
application under this subsection within 90 days after the
submission of such application. An application shall be deemed
approved unless, within such 90 days, the Director notifies the
plan sponsor of the denial of such application and the reasons
for such denial. Any approval or denial of an application by
the Director of the Pension Rehabilitation Administration shall
be treated as a final agency action for purposes of section 704
of title 5, United States Code. The Pension Rehabilitation
Administration shall make the loan pursuant to any application
promptly after the approval of such application.
(4) Certain plans required to apply.--The plan sponsor of
any plan with respect to which a suspension of benefits has
been approved under section 432(e)(9) of the Internal Revenue
Code of 1986 and section 305(e)(9) of the Employee Retirement
Income Security Act of 1974 or under section 418E of such Code,
before the date of the enactment of this Act shall apply for a
loan under this section. The Director of the Pension
Rehabilitation Administration shall provide for such plan
sponsors to use the simplified application under subsection
(d)(2)(B).
(5) Incentive for early repayment.--The plan sponsor may
elect at the time of the application to repay the loan
principal, along with the remaining interest, at least as
rapidly as equal installments over the 10-year period beginning
with the 21st year after the date of the loan. In the case of a
plan making this election, the interest on the loan shall be
reduced by 0.5 percentage points.
(d) Loan Amount and Use.--
(1) Amount of loan.--
(A) In general.--Except as provided in subparagraph
(B) and paragraph (2), the amount of any loan under
subsection (a) shall be, as demonstrated by the plan
sponsor on the application under subsection (c), the
amount needed to purchase annuity contracts or to
implement a portfolio described in paragraph (3)(C) (or
a combination of the two) sufficient to provide
benefits of participants and beneficiaries of the plan
in pay status, and terminated vested benefits, at the
time the loan is made.
(B) Plans with suspended benefits.--In the case of
a plan with respect to which a suspension of benefits
has been approved under section 432(e)(9) of the
Internal Revenue Code of 1986 and section 305(e)(9) of
the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1085(e)(9)) or under section 418E of such Code--
(i) the suspension of benefits shall not be
taken into account in applying subparagraph
(A); and
(ii) the loan amount shall be the amount
sufficient to provide benefits of participants
and beneficiaries of the plan in pay status and
terminated vested benefits at the time the loan
is made, determined without regard to the
suspension, including retroactive payment of
benefits which would otherwise have been
payable during the period of the suspension.
(2) Coordination with pbgc financial assistance.--
(A) In general.--In the case of a plan which is
also applying for financial assistance under section
4261(d) of the Employee Retirement Income Security Act
of 1974 (29 U.S.C. 1431(d))--
(i) the plan sponsor shall submit the loan
application and the application for financial
assistance jointly to the Pension
Rehabilitation Administration and the Pension
Benefit Guaranty Corporation with the
information necessary to determine the
eligibility for and amount of the loan under
this section and the financial assistance under
section 4261(d) of such Act; and
(ii) if such financial assistance is
granted, the amount of the loan under
subsection (a) shall not exceed an amount equal
to the excess of--
(I) the amount determined under
paragraph (1)(A) or (1)(B)(ii)
(whichever is applicable); over
(II) the amount of such financial
assistance.
(B) Plans already receiving pbgc assistance.--The
Director of the Pension Rehabilitation Administration
shall provide for a simplified application for the loan
under this section which may be used by an insolvent
plan which has not been terminated and which is already
receiving financial assistance (other than under
section 4261(d) of such Act) from the Pension Benefit
Guaranty Corporation at the time of the application for
the loan under this section.
(3) Use of loan funds.--
(A) In general.--Notwithstanding section
432(f)(2)(A)(ii) of the Internal Revenue Code of 1986
and section 305(f)(2)(A)(ii) of such Act, the loan
received under subsection (a) shall only be used to
purchase annuity contracts which meet the requirements
of subparagraph (B) or to implement a portfolio
described in subparagraph (C) (or a combination of the
two) to provide the benefits described in paragraph
(1).
(B) Annuity contract requirements.--The annuity
contracts purchased under subparagraph (A) shall be
issued by an insurance company which is licensed to do
business under the laws of any State and which is rated
A or better by a nationally recognized statistical
rating organization, and the purchase of such contracts
shall meet all applicable fiduciary standards under the
Employee Retirement Income Security Act of 1974.
(C) Portfolio.--
(i) In general.--A portfolio described in
this subparagraph is--
(I) a cash matching portfolio or
duration matching portfolio consisting
of investment grade (as rated by a
nationally recognized statistical
rating organization) fixed income
investments, including United States
dollar-denominated public or private
debt obligations issued or guaranteed
by the United States or a foreign
issuer, which are tradeable in United
States currency and are issued at fixed
or zero coupon rates; or
(II) any other portfolio prescribed
by the Secretary of the Treasury in
regulations which has a similar risk
profile to the portfolios described in
subclause (I) and is equally protective
of the interests of participants and
beneficiaries.
Once implemented, such a portfolio shall be
maintained until all liabilities to
participants and beneficiaries in pay status,
and terminated vested participants, at the time
of the loan are satisfied.
(ii) Fiduciary duty.--Any investment
manager of a portfolio under this subparagraph
shall acknowledge in writing that such person
is a fiduciary under the Employee Retirement
Income Security Act of 1974 with respect to the
plan.
(iii) Treatment of participants and
beneficiaries.--Participants and beneficiaries
covered by a portfolio under this subparagraph
shall continue to be treated as participants
and beneficiaries of the plan, including for
purposes of title IV of the Employee Retirement
Income Security Act of 1974.
(D) Accounting.--
(i) In general.--Annuity contracts
purchased and portfolios implemented under this
paragraph shall be used solely to provide the
benefits described in paragraph (1) until all
such benefits have been paid and shall be
accounted for separately from the other assets
of the plan.
(ii) Oversight of non-annuity
investments.--
(I) In general.--Any portfolio
implemented under this paragraph shall
be subject to oversight by the Pension
Rehabilitation Administration,
including a mandatory triennial review
of the adequacy of the portfolio to
provide the benefits described in
paragraph (1) and approval (to be
provided within a reasonable period of
time) of any decision by the plan
sponsor to change the investment
manager of the portfolio.
(II) Remedial action.--If the
oversight under subclause (I)
determines an inadequacy, the plan
sponsor shall take remedial action to
ensure that the inadequacy will be
cured within 2 years of such
determination.
(E) Ombudsperson.--The Participant and Plan Sponsor
Advocate established under section 4004 of the Employee
Retirement Income Security Act of 1974 shall act as
ombudsperson for participants and beneficiaries on
behalf of whom annuity contracts are purchased or who
are covered by a portfolio under this paragraph.
(e) Collection of Repayment.--Except as provided in subsection (f),
the Pension Rehabilitation Administration shall make every effort to
collect repayment of loans under this section in accordance with
section 3711 of title 31, United States Code.
(f) Loan Default.--If a plan is unable to make any payment on a
loan under this section when due, the Pension Rehabilitation
Administration shall negotiate with the plan sponsor revised terms for
repayment (including installment payments over a reasonable period or
forgiveness of a portion of the loan principal), but only to the extent
necessary to avoid insolvency in the subsequent 18 months.
(g) Authority To Issue Rules, Etc.--The Director of the Pension
Rehabilitation Administration, in consultation with the Director of the
Pension Benefit Guaranty Corporation, the Secretary of the Treasury,
and the Secretary of Labor, is authorized to issue rules regarding the
form, content, and process of applications for loans under this
section, actuarial standards and assumptions to be used in making
estimates and projections for purposes of such applications, and
assumptions regarding interest rates, mortality, and distributions with
respect to a portfolio described in subsection (d)(3)(C).
(h) Report to Congress on Status of Certain Plans With Loans.--Not
later than 1 year after the date of the enactment of this Act, and
annually thereafter, the Director of the Pension Rehabilitation
Administration shall submit to the Committee on Ways and Means and the
Committee on Education and Labor of the House of Representatives, and
the Committee on Finance and the Committee on Health, Education, Labor
and Pensions of the Senate, a report identifying any plan that--
(1) has failed to make any scheduled payment on a loan
under this section;
(2) has negotiated revised terms for repayment of such loan
(including any installment payments or forgiveness of a portion
of the loan principal); or
(3) the Director has determined is no longer reasonably
expected to be able to--
(A) pay benefits and the interest on the loan; or
(B) accumulate sufficient funds to repay the
principal when due.
Such report shall include the details of any such failure, revised
terms, or determination, as the case may be.
(i) Coordination With Taxation of Unrelated Business Income.--
Subparagraph (A) of section 514(c)(6) of the Internal Revenue Code of
1986 is amended--
(1) by striking ``or'' at the end of clause (i);
(2) by striking the period at the end of clause (ii)(II)
and inserting ``, or''; and
(3) by adding at the end the following new clause:
``(iii) indebtedness with respect to a
multiemployer plan under a loan made by the
Pension Rehabilitation Administration pursuant
to section 4 of the Rehabilitation for
Multiemployer Pensions Act of 2019.''.
SEC. 5. COORDINATION WITH WITHDRAWAL LIABILITY AND FUNDING RULES.
(a) Amendment to Internal Revenue Code of 1986.--Section 432 of the
Internal Revenue Code of 1986 is amended by adding at the end the
following new subsection:
``(k) Special Rules for Plans Receiving Pension Rehabilitation
Loans.--
``(1) Determination of withdrawal liability.--
``(A) In general.--If any employer participating in
a plan at the time the plan receives a loan under
section 4(a) of the Rehabilitation for Multiemployer
Pensions Act of 2019 withdraws from the plan before the
end of the 30-year period beginning on the date of the
loan, the withdrawal liability of such employer shall
be determined under the Employee Retirement Income
Security Act of 1974--
``(i) by applying section 4219(c)(1)(D) of
the Employee Retirement Income Security Act of
1974 as if the plan were terminating by the
withdrawal of every employer from the plan, and
``(ii) by determining the value of
nonforfeitable benefits under the plan at the
time of the deemed termination by using the
interest assumptions prescribed for purposes of
section 4044 of the Employee Retirement Income
Security Act of 1974, as prescribed in the
regulations under section 4281 of the Employee
Retirement Income Security Act of 1974 in the
case of such a mass withdrawal.
``(B) Annuity contracts and investment portfolios
purchased with loan funds.--Annuity contracts purchased
and portfolios implemented under section 4(d)(3) of the
Rehabilitation for Multiemployer Pensions Act of 2019
shall not be taken into account as plan assets in
determining the withdrawal liability of any employer
under subparagraph (A), but the amount equal to the
greater of--
``(i) the benefits provided under such
contracts or portfolios to participants and
beneficiaries, or
``(ii) the remaining payments due on the
loan under section 4(a) of such Act,
shall be taken into account as unfunded vested benefits
in determining such withdrawal liability.
``(2) Coordination with funding requirements.--In the case
of a plan which receives a loan under section 4(a) of the
Rehabilitation for Multiemployer Pensions Act of 2019--
``(A) annuity contracts purchased and portfolios
implemented under section 4(d)(3) of such Act, and the
benefits provided to participants and beneficiaries
under such contracts or portfolios, shall not be taken
into account in determining minimum required
contributions under section 412,
``(B) payments on the interest and principal under
the loan, and any benefits owed in excess of those
provided under such contracts or portfolios, shall be
taken into account as liabilities for purposes of such
section, and
``(C) if such a portfolio is projected due to
unfavorable investment or actuarial experience to be
unable to fully satisfy the liabilities which it
covers, the amount of the liabilities projected to be
unsatisfied shall be taken into account as liabilities
for purposes of such section.''.
(b) Amendment to Employee Retirement Income Security Act of 1974.--
Section 305 of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1085) is amended by adding at the end the following new
subsection:
``(k) Special Rules for Plans Receiving Pension Rehabilitation
Loans.--
``(1) Determination of withdrawal liability.--
``(A) In general.--If any employer participating in
a plan at the time the plan receives a loan under
section 4(a) of the Rehabilitation for Multiemployer
Pensions Act of 2019 withdraws from the plan before the
end of the 30-year period beginning on the date of the
loan, the withdrawal liability of such employer shall
be determined--
``(i) by applying section 4219(c)(1)(D) as
if the plan were terminating by the withdrawal
of every employer from the plan, and
``(ii) by determining the value of
nonforfeitable benefits under the plan at the
time of the deemed termination by using the
interest assumptions prescribed for purposes of
section 4044, as prescribed in the regulations
under section 4281 in the case of such a mass
withdrawal.
``(B) Annuity contracts and investment portfolios
purchased with loan funds.--Annuity contracts purchased
and portfolios implemented under section 4(d)(3) of the
Rehabilitation for Multiemployer Pensions Act of 2019
shall not be taken into account in determining the
withdrawal liability of any employer under subparagraph
(A), but the amount equal to the greater of--
``(i) the benefits provided under such
contracts or portfolios to participants and
beneficiaries, or
``(ii) the remaining payments due on the
loan under section 4(a) of such Act,
shall be taken into account as unfunded vested benefits
in determining such withdrawal liability.
``(2) Coordination with funding requirements.--In the case
of a plan which receives a loan under section 4(a) of the
Rehabilitation for Multiemployer Pensions Act of 2019--
``(A) annuity contracts purchased and portfolios
implemented under section 4(d)(3) of such Act, and the
benefits provided to participants and beneficiaries
under such contracts or portfolios, shall not be taken
into account in determining minimum required
contributions under section 302,
``(B) payments on the interest and principal under
the loan, and any benefits owed in excess of those
provided under such contracts or portfolios, shall be
taken into account as liabilities for purposes of such
section, and
``(C) if such a portfolio is projected due to
unfavorable investment or actuarial experience to be
unable to fully satisfy the liabilities which it
covers, the amount of the liabilities projected to be
unsatisfied shall be taken into account as liabilities
for purposes of such section.''.
SEC. 6. ISSUANCE OF TREASURY BONDS.
The Secretary of the Treasury shall from time to time transfer from
the general fund of the Treasury to the Pension Rehabilitation Trust
Fund established under section 9512 of the Internal Revenue Code of
1986 such amounts as are necessary to fund the loan program under
section 4 of this Act, including from proceeds from the Secretary's
issuance of obligations under chapter 31 of title 31, United States
Code.
SEC. 7. REPORTS OF PLANS RECEIVING PENSION REHABILITATION LOANS.
(a) In General.--Subpart E of part III of subchapter A of chapter
61 of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 6059A. REPORTS OF PLANS RECEIVING PENSION REHABILITATION LOANS.
``(a) In General.--In the case of a plan receiving a loan under
section 4(a) of the Rehabilitation for Multiemployer Pensions Act of
2019, with respect to the first plan year beginning after the date of
the loan and each of the 29 succeeding plan years, not later than the
90th day of each such plan year the plan sponsor shall file with the
Secretary a report (including appropriate documentation and actuarial
certifications from the plan actuary, as required by the Secretary)
that contains--
``(1) the funded percentage (as defined in section
432(j)(2)) as of the first day of such plan year, and the
underlying actuarial value of assets (determined with regard,
and without regard, to annuity contracts purchased and
portfolios implemented with proceeds of such loan) and
liabilities (including any amounts due with respect to such
loan) taken into account in determining such percentage,
``(2) the market value of the assets of the plan
(determined as provided in paragraph (1)) as of the last day of
the plan year preceding such plan year,
``(3) the total value of all contributions made by
employers and employees during the plan year preceding such
plan year,
``(4) the total value of all benefits paid during the plan
year preceding such plan year,
``(5) cash flow projections for such plan year and the 9
succeeding plan years, and the assumptions used in making such
projections,
``(6) funding standard account projections for such plan
year and the 9 succeeding plan years, and the assumptions
relied upon in making such projections,
``(7) the total value of all investment gains or losses
during the plan year preceding such plan year,
``(8) any significant reduction in the number of active
participants during the plan year preceding such plan year, and
the reason for such reduction,
``(9) a list of employers that withdrew from the plan in
the plan year preceding such plan year, and the resulting
reduction in contributions,
``(10) a list of employers that paid withdrawal liability
to the plan during the plan year preceding such plan year and,
for each employer, a total assessment of the withdrawal
liability paid, the annual payment amount, and the number of
years remaining in the payment schedule with respect to such
withdrawal liability,
``(11) any material changes to benefits, accrual rates, or
contribution rates during the plan year preceding such plan
year, and whether such changes relate to the terms of the loan,
``(12) details regarding any funding improvement plan or
rehabilitation plan and updates to such plan,
``(13) the number of participants during the plan year
preceding such plan year who are active participants, the
number of participants and beneficiaries in pay status, and the
number of terminated vested participants and beneficiaries,
``(14) the amount of any financial assistance received
under section 4261 of the Employee Retirement Income Security
Act of 1974 to pay benefits during the preceding plan year, and
the total amount of such financial assistance received for all
preceding years,
``(15) the information contained on the most recent annual
funding notice submitted by the plan under section 101(f) of
the Employee Retirement Income Security Act of 1974,
``(16) the information contained on the most recent annual
return under section 6058 and actuarial report under section
6059 of the plan, and
``(17) copies of the plan document and amendments, other
retirement benefit or ancillary benefit plans relating to the
plan and contribution obligations under such plans, a breakdown
of administrative expenses of the plan, participant census data
and distribution of benefits, the most recent actuarial
valuation report as of the plan year, copies of collective
bargaining agreements, and financial reports, and such other
information as the Secretary, in consultation with the Director
of the Pension Rehabilitation Administration, may require.
``(b) Electronic Submission.--The report required under subsection
(a) shall be submitted electronically.
``(c) Information Sharing.--The Secretary shall share the
information in the report under subsection (a) with the Secretary of
Labor and the Director of the Pension Benefit Guaranty Corporation.
``(d) Report to Participants, Beneficiaries, and Employers.--Each
plan sponsor required to file a report under subsection (a) shall,
before the expiration of the time prescribed for the filing of such
report, also provide a summary (written in a manner so as to be
understood by the average plan participant) of the information in such
report to participants and beneficiaries in the plan and to each
employer with an obligation to contribute to the plan.''.
(b) Penalty.--Subsection (e) of section 6652 of the Internal
Revenue Code of 1986 is amended--
(1) by inserting ``, 6059A (relating to reports of plans
receiving pension rehabilitation loans)'' after ``deferred
compensation)'';
(2) by inserting ``($100 in the case of failures under
section 6059A)'' after ``$25''; and
(3) by adding at the end the following: ``In the case of a
failure with respect to section 6059A, the amount imposed under
this subsection shall not be paid from the assets of the
plan.''.
(c) Clerical Amendment.--The table of sections for subpart E of
part III of subchapter A of chapter 61 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 6059A. Reports of plans receiving pension rehabilitation
loans.''.
SEC. 8. PBGC FINANCIAL ASSISTANCE.
(a) In General.--Section 4261 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1431) is amended by adding at the end
the following new subsection:
``(d)(1) The plan sponsor of a multiemployer plan--
``(A) which is in critical and declining status (within the
meaning of section 305(b)(6)) as of the date of the enactment
of this subsection, or with respect to which a suspension of
benefits has been approved under section 305(e)(9) as of such
date;
``(B) which, as of such date of enactment, is in critical
status (within the meaning of section 305(b)(2)), has a
modified funded percentage of less than 40 percent (as defined
in section 4(a)(1) of the Rehabilitation for Multiemployer
Pensions Act of 2019), and has a ratio of active to inactive
participants which is less than 2 to 5; or
``(C) which is insolvent for purposes of section 418E of
the Internal Revenue Code of 1986 as of such date of enactment,
if the plan became insolvent after December 16, 2014, and has
not been terminated;
and which is applying for a loan under section 4(a) of the
Rehabilitation for Multiemployer Pensions Act of 2019 may also apply to
the corporation for financial assistance under this subsection, by
jointly submitting such applications in accordance with section 4(d)(2)
of such Act. The application for financial assistance under this
subsection shall demonstrate, based on projections by the plan actuary,
that after the receipt of the anticipated loan amount under section
4(a) of such Act, the plan will still become (or remain) insolvent
within the 30-year period beginning on the date of the loan.
``(2) In reviewing an application under paragraph (1), the
corporation shall review the determinations and demonstrations
submitted with the loan application under section 4(c) of the
Rehabilitation for Multiemployer Pensions Act of 2019 and provide
guidance regarding such determinations and demonstrations prior to
approving any application for financial assistance under this
subsection. The corporation may deny any application if any such
determinations or demonstrations (or any underlying assumptions) are
unreasonable, or inconsistent with rules issued by the corporation, and
the plan and the corporation are unable to reach agreement on such
determinations or demonstrations. The corporation shall prescribe any
such rules or guidance not later than December 31, 2019.
``(3)(A) In the case of a plan described in paragraph (1)(A) or
(1)(B), the total financial assistance provided under this subsection
shall be an amount equal to the smallest portion of the loan amount
with respect to the plan under paragraph (1)(A) or (1)(B)(ii) of
section 4(d) of the Rehabilitation for Multiemployer Pensions Act of
2019 (determined without regard to paragraph (2) thereof) that, if
provided as financial assistance under this subsection instead of a
loan, would allow the plan to avoid the projected insolvency.
``(B) Such amount shall not exceed the present value of the maximum
guaranteed benefit with respect to all participants and beneficiaries
of the plan under sections 4022A and 4022B. For purposes of the
preceding sentence, the present value of the maximum guaranteed benefit
amount shall be determined by disregarding any loan available from the
Pension Rehabilitation Administration and shall be determined as if the
plan were insolvent on the date of the application, and the present
value of the maximum guaranteed benefit amount with respect to such
participants and beneficiaries may be calculated in the aggregate,
rather than by reference to the benefit of each such participant or
beneficiary.
``(4) In the case of a plan described in paragraph (1)(C), the
financial assistance provided pursuant to such application under this
subsection shall be the present value of the amount (determined by the
plan actuary and submitted on the application) that, if such amount
were paid by the corporation in combination with the loan and any other
assistance being provided to the plan by the corporation at the time of
the application, would enable the plan to emerge from insolvency and
avoid any other insolvency projected under paragraph (1).
``(5)(A)(i) Except as provided in subparagraph (B), if the
corporation determines at the time of approval, or at the beginning of
any plan year beginning thereafter, that the plan's 5-year expenditure
projection (determined without regard to loan payments described in
clause (iii)(III)) exceeds the fair market value of the plan's assets,
the corporation shall (subject to the total amount of financial
assistance approved under this subsection) provide such assistance in
an amount equal to the lesser of--
``(I) the amount by which the plan's 5-year
expenditure projection exceeds such fair market value;
or
``(II) the plan's expected expenditures for the
plan year.
``(ii) For purposes of this subparagraph, the term `5-year
expenditure projection' means, with respect to any plan for a plan
year, an amount equal to 500 percent of the plan's expected
expenditures for the plan year.
``(iii) For purposes of this subparagraph, the term `expected
expenditures' means, with respect to any plan for a plan year, an
amount equal to the sum of--
``(I) expected benefit payments for the plan year;
``(II) expected administrative expense payments for the
plan year; plus
``(III) payments on the loan scheduled during the plan year
pursuant to the terms of the loan under section 4(b) of the
Rehabilitation for Multiemployer Pensions Act of 2019.
``(iv) For purposes of this subparagraph, in the case of any plan
year during which a plan is approved for a loan under section 4 of such
Act, but has not yet received the proceeds, such proceeds shall be
included in determining the fair market value of the plan's assets for
the plan year. The preceding sentence shall not apply in the case of
any plan that for the plan year beginning in 2015 was certified
pursuant to section 305(b)(3) as being in critical and declining
status, and had more than 300,000 participants.
``(B) The financial assistance under this subsection shall be
provided in a lump sum if the plan sponsor demonstrates in the
application, and the corporation determines, that such a lump sum
payment is necessary for the plan to avoid the insolvency to which the
application relates. In the case of a plan described in paragraph
(1)(C), such lump sum shall be provided not later than December 31,
2020.
``(6) Subsections (b) and (c) shall apply to financial assistance
under this subsection as if it were provided under subsection (a),
except that the terms for repayment under subsection (b)(2) shall not
require the financial assistance to be repaid before the date on which
the loan under section 4(a) of the Rehabilitation for Multiemployer
Pensions Act of 2019 is repaid in full.
``(7) The corporation may forgo repayment of the financial
assistance provided under this subsection if necessary to avoid any
suspension of the accrued benefits of participants.''.
(b) Appropriations.--There is appropriated to the Director of the
Pension Benefit Guaranty Corporation such sums as may be necessary for
each fiscal year to provide the financial assistance described in
section 4261(d) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1431(d)) (as added by this section) (including necessary
administrative and operating expenses relating to such assistance).
SEC. 9. MODIFICATION OF REQUIRED DISTRIBUTION RULES FOR DESIGNATED
BENEFICIARIES.
(a) Modification of Rules Where Employee Dies Before Entire
Distribution.--
(1) In general.--Section 401(a)(9) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:
``(H) Special rules for certain defined
contribution plans.--In the case of a defined
contribution plan, if an employee dies before the
distribution of the employee's entire interest--
``(i) In general.--Except in the case of a
beneficiary who is not a designated
beneficiary, subparagraph (B)(ii)--
``(I) shall be applied by
substituting `10 years' for `5 years',
and
``(II) shall apply whether or not
distributions of the employee's
interests have begun in accordance with
subparagraph (A).
``(ii) Exception only for eligible
designated beneficiaries.--Subparagraph
(B)(iii) shall apply only in the case of an
eligible designated beneficiary.
``(iii) Rules upon death of eligible
designated beneficiary.--If an eligible
designated beneficiary dies before the portion
of the employee's interest to which this
subparagraph applies is entirely distributed,
the exception under clause (iii) shall not
apply to any beneficiary of such eligible
designated beneficiary and the remainder of
such portion shall be distributed within 10
years after the death of such eligible
designated beneficiary.
``(iv) Application to certain eligible
retirement plans.--For purposes of applying the
provisions of this subparagraph in determining
amounts required to be distributed pursuant to
this paragraph, all eligible retirement plans
(as defined in section 402(c)(8)(B), other than
a defined benefit plan described in clause (iv)
or (v) thereof or a qualified trust which is a
part of a defined benefit plan) shall be
treated as a defined contribution plan.''.
(2) Definition of eligible designated beneficiary.--Section
401(a)(9)(E) of such Code is amended to read as follows:
``(E) Definitions and rules relating to designated
beneficiary.--For purposes of this paragraph--
``(i) Designated beneficiary.--The term
`designated beneficiary' means any individual
designated as a beneficiary by the employee.
``(ii) Eligible designated beneficiary.--
The term `eligible designated beneficiary'
means, with respect to any employee, any
designated beneficiary who is--
``(I) the surviving spouse of the
employee,
``(II) subject to clause (iii), a
child of the employee who has not
reached majority (within the meaning of
subparagraph (F)),
``(III) disabled (within the
meaning of section 72(m)(7)),
``(IV) a chronically ill individual
(within the meaning of section
7702B(c)(2), except that the
requirements of subparagraph (A)(i)
thereof shall only be treated as met if
there is a certification that, as of
such date, the period of inability
described in such subparagraph with
respect to the individual is an
indefinite one which is reasonably
expected to be lengthy in nature), or
``(V) an individual not described
in any of the preceding subclauses who
is not more than 10 years younger than
the employee.
``(iii) Special rule for children.--Subject
to subparagraph (F), an individual described in
clause (ii)(II) shall cease to be an eligible
designated beneficiary as of the date the
individual reaches majority and any remainder
of the portion of the individual's interest to
which subparagraph (H)(ii) applies shall be
distributed within 10 years after such date.
``(iv) Time for determination of eligible
designated beneficiary.--The determination of
whether a designated beneficiary is an eligible
designated beneficiary shall be made as of the
date of death of the employee.''.
(3) Effective dates.--
(A) In general.--Except as provided in this
paragraph and paragraphs (4) and (5), the amendments
made by this subsection shall apply to distributions
with respect to employees who die after December 31,
2019.
(B) Collective bargaining exception.--In the case
of a plan maintained pursuant to one or more collective
bargaining agreements between employee representatives
and one or more employers ratified before the date of
enactment of this Act, the amendments made by this
subsection shall apply to distributions with respect to
employees who die in calendar years beginning after the
earlier of--
(i) the later of--
(I) the date on which the last of
such collective bargaining agreements
terminates (determined without regard
to any extension thereof agreed to on
or after the date of the enactment of
this Act); or
(II) December 31, 2019; or
(ii) December 31, 2021.
For purposes of clause (i)(I), any plan amendment made
pursuant to a collective bargaining agreement relating
to the plan which amends the plan solely to conform to
any requirement added by this section shall not be
treated as a termination of such collective bargaining
agreement.
(C) Governmental plans.--In the case of a
governmental plan (as defined in section 414(d) of the
Internal Revenue Code of 1986), subparagraph (A) shall
be applied by substituting ``December 31, 2021'' for
``December 31, 2019''.
(4) Exception for certain existing annuity contracts.--
(A) In general.--The amendments made by this
subsection shall not apply to a qualified annuity which
is a binding annuity contract in effect on the date of
enactment of this Act and at all times thereafter.
(B) Qualified annuity.--For purposes of this
paragraph, the term ``qualified annuity'' means, with
respect to an employee, an annuity--
(i) which is a commercial annuity (as
defined in section 3405(e)(6) of the Internal
Revenue Code of 1986);
(ii) under which the annuity payments are
made over the life of the employee or over the
joint lives of such employee and a designated
beneficiary (or over a period not extending
beyond the life expectancy of such employee or
the joint life expectancy of such employee and
a designated beneficiary) in accordance with
the regulations described in section
401(a)(9)(A)(ii) of such Code (as in effect
before such amendments) and which meets the
other requirements of section 401(a)(9) of such
Code (as so in effect) with respect to such
payments; and
(iii) with respect to which--
(I) annuity payments to the
employee have begun before the date of
enactment of this Act, and the employee
has made an irrevocable election before
such date as to the method and amount
of the annuity payments to the employee
or any designated beneficiaries; or
(II) if subclause (I) does not
apply, the employee has made an
irrevocable election before the date of
enactment of this Act as to the method
and amount of the annuity payments to
the employee or any designated
beneficiaries.
(5) Exception for certain beneficiaries.--
(A) In general.--If an employee dies before the
effective date, then, in applying the amendments made
by this subsection to such employee's designated
beneficiary who dies after such date--
(i) such amendments shall apply to any
beneficiary of such designated beneficiary; and
(ii) the designated beneficiary shall be
treated as an eligible designated beneficiary
for purposes of applying section
401(a)(9)(H)(ii) of the Internal Revenue Code
of 1986 (as in effect after such amendments).
(B) Effective date.--For purposes of this
paragraph, the term ``effective date'' means the first
day of the first calendar year to which the amendments
made by this subsection apply to a plan with respect to
employees dying on or after such date.
(b) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any plan
amendment--
(A) such plan shall be treated as being operated in
accordance with the terms of the plan during the period
described in paragraph (2)(B)(i); and
(B) except as provided by the Secretary of the
Treasury, such plan shall not fail to meet the
requirements of section 411(d)(6) of the Internal
Revenue Code of 1986 and section 204(g) of the Employee
Retirement Income Security Act of 1974 by reason of
such amendment.
(2) Amendments to which subsection applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or which is made--
(i) pursuant to any amendment made by this
section or pursuant to any regulation issued by
the Secretary of the Treasury under this
section or such amendments; and
(ii) on or before the last day of the first
plan year beginning after December 31, 2021, or
such later date as the Secretary of the
Treasury may prescribe.
In the case of a governmental or collectively bargained
plan to which subparagraph (B) or (C) of subsection
(a)(4) applies, clause (ii) shall be applied by
substituting the date which is 2 years after the date
otherwise applied under such clause.
(B) Conditions.--This subsection shall not apply to
any amendment unless--
(i) during the period--
(I) beginning on the date the
legislative or regulatory amendment
described in paragraph (1)(A) takes
effect (or in the case of a plan
amendment not required by such
legislative or regulatory amendment,
the effective date specified by the
plan); and
(II) ending on the date described
in subparagraph (A)(ii) (or, if
earlier, the date the plan amendment is
adopted),
the plan is operated as if such plan amendment
were in effect; and
(ii) such plan amendment applies
retroactively for such period.
SEC. 10. INCREASE IN PENALTY FOR FAILURE TO FILE.
(a) In General.--The second sentence of section 6651(a) of the
Internal Revenue Code of 1986, as amended by the Taxpayer First Act, is
amended by striking ``$330'' and inserting ``$435''.
(b) Inflation Adjustment.--Section 6651(j)(1) of such Code, as
amended by such Act, is amended by striking ``$330'' and inserting
``$435''.
(c) Effective Date.--The amendments made by this section shall
apply to returns the due date for which (including extensions) is after
December 31, 2019.
SEC. 11. INCREASED PENALTIES FOR FAILURE TO FILE RETIREMENT PLAN
RETURNS.
(a) In General.--Subsection (e) of section 6652 of the Internal
Revenue Code of 1986 is amended--
(1) by striking ``$25'' and inserting ``$250''; and
(2) by striking ``$15,000'' and inserting ``$150,000''.
(b) Annual Registration Statement and Notification of Changes.--
Subsection (d) of section 6652 of the Internal Revenue Code of 1986 is
amended--
(1) by striking ``$1'' both places it appears in paragraphs
(1) and (2) and inserting ``$10'';
(2) by striking ``$5,000'' in paragraph (1) and inserting
``$50,000''; and
(3) by striking ``$1,000'' in paragraph (2) and inserting
``$10,000''.
(c) Failure To Provide Notice.--Subsection (h) of section 6652 of
the Internal Revenue Code of 1986 is amended--
(1) by striking ``$10'' and inserting ``$100''; and
(2) by striking ``$5,000'' and inserting ``$50,000''.
(d) Effective Date.--The amendments made by this section shall
apply to returns, statements, and notifications required to be filed,
and notices required to be provided, after December 31, 2019.
SEC. 12. INCREASE INFORMATION SHARING TO ADMINISTER EXCISE TAXES.
(a) In General.--Section 6103(o) of the Internal Revenue Code of
1986 is amended by adding at the end the following new paragraph:
``(3) Taxes imposed by section 4481.--Returns and return
information with respect to taxes imposed by section 4481 shall
be open to inspection by or disclosure to officers and
employees of United States Customs and Border Protection of the
Department of Homeland Security whose official duties require
such inspection or disclosure for purposes of administering
such section.''.
(b) Conforming Amendments.--Paragraph (4) of section 6103(p) of the
Internal Revenue Code of 1986 is amended by striking ``or (o)(1)(A)''
each place it appears and inserting ``, (o)(1)(A), or (o)(3)''.
Passed the House of Representatives July 24, 2019.
Attest:
CHERYL L. JOHNSON,
Clerk.
Calendar No. 390
116th CONGRESS
1st Session
H. R. 397
_______________________________________________________________________
AN ACT
To amend the Internal Revenue Code of 1986 to create a Pension
Rehabilitation Trust Fund, to establish a Pension Rehabilitation
Administration within the Department of the Treasury to make loans to
multiemployer defined benefit plans, and for other purposes.
_______________________________________________________________________
December 19, 2019
Read the second time and placed on the calendar