§ 1107. Limitation with respect to acquisition and holding of employer securities and employer real property by certain plans

Footnotes

1. 1 So in original. Probably should be followed by a dash.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1974

   Employee Retirement Income Security Act of 1974

   Pub. L. 93–406 title I § 407 · 88 Stat. 829

   Enacted · 29 U.S.C. § 1107

   Pub. L. 93–406, title I, § 407, Sept. 2, 1974, 88 Stat. 880

   Source evidence

   Code source credit
   Pub. L. 93–406, title I, § 407, Sept. 2, 1974, 88 Stat. 880

   Enacted provision · exact public law section
   Sec. 407. 10 percent limitation with respect to acquisition and holding of employer securities and employer real property by certain plans (a) Except as otherwise provided in this section and section 29 USC 1107. 414: (1) A plan may not acquire or hold— (A) any employer security which is not a qualifying employer security, or (B) any employer real property which is not qualifying employer real property. (2) A plan may not acquire any qualifying employer security or qualifying employer real property, if immediately after such acquisition the aggregate fair market value of employer securities and employer real property held by the plan exceeds 10 percent of the fair market value of the assets of the plan. (3) (A) After December 31, 1984, a plan may not hold any qualifying employer securities or qualifying employer real property (or both) to the extent that the aggregate fair market value of such securities and property determined on December 31, 1984, exceeds 10 percent of the greater of— (i) the fair market value of the assets of the plan, determined on December 31, 1984, or (ii) the fair market value of the assets of the plan determined on January 1, 1975. (B) Subparagraph (A) of this paragraph shall not apply to any plan which on any date after December 31, 1974; and before January 1, 1985, did not hold employer securities or employer real property (or both) the aggregate fair market value of which determined on such date exceeded 10 percent of the greater of (i) the fair market value of the assets of the plan, determined on such date, or (ii) the fair market value of the assets of the plan determined on January 1, 1975. (4) (A) After December 31, 1979, a plan may not hold any employer securities or employer real property in excess of the amount specified in regulations under subparagraph (B). This subparagraph shall not apply to a plan after the earliest date after December 31, 1974, on which it complies with such regulations. (B) Not later than December 31, 1976, the Secretary shall prescribe Regulations. regulations which shall have the effect of requiring that a plan divest itself of 50 percent of the holdings of employer securities and employer real property which the plan would be required to divest before January 1, 1985, under paragraph (2) or subsection (c) (whichever is applicable). (b) (1) Subsection (a) of this section shall not apply to any acquisition or holding of qualifying employer securities or qualifying employer real property by an eligible individual account plan. (2) Cross References.— (A) For exemption from diversification requirements for holding of qualifying employer securities and qualifying employer real property by eligible individual account plans, see section 404(a)(2). (B) For exemption from prohibited transactions for certain acquisitions of qualifying employer securities and qualifying employer real property which are not in violation of 10 percent limitation, see section 408(c). (C) For transitional rules respecting securities or real property subject to binding contracts in effect on June 30, 1974, see section 414(c). (c) (1) A plan which makes the election, under paragraph (3) shall be treated as satisfying the requirement of subsection (a)(3) if and only if employer securities held on any date after December 31, 1974 and before January 1, 1985 have a fair market value, determined as of December 31, 1974, not in excess of 10 percent of the lesser of— (A) the fair market value of the assets of the plan determined on such date (disregarding any portion of the fair market value of employer securities which is attributable to appreciation of such securities after December 31, 1974) but not less than the fair market value of plan assets on January 1, 1975, or (B) an amount equal to the sum of (i) the total amount of the contributions to the plan received after December 31, 1974, and prior to such date, plus (ii) the fair market value of the assets of the plan, determined on January 1, 1975. (2) For purposes of this subsection, in the case of an employer security held by a plan after January 1, 1975, the ownership of which is derived from ownership of employer securities held by the plan on January 1, 1975, or from the exercise of rights derived from such ownership, the value of such security held after January 1, 1975, shall be based on the value as of January 1, 1975, of the security from which ownership was derived. The Secretary shall prescribe regulations to carry out this paragraph. (3) An election under this paragraph may not be made after December 31, 1975. Such an election shall be made in accordance with regulations prescribed by the Secretary, and shall be irrevocable. A plan may make an election under this paragraph only if on January 1, 1975, the plan holds no employer real property. After such election and before January 1, 1985 the plan may not acquire any employer real property. (d) For purposes of this section— Definitions. (1) The term “employer security” means a security issued by an employer of employees covered by the plan, or by an affiliate of such employer. A contract to which section 408(b)(5) applies shall not be treated as a security for purposes of this section. (2) The term “employer real property” means real property (and related personal property) which is leased to an employer of employees covered by the plan, or to an affiliate of such employer. For purposes of determining the time at which a plan acquires employer real property for purposes of this section, such property shall be deemed to be acquired by the plan on the date on which the plan acquires the property or on the date on which the lease to the employer (or affiliate) is entered into, whichever is later. (3) (A) The term “eligible individual account plan” means an individual account plan which is (i) a profit-sharing, stock bonus, thrift, or savings plan; (ii) an employee stock ownership plan; or (iii) a money purchase plan which was in existence on the date of enactment of this Act and which on such date invested primarily in qualifying employer securities. Such term excludes an individual retirement account or annuity described in section 408 of the Internal Revenue Code of 1954. Post, p. 959. (B) Notwithstanding subparagraph (A), a plan shall be treated as an eligible individual account plan with respect to the acquisition or holding of qualifying employer real property or qualifying employer securities only if such plan explicitly provides for acquisition and holding of qualifying employer securities or qualifying employer real property (as the case may be). In the case of a plan in existence on the date of enactment of this Act, this subparagraph shall not take effect until January 1, 1976. (4) The term “qualifying employer real property” means parcels of employer real property— (A) if a substantial number of the parcels are dispersed geographically; (B) if each parcel of real property and the improvements thereon are suitable (or adaptable without excessive cost) for more than one use; (C) even if all of such real property is leased to one lessee (which may be an employer, or an affiliate of an employer); and (D) if the acquisition and retention of such property comply with the provisions of this part (other than section 404 (a)(1)(B) to the extent it requires diversification, and sections 404(a)(1)(C),406, and subsection (a) of this section). (5) The term “qualifying employer security” means an employer security which is stock or a marketable obligation (as defined in subsection (e)). (6) The term “employee stock ownership plan” means an individual account plan— (A) which is a stock bonus plan which is qualified, or a stock bonus plan and money purchase both of which are qualified, under section 401 of the Internal Revenue Code of 1954, and which is designed to invest primarily in qualifying 26 USC 401. employee securities, and (B) which meets such other requirements as the Secretary of the Treasury may prescribe by regulation. (7) A corporation is an affiliate of an employer if it is a member of any controlled group of corporations (as defined in section 1563(a) of the Internal Revenue Code of 1954, except that “applicable 26 USC 1563. percentage” shall be substituted for “80 percent” wherever the latter percentage appears in such section) of which the employer who maintains the plan is a member. For purposes of the preceding sentence, the term “applicable percentage” means 50 percent, or such lower percentage as the Secretary may prescribe by regulation. A person other than a corporation shall be treated as an affiliate of an employer to the extent provided in regulations of the Secretary. An employer which is a person other than a corporation shall be treated as affiliated with another person to the extent provided by regulations of the Secretary. Regulations under this paragraph shall be prescribed only after consultation and coordination with the Secretary of the Treasury. (8) The Secretary may prescribe regulations specifying the Regulations. extent to which conversions, splits, the exercise of rights, and similar transactions are not treated as acquisitions. (e) For purposes of subsection (d)(5), the term “marketable obligation” “Marketable obligation.” means a bond, debenture, note, or certificate, or other evidence of indebtedness (hereinafter in this subsection referred to as “obligation”) if— (1) such obligation is acquired— (A) on the market, either (i) at the price of the obligation prevailing on a national securities exchange which is registered with the Securities and Exchange Commission, or (ii) if the obligation is not traded on such a national securities exchange, at a price not less favorable to the plan than the offering price for the obligation as established by current bid and asked prices quoted by persons independent of the issuer; (B) from an underwriter, at a price (i) not in excess of the public offering price for the obligation as set forth in a prospectus or offering circular filed with the Securities and Exchange Commission, and (ii) at which a substantial portion of the same issue is acquired by persons independent of the issuer; or (C) directly from the issuer, at a price not less favorable to the plan than the price paid currently for a substantial portion of the same issue by persons independent of the issuer; (2) immediately following acquisition of such obligation— (A) not more than 25 percent of the aggregate amount of obligations issued in such issue 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; and (3) immediately following acquisition of the obligation, not more than 25 percent of the assets of the plan is invested in obligations of the employer or an affiliate of the employer.

2. 1987

   Pub. L. 100–203 § 9345(a)(1) · 101 Stat. 1330

   Added · 29 U.S.C. § 1107(d)(3)(C)

   Pub. L. 100–203, § 9345(a)(1), added subpar. (C)

   Source evidence

   Code amendment note
   Subsec. (d)(3)(C). Pub. L. 100–203, § 9345(a)(1), added subpar. (C).

   Enacted provision · exact public law section
   (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.”

3. 1987

   Pub. L. 100–203 § 9345(b)(1) · 101 Stat. 1330

   Inserted · 29 U.S.C. § 1107(d)(5)

   Pub. L. 100–203, § 9345(b)(1), inserted at end “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).”

   Source evidence

   Code amendment note
   Subsec. (d)(5). Pub. L. 100–203, § 9345(b)(1), inserted at end “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).”

   Enacted provision · exact public law section
   (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

4. 1987

   Pub. L. 100–203 § 9345(a)(2) · 101 Stat. 1330

   Added · 29 U.S.C. § 1107(d)(9)

   Pub. L. 100–203, § 9345(a)(2), added par. (9)

   Source evidence

   Code amendment note
   Subsec. (d)(9). Pub. L. 100–203, § 9345(a)(2), added par. (9).

   Enacted provision · exact public law section
   (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:

5. 1987

   Pub. L. 100–203 § 9345(b)(2) · 101 Stat. 1330

   Added · 29 U.S.C. § 1107(f)

   Pub. L. 100–203, § 9345(b)(2), added subsec. (f)

   Source evidence

   Code amendment note
   Subsec. (f). Pub. L. 100–203, § 9345(b)(2), added subsec. (f).

   Enacted provision · exact public law section
   (2) by adding at the end the following new subsection:

6. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 § 7891(a)(1) · 103 Stat. 2106

   Substituted · 29 U.S.C. § 1107(d)(3)(A); 29 U.S.C. § 1107(d)(6)(A); 29 U.S.C. § 1107(d)(3)(7)

   Pub. L. 101–239, § 7891(a)(1), substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text

   Source evidence

   Code amendment note
   Subsec. (d)(3)(A), (6)(A), (7). Pub. L. 101–239, § 7891(a)(1), substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text.

   Enacted provision · exact public law section
   (1) Titles I, III, and IV of ERISA (other than sections 3(37)(E), 29 USC 1001 et seq. 301(a)(7), and 308, the last sentence of section 408(d), and sections 414(c), 4001(a)(3)(ii), and 4303) are each amended by striking “Internal Revenue Code of 1954” each place it appears and inserting “Internal Revenue Code of 1986”.

7. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 § 7881 · 103 Stat. 2106

   Changed · 29 U.S.C. § 1107(d)(3)(C)

   Pub. L. 101–239, § 7881(l)(1), realigned margin

   Source evidence

   Code amendment note
   Subsec. (d)(3)(C). Pub. L. 101–239, § 7881(l)(1), realigned margin.

   Enacted provision · exact public law section
   SEC. 7881. AMENDMENTS RELATED TO PENSION PROTECTION ACT. (a) Amendments Related to Section 9303.— (1) (A) Subclause (II) of section 412(l)(3)(C)(ii) is amended by 26 USC 412. inserting “(but not below zero)” after “reducing”. (B) Subclause (II) of section 302(d)(3)(C)(ii) of ERISA is 29 USC 1082. amended by inserting “(but not below zero)” after “reducing”. (2) (A) Clause (i) of section 412(1)(4)(8) is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (B) Clause (i) of section 302(d)(4)(B) of ERISA is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (3) (A) Section 412(l)(5)(C) is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (B) Section 302(d)(5)(C) of ERISA is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (4) (A) Section 412(1)(7)(D) is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary.”. (B) Section 302(d)(7)(D) of ERISA is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary of the Treasury.”. (5) (A) Section 412(1)(8) is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary may provide for such reduction for purposes of any other provision which references this subsection.”. (B) Section 302(d)(8) of ERISA is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary of the Treasury may provide for such reduction for purposes of any other provision which references this subsection.”. (6) (A) Section 412(c)(9) is amended— (i) by striking “3 years” and inserting “year”, and (ii) by striking “3-year” in the heading and inserting “Annual”. (B) Section 302(c)(9) of ERISA is amended by striking “3 years” and inserting “year”. (7) Subclause (II) of section 9303(e)(3)(C)(ii) of the Pension 26 USC 412 note. Protection Act is amended by inserting “(and any income allocable to such amount)” after “clause (i)”. (b) Amendments Related to Section 9304.— (1) (A) Subparagraph (A) of section 412(c)(10) is amended— (i) by inserting “defined benefit” before “plan other”, and (ii) by striking “Plans” in the heading and inserting “Defined benefit plans”. (B) Subparagraph (A) of section 302(c)(10) of ERISA is 29 USC 1082. amended by inserting “defined benefit” before “plan other”. (2) (A) Subparagraph (B) of section 412(c)(10) is amended— 26 USC 412. (i) by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”, and (ii) by striking “Multiemployer” in the heading and inserting “Other”. (B) Subparagraph (B) of section 302(c)(10) of ERISA is amended by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”. (3) (A) Section 412(m)(1) is amended by inserting “defined benefit” before “plan (other”. (B) Section 302(e)(1) of ERISA is amended by inserting “defined benefit” before “plan (other”. (4) (A) Subparagraph (D) of section 412(m)(4) is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (1) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (l)(5)(A)(i) paid during the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (l)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (1)(8)(B)) for the plan year to 100 percent.”. (B) Subparagraph (D) of section 302(e)(4) of ERISA is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (d) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (d)(5)(A)(i) paid curing the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (d)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection (d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (d)(8)(B)) for the plan year to 100 percent.”. (5) (A) Section 101(d)(1) of ERISA is amended by striking “an employer of a plan” and inserting “an employer maintaining a plan”. (B) Section 502(c) of ERISA is amended by adding at the end thereof the following new paragraph: “(3) Any employer maintaining a plan who fails to meet the notice requirement of section 101(d) with respect to any participant or beneficiary may in the court’s discretion be liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure, and the court may in its discretion order such other relief as it deems proper.”. (C) Section 9304(d) of the Pension Protection Act is amended by striking “Section” and inserting “Effective with respect to plan years beginning after December 31, 1987, section”. (6) (A) (i) Subparagraph (B) of section 412(m)(1) is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Clause (ii) of section 412(d)(1)(A) is amended by inserting “(including adjustments under subsection (b)(5)(B))” after “costs”. (B) (i) Subparagraph (B) of section 302(e)(1) of ERISA is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Section 303(a)(1)(B) of ERISA (as redesignated by subsection (e)(2)) is amended by inserting “(including adjustments under section 302(b)(5)(B))” after “costs”. (7) Section 303(a) of ERISA (as amended by section 9306(c)(2)(A) of the Pension Protection Act) is amended— (A) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and by adjusting the left-hand margination thereof 4 ems to the left; (B) in paragraph (1) (as redesignated), by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively; and (C) in paragraph (2) (as redesignated), by inserting “of such Code” after “section 6621(b)”. (8) Subsection (f) of section 303 of ERISA (as so redesignated by section 9306(a)(2) of the Pension Protection Act) is transferred to immediately after subsection (e) of such section. (c) Amendments Related to Section 9306.— (1) The last sentence of section 412(f)(4)(A) is amended by striking “the benefit liabilities” and inserting “for benefit liabilities”. (2) The last sentence of section 303(e)(1) of ERISA is amended 29 USC 1083. by striking “the benefit liabilities” and inserting “for benefit liabilities”. (3) Section 9306(f)(3) of the Pension Protection Act is amended 26 USC 412 note. to read as follows: “(3) Subsection (b).— The amendments made by subsection (b) shall apply to waivers for plan years beginning after December 31, 1987. For purposes of applying such amendments, the number of waivers which may be granted for plan years after December 31, 1987, shall be determined without regard to any waivers granted for plan years beginning before January 1, 1988.”. (d) Amendments Related to Section 9307.— (1) (A) Clause (iii) of section 412(b)(5)(B) is amended by striking 26 USC 412. “for purposes of this section and for purposes of determining current liability,”. (B) Clause (iii) of section 302(b)(5)(B) of ERISA is amended by 29 USC 1082. striking “for purposes of this section and for purposes of determining current liability,”. (2) (A) Section 302(b)(5)(B) of ERISA is amended by inserting the following matter after the heading and before clause (i): “For purposes of determining a plan’s current liability and for purposes of determining a plan’s required contribution under section 302(d) for any plan year—”. (B) Section 302(b)(5) of ERISA is amended by striking the matter following the heading thereof and preceding subparagraph (A). (C) Subclause (I) of section 302(b)(5)(B)(ii) of ERISA is amended by striking “average rate” and inserting “the weighted average of the rates”. (3) Section 9307(f) of the Pension Protection Act is amended to 26 USC 404 note. read as follows: “(f) Effective Date.— “(1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 1987. “(2) Amortization of gains and losses.— Sections 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of the Internal Revenue Code of 1986 and sections 302(b)(2)(B)(iv) and 302(b)(3)(B)(ii) of the Employee Retirement Income Security Act of 1974 (as amended by paragraphs (1)(A) and (2)(A) of subsection (a)) shall apply to gains and losses established in years beginning after December 31, 1987. For purposes of the preceding sentence, any gain or loss determined by a valuation occurring as of January 1, 1988, shall be treated as established in years beginning before 1988, or at the election of the employer, shall be amortized in accordance with Internal Revenue Service Notice 89–52.”. (4) Subparagraphs (A) and (B) of section 302(c)(3) of ERISA are each amended by adjusting the left-hand margination thereof, and of each subdivision thereof, 2 ems to the left. (e) Amendments Related to Section 9311.— (1) Section 9311(a)(2) of the Pension Protection Act is amended 29 USC 1344 note. by striking “plan assets to the employer for purposes of section 4044(d)(1)(C) of the Employee Retirement Income Security Act of 1974” and inserting “residual plan assets upon termination”. (2) Section 9311(d) of the Pension Protection Act is amended— (A) by striking “section 4041(c)” and inserting “section 4041” in paragraph (1), and (B) by adding at the end thereof the following new flush sentence: “Except as provided in subsection (a)(2), the amendments made by subsection (a) shall, apply to any provision of the plan or plan amendment adopted after December 17, 1987.”. (3) Section 9311(b)(2) of the Pension Protection Act is amended by striking “subsection (c)(1)” and inserting “subsection (a)(1)”. (4) Section 9311(a)(2) of the Pension Protection Act is amended— (A) by striking “1 year after the effective date of such amendments made by paragraph (1)” and inserting “December 17, 1988”; and (B) by striking the last sentence. (f) Amendments Related to Section 9312.— (1) Section 9312(b)(3)(B)(i) of the Pension Protection Act is amended— (A) by striking “section 4022(c)(1)” in subclause (I) and inserting “section 4022(c)(3)”, and (B) by striking “subparagraph (B) of section 4022(c)(1)” and inserting “subparagraph (C) of section 4022(c)(3)”. (2) Section 4062(a) of ERISA is amended— (A) by inserting “and” at the end of paragraph (1); (B) by striking paragraph (2); (C) by redesignating paragraph (3) as paragraph (2); and (D) in paragraph (2) (as so redesignated), by striking “subsection (d)” and inserting “subsection (c)”. (3) (A) Section 4064(b) of ERISA is amended by striking “and clauses (i)(II) and (ii) of section 4062(b)(1)(A)” and inserting “and section 4068(a)”. (B) Section 4068(a) of ERISA is amended by striking the last sentence. (4) Section 4022(c)(1) of ERISA is amended by striking “(in the case of a deceased participant)”. (5) Section 4022(c)(3)(B)(ii) of ERISA is amended by inserting “, and during the 5-Federal fiscal year period ending with the fiscal year preceding the fiscal year in which occurs the date of the notice of intent to terminate with respect to the plan termination for which the recovery ratio is being determined” after “1987”. (6) Section 9312(b)(3)(B) of the Pension Protection Act is amended by striking clause (ii). (7) Section 4041(c) of ERISA is amended— (A) fay striking “(or its designee under section 4049(b))” in paragraph (2)(A)(iii)(H), (B) by striking “section 4049” in paragraph (2)(A)(iii)(II) and inserting “section 4022(c)”, and (C) by striking the last sentence of paragraph (3)(C)(i). (8) Section 4070(a) of ERISA is amended by striking “4049,”. (9) Section 9312(d)(1) of the Pension Protection Act is amended by striking “section 4041(c)” and inserting “section 4041”. (10) (A) Section 4062(b)(2)(B) of ERISA is amended by striking “the liability under paragraph (1)(A)(ii)” and inserting “so much of the liability under paragraph (1)(A) as exceeds 30 percent of the collective net worth of all persons described in subsection (a) (including interest)”. (B) Section 9312(b)(2)(B)(ii) of the Pension Protection Act is 29 USC 1362. amended to read as follows: “(ii) Section 4062(d) of ERISA (as redesignated by paragraph (1)(B)) is amended by striking out paragraph (3).”. (C) Section 4068 of ERISA is amended by adding at the end 29 USC 1368. the following new subsection: “(f) Definitions.— For purposes of this section— “(1) The collective net worth of persons subject to liability in connection with a plan termination shall be determined as provided in section 4062(d)(1). “(2) The term ‘pre-tax profits’ has the meaning provided in section 4062(d)(2).”. (11) Section 4022(c)(1) of ERISA is amended by striking “section 29 USC 1322. 4044(a), to such participant” and inserting “section 4044(a). Such payment shall be made to such participant”. (12) Subsection (a) of section 4068 of ERISA is amended— (A) by striking “to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the first place it appears; and (B) by striking “to the extent such amount does not Gifts and property. Real property. exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the second place it appears and all that follows and inserting the following: “in the amount of such liability (including interest) upon all property and rights to property, whether real or personal, belonging to such person, except that such lien may not be in an amount in excess of 30 percent of the collective net worth of all persons described in section 4062(a)”. (13) The table of contents in section 1 of ERISA is amended by striking the item relating to section 4049. (g) Amendments Related to Section 9313.— (1) Section 4041(d)(1) of ERISA is amended by striking “sufficient 29 USC 1341. for benefit commitments” and inserting “sufficient for benefit liabilities”. (2) Section 4041(c)(2)(B) of ERISA is amended by inserting “proposed” before “termination” in the parenthetical in the second sentence. (3) Clause (ii) of section 4041(c)(2)(A) of ERISA is amended— (A) by inserting “unless the corporation determines the information is not necessary for purposes of paragraph (3)(A) or section 4062,” before “certification”, (B) by inserting “and, if applicable, the proposed distribution date” after “termination date” in subclause (I), and (C) by striking “date” and inserting “dates” in subclauses (II) through (V). (4) Subparagraph (B) of section 4041(b)(3) of ERISA is amended by adding a period at the end. (5) Section 9313(b)(3) of the Pension Protection Act is amended 29 USC 1341. by inserting “each place it appears” before the period. (6) Section 4041(b)(2)(A) of ERISA is amended by adjusting the left-hand margination of the last sentence two ems to the right. (7) The first subsection (b) of section 9314 of the Pension Protection Act is amended by striking “Section 4042” and 29 USC 1342. inserting “Section 4042(a)”, and by striking “third sentence” and inserting “last sentence”. (8) Section 9314(c)(1) of the Pension Protection Act is amended by inserting “title IV of” after “Subtitle D of”. (h) Amendment Related to Section 9331.— (1) Subparagraph (E) of section 4006(a)(3) of ERISA is amended by adding at the end thereof the following new clause: “(v) No premium shall be determined under this subparagraph for any plan year if, as of the close of the preceding plan year, contributions to the plan for the preceding plan year were not less than the full funding limitation for the preceding plan year under section 412(c)(7) of the Internal Revenue Code of 1986.”. (2) Clause (iii) of section 4006(c)(1)(A) of ERISA is amended by adjusting the left-hand margination thereof 2 ems to the left. (i) Amendments Related to Section 9341.— (1) (A) Section 401(a)(29)(C)(i)(H) is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment” after “amendment”. (B) Section 307(c)(1)(B) of ERISA is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment”. (2) Section 307(d) of ERISA is amended by inserting “of the Treasury” after “Secretary”. (3) (A) Section 307 of ERISA is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Notice.— A contributing sponsor which is required to provide security under subsection (a) shall notify the Pension Benefit Guaranty Corporation within 30 days after the amendment requiring such security takes effect. Such notice shall contain such information as the Corporation may require.”. (B) Section 4071 of ERISA is amended— (i) by striking “or subtitle A B, or C” and inserting “, subtitle A B, or C, as section 302(f)(4) or 307(e)”, and (ii) by inserting “or such section” after “such subtitle”. (4) (A) Clause (i) of section 401(a)(29)(A) is amended by inserting “to which the requirements of section 412 apply” after “multiemployer plan)”. (B) Section 307(a)(1) of ERISA is amended by inserting “to which the requirements of section 302 apply” after “multiemployer plan)”. (5) Section 9341(c) of the Pension Protection Act is amended by inserting “(without regard to any extension, amendment, or modification of such agreements on or after such date of enactment)” after “ratified before the date of enactment”. (j) Amendments Related to Section 9342.— (1) Paragraph (11) of section 103(d) of ERISA is amended— (A) by striking “60 percent” and inserting “70 percent”, and (B) by striking “such percentage” and inserting “the percentage which such value is of such liability.”. (2) Section 502(a)(6) of ERISA is amended by striking “subsection (i)” and inserting “subsection (c)(2) or (i)”. (3) Section 502(c)(2) of ERISA is amended— (A) by inserting “against any plan administrator” after “civil penalty”, and (B) by striking “a plan administrator’s” and inserting “such plan administrator’s”. (4) Paragraph (2) of section 413 of ERISA is amended by 29 USC 1113. striking the comma. (k) Amendment Related to Section 9343.— Section 403(c) of ERISA is amended by striking paragraph (3) and by redesignating 29 USC 1103. paragraph (4) as paragraph (3). (l) Amendments Related to Section 9345.— (1) Section 407(d)(3)(C) of ERISA is amended by adjusting the 29 USC 1107. left-hand margination thereof 2 ems to the left. (2) Section 4O7(d)(9) of ERISA is amended— (A) by striking “such arrangement” and inserting “such individual account plan”; and (B) by adjusting the left-hand margination thereof 2 ems to the right. (3) Section 407(f) of ERISA is amended— (A) in paragraph (1), by striking “this subsection” and inserting “this paragraph”; and (B) by striking paragraph (3). (4) Section 407(f)(1) of ERISA is amended by inserting “, immediately following the acquisition of such stock” after “if”. (5) Section 408(b) of ERISA is amended by adding at the end 29 USC 1108. the following new paragraph: “(12) The sale by a plan to a party in interest on or after Securities. December 18, 1987, of any stock, if— “(A) the requirements of paragraphs (1) and (2) of subsection (e) are met with respect to such stock, “(B) on the later of the date on which the stock was acquired by the plan, or January 1, 1975, such stock constituted a qualifying employer security (as defined in section 4O7(d)(5) as then in effect), and “(C) such stock does not constitute a qualifying employer security (as defined in section 407(d)(5) as in effect at the time of the sale).”. (m) Amendments Related to Section 9346.— (1) (A) Clause (iii) of section 411(c)(2)(C) is amended to read as 26 USC 411. follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year) for the period beginning with the 1st plan year to which subsection (a)(2) applies (by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 417(e)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”, (B) Subparagraph (B) of section 411(c)(2) is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 417(e)(3) (as of the determination date).”. (C) Section 411(c)(2) is amended by striking subparagraph (E). (D) Section 411(a)(7) is amended by adding at the end thereof the following new subparagraph: “(D) Accrued benefit attributable to employee contributions.— The accrued benefit of an employee shall not be less than the amount determined under subsection (c)(2)(B) with respect to the employee’s accumulated contributions.”. (2) (A) Clause (iii) of section 204(c)(2)(C) of ERISA is amended to read as follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 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 for the period beginning with the 1st plan year to which subsection (a)(2) applies by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 205(g)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”. (B) Subparagraph (B) of section 204(c)(2) of ERISA is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 205(g)(3) (as of the determination date).”. (C) Section 204(c)(2) of ERISA is amended by striking subparagraph (E). (D) Paragraph (23) of section 3 of ERISA is amended by adding at the end thereof the following new flush sentence: “The accrued benefit of an employee shall not be less than the amount determined under section 204(c)(2)(B) with respect to the employee’s accumulated contribution.”. (3) If— (A) during the period beginning December 22, 1987, and ending June 21, 1988, a plan was amended to reflect the amendments made by section 9346 of the Pension Protection Act, and (B) such plan is amended to reflect the amendments made by this subsection, any plan amendment described in subparagraph (B) shall not be treated as reducing accrued benefits for purposes of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of ERISA.

8. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 § 7894(e)(2) · 103 Stat. 2106

   1. Substituted · 29 U.S.C. § 1107(d)(6)(A)

      Pub. L. 101–239, § 7894(e)(2), substituted “money purchase plan” for “money purchase”

   2. Substituted · 29 U.S.C. § 1107(d)(6)(A)

      Pub. L. 101–239, § 7894(e)(2), substituted “employer securities” for “employee securities”

   Source evidence

   Code amendment note
   Subsec. (d)(6)(A). Pub. L. 101–239, § 7894(e)(2), substituted “money purchase plan” for “money purchase” and “employer securities” for “employee securities”.

   Enacted provision · exact public law section
   (2) Section 407(d)(6)(A) of ERISA is amended— (A) by inserting “plan” after “money purchase”; and (B) by striking “employee securities” and inserting “employer securities”.

9. 1989

   Revenue Reconciliation Act of 1989

   Pub. L. 101–239 § 7881 · 103 Stat. 2106

   Substituted · 29 U.S.C. § 1107(d)(9)

   Pub. L. 101–239, § 7881(l)(2), substituted “such individual account plan” for “such arrangement” and realigned margin

   Source evidence

   Code amendment note
   Subsec. (d)(9). Pub. L. 101–239, § 7881(l)(2), substituted “such individual account plan” for “such arrangement” and realigned margin.

   Enacted provision · exact public law section
   SEC. 7881. AMENDMENTS RELATED TO PENSION PROTECTION ACT. (a) Amendments Related to Section 9303.— (1) (A) Subclause (II) of section 412(l)(3)(C)(ii) is amended by 26 USC 412. inserting “(but not below zero)” after “reducing”. (B) Subclause (II) of section 302(d)(3)(C)(ii) of ERISA is 29 USC 1082. amended by inserting “(but not below zero)” after “reducing”. (2) (A) Clause (i) of section 412(1)(4)(8) is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (B) Clause (i) of section 302(d)(4)(B) of ERISA is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (3) (A) Section 412(l)(5)(C) is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (B) Section 302(d)(5)(C) of ERISA is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (4) (A) Section 412(1)(7)(D) is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary.”. (B) Section 302(d)(7)(D) of ERISA is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary of the Treasury.”. (5) (A) Section 412(1)(8) is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary may provide for such reduction for purposes of any other provision which references this subsection.”. (B) Section 302(d)(8) of ERISA is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary of the Treasury may provide for such reduction for purposes of any other provision which references this subsection.”. (6) (A) Section 412(c)(9) is amended— (i) by striking “3 years” and inserting “year”, and (ii) by striking “3-year” in the heading and inserting “Annual”. (B) Section 302(c)(9) of ERISA is amended by striking “3 years” and inserting “year”. (7) Subclause (II) of section 9303(e)(3)(C)(ii) of the Pension 26 USC 412 note. Protection Act is amended by inserting “(and any income allocable to such amount)” after “clause (i)”. (b) Amendments Related to Section 9304.— (1) (A) Subparagraph (A) of section 412(c)(10) is amended— (i) by inserting “defined benefit” before “plan other”, and (ii) by striking “Plans” in the heading and inserting “Defined benefit plans”. (B) Subparagraph (A) of section 302(c)(10) of ERISA is 29 USC 1082. amended by inserting “defined benefit” before “plan other”. (2) (A) Subparagraph (B) of section 412(c)(10) is amended— 26 USC 412. (i) by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”, and (ii) by striking “Multiemployer” in the heading and inserting “Other”. (B) Subparagraph (B) of section 302(c)(10) of ERISA is amended by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”. (3) (A) Section 412(m)(1) is amended by inserting “defined benefit” before “plan (other”. (B) Section 302(e)(1) of ERISA is amended by inserting “defined benefit” before “plan (other”. (4) (A) Subparagraph (D) of section 412(m)(4) is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (1) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (l)(5)(A)(i) paid during the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (l)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (1)(8)(B)) for the plan year to 100 percent.”. (B) Subparagraph (D) of section 302(e)(4) of ERISA is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (d) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (d)(5)(A)(i) paid curing the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (d)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection (d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (d)(8)(B)) for the plan year to 100 percent.”. (5) (A) Section 101(d)(1) of ERISA is amended by striking “an employer of a plan” and inserting “an employer maintaining a plan”. (B) Section 502(c) of ERISA is amended by adding at the end thereof the following new paragraph: “(3) Any employer maintaining a plan who fails to meet the notice requirement of section 101(d) with respect to any participant or beneficiary may in the court’s discretion be liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure, and the court may in its discretion order such other relief as it deems proper.”. (C) Section 9304(d) of the Pension Protection Act is amended by striking “Section” and inserting “Effective with respect to plan years beginning after December 31, 1987, section”. (6) (A) (i) Subparagraph (B) of section 412(m)(1) is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Clause (ii) of section 412(d)(1)(A) is amended by inserting “(including adjustments under subsection (b)(5)(B))” after “costs”. (B) (i) Subparagraph (B) of section 302(e)(1) of ERISA is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Section 303(a)(1)(B) of ERISA (as redesignated by subsection (e)(2)) is amended by inserting “(including adjustments under section 302(b)(5)(B))” after “costs”. (7) Section 303(a) of ERISA (as amended by section 9306(c)(2)(A) of the Pension Protection Act) is amended— (A) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and by adjusting the left-hand margination thereof 4 ems to the left; (B) in paragraph (1) (as redesignated), by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively; and (C) in paragraph (2) (as redesignated), by inserting “of such Code” after “section 6621(b)”. (8) Subsection (f) of section 303 of ERISA (as so redesignated by section 9306(a)(2) of the Pension Protection Act) is transferred to immediately after subsection (e) of such section. (c) Amendments Related to Section 9306.— (1) The last sentence of section 412(f)(4)(A) is amended by striking “the benefit liabilities” and inserting “for benefit liabilities”. (2) The last sentence of section 303(e)(1) of ERISA is amended 29 USC 1083. by striking “the benefit liabilities” and inserting “for benefit liabilities”. (3) Section 9306(f)(3) of the Pension Protection Act is amended 26 USC 412 note. to read as follows: “(3) Subsection (b).— The amendments made by subsection (b) shall apply to waivers for plan years beginning after December 31, 1987. For purposes of applying such amendments, the number of waivers which may be granted for plan years after December 31, 1987, shall be determined without regard to any waivers granted for plan years beginning before January 1, 1988.”. (d) Amendments Related to Section 9307.— (1) (A) Clause (iii) of section 412(b)(5)(B) is amended by striking 26 USC 412. “for purposes of this section and for purposes of determining current liability,”. (B) Clause (iii) of section 302(b)(5)(B) of ERISA is amended by 29 USC 1082. striking “for purposes of this section and for purposes of determining current liability,”. (2) (A) Section 302(b)(5)(B) of ERISA is amended by inserting the following matter after the heading and before clause (i): “For purposes of determining a plan’s current liability and for purposes of determining a plan’s required contribution under section 302(d) for any plan year—”. (B) Section 302(b)(5) of ERISA is amended by striking the matter following the heading thereof and preceding subparagraph (A). (C) Subclause (I) of section 302(b)(5)(B)(ii) of ERISA is amended by striking “average rate” and inserting “the weighted average of the rates”. (3) Section 9307(f) of the Pension Protection Act is amended to 26 USC 404 note. read as follows: “(f) Effective Date.— “(1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 1987. “(2) Amortization of gains and losses.— Sections 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of the Internal Revenue Code of 1986 and sections 302(b)(2)(B)(iv) and 302(b)(3)(B)(ii) of the Employee Retirement Income Security Act of 1974 (as amended by paragraphs (1)(A) and (2)(A) of subsection (a)) shall apply to gains and losses established in years beginning after December 31, 1987. For purposes of the preceding sentence, any gain or loss determined by a valuation occurring as of January 1, 1988, shall be treated as established in years beginning before 1988, or at the election of the employer, shall be amortized in accordance with Internal Revenue Service Notice 89–52.”. (4) Subparagraphs (A) and (B) of section 302(c)(3) of ERISA are each amended by adjusting the left-hand margination thereof, and of each subdivision thereof, 2 ems to the left. (e) Amendments Related to Section 9311.— (1) Section 9311(a)(2) of the Pension Protection Act is amended 29 USC 1344 note. by striking “plan assets to the employer for purposes of section 4044(d)(1)(C) of the Employee Retirement Income Security Act of 1974” and inserting “residual plan assets upon termination”. (2) Section 9311(d) of the Pension Protection Act is amended— (A) by striking “section 4041(c)” and inserting “section 4041” in paragraph (1), and (B) by adding at the end thereof the following new flush sentence: “Except as provided in subsection (a)(2), the amendments made by subsection (a) shall, apply to any provision of the plan or plan amendment adopted after December 17, 1987.”. (3) Section 9311(b)(2) of the Pension Protection Act is amended by striking “subsection (c)(1)” and inserting “subsection (a)(1)”. (4) Section 9311(a)(2) of the Pension Protection Act is amended— (A) by striking “1 year after the effective date of such amendments made by paragraph (1)” and inserting “December 17, 1988”; and (B) by striking the last sentence. (f) Amendments Related to Section 9312.— (1) Section 9312(b)(3)(B)(i) of the Pension Protection Act is amended— (A) by striking “section 4022(c)(1)” in subclause (I) and inserting “section 4022(c)(3)”, and (B) by striking “subparagraph (B) of section 4022(c)(1)” and inserting “subparagraph (C) of section 4022(c)(3)”. (2) Section 4062(a) of ERISA is amended— (A) by inserting “and” at the end of paragraph (1); (B) by striking paragraph (2); (C) by redesignating paragraph (3) as paragraph (2); and (D) in paragraph (2) (as so redesignated), by striking “subsection (d)” and inserting “subsection (c)”. (3) (A) Section 4064(b) of ERISA is amended by striking “and clauses (i)(II) and (ii) of section 4062(b)(1)(A)” and inserting “and section 4068(a)”. (B) Section 4068(a) of ERISA is amended by striking the last sentence. (4) Section 4022(c)(1) of ERISA is amended by striking “(in the case of a deceased participant)”. (5) Section 4022(c)(3)(B)(ii) of ERISA is amended by inserting “, and during the 5-Federal fiscal year period ending with the fiscal year preceding the fiscal year in which occurs the date of the notice of intent to terminate with respect to the plan termination for which the recovery ratio is being determined” after “1987”. (6) Section 9312(b)(3)(B) of the Pension Protection Act is amended by striking clause (ii). (7) Section 4041(c) of ERISA is amended— (A) fay striking “(or its designee under section 4049(b))” in paragraph (2)(A)(iii)(H), (B) by striking “section 4049” in paragraph (2)(A)(iii)(II) and inserting “section 4022(c)”, and (C) by striking the last sentence of paragraph (3)(C)(i). (8) Section 4070(a) of ERISA is amended by striking “4049,”. (9) Section 9312(d)(1) of the Pension Protection Act is amended by striking “section 4041(c)” and inserting “section 4041”. (10) (A) Section 4062(b)(2)(B) of ERISA is amended by striking “the liability under paragraph (1)(A)(ii)” and inserting “so much of the liability under paragraph (1)(A) as exceeds 30 percent of the collective net worth of all persons described in subsection (a) (including interest)”. (B) Section 9312(b)(2)(B)(ii) of the Pension Protection Act is 29 USC 1362. amended to read as follows: “(ii) Section 4062(d) of ERISA (as redesignated by paragraph (1)(B)) is amended by striking out paragraph (3).”. (C) Section 4068 of ERISA is amended by adding at the end 29 USC 1368. the following new subsection: “(f) Definitions.— For purposes of this section— “(1) The collective net worth of persons subject to liability in connection with a plan termination shall be determined as provided in section 4062(d)(1). “(2) The term ‘pre-tax profits’ has the meaning provided in section 4062(d)(2).”. (11) Section 4022(c)(1) of ERISA is amended by striking “section 29 USC 1322. 4044(a), to such participant” and inserting “section 4044(a). Such payment shall be made to such participant”. (12) Subsection (a) of section 4068 of ERISA is amended— (A) by striking “to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the first place it appears; and (B) by striking “to the extent such amount does not Gifts and property. Real property. exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the second place it appears and all that follows and inserting the following: “in the amount of such liability (including interest) upon all property and rights to property, whether real or personal, belonging to such person, except that such lien may not be in an amount in excess of 30 percent of the collective net worth of all persons described in section 4062(a)”. (13) The table of contents in section 1 of ERISA is amended by striking the item relating to section 4049. (g) Amendments Related to Section 9313.— (1) Section 4041(d)(1) of ERISA is amended by striking “sufficient 29 USC 1341. for benefit commitments” and inserting “sufficient for benefit liabilities”. (2) Section 4041(c)(2)(B) of ERISA is amended by inserting “proposed” before “termination” in the parenthetical in the second sentence. (3) Clause (ii) of section 4041(c)(2)(A) of ERISA is amended— (A) by inserting “unless the corporation determines the information is not necessary for purposes of paragraph (3)(A) or section 4062,” before “certification”, (B) by inserting “and, if applicable, the proposed distribution date” after “termination date” in subclause (I), and (C) by striking “date” and inserting “dates” in subclauses (II) through (V). (4) Subparagraph (B) of section 4041(b)(3) of ERISA is amended by adding a period at the end. (5) Section 9313(b)(3) of the Pension Protection Act is amended 29 USC 1341. by inserting “each place it appears” before the period. (6) Section 4041(b)(2)(A) of ERISA is amended by adjusting the left-hand margination of the last sentence two ems to the right. (7) The first subsection (b) of section 9314 of the Pension Protection Act is amended by striking “Section 4042” and 29 USC 1342. inserting “Section 4042(a)”, and by striking “third sentence” and inserting “last sentence”. (8) Section 9314(c)(1) of the Pension Protection Act is amended by inserting “title IV of” after “Subtitle D of”. (h) Amendment Related to Section 9331.— (1) Subparagraph (E) of section 4006(a)(3) of ERISA is amended by adding at the end thereof the following new clause: “(v) No premium shall be determined under this subparagraph for any plan year if, as of the close of the preceding plan year, contributions to the plan for the preceding plan year were not less than the full funding limitation for the preceding plan year under section 412(c)(7) of the Internal Revenue Code of 1986.”. (2) Clause (iii) of section 4006(c)(1)(A) of ERISA is amended by adjusting the left-hand margination thereof 2 ems to the left. (i) Amendments Related to Section 9341.— (1) (A) Section 401(a)(29)(C)(i)(H) is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment” after “amendment”. (B) Section 307(c)(1)(B) of ERISA is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment”. (2) Section 307(d) of ERISA is amended by inserting “of the Treasury” after “Secretary”. (3) (A) Section 307 of ERISA is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Notice.— A contributing sponsor which is required to provide security under subsection (a) shall notify the Pension Benefit Guaranty Corporation within 30 days after the amendment requiring such security takes effect. Such notice shall contain such information as the Corporation may require.”. (B) Section 4071 of ERISA is amended— (i) by striking “or subtitle A B, or C” and inserting “, subtitle A B, or C, as section 302(f)(4) or 307(e)”, and (ii) by inserting “or such section” after “such subtitle”. (4) (A) Clause (i) of section 401(a)(29)(A) is amended by inserting “to which the requirements of section 412 apply” after “multiemployer plan)”. (B) Section 307(a)(1) of ERISA is amended by inserting “to which the requirements of section 302 apply” after “multiemployer plan)”. (5) Section 9341(c) of the Pension Protection Act is amended by inserting “(without regard to any extension, amendment, or modification of such agreements on or after such date of enactment)” after “ratified before the date of enactment”. (j) Amendments Related to Section 9342.— (1) Paragraph (11) of section 103(d) of ERISA is amended— (A) by striking “60 percent” and inserting “70 percent”, and (B) by striking “such percentage” and inserting “the percentage which such value is of such liability.”. (2) Section 502(a)(6) of ERISA is amended by striking “subsection (i)” and inserting “subsection (c)(2) or (i)”. (3) Section 502(c)(2) of ERISA is amended— (A) by inserting “against any plan administrator” after “civil penalty”, and (B) by striking “a plan administrator’s” and inserting “such plan administrator’s”. (4) Paragraph (2) of section 413 of ERISA is amended by 29 USC 1113. striking the comma. (k) Amendment Related to Section 9343.— Section 403(c) of ERISA is amended by striking paragraph (3) and by redesignating 29 USC 1103. paragraph (4) as paragraph (3). (l) Amendments Related to Section 9345.— (1) Section 407(d)(3)(C) of ERISA is amended by adjusting the 29 USC 1107. left-hand margination thereof 2 ems to the left. (2) Section 4O7(d)(9) of ERISA is amended— (A) by striking “such arrangement” and inserting “such individual account plan”; and (B) by adjusting the left-hand margination thereof 2 ems to the right. (3) Section 407(f) of ERISA is amended— (A) in paragraph (1), by striking “this subsection” and inserting “this paragraph”; and (B) by striking paragraph (3). (4) Section 407(f)(1) of ERISA is amended by inserting “, immediately following the acquisition of such stock” after “if”. (5) Section 408(b) of ERISA is amended by adding at the end 29 USC 1108. the following new paragraph: “(12) The sale by a plan to a party in interest on or after Securities. December 18, 1987, of any stock, if— “(A) the requirements of paragraphs (1) and (2) of subsection (e) are met with respect to such stock, “(B) on the later of the date on which the stock was acquired by the plan, or January 1, 1975, such stock constituted a qualifying employer security (as defined in section 4O7(d)(5) as then in effect), and “(C) such stock does not constitute a qualifying employer security (as defined in section 407(d)(5) as in effect at the time of the sale).”. (m) Amendments Related to Section 9346.— (1) (A) Clause (iii) of section 411(c)(2)(C) is amended to read as 26 USC 411. follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year) for the period beginning with the 1st plan year to which subsection (a)(2) applies (by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 417(e)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”, (B) Subparagraph (B) of section 411(c)(2) is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 417(e)(3) (as of the determination date).”. (C) Section 411(c)(2) is amended by striking subparagraph (E). (D) Section 411(a)(7) is amended by adding at the end thereof the following new subparagraph: “(D) Accrued benefit attributable to employee contributions.— The accrued benefit of an employee shall not be less than the amount determined under subsection (c)(2)(B) with respect to the employee’s accumulated contributions.”. (2) (A) Clause (iii) of section 204(c)(2)(C) of ERISA is amended to read as follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 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 for the period beginning with the 1st plan year to which subsection (a)(2) applies by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 205(g)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”. (B) Subparagraph (B) of section 204(c)(2) of ERISA is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 205(g)(3) (as of the determination date).”. (C) Section 204(c)(2) of ERISA is amended by striking subparagraph (E). (D) Paragraph (23) of section 3 of ERISA is amended by adding at the end thereof the following new flush sentence: “The accrued benefit of an employee shall not be less than the amount determined under section 204(c)(2)(B) with respect to the employee’s accumulated contribution.”. (3) If— (A) during the period beginning December 22, 1987, and ending June 21, 1988, a plan was amended to reflect the amendments made by section 9346 of the Pension Protection Act, and (B) such plan is amended to reflect the amendments made by this subsection, any plan amendment described in subparagraph (B) shall not be treated as reducing accrued benefits for purposes of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of ERISA.

10. 1989

    Revenue Reconciliation Act of 1989

    Pub. L. 101–239 § 7881 · 103 Stat. 2106

    1. Substituted · 29 U.S.C. § 1107(f)(1)

       Pub. L. 101–239, § 7881(l)(3)(A), (4), substituted “paragraph” for “subsection”

    2. Substituted · 29 U.S.C. § 1107(f)(1)

       Pub. L. 101–239, § 7881(l)(3)(A), (4), substituted “if, immediately following the acquisition of such stock” for “if”

    Source evidence

    Code amendment note
    Subsec. (f)(1). Pub. L. 101–239, § 7881(l)(3)(A), (4), substituted “paragraph” for “subsection” and “if, immediately following the acquisition of such stock” for “if”.

    Enacted provision · exact public law section
    SEC. 7881. AMENDMENTS RELATED TO PENSION PROTECTION ACT. (a) Amendments Related to Section 9303.— (1) (A) Subclause (II) of section 412(l)(3)(C)(ii) is amended by 26 USC 412. inserting “(but not below zero)” after “reducing”. (B) Subclause (II) of section 302(d)(3)(C)(ii) of ERISA is 29 USC 1082. amended by inserting “(but not below zero)” after “reducing”. (2) (A) Clause (i) of section 412(1)(4)(8) is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (B) Clause (i) of section 302(d)(4)(B) of ERISA is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (3) (A) Section 412(l)(5)(C) is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (B) Section 302(d)(5)(C) of ERISA is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (4) (A) Section 412(1)(7)(D) is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary.”. (B) Section 302(d)(7)(D) of ERISA is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary of the Treasury.”. (5) (A) Section 412(1)(8) is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary may provide for such reduction for purposes of any other provision which references this subsection.”. (B) Section 302(d)(8) of ERISA is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary of the Treasury may provide for such reduction for purposes of any other provision which references this subsection.”. (6) (A) Section 412(c)(9) is amended— (i) by striking “3 years” and inserting “year”, and (ii) by striking “3-year” in the heading and inserting “Annual”. (B) Section 302(c)(9) of ERISA is amended by striking “3 years” and inserting “year”. (7) Subclause (II) of section 9303(e)(3)(C)(ii) of the Pension 26 USC 412 note. Protection Act is amended by inserting “(and any income allocable to such amount)” after “clause (i)”. (b) Amendments Related to Section 9304.— (1) (A) Subparagraph (A) of section 412(c)(10) is amended— (i) by inserting “defined benefit” before “plan other”, and (ii) by striking “Plans” in the heading and inserting “Defined benefit plans”. (B) Subparagraph (A) of section 302(c)(10) of ERISA is 29 USC 1082. amended by inserting “defined benefit” before “plan other”. (2) (A) Subparagraph (B) of section 412(c)(10) is amended— 26 USC 412. (i) by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”, and (ii) by striking “Multiemployer” in the heading and inserting “Other”. (B) Subparagraph (B) of section 302(c)(10) of ERISA is amended by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”. (3) (A) Section 412(m)(1) is amended by inserting “defined benefit” before “plan (other”. (B) Section 302(e)(1) of ERISA is amended by inserting “defined benefit” before “plan (other”. (4) (A) Subparagraph (D) of section 412(m)(4) is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (1) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (l)(5)(A)(i) paid during the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (l)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (1)(8)(B)) for the plan year to 100 percent.”. (B) Subparagraph (D) of section 302(e)(4) of ERISA is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (d) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (d)(5)(A)(i) paid curing the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (d)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection (d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (d)(8)(B)) for the plan year to 100 percent.”. (5) (A) Section 101(d)(1) of ERISA is amended by striking “an employer of a plan” and inserting “an employer maintaining a plan”. (B) Section 502(c) of ERISA is amended by adding at the end thereof the following new paragraph: “(3) Any employer maintaining a plan who fails to meet the notice requirement of section 101(d) with respect to any participant or beneficiary may in the court’s discretion be liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure, and the court may in its discretion order such other relief as it deems proper.”. (C) Section 9304(d) of the Pension Protection Act is amended by striking “Section” and inserting “Effective with respect to plan years beginning after December 31, 1987, section”. (6) (A) (i) Subparagraph (B) of section 412(m)(1) is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Clause (ii) of section 412(d)(1)(A) is amended by inserting “(including adjustments under subsection (b)(5)(B))” after “costs”. (B) (i) Subparagraph (B) of section 302(e)(1) of ERISA is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Section 303(a)(1)(B) of ERISA (as redesignated by subsection (e)(2)) is amended by inserting “(including adjustments under section 302(b)(5)(B))” after “costs”. (7) Section 303(a) of ERISA (as amended by section 9306(c)(2)(A) of the Pension Protection Act) is amended— (A) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and by adjusting the left-hand margination thereof 4 ems to the left; (B) in paragraph (1) (as redesignated), by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively; and (C) in paragraph (2) (as redesignated), by inserting “of such Code” after “section 6621(b)”. (8) Subsection (f) of section 303 of ERISA (as so redesignated by section 9306(a)(2) of the Pension Protection Act) is transferred to immediately after subsection (e) of such section. (c) Amendments Related to Section 9306.— (1) The last sentence of section 412(f)(4)(A) is amended by striking “the benefit liabilities” and inserting “for benefit liabilities”. (2) The last sentence of section 303(e)(1) of ERISA is amended 29 USC 1083. by striking “the benefit liabilities” and inserting “for benefit liabilities”. (3) Section 9306(f)(3) of the Pension Protection Act is amended 26 USC 412 note. to read as follows: “(3) Subsection (b).— The amendments made by subsection (b) shall apply to waivers for plan years beginning after December 31, 1987. For purposes of applying such amendments, the number of waivers which may be granted for plan years after December 31, 1987, shall be determined without regard to any waivers granted for plan years beginning before January 1, 1988.”. (d) Amendments Related to Section 9307.— (1) (A) Clause (iii) of section 412(b)(5)(B) is amended by striking 26 USC 412. “for purposes of this section and for purposes of determining current liability,”. (B) Clause (iii) of section 302(b)(5)(B) of ERISA is amended by 29 USC 1082. striking “for purposes of this section and for purposes of determining current liability,”. (2) (A) Section 302(b)(5)(B) of ERISA is amended by inserting the following matter after the heading and before clause (i): “For purposes of determining a plan’s current liability and for purposes of determining a plan’s required contribution under section 302(d) for any plan year—”. (B) Section 302(b)(5) of ERISA is amended by striking the matter following the heading thereof and preceding subparagraph (A). (C) Subclause (I) of section 302(b)(5)(B)(ii) of ERISA is amended by striking “average rate” and inserting “the weighted average of the rates”. (3) Section 9307(f) of the Pension Protection Act is amended to 26 USC 404 note. read as follows: “(f) Effective Date.— “(1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 1987. “(2) Amortization of gains and losses.— Sections 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of the Internal Revenue Code of 1986 and sections 302(b)(2)(B)(iv) and 302(b)(3)(B)(ii) of the Employee Retirement Income Security Act of 1974 (as amended by paragraphs (1)(A) and (2)(A) of subsection (a)) shall apply to gains and losses established in years beginning after December 31, 1987. For purposes of the preceding sentence, any gain or loss determined by a valuation occurring as of January 1, 1988, shall be treated as established in years beginning before 1988, or at the election of the employer, shall be amortized in accordance with Internal Revenue Service Notice 89–52.”. (4) Subparagraphs (A) and (B) of section 302(c)(3) of ERISA are each amended by adjusting the left-hand margination thereof, and of each subdivision thereof, 2 ems to the left. (e) Amendments Related to Section 9311.— (1) Section 9311(a)(2) of the Pension Protection Act is amended 29 USC 1344 note. by striking “plan assets to the employer for purposes of section 4044(d)(1)(C) of the Employee Retirement Income Security Act of 1974” and inserting “residual plan assets upon termination”. (2) Section 9311(d) of the Pension Protection Act is amended— (A) by striking “section 4041(c)” and inserting “section 4041” in paragraph (1), and (B) by adding at the end thereof the following new flush sentence: “Except as provided in subsection (a)(2), the amendments made by subsection (a) shall, apply to any provision of the plan or plan amendment adopted after December 17, 1987.”. (3) Section 9311(b)(2) of the Pension Protection Act is amended by striking “subsection (c)(1)” and inserting “subsection (a)(1)”. (4) Section 9311(a)(2) of the Pension Protection Act is amended— (A) by striking “1 year after the effective date of such amendments made by paragraph (1)” and inserting “December 17, 1988”; and (B) by striking the last sentence. (f) Amendments Related to Section 9312.— (1) Section 9312(b)(3)(B)(i) of the Pension Protection Act is amended— (A) by striking “section 4022(c)(1)” in subclause (I) and inserting “section 4022(c)(3)”, and (B) by striking “subparagraph (B) of section 4022(c)(1)” and inserting “subparagraph (C) of section 4022(c)(3)”. (2) Section 4062(a) of ERISA is amended— (A) by inserting “and” at the end of paragraph (1); (B) by striking paragraph (2); (C) by redesignating paragraph (3) as paragraph (2); and (D) in paragraph (2) (as so redesignated), by striking “subsection (d)” and inserting “subsection (c)”. (3) (A) Section 4064(b) of ERISA is amended by striking “and clauses (i)(II) and (ii) of section 4062(b)(1)(A)” and inserting “and section 4068(a)”. (B) Section 4068(a) of ERISA is amended by striking the last sentence. (4) Section 4022(c)(1) of ERISA is amended by striking “(in the case of a deceased participant)”. (5) Section 4022(c)(3)(B)(ii) of ERISA is amended by inserting “, and during the 5-Federal fiscal year period ending with the fiscal year preceding the fiscal year in which occurs the date of the notice of intent to terminate with respect to the plan termination for which the recovery ratio is being determined” after “1987”. (6) Section 9312(b)(3)(B) of the Pension Protection Act is amended by striking clause (ii). (7) Section 4041(c) of ERISA is amended— (A) fay striking “(or its designee under section 4049(b))” in paragraph (2)(A)(iii)(H), (B) by striking “section 4049” in paragraph (2)(A)(iii)(II) and inserting “section 4022(c)”, and (C) by striking the last sentence of paragraph (3)(C)(i). (8) Section 4070(a) of ERISA is amended by striking “4049,”. (9) Section 9312(d)(1) of the Pension Protection Act is amended by striking “section 4041(c)” and inserting “section 4041”. (10) (A) Section 4062(b)(2)(B) of ERISA is amended by striking “the liability under paragraph (1)(A)(ii)” and inserting “so much of the liability under paragraph (1)(A) as exceeds 30 percent of the collective net worth of all persons described in subsection (a) (including interest)”. (B) Section 9312(b)(2)(B)(ii) of the Pension Protection Act is 29 USC 1362. amended to read as follows: “(ii) Section 4062(d) of ERISA (as redesignated by paragraph (1)(B)) is amended by striking out paragraph (3).”. (C) Section 4068 of ERISA is amended by adding at the end 29 USC 1368. the following new subsection: “(f) Definitions.— For purposes of this section— “(1) The collective net worth of persons subject to liability in connection with a plan termination shall be determined as provided in section 4062(d)(1). “(2) The term ‘pre-tax profits’ has the meaning provided in section 4062(d)(2).”. (11) Section 4022(c)(1) of ERISA is amended by striking “section 29 USC 1322. 4044(a), to such participant” and inserting “section 4044(a). Such payment shall be made to such participant”. (12) Subsection (a) of section 4068 of ERISA is amended— (A) by striking “to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the first place it appears; and (B) by striking “to the extent such amount does not Gifts and property. Real property. exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the second place it appears and all that follows and inserting the following: “in the amount of such liability (including interest) upon all property and rights to property, whether real or personal, belonging to such person, except that such lien may not be in an amount in excess of 30 percent of the collective net worth of all persons described in section 4062(a)”. (13) The table of contents in section 1 of ERISA is amended by striking the item relating to section 4049. (g) Amendments Related to Section 9313.— (1) Section 4041(d)(1) of ERISA is amended by striking “sufficient 29 USC 1341. for benefit commitments” and inserting “sufficient for benefit liabilities”. (2) Section 4041(c)(2)(B) of ERISA is amended by inserting “proposed” before “termination” in the parenthetical in the second sentence. (3) Clause (ii) of section 4041(c)(2)(A) of ERISA is amended— (A) by inserting “unless the corporation determines the information is not necessary for purposes of paragraph (3)(A) or section 4062,” before “certification”, (B) by inserting “and, if applicable, the proposed distribution date” after “termination date” in subclause (I), and (C) by striking “date” and inserting “dates” in subclauses (II) through (V). (4) Subparagraph (B) of section 4041(b)(3) of ERISA is amended by adding a period at the end. (5) Section 9313(b)(3) of the Pension Protection Act is amended 29 USC 1341. by inserting “each place it appears” before the period. (6) Section 4041(b)(2)(A) of ERISA is amended by adjusting the left-hand margination of the last sentence two ems to the right. (7) The first subsection (b) of section 9314 of the Pension Protection Act is amended by striking “Section 4042” and 29 USC 1342. inserting “Section 4042(a)”, and by striking “third sentence” and inserting “last sentence”. (8) Section 9314(c)(1) of the Pension Protection Act is amended by inserting “title IV of” after “Subtitle D of”. (h) Amendment Related to Section 9331.— (1) Subparagraph (E) of section 4006(a)(3) of ERISA is amended by adding at the end thereof the following new clause: “(v) No premium shall be determined under this subparagraph for any plan year if, as of the close of the preceding plan year, contributions to the plan for the preceding plan year were not less than the full funding limitation for the preceding plan year under section 412(c)(7) of the Internal Revenue Code of 1986.”. (2) Clause (iii) of section 4006(c)(1)(A) of ERISA is amended by adjusting the left-hand margination thereof 2 ems to the left. (i) Amendments Related to Section 9341.— (1) (A) Section 401(a)(29)(C)(i)(H) is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment” after “amendment”. (B) Section 307(c)(1)(B) of ERISA is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment”. (2) Section 307(d) of ERISA is amended by inserting “of the Treasury” after “Secretary”. (3) (A) Section 307 of ERISA is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Notice.— A contributing sponsor which is required to provide security under subsection (a) shall notify the Pension Benefit Guaranty Corporation within 30 days after the amendment requiring such security takes effect. Such notice shall contain such information as the Corporation may require.”. (B) Section 4071 of ERISA is amended— (i) by striking “or subtitle A B, or C” and inserting “, subtitle A B, or C, as section 302(f)(4) or 307(e)”, and (ii) by inserting “or such section” after “such subtitle”. (4) (A) Clause (i) of section 401(a)(29)(A) is amended by inserting “to which the requirements of section 412 apply” after “multiemployer plan)”. (B) Section 307(a)(1) of ERISA is amended by inserting “to which the requirements of section 302 apply” after “multiemployer plan)”. (5) Section 9341(c) of the Pension Protection Act is amended by inserting “(without regard to any extension, amendment, or modification of such agreements on or after such date of enactment)” after “ratified before the date of enactment”. (j) Amendments Related to Section 9342.— (1) Paragraph (11) of section 103(d) of ERISA is amended— (A) by striking “60 percent” and inserting “70 percent”, and (B) by striking “such percentage” and inserting “the percentage which such value is of such liability.”. (2) Section 502(a)(6) of ERISA is amended by striking “subsection (i)” and inserting “subsection (c)(2) or (i)”. (3) Section 502(c)(2) of ERISA is amended— (A) by inserting “against any plan administrator” after “civil penalty”, and (B) by striking “a plan administrator’s” and inserting “such plan administrator’s”. (4) Paragraph (2) of section 413 of ERISA is amended by 29 USC 1113. striking the comma. (k) Amendment Related to Section 9343.— Section 403(c) of ERISA is amended by striking paragraph (3) and by redesignating 29 USC 1103. paragraph (4) as paragraph (3). (l) Amendments Related to Section 9345.— (1) Section 407(d)(3)(C) of ERISA is amended by adjusting the 29 USC 1107. left-hand margination thereof 2 ems to the left. (2) Section 4O7(d)(9) of ERISA is amended— (A) by striking “such arrangement” and inserting “such individual account plan”; and (B) by adjusting the left-hand margination thereof 2 ems to the right. (3) Section 407(f) of ERISA is amended— (A) in paragraph (1), by striking “this subsection” and inserting “this paragraph”; and (B) by striking paragraph (3). (4) Section 407(f)(1) of ERISA is amended by inserting “, immediately following the acquisition of such stock” after “if”. (5) Section 408(b) of ERISA is amended by adding at the end 29 USC 1108. the following new paragraph: “(12) The sale by a plan to a party in interest on or after Securities. December 18, 1987, of any stock, if— “(A) the requirements of paragraphs (1) and (2) of subsection (e) are met with respect to such stock, “(B) on the later of the date on which the stock was acquired by the plan, or January 1, 1975, such stock constituted a qualifying employer security (as defined in section 4O7(d)(5) as then in effect), and “(C) such stock does not constitute a qualifying employer security (as defined in section 407(d)(5) as in effect at the time of the sale).”. (m) Amendments Related to Section 9346.— (1) (A) Clause (iii) of section 411(c)(2)(C) is amended to read as 26 USC 411. follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year) for the period beginning with the 1st plan year to which subsection (a)(2) applies (by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 417(e)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”, (B) Subparagraph (B) of section 411(c)(2) is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 417(e)(3) (as of the determination date).”. (C) Section 411(c)(2) is amended by striking subparagraph (E). (D) Section 411(a)(7) is amended by adding at the end thereof the following new subparagraph: “(D) Accrued benefit attributable to employee contributions.— The accrued benefit of an employee shall not be less than the amount determined under subsection (c)(2)(B) with respect to the employee’s accumulated contributions.”. (2) (A) Clause (iii) of section 204(c)(2)(C) of ERISA is amended to read as follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 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 for the period beginning with the 1st plan year to which subsection (a)(2) applies by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 205(g)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”. (B) Subparagraph (B) of section 204(c)(2) of ERISA is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 205(g)(3) (as of the determination date).”. (C) Section 204(c)(2) of ERISA is amended by striking subparagraph (E). (D) Paragraph (23) of section 3 of ERISA is amended by adding at the end thereof the following new flush sentence: “The accrued benefit of an employee shall not be less than the amount determined under section 204(c)(2)(B) with respect to the employee’s accumulated contribution.”. (3) If— (A) during the period beginning December 22, 1987, and ending June 21, 1988, a plan was amended to reflect the amendments made by section 9346 of the Pension Protection Act, and (B) such plan is amended to reflect the amendments made by this subsection, any plan amendment described in subparagraph (B) shall not be treated as reducing accrued benefits for purposes of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of ERISA.

11. 1989

    Revenue Reconciliation Act of 1989

    Pub. L. 101–239 § 7881 · 103 Stat. 2106

    Struck · 29 U.S.C. § 1107(f)(3)

    Pub. L. 101–239, § 7881(l)(3)(B), struck out par. (3) which read as follows: “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.”

    Source evidence

    Code amendment note
    Subsec. (f)(3). Pub. L. 101–239, § 7881(l)(3)(B), struck out par. (3) which read as follows: “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.”

    Enacted provision · exact public law section
    SEC. 7881. AMENDMENTS RELATED TO PENSION PROTECTION ACT. (a) Amendments Related to Section 9303.— (1) (A) Subclause (II) of section 412(l)(3)(C)(ii) is amended by 26 USC 412. inserting “(but not below zero)” after “reducing”. (B) Subclause (II) of section 302(d)(3)(C)(ii) of ERISA is 29 USC 1082. amended by inserting “(but not below zero)” after “reducing”. (2) (A) Clause (i) of section 412(1)(4)(8) is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (B) Clause (i) of section 302(d)(4)(B) of ERISA is amended by inserting “and the unamortized portion of the unfunded existing benefit increase liability” after “liability”. (3) (A) Section 412(l)(5)(C) is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (B) Section 302(d)(5)(C) of ERISA is amended by striking “October 17, 1987” and inserting “the first plan year beginning after December 31, 1988”. (4) (A) Section 412(1)(7)(D) is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary.”. (B) Section 302(d)(7)(D) of ERISA is amended— (i) by striking “and” at the end of clause (iii)(I), by striking the period at the end of clause (iii)(II) and inserting “, and”, and by adding at the end of clause (iii) the following new subclause: “(III) has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.”, and (ii) by adding at the end thereof the following new clause: “(iv) Election.— An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the Secretary of the Treasury.”. (5) (A) Section 412(1)(8) is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary may provide for such reduction for purposes of any other provision which references this subsection.”. (B) Section 302(d)(8) of ERISA is amended— (i) by striking “reduced by any credit balance in the funding standard account” in subparagraph (A)(ii), and (ii) by adding at the end thereof the following new subparagraph: “(E) Deduction for credit balances.— For purposes of this subsection, the amount determined under subparagraph (A)(ii) shall be reduced by any credit balance in the funding standard account. The Secretary of the Treasury may provide for such reduction for purposes of any other provision which references this subsection.”. (6) (A) Section 412(c)(9) is amended— (i) by striking “3 years” and inserting “year”, and (ii) by striking “3-year” in the heading and inserting “Annual”. (B) Section 302(c)(9) of ERISA is amended by striking “3 years” and inserting “year”. (7) Subclause (II) of section 9303(e)(3)(C)(ii) of the Pension 26 USC 412 note. Protection Act is amended by inserting “(and any income allocable to such amount)” after “clause (i)”. (b) Amendments Related to Section 9304.— (1) (A) Subparagraph (A) of section 412(c)(10) is amended— (i) by inserting “defined benefit” before “plan other”, and (ii) by striking “Plans” in the heading and inserting “Defined benefit plans”. (B) Subparagraph (A) of section 302(c)(10) of ERISA is 29 USC 1082. amended by inserting “defined benefit” before “plan other”. (2) (A) Subparagraph (B) of section 412(c)(10) is amended— 26 USC 412. (i) by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”, and (ii) by striking “Multiemployer” in the heading and inserting “Other”. (B) Subparagraph (B) of section 302(c)(10) of ERISA is amended by striking “multiemployer plan” and inserting “plan not described in subparagraph (A)”. (3) (A) Section 412(m)(1) is amended by inserting “defined benefit” before “plan (other”. (B) Section 302(e)(1) of ERISA is amended by inserting “defined benefit” before “plan (other”. (4) (A) Subparagraph (D) of section 412(m)(4) is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (1) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (l)(5)(A)(i) paid during the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (l)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (1)(8)(B)) for the plan year to 100 percent.”. (B) Subparagraph (D) of section 302(e)(4) of ERISA is amended to read as follows: “(D) Special rules for unpredictable contingent event benefits.— In the case of a plan to which subsection (d) applies for any calendar year and which has any unpredictable contingent event benefit liabilities— “(i) Liabilities not taken into account.— Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (B). “(ii) Increase in installments.— Each required installment shall be increased by the greater of— “(I) the unfunded percentage of the amount of benefits described in subsection (d)(5)(A)(i) paid curing the 3-month period preceding the month in which the due date for such installment occurs, or “(II) 25 percent of the amount determined under subsection (d)(5)(A)(ii) for the plan year. “(iii) Unfunded percentage.— For purposes of clause (ii)(I), the term ‘unfunded percentage’ means the percentage determined under subsection (d)(5)(A)(i)(I) for the plan year. “(iv) Limitation on increase.— In no event shall the increases under clause (ii) exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (d)(8)(B)) for the plan year to 100 percent.”. (5) (A) Section 101(d)(1) of ERISA is amended by striking “an employer of a plan” and inserting “an employer maintaining a plan”. (B) Section 502(c) of ERISA is amended by adding at the end thereof the following new paragraph: “(3) Any employer maintaining a plan who fails to meet the notice requirement of section 101(d) with respect to any participant or beneficiary may in the court’s discretion be liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure, and the court may in its discretion order such other relief as it deems proper.”. (C) Section 9304(d) of the Pension Protection Act is amended by striking “Section” and inserting “Effective with respect to plan years beginning after December 31, 1987, section”. (6) (A) (i) Subparagraph (B) of section 412(m)(1) is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Clause (ii) of section 412(d)(1)(A) is amended by inserting “(including adjustments under subsection (b)(5)(B))” after “costs”. (B) (i) Subparagraph (B) of section 302(e)(1) of ERISA is amended to read as follows: “(B) the rate of interest used under the plan in determining costs (including adjustments under subsection (b)(5)(B)).”. (ii) Section 303(a)(1)(B) of ERISA (as redesignated by subsection (e)(2)) is amended by inserting “(including adjustments under section 302(b)(5)(B))” after “costs”. (7) Section 303(a) of ERISA (as amended by section 9306(c)(2)(A) of the Pension Protection Act) is amended— (A) by redesignating subparagraphs (A) and (B) as paragraphs (1) and (2), respectively, and by adjusting the left-hand margination thereof 4 ems to the left; (B) in paragraph (1) (as redesignated), by redesignating clauses (i) and (ii) as subparagraphs (A) and (B), respectively; and (C) in paragraph (2) (as redesignated), by inserting “of such Code” after “section 6621(b)”. (8) Subsection (f) of section 303 of ERISA (as so redesignated by section 9306(a)(2) of the Pension Protection Act) is transferred to immediately after subsection (e) of such section. (c) Amendments Related to Section 9306.— (1) The last sentence of section 412(f)(4)(A) is amended by striking “the benefit liabilities” and inserting “for benefit liabilities”. (2) The last sentence of section 303(e)(1) of ERISA is amended 29 USC 1083. by striking “the benefit liabilities” and inserting “for benefit liabilities”. (3) Section 9306(f)(3) of the Pension Protection Act is amended 26 USC 412 note. to read as follows: “(3) Subsection (b).— The amendments made by subsection (b) shall apply to waivers for plan years beginning after December 31, 1987. For purposes of applying such amendments, the number of waivers which may be granted for plan years after December 31, 1987, shall be determined without regard to any waivers granted for plan years beginning before January 1, 1988.”. (d) Amendments Related to Section 9307.— (1) (A) Clause (iii) of section 412(b)(5)(B) is amended by striking 26 USC 412. “for purposes of this section and for purposes of determining current liability,”. (B) Clause (iii) of section 302(b)(5)(B) of ERISA is amended by 29 USC 1082. striking “for purposes of this section and for purposes of determining current liability,”. (2) (A) Section 302(b)(5)(B) of ERISA is amended by inserting the following matter after the heading and before clause (i): “For purposes of determining a plan’s current liability and for purposes of determining a plan’s required contribution under section 302(d) for any plan year—”. (B) Section 302(b)(5) of ERISA is amended by striking the matter following the heading thereof and preceding subparagraph (A). (C) Subclause (I) of section 302(b)(5)(B)(ii) of ERISA is amended by striking “average rate” and inserting “the weighted average of the rates”. (3) Section 9307(f) of the Pension Protection Act is amended to 26 USC 404 note. read as follows: “(f) Effective Date.— “(1) In general.— Except as provided in paragraph (2), the amendments made by this section shall apply to years beginning after December 31, 1987. “(2) Amortization of gains and losses.— Sections 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of the Internal Revenue Code of 1986 and sections 302(b)(2)(B)(iv) and 302(b)(3)(B)(ii) of the Employee Retirement Income Security Act of 1974 (as amended by paragraphs (1)(A) and (2)(A) of subsection (a)) shall apply to gains and losses established in years beginning after December 31, 1987. For purposes of the preceding sentence, any gain or loss determined by a valuation occurring as of January 1, 1988, shall be treated as established in years beginning before 1988, or at the election of the employer, shall be amortized in accordance with Internal Revenue Service Notice 89–52.”. (4) Subparagraphs (A) and (B) of section 302(c)(3) of ERISA are each amended by adjusting the left-hand margination thereof, and of each subdivision thereof, 2 ems to the left. (e) Amendments Related to Section 9311.— (1) Section 9311(a)(2) of the Pension Protection Act is amended 29 USC 1344 note. by striking “plan assets to the employer for purposes of section 4044(d)(1)(C) of the Employee Retirement Income Security Act of 1974” and inserting “residual plan assets upon termination”. (2) Section 9311(d) of the Pension Protection Act is amended— (A) by striking “section 4041(c)” and inserting “section 4041” in paragraph (1), and (B) by adding at the end thereof the following new flush sentence: “Except as provided in subsection (a)(2), the amendments made by subsection (a) shall, apply to any provision of the plan or plan amendment adopted after December 17, 1987.”. (3) Section 9311(b)(2) of the Pension Protection Act is amended by striking “subsection (c)(1)” and inserting “subsection (a)(1)”. (4) Section 9311(a)(2) of the Pension Protection Act is amended— (A) by striking “1 year after the effective date of such amendments made by paragraph (1)” and inserting “December 17, 1988”; and (B) by striking the last sentence. (f) Amendments Related to Section 9312.— (1) Section 9312(b)(3)(B)(i) of the Pension Protection Act is amended— (A) by striking “section 4022(c)(1)” in subclause (I) and inserting “section 4022(c)(3)”, and (B) by striking “subparagraph (B) of section 4022(c)(1)” and inserting “subparagraph (C) of section 4022(c)(3)”. (2) Section 4062(a) of ERISA is amended— (A) by inserting “and” at the end of paragraph (1); (B) by striking paragraph (2); (C) by redesignating paragraph (3) as paragraph (2); and (D) in paragraph (2) (as so redesignated), by striking “subsection (d)” and inserting “subsection (c)”. (3) (A) Section 4064(b) of ERISA is amended by striking “and clauses (i)(II) and (ii) of section 4062(b)(1)(A)” and inserting “and section 4068(a)”. (B) Section 4068(a) of ERISA is amended by striking the last sentence. (4) Section 4022(c)(1) of ERISA is amended by striking “(in the case of a deceased participant)”. (5) Section 4022(c)(3)(B)(ii) of ERISA is amended by inserting “, and during the 5-Federal fiscal year period ending with the fiscal year preceding the fiscal year in which occurs the date of the notice of intent to terminate with respect to the plan termination for which the recovery ratio is being determined” after “1987”. (6) Section 9312(b)(3)(B) of the Pension Protection Act is amended by striking clause (ii). (7) Section 4041(c) of ERISA is amended— (A) fay striking “(or its designee under section 4049(b))” in paragraph (2)(A)(iii)(H), (B) by striking “section 4049” in paragraph (2)(A)(iii)(II) and inserting “section 4022(c)”, and (C) by striking the last sentence of paragraph (3)(C)(i). (8) Section 4070(a) of ERISA is amended by striking “4049,”. (9) Section 9312(d)(1) of the Pension Protection Act is amended by striking “section 4041(c)” and inserting “section 4041”. (10) (A) Section 4062(b)(2)(B) of ERISA is amended by striking “the liability under paragraph (1)(A)(ii)” and inserting “so much of the liability under paragraph (1)(A) as exceeds 30 percent of the collective net worth of all persons described in subsection (a) (including interest)”. (B) Section 9312(b)(2)(B)(ii) of the Pension Protection Act is 29 USC 1362. amended to read as follows: “(ii) Section 4062(d) of ERISA (as redesignated by paragraph (1)(B)) is amended by striking out paragraph (3).”. (C) Section 4068 of ERISA is amended by adding at the end 29 USC 1368. the following new subsection: “(f) Definitions.— For purposes of this section— “(1) The collective net worth of persons subject to liability in connection with a plan termination shall be determined as provided in section 4062(d)(1). “(2) The term ‘pre-tax profits’ has the meaning provided in section 4062(d)(2).”. (11) Section 4022(c)(1) of ERISA is amended by striking “section 29 USC 1322. 4044(a), to such participant” and inserting “section 4044(a). Such payment shall be made to such participant”. (12) Subsection (a) of section 4068 of ERISA is amended— (A) by striking “to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the first place it appears; and (B) by striking “to the extent such amount does not Gifts and property. Real property. exceed 30 percent of the collective net worth of all persons described in section 4062(a)” the second place it appears and all that follows and inserting the following: “in the amount of such liability (including interest) upon all property and rights to property, whether real or personal, belonging to such person, except that such lien may not be in an amount in excess of 30 percent of the collective net worth of all persons described in section 4062(a)”. (13) The table of contents in section 1 of ERISA is amended by striking the item relating to section 4049. (g) Amendments Related to Section 9313.— (1) Section 4041(d)(1) of ERISA is amended by striking “sufficient 29 USC 1341. for benefit commitments” and inserting “sufficient for benefit liabilities”. (2) Section 4041(c)(2)(B) of ERISA is amended by inserting “proposed” before “termination” in the parenthetical in the second sentence. (3) Clause (ii) of section 4041(c)(2)(A) of ERISA is amended— (A) by inserting “unless the corporation determines the information is not necessary for purposes of paragraph (3)(A) or section 4062,” before “certification”, (B) by inserting “and, if applicable, the proposed distribution date” after “termination date” in subclause (I), and (C) by striking “date” and inserting “dates” in subclauses (II) through (V). (4) Subparagraph (B) of section 4041(b)(3) of ERISA is amended by adding a period at the end. (5) Section 9313(b)(3) of the Pension Protection Act is amended 29 USC 1341. by inserting “each place it appears” before the period. (6) Section 4041(b)(2)(A) of ERISA is amended by adjusting the left-hand margination of the last sentence two ems to the right. (7) The first subsection (b) of section 9314 of the Pension Protection Act is amended by striking “Section 4042” and 29 USC 1342. inserting “Section 4042(a)”, and by striking “third sentence” and inserting “last sentence”. (8) Section 9314(c)(1) of the Pension Protection Act is amended by inserting “title IV of” after “Subtitle D of”. (h) Amendment Related to Section 9331.— (1) Subparagraph (E) of section 4006(a)(3) of ERISA is amended by adding at the end thereof the following new clause: “(v) No premium shall be determined under this subparagraph for any plan year if, as of the close of the preceding plan year, contributions to the plan for the preceding plan year were not less than the full funding limitation for the preceding plan year under section 412(c)(7) of the Internal Revenue Code of 1986.”. (2) Clause (iii) of section 4006(c)(1)(A) of ERISA is amended by adjusting the left-hand margination thereof 2 ems to the left. (i) Amendments Related to Section 9341.— (1) (A) Section 401(a)(29)(C)(i)(H) is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment” after “amendment”. (B) Section 307(c)(1)(B) of ERISA is amended by inserting “and any other plan amendments adopted after December 22, 1987, and before such plan amendment”. (2) Section 307(d) of ERISA is amended by inserting “of the Treasury” after “Secretary”. (3) (A) Section 307 of ERISA is amended by redesignating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: “(e) Notice.— A contributing sponsor which is required to provide security under subsection (a) shall notify the Pension Benefit Guaranty Corporation within 30 days after the amendment requiring such security takes effect. Such notice shall contain such information as the Corporation may require.”. (B) Section 4071 of ERISA is amended— (i) by striking “or subtitle A B, or C” and inserting “, subtitle A B, or C, as section 302(f)(4) or 307(e)”, and (ii) by inserting “or such section” after “such subtitle”. (4) (A) Clause (i) of section 401(a)(29)(A) is amended by inserting “to which the requirements of section 412 apply” after “multiemployer plan)”. (B) Section 307(a)(1) of ERISA is amended by inserting “to which the requirements of section 302 apply” after “multiemployer plan)”. (5) Section 9341(c) of the Pension Protection Act is amended by inserting “(without regard to any extension, amendment, or modification of such agreements on or after such date of enactment)” after “ratified before the date of enactment”. (j) Amendments Related to Section 9342.— (1) Paragraph (11) of section 103(d) of ERISA is amended— (A) by striking “60 percent” and inserting “70 percent”, and (B) by striking “such percentage” and inserting “the percentage which such value is of such liability.”. (2) Section 502(a)(6) of ERISA is amended by striking “subsection (i)” and inserting “subsection (c)(2) or (i)”. (3) Section 502(c)(2) of ERISA is amended— (A) by inserting “against any plan administrator” after “civil penalty”, and (B) by striking “a plan administrator’s” and inserting “such plan administrator’s”. (4) Paragraph (2) of section 413 of ERISA is amended by 29 USC 1113. striking the comma. (k) Amendment Related to Section 9343.— Section 403(c) of ERISA is amended by striking paragraph (3) and by redesignating 29 USC 1103. paragraph (4) as paragraph (3). (l) Amendments Related to Section 9345.— (1) Section 407(d)(3)(C) of ERISA is amended by adjusting the 29 USC 1107. left-hand margination thereof 2 ems to the left. (2) Section 4O7(d)(9) of ERISA is amended— (A) by striking “such arrangement” and inserting “such individual account plan”; and (B) by adjusting the left-hand margination thereof 2 ems to the right. (3) Section 407(f) of ERISA is amended— (A) in paragraph (1), by striking “this subsection” and inserting “this paragraph”; and (B) by striking paragraph (3). (4) Section 407(f)(1) of ERISA is amended by inserting “, immediately following the acquisition of such stock” after “if”. (5) Section 408(b) of ERISA is amended by adding at the end 29 USC 1108. the following new paragraph: “(12) The sale by a plan to a party in interest on or after Securities. December 18, 1987, of any stock, if— “(A) the requirements of paragraphs (1) and (2) of subsection (e) are met with respect to such stock, “(B) on the later of the date on which the stock was acquired by the plan, or January 1, 1975, such stock constituted a qualifying employer security (as defined in section 4O7(d)(5) as then in effect), and “(C) such stock does not constitute a qualifying employer security (as defined in section 407(d)(5) as in effect at the time of the sale).”. (m) Amendments Related to Section 9346.— (1) (A) Clause (iii) of section 411(c)(2)(C) is amended to read as 26 USC 411. follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 120 percent of the Federal mid-term rate (as in effect under section 1274 for the 1st month of a plan year) for the period beginning with the 1st plan year to which subsection (a)(2) applies (by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 417(e)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”, (B) Subparagraph (B) of section 411(c)(2) is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 417(e)(3) (as of the determination date).”. (C) Section 411(c)(2) is amended by striking subparagraph (E). (D) Section 411(a)(7) is amended by adding at the end thereof the following new subparagraph: “(D) Accrued benefit attributable to employee contributions.— The accrued benefit of an employee shall not be less than the amount determined under subsection (c)(2)(B) with respect to the employee’s accumulated contributions.”. (2) (A) Clause (iii) of section 204(c)(2)(C) of ERISA is amended to read as follows: “(iii) interest on the sum of the amounts determined under clauses (i) and (ii) compounded annually— “(I) at the rate of 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 for the period beginning with the 1st plan year to which subsection (a)(2) applies by reason of the applicable effective date) and ending with the date on which the determination is being made, and “(II) at the interest rate which would be used under the plan under section 205(g)(3) (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.”. (B) Subparagraph (B) of section 204(c)(2) of ERISA is amended to read as follows: “(B) Defined benefit plans.— In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee’s accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under section 205(g)(3) (as of the determination date).”. (C) Section 204(c)(2) of ERISA is amended by striking subparagraph (E). (D) Paragraph (23) of section 3 of ERISA is amended by adding at the end thereof the following new flush sentence: “The accrued benefit of an employee shall not be less than the amount determined under section 204(c)(2)(B) with respect to the employee’s accumulated contribution.”. (3) If— (A) during the period beginning December 22, 1987, and ending June 21, 1988, a plan was amended to reflect the amendments made by section 9346 of the Pension Protection Act, and (B) such plan is amended to reflect the amendments made by this subsection, any plan amendment described in subparagraph (B) shall not be treated as reducing accrued benefits for purposes of section 411(d)(6) of the Internal Revenue Code of 1986 or section 204(g) of ERISA.

12. 1990

    Pub. L. 101–540 § 1 · 104 Stat. 2377

    Amended · 29 U.S.C. § 1107(d)(5)

    Pub. L. 101–540 amended par. (5) generally. Prior to amendment, par. (5) read as follows: “The term ‘qualifying employer security’ means an employer security which is stock or a marketable obligation (as defined in subsection (e)). 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).”

    Source evidence

    Code amendment note
    Subsec. (d)(5). Pub. L. 101–540 amended par. (5) generally. Prior to amendment, par. (5) read as follows: “The term ‘qualifying employer security’ means an employer security which is stock or a marketable obligation (as defined in subsection (e)). 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).”

    Enacted provision · exact public law section
    SECTION 1. QUALIFYING EMPLOYER SECURITY TO INCLUDE INTEREST IN PUBLICLY TRADED PARTNERSHIPS. Paragraph (5) of section 407(d) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1107(d)(5)) is amended to read as follows: “(5) The term ‘qualifying employer security’ means an employer security which is— “(A) stock, “(B) a marketable obligation (as defined in subsection (e)), or “(C) an interest in a publicly traded partnership (as defined in section 7704(b) of the Internal Revenue Code of 1986), but only if such partnership is an existing partner-ship as defined in section 10211(c)(2)(A) of the Revenue Act of 1987 (Public Law 100–203). After December 17, 1987, in the case of a plan other than an eligible individual account plan, an employer security described in subparagraph (A) or (C) shall be considered a qualifying employer security only if such employer security satisfies the requirements of subsection (f)(l).”.

13. 1997

    Pub. L. 105–34 title XV § 1524(a) · 111 Stat. 788

    1. Added · 29 U.S.C. § 1107(b)(2); 29 U.S.C. § 1107(b)(3)

       Pub. L. 105–34 added par. (2)

    2. Redesignated · 29 U.S.C. § 1107(b)(2); 29 U.S.C. § 1107(b)(3)

       Pub. L. 105–34 redesignated former par. (2) as (3)

    Source evidence

    Code amendment note
    Subsec. (b)(2), (3). Pub. L. 105–34 added par. (2) and redesignated former par. (2) as (3).

    Enacted provision · exact public law section
    (a) Limitations on Investment in Employer Securities and Employer Real Property by Cash or Deferred Arrangements.— Section 407(b) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1107(b)) is amended by redesignating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: “(2) (A) If this paragraph applies to an eligible individual account plan, the portion of such plan which consists of applicable elective deferrals (and earnings allocable thereto) shall be treated as a separate plan— “(i) which is not an eligible individual account plan, and “(ii) to which the requirements of this section apply. “(B) (i) This paragraph shall apply to any eligible individual Applicability. account plan if any portion of the plan’s applicable elective deferrals (or earnings allocable thereto) are required to be invested in qualifying employer securities or qualifying employer real property or both— “(I) pursuant to the terms of the plan, or “(II) at the direction of a person other than the participant on whose behalf such elective deferrals are made to the plan (or a beneficiary). “(ii) This paragraph shall not apply to an individual account plan for a plan year if, on the last day of the preceding plan year, the fair market value of the assets of all individual account plans maintained by the employer equals not more than 10 percent of the fair market value of the assets of all pension plans (other than multiemployer plans) maintained by the employer. “(iii) This paragraph shall not apply to an individual account plan that is an employee stock ownership plan as defined in section 4975(e)(7) of the Internal Revenue Code of 1986. “(iv) This paragraph shall not apply to an individual account plan if, pursuant to the terms of the plan, the portion of any employee’s applicable elective deferrals which is required to be invested in qualifying employer securities and qualifying employer real property for any year may not exceed 1 percent of the employee’s compensation which is taken into account under the plan in determining the maximum amount of the employee’s applicable elective deferrals for such year. “(C) For purposes of this paragraph, the term ‘applicable elective deferral’ means any elective deferral (as defined in section 402(g)(3)(A) of the Internal Revenue Code of 1986) which is made pursuant to a qualified cash or deferred arrangement as defined in section 401(k) of the Internal Revenue Code of 1986.”.

14. 2006

    Pub. L. 109–280 title IX § 901(b)(2) · 120 Stat. 780

    Added · 29 U.S.C. § 1107(b)(3)(D)

    Pub. L. 109–280 added subpar. (D)

    Source evidence

    Code amendment note
    Subsec. (b)(3)(D). Pub. L. 109–280 added subpar. (D).

    Enacted provision · exact public law section
    (2) Conforming amendment.— Section 407(b)(3) of such Act (29 U.S.C. 1107(b)(3)) is amended by adding at the end the following: “(D) For diversification requirements for qualifying employer securities held in certain individual account plans, see section 204(j).” .

    Effective date note
    Amendment by Pub. L. 109–280 applicable to plan years beginning after Dec. 31, 2006, with special rules for collectively bargained agreements and certain employer securities held in an ESOP, see section 901(c) of Pub. L. 109–280, set out as a note under section 401 of Title 26, Internal Revenue Code.

17 of 17 references resolved to an enrolled provision