The Pension Reform Bill -- Educate Me, Please

[theHandpuppet]

On the GD Forum I had posted some good news from Second Harvest regarding a bill just passed by the Senate which would provide tax incentives for charitable giving by small businesses, the small farmer or rancher, etc. (See: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=364x1829846) However, turns out this was tacked on as part of a package which included the Pension Reform bill and it was carried by a large margin of GOP Senators, whereas a majority of Dems voted NAY. I feel pretty bummed right now as this seems this has been a trade-off in much the same way the GOP tried to tack on that estate tax deal onto legislation aimed to increase the minimum wage.

Can anyone here educate me on the Pension Reform bill?

[The Velveteen Ocelot]

1. It's a huge bill, about 900 pages.

I'm not sure whether over all it's good or bad. But only five senators voted against it, and two of the five were Republicans: Barbara Boxer, D-Calif., Robert Byrd, D-W.Va., Tom Coburn, R-Okla., John Cornyn, R-Texas and Russ Feingold, D-Wis. Two senators, Democrats Max Baucus of Montana and Joe Lieberman of Connecticut, did not vote.

[chill_wind]

2. Here's the text. Pdf

http://waysandmeans.house.gov/media/pdf/taxdocs/pensiontextpt1.pdf

[chill_wind]

3. Detailed Technical Summary (pdf)

Still a huge document at 386 pages.

http://www.house.gov/jct/x-38-06.pdf

I haven't read any of it yet.

[chill_wind]

4. FWIW here's just the T.O.C.

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CONTENTS
Page
INTRODUCTION .......................................................................................................................... 1
TITLE I: REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER DEFINED
BENEFIT PENSION PLANS......................................................................................................... 2
A. Minimum Funding Standards for Single-Employer Defined Benefit Pension
Plans (secs. 302-308 of ERISA, and sec. 412 and new sec. 430 of the Code) ............... 2
B. Benefit Limitations Under Single-Employer Defined Benefit Pension Plans
(new secs. 101(j) and 206(g) and (h) of ERISA, and new secs. 436-437 of the
Code)............................................................................................................................ 24
C. Special Rules for Multiple-Employer Plans of Certain Cooperatives .......................... 32
D. Temporary Relief for Certain PBGC Settlement Plans ................................................ 34
E. Special Rules for Plans of Certain Government Contractors........................................ 35
F. Modification of Transition Rule to Pension Funding Requirements for Interstate
Bus Company (769(c) of the Retirement Protection Act, as added by sec. 1508
of the Taxpayer Relief Act of 1997) ............................................................................. 37
G. Restrictions on Funding of Nonqualified Deferred Compensation Plans by
Employers Maintaining Underfunded or Terminated Single-Employer Plans
(sec. 409A of the Code) ................................................................................................ 39
TITLE II: FUNDING RULES FOR MULTIEMPLOYER DEFINED BENEFIT PLANS........ 42
A. Funding Rules for Multiemployer Defined Benefit Plans (new sec. 304 of ERISA
and new sec. 431 of the Code) ...................................................................................... 42
B. Additional Funding Rules for Multiemployer Plans in Endangered or Critical
Status (new sec. 305 of ERISA and new sec. 432 of the Code) ................................... 48
C. Measures to Forestall Insolvency of Multiemployer Plans (sec. 4245 of ERISA
and sec. 418E of the Code) ........................................................................................... 63
D. Withdrawal Liability Reforms (secs. 4203, 4205, 4210, 4219, 4221 and 4225
of ERISA) ..................................................................................................................... 64
1. Repeal of limitation on withdrawal liability in certain cases................................... 64
2. Withdrawal liability continues if work contracted out ............................................ 65
3. Application of forgiveness rule to plans primarily covering employees in
building and construction......................................................................................... 66
4. Procedures applicable to disputes involving withdrawal liability ........................... 67
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E. Prohibition on Retaliation against Employers Exercising their Rights to Petition
the Federal Government (sec. 510 of ERISA) ............................................................... 69
F. Special Rule for Certain Benefits Funded under an Agreement Approved by
the PBGC ....................................................................................................................... 70
G. Exception from Excise Tax for Certain Multiemployer Pension Plans (sec. 4971
of the Code).................................................................................................................... 71
H. Sunset of Multiemployer Plan Funding Provisions ...................................................... 72
TITLE III: INTEREST RATE ASSUMPTIONS ........................................................................ 73
A. Extension of Replacement of 30-Year Treasury Rates (secs. 302 and 4006 of
ERISA, and sec. 412 of the Code) ................................................................................ 73
B. Interest Rate Assumption for Determination of Lump-Sum Distributions
(sec. 205(g) of ERISA and sec. 417(e) of the Code) .................................................... 74
C. Interest Rate Assumption for Applying Benefit Limitations to Lump-Sum
Distributions (sec. 415(b) of the Code)......................................................................... 76
TITLE IV: PBGC GUARANTEE AND RELATED PROVISIONS.......................................... 78
A. PBGC Premiums (sec. 4006 of ERISA) ....................................................................... 78
B. Special Funding Rules for Plans Maintained by Commercial Airlines ........................ 82
C. Limitations on PBGC Guarantee of Shutdown and Other Benefits
(sec. 4022 of ERISA) .................................................................................................... 90
D. Rules Relating to Bankruptcy of the Employer (secs. 4022 and 4044 of ERISA) ....... 92
E. PBGC Premiums for Small Plans (sec. 4006 of ERISA).............................................. 95
F. Authorization for PBGC to Pay Interest on Premium Overpayment Refunds
(sec. 4007(b) of ERISA) ............................................................................................... 96
G. Rules for Substantial Owner Benefits in Terminated Plans (secs. 4021, 4022,
4043, and 4044 of ERISA)............................................................................................ 97
H. Acceleration of PBGC Computation of Benefits Attributable to Recoveries
from Employers (secs. 4022(c) and 4062(c) of ERISA)............................................... 98
I. Treatment of Certain Plans Where There is a Cessation or Change in Membership
of a Controlled Group (sec. 4041(b) of ERISA)........................................................ 100
J. Missing Participants (sec. 4050 of ERISA) ................................................................ 102
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K. Director of the PBGC (secs. 4002 and 4003 of ERISA)............................................. 103
L. Inclusion of Information in the PBGC Annual Report (sec. 4008 of ERISA) ........... 105
TITLE V: DISCLOSURE.......................................................................................................... 106
A. Defined Benefit Plan Funding Notice (secs. 101(f) and 4011 of ERISA).................. 106
B. Access to Multiemployer Pension Plan Information (secs. 101, 204(h), and 502(c)
of ERISA and sec. 4980F of the Code)....................................................................... 109
C. Additional Annual Reporting Requirements and Electronic Display of Annual
Report Information (secs. 103 and 104 of ERISA)..................................................... 111
D. Section 4010 Filings with the PBGC (sec. 4010 of ERISA) ...................................... 115
E. Disclosure of Plan Termination Information to Plan Participants
(secs. 4041 and 4042 of ERISA)................................................................................. 117
F. Notice of Freedom to Divest Employer Securities (new sec. 101(m) of ERISA) ...... 119
G. Periodic Pension Benefit Statements (secs. 105(a) and 502(c)(1) of ERISA)............ 121
H. Notice to Participants or Beneficiaries of Blackout Periods (sec. 101(i) of ERISA) . 124
TITLE VI: INVESTMENT ADVICE, PROHIBITED TRANSACTIONS, AND
FIDUCIARY RULES................................................................................................................. 127
A. Investment Advice (sec. 408 of ERISA and sec. 4975 of the Code) .......................... 127
B. Prohibited Transaction Rules Relating to Financial Investments (secs. 408, 412(a),
and 502(i) and new sec. 3(42) of ERISA, and sec. 4975 of the Code) ........................ 133
1. Exemption for block trading .................................................................................. 133
2. Bonding relief ........................................................................................................ 134
3. Exemption for electronic communication network................................................ 134
4. Exemption for service providers............................................................................ 135
5. Relief for foreign exchange transactions ............................................................... 136
6. Definition of plan asset vehicle.............................................................................. 137
7. Exemption for cross trading................................................................................... 138
C. Correction Period for Certain Transactions Involving Securities and
Commodities (sec. 408 of ERISA, and sec. 4975 of the Code).................................. 140
D. Inapplicability of Relief from Fiduciary Liability During Suspension of Ability
of Participant or Beneficiary to Direct Investments (sec. 404(c) of ERISA) ............. 142
E. Increase in Maximum Bond Amount (sec. 412(a) of ERISA).................................... 146
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F. Increase in Penalties for Coercive Interference with Exercise of ERISA Rights
(sec. 511 of ERISA).................................................................................................... 147
G. Treatment of Investment of Assets By Plan Where Participant Fails to Exercise
Investment Election (sec. 404(c) of ERISA) .............................................................. 148
H. Clarification of Fiduciary Rules.................................................................................. 149
TITLE VII: BENEFIT ACCRUAL STANDARDS (secs. 203, 204, and 205 of ERISA,
secs. 411 and 417 of the Code, and sec. 4(i)(2) of ADEA) ........................................................ 150
TITLE VIII: PENSION RELATED REVENUE PROVISIONS .............................................. 159
A. Deduction Limitations ................................................................................................ 159
1. Increase in deduction limits applicable to single-employer and multiemployer
defined benefit pension plans (sec. 404 of the Code) ............................................ 159
2. Updating deduction rules for combination of plans (secs. 404(a)(7) and 4972
of the Code)............................................................................................................ 162
B. Certain Pension Provisions Made Permanent ............................................................. 164
1. Permanency of EGTRRA pension and IRA provisions (Title X of EGTRRA) .... 164
2. Saver’s credit made permanent (sec. 25B of the Code)......................................... 167
C. Improvements in Portability, Distribution, and Contribution Rules........................... 169
1. Purchase of permissive service credit (secs. 403(b)(13), 415(n)(3), and
457(e)(17) of the Code) ............................................................................................ 169
2. Rollover of after-tax amounts in annuity contracts (sec. 402(c)(2) of the Code) .. 171
3. Application of minimum distribution rules to governmental plans ....................... 172
4. Allow direct rollovers from retirement plans to Roth IRAs (sec. 408A(e)
of the Code)............................................................................................................... 173
5. Eligibility for participation in eligible deferred compensation plans (sec. 457
of the Code)............................................................................................................ 175
6. Modifications of rules governing hardships and unforeseen financial
emergencies............................................................................................................ 175
7. Treatment of distributions to individuals called to active duty for at least 179
days (sec. 72(t) of the Code) .................................................................................. 176
8. Inapplicability of 10-percent additional tax on early distributions of pension
plans of public safety employees (sec. 72(t) of the Code)..................................... 177
9. Rollovers by nonspouse beneficiaries (sec. 402 of the Code) ............................... 178
10. Direct deposit of tax refunds in an IRA................................................................. 179
11. Additional IRA contributions for certain employees (secs. 25B and 219 of the
Code)...................................................................................................................... 180
12. Special rule for computing high-three average compensation for benefit
limitation purposes (sec. 415(b)(3) of the Code) ................................................... 181
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13. Inflation indexing of gross income limitations on certain retirement savings
incentives (secs. 25A and 219 of the Code).......................................................... 182
D. Health and Medical Benefits....................................................................................... 185
1. Ability to use excess pension assets for future retiree health benefits and
collectively bargained retiree health benefits (sec. 420 of the Code) .................... 185
2. Transfer of excess pension assets to multiemployer health plans
(sec. 420 of the Code) ............................................................................................ 189
3. Allowance of reserve for medical benefits of plans sponsored by bona fide
associations (sec. 419A of the Code)..................................................................... 191
4. Tax treatment of combined annuity or life insurance contracts with a long-term
care insurance feature (secs. 72. 1035, and 7702B and new sec. 6050U of the
Code)...................................................................................................................... 192
5. Permit tax-free distributions from governmental retirement plans for premiums
for health and long-term care insurance for public safety officers (sec. 402 of
the Code)................................................................................................................ 197
E. United States Tax Court Modernization ..................................................................... 199
1. Judges of the Tax Court (secs. 7447, 7448, and 7472 of the Code) ...................... 199
2. Special trial judges of the Tax Court (sec. 7448 and new sec. 7443C of the
Code)...................................................................................................................... 200
3. Consolidate review of collection due process cases in the Tax Court
(sec. 6330(d) of the Code) ..................................................................................... 201
4. Extend authority for special trial judges to hear and decide certain employment
status cases (sec. 7443A of the Code).................................................................... 202
5. Confirmation of Tax Court authority to apply equitable recoupment
(sec. 6214(b) of the Code) ..................................................................................... 203
6. Tax Court filing fee (sec. 7451 of the Code) ......................................................... 204
7. Use of practitioner fee (sec. 7475(b) of the Code)................................................. 204
F. Other Provisions.......................................................................................................... 206
1. Extension to all governmental plans of moratorium on application of certain
nondiscrimination rules (sec. 1505 of the Taxpayer Relief Act of 1997, and
secs. 401(a) and 401(k) of the Code) ..................................................................... 206
2. Eliminate aggregate limit for usage of excess funds from black lung disability
trusts to pay for retiree health (secs. 501(c)(21) and 9705 of the Code) ............... 206
3. Tax treatment of company-owned life insurance (“COLI”) (new secs. 101(j)
and 6039I of the Code) .......................................................................................... 208
4. Treatment of test room supervisors and proctors who assist in the administration
of college entrance and placement exams (sec. 530 of the Revenue
Reconciliation Act of 1978)................................................................................... 213
5. Rule for church plans which self-annuitize (sec. 401(a)(9) of the Code).............. 214
6. Exemption for income from leveraged real estate held by church plans
(sec. 514(c)(9) of the Code) ................................................................................... 214
vi
7. Church plan rule for benefit limitations (sec. 415 of the Code) ............................ 215
8. Gratuitous transfers for the benefit of employees (sec. 664 of the Code) ............. 215
TITLE IX: INCREASE IN PENSION PLAN DIVERSIFICATION AND
PARTICIPATION ...................................................................................................................... 217
A. Defined Contribution Plans Required to Provide Employees with Freedom to
Invest Their Plan Assets (new sec. 401(a)(35) of the Code and new sec. 204(j)
of ERISA) ................................................................................................................... 217
B. Increasing Participation Through Automatic Enrollment Arrangements
(secs. 404(c) and 514 of ERISA and secs. 401(k), 401(m), 414 and 4979 of the
Code).......................................................................................................................... 224
C. Treatment of Eligible Combined Defined Benefit Plans and Qualified Cash or
Deferred Arrangements (new sec. 414(x) of the Code and new sec. 210(e)
of ERISA) ................................................................................................................... 231
D. Faster Vesting of Employer Nonelective Contributions (sec. 203 of ERISA,
and sec. 411 of the Code)............................................................................................ 240
E. Distributions During Working Retirement (sec. 3(2) of ERISA and new
sec. 401(a)(35) of the Code) ....................................................................................... 242
F. Treatment of Plans Maintained by Indian Tribes (sec. 414(d) of the Code and
sec. 3(32) of ERISA)................................................................................................... 244
TITLE X: SPOUSAL PENSION PROTECTION..................................................................... 245
A. Regulations on Time and Order of Issuance of Domestic Relations Orders .............. 245
B. Benefits Under the Railroad Retirement System for Former Spouses
(secs. 2 and 5 of the Railroad Retirement Act of 1974).............................................. 247
C. Requirement for Additional Survivor Annuity Option (sec. 417 of the Code and
sec. 205 of ERISA) ..................................................................................................... 248
TITLE XI: ADMINISTRATIVE PROVISIONS ...................................................................... 250
A. Updating of Employee Plans Compliance Resolution System................................... 250
B. Notice and Consent Period Regarding Distributions (sec. 417(a) of the Code,
and sec. 205(c) of ERISA) .......................................................................................... 252
C. Pension Plan Reporting Simplification....................................................................... 254
D. Voluntary Early Retirement Incentive and Employment Retention Plans
Maintained by Local Educational Agencies and Other Entities (secs. 457(e)(11)
and 457(f) of the Code, sec. 3(2)(B) of ERISA, and sec. 4(l)(1) of the ADEA) ....... 256
vii
E. No Reduction in Unemployment Compensation as a Result of Pension Rollovers
(sec. 3304(a)(15) of the Code) .................................................................................... 259
F. Revocation of Election Relating to Treatment as Multiemployer Plan
(sec. 3(37) of ERISA and sec. 414(f) of the Code)..................................................... 260
G. Provisions Relating to Plan Amendments................................................................... 262
TITLE XII: PROVISIONS RELATING TO EXEMPT ORGANIZATIONS ...................... 263
A. Charitable Giving Incentives ...................................................................................... 263
1. Tax-free distributions from individual retirement plans for charitable purposes
(secs. 408, 6034, 6104, and 6652 of the Code)...................................................... 263
2. Charitable deduction for contributions of food inventory (sec. 170 of the
Code)...................................................................................................................... 269
3. Basis adjustment to stock of s corporation contributing property
(sec. 1367 of the Code) .......................................................................................... 271
4. Charitable deduction for contributions of book inventory (sec. 170 of the
Code)...................................................................................................................... 272
5. Modify tax treatment of certain payments to controlling exempt organizations
(secs. 512 and 6033 of the Code)........................................................................... 273
6. Encourage contributions of real property made for conservation purposes
(sec. 170 of the Code) ............................................................................................ 274
7. Excise tax exemptions for blood collector organizations (secs. 4041, 4221,
4253, 4483, 6416, and 7701 of the Code).............................................................. 277
B. Reforming Exempt Organizations .............................................................................. 283
1. Reporting on certain acquisitions of interests in insurance contracts in which
certain exempt organizations hold interests (new sec. 6050V of the Code).......... 283
2. Increase the amounts of excise taxes imposed relating to public charities,
social welfare organizations, and private foundations (secs. 4941, 4942, 4943,
4944, 4945, and 4958 of the Code)........................................................................ 286
3. Reform rules for charitable contributions of easements in registered historic
districts and take account of rehabilitation credit in easement donations
(sec. 170 of the Code) ............................................................................................ 291
4. Reform rules relating to charitable contributions of taxidermy
(sec. 170 of the Code) ............................................................................................ 296
5. Recapture of tax benefit on property not used for an exempt use
(secs. 170, 6050L, and new sec. 6720B of the Code)............................................ 298
6. Limit charitable deduction for contributions of clothing and household items
(sec. 170 of the Code) ............................................................................................ 302
7. Modify recordkeeping and substantiation requirements for certain charitable
contributions (sec. 170 of the Code) ...................................................................... 305
8. Contributions of fractional interests in tangible personal property
(secs. 170, 2055, and 2522 of the Code)................................................................ 306
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9. Proposals relating to appraisers and substantial and gross overstatement of
valuations of property (secs. 170, 6662, 6664, 6696 and new sec. 6695A of the
Code)...................................................................................................................... 308
10. Establish additional exemption standards for credit counseling organizations
(secs. 501 and 513 of the Code) 312
11. Expand the base of the tax on private foundation net investment income
(and sec. 4940 of the Code) ................................................................................... 320
12. Definition of convention or association of churches (sec. 7701 of the Code)....... 324
13. Notification requirement for exempt entities not currently required to file an
annual information return (secs. 6033, 6652, and 7428 of the Code).................... 325
14. Disclosure to State officials relating to section 501(c) organizations
(secs. 6103, 6104, 7213, 7213A, and 7431 of the Code)....................................... 327
15. Require that unrelated business income tax returns of section 501(c)(3)
organizations be made publicly available (sec. 6104 of the Code)........................ 329
16. Treasury study on donor advised funds and supporting organizations.................. 330
17. Improve accountability of donor advised funds (secs. 170, 508, 2055, 2522,
4958, 6033 and new secs. 4966 and 4967 of the Code)......................................... 334
18. Improve accountability of supporting organizations (secs. 509, 4942, 4943,
4945, 4958, and 6033 of the Code)........................................................................ 351
TITLE XIII: OTHER PROVISIONS......................................................................................... 364
A. Technical Corrections to Mine Safety Act.................................................................. 364
B. Going To The Sun Road ............................................................................................. 364
C. Exception to Local Furnishing Requirements for Certain Alaska Hydroelectric
Projects....................................................................................................................... 365
D. Extend Certain Tax Rules for Qualified Tuition Programs (sec. 529 of the Code).... 366
TITLE XIV: TARIFF PROVISIONS........................................................................................ 370
A. Suspension of Duties on Liquid Crystal Device (LCD) Panel Assemblies for
Use in LCD Direct View Televisions ......................................................................... 370
B. Suspension of Duties on Ceiling Fans ........................................................................ 370
C. Suspension of Duties on Nuclear Steam Generators, Reactor Vessel Heads
and Pressurizers ..........................................................................................................371
D. Suspension of New Shipper Bonding Privilege.......................................................... 372
E. Wool Trust Fund and Wool Fabric Duty Suspension................................................. 373
F. Miscellaneous Trade and Technical Corrections Provisions ...................................... 374

G. Vessel Repair Duties................................................................................................... 375
H. CAFTA-DR Provisions Related to Agreement Implementation ................................ 376

http://www.house.gov/jct/x-38-06.pdf

[Faux pas]

5. Easy to translate: In other words, screw ya all unless you're a

one percenter.