[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4275 Enrolled Bill (ENR)]
H.R.4275
One Hundred Thirteenth Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Friday,
the third day of January, two thousand and fourteen
An Act
To amend the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code of 1986 to provide for cooperative and small
employer charity pension plans.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,

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(a) Short Title.--This Act may be cited as the ``Cooperative and
Small Employer Charity Pension Flexibility Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:

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TITLE I

-AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

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TITLE II

-AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

Congress finds as follows:
(1) Defined benefit pension plans are a cost-effective way for
cooperative associations and charities to provide their employees
with economic security in retirement.
(2) Many cooperative associations and charitable organizations
are only able to provide their employees with defined benefit
pension plans because those organizations are able to pool their
resources using the multiple employer plan structure.
(3) The pension funding rules should encourage cooperative
associations and charities to continue to provide their employees
with pension benefits.

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Unless otherwise specified in this Act, the provisions of this Act
shall apply to years beginning after December 31, 2013.
AND OTHER PROVISIONS

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PENSION PLANS.
Section 210 of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1060) is amended by adding at the end the following new
subsection:
``(f) Cooperative and Small Employer Charity Pension Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is an employee pension
benefit plan (other than a multiemployer plan) that is a defined
benefit plan--
``(A) to which section 104 of the Pension Protection Act of
2006 applies, without regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by section
202(b) of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of June 25, 2010, was maintained by more
than one employer and all of the employers were organizations
described in section 501(c)(3) of the Internal Revenue Code of
1986.
``(2) Aggregation.--All employers that are treated as a single
employer under subsection (b) or (c) of section 414 of the Internal
Revenue Code of 1986 shall be treated as a single employer for
purposes of determining if a plan was maintained by more than one
employer under paragraph (1)(B).''.

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(a) Election Not To Be Treated as a CSEC Plan.--Subsection (f) of
section 210 of the Employee Retirement Income Security Act of 1974, as
added by section 101, is amended by adding at the end the following new
paragraph:
``(3) Election.--
``(A) In general.--If a plan falls within the definition of
a CSEC plan under this subsection (without regard to this
paragraph), such plan shall be a CSEC plan unless the plan
sponsor elects not later than the close of the first plan year
of the plan beginning after December 31, 2013, not to be
treated as a CSEC plan. An election under the preceding
sentence shall take effect for such plan year and, once made,
may be revoked only with the consent of the Secretary of the
Treasury.
``(B) Special rule.--If a plan described in subparagraph
(A) is treated as a CSEC plan, section 104 of the Pension
Protection Act of 2006, as amended by the Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief
Act of 2010, shall cease to apply to such plan as of the first
date as of which such plan is treated as a CSEC plan.''.
(b) Election To Cease To Be Treated as an Eligible Charity Plan.--
Subsection (d) of section 104 of the Pension Protection Act of 2006, as
added by section 202 of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010, is amended--
(1) by striking ``For purposes of'' and inserting ``(1) In
general.--For purposes of'', and
(2) by adding at the end the following:
``(2) Election not to be an eligible charity plan.--A plan
sponsor may elect for a plan to cease to be treated as an eligible
charity plan for plan years beginning after December 31, 2013. Such
election shall be made at such time and in such form and manner as
shall be prescribed by the Secretary of the Treasury. Any such
election may be revoked only with the consent of the Secretary of
the Treasury.
``(3) Election to use funding options available to other plan
sponsors.--
``(A) A plan sponsor that makes the election described in
paragraph (2) may elect for a plan to apply the rules described
in subparagraphs (B), (C), and (D) for plan years beginning
after December 31, 2013. Such election shall be made at such
time and in such form and manner as shall be prescribed by the
Secretary of the Treasury. Any such election may be revoked
only with the consent of the Secretary of the Treasury.
``(B) Under the rules described in this subparagraph, for
the first plan year beginning after December 31, 2013, a plan
has--
``(i) an 11-year shortfall amortization base,
``(ii) a 12-year shortfall amortization base, and
``(iii) a 7-year shortfall amortization base.
``(C) Under the rules described in this subparagraph,
section 303(c)(2)(A) and (B) of the Employee Retirement Income
Security Act of 1974, and section 430(c)(2)(A) and (B) of the
Internal Revenue Code of 1986 shall be applied by--
``(i) in the case of an 11-year shortfall amortization
base, substituting `11-plan-year period' for `7-plan-year
period' wherever such phrase appears, and
``(ii) in the case of a 12-year shortfall amortization
base, substituting `12-plan-year period' for `7-plan-year
period' wherever such phrase appears.
``(D) Under the rules described in this subparagraph,
section 303(c)(7) of the Employee Retirement Income Security
Act of 1974 and section 430(c)(7) of the Internal Revenue Code
of 1986 shall apply to a plan for which an election has been
made under subparagraph (A). Such provisions shall apply in the
following manner:
``(i) The first plan year beginning after December 31,
2013, shall be treated as an election year, and no other
plan years shall be so treated.
``(ii) All references in section 303(c)(7) of such Act
and section 430(c)(7) of such Code to `February 28, 2010'
or `March 1, 2010' shall be treated as references to
`February 28, 2013' or `March 1, 2013', respectively.
``(E) For purposes of this paragraph, the 11-year
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to the
unamortized principal amount of the shortfall amortization base
(as defined in section 303(c)(3) of the Employee Retirement
Income Security Act of 1974 and section 430(c)(3) of the
Internal Revenue Code of 1986) that would have applied to the
plan for the first plan beginning after December 31, 2009, if--
``(i) the plan had never been an eligible charity plan,
``(ii) the plan sponsor had made the election described
in section 303(c)(2)(D)(i) of the Employee Retirement
Income Security Act of 1974 and in section 430(c)(2)(D)(i)
of the Internal Revenue Code of 1986 to have section
303(c)(2)(D)(i) of such Act and section 430(c)(2)(D)(iii)
of such Code apply with respect to the shortfall
amortization base for the first plan year beginning after
December 31, 2009, and
``(iii) no event had occurred under paragraph (6) or
(7) of section 303(c) of such Act or paragraph (6) or (7)
of section 430(c) of such Code that, as of the first day of
the first plan year beginning after December 31, 2013,
would have modified the shortfall amortization base or the
shortfall amortization installments with respect to the
first plan year beginning after December 31, 2009.
``(F) For purposes of this paragraph, the 12-year
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to the
unamortized principal amount of the shortfall amortization base
(as defined in section 303(c)(3) of the Employee Retirement
Income Security Act of 1974 and section 430(c)(3) of the
Internal Revenue Code of 1986) that would have applied to the
plan for the first plan beginning after December 31, 2010, if--
``(i) the plan had never been an eligible charity plan,
``(ii) the plan sponsor had made the election described
in section 303(c)(2)(D)(i) of the Employee Retirement
Income Security Act of 1974 and in section 430(c)(2)(D)(i)
of the Internal Revenue Code of 1986 to have section
303(c)(2)(D)(i) of such Act and section 430(c)(2)(D)(iii)
of such Code apply with respect to the shortfall
amortization base for the first plan year beginning after
December 31, 2010, and
``(iii) no event had occurred under paragraph (6) or
(7) of section 303(c) of such Act or paragraph (6) or (7)
of section 430(c) of such Code that, as of the first day of
the first plan year beginning after December 31, 2013,
would have modified the shortfall amortization base or the
shortfall amortization installments with respect to the
first plan year beginning after December 31, 2010.
``(G) For purposes of this paragraph, the 7-year shortfall
amortization base is an amount, determined for the first plan
year beginning after December 31, 2013, equal to--
``(i) the shortfall amortization base for the first
plan year beginning after December 31, 2013, without regard
to this paragraph, minus
``(ii) the sum of the 11-year shortfall amortization
base and the 12-year shortfall amortization base.
``(4) Retroactive election.--Not later than December 31, 2014,
a plan sponsor may make a one-time, irrevocable, retroactive
election to not be treated as an eligible charity plan. Such
election shall be effective for plan years beginning after December
31, 2007, and shall be made by providing reasonable notice to the
Secretary of the Treasury.''.
(c) Deemed Election.--For purposes of the Internal Revenue Code of
1986, sections 4(b)(2) and 4021(b)(3) of the Employee Retirement Income
Security Act of 1974, and all other purposes, a plan shall be deemed to
have made an irrevocable election under section 410(d) of the Internal
Revenue Code of 1986 if--
(1) the plan was established before January 1, 2014;
(2) the plan falls within the definition of a CSEC plan;
(3) the plan sponsor does not make an election under section
210(f)(3)(A) of the Employee Retirement Income Security Act of 1974
and section 414(y)(3)(A) of the Internal Revenue Code of 1986, as
added by this Act; and
(4) the plan, plan sponsor, administrator, or fiduciary remits
one or more premium payments for the plan to the Pension Benefit
Guaranty Corporation for a plan year beginning after December 31,
2013.
(d) Effective Date.--The amendments made by this section shall
apply as of the date of enactment of this Act.

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(a) Notice to Participants.--
(1) In general.--Paragraph (2) of section 101(f) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021(f))
is amended by adding at the end the following new subparagraph:
``(E) Effect of csec plan rules on plan funding.--In the
case of a CSEC plan, each notice under paragraph (1) shall
include--
``(i) a statement that different rules apply to CSEC
plans than apply to single-employer plans,
``(ii) for the first 2 plan years beginning after
December 31, 2013, a statement that, as a result of changes
in the law made by the Cooperative and Small Employer
Charity Pension Flexibility Act, the contributions to the
plan may have changed, and
``(iii) in the case of a CSEC plan that is in funding
restoration status for the plan year, a statement that the
plan is in funding restoration status for such plan year.
A copy of the statement required under clause (iii) shall be
provided to the Secretary, the Secretary of the Treasury, and
the Director of the Pension Benefit Guaranty Corporation.''.
(2) Model notice.--The Secretary of Labor may modify the model
notice required to be published under section 501(c) of the Pension
Protection Act of 2006 to include the information described in
section 101(f)(2)(E) of the Employee Retirement Income Security Act
of 1974, as added by this subsection.
(b) Notice of Failure To Meet Minimum Funding Standards.--
(1) Pending waivers.--Paragraph (2) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021(d))
is amended by striking ``303'' and inserting ``303 or 306''.
(2) Definitions.--Paragraph (3) of section 101(d) of the
Employee Retirement Income Security Act of 1974 (21 U.S.C. 1021(d))
is amended by striking ``303(j)'' and inserting ``303(j) or 306(f),
whichever is applicable''.
(c) Additional Reporting Requirements.--Section 103 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1023) is amended by
adding at the end the following new subsection:
``(g) Additional Information With Respect to Multiple Employer
Plans.--With respect to any multiple employer plan, an annual report
under this section for a plan year shall include a list of
participating employers and a good faith estimate of the percentage of
total contributions made by such participating employers during the
plan year.''.

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(a) Definition.--In this section, the term ``CSEC plan'' has the
meaning given that term in subsection (f)(1) of section 210 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1060(f)(1))
(as added by this Act).
(b) Education.--The Participant and Plan Sponsor Advocate
established under section 4004 of the Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1304) shall make itself available to
assist CSEC plan sponsors and participants as part of the duties it
performs under the general supervision of the Board of Directors under
section 4004(b) of such Act (29 U.S.C. 1304(b)).

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PENSION PLANS.
Section 414 of the Internal Revenue Code of 1986 is amended by
adding at the end the following new subsection:
``(y) Cooperative and Small Employer Charity Pension Plans.--
``(1) In general.--For purposes of this title, except as
provided in this subsection, a CSEC plan is a defined benefit plan
(other than a multiemployer plan)--
``(A) to which section 104 of the Pension Protection Act of
2006 applies, without regard to--
``(i) section 104(a)(2) of such Act;
``(ii) the amendments to such section 104 by section
202(b) of the Preservation of Access to Care for Medicare
Beneficiaries and Pension Relief Act of 2010; and
``(iii) paragraph (3)(B); or
``(B) that, as of June 25, 2010, was maintained by more
than one employer and all of the employers were organizations
described in section 501(c)(3).
``(2) Aggregation.--All employers that are treated as a single
employer under subsection (b) or (c) shall be treated as a single
employer for purposes of determining if a plan was maintained by
more than one employer under paragraph (1)(B).''.

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(a) In General.--Section 414(y) of the Internal Revenue Code of
1986, as added by section 201, is amended by adding at the end the
following new paragraph:
``(3) Election.--
``(A) In general.--If a plan falls within the definition of
a CSEC plan under this subsection (without regard to this
paragraph), such plan shall be a CSEC plan unless the plan
sponsor elects not later than the close of the first plan year
of the plan beginning after December 31, 2013, not to be
treated as a CSEC plan. An election under the preceding
sentence shall take effect for such plan year and, once made,
may be revoked only with the consent of the Secretary.
``(B) Special rule.--If a plan described in subparagraph
(A) is treated as a CSEC plan, section 104 of the Pension
Protection Act of 2006, as amended by the Preservation of
Access to Care for Medicare Beneficiaries and Pension Relief
Act of 2010, shall cease to apply to such plan as of the first
date as of which such plan is treated as a CSEC plan.''.
(b) Effective Date.--The amendment made by this section shall apply
as of the date of enactment of this Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.

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Cooperative and Small Employer Charity Pension Flexibility Act — HR. 4275

Other Sections

TITLE I

TITLE II

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