LIMITATIONS ON EMPLOYER REVERSIONS UPON PLAN TERMINATION.

SEC. 9311. LIMITATIONS ON EMPLOYER REVERSIONS UPON PLAN TERMINATION. (a) Restrictions On Reversions Pursuant To Recently Amended Plans.— (1) In general.— Section 4044(d) of ERISA (29 U.S.C. 1344(d)) is amended— (A) by redesignating paragraph (2) as paragraph (3); and (B) by inserting after paragraph (1) the following new paragraph: “(2) (A) In determining the extent to which a plan provides for the distribution of plan assets to the employer for purposes of paragraph (1)(C), any such provision, and any amendment increasing the amount which may be distributed to the employer, shall not be treated as effective before the end of the fifth calendar year following the date of the adoption of such provision or amendment. “(B) A distribution to the employer from a plan shall not be treated as failing to satisfy the requirements of this paragraph if the plan has been in effect for fewer than 5 years and the plan has provided for such a distribution since the effective date of the plan. “(C) Except as otherwise provided in regulations of the Secretary of the Treasury, in any case in which a transaction described in section 208 occurs, subparagraph (A) shall continue to apply separately with respect to the amount of any assets transferred in such transaction. “(D) For purposes of this subsection, the term ‘employer’ includes any member of the controlled group of which the employer is a member. For purposes of the preceding sentence, the term ‘controlled group’ means any group treated as a single employer under subsection (b), (c), (m) or (o) of section 414 of the Internal Revenue Code of 1986.” (2) Transitional rule.— The amendments made by paragraph (1) shall apply, in the case of plans which, as of note. December 17, 1987, have no provision relating to the distribution of plan assets to the employer for purposes of section 4044(d)(1)(C) of the Employee Retirement Income Security Act of 1974, only with respect to plan amendments providing for the101 STAT. 1330–360 distribution of plan assets to the employer which are adopted after 1 year after the effective date of such amendments made by paragraph (1). Such amendment shall not apply to any provision of the plan adopted on or before December 17, 1987, which provides for the distribution of plan assets to the employer. (b) Distribution of Assets Attributable to Employee Contributions.— Section 4044(d) of ERISA (29 U.S.C. 1344(d)) is amended— (1) in paragraph (1), by striking “Any” and inserting “Subject to paragraph (3), any”; and (2) by striking paragraph (3) (as redesignated by subsection (c)(1)) and inserting the following new paragraph: “(3) (A) Before any distribution from a plan pursuant to paragraph (1), if any assets of the plan attributable to employee contributions remain after satisfaction of all liabilities described in subsection (a), such remaining assets shall be equitably distributed to the participants who made such contributions or their beneficiaries (including alternate payees, within the meaning of section 206(d)(3)(K)). “(B) For purposes of subparagraph (A), the portion of the remaining assets which are attributable to employee contributions shall be an amount equal to the product derived by multiplying— “(i) the market value of the total remaining assets, by “(ii) a fraction— “(I) the numerator of which is the present value of all portions of the accrued benefits with respect to participants which are derived from participants’ mandatory contributions (referred to in subsection (a)(2)), and “(II) the denominator of which is the present value of all benefits with respect to which assets are allocated under paragraphs (2) through (6) of subsection (a). “(C) For purposes of this paragraph, each person who is, as of the termination date— “(i) a participant under the plan, or “(ii) an individual who has received, during the 3-year period ending with the termination date, a distribution from the plan of such individual’s entire nonforfeitable benefit in the form of a single sum distribution in accordance with section 203(e) or in the form of irrevocable commitments purchased by the plan from an insurer to provide such nonforfeitable benefit, shall be treated as a participant with respect to the termination, if all or part of the nonforfeitable benefit with respect to such person is or was attributable to participants’ mandatory contributions (referred to in subsection (a)(2)).” (c) Technical Amendment.— Section 4044(b)(4) of ERISA (29 U.S.C. 1344(b)(4)) is amended by striking “section 401(a), 403(a), or 405(a)” and inserting “section 401(a) or 403(a)”. (d) Effective Date.— The amendments made by this section shall apply with respect to— (1) plan terminations under section 4041(c) of ERISA with respect to which notices of intent to terminate are provided under section 4041(aX2) of ERISA after December 17, 1987, and (2) plan terminations with respect to which proceedings are instituted by the Pension Benefit Guaranty Corporation under section 4042 of ERISA after December 17, 1987.