ELIMINATION OF SECTION 4049 TRUST: INCREASE IN LIABILITY TO PENSION BENEFIT GUARANTY CORPORATION AND IN PAYMENTS BY CORPORATION TO PARTICIPANTS AND BENEFICIARIES.

SEC. 9312. ELIMINATION OF SECTION 4049 TRUST: INCREASE IN LIABILITY TO PENSION BENEFIT GUARANTY CORPORATION AND IN PAYMENTS BY CORPORATION TO PARTICIPANTS AND BENEFICIARIES. (a) Repeal.— Section 4049 of ERISA (29 U.S.C. 1349) is repealed. (b) Conforming Amendments.— (1) Elimination of employer liability to section 4049 trust.— (A) Repeal.— Subsection (c) of section 4062 of ERISA (29 U.S.C. 1362(c)) is repealed. (B) Conforming amendments.— Section 4062 of ERISA is further amended by redesignating subsections (d), (e), and (f) as subsections (c), (d), and (e), respectively. (2) Increase in employer liability to the corporation.— (A) In general.— Subparagraph (A) of section 4062(b)(1) of ERISA (29 U.S.C. 1362(b)(1)(A)) is amended to read as follows: “(A) In general.— Except as provided in subparagraph (B), the liability to the corporation of a person described in subsection (a) shall be the total amount of the unfunded benefit liabilities (as of the termination date) to all participants and beneficiaries under the plan, together with interest (at a reasonable rate) calculated from the termination date in accordance with regulations prescribed by the corporation.” (B) Lien limited to 30 percent of net worth.— (i) Subsection (a) of section 4068 of ERISA (29 U.S.C. 1368(a)) is amended by striking out “to the extent of an amount equal to the unpaid amount described in section 4062(b)(l)(A)(i)” each place it appears and inserting in lieu thereof “to the extent such amount does not exceed 30 percent of the collective net worth of all persons described in section 4062(a)”. (ii) Title IV of ERISA (29 U.S.C. 4001 et seq.) is amended by transferring subsection (e) of section 4062 of ERISA (29 U.S.C. 1362(e)) to the end of section 4068 of ERISA (29 U.S.C. 1368) and by redesignating such subsection as subsection (f). (C) Treatment of multiple controlled groups.— (i) In general.— So much of section 4064(b) of ERISA (29 U.S.C. 13640t))) as precedes the second sentence is amended to read as follows: “(b) The corporation shall determine the liability with respect to each contributing sponsor and each member of its controlled group in a manner consistent with section 4062, except that the amount of liability determined under section 4062(b)(1) with respect to the entire plan shall be allocated to each controlled group by multiplying such amount by a fraction— “(1) the numerator of which is the amount required to be contributed to the plan for the last 5 plan years ending prior to the termination date by persons in such controlled group as contributing sponsors, and “(2) the denominator of which is the total amount required to be contributed to the plan for such last 5 plan years by all persons as contributing sponsors, 101 STAT. 1330–362 and clauses (i)(II) and (ii) of section 4062(b)(1)(A) shall be applied separately with respect to each controlled group.” (ii) Conforming amendments.— Section 4068(a) of ERISA (29 U.S.C. 1368(a)) is amended by adding at the end thereof the following new sentence: “The preceding provision of this subsection shall be applied in a manner consistent with the provisions of section 4064(d) relating to treatment of multiple controlled groups.” (3) Payment by corporation to participants and beneficiaries of recovery percentage of outstanding amount of benefit liabilities— (A) In general.— Section 4022 of ERISA (29 U.S.C. 1322) is amended— (i) by redesignating subsections (c) and (d) as subsections (d) and (e); and (ii) by inserting after subsection 0)) the following new subsection: “(c) (1) In addition to benefits paid under the preceding provisions of this section with respect to a terminated plan, the corporation shall pay the portion of the amount determined under paragraph (2) which is allocated with respect to each participant under section 4044(a), to such participant or (in the case of a deceased participant) to such participant’s beneficiaries (including alternate payees, within the meaning of section 206(d)(3)(K)). “(2) The amount determined under this paragraph is an amount equal to the product derived by multiplying— “(A) the outstanding amount of benefit liabilities under the plan (including interest calculated from the termination date), by “(B) the applicable recovery ratio. “(3) (A) Except as provided in subparagraph (C), for purposes of this subsection, the term ‘recovery ratio’ means the average ratio, with respect to prior plan terminations described in subparagraph (B), of— “(i) the value of the recovery of the corporation under section 4062, 4063, or 4064 in connection with such prior terminations, to “(ii) the amount of unfunded benefit liabilities under such plans as of the termination date in connection with such prior terminations. “(B) A plan termination described in this subparagraph is a termination with respect to which— “(i) the corporation has determined the value of recoveries under section 4062, 4063, or 4064, and “(ii) notices of intent to terminate were provided after December 17, 1987. “(C) In the case of a terminated plan with respect to which the outstanding amount of benefit liabilities exceeds $20,000,000, for purposes of this section, the term ‘recovery ratio’ means, with respect to the termination of such plan, the ratio of— “(i) the value of the recoveries of the corporation under section 4062, 4063, or 4064 in connection with such plan, to “(ii) the amount of unfunded benefit liabilities under such plan as of the termination date. 101 STAT. 1330–363 “(4) Determinations under this subsection shall be made by the corporation. Such determinations shall be binding unless shown by clear and convincing evidence to be unreasonable.” (B) Transitional rule.— (i) In general.— In the case of any plan termination to which the amendments made by this section apply and with respect to which notices of intent to terminate were provided on or before December 17, 1990— (I) subparagraph (A) of section 4022(c)(1) of ERISA (as amended by this paragraph) shall not apply, and (II) subparagraph (B) of section 4022(c)(1) of ERISA (as so amended) shall apply irrespective of the outstanding amount of benefit liabilities under the plan, (ii) Limitation.— Clause (i) shall not apply in the case of any plan termination referred to in clause (i) with respect to which the recovery ratio is not finally determined under section 4022(c)(1)(B) of ERISA (as so amended) as of December 17, 1990. (4) Benefit liabilities.— Paragraph (16) of section 4001(a) of ERISA (29 U.S.C. 1301(aX16)) is amended to read as follows: “(16) ‘benefit liabilities’ means the benefits of employees and their beneficiaries under the plan (within the meaning of section 401(a)(2) of the Internal Revenue Code of 1986);”. (5) Outstanding amount of benefit liabilities.— Paragraph (19) of section 4001(a) of ERISA (29 U.S.C. 1301(a)(19)) is amended to read as follows: “(19) ‘outstanding amount of benefit liabilities’ means, with respect to any plan, the excess (if any) of— “(A) the value of the benefit liabilities under the plan (determined as of the termination date on the basis of assumptions prescribed by the corporation for purposes of section 4044), over “(B) the value of the benefit liabilities which would be so determined by only taking into account benefits which are guaranteed under section 4022 or to which assets of the plan are allocated under section 4044;”. (c) Additional Conforming Amendments.— (1) Section 4041(c)(3)(B)(ii) of ERISA (29 U.S.C. 1341(c)(3)(B)(ii)) is amended— (A) by striking subclause (II); (B) by striking “plan, and” at the end of subclause (I) and inserting “plan.”; and (C) by striking “available to it—” and all that follows through “the plan administrator” and inserting “available to it, the plan administrator”. (2) Section 4041(c)(3)(B)(iii) of ERISA (29 U.S.C. 1341(c)(3)(B)(iii)) is amended— (A) by striking subclause (II); (B) by striking “section 4042, and” at the end of subclause (I) and inserting “section 4042.”; and (C) by striking “available to it—” and all that follows through “the corporation” in subclause (I) and inserting “available to it, the corporation”. (3) Subsection (i) of section 4042 of ERISA (29 U.S.C. 1342(i)) is repealed. 101 STAT. 1330–364 (4) Section 4005(g) of ERISA (29 U.S.C. 1305(g)) is amended by striking out “or fiduciaries with respect to trusts to which the requirements of section 4049 apply”, (d) Effective Date.— (1) In general.— The amendments made by this section shall apply with respect to— (A) plan terminations under section 4041(c) of ERISA with respect to which notices of intent to terminate are provided under section 4041(a)(2) of ERISA after December 17, 1987, and (B) plan terminations with respect to which proceedings are instituted by the Pension Benefit Guaranty Corporation under section 4042 of ERISA after December 17, 1987. (2) Section 4049 administrative expenses under prior terminations.— Section 4049(a) of ERISA (as effective under paragraph (1)), is amended by adding at the end thereof the following new sentence: "Reasonable administrative expenses incurred in carrying out the responsibilities under this section prior to the receipt of any liability payments under section 4062(c) shall be paid by the persons described in section 4062(a) in accordance with procedures which shall be prescribed by the corporation by regulation, and the amount of the liability determined under section 4062(c) shall be reduced by the amount of such expenses so paid.”