REDUCTION IN COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING CONTRIBUTIONS AND BENEFITS UNDER QUALIFIED RETIREMENT PLANS.

SEC. 13212. REDUCTION IN COMPENSATION TAKEN INTO ACCOUNT IN DETERMINING CONTRIBUTIONS AND BENEFITS UNDER QUALIFIED RETIREMENT PLANS. (a) Qualification Requirement.— (1) In general.— Section 401(a)(17) is amended— (A) by striking “$200,000” in the first sentence and inserting “$150,000”, (B) by striking the second sentence, and (C) by adding at the end the following new subparagraph: “(B) Cost-of-living adjustment.— “(i) In general.— If, for any calendar year after 1994, the excess (if any) of— “(I) $150,000, increased by the cost-of-living adjustment for the calendar year, over “(II) the dollar amount in effect under subparagraph (A) for taxable years beginning in the calendar year, is equal to or greater than $10,000, then the $150,000 amount under subparagraph (A) (as previously adjusted under this subparagraph) for any taxable year beginning in any subsequent calendar year shall be increased by the amount of such excess, rounded to the next lowest multiple of $10,000. “(ii) Cost-of-living adjustment.— The cost-of-living adjustment for any calendar year shall be the adjustment made under section 415(d) for such cal-107 STAT. 472endar year, except that the base period for purposes of section 415(d)(1)(A) shall be the calendar quarter beginning October 1, 1993.” (2) Conforming amendment.— Section 401(a)(17) is amended by striking “(17) A trust” and inserting: “(17) Compensation limit.— “(A) In general.— A trust”. (b) Simplified Employee Pensions.— (1) In general.— Paragraphs (3)(C) and (6)(D)(ii) of section 408(k) are each amended by striking “$200,000” and inserting “$150,000”. (2) Cost-of-living.— Paragraph (8) of section 408(k) is amended to read as follows: “(8) Cost-of-living adjustment.— The Secretary shall adjust the $300 amount in paragraph (2)(C) at the same time and in the same manner as under section 415(d) and shall adjust the $150,000 amount in paragraphs (3)(C) and (6)(D)(ii) at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).” (c) Other Related Provisions.— (1) In general.— Sections 404(l) and 505(b)(7) are each amended— (A) by striking “$200,000” in the first sentence and inserting “$150,000”, and (B) by striking the second sentence and inserting “The Secretary shall adjust the $150,000 amount at the same time, and by the same amount, as any adjustment under section 401(a)(17)(B).” (2) Conforming amendment.— The heading for section 505(b)(7) is amended by striking “$200,000”. (d) Effective Dates.— (1) In general.— Except as provided in this subsection, the amendments made by this section shall apply to benefits accruing in plan years beginning after December 31, 1993. (2) Collectively bargained plans.— In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to contributions or benefits pursuant to such agreements for plan years beginning before the earlier of— (A) the latest of— (i) January 1, 1994, (ii) the date on which the last of such collective bargaining agreements terminates (without regard to any extension, amendment, or modification of such agreements on or after such date of enactment), or (iii) in the case of a plan maintained pursuant to collective bargaining under the Railway Labor Act, the date of execution of an extension or replacement of the last of such collective bargaining agreements in effect on such date of enactment, or (B) January 1, 1997. (3) Transition rule for state and local plans.— (A) In general.— In the case of an eligible participant in a governmental plan (within the meaning of section 414(d) of the Internal Revenue Code of 1986), the dollar 107 STAT. 473limitation under section 401(a)(17) of such Code shall not apply to the extent the amount of compensation which is allowed to be taken into account under the plan would be reduced below the amount which was allowed to be taken into account under the plan as in effect on July 1, 1993. (B) Eligible participant.— For purposes of subparagraph (A), an eligible participant is an individual who first became a participant in the plan during a plan year beginning before the 1st plan year beginning after the earlier of— (i) the plan year in which the plan is amended to reflect the amendments made by this section, or (ii) December 31, 1995. (C) Plan must be amended to incorporate limits.— This paragraph shall not apply to any eligible participant of a plan unless the plan is amended so that the plan incorporates by reference the dollar limitation under section 401(a)(17) of the Internal Revenue Code of 1986, effective with respect to noneligible participants for plan years beginning after December 31, 1995 (or earlier if the plan amendment so provides).