TREATMENT OF FORMS OF DISTRIBUTION.

SEC. 645. TREATMENT OF FORMS OF DISTRIBUTION. (a) Plan Transfers.— (1) Amendment of internal revenue code.—Paragraph (6) of section 411(d) (relating to accrued benefit not to be 115 STAT. 124decreased by amendment) is amended by adding at the end the following: “(D) Plan transfers.— “(i) In general.—A defined contribution plan (in this subparagraph referred to as the ‘transferee plan’) shall not be treated as failing to meet the requirements of this subsection merely because the transferee plan does not provide some or all of the forms of distribution previously available under another defined contribution plan (in this subparagraph referred to as the ‘transferor plan’) to the extent that— “(I) the forms of distribution previously available under the transferor plan applied to the account of a participant or beneficiary under the transferor plan that was transferred from the transferor plan to the transferee plan pursuant to a direct transfer rather than pursuant to a distribution from the transferor plan, “(II) the terms of both the transferor plan and the transferee plan authorize the transfer described in subclause (I), “(III) the transfer described in subclause (I) was made pursuant to a voluntary election by the participant or beneficiary whose account was transferred to the transferee plan, “(IV) the election described in subclause (III) was made after the participant or beneficiary received a notice describing the consequences of making the election, and “(V) the transferee plan allows the participant or beneficiary described in subclause (III) to receive any distribution to which the participant or beneficiary is entitled under the transferee plan in the form of a single sum distribution. “(ii) Special rule for mergers, etc.—Clause (i) shall apply to plan mergers and other transactions having the effect of a direct transfer, including consolidations of benefits attributable to different employers within a multiple employer plan. “(E) Elimination of form of distribution.—Except to the extent provided in regulations, a defined contribution plan shall not be treated as failing to meet the requirements of this section merely because of the elimination of a form of distribution previously available thereunder. This subparagraph shall not apply to the elimination of a form of distribution with respect to any participant unless— “(i) a single sum payment is available to such participant at the same time or times as the form of distribution being eliminated, and “(ii) such single sum payment is based on the same or greater portion of the participant’s account as the form of distribution being eliminated.”. (2) Amendment of erisa.—Section 204(g) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) is amended by adding at the end the following:115 STAT. 125 “(4)(A) A defined contribution plan (in this subparagraph referred to as the ‘transferee plan’) shall not be treated as failing to meet the requirements of this subsection merely because the transferee plan does not provide some or all of the forms of distribution previously available under another defined contribution plan (in this subparagraph referred to as the ‘transferor plan’) to the extent that— “(i) the forms of distribution previously available under the transferor plan applied to the account of a participant or beneficiary under the transferor plan that was transferred from the transferor plan to the transferee plan pursuant to a direct transfer rather than pursuant to a distribution from the transferor plan; “(ii) the terms of both the transferor plan and the transferee plan authorize the transfer described in clause (i); “(iii) the transfer described in clause (i) was made pursuant to a voluntary election by the participant or beneficiary whose account was transferred to the transferee plan; “(iv) the election described in clause (iii) was made after the participant or beneficiary received a notice describing the consequences of making the election; and “(v) the transferee plan allows the participant or beneficiary described in clause (iii) to receive any distribution to which the participant or beneficiary is entitled under the transferee plan in the form of a single sum distribution. “(B) Subparagraph (A) shall apply to plan mergers and other transactions having the effect of a direct transfer, including consolidations of benefits attributable to different employers within a multiple employer plan. “(5) Except to the extent provided in regulations promulgated by the Secretary of the Treasury, a defined contribution plan shall not be treated as failing to meet the requirements of this subsection merely because of the elimination of a form of distribution previously available thereunder. This paragraph shall not apply to the elimination of a form of distribution with respect to any participant unless— “(A) a single sum payment is available to such participant at the same time or times as the form of distribution being eliminated; and “(B) such single sum payment is based on the same or greater portion of the participant’s account as the form of distribution being eliminated.”. (3) Effective date.—The amendments made by this subsection shall apply to years beginning after December 31, 2001. (b) Regulations.— (1) Amendment of internal revenue code.—Paragraph (6)(B) of section 411(d) (relating to accrued benefit not to be decreased by amendment) is amended by inserting after the second sentence the following: “The Secretary shall by regulations provide that this subparagraph shall not apply to any plan amendment which reduces or eliminates benefits or subsidies which create significant burdens or complexities for the plan and plan participants, unless such amendment adversely affects the rights of any participant in a more than de minimis manner.”. (2) Amendment of erisa.—Section 204(g)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 115 STAT. 1261054(g)(2)) is amended by inserting after the second sentence the following: “The Secretary of the Treasury shall by regulations provide that this paragraph shall not apply to any plan amendment which reduces or eliminates benefits or subsidies which create significant burdens or complexities for the plan and plan participants, unless such amendment adversely affects the rights of any participant in a more than de minimis manner.”. (3) Secretary directed.—Not later than December 31, 2003, the Secretary of the Treasury is directed to issue regulations under section 411(d)(6) of the Internal Revenue Code of 1986 and section 204(g) of the Employee Retirement Income Security Act of 1974, including the regulations required by the amendment made by this subsection. Such regulations shall apply to plan years beginning after December 31, 2003, or such earlier date as is specified by the Secretary of the Treasury.