- Caplan which has not, at any time after the date of the enactment of the Employee Retirement Income Security Act of 1974, provided for employer contributions, and -Da plan established and maintained by a society, order, te, p. 809. or association described in section 501 el S or (9), if no 26 s 502. (2) A plan desented in paragraph (1) shall be treated as from the application of sections 41 a 4) and 401 a)7) as in Post, p. 335. (b) COMPARABILITY OF PLANS-Section 4018) (relating to requirements for qualification is amended by adding at the end of paragraph (5) the following: "For purposes of determining whether wo or more plans of an employer satisfy the requirements of paragraph (4) when considered as a single plan, if the amount of contributions on behalf of the employees allowed as a deduction under section 404 for the taxable year with respect to such plans, taken together, pears a uniform relationship to the total compensation, or the basic or regular rate of compensation, of such employees, the plans shall not be considered discriminatory merely because the rights of employees to. or derived from, the employer contributions under the separate plans do not become non forfeitable at the same rate. For the purposes of determining whether two or more plans of an employer satisfy the requirements of paragraph 14 when considered as a single plan, if the employees' rights to benefits under the separate plans do not become nonforfeitable at the same rate, but the levels of benefits provided by the separate plans satisfy the requirements of regulations prescribed by the Secretary or his delegate to take account of the differences in such rates, the plans shall not be considered discriminatory merely because of the diference in such rates." (C) VARIATIONS FROM CERTAIN VESTING AND ACCRUED BENEFITS 25 USC 422 REQUIREMENTS-In the case of any plan maintained on January 1, note. 1974. if. not later than 2 years after the date of the enactment of this Act. the plan administrator petitions the Secretary of Labor, the Secretary of Labor may prescribe an alternate method which shall be treated as satisfying the requirements of subsection (2)(2) of section 411 of the Internal Revenue Code of 1954, or of subsection (b)(1) Ante, p. 901. (other than subparagraph D) thereof) of such section 411, or of both such provisions for a period of not more than 4 years. The Secretary may prescribe such alternate method only when he finds that (1) the application of such requirements would increase the costs of the plan to such an extent that there would result a substantial risk to the voluntary continuation of the plan or a substantial curtailment of benent levels or the levels of employees' compensation. (2) the application of such requirements or discontinuance of the plan would be adverse to the interests of plan participants in the aggregate, and (3) a waiver or extension of time granted under section 412(d) or (e) would be inadequate. In the case of any plan with respect to which an alternate method has been prescribed under the preceding provisions of this subsection for a period of not more than 4 years, if, not later than 1 year before the expiration of such period, the plan administrator petitions the Secre tary of Labor for an extension of such alternate method, and the Secretary makes the findings required by the preceding sentence, such alternate method may be extended for not more than 3 years. 924. inte p. 301. 28 SC 401. 233, pp. 369, 26 DSC 405. "Accumulated funding deficiency." Post, p. 920. SEC. 1013. MINIMUM FUNDING STANDARDS. (a) IN GENERAL.-Subpart B of part I of subchapter D of chapter 1 is amended by adding after section 411 the following new section: "SEC. 412. MINIMUM FUNDING STANDARDS. "(a) GENERAL ROLE.-Except as provided in subsection (h), this section applies to a plan if, for any plan year beginning on or after the effective date of this section for such plan- “(1) such plan included a trust which qualified (or was determined by the Secretary or his delegate to have qualified) under section 401(a), or "(2) such plan satisfied (or was determined by the Secretary or his delegate to have satisfied) the requirements of section 403 (a) or 405 (a). A plan to which this section applies shall have satisfied the minimum funding standard for such plan for a plan year if as of the end of such plan year, the plan does not have an accumulated funding deficiency. For purposes of this section and section 4971, the term 'accumulated funding deficiency' means for any plan the excess of the total charges to the funding standard account for all plan years (beginning with the first plan year to which this section applies) over the total credits to such account for such years or, if less, the excess of the total charges to the alternative minimum funding standard account for such plan years over the total credits to such account for such years. "(b) FUNDING STANDARD ACCOUNT. "(1) ACCOUNT REQUIRED.- -Each plan to which this section applies shall establish and maintain a funding standard account. Such account shall be credited and charged solely as provided in this section. "(2) CHARGES TO ACCOUNT. For a plan year, the funding standard account shall be charged with the sum of "(A) the normal cost of the plan for the plan year, "(B) the amounts necessary to amortize in equal annual installments (until fully amortized)-- "(i) in the case of a plan in existence on January 1, 1974, the unfunded past service liability under the plan on the first day of the first plan year to which this section applies, over a period of 40 plan years, (ii) in the case of a plan which comes into existence after January 1, 1974, the unfunded past service liability under the plan on the first day of the first plan year to which this section applies, over a period of 30 plan years (40 plan years in the case of a multiemployer plan), 66 "(iii) separately, with respect to each plan year, the net increase (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of 30 plan years (40 plan years in the case of a multiemployer plan), "(iv) separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of 15 plan years (20 plan years in the case of a multiemployer plan), and (v) separately, with respect to each plan year, the net loss (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 30 plan years, "(C) the amount necessary to amortize each waived funding deficiency (within the meaning of subsection (d) (3)) for each prior plan year in equal annual installments (until fully amortized) over a period of 15 plan years, and "(D) the amount necessary to amortize in equal annual installments (until fully amortized) over a period of 5 plan years any amount credited to the funding standard account under paragraph (3) (D). "(3) CREDITS TO ACCOUNT. For a plan year, the funding standard account shall be credited with the sum of "(A) the amount considered contributed by the employer to or under the plan for the plan year, "(B) the amount necessary to amortize in equal annual installments (until fully amortized) "(i) separately, with respect to each plan year, the net decrease (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of 30 plan years (40 plan years in the case of a multiemployer plan), 66 "(ii) separately, with respect to each plan year, the net experience gain (if any) under the plan, over a period of 15 plan years (20 plan years in the case of a multiemployer plan), and "(iii) separately, with respect to each plan year, the net gain (if any) resulting from changes in actuarial assumptions used under the plan, over a period of 30 plan years, "(C) the amount of the waived funding deficiency (within the meaning of subsection (d) (3) for the plan year, and "(D) in the case of a plan year for which the accumulated funding deficiency is determined under the funding standard account if such plan year follows a plan year for which such deficiency was determined under the alternative minimum funding standard, the excess (if any) of any debit balance in the funding standard account (determined without regard to this subparagraph) over any debit balance in the alternative minimum funding standard account. "(4) COMBINING AND OFFSETTING AMOUNTS TO BE AMORTIZED.— Under regulations prescribed by the Secretary or his delegate, amounts required to be amortized under paragraph (2) or paragraph (3), as the case may be "(A) may be combined into one amount under such paragraph to be amortized over a period determined on the basis of the remaining amortization period for all items entering into such combined amount, and "(B) may be offset against amounts required to be amortized under the other such paragraph, with the resulting amount to be amortized over a period determined on the basis of the remaining amortization periods for all items entering into whichever of the two amounts being offset is the greater. "(5) INTEREST.-The funding standard account (and items therein) shall be charged or credited (as determined under regulations prescribed by the Secretary or his delegate) with interest at the appropriate rate consistent with the rate or rates of interest used under the plan to determine costs. "(c) SPECIAL RULES.— 66 "(1) DETERMINATIONS TO BE MADE UNDER FUNDING METHOD.— For purposes of this section, normal costs, accrued liability, past service liabilities, and experience gains and losses shall be determined under the funding method used to determine costs under the plan. 88 STAT. 915 88 STAT. 904 Ante, p. 898. Regulations. his delegate shall prescribe such regulations as may be necessary to carry out the purposes of this clause. "(iv) For purposes of this subparagraph, in the case of any class-year plan, a withdrawal of employee contributions shall be treated as a withdrawal of such contributions on a plan year by plan year basis in succeeding order of time. "(v) For nonforfeitability where the employee has a nonforfeitable right to at least 50 percent of his accrued benefit, see section 401 (a) (19). "(4) SERVICE INCLUDED IN DETERMINATION OF NONFORFEITABLE PERCENTAGE.—In computing the period of service under the plan for purposes of determining the nonforfeitable percentage under paragraph (2), all of an employee's years of service with the employer or employers maintaining the plan shall be taken into account, except that the following may be disregarded: "(A) years of service before age 22, except that in the case of a plan which does not satisfy subparagraph (A) or (B) of paragraph (2), the plan may not disregard any such year of service during which the employee was a participant; "(B) years of service during a period for which the employee declined to contribute to a plan requiring employee contributions; "(C) years of service with an employer during any period for which the employer did not maintain the plan or a predecessor plan (as defined under regulations prescribed by the Secretary or his delegate); "(D) service not required to be taken into account under paragraph (6); "(E) years of service before January 1, 1971, unless the employee has had at least 3 years of service after December 31, 1970; and "(F) years of service before the first plan year to which this section applies, if such service would have been disregarded under the rules of the plan with regard to breaks in service as in effect on the applicable date. "(5) YEAR OF SERVICE.— "(A) GENERAL RULE. For purposes of this subsection, except as provided in subparagraph (C), the term 'year of service' means a calendar year, plan year, or other 12-consecutive month period designated by the plan (and not prohibited under regulations prescribed by the Secretary of Labor) during which the participant has completed 1.000 hours of service. (B) HOURS OF SERVICE. For purposes of this subsection, the term 'hours of service' has the meaning provided by section 410 (a) (3) (C). "(C) SEASONAL INDUSTRIES.—In the case of any seasonal industry where the customary period of employment is less than 1,000 hours during a calendar year, the term 'year of service' shall be such period as may be determined under regulations prescribed by the Secretary of Labor. "(D) MARITIME INDUSTRIES. For purposes of this subsection, in the case of any maritime industry, 125 days of service shall be treated as 1,000 hours of service. The Secretary of Labor may prescribe regulations to carry out the purposes of this subparagraph. "(6) BREAKS IN SERVICE.— "(A) DEFINITION OF 1-YEAR BREAK IN SERVICE. For purposes of this paragraph, the term '1-year break in service' means a calendar year, plan year, or other 12-consecutive- SERV "(B) 1 YEAR OF SERVICE AFTER 1-YEAR BREAK IN return. "(C) 1-YEAR BREAK IN SERVICE UNDER DEFINED CONTRIBUTION PLAN. For purposes of paragraph (4), in the case of any participant in a defined contribution plan, or an insured defined benefit plan which satisfies the requirements of subsection (b) (1) (F), who has any 1-year break in service, years. of service after such break shall not be required to be taken into account for purposes of determining the nonforfeitable percentage of his accrued benefit derived from employer contributions which accrued before such break. "(D) NONVESTED PARTICIPANTS.-For purposes of paragraph (4), in the case of a participant who, under the plan, does not have any nonforfeitable right to an accrued benefit derived from employer contributions, years of service before any 1-year break in service shall not be required to be taken into account if the number of consecutive 1-year breaks in service equals or exceeds the aggregate number of such years of service prior to such break. Such aggregate number of years of service before such break shall be deemed not to include any years of service not required to be taken into account under this subparagraph by reason of any prior break in service. "(7) ACCRUED BENEFIT.— "(A) IN GENERAL. -For purposes of this section, the term 'accrued benefit' means "(i) in the case of a defined benefit plan, the employee's accrued benefit determined under the plan and, except as provided in subsection (c) (3), expressed in the form of an annual benefit commencing at normal retirement age, or 66 (ii) in the case of a plan which is not a defined benefit plan, the balance of the employee's account. "(B) EFFECT OF CERTAIN DISTRIBUTIONS.-Notwithstanding paragraph (4), for purposes of determining the employee's accrued benefit under the plan, the plan may disregard service performed by the employee with respect to which he has received "(i) a distribution of the present value of his entire nonforfeitable benefit if such distribution was in an amount (not more than $1,750) permitted under regulations prescribed by the Secretary or his delegate, or "(ii) a distribution of the present value of his non- Clause (i) of this subparagraph shall apply only if such dis- 88 STAT. 905 |