"(B) by any other period which the Secretary or his delegate determines is reasonable and necessary to permit a reduction of the accumulated funding deficiency to zero under this section. "(d) NOTIFICATION OF THE SECRETARY OF LABOR.—Before issuing a otice of deficiency with respect to the tax imposed by subsection (a) r (b), the Secretary or his delegate shall notify the Secretary of abor and provide him a reasonable opportunity (but not more than 60 ays) "(1) to require the employer responsible for contributing to or under the plan to eliminate the accumulated funding deficiency, or "(2) to comment on the imposition of such tax. "(e) CROSS REFERENCES.— "For disallowance of deduction for taxes paid under this section, see section 275. "For liability for tax in case of an employer party to collective bargaining agreement, see section 413(b)(6). "For provisions concerning notification of Secretary of Labor of imposition of tax under this section, waiver of the tax imposed by subsection (b), and other coordination between Secretary of the Treasury and Secretary of Labor with respect to compliance with this section, see section 3002(b) of title III of the Employee Retirement Income Security Act of 1974.”. (c) AMENDMENTS TO SECTION 404. (1) Paragraph (1) of section 104(a) (relating to deduction for 26 USC 404, employer contributions to pension trusts) is amended to read as follows: "(1) PENSION TRUSTS. "(A) IN GENERAL.—In the taxable year when paid, if the contributions are paid into a pension trust, and if such taxable year ends within or with a taxable year of the trust for which the trust is exempt under section 501(a), in an amount determined as follows: “(i) the amount necessary to satisfy the minimum funding standard provided by section 412 (a) for plan Ante, p. 914. years ending within or with such taxable year (or for any prior plan year), if such amount is greater than the amount determined under clause (ii) or (iii) (whichever is applicable with respect to the plan), "(ii) the amount necessary to provide with respect to all of the employees under the trust the remaining unfunded cost of their past and current service credits distributed as a level amount, or a level percentage of compensation, over the remaining future service of each such employee, as determined under regulations prescribed by the Secretary or his delegate, but if such remaining unfunded cost with respect to any 3 individuals is more than 50 percent of such remaining unfunded cost, the amount of such unfunded cost attributable to such individuals shall be distributed over a period of at least 5 taxable years. "(iii) an amount equal to the normal cost of the plan, In determining the amount deductible in such year under the 88 STAT. 922 Ante, p. 914. 26 USC 167. 42 USC 401. "Controlled group." 26 USC 1563. section 412, and the maximum amount deductible for such year shall be an amount equal to the full funding limitation for such year determined under section 412. "(B) SPECIAL RULE IN CASE OF CERTAIN AMENDMENTS.-In the case of a plan which the Secretary of Labor finds to be collectively bargained which makes an election under this subparagraph (in such manner and at such time as may be provided under regulations prescribed by the Secretary or his delegate), if the full funding limitation determined under section 412 (c) (7) for such year is zero, if as a result of any plan amendment applying to such plan year, the amount determined under section 412(c) (7) (B) exceeds the amount determined under section 412(c) (7) (A), and if the funding method and the actuarial assumptions used are those used for such year under section 412. the maximum amount deductible in such year under the limitations of this paragraph shall be an amount equal to the lesser of— "(i) the full funding limitation for such year determined by applying section 412(c) (7) but increasing the amount referred to in subparagraph (A) thereof by the decrease in the present value of all unamortized liabilities resulting from such amendment, or "(ii) the normal cost under the plan reduced by the amount necessary to amortize in equal annual installments over 10 years (until fully amortized) the decrease described in clause (i). In the case of any election under this subparagraph, the amount deductible under the limitations of this paragraph with respect to any of the plan years following the plan year for which such election was made shall be determined as provided under such regulations as may be prescribed by the Secretary or his delegate to carry out the purposes of this subparagraph. "(C) CERTAIN COLLECTIVELY-BARGAINED PLANS.-In the case of a plan which the Secretary of Labor finds to be collectively bargained, established or maintained by an employer doing business in not less than 40 States and engaged in the trade or business of furnishing or selling services described in section 167(1) (3) (A) (iii), with respect to which the rates have been established or approved by a State or political subdivision thereof, by any agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision thereof, and in the case of any employer which is a member of a controlled group with such employer, subparagraph (B) shall be applied by substituting for the words 'plan amendment' the words 'plan amendment or increase in benefits payable under title II of the Social Security Act'. For purposes of this subparagraph, the term 'controlled group' has the meaning provided by section 1563 (a), determined without regard to section 1563 (a) (4) and (e) (3) (C). "(D) CARRYOVER.-Any amount paid in a taxable year in excess of the amount deductible in such year under the foregoing limitations shall be deductible in the succeeding taxable years in order of time to the extent of the difference between the amount paid and deductible in each such succeeding year and the maximum amount deductible for such year under the foregoing limitations." 29 34.923 (2) Paragraph (6) of section 404 (a) (relating to taxpayers 28 :SC 404. on accrual basis) is amended to read as follows: “(6) TIME WHEN CONTRIBUTIONS DEEMED MADE. - For purposes of paragraphs (1), (2), and (3), a taxpayer shall be deemed to have made a payment on the last day of the preceding taxable year if the payment is on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (including extensions thereof).” (3) Paragraph (7) of section 404(a) (relating to limit on supra. deductions) is amended to read as follows: “(7) Limit on DEDUCTIONS. - If amounts are deductible under paragraphs (1) and (3), or (2) and (3), or (1), (2), and (3), in connection with two or more trusts, or one or more trusts and an annuity plan, the total amount deductible in a taxable year under such trusts and plans shall not exceed the greater of 25 percent of the compensation otherwise paid or accrued during the taxable year to the beneficiaries of the trusts or plans, or the amount of contributions made to or under the trusts or plans to the extent such contributions do not exceed the amount of employer contributions necessary to satisfy the minimum funding standard provided by section 412 for the plan year which ends with or Ante, p. 914. within such taxable year (or for any prior plan year). In addition, any amount paid into such trust or under such annuity plans in any taxable year in excess of the amount allowable with respect to such year under the preceding provisions of this paragraph shall be deductible in the succeeding taxable years in order of time, but the amount so deductible under this sentence in any one such succeeding taxable year together with the amount allowable under the first sentence of this paragraph shall not exceed 25 percent of the compensation otherwise paid or accrued during such taxable years to the beneficiaries under the trusts or plans, This paragraph shall not have the effect of reducing the amount otherwise deductible under paragraphs (1), (2), and (3), if no employee is a beneficiary under more than one trust or a trust and an annuity plan." (d) ALTERNATIVE AMORTIZATION METHOD FOR CERTAIN MULTI-26 95C 412 MPLOYER PLANS, note. (1) GENERAL RULE. In the case of any multiemployer plan (as defined in section 414(f) of the Internal Revenue Code of 1954) Post, p. 925. to which section 412 of such Code applies, if (A) on January 1, 1974, the contributions under the plan Ante, p. 914. were based on a percentage of pay, (B) the actuarial assumptions with respect to pay are reasonably related to past and projected 'experience, and (C) the rates of interest under the plan are determined on the basis of reasonable actuarial assumptions, the plan may elect (in such manner and at such time as may be provided under regulations prescribed by the Secretary of the Treasury or his delegate) to fund the unfunded past service liability under the plan existing as of the date 12 months following the first date on which such section 412 first applies to the plan by charging the funding standard account with an equal annual percentage of the aggregate pay of all participants in the plan in lieu of the level dollar charges to such account required under clauses (1), (ii), and (iii) of section 412(b) (2) (B) of such Code and section 302(b) (2) (B) (i), (ii), and (iii) of this Act. (2) LIMITATION.---In the case of a plan which makes an election under paragraph (1), the aggregate of the charges required under such paragraph for a plan year shall not be less than the interest 88 STAT. 924 Ante, p. 914. Ante, p. 898. Post, p. 938; Ante, p. 920. 26 USC 404. on the unfunded past service liabilities described in clauses (i), (ii), and (iii) of section 412(b) (2) (B) of the Internal Revenue Code of 1954. SEC. 1014. COLLECTIVELY BARGAINED PLANS, ETC. Subpart B of part I of subchapter D of chapter 1 (relating to special rules) is amended by inserting after section 412 the following new section: "SEC. 413. COLLECTIVELY BARGAINED PLANS, ETC. "(a) APPLICATION OF SUBSECTION (b).-Subsection (b) applies to"(1) a plan maintained pursuant to an agreement which the Secretary of Labor finds to be a collective-bargaining agreement between employee representatives and one or more employers, and "(2) each trust which is a part of such plan. "(b) GENERAL RULE. If this subsection applies to a plan, notwithstanding any other provision of this title 66 "(1) PARTICIPATION.-Section 410 shall be applied as if all employees of each of the employers who are parties to the collective bargaining agreement and who are subject to the same benefit computation formula under the plan were employed by a single employer. 66 (2) DISCRIMINATION, ETC.-Sections 401 (a) (4) and 411 (d) (3) shall be applied as if all participants who are subject to the same benefit computation formula and who are employed by employers who are parties to the collective bargaining agreement were employed by a single employer. (3) EXCLUSIVE BENEFIT. For purposes of section 401(a), in determining whether the plan of an employer is for the exclusive benefit of his employees and their beneficiaries, all plan participants shall be considered to be his employees. "(4) VESTING.-Section 411 (other than subsection (d) (3)) shall be applied as if all employers who have been parties to the collective-bargaining agreement constituted a single employer, except that the application of any rules with respect to breaks in service shall be made under regulations prescribed by the Secretary of Labor. (5) FUNDING. The minimum funding standard provided by section 412 shall be determined as if all participants in the plan were employed by a single employer. "(6) LIABILITY FOR FUNDING TAX.-For a plan year the liability under section 4971 of each employer who is a party to the collective bargaining agreement shall be determined in a reasonable manner not inconsistent with regulations prescribed by the Secretary or his delegate- "(A) first on the basis of their respective delinquencies in meeting required employer contributions under the plan, and "(B) then on the basis of their respective liabilities for contributions under the plan. "(7) DEDUCTION LIMITATIONS. Each applicable limitation provided by section 404 (a) shall be determined as if all participants in the plan were employed by a single employer. The amounts contributed to or under the plan by each employer who is a party to the agreement, for the portion of his taxable year which is included within such a plan year, shall be considered not to exceed such a limitation if the anticipated employer contributions for such plan year (determined in a manner consistent with the manner in which actual employer contributions for such plan year are determined) do not exceed such limitation. If such anticipated contributions exceed such a limitation, the portion of each such employer's contributions which is not deductible under section 88 STAT. 925 404 shall be determined in accordance with regulations prescribed 26 USC 404. by the Secretary or his delegate. "(8) EMPLOYEES OF LABOR UNIONS.-For purposes of this subsection, employees of employee representatives shall be treated as employees of an employer described in subsection (a) (1) if such representatives meet the requirements of sections 401(a) (4) and 410 with respect to such employees. Post, p. 938; "(c) PLANS MAINTAINED BY MORE THAN ONE EMPLOYER.-In the Ante, p. 898. case of a plan maintained by more than one employer "(1) PARTICIPATION.-Section 410(a) shall be applied as if all employees of each of the employers who maintain the plan were employed by a single employer. "(2) EXCLUSIVE BENEFIT.-For purposes of section 401(a), in determining whether the plan of an employer is for the exclusive benefit of his employees and their beneficiaries all plan participants shall be considered to be his employees. "(3) VESTING.-Section 411 shall be applied as if all employers Ante, p. 901. who maintain the plan constituted a single employer, except that the application of any rules with respect to breaks in service shall be made under regulations prescribed by the Secretary of Labor. "(4) FUNDING.-The minimum funding standard provided by section 412 shall be determined as if all participants in the plan Ante, p. 914. were employed by a single employer. "(5) LIABILITY FOR FUNDING TAX.-For a plan year the liability under section 4971 of each employer who maintains the plan shall Ante, p. 920. be determined in a reasonable manner not inconsistent with regulations prescribed by the Secretary or his delegate— "(A) first on the basis of their respective delinquencies in meeting required employer contributions under the plan, and "(B) then on the basis of their respective liabilities for contributions under the plan. "(6) DEDUCTION LIMITATIONS.-Each applicable limitation provided by section 404 (a) shall be determined as if all participants in the plan were employed by a single employer. The amounts contributed to or under the plan by each employer who maintains the plan, for the portion of this taxable year which is included within such a plan year, shall be considered not to exceed such a limitation if the anticipated employer contributions for such plan year (determined in a reasonable manner not inconsistent with regulations prescribed by the Secretary or his delegate) do not exceed such limitation. If such anticipated contributions exceed such a limitation, the portion of each such employer's contributions which is not deductible under section 404 shall be determined in accordance with regulations prescribed by the Secretary or his delegate. Allocations of amounts under paragraphs (4), (5), and (6), among the employers maintaining the plan, shall not be inconsistent with regulations prescribed for this purpose by the Secretary or his delegate." SEC. 1015. DEFINITIONS AND SPECIAL RULES. Subpart B of part I of subchapter D of chapter 1 is amended by inserting after section 413 the following new section: "SEC. 414. DEFINITIONS AND SPECIAL RULES. "(a) SERVICE FOR PREDECESSOR EMPLOYER.-For purposes of this part Ante, p. 924. |