Retirement Legislative Tracking Chart

Health and Welfare Legislative Tracking Chart
Human Resources Legislative Tracking Chart

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Legislative Tracking Chart
-- Retirement --
Updated May 1, 2003

What's New:

A comprehensive pension reform bill (H.R. 1776).

A bill (H.R. 1677 and S. 825) that (i) requires employers who convert to a cash balance pension plan give certain participants a choice to remain under the terms of the plan in effect immediately before its conversion and (ii) prohibits "wearaway" in the case of any such conversions.

A bill (S. 832) that would allow a bankruptcy trustee to recover certain payments made to executives prior to a corporate bankruptcy filing.

Pension Reform
Stock Purchase Plans
Miscellaneous Benefit Issues
stock
Social Security Reform

The chart summarizes selected federal legislation that would affect employer benefit programs. The bills included on the chart are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors.

Pension Reform
Bill	Summary	Status
Pension Preservation and Savings Expansion Act of 2003 H.R. 1776 Portman (R-OH)	This bill would, among other things: (i) replace the 30-year Treasury bond rate with a rate based on amounts conservatively invested in long-term corporate bonds; (ii) allow employers to value liabilities as of the first day of the plan year but assets as of the last day of the plan year for purposes of the funding and deduction rules; (iii) allow defined benefit plans to use census data for plan valuation purposes that dates from up to one year prior to the first day of the plan year; (iv) extend the temporary funding relief for 2002 and 2003 (enacted as part of the Job Creation and Work Assistance Act) to 2001 and permit PBGC variable premiums for 2002-2003 to be based on 115% of the 30-year Treasury yield with fair market value of assets; (v) allow employee contributions to private-sector defined benefit plans to be made on a pre-tax basis; (vi) permit multiple employer plans to elect aggregate treatment for purposes of applying the funding rules and deduction limitations; (vii) require employers to offer enhanced investment diversification rights in qualified defined contribution plans; (viii) accelerate the savings limits contained in EGTRRA; (ix) allow the Secretary of the Treasury to issue regulations that exclude certain groups of employees from the "universal availability" requirement included in the catch-up contribution rules; (x) accelerate the vesting schedules for employer non-elective contributions to individual account plans; (xi) permit the rollover of after-tax monies between defined contribution plans and 403(b) plans and also allow in-service transfers between these plans; (xii) provide that employers utilizing negative elections would be protected under ERISA; (xiii) allow employers that maintain both defined benefit and defined contribution plans to deduct the first 6% of employer contributions to the defined contribution plan, even if that amount exceeded the 25% of pay deduction limit; (xiv) make permanent the pension reform changes included in EGTRRA; (xv) require employers to provide investment education notices to employees who self-direct their accounts; (xvi) extend the blackout notice requirements to non-ERISA 403(b) plans, governmental 457(b) plans and self-directed defined benefit plans; (xvii) allow employees to pay for qualified retirement planning services on a pre-tax salary reduction basis; (xviii) gradually raise the age at which minimum required distributions must begin to age 75; (xix) allow individuals to exclude up to 10% of the first $20,000 in annual retirement plan annuity income from taxation; (xx) allow employers to transfer unclaimed benefits (whether from a defined benefit plan or defined contribution plan) to the Pension Benefit Guaranty Corporation; (xxi) allow non-spouse beneficiaries to roll over retirement plan benefits to an IRA; (xxii) permit individuals to direct some or all of their retirement distribution to the IRA of their spouse; (xxiii) permit premiums for employer-provided retiree health coverage to be paid from pensions with pre-tax money; (xxiv) permit employers with defined contribution plans to fund retiree health expenses through a 401(h) account; (xxv) allow employees to roll up to $500 of unused health flexible spending account money into other retirement plans; (xxvi) impose a 50% excise tax on excessive corporate payments to senior executives during the two-year period prior to bankruptcy; (xxvii) create a new Internal Revenue Code section which would modify the contribution limits applicable to nonqualified deferred compensation offered by tax-exempt organizations to their executives; and (xxviii) clarify that FICA and FUTA taxes do not apply to the purchase or sale of stock acquired through an incentive stock option or an employee stock purchase plan and that disqualifying dispositions of such stock would not be subject to the income tax withholding rules.	The bill was introduced on April 11, 2003 and referred to the House Energy and Commerce Committee and the House Ways and Means Committee.
Pension Benefits Protection Act of 2003 H.R. 1677 Sanders (I-VT) S. 825 Harkin (D-IA)	This bill would amend ERISA and the Internal Revenue Code to: (i) require employers that convert (or have already converted) to a cash balance or similar type plan to allow participants who attained age 40 or who had at least 10 years of service at the time of the conversion to choose to remain under the terms of the plan immediately before its conversion; (ii) require the Treasury Department to withdraw the proposed cash balance regulations and re-issue new regulations that comply with the choice requirements of this legislation; and (iii) prohibit "wearaway" in cash balance conversions.	H.R. 1677 was introduced on April 8, 2003 and referred to the House Education and the Workforce Committee and the House Ways and Means Committee S. 825 was introduced on April 8, 2003 and referred to the Senate Health, Education, Labor and Pensions Committee.
Corporate Accountability in Bankruptcy Act S. 832 Grassley (R-IA)	This bill would reform the bankruptcy laws to allow a bankruptcy trustee to recover "extraordinary or excessive compensation" made to company insiders, officers and directors within one year of a corporate bankruptcy filing. In addition, if securities violations or any other fraud were committed, the trustee could recover payments made within four years of the bankruptcy filing.	Introduced on April 9, 2003 and referred to the Senate Judiciary Committee.
Employee Benefits Protection Act of 2003 H.R. 1397 McCarthy (D-NY)	This bill amends the ERISA minimum participation standards by requiring employers to credit as years of service any time an individual works for the employer as a common law employee regardless of whether the individual was paid through a staffing firm, temporary help firm, payroll agency, employment agency, or from an account not designated as a payroll account. The bill would also prohibit ERISA-covered pension plans from excluding any individual who performs the same work (or substantially the same work) for the employer as an employee who is included in the plan. The bill allows employee benefit plans to set forth eligibility criteria which are based on reasonable job classifications other than the mere labeling of a job position as something other than an employee.	Introduced on March 20, 2003 and referred to the House Education and the Workforce Committee.
Bankruptcy Abuse Prevention and Consumer Protection Act H.R. 975 Sensenbrenner (R-WI)	This bill protects assets in "retirement funds" (e.g., 401(a), 403(b), and 457 plans and IRAs) from creditors. Fund (i) must have current favorable determination letter or (ii) must have been operated in substantial compliance with tax code and not been found by a court or IRS to be in violation of applicable qualification rules. Monies in the process of being rolled over also protected. IRA assets (excluding those attributable to rollovers from employer plans) would be subject to a flat $1 million cap, meaning amounts over this level would be made available to satisfy creditors in bankruptcy.	The House approved H.R. 975 on March 19, 2003 by a 315-113 vote. The measure now goes to the Senate where its fate is uncertain.
Pension Security Act of 2003 H.R. 1000 Boehner (R-OH)	This bill would, among other things: (i) require employers to offer enhanced investment diversification rights; (ii) require employers to provide participants in individual account plans with quarterly benefit statements (if the participants direct investments) or annual statements (if participants don稚 direct investments), along with an explanation to participants who self-direct of the importance of a diversified portfolio; (iii) require employers to provide defined benefit participants with either triennial benefit statements or annual notices regarding the availability of benefit statements; (iv) require employers to provide participants in self-directed plans with an 妬nvestment education notice・ (v) add a new exemption to the prohibited transaction rules to facilitate the provision of investment advice to participants; (vi) require the DOL to study the costs and benefits of requiring independent consultants to advise plan fiduciaries in connection with individual account plans; (vii) extend the PBGC missing participant program to defined contribution plans; (viii) allow suspension of benefit notices for employees working past normal retirement age to be provided in a summary plan description; (ix) clarify the fiduciary relief provisions that apply under ERISA section 404(c) during blackout periods; (x) adopt a number of pension reform provisions dropped from earlier legislation (e.g., giving employers more flexibility in nondiscrimination testing by allowing facts and circumstances testing if certain requirements are met); (xi) extend the funding interest rate relief provision contained in the Job Creation and Worker Assistance Act (P.L. 107-147) to 2001 plan years; (xii) provide that for PBGC variable premium purposes, employers would be allowed to make, on a temporary basis, liability valuations based on 115% of the annual yield of 30-year Treasuries if the government updates the current liability mortality tables; and (xiii) allow employers to use the temporarily increased interest rates for purposes of the PBGC notice and participant disclosure requirements under ERISA sections 4010, 4011 and 4043.	Introduced on February 27, 2003 and referred to the House Education and the Workforce Committee. The Education and the Workforce Committee approved this bill on March 6, 2003. President Bush has indicated he will sign the measure into law if it reaches his desk.
Retirement Account Portability Improvement Act of 2003 H.R. 518 Pomeroy (D-ND)	The bill would, among other things: (i) allow distributions to be rolled over to a spouse痴 retirement plan; (ii) permit a non-spouse beneficiary to roll over a distribution received upon the employee痴 death to an IRA; (iii) require faster vesting of nonelective employer contributions made to defined contribution plans; and (iv) allow participants in health flexible spending accounts to transfer up to $500 to a retirement plan.	Introduced on January 31, 2003 and referred to the House Ways and Means Committee and the House Education and the Workforce Committee.
Pension Protection and Expansion Act of 2003 S. 9 Daschle (D-SD)	This bill would, among other things: (i) require employers to offer enhanced investment diversification rights; (ii) require employers to provide participants in individual account plans with quarterly benefit statements (if the participants direct investments) or annual statements (if participants don稚 direct investments), along with a warning to any participant whose investment in employer stock exceeded 20% of the value of the participant痴 account; (iii) require employers to provide defined benefit participants with either triennial benefit statements or annual notices regarding the availability of benefit statements; (iv) require employers to provide participants in self-directed individual account plans who can invest in employer stock with all material information required to be disclosed under applicable securities laws; (v) require employers to provide participants in self-directed individual account plans with basic investment guidelines; (vi) require plan fiduciaries to certify that any option to invest account balances in employer stock is prudent; (vii) increase the bonding and insurance requirements for certain plans; (viii) require individual account plans covering more than 100 employees be administered by a joint board of trustees; (ix) provide a limited safe harbor from ERISA痴 fiduciary duty rules in connection with the provision of investment advice; (x) provide that either employees could invest elective deferrals in employer stock or employers could make contributions in employer stock, but not both unless the employer covered 90% of the individual account participants in a defined benefit plan; (xi) require that employers converting to a cash balance plan offer participants the right to remain under the terms of the plan prior to its amendment; (xii) require that the normal form of distribution in individual account plans be a qualified joint and survivor annuity; (xiii) provide funding interest rate relief with respect to 2001 plan year contributions by raising the top of the current liability interest rate range from 105% to 108%; (xiv) allow employers to use temporarily increased interest rates for purposes of the PBGC notice and participant disclosure requirements under ERISA 4010, 4011 and 4043; (xv) provide a two-year extension of a special transition rule related to the pension funding requirements; and (xvi) adopt a number of ERISA pension reforms dropped from earlier legislation. The bill would also: (i) repeal the tax code limitation on the issuance of guidance by the Treasury Department affecting the taxation of amounts covered by an employer sponsored deferred compensation arrangement; (ii) require that amounts deferred under nonqualified arrangements funded by an offshore trust be included in income when the right to the compensation is no longer subject to a substantial risk of forfeiture, regardless of when the compensation is paid; (iii) require certain executives to include, as income, compensation that is deferred under 断unded・nonqualified plans; and (iv) impose a 20% tax on stock compensation provided to certain executives whose companies reincorporate outside the US.	Introduced on January 7, 2003 and referred to the Senate Finance Committee.

Stock Purchase Plans

Bill

Summary

Status

Broad-Based Stock Option Plan Transparency Act of 2003
H.R. 1372
Dreier (R-CA)
This bill would require the SEC to adopt rules requiring periodic reports to include more detailed information regarding stock option plans, stock purchase plans, and other arrangements involving an employee acquisition of an equity interest in the company, particularly with respect to the dilutive effect of such plans, including: (i) a discussion of the dilutive effect of stock option plans, including tables or graphic illustrations of such dilutive effects; (ii) expanded disclosure of the dilutive effect of employee stock options on the company's earnings per share number; (iii) prominent placement and increased comparability of all stock option related information; and (iv) a summary of the stock options granted to the five most highly compensated executive officers of the company, including any outstanding stock options of those officers.
The bill would also impose a moratorium on new accounting standards related to the treatment of stock options.
Introduced on March 20, 2003 and referred to the House Financial Services Committee.

Alternative Minimum Tax Relief Bill

H.R. 433
Johnson (R-TX)

This bill provides relief from the alternative minimum tax with respect to incentive stock options exercised after December 31, 2003.

Introduced on January 28, 2003 and referred to the House Ways and Means Committee.

Stock Option Accounting Review Act

S. 181
Levin (D-MI)

This bill would direct the Financial Accounting Standards Board to conduct a fresh review of the accounting for stock options and issue a rule within one year. Such rule is to override the 1994 sense of the Senate resolution that options not be expensed.

Introduced on January 16, 2003 and referred to the Senate Banking, Housing and Urban Affairs Committees.

Ending the Double Standard for Stock Options Act

S. 182
Levin (D-MI)

H.R. 626
Stark (D-CA)

This bill restricts the compensation deduction that a company can claim for the exercise of a stock option by limiting the stock option deduction to the amount that the company has claimed as an expense on its financial statements.
H.R. 626 was introduced on February 5, 2003 and referred to the House Ways and Means Committee.
S. 182 was introduced on January 16, 2003 and referred to the Senate Finance Committee.

Similar legislation was also introduced in 1993 and 1997. The bills were defeated amid opposition from several trade associations and a coalition of executives.

Tax Treatment of Stock Compensation

H.R. 286
Houghton (R-NY)

S. 206
Roberts (R-KS)
This bill exempts from FICA and FUTA taxes purchases and sales of stock acquired through an incentive stock option plan or an employee stock purchase plan and also provides that disqualifying dispositions of such stock will not be subject to the income tax withholding rules.
The bill would make permanent the guidance in IRS Notice 2001-14 which provides that for statutory stock options exercised before January 1, 2003, the IRS will not assess FICA or FUTA taxes nor will it treat the disqualifying disposition of stock so acquired as subject to the income tax withholding rules.
S. 206 was introduced on January 23, 2003 and referred to the Senate Finance Committee.
H.R. 286 was introduced on January 8, 2003 and referred to the House Ways and Means Committee.

IRS Notice 2002-47 extends indefinitely the administrative moratorium provided in Notice 2001-14. If regulations imposing taxes on statutory stock options are ever finalized, Notice 2002-47 indicates that the new regulatory taxes will not be collected for two years following publication of final regulations.

Miscellaneous Benefit Issues

Bill

Summary

Status

Social Security Number Misuse Prevention Act
S. 228 Feinstein (D-CA)

H.R. 637 Sweeney (R-NY)
This bill would prohibit the misuse, sale, display or purchase of social security numbers. However, the bill allows certain uses of the numbers for background checks and consumer reports, among other things. S. 228 was introduced on January 28, 2003. The Senate Judiciary Committee approved an earlier version of the bill during the 107th Congress.
H.R. 637 was introduced on February 5, 2003 and referred to the House Judiciary Committee and the House Ways and Means Committee.

Life Insurance Employee Notification Act

H.R. 414
Green (D-TX)

This bill would require companies that take out corporate-owned life insurance (鼎OLI・ policies on their employees disclose the purchase and amount of each policy to the insured within 30 days of the purchase. The bill would also require the companies (i) to notify (within 1 year of enactment of the bill) former employees ever covered by a policy since January 1, 1985; and (ii) to notify (within 90 days of enactment of the bill) existing employees covered by a policy.

Introduced on January 28, 2003 and referred to the Education and the Workforce Committee and also the House Energy and Commerce Committee.

Social Security Reform
Bill	Summary	Status
Social Security Guarantee Plus Act of 2003 H.R. 75 Shaw (R-FL)	This bill provides a refundable tax credit of up to four percent of wages, capped at $1,000, for workers who opt to establish personal retirement savings accounts.	Introduced on January 7, 2003 and referred to the House Ways and Means Committee.

Health and Welfare Legislative Tracking Chart
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Stock Purchase Plans
Bill	Summary	Status
Broad-Based Stock Option Plan Transparency Act of 2003 H.R. 1372 Dreier (R-CA)	This bill would require the SEC to adopt rules requiring periodic reports to include more detailed information regarding stock option plans, stock purchase plans, and other arrangements involving an employee acquisition of an equity interest in the company, particularly with respect to the dilutive effect of such plans, including: (i) a discussion of the dilutive effect of stock option plans, including tables or graphic illustrations of such dilutive effects; (ii) expanded disclosure of the dilutive effect of employee stock options on the company's earnings per share number; (iii) prominent placement and increased comparability of all stock option related information; and (iv) a summary of the stock options granted to the five most highly compensated executive officers of the company, including any outstanding stock options of those officers. The bill would also impose a moratorium on new accounting standards related to the treatment of stock options.	Introduced on March 20, 2003 and referred to the House Financial Services Committee.
Alternative Minimum Tax Relief Bill H.R. 433 Johnson (R-TX)	This bill provides relief from the alternative minimum tax with respect to incentive stock options exercised after December 31, 2003.	Introduced on January 28, 2003 and referred to the House Ways and Means Committee.
Stock Option Accounting Review Act S. 181 Levin (D-MI)	This bill would direct the Financial Accounting Standards Board to conduct a fresh review of the accounting for stock options and issue a rule within one year. Such rule is to override the 1994 sense of the Senate resolution that options not be expensed.	Introduced on January 16, 2003 and referred to the Senate Banking, Housing and Urban Affairs Committees.
Ending the Double Standard for Stock Options Act S. 182 Levin (D-MI) H.R. 626 Stark (D-CA)	This bill restricts the compensation deduction that a company can claim for the exercise of a stock option by limiting the stock option deduction to the amount that the company has claimed as an expense on its financial statements.	H.R. 626 was introduced on February 5, 2003 and referred to the House Ways and Means Committee. S. 182 was introduced on January 16, 2003 and referred to the Senate Finance Committee. Similar legislation was also introduced in 1993 and 1997. The bills were defeated amid opposition from several trade associations and a coalition of executives.
Tax Treatment of Stock Compensation H.R. 286 Houghton (R-NY) S. 206 Roberts (R-KS)	This bill exempts from FICA and FUTA taxes purchases and sales of stock acquired through an incentive stock option plan or an employee stock purchase plan and also provides that disqualifying dispositions of such stock will not be subject to the income tax withholding rules. The bill would make permanent the guidance in IRS Notice 2001-14 which provides that for statutory stock options exercised before January 1, 2003, the IRS will not assess FICA or FUTA taxes nor will it treat the disqualifying disposition of stock so acquired as subject to the income tax withholding rules.	S. 206 was introduced on January 23, 2003 and referred to the Senate Finance Committee. H.R. 286 was introduced on January 8, 2003 and referred to the House Ways and Means Committee. IRS Notice 2002-47 extends indefinitely the administrative moratorium provided in Notice 2001-14. If regulations imposing taxes on statutory stock options are ever finalized, Notice 2002-47 indicates that the new regulatory taxes will not be collected for two years following publication of final regulations.

Miscellaneous Benefit Issues
Bill	Summary	Status
Social Security Number Misuse Prevention Act S. 228 Feinstein (D-CA) H.R. 637 Sweeney (R-NY)	This bill would prohibit the misuse, sale, display or purchase of social security numbers. However, the bill allows certain uses of the numbers for background checks and consumer reports, among other things.	S. 228 was introduced on January 28, 2003. The Senate Judiciary Committee approved an earlier version of the bill during the 107th Congress. H.R. 637 was introduced on February 5, 2003 and referred to the House Judiciary Committee and the House Ways and Means Committee.
Life Insurance Employee Notification Act H.R. 414 Green (D-TX)	This bill would require companies that take out corporate-owned life insurance (鼎OLI・ policies on their employees disclose the purchase and amount of each policy to the insured within 30 days of the purchase. The bill would also require the companies (i) to notify (within 1 year of enactment of the bill) former employees ever covered by a policy since January 1, 1985; and (ii) to notify (within 90 days of enactment of the bill) existing employees covered by a policy.	Introduced on January 28, 2003 and referred to the Education and the Workforce Committee and also the House Energy and Commerce Committee.