A BILL
To provide special funding requirements for certain pension plans maintained by commercial passenger air carriers.
Sec. 1. MODIFICATION OF FUNDING REQUIREMENTS FOR CERTAIN PLANS.
(a) FUNDING RULES FOR CERTAIN PLANS.
(1) IN GENERAL. Notwithstanding any other provision of the Internal Revenue Code of 1986 (the "Code") or the Employee Retirement Income Security Act of 1974 ("ERISA") to the contrary, the funding rules under paragraphs (2), (3) and (4) shall apply for any plan year beginning after December 27, 2002 in the case of a defined benefit plan-
(A) established and maintained by a commercial passenger air carrier; and
(B) that has a funded percentage of less than 80% as of January 1, 2003. For purposes of this section, the following rules shall apply -
(i) The funded percentage is defined as the market value of assets (excluding receivable contributions) divided by current liability as of January 1, 2003.
(ii) The current liability interest rate used shall be 6.65%.
(iii) If the valuation date for the plan is not January 1, 2003, the current liability as of January 1, 2003 shall be estimated based on generally accepted actuarial principles and practices.
(2) MORATORIUM ON DEFICIT REDUCTION CONTRIBUTION.
(A) IN GENERAL. For purposes of section 412(l)(9)(A) of the Code and section 302(d)(9)(A) of ERISA, the funded current liability percentage of a plan described in paragraph (1) shall be treated as not less than 90 percent for plan years beginning after December 27, 2002 and before December 27, 2007.
(B) RULES OF SPECIAL APPLICATION. If the funded current liability percentage of a plan, without application of paragraph (2)(A), is 90 percent or greater during any plan year beginning after December 27, 2002 and before December 27, 2007, the special provisions in paragraph (2)(A) will cease to apply to that plan as of the last day of the previous plan year.
© EXTENSION OF AMORTIZATION PERIODS. For purposes of sections 412(B)(2)(B)(iv) and 412(B)(3)(B)(ii) of the Code and sections 302(B)(2)(B)(iv) and 302(B)(3)(B)(ii) of ERISA, experience gains or losses, if any, for plan years during which the special provisions in paragraph 2(A) apply to such plan shall be amortized over a period of 15 plan years.
(D) OPTION TO COMBINE OR TO OFFSET AMORTIZATION BASES. For the first plan year in which the special provisions in paragraph 2(A) apply to such plan, amounts required to be amortized under sections 412(B)(2) or (3) of the Code, and sections 302(B)(2) or (3) of ERISA, may be combined into one amount under such sections, and may be offset against other amounts required to be amortized under such sections, with the resulting amount in either case to be amortized over a period of 15 plan years.
(E) PBGC LIABILITY LIMITED. For any plan that terminates at a time when the special provisions in paragraph (2)(A) apply to such plan, sections 4022(B)(1), (3) and (7) shall be applied as if the plan had been amended to provide that participants would receive no credit for benefit accrual purposes under the plan for service on and after the first day of the plan year beginning after December 27, 2002.
(3) AMORTIZATION OF 2008 UNFUNDED CURRENT LIABILITY.
(A) IN GENERAL. The sponsor of a plan described in paragraph (1) may make a one-time, irrevocable election to amortize the 2008 unfunded current liability on an interest-only basis for the first 5 plan years (beginning with the first plan year after December 27, 2007) and thereafter in equal annual installments over a period of 15 plan years (beginning with the first plan year after December 27, 2012).
(B) DETERMINATION OF 2008 UNFUNDED CURRENT LIABILITY IN CALCULATING DEFICIT REDUCTION CONTRIBUTION AFTER MORATORIM ENDS. If the plan sponsor makes an election under paragraph 3(A) with respect to a plan, the plan’s 2008 unfunded current liability will be calculated as follows:
(i) the 2008 unfunded current liability shall equal the unfunded current liability as of the first day of the plan year beginning after December 27, 2007, and
(ii) the 2008 unfunded current liability shall be calculated using the actuarial value of assets as of the first day of the plan year beginning after December 27, 2007.
© USE OF 2008 UNFUNDED CURRENT LIABILITY IN CALCULATING DEFICIT REDUCTION AFTER MORATORIUM ENDS. If the plan sponsor makes an election under paragraph 3(A) with respect to a plan, the plan’s unfunded old liability, for purposes of section 412(l) of the Code and section 302(l) of ERISA, shall mean the 2008 unfunded current liability calculated under paragraph 3(B), and the plan’s unfunded old liability amount for any plan year, for purposes of section 412(l) of the Code and section 302(l) of ERISA, shall be the amount necessary to amortize the unfunded old liability under the plan as described in paragraph (3)(A).
(D) CESSATION OF MODIFICATIONS. If the funded current liability percentage of a plan, determined without regard to this section 1, is 90 percent or greater for any plan year after December 27, 2002, the special provisions of paragraph (3) shall cease to apply to that plan as of the last day of the previous plan year.
(4) RECOGNITION OF WAIVER IN DEFICIT REDUCTION CONTRIBUTION. For any plan described in paragraph (1), section 412(l)(8)(A) of the Code and section 302(d)(8)(A) of ERISA are amended by adding at the end the following sentence: "In the case of a plan maintained by a commercial passenger air carrier, the following shall be substituted for clause (A)(ii): "the sum of -
(I) the value of the plan''s assets determined under subsection ©(2), and
(II) the unamortized portion of any waived funding deficiency."
(B) SPECIAL RULE FOR PLANS TERMINATING IN 2003.
(1) IN GENERAL. Notwithstanding any other provision of the Internal Revenue Code of 1986 or the Employee Retirement Income Security Act of 1974, the provisions of paragraph (2) shall apply to any defined benefit plan -
(A) maintained by a commercial passenger air carrier,
(B) for the benefit of such carrier''s employees pursuant to a collective bargaining agreement, and
© which terminated during the 2003 calendar year.
(2) SPECIAL RULE. A plan described in paragraph (1) shall be restored by the Pension Benefit Guaranty Corporation to the plan''s pre-termination status and the control of the plan''s assets and liabilities shall be transferred to the employer, unless the collective bargaining agreement provides that the plan should not be restored.
© EFFECTIVE DATE. The amendments made by section shall apply to plan years beginning after December 27, 2002.
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