Women's Pension Protection Act of 2003

108th CONGRESS
1st Session

S. 1617

To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide comprehensive pension protection for women.

IN THE SENATE OF THE UNITED STATES

September 15, 2003

Mr. KENNEDY (for himself and Ms. SNOWE) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code of 1986 to provide comprehensive pension protection for women.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Women's Pension Protection Act of 2003'.

(b) TABLE OF CONTENTS-

Sec. 1. Short title; table of contents.

TITLE I--SPOUSAL CONSENT REQUIRED FOR DISTRIBUTIONS FROM DEFINED CONTRIBUTION PLANS

Sec. 101. Application of joint and survivor annuity rules to all defined contribution plans.

TITLE II--DIVISION OF PENSION BENEFITS UPON DIVORCE

Sec. 201. Regulations on time and order of issuance of domestic relations orders.

Sec. 202. Former spouses treated as surviving spouses in certain cases.

TITLE III--PROTECTION OF RIGHTS OF FORMER SPOUSES TO PENSION BENEFITS UNDER CERTAIN GOVERNMENT AND GOVERNMENT-SPONSORED RETIREMENT PROGRAMS

Subtitle A--Civil Service Retirement

Sec. 301. Survivor annuities for widows, widowers, and former spouses of Federal employees who die before attaining age for deferred annuity under civil service retirement system.

Sec. 302. Court orders relating to Federal retirement benefits for former spouses of Federal employees.

Sec. 303. Order of precedence for disposition of amounts remaining in the thrift savings account of a Federal employee (or former employee) who dies before making an effective election controlling such disposition.

Subtitle B--Railroad Retirement

Sec. 311. Entitlement of divorced spouses to railroad retirement annuities independent of actual entitlement of employee.

Sec. 312. Extension of tier II railroad retirement benefits to surviving former spouses pursuant to divorce agreements.

TITLE IV--MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS

Sec. 401. Modifications of joint and survivor annuity requirements.

TITLE V--PLAN AMENDMENTS

Sec. 501. Provisions relating to plan amendments.

TITLE I--SPOUSAL CONSENT REQUIRED FOR DISTRIBUTIONS FROM DEFINED CONTRIBUTION PLANS

SEC. 101. APPLICATION OF JOINT AND SURVIVOR ANNUITY RULES TO ALL DEFINED CONTRIBUTION PLANS.

(a) APPLICATION TO ALL DEFINED CONTRIBUTION PLANS-

(1) AMENDMENTS TO ERISA-

(A) IN GENERAL- Section 205(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(a)) is amended by striking `to which this section applies'.

(B) CONFORMING AMENDMENTS-

(i) Section 205(b) of such Act (29 U.S.C. 1055(b)) is amended to read as follows:

`(b)(1)(A) In the case of--

`(i) a tax credit employee stock ownership plan (as defined in section 409(a) of the Internal Revenue Code of 1986), or

`(ii) an employee stock ownership plan (as defined in section 4975(e)(7) of such Code),

subsection (a) shall not apply to that portion of the employee's accrued benefit to which the requirements of section 409(h) of such Code apply.

`(B) Subparagraph (A) shall apply with respect to any participant only if--

`(i) such plan provides that the participant's nonforfeitable accrued benefit (reduced by any security interest held by the plan by reason of a loan outstanding to such participant) is payable in full, on the death of the participant, to the participant's surviving spouse (or, if there is no surviving spouse or the surviving spouse consents in the manner required under subsection (c)(2), to a designated beneficiary),

`(ii) such participant does not elect the payment of benefits in the form of a life annuity, and

`(iii) with respect to such participant, such plan is not a direct or indirect transferee (in a transfer after December 31, 1984) of a plan to which, at the time of the transfer, subsection (a) applied (or to which this clause applied with respect to the participant).

Clause (iii) shall apply only with respect to the transferred assets (and income therefrom) if the plan separately accounts for such assets and any income therefrom. A plan shall not be treated as failing to meet the requirements of this subparagraph merely because the plan provides that benefits will not be payable to the surviving spouse of the participant unless the participant and such spouse had been married throughout the 1-year period ending on the earlier of the participant's annuity starting date or the date of the participant's death.

`(2) This section shall not apply to a plan which the Secretary of the Treasury or his delegate has determined is a plan described in section 404(c) of the Internal Revenue Code of 1986 (or a continuation thereof) in which participation is substantially limited to individuals who, before January 1, 1976, ceased employment covered by the plan.'

(ii) Section 205(e)(2) of such Act (20 U.S.C. 1055(e)(2)) is amended--

(I) by striking `individual account plan or participant described in subparagraph (B) or (C) of subsection (b)(1)' and inserting `individual account plan to which this section applies, or any participant described in subsection (b)(1)(B)', and

(II) by striking `50 percent of'.

(2) AMENDMENTS TO INTERNAL REVENUE CODE-

(A) IN GENERAL- Section 401(a)(11)(A) of the Internal Revenue Code of 1986 (relating to requirement of joint and survivor annuity and preretirement survivor annuity) is amended by striking the matter preceding clause (i) and inserting:

`(A) IN GENERAL- Except as provided in section 417 and subparagraph (B), a trust forming part of a plan shall not constitute a

qualified trust under this section unless such plan provides--'.

(B) CONFORMING AMENDMENTS-

(i) Section 401(a)(11) of such Code is amended by striking subparagraphs (B), (C), and (D) and inserting the following new subparagraphs:

`(B) EXCEPTION FOR CERTAIN ESOP BENEFITS-

`(i) IN GENERAL- In the case of--

`(I) a tax credit employee stock ownership plan (as defined in section 409(a)), or

`(II) an employee stock ownership plan (as defined in section 4975(e)(7)),

subparagraph (A) shall not apply to that portion of the employee's accrued benefit to which the requirements of section 409(h) apply.

`(ii) NONFORFEITABLE BENEFIT MUST BE PAID IN FULL, ETC- In the case of any participant, clause (i) shall apply only if--

`(I) such plan provides that the participant's nonforfeitable accrued benefit (reduced by any security interest held by the plan by reason of a loan outstanding to such participant) is payable in full, on the death of the participant, to the participant's surviving spouse (or, if there is no surviving spouse or the surviving spouse consents in the manner required under section 417(a)(2), to a designated beneficiary),

`(II) such participant does not elect the payment of benefits in the form of a life annuity, and

`(III) with respect to such participant, such plan is not a direct or indirect transferee (in a transfer after December 31, 1984) of a plan to which, at the time of the transfer, subparagraph (A) applied (or to which this subclause applied with respect to the participant).

Subclause (III) shall apply only with respect to the transferred assets (and income therefrom) if the plan separately accounts for such assets and any income therefrom.

`(C) SPECIAL RULE WHERE PARTICIPANT AND SPOUSE MARRIED LESS THAN 1 YEAR- A plan shall not be treated as failing to meet the requirements of subparagraph (B)(ii) merely because the plan provides that benefits will not be payable to the surviving spouse of the participant unless the participant and such spouse had been married throughout the 1-year period ending on the earlier of the participant's annuity starting date or the date of the participant's death.'

(ii) Section 401(a)(11) of such Code is amended by redesignating subparagraphs (E) and (F) as subparagraphs (D) and (E), respectively.

(iii) Section 417(c)(2) of such Code is amended--

(I) by striking `defined contribution plan or participant described in clause (ii) or (iii) of section 401(a)(11)(B)' and inserting `defined contribution plan to which section 401(a)(11) applies, or any participant described in section 401(a)(11)(B)(ii),'; and

(II) by striking `50 percent of'.

(b) SPECIAL RULES RELATING TO DEFINED CONTRIBUTION PLANS-

(1) AMENDMENTS TO ERISA-

(A) LOANS- Section 205(c)(4) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)(4)) is amended by adding at the end the following flush sentence:

`This paragraph shall not apply to an individual account plan other than a plan which is subject to the funding standards of section 302.'

(B) HARDSHIP WITHDRAWALS- Section 205(c) of such Act (29 U.S.C. 1055(c)) is amended by adding at the end the following new paragraph:

`(9) Nothing in this section shall be construed as requiring an individual account plan to obtain the consent of the spouse of a participant before making a hardship distribution to the participant.'

(C) PAYMENTS IN LIEU OF ANNUITY- Section 205 of such Act (29 U.S.C. 1055) is amended by redesignating subsection (l) as subsection (m) and by inserting after subsection (k) the following new subsection:

`(l)(1) For purposes of this section, an individual account plan required to provide a qualified joint and survivor annuity or a qualified preretirement survivor annuity shall be treated as providing--

`(A) a qualified joint and survivor annuity if the plan provides that the account balance of the participant to which the participant had a nonforfeitable right (within the meaning of section 203) will be distributed in a series of periodic payments (determined in accordance with tables prescribed by the Secretary of the Treasury) over the joint life expectancy of the participant and the participant's spouse, and

`(B) a qualified preretirement survivor annuity if the plan provides that the account balance of the participant (as of the date of death) to which the participant had a nonforfeitable right (as so defined) will be distributed to the surviving spouse, at the option of the spouse, in either such a series of periodic payments over the life expectancy of the surviving spouse or any other form of benefit payment that the plan provides.

A plan shall not be treated as failing to meet the requirements of subparagraph (A) merely because the plan provides that a participant may, with the consent of the spouse, elect at any time to have the plan pay all of the remaining portion of the account balance in any other form of benefit payment that the plan provides.

`(2) In the case of a termination of an individual account plan that provides for payments described in paragraph (1), such plan shall be treated as meeting the requirements of paragraph (1) only if, for each participant or surviving spouse eligible to receive such payments who is not paid the remaining account balance in a lump sum, the plan administrator purchases from an insurer an irrevocable commitment to provide--

`(A) the payments described in paragraph (1), or

`(B) either--

`(i) a qualified joint and survivor annuity (and, if applicable, a qualified preretirement survivor annuity) in the case of a participant, or

`(ii) a single life annuity or qualified preretirement survivor annuity, whichever is applicable, in the case of a surviving spouse of a participant.

`(3) The requirements of paragraph (2) are met with respect to a purchase only if, within a reasonable time after the effective date of the purchase, the individual entitled to payments from the insurer is provided a copy of the insurance contract or a certificate showing the insurer's name and address and clearly stating the insurer's obligation to provide the required payments.'.

(D) CONFORMING AMENDMENT- Section 206 of such Act (29 U.S.C. 1056) is amended by adding at the end the following:

`(g) FINAL DISTRIBUTIONS FROM TERMINATED INDIVIDUAL ACCOUNT PLANS- In the case of an individual account plan which provides for payments described in section 205(l)(1), the plan shall provide that, upon termination of such plan, benefits of married participants and surviving spouses shall be paid in accordance with section 205(l)(2).'.

(2) AMENDMENTS TO INTERNAL REVENUE CODE-

(A) LOANS- Section 417(a)(4) of the Internal Revenue Code of 1986 is amended by adding at the end the following flush sentence:

`This paragraph shall not apply to a defined contribution plan other than a plan which is subject to the funding standards of section 412.'

(B) HARDSHIP WITHDRAWALS- Section 417(a) of such Code is amended by adding at the end the following new paragraph:

`(8) HARDSHIP DISTRIBUTIONS- Nothing in this section or section 401(a)(11) shall be construed as requiring a defined contribution plan to obtain the consent of the spouse of a participant before making a hardship distribution to the participant.'

(C) PAYMENTS IN LIEU OF ANNUITY- Section 417 of such Code (relating to definitions and special rules for purposes of minimum survivor annuity requirements) is amended by adding at the end the following new subsection:

`(g) SPECIAL RULES FOR DEFINED CONTRIBUTION PLANS- For purposes of this section and section 401(a)(11)--

`(1) PAYMENTS IN LIEU OF ANNUITIES- A defined contribution plan required to provide a qualified joint and survivor annuity or a qualified preretirement survivor annuity shall be treated as providing--

`(A) a qualified joint and survivor annuity if the plan provides that the account balance of the participant to which the participant had a nonforfeitable right (within the meaning of section 411(a)) will be distributed in a series of periodic payments (determined in accordance with tables prescribed by the Secretary) over the joint life expectancy of the participant and the participant's spouse, and

`(2) TERMINATING PLANS- In the case of a termination of a defined contribution plan that provides for payments described in paragraph (1), such plan shall be treated as meeting the requirements of paragraph (1) only if, for each participant or surviving spouse eligible to receive such payments who is not paid the remaining account balance in a lump sum, the plan administrator purchases from an insurer an irrevocable commitment to provide--

`(A) the payments described in paragraph (1), or

`(B) either--

`(i) a qualified joint and survivor annuity (and, if applicable, a qualified preretirement survivor annuity) in the case of a participant, or

`(ii) a single life annuity or qualified preretirement survivor annuity, whichever is applicable, in the case of a surviving spouse of a participant.

`(3) NOTICE- The requirements of paragraph (2) are met with respect to a purchase only if, within a reasonable time after the effective date of the purchase, the individual entitled to payments from the insurer is provided a copy of the insurance contract or a certificate showing the insurer's name and address and clearly stating the insurer's obligation to provide the required payments.'.

(D) CONFORMING AMENDMENT- Section 401(a) of such Code (relating to requirements for a qualified trust) is amended by inserting after paragraph (34) the following new paragraph:

`(35) FINAL DISTRIBUTIONS FROM TERMINATED DEFINED CONTRIBUTION PLANS- In the case of a defined contribution plan which provides for payments described in section 417(g)(1), a trust forming part of such plan shall not be treated as failing to constitute a qualified trust under this section merely because the pension plan of which such trust is a part pays, upon its termination, benefits in accordance with section 417(g)(2).'

(1) AMENDMENT TO ERISA- Section 205(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)), as amended by this Act, is amended by adding at the end the following new paragraph:

`(10) Nothing in this section shall be treated as requiring a plan to obtain the consent of the spouse of the participant before making a direct trustee-to-trustee transfer of any portion of the balance to the credit of the participant to another pension plan if the other plan is a plan to which this section applies.'

(2) AMENDMENT TO INTERNAL REVENUE CODE- Section 417(a) of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new paragraph:

`(9) TRANSFERS- Nothing in this section or section 401(a)(11) shall be treated as requiring a plan to obtain the consent of the spouse of the participant before making a direct trustee-to-trustee transfer of any portion of the balance to the credit of the participant to another plan if the other plan is a plan to which this section and section 401(a)(11) apply.'

(d) EFFECTIVE DATES-

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this section shall apply to plan years beginning after December 31, 2003.

(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified on or before the date of the enactment of this Act the amendments made by this section shall not, in the case of employees covered by any such agreement, apply to plan years beginning before the earlier of--

(A) the later of--

(i) January 1, 2004, or

(ii) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after the date of enactment of this Act), or

(B) January 1, 2005.

(3) 1 HOUR OF SERVICE REQUIREMENT- The amendments made by this section shall apply only in the case of participants who have at least 1 hour of service under the plan on or after the date of the enactment of this Act or who have at least 1 hour of paid leave on or after such date.

TITLE II--DIVISION OF PENSION BENEFITS UPON DIVORCE

SEC. 201. REGULATIONS ON TIME AND ORDER OF ISSUANCE OF DOMESTIC RELATIONS ORDERS.

Not later than one year after the date of the enactment of this Act, the Secretary of the Treasury shall issue regulations under section 206(d)(3) of the Employee Retirement Security Act of 1974 and section 414(p) of the Internal Revenue Code of 1986 which clarify that--

(1) a domestic relations order otherwise meeting the requirements to be a qualified domestic relations order, including the requirements of section 206(d)(3)(D) of such Act and section 414(p)(3) of such Code, shall not fail to be treated as a qualified domestic relations order solely because--

(A) the order is issued after, or revises, another domestic relations order or qualified domestic relations order; or

(B) of the time at which it is issued; and

(2) any order described in paragraph (1) shall be subject to the same requirements and protections which apply to qualified domestic relations orders, including the provisions of section 206(d)(3)(H) of such Act and section 414(p)(7) of such Code.

SEC. 202. FORMER SPOUSES TREATED AS SURVIVING SPOUSES IN CERTAIN CASES.

(a) AMENDMENT TO ERISA- Section 205 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055), as amended by this Act, is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following new subsection:

`(m)(1)(A) For purposes of this section, a former spouse to whom this subsection applies shall, upon the death of the participant to whom the former spouse was married, be entitled to receive a qualified joint and survivor annuity or qualified preretirement survivor annuity in the same manner, and to the same extent, as if the former spouse were the surviving spouse of the participant.

`(B) This subsection applies to a former spouse of a participant in a plan if--

`(i) the plan is a defined benefit plan or an individual account plan subject to the funding standards under section 302,

`(ii) an election by the former spouse to waive the benefits of this section was not in effect during the period the participant was covered by the plan or at the time of the dissolution of the marriage,

`(iii) there is no domestic relations order which specifically provides that the survivor benefits under the plan were considered by the participant and the former spouse and that the survivor benefits were expressly awarded, denied, or waived by the former spouse, and

`(iv) the requirements of either paragraph (2) or (3) are met with respect to the participant.

`(2) In the case of a qualified joint and survivor annuity, the requirements of this paragraph are met with respect to a participant if the participant and the former spouse were married on the annuity starting date and--

`(A) the participant's annuity was reduced in order to provide a qualified joint and survivor annuity under this section, or

`(B) the participant was receiving a subsidized annuity described in subsection (c)(5).

`(3) In the case of a qualified preretirement survivor annuity, the requirements of this paragraph are met with respect to a participant if the participant--

`(A) was married to the former spouse for at least 1 year during the period the participant was covered by the plan,

`(B) did not remarry at any time following the dissolution of the marriage to the former spouse, and

`(C) did not make a subsequent beneficiary designation at any time after dissolution of the marriage to the former spouse, and the plan does not provide for the payment of an equivalent or greater benefit to a default beneficiary.

`(4)(A) This subsection shall not apply to a former spouse unless the former spouse notifies the plan of possible eligibility for a benefit under this subsection within one year of the participant's death or one year after the effective date of this subsection, whichever is later, and provides such information as may be necessary to establish each element of eligibility.

`(B) The plan may waive the one-year requirement under this paragraph where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement.

`(C) Payments to a former spouse under this subsection shall not be made before the earliest date the participant would have been eligible to receive a retirement benefit under the plan.

`(D) Any payments to a former spouse pursuant to this subsection shall be prospective only, beginning from the date the former spouse notifies the plan of the former spouse's potential eligibility for benefits under this subsection.

`(E) In making determinations under this subsection, the plan may reasonably rely on the validity of marriage certificates, divorce decrees, death certificates, and other documentation such as obituaries and affidavits, and need not independently authenticate their validity. Any plan fiduciary that in good faith pays a qualified preretirement survivor annuity benefit to a former spouse in accordance with this subsection shall be discharged from liability to any other claimant.

`(F) In the event that the plan makes payments to a former spouse under this section, and a surviving spouse or another former spouse comes forward and establishes that the participant had remarried after dissolution of the marriage to the former spouse who is receiving benefits, the plan shall cease payments to that former spouse. If the plan has evidence that the former spouse's representations to the plan on the participant's remarriage status were not in good faith, the plan may seek repayment of any amounts paid. If the plan determines that the participant was legally married at the time of death, it shall make payments on a prospective basis only to that surviving spouse.'

(b) AMENDMENT TO INTERNAL REVENUE CODE- Section 417 of the Internal Revenue Code of 1986 (relating to definitions and special rules for purposes of minimum survivor annuity requirements), as amended by this Act, is amended by adding at the end the following new subsection:

`(h) TREATMENT OF CERTAIN FORMER SPOUSES-

`(1) IN GENERAL- For purposes of this section and section 401(a)(11), a former spouse to whom this subsection applies shall, upon the death of the participant to whom the former spouse was married, be entitled to receive a qualified joint and survivor annuity or qualified preretirement survivor annuity in the same manner, and to the same extent, as if the former spouse were the surviving spouse of the participant.

`(2) APPLICATION- This subsection applies to a former spouse of a participant in a plan if--

`(A) the plan is a defined benefit plan or a defined contribution plan subject to the funding standards under section 412,

`(B) an election by the former spouse to waive the benefits of this section was not in effect during the period the participant was covered by the plan or at the time of the dissolution of the marriage,

`(C) there is no domestic relations order which specifically provides that the survivor benefits under the plan were considered by the participant and the former spouse and that the survivor benefits were expressly awarded, denied, or waived by the former spouse, and

`(D) the requirements of either paragraph (3) or (4) are met with respect to the participant.

`(3) QUALIFIED JOINT AND SURVIVOR ANNUITY- In the case of a qualified joint and survivor annuity, the requirements of this paragraph are met with respect to a participant if the participant and the former spouse were married on the annuity starting date and--

`(A) the participant's annuity was reduced in order to provide a qualified joint and survivor annuity under this section, or

`(B) the participant was receiving a subsidized annuity described in section 417(a)(5).

`(4) QUALIFIED PRERETIREMENT SURVIVOR ANNUITY- In the case of a qualified preretirement survivor annuity, the requirements of this paragraph are met with respect to a participant if the participant--

`(A) was married to the former spouse for at least 1 year during the period the participant was covered by the plan,

`(B) did not remarry at any time following the dissolution of the marriage to the former spouse, and

`(5) OTHER RULES-

`(A) NOTICE-

`(i) IN GENERAL- This subsection shall not apply to a former spouse unless the former spouse notifies the plan of the former spouse's eligibility under this subsection within one year of the participant's death or one year after the effective date of this subsection, whichever is later, and provides such information as may be required to establish each element of eligibility.

`(ii) WAIVER- The plan may waive the one-year requirement under clause (i) where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable ~control of the individual subject to such requirement.

`(B) TIME FOR PAYMENT- Payments to a former spouse under this subsection shall not be made before the earliest date the participant would have been eligible to receive a retirement benefit under the plan.

`(C) PROSPECTIVE PAYMENTS- Payments to a former spouse under this subsection shall be prospective only, beginning from the date the former spouse notifies the plan of the former spouse's potential eligibility for benefits under this subsection.

`(D) RELIANCE- In making determinations under this subsection, the plan may reasonably rely on the validity of marriage certificates, divorce decrees, death certificates, and other documentation such as obituaries and affidavits, and need not independently authenticate their validity. Any plan fiduciary that in good faith pays a qualified preretirement survivor annuity to a former spouse under this subsection shall be discharged from liability to any other claimant.

`(E) SUBSEQUENT CLAIMS- In the event that the plan makes payments to a former spouse under this section, and a surviving spouse or another former spouse comes forward and establishes that the participant had remarried after dissolution of the marriage to the former spouse who is receiving benefits, the plan shall cease payments to that former spouse. If the plan has evidence that the former spouse's representations to the plan on the participant's remarriage status were not in good faith, the plan may seek repayment of any amounts paid. If the plan determines that the ~~participant was legally married at the time of death, it shall make payments on a prospective basis only to that surviving spouse.'

(1) IN GENERAL- Except as provided in paragraph (2), the amendments made by this subsection shall apply to plan years after December 31, 2003.

(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified on or before the date of the enactment of this Act, the amendments made by this section shall not, in the case of employees covered by any such agreement, apply to benefits which are payable (without regard to when the participant died) in plan years before the earlier of--

(A) the later of January 1, 2004, or the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after the date of enactment of this Act), or

(B) January 1, 2005.

TITLE III--PROTECTION OF RIGHTS OF FORMER SPOUSES TO PENSION BENEFITS UNDER CERTAIN GOVERNMENT AND GOVERNMENT-SPONSORED RETIREMENT PROGRAMS

Subtitle A--Civil Service Retirement

SEC. 301. SURVIVOR ANNUITIES FOR WIDOWS, WIDOWERS, AND FORMER SPOUSES OF FEDERAL EMPLOYEES WHO DIE BEFORE ATTAINING AGE FOR DEFERRED ANNUITY UNDER CIVIL SERVICE RETIREMENT SYSTEM.

(a) BENEFITS FOR WIDOW OR WIDOWER- Section 8341(f) of title 5, United States Code, is amended--

(1) in the matter preceding paragraph (1)--

(A) by inserting `a former employee separated from the service with title to deferred annuity from the Fund dies before having established a valid claim for annuity and is survived by a spouse, or if' before `a Member'; and

(B) by inserting `of such former employee or Member' after `the surviving spouse';

(2) in paragraph (1)--

(A) by inserting `former employee or' before `Member commencing'; and

(B) by inserting `former employee or' before `Member dies'; and

(3) in the undesignated sentence following paragraph (2)--

(A) in the matter preceding subparagraph (A), by inserting `former employee or' before `Member'; and

(B) in subparagraph (B), by inserting `former employee or' before `Member'.

(b) BENEFITS FOR FORMER SPOUSE- Section 8341(h) of title 5, United States Code, is amended--

(1) in paragraph (1), by adding after the first sentence `Subject to paragraphs (2) through (5) of this subsection, a former spouse of a former employee who dies after having separated from the service with title to a deferred annuity under section 8338(a) but before having established a valid claim for annuity is entitled to a survivor annuity under this subsection, if and to the extent expressly provided for in an election under section 8339(j)(3) of this title, or in the terms of any decree of divorce or annulment or any court order or court-approved property settlement agreement incident to such decree.'; and

(2) in paragraph (2)--

(A) in subparagraph (A)(ii), by striking `or annuitant,' and inserting `annuitant, or former employee'; and

(B) in subparagraph (B)(iii), by inserting `former employee or' before `Member'.

(c) PROTECTION OF SURVIVOR BENEFIT RIGHTS- Section 8339(j)(3) of title 5, United States Code, is amended by inserting at the end the following: `The Office shall provide by regulation for the application of this subsection to the widow, widower, or surviving former spouse of a former employee who dies after having separated from the service with title to a deferred annuity under section 8338(a) but before having established a valid claim for annuity.'.

(d) EFFECTIVE DATE- The amendments made by this section shall take effect on the date of the enactment of this Act and shall apply only in the case of a former employee who dies on or after such date.

SEC. 302. COURT ORDERS RELATING TO FEDERAL RETIREMENT BENEFITS FOR FORMER SPOUSES OF FEDERAL EMPLOYEES.

(a) CIVIL SERVICE RETIREMENT SYSTEM-

(1) IN GENERAL- Section 8345(j) of title 5, United States Code, is amended--

(A) by redesignating paragraph (3) as paragraph (4); and

(B) by inserting after paragraph (2) the following:

`(3)(A) Except as provided in this paragraph, a court decree, court order, property settlement, or similar process referred to under paragraph (1)(A) shall not be treated as failing to meet the requirements of such paragraph solely because it authorizes payment of benefits to be made to the former spouse of the employee or Member before the employee or Member begins to receive payment of benefits.

`(B) Subparagraph (A) shall only apply if the payment of benefits--

`(i) are not required to be made before the date on which the employee or Member attains (or would have attained) the earliest retirement age; and

`(ii) are required to be made as if the employee or Member had retired on the date on which such payment is to begin, but taking into account only the present value of the benefits as calculated on the basis of the employee's or Member's service at the time the former spouse begins collecting benefits.

`(C) For purposes of this paragraph, the term `earliest retirement age' means the date on which the employee or Member is entitled to an annuity under this chapter (without regard to whether the employee or Member separated from service or made any required election).

`(D) For purposes of this paragraph, former employees or Members shall be treated as employees or Members.

`(E)(i) The Office of Personnel Management shall make such adjustments as are necessary to the benefits of a former spouse under this paragraph to reflect any increase in creditable service that affects the benefit of the former spouse and that occurs at the time the employee or Member actually retires.

`(ii) To ensure that the total of all benefits payable under this chapter (other than benefits based on participation in the Thrift Savings Plan) based on the service of an employee or Member do not actuarially exceed all benefits which could otherwise be payable under section 8339, the Office of Personnel Management may make an adjustment in the payment of benefits to--

`(I) a former spouse under this paragraph; or

`(II) the employee or Member.

I22Such actuarial value shall in no event be less than the present value determined under subparagraph (B).'

(b) FEDERAL EMPLOYEES RETIREMENT SYSTEM- Section 8467 of title 5, United States Code, is amended--

(1) by redesignating subsection (c) as subsection (d); and

(2) by inserting after subsection (b) the following:

`(c)(1) Except as provided in this subsection, a court decree, court order, property settlement, or similar process referred to under subsection (a)(1) shall not be treated as failing to meet the requirements of such subsection solely because it authorizes payment of benefits to be made to the former spouse of the employee or Member before the employee or Member begins to receive payment of benefits.

`(2) Paragraph (1) shall only apply if the payment of benefits--

`(A) are not required to be made before the date on which the employee or Member attains (or would have attained) the earliest retirement age; and

`(B) are required to be made as if the employee or Member had retired on the date on which such payment is to begin, but taking into account only the present value of the benefits as calculated on the basis of the employee's or Member's service at the time the former spouse begins collecting benefits.

`(3) For purposes of this subsection, the term `earliest retirement age' means the date on which the employee or Member is entitled to an annuity under this chapter (without regard to whether the employee or Member separated from service or made any required election).

`(4) For purposes of this subsection, former employees or Members shall be treated as employees or Members.

`(5)(A) The Office of Personnel Management shall make such adjustments as are necessary to the benefits of a former spouse under this subsection to reflect any increase in creditable service that affects the benefit of the former spouse and that occurs at the time the employee or Member actually retires.

`(B) To ensure that the total of all benefits payable under this chapter (other than benefits based on participation in the Thrift Savings Plan) based on the service of an employee or Member do not actuarially exceed all benefits which could otherwise be payable under section 8415, the Office of Personnel Management may make an adjustment in the payment of benefits to--

`(i) a former spouse under this subsection; or

`(ii) the employee or Member.

Such actuarial value shall in no event be less than the present value determined under paragraph (2).'

(c) REGULATIONS- Not later than 1 year after the date of enactment of this Act, the Office of Personnel Management shall prescribe regulations to carry out the amendments made by this section.

(d) EFFECTIVE DATE- The amendments made by this section shall take effect 1 year after the date of enactment of this Act and apply to any court decree, court order, property settlement, or similar process issued after such effective date.

SEC. 303. ORDER OF PRECEDENCE FOR DISPOSITION OF AMOUNTS REMAINING IN THE THRIFT SAVINGS ACCOUNT OF A FEDERAL EMPLOYEE (OR FORMER EMPLOYEE) WHO DIES BEFORE MAKING AN EFFECTIVE ELECTION CONTROLLING SUCH DISPOSITION.

(a) IN GENERAL- Section 8433(e) of title 5, United States Code, is amended--

(1) by striking `(e)' and inserting `(e)(1)';

(2) by striking all that follows `paid' and inserting `in accordance with paragraph (2).'; and

(3) by adding at the end the following:

`(2)(A) An amount under paragraph (1) shall be paid in a manner consistent with the provisions of section 8424(d), except that, in applying the order of precedence under such provisions--

`(i) the widow or widower of the decedent shall be the first party entitled to receive (instead of any designated beneficiary); and

`(ii) if there is no widow or widower, the party next entitled to receive shall be the beneficiary or beneficiaries designated by the employee or Member (or former employee or Member) in accordance with the procedures that would otherwise normally apply, subject to such additional conditions as the Executive Director shall by regulation prescribe based on section 205(c)(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)(2)).

`(B) The order of precedence under subparagraph (A) shall not apply if the widow or widower consents in writing to the application of the order of precedence under section 8424(d).

`(C) For purposes of this paragraph, the term `widow' or `widower' shall not include a common law spouse of a deceased employee or Member (or former employee or Member).'

(b) EFFECTIVE DATE- The amendments made by this section shall take effect on the date which is 1 year after the date of the enactment of this Act (or such earlier date as the Executive Director of the Federal Retirement Thrift Investment Board may prescribe), and shall apply in the case of any individual who dies on or after such date.

Subtitle B--Railroad Retirement

SEC. 311. ENTITLEMENT OF DIVORCED SPOUSES TO RAILROAD RETIREMENT ANNUITIES INDEPENDENT OF ACTUAL ENTITLEMENT OF EMPLOYEE.

(a) IN GENERAL- Section 2 of the Railroad Retirement Act of 1974 (45 U.S.C. 231a) is amended--

(1) in subsection (c)(4)(i), by striking `(A) is entitled to an annuity under subsection (a)(1) and (B)'; and

(2) in subsection (e)(5), by striking `or divorced wife' the second place it appears.

(b) EFFECTIVE DATE- The amendments made by this section shall take effect 1 year after the date of the enactment of this Act.

SEC. 312. EXTENSION OF TIER II RAILROAD RETIREMENT BENEFITS TO SURVIVING FORMER SPOUSES PURSUANT TO DIVORCE AGREEMENTS.

(a) IN GENERAL- Section 5 of the Railroad Retirement Act of 1974 (45 U.S.C. 231d) is amended by adding at the end the following:

`(d) Notwithstanding any other provision of law, the payment of any portion of an annuity computed under section 3(b) to a surviving former spouse in accordance with a court decree of divorce, annulment, or legal separation or the terms of any court-approved property settlement incident to any such court decree shall not be terminated upon the death of the individual who performed the service with respect to which such annuity is so computed unless such termination is otherwise required by the terms of such court decree.'

(b) EFFECTIVE DATE- The amendment made by this section shall take effect 1 year after the date of the enactment of this Act.

TITLE IV--MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS

SEC. 401. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS.

(a) AMENDMENTS TO ERISA-

(1) AMOUNT OF ANNUITY-

(A) IN GENERAL- Paragraph (1) of section 205(a) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(a)) is amended by inserting `or, at the election of the participant, shall be provided in the form of a qualified joint and 3/4 survivor annuity,' after `survivor annuity,'.

(B) DEFINITION- Subsection (d) of section 205 of such Act (29 U.S.C. 1055) is amended--

(i) by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), respectively,

(ii) by inserting `(1)' after `(d)', and

(iii) by adding at the end the following new paragraph:

`(2)(A) For purposes of this section, the term `qualified joint and 3/4 survivor annuity' means an annuity--

`(i) for the life of the participant with a survivor annuity for the life of the spouse which is not less than 75 percent of the amount of the annuity which is payable during the joint lives of the participant and the spouse, and

`(ii) which is the actuarial equivalent of a single annuity for the life of the participant.

`(B) For purposes of this Act, a qualified joint and 3/4 survivor annuity shall be treated as a qualified joint and survivor annuity.'

(2) ILLUSTRATION REQUIREMENT- Clause (i) of section 205(c)(3)(A) of such Act (29 U.S.C. 1055(c)(3)(A)) is amended to read as follows:

`(i) the terms and conditions of each qualified joint and survivor annuity and qualified joint and 3/4 survivor annuity offered, accompanied by an illustration of the benefits under each such annuity for the particular participant and spouse,'.

(b) AMENDMENTS TO INTERNAL REVENUE CODE-

(1) AMOUNT OF ANNUITY-

(A) IN GENERAL- Clause (i) of section 401(a)(11)(A) of the Internal Revenue Code of 1986 (relating to requirement of joint and survivor annuity and preretirement survivor annuity) is amended by inserting `or, at the election of the participant, shall be provided in the form of a qualified joint and 3/4 survivor annuity,' after `survivor annuity,'.

(B) DEFINITION- Section 417 (relating to definitions and special rules for purposes of minimum survivor annuity requirements), as amended by this Act, is amended by adding at the end the following new subsection:

`(i) DEFINITION OF QUALIFIED JOINT AND 3/4 SURVIVOR ANNUITY-

`(1) IN GENERAL- For purposes of this section and section 401(a)(11), the term `qualified joint and 3/4 survivor annuity' means an annuity--

`(A) for the life of the participant with a survivor annuity for the life of the spouse which is not less than 75 percent of the amount of the annuity which is payable during the joint lives of the participant and the spouse, and

`(B) which is the actuarial equivalent of a single annuity for the life of the participant.

`(2) TREATMENT- For purposes of this title, a qualified joint and 3/4 survivor annuity shall be treated as a qualified joint and survivor annuity.'

(2) ILLUSTRATION REQUIREMENT- Clause (i) of section 417(a)(3)(A) (relating to explanation of joint and survivor annuity) is amended to read as follows:

(1) IN GENERAL- The amendments made by this section shall apply to plan years beginning on or after January 1, 2005.

(2) SPECIAL RULE FOR COLLECTIVELY BARGAINED PLANS- In the case of a plan maintained pursuant to 1 or more collective bargaining agreements between employee representatives and 1 or more employers ratified on or before the date of the enactment of this Act, the amendments made by this section shall apply to the first plan year beginning on or after the earlier of--

(A) the later of--

(i) January 1, 2005, or

(ii) the date on which the last of such collective bargaining agreements terminates (determined without regard to any extension thereof after the date of enactment of this Act), or

(B) January 1, 2006.

(3) FORM OF ACCRUED BENEFIT NOT TREATED AS DECREASED BY REASON OF AMENDMENT- For purposes of sections 204(g) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1054(g)) and 411(d)(6) of the Internal Revenue Code of 1986, a plan shall not be treated as having decreased the accrued benefit of a participant solely by reason of the adoption of a plan amendment which provides for a qualified joint and 3/4 survivor annuity.

TITLE V--PLAN AMENDMENTS

SEC. 501. PROVISIONS RELATING TO PLAN AMENDMENTS.

(a) IN GENERAL- If this section applies to any plan or contract amendment, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in subsection (b)(2)(A).

(b) AMENDMENTS TO WHICH SECTION APPLIES-

(1) IN GENERAL- This section shall apply to any amendment to any plan or annuity contract which is made--

(A) pursuant to any amendment made by this Act, or pursuant to any regulation issued under this Act, and

(B) on or before the last day of the first plan year beginning on or after January 1, 2005.

In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), this paragraph shall be applied by substituting `2007' for `2005'.

(2) CONDITIONS- This section shall not apply to any amendment unless--

(A) during the period--

(i) beginning on the date the legislative or regulatory amendment described in paragraph (1)(A) takes effect (or in the case of a plan or contract amendment not required by such legislative or regulatory amendment, the effective date specified by the plan); and

(ii) ending on the date described in paragraph (1)(B) (or, if earlier, the date the plan or contract amendment is adopted),

the plan or contract is operated as if such plan or contract amendment were in effect; and

(B) such plan or contract amendment applies retroactively for such period.

END