Worker, Retiree, and Employer Recovery Act of 2008/Title I/Subtitle B

by United States Congress

Subtitle B--Other Provisions

SEC. 121. AMENDMENTS RELATED TO SECTIONS 102 AND 112 OF THE PENSION PROTECTION ACT OF 2006.

(a) Amendment of ERISA- The last sentence of section 303(g)(3)(B) of ERISA is amended to read as follows: `Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan's actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary of the Treasury.'.

(b) Amendment of Internal Revenue Code of 1986- The last sentence of section 430(g)(3)(B) of the Internal Revenue Code of 1986 is amended to read as follows: `Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan's actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary.'.

(c) Effective Date- The amendments made by this section shall take effect as if included in the provisions of the 2006 Act to which the amendments relate.

SEC. 122. MODIFICATION OF INTEREST RATE ASSUMPTION REQUIRED WITH RESPECT TO CERTAIN SMALL EMPLOYER PLANS.

(a) In General- Subparagraph (E) of section 415(b)(2) of the Internal Revenue Code of 1986 (relating to limitation on certain assumptions) is amended by adding at the end the following new clause:

`(vi) In the case of a plan maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), clause (ii) shall be applied without regard to subclause (II) thereof.'.

(b) Effective Date- The amendment made by this section shall apply to years beginning after December 31, 2008.

SEC. 123. DETERMINATION OF MARKET RATE OF RETURN FOR GOVERNMENTAL PLANS.

(a) Amendment of ADEA- Section 4(i)(10)(B)(i)(III) of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 623(i)(10)(B)(i)(III)) is amended by adding at the end the following: `In the case of a governmental plan (as defined in the first sentence of section 414(d) of the Internal Revenue Code of 1986), a rate of return or a method of crediting interest established pursuant to any provision of Federal, State, or local law (including any administrative rule or policy adopted in accordance with any such law) shall be treated as a market rate of return for purposes of subclause (I) and a permissible method of crediting interest for purposes of meeting the requirements of subclause (I), except that this sentence shall only apply to a rate of return or method of crediting interest if such rate or method does not violate any other requirement of this Act.'.

(b) Effective Date- The amendment made by this section shall take effect as if included in the provisions of the Pension Protection Act of 2006 to which such amendment relates.

SEC. 124. TREATMENT OF CERTAIN REIMBURSEMENTS FROM GOVERNMENTAL PLANS FOR MEDICAL CARE.

(a) In General- Section 105 of the Internal Revenue Code of 1986 (relating to amounts received under accident and health plans) is amended by adding at the end the following new subsection:

`(j) Special Rule for Certain Governmental Plans-

`(1) IN GENERAL- For purposes of subsection (b), amounts paid (directly or indirectly) to the taxpayer from an accident or health plan described in paragraph (2) shall not fail to be excluded from gross income solely because such plan, on or before January 1, 2008, provides for reimbursements of health care expenses of a deceased plan participant's beneficiary.

`(2) PLAN DESCRIBED- An accident or health plan is described in this paragraph if such plan is funded by a medical trust that is established in connection with a public retirement system and that--

`(A) has been authorized by a State legislature, or

`(B) has received a favorable ruling from the Internal Revenue Service that the trust's income is not includible in gross income under section 115.'.

(b) Effective Date- The amendment made by subsection (a) shall apply to payments before, on, or after the date of the enactment of this Act.

SEC. 125. ROLLOVER OF AMOUNTS RECEIVED IN AIRLINE CARRIER BANKRUPTCY TO ROTH IRAS.

(a) General Rule- If a qualified airline employee receives any airline payment amount and transfers any portion of such amount to a Roth IRA within 180 days of receipt of such amount (or, if later, within 180 days of the date of the enactment of this Act), then such amount (to the extent so transferred) shall be treated as a qualified rollover contribution described in section 408A(e) of the Internal Revenue Code of 1986, and the limitations described in section 408A(c)(3) of such Code shall not apply to any such transfer.

(b) Definitions and Special Rules- For purposes of this section--

(1) AIRLINE PAYMENT AMOUNT-

(A) IN GENERAL- The term `airline payment amount' means any payment of any money or other property which is payable by a commercial passenger airline carrier to a qualified airline employee--

(i) under the approval of an order of a Federal bankruptcy court in a case filed after September 11, 2001, and before January 1, 2007, and

(ii) in respect of the qualified airline employee's interest in a bankruptcy claim against the carrier, any note of the carrier (or amount paid in lieu of a note being issued), or any other fixed obligation of the carrier to pay a lump sum amount.

The amount of such payment shall be determined without regard to any requirement to deduct and withhold tax from such payment under sections 3102(a) and 3402(a).

(B) EXCEPTION- An airline payment amount shall not include any amount payable on the basis of the carrier's future earnings or profits.

(2) QUALIFIED AIRLINE EMPLOYEE- The term `qualified airline employee' means an employee or former employee of a commercial passenger airline carrier who was a participant in a defined benefit plan maintained by the carrier which--

(A) is a plan described in section 401(a) of the Internal Revenue Code of 1986 which includes a trust exempt from tax under section 501(a) of such Code, and

(B) was terminated or became subject to the restrictions contained in paragraphs (2) and (3) of section 402(b) of the Pension Protection Act of 2006.

(3) REPORTING REQUIREMENTS- If a commercial passenger airline carrier pays 1 or more airline payment amounts, the carrier shall, within 90 days of such payment (or, if later, within 90 days of the date of the enactment of this Act), report--

(A) to the Secretary of the Treasury, the names of the qualified airline employees to whom such amounts were paid, and

(B) to the Secretary and to such employees, the years and the amounts of the payments.

Such reports shall be in such form, and contain such additional information, as the Secretary may prescribe.

(c) Effective Date- This section shall apply to transfers made after the date of the enactment of this Act with respect to airline payment amounts paid before, on, or after such date.

SEC. 126. DETERMINATION OF ASSET VALUE FOR SPECIAL AIRLINE FUNDING RULES.

(a) In General- Section 402(e)(4)(C) of the 2006 Act is amended to read as follows:

`(C) the value of plan assets shall be determined under sections 303(g)(3) of such Act and 430(g)(3) of such Code.'.

(b) Effective Date- The amendment made by this section shall apply to plan years beginning after December 31, 2007.

SEC. 127. MODIFICATION OF PENALTY FOR FAILURE TO FILE PARTNERSHIP RETURNS.

(a) In General- Section 6698(b)(1) of the Internal Revenue Code of 1986 is amended by striking `$85' and inserting `$89'.

(b) Effective Date- The amendment made by subsection (a) shall apply to returns required to be filed after December 31, 2008.

SEC. 128. MODIFICATION OF PENALTY FOR FAILURE TO FILE S CORPORATION RETURNS.

(a) In General- Section 6699(b)(1) of the Internal Revenue Code of 1986 is amended by striking `$85' and inserting `$89'.

(b) Effective Date- The amendment made by subsection (a) shall apply to returns required to be filed after December 31, 2008.