I.R.C. § 4980F(a) Imposition Of Tax —
There is hereby imposed a tax on the failure of any applicable pension plan to meet
the requirements of subsection (e)
with respect to any applicable individual.
I.R.C. § 4980F(b) Amount Of Tax
I.R.C. § 4980F(b)(1) In General —
The amount of the tax imposed by subsection (a) on any failure with respect to any
applicable individual shall be $100 for each day in the noncompliance period with
respect to such failure.
I.R.C. § 4980F(b)(2) Noncompliance Period —
For purposes of this section, the term “noncompliance period” means, with respect
to any failure, the period beginning on the date the failure first occurs and ending
on the date the notice to which the failure relates is provided or the failure is
otherwise corrected.
I.R.C. § 4980F(c) Limitations On Amount Of Tax
I.R.C. § 4980F(c)(1) Tax Not To Apply Where Failure Not Discovered And Reasonable Diligence Exercised —
No tax shall be imposed by subsection (a) on any failure during any period for which
it is established to the satisfaction of the Secretary that any person subject to
liability for the tax under subsection (d) did not know that the failure existed
and exercised reasonable diligence to meet the requirements of subsection (e).
I.R.C. § 4980F(c)(2) Tax Not To Apply To Failures Corrected Within 30 Days —
No tax shall be imposed by subsection (a) on any failure if—-
I.R.C. § 4980F(c)(2)(A) —
any person subject to liability for the tax under subsection (d) exercised reasonable
diligence to meet the requirements of subsection (e), and
I.R.C. § 4980F(c)(2)(B) —
such person provides the notice described in subsection (e) during the 30-day period
beginning on the first date such person knew, or exercising reasonable diligence
would have known, that such failure existed.
I.R.C. § 4980F(c)(3) Overall Limitation For Unintentional Failures
I.R.C. § 4980F(c)(3)(A) In General —
If the person subject to liability for tax under subsection
(d) exercised reasonable diligence to meet the requirements of subsection
(e), the tax imposed by subsection (a) for failures during the taxable year of the
employer (or, in the case of a multiemployer plan, the taxable year of the trust
forming part of the plan) shall not exceed
$500,000. For purposes of the preceding sentence, all multiemployer plans of which
the same trust forms a part shall be treated as 1 plan.
I.R.C. § 4980F(c)(3)(B) Taxable Years In The Case Of Certain Controlled Groups —
For purposes of this paragraph, if all persons who are treated as a single employer
for purposes of this section do not have the same taxable year, the taxable years
taken into account shall be determined under principles similar to the principles
of section 1561.
I.R.C. § 4980F(c)(4) Waiver By Secretary —
In the case of a failure which is due to reasonable cause and not to willful neglect,
the Secretary may waive part or all of the tax imposed by subsection (a) to the extent
that the payment of such tax would be excessive or otherwise inequitable relative
to the failure involved.
I.R.C. § 4980F(d) Liability For Tax —
The following shall be liable for the tax imposed by subsection (a):
I.R.C. § 4980F(d)(1) —
In the case of a plan other than a multiemployer plan, the employer.
I.R.C. § 4980F(d)(2) —
In the case of a multiemployer plan, the plan.
I.R.C. § 4980F(e) Notice Requirements For Plans Significantly Reducing Benefit Accruals
I.R.C. § 4980F(e)(1) In General —
If an applicable pension plan is amended to provide for a significant reduction in
the rate of future benefit accrual, the plan administrator shall provide the notice
described in paragraph (2) to each applicable individual (and to each employee organization
representing applicable individuals) and to each employer who has an obligation to
contribute to the plan.
I.R.C. § 4980F(e)(2) Notice —
The notice required by paragraph (1) shall be written in a manner calculated to
be understood by the average plan participant and shall provide sufficient information
(as determined in accordance with regulations prescribed by the Secretary) to allow
applicable individuals to understand the effect of the plan amendment. The Secretary
may provide a simplified form of notice for, or exempt from any notice requirement,
a plan—-
I.R.C. § 4980F(e)(2)(A) —
which has fewer than 100 participants who have accrued a benefit under the plan,
or
I.R.C. § 4980F(e)(2)(B) —
which offers participants the option to choose between the new benefit formula and
the old benefit formula.
I.R.C. § 4980F(e)(3) Timing Of Notice —
Except as provided in regulations, the notice required by paragraph (1) shall be
provided within a reasonable time before the effective date of the plan amendment.
I.R.C. § 4980F(e)(4) Designees —
Any notice under paragraph (1) may be provided to a person designated, in writing,
by the person to which it would otherwise be provided.
I.R.C. § 4980F(e)(5) Notice Before Adoption Of Amendment —
A plan shall not be treated as failing to meet the requirements of paragraph (1)
merely because notice is provided before the adoption of the plan amendment if no
material modification of the amendment occurs before the amendment is adopted.
I.R.C. § 4980F(f) Definitions And Special Rules —
For purposes of this section—-
I.R.C. § 4980F(f)(1) Applicable Individual —
The term “applicable individual” means, with respect to any plan amendment—-
I.R.C. § 4980F(f)(1)(A) —
each participant in the plan, and
I.R.C. § 4980F(f)(1)(B) —
any beneficiary who is an alternate payee (within the meaning of section 414(p)(8)) under an applicable qualified domestic relations order (within the meaning of section
414(p)(1)(A)),
whose rate of future benefit accrual
under the plan may reasonably be expected to be significantly reduced by such plan
amendment.
I.R.C. § 4980F(f)(2) Applicable Pension Plan —
The term “applicable pension plan” means--
I.R.C. § 4980F(f)(2)(A) —
any defined benefit plan described in section 401(a)
which includes a trust exempt from tax under section 501(a), or
I.R.C. § 4980F(f)(2)(B) —
an individual account plan which is subject to the funding standards of section 412.
Such term shall not include a governmental plan (within the meaning of section 414(d))
or a church plan (within the meaning of section 414(e)) with respect to which the election provided by section 410(d) has not been made.
I.R.C. § 4980F(f)(3) Early Retirement —
A plan amendment which eliminates or reduces any early retirement benefit or retirement-type
subsidy (within the meaning of section 411(d)(6)(B)(i))
shall be treated as having the effect of reducing the rate of future
benefit accrual.
I.R.C. § 4980F(g) New Technologies —
The Secretary may by regulations allow any notice under subsection (e) to be provided
by using new technologies.
(Added by Pub. L. 107-16, title VI, Sec. 659(a)(1), June 7, 2001, 115 Stat. 38; amended by Pub. L. 107-147, title IV, Sec. 411(u),
Mar. 9, 2002, 116 Stat. 21; Pub. L. 109-280, title V, Sec. 502(c)(2), Aug. 17, 2006, 120 Stat. 780.)
BACKGROUND NOTES
AMENDMENTS
2006 - Subsec. (e)(1). Pub. L. 109-280, Sec. 502(c)(2), amended par. (2) by inserting “and to each employer who has an obligation to contribute
to the plan” before the period.
2002 - Subsec. (e)(1). Pub. L. 107-147, Sec. 411(u)(1), amended par. (1) by substituting “the notice described in paragraph
(2)” for “written notice”.
Subsec. (f)(2)(A). Pub. L. 107-147, Sec. 411(u)(1), amended subpar. (A). Before amendment it read as follows:
“(A) any defined benefit plan, or”.
Subsec. (f)(3). Pub. L. 107-147, Sec. 411(u)(1), amended par. (3) by striking
“significantly” before “reduces” and “reducing”.
EFFECTIVE DATE OF 2006 AMENDMENT
Amendment made by Sec. 502(c)(2) of Pub. L. 109-280 effective for plan years beginning after 2007.
EFFECTIVE DATE OF 2002 AMENDMENTS
Amendments made by Sec. 411(u)(1) of Pub. L. 107-147 effective as if included in the provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 [Pub. L. 107-16, Sec. 659]
to which they relate.
EFFECTIVE DATE
Effective for plan amendments taking effect on or after the date of the enactment
of this Act [Enacted: June 7, 2001]. Sec. 659(c)(2) and (3), as amended by Pub. L. 107-147, Sec. 411(u)(3), provided the following transition and special rules:
“(2) TRANSITION.--Until such time as the Secretary of the Treasury issues regulations
under sections 4980F(e)(2) and (3) of the Internal Revenue Code of 1986, and section 204(h) of the Employee Retirement Income Security Act of 1974, as added by the amendments made by this section, a plan shall be treated
as meeting the requirements of such sections if it makes a good faith effort to comply
with such requirements.
“ (3) SPECIAL NOTICE RULE.--
“(A) IN GENERAL.--The period for providing any notice required by the amendments made
by this section shall not end before the date which is 3 months after the date of
the enactment of this Act.
“ (B) REASONABLE NOTICE.--The amendments made by this section shall not apply to any
plan amendment taking effect on or after the date of the enactment of this Act if,
before April 25, 2001, notice was provided to participants and beneficiaries adversely
affected by the plan amendment (and their representatives)
which was reasonably expected to notify them of the nature and effective date of the
plan amendment.”
Section 901 (Sunset of Provisions of Act) of Pub. L. 107-16, as amended by Pub. L. 107-358, provided that:
“(a) IN GENERAL.--All provisions of, and amendments made by, this Act shall not apply--
“(1) to taxable, plan, or limitation years beginning after December 31, 2010, or
“(2) in the case of title V, to estates of decedents dying, gifts made, or generation
skipping transfers, after December 31, 2010.
“(b) APPLICATION OF CERTAIN LAWS.--The Internal Revenue Code of 1986 and the Employee
Retirement Income Security Act of 1974 shall be applied and administered to years,
estates, gifts, and transfers described in subsection (a) as if the provisions and
amendments described in subsection (a) had never been enacted.
“(c) EXCEPTION.-Subsection (a) shall not apply to section 803 (relating to no federal
income tax on restitution received by victims of the Nazi regime or their heirs or
estates).”
PENSIONS AND INDIVIDUAL RETIREMENT ARRANGEMENT PROVISIONS OF ECONOMIC GROWTH AND
TAX RELIEF RECONCILIATION ACT OF 2001 MADE PERMANENT
Section 811 of Pub. L. 109-280 provided that:
“Title IX of the Economic Growth and Tax Relief Reconciliation Act of 2001 shall
not apply to the provisions of, and amendments made by, subtitles A through F of
title VI of such Act (relating to pension and individual retirement arrangement
provisions).”
