article: SECTION 1. SHORT TITLE. This Act may be cited as the ``Air Line Pension Act of 2003''. SEC. 2. MODIFICATION OF FUNDING REQUIREMENTS FOR CERTAIN PLANS. (a) Funding Rules for Certain Plans.-- (1) In general.--Notwithstanding any provision of the Internal Revenue Code of 1986 or the Employee Retirement Income Security Act of 1974 to the contrary, the provisions of subsections (b), (c), and (d) shall apply for any plan year beginning after December 27, 2002, in the case of a defined benefit plan-- (A) that is established and maintained by a commercial passenger air carrier; and (B) that has a funded percentage of less than 80 percent as of January 1, 2003. (2) Funded percentage.--For purposes of this section, the term ``funded percentage'' means the quotient (expressed as a percentage) derived by dividing-- (A) the market value of plan assets as of January 1, 2003 (excluding receivable contributions), by (B) the current liability of the plan as of January 1, 2003. (3) Interest rate.--In determining current liability for purposes of paragraph (2), the assumed interest rate shall be 6.65 percent. (4) Estimation of current liability.--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. (b) Moratorium on Deficit Reduction Contribution.-- (1) In general.--In applying section 412(l)(9)(A) of such Code and section 302(d)(9)(A) of such Act with respect to a plan described in subsection (a)(1), the funded current liability percentage of the plan shall be treated as not less than 90 percent for plan years beginning after December 27, 2002 and before December 27, 2007. (2) Termination of moratorium in certain cases.--If the funded current liability percentage of the plan, without application of paragraph (1), is 90 percent or greater during any plan year beginning after December 27, 2002 and before December 27, 2007, paragraph (1) shall cease to apply to the plan for plan years beginning with or after such plan year. (3) Extension of amortization periods.--For plan years for which paragraph (1) applies in the case of the plan, net experience gains and net experience losses shall be amortized under sections 412(b)(2)(B)(iv) and 412(b)(3)(B)(ii) of such Code (respectively) and sections 302(b)(2)(B)(iv) and 302(b)(3)(B)(ii) of such Act (respectively), over a period of 15 plan years. (4) Option to combine or to offset amortization bases.--For the first plan year for which paragraph (1) applies with respect to the plan, amounts required to be amortized under paragraphs (2) and (3) of section 412(b) of such Code and paragraphs (2) and (3) of section 302(b) of such Act 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. (c) Amortization of 2008 Unfunded Current Liability.-- (1) In general.--In such form and manner as the Secretary of the Treasury may prescribe, the sponsor of a plan described in subsection (a)(1) may make a one-time, irrevocable election with the Secretary of the Treasury to amortize the unfunded current liability for the first plan year beginning after December 27, 2007, on an interest-only basis for the first 5 plan years (beginning with such first plan year) and thereafter in equal annual installments over a period of 15 plan years (beginning with the first plan year after December 27, 2012). (2) Determination of 2008 unfunded current liability in calculating deficit reduction contribution after moratorium ends.--If the plan sponsor makes an election under paragraph (1) with respect to the plan, the unfunded current liability of the plan for the first plan year after December 27, 2007, shall be calculated as follows: (A) such unfunded current liability shall equal the unfunded current liability as of the first day of such first plan year, and (B) such unfunded current liability shall be calculated using the actuarial value of assets as of the first day of such first plan year. (3) Use of 2008 unfunded current liability in calculating deficit reduction after moratorium ends.--If the plan sponsor makes an election under paragraph (1) with respect to the plan, the plan's unfunded old liability, for purposes of section 412(l) of such Code and section 302(l) of such Act, shall be deemed equal to the unfunded current liability calculated under paragraph (2) for the first plan year after December 27, 2007, and the plan's unfunded old liability amount for any plan year, for purposes of section 412(l) of such Code and section 302(l) of such Act, shall be the amount necessary to amortize the unfunded old liability under the plan as described in paragraph (1). (4) Cessation of modifications.--If the funded current liability percentage of the plan, determined without regard to this section, is 90 percent or greater for any plan year after December 27, 2002, this subsection shall cease to apply to the plan for plan years beginning with or after such plan year. (d) Recognition of Waiver in Deficit Reduction Contribution.--For any plan described in subsection (a)(1), the amount referred to in clause (ii) of section 412(l)(8)(A) of such Code and section 302(d)(8)(A) of such Act shall be deemed to be an amount equal to the sum of-- (1) the value of the plan's assets determined under section 412(c)(2) of such Code and section 302(c)(2) of such Act, and (2) the unamortized portion of any waived funding deficiency. SEC. 3. RESTORATION OF CERTAIN PLANS TERMINATING IN 2003. (a) In General.--Notwithstanding any provision of the Internal Revenue Code of 1986 or the Employee Retirement Income Security Act of 1974, the provisions of subsection (b) shall apply to any defined benefit plan-- (1) that is maintained by a commercial passenger air carrier, (2) that is maintained for the benefit of such carrier's employees pursuant to a collective bargaining agreement, and (3) that terminated during the calendar year 2003. (b) Restoration of Plan.--Not later than December 31, 2003, the Pension Benefit Guaranty Corporation shall restore any plan described in paragraph (1) 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. (c) Exclusion of Expected Increase in Current Liability.--In applying section 412(l)(1)(A)(i) of such Code and section 302(d)(1)(A)(i) of such Act with respect to a plan restored under subsection (b), any expected increase in current liability due to benefits accruing during each plan year as described in section 412(1)(2)(C) of such Code and section 302(d)(2)(C) of such Act shall be excluded. (d) Amortization of Unfunded Amounts Under Restoration Payment Schedule.-- (1) 2004 unfunded accrued liability.-- (A) In general.--In the case of a plan restored under subsection (b)-- (i) the initial post-restoration valuation date for a plan described in subsection (a) shall be January 1, 2004, (ii) the initial restoration amortization base for a plan described in subsection (a) shall be an amount equal to the excess of-- (I) the accrued benefit liabilities returned by the Corporation, over (II) the market value of plan assets returned by the Corporation, and (iii) the initial restoration amortization base shall be amortized in level annual installments over a period of 30 years after the initial post-restoration valuation date, and the funding standard account of the plan under section 412 of such Code and section 302 of such Act shall be charged with such installments. (B) Other special funding rules remain applicable.--At the election of the plan sponsor, the provisions of subsections (b), (c), and (d) of section 2 shall apply with respect to the plan. (2) Rules of special application.--In applying the 30-year amortization described in paragraph (1)(A)-- (A) the assumed interest rate shall be the valuation interest rate used to determine the accrued liability under section 412(c) of such Code and section 302(c) of such Act, (B) the actuarial value of assets as of the initial post-restoration valuation date shall be reset to the market value of assets with a 5-year phase-in of unexpected investment gains or losses on a prospective basis, and (C) for plans using the frozen initial liability (FIL) funding method in accordance with section 412(c) of such Code and section 302(c) of such Act, the initial unfunded liability used to determine normal cost shall be reset to the initial restoration amortization base. (e) Quarterly Contributions.--The requirements of section 412(m) of such Code and section 302(e) of such Act shall not apply to a plan restored under subsection (b) until the plan year beginning on the initial post-restoration valuation date. The required annual payment for that year shall be the lesser of-- (1) the amount determined under section 412(m)(4)(B)(i) of such Code and section 302(e)(4)(B)(i) of such Act, or (2) 100 percent of the amount required to be contributed under the plan for the plan year beginning January 1, 2003 and ending on the date of plan termination. (f) Resetting of Funding Standard Account Balances.--In the case of a plan restored under subsection (b), any accumulated funding deficiency or credit balance in the funding standard account under section 412 of such Code or section 302 of such Act shall be set equal to zero as of the initial post-restoration valuation date. SEC. 4. PBGC LIABILITY LIMITED. In the case of any plan-- (1) which is described in section 2(a)(1), and which terminates at a time when section 2(b)(1) applies to the plan, or at a time when the unfunded current liability of the plan for the first plan year after December 27, 2007, is being amortized on an interest-only basis under section 2(c), or (2) which is described in section 3(a), which is restored pursuant to section 3(b), and which subsequently terminates with a date of plan termination prior to the end of the fifth plan year beginning after December 27, 2007, section 4022 of the Employee Retirement Income Security Act of 1974 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 the date of the enactment of this Act. SEC. 5. EFFECTIVE DATE. The provisions of this Act shall apply to plan years beginning after December 27, 2002.
summary: Air Line Pension Act of 2003 - Sets forth special funding requirements for certain pension plans maintained by commercial passenger air carriers (plans), notwithstanding any contrary provisions of the Internal Revenue Code or of the Employee Retirement Income Security Act of 1974 (ERISA). Provides for such plans, if they have a funded percentage of less than 80 percent as of January 1, 2003, the following: (1) modifications of funding rules, including funded percentage, assumed interest rate for determining current liability, and estimation of current liability; (2) a moratorium on the deficit reduction contribution, under specified conditions; (3) a one-time amortization of 2008 unfunded current liability; and (4) recognition of a waiver in the deficit reduction contribution. Provides for such plans, if they are maintained for benefit of the carrier's employees pursuant to a collective bargaining agreement and if they terminated during calendar year 2003, the following: (1) restoration by the Pension Benefit Guaranty Corporation (PBGC) to the plan's pre-termination status and transfer of control of plan assets and liabilities to the employer, unless the collective bargaining agreement provides that the plan should not be restored; (2) exclusion of any expected increase in current liability due to benefits accruing during each plan year; (3) amortization of unfunded amounts under the restoration payment schedule; (4) inapplicability of certain contribution requirements to a restored plan until a plan year beginning on the initial post-restoration valuation date, with modified required annual payments; and (5) resetting of funding standard account balances. Limits PBGC liability with respect to certain plans under this Act.