The nonforfeitable

Years of service: percentage is:

4 . . . . . . . . . . . . . . . . . . . . . 40

5 . . . . . . . . . . . . . . . . . . . . . 60

6 . . . . . . . . . . . . . . . . . . . . . 80

7 or more 100 . . . . . . . . . . . . . . . 100

(iii) A plan satisfies the requirements of this subparagraph if:

1. The plan is a multiemployer plan as defined in Section 2 of this act, and

2. Under the plan:

A. An employee who is covered pursuant to a collective bargaining agreement described in Section 2(ff)(i)1, and who has completed at least ten (10) years of service has a nonforfeitable right to one hundred percent (100%) of the employee's accrued benefit derived from employer contributions, an

B. The requirements of subparagraph (i) or (ii) are met with respect to employees not described in subclause A.

(c) (i) A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that it is not payable if the participant dies (except in the case of a survivor annuity which is payable as provided in Section 18 of this act).

(ii) A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that the payment of benefits is suspended for such period as the employee is employed, subsequent to the commencement of payment of such benefits:

1. In the case of a plan other than a multiemployer plan, by an employer who maintains the plan under which such benefits were being paid; and

2. In the case of a multiemployer plan, in the same industry, in the same trade or craft, and the same geographic area covered by the plan, as when such benefits commenced.

The board shall prescribe such regulations as may be necessary to carry out the purposes of this subparagraph, including regulations with respect to the meaning of the term "employed."

(iii) A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because plan amendments may be given retroactive application as provided in Section 25(1)(b) of this act.

(iv) 1. A right to an accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that, in the case of a participant who does not have a nonforfeitable right to at least fifty percent (50%) of his accrued benefit derived from employer contributions, such accrued benefit may be forfeited on account of the withdrawal by the participant of any amount attributable to the benefit derived from mandatory contributions (as defined in the last sentence of Section 17(3)(b)(iii) of this act) made by such participant.

2. Clause 1. shall not apply to a plan unless the plan provides that any accrued benefit forfeited under a plan provision described in such clause shall be restored upon repayment by the participant of the full amount of the withdrawal described in such clause plus, in the case of a defined benefit plan, interest. Such interest shall be computed on such amount at the rate determined for purposes of Section 17(3)(b)(iii) of this act (if such subsection applies) on the date of such repayment (computed annually from the date of such withdrawal). The plan provision required under this clause may provide that such repayment must be made:

A. In the case of a withdrawal on account of separation from service, before the earlier of five (5) years after the first date on which the participant is subsequently reemployed by the employer, or the close of the first period of five (5) consecutive one-year breaks in service commencing after the withdrawal; or

B. In the case of any other withdrawal, five (5) years after the date of the withdrawal.

3. In the case of accrued benefits derived from employer contributions which accrued before July 1, 1997, a right to such accrued benefit derived from employer contributions shall not be treated as forfeitable solely because the plan provides that an amount of such accrued benefit may be forfeited on account of the withdrawal by the participant of an amount attributable to the benefit derived from mandatory contributions, made by such participant before July 1, 1997, if such amount forfeited is proportional to such amount withdrawn. This clause shall not apply to any plan to which any mandatory contribution is made after June 30, 1997. The board shall prescribe such regulations as may be necessary to carry out the purposes of this clause.

4. For purposes of this subparagraph, in the case of any class-year plan, a withdrawal of employee contributions shall be treated as a withdrawal of such contributions on a plan-year-by-plan-year basis in succeeding order of time.

5. Cross reference. For nonforfeitability where the employee has a nonforfeitable right to at least fifty percent (50%) of his accrued benefit, see Section 19(3) of this act.

(v) A right to an accrued benefit derived from employer contributions under a multiemployer plan shall not be treated as forfeitable solely because the plan provides that benefits accrued as a result of service with the participant's employer before the employer had an obligation to contribute under the plan may not be payable if the employer ceases contributions to the multiemployer plan.

(vi) A matching contribution (within the meaning of 26 USCS Section 401(m) shall not be treated as forfeitable merely because such contribution is forfeitable if the contribution to which the matching contribution relates is treated as an excess contribution under USCS Section 401(k)(8)(B), an excess deferral under 26 USCS Section 401(g)(2)(A), or an excess aggregate contribution under 26 USCS Section 401(m)(6)(B).

(2) Computation of period of service.

(a) In computing the period of service under the plan for purposes of determining the nonforfeitable percentage under subsection (1)(b), all of an employee's years of service with the employer or employers maintaining the plan shall be taken into account, except that the following may be disregarded:

(i) Years of service before age eighteen (18),

(ii) Years of service during a period for which the employee declined to contribute to a plan requiring employee contributions,

(iii) Years of service with an employer during any period for which the employer did not maintain the plan or a predecessor plan, defined by the board,

(iv) Service not required to be taken into account under paragraph (c); and

(v) Years of service before this article first applies to the plan if such service would have been disregarded under the rules of the plan with regard to breaks in service, as in effect on the applicable date.

(b) (i) For purposes of this section, except as provided in subparagraph (iii), the term "year of service" means a calendar year, plan year, or other twelve-consecutive-month period designated by the plan (and not prohibited under regulations prescribed by the board) during which the participant has completed one thousand (1,000) hours of service.

(ii) For purposes of this section, the term "hour of service" has the meaning provided by Section 15(1)(c)(iii) of this act.

(iii) In the case of any seasonal industry where the customary period of employment is less than one thousand (1,000) hours during a calendar year, the term "year of service" shall be such period as determined under regulations of the board.

(iv) For purposes of this section, in the case of any maritime industry, one hundred twenty-five (125) days of service shall be treated and one thousand (1,000) hours of service. The board may prescribe regulations to carry out the purposes of this subparagraph.

(c) (i) For purposes of this paragraph, the term "one-year break in service" means a calendar year, plan year, or other twelve-consecutive-month period designated by the plan (and not prohibited under regulations prescribed by the board) during which the participant has not completed more than five hundred (500) hours of service.

(ii) For purposes of paragraph (a), in the case of any employee who has any one-year break in service, years of service before such break shall not be required to be taken into account until he has completed a year of service after his return.

(iii) For purposes of paragraph (a), in the case of any participant in an individual account plan or an insured defined benefit plan which satisfies the requirements of Section 17(2)(a)(vi) of this act who has five (5) consecutive one-year breaks in service, years of service after such five-year period shall not be required to be taken into account for purposes of determining the nonforfeitable percentage of his accrued benefit derived from employer contributions which accrued before such five-year period.

(iv) 1. For purposes of paragraph (a), in the case of a nonvested participant, years of service with the employer or employers maintaining the plan before any period of consecutive one-year breaks in service shall not be required to be taken into account if the number of consecutive one-year breaks in service within such period equals or exceeds the greater of:

A. Five (5), or

B. The aggregate number of years of service before such period.

2. If any years of service are not required to be taken into account by reason of a period of breaks in service to which clause 1. applies, such years of service shall not be taken into account in applying clause 1. to a subsequent period of breaks in service.

3. For purposes of clause 1., the term "nonvested participant" means a participant who does not have any nonforfeitable right under the plan to an accrued benefit derived from employer contributions.

(v) 1. In the case of each individual who is absent from work for any period:

A. By reason of the pregnancy of the individual,

B. By reason of the birth of a child of the individual,

C. By reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or

D. For purposes of caring for such child for a period beginning immediately following such birth or placement,

the plan shall treat as hours of service, solely for purposes of determining under this paragraph whether a one-year break in service has occurred, the hours described in clause 2.

2. The hours described in this clause are:

A. The hours of service which otherwise would normally have been credited to such individual but for such absence, or

B. In any case in which the plan is unable to determine the hours described in subclause A., eight (8) hours of service per day of absence,

except that the total number of hours treated as hours of service under this clause by reason of such pregnancy or placement shall not exceed five hundred one (501) hours.

3. The hours described in clause 2. shall be treated as hours of service as provided in this subparagraph:

A. Only in the year in which the absence from work begins, if a participant would be prevented from incurring a one-year break in service in such year solely because the period of absence is treated as hours of service as provided in clause 1.; or

B. In any other case, in the immediately following year.

4. For purposes of this subparagraph, the term "year" means the period used in computations pursuant to paragraph (b).

5. A plan may provide that no credit will be given pursuant to this subparagraph unless the individual furnishes to the plan administrator such timely information as the plan may reasonably require to establish:

A. That the absence from work is for reasons referred to in clause 1.;

B. The number of days for which there was such an absence.

(d) Cross references. (i) For definitions of "accrued benefit" and "normal retirement age," see Section 2 of this act.

(ii) For effect of certain cash out distributions, see Section 17(4)(a) of this act.

(3) Plan amendments altering vesting schedule.

(a) (i) A plan amendment changing any vesting schedule under the plan shall be treated as not satisfying the requirements of subsection (1)(b) if the nonforfeitable percentage of the accrued benefit derived from employer contributions (determined as of the later of the date such amendment is adopted, or the date such amendment becomes effective) of any employee who is a participant in the plan is less than such nonforfeitable percentage computed under the plan without regard to such amendment.

(ii) A plan amendment changing any vesting schedule under the plan shall be treated as not satisfying the requirements of subsection (1)(b) unless each participant having not less than three (3) years of service is permitted to elect, within a reasonable period after adoption of such amendment, to have his nonforfeitable percentage computed under the plan without regard to such amendment.

(b) Subsection (1) shall not apply to benefits which may not be provided for designated employees in the event of early termination of the plan under provisions of the plan adopted pursuant to regulations prescribed by the Secretary of the Treasury to preclude the discrimination prohibited by 26 USCS Section 401(a)(4).

(c) (i) The requirements of subsection (1)(b) shall be treated as satisfied in the case of a class-year plan if such plan provides that one hundred percent (100%) of each employee's right to or derived from the contributions of the employer on the employee's behalf with respect to any plan year is nonforfeitable not later than when such participant was performing services for the employer as of the close of each of five (5) plan years (whether or not consecutive) after the plan year for which the contributions were made.

(ii) For purposes of subparagraph (i) if:

1. Any contributions are made on behalf of a participant with respect to any plan year, and

2. Before such participant meets the requirements of subparagraph (i), such participant was not performing services for the employer as of the close of each of any five (5) consecutive plan years after such plan year,

then the plan may provide that the participant forfeits any right to or derived from the contributions made with respect to such plan year.

(iii) For purposes of this article, the term "class year plan" means a profit-sharing, stock bonus, or money purchase plan which provides for the separate nonforfeitability of employees' rights to or derived from the contributions for each plan year.

(4) Nonforfeitable benefits after lesser period and in greater amounts than required. A pension plan may allow for nonforfeitable benefits after a lesser period and in greater amounts than are required by this article.

(5) Consent for distribution; present value; covered distributions.

(a) If the present value of any nonforfeitable benefit with respect to a participant in a plan exceeds Three Thousand Five Hundred Dollars ($3,500.00), the plan shall provide that such benefit may not be immediately distributed without the consent of the participant.

(b) For purposes of paragraph (a), the present value shall be calculated in accordance with Section 18(7)(c) of this act.

(c) This subsection shall not apply to any distribution of dividends to which 26 USCS Section 404(k) applies.

SECTION 17. (1) Satisfactory requirements of pension plans. Each pension plan shall satisfy the requirements of subsection (2)(c), and:

(a) In the case of a defined benefit plan, shall satisfy the requirements of subsection (2)(a);

(b) In the case of a defined contribution plan, shall satisfy the requirements of subsection (2)(b).

(2) Enumeration of plan requirements.

(a) (i) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which each participant is entitled upon his separation from the service is not less than:

1. Three percent (3%) of the normal retirement benefit to which he would be entitled at the normal retirement age if he commenced participation at the earliest possible entry age under the plan and served continuously until the earlier of age sixty-five (65) or the normal retirement age specified under the plan, multiplied by

2. The number of years (not in excess of thirty-three and one-third (33-1/3)) of his participation in the plan.

In the case of a plan providing retirement benefits based on compensation during any period, the normal retirement benefit to which a participant would be entitled shall be determined as if he continued to earn annually the average rate of compensation which he earned during consecutive years of service, not in excess of ten (10), for which his compensation was the highest. For purposes of this subparagraph, social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after such current year.

(ii) A defined benefit plan satisfies the requirements of this paragraph of a particular plan year if under the plan the accrued benefit payable at the normal retirement age is equal to the normal retirement benefit and the annual rate at which any individual who is or could be a participant can accrue the retirement benefits payable at normal retirement age under the plan for any later plan year is not more than one hundred thirty-three and one-third percent (133-1/3%) of the annual rate at which he can accrue benefits for any plan year beginning on or after such particular plan year and before such later plan year. For purposes of this subparagraph:

1. Any amendment to the plan which is in effect for the current year shall be treated as in effect for all other plan years;

2. Any change in an accrual rate which does not apply to any individual who is or could be a participant in the current year shall be disregarded;

3. The fact that benefits under the plan may be payable to certain employees before normal retirement age shall be disregarded; and

4. Social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after the current year.

(iii) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which any participant is entitled upon his separation from the service is not less than a fraction of the annual benefit commencing at normal retirement age to which he would be entitled under the plan as in effect on the date of his separation if he continued to earn annually until normal retirement age the same rate of compensation upon which his normal retirement benefit would be computed under the plan, determined as if he had attained normal retirement age on the date any such determination is made (but taking into account no more than the ten (10) years of service immediately preceding his separation from service). Such fraction shall be a fraction, not exceeding one (1), the numerator of which is the total number of his years of participation in the plan (as of the date of his separation from the service) and the denominator of which is the total number of years he would have participated in the plan if he separated from the service at the normal retirement age. For purposes of this subparagraph, social security benefits and all other relevant factors used to compute benefits shall be treated as remaining constant as of the current year for all years after such current year.

(iv) Subparagraphs (i), (ii) and (iii) shall not apply with respect to years of participation before the first plan year to which this section applies but a defined benefit plan satisfies the requirements of this subparagraph with respect to such years of participation only if the accrued benefit of any participant with respect to such years of participation is not less than the greater of:

1. His accrued benefit determined under the plan, as in effect from time to time before July 1, 1997, or

2. An accrued benefit which is not less than one-half (1/2) of the accrued benefit to which such participant would have been entitled if subparagraph (i), (ii) or (iii) applied with respect to such years of participation.

(v) Notwithstanding subparagraphs (i), (ii) and (iii) of this paragraph, a plan shall not be treated as not satisfying the requirements of this paragraph solely because the accrual of benefits under the plan does not become effective until the employee has two (2) continuous years of service. For purposes of this subparagraph, the term "year of service" has the meaning provided by Section 15(1)(c)(i) of this act.

(vi) Notwithstanding subparagraphs (i), (ii) and (iii), a defined benefit plan satisfies the requirements of this paragraph if such plan: is funded exclusively by the purchase of insurance contracts, but only if an employee's accrued benefit as of any applicable date is not less than the cash surrender value his insurance contracts would have on such applicable date.

(vii) Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if the participant's accrued benefit is reduced on account of any increase in his age or service. The preceding sentence shall not apply to benefits under the plan commencing before benefits payable under Title II of the Social Security Act [42 USCS Sections 401 et seq.] which benefits under the plan:

1. Do not exceed social security benefits, and

2. Terminate when such social security benefits commence.

(viii) 1. Notwithstanding the preceding subparagraphs, a defined benefit plan shall be treated as not satisfying the requirements of this paragraph if, under the plan, an employee's benefit accrual is ceased, or the rate of an employee's benefit accrual is reduced, because of the attainment of any age.

2. A plan shall not be treated as failing to meet the requirements of this subparagraph solely because the plan imposes (without regard to age) a limitation on the amount of benefits that the plan provides or a limitation on the number of years of service or years of participation which are taken into account for purposes of determining benefit accrual under the plan.

3. In the case of any employee who, as of the end of any plan year under a defined benefit plan, has attained normal retirement age under such plan:

A. If distribution of benefits under such plan with respect to such employee has commenced as of the end of such plan year, then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extend of the actuarial equivalent of in-service distribution of benefits, and

B. If distribution of benefits under such plan with respect to such employee has not commenced as of the end of such year in accordance with Section 19(1)(c) of this act, and the payment of benefits under such plan with respect to such employee is not suspended during such plan year pursuant to Section 16(1)(c)(ii) of this act, then any requirement of this subparagraph for continued accrual of benefits under such plan with respect to such employee during such plan year shall be treated as satisfied to the extend of any adjustment in the benefit payable under the plan during such plan year attributable to the delay in the distribution of benefits after the attainment of normal retirement age.

The preceding provisions of this clause shall apply in accordance with regulations of the board. Such regulations may provide for the application of the preceding provisions of this clause, in the case of any such employee, with respect to any period of time within a plan year.

4. Clause 1. shall not apply with respect to any employee who is a highly compensated employee (within the meaning of 26 USCS Section 414(q)) to the extent provided in regulations prescribed by the Secretary of the Treasury for purposes of precluding discrimination in favor of highly compensated employees within the meaning of 26 USCS Sections 401 et seq.

5. A plan shall not be treated as failing to meet the requirements of clause 1. solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.

6. Any regulations prescribed by the Secretary of the Treasury pursuant to 26 USCS Section 411(b)(1)(H)(v) shall apply with respect to the requirements of this subparagraph in the same manner and to the same extent as such regulations apply with respect to the requirements of 26 USCS Section 411(b)(1)(H).

(b) (i) A defined contribution plan satisfies the requirements of this paragraph if, under the plan, allocations to the employee's account are not ceased, and the rate at which amounts are allocated to the employee's account is not reduced, because of the attainment of any age.

(ii) A plan shall not be treated as failing to meet the requirements of subparagraph (i) solely because the subsidized portion of any early retirement benefit is disregarded in determining benefit accruals.

(iii) Any regulations prescribed by the Secretary of the Treasury pursuant to 26 USCS Section 411(b)(2)(B) and (C) shall apply with respect to the requirements of this paragraph in the same manner and to the same extent as such regulations apply with respect to the requirements of 26 USCS Section 411(b)(2).

(c) A plan satisfies the requirements of this paragraph if:

(i) In the case of a defined benefit plan, the plan requires separate accounting for the portion of each employee's accrued benefit derived from any voluntary employee contributions permitted under the plan; and

(ii) In the case of any plan which is not a defined benefit plan, the plan requires separate accounting for each employee's accrued benefit.

(d) (i) For purposes of determining an employee's accrued benefit, the term "year of participation" means a period of service (beginning at the earliest date on which the employee is a participant in the plan and which is included in a period of service required to be taken into account under Section 15(2) of this act, determined without regard to Section 15(2)(e) of this act as determined under regulations prescribed by the board which provides for the calculation of such period on any reasonable and consistent basis.

(ii) For purposes of this paragraph, except as provided in subparagraph (iii), in the case of any employee whose customary employment is less than full time, the calculation of such employee's service on any basis which provides less than a ratable portion of the accrued benefit to which he would be entitled under the plan if his customary employment were full time shall not be treated as made on a reasonable and consistent basis.

(iii) For purposes of this paragraph, in the case of any employee whose service is less than one thousand (1,000) hours during any calendar year, plan year or other twelve-consecutive-month period designated by the plan (and not prohibited under regulations prescribed by the board) the calculation of his period of service shall not be treated as not made on a reasonable and consistent basis merely because such service is not taken into account.

(iv) In the case of any seasonal industry where the customary period of employment is less than one thousand (1,000) hours during a calendar year, the term "year of participation" shall be such period as determined under regulations prescribed by the board.

(v) For purposes of this subsection in the case of any maritime industry, one hundred twenty-five (125) days of service shall be treated as a year of participation. The board may prescribe regulations to carry out the purposes of this subparagraph.

(3) Employee's accrued benefits derived from employer and employee contributions.

(a) For purposes of this section and Section 16 of this act an employee's accrued benefit derived from employer contributions as of any applicable date is the excess (if any) of the accrued benefit for such employee as of such applicable date over the accrued benefit derived from contributions made by such employee as of such date.

(b) (i) In the case of a plan other than a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is:

1. Except as provided in clause 2., the balance of the employee's separate account consisting only of his contributions and the income, expenses, gains, and losses attributable thereto, or

2. If a separate account is not maintained with respect to an employee's contributions under such a plan, the amount which bears the same ratio to his total accrued benefit as the total amount of the employee's contributions (less withdrawals) bears to the sum of such contributions and the contributions made on his behalf by the employer (less withdrawals).

(ii) Defined benefit plans. In the case of a defined benefit plan, the accrued benefit derived from contributions made by an employee as of any applicable date is the amount equal to the employee's accumulated contributions expressed as an annual benefit commencing at normal retirement age, using an interest rate which would be used under the plan under Section 18(7)(c) of this act (as of the determination date).

(iii) For purposes of this subsection, the term "accumulated contributions" means the total of:

1. All mandatory contributions made by the employee,

2. Interest (if any) under the plan to the end of the last plan year to which Section 15(1)(b) of this act does not apply (by reason of the applicable effective date), and

3. Interest on the sum of the amounts determined under clauses 1. and 2. compounded annually:

A. At the rate of one hundred twenty percent (120%) of the federal midterm rate (as in effect under Section 26 USCS Section 1274 for the first month of a plan year for the period beginning with the first plan year to which subsection (1)(b) applies by reason of the applicable effective date) and ending with the date on which the determination is being made, and

B. At the interest rate which would be used under the plan under Section 18(7)(c) of this act (as of the determination date) for the period beginning with the determination date and ending on the date on which the employee attains normal retirement age.

For purposes of this subparagraph, the term "mandatory contributions" means amounts contributed to the plan by the employee which are required as a condition of employment, as a condition of participation in such plan, or as a condition of obtaining benefits under the plan attributable to employer contributions.

(iv) The board is authorized to adjust by regulation the conversion factor described in subparagraph (ii) from time to time as it may deem necessary. No such adjustment shall be effective for a plan year beginning before the expiration of one (1) year after such adjustment is determined and published.

(c) For purposes of this section, in the case of any defined benefit plan, if an employee's accrued benefit is to be determined as an amount other than an annual benefit commencing at normal retirement age, or if the accrued benefit derived from contributions made by an employee is to be determined with respect to a benefit other than an annual benefit in the form of a single life annuity (without ancillary benefits) commencing at normal retirement age, the employee's accrued benefit, or the accrued benefits derived from contributions made by an employee, as the case may be, shall be the actuarial equivalent of such benefit or amount determined under paragraph (a) or (b).

(d) In the case of a defined benefit plan which permits voluntary employee contributions, the portion of an employee's accrued benefit derived from such contributions shall be treated as an accrued benefit derived from employee contributions under a plan other than a defined benefit plan.

(4) Employee service which may be disregarded in determining employee's accrued benefits under plan. Notwithstanding Section 16(2)(a) of this act, for purposes of determining the employee's accrued benefit under the plan, the plan may disregard service performed by the employee with respect to which he has received:

(a) A distribution of the present value of his entire nonforfeitable benefit if such distribution was in an amount (not more than Three Thousand Five Hundred Dollars ($3,500.00)) permitted under regulations prescribed by the board, or

(b) A distribution of the present value of his nonforfeitable benefit attributable to such service which he elected to receive.

Paragraph (a) shall apply only if such distribution was made on termination of the employee's participation in the plan. Paragraph (b) shall apply only if such distribution was made on termination of the employee's participation in the plan or under such other circumstances as may be provided under regulations prescribed by the board.

(5) Opportunity to repay full amount of distributions which have been reduced through disregarded employee service. For purposes of determining the employee's accrued benefit, the plan shall not disregard service as provided in subsection (4) unless the plan provides an opportunity for the participant to repay the full amount of a distribution described in subsection (4) with, in the case of a defined benefit plan, interest at the rate determined for purposes of subsection (3)(b)(iii) and provides that upon such repayment the employee's accrued benefit shall be recomputed by taking into account service so disregarded. This subsection shall apply only in the case of a participant who:

(a) Received such a distribution in any plan year to which this section applies, which distribution was less than the present value of his accrued benefit,

(b) Resumes employment covered under the plan, and

(c) Repays the full amount of such distribution with, in the case of a defined benefit plan, interest at the rate determined for purposes of subsection (3)(b)(iii).

The plan provision required under this subsection may provide that such repayment must be made (i) in the case of a withdrawal on account of separation from service, before the earlier of five (5) years after the first date on which the participant is subsequently reemployed by the employer, or the close of the first period of five (5) consecutive one-year breaks in service commencing after the withdrawal; or (ii) in the case of any other withdrawal, five (5) years after the date of the withdrawal.

(6) Employer treated as maintaining a plan. For the purposes of this article, an employer shall be treated as maintaining a plan if any employee of such employer accrues benefits under such plan by reason of service with such employer.

(7) Decrease of accrued benefits through amendment of plan.

(a) The accrued benefit of a participant under a plan may not be decreased by an amendment of the plan, other than an amendment described in Section 25(3)(h) of this act.

(b) For purposes of paragraph (a), a plan amendment which has the effect of:

(i) Eliminating or reducing an early retirement benefit or a retirement-type subsidy (as defined in regulations), or

(ii) Eliminating an optional form of benefit,

with respect to benefits attributable to service before the amendment shall be treated as reducing accrued benefits. In the case of a retirement-type subsidy, the preceding sentence shall apply only with respect to a participant who satisfies (either before or after the amendment) the preamendment conditions for the subsidy. The board may by regulations provide that this subparagraph shall not apply to a plan amendment described in subparagraph (ii) (other than a plan amendment having an effect described in subparagraph (i)).

(c) For purposes of this subsection, any:

(i) Tax credit employee stock ownership plan (as defined in 26 USCS Section 409(a), or

(ii) Employee stock ownership plan (as defined in 26 USCS Section 4975(e)(7),

shall not be treated as failing to meet the requirements of this subsection merely because it modifies distribution options in a nondiscriminatory manner.

(8) Notice of significant reduction in benefit accruals. (a) A plan described in paragraph (b) may not be amended so as to provide for a significant reduction in the rate of future benefit accrual, unless, after adoption of the plan amendment and not less than fifteen (15) days before the effective date of the plan amendment, the plan administrator provides a written notice, setting forth the plan amendment and its effective date, to:

(i) Each participant in the plan,

(ii) Each beneficiary who is an alternate payee (within the meaning of Section 19(4)(c)(ix) of this act) under an applicable qualified domestic relations order (within the meaning of Section 19(4)(c)(ii)1.), and

(iii) Each employee organization representing participants in the plan, except that such notice shall instead be provided to a person designated, in writing, to receive such notice on behalf of any person referred to in subparagraph (i), (ii) or (iii).

(b) A plan is described in this paragraph if such plan is:

(i) A defined benefit plan, or

(ii) An individual account plan which is subject to the funding standards of Section 25 of this act.

(9) Cross Reference. For special rules relating to plan provisions adopted to preclude discrimination, see Section 203(c)(2) [29 USCS Section 15(3)(b) of this act].

SECTION 18. (1) Required contents for applicable plans. Each pension plan to which this section applies shall provide that:

(a) In the case of a vested participant who does not die before the annuity starting date, the accrued benefit payable to such participant shall be provided in the form of a qualified joint and survivor annuity, and

(b) In the case of a vested participant who dies before the annuity starting date and who has a surviving spouse, a qualified preretirement survivor annuity shall be provided to the surviving spouse of such participant.

(2) Applicable plans.

(a) This section shall apply to:

(i) Any defined benefit plan,

(ii) Any individual account plan which is subject to the funding standards of Section 25 of this act, and

(iii) Any participant under any other individual account plan unless:

1. 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 (3)(b), to a designated beneficiary),

2. Such participant does not elect the payment of benefits in the form of a life annuity, and

3. With respect to such participant, such plan is not a direct or indirect transferee (in a transfer after December 31, 1984) of a plan which is described in subparagraph (i) or (ii) or to which this clause applied with respect to the participant.

Clause 3. of subparagraph (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.

(b) (i) In the case of:

1. A tax credit employee stock ownership plan (as defined in 26 USCS Section 409(a), or

2. An employee stock ownership plan (as defined in 26 USCS Section 4975(e)(7),

subsection (1) shall not apply to that portion of the employee's accrued benefit to which the requirements of 26 USCS Section 409(h) apply.

(ii) Subparagraph (i) shall not apply with respect to any participant unless the requirements of clauses 1., 2., and 3. of (a)(iii) are met with respect to such participant.

(c) A plan shall not be treated as failing to meet the requirements of paragraph (a)(iii) or (b) 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 one-year period ending on the earlier of the participant's annuity starting date or the date of the participant's death.

(3) Plans meeting requirements of section.

(a) A plan meets the requirements of this section only if:

(i) Under the plan, each participant:

1. May elect at any time during the applicable election period to waive the qualified joint and survivor annuity form of benefit or the qualified preretirement survivor annuity form of benefit (or both), and

2. May revoke any such election at any time during the applicable election period, and

(ii) The plan meets the requirements of paragraphs (b), (c), and (d).

(b) Each plan shall provide that an election under paragraph (a)(i)1. shall not take effect unless:

(i) 1. The spouse of the participant consents in writing to such election,

2. Such election designates a beneficiary (or a form of benefits) which may not be changed without spousal consent (or the consent of the spouse expressly permits designations by the participant without any requirement of further consent by the spouse), and

3. The spouse's consent acknowledges the effect of such election and is witnessed by a plan representative or a notary public, or

(ii) It is established to the satisfaction of a plan representative that the consent required under subparagraph (i) may not be obtained because there is no spouse, because the spouse cannot be located, or because of such other circumstances as the board may by regulations prescribe.

Any consent by a spouse (or establishment that the consent of a spouse may not be obtained) under the preceding sentence shall be effective only with respect to such spouse.

(c) (i) Each plan shall provide to each participant within a reasonable period of time before the annuity starting date (and consistent with such regulations as the board may prescribe) a written explanation of:

1. The terms and conditions of the qualified joint and survivor annuity,

2. The participant's right to make, and the effect of, an election under paragraph (a) to waive the joint and survivor annuity form of benefit,

3. The rights of the participant's spouse under paragraph (b), and

4. The right to make, and the effect of, a revocation of an election under paragraph (a).

(ii) 1. Each plan shall provide to each participant, within the applicable period with respect to such participant (and consistent with such regulations as the board may prescribe), a written explanation with respect to the qualified preretirement survivor annuity comparable to that required under subparagraph (i).

2. For purposes of clause 1., the term "applicable period" means, with respect to a participant, whichever of the following periods ends last:

A. The period beginning with the first day of the plan year in which the participant attains age thirty-two (32) and ending with the close of the plan year preceding the plan year in which the participant attains age thirty-five (35).

B. A reasonable period after the individual becomes a participant.

C. A reasonable period ending after paragraph (5) ceases to apply to the participant.

D. A reasonable period ending after this section applies to the participant.

In the case of a participant who separates from service before attaining age thirty-five (35), the applicable period shall be a reasonable period after separation.

(d) Each plan shall provide that, if this section applies to a participant when part or all of the participant's accrued benefit is to be used as security for a loan, no portion of the participant's accrued benefit may be used as security for such loan unless:

(i) The spouse of the participant (if any) consents in writing to such use during the ninety-day period ending on the date on which the loan is to be so secured, and

(ii) Requirements comparable to the requirements of paragraph (b) are met with respect to such consent.

(e) (i) The requirements of this subsection shall not apply with respect to the qualified joint and survivor annuity form of benefit or the qualified preretirement survivor annuity form of benefit, as the case may be, if such benefit may not be waived (or another beneficiary selected) and if the plan fully subsidizes the cost of such benefit.

(ii) For purposes of subparagraph (i), a plan fully subsidizes the costs of a benefit if under the plan the failure to waive such benefit by a participant would not result in a decrease in any plan benefits with respect to such participant and would not result in increased contributions from such participant.

(f) If a plan fiduciary acts in accordance with Article 9 of this act in:

(i) Relying on a consent or revocation referred to in paragraph (a)(i), or

(ii) Making a determination under paragraph (b),

then such consent, revocation, or determination shall be treated as valid for purposes of discharging the plan from liability to the extent of payments made pursuant to that article.

(g) For purposes of this subsection, the term "applicable election period" means:

(i) In the case of an election to waive the qualified joint and survivor annuity form of benefit, the ninety-day period ending on the annuity starting date, or

(ii) In the case of an election to waive the qualified preretirement survivor annuity, the period which begins on the first day of the plan year in which the participant attains age thirty-five (35) and ends on the date of the participant's death.

In the case of a participant who is separated from service, the applicable election period under subparagraph (ii) with respect to benefits accrued before the date of such separation from service shall not begin later than such date.

(4) "Qualified joint and survivor annuity" defined. For purposes of this section, the term "qualified joint and 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 fifty percent (50%) of (and is not greater than one hundred percent (100%) 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.

Such term also includes any annuity in a form having the effect of an annuity described in the preceding sentence.

(5) "Qualified preretirement survivor annuity" defined. For purposes of this section:

(a) Except as provided in paragraph (b), the term "qualified preretirement survivor annuity" means a survivor annuity for the life of the surviving spouse of the participant if:

(i) The payments to the surviving spouse under such annuity are not less than the amounts which would be payable as a survivor annuity under the qualified joint and survivor annuity under the plan (or the actuarial equivalent thereof) if:

1. In the case of a participant who dies after the date on which the participant attained the earliest retirement age, such participant had retired with an immediate qualified joint and survivor annuity on the day before the participant's date of death, or

2. In the case of a participant who dies on or before the date on which the participant would have attained the earliest retirement age, such participant had:

A. Separated from service on the date of death,

B. Survived to the earliest retirement age,

C. Retired with an immediate qualified joint and survivor annuity at the earliest retirement age, and

D. Died on the day after the day on which such participant would have attained the earliest retirement age, and

(ii) Under the plan, the earliest period for which the surviving spouse may receive a payment under such annuity is not later than the month in which the participant would have attained the earliest retirement age under the plan.

In the case of an individual who separated from service before the date of such individual's death, subparagraph (i)1.A shall not apply.

(b) In the case of any individual account plan or participant described in subparagraph (ii) or (iii) of subsection (2)(a), the term "qualified preretirement survivor annuity" means an annuity for the life of the surviving spouse the actuarial equivalent of which is not less than fifty percent (50%) of the portion of the account balance of the participant (as of the date of death) to which the participant had a nonforfeitable right (within the meaning of Section 16 of this act).

(c) For the purposes of paragraphs (a) and (b), any security interest held by the plan by reason of a loan outstanding to the participant shall be taken into account in determining the amount of the qualified preretirement survivor annuity.

(6) Marriage requirements for plan.

(a) Except as provided in paragraph (b), a plan may provide that a qualified joint and survivor annuity (or a qualified preretirement survivor annuity) will not be provided unless the participant and spouse had been married throughout the one-year period ending on the earlier of:

(i) The participants annuity starting date, or

(ii) The date of the participant's death.

(b) For purposes of paragraph (a), if:

(i) A participant marries within one (1) year before the annuity starting date, and

(ii) The participant and the participant's spouse in such marriage have been married for at least a one-year period ending on or before the date of the participant's death,

such participant and such spouse shall be treated as having been married throughout the one-year period ending on the participant's annuity starting date.

(7) Distribution of present value of annuity; written consent; determination of present value.

(a) A plan may provide that the present value of a qualified joint and survivor annuity or a qualified preretirement survivor annuity will be immediately distributed if such value does not exceed Three Thousand Five Hundred Dollars ($3,500.00).

No distribution may be made under the preceding sentence after the annuity starting date unless the participant and the spouse of the participant (or where the participant has died, the surviving spouse) consent in writing to such distribution.

(b) If:

(i) The present value of the qualified joint and survivor annuity or the qualified preretirement survivor annuity exceeds Three Thousand Five Hundred Dollars ($3,500.00), and

(ii) The participant and the spouse of the participant (or where the participant has died, the surviving spouse) consent in writing to the distribution,

the plan may immediately distribute the present value of such annuity.

(c) Determination of present value.

(i) Present value. For purposes of paragraphs (a) and (b), the present value shall not be less than the present value calculated by using the applicable mortality table and the applicable interest rate.

(ii) Definitions. For purposes of subparagraph (i):

1. Applicable mortality table. The term "applicable mortality table" means the table prescribed by the Secretary of the Treasury. Such table shall be based on the prevailing commissioners' standard table (described in 26 USCS Section 807(d)(5)(A)) used to determine reserves for group annuity contracts issued on the date as of which present value is being determined (without regard to any other subparagraph of 26 USCS Section 807(d)(5)).

2. Applicable interest rate. The term "applicable interest rate" means the annual rate of interest on thirty-year Treasury securities for the month before the date of distribution or such other time as the board may by regulations prescribe.

(8) Definitions. For purposes of this section:

(a) The term "vested participant" means any participant who has a nonforfeitable right (within the meaning of Section 2 of this act) to any portion of such participant's accrued benefit.

(b) (i) The term "annuity starting date" means:

1. The first day of the first period for which an amount is payable as an annuity, or

2. In the case of a benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the participant to such benefit.

(ii) For purposes of subparagraph (i), the first day of the first period for which a benefit is to be received by reason of disability shall be treated as the annuity starting date only if such benefit is not an auxiliary benefit.

(c) The term "earliest retirement age" means the earliest date on which, under the plan, the participant could elect to receive retirement benefits.

(9) Increased costs from providing annuity. A plan may take into account in any equitable manner (as determined by the board any increased costs resulting from providing a qualified joint or survivor annuity or a qualified preretirement survivor annuity.

(10) Use of participant's accrued benefit as security for loan as not preventing distribution. If the use of any participant's accrued benefit (or any portion thereof) as security for a loan meets the requirements of subsection (3)(d), nothing in this section shall prevent any distribution required by reason of a failure to comply with the terms of such loan.

(11) Spousal consent. No consent of a spouse shall be effective for purposes of subsection (7)(a) or (7)(b) (as the case may be) unless requirements comparable to the requirements for spousal consent to an election under subsection (3)(a)(i) are met.

SECTION 19. (1) Commencement date for payment of benefits. Each pension plan shall provide that unless the participant otherwise elects, the payment of benefits under the plan to the participant shall begin not later than the sixtieth day after the latest of the close of the plan year in which:

(a) Occurs the date on which the participant attains the earlier of age sixty-five (65) or the normal retirement age specified under the plan,

(b) Occurs the tenth anniversary of the year in which the participant commenced participation in the plan, or

(c) The participant terminates his service with the employer.

In the case of a plan which provides for the payment of an early retirement benefit, such plan shall provide that a participant who satisfied the service requirements for such early retirement benefit, but separated from the service (with any nonforfeitable right to an accrued benefit) before satisfying the age requirement for such early retirement benefit, is entitled upon satisfaction of such age requirement to receive a benefit not less than the benefit to which he would be entitled at the normal retirement age, actuarially reduced under regulations prescribed by the board.

(2) Decrease in plan benefits by reason of increases in benefit levels under Social Security Act or Railroad Retirement Act of 1937:

(a) A participant or beneficiary is receiving benefits under a pension plan, or

(b) A participant is separated from the service and has nonforfeitable rights to benefits,

a plan may not decrease benefits of such a participant by reason of any increase in the benefit levels payable under Title II of the Social Security Act [42 USCS Section 401 et seq.] or the Railroad Retirement Act of 1937, or any increase in the wage base under 42 USCS Section 401 et seq., if such increase takes place after July 1, 1997, or (if later) the earlier of the date of first entitlement of such benefits or the date of such separation.

(3) Forfeitures of accrued benefits derived from employer contributions. No pension plan may provide that any part of a participant's accrued benefit derived from employer contributions (whether or not otherwise nonforfeitable) is forfeitable solely because of withdrawal by such participant of any amount attributable to the benefit derived from contributions made by such participant. The preceding sentence shall not apply (a) to the accrued benefit of any participant unless, at the time of such withdrawal, such participant has a nonforfeitable right to at least fifty percent (50%) of such accrued benefit, or (b) to the extent that an accrued benefit is permitted to be forfeited in accordance with Section 16(1)(c)(iv)3. of this act.

(4) Assignment or alienation of plan benefits.

(a) Each pension plan shall provide that benefits provided under the plan may not be assigned or alienated.

(b) For the purposes of paragraph (a) of this subsection, there shall not be taken into account any voluntary and revocable assignment of not to exceed ten percent (10%) of any benefit payment, or of any irrevocable assignment or alienation of benefits executed before July 1, 1997. The preceding sentence shall not apply to any assignment or alienation made for the purposes of defraying plan administration costs. For purposes of this paragraph a loan made to a participant or beneficiary shall not be treated as an assignment or alienation if such loan is secured by the participant's accrued nonforfeitable benefit and is exempt from the tax imposed by 26 USCS Section 4975 (relating to tax on prohibited transactions) by reason of 26 USCS Section 4975(d)(1).

(c) (i) Paragraph (a) shall apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a participant pursuant to a domestic relations order, except that paragraph (a) shall not apply if the order is determined to be a qualified domestic relations order. Each pension plan shall provide for the payment of benefits in accordance with the applicable requirements of any qualified domestic relations order.

(ii) For purposes of this paragraph:

1. The term "qualified domestic relations order" means a domestic relations order:

A. Which creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable with respect to a participant under a plan, and

B. With respect to which the requirements of subparagraphs (iii) and (iv) are met, and

2. The term "domestic relations order" means any judgment, decree, or order (including approval of a property settlement agreement) which:

A. Relates to the provision of child support, alimony payments, or marital property rights to a spouse, former spouse, child, or other dependent of a participant, and

B. Is made pursuant to a state domestic relations law (including a community property law).

(iii) A domestic relations order meets the requirements of this subparagraph only if such order clearly specifies:

1. The name and the last known mailing address (if any) of the participant and the name and mailing address of each alternate payee covered by the order,

2. The amount or percentage of the participant's benefits to be paid by the plan to each such alternate payee, or the manner in which such amount or percentage is to be determined,

3. The number of payments or period to which such order applies, and

4. Each plan to which such order applies.

(iv) A domestic relations order meets the requirements of this subparagraph only if such order:

1. Does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan,

2. Does not require the plan to provide increased benefits (determined on the basis of actuarial value), and

3. Does not require the payment of benefits to an alternate payee which are required to be paid to another alternate payee under another order previously determined to be a qualified domestic relations order.

(v) 1. A domestic relations order shall not be treated as failing to meet the requirements of clause 1. of subparagraph (iv) solely because such order requires that payment of benefits be made to an alternate payee:

A. On or in the case of any payment before a participant has separated from service, after the date on which the participant attains (or would have attained) the earliest retirement age,

B. As if the participant had retired on the date on which such payment is to begin under such order (but taking into account only the present value of benefits actually accrued and not taking into account the present value of any employer subsidy for early retirement), and

C. In any form in which such benefits may be paid under the plan to the participant (other than in the form of a joint and survivor annuity with respect to the alternate payee and his or her subsequent spouse).

For purposes of subclause B., the interest rate assumption used in determining the present value shall be the interest rate specified in the plan or, if no rate is specified, five percent (5%).

2. For purposes of this subparagraph, the term "earliest retirement age" means the earlier of:

A. The date on which the participant is entitled to a distribution under the plan, or

B. The later of the date of the participant attains age fifty (50) or the earliest date on which the participant could begin receiving benefits under the plan if the participant separated from service.

(vi) To the extent provided in any qualified domestic relations order:

1. The former spouse of a participant shall be treated as a surviving spouse of such participant for purposes of Section 18 of this act (and any spouse of the participant shall not be treated as a spouse of the participant for such purposes), and

2. If married for at least one (1) year, the surviving former spouse shall be treated as meeting the requirements of Section 18(6) of this act.

(vii) 1. In the case of any domestic relations order received by a plan:

A. The plan administrator shall promptly notify the participant and each alternate payee of the receipt of such order and the plan's procedures for determining the qualified status of domestic relations orders, and

B. Within a reasonable period after receipt of such order, the plan administrator shall determine whether such order is a qualified domestic relations order and notify the participant and each alternate payee of such determination.

2. Each plan shall establish reasonable procedures to determine the qualified status of domestic relations orders and to administer distribution under such qualified orders. Such procedures:

A. Shall be in writing,

B. Shall provide for the notification of each person specified in a domestic relations order as entitled to payment of benefits under the plan (at the address included in the domestic relations order) of such procedures promptly upon receipt by the plan of the domestic relations order, and

C. Shall permit an alternate payee to designate a representative for receipt of copies of notices that are sent to the alternate payee with respect to a domestic relations order.

(viii) 1. During any period in which the issue of whether a domestic relations order is a qualified domestic relations order is being determined (by the plan administrator, by a court of competent jurisdiction, or otherwise), the plan administrator shall separately account for the amounts (hereinafter in this subparagraph referred to as the "segregated amounts") which would have been payable to the alternate payee during such period if the order had been determined to be a qualified domestic relations order.

2. If within the eighteen-month period described in clause 5. the order (or modification thereof) is determined to be a qualified domestic relations order, the plan administrator shall pay the segregated amounts (including any interest thereon) to the person or persons entitled thereto.

3. If within the eighteen-month period described in clause 5.:

A. It is determined that the order is not a qualified domestic relations order, or

B. The issue as to whether such order is a qualified domestic relations order is not resolved,

then the plan administrator shall pay the segregated amounts (including any interest thereon) to the person or persons who would have been entitled to such amounts if there had been no order.

4. Any determination that an order is a qualified domestic relations order which is made after the close of the eighteen-month period described in clause 5. shall be applied prospectively only.

5. For purposes of this subparagraph, the eighteen-month period described in this clause is the eighteen-month period beginning with the date on which the first payment would be required to be made under the domestic relations order.

(ix) If a plan fiduciary acts in accordance with Article 9 of this act in:

1. Treating a domestic relations order as being (or not being) a qualified domestic relations order, or

2. Taking action under subparagraph (viii), then the plan's obligation to the participant and each alternate payee shall be discharged to the extent of any payment made pursuant to that article.

(x) A person who is an alternate payee under a qualified domestic relations order shall be considered for purposes of any provision of this act a beneficiary under the plan.

(xi) The term "alternate payee" means any spouse, former spouse, child, or other dependent of a participant who is recognized by a domestic relations order as having a right to receive all, or a portion of, the benefits payable under a plan with respect to such participant.

(xii) This paragraph shall not apply to any plan to which paragraph (a) does not apply.

(xiii) Payment of benefits by a pension plan in accordance with the applicable requirements of a qualified domestic relations order shall not be treated as garnishment for purposes of Section 303(a) of the Consumer Credit Protection Act [15 USCS Section 1673(A)].

(5) Limitation on distributions other than life annuities paid by the plan.

(a) In general. Notwithstanding any other provision of this article, the fiduciary of a pension plan that is subject to the additional funding requirements of Section 25(4) of this act shall not permit a prohibited payment to be made from a plan during a period in which such plan has a liquidity shortfall (as defined in Section 25(5)(e) of this act.

(b) Prohibited payment. For purposes of paragraph (a), the term "prohibited payment" means:

(i) Any payment, in excess of the monthly amount paid under a single life annuity (plus any social security supplements described in the last sentence of Section 17(2)(a)(vii) of this act), to a participant or beneficiary whose annuity starting date (as defined in Section 18(8)(b) of this act) that occurs during the period referred to in paragraph (a),

(ii) Any payment for the purchase of an irrevocable commitment from an insurer to pay benefits, and

(iii) Any other payment specified by the board by regulations.

(c) Period of shortfall. For purposes of this subsection, a plan has a liquidity shortfall during the period that there is an underpayment of an installment under Section 25(3) of this act by reason of paragraph (e)(i) thereof.

(d) Coordination with other provisions. Compliance with this subsection shall not constitute a violation of any other provision of this act.

SECTION 20. In the case of any plan maintained on January 1, 1997, if, not later than two (2) years after the administrator petitions the board, the board may prescribe an alternate method which shall be treated as satisfying the requirements of Section 16(1)(b) of this act or Section 17(2)(a) of this act (other than subparagraph (iv) thereof) or both for a period of not more than four (4) years. The board may prescribe such alternate method only when it finds that:

(a) The application of such requirements would increase the costs of the plan to such an extent that there would result a substantial risk to the voluntary continuation of the plan or a substantial curtailment of benefit levels or the levels of employees' compensation.

(b) The application of such requirements or discontinuance of the plan would be adverse to the interests of plan participants in the aggregate, and

(c) A waiver or extension of time granted under Section 26 or 27 of this act would be inadequate.

In the case of any plan with respect to which an alternate method has been prescribed under the preceding provision of this subsection for a period of not more than four (4) years, if, not later than one (1) year before the expiration of such period, the administrator petitions the board for an extension of such alternate method, and the board makes the findings required by the preceding sentence, such alternate method may be extended for not more than three (3) years.

SECTION 21. A pension plan may not merge or consolidate with, or transfer its assets or liabilities to, any other plan after July 1, 1997, unless each participant in the plan would (if the plan then terminated) receive a benefit immediately after the merger, consolidation, or transfer which is equal to or greater than the benefit he would have been entitled to receive immediately before the merger, consolidation, or transfer (if the plan had then terminated).

SECTION 22. (1) (a) Except as provided by paragraph (b) every employer shall, in accordance with regulations prescribed by the board, maintain records with respect to each of his employees sufficient to determine the benefits due or which may become due to such employees. The plan administrator shall make a report, in such manner and at such time as may be provided in regulations prescribed by the board, to each employee who is a participant under the plan and who:

(i) Requests such report, in such manner and at such time as may be provided in such regulations,

(ii) Terminates his service with the employer, or

(iii) Has a one-year break in service (as defined in Section 16(2)(c)(i) of this act).

The employer shall furnish to the plan administrator the information necessary for the administrator to make the reports required by the preceding sentence. Not more than one (1) report shall be required under subparagraph (i) in any twelve-month period. Not more than one (1) report shall be required under subparagraph (iii) with respect to consecutive one-year breaks in service. The report required under this paragraph shall be sufficient to inform the employee of his accrued benefits under the plan and the percentage of such benefits which are nonforfeitable under the plan.

(b) If more than one employer adopts a plan, each such employer shall, in accordance with regulations prescribed by the board, furnish to the plan administrator the information necessary for the administrator to maintain the records and make the reports required by paragraph (a). Such administrator shall maintain the records and, to the extent provided under regulations prescribed by the board, make the reports, required by paragraph (a).

(2) If any person who is required, under subsection (1), to furnish information or maintain records for any plan year fails to comply with such requirement, he shall pay to the board a civil penalty of Ten Dollars ($10.00) for each employee with respect to whom such failure occurs, unless it is shown that such failure is due to reasonable cause.

SECTION 23. (1) Plan maintained by more than one (1) employer. Notwithstanding any other provision of this article or Article 7 of this act, the following provisions of this subsection shall apply to a plan maintained by more than one employer:

(a) Section 15 of this act shall be applied as if all employees of each of the employers were employed by a single employer.

(b) Sections 16 and 17 of this act shall be applied as if all such employers constituted a single employer, except that the application of any rules with respect to breaks in service shall be made under regulations prescribed by the board.

(c) The minimum funding standard provided by Section 25 of this act shall be determined as if all participants in the plan were employed by a single employer.

(2) Maintenance of plan of predecessor employer. For purposes of this article and Article 7 of this act:

(a) In any case in which the employer maintains a plan of a predecessor employer, service for such predecessor shall be treated as service for the employer, and

(b) In any case in which the employer maintains a plan which is not the plan maintained by a predecessor employer, service for such predecessor shall, to the extend provided in regulations prescribed by the board, be treated as service for the employer.

(3) Plan maintained by controlled group of corporations.

For purposes of Sections 15 through 17 of this act, all employees of all corporations which are members of a controlled group of corporations (within the meaning of 26 USCS Section 1563(a), determined without regard to 26 USCS Section 1563(a)(4) and (e)(3)(C)) shall be treated as employed by a single employer. With respect to a plan adopted by more than one such corporation, the minimum funding standard of Section 25 of this act shall be determined as if all such employers were a single employer, and allocated to each employer in accordance with regulations prescribed by the board.

(4) Plan of trades or businesses under common control.

For purposes of Sections 15 through 17 of this act, under regulations prescribed by the board, all employees of trades or businesses (whether or not incorporated) which are under common control shall be treated as employed by a single employer. The regulations prescribed under this subsection shall be based on principles similar to the principles which apply in the case of subsection (3).

ARTICLE 7

Funding

SECTION 24. This article shall apply to any employee pension benefit plan described in Section 3(1) of this act and not exempted under Section 3(2) of this act.

SECTION 25. (1) Avoidance of accumulated funding deficiency.

(a) Every employee pension benefit plan subject to this article shall satisfy the minimum funding standard (or the alternative minimum funding standard under Section 28 of this act, for any plan year to which this article applies. A plan to which this article applies shall have satisfied the minimum funding standard for such plan for a plan year if as of the end of such plan year the plan does not have an accumulated funding deficiency.

(b) For the purpose of this article, the term "accumulated funding deficiency" means for any plan the excess of the total charges to the funding standard account for all plan years (beginning with the first plan year to which this part applies) over the total credits to such account for such years or, if less, the excess of the total charges to the alternative minimum funding standard account for such plan years over the total credits to such account for such years.

(2) Funding standard account.

(a) Each plan to which this article applies shall establish and maintain a funding standard account. Such account shall be credited and charged solely as provided in this section.

(b) For a plan year, the funding standard account shall be charged with the sum of:

(i) The normal cost of the plan for the plan year;

(ii) The amounts necessary to amortize in equal annual installments (until fully amortized):

1. In the case of a plan in existence on January 1, 1997, the unfunded past service liability under the plan on the first day of the first plan year to which this article applies, over a period of forty (40) plan years;

2. In the case of a plan which comes into existence after January 1, 1997, the unfunded past service liability under the plan on the first day of the first plan year to which this article applies, over a period of thirty (30) plan years;

3. Separately, with respect to each plan year, the net increase (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of thirty (30) plan years;

4. Separately, with respect to each plan year, the net experience loss (if any) under the plan, over a period of five (5) plan years (fifteen (15) plan years in the case of a multiemployer plan); and

5. Separately, with respect to each plan year, the net loss (if any) resulting from changes in actuarial assumptions used under the plan, over a period of ten (10) plan years (thirty (30) plan years in the case of a multiemployer plan).

(iii) The amount necessary to amortize each waived funding deficiency (within the meaning of Section 25(3) of this act) for each prior plan year in equal annual installments (until fully amortized) over a period of five (5) plan years (fifteen (15) plan years in the case of a multiemployer plan); and

(iv) The amount necessary to amortize in equal annual installments (until fully amortized) over a period of five (5) plan years any amount credited to the funding standard account under paragraph (c)(iv).

(c) For a plan year, the funding standard account shall be credited with the sum of:

(i) The amount considered contributed by the employer to or under the plan for the plan year;

(ii) The amount necessary to amortize in equal annual installments (until fully amortized):

1. Separately, with respect to each plan year, the net decrease (if any) in unfunded past service liability under the plan arising from plan amendments adopted in such year, over a period of thirty (30) plan years;

2. Separately, with respect to each plan year, the net experience gain (if any) under the plan, over a period of five (5) plan years (fifteen (15) plan years in the case of a multiemployer plan); and

3. Separately, with respect to each plan year, the net gain (if any) resulting from changes in actuarial assumptions used under the plan, over a period of ten (10) plan years (thirty (30) plan years in the case of a multiemployer plan);

(iii) The amount of the waived funding deficiency (within the meaning of Section 26 of this act) for the plan year; and

(iv) In the case of a plan year for which the accumulated funding deficiency is determined under the funding standard account if such plan year follows a plan year for which such deficiency was determined under the alternative minimum funding standard, the excess (if any) of any debit balance in the funding standard account (determined without regard to this subparagraph) over any debit balance in the alternative minimum funding standard account.

(d) Under regulations prescribed by the board, amounts required to be amortized under paragraph (b) or paragraph (c), as the case may be:

(i) May be combined into one amount under such paragraph to be amortized over a period determined on the basis of the remaining amortization period for all items entering into such combined amount; and

(ii) May be offset against amounts required to be amortized under the other such paragraph, with the resulting amount to be amortized over a period determined on the basis of the remaining amortization periods for all items entering into whichever of the two (2) amounts being offset is the greater.

(e) Interest.

(i) In general. The funding standard account (and items therein) shall be charged or credited (as determined under regulations prescribed by the board) with interest at the appropriate rate consistent with the rate or rates of interest used under the plan to determine costs.

(ii) Required change of interest rate. For purposes of determining a plan's current liability and for purposes of determining a plan's required contribution under subsection (4) of this section for any plan year:

1. In general. If any rate of interest used under the plan to determine the cost is not within the permissible range, the plan shall establish a new rate of interest within the permissible range.

2. Permissible range. For purposes of this subparagraph:

A. In general. Except as provided in subclause B., the term "permissible range" means a rate of interest which is not more than ten percent (10%) above, and not more than ten percent (10%) below, the weighted average of the rates of interest on thirty-year Treasury securities during the four-year period ending on the last day before the beginning of the plan year.

B. Board authority. If the board finds that the lowest rate of interest permissible under subclause A is unreasonably high, the board may prescribe a lower rate of interest, except that such rate may not be less than eighty percent (80%) of the average rate determined under the subclause A.

3. Assumptions. Notwithstanding subsection (3)(c)(i)1., the interest rate used under the plan shall be:

A. Determined without taking into account the experience of the plan and reasonable expectations, but

B. Consistent with the assumptions which reflect the purchase rates which would be used by insurance companies to satisfy the liabilities under the plan.

(3) Methods.

(a) For purposes of this article, normal costs, accrued liability, past service liabilities, and experience gains and losses shall be determined under the funding method used to determine costs under the plan.

(b) (i) For purposes of this article, the value of the plan's assets shall be determined on the basis of any reasonable actuarial method of valuation which takes into account fair market value and which is permitted under regulations prescribed by the board.

(ii) For purposes of this article, the value of a bond or other evidence of indebtedness which is not in default as to principal or interest may, at the election of the plan administrator, be determined on an amortized basis running from initial cost at purchase to par value at maturity or earlier call date. Any election under this subparagraph shall be made at such time and in such manner as the board shall by regulations provided, shall apply to all such evidences of indebtedness, and may be revoked only with the consent of the board. In the case of a plan other than a multiemployer plan, this subparagraph shall not apply, but the board may by regulations provide that the value of any dedicated bond portfolio of such plan shall be determined by using the interest rate under subsection (2)(e).

(c) For purposes of this section, all costs, liabilities, rates of interest, and other factors under the plan shall be determined on the basis of actuarial assumptions and methods:

(i) In the case of:

1. A plan other than a multiemployer plan, each of which is reasonable (taking into account the experience of the plan and reasonable expectations) or which, in the aggregate, result in a total contribution equivalent to that which would be determined if each such assumption and method were reasonable, or

2. A multiemployer plan, which, in the aggregate, are reasonable (taking into account the experiences of the plan and reasonable expectations), and

(ii) Which, in combination, offer the actuary's best estimate of anticipated experience under the plan.

(d) For purposes of this section, if:

(i) A change in benefits under the Social Security Act or in other retirement benefits created under federal or state law, or

(ii) A change in the definition of the term "wages" under 26 USCS Section 3121, or a change in the amount of such wages taken into account under regulations prescribed for purposes of 26 USCS Section 401(a)(5), results in an increase or decrease in accrued liability under a plan, such increase or decrease shall be treated as an experience loss or gain.

(e) If the funding method for a plan is changed, the new funding method shall become the funding method used to determine costs and liabilities under the plan only if the change is approved by the board. If the plan year for a plan is changed, the new plan year shall become the plan year for the plan only if the change is approved by the board.

(f) If, as of the close of a plan year, a plan would (without regard to this paragraph) have an accumulated funding deficiency (determined without regard to the alternative minimum funding standard account permitted under Section 28 of this act, in excess of the full funding limitation:

(i) The funding standard account shall be credited with the amount of such excess; and

(ii) All amounts described in paragraphs (b)(ii), (iii) and (iv) and (c)(ii) considered fully amortized for purposes of such paragraphs.

(g) Full-funding limitation.

(i) In general. For purposes of paragraph (b), the term "full-funding limitation" means the excess (if any) of:

1. The lesser of:

A. One hundred fifty percent (150%) of current liability (including the expected increase in current liability due to benefits accruing during the plan year), or

B. The accrued liability (including normal cost) under the plan (determined under the entry age normal funding method if such accrued liability cannot be directly calculated under the funding method used for the plan), over

2. The lesser of:

A. The fair market value of the plan's assets, or

B. The value of such assets determined under paragraph (b).

(ii) Current liability. For purposes of subparagraph (iv) and subclause A. of subparagraph (i)1., the term "current liability" has the meaning given such term by subsection (4)(g), (without regard to subparagraphs (iii) and (iv) thereof) and using the rate of interest used under subsection (2)(e)(ii).

(iii) Special rule for paragraph (b)(ii). For purposes of paragraph (b)(ii), subparagraph (i)1. shall be applied without regard to subclause A. thereof.

(iv) Regulatory authority. The board may by regulations provide:

1. For adjustments to the percentage contained in subparagraph (i)1. to take into account the respective ages or lengths of service of the participants;

2. Alternative methods based on factors other than current liability for the determination of the amount taken into account under subparagraph (i)1., and

3. For the treatment under this section of contributions which would be required to be made under the plan but for the provisions of subparagraph (i)1.A.

(v) Minimum amount.

1. In general. In no event shall the full-funding limitation determined under subparagraph (i) be less than the excess (if any) of:

A. Ninety percent (90%) of the current liability of the plan (including the expected increase in current liability due to benefits accruing during the plan year), over

B. The value of the plan's assets determined under paragraph (b).

2. Current liability; assets. For purposes of clause 1.:

A. The term "current liability" has the meaning given such term by subsection (4)(g) (without regard to subparagraph (iv) thereof), and

B. Assets shall not be reduced by any credit balance in the funding standard account.

(h) For purposes of this article, any amendment applying to a plan year which:

(i) Is adopted after the close of such plan year but no later than two and one-half (2-1/2) months after the close of the plan year (or, in the case of a multiemployer plan, no later than two (2) years after the close of such plan year),

(ii) Does not reduce the accrued benefit of any participant determined as of the beginning of the first plan year to which the amendment applies, and

(iii) Does not reduce the accrued benefit of any participant determined as of the time of adoption except to the extent required by the circumstances,

shall, at the election of the plan administrator, be deemed to have been made on the first day of such plan year. No amendment described in this paragraph which reduces the accrued benefits of any participant shall take effect unless the plan administrator files a notice with the board notifying it of such amendment and the board has approved such amendment or, within ninety (90) days after the date on which such notice was filed, failed to disapprove such amendment. No amendment described in this subsection shall be approved by the board unless it determines that such amendment is necessary because of substantial business hardship (as determined under Section 26(2) of this act and that waiver under Section 26(1) of this act is unavailable or inadequate.

(i) For purposes of this article, a determination of experience gains and losses and a valuation of the plan's liability shall be made not less frequently than once every year, except that such determination shall be made more frequently to the extent required in particular cases under regulations prescribed by the board.

(j) For purposes of this section:

(i) In the case of a defined benefit plan other than a multiemployer plan, any contributions for a plan year made by an employer during the period:

1. Beginning on the day after the last day of such plan year, and

2. Ending on the date which is eight and one-half (8-1/2) months after the close of the plan year,

shall be deemed to have been made on such last day.

(ii) In the case of a plan not described in subparagraph (i), any contributions for a plan year made by an employer after the last day of such plan year, but not later then two and one-half (2-1/2) months after such day, shall be deemed to have been made on such last day. For purposes of this subparagraph, such two and one-half (2-1/2) month period may be extended for not more than six (6) months under regulations prescribed by the board.

(k) Liability for contributions.

(i) In general. Except as provided in subparagraph (ii), the amount of any contribution required by this section and any required installments under subsection (5) shall be paid by the employer responsible for contributing to or under the plan the amount described in subsection (2)(c)(i).

(ii) Joint and several liability where employer member of controlled group.

1. In general. In the case of a plan other than a multiemployer plan, if the employer referred to in subparagraph (i) is a member of a controlled group, each member of such group shall be jointly and severally liable for payment of such contribution or required installment.

2. Controlled group. For purposes of clause (1.), the term "controlled group" means any group treated as a single employer under 26 USCS Section 414(b), (c), (n), or (o).

(l) Anticipation of benefit increases effective in the future. In determining projected benefits, the funding method of a collectively bargained plan described in 26 USCS Section 413(a) (other than a multiemployer plan) shall anticipate benefit increases scheduled to take effect during the term of the collective bargaining agreement applicable to the plan.

(4) Additional funding requirement for plans which are not multiemployer plans.

(a) In general. In the case of a defined benefit plan (other than a multiemployer plan) to which this subsection applies under paragraph (i) for any plan year, the amount charged to the funding standard account for such plan year shall be increased by the sum of:

(i) The excess (if any) of:

1. The deficit reduction contribution determined under paragraph (b) for such plan year; over

2. The sum of the charges for such plan year under subsection (2)(b), reduced by the sum of the credits for such plan year under subparagraph (ii) of subsection (2)(c), plus

(ii) The unpredictable contingent event amount (if any) for such plan year. Such increase shall not exceed the amount which, after taking into account charges (other than the additional charge under this subsection) and credits under subsection (2), is necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) to one hundred percent (100%).

(b) Deficit reduction contribution. For purposes of paragraph (a), the deficit reduction contribution determined under this paragraph for any plan year is the sum of:

(i) The unfunded old liability amount;

(ii) the unfunded new liability amount;

(iii) The expected increase in current liability due to benefits accruing during the plan year; and

(iv) The aggregate of the unfunded mortality increase amounts.

(c) Unfunded old liability amount. For purposes of this subsection:

(i) In general. The unfunded old liability amount with respect to any plan for any plan year is the amount necessary to amortize the unfunded old liability under the plan in equal annual installments over a period of eighteen (18) plan years (beginning with the first plan year beginning after December 31, 1997).

(ii) Unfunded old liability. The term "unfunded old liability" means the unfunded current liability of the plan as of the beginning of the first plan year beginning after December 31, 1996.

(iii) Special rules for benefit increases under existing collective bargaining agreements.

1. In general. In the case of a plan maintained pursuant to one (1) or more collective bargaining agreements between employee representatives and the employer ratified before January 1, 1997, the unfunded old liability amount with respect to such plan for any plan year shall be increased by the amount necessary to amortize the unfunded existing benefit increase liability in equal annual installments over a period of eighteen (18) plan years beginning with:

A. The plan year in which the benefit increase with respect to such liability occurs; or

B. If the taxpayer elects, the first plan year beginning after December 31, 1997.

2. Unfunded existing benefit increase liabilities. For purposes of clause 1), the unfunded existing benefit increase liability means, with respect to any benefit increase under the agreements described in clause 1. which takes effect during or after the first plan year beginning after December 31, 1997, the unfunded current liability determined:

A. By taking into account only liabilities attributable to such benefit increase; and

B. By reducing (but not below zero) the amount determined under paragraph (h)(i)2. by the current liability determined without regard to such benefit increase.

3. Extensions, modifications, etc., not taken into account. For purposes of this subparagraph, any extension, amendment, or other modification of an agreement after January 1, 1997, shall not be taken into account.

(iv) Special rule for required changes in actuarial assumptions.

1. In general. The unfunded old liability amount with respect to any plan for any plan year shall be increased by the amount necessary to amortize the amount of additional unfunded old liability under the plan in equal annual installments over a period of twelve (12) plan years (beginning with the first plan year beginning after December 31, 1996).

2. Additional unfunded old liability. For purposes of clause 1., the term "additional unfunded old liability" means the amount (if any) by which:

A. The current liability of the plan as of the beginning of the first plan year beginning after December 31, 1996, valued using the assumptions required by paragraph (b)(iii) as in effect for plan years beginning after December 31, 1996; exceeds

B. The current liability of the plan as of the beginning of such first plan year, valued using the same assumptions used under subclause A. (other than the assumptions required by paragraph (b)(iii), using the prior interest rate, and using such mortality assumptions as were used to determine current liability for the first plan year beginning after December 31, 1994.

3. Prior interest rate. For purposes of clause 2., the term "prior interest rate" means the rate of interest that is the same percentage of the weighted average under subsection (2)(e)(ii)2.B. for the first plan year beginning after December 31, 1996, as the rate of interest used by the plan to determine current liability for the first plan year beginning after December 31, 1994, is of the weighted average under subsection (2)(e)(ii)2.B. for such first plan year beginning after December 31, 1994.

(v) Optional rule for additional unfunded old liability.

1. In general. If any employer makes an election under clause 2., the additional unfunded old liability for purposes of subparagraph (iv) shall be the amount (if any) by which:

A. The unfunded current liability of the plan as of the beginning of the first plan year beginning after December 31, 1996, valued using the assumptions required by paragraph (b)(iii) as in effect for plan years beginning after December 31, 1996, exceeds

B. The unamortized portion of the unfunded old liability under the plan as of the beginning of the first plan year beginning after December 31, 1996.

2. Election.

A. An employer may irrevocably elect to apply the provisions of this subparagraph as of the beginning of the first plan year beginning after December 31, 1996;

B. If an election is made under this clause, the increase under paragraph (a) for any plan year beginning after December 31, 1996, and before January 1, 2002, to which this subsection applies (without regard to this subclause) shall not be less than the increase that would be required under paragraph (a) if the provisions of this act as in effect for the last plan year beginning before January 1, 1997, had remained in effect.

(d) Unfunded new liability amount. For purposes of this subsection:

(i) In general. The unfunded new liability amount with respect to any plan for any plan year is the applicable percentage of the unfunded new liability.

(ii) The liability with respect to any unpredictable contingent event benefits (without regard to whether the event has occurred).

(iii) Applicable percentage. The term "applicable percentage" means, with respect to any plan year, thirty percent (30%), reduced by the product of:

1. Forty one-hundredths (.40) multiplied by;

2. The number of percentage points (if any) by which the funded current liability percentage exceeds sixty percent (60%).

(e) Unpredictable contingent event amount.

(i) In general. The unpredictable contingent event amount with respect to a plan for any plan year is an amount equal to the greatest of:

1. The applicable percentage of the product of:

A. One hundred percent (100%), reduced (but not below zero) by the funded current liability percentage for the plan year, multiplied by,

B. The amount of unpredictable contingent event benefits paid during the plan year, including (except as provided by the board) any payment for the purchase of an annuity contract for a participant or beneficiary with respect to such benefits,

2. The amount which would be determined for the plan year if the unpredictable contingent event benefit liabilities were amortized in equal annual installments over seven (7) plan years (beginning with the plan year in which such event occurs), or

3. The additional amount that would be determined under paragraph (d)(i) if the unpredictable contingent event benefit liabilities were included in unfunded new liability notwithstanding paragraph (d)(ii)2.

(ii) Applicable percentage.

1997 60

1998 70

1999 80

2000 90

2001 and thereafter 100

(iii) Paragraph not to apply to existing benefits. This paragraph shall not apply to unpredictable contingent event benefits (and liabilities attributable thereto) for which the event occurred before the first plan year beginning after December 31, 1997.

(iv) Special rule for first year of amortization. Unless the employer elects otherwise, the amount determined under subparagraph (i) for the plan year in which the event occurs shall be equal to one hundred fifty percent (150%) of the amount determined under subparagraph (i)1. The amount under subparagraph (i)2. for subsequent plan years in the amortization period shall be adjusted in the manner provided by the board to reflect the application of this subparagraph.

(v) Limitation. The present value of the amounts described in subparagraph (i) with respect to any one event shall not exceed the unpredictable contingent event benefit liabilities attributable to that event.

(f) Special rules for small plans.

(i) Plans with one hundred (100) or fewer participants. This subsection shall not apply to any plan for any plan year if on each day during the preceding plan year such plan had no more than one hundred (100) participants.

(ii) Plans with more than one hundred (100) but not more than one hundred fifty (150) participants. In the case of a plan to which subparagraph (i) does not apply and which one each day during the preceding plan year had no more than one hundred fifty (150) participants, the amount of the increase under paragraph (a) for such plan year shall be equal to the product of:

1. Such increase determined without regard to this subparagraph, multiplied by;

2. Two percent (2%) for the highest number of participants in excess of one hundred (100) on any such day.

(iii) Aggregation of plans. For purposes of this paragraph, all defined benefit plans maintained by the same employer (or any member of such employer's controlled group) shall be treated as one plan, but only employees of such employer or member shall be taken into account.

(g) Current liability. For purposes of this subsection:

(i) In general. The term "current liability" means all liabilities to participants and their beneficiaries under the plan;

(ii) Treatment of unpredictable contingent event benefits.

1. In general. For purposes of subparagraph (i), any unpredictable contingent event benefit shall not be taken into account until the event on which the benefit is contingent occurs.

2. Unpredictable contingent event benefit. The term "unpredictable contingent event benefit" means any benefit contingent on an event other than:

A. Age, service, compensation, death, or disability, or

B. An event which is reasonably and reliably predictable (as determined by the board).

(iii) Interest rate and mortality assumptions used. Effective for plan years beginning after December 31, 1996:

1. Interest rate.

A. In general. The rate of interest used to determine current liability under this subsection shall be the rate of interest used under subsection (2)(e), except that the highest rate in the permissible range under subparagraph (ii)2. thereof shall not exceed the specified percentage under subclause B. of the weighted average referred to in such subparagraph.

B. Specified percentage. For purposes of subclause A., the specified percentage shall be determined as follows:

1997 107

1998 106

1999 and thereafter 105

2. Mortality tables.

A. Commissioners' standard table. In the case of plan years beginning before the first plan year to which the first tables prescribed under subclause B. apply, the mortality table used in determining current liability under this subsection shall be the table prescribed by the board which is based on the prevailing commissioners' standard table (described in 26 USCS Section 807(d)(5)A.) used to determine reserves for group annuity contracts issued on January 1, 1993;

B. Secretarial authority. The board may by regulation prescribe the plan years beginning after December 31, 1999, mortality tables to be used in determining current liability under this subsection. Such tables shall be based upon the actual experience of pension plans and projected trends in such experience. In prescribing such tables, the board shall take into account results of available independent studies of mortality of individuals covered by pension plans.

C. Periodic review. The board shall periodically (at least every five (5) years) review any tables in effect under this subsection and shall, to the extent the board determines necessary, by regulation update the tables to reflect the actual experience of pension plans and projected trends in such experience.

3. Separate mortality tables for the disabled. Notwithstanding clause 2.:

A. In general. In the case of plan years beginning after December 31, 1996, the board shall establish mortality tables which may be used (in lieu of the tables under clause 2.) to determine current liability under this subsection for individuals who are entitled to benefits under the plan on account of disability. The board shall establish separate tables for individuals whose disabilities occur in plan years beginning before January 1, 1997, and for individuals whose disabilities occur in plan years beginning on or after such date.

B. Special rule for disabilities occurring after 1996. In the case of disabilities occurring in plan years beginning after December 31, 1996, the tables under subclause A. shall only with respect to individuals described in such subclause who are disabled within the meaning of title II of the Social Security Act [42 USCS Section 401 et seq.] and the regulations thereunder.

C. Plan years beginning in 1996. In the case of any plan year beginning in 1996, a plan may use its own mortality assumptions for individuals who are entitled to benefits under the plan on account of disability.

(iv) Certain service disregarded.

1. In general. In the case of a participant to whom this subparagraph applies, only the applicable percentage of the years of service before such individual became a participant shall be taken into account in computing the current liability of the plan.

2. Applicable percentage. For purposes of this subparagraph, the applicable percentage shall be determined as follows:

1 20

2 40

3 60

4 80

5 100

3. Participants to whom subparagraph applies. This subparagraph shall apply to any participant who, at the time of becoming a participant:

A. Has not accrued any other benefit under any defined benefit plan (whether or not terminated) maintained by the employer or a member of the same controlled group of which the employer is a member,

B. Who first becomes a participant under the plan in a plan year beginning after December 31, 1996, and

C. Has years of service greater than the minimum years of service necessary for eligibility to participate in the plan.

4. Election. An employer may elect not to have this subparagraph apply. Such an election, once made, may be revoked only with the consent of the board.

(h) Other definitions. For purposes of this subsection:

(i) Unfunded current liability. The term "unfunded current liability" means, with respect to any plan year, the excess (if any) of:

1. The current liability under the plan, over

2. Value of the plan's assets determined under subsection (3)(b).

(ii) Funded current liability percentage. The term "funded current liability percentage" means, with respect to any plan year, the percentage which:

1. The amount determined under subparagraph (i)2., is of

2. The current liability under the plan.

(iii) Controlled group. The term "controlled group" means any group treated as a single employer under 26 USCS Section 414(b), (c), (m), (o).

(iv) Adjustments to prevent omissions and duplications. The board shall provide such adjustments in the unfunded old liability amount, the unfunded new liability amount,d the unpredictable contingent event amount, the current payment amount, and any other charges or credits under this section as are necessary to avoid duplication or omission of any factors in the determination of such amounts, charges, or credits.

(v) Deduction for credit balances. For purposes of this subsection, the amount determined under subparagraph (i)2. shall be reduced by any credit balance in the funding standard account. The board may provide for such reduction for purposes of any other provision which references this subsection.

(i) Applicability of subsection.

(i) In general. Except as provided in paragraph (b)(i), this subsection shall apply to a plan for any plan year if its funded current liability percentage for such year is less than ninety percent (90%).

(ii) Exception for certain plans at least eighty percent (80%) funded. Subparagraph (i) shall not apply to a plan for a plan year if:

1. The funded current liability percentage for the plan is at least eighty percent (80%), and

2. Such percentage for each of the two (2) immediately preceding plan years (or each of the second and third immediately preceding plan years) is at least ninety percent (90%).

(iii) Funded current liability percentage. For purposes of subparagraphs (i) and (ii), the term "funded current liability percentage" has the meaning given such term by paragraph (b)(ii), except that such percentage shall be determined for any plan year:

1. Without regard to paragraph (b)(v), and

2. By using the rate of interest which is the highest rate allowable for the plan year under paragraph (g)(iii).

(iv) Transition rules. For purposes of this paragraph, the funded current liability percentage for any plan year beginning before January 1, 1997, shall be treated as not less than ninety percent (90%) only if for such plan year the plan met one of the following requirements (as in effect for such year):

1. The full-funding limitation under subsection (3)(g) for the plan was zero.

2. The plan had no additional funding requirement under this subsection (or would have had no such requirement if its funded current liability percentage had been determined under subparagraph (iii)).

3. The plan's additional funding requirement under this subsection did not exceed the lesser of five tenths of one percent (0.5%) of current liability or Five Million Dollars ($5,000,000.00).

(j) Unfunded mortality increase amount.

(i) In general. The unfunded mortality increase amount with respect to each unfunded mortality increase is the amount necessary to amortize such increase in equal annual installments over a period of ten (10) plan years (beginning with the first plan year for which a plan uses any new mortality table issued under paragraph (g)(iii)2.B. or C.

(ii) Unfunded mortality increase. For purposes of subparagraph (i), the term "unfunded mortality increase" means an amount equal to the excess of:

1. The current liability of the plan for the first plan year for which a plan uses any new mortality table issued under paragraph (g)(iii)2.B. or C., over

2. The current liability of the plan for such plan year which would have been determined if the mortality table in effect for the preceding plan year had been used.

(k) Phase-in of increases in funding required by Retirement Protection Act of 1994.

(i) In general. For any applicable plan year, at the election of the employer, the increase under paragraph (a) shall not exceed the greater of:

1. The increase that would be required under paragraph (1) if the provisions of this title as in effect for plan years beginning before January 1, 1997, had remained in effect, or

2. The amount which, after taking into account charges (other than the additional charge under this subsection) and credits under subsection (2), is necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) for the applicable plan year to a percentage equal to the sum of the initial funded current liability percentage of the plan plus the applicable number of percentage points for such applicable plan year.

(ii) Applicable number of percentage points.

1. Initial funded current liability percentage of seventy-five percent (75%) or less. Except as provided in clause 2., for plans with an initial funded current liability percentage of seventy-five percent (75%) or less, the applicable number of percentage points for the applicable plan year is:

1997 9

1998 12

1999 15

2000 19

2001 24

2. Other cases. In the case of a plan to which this clause applies, the applicable number of percentage points for any such applicable plan year is the sum of :

A. Two (2) percentage points;

B. The applicable number of percentage points (if any) under this clause for the preceding applicable plan year;

C. The product of ten one-hundredths (.10) multiplied by the excess (if any) of (a) eighty-five (85) percentage points over (b) the sum of the initial funded current liability percentage and the number determined under subclause B.;

D. For applicable plan years beginning in 2000, one (1) percentage point; and

E. For applicable plan years beginning in 2001, two (2) percentage points.

3. Plans to which clause 2. applies:

A. In general. Clause 2. shall apply to a plan for an applicable plan year if the initial funded current liability percentage of such plan is more than seventy-five percent (75%).

B. Plans initially under clause 1. In the case of a plan which (but for this subclause) has an initial funded current liability percentage of seventy-five percent (75%) or less, clause 2. (and not clause 1.) shall apply to such plan with respect to applicable plan years beginning after the first applicable plan year for which the sum of the initial funded current liability percentage and the applicable number of percentage points (determined under clause 1.) exceeds seventy-five percent (75%). For purposes of applying clause 2. to such a plan, the initial funded current liability percentage of such plan shall be treated as being the sum referred to in the preceding sentence.

(iii) Definitions. For purposes of this paragraph:

1. The term "applicable plan year" means a plan year beginning after December 31, 1996, and before January 1, 2002.

2. The term "initial funded current liability percentage" means the funded current liability percentage as of the first day of the first plan year beginning after December 31, 1996.

(5) Quarterly contributions required.

(a) In general. If a defined benefit plan (other than a multiemployer plan) which has a funded current liability percentage (as defined in subsection (4)(b) for the preceding plan year of less than one hundred percent (100%) fails to pay the full amount of a required installment for the plan year, then the rate of interest charged to the funding standard account under subsection (2)(f) with respect to the amount of the underpayment for the period of the underpayment shall be equal to the greater of:

(i) One hundred seventy-five percent (175%) of the federal mid-term rate (as in effect under 26 USCS Section 1274 for the first month of such plan year), or

(ii) The rate of interest used under the plan in determining costs (including adjustments under subsection (2)(e)(ii)).

(b) Amount of underpayment, period of under payment. For purposes of paragraph (a):

(i) Amount. The amount of the underpayment shall be the excess of:

1. The required installment, over

2. The amount (if any) of the installment contributed to or under the plan on or before the due date for the installment.

(ii) Period of underpayment. The period for which any interest is charged under this subsection with respect to any portion of the underpayment shall run from the due date for the installment to the date on which such portion is contributed to or under the plan (determined without regard to subsection (3)(j)).

(iii) Order of crediting contributions. For purposes of subparagraph (i)2., contributions shall be credited against unpaid required installments in the order in which such installments are required to be paid.

(c) Number of required installments; due dates. For purposes of this subsection:

(i) Payable in four (4) installments. There shall be four (4) required installments for each plan year.

(ii) Time for payment of installments

1st April 15

2nd July 15

3rd October 15

4th January 15 of the

following year.

(d) Amount of required installment. For purposes of this subsection:

(i) In general. The amount of any required installment shall be the applicable percentage of the required annual payment.

(ii) Required annual payment. For purposes of subparagraph (i), the term "required annual payment" means the lesser of:

1. Ninety percent (90%) of the amount required to be contributed to or under the plan by the employer for the plan year under 26 USCS Section 412 (without regard to any waiver under subsection (c) thereof), or

2. One hundred percent (100%) of the amount so required for the preceding plan year. Clause 2. shall not apply if the preceding plan year was not a year of twelve (12) months.

(iii) Applicable percentage. For purposes of subparagraph (i), the applicable percentage shall be twenty-five percent (25%).

(iv) Special rules for unpredictable contingent event benefits. In the case of a plan to which subsection (4) applies for any calendar year and which has any unpredictable contingent event benefit liabilities:

1. Liabilities not taken into account. Such liabilities shall not be taken into account in computing the required annual payment under subparagraph (ii).

2. Increase in installments. Each required installment shall be increased by the greatest of:

A. The unfunded percentage of the amount of benefits described in subsection (4)(e)(i)1. paid during the three-month period preceding which the due date for such installment occurs.

B. Twenty-five percent (25%) of the amount determined under subsection (4)(e)(i)2. for the plan year, or

C. Twenty-five percent (25%) of the amount determined under subsection (4)(e)(i)3. for the plan year.

3. Unfunded percentage. For purposes of clause 2.A., the term "unfunded percentage" means the percentage determined under subsection (4)(e)(i)1.A. for the plan year.

4. Limitation on increase. In no event shall the increases under clause 2. exceed the amount necessary to increase the funded current liability percentage (within the meaning of subsection (4)(h)(ii) for the plan year to one hundred percent (100%).

(e) Liquidity requirement. (i) In general. A plan to which this paragraph applies shall be treated as failing to pay the full amount of any required installment to the extent that the value of the liquid assets paid in such installment is less than the liquidity shortfall (whether or not such liquidity shortfall exceeds the amount of such installment required to be paid but for this paragraph).

(ii) Plans to which paragraph applies. This paragraph shall apply to a defined benefit plan (other than a multiemployer plan or a plan described in subsection (4)(f)(i) which:

1. Is required to pay installments under this subsection for a plan year, and

2. Has a liquidity shortfall for any quarter during such plan year.

(iii) Period of underpayment. For purposes of paragraph (a), any portion of an installment that is treated as not paid under subparagraph (i), shall continue to be treated as unpaid until the close of the quarter in which the due date for such installment occurs.

(iv) Limitation on increase. If the amount of any required installment is increased by reason of subparagraph (i), in no event shall such increase exceed the amount which, when added to prior installments for the plan year, is necessary to increase the funded current liability percentage (taking into account the expected increase in current liability due to benefits accruing during the plan year) to one hundred percent (100%).

(v) Definitions. For purposes of this paragraph:

1. Liquidity shortfall. The term "liquidity shortfall" means, with respect to any required installment, an amount equal to the excess (as of the last day of the quarter for which such installment is made) of the base amount with respect to such quarter over the value (as of such last day) of the plan's liquid assets.

2. Base amount. A. In general. The term "base amount" means, with respect to any quarter, an amount equal to three (3) times the sum of the adjusted disbursements from the plan for the twelve (12) months ending on the last day of such quarter.

B. Special rule. If the amount determined under clause 1. exceeds an amount equal to two (2) times the sum of the adjusted disbursements from the plan for the thirty-six (36) months ending on the last day of the quarter and an enrolled actuary certifies to the satisfaction of the board that such excess is the result of nonrecurring circumstances, the base amount with respect to such quarter shall be determined without regard to amounts related to those nonrecurring circumstances.

3. Disbursements from the plan. The term "disbursements from the plan" means all disbursements from the trust, including purchases of annuities, payments of single sums and other benefits, and administrative expenses.

4. Adjusted disbursements. The term "adjusted disbursements" means disbursements from the plan reduced by the product of:

A. The plan's funded current liability percentage (as defined in subsection (4)(h) for the plan year, and

B. The sum of the purchases of annuities, payments of single sums, and such other disbursements as the board shall provide in regulations.

5. Liquid assets. The term "liquid assets" means cash, marketable securities and such other assets as specified by the board in regulations.

6. Quarter. The term "quarter" means, with respect to any required installment, the three-month period preceding the month in which the due date for such installment occurs.

(vi) Regulations. The board may prescribe such regulations as are necessary to carry out this paragraph.

(f) Fiscal years and short years. (i) Fiscal years. In applying the subsection to a plan year beginning on any date other than January 1, there shall be substituted for the months specified in this subsection, the months which correspond thereto.

(ii) Short plan year. This section shall be applied to plan years of less than twelve (12) months in accordance with regulations prescribed by the board.

(6) Imposition of lien where failure to make required contributions.

(a) In general. In the case of a plan to which this section applies, if:

(i) Any person fails to make a required installment under subsection (5) or any other payment required under this section before the due date for such installment or other payment, and

(ii) The unpaid balance of such installment or other payment (including interest), when added to the aggregate unpaid balance of all preceding such installments or other payments for which payment was not made before the due date (including interest), exceeds One Million Dollars ($1,000,000.00), then there shall be a lien in favor of the plan in the amount determined paragraph (c) upon all property and rights to property, whether real or personal, belonging to such person and any other person who is a member of the same controlled group of which such person is a member.

(b) Plans to which subsection applies. This subsection shall apply to a defined benefit plan (other than a multiemployer plan) for any plan year for which the funded current liability percentage (within the meaning of subsection (4)(h)(ii) of such plan is less than one hundred percent (100%).

(c) Amount of lien. For purposes of paragraph (a), the amount of the lien shall be equal to the aggregate unpaid balance of required installments and other payments required under this section (including interest):

(i) For plan years beginning after 1996, and

(ii) For which payment has not been made before the due date.

(d) Notice of failure; lien. (i) Notice of failure. A person committing a failure described in paragraph (a) shall notify the board of such failure within ten (10) days of the due date for the required installment or other payment.

(ii) Period of lien. The lien imposed by paragraph (a) shall arise on the due date for the required installment or other payment and shall continue until the last day of the first plan year in which the plan ceases to be described in paragraph (a)(ii). Such lien shall continue to run without regard to whether such plan continues to be described in paragraph (b) during the period referred to in the preceding sentence.

(iii) Certain rules to apply. Any amount with respect to which a lien is imposed under paragraph (a) shall be treated as taxes due and owing the State of Mississippi.

(e) Enforcement. Any lien created under paragraph (a) may be perfected and enforced only by the board, or at the direction of the board, by the contributing sponsor (or any member of the controlled group of the contributing sponsor).

(f) Definitions. For purposes of this subsection:

(i) Due date, required installment. The terms "due date" and "required installment" have the meanings given such terms by subsection (5), except that in the case of a payment other than a required installment, the due date shall be the date such payment is required to be made under this section.

(ii) Controlled group. The term "controlled group" means any group treated as a single employer under 26 USCS Section 414(b), (c), (m), and (o).

(7) Qualified transfers to health benefit accounts. For purpose of this section, in the case of a qualified transfer (as defined in 26 USCS Section 420):

(a) Any assets transferred in a plan year on or before the valuation date for such year (and any income allocable thereto) shall, for purposes of subsection (3)(g), be treated as assets in the plan as of the valuation date for such year, and

(b) The plan shall be treated as having a net experience loss under subsection (2)(b)(ii)4. in an amount equal to the amount of such transfer (reduced by any amounts transferred back to the plan under 26 USCS Section 420(c)(1)(B) and for which amortization charges begin for the first plan year after the plan year in which such transfer occurs, except that such subsection shall be applied to such amount by substituting "ten (10) plan years" for "five (5) plan years."

SECTION 26. Variance from minimum funding standard. (1) Waiver of requirements in event of business hardship. If an employer, or in the case of a multiemployer plan, ten percent (10%) or more of the number of employers contributing to or under the plan are unable to satisfy the minimum funding standard for a plan year without temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan) and if application of the standard would be adverse to the interests of plan participants in the aggregate, the board may waive the requirements of Section 25(1) of this act for such year with respect to all or any portion of the minimum funding standard other than the portion thereof determined under Section 25(2)(b)(iii) of this act. The board shall not waive the minimum funding standard with respect to a plan for more than three (3) of any fifteen (15) (five (5) of any fifteen (15) in the case of a multiemployer plan) consecutive plan years. The interest rate used for purposes of computing the amortization charge described in subsection (2)(b)(iii) of Section 25 of this act for any plan year shall be:

(a) In the case of a plan other than a multiemployer plan, the greater of:

(i) One hundred fifty percent (150%) of the federal mid-term rate (as in effect under 26 USCS Section 1274 for the first month of such plan year), or

(ii) The rate of interest used under the plan in determining costs (including adjustments under Section 25(2)(e)(ii) of this act); and

(b) In the case of a multiemployer plan, the rate determined under 26 USCS Section 6621(b).

(2) Matters considered in determining business hardship. For purposes of this article, the factors taken into account in determining temporary substantial business hardship (substantial business hardship in the case of a multiemployer plan) shall include (but shall not be limited to) whether:

(a) The employer is operating at an economic loss,

(b) There is substantial unemployment or underemployment in the trade or business and in the industry concerned,

(c) The sales and profits of the industry concerned are depressed or declining, and

(d) It is reasonable to expect that the plan will be continued only if the waiver is granted.

(3) Definition of "waived funding deficiency". For purposes of this article, the term "waived funding deficiency" means the portion of the minimum funding standard (determined without regard to subsection (2)(c)(iii) of Section 25 of this act) for a plan year waived by the board and not satisfied by employer contributions.

(4) Special rules.

(a) Application must be submitted before date two and one-half (2-1/2) months after close of year. In the case of a plan other than a multiemployer plan, no waiver may be granted under this section with respect to any plan for any plan year unless an application therefor is submitted to the board not later than the fifteenth day of the third month beginning after the close of such plan year.

(b) Special rule if employer is member of controlled group.

(i) In general. In the case of a plan other than a multiemployer plan, if an employer is a member of a controlled group, the temporary substantial business hardship requirements of subsection (1) shall be treated as met only if such requirements are met:

1. With respect to such employer, and

2. With respect to the controlled group of which such employer is a member (determined by treating all members of such group as a single employer).

The board may provide that an analysis of a trade or business or industry of a member need not be conducted if the board determines such analysis is not necessary because the taking into account of such member would not significantly affect the determination under this subsection.

(ii) Controlled group. For purposes of subparagraph (i), the term "controlled group" means any group treated as a single employer under 26 USCS Section 414(b), (c), (m), or (o).

(5) Notice of filing of application for waiver.

(a) The board shall, before granting a waiver under this section, require each applicant to provide evidence satisfactory to such board that the applicant has provided notice of the filing of the application for such waiver to each employee organization representing employees covered by the affected plan, and each affected party. Such notice shall include a description of the extent to which the plan is funded for benefits and for benefit liabilities.

(b) The board shall consider any relevant information provided by a person to whom notice was given under paragraph (a).

SECTION 27. (1) Determinations by board in granting extension. The period of years required to amortize any unfunded liability (described in any clause of subsection (2)(b)(ii) of Section 25 of this act), of any plan may be extended by the board for a period of time (not in excess of ten (10) years) if it determines that such extension would carry out the purposes of this act and would provide adequate protection for participants under the plan and their beneficiaries and if it determines that the failure to permit such extension would:

(a) Result in:

(i) A substantial risk to the voluntary continuation of the plan, or

(ii) A substantial curtailment of pension benefit levels or employee compensation, and

(b) Be adverse to the interests of plan participants in the aggregate. In the case of a plan other than a multiemployer plan, the interest rate applicable for any plan year under any arrangement entered into by the board in connection with an extension granted under this subsection shall be the greater of:

(i) One hundred fifty percent (150%) of the federal mid-term rate (as in effect under 26 USCS Section 1274 for the first month of such plan year), or

(ii) The rate of interest used under the plan in determining costs. In the case of a multiemployer plan, such rate shall be the rate determined under 26 USCS Section 6621(b).

(2) Amendment of plan.

(a) No amendment of the plan which increases the liabilities of the plan by reason of any increase in benefits, and change in the accrual of benefits, or any change in the rate at which benefits become nonforfeitable under the plan shall be adopted if a waiver under Section 26(1) of this act or an extension of time under subsection (1) of this section is in effect with respect to the plan, or if a plan amendment described in Section 25(3)(h) of this act has been made at any time in the preceding twelve (12) months (twenty-four (24) months in the case of a multiemployer plan). If a plan is amended in violation of the preceding sentence, any such waiver, or extension of time, shall not apply to any plan year ending on or after the date on which such amendment is adopted.

(b) Paragraph (a) shall not apply to any plan amendment which:

(i) The board to be reasonable and which provides for only de minimis increases in the liabilities of the plan;

(ii) Only repeals an amendment described in Section 25(3)(h) of this act;

(iii) Is required as a condition of qualification under 26 USCS Sections 401 et seq.

(3) Notice of filing of application for extension.

(a) The board shall, before granting an extension under this section, require each applicant to provide evidence satisfactory to the board that the applicant has provided notice of the filing of the application for such extension to each employee organization representing employees covered by the affected plan.

(b) The board shall consider any relevant information provided by a person to whom notice was given under paragraph (a).

SECTION 28. (1) Maintenance of account. A plan which uses a funding method that requires contributions in all years not less than those required under the entry age normal funding method may maintain an alternative minimum funding standard account for any plan year. Such account shall be credited and charged solely as provided in this section.

(2) Operation of account. For a plan year the alternative minimum funding standard accounts shall be:

(a) Charged with the sum of:

(i) The lesser of normal cost under the funding method used under the plan or normal cost determined under the unit credit method,

(ii) The excess, if any, of the present value of accrued benefits under the plan over the fair market value of the assets, and

(iii) An amount equal to the excess, if any, of credits to the alternative minimum funding standard account for all prior plan years over charges to such account for all such years, and

(b) Credited with the amount considered contributed by the employer to or under the plan (within the meaning of Section 25(3)(j) of this act) for the plan year.

(3) Interest. The alternative minimum funding standard account (and items therein) shall be charged or credited with interest in the manner provided under Section 25(2)(e) of this act with respect to the funding standard account.

SECTION 29. (1) In general. If:

(a) A defined benefit plan (other than a multiemployer plan) to which the requirements of Section 25 of this act apply adopts an amendment an effect of which is to increase current liability under the plan for a plan year, and

(b) The funded current liability percentage of the plan for the plan year in which the amendment takes effect is less than sixty percent (60%), including the amount of the unfunded current liability under the plan attributable to the plan amendment,

the contributing sponsor (or any member of the controlled group of the contributing sponsor) shall provide security to the plan.

(2) Form of security. The security required under subsection (1) shall consist of:

(a) A bond issued by a corporate surety company that is an acceptable surety for purposes of Section 41 of this act,

(b) Cash, or United States obligations which mature in three (3) years or less, held in escrow by a bank or similar financial institution, or

(c) Such other form of security as is satisfactory to the board and the parties involved.

(3) Amount of security. The security shall be in an amount equal to the excess of:

(a) The lesser of:

(i) The amount of additional plan assets which would be necessary to increase the funded current liability percentage under the plan to sixty percent (60%), including the amount of the unfunded current liability under the plan attributable to the plan amendment, or

(ii) The amount of the increase in current liability under the plan attributable to the plan amendment and any other plan amendments adopted after December 31, 1996, and before such plan amendment, over

(b) Ten Million Dollars ($10,000,000.00).

(4) Release of security. The security shall be released (and any amounts thereunder shall be refunded together with any interest accrued thereon) at the end of the first plan year which ends after the provision of the security and for which the funded current liability percentage under the plan is not less than sixty percent (60%). The board may prescribe regulations for partial releases of the security by reason of increases in the funded current liability percentage.

(5) Definitions. For purposes of this section, the terms "current liability" "funded current liability percentage", and "unfunded current liability" shall have the meanings given such terms by Section 25(4) of this act, except that in computing unfunded current liability there shall not be taken into account any unamortized portion of the unfunded old liability amount as of the close of the plan year.

ARTICLE 9

Fiduciary Responsibility

SECTION 30. (1) This article shall apply to any employee pension benefit plan described in Section 3(1) of this act and not exempted under Section 3(2) of this act.

(2) For purposes of this article:

(a) In the case of a plan which invests in any security issued by an investment company registered under the Investment Company Act of 1940, the assets of such plan shall be deemed to include such security but shall not, solely by reason of such investment, be deemed to include any assets of such investment company.

(b) In the case of a plan to which a guaranteed benefit policy is issued by an insurer, the assets of such plan shall be deemed to include such policy, but shall not, solely by reason of the issuance of such policy, be deemed to include any assets of such insurer. For purposes of this paragraph:

(i) The term "insurer" means an insurance company, insurance service, or insurance organization, qualified to do business in a state.

(ii) The term "guaranteed benefit policy" means an insurance policy or contract to the extent that such policy or contract provides for benefits the amount of which is guaranteed by the insurer. Such term includes any surplus in a separate account, but excludes any other portion of a separate account.

SECTION 31. (1) Named fiduciaries.

(a) Every employee pension benefit plan shall be established and maintained pursuant to a written instrument. Such instrument shall provide for one or more named fiduciaries who jointly or severally shall have authority to control and manage the operation and administration of the plan.

(b) For purposes of this act, the term "named fiduciary" means a fiduciary who is named in the plan instrument, or who, pursuant to a procedure specified in the plan, is identified as a fiduciary:

(i) By a person who is an employer or employee organization with respect to the plan, or

(ii) By such an employer and such an employee organization acting jointly.

(2) Requisite features of plan. Every employee pension benefit plan shall:

(a) Provide a procedure for establishing and carrying out a funding policy and method consistent with the objectives of the plan and the requirements of this act,

(b) Describe any procedure under the plan for the allocation of responsibilities for the operation and administration of the plan (including any procedure described in Section 34(3)(a) of this act),

(c) Provide a procedure for amending such plan, and for identifying the persons who have authority to amend the plan, and

(d) Specify the basis on which payments are made to and from the plan.

(3) Optional features of plan. Any employee pension benefit plan may provide:

(a) That any person or group of persons may serve in more than one fiduciary capacity with respect to the plan (including service both as trustee and administrator);

(b) That a named fiduciary, or a fiduciary designated by a named fiduciary pursuant to a plan procedure described in Section 34(3)(a) of this act, may employ one or more persons to render advice with regard to any responsibility such fiduciary has under the plan; or

(c) That a person who is a named fiduciary with respect to control or management of the assets of the plan may appoint an investment manager or managers to manage (including the power to acquire and dispose of) any assets of a plan.

SECTION 32. (1) Benefit plan assets to be held in trust; authority of trustees. Except as provided in subsection (2), all assets of an employee pension benefit plan shall be held in trust by one or more trustees. Such trustee or trustees shall be either named in the trust instrument or in the plan instrument described in Section 31(1) of this act or appointed by a person who is a named fiduciary, and upon acceptance of being named or appointed, the trustee or trustees shall have exclusive authority and discretion to manage and control the assets of the plan, except to the extent that:

(a) The plan expressly provides that the trustee or trustees are subject to the direction of a named fiduciary who is not a trustee, in which case the trustees shall be subject to proper directions of such fiduciary which are made in accordance with the terms of the plan and which are not contrary to this act, or

(b) Authority to manage, acquire, or dispose of assets of the plan is delegated to one or more investment managers pursuant to Section 31(3)(c) of this act.

(2) Exceptions. The requirements of subsection (1) of this section shall not apply:

(a) To any assets of a plan which consist of insurance contracts or policies issued by an insurance company qualified to do business in a state;

(b) To any assets of such an insurance company or any assets of a plan which are held by such an insurance company;

(c) To a plan:

(i) Some or all of the participants of which are employees described in 26 USCS Section 401(c)(1); or

(ii) Which consists of one or more individual retirement accounts described in 26 USCS Section 408; custodial accounts which qualify under 26 USCS Section 401(f) or 408(h), whichever is applicable; to the extent that such plan's assets are held in one or more custodial accounts which qualify under 26 USCS Section 401(f) or 408(h), whichever is applicable;

(d) To a plan which the board exempts from the requirement of subsection (1) and which is not subject to any of the following provisions of this act:

(i) Article 5 of this act, or

(ii) Article 7 of this act;

(e) To a contract established and maintained under 26 USCS Section 403(b) to the extent that the assets of the contract are held in one or more custodial accounts pursuant to 26 USCS Section 403(b)(7); or

(f) To any plan, fund or program under which an employer, all of whose stock is directly or indirectly owned by employees, former employees or their beneficiaries, proposes through an unfunded arrangement to compensate retired employees for benefits which were forfeited by such employees under a pension plan maintained by a former employer prior to the date such pension plan became subject to this act.

(3) Assets of plan not to inure to benefit of employer; allowable purposes of holding plan assets.

(a) Except as provided in paragraph (b), (c) or (d) or subsection (4) under 26 USCS Section 420 (as in effect on January 1, 1995), the assets of a plan shall never inure to the benefit of any employer and shall be held for the exclusive purposes of providing benefits to participants in the plan and their beneficiaries and defraying reasonable expenses of administering the plan.

(b) (i) In the case of a contribution:

1. If such contribution is made by an employer to a plan (other than a multiemployer plan) by a mistake of fact, paragraph (a) shall not prohibit the return of such contribution to the employer within one (1) year after the payment of the contribution, and

2. If such contribution is made by an employer to a multiemployer plan by a mistake of fact or law (other than a mistake relating to whether the plan is described in 26 USCS Section 401(a) or the trust which is part of such plan is exempt from taxation under 26 USCS Section 501(a), paragraph (a) shall not prohibit the return of such contribution to the employer within six (6) months after the plan administrator determines that the contribution was made by such a mistake.

(ii) If a contribution is conditioned on initial qualification of the plan under 26 USCS Section 401 or 403(a), and if the plan receives an adverse determination with respect to its initial qualification, then paragraph (a) shall not prohibit the return of such contribution to the employer within one (1) year after such determination, but only if the application for the determination is made by the time prescribed by law for filing the employer's return for the taxable year in which such plan was adopted, or such later date as the board may prescribe.

(iii) If a contribution is conditioned upon the deductibility of the contribution under 26 USCS Section 404, then, to the extent the deduction is disallowed, paragraph (a) shall not prohibit the return to the employer of such contribution (to the extent disallowed) within one (1) year after the disallowance of the deduction.

SECTION 33. (1) Prudent person standard of care.

(a) Subject to Section 32(3) and (4) of this act, a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and:

(i) For the exclusive purpose of:

1. Providing benefits to participants and their beneficiaries; and

2. Defraying reasonable expenses of administering the plan;

(ii) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims;

(iii) By diversifying the investments of the plan so as to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so; and

(iv) In accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this act.

(b) In the case of an eligible individual account plan (as defined in Section 36(4)(c) of this act), the diversification requirement of paragraph (a)(iii) and the prudence requirement (only to the extent that it requires diversification) of paragraph (a)(ii) is not violated by acquisition or holding of qualifying employer real property or qualifying employer securities (as defined in Section 36(4)(d) and (e) of this act).

(2) Indicia of ownership of assets outside jurisdiction of district courts. Except as authorized by the board by regulation, no fiduciary may maintain the indicia of ownership of any assets of a plan outside the jurisdiction of the district courts of the United States.

(3) Control over assets by participant or beneficiary. In the case of a pension plan which provides for individual accounts and permits a participant or beneficiary to exercise control over assets in his account, if a participant or beneficiary exercises control over the assets in his account (as determined under regulations of the board):

(a) Such participant or beneficiary shall not be deemed to be a fiduciary by reason of such exercise, and

(b) No person who is otherwise a fiduciary shall be liable under this part for any loss, or by reason of any breach, which results from such participant's or beneficiary's exercise of control.

(4) Fiduciary responsibility.

(a) If, in connection with the termination of a pension plan which is a single-employer plan, there is an election to establish or maintain a qualified replacement plan, or to increase benefits, as provided under 26 USCS Section 4980(d), a fiduciary shall discharge the fiduciary's duties under this act in accordance with the following requirements:

(i) In the case of a fiduciary of the terminated plan, any requirement:

1. Under 26 USCS Section 4980(d)(2)(B) with respect to the transfer of assets from the terminated plan to a qualified replacement plan, and

2. Under 26 USCS Section 4980(d)(2)(B)(ii) or (3) with respect to any increase in benefits under the terminated plan.

(ii) In the case of a fiduciary of a qualified replacement plan, any requirement:

1. Under 26 USCS Section 4980(d)(2)(A) with respect to participation in the qualified replacement plan of active participants in the terminated plan,

2. Under 26 USCS Section 4980(d)(2)(B) with respect to the receipt of assets from the terminated plan, and

3. Under 26 USCS Section 4980(d)(2)(C) with respect to the allocation of assets to participants of the qualified replacement plan.

(b) For purposes of this subsection any term used in this subsection which is also used in 26 USCS Section 4980(d) shall have the same meaning as when used in such section.

SECTION 34. (1) Circumstances giving to liability. In addition to any liability which he may have under any other provision of this article, a fiduciary with respect to a plan shall be liable for a breach of fiduciary responsibility of another fiduciary with respect to the same plan in the following circumstances:

(a) If he participates knowingly in, or knowingly undertakes to conceal, an act or omission of such other fiduciary, knowing such act or omission is a breach;

(b) If, by his failure to comply with Section 33(1)(a) of this act in the administration of his specific responsibilities which give rise to his status as a fiduciary, he has enabled such other fiduciary to commit a breach; or

(c) If he has knowledge of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances to remedy the breach.

(2) Assets held by two or more trustees.

(a) Except as otherwise provided in subsection (4) and in Section 32(1)(a) and (b) of this act, if the assets of a plan are held by two (2) or more trustees:

(i) Each shall use reasonable care to prevent to co-trustee from committing a breach; and

(ii) They shall jointly manage and control the assets of the plan except that nothing in this subparagraph (ii) shall preclude any agreement, authorized by the trust instrument, allocating specific responsibilities, obligations, or duties among trustees, in which event a trustee to whom certain responsibilities, obligations, or duties have not been allocated shall not be liable by reason of this subparagraph (ii) either individually or as a trustee for any loss resulting to the plan arising from the acts or omissions on the part of another trustee to whom such responsibilities, obligations, or duties have been allocated.

(b) Nothing in this subsection shall limit any liability that a fiduciary may have under subsection (1) or any other provision of this article.

(c) (i) In the case of a plan the assets of which are held in more than one trust, a trustee shall not be liable under paragraph (a) except with respect to an act or omission of a trustee of a trust of which he is a trustee.

(ii) No trustee shall be liable under this subsection for following instructions referred to in Section 32(1)(a) of this act.

(3) Allocation of fiduciary responsibility; designated persons to carry out fiduciary responsibilities.

(a) The instrument under which a plan is maintained may expressly provide for procedures:

(i) Fiduciary responsibilities (other than trustee responsibilities) among named fiduciaries, and

(ii) For named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary responsibilities (other than trustee responsibilities) under the plan.

(b) If a plan expressly provides for a procedure described in paragraph (a), and pursuant to such procedure any fiduciary responsibility of a named fiduciary is allocated to any person, or a person is designated to carry out any such responsibility, then such named fiduciary shall not be liable for an act or omission of such person in carrying out such responsibility except to the extent that:

(i) The named fiduciary violated Section 33(1)(a) of this act:

1. With respect to such allocation or designation,

2. With respect to the establishment or implementation of the procedure under paragraph (a), or

3. In continuing the allocation or designation; or

(ii) The named fiduciary would otherwise be liable in accordance with subsection (1).

(c) For purposes of this subsection, the term "trustee responsibility" means any responsibility provided in the plan's trust instrument (if any) to manage or control the assets of the plan, other than a power under the trust instrument of a named fiduciary to appoint an investment manager in accordance with Section 31(3)(c) of this act.

(4) Investment managers.

(a) If an investment manager or managers have been appointed under Section 31(3)(c) of this act, then, notwithstanding subsections (1)(b) and (c) and subsection (2), no trustee shall be liable for the acts or omissions of such investment manager or managers, or be under an obligation to invest or otherwise manage any asset of the plan which is subject to the management of such investment manager.

(b) Nothing in this subsection shall relieve any trustee of any liability under this article for any act of such trustee.

SECTION 35. (1) Transactions between plan and party in interest. Except as provided in Section 37 of this act:

(a) A fiduciary with respect to a plan shall not cause the plan to engage in a transaction, if he knows or should know that such transaction constitutes a direct or indirect:

(i) Sale or exchange, or leasing, of any property between the plan and a party in interest;

(ii) Lending of money or other extension of credit between the plan and a party in interest;

(iii) Furnishing of goods, services, or facilities between the plan and a party in interest;

(iv) Transfer to, or use by or for the benefit of, a party in interest, of any assets of the plan; or

(v) Acquisition, on behalf if the plan, of any employer security or employer real property in violation of Section 36(1) of this act.

(b) No fiduciary who has authority or discretion to control or manage the assets of a plan shall permit the plan to hold any employer security or employer real property if he knows or should know that holding such security or real property violates Section 36(1) of this act.

(2) Transaction between plan and fiduciary. A fiduciary with respect to a plan shall not:

(a) Deal with the assets of the plan in his own interest or for his own account,

(b) In his individual or in any other capacity act in any transaction involving the plan on behalf of a party (or represent a party) whose interests are adverse to the interests of the plan or the interests of its participants or beneficiaries, or

(c) Receive any consideration for his own personal account from any party dealing with such plan in connection with a transaction involving the assets of the plan.

(3) Transfer of real or personal property to plan by party in interest. A transfer of real or personal property by a party in interest to a plan shall be treated as a sale or exchange if the property is subject to a mortgage or similar lien which the plan assumes or if it is subject to a mortgage or similar lien which a party-in-interest placed on the property within the ten-year period ending on the date of the transfer.

SECTION 36. (1) Percentage limitation. Except as otherwise provided in this section:

(a) A plan may not acquire or hold:

(i) Any employer security which is not a qualifying employer security, or

(ii) Any employer real property which is not qualifying employer real property.

(b) A plan may not acquire any qualifying employer security or qualifying employer real property, if immediately after such acquisition the aggregate fair market value of employer securities and employer real property held by the plan exceeds ten percent (10%) of the fair market value of the assets of the plan.

(2) Exception.

(a) Subsection (1) of this section shall not apply to any acquisition or holding of qualifying employer securities or qualifying employer real property by an eligible individual account plan.

(b) Cross references.

(i) For exemption from diversification requirements for holding of qualifying employer securities or qualifying employer real property by an eligible individual account plans, see Section 33(1)(b) of this act.

(ii) For exemption from prohibited transactions for certain acquisitions of qualifying employer securities and qualifying employer real property which are not in violation of ten percent (10%) limitation, see Section 37(5) of this act.

(3) Definitions. For purposes of this section:

(a) The term "employer security" means a security issued by an employer of employees covered by the plan, or by an affiliate of such employer. A contract to which Section 37(2)(e) of this act applies shall not be treated as a security for purposes of this section.

(b) The term "employer real property" means real property (and related personal property) which is leased to an employer of employees covered by the plan, or to an affiliate of such employer. For purposes of determining the time at which a plan acquires employer real property for purposes of this section, such property shall be deemed to be acquired by the plan on the date on which the plan acquires the property or on the date which the lease to the employer (or affiliate) is entered into, whichever is later.

(c) (i) The term "eligible individual account plan" means an individual account plan which is

1. A profit-sharing, stock bonus, thrift, or savings plan;

2. An employee stock ownership plan; or

3. A money purchase plan which was in existence on July 1, 1997, and which on such date invested primarily in qualifying employer securities. Such term excludes an individual retirement account or annuity described in 26 USCS Section 408.

(ii) Notwithstanding subparagraph (i), a plan shall be treated as an eligible individual account plan with respect to the acquisition or holding of qualifying employer real property or qualifying employer securities only if such plan explicitly provides for acquisition and holding of qualifying employer securities or qualifying employer real property (as the case may be). In the case of a plan in existence on July 1, 1997, this subparagraph shall not take effect until January 1, 1998.

(iii) The term "eligible individual account plan" does not include any individual account plan the benefits of which are taken into account in determining the benefits payable to a participant under any defined benefit plan.

(d) The term "qualifying employer real property" means parcels of employer real property:

(i) If a substantial number of the parcels are dispersed geographically;

(ii) If each parcel of real property and the improvements thereon are suitable (or adaptable without excessive cost) for more than one (1) use;

(iii) Even if all of such real property is leased to one lessee (which may be an employer, or an affiliate of an employer); and

(iv) If the acquisition and retention of such property comply with the provisions of this article (other than Section 33(1)(a)(ii) of this act) to the extent it requires diversification, and Sections 33(1)(a)(iii) and 35 of this act, and subsection (1).

(e) The term "qualifying employer security" means an employer security which is:

(i) Stock,

(ii) A marketable obligation (as defined in subsection (5)), or

(iii) An interest in a publicly traded partnership (as defined in 26 USCS Section 7704(b)), but only if such partnership is an existing partnership as defined in Section 10211(c)(2)(A) of the Revenue Act of 1987 (Public Law 100-203)(26 USCS Section 7704 note).

After December 31, 1997, in the case of a plan other than an eligible individual account plan, an employer security described in subparagraph (i) or (iii) shall be considered a qualifying employer security only if such employer security satisfies the requirements of subsection (6)(a).

(f) The term "employee stock ownership plan" means an individual account plan:

(i) Which is a stock bonus plan which is qualified, or a stock bonus plan and money purchase plan both of which are qualified, under 26 USCS Section 401, and which is designed to invest primarily in qualifying employer securities, and

(ii) Which meets such other requirements as the board my prescribe by regulation.

(g) A corporation is an affiliate of an employer if it is a member of any controlled group of corporations (as defined in 26 USCS Section 1563(a), except that "applicable percentage" shall be substituted for "eighty percent (80%)" wherever the latter percentage appears in such section) of which the employer who maintains the plan is a member. For purposes of the preceding sentence, the term "applicable percentage" means fifty percent (50%), or such lower percentage as the board may prescribe by regulation. A person other than a corporation shall be treated as an affiliate of an employer to the extent provided in regulations of the board. An employer which is a person other than a corporation shall be treated as affiliated with another person to the extent provided by regulations of the board.

(h) The board may prescribe regulations specifying the extent to which conversions, splits, the exercise of rights, and similar transactions are not treated as acquisitions.

(i) For purposes of this section, an arrangement which consists of a defined benefit plan and an individual account plan shall be treated as one plan if the benefits of such individual account plan are taken into account in determining the benefits payable under such defined benefit plan.

(4) Marketable obligations. For purposes of subsection (4)(e), the term "marketable obligation" means a bond, debenture, note, or certificate, or other evidence of indebtedness (hereinafter in this subsection referred to as "obligation") if:

(a) Such obligation is acquired:

(i) On the market, either

1. At the price of the obligation prevailing on a national securities exchange which is registered with the Securities and Exchange Commission, or

2. If the obligation is not traded on such a national securities exchange, at a price not less favorable to the plan than the offering price for the obligations as established by current bid and asked prices quoted by persons independent of the issuer;

(ii) From an underwriter, at a price

1. Not in excess of the public offering price for the obligation as set forth in a prospectus or offering circular filed with the Securities and Exchange Commission, and

2. At which a substantial portion of the same issue is acquired by persons independent of the issuer; or

(iii) Directly from issuer, at a price not less favorable to the plan than the price paid currently for a substantial portion of the same issue by persons independent of the issuer;

(b) Immediately following acquisition of such obligation:

(i) Not more than twenty-five percent (25%) of the aggregate amount of obligations issued in such issue and outstanding at the time of acquisition is held by the plan, and

(ii) At least fifty percent (50%) of the aggregate amount referred to in subparagraph (i) is held by persons independent of the issuer; and

(c) Immediately following acquisition of the obligation, not more than twenty-five percent (25%) of the assets of the plan is invested in obligations of the employer or an affiliate of the employer.

(5) Maximum percentage of stock held by plan; time of holding or acquisition; necessity of legally binding contract. Stock satisfies the requirements of this paragraph if, immediately following the acquisition of such stock:

(a) No more than twenty-five percent (25%) of the aggregate amount of stock of the same class issued and outstanding at the time of acquisition is held by the plan, and

(b) At least fifty percent (50%) of the aggregate amount referred to in paragraph (a) is held by persons independent of the issuer.

SECTION 37. (1) Grant of exemptions. The board shall establish an exemption procedure for purposes of this subsection. Pursuant to such procedure, it may grant a conditional or unconditional exemption of any fiduciary or transaction, or class of fiduciaries or transactions, from all or part of the restrictions imposed by Sections 35 and 36(1) of this act. An exemption granted under this section shall not relieve a fiduciary from any other applicable provision of this act. The board may not grant an exemption under this subsection unless it finds that such exemption is:

(a) Administratively feasible,

(b) In the interests of the plan and of its participants and beneficiaries, and

(c) Protective of the rights of participants and beneficiaries of such plan.

Before granting an exemption under this subsection from Section 35(1) or 36(1) of this act, the board shall publish notice of the pendency of the exemption, shall require that adequate notice be given to interested persons, and shall afford interested persons opportunity to present views. The board may not grand an exemption under this subsection from Section 35(2) of this act unless it affords an opportunity for a hearing and makes a determination on the record with respect to the findings required by paragraphs (a), (b) and (c) of this subsection.

(2) Enumeration of transactions exempted from Section 35 of this act prohibitions. The prohibitions provided in Section 35 of this act shall not apply to any of the following transactions:

(a) Any loans made by the plan to parties in interest who are participants or beneficiaries of the plan if such loans

(i) Are available to all such participants and beneficiaries on a reasonably equivalent basis,

(ii) Are not made available to highly compensated employees (within the meaning of 26 USCS Section 414(a) in an amount greater than the amount made available to other employees, (iii) Are made in accordance with specific provisions regarding such loans set forth in the plan,

(iv) Bear a reasonable rate of interest, and

(v) Are adequately secured.

(b) Contracting or making reasonable arrangements with a party in interest for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefor.

(c) A loan to an employee stock ownership plan (as defined in Section 36(4)(b) of this act), if:

(i) Such loan is primarily for the benefit of participants and beneficiaries of the plan, and

(ii) Such loan is at an interest rate which is not in excess of a reasonable rate.

If the plan gives collateral to a party in interest for such loan, such collateral may consist only of qualifying employer securities (as defined in Section 36(4)(e) of this act).

(d) The investment of all or part of a plan's assets in deposits which bear a reasonable interest rate in a bank or similar financial institution supervised by the United States or a state, if such bank or other institution is a fiduciary of such plan and if:

(i) The plan covers only employees of such bank or other institution and employees of affiliates of such bank or other institution, or

(ii) Such investment is expressly authorized by a provision of the plan or by a fiduciary (other than such bank or institution or affiliate thereof) who is expressly empowered by the plan to so instruct the trustee with respect to such investment.

(e) Any contract for life insurance, health insurance, or annuities with one or more insurers which are qualified to do business in a State, if the plan pays no more than adequate consideration, and if each such insurer or insurers is:

(i) The employer maintaining the plan, or

(ii) A party in interest which is wholly owned (directly or indirectly) by the employer maintaining the plan, or by any person which is a party in interest with respect to the plan, but only if the total premiums and annuity considerations written by such insurers for life insurance, health insurance, or annuities for all plans (and their employers) with respect to which such insurers are parties in interest (not including premiums or annuity considerations written by the employer maintaining the plan) do not exceed five percent (5%) of the total premiums and annuity considerations written for all lines of insurance in that year by such insurers (not including premiums or annuity considerations written by the employer maintaining the plan).

(f) The providing of any ancillary service by a bank or similar financial institution supervised by the United States or a State, if such bank or other institution is a fiduciary of such plan, and if:

(i) Such bank or similar financial institution has adopted adequate internal safeguards which assure that the providing of such ancillary service is consistent with sound banking and financial practice, as determined by federal or state supervisory authority, and

(ii) The extent to which such ancillary service is provided is subject to specific guidelines issued by such bank or similar financial institution (as determined by the board after consultation with federal and state supervisory authority), and adherence to such guidelines would reasonably preclude such bank or similar financial institution from providing such ancillary service

1. In an excessive or unreasonable manner, and

2. In a manner that would be inconsistent with the best interests of participants and beneficiaries of employee benefit plans.

Such ancillary services shall not be provided at more than reasonable compensation.

(g) The exercise of a privilege to convert securities, to the extent provided in regulations of the board, but only if the plan receives no less than adequate consideration pursuant to such conversion.

(h) Any transaction between a plan and a common or collective trust fund or pooled investment fund maintained by a party in interest which is a bank or trust company supervised by a state or federal agency, or between a plan and a pooled investment fund of an insurance company qualified to do business in a State, if:

(i) The transaction is a sale or purchase of an interest in the fund,

(ii) The bank, trust company, or insurance company receives not more than reasonable compensation, and

(iii) Such transaction is expressly permitted by the instrument under which the plan is maintained, or by a fiduciary (other than the bank, trust company, or insurance company or an affiliate thereof) who has authority to manage and control the assets of the plan.

(i) The sale by a plan to a party in interest on or after December 31, 1997, of any stock, if:

(i) The requirements of paragraphs (a) and (b) of subsection (5) are met with respect to such stock,

(ii) On the later of the date on which the stock was acquired by the plan, or January 1, 1998, such stock constituted a qualifying employer security (as defined in Section 36(4)(e) of this act as then in effect), and

(iii) Such stock does not constitute a qualifying employer security (as defined in Section 36(4)(e) of this act as in effect at the time of the sale).

(3) Fiduciary benefits and compensation not prohibited by Section 35 of this act. Nothing in Section 35 of this act shall be construed to prohibit any fiduciary from:

(a) Receiving any benefit to which he may be entitled as a participant or beneficiary in the plan, so long as the benefit is computed and paid on a basis which is consistent with the terms of the plan as applied to all other participants and beneficiaries;

(b) Receiving any reasonable compensation for services rendered, or for the reimbursement of expenses properly and actually incurred, in the performance of his duties with the plan; except that no person so serving who already receives full-time pay from an employer or an association of employers, whose employees are participants in the plan, or from an employee organization whose members are participants in such plan shall receive compensation from such plan, except for reimbursement of expenses properly and actually incurred; or

(c) Serving as a fiduciary in addition to being an officer, employee, agent, or other representative of a party in interest.

(4) Owner-employees; family members; shareholder employees. Section 36(2) of this act and subsections (2), (3) and (5) of this section shall not apply to any transaction in which a plan, directly or indirectly:

(a) Lends any part of the corpus or income of the plan to;

(b) Pays any compensation for personal services rendered to the plan to; or

(c) Acquires for the plan any property from or sells any property to:

any person who is with respect to the plan an owner-employee (as defined in 26 USCS Section 401(c)(3), a member of the family (as defined in 26 USCS Section 267(c)(4) of any such owner-employee, or a corporation controlled by any such owner-employee through the ownership, directly or indirectly, of fifty percent (50%) or more of the total combined voting power of all classes of stock entitled to vote or fifty percent (50%) or more of the total value of shares of all classes of stock of the corporation. For purposes of this subsection a shareholder employee (as defined in 26 USCS Section 1379 as in effect on the day before October 19, 1982), and a participant or beneficiary of an individual retirement account or individual retirement annuity described in 26 USCS Section 408 or a retirement bond described in 26 USCS Section 409 (as effective for obligations issued before January 1, 1984) and an employer or association of employers which establishes such an account or annuity under 26 USCS Section 408(c) shall be deemed to be an owner-employee.

(5) Acquisition or sale by plan of qualifying employer securities; acquisition, sale, or lease by plan of qualifying employer real property. Sections 35 and 36 of this act shall not apply to the acquisition or sale by a plan of qualifying employer securities (as defined in Section 36 (4)(e) of this act), or acquisition, sale or lease by a plan of qualifying employer real property (as defined in Section 36(4)(d) of this act):

(a) If such acquisition, sale or lease is for adequate consideration (or in the case of a marketable obligation, at a price not less favorable to the plan than the price determined under Section 36(5)(a) of this act),

(b) If no commission is charged with respect thereto, and

(c) If:

(i) The plan is an eligible individual account plan (as defined in Section 36(4)(c) of this act),

(ii) In the case of an acquisition or lease of qualifying employer real property by a plan which is not an eligible individual account plan, or of an acquisition of qualifying employer securities by such a plan, the lease or acquisition is not prohibited by Section 36(1) of this act.

SECTION 38. (1) Any person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by this act shall be personally liable to make good to such plan any losses to the plan resulting from each such breach, and to restore to such plan any profits of such fiduciary which have been made through use of assets of the plan by the fiduciary, and shall be subject to such other equitable or remedial relief as the court may deem appropriate, including removal of such fiduciary. A fiduciary may also be removed for a violation of Section 40 of this act.

(2) No fiduciary shall be liable with respect to a breach of fiduciary duty under this title if such breach was committed before he became a fiduciary or after he ceased to be a fiduciary.

SECTION 39. (1) Except as provided in Section 34(2)(a) and (4) of this act, any provision in an agreement or instrument which purports to relieve a fiduciary from responsibility or liability for any responsibility, obligation, or duty under this article shall be void as against public policy.

(2) Nothing in this article shall preclude:

(a) A plan from purchasing insurance for its fiduciaries or for itself to cover liability or losses occurring by reason of the act or omission of a fiduciary, if such insurance permits recourse by the insurer against the fiduciary in the case of a breach of a fiduciary obligation by such fiduciary;

(b) A fiduciary from purchasing insurance to cover liability under this article from and for his own account; or

(c) An employer or an employee organization from purchasing insurance to cover potential liability of one or more persons who serve in a fiduciary capacity with regard to an employee pension benefit plan.

SECTION 40. (1) Conviction or imprisonment. No person who has been convicted of, or has been imprisoned as a result of his conviction of, in state or in federal court, robbery, bribery, extortion, embezzlement, fraud, grand larceny, burglary, arson, a felony violation of federal or state law involving controlled substances, murder, rape, kidnapping, perjury, assault with intent to kill, any crime described in Section 9(a)(1) of the Investment Company Act of 1940 (15 USCS 80a-9(a)(1)), a violation of any provision of this act, any felony involving abuse or misuse of such person's position or employment in a labor organization or employee pension benefit plan to seek or obtain an illegal gain at the expense of the members of the labor organization or the beneficiaries of the employee pension benefit plan, or conspiracy to commit any such crimes or attempt to commit any such crimes, or a crime in which any of the foregoing crimes is an element, shall serve or be permitted to serve:

(a) As an administrator, fiduciary, officer, trustee, custodian, counsel, agent, employee, or representative in any capacity of any employee pension benefit plan,

(b) As a consultant or adviser to an employee pension benefit plan, including but not limited to any entity whose activities are in whole or substantial part devoted to providing goods or services to any employee pension benefit plan, or

(c) In any capacity that involves decision making authority or custody or control of the moneys, funds, assets, or property of an employee pension benefit plan, during or for the period of thirteen (13) years after such conviction or after the end of such imprisonment, whichever is later, unless the sentencing court on the motion of the person convicted sets a lesser period of at least three (3) years after such conviction or after the end of such period, in the case of a person so convicted or imprisoned, his citizenship rights, having been revoked as a result of such conviction, have been fully restored, or if the offense is a federal offense, the sentencing judge or, if the offense is a state or local offense, the United States district court for the district in which the offense was committed, determines that such person's service in any capacity referred to in paragraphs (a) through (c) would not be contrary to the purposes of this act. Before making any such determination the court shall hold a hearing and shall give notice of such proceeding by certified mail to state, county, and federal prosecuting officials in the jurisdiction or jurisdictions in which such person was convicted. The court's determination in any such proceeding shall be final. No person shall knowingly hire, retain, employ, or otherwise place any other person to serve in any capacity in violation of this subsection. Notwithstanding the preceding provisions of this subsection, no corporation or partnership will be precluded from acting as an administrator, fiduciary, officer, trustee, custodian, counsel, agent, or employee of any employee pension benefit plan or as a consultant to any employee pension benefit plan without a notice, hearing, and determination by such court that such service would be inconsistent with the intention of this section.

(2) Penalty. Any person who intentionally violates this section shall be fined not more than Ten Thousand Dollars ($10,000.00) or imprisoned for not more than five (5) years, or both.

(3) Definitions. For the purpose of this section:

(a) A person shall be deemed to have been "convicted" and under the disability of "conviction" from the date of the judgment of the trial court, regardless of whether that judgment remains under appeal.

(b) The term "consultant" means any person who, for compensation, advises, or represents an employee pension benefit plan or who provides other assistance to such plan, concerning the establishment or operation of such plan.

(c) A period of parole or supervised release shall not be considered as part of a period of imprisonment.

(4) Salary of person barred from employee benefit plan office during appeal of conviction. Whenever any person:

(a) By operation of this section, has been barred from office or other position in an employee benefit plan as a result of a conviction, and

(b) Has filed an appeal of that conviction,

any salary which would be otherwise due such person by virtue of such office or position, shall be placed in escrow by the individual or organization responsible for payment of such salary. Payment of such salary into escrow shall continue for the duration of the appeal or for the period of time during which such salary would be otherwise due, whichever period is shorter. Upon the final reversal of such person's conviction on appeal, the amounts in escrow shall be paid to such person. Upon the final sustaining of that person's conviction on appeal, the amounts in escrow shall be returned to the individual or organization responsible for payments of those amounts. Upon final reversal of such person's conviction, such person shall no longer be barred by this section from assuming any position from which such person was previously barred.

SECTION 41. (1) Requisite bonding of plan officials. Every fiduciary of an employee pension benefit plan and every person who handles funds or other property of such a plan (hereafter in this section referred to as "plan official") shall be bonded as provided in this section; except that:

(a) Where such plan is one under which the only assets from which benefits are paid are the general assets of a union or of an employer, the administrator, officers, and employees of such plan shall be exempt from the bonding requirements of this section, and

(b) No bond shall be required of a fiduciary (or of any director, officer, or employee of such fiduciary) if such fiduciary:

(i) Is a corporation organized and doing business under the laws of the United States or of any state;

(ii) Is authorized under such laws to exercise trust powers or to conduct an insurance business;

(iii) Is subject to supervision or examination by federal or state authority; and

(iv) Has at all times a combined capital and surplus in excess of such a minimum amount as may be established by regulations issued by the board, which amount shall be at least One Million Dollars ($1,000,000.00). Paragraph (b) shall apply to a bank or other financial institution which is authorized to exercise trust powers and the deposits of which are not insured by the Federal Deposit Insurance Corporation, only if such bank or institution meets bonding or similar requirements under state law which the board determines are at least equivalent to those imposed on banks by federal law.

The amount of such bond shall be fixed at the beginning of each fiscal year of the plan. Such amount shall be not less than ten percent (10%) of the amount of funds handled. In no case shall such bond be less than One Thousand Dollars ($1,000.00) nor more than Five Hundred Thousand Dollars ($500,000.00), except that the board, after due notice and opportunity for hearing to all interested parties, and after consideration of the record, may prescribe an amount in excess of Five Hundred Thousand Dollars ($500,000.00), subject to the ten percent (10%) limitation of the preceding sentence. For purposes of fixing the amount of such bond, the amount of funds handled shall be determined by the funds handled by the person, group, or class to be covered by such bond and by their predecessor or predecessors, if any, during the preceding reporting year, or if the plan has no preceding reporting year, the amount of funds to be handled during the current reporting year by such person, group, or class, estimated as provided in regulations of the board. Such bond shall provide protection to the plan against loss by reason of acts of fraud or dishonesty on the part of the plan official, directly or through connivance with others. Any bond shall have as surety thereon a corporate surety company which is an acceptable surety on federal bonds under authority granted by the Secretary of the Treasury pursuant to Sections 6 through 13 of Title 6, United States Code. Any bond shall be in a form or of a type approved by the board, including individual bonds or schedule or blanket forms of bonds which cover a group or class.

(2) Unlawful acts. It shall be unlawful for any plan official to whom subsection (1) applies, to receive, handle, disburse, or otherwise exercise custody or control of any of the funds or other property of any employee pension benefit plan, without being bonded as required by subsection (1) and it shall be unlawful for any plan official of such plan, or any other person having authority to direct the performance of such functions, to permit such functions, or any of them, to be performed by any plan official, with respect to whom the requirements of subsection (1) have not been met.

(3) Conflict of interest prohibited in procuring bonds. It shall be unlawful for any person to procure any bond required by subsection (1) from any surety or other company or through any agent or broker in whose business operations such plan or any party in interest in such plan has any control or significant financial interest, direct or indirect.

(4) Exclusiveness of statutory basis for bonding requirement for persons handling funds or other property of employee benefit plans. Nothing in any other provision of law shall require any person, required to be bonded as provided in subsection (1) because he handles funds or other property of an employee pension benefit plan, to be bonded insofar as the handling by such person of the funds or other property of such plan is concerned.

(5) Regulations. The board shall prescribe such regulations as may be necessary to carry out the provisions of this section including exempting a plan from the requirements of this section where it finds that (a) other bonding arrangements or (b) the overall financial condition of the plan would be adequate to protect the interests of the beneficiaries and participants. When, in the opinion of the board, the administrator of a plan offers adequate evidence of the financial responsibility of the plan, or that other bonding arrangements would provide adequate protection of the beneficiaries and participants, it may exempt such plan from the requirements of this section.

SECTION 42. No action may be commenced under this act with respect to a fiduciary's breach of any responsibility, duty, or obligation under this article, or with respect to a violation of this article, after the earlier of:

(a) Six (6) years after:

(i) The date of the last action which constituted a part of the breach or violation, or

(ii) In the case of an omission, the latest date on which the fiduciary could have cured the breach or violation, or

(b) Three (3) years after the earliest date on which the plaintiff had actual knowledge of the breach or violation;

Except that in the case of fraud or concealment, such action may be commenced not later than six (6) years after the date of discovery of such breach or violation.

ARTICLE 11

Administration and Enforcement

SECTION 43. Any person who willfully violates any provision of Article 3 of this act, or any regulation or order issued under any such provision, shall upon conviction be fined not more than Five Thousand Dollars ($5,000.00) or imprisoned not more than one (1) year, or both; except that in the case of such violation by a person not an individual, the fine imposed upon such person shall be a fine not exceeding One Hundred Thousand Dollars ($100,000.00).

SECTION 44. (1) Persons empowered to bring a civil action. A civil action may be brought:

(a) By a participant or beneficiary:

(i) For the relief provided for in subsection (3) of this section, or

(ii) To recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan;

(b) By the board, or by a participant, beneficiary or fiduciary, for appropriate relief under Section 38 of this act;

(c) By a participant, beneficiary, or fiduciary

(i) To enjoin any act or practice which violates any provision of this title or the terms of the plan, or

(ii) To obtain other appropriate equitable relief

1. To redress such violations or

2. To enforce any provisions of this act or the terms of the plan;

(d) By the board, or by a participant, or beneficiary, for appropriate relief in the case of a violation of Section 8(3) of this act;

(e) Except as otherwise provided in subsection (2), by the board

(i) To enjoin any act or practice which violates any provision of this act, or

(ii) To obtain other appropriate equitable relief to redress such violation or to enforce any provision of this act;

(f) By the board to collect any civil penalty under subsection (3)(b) or (8) or (11); or

(g) In the event that the purchase of an insurance contract or insurance annuity in connection with termination of an individual's status as a participant covered under a pension plan with respect to all or any portion of the participant's pension benefit under such plan constitutes a violation of the terms of the plan, by the board, by any individual who was a participant or beneficiary at the time of the alleged violation, or by a fiduciary, to obtain appropriate relief, including the posting of security if necessary, to assure receipt by the participant or beneficiary of the amounts provided or to be provided by such insurance contract or annuity, plus reasonable prejudgment interest on such amounts.

(2) Plans qualified under Internal Revenue Code; maintenance of actions involving delinquent contributions.

(a) In the case of a plan which is qualified under Section 401(a), 403(a), or 405(a) of the Internal Revenue Code of 1986 (or with respect to which an application to so qualify has been filed and has not been finally determined) the board may exercise its authority under subsection (1)(e) with respect to a violation of, or the enforcement of, Article 5 and Article 7 of this act (relating to participation, vesting, and funding), only if one or more participants, beneficiaries, or fiduciaries, of such plan request in writing (in such manner as the board prescribes by regulation) that it exercise such authority on their behalf. In the case of such a request under this paragraph the board may exercise such authority only if it determines that such violation affects, or such enforcement is necessary to protect, claims of participants or beneficiaries to benefits under the plan.

(b) The board shall not initiate an action to enforce Section 53 of this act.

(3) Administrator's refusal to supply requested information; penalty for failure to provide annual report in complete form.

(a) Any administrator:

(i) Who fails to meet the requirements of Section 4(5)(a) of this act with respect to a participant or beneficiary, or

(ii) Who fails or refuses to comply with a request for any information which such administrator is required by this act to furnish to a participant or beneficiary (unless such failure or refusal results from matters reasonably beyond the control of the administrator) by mailing the material requested to the last known address of the requesting participant or beneficiary within thirty (30) days after such request may in the court's discretion be personally liable to such participation or beneficiary in the amount of up to One Hundred Dollars ($100.00) a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper.

(b) The board may assess a civil penalty against any plan administrator of up to One Thousand Dollars ($1,000.00) a day from the date of such plan administrator's failure or refusal to file the annual report required to be filed with the board under Section 4(2)(d) of this act. For purposes of this paragraph, an annual report that has been rejected under Section 7(1)(d) of this act for failure to provide material information shall not be treated as having been filed with the board.

(c) Any employer maintaining a plan who fails to meet the notice requirement of Section 4(4) of this act with respect to any participant or beneficiary or who fails to meet the requirements of Section 4(5)(b) of this act with respect to any person may in the court's discretion be liable to such participant or beneficiary or to such person in the amount of up to One Hundred Dollars ($100.00) a day from the date of such failure, and the court may in its discretion order such other relief as it deems proper.

(4) Status of employee pension benefit plan as entity.

(a) An employee pension benefit plan may sue or be sued under this act as an entity. Service of summons, subpoena, or other legal process of a court upon a trustee or an administrator of an employee pension benefit plan in his capacity as such shall constitute service upon the employee pension benefit plan. In a case where a plan has not designated in the summary plan description of the plan an individual as agent for the service of legal process, service upon the board shall constitute such service. The board, not later that fifteen (15) days after receipt of service under the preceding sentence, shall notify the administrator or any trustee of the plan of receipt of such service.

(b) Any money judgment under this act against an employee pension benefit plan shall be enforceable only against the plan as an entity and shall not be enforceable against any other person unless liability against such person is established in his individual capacity under this act.

(5) Jurisdiction.

(a) The circuit court of this state shall have exclusive jurisdiction of civil actions under this act brought by the board or by a participant, beneficiary or fiduciary.

(b) An action brought under this act may be brought in the circuit court of the district where the plan is administered, where the breach took place, or where a defendant resides or may be found.

(6) Attorney's fees and costs; awards in actions involving delinquent contributions.

(a) In any action under this act (other than an action described in paragraph (b)) by a participant, beneficiary, or fiduciary, the court in its discretion may allow a reasonable attorney's fee and costs of action to either party.

(b) In any action under this act by a fiduciary for or on behalf of a plan to enforce Section 53 of this act in which a judgment in favor of the plan is awarded, the court shall award the plan:

(i) The unpaid contributions,

(ii) Interest on the unpaid contributions,

(iii) An amount equal to the greater of:

1. Interest on the unpaid contributions, or

2. Liquidated damages provided for under the plan in an amount not in excess of twenty percent (20%) (or such higher percentage as may be permitted under federal or state law) of the amount determined by the court under subparagraph (i),

(iv) Reasonable attorney's fees and costs of the action, to be paid by the defendant, and

(v) Such other legal or equitable relief as the court deems appropriate.

For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under 26 USCS Section 6621.

(7) Service upon board. A copy of the complaint in any action under this act by a participant, beneficiary, or fiduciary (other than an action brought by one or more participants or beneficiaries under subsection (1)(a)(ii) which is solely for the purpose of recovering benefits due such participants under the terms of the plan) shall be served upon the board by certified mail. The board shall have the right in its discretion to intervene in any action.

(8) Administrative assessment of civil penalty. In the case of a transaction prohibited by Section 35 of this act by a party in interest with respect to a plan to which this article applies, the board may assess a civil penalty against such party in interest. The amount of such penalty may not exceed five percent (5%) of the amount involved in each such transaction (as defined in 26 USCS Section 4975(f)(4)) for each year or part thereof during which the prohibited transaction continues, except that, if the transaction is not corrected (in such a manner as the board prescribes in regulations which shall be consistent with 26 USCS Section 4975(f)(5)) within ninety (90) days after notice from the board (or such longer period as the board may permit), such penalty may be in an amount not more than one hundred percent (100%) of the amount involved. This subsection shall not apply to a transaction with respect to a plan described in 26 USCS Section 4975(e)(1).

(9) Direction and control of litigation by Attorney General. In all civil actions under this act, attorneys appointed by the board may represent the board, but all such litigation shall be subject to the direction and control of the Attorney General.

(10) Jurisdiction of actions against the board. Suits by an administrator, fiduciary, participant, or beneficiary of an employee pension benefit plan to review a final order of the board, to restrain the board from taking any action contrary to the provisions of this act, or to compel the board to take action required under this act, may brought in the circuit court of the district where the plan has its principal office, or in the Circuit Court of the First Judicial District of Hinds County.

(11) Civil penalties on violations by fiduciaries.

(a) In the case of:

(i) Any breach of fiduciary responsibility under (or other violation of) Article 9 of this act by a fiduciary, or

(ii) Any knowing participation in such a breach or violation by any other person, the board shall assess a civil penalty against such fiduciary or other person in an amount equal to twenty percent (20%) of the applicable recovery amount.

(b) For purposes of paragraph (a), the term "applicable recovery amount" means any amount which is recovered from a fiduciary or other person with respect to a breach or violation described in paragraph (a):

(i) Pursuant to any settlement agreement with the board, or

(ii) Ordered by a court to be paid by such fiduciary or other person to a plan or its participants and beneficiaries in a judicial proceeding instituted by the board under subsection (1)(b) or (1)(e).

(c) The board may, in its sole discretion, waive or reduce the penalty under paragraph (a) if the board determines in writing that:

(i) The fiduciary or other person acted reasonably and in good faith, or

(ii) It is reasonable to expect that the fiduciary or other person will not be able to restore all losses to the plan (or to provide the relief ordered pursuant to subsection (1)(h)) without severe financial hardship unless such waiver or reduction is granted.

(d) The penalty imposed on a fiduciary or other person under this subsection with respect to any transaction shall be reduced by the amount of any penalty or tax imposed on such fiduciary or other person with respect to such transaction under subsection (8) of this section and 26 USCS Section 4975.

(12) In the case of a distribution to a pension plan participant or beneficiary in violation of Section 19(5) of this act by a plan fiduciary, the board shall assess a penalty against such fiduciary in an amount equal to the value of the distribution. Such penalty shall not exceed Ten Thousand Dollars ($10,000.00) for each such distribution.

SECTION 45. In accordance with regulations of the board, every employee pension benefit plan shall:

(a) Provide adequate notice in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant, and

(b) Afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim.

SECTION 46. (1) Investigation and submission of reports, books, etc. The board shall have the power, in order to determine whether any person has violated or is about to violate any provision of this act or any regulation or order thereunder:

(a) To make an investigation, and in connection therewith to require the submission of reports, books, and records, and the filing of data in support of any information required to be filed with the board under this act, and

(b) To enter such places, inspect such books and records and question such persons as he may deem necessary to enable the board to determine the facts relative to such investigation, if it has reasonable cause to believe there may exist a violation of this act or any rule or regulation issued thereunder or if the entry is pursuant to an agreement with the plan.

The board may make available to any person actually affected by any matter which is the subject of an investigation under this section, and to any department or agency of the State of Mississippi or of the United States, information concerning any matter which may be the subject of such investigation.

(2) Frequency of submission of books and records. The board may not under the authority of this section require any plan to submit to the board any books or records of the plan more than once in any twelve-month period, unless the board has reasonable cause to believe there may exist a violation of this act or any regulation or order thereunder.

SECTION 47. Subject to Section 12 of this act, the board may prescribe such regulations as it finds necessary or appropriate to carry out the provisions of this act. Among other things, such regulations may define accounting, technical and trade terms used in such provisions; may prescribe forms; and may provide for the keeping of books and records, and for the inspection of such books and records (subject to Section 46(1) and (2) of this act).

SECTION 48. (1) Coordination with other agencies and departments. In order to avoid unnecessary expense and duplication of functions among government agencies, the board may make such arrangements or agreements for cooperation or mutual assistance in the performance of its functions under this act and the functions of any such agency as it may find to be practicable and consistent with law. The board may utilize, on a reimbursable or other basis, the facilities or services of any department, agency, or establishment of the state or of any political subdivision or the state, including the services of any of its employees, with the lawful consent of such department, agency, or establishment; and each department, agency, or establishment of the state is authorized and directed to cooperate with the board and, to the extent permitted by law, to provide such information and facilities as it may request for its assistance in the performance of its functions under this act. The Attorney General or his representative shall receive from the board for appropriate action such evidence developed in the board's performance of its functions under this act as may be found to warrant consideration for criminal prosecution under the provisions of this act or other state law.

(2) Responsibility for detecting and investigating civil and criminal violations of Mississippi Employee Retirement Income Security Act and related state laws. The board shall have the responsibility and authority to detect and investigate and refer, where appropriate, civil and criminal violations related to the provisions of this act and other related state laws. Nothing in this subsection shall be construed to preclude other appropriate state agencies from detecting and investigating civil and criminal violations of this act and other related state laws.

SECTION 49. No employee of the board shall administer or enforce this act with respect to any employee pension benefit plan under which he is a participant or beneficiary, any employee organization of which he is a member, or any employer organization in which he has an interest.

SECTION 50. It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee pension benefit plan or this act, or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan or this act. It shall be unlawful for any person to discharge, fine, suspend, expel, or discriminate against any person because he has given information or has testified or is about to testify in any inquiry or proceeding relating to this act. The provisions of Section 44 of this act shall be applicable in the enforcement of this section.

SECTION 51. It shall be unlawful for any person through the use of fraud, force, violence, or threat of the use of force or violence, to restrain, coerce, intimidate, or attempt to restrain, coerce, or intimidate any participant or beneficiary for the purpose of interfering with or preventing the exercise of any right to which he is or may become entitled under the plan or this act. Any person who willfully violates this section shall be fined Ten Thousand Dollars ($10,000.00) or imprisoned for not more than one (1) year, or both.

SECTION 52. (1) Authorization to undertake research and surveys.

(a) The board may undertake research and surveys and in connection therewith may collect, compile, analyze and publish data, information, and statistics relating to employee pension benefit plans, including retirement and deferred compensation plans, and types of plans not subject to this act.

(b) The board may, as it deems appropriate or necessary, undertake other studies relating to employee pension benefit plans, the matters regulated by this act, and the enforcement procedures provided for under this act.

(c) The research, surveys, studies, and publications referred to in this subsection may be conducted directly, or indirectly through grant or contract arrangements.

(2) Submission of annual report to the Legislature; contents. The board shall submit annually a report to the Legislature covering his administration of this act for the preceding year, and including:

(a) An explanation of any variances or extensions granted under Section 13, 20, 26, or 27 of this act and the projected date for terminating the variance;

(b) The status of cases in enforcement status; and

(c) Such information, data, research findings, studies, and recommendations for further legislation in connection with the matters covered by this act as the board may find advisable.

(3) Cooperation with the Legislature. The board shall cooperate with the Legislature and its appropriate committees, subcommittees, and staff in supplying data and any other information, and personnel and services, required by the Legislature in any study, examination, or report by the Legislature relating to pension benefit plans established or maintained by any political subdivision of the State of Mississippi or by any agency or instrumentality of any such political subdivision.

SECTION 53. Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.

SECTION 54. This act shall take effect and be in force from and after July 1, 1997.