,,ii  #aac? ,,congress  #a/ ,session    
,s4 #ggi  ,,9 ,,! ,,s5ate ,,( ,,!       
,,unit$ ,,/ates  ,april #bc1 #bjac ,mr4 
,burr 7= himself1 ,mr4 ,coburn1 & ,mr4  
,?une7 introduc$ ! foll[+ bill2 :i* 0   
read twice & ref]r$ to ! ,committee on  
,f9ance  ,a ,,bill  ,to am5d ! ,int]nal 
,rev5ue ,code ( #aihf to provide =      
report+ & disclosure by ,/ate & local   
public employee retirem5t p5sion plans4 
#a4 ,%ort title ,?is ,act may be cit$ z 
! ,public ,employee ,p5sion ,transp>5cy 
,act4  #b4 ,f9d+s ,! ,congress f9ds !   
foll[+3  7#a7 ,pursuant to clauses #a & 
#c ( section #h ( article ,i ( !        
,con/itution ( ! ,unit$ ,/ates1 !       
,congress has ! au?ority to condition ! 
cont9uation ( c]ta9 specifi$ ,f$]al tax 
b5efits ^u ,/ate or local gov]nm5t      
employee p5sion b5efit plans on !       
provision ( mean+ful disclosure "u      
section #dihj;,j ( ! ,int]nal ,rev5ue   
,code ( #aihf1 z add$ by ?is ,act4  7#b7
 ,/ate & local gov]nm5t employee p5sion 
b5efit plans h promis$ p5sion b5efits to

 approximately #bj1jjj1jjj ,am]icans :o 
are active employees ( ^! entities4 ,an 
additional #g1jjj1jjj retirees & _!     
dep5d5ts curr5tly receive b5efits f     
,/ate or local gov]nm5t employee p5sion 
b5efit plans4 ,! int]e/s ( p>ticipants 9
 _m ( su* plans are 9 ! nature ( prop]ty
 rights "u ,/ate law4  7#c7 ,/ate &     
local gov]nm5t employee p5sion b5efit   
plans are sub/antially facilitat$ by !  
favorable tax treatm5t ( p>ticipants &  
b5efici>ies1 inve/m5t e>n+s1 & employee 
contributions ) respect to su* plans    
provid$ by ! ,f$]al ,gov]nm5t "u !      
,int]nal ,rev5ue ,code ( #aihf4  7#d7 ,!
 inve/m5t ( ,/ate or local gov]nm5t     
employee p5sion b5efit plan assets1 !   
di/ribution ( b5efits "u su* plans1 &   
o!r relat$ f9ancial activities are      
facilitat$ ?r\gh ! use ( in/rum5talities
 (1 & sub/antially affect1 int]/ate     
comm]ce4 ,^! activities1 :i* are        
int]/ate 9 nature & h a sub/antial      
impact on ! national economy1 affect    
capital =mation1 regional gr[? & decl9e1

 ! national m>kets = insurance1 & !     
m>kets = securities & ! trad+ (         
securities ( ,/ate & local gov]nm5ts4   
7#e7 ,! f9ancial /atus ( ,/ate or local 
gov]nm5t employee p5sion b5efit plans   
also has a direct impact on ! national  
m>kets = insurance & trad+ ( securities 
( ,/ate & local gov]nm5ts4  7#f7 ,/ate  
or local gov]nm5t employee p5sion b5efit
 plans additionally h a sub/antial      
impact on int]/ate comm]ce z a          
consequ5ce ( ! int]/ate movem5t (       
p>ticipants4  7#g7 ,/ate or local       
gov]nm5t employee p5sion b5efit plans   
are becom+ a l>ge f9ancial burd5 on     
c]ta9 ,/ate & local gov]nm5ts & h       
already result$ 9 tax increases & !     
r$uction ( s]vices4  7#h7 ,9 fact1 a    
rec5t /udy publi%$ 9 ! ,j\rnal (        
,economic ,p]spectives f\nd t ! pres5t  
value ( ! already promis$ p5sion        
liabilities ( ! #ej ,/ates am\nt to     
#e1agj1jjj1jjj1jjj & t ^! p5sion plans  
are unfund$ by #c1bcj1jjj1jjj1jjj4      
,ano!r /udy det]m9$ t ! total unfund$   

liability = all municipal plans 9 !     
,unit$ ,/ates is #egd1jjj1jjj1jjj4  7#i7
 ,"s economi/s & obs]v]s h /at$ t !     
ext5t to :i* ,/ate or local gov]nm5t    
employee p5sion b5efit plans are        
und]fund$ is obscur$ by gov]nm5tal      
acc\nt+ rules & practices1 p>ticul>ly z 
!y relate to ! valuation ( plan assets &
 liabilities4 ,?is results 9 a          
mis/atem5t ( ! value ( plan assets & an 
und]/atem5t ( plan liabilities1 a       
situation t poses a significant ?reat to
 ! s\ndness ( ,/ate & local budgets4    
7#aj7 ,!re curr5tly is a lack ( mean+ful
 disclosure reg>d+ ! value ( ,/ate or   
local gov]nm5t employee p5sion b5efit   
plan assets & liabilities4 ,?is lack (  
mean+ful disclosure poses a direct &    
s]i\s ?reat to ! f9ancial /ability ( su*
 plans & _! sponsor+ gov]nm5ts1 impairs 
! ability ( ,/ate & local gov]nm5t      
taxpay]s & (ficials to und]/& ! f9ancial
 obligations ( _! gov]nm5t1 & r$uces !  
likelihood t ,/ate & local gov]nm5t     
processes w be effective 9 assur+ !     

prud5t managem5t ( _! plans4 ,! /atus   
quo also con/itutes a s]i\s ?reat to !  
future economic heal? ( ! ,nation &     
places an undue burd5 ^u ,/ate & local  
gov]nm5t taxpay]s1 :o w be call$ ^u to  
fully fund exi/+1 & future1 p5sion      
promises4  7#aa7 ,/ate or local gov]nm5t
 employee p5sion b5efit plans affect !  
national public int]e/ & mean+ful       
disclosure ( ! value ( _! assets &      
liabilities is necess>y & desirable 9   
ord] to adequately protect plan         
p>ticipants & _! b5efici>ies & ! g5]al  
public4 ,mean+ful disclosure w\ld also  
fur!r ef=ts to provide = ! g5]al welf>e 
& ! free fl[ ( comm]ce4  #c4 ,report+ ( 
in=mation ) respect to ,/ate or local   
gov]nm5t employee p5sion b5efit plans   
treat$ z a tax exemption1 etc41         
requirem5t = ,/ate & local bonds  7a7 ,9
 g5]al ,subp>t ,b ( "p ,,iv ( sub*apt]  
,b ( *apt] #a ( ! ,int]nal ,rev5ue ,code
 ( #aihf is am5d$ by add+ at ! end !    
foll[+ new section3  #adi;,a4 ,report+ )
 respect to ,/ate or local gov]nm5t     

employee p5sion b5efit plans  7a7 ,9    
g5]al ,9 ! case ( a failure to satisfy  
any requirem5t ( subsection 7a7 or 7b7 (
 section #dihj;,j ) respect to any plan 
ma9ta9$ ) respect to employees ( "o or m
 ,/ates or political subdivisions ( "o  
or m ,/ates1 no specifi$ ,f$]al tax     
b5efit %all be all[$ or made ) respect  
to any specifi$ bond issu$ by any su*   
,/ate or political subdivision 7or by   
any bond+ au?ority act+ on behalf1 or = 
! b5efit1 ( su* ,/ate or political      
subdivision7 dur+ ! noncompliance p]iod4
  7b7 ,noncompliance p]iod ,= purposes (
 ?is section1 ! t]m noncompliance p]iod 
means1 ) respect to any ,/ate or        
political subdivision 9 connection ) any
 failure describ$ 9 subsection 7a71 !   
p]iod beg9n+ on ! date t ! ,secret>y    
notifies su* ,/ate or political         
subdivision ( su* failure & end+ on !   
date t su* failure is cur$ 7z det]m9$ by
 ! ,secret>y74  7c7 ,specifi$ bond ,=   
purposes ( ?is section1 ! t]m specifi$  
bond means--  7#a7 any ,/ate or local   

bond )9 ! mean+ ( section #ajc1  7#b7   
any qualifi$ tax cr$it bond )9 ! mean+ (
 section #ed;,a1 &  7#c7 any build      
,am]ica bond )9 ! mean+ ( section       
#ed;,,aa4  7d7 ,specifi$ f$]al tax      
b5efit ,= purposes ( ?is section1 ! t]m 
specifi$ ,f$]al tax b5efit means--  7#a7
 any exemption f gross income all[$ "u  
section #ajc 7relat+ to int]e/ on ,/ate 
& local bonds71  7#b7 any cr$it all[$ "u
 section #ed;,a 7relat+ to cr$it to     
hold]s ( qualifi$ tax cr$it bonds71     
7#c7 any cr$it all[$ "u section #ed;,,aa
 7relat+ to build ,am]ica bonds71 &     
7#d7 any cr$it or paym5t all[$ or made  
"u section #fdca 7relat+ to cr$it =     
qualifi$ bonds all[$ to issu]74  4  7b7 
,report+ requirem5ts ,*apt] #dc ( su*   
,code is am5d$ by add+ at ! end ! foll[+
 new section3  #dihj;,j4 ,failure (     
,/ate or local gov]nm5t employee p5sion 
b5efit plans to meet report+ requirem5ts
  7a7 ,annual report ,= purposes (      
section #adi;,a1 ! requirem5ts ( ?is    
subsection are z foll[s3  7#a7 ,9 g5]al 

,! plan sponsor ( a ,/ate or local      
gov]nm5t employee p5sion b5efit plan    
%all file ) ! ,secret>y1 9 su* =m &     
mann] z %all be prescrib$ by !          
,secret>y1 a report = ea* plan ye>      
beg9n+ on or aft] ,janu>y #a1 #bjad1    
sett+ =? ! foll[+ in=mation ) respect to
 ! plan1 z det]m9$ by ! plan sponsor z (
 ! end ( su* plan ye>3  7,a7 ,a s*$ule (
 fund+ /atus1 :i* %all include a /atem5t
 z to ! curr5t liability ( ! plan1 !    
am\nt ( plan assets available to meet t 
liability1 ! am\nt ( ! net unfund$      
liability 7if any71 & ! fund+ p]c5tage (
 ! plan4  7,b7 ,a s*$ule ( contributions
 by ! plan sponsor = ! plan ye>1        
indicat+ :i* are or are n tak5 into     
acc\nt "u subp>agraph 7,a74  7,c7       
,alt]native projections :i* %all be     
specifi$ 9 regulations ( ! ,secret>y =  
ea* ( ! next #fj plan ye>s foll[+ ! plan
 ye> ( ! ca% fl[s associat$ ) ! curr5t  
liability1 toge!r ) a /atem5t ( !       
assumptions us$ 9 connection ) su*      
projections4 ,! ,secret>y %all specify 9

 su* regulations ! projection           
assumptions to be us$ z necess>y to     
a*ieve comp>ability across plans4  7,d7 
,a /atem5t ( ! actu>ial assumptions us$ 
= ! plan ye>1 includ+ ! rate ( return on
 inve/m5t ( plan assets & assumptions z 
to su* o!r matt]s z ! ,secret>y may     
prescribe by regulation4  7,e7 ,a       
/atem5t ( ! numb] ( p>ticipants :o are  
ea* ( ! foll[+--  7i7 ^? :o are retir$  
or sep>at$ f s]vice & are receiv+       
b5efits1  7ii7 ^? :o are retir$ or      
sep>at$ & are entitl$ to future b5efits1
 &  7iii7 ^? :o are active "u ! plan4   
7,f7 ,a /atem5t ( ! plan's inve/m5t     
returns1 includ+ ! rate ( return1 = !   
plan ye> & ! #e prec$+ plan ye>s4  7,g7 
,a /atem5t ( ! degree to :i*1 & mann] 9 
:i*1 ! plan sponsor expects to elim9ate 
any unfund$ curr5t liability t may exi/ 
= ! plan ye> & ! ext5t to :i* ! plan    
sponsor has foll[$ ! plan's fund+ policy
 = ea* ( ! prec$+ #e plan ye>s4 ,!      
,secret>y %all prescribe by regulation !
 specific crit]ia to be us$ = meet+ !   

requirem5ts ( ?is p>agraph4  7,h7 ,a    
/atem5t ( ! am\nt ( p5sion obligation   
bonds out/&+4  7,i7 ,a /atem5t ( !      
curr5t co/ ( ! plan = ! plan ye>4  7#b7 
,tim+ ( report ,! plan sponsor ( a ,/ate
 or local gov]nm5t employee p5sion      
b5efit plan %all make ! fil+ requir$ "u 
p>agraph 7#a7 = ea* plan ye> n lat] ?an 
#baj days aft] ! end ( su* plan ye> 7or 
)9 su* "t z may be requir$ by           
regulations prescrib$ by ! ,secret>y 9  
ord] to r$uce duplicative fil+74  7b7   
,additional report+ requirem5ts ,=      
purposes ( section #adi;,a1 !           
requirem5ts ( ?is subsection are z      
foll[s3  7#a7 ,supplem5t>y reports ,9   
any case 9 :i*1 9 det]m9+ ! in=mation   
fil$ 9 ! annual report = a plan ye> "u  
subsection 7a7--  7,a7 ! value ( plan   
assets is det]m9$ us+ a /&>d o!r ?an    
fair m>ket value1 or  7,b7 ! int]e/ rate
 or rates us$ to det]m9e ! value (      
liabilities or z ! disc\nt value =      
liabilities are n ! int]e/ rates        
describ$ 9 p>agraph 7#c71 ! plan sponsor

 %all include 9 ! annual report fil$ =  
su* plan ye> pursuant to subsection 7a7 
! supplem5t>y report = su* plan ye>     
describ$ 9 p>agraph 7#b7 ( ?is          
subsection4  7#b7 ,use ( prescrib$      
valuation me?od & int]e/ rates ,a       
supplem5t>y report = a plan ye> fil$ = a
 plan ye> pursuant to ?is subsection    
%all include ! in=mation specifi$ z     
requir$ 9 ! annual report "u            
subp>agraphs 7,a71 7,f71 7,g7 & 7,i7 (  
subsection 7a77#a71 det]m9$ z ( ! end ( 
su* plan ye> by valu+ plan assets at    
fair m>ket value & by us+ ! int]e/ rates
 describ$ 9 p>agraph 7#c7 to value      
liabilities & z ! disc\nt value =       
liabilities4  7#c7 ,int]e/ rates bas$ on
 ,u4,s4 ,treasury obligation yield curve
 rate  7,a7 ,9 g5]al ,! int]e/ rates    
describ$ 9 ?is subsection are1 ) respect
 to any day1 ! rates ( int]e/ :i* %all  
be det]m9$ by ! ,secret>y = su* day on !
 basis ( ! ,u4,s4 ,treasury obligation  
yield curve = su* day4  7,b7 ,u4,s4     
treasury obligation yield curve ,=      

purposes ( ?is subsection1 ! t]m ,u4,s4 
,treasury obligation yield curve means1 
) respect to any day1 a yield curve :i* 
%all be prescrib$ by ! ,secret>y = su*  
day on int]e/-be>+ obligations ( !      
,unit$ ,/ates4  7c7 ,def9itions &       
special rules ,= purposes ( ?is         
section--  7#a7 ,/ate or local gov]nm5t 
employee p5sion b5efit plan ,! t]ms     
,/ate or local gov]nm5t employee p5sion 
b5efit plan & plan mean any plan1 fund1 
or program1 o!r ?an a def9$ contribution
 plan 7)9 ! mean+ ( section #dad7;i771  
:i* 0 h]et(ore or is h]eaft] e/abli%$ or
 ma9ta9$1 9 :ole or 9 "p1 by a ,/ate1 a 
political subdivision ( a ,/ate1 or any 
ag5cy or in/rum5tality ( a ,/ate or     
political subdivision ( a ,/ate1 to !   
ext5t t by its express t]ms or z a      
result ( surr\nd+ circum/ances su* plan1
 fund1 or program--  7,a7 provides      
retirem5t income to employees1 or  7,b7 
results 9 a def]ral ( income by         
employees = p]iods ext5d+ to ! t]m9ation
 ( cov]$ employm5t or beyond1 reg>dless 

( ! me?od ( calculat+ ! contributions   
made to ! plan1 ! me?od ( calculat+ !   
b5efits "u ! plan1 or ! me?od (         
di/ribut+ b5efits f ! plan4  7#b7 ,fund+
 p]c5tage ,! t]m fund+ p]c5tage = a plan
 ye> means ! ratio 7express$ z a        
p]c5tage7 :i*--  7,a7 ! value ( plan    
assets z ( ! end ( ! plan ye> be>s to   
7,b7 ! curr5t liability ( ! plan = !    
plan ye>4  7#c7 ,curr5t liability ,! t]m
 curr5t liability ( a plan = a plan ye> 
means ! pres5t value ( all b5efits      
accru$ or e>n$ "u ! plan z ( ! end ( !  
plan ye>4  7#d7 ,pres5t value  7,a7 ,9  
g5]al ,! pres5t value ( an accru$ b5efit
 %all be det]m9$ by disc\nt+ its future 
ca% fl[s 9 accordance ) subsection      
7b77#c74 ,! pres5t value ( all b5efits  
accru$ = a p>ticipant %all be calculat$ 
z ! sum ( ! pres5t value ( ! accru$     
b5efit = ea* exit ev5t multipli$ by !   
probability ( ! associat$ exit ev5t4    
7,b7 ,exit ev5t ,an exit ev5t occurs :5 
! employm5t ( a plan p>ticipant         
t]m9ates4 ,= ea* curr5tly employ$ plan  

p>ticipant z ( ! measurem5t date1 !re   
are "o or m pot5tial future exit ev5ts4 
,ea* exit ev5t is associat$ ) a         
t]m9ation date1 a cause ( t]m9ation     
7e4g41 retirem5t1 dea?1 disability1     
quit1 etc471 a contractual b5efit1 & a  
probability t ! p>ticipant w exit       
employm5t via ! p>ticul> ev5t4  7#e7    
,accru$ b5efit  7,a7 ,9 g5]al ,an accru$
 b5efit is det]m9$ = ea* exit ev5t z !  
project$ b5efit multipli$ by s]vice e>n$
 z ( ! measurem5t date divid$ by s]vice 
project$ to be e>n$ by ! ev5t date4 ,=  
p>ticipants retir$ or sep>at$ f s]vice z
 ( ! measurem5t date1 ! accru$ b5efit   
equals ! project$ b5efit4  7,b7         
,project$ b5efit ,z ( ! measurem5t date1
 a project$ b5efit 7consi/+ ( future ca%
 fl[s7 is calculat$ = ea* possible exit 
ev5t us+ s]vice project$ to be e>n$ to !
 ev5t date & sal>y z ( ! measurem5t     
date4 ,su* project$ b5efit %all reflect 
any co/-(-liv+ adju/m5ts payable 9 !    
future bas$ on ! law 9 effect z ( !     
measurem5t date4  7#f7 ,measurem5t date 

,! t]m measurem5t date means ! date z ( 
:i* ! value ( ! p5sion obligation is    
det]m9$ 7sometimes ref]r$ to z !        
valuation date74  7#g7 ,curr5t co/ ,!   
t]m curr5t co/ ( a plan = a plan ye>    
means ! pres5t value z ( ! end ( ! plan 
ye> ( all b5efits accru$ or e>n$ "u !   
plan dur+ ! plan ye>4  7#h7 ,plan       
sponsor ,! t]m plan sponsor means1 9    
connection ) a ,/ate or local gov]nm5t  
employee p5sion b5efit plan1 ! ,/ate1   
political subdivision ( a ,/ate1 or     
ag5cy or in/rum5tality ( a ,/ate or a   
political subdivision ( a ,/ate :i*     
e/abli%es or ma9ta9s ! plan4  7#i7      
,p>ticipant  7,a7 ,9 g5]al ,! t]m       
p>ticipant means1 9 connection ) a ,/ate
 or local gov]nm5t employee p5sion      
b5efit plan1 an individual--  7i7 :o is 
an employee or =m] employee ( a ,/ate1  
political subdivision ( a ,/ate1 or     
ag5cy or in/rum5tality ( a ,/ate or a   
political subdivision ( a ,/ate :i* is !
 plan sponsor ( su* plan1 &  7ii7 :o is 
or may become eligible to receive a     

b5efit ( any type f su* plan or ^:      
b5efici>ies may be eligible to receive  
any su* b5efit4  7,b7 ,b5efici>y ,! t]m 
b5efici>y means a p]son designat$ by a  
p>ticipant1 or by ! t]ms ( ! plan1 :o is
 or may become entitl$ to a b5efit      
!reund]4  7#aj7 ,plan ye> ,! t]m plan   
ye> means1 9 connection ) a plan1 !     
cal5d> or fiscal ye> on :i* ! records ( 
! plan are kept4  7#aa7 ,/ate ,! t]m    
,/ate includes any ,/ate ( ! ,unit$     
,/ates1 ! ,di/rict ( ,columbia1 !       
,commonweal? ( ,pu]to ,rico1 ! ,unit$   
,/ates ,virg9 ,isl&s1 ,am]ican ,samoa1  
,guam1 & ! ,commonweal? ( ! ,nor!rn     
,m>iana ,isl&s4  7#ab7 ,fair m>ket value
 ,! t]m fair m>ket value has ! mean+ (  
su* t]m "u section #dcj7;g77#c77;,a7    
7)\t reg>d to section                   
#dcj7;g77#c77;,b774  7d7 ,model report+ 
/atem5t ,! ,secret>y %all develop model 
report+ /atem5ts = purposes (           
subsections 7a7 & 7b74 ,plan sponsors ( 
,/ate or local gov]nm5t employee p5sion 
plans may elect1 9 su* =m & mann] z %all

 be prescrib$ by ! ,secret>y1 to utilize
 ! applicable model report+ /atem5t =   
purposes ( comply+ ) requirem5ts ( su*  
subsections4  7e7 ,transp>5cy (         
in=mation fil$ ,! ,secret>y %all create 
& ma9ta9 a public ,web site1 ) se>*able 
capabilities1 = purposes ( po/+ !       
in=mation receiv$ by ! ,secret>y        
pursuant to subsections 7a7 & 7b74 ,any 
su* in=mation receiv$ by ! ,secret>y    
7includ+ any updates to su* in=mation   
receiv$ by ! ,secret>y7 %all be po/$ on 
! ,web site n lat] ?an #fj days aft]    
receipt & %all n be treat$ z return     
in=mation = purposes ( ?is title4  4    
7c7 ,cl]ical am5dm5ts  7#a7 ,! table (  
sections = subp>t ,b ( "p ,,iv (        
sub*apt] ,b ( *apt] #a ( su* ,code is   
am5d$ by add+ at ! end ! foll[+ new     
item3  ,sec4 #adi;,a4 ,report+ ) respect
 to ,/ate or local gov]nm5t employee    
p5sion b5efit plans4  4  7#b7 ,! table (
 sections = *apt] #dc ( su* ,code is    
am5d$ by add+ at ! end ! foll[+ new     
item3  ,sec4 #dihj;,j4 ,failure ( ,/ate 

or local gov]nm5t employee p5sion b5efit
 plans to meet report+ requirem5ts4  4  
#d4 ,g5]al provisions & rules (         
con/ruction  7a7 ,limitations on f$]al  
responsibilities relat+ to plan         
obligations & liabilities ,! ,unit$     
,/ates %all n be liable = any obligation
 relat$ to any curr5t or future %ortfall
 9 any ,/ate or local gov]nm5t employee 
p5sion plan4 ,no?+ 9 ?is ,act 7or any   
am5dm5t made by ?is ,act7 or any o!r    
provision ( law %all be con/ru$ to      
provide ,f$]al ,gov]nm5t funds to dim9i%
 or meet any curr5t or future %ortfall  
91 or obligation (1 any ,/ate or local  
gov]nm5t employee p5sion plan4 ,! prec$+
 s5t5ce %all also apply to ! ,f$]al     
,res]ve4  7b7 ,no f$]al fund+ /&>ds     
,no?+ 9 ?is ,act 7or any am5dm5t made by
 ?is ,act7 %all be con/ru$ to alt] exi/+
 fund+ /&>ds = ,/ate or local gov]nm5t  
employee p5sion plans or to require     
,f$]al fund+ /&>ds = su* plans4  7c7    
,def9itions ,t]ms us$ 9 ?is section :i* 
are also us$ 9 section #dihj;,j ( !     

,int]nal ,rev5ue ,code ( #aihf %all h ! 
same mean+ z :5 us$ 9 su* section4