Subtitle B--Other Provisions
SEC. 121. AMENDMENTS RELATED TO SECTIONS 102 AND 112 OF THE PENSION PROTECTION ACT OF 2006. (a) Amendment of ERISA- The last sentence of section 303(g)(3)(B) of ERISA is amended to read as follows: `Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan's actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary of the Treasury.'. (b) Amendment of Internal Revenue Code of 1986- The last sentence of section 430(g)(3)(B) of the Internal Revenue Code of 1986 is amended to read as follows: `Any such averaging shall be adjusted for contributions, distributions, and expected earnings (as determined by the plan's actuary on the basis of an assumed earnings rate specified by the actuary but not in excess of the third segment rate applicable under subsection (h)(2)(C)(iii)), as specified by the Secretary.'. (c) Effective Date- The amendments made by this section shall take effect as if included in the provisions of the 2006 Act to which the amendments relate.
SEC. 122. MODIFICATION OF INTEREST RATE ASSUMPTION REQUIRED WITH RESPECT TO CERTAIN SMALL EMPLOYER PLANS. (a) In General- Subparagraph (E) of section 415(b)(2) of the Internal Revenue Code of 1986 (relating to limitation on certain assumptions) is amended by adding at the end the following new clause:
`(vi) In the case of a plan maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), clause (ii) shall be applied without regard to subclause (II) thereof.'.
(b) Effective Date- The amendment made by this section shall apply to years beginning after December 31, 2008.
SEC. 123. DETERMINATION OF MARKET RATE OF RETURN FOR GOVERNMENTAL PLANS. (a) Amendment of ADEA- Section 4(i)(10)(B)(i)(III) of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 623(i)(10)(B)(i)(III)) is amended by adding at the end the following: `In the case of a governmental plan (as defined in the first sentence of section 414(d) of the Internal Revenue Code of 1986), a rate of return or a method of crediting interest established pursuant to any provision of Federal, State, or local law (including any administrative rule or policy adopted in accordance with any such law) shall be treated as a market rate of return for purposes of subclause (I) and a permissible method of crediting interest for purposes of meeting the requirements of subclause (I), except that this sentence shall only apply to a rate of return or method of crediting interest if such rate or method does not violate any other requirement of this Act.'. (b) Effective Date- The amendment made by this section shall take effect as if included in the provisions of the Pension Protection Act of 2006 to which such amendment relates.
SEC. 124. TREATMENT OF CERTAIN REIMBURSEMENTS FROM GOVERNMENTAL PLANS FOR MEDICAL CARE. (a) In General- Section 105 of the Internal Revenue Code of 1986 (relating to amounts received under accident and health plans) is amended by adding at the end the following new subsection:
`(j) Special Rule for Certain Governmental Plans-
`(1) IN GENERAL- For purposes of subsection (b), amounts paid (directly or indirectly) to the taxpayer from an accident or health plan described in paragraph (2) shall not fail to be excluded from gross income solely because such plan, on or before January 1, 2008, provides for reimbursements of health care expenses of a deceased plan participant's beneficiary. `(2) PLAN DESCRIBED- An accident or health plan is described in this paragraph if such plan is funded by a medical trust that is established in connection with a public retirement system and that-- `(A) has been authorized by a State legislature, or `(B) has received a favorable ruling from the Internal Revenue Service that the trust's income is not includible in gross income under section 115.'.
(b) Effective Date- The amendment made by subsection (a) shall apply to payments before, on, or after the date of the enactment of this Act.