§906. Treatment of certain pension plans of Indian tribal governments

Pension Protection Act of 2006

Title IX Increase in Pension Plan Diversification and Participation and Other Pension Provisions

(a) DEFINITION OF GOVERNMENT PLAN TO INCLUDE CERTAIN PENSION PLANS OF INDIAN TRIBAL GOVERNMENTS.-

(a)(1) AMENDMENT TO INTERNAL REVENUE CODE OF 1986.- Section 414(d) of the Internal Revenue Code of 1986 (defining governmental plan) is amended by adding at the end the following: "The term 'governmental plan' includes a plan which is established and maintained by an Indian tribal government (as defined in section 7701(a)(40)), a subdivision of an Indian tribal government (determined in accordance with section 7871(d)), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).".

(a)(2) AMENDMENT TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.-

(a)(2)(A) Section 3(32) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1002(32)) is amended by adding at the end the following: "The term 'governmental plan' includes a plan which is established and maintained by an Indian tribal government (as defined in section 7701(a)(40) of the Internal Revenue Code of 1986), a subdivision of an Indian tribal government (determined in accordance with section 7871(d) of such Code), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function)".

(a)(2)(B) Section 4021(b )(2) of such Act is amended by adding at the end the following: "or which is described in the last sentence of section 3(32)".

(b) CLARIFICATION THAT TRIBAL GOVERNMENTS ARE SUBJECT TO THE SAME PENSION PLAN RULES AND REGULATIONS APPLIED TO STATE AND OTHER LOCAL GOVERNMENTS AND THEIR POLICE AND FIREFIGHTERS.-

(b)(1) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986.-

(b)(1)(A) POLICE AND FIREFIGHTERS.-Subparagraph (H) section 415(b)(2) of the Internal Revenue Code of 1986 (defining participant) is amended-

(b)(1)(A)( i) in clause ( i), by striking "State or political subdivision" and inserting "State, Indian tribal government (as defined in section 7701(a)(40)), or any political subdivision"; and

(b)(1)(A)(ii) in clause (ii)(I), by striking "State or political subdivision" each place it appears and inserting "State, Indian tribal government (as so defined), or any political subdivision".

(b)(1)(B) STATE AND LOCAL GOVERNMENT PLANS.-

(b)(1)(B)( i) IN GENERAL.-Subparagraph (A) of section 415(b )(10) of such Code (relating to limitation to equal accrued benefit) is amended by inserting "or a governmental plan described in the last sentence of section 414(d) (relating to plans of Indian tribal governments)," after "foregoing,".

(b)(1)(B)(ii) CONFORMING AMENDMENT.- The heading of paragraph (1) of section 415(b) of such Code is amended by striking "SPECIAL RULE FOR STATE AND" and inserting "SPECIAL RULE FOR STATE, INDIAN TRIBAL, AND".

(b)(1)(C) GOVERNMENT PICK UP CONTRIBUTIONS.-Paragraph (2) of section 414(h) of such Code (relating to designation by units of government) is amended by inserting "or a governmental plan described in the last sentence of section 414(d) (relating to plans of Indian tribal governments)," after "foregoing,".

(b)(2) AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.-Section 4021(b) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1321(b)) is amended-

(b)(2)(A) in paragraph (12), by striking "or" at the end;

(b)(2)(B) in paragraph (13), by striking "plan." and inserting "plan; or"; and

(b)(2)(C) by adding at the end the following:

"(14) established and maintained by an Indian tribal government (as defined in section 7701(a)(40) of the Internal Revenue Code of 1986), a subdivision of an Indian tribal government (determined in accordance with section 7871(d) of such Code), or an agency or instrumentality of either, and all of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).".

(c) EFFECTIVE DATE.- The amendments made by this section shall apply to any year beginning on or after the date of the enactment of this Act.