I 

109TH CONGRESS 

1ST SESSION H. R. 2830

To amend the Employee Retirement Income Security Act of 1974 and the 

Internal Revenue Code of 1986 to reform the pension funding rules, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 9, 2005

Mr. BOEHNER (for himself, Mr. THOMAS, Mr. SAM JOHNSON of Texas, Mr. 

KLINE, Mr. MCKEON, Mr. TIBERI, and Mr. BOUSTANY) introduced the 

following bill; which was referred to the Committee on Education and the 

Workforce, and in addition to the Committee on Ways and Means, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

reform the pension funding rules, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE AND TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Pension Protection Act of 2005’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows:
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Sec. 1. Short title and table of contents. 

TITLE I—REFORM OF FUNDING RULES FOR SINGLE-EMPLOYER 

DEFINED BENEFIT PENSION PLANS 

Subtitle A—Amendments to Employee Retirement Income Security Act of 

1974

Sec. 101. Minimum funding standards. 

Sec. 102. Funding rules for single-employer defined benefit pension plans. 

Sec. 103. Limitations on distributions and benefit accruals under single-employer plans. 

Sec. 104. Technical and conforming amendments. 

Subtitle B—Amendments to Internal Revenue Code of 1986

Sec. 111. Minimum funding standards. 

Sec. 112. Funding rules for single-employer defined benefit pension plans. 

Sec. 113. Limitations on distributions and benefit accruals under single-employer plans. 

Sec. 114. Technical and conforming amendments. 

Subtitle C—Other provisions 

Sec. 121. Modification of transition rule to pension funding requirements. 

Sec. 122. Treatment of nonqualified deferred compensation plans when employer defined benefit plan in at-risk status. 

TITLE II—FUNDING RULES FOR MULTIEMPLOYER DEFINED 

BENEFIT PLANS 

Subtitle A—Amendments to Employee Retirement Income Security Act of 

1974

Sec. 201. Funding rules for multiemployer defined benefit plans. 

Sec. 202. Additional funding rules for multiemployer plans in endangered or 

critical status. 

Sec. 203. Measures to forestall insolvency of multiemployer plans. 

Sec. 204. Withdrawal liability reforms. 

Sec. 205. Removal of restrictions with respect to procedures applicable to disputes involving withdrawal liability. 

Subtitle B—Amendments to Internal Revenue Code of 1986

Sec. 211. Funding rules for multiemployer defined benefit plans. 

Sec. 212. Additional funding rules for multiemployer plans in endangered or 

critical status. 

TITLE III—OTHER INTEREST-RELATED FUNDING PROVISIONS 

Sec. 301. Interest rate assumption for determination of lump sum distributions. 

Sec. 302. Interest rate assumption for applying benefit limitations to lump sum 

distributions. 

TITLE IV—IMPROVEMENTS IN PBGC GUARANTEE PROVISIONS 

Sec. 401. Increases in PBGC premiums. 

TITLE V—DISCLOSURE 
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Sec. 501. Defined benefit plan funding notices. 

Sec. 502. Additional disclosure requirements. 

Sec. 503. Notice to participants and beneficiaries of section 4010 filings with 

the PBGC. 

TITLE VI—INVESTMENT ADVICE 

Sec. 601. Amendments to Employee Retirement Income Security Act of 1974 

providing prohibited transaction exemption for provision of investment advice. 

Sec. 602. Amendments to Internal Revenue Code of 1986 providing prohibited 

transaction exemption for provision of investment advice. 

TITLE VII—DEDUCTION LIMITATIONS 

Sec. 701. Increase in deduction limits. 

Sec. 702. Updating deduction rules for combination of plans.

1 TITLE I—REFORM OF FUNDING 

2 RULES FOR SINGLE-EM3 PLOYER DEFINED BENEFIT 

4 PENSION PLANS 

5 Subtitle A—Amendments to Em6 ployee Retirement Income Secu7 rity Act of 1974

8 SEC. 101. MINIMUM FUNDING STANDARDS. 

9 (a) REPEAL OF EXISTING FUNDING RULES.—Sec10 tions 302 through 306 of the Employee Retirement In11 come Security Act of 1974 (29 U.S.C. 1082 through 

12 1085a) are repealed. 

13 (b) NEW MINIMUM FUNDING STANDARDS.—Part 3 

14 of subtitle B of title I of such Act (as amended by sub15 section (a)) is amended further by inserting after section 

16 301 the following new section: 
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1 ‘‘MINIMUM FUNDING STANDARDS

2 ‘‘SEC. 302. (a) REQUIREMENT TO MEET MINIMUM

3 FUNDING STANDARD.—

4 ‘‘(1) IN GENERAL.—A plan to which this part 

5 applies shall satisfy the minimum funding standard 

6 applicable to the plan for any plan year. 

7 ‘‘(2) MINIMUM FUNDING STANDARD.—For pur8 poses of paragraph (1), a plan shall be treated as 

9 satisfying the minimum funding standard for a plan 

10 year if—

11 ‘‘(A) in the case of a defined benefit plan 

12 which is a single-employer plan, the employer 

13 makes contributions to or under the plan for 

14 the plan year which, in the aggregate, are not 

15 less than the minimum required contribution 

16 determined under section 303 for the plan for 

17 the plan year, 

18 ‘‘(B) in the case of a money purchase plan 

19 which is a single-employer plan, the employer 

20 makes contributions to or under the plan for 

21 the plan year which are required under the 

22 terms of the plan, and 

23 ‘‘(C) in the case of a multiemployer plan, 

24 the employers make contributions to or under 

25 the plan for any plan year which, in the aggre-
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1 gate, are sufficient to ensure that the plan does 

2 not have an accumulated funding deficiency 

3 under section 304 as of the end of the plan 

4 year. 

5 ‘‘(b) LIABILITY FOR CONTRIBUTIONS.—

6 ‘‘(1) IN GENERAL.—Except as provided in para7 graph (2), the amount of any contribution required 

8 by this section (including any required installments 

9 under paragraphs (3) and (4) of section 303(i)) 

10 shall be paid by any employer responsible for mak11 ing contributions to or under the plan. 

12 ‘‘(2) JOINT AND SEVERAL LIABILITY WHERE

13 EMPLOYER MEMBER OF CONTROLLED GROUP.—In 

14 the case of a single-employer plan, if the employer 

15 referred to in paragraph (1) is a member of a con16 trolled group, each member of such group shall be 

17 jointly and severally liable for payment of such con18 tributions. 

19 ‘‘(c) VARIANCE FROM MINIMUM FUNDING STAND20 ARDS.—

21 ‘‘(1) WAIVER IN CASE OF BUSINESS HARD22 SHIP.—

23 ‘‘(A) IN GENERAL.—If—

24 ‘‘(i) an employer is (or in the case of 

25 a multiemployer plan, 10 percent or more 
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1 of the number of employers contributing to 

2 or under the plan is) unable to satisfy the 

3 minimum funding standard for a plan year 

4 without temporary substantial business 

5 hardship (substantial business hardship in 

6 the case of a multiemployer), and 

7 ‘‘(ii) application of the standard would 

8 be adverse to the interests of plan partici9 pants in the aggregate, 

10 the Secretary of the Treasury may, subject to 

11 subparagraphs (B) and (C), waive the require12 ments of subsection (a) for such year with re13 spect to all or any portion of the minimum 

14 funding standard. The Secretary of the Treas15 ury shall not waive the minimum funding 

16 standard with respect to a plan for more than 

17 3 of any 15 (5 of any 15 in the case of a multi18 employer plan) consecutive plan years. 

19 ‘‘(B) EFFECTS OF WAIVER.—If a waiver is 

20 granted under subparagraph (A) for any plan 

21 year—

22 ‘‘(i) in the case of a single-employer 

23 plan, the minimum required contribution 

24 under section 303 for the plan year shall 

25 be reduced by the amount of the waived 
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1 funding deficiency and such amount shall 

2 be amortized as required under section 

3 303(j), and 

4 ‘‘(ii) in the case of a multiemployer 

5 plan, the funding standard account shall 

6 be credited under section 304(b)(3)(C) 

7 with the amount of the waived funding de8 ficiency and such amount shall be amor9 tized as required under section 

10 304(b)(2)(C). 

11 ‘‘(C) WAIVER OF AMORTIZED PORTION

12 NOT ALLOWED.—The Secretary of the Treasury 

13 may not waive under subparagraph (A) any 

14 portion of the minimum funding standard 

15 under subsection (a) for a plan year which is 

16 attributable to any amortization payment re17 quired to be made for such plan year with re18 spect to any amortization described in subpara19 graph (B) of any waived portion of the min20 imum funding standard for any preceding plan 

21 year. 

22 ‘‘(2) DETERMINATION OF BUSINESS HARD23 SHIP.—For purposes of this subsection, the factors 

24 taken into account in determining temporary sub25 stantial business hardship (substantial business 
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1 hardship in the case of a multiemployer plan) shall 

2 include (but shall not be limited to) whether or 

3 not—

4 ‘‘(A) the employer is operating at an eco5 nomic loss, 

6 ‘‘(B) there is substantial unemployment or 

7 underemployment in the trade or business and 

8 in the industry concerned, 

9 ‘‘(C) the sales and profits of the industry 

10 concerned are depressed or declining, and 

11 ‘‘(D) it is reasonable to expect that the 

12 plan will be continued only if the waiver is 

13 granted. 

14 ‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur15 poses of this part, the term ‘waived funding defi16 ciency’ means the portion of the minimum funding 

17 standard under subsection (a) (determined without 

18 regard to the waiver) for a plan year waived by the 

19 Secretary of the Treasury and not satisfied by em20 ployer contributions. 

21 ‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EM22 PLOYER PLANS, CONSULTATIONS.—

23 ‘‘(A) SECURITY MAY BE REQUIRED.—

24 ‘‘(i) IN GENERAL.—Except as pro25 vided in subparagraph (C), the Secretary 
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1 of the Treasury may require an employer 

2 maintaining a defined benefit plan which is 

3 a single-employer plan (within the meaning 

4 of section 4001(a)(15)) to provide security 

5 to such plan as a condition for granting or 

6 modifying a waiver under paragraph (1). 

7 ‘‘(ii) SPECIAL RULES.—Any security 

8 provided under clause (i) may be perfected 

9 and enforced only by the Pension Benefit 

10 Guaranty Corporation, or at the direction 

11 of the Corporation, by a contributing spon12 sor (within the meaning of section 

13 4001(a)(13)), or a member of such spon14 sor’s controlled group (within the meaning 

15 of section 4001(a)(14)). 

16 ‘‘(B) CONSULTATION WITH THE PENSION

17 BENEFIT GUARANTY CORPORATION.—Except as 

18 provided in subparagraph (C), the Secretary of 

19 the Treasury shall, before granting or modi20 fying a waiver under this subsection with re21 spect to a plan described in subparagraph 

22 (A)(i)—

23 ‘‘(i) provide the Pension Benefit 

24 Guaranty Corporation with—
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1 ‘‘(I) notice of the completed ap2 plication for any waiver or modifica3 tion, and 

4 ‘‘(II) an opportunity to comment 

5 on such application within 30 days 

6 after receipt of such notice, and 

7 ‘‘(ii) consider—

8 ‘‘(I) any comments of the Cor9 poration under clause (i)(II), and 

10 ‘‘(II) any views of any employee 

11 organization (within the meaning of 

12 section 3(4)) representing participants 

13 in the plan which are submitted in 

14 writing to the Secretary of the Treas15 ury in connection with such applica16 tion. 

17 Information provided to the Corporation 

18 under this subparagraph shall be consid19 ered tax return information and subject to 

20 the safeguarding and reporting require21 ments of section 6103(p) of the Internal 

22 Revenue Code of 1986. 

23 ‘‘(C) EXCEPTION FOR CERTAIN WAIV24 ERS.—
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1 ‘‘(i) IN GENERAL.—The preceding 

2 provisions of this paragraph shall not 

3 apply to any plan with respect to which the 

4 sum of—

5 ‘‘(I) the shortfall amortization 

6 charge (within the meaning of section 

7 303(c)(1)) for the plan year, and 

8 ‘‘(II) the aggregate total of 

9 shortfall amortization installments de10 termined for succeeding plan years 

11 under section 303(c)(2), 

12 is less than $1,000,000. 

13 ‘‘(ii) TREATMENT OF WAIVERS FOR

14 WHICH APPLICATIONS ARE PENDING.—The 

15 amount described in clause (i)(I) shall in16 clude any increase in such amount which 

17 would result if all applications for waivers 

18 of the minimum funding standard under 

19 this subsection which are pending with re20 spect to such plan were denied. 

21 ‘‘(5) SPECIAL RULES FOR SINGLE-EMPLOYER

22 PLANS.—

23 ‘‘(A) APPLICATION MUST BE SUBMITTED

BEFORE DATE 21 24 ⁄2 MONTHS AFTER CLOSE OF

25 YEAR.—In the case of a single-employer plan, 
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1 no waiver may be granted under this subsection 

2 with respect to any plan for any plan year un3 less an application therefor is submitted to the 

4 Secretary of the Treasury not later than the 

5 15th day of the 3rd month beginning after the 

6 close of such plan year. 

7 ‘‘(B) SPECIAL RULE IF EMPLOYER IS MEM8 BER OF CONTROLLED GROUP.—In the case of a 

9 single-employer plan, if an employer is a mem10 ber of a controlled group, the temporary sub11 stantial business hardship requirements of 

12 paragraph (1) shall be treated as met only if 

13 such requirements are met—

14 ‘‘(i) with respect to such employer, 

15 and 

16 ‘‘(ii) with respect to the controlled 

17 group of which such employer is a member 

18 (determined by treating all members of 

19 such group as a single employer). 

20 The Secretary of the Treasury may provide that 

21 an analysis of a trade or business or industry 

22 of a member need not be conducted if the Sec23 retary of the Treasury determines such analysis 

24 is not necessary because the taking into account 
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1 of such member would not significantly affect 

2 the determination under this paragraph. 

3 ‘‘(6) NOTICE TO EMPLOYEE ORGANIZATIONS.—

4 ‘‘(A) IN GENERAL.—The Secretary of the 

5 Treasury shall, before granting a waiver under 

6 this subsection, require each applicant to pro7 vide evidence satisfactory to such Secretary that 

8 the applicant has provided notice of the filing of 

9 the application for such waiver to each em10 ployee organization representing employees cov11 ered by the affected plan, and each affected 

12 party (as defined in section 4001(a)(21)). Such 

13 notice shall include a description of the extent 

14 to which the plan is funded for benefits which 

15 are guaranteed under title IV and for benefit li16 abilities. 

17 ‘‘(B) CONSIDERATION OF RELEVANT IN18 FORMATION.—The Secretary of the Treasury 

19 shall consider any relevant information provided 

20 by a person to whom notice was given under 

21 subparagraph (A). 

22 ‘‘(7) CROSS REFERENCE.—For corresponding 

23 duties of the Secretary of the Treasury with regard 

24 to implementation of the Internal Revenue Code of 

25 1986, see section 412(c) of such Code. 
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1 ‘‘(d) MISCELLANEOUS RULES.—

2 ‘‘(1) CHANGE IN METHOD OR YEAR.—If the 

3 funding method, the valuation date, or a plan year 

4 for a plan is changed, the change shall take effect 

5 only if approved by the Secretary of the Treasury. 

6 ‘‘(2) CERTAIN RETROACTIVE PLAN AMEND7 MENTS.—For purposes of this section, any amend8 ment applying to a plan year which—

9 ‘‘(A) is adopted after the close of such plan 

year but no later than 21 10 ⁄2 months after the 

11 close of the plan year (or, in the case of a mul12 tiemployer plan, no later than 2 years after the 

13 close of such plan year), 

14 ‘‘(B) does not reduce the accrued benefit 

15 of any participant determined as of the begin16 ning of the first plan year to which the amend17 ment applies, and 

18 ‘‘(C) does not reduce the accrued benefit of 

19 any participant determined as of the time of 

20 adoption except to the extent required by the 

21 circumstances, 

22 shall, at the election of the plan administrator, be 

23 deemed to have been made on the first day of such 

24 plan year. No amendment described in this para25 graph which reduces the accrued benefits of any par-
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1 ticipant shall take effect unless the plan adminis2 trator files a notice with the Secretary of the Treas3 ury notifying him of such amendment and such Sec4 retary has approved such amendment, or within 90 

5 days after the date on which such notice was filed, 

6 failed to disapprove such amendment. No amend7 ment described in this subsection shall be approved 

8 by the Secretary of the Treasury unless such Sec9 retary determines that such amendment is necessary 

10 because of a substantial business hardship (as deter11 mined under subsection (c)(2)) and that a waiver 

12 under subsection (c) (or, in the case of a multiem13 ployer plan, any extension of the amortization period 

14 under section 304(d)) is unavailable or inadequate. 

15 ‘‘(3) CONTROLLED GROUP.—For purposes of 

16 this section, the term ‘controlled group’ means any 

17 group treated as a single employer under subsection 

18 (b), (c), (m), or (o) of section 414 of the Internal 

19 Revenue Code of 1986.’’. 

20 (c) CLERICAL AMENDMENT.—The table of contents 

21 in section 1 of such Act is amended by striking the items 

22 relating to sections 302 through 306 and inserting the fol23 lowing new item:

‘‘Sec. 302. Minimum funding standards.’’.

24 (d) EFFECTIVE DATE.—The amendments made by 

25 this section shall apply to plan years beginning after 2005. 
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1 SEC. 102. FUNDING RULES FOR SINGLE-EMPLOYER DE2 FINED BENEFIT PENSION PLANS. 

3 (a) IN GENERAL.—Part 3 of subtitle B of title I of 

4 the Employee Retirement Income Security Act of 1974 (as 

5 amended by section 101 of this Act) is amended further 

6 by inserting after section 302 the following new section. 

7 ‘‘MINIMUM FUNDING STANDARDS FOR SINGLE-EMPLOYER

8 DEFINED BENEFIT PENSION PLANS

9 ‘‘SEC. 303. (a) MINIMUM REQUIRED CONTRIBU10 TION.—

11 ‘‘(1) IN GENERAL.—For purposes of section 

12 302(a)(2)(A), except as otherwise provided in this 

13 subsection, the minimum required contribution with 

14 respect to a plan for a plan year is the target nor15 mal cost of the plan for the plan year. 

16 ‘‘(2) SHORTFALL AMORTIZATION CHARGE.—In 

17 any case in which the value of plan assets (deter18 mined without regard to subsection (e)(1)) of the 

19 plan for the plan year which are held by the plan 

20 immediately before the valuation date is less than 

21 the funding target of the plan for the plan year, the 

22 minimum required contribution with respect to the 

23 plan for the plan year is the sum of the amount de24 termined under paragraph (1) plus a shortfall amor25 tization charge for such plan year determined under 

26 subsection (c). 
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1 ‘‘(3) CREDIT FOR EXCESS ASSETS.—In any 

2 case in which the value of plan assets of the plan for 

3 the plan year which are held by the plan imme4 diately before the valuation date exceed the funding 

5 target of the plan for the plan year, the minimum 

6 required contribution with respect to the plan for the 

7 plan year is the amount determined under para8 graph (1), reduced by such excess. 

9 ‘‘(4) PRE-FUNDING BALANCE.—In the case of 

10 any plan year in which—

11 ‘‘(A) the ratio (expressed as a percentage) 

12 which—

13 ‘‘(i) the value of plan assets (deter14 mined without regard to subsection 

15 (e)(1)(B)) for the preceding plan year, 

16 bears to 

17 ‘‘(ii) the funding target of the plan for 

18 the preceding plan year (determined with19 out regard to subsection (g)(1)), 

20 is at least 80 percent, and 

21 ‘‘(B) the plan sponsor elects (in such form 

22 and manner as shall be prescribed in regula23 tions of the Secretary of the Treasury) to credit 

24 against the minimum required contribution for 

25 the current plan year all or a portion of the 
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1 funding standard carryover balance and the 

2 pre-funding balance (to the extent provided in 

3 subsection (h)) for the preceding plan year (not 

4 in excess of such minimum required contribu5 tion), 

6 the minimum required contribution for the plan year 

7 shall be reduced by the amount so credited by the 

8 plan sponsor. 

9 ‘‘(b) TARGET NORMAL COST.—For purposes of this 

10 section, subject to subsection (g)(2), the term ‘target nor11 mal cost’ means, for any plan year, the present value of 

12 all benefits which are expected to accrue or to be earned 

13 under the plan during the plan year. If any benefit attrib14 utable to services performed in a preceding plan year is 

15 increased by reason of any increase in compensation dur16 ing the current plan year, the increase shall be treated 

17 as having accrued during the current plan year. 

18 ‘‘(c) SHORTFALL AMORTIZATION CHARGE.—

19 ‘‘(1) IN GENERAL.—The shortfall amortization 

20 charge for a plan for any plan year is the aggregate 

21 total of the shortfall amortization installments for 

22 such plan year with respect to the shortfall amorti23 zation bases for such plan year and each of the 6 

24 preceding plan years. 
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1 ‘‘(2) SHORTFALL AMORTIZATION INSTALL2 MENT.—

3 ‘‘(A) IN GENERAL.—For purposes of para4 graph (1), the plan sponsor shall determine, 

5 with respect to the shortfall amortization base 

6 of the plan for any plan year, the amounts nec7 essary to amortize such shortfall amortization 

8 base, in level annual installments over a period 

9 of 7 plan years beginning with such plan year. 

10 The annual installment of such amortization for 

11 each plan year in such 7-plan-year period is the 

12 shortfall amortization installment for such plan 

13 year with respect to such shortfall amortization 

14 base. 

15 ‘‘(B) COMPUTATION ASSUMPTIONS.—The 

16 determination of any annual installment under 

17 subparagraph (A) for any plan year shall be 

18 made as of the valuation date for such plan 

19 year, using the effective rate of interest for the 

20 plan for such plan year. 

21 ‘‘(3) SHORTFALL AMORTIZATION BASE.—The 

22 shortfall amortization base of a plan for a plan year 

23 is the excess (if any) of—

24 ‘‘(A) the funding shortfall of such plan for 

25 such plan year, over 
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1 ‘‘(B) the present value (determined using 

2 the effective interest rate of the plan for the 

3 plan year) of the aggregate total of the shortfall 

4 amortization installments, for such plan year 

5 and the 5 succeeding plan years, which have 

6 been determined with respect to the shortfall 

7 amortization bases of the plan for each of the 

8 6 plan years preceding such plan year. 

9 ‘‘(4) FUNDING SHORTFALL.—For purposes of 

10 this section, the funding shortfall of a plan for any 

11 plan year is the excess (if any) of—

12 ‘‘(A) the funding target of the plan for the 

13 plan year, over 

14 ‘‘(B) the value of plan assets of the plan 

15 for the plan year which are held by the plan im16 mediately before the valuation date. 

17 ‘‘(5) EARLY DEEMED AMORTIZATION UPON AT18 TAINMENT OF FUNDING TARGET.—In any case in 

19 which the funding shortfall of a plan for a plan year 

20 is zero, for purposes of determining the shortfall am21 ortization charge for such plan year and succeeding 

22 plan years, the shortfall amortization base for all 

23 preceding plan years shall be reduced to zero. 

24 ‘‘(d) RULES RELATING TO FUNDING TARGET.—For 

25 purposes of this section—
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1 ‘‘(1) FUNDING TARGET.—Except as provided in 

2 subsection (g)(1), the funding target of a plan for a 

3 plan year is the present value of all liabilities to par4 ticipants and their beneficiaries under the plan for 

5 the plan year. 

6 ‘‘(2) FUNDING TARGET ATTAINMENT PERCENT7 AGE.—The ‘funding target attainment percentage’ of 

8 a plan for a plan year is the ratio (expressed as a 

9 percentage) which—

10 ‘‘(A) the value of plan assets for the plan 

11 year, bears to 

12 ‘‘(B) the funding target of the plan for the 

13 plan year (determined without regard to sub14 section (g)(1)). 

15 ‘‘(e) VALUATION OF PLAN ASSETS AND LIABIL16 ITIES.—

17 ‘‘(1) VALUE OF PLAN ASSETS.—For purposes 

18 of this section (other than paragraph (4) and sub19 sections (a)(2) and (h)(3)), the term ‘value of plan 

20 assets’ means the excess of the value of plan assets 

21 (determined without regard to this paragraph) over 

22 the sum of—

23 ‘‘(A) the pre-funding balance of the plan 

24 maintained under subsection (h)(1), and 
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1 ‘‘(B) the funding standard carryover bal2 ance of the plan maintained under subsection 

3 (h)(2). 

4 ‘‘(2) TIMING OF DETERMINATIONS.—Except as 

5 otherwise provided under this subsection, all deter6 minations under this section for a plan year shall be 

7 made as of the valuation date of the plan for such 

8 plan year. 

9 ‘‘(3) VALUATION DATE.—For purposes of this 

10 section—

11 ‘‘(A) IN GENERAL.—Except as provided in 

12 subparagraph (B), the valuation date of a plan 

13 for any plan year shall be the first day of the 

14 plan year. 

15 ‘‘(B) EXCEPTION FOR SMALL PLANS.—If, 

16 on each day during the preceding plan year, a 

17 plan had 500 or fewer participants, the plan 

18 may designate any day during the plan year as 

19 its valuation date for such plan year. For pur20 poses of this subparagraph, all defined benefit 

21 plans (other than multiemployer plans) main22 tained by the same employer (or any member of 

23 such employer’s controlled group) shall be treat24 ed as 1 plan, but only employees of such em25 ployer or member shall be taken into account. 
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1 ‘‘(C) APPLICATION OF CERTAIN RULES IN

2 DETERMINATION OF PLAN SIZE.—For purposes 

3 of this paragraph—

4 ‘‘(i) PLANS NOT IN EXISTENCE IN

5 PRECEDING YEAR.—In the case of the first 

6 plan year of any plan, subparagraph (B) 

7 shall apply to such plan by taking into ac8 count the number of participants that the 

9 plan is reasonably expected to have on 

10 days during such first plan year. 

11 ‘‘(ii) PREDECESSORS.—Any reference 

12 in subparagraph (B) to an employer shall 

13 include a reference to any predecessor of 

14 such employer. 

15 ‘‘(4) AUTHORIZATION OF USE OF ACTUARIAL

16 VALUE.—For purposes of this section, the value of 

17 plan assets (determined without regard to paragraph 

18 (1)) shall be determined on the basis of any reason19 able actuarial method of valuation which takes into 

20 account fair market value and which is permitted 

21 under regulations prescribed by the Secretary of the 

22 Treasury, except that—

23 ‘‘(A) any such method providing for aver24 aging of fair market values may not provide for 

25 averaging of such values over more than the 
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1 current plan year and the 2 preceding plan 

2 years, and 

3 ‘‘(B) any such method may not result in a 

4 determination of the value of plan assets which, 

5 at any time, is lower than 90 percent or greater 

6 than 110 percent of the fair market value of 

7 such assets at such time. 

8 ‘‘(5) ACCOUNTING FOR CONTRIBUTION RE9 CEIPTS.—For purposes of this section—

10 ‘‘(A) CONTRIBUTIONS FOR PRIOR PLAN

11 YEARS TAKEN INTO ACCOUNT.—For purposes 

12 of determining the value of plan assets for any 

13 current plan year, in any case in which a con14 tribution properly allocable to amounts owed for 

15 a preceding plan year is made on or after the 

16 valuation date of the plan for such current plan 

17 year, such contribution shall be taken into ac18 count, except that any such contribution made 

19 during any such current plan year beginning 

20 after 2006 shall be taken into account only in 

21 an amount equal to its present value (deter22 mined using the effective rate of interest for the 

23 plan for the preceding plan year) as of the valu24 ation date of the plan for such current plan 

25 year. 
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1 ‘‘(B) CONTRIBUTIONS FOR CURRENT PLAN

2 YEAR DISREGARDED.—For purposes of deter3 mining the value of plan assets for any current 

4 plan year, contributions which are properly allo5 cable to amounts owed for such plan year shall 

6 not be taken into account, and, in the case of 

7 any such contribution made before the valuation 

8 date of the plan for such plan year, such value 

9 of plan assets shall be reduced for interest on 

10 such amount determined using the effective rate 

11 of interest of the plan for the preceding plan 

12 year for the period beginning when such pay13 ment was made and ending on the valuation 

14 date of the plan. 

15 ‘‘(6) ACCOUNTING FOR PLAN LIABILITIES.—

16 For purposes of this section—

17 ‘‘(A) LIABILITIES TAKEN INTO ACCOUNT

18 FOR CURRENT PLAN YEAR.—In determining the 

19 value of liabilities under a plan for a plan year, 

20 liabilities shall be taken into account to the ex21 tent attributable to benefits (including any early 

22 retirement or similar benefit) accrued as of the 

23 beginning of the plan year. 

24 ‘‘(B) ACCRUALS DURING CURRENT PLAN

25 YEAR DISREGARDED.—For purposes of sub-
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1 paragraph (A), benefits accrued during such 

2 plan year (after those taken into account under 

3 subparagraph (A)) shall not be taken into ac4 count, irrespective of whether the valuation date 

5 of the plan for such plan year is later than the 

6 first day of such plan year. 

7 ‘‘(f) ACTUARIAL ASSUMPTIONS AND METHODS.—

8 ‘‘(1) IN GENERAL.—Subject to this subsection, 

9 the determination of any present value or other com10 putation under this section shall be made on the 

11 basis of actuarial assumptions and methods—

12 ‘‘(A) each of which is reasonable (taking 

13 into account the experience of the plan and rea14 sonable expectations), and 

15 ‘‘(B) which, in combination, offer the actu16 ary’s best estimate of anticipated experience 

17 under the plan. 

18 ‘‘(2) INTEREST RATES.—

19 ‘‘(A) EFFECTIVE INTEREST RATE.—For 

20 purposes of this section, the term ‘effective in21 terest rate’ means, with respect to any plan for 

22 any plan year, the single rate of interest which, 

23 if used to determine the present value of the 

24 plan’s liabilities referred to in subsection (d)(1) 
27

•HR 2830 IH 

1 would result in an amount equal to the funding 

2 target of the plan for such plan year. 

3 ‘‘(B) APPLICATION TO FUNDING TAR4 GET.—For purposes of determining the funding 

5 target of a plan for any plan year, the interest 

6 rate used in determining the present value of 

7 the liabilities of the plan shall be—

8 ‘‘(i) in the case of liabilities reason9 ably determined to be payable during the 

10 5-year period beginning on the first day of 

11 the plan year, the first segment rate with 

12 respect to the applicable month, 

13 ‘‘(ii) in the case of liabilities reason14 ably determined to be payable during the 

15 15-year period beginning at the end of the 

16 period described in clause (i), the second 

17 segment rate with respect to the applicable 

18 month, and 

19 ‘‘(iii) in the case of liabilities reason20 ably determined to be payable after the pe21 riod described in clause (ii), the third seg22 ment rate with respect to the applicable 

23 month. 

24 ‘‘(C) SEGMENT RATES.—For purposes of 

25 this paragraph—
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•HR 2830 IH 

1 ‘‘(i) FIRST SEGMENT RATE.—The 

2 term ‘first segment rate’ means, with re3 spect to any month, the single rate of in4 terest which shall be determined by the 

5 Secretary of the Treasury for such month 

6 on the basis of the corporate bond yield 

7 curve for such month, taking into account 

8 only that portion of such yield curve which 

9 is based on bonds maturing during the 5-

10 year period commencing with such month. 

11 ‘‘(ii) SECOND SEGMENT RATE.—The 

12 term ‘second segment rate’ means, with re13 spect to any month, the single rate of in14 terest which shall be determined by the 

15 Secretary of the Treasury for such month 

16 on the basis of the corporate bond yield 

17 curve for such month, taking into account 

18 only that portion of such yield curve which 

19 is based on bonds maturing during the 15-

20 year period beginning at the end of the pe21 riod described in clause (i). 

22 ‘‘(iii) THIRD SEGMENT RATE.—The 

23 term ‘third segment rate’ means, with re24 spect to any month, the single rate of in25 terest which shall be determined by the 
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•HR 2830 IH 

1 Secretary of the Treasury for such month 

2 on the basis of the corporate bond yield 

3 curve for such month, taking into account 

4 only that portion of such yield curve which 

5 is based on bonds maturing during periods 

6 beginning after the period described in 

7 clause (ii). 

8 ‘‘(D) CORPORATE BOND YIELD CURVE.—

9 For purposes of this paragraph—

10 ‘‘(i) IN GENERAL.—The term ‘cor11 porate bond yield curve’ means, with re12 spect to any month, a yield curve which is 

13 prescribed by the Secretary of the Treas14 ury for such month and which reflects a 3-

15 year weighted average of yields on invest16 ment grade corporate bonds with varying 

17 maturities. 

18 ‘‘(ii) 3-YEAR WEIGHTED AVERAGE.—

19 The term ‘3-year weighted average’ means 

20 an averaging methodology under which the 

21 most recent year is weighted 50 percent, 

22 the year preceding such year is weighted 

23 35 percent, and the second year preceding 

24 such year is weighted 15 percent. 
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1 ‘‘(E) APPLICABLE MONTH.—For purposes 

2 of this paragraph, the term ‘applicable month’ 

3 means, with respect to any plan for any plan 

4 year, the month which includes the valuation 

5 date of such plan for such plan year or, at the 

6 election of the plan administrator, any of the 4 

7 months which precede such month. Any election 

8 made under this subparagraph shall apply to 

9 the plan year for which made and all succeeding 

10 plan years unless revoked with the consent of 

11 the Secretary of the Treasury. 

12 ‘‘(F) PUBLICATION REQUIREMENTS.—The 

13 Secretary of the Treasury shall publish for each 

14 month the corporate bond yield curve (and the 

15 corporate bond yield curve reflecting the modi16 fication described in section 

17 205(g)(3)(B)(iii)(I)) for such month and each 

18 of the rates determined under subparagraph 

19 (B) for such month. The Secretary of the 

20 Treasury shall also publish a description of the 

21 methodology used to determine such yield curve 

22 and such rates which is sufficiently detailed to 

23 enable plans to make reasonable projections re24 garding the yield curve and such rates for fu-
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•HR 2830 IH 

1 ture months based on the plan’s projection of 

2 future interest rates. 

3 ‘‘(G) TRANSITION RULE.—

4 ‘‘(i) IN GENERAL.—Notwithstanding 

5 the preceding provisions of this paragraph, 

6 for plan years beginning in 2006 or 2007, 

7 the first, second, and third segment rates 

8 for a plan with respect to any month shall 

9 be equal to the sum of—

10 ‘‘(I) the product of such rate for 

11 such month determined without re12 gard to this subparagraph, multiplied 

13 by the applicable percentage, and 

14 ‘‘(II) the product of the rate de15 termined under the rules of section 

16 302(b)(5)(B)(ii)(II) (as in effect for 

17 plan years beginning in 2005), multi18 plied by a percentage equal to 100 

19 percent minus the applicable percent20 age. 

21 ‘‘(ii) APPLICABLE PERCENTAGE.—For 

22 purposes of clause (i), the applicable percentage is 331 23 ⁄3 percent for plan years beginning in 2006 and 662 24 ⁄3 percent for plan 

25 years beginning in 2007. 
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1 ‘‘(3) MORTALITY TABLE.—

2 ‘‘(A) IN GENERAL.—The mortality tables 

3 used in determining any present value or mak4 ing any computation under this section shall be 

5 the RP–2000 Combined Mortality Table, as 

6 published by the Society of American Actuaries, 

7 as in effect on the date of the enactment of the 

8 Pension Protection Act of 2005 and as revised 

9 from time to time under subparagraph (B). 

10 ‘‘(B) PERIODIC REVISION.—The Secretary 

11 of the Treasury shall (at least every 10 years) 

12 make revisions in any tables in effect under this 

13 paragraph to reflect the actual experience of 

14 pension plans and projected trends in such ex15 perience. 

16 ‘‘(C) TRANSITION RULE.—Under regula17 tions of the Secretary of the Treasury, any dif18 ference in assumptions as set forth in the mor19 tality table specified in subparagraph (A) and 

20 assumptions as set forth in the mortality table 

21 described in section 302(d)(7)(C)(ii) (as in ef22 fect for plan years beginning in 2005) shall be 

23 phased in ratably over the first period of 5 plan 

24 years beginning in or after 2006 so as to be 

25 fully effective for the fifth plan year. 
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•HR 2830 IH 

1 ‘‘(4) PROBABILITY OF BENEFIT PAYMENTS IN

2 THE FORM OF LUMP SUMS OR OTHER OPTIONAL

3 FORMS.—For purposes of determining any present 

4 value or making any computation under this section, 

5 there shall be taken into account—

6 ‘‘(A) the probability that future benefit 

7 payments under the plan will be made in the 

8 form of optional forms of benefits provided 

9 under the plan (including lump sum distribu10 tions, determined on the basis of the plan’s ex11 perience and other related assumptions), and 

12 ‘‘(B) any difference in the present value of 

13 such future benefit payments resulting from the 

14 use of actuarial assumptions, in determining 

15 benefit payments in any such optional form of 

16 benefits, which are different from those speci17 fied in this subsection. 

18 ‘‘(5) APPROVAL OF LARGE CHANGES IN ACTU19 ARIAL ASSUMPTIONS.—

20 ‘‘(A) IN GENERAL.—No actuarial assump21 tion used to determine the funding target for a 

22 single-employer plan to which this paragraph 

23 applies may be changed without the approval of 

24 the Secretary of the Treasury. 
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•HR 2830 IH 

1 ‘‘(B) PLANS TO WHICH PARAGRAPH AP2 PLIES.—This paragraph shall apply to a plan 

3 only if—

4 ‘‘(i) the aggregate unfunded vested 

5 benefits as of the close of the preceding 

6 plan year (as determined under section 

7 4006(a)(3)(E)(iii)) of such plan and all 

8 other plans maintained by the contributing 

9 sponsors (as defined in section 

10 4001(a)(13)) and members of such spon11 sors’ controlled groups (as defined in sec12 tion 4001(a)(14)) which are covered by 

13 title IV (disregarding plans with no un14 funded vested benefits) exceed 

15 $50,000,000; and 

16 ‘‘(ii) the change in assumptions (de17 termined after taking into account any 

18 changes in interest rate and mortality 

19 table) results in a decrease in the funding 

20 shortfall of the plan for the current plan 

21 year that exceeds $50,000,000, or that ex22 ceeds $5,000,000 and that is 5 percent or 

23 more of the funding target of the plan be24 fore such change. 

25 ‘‘(g) SPECIAL RULES FOR AT-RISK PLANS.—
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•HR 2830 IH 

1 ‘‘(1) FUNDING TARGET FOR PLANS IN AT-RISK

2 STATUS.—

3 ‘‘(A) IN GENERAL.—In any case in which 

4 a plan is in at-risk status for a plan year, the 

5 funding target of the plan for the plan year is 

6 the sum of—

7 ‘‘(i) the present value of all liabilities 

8 to participants and their beneficiaries 

9 under the plan for the plan year, as deter10 mined by using, in addition to the actu11 arial assumptions described in subsection 

12 (f), the supplemental actuarial assumptions 

13 described in subparagraph (B), plus 

14 ‘‘(ii) a loading factor determined 

15 under subparagraph (C). 

16 ‘‘(B) SUPPLEMENTAL ACTUARIAL ASSUMP17 TIONS.—The actuarial assumptions used in de18 termining the valuation of the funding target 

19 shall include, in addition to the actuarial as20 sumptions described in subsection (f), an as21 sumption that all participants will elect benefits 

22 at such times and in such forms as will result 

23 in the highest present value of liabilities under 

24 subparagraph (A)(i). 
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•HR 2830 IH 

1 ‘‘(C) LOADING FACTOR.—The loading fac2 tor applied with respect to a plan under this 

3 paragraph for any plan year is the sum of—

4 ‘‘(i) $700, times the number of par5 ticipants in the plan, plus 

6 ‘‘(ii) 4 percent of the funding target 

7 (determined without regard to this para8 graph) of the plan for the plan year. 

9 ‘‘(2) TARGET NORMAL COST OF AT-RISK

10 PLANS.—

11 ‘‘(A) IN GENERAL.—In any case in which 

12 a plan is in at-risk status for a plan year, the 

13 target normal cost of the plan for such plan 

14 year shall be the sum of—

15 ‘‘(i) the present value of all benefits 

16 which are expected to accrue under the 

17 plan during the plan year, determined 

18 under the actuarial assumptions used 

19 under paragraph (1), plus 

20 ‘‘(ii) the loading factor under para21 graph (1)(C), excluding the portion of the 

22 loading factor described in paragraph 

23 (1)(C)(i). 

24 ‘‘(B) MINIMUM AMOUNT.—In no event 

25 shall the target normal cost of a plan deter-
37

•HR 2830 IH 

1 mined under this paragraph be less than the 

2 target normal cost of such plan as determined 

3 without regard to this paragraph. 

4 ‘‘(3) DETERMINATION OF AT-RISK STATUS.—

5 For purposes of this subsection, a plan is in ‘at-risk 

6 status’ for a plan year if the funding target attain7 ment percentage of the plan for the preceding plan 

8 year was less than 60 percent. 

9 ‘‘(4) TRANSITION BETWEEN APPLICABLE FUND10 ING TARGETS AND BETWEEN APPLICABLE TARGET

11 NORMAL COST.—

12 ‘‘(A) IN GENERAL.—In any case in which 

13 a plan which is in at-risk status for a plan year 

14 has been in such status for a consecutive period 

15 of fewer than 5 plan years, the applicable 

16 amount of the funding target and of the target 

17 normal cost shall be, in lieu of the amount de18 termined without regard to this paragraph, the 

19 sum of—

20 ‘‘(i) the amount determined under this 

21 section without regard to this subsection, 

22 plus 

23 ‘‘(ii) the transition percentage for 

24 such plan year of the excess of the amount 

25 determined under this subsection (without 
38

•HR 2830 IH 

1 regard to this paragraph) over the amount 

2 determined under this section without re3 gard to this subsection. 

4 ‘‘(B) TRANSITION PERCENTAGE.—For 

5 purposes of this paragraph, the ‘transition per6 centage’ for a plan year is the product derived 

7 by multiplying—

8 ‘‘(i) 20 percent, by 

9 ‘‘(ii) the number of plan years during 

10 the period described in subparagraph (A). 

11 ‘‘(h) PRE-FUNDING AND FUNDING STANDARD CAR12 RYOVER BALANCES.—

13 ‘‘(1) PRE-FUNDING BALANCE.—

14 ‘‘(A) IN GENERAL.—The plan sponsor of a 

15 pension plan which is a single-employer plan 

16 shall maintain a pre-funding balance for pur17 poses of this subsection. Such balance shall con18 sist of a beginning balance of zero, increased 

19 and decreased to the extent provided in sub20 paragraphs (B) and (C), and adjusted further 

21 as provided in paragraph (3). 

22 ‘‘(B) INCREASES.—As of the valuation 

23 date for each plan year beginning after 2006, 

24 the pre-funding balance of a plan shall be in25 creased by the amount elected by the plan spon-
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•HR 2830 IH 

1 sor for the plan year. Such amount shall not ex2 ceed the excess (if any) of—

3 ‘‘(i) the aggregate total of employer 

4 contributions to the plan for the preceding 

5 plan year, over 

6 ‘‘(ii) the minimum required contribu7 tion for such preceding plan year (in8 creased by interest on any portion of such 

9 minimum required contribution remaining 

10 unpaid, at the effective interest rate for 

11 the plan for the preceding plan year, for 

12 the period beginning with the first day of 

13 such preceding plan year and ending on 

14 the date that payment of such portion is 

15 made). 

16 ‘‘(C) DECREASES.—As of the valuation 

17 date for each plan year after 2006, the pre18 funding balance of a plan shall be decreased 

19 (but not below zero) by the sum of—

20 ‘‘(i) the amount credited under sub21 section (a)(4) (if any) in reducing the min22 imum required contribution of the plan for 

23 the preceding plan year, and 

24 ‘‘(ii) the amount elected by the plan 

25 sponsor as a reduction in the pre-funding 
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1 balance (for purposes of the determination 

2 under subsection (e)(1) and any other pur3 pose under this section). 

4 ‘‘(D) COORDINATION WITH FUNDING

5 STANDARD CARRYOVER BALANCE.—To the ex6 tent that any plan has a funding standard car7 ryover balance greater than zero—

8 ‘‘(i) no amount of the pre-funding bal9 ance of such plan may be credited under 

10 subsection (a)(4) in reducing the minimum 

11 required contribution, and 

12 ‘‘(ii) no election may be made under 

13 subparagraph (C)(ii). 

14 ‘‘(E) NO USE OF BALANCE TO REDUCE

15 MINIMUM REQUIRED CONTRIBUTION IF USED

16 TO AVOID SHORTFALL AMORTIZATION.—The 

17 amount of the pre-funding balance of such plan 

18 may be credited under subsection (a)(4) in re19 ducing the minimum required contribution only 

20 if the plan sponsor has elected to apply sub21 section (a)(2) to the plan for such plan year by 

22 substituting ‘subsection (e)(1)(B)’ for ‘sub23 section (e)(1)’. 

24 ‘‘(2) FUNDING STANDARD CARRYOVER BAL25 ANCE.—
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•HR 2830 IH 

1 ‘‘(A) IN GENERAL.—The plan sponsor of a 

2 pension plan to which this paragraph applies 

3 shall maintain a funding standard carryover 

4 balance for purposes of this subsection. Such 

5 balance shall consist of a beginning balance de6 termined under subparagraph (C), decreased to 

7 the extent provided in subparagraph (D), and 

8 adjusted further as provided in paragraph (3). 

9 ‘‘(B) PLANS TO WHICH THIS PARAGRAPH

10 APPLIES.—This paragraph applies to any plan 

11 which—

12 ‘‘(i) is a single-employer plan subject 

13 to this part, 

14 ‘‘(ii) was in effect for a plan year be15 ginning in 2005, and 

16 ‘‘(iii) had a positive balance in the 

17 funding standard account under section 

18 302(b) as in effect for such plan year and 

19 determined as of the end of such plan year. 

20 ‘‘(C) BEGINNING BALANCE.—The begin21 ning balance of the funding standard carryover 

22 balance shall be the positive balance described 

23 in subparagraph (B)(iii). 

24 ‘‘(D) DECREASES.—As of the valuation 

25 date for each plan year after 2006, the funding 
42

•HR 2830 IH 

1 standard carryover balance of a plan shall be 

2 decreased (but not below zero) by the sum of—

3 ‘‘(i) the amount credited under sub4 section (a)(4) (if any) in reducing the min5 imum required contribution of the plan for 

6 the preceding plan year, and 

7 ‘‘(ii) the amount elected by the plan 

8 sponsor as a reduction in the funding 

9 standard carryover balance (for purposes 

10 of the determination under subsection 

11 (e)(1) and any other purpose under this 

12 section). 

13 ‘‘(3) ADJUSTMENTS.—In determining the pre14 funding balance or the funding standard carryover 

15 balance of a plan as of the valuation date of the plan 

16 (before applying any increase or decrease under 

17 paragraph (1) or (2)), the plan sponsor shall, in ac18 cordance with regulations which shall be prescribed 

19 by the Secretary of the Treasury, adjust such bal20 ance of the plan so as to reflect the rate of net gain 

21 or loss (determined, notwithstanding subsection 

22 (e)(4), on the basis of fair market value) experienced 

23 by all plan assets for the period beginning with the 

24 valuation date for the preceding plan year and end25 ing with the date preceding the valuation date for 
43

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1 the current plan year, properly taking into account, 

2 in accordance with such regulations, all contribu3 tions, distributions, and other plan payments made 

4 during such period. 

5 ‘‘(4) ELECTIONS.—Except as otherwise pro6 vided in this subsection, any election made under 

7 this subsection shall be made at such time and in 

8 such form and manner as the Secretary of the 

9 Treasury may provide. 

10 ‘‘(5) COORDINATION WITH WAIVERS.—For pur11 poses of this subsection, the term ‘minimum re12 quired contribution’ means for any plan year the 

13 minimum required contribution for such plan year 

14 determined without regard to this subsection and by 

15 taking into account any waiver under section 302(c) 

16 and any waiver amortization charge under sub17 section (j) for such plan year. 

18 ‘‘(i) PAYMENT OF MINIMUM REQUIRED CONTRIBU19 TIONS.—

20 ‘‘(1) IN GENERAL.—For purposes of this sec21 tion, the due date for any payment of any minimum 

required contribution for any plan year shall be 81 22 ⁄2

23 months after the close of the plan year. 

24 ‘‘(2) INTEREST.—Any payment required under 

25 paragraph (1) for a plan year made after the valu-
44

•HR 2830 IH 

1 ation date for such plan year shall be increased by 

2 interest, for the period from the valuation date to 

3 the payment date, at the effective rate of interest for 

4 the plan for such plan year. 

5 ‘‘(3) ACCELERATED QUARTERLY CONTRIBUTION

6 SCHEDULE FOR UNDERFUNDED PLANS.—

7 ‘‘(A) INTEREST PENALTY FOR FAILURE TO

8 MEET ACCELERATED QUARTERLY PAYMENT

9 SCHEDULE.—In any case in which the plan has 

10 a funding shortfall for the preceding plan year, 

11 if the required installment is not paid in full, 

12 then the minimum required contribution for the 

13 plan year (as increased under paragraph (2)) 

14 shall be further increased by an amount equal 

15 to the interest on the amount of the under16 payment for the period of the underpayment, 

17 using an interest rate equal to the excess of—

18 ‘‘(i) 175 percent of the Federal mid19 term rate (as in effect under section 1274 

20 of the Internal Revenue Code of 1986 for 

21 the 1st month of such plan year), over 

22 ‘‘(ii) the effective rate of interest for 

23 the plan for the plan year. 
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•HR 2830 IH 

1 ‘‘(B) AMOUNT OF UNDERPAYMENT, PE2 RIOD OF UNDERPAYMENT.—For purposes of 

3 subparagraph (A)—

4 ‘‘(i) AMOUNT.—The amount of the 

5 underpayment shall be the excess of—

6 ‘‘(I) the required installment, 

7 over 

8 ‘‘(II) the amount (if any) of the 

9 installment contributed to or under 

10 the plan on or before the due date for 

11 the installment. 

12 ‘‘(ii) PERIOD OF UNDERPAYMENT.—

13 The period for which any interest is 

14 charged under this paragraph with respect 

15 to any portion of the underpayment shall 

16 run from the due date for the installment 

17 to the date on which such portion is con18 tributed to or under the plan. 

19 ‘‘(iii) ORDER OF CREDITING CON20 TRIBUTIONS.—For purposes of clause 

21 (i)(II), contributions shall be credited 

22 against unpaid required installments in the 

23 order in which such installments are re24 quired to be paid. 
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•HR 2830 IH 

1 ‘‘(C) NUMBER OF REQUIRED INSTALL2 MENTS; DUE DATES.—For purposes of this 

3 paragraph—

4 ‘‘(i) PAYABLE IN 4 INSTALLMENTS.—

5 There shall be 4 required installments for 

6 each plan year. 

7 ‘‘(ii) TIME FOR PAYMENT OF IN8 STALLMENTS.—The due dates for required 

9 installments are set forth in the following 

10 table:

‘‘In the case of the following 

required installment:

The due date is:

1st ........................................................................... April 15

2nd ......................................................................... July 15

3rd .......................................................................... October 15

4th .......................................................................... January 15 of the following year 

11 ‘‘(D) AMOUNT OF REQUIRED INSTALL12 MENT.—For purposes of this paragraph—

13 ‘‘(i) IN GENERAL.—The amount of 

14 any required installment shall be 25 per15 cent of the required annual payment. 

16 ‘‘(ii) REQUIRED ANNUAL PAYMENT.—

17 For purposes of clause (i), the term ‘re18 quired annual payment’ means the lesser 

19 of—

20 ‘‘(I) 90 percent of the minimum 

21 required contribution (without regard 
47

•HR 2830 IH 

1 to any waiver under section 302(c)) to 

2 the plan for the plan year under this 

3 section, or 

4 ‘‘(II) in the case of a plan year 

5 beginning after 2006, 100 percent of 

6 the minimum required contribution 

7 (without regard to any waiver under 

8 section 302(c)) to the plan for the 

9 preceding plan year. 

10 Subclause (II) shall not apply if the pre11 ceding plan year referred to in such clause 

12 was not a year of 12 months. 

13 ‘‘(E) FISCAL YEARS AND SHORT YEARS.—

14 ‘‘(i) FISCAL YEARS.—In applying this 

15 paragraph to a plan year beginning on any 

16 date other than January 1, there shall be 

17 substituted for the months specified in this 

18 paragraph, the months which correspond 

19 thereto. 

20 ‘‘(ii) SHORT PLAN YEAR.—This sub21 paragraph shall be applied to plan years of 

22 less than 12 months in accordance with 

23 regulations prescribed by the Secretary of 

24 the Treasury. 
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•HR 2830 IH 

1 ‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION

2 WITH QUARTERLY CONTRIBUTIONS.—

3 ‘‘(A) IN GENERAL.—A plan to which this 

4 paragraph applies shall be treated as failing to 

5 pay the full amount of any required installment 

6 under paragraph (3) to the extent that the 

7 value of the liquid assets paid in such install8 ment is less than the liquidity shortfall (wheth9 er or not such liquidity shortfall exceeds the 

10 amount of such installment required to be paid 

11 but for this paragraph). 

12 ‘‘(B) PLANS TO WHICH PARAGRAPH AP13 PLIES.—This paragraph shall apply to a plan 

14 (other than a plan that would be described in 

15 subsection (e)(3)(B) if ‘100’ were substituted 

16 for ‘500’ therein) which—

17 ‘‘(i) is required to pay installments 

18 under paragraph (3) for a plan year, and 

19 ‘‘(ii) has a liquidity shortfall for any 

20 quarter during such plan year. 

21 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

22 purposes of paragraph (3)(A), any portion of an 

23 installment that is treated as not paid under 

24 subparagraph (A) shall continue to be treated 
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•HR 2830 IH 

1 as unpaid until the close of the quarter in 

2 which the due date for such installment occurs. 

3 ‘‘(D) LIMITATION ON INCREASE.—If the 

4 amount of any required installment is increased 

5 by reason of subparagraph (A), in no event 

6 shall such increase exceed the amount which, 

7 when added to prior installments for the plan 

8 year, is necessary to increase the funding target 

9 attainment percentage of the plan for the plan 

10 year (taking into account the expected increase 

11 in funding target due to benefits accruing or 

12 earned during the plan year) to 100 percent. 

13 ‘‘(E) DEFINITIONS.—For purposes of this 

14 subparagraph: 

15 ‘‘(i) LIQUIDITY SHORTFALL.—The 

16 term ‘liquidity shortfall’ means, with re17 spect to any required installment, an 

18 amount equal to the excess (as of the last 

19 day of the quarter for which such install20 ment is made) of—

21 ‘‘(I) the base amount with re22 spect to such quarter, over 

23 ‘‘(II) the value (as of such last 

24 day) of the plan’s liquid assets. 

25 ‘‘(ii) BASE AMOUNT.—
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•HR 2830 IH 

1 ‘‘(I) IN GENERAL.—The term 

2 ‘base amount’ means, with respect to 

3 any quarter, an amount equal to 3 

4 times the sum of the adjusted dis5 bursements from the plan for the 12 

6 months ending on the last day of such 

7 quarter. 

8 ‘‘(II) SPECIAL RULE.—If the 

9 amount determined under subclause 

10 (I) exceeds an amount equal to 2 

11 times the sum of the adjusted dis12 bursements from the plan for the 36 

13 months ending on the last day of the 

14 quarter and an enrolled actuary cer15 tifies to the satisfaction of the Sec16 retary of the Treasury that such ex17 cess is the result of nonrecurring cir18 cumstances, the base amount with re19 spect to such quarter shall be deter20 mined without regard to amounts re21 lated to those nonrecurring cir22 cumstances. 

23 ‘‘(iii) DISBURSEMENTS FROM THE

24 PLAN.—The term ‘disbursements from the 

25 plan’ means all disbursements from the 
51

•HR 2830 IH 

1 trust, including purchases of annuities, 

2 payments of single sums and other bene3 fits, and administrative expenses. 

4 ‘‘(iv) ADJUSTED DISBURSEMENTS.—

5 The term ‘adjusted disbursements’ means 

6 disbursements from the plan reduced by 

7 the product of—

8 ‘‘(I) the plan’s funding target at9 tainment percentage for the plan year, 

10 and 

11 ‘‘(II) the sum of the purchases of 

12 annuities, payments of single sums, 

13 and such other disbursements as the 

14 Secretary of the Treasury shall pro15 vide in regulations. 

16 ‘‘(v) LIQUID ASSETS.—The term ‘liq17 uid assets’ means cash, marketable securi18 ties, and such other assets as specified by 

19 the Secretary of the Treasury in regula20 tions. 

21 ‘‘(vi) QUARTER.—The term ‘quarter’ 

22 means, with respect to any required install23 ment, the 3-month period preceding the 

24 month in which the due date for such in25 stallment occurs. 
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•HR 2830 IH 

1 ‘‘(F) REGULATIONS.—The Secretary of the 

2 Treasury may prescribe such regulations as are 

3 necessary to carry out this paragraph. 

4 ‘‘(j) WAIVER AMORTIZATION CHARGE.—

5 ‘‘(1) IN GENERAL.—The minimum required 

6 contribution for any plan year under subsection (a) 

7 shall be increased by the amount of the waiver am8 ortization charge (if any) for such plan year. 

9 ‘‘(2) DETERMINATION OF WAIVER AMORTIZA10 TION CHARGE.—The waiver amortization charge for 

11 a plan for any plan year is the aggregate total of the 

12 waiver amortization installments for such plan year 

13 with respect to the waiver amortization bases for 

14 such plan year and each of the 4 preceding plan 

15 years. 

16 ‘‘(3) WAIVER AMORTIZATION INSTALLMENT.—

17 For purposes of paragraph (2), the plan sponsor 

18 shall determine, with respect to the waiver amortiza19 tion base of the plan for any plan year, the amounts 

20 necessary to amortize such waiver amortization base, 

21 in level annual installments over a period of 5 plan 

22 years beginning with such plan year. The annual in23 stallment of such amortization for each plan year in 

24 such 5-plan year period is the waiver amortization 
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1 installment for such plan year with respect to such 

2 waiver amortization base. 

3 ‘‘(4) COMPUTATION ASSUMPTIONS.—The deter4 mination of any annual installment under paragraph 

5 (2) for any plan year shall be made as of the valu6 ation date for such plan year, using the effective 

7 rate of interest for the plan for the preceding plan 

8 year. 

9 ‘‘(5) WAIVER AMORTIZATION BASE.—The waiv10 er amortization base of a plan for a plan year is the 

11 excess (if any) of—

12 ‘‘(A) the portion of the minimum required 

13 contribution of such plan waived under section 

14 302(c) for such plan year, over 

15 ‘‘(B) the aggregate total of the waiver am16 ortization installments, for such plan year and 

17 the 3 succeeding plan years, which have been 

18 determined with respect to the waiver amortiza19 tion bases of the plan for each of the 4 plan 

20 years preceding such plan year. 

21 ‘‘(k) IMPOSITION OF LIEN WHERE FAILURE TO

22 MAKE REQUIRED CONTRIBUTIONS.—

23 ‘‘(1) IN GENERAL.—In the case of a plan cov24 ered under section 4021 of this Act and to which 
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•HR 2830 IH 

1 this subsection applies (as provided under paragraph 

2 (2)), if—

3 ‘‘(A) any person fails to make a contribu4 tion payment required by section 302 and this 

5 section before the due date for such payment, 

6 and 

7 ‘‘(B) the unpaid balance of such payment 

8 (including interest), when added to the aggre9 gate unpaid balance of all preceding such pay10 ments for which payment was not made before 

11 the due date (including interest), exceeds 

12 $1,000,000, 

13 then there shall be a lien in favor of the plan in the 

14 amount determined under paragraph (3) upon all 

15 property and rights to property, whether real or per16 sonal, belonging to such person and any other per17 son who is a member of the same controlled group 

18 of which such person is a member. 

19 ‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—

20 This subsection shall apply to a defined benefit plan 

21 which is a single-employer plan for any plan year for 

22 which the funding target attainment percentage (as 

23 defined in subsection (d)(2)) of such plan is less 

24 than 100 percent. 
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1 ‘‘(3) AMOUNT OF LIEN.—For purposes of para2 graph (1), the amount of the lien shall be equal to 

3 the aggregate unpaid balance of contribution pay4 ments required under this section and section 302 

5 for which payment has not been made before the due 

6 date. 

7 ‘‘(4) NOTICE OF FAILURE; LIEN.—

8 ‘‘(A) NOTICE OF FAILURE.—A person 

9 committing a failure described in paragraph (1) 

10 shall notify the Pension Benefit Guaranty Cor11 poration of such failure within 10 days of the 

12 due date for the required contribution payment. 

13 ‘‘(B) PERIOD OF LIEN.—The lien imposed 

14 by paragraph (1) shall arise on the due date for 

15 the required contribution payment and shall 

16 continue until the last day of the first plan year 

17 in which the plan ceases to be described in 

18 paragraph (1)(B). Such lien shall continue to 

19 run without regard to whether such plan con20 tinues to be described in paragraph (2) during 

21 the period referred to in the preceding sentence. 

22 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

23 amount with respect to which a lien is imposed 

24 under paragraph (1) shall be treated as taxes 

25 due and owing the United States and rules 
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1 similar to the rules of subsections (c), (d), and 

2 (e) of section 4068 shall apply with respect to 

3 a lien imposed by subsection (a) and the 

4 amount with respect to such lien. 

5 ‘‘(5) ENFORCEMENT.—Any lien created under 

6 paragraph (1) may be perfected and enforced only 

7 by the Pension Benefit Guaranty Corporation, or at 

8 the direction of the Pension Benefit Guaranty Cor9 poration, by the contributing sponsor (or any mem10 ber of the controlled group of the contributing spon11 sor). 

12 ‘‘(6) DEFINITIONS.—For purposes of this sub13 section—

14 ‘‘(A) CONTRIBUTION PAYMENT.—The term 

15 ‘contribution payment’ means, in connection 

16 with a plan, a contribution payment required to 

17 be made to the plan, including any required in18 stallment under paragraphs (3) and (4) of sub19 section (i). 

20 ‘‘(B) DUE DATE; REQUIRED INSTALL21 MENT.—The terms ‘due date’ and ‘required in22 stallment’ have the meanings given such terms 

23 by subsection (i), except that in the case of a 

24 payment other than a required installment, the 
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1 due date shall be the date such payment is re2 quired to be made under section 303. 

3 ‘‘(C) CONTROLLED GROUP.—The term 

4 ‘controlled group’ means any group treated as 

5 a single employer under subsections (b), (c), 

6 (m), and (o) of section 414 of the Internal Rev7 enue Code of 1986. 

8 ‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT

9 ACCOUNTS.—In the case of a qualified transfer (as de10 fined in section 420 of the Internal Revenue Code of 

11 1986), any assets so transferred shall not, for purposes 

12 of this section, be treated as assets in the plan.’’. 

13 (b) CLERICAL AMENDMENT.—The table of sections 

14 in section 1 of such Act (as amended by section 101) is 

15 amended by inserting after the item relating to section 

16 302 the following new item:

‘‘Sec. 303. Minimum funding standards for single-employer defined benefit pension plans.’’.

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply with respect to plan years begin19 ning after 2005. 

20 SEC. 103. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT 

21 ACCRUALS UNDER SINGLE-EMPLOYER 

22 PLANS. 

23 (a) PROHIBITION OF SHUTDOWN BENEFITS AND

24 OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS
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1 UNDER SINGLE-EMPLOYER PLANS.—Section 206 of the 

2 Employee Retirement Income Security Act of 1974 (29 

3 U.S.C. 1056) is amended by adding at the end the fol4 lowing new subsection: 

5 ‘‘(g) PROHIBITION OF SHUTDOWN BENEFITS AND

6 OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS

7 UNDER SINGLE-EMPLOYER PLANS.—

8 ‘‘(1) IN GENERAL.—No pension plan which is a 

9 single-employer plan may provide benefits which are 

10 payable upon the occurrence of—

11 ‘‘(A) a plant shutdown, or 

12 ‘‘(B) any other unpredictable contingent 

13 event. 

14 ‘‘(2) UNPREDICTABLE CONTINGENT EVENT.—

15 For purposes of this subsection, the term ‘unpredict16 able contingent event’ means an event other than—

17 ‘‘(A) attainment of any age, performance 

18 of any service, receipt or derivation of any com19 pensation, or the occurrence of death or dis20 ability, or 

21 ‘‘(B) an event which is reasonably and reli22 ably predictable (as determined by the Sec23 retary of the Treasury).’’. 

24 (b) OTHER LIMITS ON BENEFITS AND BENEFIT AC25 CRUALS.—
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1 (1) IN GENERAL.—Section 206 of such Act (as 

2 amended by subsection (a)) is amended further by 

3 adding at the end the following new subsection: 

4 ‘‘(h) FUNDING-BASED LIMITS ON BENEFITS AND

5 BENEFIT ACCRUALS UNDER SINGLE-EMPLOYER

6 PLANS.—

7 ‘‘(1) LIMITATIONS ON PLAN AMENDMENTS IN8 CREASING LIABILITY FOR BENEFITS.—

9 ‘‘(A) IN GENERAL.—No amendment to a 

10 single-employer plan which has the effect of in11 creasing liabilities of the plan by reason of in12 creases in benefits, establishment of new bene13 fits, changing the rate of benefit accrual, or 

14 changing the rate at which benefits become 

15 nonforfeitable to the plan may take effect dur16 ing any plan year if the funding target attain17 ment percentage as of the valuation date of the 

18 plan for such plan year is—

19 ‘‘(i) less than 80 percent, or 

20 ‘‘(ii) would be less than 80 percent 

21 taking into account such amendment. 

22 ‘‘(B) EXEMPTION.—Subparagraph (A) 

23 shall cease to apply with respect to any plan 

24 year, effective as of the first date of the plan 

25 year (or if later, the effective date of the 
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1 amendment), upon payment by the plan sponsor 

2 of a contribution equal to—

3 ‘‘(i) in the case of subparagraph 

4 (A)(i), the amount of the increase in the 

5 funding target of the plan (under section 

6 303) for the plan year attributable to the 

7 amendment, and 

8 ‘‘(ii) in the case of subparagraph 

9 (A)(ii), the amount sufficient to result in a 

10 funding target attainment percentage of 80 

11 percent. 

12 ‘‘(2) FUNDING-BASED LIMITATION ON CERTAIN

13 FORMS OF DISTRIBUTION.—A single-employer plan 

14 shall provide that, in any case in which the plan’s 

15 funding target attainment percentage as of the valu16 ation date of the plan for a plan year is less than 

17 80 percent, the plan may not after such date pay 

18 any prohibited payment (as defined in section 

19 206(e)). 

20 ‘‘(3) LIMITATIONS ON BENEFIT ACCRUALS FOR

21 PLANS WITH SEVERE FUNDING SHORTFALLS.—A 

22 single-employer plan shall provide that, in any case 

23 in which the plan’s funding target attainment per24 centage as of the valuation date of the plan for a 
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•HR 2830 IH 

1 plan year is less than 60 percent, all future benefit 

2 accruals under the plan shall cease as of such date. 

3 ‘‘(4) NEW PLANS.—Paragraphs (1) and (3) 

4 shall not apply to a plan for the first 5 plan years 

5 of the plan. For purposes of this paragraph, the ref6 erence in this paragraph to a plan shall include a 

7 reference to any predecessor plan. 

8 ‘‘(5) PRESUMED UNDERFUNDING FOR PUR9 POSES OF BENEFIT LIMITATIONS BASED ON PRIOR

10 YEAR’S FUNDING STATUS.—

11 ‘‘(A) PRESUMPTION OF CONTINUED

12 UNDERFUNDING.—In any case in which a ben13 efit limitation under paragraph (1), (2), or (3) 

14 has been applied to a plan with respect to the 

15 plan year preceding the current plan year, the 

16 funding target attainment percentage of the 

17 plan as of the valuation date of the plan for the 

18 current plan year shall be presumed to be equal 

19 to the funding target attainment percentage of 

20 the plan as of the valuation date of the plan for 

21 the preceding plan year until the enrolled actu22 ary of the plan certifies the actual funding tar23 get attainment percentage of the plan as of the 

24 valuation date of the plan for the current plan 

25 year. 
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1 ‘‘(B) PRESUMPTION OF UNDERFUNDING

2 AFTER 10TH MONTH.—In any case in which no 

3 such certification is made with respect to the 

4 plan before the first day of the 10th month of 

5 the current plan year, for purposes of para6 graphs (1), (2), and (3), the plan’s funding tar7 get attainment percentage shall be conclusively 

8 presumed to be less than 60 percent as of the 

9 first day of such 10th month, and such day 

10 shall be deemed, for purposes of such para11 graphs, to be the valuation date of the plan for 

12 the current plan year. 

13 ‘‘(C) PRESUMPTION OF UNDERFUNDING

14 AFTER 4TH MONTH FOR NEARLY UNDER15 FUNDED PLANS.—In any case in which—

16 ‘‘(i) a benefit limitation under para17 graph (1), (2), or (3) did not apply to a 

18 plan with respect to the plan year pre19 ceding the current plan year, but the fund20 ing target attainment percentage of the 

21 plan for such preceding plan year was not 

22 more than 10 percentage points greater 

23 than the percentage which would have 

24 caused such paragraph to apply to the plan 
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1 with respect to such preceding plan year, 

2 and 

3 ‘‘(ii) as of the first day of the 4th 

4 month of the current plan year, the en5 rolled actuary of the plan has not certified 

6 the actual funding target attainment per7 centage of the plan as of the valuation date 

8 of the plan for the current plan year, 

9 until the enrolled actuary so certifies, such first 

10 day shall be deemed, for purposes of such para11 graph, to be the valuation date of the plan for 

12 the current plan year and the funding target at13 tainment percentage of the plan as of such first 

14 day shall, for purposes of such paragraph, be 

15 presumed to be equal to 10 percentage points 

16 less than the funding target attainment per17 centage of the plan as of the valuation date of 

18 the plan for such preceding plan year. 

19 ‘‘(6) RESTORATION BY PLAN AMENDMENT OF

20 BENEFITS OR BENEFIT ACCRUAL.—In any case in 

21 which a prohibition under paragraph (2) of the pay22 ment of lump sum distributions or benefits in any 

23 other accelerated form or a cessation of benefit ac24 cruals under paragraph (3) is applied to a plan with 

25 respect to any plan year and such prohibition or ces-
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•HR 2830 IH 

1 sation, as the case may be, ceases to apply to any 

2 subsequent plan year, the plan may provide for the 

3 resumption of such benefit payment or such benefit 

4 accrual only by means of the adoption of a plan 

5 amendment after the valuation date of the plan for 

6 such subsequent plan year. The preceding sentence 

7 shall not apply to a prohibition or cessation required 

8 by reason of paragraph (5). 

9 ‘‘(7) FUNDING TARGET ATTAINMENT PERCENT10 AGE.—For purposes of this subsection, the term 

11 ‘funding target attainment percentage’ has the 

12 meaning provided such term under section 

13 303(d)(2).’’. 

14 (2) NOTICE REQUIREMENT.—

15 (A) IN GENERAL.—Section 101 of such 

16 Act (29 U.S.C. 1021) is amended—

17 (i) by redesignating subsection (j) as 

18 subsection (k); and 

19 (ii) by inserting after subsection (i) 

20 the following new subsection: 

21 ‘‘(j) NOTICE OF FUNDING-BASED LIMITATION ON

22 CERTAIN FORMS OF DISTRIBUTION.—The plan adminis23 trator of a single-employer plan shall provide a written no24 tice to plan participants and beneficiaries within 30 days 

25 after the plan has become subject to the restriction de-
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1 scribed in section 206(h)(2) or at such other time as may 

2 be deterimined by the Secretary.’’. 

3 (B) PENALTY.—Section 502(c)(1)(A) of 

4 such Act (29 U.S.C. 1132(c)(1)(A)) is amended 

5 by striking ‘‘section 606’’ and all that follows 

6 through ‘‘101(f)’’ and inserting ‘‘section 606, 

7 101(e)(1), 101(f), or 101(j)’’. 

8 (c) SPECIAL RULE FOR PLAN AMENDMENTS.—A 

9 plan shall not fail to meet the requirements of section 

10 204(g) of the Employee Retirement Income Security Act 

11 of 1974 or section 411(d)(6) of the Internal Revenue Code 

12 of 1986 solely by reason of the adoption by the plan of 

13 an amendment necessary to meet the requirements of the 

14 amendments made by this section. 

15 (d) EFFECTIVE DATE.—

16 (1) SHUTDOWN BENEFITS.—Except as provided 

17 in paragraph (3), the amendments made by sub18 section (a) shall apply with respect to plant shut19 downs, or other unpredictable contingent events, oc20 curring after 2006. 

21 (2) OTHER BENEFITS.—Except as provided in 

22 paragraph (3), the amendments made by subsection 

23 (b) shall apply with respect to plan years beginning 

24 after 2006. 
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1 (3) COLLECTIVE BARGAINING EXCEPTION.—In 

2 the case of a plan maintained pursuant to 1 or more 

3 collective bargaining agreements between employee 

4 representatives and 1 or more employers ratified be5 fore the date of the enactment of this Act, the 

6 amendments made by this subsection shall not apply 

7 to plan years beginning before the earlier of—

8 (A) the later of—

9 (i) the date on which the last collec10 tive bargaining agreement relating to the 

11 plan terminates (determined without re12 gard to any extension thereof agreed to 

13 after the date of the enactment of this 

14 Act), or 

15 (ii) the first day of the first plan year 

16 to which the amendments made by this 

17 subsection would (but for this subpara18 graph) apply, or 

19 (B) January 1, 2009. 

20 For purposes of clause (i), any plan amendment 

21 made pursuant to a collective bargaining agreement 

22 relating to the plan which amends the plan solely to 

23 conform to any requirement added by this subsection 

24 shall not be treated as a termination of such collec25 tive bargaining agreement. 
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•HR 2830 IH 

1 SEC. 104. TECHNICAL AND CONFORMING AMENDMENTS. 

2 (a) SECURITY REQUIRED FOR PLAN AMENDMENT

3 RESULTING IN SIGNIFICANT UNDERFUNDING.—Section 

4 307 of the Employee Retirement Income Security Act of 

5 1974 (29 U.S.C. 1085b) is amended—

6 (1) in subsection (a)(1), by striking ‘‘current li7 ability under the plan’’ and inserting ‘‘the funding 

8 target of the plan’’; 

9 (2) in subsection (a)(2), by striking ‘‘funded 

10 current liability percentage’’ and inserting ‘‘funding 

11 target attainment percentage’’, and by striking ‘‘un12 funded current liability’’ and inserting ‘‘unfunded li13 abilities’’; 

14 (3) in subsection (c)(1)(A), by striking ‘‘funded 

15 current liability percentage’’ and inserting ‘‘funding 

16 target attainment percentage’’, and by ‘‘unfunded 

17 current liability’’ and inserting ‘‘unfunded liabil18 ities’’; 

19 (4) in subsection (c)(1)(B), by striking ‘‘current 

20 liability’’ and inserting ‘‘funding target’’; 

21 (5) in subsection (d), by striking ‘‘funded cur22 rent liability percentage’’ each place it appears and 

23 inserting ‘‘funding target attainment percentage’’; 

24 and 

25 (6) in subsection (f), by striking ‘‘the terms’’ 

26 and all that follows and inserting the following: ‘‘the 
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•HR 2830 IH 

1 terms ‘funding target’ and ‘funding target attain2 ment percentage’ shall have the meanings given such 

3 terms by sections 303(d) and 303(g)(4), respectively, 

4 and the term ‘unfunded liabilities’ means, with re5 spect to any plan year, the excess (if any) of the 

6 funding target of the plan over the value of the 

7 plan’s assets determined under section 303(e)(4).’’

8 (b) MISCELLANEOUS AMENDMENTS.—Subtitle B of 

9 title I of such Act (29 U.S.C. 1021 et seq.) is amended—

10 (1) in section 101(d)(3), by striking ‘‘section 

11 302(e)’’ and inserting ‘‘section 303(i)’’; 

12 (2) in section 101(f)(2)(B), by striking clause 

13 (i) and inserting the following: 

14 ‘‘(i) a statement as to whether—

15 ‘‘(I) in the case of a single-em16 ployer plan, the plan’s funding target 

17 attainment percentage (as defined in 

18 section 303(g)(4)), or 

19 ‘‘(II) in the case of a multiem20 ployer plan, the plan’s funded current 

21 liability percentage (as defined in sec22 tion 305(e)(4)), 

23 is at least 100 percent (and, if note, the 

24 actual percentage);’’; 
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•HR 2830 IH 

1 (3) in section 103(d)(8)(B), by striking ‘‘the re2 quirements of section 302(c)(3)’’ and inserting ‘‘the 

3 applicable requirements of sections 303(f) and 

4 304(c)(3)’’; 

5 (4) in section 103(d), by striking paragraph 

6 (11) and inserting the following: 

7 ‘‘(11) If the current value of the assets of the 

8 plan is less than 70 percent of—

9 ‘‘(A) in the case of a single-employer plan, 

10 the funding target (as defined in section 

11 303(d)) of the plan, or 

12 ‘‘(B) in the case of a multiemployer plan, 

13 the current liability (as defined in section 

14 304(c)(6)(C)) under the plan, 

15 the percentage which such value is of the amount 

16 described in subparagraph (A) or (B).’’; 

17 (5) in section 203(a)(3)(C), by striking ‘‘section 

18 302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’; 

19 (6) in section 204(g)(1), by striking ‘‘section 

20 302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’; 

21 (7) in section 204(i)(2)(B), by striking ‘‘section 

22 302(c)(8)’’ and inserting ‘‘section 302(d)(2)’’; 

23 (8) in section 204(i)(3), by striking ‘‘funded 

24 current liability percentage (within the meaning of 

25 section 302(d)(8) of this Act)’’ and inserting ‘‘fund-
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•HR 2830 IH 

1 ing target attainment percentage (as defined in sec2 tion 303(g)(4))’’; 

3 (9) in section 204(i)(4), by striking ‘‘section 

4 302(c)(11)(A), without regard to section 

5 302(c)(11)(B)’’ and inserting ‘‘section 302(b)(1), 

6 without regard to section 302(b)(2)’’; 

7 (10) in section 206(e)(1), by striking ‘‘subject 

8 to the additional funding requirements of section 

9 302(d)’’ and inserting ‘‘in at-risk status under sec10 tion 303(g)’’, and by striking ‘‘section 302(e)(5)’’ 

11 and inserting ‘‘section 303(i)(4)(E)(i)’’; 

12 (11) in section 206(e)(3), by striking ‘‘section 

13 302(e) by reason of paragraph (5)(A) thereof’’ and 

14 inserting ‘‘section 303(i)(3) by reason of section 

15 303(i)(4)(A)’’; and 

16 (12) in sections 101(e)(3), 403(c)(1), and 

17 408(b)(13), by striking ‘‘American Jobs Creation 

18 Act of 2004’’ and inserting ‘‘Pension Protection Act 

19 of 2005’’. 

20 (c) REPEAL OF EXPIRED AUTHORITY FOR TEM21 PORARY VARIANCES.—Section 207 of such Act (29 U.S.C. 

22 1057) is repealed. 

23 (d) EFFECTIVE DATE.—The amendments made by 

24 this section shall apply to plan years beginning after 2005. 
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•HR 2830 IH 

1 Subtitle B—Amendments to 

2 Internal Revenue Code of 1986

3 SEC. 111. MINIMUM FUNDING STANDARDS. 

4 (a) IN GENERAL.—Section 412 of the Internal Rev5 enue Code of 1986 (relating to minimum funding stand6 ards) is amended to read as follows: 

7 ‘‘SEC. 412. MINIMUM FUNDING STANDARDS. 

8 ‘‘(a) REQUIREMENT TO MEET MINIMUM FUNDING

9 STANDARD.—

10 ‘‘(1) IN GENERAL.—A plan to which this part 

11 applies shall satisfy the minimum funding standard 

12 applicable to the plan for any plan year. 

13 ‘‘(2) MINIMUM FUNDING STANDARD.—For pur14 poses of paragraph (1), a plan shall be treated as 

15 satisfying the minimum funding standard for a plan 

16 year if—

17 ‘‘(A) in the case of a defined benefit plan 

18 which is a single-employer plan, the employer 

19 makes contributions to or under the plan for 

20 the plan year which, in the aggregate, are not 

21 less than the minimum required contribution 

22 determined under section 430 for the plan for 

23 the plan year, 

24 ‘‘(B) in the case of a money purchase plan 

25 which is a single-employer plan, the employer 
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•HR 2830 IH 

1 makes contributions to or under the plan for 

2 the plan year which are required under the 

3 terms of the plan, and 

4 ‘‘(C) in the case of a multiemployer plan, 

5 the employers make contributions to or under 

6 the plan for any plan year which, in the aggre7 gate, are sufficient to ensure that the plan does 

8 not have an accumulated funding deficiency 

9 under section 431 as of the end of the plan 

10 year. 

11 ‘‘(b) LIABILITY FOR CONTRIBUTIONS.—

12 ‘‘(1) IN GENERAL.—Except as provided in para13 graph (2), the amount of any contribution required 

14 by this section (including any required installments 

15 under paragraphs (3) and (4) of section 430(i)) 

16 shall be paid by any employer responsible for mak17 ing contributions to or under the plan. 

18 ‘‘(2) JOINT AND SEVERAL LIABILITY WHERE

19 EMPLOYER MEMBER OF CONTROLLED GROUP.—In 

20 the case of a single-employer plan, if the employer 

21 referred to in paragraph (1) is a member of a con22 trolled group, each member of such group shall be 

23 jointly and severally liable for payment of such con24 tributions. 
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•HR 2830 IH 

1 ‘‘(c) VARIANCE FROM MINIMUM FUNDING STAND2 ARDS.—

3 ‘‘(1) WAIVER IN CASE OF BUSINESS HARD4 SHIP.—

5 ‘‘(A) IN GENERAL.—If—

6 ‘‘(i) an employer is (or in the case of 

7 a multiemployer plan, 10 percent or more 

8 of the number of employers contributing to 

9 or under the plan is) unable to satisfy the 

10 minimum funding standard for a plan year 

11 without temporary substantial business 

12 hardship (substantial business hardship in 

13 the case of a multiemployer), and 

14 ‘‘(ii) application of the standard would 

15 be adverse to the interests of plan partici16 pants in the aggregate, 

17 the Secretary may, subject to subparagraphs 

18 (B) and (C), waive the requirements of sub19 section (a) for such year with respect to all or 

20 any portion of the minimum funding standard. 

21 The Secretary shall not waive the minimum 

22 funding standard with respect to a plan for 

23 more than 3 of any 15 (5 of any 15 in the case 

24 of a multiemployer plan) consecutive plan years. 
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1 ‘‘(B) EFFECTS OF WAIVER.—If a waiver is 

2 granted under subparagraph (A) for any plan 

3 year—

4 ‘‘(i) in the case of a single-employer 

5 plan, the minimum required contribution 

6 under section 430 for the plan year shall 

7 be reduced by the amount of the waived 

8 funding deficiency and such amount shall 

9 be amortized as required under section 

10 430(j), and 

11 ‘‘(ii) in the case of a multiemployer 

12 plan, the funding standard account shall 

13 be credited under section 431(b)(3)(C) 

14 with the amount of the waived funding de15 ficiency and such amount shall be amor16 tized as required under section 

17 431(b)(2)(C). 

18 ‘‘(C) WAIVER OF AMORTIZED PORTION

19 NOT ALLOWED.—The Secretary may not waive 

20 under subparagraph (A) any portion of the 

21 minimum funding standard under subsection 

22 (a) for a plan year which is attributable to any 

23 amortization payment required to be made for 

24 such plan year with respect to any amortization 

25 described in subparagraph (B) of any waived 
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1 portion of the minimum funding standard for 

2 any preceding plan year. 

3 ‘‘(2) DETERMINATION OF BUSINESS HARD4 SHIP.—For purposes of this subsection, the factors 

5 taken into account in determining temporary sub6 stantial business hardship (substantial business 

7 hardship in the case of a multiemployer plan) shall 

8 include (but shall not be limited to) whether or 

9 not—

10 ‘‘(A) the employer is operating at an eco11 nomic loss, 

12 ‘‘(B) there is substantial unemployment or 

13 underemployment in the trade or business and 

14 in the industry concerned, 

15 ‘‘(C) the sales and profits of the industry 

16 concerned are depressed or declining, and 

17 ‘‘(D) it is reasonable to expect that the 

18 plan will be continued only if the waiver is 

19 granted. 

20 ‘‘(3) WAIVED FUNDING DEFICIENCY.—For pur21 poses of this part, the term ‘waived funding defi22 ciency’ means the portion of the minimum funding 

23 standard under subsection (a) (determined without 

24 regard to the waiver) for a plan year waived by the 
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1 Secretary and not satisfied by employer contribu2 tions. 

3 ‘‘(4) SECURITY FOR WAIVERS FOR SINGLE-EM4 PLOYER PLANS, CONSULTATIONS.—

5 ‘‘(A) SECURITY MAY BE REQUIRED.—

6 ‘‘(i) IN GENERAL.—Except as pro7 vided in subparagraph (C), the Secretary 

8 may require an employer maintaining a de9 fined benefit plan which is a single-em10 ployer plan (within the meaning of section 

11 4001(a)(15) of the Employee Retirement 

12 and Income Security Act of 1974) to pro13 vide security to such plan as a condition 

14 for granting or modifying a waiver under 

15 paragraph (1). 

16 ‘‘(ii) SPECIAL RULES.—Any security 

17 provided under clause (i) may be perfected 

18 and enforced only by the Pension Benefit 

19 Guaranty Corporation, or at the direction 

20 of the Corporation, by a contributing spon21 sor (within the meaning of section 

22 4001(a)(13) of such Act), or a member of 

23 such sponsor’s controlled group (within the 

24 meaning of section 4001(a)(14) of such 

25 Act). 
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1 ‘‘(B) CONSULTATION WITH THE PENSION

2 BENEFIT GUARANTY CORPORATION.—Except as 

3 provided in subparagraph (C), the Secretary 

4 shall, before granting or modifying a waiver 

5 under this subsection with respect to a plan de6 scribed in subparagraph (A)(i)—

7 ‘‘(i) provide the Pension Benefit 

8 Guaranty Corporation with—

9 ‘‘(I) notice of the completed ap10 plication for any waiver or modifica11 tion, and 

12 ‘‘(II) an opportunity to comment 

13 on such application within 30 days 

14 after receipt of such notice, and 

15 ‘‘(ii) consider—

16 ‘‘(I) any comments of the Cor17 poration under clause (i)(II), and 

18 ‘‘(II) any views of any employee 

19 organization (within the meaning of 

20 section 3(4) of the Employee Retire21 ment and Income Security Act of 

22 1974) representing participants in the 

23 plan which are submitted in writing to 

24 the Secretary in connection with such 

25 application. 
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1 Information provided to the Corporation 

2 under this subparagraph shall be consid3 ered tax return information and subject to 

4 the safeguarding and reporting require5 ments of section 6103(p). 

6 ‘‘(C) EXCEPTION FOR CERTAIN WAIV7 ERS.—

8 ‘‘(i) IN GENERAL.—The preceding 

9 provisions of this paragraph shall not 

10 apply to any plan with respect to which the 

11 sum of—

12 ‘‘(I) the shortfall amortization 

13 charge (within the meaning of section 

14 303(c)(1)) for the plan year, and 

15 ‘‘(II) the aggregate total of 

16 shortfall amortization installments de17 termined for succeeding plan years 

18 under section 303(c)(2), 

19 is less than $1,000,000. 

20 ‘‘(ii) TREATMENT OF WAIVERS FOR

21 WHICH APPLICATIONS ARE PENDING.—The 

22 amount described in clause (i)(I) shall in23 clude any increase in such amount which 

24 would result if all applications for waivers 

25 of the minimum funding standard under 
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1 this subsection which are pending with re2 spect to such plan were denied. 

3 ‘‘(5) SPECIAL RULES FOR SINGLE-EMPLOYER

4 PLANS.—

5 ‘‘(A) APPLICATION MUST BE SUBMITTED

BEFORE DATE 21 6 ⁄2 MONTHS AFTER CLOSE OF

7 YEAR.—In the case of a single-employer plan, 

8 no waiver may be granted under this subsection 

9 with respect to any plan for any plan year un10 less an application therefor is submitted to the 

11 Secretary not later than the 15th day of the 

12 3rd month beginning after the close of such 

13 plan year. 

14 ‘‘(B) SPECIAL RULE IF EMPLOYER IS MEM15 BER OF CONTROLLED GROUP.—In the case of a 

16 single-employer plan, if an employer is a mem17 ber of a controlled group, the temporary sub18 stantial business hardship requirements of 

19 paragraph (1) shall be treated as met only if 

20 such requirements are met—

21 ‘‘(i) with respect to such employer, 

22 and 

23 ‘‘(ii) with respect to the controlled 

24 group of which such employer is a member 
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1 (determined by treating all members of 

2 such group as a single employer). 

3 The Secretary may provide that an analysis of 

4 a trade or business or industry of a member 

5 need not be conducted if the Secretary deter6 mines such analysis is not necessary because 

7 the taking into account of such member would 

8 not significantly affect the determination under 

9 this paragraph. 

10 ‘‘(6) NOTICE TO EMPLOYEE ORGANIZATIONS.—

11 ‘‘(A) IN GENERAL.—The Secretary shall, 

12 before granting a waiver under this subsection, 

13 require each applicant to provide evidence satis14 factory to the Secretary that the applicant has 

15 provided notice of the filing of the application 

16 for such waiver to each employee organization 

17 representing employees covered by the affected 

18 plan, and participant, beneficiary, and alternate 

19 payee (within the meaning of section 

20 414(p)(8)). Such notice shall include a descrip21 tion of the extent to which the plan is funded 

22 for benefits which are guaranteed under title IV 

23 and for benefit liabilities. 

24 ‘‘(B) CONSIDERATION OF RELEVANT IN25 FORMATION.—The Secretary shall consider any 
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1 relevant information provided by a person to 

2 whom notice was given under subparagraph 

3 (A). 

4 ‘‘(d) MISCELLANEOUS RULES.—

5 ‘‘(1) CHANGE IN METHOD OR YEAR.—If the 

6 funding method, the valuation date, or a plan year 

7 for a plan is changed, the change shall take effect 

8 only if approved by the Secretary. 

9 ‘‘(2) CERTAIN RETROACTIVE PLAN AMEND10 MENTS.—For purposes of this section, any amend11 ment applying to a plan year which—

12 ‘‘(A) is adopted after the close of such plan 

year but no later than 21 13 ⁄2 months after the 

14 close of the plan year (or, in the case of a mul15 tiemployer plan, no later than 2 years after the 

16 close of such plan year), 

17 ‘‘(B) does not reduce the accrued benefit 

18 of any participant determined as of the begin19 ning of the first plan year to which the amend20 ment applies, and 

21 ‘‘(C) does not reduce the accrued benefit of 

22 any participant determined as of the time of 

23 adoption except to the extent required by the 

24 circumstances, 
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1 shall, at the election of the plan administrator, be 

2 deemed to have been made on the first day of such 

3 plan year. No amendment described in this para4 graph which reduces the accrued benefits of any par5 ticipant shall take effect unless the plan adminis6 trator files a notice with the Secretary notifying him 

7 of such amendment and the Secretary has approved 

8 such amendment, or within 90 days after the date 

9 on which such notice was filed, failed to disapprove 

10 such amendment. No amendment described in this 

11 subsection shall be approved by the Secretary unless 

12 the Secretary determines that such amendment is 

13 necessary because of a substantial business hardship 

14 (as determined under subsection (c)(2)) and that a 

15 waiver under subsection (c) (or, in the case of a 

16 multiemployer plan, any extension of the amortiza17 tion period under section 431(d)) is unavailable or 

18 inadequate. 

19 ‘‘(3) CONTROLLED GROUP.—For purposes of 

20 this section, the term ‘controlled group’ means any 

21 group treated as a single employer under subsection 

22 (b), (c), (m), or (o) of section 414. 

23 ‘‘(4) CERTAIN INSURANCE CONTRACT PLANS.—

24 A plan is described in this paragraph if—
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1 ‘‘(A) the plan is funded exclusively by the 

2 purchase of individual insurance contracts, 

3 ‘‘(B) such contracts provide for level an4 nual premium payments to be paid extending 

5 not later than the retirement age for each indi6 vidual participating in the plan, and com7 mencing with the date the individual became a 

8 participant in the plan (or, in the case of an in9 crease in benefits, commencing at the time such 

10 increase becomes effective), 

11 ‘‘(C) benefits provided by the plan are 

12 equal to the benefits provided under each con13 tract at normal retirement age under the plan 

14 and are guaranteed by an insurance carrier (li15 censed under the laws of a State to do business 

16 with the plan) to the extent premiums have 

17 been paid, 

18 ‘‘(D) premiums payable for the plan year, 

19 and all prior plan years, under such contracts 

20 have been paid before lapse or there is rein21 statement of the policy, 

22 ‘‘(E) no rights under such contracts have 

23 been subject to a security interest at any time 

24 during the plan year, and 
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1 ‘‘(F) no policy loans are outstanding at 

2 any time during the plan year. 

3 A plan funded exclusively by the purchase of group 

4 insurance contracts which is determined under regu5 lations prescribed by the Secretary to have the same 

6 characteristics as contracts described in the pre7 ceding sentence shall be treated as a plan described 

8 in this paragraph.’’. 

9 (b) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to plan years beginning after 2005. 

11 SEC. 112. FUNDING RULES FOR SINGLE-EMPLOYER DE12 FINED BENEFIT PENSION PLANS. 

13 (a) IN GENERAL.—Subchapter D of chapter 1 of the 

14 Internal Revenue Code of 1986 (relating to deferred com15 pensation, etc.) is amended by adding at the end the fol16 lowing new part: 

17 ‘‘PART III—MINIMUM FUNDING STANDARDS FOR 

18 SINGLE-EMPLOYER DEFINED BENEFIT PEN19 SION PLANS 

20 ‘‘SEC. 430. MINIMUM FUNDING STANDARDS FOR SINGLE21 EMPLOYER DEFINED BENEFIT PENSION 

22 PLANS. 

23 ‘‘(a) MINIMUM REQUIRED CONTRIBUTION.—

24 ‘‘(1) IN GENERAL.—For purposes of section 

25 412(a)(2)(A), except as otherwise provided in this 
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1 subsection, the minimum required contribution with 

2 respect to a plan for a plan year is the target nor3 mal cost of the plan for the plan year. 

4 ‘‘(2) SHORTFALL AMORTIZATION CHARGE.—In 

5 any case in which the value of plan assets (deter6 mined without regard to subsection (e)(1)) of the 

7 plan for the plan year which are held by the plan 

8 immediately before the valuation date is less than 

9 the funding target of the plan for the plan year, the 

10 minimum required contribution with respect to the 

11 plan for the plan year is the sum of the amount de12 termined under paragraph (1) plus a shortfall amor13 tization charge for such plan year determined under 

14 subsection (c). 

15 ‘‘(3) CREDIT FOR EXCESS ASSETS.—In any 

16 case in which the value of plan assets of the plan for 

17 the plan year which are held by the plan imme18 diately before the valuation date exceed the funding 

19 target of the plan for the plan year, the minimum 

20 required contribution with respect to the plan for the 

21 plan year is the amount determined under para22 graph (1), reduced by such excess. 

23 ‘‘(4) PRE-FUNDING BALANCE.—In the case of 

24 any plan year in which—
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1 ‘‘(A) the ratio (expressed as a percentage) 

2 which—

3 ‘‘(i) the value of plan assets (deter4 mined without regard to subsection 

5 (e)(1)(B)) for the preceding plan year, 

6 bears to 

7 ‘‘(ii) the funding target of the plan for 

8 the preceding plan year (determined with9 out regard to subsection (g)(1)), 

10 is at least 80 percent, and 

11 ‘‘(B) the plan sponsor elects (in such form 

12 and manner as shall be prescribed in regula13 tions of the Secretary) to credit against the 

14 minimum required contribution for the current 

15 plan year all or a portion of the funding stand16 ard carryover balance and the pre-funding bal17 ance (to the extent provided in subsection (h)) 

18 for the preceding plan year (not in excess of 

19 such minimum required contribution), 

20 the minimum required contribution for the plan year 

21 shall be reduced by the amount so credited by the 

22 plan sponsor. 

23 ‘‘(b) TARGET NORMAL COST.—For purposes of this 

24 section, subject to subsection (g)(2), the term ‘target nor25 mal cost’ means, for any plan year, the present value of 
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1 all benefits which are expected to accrue or to be earned 

2 under the plan during the plan year. If any benefit attrib3 utable to services performed in a preceding plan year is 

4 increased by reason of any increase in compensation dur5 ing the current plan year, the increase shall be treated 

6 as having accrued during the current plan year. 

7 ‘‘(c) SHORTFALL AMORTIZATION CHARGE.—

8 ‘‘(1) IN GENERAL.—The shortfall amortization 

9 charge for a plan for any plan year is the aggregate 

10 total of the shortfall amortization installments for 

11 such plan year with respect to the shortfall amorti12 zation bases for such plan year and each of the 6 

13 preceding plan years. 

14 ‘‘(2) SHORTFALL AMORTIZATION INSTALL15 MENT.—

16 ‘‘(A) IN GENERAL.—For purposes of para17 graph (1), the plan sponsor shall determine, 

18 with respect to the shortfall amortization base 

19 of the plan for any plan year, the amounts nec20 essary to amortize such shortfall amortization 

21 base, in level annual installments over a period 

22 of 7 plan years beginning with such plan year. 

23 The annual installment of such amortization for 

24 each plan year in such 7-plan-year period is the 

25 shortfall amortization installment for such plan 
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1 year with respect to such shortfall amortization 

2 base. 

3 ‘‘(B) COMPUTATION ASSUMPTIONS.—The 

4 determination of any annual installment under 

5 subparagraph (A) for any plan year shall be 

6 made as of the valuation date for such plan 

7 year, using the effective rate of interest for the 

8 plan for such plan year. 

9 ‘‘(3) SHORTFALL AMORTIZATION BASE.—The 

10 shortfall amortization base of a plan for a plan year 

11 is the excess (if any) of—

12 ‘‘(A) the funding shortfall of such plan for 

13 such plan year, over 

14 ‘‘(B) the present value (determined using 

15 the effective interest rate of the plan for the 

16 plan year) of the aggregate total of the shortfall 

17 amortization installments, for such plan year 

18 and the 5 succeeding plan years, which have 

19 been determined with respect to the shortfall 

20 amortization bases of the plan for each of the 

21 6 plan years preceding such plan year. 

22 ‘‘(4) FUNDING SHORTFALL.—For purposes of 

23 this section, the funding shortfall of a plan for any 

24 plan year is the excess (if any) of—
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1 ‘‘(A) the funding target of the plan for the 

2 plan year, over 

3 ‘‘(B) the value of plan assets of the plan 

4 for the plan year which are held by the plan im5 mediately before the valuation date. 

6 ‘‘(5) EARLY DEEMED AMORTIZATION UPON AT7 TAINMENT OF FUNDING TARGET.—In any case in 

8 which the funding shortfall of a plan for a plan year 

9 is zero, for purposes of determining the shortfall am10 ortization charge for such plan year and succeeding 

11 plan years, the shortfall amortization base for all 

12 preceding plan years shall be reduced to zero. 

13 ‘‘(d) RULES RELATING TO FUNDING TARGET.—For 

14 purposes of this section—

15 ‘‘(1) FUNDING TARGET.—Except as provided in 

16 subsection (g)(1), the funding target of a plan for a 

17 plan year is the present value of all liabilities to par18 ticipants and their beneficiaries under the plan for 

19 the plan year. 

20 ‘‘(2) FUNDING TARGET ATTAINMENT PERCENT21 AGE.—The ‘funding target attainment percentage’ of 

22 a plan for a plan year is the ratio (expressed as a 

23 percentage) which—

24 ‘‘(A) the value of plan assets for the plan 

25 year, bears to 
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1 ‘‘(B) the funding target of the plan for the 

2 plan year (determined without regard to sub3 section (g)(1)). 

4 ‘‘(e) VALUATION OF PLAN ASSETS AND LIABIL5 ITIES.—

6 ‘‘(1) VALUE OF PLAN ASSETS.—For purposes 

7 of this section (other than paragraph (4) and sub8 sections (a)(2) and (h)(3)), the term ‘value of plan 

9 assets’ means the excess of the value of plan assets 

10 (determined without regard to this paragraph) over 

11 the sum of—

12 ‘‘(A) the pre-funding balance of the plan 

13 maintained under subsection (h)(1), and 

14 ‘‘(B) the funding standard carryover bal15 ance of the plan maintained under subsection 

16 (h)(2). 

17 ‘‘(2) TIMING OF DETERMINATIONS.—Except as 

18 otherwise provided under this subsection, all deter19 minations under this section for a plan year shall be 

20 made as of the valuation date of the plan for such 

21 plan year. 

22 ‘‘(3) VALUATION DATE.—For purposes of this 

23 section—

24 ‘‘(A) IN GENERAL.—Except as provided in 

25 subparagraph (B), the valuation date of a plan 
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1 for any plan year shall be the first day of the 

2 plan year. 

3 ‘‘(B) EXCEPTION FOR SMALL PLANS.—If, 

4 on each day during the preceding plan year, a 

5 plan had 500 or fewer participants, the plan 

6 may designate any day during the plan year as 

7 its valuation date for such plan year. For pur8 poses of this subparagraph, all defined benefit 

9 plans (other than multiemployer plans) main10 tained by the same employer (or any member of 

11 such employer’s controlled group) shall be treat12 ed as 1 plan, but only employees of such em13 ployer or member shall be taken into account. 

14 ‘‘(C) APPLICATION OF CERTAIN RULES IN

15 DETERMINATION OF PLAN SIZE.—For purposes 

16 of this paragraph—

17 ‘‘(i) PLANS NOT IN EXISTENCE IN

18 PRECEDING YEAR.—In the case of the first 

19 plan year of any plan, subparagraph (B) 

20 shall apply to such plan by taking into ac21 count the number of participants that the 

22 plan is reasonably expected to have on 

23 days during such first plan year. 

24 ‘‘(ii) PREDECESSORS.—Any reference 

25 in subparagraph (B) to an employer shall 
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1 include a reference to any predecessor of 

2 such employer. 

3 ‘‘(4) AUTHORIZATION OF USE OF ACTUARIAL

4 VALUE.—For purposes of this section, the value of 

5 plan assets (determined without regard to paragraph 

6 (1)) shall be determined on the basis of any reason7 able actuarial method of valuation which takes into 

8 account fair market value and which is permitted 

9 under regulations prescribed by the Secretary, ex10 cept that—

11 ‘‘(A) any such method providing for aver12 aging of fair market values may not provide for 

13 averaging of such values over more than the 

14 current plan year and the 2 preceding plan 

15 years, and 

16 ‘‘(B) any such method may not result in a 

17 determination of the value of plan assets which, 

18 at any time, is lower than 90 percent or greater 

19 than 110 percent of the fair market value of 

20 such assets at such time. 

21 ‘‘(5) ACCOUNTING FOR CONTRIBUTION RE22 CEIPTS.—For purposes of this section—

23 ‘‘(A) CONTRIBUTIONS FOR PRIOR PLAN

24 YEARS TAKEN INTO ACCOUNT.—For purposes 

25 of determining the value of plan assets for any 
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1 current plan year, in any case in which a con2 tribution properly allocable to amounts owed for 

3 a preceding plan year is made on or after the 

4 valuation date of the plan for such current plan 

5 year, such contribution shall be taken into ac6 count, except that any such contribution made 

7 during any such current plan year beginning 

8 after 2006 shall be taken into account only in 

9 an amount equal to its present value (deter10 mined using the effective rate of interest for the 

11 plan for the preceding plan year) as of the valu12 ation date of the plan for such current plan 

13 year. 

14 ‘‘(B) CONTRIBUTIONS FOR CURRENT PLAN

15 YEAR DISREGARDED.—For purposes of deter16 mining the value of plan assets for any current 

17 plan year, contributions which are properly allo18 cable to amounts owed for such plan year shall 

19 not be taken into account, and, in the case of 

20 any such contribution made before the valuation 

21 date of the plan for such plan year, such value 

22 of plan assets shall be reduced for interest on 

23 such amount determined using the effective rate 

24 of interest of the plan for the preceding plan 

25 year for the period beginning when such pay-
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1 ment was made and ending on the valuation 

2 date of the plan. 

3 ‘‘(6) ACCOUNTING FOR PLAN LIABILITIES.—

4 For purposes of this section—

5 ‘‘(A) LIABILITIES TAKEN INTO ACCOUNT

6 FOR CURRENT PLAN YEAR.—In determining the 

7 value of liabilities under a plan for a plan year, 

8 liabilities shall be taken into account to the ex9 tent attributable to benefits (including any early 

10 retirement or similar benefit) accrued as of the 

11 beginning of the plan year. 

12 ‘‘(B) ACCRUALS DURING CURRENT PLAN

13 YEAR DISREGARDED.—For purposes of sub14 paragraph (A), benefits accrued during such 

15 plan year (after those taken into account under 

16 subparagraph (A)) shall not be taken into ac17 count, irrespective of whether the valuation date 

18 of the plan for such plan year is later than the 

19 first day of such plan year. 

20 ‘‘(f) ACTUARIAL ASSUMPTIONS AND METHODS.—

21 ‘‘(1) IN GENERAL.—Subject to this subsection, 

22 the determination of any present value or other com23 putation under this section shall be made on the 

24 basis of actuarial assumptions and methods—
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1 ‘‘(A) each of which is reasonable (taking 

2 into account the experience of the plan and rea3 sonable expectations), and 

4 ‘‘(B) which, in combination, offer the actu5 ary’s best estimate of anticipated experience 

6 under the plan. 

7 ‘‘(2) INTEREST RATES.—

8 ‘‘(A) EFFECTIVE INTEREST RATE.—For 

9 purposes of this section, the term ‘effective in10 terest rate’ means, with respect to any plan for 

11 any plan year, the single rate of interest which, 

12 if used to determine the present value of the 

13 plan’s liabilities referred to in subsection (d)(1) 

14 would result in an amount equal to the funding 

15 target of the plan for such plan year. 

16 ‘‘(B) APPLICATION TO FUNDING TAR17 GET.—For purposes of determining the funding 

18 target of a plan for any plan year, the interest 

19 rate used in determining the present value of 

20 the liabilities of the plan shall be—

21 ‘‘(i) in the case of liabilities reason22 ably determined to be payable during the 

23 5-year period beginning on the first day of 

24 the plan year, the first segment rate with 

25 respect to the applicable month, 
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1 ‘‘(ii) in the case of liabilities reason2 ably determined to be payable during the 

3 15-year period beginning at the end of the 

4 period described in clause (i), the second 

5 segment rate with respect to the applicable 

6 month, and 

7 ‘‘(iii) in the case of liabilities reason8 ably determined to be payable after the pe9 riod described in clause (ii), the third seg10 ment rate with respect to the applicable 

11 month. 

12 ‘‘(C) SEGMENT RATES.—For purposes of 

13 this paragraph—

14 ‘‘(i) FIRST SEGMENT RATE.—The 

15 term ‘first segment rate’ means, with re16 spect to any month, the single rate of in17 terest which shall be determined by the 

18 Secretary for such month on the basis of 

19 the corporate bond yield curve for such 

20 month, taking into account only that por21 tion of such yield curve which is based on 

22 bonds maturing during the 5-year period 

23 commencing with such month. 

24 ‘‘(ii) SECOND SEGMENT RATE.—The 

25 term ‘second segment rate’ means, with re-
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1 spect to any month, the single rate of in2 terest which shall be determined by the 

3 Secretary for such month on the basis of 

4 the corporate bond yield curve for such 

5 month, taking into account only that por6 tion of such yield curve which is based on 

7 bonds maturing during the 15-year period 

8 beginning at the end of the period de9 scribed in clause (i). 

10 ‘‘(iii) THIRD SEGMENT RATE.—The 

11 term ‘third segment rate’ means, with re12 spect to any month, the single rate of in13 terest which shall be determined by the 

14 Secretary for such month on the basis of 

15 the corporate bond yield curve for such 

16 month, taking into account only that por17 tion of such yield curve which is based on 

18 bonds maturing during periods beginning 

19 after the period described in clause (ii). 

20 ‘‘(D) CORPORATE BOND YIELD CURVE.—

21 For purposes of this paragraph—

22 ‘‘(i) IN GENERAL.—The term ‘cor23 porate bond yield curve’ means, with re24 spect to any month, a yield curve which is 

25 prescribed by the Secretary for such month 
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1 and which reflects a 3-year weighted aver2 age of yields on investment grade cor3 porate bonds with varying maturities. 

4 ‘‘(ii) 3-YEAR WEIGHTED AVERAGE.—

5 The term ‘3-year weighted average’ means 

6 an averaging methodology under which the 

7 most recent year is weighted 50 percent, 

8 the year preceding such year is weighted 

9 35 percent, and the second year preceding 

10 such year is weighted 15 percent. 

11 ‘‘(E) APPLICABLE MONTH.—For purposes 

12 of this paragraph, the term ‘applicable month’ 

13 means, with respect to any plan for any plan 

14 year, the month which includes the valuation 

15 date of such plan for such plan year or, at the 

16 election of the plan administrator, any of the 4 

17 months which precede such month. Any election 

18 made under this subparagraph shall apply to 

19 the plan year for which made and all succeeding 

20 plan years unless revoked with the consent of 

21 the Secretary. 

22 ‘‘(F) PUBLICATION REQUIREMENTS.—The 

23 Secretary shall publish for each month the cor24 porate bond yield curve (and the corporate bond 

25 yield curve reflecting the modification described 
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1 in section 417(e)(3)(A)(iii)(I)) for such month 

2 and each of the rates determined under sub3 paragraph (B) for such month. The Secretary 

4 shall also publish a description of the method5 ology used to determine such yield curve and 

6 such rates which is sufficiently detailed to en7 able plans to make reasonable projections re8 garding the yield curve and such rates for fu9 ture months based on the plan’s projection of 

10 future interest rates. 

11 ‘‘(G) TRANSITION RULE.—

12 ‘‘(i) IN GENERAL.—Notwithstanding 

13 the preceding provisions of this paragraph, 

14 for plan years beginning in 2006 or 2007, 

15 the first, second, and third segment rates 

16 for a plan with respect to any month shall 

17 be equal to the sum of—

18 ‘‘(I) the product of such rate for 

19 such month determined without re20 gard to this subparagraph, multiplied 

21 by the applicable percentage, and 

22 ‘‘(II) the product of the rate de23 termined under the rules of section 

24 412(b)(5)(B)(ii)(II) (as in effect for 

25 plan years beginning in 2005), multi-
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1 plied by a percentage equal to 100 

2 percent minus the applicable percent3 age. 

4 ‘‘(ii) APPLICABLE PERCENTAGE.—For 

5 purposes of clause (i), the applicable percentage is 331 6 ⁄3 percent for plan years beginning in 2006 and 662 7 ⁄3 percent for plan 

8 years beginning in 2007. 

9 ‘‘(3) MORTALITY TABLE.—

10 ‘‘(A) IN GENERAL.—The mortality tables 

11 used in determining any present value or mak12 ing any computation under this section shall be 

13 the RP–2000 Combined Mortality Table, as 

14 published by the Society of American Actuaries, 

15 as in effect on the date of the enactment of the 

16 Pension Protection Act of 2005 and as revised 

17 from time to time under subparagraph (B). 

18 ‘‘(B) PERIODIC REVISION.—The Secretary 

19 shall (at least every 10 years) make revisions in 

20 any tables in effect under this paragraph to re21 flect the actual experience of pension plans and 

22 projected trends in such experience. 

23 ‘‘(C) TRANSITION RULE.—Under regula24 tions of the Secretary, any difference in as25 sumptions as set forth in the mortality table 
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1 specified in subparagraph (A) and assumptions 

2 as set forth in the mortality table described in 

3 section 412(d)(7)(C)(ii) (as in effect for plan 

4 years beginning in 2005) shall be phased in rat5 ably over the first period of 5 plan years begin6 ning in or after 2006 so as to be fully effective 

7 for the fifth plan year. 

8 ‘‘(4) PROBABILITY OF BENEFIT PAYMENTS IN

9 THE FORM OF LUMP SUMS OR OTHER OPTIONAL

10 FORMS.—For purposes of determining any present 

11 value or making any computation under this section, 

12 there shall be taken into account—

13 ‘‘(A) the probability that future benefit 

14 payments under the plan will be made in the 

15 form of optional forms of benefits provided 

16 under the plan (including lump sum distribu17 tions, determined on the basis of the plan’s ex18 perience and other related assumptions), and 

19 ‘‘(B) any difference in the present value of 

20 such future benefit payments resulting from the 

21 use of actuarial assumptions, in determining 

22 benefit payments in any such optional form of 

23 benefits, which are different from those speci24 fied in this subsection. 
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1 ‘‘(5) APPROVAL OF LARGE CHANGES IN ACTU2 ARIAL ASSUMPTIONS.—

3 ‘‘(A) IN GENERAL.—No actuarial assump4 tion used to determine the funding target for a 

5 single-employer plan to which this paragraph 

6 applies may be changed without the approval of 

7 the Secretary. 

8 ‘‘(B) PLANS TO WHICH PARAGRAPH AP9 PLIES.—This paragraph shall apply to a plan 

10 only if—

11 ‘‘(i) the aggregate unfunded vested 

12 benefits as of the close of the preceding 

13 plan year (as determined under section 

14 4006(a)(3)(E)(iii) of the Employee Retire15 ment and Income Security Act of 1974) of 

16 such plan and all other plans maintained 

17 by the contributing sponsors (as defined in 

18 section 4001(a)(13) of such Act) and 

19 members of such sponsors’ controlled 

20 groups (as defined in section 4001(a)(14) 

21 of such Act) which are covered by title IV 

22 (disregarding plans with no unfunded vest23 ed benefits) exceed $50,000,000; and 

24 ‘‘(ii) the change in assumptions (de25 termined after taking into account any 
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1 changes in interest rate and mortality 

2 table) results in a decrease in the funding 

3 shortfall of the plan for the current plan 

4 year that exceeds $50,000,000, or that ex5 ceeds $5,000,000 and that is 5 percent or 

6 more of the funding target of the plan be7 fore such change. 

8 ‘‘(g) SPECIAL RULES FOR AT-RISK PLANS.—

9 ‘‘(1) FUNDING TARGET FOR PLANS IN AT-RISK

10 STATUS.—

11 ‘‘(A) IN GENERAL.—In any case in which 

12 a plan is in at-risk status for a plan year, the 

13 funding target of the plan for the plan year is 

14 the sum of—

15 ‘‘(i) the present value of all liabilities 

16 to participants and their beneficiaries 

17 under the plan for the plan year, as deter18 mined by using, in addition to the actu19 arial assumptions described in subsection 

20 (f), the supplemental actuarial assumptions 

21 described in subparagraph (B), plus 

22 ‘‘(ii) a loading factor determined 

23 under subparagraph (C). 

24 ‘‘(B) SUPPLEMENTAL ACTUARIAL ASSUMP25 TIONS.—The actuarial assumptions used in de-
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1 termining the valuation of the funding target 

2 shall include, in addition to the actuarial as3 sumptions described in subsection (f), an as4 sumption that all participants will elect benefits 

5 at such times and in such forms as will result 

6 in the highest present value of liabilities under 

7 subparagraph (A)(i). 

8 ‘‘(C) LOADING FACTOR.—The loading fac9 tor applied with respect to a plan under this 

10 paragraph for any plan year is the sum of—

11 ‘‘(i) $700, times the number of par12 ticipants in the plan, plus 

13 ‘‘(ii) 4 percent of the funding target 

14 (determined without regard to this para15 graph) of the plan for the plan year. 

16 ‘‘(2) TARGET NORMAL COST OF AT-RISK

17 PLANS.—

18 ‘‘(A) IN GENERAL.—In any case in which 

19 a plan is in at-risk status for a plan year, the 

20 target normal cost of the plan for such plan 

21 year shall be the sum of—

22 ‘‘(i) the present value of all benefits 

23 which are expected to accrue under the 

24 plan during the plan year, determined 
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1 under the actuarial assumptions used 

2 under paragraph (1), plus 

3 ‘‘(ii) the loading factor under para4 graph (1)(C), excluding the portion of the 

5 loading factor described in paragraph 

6 (1)(C)(i). 

7 ‘‘(B) MINIMUM AMOUNT.—In no event 

8 shall the target normal cost of a plan deter9 mined under this paragraph be less than the 

10 target normal cost of such plan as determined 

11 without regard to this paragraph. 

12 ‘‘(3) DETERMINATION OF AT-RISK STATUS.—

13 For purposes of this subsection, a plan is in ‘at-risk 

14 status’ for a plan year if the funding target attain15 ment percentage of the plan for the preceding plan 

16 year was less than 60 percent. 

17 ‘‘(4) TRANSITION BETWEEN APPLICABLE FUND18 ING TARGETS AND BETWEEN APPLICABLE TARGET

19 NORMAL COST.—

20 ‘‘(A) IN GENERAL.—In any case in which 

21 a plan which is in at-risk status for a plan year 

22 has been in such status for a consecutive period 

23 of fewer than 5 plan years, the applicable 

24 amount of the funding target and of the target 

25 normal cost shall be, in lieu of the amount de-
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1 termined without regard to this paragraph, the 

2 sum of—

3 ‘‘(i) the amount determined under this 

4 section without regard to this subsection, 

5 plus 

6 ‘‘(ii) the transition percentage for 

7 such plan year of the excess of the amount 

8 determined under this subsection (without 

9 regard to this paragraph) over the amount 

10 determined under this section without re11 gard to this subsection. 

12 ‘‘(B) TRANSITION PERCENTAGE.—For 

13 purposes of this paragraph, the ‘transition per14 centage’ for a plan year is the product derived 

15 by multiplying—

16 ‘‘(i) 20 percent, by 

17 ‘‘(ii) the number of plan years during 

18 the period described in subparagraph (A). 

19 ‘‘(h) PRE-FUNDING AND FUNDING STANDARD CAR20 RYOVER BALANCES.—

21 ‘‘(1) PRE-FUNDING BALANCE.—

22 ‘‘(A) IN GENERAL.—The plan sponsor of a 

23 pension plan which is a single-employer plan 

24 shall maintain a pre-funding balance for pur25 poses of this subsection. Such balance shall con-
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1 sist of a beginning balance of zero, increased 

2 and decreased to the extent provided in sub3 paragraphs (B) and (C), and adjusted further 

4 as provided in paragraph (3). 

5 ‘‘(B) INCREASES.—As of the valuation 

6 date for each plan year beginning after 2006, 

7 the pre-funding balance of a plan shall be in8 creased by the amount elected by the plan spon9 sor for the plan year. Such amount shall not ex10 ceed the excess (if any) of—

11 ‘‘(i) the aggregate total of employer 

12 contributions to the plan for the preceding 

13 plan year, over 

14 ‘‘(ii) the minimum required contribu15 tion for such preceding plan year (in16 creased by interest on any portion of such 

17 minimum required contribution remaining 

18 unpaid, at the effective interest rate for 

19 the plan for the preceding plan year, for 

20 the period beginning with the first day of 

21 such preceding plan year and ending on 

22 the date that payment of such portion is 

23 made). 

24 ‘‘(C) DECREASES.—As of the valuation 

25 date for each plan year after 2006, the pre-
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1 funding balance of a plan shall be decreased 

2 (but not below zero) by the sum of—

3 ‘‘(i) the amount credited under sub4 section (a)(4) (if any) in reducing the min5 imum required contribution of the plan for 

6 the preceding plan year, and 

7 ‘‘(ii) the amount elected by the plan 

8 sponsor as a reduction in the pre-funding 

9 balance (for purposes of the determination 

10 under subsection (e)(1) and any other pur11 pose under this section). 

12 ‘‘(D) COORDINATION WITH FUNDING

13 STANDARD CARRYOVER BALANCE.—To the ex14 tent that any plan has a funding standard car15 ryover balance greater than zero—

16 ‘‘(i) no amount of the pre-funding bal17 ance of such plan may be credited under 

18 subsection (a)(4) in reducing the minimum 

19 required contribution, and 

20 ‘‘(ii) no election may be made under 

21 subparagraph (C)(ii). 

22 ‘‘(E) NO USE OF BALANCE TO REDUCE

23 MINIMUM REQUIRED CONTRIBUTION IF USED

24 TO AVOID SHORTFALL AMORTIZATION.—The 

25 amount of the pre-funding balance of such plan 
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1 may be credited under subsection (a)(4) in re2 ducing the minimum required contribution only 

3 if the plan sponsor has elected to apply sub4 section (a)(2) to the plan for such plan year by 

5 substituting ‘subsection (e)(1)(B)’ for ‘sub6 section (e)(1)’. 

7 ‘‘(2) FUNDING STANDARD CARRYOVER BAL8 ANCE.—

9 ‘‘(A) IN GENERAL.—The plan sponsor of a 

10 pension plan to which this paragraph applies 

11 shall maintain a funding standard carryover 

12 balance for purposes of this subsection. Such 

13 balance shall consist of a beginning balance de14 termined under subparagraph (C), decreased to 

15 the extent provided in subparagraph (D), and 

16 adjusted further as provided in paragraph (3). 

17 ‘‘(B) PLANS TO WHICH THIS PARAGRAPH

18 APPLIES.—This paragraph applies to any plan 

19 which—

20 ‘‘(i) is a single-employer plan subject 

21 to this part, 

22 ‘‘(ii) was in effect for a plan year be23 ginning in 2005, and 

24 ‘‘(iii) had a positive balance in the 

25 funding standard account under section 
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1 412(b) as in effect for such plan year and 

2 determined as of the end of such plan year. 

3 ‘‘(C) BEGINNING BALANCE.—The begin4 ning balance of the funding standard carryover 

5 balance shall be the positive balance described 

6 in subparagraph (B)(iii). 

7 ‘‘(D) DECREASES.—As of the valuation 

8 date for each plan year after 2006, the funding 

9 standard carryover balance of a plan shall be 

10 decreased (but not below zero) by the sum of—

11 ‘‘(i) the amount credited under sub12 section (a)(4) (if any) in reducing the min13 imum required contribution of the plan for 

14 the preceding plan year, and 

15 ‘‘(ii) the amount elected by the plan 

16 sponsor as a reduction in the funding 

17 standard carryover balance (for purposes 

18 of the determination under subsection 

19 (e)(1) and any other purpose under this 

20 section). 

21 ‘‘(3) ADJUSTMENTS.—In determining the pre22 funding balance or the funding standard carryover 

23 balance of a plan as of the valuation date of the plan 

24 (before applying any increase or decrease under 

25 paragraph (1) or (2)), the plan sponsor shall, in ac-
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1 cordance with regulations which shall be prescribed 

2 by the Secretary, adjust such balance of the plan so 

3 as to reflect the rate of net gain or loss (determined, 

4 notwithstanding subsection (e)(4), on the basis of 

5 fair market value) experienced by all plan assets for 

6 the period beginning with the valuation date for the 

7 preceding plan year and ending with the date pre8 ceding the valuation date for the current plan year, 

9 properly taking into account, in accordance with 

10 such regulations, all contributions, distributions, and 

11 other plan payments made during such period. 

12 ‘‘(4) ELECTIONS.—Except as otherwise pro13 vided in this subsection, any election made under 

14 this subsection shall be made at such time and in 

15 such form and manner as the Secretary may pro16 vide. 

17 ‘‘(5) COORDINATION WITH WAIVERS.—For pur18 poses of this subsection, the term ‘minimum re19 quired contribution’ means for any plan year the 

20 minimum required contribution for such plan year 

21 determined without regard to this subsection and by 

22 taking into account any waiver under section 412(c) 

23 and any waiver amortization charge under sub24 section (j) for such plan year. 
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1 ‘‘(i) PAYMENT OF MINIMUM REQUIRED CONTRIBU2 TIONS.—

3 ‘‘(1) IN GENERAL.—For purposes of this sec4 tion, the due date for any payment of any minimum 

required contribution for any plan year shall be 81 5 ⁄2

6 months after the close of the plan year. 

7 ‘‘(2) INTEREST.—Any payment required under 

8 paragraph (1) for a plan year made after the valu9 ation date for such plan year shall be increased by 

10 interest, for the period from the valuation date to 

11 the payment date, at the effective rate of interest for 

12 the plan for such plan year. 

13 ‘‘(3) ACCELERATED QUARTERLY CONTRIBUTION

14 SCHEDULE FOR UNDERFUNDED PLANS.—

15 ‘‘(A) INTEREST PENALTY FOR FAILURE TO

16 MEET ACCELERATED QUARTERLY PAYMENT

17 SCHEDULE.—In any case in which the plan has 

18 a funding shortfall for the preceding plan year, 

19 if the required installment is not paid in full, 

20 then the minimum required contribution for the 

21 plan year (as increased under paragraph (2)) 

22 shall be further increased by an amount equal 

23 to the interest on the amount of the under24 payment for the period of the underpayment, 

25 using an interest rate equal to the excess of—
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1 ‘‘(i) 175 percent of the Federal mid2 term rate (as in effect under section 1274 

3 for the 1st month of such plan year), over 

4 ‘‘(ii) the effective rate of interest for 

5 the plan for the plan year. 

6 ‘‘(B) AMOUNT OF UNDERPAYMENT, PE7 RIOD OF UNDERPAYMENT.—For purposes of 

8 subparagraph (A)—

9 ‘‘(i) AMOUNT.—The amount of the 

10 underpayment shall be the excess of—

11 ‘‘(I) the required installment, 

12 over 

13 ‘‘(II) the amount (if any) of the 

14 installment contributed to or under 

15 the plan on or before the due date for 

16 the installment. 

17 ‘‘(ii) PERIOD OF UNDERPAYMENT.—

18 The period for which any interest is 

19 charged under this paragraph with respect 

20 to any portion of the underpayment shall 

21 run from the due date for the installment 

22 to the date on which such portion is con23 tributed to or under the plan. 

24 ‘‘(iii) ORDER OF CREDITING CON25 TRIBUTIONS.—For purposes of clause 
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1 (i)(II), contributions shall be credited 

2 against unpaid required installments in the 

3 order in which such installments are re4 quired to be paid. 

5 ‘‘(C) NUMBER OF REQUIRED INSTALL6 MENTS; DUE DATES.—For purposes of this 

7 paragraph—

8 ‘‘(i) PAYABLE IN 4 INSTALLMENTS.—

9 There shall be 4 required installments for 

10 each plan year. 

11 ‘‘(ii) TIME FOR PAYMENT OF IN12 STALLMENTS.—The due dates for required 

13 installments are set forth in the following 

14 table:

‘‘In the case of the following 

required installment:

The due date is:

1st ........................................................................... April 15

2nd ......................................................................... July 15

3rd .......................................................................... October 15

4th .......................................................................... January 15 of the following year 

15 ‘‘(D) AMOUNT OF REQUIRED INSTALL16 MENT.—For purposes of this paragraph—

17 ‘‘(i) IN GENERAL.—The amount of 

18 any required installment shall be 25 per19 cent of the required annual payment. 

20 ‘‘(ii) REQUIRED ANNUAL PAYMENT.—

21 For purposes of clause (i), the term ‘re-
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1 quired annual payment’ means the lesser 

2 of—

3 ‘‘(I) 90 percent of the minimum 

4 required contribution (without regard 

5 to any waiver under section 412(c)) to 

6 the plan for the plan year under this 

7 section, or 

8 ‘‘(II) in the case of a plan year 

9 beginning after 2006, 100 percent of 

10 the minimum required contribution 

11 (without regard to any waiver under 

12 section 412(c)) to the plan for the 

13 preceding plan year. 

14 Subclause (II) shall not apply if the pre15 ceding plan year referred to in such clause 

16 was not a year of 12 months. 

17 ‘‘(E) FISCAL YEARS AND SHORT YEARS.—

18 ‘‘(i) FISCAL YEARS.—In applying this 

19 paragraph to a plan year beginning on any 

20 date other than January 1, there shall be 

21 substituted for the months specified in this 

22 paragraph, the months which correspond 

23 thereto. 

24 ‘‘(ii) SHORT PLAN YEAR.—This sub25 paragraph shall be applied to plan years of 
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1 less than 12 months in accordance with 

2 regulations prescribed by the Secretary. 

3 ‘‘(4) LIQUIDITY REQUIREMENT IN CONNECTION

4 WITH QUARTERLY CONTRIBUTIONS.—

5 ‘‘(A) IN GENERAL.—A plan to which this 

6 paragraph applies shall be treated as failing to 

7 pay the full amount of any required installment 

8 under paragraph (3) to the extent that the 

9 value of the liquid assets paid in such install10 ment is less than the liquidity shortfall (wheth11 er or not such liquidity shortfall exceeds the 

12 amount of such installment required to be paid 

13 but for this paragraph). 

14 ‘‘(B) PLANS TO WHICH PARAGRAPH AP15 PLIES.—This paragraph shall apply to a plan 

16 (other than a plan that would be described in 

17 subsection (e)(3)(B) if ‘100’ were substituted 

18 for ‘500’ therein) which—

19 ‘‘(i) is required to pay installments 

20 under paragraph (3) for a plan year, and 

21 ‘‘(ii) has a liquidity shortfall for any 

22 quarter during such plan year. 

23 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

24 purposes of paragraph (3)(A), any portion of an 

25 installment that is treated as not paid under 
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1 subparagraph (A) shall continue to be treated 

2 as unpaid until the close of the quarter in 

3 which the due date for such installment occurs. 

4 ‘‘(D) LIMITATION ON INCREASE.—If the 

5 amount of any required installment is increased 

6 by reason of subparagraph (A), in no event 

7 shall such increase exceed the amount which, 

8 when added to prior installments for the plan 

9 year, is necessary to increase the funding target 

10 attainment percentage of the plan for the plan 

11 year (taking into account the expected increase 

12 in funding target due to benefits accruing or 

13 earned during the plan year) to 100 percent. 

14 ‘‘(E) DEFINITIONS.—For purposes of this 

15 subparagraph: 

16 ‘‘(i) LIQUIDITY SHORTFALL.—The 

17 term ‘liquidity shortfall’ means, with re18 spect to any required installment, an 

19 amount equal to the excess (as of the last 

20 day of the quarter for which such install21 ment is made) of—

22 ‘‘(I) the base amount with re23 spect to such quarter, over 

24 ‘‘(II) the value (as of such last 

25 day) of the plan’s liquid assets. 
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1 ‘‘(ii) BASE AMOUNT.—

2 ‘‘(I) IN GENERAL.—The term 

3 ‘base amount’ means, with respect to 

4 any quarter, an amount equal to 3 

5 times the sum of the adjusted dis6 bursements from the plan for the 12 

7 months ending on the last day of such 

8 quarter. 

9 ‘‘(II) SPECIAL RULE.—If the 

10 amount determined under subclause 

11 (I) exceeds an amount equal to 2 

12 times the sum of the adjusted dis13 bursements from the plan for the 36 

14 months ending on the last day of the 

15 quarter and an enrolled actuary cer16 tifies to the satisfaction of the Sec17 retary that such excess is the result of 

18 nonrecurring circumstances, the base 

19 amount with respect to such quarter 

20 shall be determined without regard to 

21 amounts related to those nonrecurring 

22 circumstances. 

23 ‘‘(iii) DISBURSEMENTS FROM THE

24 PLAN.—The term ‘disbursements from the 

25 plan’ means all disbursements from the 
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1 trust, including purchases of annuities, 

2 payments of single sums and other bene3 fits, and administrative expenses. 

4 ‘‘(iv) ADJUSTED DISBURSEMENTS.—

5 The term ‘adjusted disbursements’ means 

6 disbursements from the plan reduced by 

7 the product of—

8 ‘‘(I) the plan’s funding target at9 tainment percentage for the plan year, 

10 and 

11 ‘‘(II) the sum of the purchases of 

12 annuities, payments of single sums, 

13 and such other disbursements as the 

14 Secretary shall provide in regulations. 

15 ‘‘(v) LIQUID ASSETS.—The term ‘liq16 uid assets’ means cash, marketable securi17 ties, and such other assets as specified by 

18 the Secretary in regulations. 

19 ‘‘(vi) QUARTER.—The term ‘quarter’ 

20 means, with respect to any required install21 ment, the 3-month period preceding the 

22 month in which the due date for such in23 stallment occurs. 
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1 ‘‘(F) REGULATIONS.—The Secretary may 

2 prescribe such regulations as are necessary to 

3 carry out this paragraph. 

4 ‘‘(j) WAIVER AMORTIZATION CHARGE.—

5 ‘‘(1) IN GENERAL.—The minimum required 

6 contribution for any plan year under subsection (a) 

7 shall be increased by the amount of the waiver am8 ortization charge (if any) for such plan year. 

9 ‘‘(2) DETERMINATION OF WAIVER AMORTIZA10 TION CHARGE.—The waiver amortization charge for 

11 a plan for any plan year is the aggregate total of the 

12 waiver amortization installments for such plan year 

13 with respect to the waiver amortization bases for 

14 such plan year and each of the 4 preceding plan 

15 years. 

16 ‘‘(3) WAIVER AMORTIZATION INSTALLMENT.—

17 For purposes of paragraph (2), the plan sponsor 

18 shall determine, with respect to the waiver amortiza19 tion base of the plan for any plan year, the amounts 

20 necessary to amortize such waiver amortization base, 

21 in level annual installments over a period of 5 plan 

22 years beginning with such plan year. The annual in23 stallment of such amortization for each plan year in 

24 such 5-plan year period is the waiver amortization 
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1 installment for such plan year with respect to such 

2 waiver amortization base. 

3 ‘‘(4) COMPUTATION ASSUMPTIONS.—The deter4 mination of any annual installment under paragraph 

5 (2) for any plan year shall be made as of the valu6 ation date for such plan year, using the effective 

7 rate of interest for the plan for the preceding plan 

8 year. 

9 ‘‘(5) WAIVER AMORTIZATION BASE.—The waiv10 er amortization base of a plan for a plan year is the 

11 excess (if any) of—

12 ‘‘(A) the portion of the minimum required 

13 contribution of such plan waived under section 

14 412(c) for such plan year, over 

15 ‘‘(B) the aggregate total of the waiver am16 ortization installments, for such plan year and 

17 the 3 succeeding plan years, which have been 

18 determined with respect to the waiver amortiza19 tion bases of the plan for each of the 4 plan 

20 years preceding such plan year. 

21 ‘‘(k) IMPOSITION OF LIEN WHERE FAILURE TO

22 MAKE REQUIRED CONTRIBUTIONS.—

23 ‘‘(1) IN GENERAL.—In the case of a plan cov24 ered under section 4021 of the Employee Retirement 

25 and Income Security Act of 1974 and to which this 
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1 subsection applies (as provided under paragraph 

2 (2)), if—

3 ‘‘(A) any person fails to make a contribu4 tion payment required by section 412 and this 

5 section before the due date for such payment, 

6 and 

7 ‘‘(B) the unpaid balance of such payment 

8 (including interest), when added to the aggre9 gate unpaid balance of all preceding such pay10 ments for which payment was not made before 

11 the due date (including interest), exceeds 

12 $1,000,000, 

13 then there shall be a lien in favor of the plan in the 

14 amount determined under paragraph (3) upon all 

15 property and rights to property, whether real or per16 sonal, belonging to such person and any other per17 son who is a member of the same controlled group 

18 of which such person is a member. 

19 ‘‘(2) PLANS TO WHICH SUBSECTION APPLIES.—

20 This subsection shall apply to a defined benefit plan 

21 which is a single-employer plan for any plan year for 

22 which the funding target attainment percentage (as 

23 defined in subsection (d)(2)) of such plan is less 

24 than 100 percent. 
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1 ‘‘(3) AMOUNT OF LIEN.—For purposes of para2 graph (1), the amount of the lien shall be equal to 

3 the aggregate unpaid balance of contribution pay4 ments required under this section and section 412 

5 for which payment has not been made before the due 

6 date. 

7 ‘‘(4) NOTICE OF FAILURE; LIEN.—

8 ‘‘(A) NOTICE OF FAILURE.—A person 

9 committing a failure described in paragraph (1) 

10 shall notify the Pension Benefit Guaranty Cor11 poration of such failure within 10 days of the 

12 due date for the required contribution payment. 

13 ‘‘(B) PERIOD OF LIEN.—The lien imposed 

14 by paragraph (1) shall arise on the due date for 

15 the required contribution payment and shall 

16 continue until the last day of the first plan year 

17 in which the plan ceases to be described in 

18 paragraph (1)(B). Such lien shall continue to 

19 run without regard to whether such plan con20 tinues to be described in paragraph (2) during 

21 the period referred to in the preceding sentence. 

22 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

23 amount with respect to which a lien is imposed 

24 under paragraph (1) shall be treated as taxes 

25 due and owing the United States and rules 
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1 similar to the rules of subsections (c), (d), and 

2 (e) of section 4068 of the Employee Retirement 

3 and Income Security Act of 1974 shall apply 

4 with respect to a lien imposed by subsection (a) 

5 and the amount with respect to such lien. 

6 ‘‘(5) ENFORCEMENT.—Any lien created under 

7 paragraph (1) may be perfected and enforced only 

8 by the Pension Benefit Guaranty Corporation, or at 

9 the direction of the Pension Benefit Guaranty Cor10 poration, by the contributing sponsor (or any mem11 ber of the controlled group of the contributing spon12 sor). 

13 ‘‘(6) DEFINITIONS.—For purposes of this sub14 section—

15 ‘‘(A) CONTRIBUTION PAYMENT.—The term 

16 ‘contribution payment’ means, in connection 

17 with a plan, a contribution payment required to 

18 be made to the plan, including any required in19 stallment under paragraphs (3) and (4) of sub20 section (i). 

21 ‘‘(B) DUE DATE; REQUIRED INSTALL22 MENT.—The terms ‘due date’ and ‘required in23 stallment’ have the meanings given such terms 

24 by subsection (i), except that in the case of a 

25 payment other than a required installment, the 
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1 due date shall be the date such payment is re2 quired to be made under section 430. 

3 ‘‘(C) CONTROLLED GROUP.—The term 

4 ‘controlled group’ means any group treated as 

5 a single employer under subsections (b), (c), 

6 (m), and (o) of section 414. 

7 ‘‘(l) QUALIFIED TRANSFERS TO HEALTH BENEFIT

8 ACCOUNTS.—In the case of a qualified transfer (as de9 fined in section 420), any assets so transferred shall not, 

10 for purposes of this section, be treated as assets in the 

11 plan. ’’. 

12 (b) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply with respect to plan years begin14 ning after 2005. 

15 SEC. 113. LIMITATIONS ON DISTRIBUTIONS AND BENEFIT 

16 ACCRUALS UNDER SINGLE-EMPLOYER 

17 PLANS. 

18 (a) PROHIBITION OF SHUTDOWN BENEFITS AND

19 OTHER UNPREDICTABLE CONTINGENT EVENT BENEFITS

20 UNDER SINGLE-EMPLOYER PLANS.—Part III of sub21 chapter D of chapter 1 of the Internal Revenue Code of 

22 1986 (relating to deferred compensation, etc.) is amend23 ed—

24 (1) by striking the heading and inserting the 

25 following: 
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1 ‘‘PART III—RULES RELATING TO MINIMUM FUND2 ING STANDARDS AND BENEFIT LIMITATIONS

‘‘Subpart A. Minimum funding standards for pension plans. 

‘‘Subpart B. Benefit limitations under single-employer plans.

3 ‘‘Subpart A—Minimum Funding Standards for 

4 Pension Plans

‘‘Sec. 430. Minimum funding standards for single-employer defined benefit pension plans.’’, and

5 (2) by adding at the end the following new sub6 part: 

7 ‘‘Subpart B—Benefit Limitations Under Single8 employer Plans

‘‘Sec. 436. Prohibition of shutdown benefits and other unpredictable contingent 

event benefits.

9 ‘‘SEC. 436. PROHIBITION OF SHUTDOWN BENEFITS AND 

10 OTHER UNPREDICTABLE CONTINGENT 

11 EVENT BENEFITS. 

12 ‘‘(a) IN GENERAL.—No pension plan which is a sin13 gle-employer plan may provide benefits which are payable 

14 upon the occurrence of—

15 ‘‘(1) a plant shutdown, or 

16 ‘‘(2) any other unpredictable contingent event. 

17 ‘‘(b) UNPREDICTABLE CONTINGENT EVENT.—For 

18 purposes of this subsection, the term ‘unpredictable con19 tingent event’ means an event other than—
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1 ‘‘(1) attainment of any age, performance of any 

2 service, receipt or derivation of any compensation, or 

3 the occurrence of death or disability, or 

4 ‘‘(2) an event which is reasonably and reliably 

5 predictable (as determined by the Secretary).’’. 

6 (b) OTHER LIMITS ON BENEFITS AND BENEFIT AC7 CRUALS.—

8 (1) IN GENERAL.—Subpart B of part III of 

9 subchapter D of chapter 1 of such Code is amended 

10 by adding at the end the following: 

11 ‘‘SEC. 437. BENEFIT LIMIATIONS ON UNDERFUNDED PLANS. 

12 ‘‘(a) LIMITATIONS ON PLAN AMENDMENTS INCREAS13 ING LIABILITY FOR BENEFITS.—

14 ‘‘(1) IN GENERAL.—No amendment to a de15 fined benefit plan (other than a multiemployer plan) 

16 which has the effect of increasing liabilities of the 

17 plan by reason of increases in benefits, establish18 ment of new benefits, changing the rate of benefit 

19 accrual, or changing the rate at which benefits be20 come nonforfeitable to the plan may take effect dur21 ing any plan year if the funding target attainment 

22 percentage as of the valuation date of the plan for 

23 such plan year is—

24 ‘‘(A) less than 80 percent, or 
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1 ‘‘(B) would be less than 80 percent taking 

2 into account such amendment. 

3 ‘‘(2) EXEMPTION.—Paragraph (1) shall cease 

4 to apply with respect to any plan year, effective as 

5 of the first date of the plan year (or if later, the ef6 fective date of the amendment), upon payment by 

7 the plan sponsor of a contribution equal to—

8 ‘‘(A) in the case of paragraph (1)(A), the 

9 amount of the increase in the funding target of 

10 the plan (under section 430) for the plan year 

11 attributable to the amendment, and 

12 ‘‘(B) in the case of subparagraph (1)(B), 

13 the amount sufficient to result in a funding tar14 get attainment percentage of 80 percent. 

15 ‘‘(b) FUNDING-BASED LIMITATION ON CERTAIN

16 FORMS OF DISTRIBUTION.—A defined benefit plan (other 

17 than a multiemployer plan) shall provide that, in any case 

18 in which the plan’s funding target attainment percentage 

19 as of the valuation date of the plan for a plan year is 

20 less than 80 percent, the plan may not after such date 

21 pay any prohibited payment (as defined in section 206(e) 

22 of the Employee Retirement and Income Security Act of 

23 1974). 

24 ‘‘(c) LIMITATIONS ON BENEFIT ACCRUALS FOR

25 PLANS WITH SEVERE FUNDING SHORTFALLS.—A de-
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1 fined benefit plan (other than a multiemployer plan) shall 

2 provide that, in any case in which the plan’s funding tar3 get attainment percentage as of the valuation date of the 

4 plan for a plan year is less than 60 percent, all future 

5 benefit accruals under the plan shall cease as of such date. 

6 ‘‘(d) NEW PLANS.—Subsections (a) and (c) shall not 

7 apply to a plan for the first 5 plan years of the plan. For 

8 purposes of this subsection, the reference in this sub9 section to a plan shall include a reference to any prede10 cessor plan. 

11 ‘‘(e) PRESUMED UNDERFUNDING FOR PURPOSES OF

12 BENEFIT LIMITATIONS BASED ON PRIOR YEAR’S FUND13 ING STATUS.—

14 ‘‘(1) PRESUMPTION OF CONTINUED UNDER15 FUNDING.—In any case in which a benefit limitation 

16 under subsections (a), (b), or (c) has been applied 

17 to a plan with respect to the plan year preceding the 

18 current plan year, the funding target attainment 

19 percentage of the plan as of the valuation date of 

20 the plan for the current plan year shall be presumed 

21 to be equal to the funding target attainment per22 centage of the plan as of the valuation date of the 

23 plan for the preceding plan year until the enrolled 

24 actuary of the plan certifies the actual funding tar-
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1 get attainment percentage of the plan as of the valu2 ation date of the plan for the current plan year. 

3 ‘‘(2) PRESUMPTION OF UNDERFUNDING AFTER

4 10TH MONTH.—In any case in which no such certifi5 cation is made with respect to the plan before the 

6 first day of the 10th month of the current plan year, 

7 for purposes of subsections (a), (b), and (c), the 

8 plan’s funding target attainment percentage shall be 

9 conclusively presumed to be less than 60 percent as 

10 of the first day of such 10th month, and such day 

11 shall be deemed, for purposes of such paragraphs, to 

12 be the valuation date of the plan for the current 

13 plan year. 

14 ‘‘(3) PRESUMPTION OF UNDERFUNDING AFTER

15 4TH MONTH FOR NEARLY UNDERFUNDED PLANS.—

16 In any case in which—

17 ‘‘(A) a benefit limitation under subsections 

18 (a), (b), or (c) did not apply to a plan with re19 spect to the plan year preceding the current 

20 plan year, but the funding target attainment 

21 percentage of the plan for such preceding plan 

22 year was not more than 10 percentage points 

23 greater than the percentage which would have 

24 caused such paragraph to apply to the plan 

25 with respect to such preceding plan year, and 
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1 ‘‘(B) as of the first day of the 4th month 

2 of the current plan year, the enrolled actuary of 

3 the plan has not certified the actual funding 

4 target attainment percentage of the plan as of 

5 the valuation date of the plan for the current 

6 plan year, 

7 until the enrolled actuary so certifies, such first day 

8 shall be deemed, for purposes of such subsection, to 

9 be the valuation date of the plan for the current 

10 plan year and the funding target attainment per11 centage of the plan as of such first day shall, for 

12 purposes of such subsection, be presumed to be 

13 equal to 10 percentage points less than the funding 

14 target attainment percentage of the plan as of the 

15 valuation date of the plan for such preceding plan 

16 year. 

17 ‘‘(f) RESTORATION BY PLAN AMENDMENT OF BENE18 FITS OR BENEFIT ACCRUAL.—In any case in which a pro19 hibition under subsection (b) of the payment of lump sum 

20 distributions or benefits in any other accelerated form or 

21 a cessation of benefit accruals under subsection (c) is ap22 plied to a plan with respect to any plan year and such 

23 prohibition or cessation, as the case may be, ceases to 

24 apply to any subsequent plan year, the plan may provide 

25 for the resumption of such benefit payment or such benefit 
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1 accrual only by means of the adoption of a plan amend2 ment after the valuation date of the plan for such subse3 quent plan year. The preceding sentence shall not apply 

4 to a prohibition or cessation required by reason of sub5 section (e). 

6 ‘‘(g) FUNDING TARGET ATTAINMENT PERCENT7 AGE.—For purposes of this section, the term ‘funding tar8 get attainment percentage’ has the meaning provided such 

9 term under section 430(d)(2).’’. 

10 (2) CLERICAL AMENDMENT.—The table of sec11 tions for such subpart is amended by adding at the 

12 end the following new item:

‘‘Sec. 437. Benefit limitations on underfunded plans.’’.

13 (c) SPECIAL RULE FOR PLAN AMENDMENTS.—A 

14 plan shall not fail to meet the requirements of section 

15 204(g) of the Employee Retirement Income Security Act 

16 of 1974 or section 411(d)(6) of the Internal Revenue Code 

17 of 1986 solely by reason of the adoption by the plan of 

18 an amendment necessary to meet the requirements of the 

19 amendments made by this section. 

20 (d) EFFECTIVE DATE.—

21 (1) SHUTDOWN BENEFITS.—Except as provided 

22 in paragraph (3), the amendments made by sub23 section (a) shall apply with respect to plant shut24 downs, or other unpredictable contingent events, oc25 curring after 2006. 
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1 (2) OTHER BENEFITS.—Except as provided in 

2 paragraph (3), the amendments made by subsection 

3 (b) shall apply with respect to plan years beginning 

4 after 2006. 

5 (3) COLLECTIVE BARGAINING EXCEPTION.—In 

6 the case of a plan maintained pursuant to 1 or more 

7 collective bargaining agreements between employee 

8 representatives and 1 or more employers ratified be9 fore the date of the enactment of this Act, the 

10 amendments made by this subsection shall not apply 

11 to plan years beginning before the earlier of—

12 (A) the later of—

13 (i) the date on which the last collec14 tive bargaining agreement relating to the 

15 plan terminates (determined without re16 gard to any extension thereof agreed to 

17 after the date of the enactment of this 

18 Act), or 

19 (ii) the first day of the first plan year 

20 to which the amendments made by this 

21 subsection would (but for this subpara22 graph) apply, or 

23 (B) January 1, 2009. 

24 For purposes of clause (i), any plan amendment 

25 made pursuant to a collective bargaining agreement 
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1 relating to the plan which amends the plan solely to 

2 conform to any requirement added by this subsection 

3 shall not be treated as a termination of such collec4 tive bargaining agreement. 

5 SEC. 114. TECHNICAL AND CONFORMING AMENDMENTS. 

6 (a) AMENDMENTS RELATED TO QUALIFICATION RE7 QUIREMENTS.—

8 (1) Section 401(a)(29) of the Internal Revenue 

9 Code of 1986 is amended to read as follows: 

10 ‘‘(29) BENEFIT LIMITATIONS ON PLANS IN AT11 RISK STATUS.—In the case of a defined benefit plan 

12 (other than a multiemployer plan) to which the re13 quirements of section 412 apply, the trust of which 

14 the plan is a part shall not constitute a qualified 

15 trust under this subsection unless the plan meets the 

16 requirements of sections 436 and 437.’’. 

17 (2) Section 401(a)(32) of such Code is amend18 ed—

19 (A) in subparagraph (A), by striking 

20 ‘‘412(m)(5)’’ each place it appears and insert21 ing ‘‘section 430(i)(4)’’, and 

22 (B) in subparagraph (C), by striking ‘‘sec23 tion 412(m)’’ and inserting ‘‘section 430(i)’’. 
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1 (3) Section 401(a) is amended by striking para2 graph (33) and by redesignating paragraph (34) as 

3 paragraph (33). 

4 (b) VESTING RULES.—Section 411 of such Code is 

5 amended—

6 (1) by striking ‘‘section 412(c)(8)’’ in sub7 section (a)(3)(C) and inserting ‘‘section 412(d)(2)’’, 

8 (2) in subsection (b)(1)(F)—

9 (A) by striking ‘‘paragraphs (2) and (3) of 

10 section 412(i)’’ in clause (ii) and inserting 

11 ‘‘subparagraphs (B) and (C) of section 

12 412(d)(4)’’, and 

13 (B) by striking ‘‘paragraphs (4), (5), and 

14 (6) of section 412(i)’’ and inserting ‘‘subpara15 graphs (D), (E), and (F) of section 412(d)(4)’’, 

16 and 

17 (3) by striking ‘‘section 412(c)(8)’’ in sub18 section (d)(6)(A) and inserting ‘‘section 412(e)(3)’’. 

19 (c) MERGERS AND CONSOLIDATIONS OF PLANS.—

20 Subclause (I) of section 414(l)(2)(B)(i) of such Code is 

21 amended to read as follows: 

22 ‘‘(I) the amount determined 

23 under section 431(c)(6)(A)(i) in the 

24 case of a multiemployer plan (and the 

25 sum of the target liability amount and 
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1 target normal cost determined under 

2 section 430 in the case of any other 

3 plan), over’’. 

4 (d) TRANSFER OF EXCESS PENSION ASSETS TO RE5 TIREE HEALTH ACCOUNTS.—

6 (1) Section 420(e)(2) of such Code is amended 

7 to read as follows: 

8 ‘‘(2) EXCESS PENSION ASSETS.—The term ‘ex9 cess pension assets’ means the excess (if any) of—

10 ‘‘(A) the lesser of—

11 ‘‘(i) the fair market value of the 

12 plan’s assets (reduced by the pre-funding 

13 balance and the funding standard carry14 over balance, as determined under section 

15 430(e)(1)), or 

16 ‘‘(ii) the value of plan assets as deter17 mined under section 430(e)(4) after reduc18 tion under section 430(e)(1), over 

19 ‘‘(B) 125 percent of the sum of the target 

20 liability amount and the target normal cost de21 termined under section 430 for such plan 

22 year.’’. 

23 (2) Section 420(e)(4) of such Code is amended 

24 to read as follows: 
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1 ‘‘(4) COORDINATION WITH SECTION 430.—In 

2 the case of a qualified transfer, any assets so trans3 ferred shall not, for purposes of this section, be 

4 treated as assets in the plan.’’. 

5 (e) EXCISE TAXES.—

6 (1) IN GENERAL.—Subsections (a) and (b) of 

7 section 4971 of such Code are amended to read as 

8 follows: 

9 ‘‘(a) INITIAL TAX.—If at any time during any taxable 

10 year an employer maintains a plan to which section 412 

11 applies, there is hereby imposed for the taxable year a tax 

12 equal to—

13 ‘‘(1) in the case of a single-employer plan, 10 

14 percent of the aggregate unpaid minimum required 

15 contributions for all plan years remaining unpaid as 

16 of the end of any plan year ending with or within 

17 the taxable year, and 

18 ‘‘(2) in the case of a multiemployer plan, 5 per19 cent of the accumulated funding deficiency deter20 mined under section 431 as of the end of any plan 

21 year ending with or within the taxable year. 

22 ‘‘(b) ADDITIONAL TAX.—If—

23 ‘‘(1) a tax is imposed under subsection (a)(1) 

24 on any unpaid required minimum contribution and 
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1 such amount remains unpaid as of the close of the 

2 taxable period, or 

3 ‘‘(2) a tax is imposed under subsection (a)(2) 

4 on any accumulated funding deficiency and the accu5 mulated funding deficiency is not corrected within 

6 the taxable period, 

7 there is hereby imposed a tax equal to 100 percent of the 

8 unpaid minimum required contribution or accumulated 

9 funding deficiency, whichever is applicable, to the extent 

10 not so paid or corrected.’’. 

11 (2) Section 4971(c) of such Code is amended—

12 (A) by striking ‘‘the last two sentences of 

13 section 412(a)’’ in paragraph (1) and inserting 

14 ‘‘section 431’’, and 

15 (B) by adding at the end the following new 

16 paragraph: 

17 ‘‘(4) UNPAID MINIMUM REQUIRED CONTRIBU18 TION.—

19 ‘‘(A) IN GENERAL.—The term ‘unpaid 

20 minimum required contribution’ means, with re21 spect to any plan year, any minimum required 

22 contribution under section 430 for the plan 

23 year which is not paid on or before the due date 

24 (as determined under section 430(i)(1)) for the 

25 plan year. 
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1 ‘‘(B) ORDERING RULE.—Any payment to 

2 or under a plan for any plan year shall be allo3 cated first to unpaid minimum required con4 tributions for all preceding plan years on a 

5 first-in, first-out basis and then to the min6 imum required contribution under section 430 

7 for the plan year.’’. 

8 (3) Section 4971(e)(1) of such Code is amended 

9 by striking ‘‘section 412(b)(3)(A)’’ and inserting 

10 ‘‘section 412(a)(1)(A)’’. 

11 (4) Section 4971(f)(1) of such Code is amend12 ed—

13 (A) by striking ‘‘section 412(m)(5)’’ and 

14 inserting ‘‘section 430(i)(4)’’, and 

15 (B) by striking ‘‘section 412(m)’’ and in16 serting ‘‘section 430(i)’’. 

17 (5) Section 4972(c)(7) of such Code is amended 

18 by striking ‘‘except to the extent that such contribu19 tions exceed the full-funding limitation (as defined in 

20 section 412(c)(7), determined without regard to sub21 paragraph (A)(i)(I) thereof)’’ and inserting ‘‘except, 

22 in the case of a multiemployer plan, to the extent 

23 that such contributions exceed the full-funding limi24 tation (as defined in section 431(c)(6))’’. 
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1 (f) REPORTING REQUIREMENTS.—Section 6059(b) of 

2 such Code is amended—

3 (1) by striking ‘‘the accumulated funding defi4 ciency (as defined in section 412(a))’’ in paragraph 

5 (2) and inserting ‘‘the minimum required contribu6 tion determined under section 430, or the accumu7 lated funding deficiency determined under section 

8 431,’’, and 

9 (2) by striking paragraph (3)(B) and inserting: 

10 ‘‘(B) the requirements for reasonable actu11 arial assumptions under section 430(f)(1) or 

12 431(c)(3), whichever are applicable, have been 

13 complied with.’’. 

14 Subtitle C—Other Provisions 

15 SEC. 121. MODIFICATION OF TRANSITION RULE TO PEN16 SION FUNDING REQUIREMENTS. 

17 (a) IN GENERAL.—In the case of a plan that—

18 (1) was not required to pay a variable rate pre19 mium for the plan year beginning in 1996, 

20 (2) has not, in any plan year beginning after 

21 1995, merged with another plan (other than a plan 

22 sponsored by an employer that was in 1996 within 

23 the controlled group of the plan sponsor); and 
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1 (3) is sponsored by a company that is engaged 

2 primarily in the interurban or interstate passenger 

3 bus service, 

4 the rules described in subsection (b) shall apply for any 

5 plan year beginning after 2005. 

6 (b) MODIFIED RULES.—The rules described in this 

7 subsection are as follows: 

8 (1) For purposes of section 430(i)(3) of the In9 ternal Revenue Code of 1986 and section 303(i)(3) 

10 of the Employee Retirement Income Security Act of 

11 1974, the plan shall be treated as not having a fund12 ing shortfall for any plan year. 

13 (2) For purposes of—

14 (A) determining unfunded vested benefits 

15 under section 4006(a)(3)(E)(iii) of such Act, 

16 and 

17 (B) determining any present value or mak18 ing any computation under section 412 of such 

19 Code or section 302 of such Act, 

20 the mortality table shall be the mortality table used 

21 by the plan. 

22 (c) CONFORMING AMENDMENT.—

23 (1) Section 769 of the Retirement Protection 

24 Act of 1994 is amended by striking subsection (c). 
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1 (2) The amendment made this subsection shall 

2 apply to plan years beginning after 2005. 

3 SEC. 122. TREATMENT OF NONQUALIFIED DEFERRED COM4 PENSATION PLANS WHEN EMPLOYER DE5 FINED BENEFIT PLAN IN AT-RISK STATUS. 

6 (a) IN GENERAL.—Subsection (b) of section 409A of 

7 the Internal Revenue Code of 1986 (providing rules relat8 ing to funding) is amended by redesignating paragraphs 

9 (3) and (4) as paragraphs (4) and (5), respectively, and 

10 by inserting after paragraph (2) the following new para11 graph: 

12 ‘‘(3) EMPLOYER’S DEFINED BENEFIT PLAN IN

13 AT-RISK STATUS.—In the case of a plan to which 

14 section 412 applies, if—

15 ‘‘(A) during any period in which any de16 fined benefit plan of an employer is in an at17 risk status (as defined in section 412(g)(3)), as18 sets are set aside (directly or indirectly) in a 

19 trust (or other arrangement determined by the 

20 Secretary), or transferred to such a trust or 

21 other arrangement, for purposes of paying de22 ferred compensation under a nonqualified de23 ferred compensation plan of the employer, or 

24 ‘‘(B) a nonqualified deferred compensation 

25 plan of the employer provides that assets will 
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1 become restricted to the provision of benefits 

2 under the plan in connection with such at-risk 

3 status (or other similar financial measure deter4 mined by the Secretary) of the defined benefit 

5 plan, or assets are so restricted, 

6 such assets shall for purposes of section 83 be treat7 ed as property transferred in connection with the 

8 performance of services whether or not such assets 

9 are available to satisfy claims of general creditors.’’. 

10 (b) CONFORMING AMENDMENTS.—Paragraphs (4) 

11 and (5) of section 409A(b) of such Code, as redesignated 

12 by subsection (a) of this subsection, are each amended by 

13 striking ‘‘paragraph (1) or (2)’’ each place it appears and 

14 inserting ‘‘paragraph (1), (2), or (3)’’. 

15 (c) EFFECTIVE DATE.—The amendments made by 

16 this section shall take effect on January 1, 2006. 
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1 TITLE II—FUNDING RULES FOR 

2 MULTIEMPLOYER DEFINED 

3 BENEFIT PLANS 

4 Subtitle A—Amendments to Em5 ployee Retirement Income Secu6 rity Act of 1974

7 SEC. 201. FUNDING RULES FOR MULTIEMPLOYER DEFINED 

8 BENEFIT PLANS. 

9 (a) IN GENERAL.—Part 3 of subtitle B of title I of 

10 the Employee Retirement Income Security Act of 1974 (as 

11 amended by section 102) is amended further by inserting 

12 after section 303 the following new section: 

13 ‘‘MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER

14 PLANS

15 ‘‘SEC. 304. (a) IN GENERAL.—For purposes of sec16 tion 302, the accumulated funding deficiency of a multi17 employer plan for any plan year is—

18 ‘‘(1) except as provided in paragraph (2), the 

19 amount, determined as of the end of the plan year, 

20 equal to the excess (if any) of the total charges to 

21 the funding standard account of the plan for all plan 

22 years (beginning with the first plan year for which 

23 this part applies to the plan) over the total credits 

24 to such account for such years, and 
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1 ‘‘(2) if the multiemployer plan is in reorganiza2 tion for any plan year, the accumulated funding de3 ficiency of the plan determined under section 4243. 

4 ‘‘(b) FUNDING STANDARD ACCOUNT.—

5 ‘‘(1) ACCOUNT REQUIRED.—Each multiem6 ployer plan to which this part applies shall establish 

7 and maintain a funding standard account. Such ac8 count shall be credited and charged solely as pro9 vided in this section. 

10 ‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 

11 the funding standard account shall be charged with 

12 the sum of—

13 ‘‘(A) the normal cost of the plan for the 

14 plan year, 

15 ‘‘(B) the amounts necessary to amortize in 

16 equal annual installments (until fully amor17 tized)—

18 ‘‘(i) in the case of a plan in existence 

19 on January 1, 1974, the unfunded past 

20 service liability under the plan on the first 

21 day of the first plan year to which this sec22 tion applies, over a period of 40 plan 

23 years, 

24 ‘‘(ii) in the case of a plan which comes 

25 into existence after January 1, 1974, the 
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1 unfunded past service liability under the 

2 plan on the first day of the first plan year 

3 to which this section applies, over a period 

4 of 15 plan years, 

5 ‘‘(iii) separately, with respect to each 

6 plan year, the net increase (if any) in un7 funded past service liability under the plan 

8 arising from plan amendments adopted in 

9 such year, over a period of 15 plan years, 

10 ‘‘(iv) separately, with respect to each 

11 plan year, the net experience loss (if any) 

12 under the plan, over a period of 15 plan 

13 years, and 

14 ‘‘(v) separately, with respect to each 

15 plan year, the net loss (if any) resulting 

16 from changes in actuarial assumptions 

17 used under the plan, over a period of 15 

18 plan years, 

19 ‘‘(C) the amount necessary to amortize 

20 each waived funding deficiency (within the 

21 meaning of section 302(c)(3)) for each prior 

22 plan year in equal annual installments (until 

23 fully amortized) over a period of 15 plan years, 

24 ‘‘(D) the amount necessary to amortize in 

25 equal annual installments (until fully amor-
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1 tized) over a period of 5 plan years any amount 

2 credited to the funding standard account under 

3 section 302(b)(3)(D) (as in effect on the day 

4 before the date of the enactment of this sec5 tion), and 

6 ‘‘(E) the amount necessary to amortize in 

7 equal annual installments (until fully amor8 tized) over a period of 20 years the contribu9 tions which would be required to be made under 

10 the plan but for the provisions of section 

11 302(c)(7)(A)(i)(I) (as in effect on the day be12 fore the date of the enactment of this section). 

13 ‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 

14 the funding standard account shall be credited with 

15 the sum of—

16 ‘‘(A) the amount considered contributed by 

17 the employer to or under the plan for the plan 

18 year, 

19 ‘‘(B) the amount necessary to amortize in 

20 equal annual installments (until fully amor21 tized)—

22 ‘‘(i) separately, with respect to each 

23 plan year, the net decrease (if any) in un24 funded past service liability under the plan 
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1 arising from plan amendments adopted in 

2 such year, over a period of 15 plan years, 

3 ‘‘(ii) separately, with respect to each 

4 plan year, the net experience gain (if any) 

5 under the plan, over a period of 15 plan 

6 years, and 

7 ‘‘(iii) separately, with respect to each 

8 plan year, the net gain (if any) resulting 

9 from changes in actuarial assumptions 

10 used under the plan, over a period of 15 

11 plan years, 

12 ‘‘(C) the amount of the waived funding de13 ficiency (within the meaning of section 

14 302(c)(3)) for the plan year, and 

15 ‘‘(D) in the case of a plan year for which 

16 the accumulated funding deficiency is deter17 mined under the funding standard account if 

18 such plan year follows a plan year for which 

19 such deficiency was determined under the alter20 native minimum funding standard under section 

21 305 (as in effect on the day before the date of 

22 the enactment of this section), the excess (if 

23 any) of any debit balance in the funding stand24 ard account (determined without regard to this 
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1 subparagraph) over any debit balance in the al2 ternative minimum funding standard account. 

3 ‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AM4 ORTIZED TO PLAN YEARS BEFORE 2006.—In the case 

5 of any amount amortized under section 302(b) (as 

6 in effect before the date of the enactment of Pension 

7 Protection Act of 2005) over any period beginning 

8 with a plan year beginning before 2006, in lieu of 

9 the amortization described in paragraphs (2)(B) and 

10 (3)(B), such amount shall continue to be amortized 

11 under such section as so in effect. 

12 ‘‘(5) COMBINING AND OFFSETTING AMOUNTS

13 TO BE AMORTIZED.—Under regulations prescribed 

14 by the Secretary of the Treasury, amounts required 

15 to be amortized under paragraph (2) or paragraph 

16 (3), as the case may be—

17 ‘‘(A) may be combined into one amount 

18 under such paragraph to be amortized over a 

19 period determined on the basis of the remaining 

20 amortization period for all items entering into 

21 such combined amount, and 

22 ‘‘(B) may be offset against amounts re23 quired to be amortized under the other such 

24 paragraph, with the resulting amount to be am25 ortized over a period determined on the basis of 
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1 the remaining amortization periods for all items 

2 entering into whichever of the two amounts 

3 being offset is the greater. 

4 ‘‘(6) INTEREST.—The funding standard ac5 count (and items therein) shall be charged or cred6 ited (as determined under regulations prescribed by 

7 the Secretary of the Treasury) with interest at the 

8 appropriate rate consistent with the rate or rates of 

9 interest used under the plan to determine costs. 

10 ‘‘(7) CERTAIN AMORTIZATION CHARGES AND

11 CREDITS.—In the case of a plan which, immediately 

12 before the date of the enactment of the Multiem13 ployer Pension Plan Amendments Act of 1980, was 

14 a multiemployer plan (within the meaning of section 

15 3(37) as in effect immediately before such date)—

16 ‘‘(A) any amount described in paragraph 

17 (2)(B)(ii), (2)(B)(iii), or (3)(B)(i) of this sub18 section which arose in a plan year beginning be19 fore such date shall be amortized in equal an20 nual installments (until fully amortized) over 40 

21 plan years, beginning with the plan year in 

22 which the amount arose; 

23 ‘‘(B) any amount described in paragraph 

24 (2)(B)(iv) or (3)(B)(ii) of this subsection which 

25 arose in a plan year beginning before such date 
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1 shall be amortized in equal annual installments 

2 (until fully amortized) over 20 plan years, be3 ginning with the plan year in which the amount 

4 arose; 

5 ‘‘(C) any change in past service liability 

6 which arises during the period of 3 plan years 

7 beginning on or after such date, and results 

8 from a plan amendment adopted before such 

9 date, shall be amortized in equal annual install10 ments (until fully amortized) over 40 plan 

11 years, beginning with the plan year in which the 

12 change arises; and 

13 ‘‘(D) any change in past service liability 

14 which arises during the period of 2 plan years 

15 beginning on or after such date, and results 

16 from the changing of a group of participants 

17 from one benefit level to another benefit level 

18 under a schedule of plan benefits which—

19 ‘‘(i) was adopted before such date, 

20 and 

21 ‘‘(ii) was effective for any plan partici22 pant before the beginning of the first plan 

23 year beginning on or after such date, 

24 shall be amortized in equal annual installments 

25 (until fully amortized) over 40 plan years, be-
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1 ginning with the plan year in which the change 

2 arises. 

3 ‘‘(8) SPECIAL RULES RELATING TO CHARGES

4 AND CREDITS TO FUNDING STANDARD ACCOUNT.—

5 For purposes of this part—

6 ‘‘(A) WITHDRAWAL LIABILITY.—Any 

7 amount received by a multiemployer plan in 

8 payment of all or part of an employer’s with9 drawal liability under part 1 of subtitle E of 

10 title IV shall be considered an amount contrib11 uted by the employer to or under the plan. The 

12 Secretary of the Treasury may prescribe by reg13 ulation additional charges and credits to a mul14 tiemployer plan’s funding standard account to 

15 the extent necessary to prevent withdrawal li16 ability payments from being unduly reflected as 

17 advance funding for plan liabilities. 

18 ‘‘(B) ADJUSTMENTS WHEN AMULTIEM19 PLOYER PLAN LEAVES REORGANIZATION.—If a 

20 multiemployer plan is not in reorganization in 

21 the plan year but was in reorganization in the 

22 immediately preceding plan year, any balance in 

23 the funding standard account at the close of 

24 such immediately preceding plan year—
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1 ‘‘(i) shall be eliminated by an offset2 ting credit or charge (as the case may be), 

3 but 

4 ‘‘(ii) shall be taken into account in 

5 subsequent plan years by being amortized 

6 in equal annual installments (until fully 

7 amortized) over 30 plan years. 

8 The preceding sentence shall not apply to the 

9 extent of any accumulated funding deficiency 

10 under section 4243(a) as of the end of the last 

11 plan year that the plan was in reorganization. 

12 ‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL

13 PROGRAM OR WITHDRAWAL LIABILITY PAYMENT

14 FUND.—Any amount paid by a plan during a 

15 plan year to the Pension Benefit Guaranty Cor16 poration pursuant to section 4222 of this Act or 

17 to a fund exempt under section 501(c)(22) of 

18 the Internal Revenue Code of 1986 pursuant to 

19 section 4223 of this Act shall reduce the 

20 amount of contributions considered received by 

21 the plan for the plan year. 

22 ‘‘(D) INTERIM WITHDRAWAL LIABILITY

23 PAYMENTS.—Any amount paid by an employer 

24 pending a final determination of the employer’s 

25 withdrawal liability under part 1 of subtitle E 
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1 of title IV and subsequently refunded to the 

2 employer by the plan shall be charged to the 

3 funding standard account in accordance with 

4 regulations prescribed by the Secretary of the 

5 Treasury. 

6 ‘‘(E) ELECTION FOR DEFERRAL OF

7 CHARGE FOR PORTION OF NET EXPERIENCE

8 LOSS.—If an election is in effect under section 

9 302(b)(7)(F) (as in effect on the day before the 

10 date of the enactment of this section) for any 

11 plan year, the funding standard account shall 

12 be charged in the plan year to which the por13 tion of the net experience loss deferred by such 

14 election was deferred with the amount so de15 ferred (and paragraph (2)(B)(iv) shall not 

16 apply to the amount so charged). 

17 ‘‘(F) FINANCIAL ASSISTANCE.—Any 

18 amount of any financial assistance from the 

19 Pension Benefit Guaranty Corporation to any 

20 plan, and any repayment of such amount, shall 

21 be taken into account under this section and 

22 section 412 in such manner as is determined by 

23 the Secretary of the Treasury. 

24 ‘‘(G) SHORT-TERM BENEFITS.—To the ex25 tent that any plan amendment increases the un-
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1 funded past service liability under the plan by 

2 reason of an increase in benefits which are pay3 able under the plan during a period that does 

4 not exceed 14 years, paragraph (2)(B)(iii) shall 

5 be applied separately with respect to such in6 crease in unfunded past service liability by sub7 stituting the number of years of the period dur8 ing which such benefits are payable for ‘15’. 

9 ‘‘(c) ADDITIONAL RULES.—

10 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

11 FUNDING METHOD.—For purposes of this part, nor12 mal costs, accrued liability, past service liabilities, 

13 and experience gains and losses shall be determined 

14 under the funding method used to determine costs 

15 under the plan. 

16 ‘‘(2) VALUATION OF ASSETS.—

17 ‘‘(A) IN GENERAL.—For purposes of this 

18 part, the value of the plan’s assets shall be de19 termined on the basis of any reasonable actu20 arial method of valuation which takes into ac21 count fair market value and which is permitted 

22 under regulations prescribed by the Secretary of 

23 the Treasury. 

24 ‘‘(B) ELECTION WITH RESPECT TO

25 BONDS.—The value of a bond or other evidence 
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1 of indebtedness which is not in default as to 

2 principal or interest may, at the election of the 

3 plan administrator, be determined on an amor4 tized basis running from initial cost at purchase 

5 to par value at maturity or earliest call date. 

6 Any election under this subparagraph shall be 

7 made at such time and in such manner as the 

8 Secretary of the Treasury shall by regulations 

9 provide, shall apply to all such evidences of in10 debtedness, and may be revoked only with the 

11 consent of such Secretary. 

12 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA13 SONABLE.—For purposes of this section, all costs, li14 abilities, rates of interest, and other factors under 

15 the plan shall be determined on the basis of actu16 arial assumptions and methods—

17 ‘‘(A) which, in the aggregate, are reason18 able (taking into account the experience of the 

19 plan and reasonable expectations), and 

20 ‘‘(B) which, in combination, offer the actu21 ary’s best estimate of anticipated experience 

22 under the plan. 

23 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX24 PERIENCE GAIN OR LOSS.—For purposes of this sec25 tion, if—
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1 ‘‘(A) a change in benefits under the Social 

2 Security Act or in other retirement benefits cre3 ated under Federal or State law, or 

4 ‘‘(B) a change in the definition of the term 

5 ‘wages’ under section 3121 of the Internal Rev6 enue Code of 1986, or a change in the amount 

7 of such wages taken into account under regula8 tions prescribed for purposes of section 

9 401(a)(5) of such Code, 

10 results in an increase or decrease in accrued liability 

11 under a plan, such increase or decrease shall be 

12 treated as an experience loss or gain. 

13 ‘‘(5) FULL FUNDING.—If, as of the close of a 

14 plan year, a plan would (without regard to this para15 graph) have an accumulated funding deficiency in 

16 excess of the full funding limitation—

17 ‘‘(A) the funding standard account shall be 

18 credited with the amount of such excess, and 

19 ‘‘(B) all amounts described in subpara20 graphs (B), (C), and (D) of paragraph (2) and 

21 subparagraph (B) of subsection (b)(3) which 

22 are required to be amortized shall be considered 

23 fully amortized for purposes of such subpara24 graphs. 

25 ‘‘(6) FULL-FUNDING LIMITATION.—
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1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (5), the term ‘full-funding limitation’ 

3 means the excess (if any) of—

4 ‘‘(i) the accrued liability (including 

5 normal cost) under the plan (determined 

6 under the entry age normal funding meth7 od if such accrued liability cannot be di8 rectly calculated under the funding method 

9 used for the plan), over 

10 ‘‘(ii) the lesser of—

11 ‘‘(I) the fair market value of the 

12 plan’s assets, or 

13 ‘‘(II) the value of such assets de14 termined under paragraph (2). 

15 ‘‘(B) MINIMUM AMOUNT.—

16 ‘‘(i) IN GENERAL.—In no event shall 

17 the full-funding limitation determined 

18 under subparagraph (A) be less than the 

19 excess (if any) of—

20 ‘‘(I) 90 percent of the current li21 ability of the plan (including the ex22 pected increase in current liability due 

23 to benefits accruing during the plan 

24 year), over 
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1 ‘‘(II) the value of the plan’s as2 sets determined under paragraph (2). 

3 ‘‘(ii) ASSETS.—For purposes of clause 

4 (i), assets shall not be reduced by any 

5 credit balance in the funding standard ac6 count. 

7 ‘‘(C) CURRENT LIABILITY.—For purposes 

8 of this paragraph—

9 ‘‘(i) IN GENERAL.—The term ‘current 

10 liability’ means all liabilities to employees 

11 and their beneficiaries under the plan. 

12 ‘‘(ii) TREATMENT OF UNPREDICTABLE

13 CONTINGENT EVENT BENEFITS.—For pur14 poses of clause (i), any benefit contingent 

15 on an event other than—

16 ‘‘(I) age, service, compensation, 

17 death, or disability, or 

18 ‘‘(II) an event which is reason19 ably and reliably predictable (as deter20 mined by the Secretary of the Treas21 ury), 

22 shall not be taken into account until the 

23 event on which the benefit is contingent oc24 curs. 
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1 ‘‘(iii) INTEREST RATE USED.—The 

2 rate of interest used to determine current 

3 liability under this paragraph shall be the 

4 rate of interest determined under subpara5 graph (D). 

6 ‘‘(iv) MORTALITY TABLES.—

7 ‘‘(I) COMMISSIONERS’ STANDARD

8 TABLE.—In the case of plan years be9 ginning before the first plan year to 

10 which the first tables prescribed under 

11 subclause (II) apply, the mortality 

12 table used in determining current li13 ability under this paragraph shall be 

14 the table prescribed by the Secretary 

15 of the Treasury which is based on the 

16 prevailing commissioners’ standard 

17 table (described in section 

18 807(d)(5)(A) of the Internal Revenue 

19 Code of 1986) used to determine re20 serves for group annuity contracts 

21 issued on January 1, 1993. 

22 ‘‘(II) SECRETARIAL AUTHOR23 ITY.—The Secretary of the Treasury 

24 may by regulation prescribe for plan 

25 years beginning after December 31, 
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1 1999, mortality tables to be used in 

2 determining current liability under 

3 this subsection. Such tables shall be 

4 based upon the actual experience of 

5 pension plans and projected trends in 

6 such experience. In prescribing such 

7 tables, such Secretary shall take into 

8 account results of available inde9 pendent studies of mortality of indi10 viduals covered by pension plans. 

11 ‘‘(v) SEPARATE MORTALITY TABLES

12 FOR THE DISABLED.—Notwithstanding 

13 clause (iv)—

14 ‘‘(I) IN GENERAL.—In the case 

15 of plan years beginning after Decem16 ber 31, 1995, the Secretary of the 

17 Treasury shall establish mortality ta18 bles which may be used (in lieu of the 

19 tables under clause (ii)) to determine 

20 current liability under this subsection 

21 for individuals who are entitled to 

22 benefits under the plan on account of 

23 disability. Such Secretary shall estab24 lish separate tables for individuals 

25 whose disabilities occur in plan years 
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1 beginning before January 1, 1995, 

2 and for individuals whose disabilities 

3 occur in plan years beginning on or 

4 after such date. 

5 ‘‘(II) SPECIAL RULE FOR DIS6 ABILITIES OCCURRING AFTER 1994.—

7 In the case of disabilities occurring in 

8 plan years beginning after December 

9 31, 1994, the tables under subclause 

10 (I) shall apply only with respect to in11 dividuals described in such subclause 

12 who are disabled within the meaning 

13 of title II of the Social Security Act 

14 and the regulations thereunder. 

15 ‘‘(vi) PERIODIC REVIEW.—The Sec16 retary of the Treasury shall periodically (at 

17 least every 5 years) review any tables in ef18 fect under this subparagraph and shall, to 

19 the extent such Secretary determines nec20 essary, by regulation update the tables to 

21 reflect the actual experience of pension 

22 plans and projected trends in such experi23 ence. 

24 ‘‘(D) REQUIRED CHANGE OF INTEREST

25 RATE.—For purposes of determining a plan’s 
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1 current liability for purposes of this para2 graph—

3 ‘‘(i) IN GENERAL.—If any rate of in4 terest used under the plan under sub5 section (b)(5) to determine cost is not 

6 within the permissible range, the plan shall 

7 establish a new rate of interest within the 

8 permissible range. 

9 ‘‘(ii) PERMISSIBLE RANGE.—For pur10 poses of this subparagraph—

11 ‘‘(I) IN GENERAL.—Except as 

12 provided in subclause (II), the term 

13 ‘permissible range’ means a rate of in14 terest which is not more than 5 per15 cent above, and not more than 10 per16 cent below, the weighted average of 

17 the rates of interest on 30-year Treas18 ury securities during the 4-year period 

19 ending on the last day before the be20 ginning of the plan year. 

21 ‘‘(II) SECRETARIAL AUTHOR22 ITY.—If the Secretary of the Treasury 

23 finds that the lowest rate of interest 

24 permissible under subclause (I) is un25 reasonably high, such Secretary may 
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1 prescribe a lower rate of interest, ex2 cept that such rate may not be less 

3 than 80 percent of the average rate 

4 determined under such subclause. 

5 ‘‘(iii) ASSUMPTIONS.—Notwith6 standing paragraph (3)(A), the interest 

7 rate used under the plan shall be—

8 ‘‘(I) determined without taking 

9 into account the experience of the 

10 plan and reasonable expectations, but 

11 ‘‘(II) consistent with the assump12 tions which reflect the purchase rates 

13 which would be used by insurance 

14 companies to satisfy the liabilities 

15 under the plan. 

16 ‘‘(E) FULL FUNDING LIMITATION.—For 

17 purposes of this paragraph, unless otherwise 

18 provided by the plan, the accrued liability under 

19 a multiemployer plan shall not include benefits 

20 which are not nonforfeitable under the plan 

21 after the termination of the plan (taking into 

22 consideration section 411(d)(3) of the Internal 

23 Revenue Code of 1986). 

24 ‘‘(7) ANNUAL VALUATION.—
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1 ‘‘(A) IN GENERAL.—For purposes of this 

2 section, a determination of experience gains and 

3 losses and a valuation of the plan’s liability 

4 shall be made not less frequently than once 

5 every year, except that such determination shall 

6 be made more frequently to the extent required 

7 in particular cases under regulations prescribed 

8 by the Secretary of the Treasury. 

9 ‘‘(B) VALUATION DATE.—

10 ‘‘(i) CURRENT YEAR.—Except as pro11 vided in clause (ii), the valuation referred 

12 to in subparagraph (A) shall be made as of 

13 a date within the plan year to which the 

14 valuation refers or within one month prior 

15 to the beginning of such year. 

16 ‘‘(ii) USE OF PRIOR YEAR VALU17 ATION.—The valuation referred to in sub18 paragraph (A) may be made as of a date 

19 within the plan year prior to the year to 

20 which the valuation refers if, as of such 

21 date, the value of the assets of the plan are 

22 not less than 100 percent of the plan’s cur23 rent liability (as defined in paragraph 

24 (6)(C) without regard to clause (iv) there25 of). 
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1 ‘‘(iii) ADJUSTMENTS.—Information 

2 under clause (ii) shall, in accordance with 

3 regulations, be actuarially adjusted to re4 flect significant differences in participants. 

5 ‘‘(iv) LIMITATION.—A change in fund6 ing method to use a prior year valuation, 

7 as provided in clause (ii), may not be made 

8 unless as of the valuation date within the 

9 prior plan year, the value of the assets of 

10 the plan are not less than 125 percent of 

11 the plan’s current liability (as defined in 

12 paragraph (6)(C) without regard to clause 

13 (iv) thereof). 

14 ‘‘(8) TIME WHEN CERTAIN CONTRIBUTIONS

15 DEEMED MADE.—For purposes of this section, any 

16 contributions for a plan year made by an employer 

17 after the last day of such plan year, but not later 

18 than two and one-half months after such day, shall 

19 be deemed to have been made on such last day. For 

20 purposes of this subparagraph, such two and one21 half month period may be extended for not more 

22 than six months under regulations prescribed by the 

23 Secretary of the Treasury. 
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1 ‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR

2 MULTIEMPLOYER PLANS.—In the case of a multiemployer 

3 plan—

4 ‘‘(1) AUTOMATIC EXTENSION.—The Secretary 

5 of the Treasury shall, upon application and subject 

6 to the requirements of paragraph (4), extend the pe7 riod of years required to amortize any unfunded li8 ability (described in any clause of subsection 

9 (b)(2)(B)) of the plan for a period of time not in ex10 cess of 5 years. 

11 ‘‘(2) EXTENSION FOR CAUSE.—The period of 

12 years required to amortize any unfunded liability 

13 (described in any clause of subsection (b)(2)(B)) of 

14 any multiemployer plan may be extended (in addi15 tion to any extension under paragraph (1)) by the 

16 Secretary of the Treasury for a period of time (not 

17 in excess of 5 years) if he determines that such ex18 tension would carry out the purposes of this Act and 

19 would provide adequate protection for participants 

20 under the plan and their beneficiaries and if he de21 termines that the failure to permit such extension 

22 would—

23 ‘‘(A) result in—

24 ‘‘(i) a substantial risk to the voluntary 

25 continuation of the plan, or 
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1 ‘‘(ii) a substantial curtailment of pen2 sion benefit levels or employee compensa3 tion, and 

4 ‘‘(B) be adverse to the interests of plan 

5 participants in the aggregate. 

6 ‘‘(3) INTEREST RATE.—The interest rate appli7 cable for any plan year under any arrangement en8 tered into by the Secretary of the Treasury in con9 nection with an extension granted under this sub10 section shall be the greater of—

11 ‘‘(A) 150 percent of the Federal mid-term 

12 rate (as in effect under section 1274 of the In13 ternal Revenue Code of 1986 for the 1st month 

14 of such plan year), or 

15 ‘‘(B) the rate of interest used under the 

16 plan for determining costs. 

17 ‘‘(4) REQUIRED NOTICE.—

18 ‘‘(A) IN GENERAL.—The Secretary of the 

19 Treasury shall, before granting an extension 

20 under this section, require each applicant to 

21 provide evidence satisfactory to such Secretary 

22 that the applicant has provided notice of the fil23 ing of the application for such extension to each 

24 employee organization representing employees 
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1 covered by the affected plan and to the Pension 

2 Benefit Guaranty Corporation. 

3 ‘‘(B) CONSIDERATION OF RELEVANT IN4 FORMATION.—The Secretary of the Treasury 

5 shall consider any relevant information provided 

6 by a person to whom notice was given under 

7 paragraph (1). 

8 ‘‘(e) RESTRICTION ON PLAN AMENDMENTS.—

9 ‘‘(1) IN GENERAL.—No amendment of a multi10 employer plan which increases the liabilities of the 

11 plan by reason of any increase in benefits, any 

12 change in the accrual of benefits, or any change in 

13 the rate at which benefits become nonforfeitable 

14 under the plan shall be adopted if a waiver under 

15 section 302(c) or an extension of time under sub16 section (d) is in effect with respect to the plan, or 

17 if a plan amendment described in section 302(d)(2) 

18 has been made at any time in the preceding 24 

19 months. If a plan is amended in violation of the pre20 ceding sentence, any such waiver, or extension of 

21 time, shall not apply to any plan year ending on or 

22 after the date on which such amendment is adopted. 

23 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

24 apply to any plan amendment which—
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1 ‘‘(A) the Secretary determines to be rea2 sonable and which provides for only de minimis 

3 increases in the liabilities of the plan, 

4 ‘‘(B) only repeals an amendment described 

5 in section 302(d)(2), or 

6 ‘‘(C) is required as a condition of qualifica7 tion under part I of subchapter D, of chapter 

8 1, of the Internal Revenue Code of 1986.’’. 

9 (b) CONFORMING AMENDMENTS.—

10 (1) Section 301 of the Employee Retirement In11 come Security Act of 1974 (29 U.S.C. 1081) is 

12 amended by striking subsection (d). 

13 (2) The table of contents in section 1 of such 

14 Act (as amended by section 102 of this Act) is 

15 amended further by inserting after the item relating 

16 to section 303 the following new item:

‘‘Sec. 304. Minimum funding standards for multiemployer plans.’’.

17 (c) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to plan years beginning after 2005. 

19 SEC. 202. ADDITIONAL FUNDING RULES FOR MULTIEM20 PLOYER PLANS IN ENDANGERED OR CRIT21 ICAL STATUS. 

22 (a) IN GENERAL.—Part 3 of subtitle B of title I of 

23 the Employee Retirement Income Security Act of 1974 (as 

24 amended by the preceding provisions of this Act) is 
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1 amended further by inserting after section 304 the fol2 lowing new section: 

3 ‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER

4 PLANS IN ENDANGERED STATUS OR CRITICAL STATUS

5 ‘‘SEC. 305. (a) ANNUAL CERTIFICATION BY PLAN

6 ACTUARY.—

7 ‘‘(1) IN GENERAL.—During the 90-day period 

8 beginning on first day of each plan year of a multi9 employer plan, the plan actuary of shall certify to 

10 the Secretary of the Treasury whether or not the 

11 plan is in endangered status for such plan year and 

12 whether or not the plan is in critical status for such 

13 plan year. 

14 ‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND

15 LIABILITIES.—

16 ‘‘(A) IN GENERAL.—In making the deter17 minations under paragraph (1), the plan actu18 ary shall make projections under subsections 

19 (b)(2) and (c)(2) for the current and succeeding 

20 plan years, using reasonable actuarial assump21 tions and methods, of the current value of the 

22 assets of the plan and the present value of all 

23 liabilities to participants and beneficiaries under 

24 the plan for the current plan year as of the be25 ginning of such year, as set forth in the actu-
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1 arial statement prepared for the preceding plan 

2 year under section 103(d). 

3 ‘‘(B) DETERMINATIONS OF FUTURE CON4 TRIBUTIONS.—Any such actuarial projection of 

5 plan assets shall assume—

6 ‘‘(i) reasonably anticipated employer 

7 and employee contributions for the current 

8 and succeeding plan years, assuming that 

9 the terms of the one or more collective bar10 gaining agreements pursuant to which the 

11 plan is maintained for the current plan 

12 year continue in effect for succeeding plan 

13 years, or 

14 ‘‘(ii) employer and employee contribu15 tions projected for the current and suc16 ceeding plan years under the terms of such 

17 collective bargaining agreements (assuming 

18 the continued application of such terms in19 definitely to such plan years), but only if 

20 the plan actuary determines there have 

21 been no significant demographic changes 

22 that would make continued application of 

23 such terms unreasonable. 

24 ‘‘(3) PRESUMED STATUS IN ABSENCE OF TIME25 LY ACTUARIAL CERTIFICATION.—If certification 
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1 under this subsection is not made before the end of 

2 the 90-day period specified in paragraph (1), the 

3 plan shall be presumed to be in critical status for 

4 such plan year until such time as the actuary makes 

5 a contrary certification. 

6 ‘‘(4) NOTICE.—In any case in which a multiem7 ployer plan is certified to be in endangered or crit8 ical status for a plan year under paragraph (1), is 

9 presumed to be in critical status under paragraph 

10 (3), or is deemed to be in critical status under sub11 section (b)(7), the plan sponsor shall, not later than 

12 30 days after the date of the certification, presump13 tion, or deeming, provide notification of the endan14 gered or critical status to the participants and bene15 ficiaries, the bargaining parties, the Pension Benefit 

16 Guaranty Corporation, the Secretary of the Treas17 ury, and the Secretary of Labor. 

18 ‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS

19 IN ENDANGERED STATUS.—

20 ‘‘(1) IN GENERAL.—In any case in which a 

21 multiemployer plan is in endangered status for a 

22 plan year, the plan sponsor shall, in accordance with 

23 this subsection, amend the plan to include a funding 

24 improvement plan upon approval thereof by the bar25 gaining parties under this subsection. The amend-
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1 ment shall be adopted not later than 240 days after 

2 the date on which the plan is certified to be in en3 dangered status under subsection (a)(1). 

4 ‘‘(2) ENDANGERED STATUS.—A multiemployer 

5 plan is in endangered status for a plan year if, as 

6 determined by the plan actuary under subsection 

7 (c)—

8 ‘‘(A) the plan’s funded percentage for such 

9 plan year is less than 80 percent, or 

10 ‘‘(B) the plan has an accumulated funding 

11 deficiency for such plan year under section 304 

12 or is projected to have such an accumulated 

13 funding deficiency for any of the 6 succeeding 

14 plan years, taking into account any extension of 

15 amortization periods under section 304(d). 

16 ‘‘(3) FUNDING IMPROVEMENT PLAN.—

17 ‘‘(A) BENCHMARKS.—A funding improve18 ment plan shall consist of amendments to the 

19 plan formulated to provide, under reasonable 

20 actuarial assumptions, for the attainment, dur21 ing the funding improvement period under the 

22 funding improvement plan, of the following 

23 benchmarks: 

24 ‘‘(i) REDUCTION IN UNFUNDED CUR25 RENT LIABILITY.—A percentage decrease 
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1 in the plan’s unfunded current liability 

2 from the amount for the first plan year of 

3 the funding improvement period to the 

4 amount for the last plan year of the funding improvement period, of at least 331 5 ⁄3

6 percent. 

7 ‘‘(ii) AVOIDANCE OF ACCUMULATED

8 FUNDING DEFICIENCIES.—No accumulated 

9 funding deficiency for any plan year during 

10 the funding improvement period (taking 

11 into account any extension of amortization 

12 periods under section 304(d)). 

13 ‘‘(B) FUNDING IMPROVEMENT PERIOD.—

14 The funding improvement period for any fund15 ing improvement plan adopted pursuant to this 

16 subsection is the 10-year period beginning on 

17 the earlier of—

18 ‘‘(i) the second anniversary of the 

19 date of the adoption of the funding im20 provement plan, or 

21 ‘‘(ii) the first day of the first plan 

22 year of the multiemployer plan following 

23 the plan year in which occurs the first date 

24 after the day of the certification as of 

25 which collective bargaining agreements cov-
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1 ering on the day of such certification at 

2 least 75 percent of active participants in 

3 such multiemployer plan have expired. 

4 ‘‘(C) REPORTING.—A summary of any 

5 funding improvement plan or modification 

6 thereto adopted during any plan year shall be 

7 included in the annual report for such plan year 

8 under section 104(a) and in the summary an9 nual report described in section 104(b)(3). 

10 ‘‘(4) DEVELOPMENT OF FUNDING IMPROVE11 MENT PLAN.—

12 ‘‘(A) ACTIONS BY PLAN SPONSOR PENDING

13 APPROVAL.—Pending the approval of a funding 

14 improvement plan under this paragraph, the 

15 plan sponsor shall take all reasonable actions, 

16 consistent with the terms of the plan and appli17 cable law, necessary to ensure—

18 ‘‘(i) an increase in the plan’s funded 

19 percentage, and 

20 ‘‘(ii) postponement of an accumulated 

21 funding deficiency for at least 1 additional 

22 plan year. 

23 Such actions include applications for extensions 

24 of amortization periods under section 304(d), 

25 use of the shortfall funding method in making 
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1 funding standard account computations, 

2 amendments to the plan’s benefit structure, re3 ductions in future benefit accruals, and other 

4 reasonable actions consistent with the terms of 

5 the plan and applicable law. 

6 ‘‘(B) RECOMMENDATIONS BY PLAN SPON7 SOR.—

8 ‘‘(i) IN GENERAL.—During the period 

9 of 90 days following the date on which a 

10 multiemployer plan is certified to be in en11 dangered status, the plan sponsor shall de12 velop and provide to the bargaining parties 

13 alternative proposals for revised benefit 

14 structures, contribution structures, or 

15 both, which, if adopted as amendments to 

16 the plan, may be reasonably expected to 

17 meet the benchmarks described in para18 graph (3)(A). Such proposals shall in19 clude—

20 ‘‘(I) at least one proposal for re21 ductions in the amount of future ben22 efit accruals necessary to achieve the 

23 benchmarks, assuming no amend24 ments increasing contributions under 

25 the plan (other than amendments in-
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1 creasing contributions necessary to 

2 achieve the benchmarks after amend3 ments have reduced future benefit ac4 cruals to the maximum extent per5 mitted by law), and 

6 ‘‘(II) at least one proposal for in7 creases in contributions under the 

8 plan necessary to achieve the bench9 marks, assuming no amendments re10 ducing future benefit accruals under 

11 the plan. 

12 ‘‘(ii) REQUESTS BY BARGAINING PAR13 TIES.—Upon the request of any bargaining 

14 party who—

15 ‘‘(I) employs at least 5 percent of 

16 the active participants, or 

17 ‘‘(II) represents as an employee 

18 organization, for purposes of collective 

19 bargaining, at least 5 percent of the 

20 active participants, 

21 the plan sponsor shall provide all such par22 ties information as to other combinations 

23 of increases in contributions and reduc24 tions in future benefit accruals which 

25 would result in achieving the benchmarks. 
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1 ‘‘(iii) OTHER INFORMATION.—The 

2 plan sponsor may, as it deems appropriate, 

3 prepare and provide the bargaining parties 

4 with additional information relating to con5 tribution structures or benefit structures 

6 or other information relevant to the fund7 ing improvement plan. 

8 ‘‘(5) MAINTENANCE OF CONTRIBUTIONS PEND9 ING APPROVAL OF FUNDING IMPROVEMENT PLAN.—

10 Pending approval of a funding improvement plan by 

11 the bargaining parties with respect to a multiem12 ployer plan, the multiemployer plan may not be 

13 amended so as to provide—

14 ‘‘(A) a reduction in the level of contribu15 tions for participants who are not in pay status, 

16 ‘‘(B) a suspension of contributions with re17 spect to any period of service, or 

18 ‘‘(C) any new direct or indirect exclusion 

19 of younger or newly hired employees from plan 

20 participation. 

21 ‘‘(6) BENEFIT RESTRICTIONS PENDING AP22 PROVAL OF FUNDING IMPROVEMENT PLAN.—Pend23 ing approval of a funding improvement plan by the 

24 bargaining parties with respect to a multiemployer 

25 plan—
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1 ‘‘(A) RESTRICTIONS ON LUMP SUM DIS2 TRIBUTIONS AND SIMILAR DISTRIBUTIONS.—

3 The multiemployer plan may not be amended so 

4 as to provide additional forms of benefits. 

5 ‘‘(B) PROHIBITION ON BENEFIT IN6 CREASES.—

7 ‘‘(i) IN GENERAL.—No amendment of 

8 the plan which increases the liabilities of 

9 the plan by reason of any increase in bene10 fits, any change in the accrual of benefits, 

11 or any change in the rate at which benefits 

12 become nonforfeitable under the plan may 

13 be adopted. 

14 ‘‘(ii) EXCEPTION.—Clause (i) shall 

15 not apply to any plan amendment which—

16 ‘‘(I) the Secretary of the Treas17 ury determines to be reasonable and 

18 which provides for only de minimis in19 creases in the liabilities of the plan, 

20 ‘‘(II) only repeals an amendment 

21 described in section 302(d)(2), or 

22 ‘‘(III) is required as a condition 

23 of qualification under part I of sub24 chapter D of chapter 1 of subtitle A 

25 of the Internal Revenue Code of 1986. 
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1 ‘‘(7) DEFAULT CRITICAL STATUS IF NO FUND2 ING IMPROVEMENT PLAN ADOPTED.—If no plan 

3 amendment adopting a funding improvement plan 

4 has been adopted by the end of the 240-day period 

5 referred to in subsection (a)(1), the plan shall be in 

6 critical status as of the first day of the succeeding 

7 plan year. 

8 ‘‘(8) RESTRICTIONS UPON APPROVAL OF FUND9 ING IMPROVEMENT PLAN.—Upon adoption of a 

10 funding improvement plan with respect to a multi11 employer plan, the plan may not be amended—

12 ‘‘(A) so as to be inconsistent with the 

13 funding improvement plan, or 

14 ‘‘(B) so as to increase future benefit accru15 als, unless the plan actuary certifies in advance 

16 that, after taking into account the proposed in17 crease, the plan is reasonably expected to meet 

18 the the benchmarks described in paragraph 

19 (3)(A). 

20 ‘‘(c) FUNDING RULES FOR MULTIEMPLOYER PLANS

21 IN CRITICAL STATUS.—

22 ‘‘(1) IN GENERAL.—In any case in which a 

23 multiemployer plan is in critical status for a plan 

24 year, the plan sponsor shall, in accordance with this 

25 subsection, amend the plan to include a rehabilita-
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1 tion plan under this subsection. The amendment 

2 shall be adopted not later than 240 days after the 

3 date on which the plan is certified to be in critical 

4 status under subsection (a)(1) or is presumed to be 

5 in critical status under subsection (a)(3), or the first 

6 day of the plan year in the case of a plan that is 

7 deemed to be in critical status under subsection 

8 (b)(7). 

9 ‘‘(2) CRITICAL STATUS.—A multiemployer plan 

10 is in critical status for a plan year if—

11 ‘‘(A) the plan is in endangered status for 

12 the plan year and the requirements of sub13 section (b)(1) are not met with respect to the 

14 plan for such plan year, or 

15 ‘‘(B) as determined by the plan actuary 

16 under subsection (a), the plan is described in 

17 paragraph (3). 

18 Any multiemployer plan which is in critical status 

19 under subparagraph (A) or (B) for a plan year shall 

20 be treated as in critical status also for the suc21 ceeding plan year. 

22 ‘‘(3) CRITICALITY DESCRIPTION.—For purposes 

23 of paragraph (2)(B), a plan is described in this 

24 paragraph if the plan is described in at least one of 

25 the following subparagraphs: 
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1 ‘‘(A) A plan is described in this subpara2 graph if, as of the beginning of the current plan 

3 year—

4 ‘‘(i) the funded percentage of the plan 

5 is less than 65 percent, and 

6 ‘‘(ii) the sum of—

7 ‘‘(I) the market value of plan as8 sets, plus 

9 ‘‘(II) the present value of the 

10 reasonably anticipated employer and 

11 employee contributions for the current 

12 plan year and each of the 6 suc13 ceeding plan years, assuming that the 

14 terms of the one or more collective 

15 bargaining agreements pursuant to 

16 which the plan is maintained for the 

17 current plan year continue in effect 

18 for succeeding plan years, 

19 is less than the present value of all non20 forfeitable benefits for all participants and 

21 beneficiaries projected to be payable under 

22 the plan during the current plan year and 

23 each of the 6 succeeding plan years (plus 

24 administrative expenses for such plan 

25 years). 
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1 ‘‘(B) A plan is described in this subpara2 graph if, as of the beginning of the current plan 

3 year, the sum of—

4 ‘‘(i) the market value of plan assets, 

5 plus 

6 ‘‘(ii) the present value of the reason7 ably anticipated employer and employee 

8 contributions for the current plan year and 

9 each of the 4 succeeding plan years, as10 suming that the terms of the one or more 

11 collective bargaining agreements pursuant 

12 to which the plan is maintained for the 

13 current plan year remain in effect for suc14 ceeding plan years, 

15 is less than the present value of all nonforfeit16 able benefits for all participants and bene17 ficiaries projected to be payable under the plan 

18 during the current plan year and each of the 4 

19 succeeding plan years (plus administrative ex20 penses for such plan years). 

21 ‘‘(C) A plan is described in this subpara22 graph if—

23 ‘‘(i) as of the beginning of the current 

24 plan year, the funded percentage of the 

25 plan is less than 65 percent, and 
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1 ‘‘(ii) the plan has an accumulated 

2 funding deficiency for the current plan 

3 year or is projected to have an accumu4 lated funding deficiency for any of the 4 

5 succeeding plan years, taking into account 

6 any extension of amortization periods 

7 under section 304(e). 

8 ‘‘(D) A plan is described in this subpara9 graph if—

10 ‘‘(i)(I) the plan’s normal cost for the 

11 current plan year, plus interest (deter12 mined at the rate used for determining 

13 cost under the plan) for the current plan 

14 year on the amount of unfunded benefit li15 abilities under the plan as of the last date 

16 of the preceding plan year, exceeds 

17 ‘‘(II) the present value, as of the be18 ginning of the current plan year, of the 

19 reasonably anticipated employer and em20 ployee contributions for the current plan 

21 year, 

22 ‘‘(ii) the present value, as of the be23 ginning of the current plan year, of non24 forfeitable benefits of inactive participants 

25 is greater than the present value, as of the 
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1 beginning of the current plan year, of non2 forfeitable benefits of active participants, 

3 and 

4 ‘‘(iii) the plan is projected to have an 

5 accumulated funding deficiency for the 

6 current plan year or any of the 4 suc7 ceeding plan years. 

8 ‘‘(E) A plan is described in this subpara9 graph if—

10 ‘‘(i) the funded percentage of the plan 

11 is greater than 65 percent for the current 

12 plan year, and 

13 ‘‘(ii) the plan is projected to have an 

14 accumulated funding deficiency during ei15 ther of the following 3 plan years. 

16 ‘‘(4) REHABILITATION PLAN.—

17 ‘‘(A) IN GENERAL.—A rehabilitation plan 

18 shall consist of—

19 ‘‘(i) amendments to the plan providing 

20 (under reasonable actuarial assumptions) 

21 for measures, agreed to by the bargaining 

22 parties, to increase contributions, reduce 

23 plan expenditures (including plan mergers 

24 and consolidations), or reduce future ben25 efit accruals, or to take any combination of 
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1 such actions, determined necessary to 

2 cause the plan to cease, during the reha3 bilitation period, to be in critical status, 

4 ‘‘(ii) measures, agreed to by the bar5 gaining parties, to provide funding relief, 

6 or 

7 ‘‘(iii) reasonable measures to forestall 

8 possible insolvency (within the meaning of 

9 section 4245) if the plan sponsor deter10 mines that, upon exhaustion of all reason11 able measures, the plan would not cease 

12 during the rehabilitation period to be in 

13 critical status. 

14 ‘‘(B) REHABILITATION PERIOD.—The re15 habilitation period for any rehabilitation plan 

16 adopted pursuant to this section is the 10-year 

17 period beginning on the earlier of—

18 ‘‘(i) the second anniversary of the 

19 date of the adoption of the rehabilitation 

20 plan, or 

21 ‘‘(ii) the first day of the first plan 

22 year of the multiemployer plan following 

23 the plan year in which occurs the first date 

24 after the day of the certification as of 

25 which collective bargaining agreements cov-
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1 ering on the day of such certification at 

2 least 75 percent of active participants in 

3 such multiemployer plan have expired. 

4 ‘‘(C) REPORTING.—A summary of any re5 habilitation plan or modification thereto adopt6 ed during any plan year, together with annual 

7 updates regarding the funding ratio of the plan, 

8 shall be included in the annual report for such 

9 plan year under section 104(a) and in the sum10 mary annual report described in section 

11 104(b)(3). 

12 ‘‘(5) DEVELOPMENT OF REHABILITATION

13 PLAN.—

14 ‘‘(A) PROPOSALS BY PLAN SPONSOR.—

15 ‘‘(i) IN GENERAL.—Within 90 days 

16 after the date of the certification under 

17 subsection (a) that the plan is in critical 

18 status (or the date as of which the require19 ments of subsection (b)(1) are not met 

20 with respect to the plan), the plan sponsor 

21 shall propose to all bargaining parties a 

22 range of alternative schedules of increases 

23 in contributions and reductions in future 

24 benefit accruals that would serve to carry 
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1 out a rehabilitation plan under this sub2 section. 

3 ‘‘(ii) PROPOSAL ASSUMING NO CON4 TRIBUTION INCREASES.—Such proposals 

5 shall include, as one of the proposed sched6 ules, a schedule of those reductions in fu7 ture benefit accruals that would be nec8 essary to cause the plan to cease to be in 

9 critical status if there were no further in10 creases in rates of contribution to the plan. 

11 ‘‘(iii) PROPOSAL WHERE CONTRIBU12 TIONS ARE NECESSARY.—If the plan spon13 sor determines that the plan will not cease 

14 to be in critical status during the rehabili15 tation period unless the plan is amended to 

16 provide for an increase in contributions, 

17 the plan sponsor’s proposals shall include a 

18 schedule of those increases in contribution 

19 rates that would be necessary to cause the 

20 plan to cease to be in critical status if fu21 ture benefit accruals were reduced to the 

22 maximum extent permitted by law and the 

23 rate of future benefit accruals did not ex24 ceed 1 percent per plan year. 
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1 ‘‘(B) REQUESTS FOR ADDITIONAL SCHED2 ULES.—Upon the joint request of all bargaining 

3 parties, each of whom—

4 ‘‘(i) employs at least 5 percent of the 

5 active participants, or 

6 ‘‘(ii) represents as an employee orga7 nization, for purposes of collective bar8 gaining, at least 5 percent of the active 

9 participants, 

10 the plan sponsor shall include among the pro11 posed schedules such schedules of increases in 

12 contributions and reductions in future benefit 

13 accruals as may be specified by the bargaining 

14 parties. 

15 ‘‘(C) DEFAULT SCHEDULE.—In any case 

16 in which the bargaining parties, as of 240 days 

17 after the later of the date of the certification 

18 under subsection (a) or the first day the plan 

19 is in critical status under subsection (a)(3) or 

20 (b)(7), have not agreed to at least one of the 

21 proposed schedules, the plan sponsor shall 

22 amend the plan to implement the schedule re23 quired by subparagraph (A)(ii). 

24 ‘‘(D) SUBSEQUENT AMENDMENTS.—Upon 

25 the adoption of a schedule of increases in con-
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1 tributions or reductions in future benefit accru2 als as part of the rehabilitation plan, the plan 

3 sponsor may amend the plan thereafter to up4 date the schedule to adjust for any experience 

5 of the plan contrary to past actuarial assump6 tions, except that such an amendment may be 

7 made not more than once in any 3-year period. 

8 ‘‘(E) ALLOCATION OF REDUCTIONS IN FU9 TURE BENEFIT ACCRUALS.—Any schedule con10 taining reductions in future benefit accruals 

11 forming a part of a rehabilitation plan shall be 

12 applicable with respect to any group of active 

13 participants who are employed by any bar14 gaining party (as an employer obligated to con15 tribute under the plan) in proportion to the ex16 tent to which increases in contributions under 

17 such schedule apply to such bargaining party. 

18 ‘‘(6) MAINTENANCE OF CONTRIBUTIONS AND

19 RESTRICTIONS ON BENEFITS PENDING ADOPTION OF

20 REHABILITATION PLAN.—The rules of paragraphs 

21 (5) and (6) of subsection (b) shall apply for pur22 poses of this subsection by substituting the term ‘re23 habilitation plan’ for ‘funding improvement plan’. 

24 ‘‘(7) DEEMED WITHDRAWAL.—Upon the failure 

25 of any employer who has an obligation to contribute 
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1 under the plan to make contributions in compliance 

2 with the schedule adopted under paragraph (6) as 

3 part of the rehabilitation plan, the failure of the em4 ployer may, at the discretion of the plan sponsor, be 

5 treated as a withdrawal by the employer from the 

6 plan under section 4203 or a partial withdrawal by 

7 the employer under section 4205. 

8 ‘‘(d) DEFINITIONS.—For purposes of this section—

9 ‘‘(1) BARGAINING PARTY.—The term ‘bar10 gaining party’ means, in connection with a multiem11 ployer plan—

12 ‘‘(A) an employer who has an obligation to 

13 contribute under the plan, and 

14 ‘‘(B) an employee organization which, for 

15 purposes of collective bargaining, represents 

16 plan participants employed by such an em17 ployer. 

18 ‘‘(2) CURRENT LIABILITY.—The term ‘current 

19 liability’ has the meaning provided such term in sec20 tion 304(c)(6)(C). 

21 ‘‘(3) UNFUNDED CURRENT LIABILITY.—The 

22 term ‘unfunded current liability’ means the excess 

23 (if any) of—

24 ‘‘(A) the current liability of the plan, over 
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1 ‘‘(B) the value of the plan’s assets deter2 mined under section 304(c)(2). 

3 ‘‘(4) FUNDED PERCENTAGE.—The term ‘fund4 ed percentage’ means the percentage expressed as a 

5 ratio of which—

6 ‘‘(A) the numerator of which is the value 

7 of the plan’s assets, as determined under sec8 tion 304(c)(2), and 

9 ‘‘(B) the denominator of which is the ac10 crued liability of the plan. 

11 ‘‘(5) UNFUNDED VESTED BENEFITS.—The 

12 term ‘unfunded vested benefits’ has the meaning 

13 provided in section 4241(b)(9). 

14 ‘‘(6) ACCUMULATED FUNDING DEFICIENCY.—

15 The term ‘accumulated funding deficiency’ has the 

16 meaning provided such term in section 304(a). 

17 ‘‘(7) ACTIVE PARTICIPANT.—The term ‘active 

18 participant’ means, in connection with a multiem19 ployer plan, a participant who is in covered service 

20 under the plan. 

21 ‘‘(8) INACTIVE PARTICIPANT.—The term ‘inac22 tive participant’ means, in connection with a multi23 employer plan, a participant who—

24 ‘‘(A) is not in covered service under the 

25 plan, and 
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1 ‘‘(B) is in pay status under the plan or has 

2 a nonforfeitable right to benefits under the 

3 plan. 

4 ‘‘(9) PAY STATUS.—A person is in ‘pay status’ 

5 under a multiemployer plan if—

6 ‘‘(A) at any time during the current plan 

7 year, such person is a participant or beneficiary 

8 under the plan and is paid an early, late, nor9 mal, or disability retirement benefit under the 

10 plan (or a death benefit under the plan related 

11 to a retirement benefit), or 

12 ‘‘(B) to the extent provided in regulations 

13 of the Secretary of the Treasury, such person 

14 is entitled to such a benefit under the plan. 

15 ‘‘(10) OBLIGATION TO CONTRIBUTE.—The term 

16 ‘obligation to contribute’ has the meaning provided 

17 such term under section 4212(a).’’. 

18 (b) CONFORMING AMENDMENT.—The table of con19 tents in section 1 of such Act (as amended by the pre20 ceding provisions of this Act) is amended further by in21 serting after the item relating to section 304 the following 

22 new item:

‘‘Sec. 305. Additional funding rules for multiemployer plans in endangered status or critical status.’’.
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1 (c) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply with respect to plan years begin3 ning after 2005. 

4 SEC. 203. MEASURES TO FORESTALL INSOLVENCY OF MUL5 TIEMPLOYER PLANS. 

6 (a) ADVANCE DETERMINATION OF IMPENDING IN7 SOLVENCY OVER 5 YEARS.—Section 4245(d)(1) of the 

8 Employee Retirement Income Security Act of 1974 (29 

9 U.S.C. 1426(d)(1)) is amended—

10 (1) by striking ‘‘3 plan years’’ the second place 

11 it appears and inserting ‘‘5 plan years’’; and 

12 (2) by adding at the end the following new sen13 tence: ‘‘If the plan sponsor makes such a determina14 tion that the plan will be insolvent in any of the next 

15 5 plan years, the plan sponsor shall make the com16 parison under this paragraph at least annually until 

17 the plan sponsor makes a determination that the 

18 plan will not be insolvent in any of the next 5 plan 

19 years.’’. 

20 (b) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply with respect to determinations 

22 made in plan years beginning after 2005. 
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1 SEC. 204. WITHDRAWAL LIABILITY REFORMS. 

2 (a) REPEAL OF LIMITATION ON WITHDRAWAL LI3 ABILITY IN THE EVENT OF CERTAIN SALES OF EM4 PLOYER ASSETS TO UNRELATED PARTIES.—

5 (1) IN GENERAL.—Section 4225 of the Em6 ployee Retirement Income Security Act of 1974 (29 

7 U.S.C. 1405) is repealed. 

8 (2) CONFORMING AMENDMENT.—The table of 

9 contents in section 1 of such Act is amended by 

10 striking the item relating to section 4225. 

11 (3) EFFECTIVE DATE.—The amendments made 

12 by this section shall apply with respect to sales oc13 curring on or after January 1, 2006. 

14 (b) REPEAL OF LIMITATION TO 20 ANNUAL PAY15 MENTS.—

16 (1) IN GENERAL.—Section 4219(c)(1) of such 

17 Act (29 U.S.C. 1399(c)(1)) is amended by striking 

18 subparagraph (B). 

19 (2) EFFECTIVE DATE.—The amendment made 

20 by this section shall apply with respect to with21 drawals occurring on or after January 1, 2006. 

22 (c) PARTIAL WITHDRAWALS BY MEANS OF

23 OUTSOURCING.—

24 (1) IN GENERAL.—Section 4205(b)(2)(A) of 

25 such Act (29 U.S.C. 1385(b)(2)(A)) is amended—
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1 (A) by striking ‘‘or’’ at the end of clause 

2 (i); 

3 (B) by striking ‘‘ceased.’’ at the end of 

4 clause (ii) and inserting ‘‘ceased, or’’; and 

5 (C) by adding at the end the following new 

6 clause: 

7 ‘‘(iii) an employer continues to per8 form work of the type for which contribu9 tions are made under the plan by means of 

10 services of individuals who are not employ11 ees of such employer covered by such 

12 plan.’’. 

13 (2) EFFECTIVE DATE.—The amendment made 

14 by this subsection shall apply with respect to work 

15 performed on or after January 1, 2006. 

16 (d) REPEAL OF SPECIAL RULE FOR LONG AND

17 SHORT HAUL TRUCKING INDUSTRY.—

18 (1) IN GENERAL.—Subsection (d) of section 

19 4203 of such Act (29 U.S.C. 1383(d)) is repealed. 

20 (2) EFFECTIVE DATE.—The repeal under this 

21 subsection shall apply with respect to cessations to 

22 have obligations to contribute to multiemployer 

23 plans and cessations of covered operations under 

24 such plans occurring on or after January 1, 2006. 
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1 (e) APPLICATION OF FORGIVENESS RULE TO PLANS

2 PRIMARILY COVERING EMPLOYEES IN THE BUILDING

3 AND CONSTRUCTION.—

4 (1) IN GENERAL.—Section 4210(b) of such Act 

5 (29 U.S.C. 1390(b)) is amended—

6 (A) by striking paragraph (1); and 

7 (B) by redesignating paragraphs (2) 

8 through (4) as paragraphs (1) through (3), re9 spectively. 

10 (2) EFFECTIVE DATE.—The amendments made 

11 by this subsection shall apply with respect to plan 

12 withdrawals occurring on or after January 1, 2006. 

13 SEC. 205. REMOVAL OF RESTRICTIONS WITH RESPECT TO 

14 PROCEDURES APPLICABLE TO DISPUTES IN15 VOLVING WITHDRAWAL LIABILITY. 

16 (a) IN GENERAL.—Section 4221(f)(1) of the Em17 ployee Retirement Income Security Act of 1974 (29 

18 U.S.C. 1401(f)(1)) is amended—

19 (1) in subparagraph (A) by inserting ‘‘and’’ 

20 after ‘‘plan,’’, and 

21 (2) by striking subparagraphs (B) and (C) and 

22 inserting the following new subparagraph: 

23 ‘‘(B) such determination is based in whole 

24 or in part on a finding by the plan sponsor 

25 under section 4212(c) that a principal purpose 
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1 of any transaction which occurred at least 5 

2 years (2 years in the case of a small employer) 

3 before the date of the complete or partial with4 drawal was to evade or avoid withdrawal liabil5 ity under this subtitle,’’. 

6 (b) SMALL EMPLOYER.—Paragraph (2) of section 

7 4221(f) of such Act is amended by adding at the end the 

8 following new subparagraph: 

9 ‘‘(C) SMALL EMPLOYER.—For purposes of 

10 paragraph (1)(B)—

11 ‘‘(i) IN GENERAL.—The term ‘small 

12 employer’ means any employer who (as of 

13 immediately before the transaction referred 

14 to in paragraph (1)(B)) employs not more 

15 than 250 employees. 

16 ‘‘(ii) CONTROLLED GROUP.—Any 

17 group treated as a single employer under 

18 subsection (b), (c), (m), or (o) of section 

19 414 of the Internal Revenue Code of 1986 

20 shall be treated as a single employer for 

21 purposes of this subparagraph.’’. 

22 (c) CONFORMING AMENDMENT.—Subparagraph (A) 

23 of section 4221(f)(2) of such Act is amended by striking 

24 ‘‘Notwithstanding’’ and inserting ‘‘In the case of a trans25 action occurring before January 1, 1999, and at least 5 
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1 years before the date of the complete or partial with2 drawal, notwithstanding’’. 

3 (d) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to any employer that receives a 

5 notification under section 4219(b)(1) of the Employee Re6 tirement Income Security Act of 1974 on or after the date 

7 of the enactment of this Act. 

8 Subtitle B—Amendments to 

9 Internal Revenue Code of 1986

10 SEC. 211. FUNDING RULES FOR MULTIEMPLOYER DEFINED 

11 BENEFIT PLANS. 

12 (a) IN GENERAL.—Subpart A of part III of sub13 chapter D of chapter 1 of the Internal Revenue Code of 

14 1986 (added by section 112 of this Act) is amended by 

15 adding at the end the following new section: 

16 ‘‘SEC. 431. MINIMUM FUNDING STANDARDS FOR MULTIEM17 PLOYER PLANS. 

18 ‘‘(a) IN GENERAL.—For purposes of section 412, the 

19 accumulated funding deficiency of a multiemployer plan 

20 for any plan year is—

21 ‘‘(1) except as provided in paragraph (2), the 

22 amount, determined as of the end of the plan year, 

23 equal to the excess (if any) of the total charges to 

24 the funding standard account of the plan for all plan 

25 years (beginning with the first plan year for which 
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1 this part applies to the plan) over the total credits 

2 to such account for such years, and 

3 ‘‘(2) if the multiemployer plan is in reorganiza4 tion for any plan year, the accumulated funding de5 ficiency of the plan determined under section 418B. 

6 ‘‘(b) FUNDING STANDARD ACCOUNT.—

7 ‘‘(1) ACCOUNT REQUIRED.—Each multiem8 ployer plan to which this part applies shall establish 

9 and maintain a funding standard account. Such ac10 count shall be credited and charged solely as pro11 vided in this section. 

12 ‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 

13 the funding standard account shall be charged with 

14 the sum of—

15 ‘‘(A) the normal cost of the plan for the 

16 plan year, 

17 ‘‘(B) the amounts necessary to amortize in 

18 equal annual installments (until fully amor19 tized)—

20 ‘‘(i) in the case of a plan in existence 

21 on January 1, 1974, the unfunded past 

22 service liability under the plan on the first 

23 day of the first plan year to which this sec24 tion applies, over a period of 40 plan 

25 years, 
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1 ‘‘(ii) in the case of a plan which comes 

2 into existence after January 1, 1974, the 

3 unfunded past service liability under the 

4 plan on the first day of the first plan year 

5 to which this section applies, over a period 

6 of 15 plan years, 

7 ‘‘(iii) separately, with respect to each 

8 plan year, the net increase (if any) in un9 funded past service liability under the plan 

10 arising from plan amendments adopted in 

11 such year, over a period of 15 plan years, 

12 ‘‘(iv) separately, with respect to each 

13 plan year, the net experience loss (if any) 

14 under the plan, over a period of 15 plan 

15 years, and 

16 ‘‘(v) separately, with respect to each 

17 plan year, the net loss (if any) resulting 

18 from changes in actuarial assumptions 

19 used under the plan, over a period of 15 

20 plan years, 

21 ‘‘(C) the amount necessary to amortize 

22 each waived funding deficiency (within the 

23 meaning of section 412(c)(3)) for each prior 

24 plan year in equal annual installments (until 

25 fully amortized) over a period of 15 plan years, 
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1 ‘‘(D) the amount necessary to amortize in 

2 equal annual installments (until fully amor3 tized) over a period of 5 plan years any amount 

4 credited to the funding standard account under 

5 section 412(b)(3)(D) (as in effect on the day 

6 before the date of the enactment of this sec7 tion), and 

8 ‘‘(E) the amount necessary to amortize in 

9 equal annual installments (until fully amor10 tized) over a period of 20 years the contribu11 tions which would be required to be made under 

12 the plan but for the provisions of section 

13 412(c)(7)(A)(i)(I) (as in effect on the day be14 fore the date of the enactment of this section). 

15 ‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 

16 the funding standard account shall be credited with 

17 the sum of—

18 ‘‘(A) the amount considered contributed by 

19 the employer to or under the plan for the plan 

20 year, 

21 ‘‘(B) the amount necessary to amortize in 

22 equal annual installments (until fully amor23 tized)—

24 ‘‘(i) separately, with respect to each 

25 plan year, the net decrease (if any) in un-
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1 funded past service liability under the plan 

2 arising from plan amendments adopted in 

3 such year, over a period of 15 plan years, 

4 ‘‘(ii) separately, with respect to each 

5 plan year, the net experience gain (if any) 

6 under the plan, over a period of 15 plan 

7 years, and 

8 ‘‘(iii) separately, with respect to each 

9 plan year, the net gain (if any) resulting 

10 from changes in actuarial assumptions 

11 used under the plan, over a period of 15 

12 plan years, 

13 ‘‘(C) the amount of the waived funding de14 ficiency (within the meaning of section 

15 412(c)(3)) for the plan year, and 

16 ‘‘(D) in the case of a plan year for which 

17 the accumulated funding deficiency is deter18 mined under the funding standard account if 

19 such plan year follows a plan year for which 

20 such deficiency was determined under the alter21 native minimum funding standard under section 

22 412(g) (as in effect on the day before the date 

23 of the enactment of this section), the excess (if 

24 any) of any debit balance in the funding stand25 ard account (determined without regard to this 
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1 subparagraph) over any debit balance in the al2 ternative minimum funding standard account. 

3 ‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AM4 ORTIZED TO PLAN YEARS BEFORE 2006.—In the case 

5 of any amount amortized under section 412(b) (as 

6 in effect before the date of the enactment of Pension 

7 Protection Act of 2005) over any period beginning 

8 with a plan year beginning before 2006, in lieu of 

9 the amortization described in paragraphs (2)(B) and 

10 (3)(B), such amount shall continue to be amortized 

11 under such section as so in effect. 

12 ‘‘(5) COMBINING AND OFFSETTING AMOUNTS

13 TO BE AMORTIZED.—Under regulations prescribed 

14 by the Secretary, amounts required to be amortized 

15 under paragraph (2) or paragraph (3), as the case 

16 may be—

17 ‘‘(A) may be combined into one amount 

18 under such paragraph to be amortized over a 

19 period determined on the basis of the remaining 

20 amortization period for all items entering into 

21 such combined amount, and 

22 ‘‘(B) may be offset against amounts re23 quired to be amortized under the other such 

24 paragraph, with the resulting amount to be am25 ortized over a period determined on the basis of 
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1 the remaining amortization periods for all items 

2 entering into whichever of the two amounts 

3 being offset is the greater. 

4 ‘‘(6) INTEREST.—The funding standard ac5 count (and items therein) shall be charged or cred6 ited (as determined under regulations prescribed by 

7 the Secretary) with interest at the appropriate rate 

8 consistent with the rate or rates of interest used 

9 under the plan to determine costs. 

10 ‘‘(7) CERTAIN AMORTIZATION CHARGES AND

11 CREDITS.—In the case of a plan which, immediately 

12 before the date of the enactment of the Multiem13 ployer Pension Plan Amendments Act of 1980, was 

14 a multiemployer plan (within the meaning of section 

15 414(f) as in effect immediately before such date)—

16 ‘‘(A) any amount described in paragraph 

17 (2)(B)(ii), (2)(B)(iii), or (3)(B)(i) of this sub18 section which arose in a plan year beginning be19 fore such date shall be amortized in equal an20 nual installments (until fully amortized) over 40 

21 plan years, beginning with the plan year in 

22 which the amount arose; 

23 ‘‘(B) any amount described in paragraph 

24 (2)(B)(iv) or (3)(B)(ii) of this subsection which 

25 arose in a plan year beginning before such date 
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1 shall be amortized in equal annual installments 

2 (until fully amortized) over 20 plan years, be3 ginning with the plan year in which the amount 

4 arose; 

5 ‘‘(C) any change in past service liability 

6 which arises during the period of 3 plan years 

7 beginning on or after such date, and results 

8 from a plan amendment adopted before such 

9 date, shall be amortized in equal annual install10 ments (until fully amortized) over 40 plan 

11 years, beginning with the plan year in which the 

12 change arises; and 

13 ‘‘(D) any change in past service liability 

14 which arises during the period of 2 plan years 

15 beginning on or after such date, and results 

16 from the changing of a group of participants 

17 from one benefit level to another benefit level 

18 under a schedule of plan benefits which—

19 ‘‘(i) was adopted before such date, 

20 and 

21 ‘‘(ii) was effective for any plan partici22 pant before the beginning of the first plan 

23 year beginning on or after such date, 

24 shall be amortized in equal annual installments 

25 (until fully amortized) over 40 plan years, be-
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1 ginning with the plan year in which the change 

2 arises. 

3 ‘‘(8) SPECIAL RULES RELATING TO CHARGES

4 AND CREDITS TO FUNDING STANDARD ACCOUNT.—

5 For purposes of this part—

6 ‘‘(A) WITHDRAWAL LIABILITY.—Any 

7 amount received by a multiemployer plan in 

8 payment of all or part of an employer’s with9 drawal liability under part 1 of subtitle E of 

10 title IV shall be considered an amount contrib11 uted by the employer to or under the plan. The 

12 Secretary may prescribe by regulation addi13 tional charges and credits to a multiemployer 

14 plan’s funding standard account to the extent 

15 necessary to prevent withdrawal liability pay16 ments from being unduly reflected as advance 

17 funding for plan liabilities. 

18 ‘‘(B) ADJUSTMENTS WHEN AMULTIEM19 PLOYER PLAN LEAVES REORGANIZATION.—If a 

20 multiemployer plan is not in reorganization in 

21 the plan year but was in reorganization in the 

22 immediately preceding plan year, any balance in 

23 the funding standard account at the close of 

24 such immediately preceding plan year—
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1 ‘‘(i) shall be eliminated by an offset2 ting credit or charge (as the case may be), 

3 but 

4 ‘‘(ii) shall be taken into account in 

5 subsequent plan years by being amortized 

6 in equal annual installments (until fully 

7 amortized) over 30 plan years. 

8 The preceding sentence shall not apply to the 

9 extent of any accumulated funding deficiency 

10 under section 418B(a) as of the end of the last 

11 plan year that the plan was in reorganization. 

12 ‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL

13 PROGRAM OR WITHDRAWAL LIABILITY PAYMENT

14 FUND.—Any amount paid by a plan during a 

15 plan year to the Pension Benefit Guaranty Cor16 poration pursuant to section 4222 of the Em17 ployee Retirement Income Security Act of 1974 

18 or to a fund exempt under section 501(c)(22) 

19 pursuant to section 4223 of such Act shall re20 duce the amount of contributions considered re21 ceived by the plan for the plan year. 

22 ‘‘(D) INTERIM WITHDRAWAL LIABILITY

23 PAYMENTS.—Any amount paid by an employer 

24 pending a final determination of the employer’s 

25 withdrawal liability under part 1 of subtitle E 
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1 of title IV and subsequently refunded to the 

2 employer by the plan shall be charged to the 

3 funding standard account in accordance with 

4 regulations prescribed by the Secretary. 

5 ‘‘(E) ELECTION FOR DEFERRAL OF

6 CHARGE FOR PORTION OF NET EXPERIENCE

7 LOSS.—If an election is in effect under section 

8 412(b)(7)(F) (as in effect on the day before the 

9 date of the enactment of this section) for any 

10 plan year, the funding standard account shall 

11 be charged in the plan year to which the por12 tion of the net experience loss deferred by such 

13 election was deferred with the amount so de14 ferred (and paragraph (2)(B)(iv) shall not 

15 apply to the amount so charged). 

16 ‘‘(F) FINANCIAL ASSISTANCE.—Any 

17 amount of any financial assistance from the 

18 Pension Benefit Guaranty Corporation to any 

19 plan, and any repayment of such amount, shall 

20 be taken into account under this section and 

21 section 412 in such manner as is determined by 

22 the Secretary. 

23 ‘‘(G) SHORT-TERM BENEFITS.—To the ex24 tent that any plan amendment increases the un25 funded past service liability under the plan by 
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1 reason of an increase in benefits which are pay2 able under the plan during a period that does 

3 not exceed 14 years, paragraph (2)(B)(iii) shall 

4 be applied separately with respect to such in5 crease in unfunded past service liability by sub6 stituting the number of years of the period dur7 ing which such benefits are payable for ‘15’. 

8 ‘‘(c) ADDITIONAL RULES.—

9 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

10 FUNDING METHOD.—For purposes of this part, nor11 mal costs, accrued liability, past service liabilities, 

12 and experience gains and losses shall be determined 

13 under the funding method used to determine costs 

14 under the plan. 

15 ‘‘(2) VALUATION OF ASSETS.—

16 ‘‘(A) IN GENERAL.—For purposes of this 

17 part, the value of the plan’s assets shall be de18 termined on the basis of any reasonable actu19 arial method of valuation which takes into ac20 count fair market value and which is permitted 

21 under regulations prescribed by the Secretary. 

22 ‘‘(B) ELECTION WITH RESPECT TO

23 BONDS.—The value of a bond or other evidence 

24 of indebtedness which is not in default as to 

25 principal or interest may, at the election of the 
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1 plan administrator, be determined on an amor2 tized basis running from initial cost at purchase 

3 to par value at maturity or earliest call date. 

4 Any election under this subparagraph shall be 

5 made at such time and in such manner as the 

6 Secretary shall by regulations provide, shall 

7 apply to all such evidences of indebtedness, and 

8 may be revoked only with the consent of the 

9 Secretary. 

10 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA11 SONABLE.—For purposes of this section, all costs, li12 abilities, rates of interest, and other factors under 

13 the plan shall be determined on the basis of actu14 arial assumptions and methods—

15 ‘‘(A) which, in the aggregate, are reason16 able (taking into account the experience of the 

17 plan and reasonable expectations), and 

18 ‘‘(B) which, in combination, offer the actu19 ary’s best estimate of anticipated experience 

20 under the plan. 

21 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX22 PERIENCE GAIN OR LOSS.—For purposes of this sec23 tion, if—
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1 ‘‘(A) a change in benefits under the Social 

2 Security Act or in other retirement benefits cre3 ated under Federal or State law, or 

4 ‘‘(B) a change in the definition of the term 

5 ‘wages’ under section 3121, or a change in the 

6 amount of such wages taken into account under 

7 regulations prescribed for purposes of section 

8 401(a)(5), 

9 results in an increase or decrease in accrued liability 

10 under a plan, such increase or decrease shall be 

11 treated as an experience loss or gain. 

12 ‘‘(5) FULL FUNDING.—If, as of the close of a 

13 plan year, a plan would (without regard to this para14 graph) have an accumulated funding deficiency in 

15 excess of the full funding limitation—

16 ‘‘(A) the funding standard account shall be 

17 credited with the amount of such excess, and 

18 ‘‘(B) all amounts described in subpara19 graphs (B), (C), and (D) of paragraph (2) and 

20 subparagraph (B) of subsection (b)(3) which 

21 are required to be amortized shall be considered 

22 fully amortized for purposes of such subpara23 graphs. 

24 ‘‘(6) FULL-FUNDING LIMITATION.—
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1 ‘‘(A) IN GENERAL.—For purposes of para2 graph (5), the term ‘full-funding limitation’ 

3 means the excess (if any) of—

4 ‘‘(i) the accrued liability (including 

5 normal cost) under the plan (determined 

6 under the entry age normal funding meth7 od if such accrued liability cannot be di8 rectly calculated under the funding method 

9 used for the plan), over 

10 ‘‘(ii) the lesser of—

11 ‘‘(I) the fair market value of the 

12 plan’s assets, or 

13 ‘‘(II) the value of such assets de14 termined under paragraph (2). 

15 ‘‘(B) MINIMUM AMOUNT.—

16 ‘‘(i) IN GENERAL.—In no event shall 

17 the full-funding limitation determined 

18 under subparagraph (A) be less than the 

19 excess (if any) of—

20 ‘‘(I) 90 percent of the current li21 ability of the plan (including the ex22 pected increase in current liability due 

23 to benefits accruing during the plan 

24 year), over 
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1 ‘‘(II) the value of the plan’s as2 sets determined under paragraph (2). 

3 ‘‘(ii) ASSETS.—For purposes of clause 

4 (i), assets shall not be reduced by any 

5 credit balance in the funding standard ac6 count. 

7 ‘‘(C) CURRENT LIABILITY.—For purposes 

8 of this paragraph—

9 ‘‘(i) IN GENERAL.—The term ‘current 

10 liability’ means all liabilities to employees 

11 and their beneficiaries under the plan. 

12 ‘‘(ii) TREATMENT OF UNPREDICTABLE

13 CONTINGENT EVENT BENEFITS.—For pur14 poses of clause (i), any benefit contingent 

15 on an event other than—

16 ‘‘(I) age, service, compensation, 

17 death, or disability, or 

18 ‘‘(II) an event which is reason19 ably and reliably predictable (as deter20 mined by the Secretary), 

21 shall not be taken into account until the 

22 event on which the benefit is contingent oc23 curs. 

24 ‘‘(iii) INTEREST RATE USED.—The 

25 rate of interest used to determine current 
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1 liability under this paragraph shall be the 

2 rate of interest determined under subpara3 graph (D). 

4 ‘‘(iv) MORTALITY TABLES.—

5 ‘‘(I) COMMISSIONERS’ STANDARD

6 TABLE.—In the case of plan years be7 ginning before the first plan year to 

8 which the first tables prescribed under 

9 subclause (II) apply, the mortality 

10 table used in determining current li11 ability under this paragraph shall be 

12 the table prescribed by the Secretary 

13 which is based on the prevailing com14 missioners’ standard table (described 

15 in section 807(d)(5)(A)) used to de16 termine reserves for group annuity 

17 contracts issued on January 1, 1993. 

18 ‘‘(II) SECRETARIAL AUTHOR19 ITY.—The Secretary may by regula20 tion prescribe for plan years beginning 

21 after December 31, 1999, mortality 

22 tables to be used in determining cur23 rent liability under this subsection. 

24 Such tables shall be based upon the 

25 actual experience of pension plans and 
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1 projected trends in such experience. 

2 In prescribing such tables, the Sec3 retary shall take into account results 

4 of available independent studies of 

5 mortality of individuals covered by 

6 pension plans. 

7 ‘‘(v) SEPARATE MORTALITY TABLES

8 FOR THE DISABLED.—Notwithstanding 

9 clause (iv)—

10 ‘‘(I) IN GENERAL.—In the case 

11 of plan years beginning after Decem12 ber 31, 1995, the Secretary shall es13 tablish mortality tables which may be 

14 used (in lieu of the tables under 

15 clause (ii)) to determine current liabil16 ity under this subsection for individ17 uals who are entitled to benefits under 

18 the plan on account of disability. The 

19 Secretary shall establish separate ta20 bles for individuals whose disabilities 

21 occur in plan years beginning before 

22 January 1, 1995, and for individuals 

23 whose disabilities occur in plan years 

24 beginning on or after such date. 
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1 ‘‘(II) SPECIAL RULE FOR DIS2 ABILITIES OCCURRING AFTER 1994.—

3 In the case of disabilities occurring in 

4 plan years beginning after December 

5 31, 1994, the tables under subclause 

6 (I) shall apply only with respect to in7 dividuals described in such subclause 

8 who are disabled within the meaning 

9 of title II of the Social Security Act 

10 and the regulations thereunder. 

11 ‘‘(vi) PERIODIC REVIEW.—The Sec12 retary shall periodically (at least every 5 

13 years) review any tables in effect under 

14 this subparagraph and shall, to the extent 

15 the Secretary determines necessary, by 

16 regulation update the tables to reflect the 

17 actual experience of pension plans and pro18 jected trends in such experience. 

19 ‘‘(D) REQUIRED CHANGE OF INTEREST

20 RATE.—For purposes of determining a plan’s 

21 current liability for purposes of this para22 graph—

23 ‘‘(i) IN GENERAL.—If any rate of in24 terest used under the plan under sub25 section (b)(5) to determine cost is not 
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1 within the permissible range, the plan shall 

2 establish a new rate of interest within the 

3 permissible range. 

4 ‘‘(ii) PERMISSIBLE RANGE.—For pur5 poses of this subparagraph—

6 ‘‘(I) IN GENERAL.—Except as 

7 provided in subclause (II), the term 

8 ‘permissible range’ means a rate of in9 terest which is not more than 5 per10 cent above, and not more than 10 per11 cent below, the weighted average of 

12 the rates of interest on 30-year Treas13 ury securities during the 4-year period 

14 ending on the last day before the be15 ginning of the plan year. 

16 ‘‘(II) SECRETARIAL AUTHOR17 ITY.—If the Secretary finds that the 

18 lowest rate of interest permissible 

19 under subclause (I) is unreasonably 

20 high, the Secretary may prescribe a 

21 lower rate of interest, except that 

22 such rate may not be less than 80 

23 percent of the average rate deter24 mined under such subclause. 
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1 ‘‘(iii) ASSUMPTIONS.—Notwith2 standing paragraph (3)(A), the interest 

3 rate used under the plan shall be—

4 ‘‘(I) determined without taking 

5 into account the experience of the 

6 plan and reasonable expectations, but 

7 ‘‘(II) consistent with the assump8 tions which reflect the purchase rates 

9 which would be used by insurance 

10 companies to satisfy the liabilities 

11 under the plan. 

12 ‘‘(E) FULL FUNDING LIMITATION.—For 

13 purposes of this paragraph, unless otherwise 

14 provided by the plan, the accrued liability under 

15 a multiemployer plan shall not include benefits 

16 which are not nonforfeitable under the plan 

17 after the termination of the plan (taking into 

18 consideration section 411(d)(3)). 

19 ‘‘(7) ANNUAL VALUATION.—

20 ‘‘(A) IN GENERAL.—For purposes of this 

21 section, a determination of experience gains and 

22 losses and a valuation of the plan’s liability 

23 shall be made not less frequently than once 

24 every year, except that such determination shall 

25 be made more frequently to the extent required 
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1 in particular cases under regulations prescribed 

2 by the Secretary. 

3 ‘‘(B) VALUATION DATE.—

4 ‘‘(i) CURRENT YEAR.—Except as pro5 vided in clause (ii), the valuation referred 

6 to in subparagraph (A) shall be made as of 

7 a date within the plan year to which the 

8 valuation refers or within one month prior 

9 to the beginning of such year. 

10 ‘‘(ii) USE OF PRIOR YEAR VALU11 ATION.—The valuation referred to in sub12 paragraph (A) may be made as of a date 

13 within the plan year prior to the year to 

14 which the valuation refers if, as of such 

15 date, the value of the assets of the plan are 

16 not less than 100 percent of the plan’s cur17 rent liability (as defined in paragraph 

18 (6)(C) without regard to clause (iv) there19 of). 

20 ‘‘(iii) ADJUSTMENTS.—Information 

21 under clause (ii) shall, in accordance with 

22 regulations, be actuarially adjusted to re23 flect significant differences in participants. 

24 ‘‘(iv) LIMITATION.—A change in fund25 ing method to use a prior year valuation, 
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1 as provided in clause (ii), may not be made 

2 unless as of the valuation date within the 

3 prior plan year, the value of the assets of 

4 the plan are not less than 125 percent of 

5 the plan’s current liability (as defined in 

6 paragraph (6)(C) without regard to clause 

7 (iv) thereof). 

8 ‘‘(8) TIME WHEN CERTAIN CONTRIBUTIONS

9 DEEMED MADE.—For purposes of this section, any 

10 contributions for a plan year made by an employer 

11 after the last day of such plan year, but not later 

12 than two and one-half months after such day, shall 

13 be deemed to have been made on such last day. For 

14 purposes of this subparagraph, such two and one15 half month period may be extended for not more 

16 than six months under regulations prescribed by the 

17 Secretary. 

18 ‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR

19 MULTIEMPLOYER PLANS.—In the case of a multiemployer 

20 plan—

21 ‘‘(1) AUTOMATIC EXTENSION.—The Secretary 

22 shall, upon application and subject to the require23 ments of paragraph (4), extend the period of years 

24 required to amortize any unfunded liability (de-
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1 scribed in any clause of subsection (b)(2)(B)) of the 

2 plan for a period of time not in excess of 5 years. 

3 ‘‘(2) EXTENSION FOR CAUSE.—The period of 

4 years required to amortize any unfunded liability 

5 (described in any clause of subsection (b)(2)(B)) of 

6 any multiemployer plan may be extended (in addi7 tion to any extension under paragraph (1)) by the 

8 Secretary for a period of time (not in excess of 5 

9 years) if he determines that such extension would 

10 carry out the purposes of this Act and would provide 

11 adequate protection for participants under the plan 

12 and their beneficiaries and if he determines that the 

13 failure to permit such extension would—

14 ‘‘(A) result in—

15 ‘‘(i) a substantial risk to the voluntary 

16 continuation of the plan, or 

17 ‘‘(ii) a substantial curtailment of pen18 sion benefit levels or employee compensa19 tion, and 

20 ‘‘(B) be adverse to the interests of plan 

21 participants in the aggregate. 

22 ‘‘(3) INTEREST RATE.—The interest rate appli23 cable for any plan year under any arrangement en24 tered into by the Secretary in connection with an ex-
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1 tension granted under this subsection shall be the 

2 greater of—

3 ‘‘(A) 150 percent of the Federal mid-term 

4 rate (as in effect under section 1274 for the 1st 

5 month of such plan year), or 

6 ‘‘(B) the rate of interest used under the 

7 plan for determining costs. 

8 ‘‘(4) REQUIRED NOTICE.—

9 ‘‘(A) IN GENERAL.—The Secretary shall, 

10 before granting an extension under this section, 

11 require each applicant to provide evidence satis12 factory to the Secretary that the applicant has 

13 provided notice of the filing of the application 

14 for such extension to each employee organiza15 tion representing employees covered by the af16 fected plan and to the Pension Benefit Guar17 anty Corporation. 

18 ‘‘(B) CONSIDERATION OF RELEVANT IN19 FORMATION.—The Secretary shall consider any 

20 relevant information provided by a person to 

21 whom notice was given under paragraph (1). 

22 ‘‘(e) RESTRICTION ON PLAN AMENDMENTS.—

23 ‘‘(1) IN GENERAL.—No amendment of a multi24 employer plan which increases the liabilities of the 

25 plan by reason of any increase in benefits, any 
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1 change in the accrual of benefits, or any change in 

2 the rate at which benefits become nonforfeitable 

3 under the plan shall be adopted if a waiver under 

4 section 412(c) or an extension of time under sub5 section (d) is in effect with respect to the plan, or 

6 if a plan amendment described in section 412(d)(2) 

7 has been made at any time in the preceding 24 

8 months. If a plan is amended in violation of the pre9 ceding sentence, any such waiver, or extension of 

10 time, shall not apply to any plan year ending on or 

11 after the date on which such amendment is adopted. 

12 ‘‘(2) EXCEPTION.—Paragraph (1) shall not 

13 apply to any plan amendment which—

14 ‘‘(A) the Secretary determines to be rea15 sonable and which provides for only de minimis 

16 increases in the liabilities of the plan, 

17 ‘‘(B) only repeals an amendment described 

18 in section 412(d)(2), or 

19 ‘‘(C) is required as a condition of qualifica20 tion under part I of subchapter D, of chapter 

21 1.’’. 

22 (b) CONFORMING AMENDMENTS.—

23 (1) Section 418(b)(2) of such Code is amend24 ed—
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1 (A) by striking ‘‘section 412(b)(2)’’ in sub2 paragraph (A) and inserting ‘‘section 

3 431(b)(2)’’, and 

4 (B) by striking ‘‘section 412(b)(3)(B)’’ in 

5 subparagraph (B) and inserting ‘‘section 

6 431(b)(3)(B)’’. 

7 (2) Section 418B of such Code is amended—

8 (A) by striking ‘‘section 412(b)(2)(A) or 

9 (B)’’ in subsection (d)(1)(B) and inserting 

10 ‘‘section 431(b)(2)(A) or (B)’’, 

11 (B) by striking ‘‘section 412(c)(8)’’ in sub12 section (e) and inserting ‘‘section 412(g)(2)’’, 

13 and 

14 (C) by striking ‘‘section 412(c)(3)’’ in sub15 section (g) and inserting ‘‘section 431(c)(3)’’. 

16 (3) Section 418D(a)(2) of such Code is amend17 ed—

18 (A) by striking ‘‘section 412(c)(8)’’ and in19 serting ‘‘section 412(g)(2)’’, and 

20 (B) by striking ‘‘section 412(c)(10)’’ and 

21 inserting ‘‘section 431(c)(8)’’. 

22 (c) CLERICAL AMENDMENT.—The table of sections 

23 for subpart A of part III of subchapter D of chapter 1 

24 of such Code is amended by adding after the item relating 

25 to section 430 the following new item:

‘‘Sec. 431. Minimum funding standards for multiemployer plans.’’.
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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to plan years beginning after 2005. 

3 SEC. 212. ADDITIONAL FUNDING RULES FOR MULTIEM4 PLOYER PLANS IN ENDANGERED OR CRIT5 ICAL STATUS. 

6 (a) IN GENERAL.—Subpart A of part III of sub7 chapter D of chapter 1 of the Internal Revenue Code of 

8 1986 is amended by inserting after section 431 the fol9 lowing new section: 

10 ‘‘SEC. 432. ADDITIONAL FUNDING RULES FOR MULTIEM11 PLOYER PLANS IN ENDANGERED STATUS OR 

12 CRITICAL STATUS. 

13 ‘‘(a) ANNUAL CERTIFICATION BY PLAN ACTUARY.—

14 ‘‘(1) IN GENERAL.—During the 90-day period 

15 beginning on first day of each plan year of a multi16 employer plan, the plan actuary of shall certify to 

17 the Secretary whether or not the plan is in endan18 gered status for such plan year and whether or not 

19 the plan is in critical status for such plan year. 

20 ‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND

21 LIABILITIES.—

22 ‘‘(A) IN GENERAL.—In making the deter23 minations under paragraph (1), the plan actu24 ary shall make projections under subsections 

25 (b)(2) and (c)(2) for the current and succeeding 
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1 plan years, using reasonable actuarial assump2 tions and methods, of the current value of the 

3 assets of the plan and the present value of all 

4 liabilities to participants and beneficiaries under 

5 the plan for the current plan year as of the be6 ginning of such year, as set forth in the actu7 arial statement prepared for the preceding plan 

8 year under section 6058. 

9 ‘‘(B) DETERMINATIONS OF FUTURE CON10 TRIBUTIONS.—Any such actuarial projection of 

11 plan assets shall assume—

12 ‘‘(i) reasonably anticipated employer 

13 and employee contributions for the current 

14 and succeeding plan years, assuming that 

15 the terms of the one or more collective bar16 gaining agreements pursuant to which the 

17 plan is maintained for the current plan 

18 year continue in effect for succeeding plan 

19 years, or 

20 ‘‘(ii) employer and employee contribu21 tions projected for the current and suc22 ceeding plan years under the terms of such 

23 collective bargaining agreements (assuming 

24 the continued application of such terms in25 definitely to such plan years), but only if 
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1 the plan actuary determines there have 

2 been no significant demographic changes 

3 that would make continued application of 

4 such terms unreasonable. 

5 ‘‘(3) PRESUMED STATUS IN ABSENCE OF TIME6 LY ACTUARIAL CERTIFICATION.—If certification 

7 under this subsection is not made before the end of 

8 the 90-day period specified in paragraph (1), the 

9 plan shall be presumed to be in critical status for 

10 such plan year until such time as the actuary makes 

11 a contrary certification. 

12 ‘‘(4) NOTICE.—In any case in which a multiem13 ployer plan is certified to be in endangered or crit14 ical status for a plan year under paragraph (1), is 

15 presumed to be in critical status under paragraph 

16 (3), or is deemed to be in critical status under sub17 section (b)(7), the plan sponsor shall, not later than 

18 30 days after the date of the certification, presump19 tion, or deeming, provide notification of the endan20 gered or critical status to the participants and bene21 ficiaries, the bargaining parties, the Pension Benefit 

22 Guaranty Corporation, the Secretary of the Treas23 ury, and the Secretary of Labor. 

24 ‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS

25 IN ENDANGERED STATUS.—
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1 ‘‘(1) IN GENERAL.—In any case in which a 

2 multiemployer plan is in endangered status for a 

3 plan year, the plan sponsor shall, in accordance with 

4 this subsection, amend the plan to include a funding 

5 improvement plan upon approval thereof by the bar6 gaining parties under this subsection. The amend7 ment shall be adopted not later than 240 days after 

8 the date on which the plan is certified to be in en9 dangered status under subsection (a)(1). 

10 ‘‘(2) ENDANGERED STATUS.—A multiemployer 

11 plan is in endangered status for a plan year if, as 

12 determined by the plan actuary under subsection 

13 (c)—

14 ‘‘(A) the plan’s funded percentage for such 

15 plan year is less than 80 percent, or 

16 ‘‘(B) the plan has an accumulated funding 

17 deficiency for such plan year under section 431 

18 or is projected to have such an accumulated 

19 funding deficiency for any of the 6 succeeding 

20 plan years, taking into account any extension of 

21 amortization periods under section 431(d). 

22 ‘‘(3) FUNDING IMPROVEMENT PLAN.—

23 ‘‘(A) BENCHMARKS.—A funding improve24 ment plan shall consist of amendments to the 

25 plan formulated to provide, under reasonable 
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1 actuarial assumptions, for the attainment, dur2 ing the funding improvement period under the 

3 funding improvement plan, of the following 

4 benchmarks: 

5 ‘‘(i) REDUCTION IN UNFUNDED CUR6 RENT LIABILITY.—A percentage decrease 

7 in the plan’s unfunded current liability 

8 from the amount for the first plan year of 

9 the funding improvement period to the 

10 amount for the last plan year of the funding improvement period, of at least 331 11 ⁄3

12 percent. 

13 ‘‘(ii) AVOIDANCE OF ACCUMULATED

14 FUNDING DEFICIENCIES.—No accumulated 

15 funding deficiency for any plan year during 

16 the funding improvement period (taking 

17 into account any extension of amortization 

18 periods under section 431(d)). 

19 ‘‘(B) FUNDING IMPROVEMENT PERIOD.—

20 The funding improvement period for any fund21 ing improvement plan adopted pursuant to this 

22 subsection is the 10-year period beginning on 

23 the earlier of—
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1 ‘‘(i) the second anniversary of the 

2 date of the adoption of the funding im3 provement plan, or 

4 ‘‘(ii) the first day of the first plan 

5 year of the multiemployer plan following 

6 the plan year in which occurs the first date 

7 after the day of the certification as of 

8 which collective bargaining agreements cov9 ering on the day of such certification at 

10 least 75 percent of active participants in 

11 such multiemployer plan have expired. 

12 ‘‘(C) REPORTING.—A summary of any 

13 funding improvement plan or modification 

14 thereto adopted during any plan year shall be 

15 included in the annual report for such plan year 

16 under section 104(a) of the Employee Retire17 ment and Income Security Act of 1974 and in 

18 the summary annual report described in section 

19 104(b)(3) of such Act. 

20 ‘‘(4) DEVELOPMENT OF FUNDING IMPROVE21 MENT PLAN.—

22 ‘‘(A) ACTIONS BY PLAN SPONSOR PENDING

23 APPROVAL.—Pending the approval of a funding 

24 improvement plan under this paragraph, the 

25 plan sponsor shall take all reasonable actions, 
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1 consistent with the terms of the plan and appli2 cable law, necessary to ensure—

3 ‘‘(i) an increase in the plan’s funded 

4 percentage, and 

5 ‘‘(ii) postponement of an accumulated 

6 funding deficiency for at least 1 additional 

7 plan year. 

8 Such actions include applications for extensions 

9 of amortization periods under section 431(d), 

10 use of the shortfall funding method in making 

11 funding standard account computations, 

12 amendments to the plan’s benefit structure, re13 ductions in future benefit accruals, and other 

14 reasonable actions consistent with the terms of 

15 the plan and applicable law. 

16 ‘‘(B) RECOMMENDATIONS BY PLAN SPON17 SOR.—

18 ‘‘(i) IN GENERAL.—During the period 

19 of 90 days following the date on which a 

20 multiemployer plan is certified to be in en21 dangered status, the plan sponsor shall de22 velop and provide to the bargaining parties 

23 alternative proposals for revised benefit 

24 structures, contribution structures, or 

25 both, which, if adopted as amendments to 
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1 the plan, may be reasonably expected to 

2 meet the benchmarks described in para3 graph (3)(A). Such proposals shall in4 clude—

5 ‘‘(I) at least one proposal for re6 ductions in the amount of future ben7 efit accruals necessary to achieve the 

8 benchmarks, assuming no amend9 ments increasing contributions under 

10 the plan (other than amendments in11 creasing contributions necessary to 

12 achieve the benchmarks after amend13 ments have reduced future benefit ac14 cruals to the maximum extent per15 mitted by law), and 

16 ‘‘(II) at least one proposal for in17 creases in contributions under the 

18 plan necessary to achieve the bench19 marks, assuming no amendments re20 ducing future benefit accruals under 

21 the plan. 

22 ‘‘(ii) REQUESTS BY BARGAINING PAR23 TIES.—Upon the request of any bargaining 

24 party who—
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1 ‘‘(I) employs at least 5 percent of 

2 the active participants, or 

3 ‘‘(II) represents as an employee 

4 organization, for purposes of collective 

5 bargaining, at least 5 percent of the 

6 active participants, 

7 the plan sponsor shall provide all such par8 ties information as to other combinations 

9 of increases in contributions and reduc10 tions in future benefit accruals which 

11 would result in achieving the benchmarks. 

12 ‘‘(iii) OTHER INFORMATION.—The 

13 plan sponsor may, as it deems appropriate, 

14 prepare and provide the bargaining parties 

15 with additional information relating to con16 tribution structures or benefit structures 

17 or other information relevant to the fund18 ing improvement plan. 

19 ‘‘(5) MAINTENANCE OF CONTRIBUTIONS PEND20 ING APPROVAL OF FUNDING IMPROVEMENT PLAN.—

21 Pending approval of a funding improvement plan by 

22 the bargaining parties with respect to a multiem23 ployer plan, the multiemployer plan may not be 

24 amended so as to provide—
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1 ‘‘(A) a reduction in the level of contribu2 tions for participants who are not in pay status, 

3 ‘‘(B) a suspension of contributions with re4 spect to any period of service, or 

5 ‘‘(C) any new direct or indirect exclusion 

6 of younger or newly hired employees from plan 

7 participation. 

8 ‘‘(6) BENEFIT RESTRICTIONS PENDING AP9 PROVAL OF FUNDING IMPROVEMENT PLAN.—Pend10 ing approval of a funding improvement plan by the 

11 bargaining parties with respect to a multiemployer 

12 plan—

13 ‘‘(A) RESTRICTIONS ON LUMP SUM DIS14 TRIBUTIONS AND SIMILAR DISTRIBUTIONS.—

15 The multiemployer plan may not be amended so 

16 as to provide additional forms of benefits. 

17 ‘‘(B) PROHIBITION ON BENEFIT IN18 CREASES.—

19 ‘‘(i) IN GENERAL.—No amendment of 

20 the plan which increases the liabilities of 

21 the plan by reason of any increase in bene22 fits, any change in the accrual of benefits, 

23 or any change in the rate at which benefits 

24 become nonforfeitable under the plan may 

25 be adopted. 
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1 ‘‘(ii) EXCEPTION.—Clause (i) shall 

2 not apply to any plan amendment which—

3 ‘‘(I) the Secretary determines to 

4 be reasonable and which provides for 

5 only de minimis increases in the liabil6 ities of the plan, 

7 ‘‘(II) only repeals an amendment 

8 described in section 430(d)(2), or 

9 ‘‘(III) is required as a condition 

10 of qualification under part I of sub11 chapter D of chapter 1 of subtitle A. 

12 ‘‘(7) DEFAULT CRITICAL STATUS IF NO FUND13 ING IMPROVEMENT PLAN ADOPTED.—If no plan 

14 amendment adopting a funding improvement plan 

15 has been adopted by the end of the 240-day period 

16 referred to in subsection (a)(1), the plan shall be in 

17 critical status as of the first day of the succeeding 

18 plan year. 

19 ‘‘(8) RESTRICTIONS UPON APPROVAL OF FUND20 ING IMPROVEMENT PLAN.—Upon adoption of a 

21 funding improvement plan with respect to a multi22 employer plan, the plan may not be amended—

23 ‘‘(A) so as to be inconsistent with the 

24 funding improvement plan, or 
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1 ‘‘(B) so as to increase future benefit accru2 als, unless the plan actuary certifies in advance 

3 that, after taking into account the proposed in4 crease, the plan is reasonably expected to meet 

5 the the benchmarks described in paragraph 

6 (3)(A). 

7 ‘‘(c) FUNDING RULES FOR MULTIEMPLOYER PLANS

8 IN CRITICAL STATUS.—

9 ‘‘(1) IN GENERAL.—In any case in which a 

10 multiemployer plan is in critical status for a plan 

11 year, the plan sponsor shall, in accordance with this 

12 subsection, amend the plan to include a rehabilita13 tion plan under this subsection. The amendment 

14 shall be adopted not later than 240 days after the 

15 date on which the plan is certified to be in critical 

16 status under subsection (a)(1) or is presumed to be 

17 in critical status under subsection (a)(3), or the first 

18 day of the plan year in the case of a plan that is 

19 deemed to be in critical status under subsection 

20 (b)(7). 

21 ‘‘(2) CRITICAL STATUS.—A multiemployer plan 

22 is in critical status for a plan year if—

23 ‘‘(A) the plan is in endangered status for 

24 the plan year and the requirements of sub-
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1 section (b)(1) are not met with respect to the 

2 plan for such plan year, or 

3 ‘‘(B) as determined by the plan actuary 

4 under subsection (a), the plan is described in 

5 paragraph (3). 

6 Any multiemployer plan which is in critical status 

7 under subparagraph (A) or (B) for a plan year shall 

8 be treated as in critical status also for the suc9 ceeding plan year. 

10 ‘‘(3) CRITICALITY DESCRIPTION.—For purposes 

11 of paragraph (2)(B), a plan is described in this 

12 paragraph if the plan is described in at least one of 

13 the following subparagraphs: 

14 ‘‘(A) A plan is described in this subpara15 graph if, as of the beginning of the current plan 

16 year—

17 ‘‘(i) the funded percentage of the plan 

18 is less than 65 percent, and 

19 ‘‘(ii) the sum of—

20 ‘‘(I) the market value of plan as21 sets, plus 

22 ‘‘(II) the present value of the 

23 reasonably anticipated employer and 

24 employee contributions for the current 

25 plan year and each of the 6 suc-
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1 ceeding plan years, assuming that the 

2 terms of the one or more collective 

3 bargaining agreements pursuant to 

4 which the plan is maintained for the 

5 current plan year continue in effect 

6 for succeeding plan years, 

7 is less than the present value of all non8 forfeitable benefits for all participants and 

9 beneficiaries projected to be payable under 

10 the plan during the current plan year and 

11 each of the 6 succeeding plan years (plus 

12 administrative expenses for such plan 

13 years). 

14 ‘‘(B) A plan is described in this subpara15 graph if, as of the beginning of the current plan 

16 year, the sum of—

17 ‘‘(i) the market value of plan assets, 

18 plus 

19 ‘‘(ii) the present value of the reason20 ably anticipated employer and employee 

21 contributions for the current plan year and 

22 each of the 4 succeeding plan years, as23 suming that the terms of the one or more 

24 collective bargaining agreements pursuant 

25 to which the plan is maintained for the 
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1 current plan year remain in effect for suc2 ceeding plan years, 

3 is less than the present value of all nonforfeit4 able benefits for all participants and bene5 ficiaries projected to be payable under the plan 

6 during the current plan year and each of the 4 

7 succeeding plan years (plus administrative ex8 penses for such plan years). 

9 ‘‘(C) A plan is described in this subpara10 graph if—

11 ‘‘(i) as of the beginning of the current 

12 plan year, the funded percentage of the 

13 plan is less than 65 percent, and 

14 ‘‘(ii) the plan has an accumulated 

15 funding deficiency for the current plan 

16 year or is projected to have an accumu17 lated funding deficiency for any of the 4 

18 succeeding plan years, taking into account 

19 any extension of amortization periods 

20 under section 431(d). 

21 ‘‘(D) A plan is described in this subpara22 graph if—

23 ‘‘(i)(I) the plan’s normal cost for the 

24 current plan year, plus interest (deter25 mined at the rate used for determining 
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1 cost under the plan) for the current plan 

2 year on the amount of unfunded benefit li3 abilities under the plan as of the last date 

4 of the preceding plan year, exceeds 

5 ‘‘(II) the present value, as of the be6 ginning of the current plan year, of the 

7 reasonably anticipated employer and em8 ployee contributions for the current plan 

9 year, 

10 ‘‘(ii) the present value, as of the be11 ginning of the current plan year, of non12 forfeitable benefits of inactive participants 

13 is greater than the present value, as of the 

14 beginning of the current plan year, of non15 forfeitable benefits of active participants, 

16 and 

17 ‘‘(iii) the plan is projected to have an 

18 accumulated funding deficiency for the 

19 current plan year or any of the 4 suc20 ceeding plan years. 

21 ‘‘(E) A plan is described in this subpara22 graph if—

23 ‘‘(i) the funded percentage of the plan 

24 is greater than 65 percent for the current 

25 plan year, and 
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1 ‘‘(ii) the plan is projected to have an 

2 accumulated funding deficiency during ei3 ther of the following 3 plan years. 

4 ‘‘(4) REHABILITATION PLAN.—

5 ‘‘(A) IN GENERAL.—A rehabilitation plan 

6 shall consist of—

7 ‘‘(i) amendments to the plan providing 

8 (under reasonable actuarial assumptions) 

9 for measures, agreed to by the bargaining 

10 parties, to increase contributions, reduce 

11 plan expenditures (including plan mergers 

12 and consolidations), or reduce future ben13 efit accruals, or to take any combination of 

14 such actions, determined necessary to 

15 cause the plan to cease, during the reha16 bilitation period, to be in critical status, 

17 ‘‘(ii) measures, agreed to by the bar18 gaining parties, to provide funding relief, 

19 or 

20 ‘‘(iii) reasonable measures to forestall 

21 possible insolvency (within the meaning of 

22 section 418E) if the plan sponsor deter23 mines that, upon exhaustion of all reason24 able measures, the plan would not cease 
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1 during the rehabilitation period to be in 

2 critical status. 

3 ‘‘(B) REHABILITATION PERIOD.—The re4 habilitation period for any rehabilitation plan 

5 adopted pursuant to this section is the 10-year 

6 period beginning on the earlier of—

7 ‘‘(i) the second anniversary of the 

8 date of the adoption of the rehabilitation 

9 plan, or 

10 ‘‘(ii) the first day of the first plan 

11 year of the multiemployer plan following 

12 the plan year in which occurs the first date 

13 after the day of the certification as of 

14 which collective bargaining agreements cov15 ering on the day of such certification at 

16 least 75 percent of active participants in 

17 such multiemployer plan have expired. 

18 ‘‘(C) REPORTING.—A summary of any re19 habilitation plan or modification thereto adopt20 ed during any plan year, together with annual 

21 updates regarding the funding ratio of the plan, 

22 shall be included in the annual report for such 

23 plan year under section 104(a) and in the sum24 mary annual report described in section 
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1 104(b)(3) of the Employee Retirement and In2 come Security Act of 1974. 

3 ‘‘(5) DEVELOPMENT OF REHABILITATION

4 PLAN.—

5 ‘‘(A) PROPOSALS BY PLAN SPONSOR.—

6 ‘‘(i) IN GENERAL.—Within 90 days 

7 after the date of the certification under 

8 subsection (a) that the plan is in critical 

9 status (or the date as of which the require10 ments of subsection (b)(1) are not met 

11 with respect to the plan), the plan sponsor 

12 shall propose to all bargaining parties a 

13 range of alternative schedules of increases 

14 in contributions and reductions in future 

15 benefit accruals that would serve to carry 

16 out a rehabilitation plan under this sub17 section. 

18 ‘‘(ii) PROPOSAL ASSUMING NO CON19 TRIBUTION INCREASES.—Such proposals 

20 shall include, as one of the proposed sched21 ules, a schedule of those reductions in fu22 ture benefit accruals that would be nec23 essary to cause the plan to cease to be in 

24 critical status if there were no further in25 creases in rates of contribution to the plan. 
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1 ‘‘(iii) PROPOSAL WHERE CONTRIBU2 TIONS ARE NECESSARY.—If the plan spon3 sor determines that the plan will not cease 

4 to be in critical status during the rehabili5 tation period unless the plan is amended to 

6 provide for an increase in contributions, 

7 the plan sponsor’s proposals shall include a 

8 schedule of those increases in contribution 

9 rates that would be necessary to cause the 

10 plan to cease to be in critical status if fu11 ture benefit accruals were reduced to the 

12 maximum extent permitted by law and the 

13 rate of future benefit accruals did not ex14 ceed 1 percent per plan year. 

15 ‘‘(B) REQUESTS FOR ADDITIONAL SCHED16 ULES.—Upon the joint request of all bargaining 

17 parties, each of whom—

18 ‘‘(i) employs at least 5 percent of the 

19 active participants, or 

20 ‘‘(ii) represents as an employee orga21 nization, for purposes of collective bar22 gaining, at least 5 percent of the active 

23 participants, 

24 the plan sponsor shall include among the pro25 posed schedules such schedules of increases in 
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1 contributions and reductions in future benefit 

2 accruals as may be specified by the bargaining 

3 parties. 

4 ‘‘(C) DEFAULT SCHEDULE.—In any case 

5 in which the bargaining parties, as of 240 days 

6 after the later of the date of the certification 

7 under subsection (a) or the first day the plan 

8 is in critical status under subsection (a)(3) or 

9 (b)(7), have not agreed to at least one of the 

10 proposed schedules, the plan sponsor shall 

11 amend the plan to implement the schedule re12 quired by subparagraph (A)(ii). 

13 ‘‘(D) SUBSEQUENT AMENDMENTS.—Upon 

14 the adoption of a schedule of increases in con15 tributions or reductions in future benefit accru16 als as part of the rehabilitation plan, the plan 

17 sponsor may amend the plan thereafter to up18 date the schedule to adjust for any experience 

19 of the plan contrary to past actuarial assump20 tions, except that such an amendment may be 

21 made not more than once in any 3-year period. 

22 ‘‘(E) ALLOCATION OF REDUCTIONS IN FU23 TURE BENEFIT ACCRUALS.—Any schedule con24 taining reductions in future benefit accruals 

25 forming a part of a rehabilitation plan shall be 
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1 applicable with respect to any group of active 

2 participants who are employed by any bar3 gaining party (as an employer obligated to con4 tribute under the plan) in proportion to the ex5 tent to which increases in contributions under 

6 such schedule apply to such bargaining party. 

7 ‘‘(6) MAINTENANCE OF CONTRIBUTIONS AND

8 RESTRICTIONS ON BENEFITS PENDING ADOPTION OF

9 REHABILITATION PLAN.—The rules of paragraphs 

10 (5) and (6) of subsection (b) shall apply for pur11 poses of this subsection by substituting the term ‘re12 habilitation plan’ for ‘funding improvement plan’. 

13 ‘‘(7) DEEMED WITHDRAWAL.—Upon the failure 

14 of any employer who has an obligation to contribute 

15 under the plan to make contributions in compliance 

16 with the schedule adopted under paragraph (6) as 

17 part of the rehabilitation plan, the failure of the em18 ployer may, at the discretion of the plan sponsor, be 

19 treated as a withdrawal by the employer from the 

20 plan under section 4203 of the Employee Retirement 

21 and Income Security Act of 1974 or a partial with22 drawal by the employer under section 4205 of such 

23 Act. 

24 ‘‘(d) DEFINITIONS.—For purposes of this section—
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1 ‘‘(1) BARGAINING PARTY.—The term ‘bar2 gaining party’ means, in connection with a multiem3 ployer plan—

4 ‘‘(A) an employer who has an obligation to 

5 contribute under the plan, and 

6 ‘‘(B) an employee organization which, for 

7 purposes of collective bargaining, represents 

8 plan participants employed by such an em9 ployer. 

10 ‘‘(2) CURRENT LIABILITY.—The term ‘current 

11 liability’ has the meaning provided such term in sec12 tion 431(c)(6)(C). 

13 ‘‘(3) UNFUNDED CURRENT LIABILITY.—The 

14 term ‘unfunded current liability’ means the excess 

15 (if any) of—

16 ‘‘(A) the current liability of the plan, over 

17 ‘‘(B) the value of the plan’s assets deter18 mined under section 431(c)(2). 

19 ‘‘(4) FUNDED PERCENTAGE.—The term ‘fund20 ed percentage’ means the percentage expressed as a 

21 ratio of which—

22 ‘‘(A) the numerator of which is the value 

23 of the plan’s assets, as determined under sec24 tion 431(c)(2), and 
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1 ‘‘(B) the denominator of which is the ac2 crued liability of the plan. 

3 ‘‘(5) UNFUNDED VESTED BENEFITS.—The 

4 term ‘unfunded vested benefits’ has the meaning 

5 provided in section 418(b)(7). 

6 ‘‘(6) ACCUMULATED FUNDING DEFICIENCY.—

7 The term ‘accumulated funding deficiency’ has the 

8 meaning provided such term in section 431(a). 

9 ‘‘(7) ACTIVE PARTICIPANT.—The term ‘active 

10 participant’ means, in connection with a multiem11 ployer plan, a participant who is in covered service 

12 under the plan. 

13 ‘‘(8) INACTIVE PARTICIPANT.—The term ‘inac14 tive participant’ means, in connection with a multi15 employer plan, a participant who—

16 ‘‘(A) is not in covered service under the 

17 plan, and 

18 ‘‘(B) is in pay status under the plan or has 

19 a nonforfeitable right to benefits under the 

20 plan. 

21 ‘‘(9) PAY STATUS.—A person is in ‘pay status’ 

22 under a multiemployer plan if—

23 ‘‘(A) at any time during the current plan 

24 year, such person is a participant or beneficiary 

25 under the plan and is paid an early, late, nor-
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•HR 2830 IH 

1 mal, or disability retirement benefit under the 

2 plan (or a death benefit under the plan related 

3 to a retirement benefit), or 

4 ‘‘(B) to the extent provided in regulations 

5 of the Secretary, such person is entitled to such 

6 a benefit under the plan. 

7 ‘‘(10) OBLIGATION TO CONTRIBUTE.—The term 

8 ‘obligation to contribute’ has the meaning provided 

9 such term under section 4212(a).’’. 

10 (b) CLERICAL AMENDMENT.—The table of sections 

11 for subpart A of part III of subchapter D of chapter 1 

12 of such Code is amended by adding at the end the fol13 lowing new item:

‘‘Sec. 432. Additional funding rules for multiemployer plans in endangered status or critical status.’’.

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to plan years beginning after 2005. 

16 TITLE III—OTHER INTEREST17 RELATED FUNDING PROVISIONS 

18 SEC. 301. INTEREST RATE ASSUMPTION FOR DETERMINA19 TION OF LUMP SUM DISTRIBUTIONS. 

20 (a) AMENDMENTS TO EMPLOYEE RETIREMENT IN21 COME SECURITY ACT OF 1974.—Subparagraph (B) of 

22 section 205(g)(3) of the Employee Retirement Income Se23 curity Act of 1974 (29 U.S.C. 1055(g)(3)) is amended to 

24 read as follows: 
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1 ‘‘(B) For purposes of subparagraph (A)—

2 ‘‘(i) The term ‘applicable mortality table’ means 

3 the mortality table specified for the plan year under 

4 section 303(f)(3). 

5 ‘‘(ii) The term ‘applicable interest rate’ means 

6 the adjusted first, second, and third segment rates 

7 applied under rules similar to the rules of section 

8 303(f)(2)(B). 

9 ‘‘(iii) For purposes of clause (ii), the adjusted 

10 first, second, and third segment rates are the first, 

11 second, and third segment rates which would be de12 termined under section 303(f)(2)(C) if—

13 ‘‘(I) section 303(f)(2)(D)(i) were applied 

14 by substituting ‘the yields’ for ‘a 3-year weight15 ed average of yields’, and 

16 ‘‘(II) the applicable percentage under sec17 tion 303(f)(2)(G) were determined in accord18 ance with the following table:

‘‘In the case of plan years beginning in: The applicable 

percentage is:

2006 ....................................................................... 20 percent

2007 ....................................................................... 40 percent

2008 ....................................................................... 60 percent

2009 ....................................................................... 80 percent.’’. 

19 (b) AMENDMENTS TO INTERNAL REVENUE CODE OF

20 1986.—Section 417(e)(3)(A) of the Internal Revenue 
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1 Code of 1986 is amended by striking clause (ii) and insert2 ing the following: 

3 ‘‘(ii) APPLICABLE MORTALITY

4 TABLE.—For purposes of clause (i), the 

5 term ‘applicable mortality table’ means the 

6 mortality table specified for the plan under 

7 section 430(f)(3). 

8 ‘‘(iii) APPLICABLE INTEREST RATE.—

9 For purposes of clause (i), the term ‘appli10 cable interest rate’ means the adjusted 

11 first, second, and third segment rates ap12 plied under rules similar to the rules of 

13 section 430(f)(2)(B). 

14 ‘‘(iv) ADJUSTED FIRST, SECOND, AND

15 THIRD SEGMENT RATES.—For purposes of 

16 clause (iii), the adjusted first, second, and 

17 third segment rates are the first, second, 

18 and third segment rates which would be 

19 determined under section 430(f)(2)(C) if—

20 ‘‘(I) section 430(f)(2)(D)(i) were 

21 applied by substituting ‘the yields’ for 

22 ‘a 3-year weighted average of yields’, 

23 and 

24 ‘‘(II) the applicable percentage 

25 under section 430(f)(2)(G) were de-
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1 termined in accordance with the fol2 lowing table:

‘‘In the case of plan years beginning in: The applicable 

percentage is:

2006 ....................................................................... 20 percent

2007 ....................................................................... 40 percent

2008 ....................................................................... 60 percent

2009 ....................................................................... 80 percent.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply with respect to plan years begin5 ning after 2005. 

6 SEC. 302. INTEREST RATE ASSUMPTION FOR APPLYING 

7 BENEFIT LIMITATIONS TO LUMP SUM DIS8 TRIBUTIONS. 

9 (a) IN GENERAL.—Clause (ii) of section 

10 415(b)(2)(E) of the Internal Revenue Code of 1986 is 

11 amended to read as follows: 

12 ‘‘(ii) For purposes of adjusting any 

13 benefit under subparagraph (B) for any 

14 form of benefit subject to section 

15 417(e)(3), the interest rate assumption 

16 shall not be less than the greater of—

17 ‘‘(I) 5.5 percent, 

18 ‘‘(II) the rate that provides a 

19 benefit of not more than 105 percent 

20 of the benefit that would be provided 

21 if the applicable interest rate (as de-
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1 fined in section 417(e)(3)) were the 

2 interest rate assumption, or 

3 ‘‘(III) the rate specified under 

4 the plan.’’. 

5 (b) EFFECTIVE DATE.—The amendment made by 

6 subsection (a) shall apply to distributions made in years 

7 beginning after 2005. 

8 TITLE IV—IMPROVEMENTS IN 

9 PBGC GUARANTEE PROVISIONS 

10 SEC. 401. INCREASES IN PBGC PREMIUMS. 

11 (a) FLAT-RATE PREMIUMS.—Section 4006(a)(3) of 

12 the Employee Retirement Income Security Act of 1974 

13 (29 U.S.C. 1306(a)(3)) is amended—

14 (1) by striking clause (i) of subparagraph (A) 

15 and inserting the following: 

16 ‘‘(i) in the case of a single-employer plan—

17 ‘‘(I) for plan years beginning after Decem18 ber 31, 1990, and before January 1, 2008, an 

19 amount equal to the sum of $19, and 

20 ‘‘(II) for plan years beginning after De21 cember 31, 2007, an amount determined under 

22 subparagraph (F), 

23 plus the additional premium (if any) determined 

24 under subparagraph (E) for each individual who is 
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1 a participant in such plan during the plan year;’’; 

2 and 

3 (2) by adding at the end the following new sub4 paragraph: 

5 ‘‘(F)(i) Except as otherwise provided in this subpara6 graph, for purposes of determining the annual premium 

7 rate payable to the corporation by a single-employer plan 

8 for basic benefits guaranteed under this title, the amount 

9 determined under this subparagraph is the greater of $30 

10 or the adjusted amount determined under clause (ii). 

11 ‘‘(ii) The adjusted amount determined under this 

12 clause is the product derived by multiplying $30 by the 

13 ratio of—

14 ‘‘(I) the national average wage index (as de15 fined in section 209(k)(1) of the Social Security Act) 

16 for the first of the 2 calendar years preceding the 

17 calendar year before the calendar year in which the 

18 plan year begins, to 

19 ‘‘(II) the national average wage index (as so de20 fined) for 2006, 

21 with such product, if not a multiple of $1, being rounded 

22 to the next higher multiple of $1 where such product is 

23 a multiple of $0.50 but not of $1, and to the nearest mul24 tiple of $1 in any other case. 
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1 ‘‘(iii) For purposes of determining the annual pre2 mium rate payable to the corporation by a single-employer 

3 plan for basic benefits guaranteed under this title for any 

4 plan year beginning after 2007 and before 2012—

5 ‘‘(I) except as provided in subclause (II), the 

6 premium amount referred to in subparagraph 

7 (A)(i)(II) for any such plan year is the amount set 

8 forth in connection with such plan year in the fol9 lowing table:

‘‘If the plan year begins in: The amount is:

2008 ....................................................................... $21.20

2009 ....................................................................... $23.40

2010 ....................................................................... $25.60

2011 ....................................................................... $27.80; or 

10 ‘‘(II) if the plan’s funding target attainment 

11 percentage for the plan year preceding the current 

12 plan year was less than 80 percent, the premium 

13 amount referred to in subparagraph (A)(i)(II) for 

14 such current plan year is the amount set forth in 

15 connection with such current plan year in the fol16 lowing table:

‘‘If the plan year begins in: The amount is:

2008 ....................................................................... $22.67

2009 ....................................................................... $26.33

2010 or 2011 .......................................................... the amount provided 

under clause (i) 
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1 ‘‘(iv) For purposes of this subparagraph, the term 

2 ‘funding target attainment percentage’ has the meaning 

3 provided such term in section 303(d)(2).’’. 

4 (b) RISK-BASED PREMIUMS.—

5 (1) IN GENERAL.—Section 4006(a)(3)(E) of 

6 such Act (29 U.S.C. 1306(a)(3)(E)) is amended—

7 (A) in clause (ii), by striking ‘‘$9.00’’ and 

8 inserting ‘‘the greater of $9.00 or the adjusted 

9 amount determined under clause (iii)’’; 

10 (B) by redesignating clauses (iii) and (iv) 

11 as clauses (iv) and (v), respectively; and 

12 (C) by inserting after clause (ii) the fol13 lowing new clause: 

14 ‘‘(iii) The adjusted amount determined under this 

15 clause is the product derived by multiplying $9.00 by the 

16 ratio of—

17 ‘‘(I) the national average wage index (as de18 fined in section 209(k)(1) of the Social Security Act) 

19 for the first of the 2 calendar years preceding the 

20 calendar year before the calendar year in which the 

21 plan year begins, to 

22 ‘‘(II) the national average wage index (as so de23 fined) for 2006, 

24 with such product, if not a multiple of $1.00, being round25 ed to the next higher multiple of $1.00 where such product 
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1 is a multiple of $0.50 but not of $1.00, and to the nearest 

2 multiple of $1.00 in any other case.’’. 

3 (2) CONFORMING AMENDMENTS RELATED TO

4 FUNDING RULES FOR SINGLE-EMPLOYER PLANS.—

5 Section 4006(a)(3)(E) of such Act (as amended by 

6 paragraph (1)) is amended further—

7 (A) by striking clause (iv) and inserting 

8 the following: 

9 ‘‘(iv)(I) For purposes of clause (ii), except as pro10 vided in subclause (II) or (III), the term ‘unfunded bene11 fits’ means, for a plan year, the amount which would be 

12 the plan’s funding shortfall (as defined in section 

13 303(c)(4)), if the value of plan assets of the plan were 

14 equal to the fair market value of such assets and deter15 mined without regard to section 303(e)(1), and only vested 

16 benefits were taken into account. 

17 ‘‘(II) The interest rate used in valuing vested benefits 

18 for purposes of subclause (I) shall be equal to the first, 

19 second, or third segment rate which would be determined 

20 under section 303(f)(2)(C) if section 303(f)(2)(D)(i) were 

21 applied by substituting ‘the yields’ for ‘the 3-year weighted 

22 average of yields’, as applicable under rules similar to the 

23 rules under section 303(f)(2)(B).’’; and 

24 (B) by striking clause (iv). 

25 (3) EFFECTIVE DATES.—
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1 (A) The amendments made by paragraph 

2 (1) shall apply with respect to premiums for 

3 plan years after 2007. 

4 (B) The amendments made by paragraph 

5 (2) shall apply with respect to plan years begin6 ning after 2005. 

7 TITLE V—DISCLOSURE 

8 SEC. 501. DEFINED BENEFIT PLAN FUNDING NOTICES. 

9 (a) APPLICATION OF PLAN FUNDING NOTICE RE10 QUIREMENTS TO ALL DEFINED BENEFIT PLANS.—Sec11 tion 101(f) of the Employee Retirement Income Security 

12 Act of 1974 (29 U.S.C. 1021(f)) is amended—

13 (1) in the heading, by striking ‘‘MULTIEM14 PLOYER’’; 

15 (2) in paragraph (1), by striking ‘‘which is a 

16 multiemployer plan’’; and 

17 (3) in paragraph (2)(B)(iii), by inserting after 

18 ‘‘plan’’ the following: ‘‘, and a summary of the rules 

19 governing termination of single-employer plans 

20 under subtitle C of title IV’’. 

21 (b) INCLUSION OF STATEMENT OF THE RATIO OF IN22 ACTIVE PARTICIPANTS TO ACTIVE PARTICIPANTS.—Sec23 tion 101(f)(2)(B) of such Act (29 U.S.C. 1021(f)(2)(B)) 

24 is amended—
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1 (1) in clause (iii)(II) (added by subsection 

2 (a)(3) of this section), by striking ‘‘and’’ at the end; 

3 (2) in clause (iv), by striking ‘‘apply.’’ and in4 serting ‘‘apply; and’’; and 

5 (3) by adding at the end the following new 

6 clause: 

7 ‘‘(v) a statement of the ratio, as of 

8 the end of the plan year to which the no9 tice relates, of—

10 ‘‘(I) the number of participants 

11 who are not in covered service under 

12 the plan and are in pay status under 

13 the plan or have a nonforfeitable right 

14 to benefits under the plan, to 

15 ‘‘(II) the number of participants 

16 who are in covered service under the 

17 plan.’’. 

18 (c) COMPARISON OF MONTHLY AVERAGE OF VALUE

19 OF PLAN ASSETS TO PROJECTED CURRENT LIABIL20 ITIES.—Section 101(f)(2)(B) of such Act (29 U.S.C. 

21 1021(f)(2)(B)) (as amended by the preceding provisions 

22 of this section) is amended further—

23 (1) by striking clause (ii) and inserting the fol24 lowing: 
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1 ‘‘(ii) a statement of a reasonable esti2 mate of—

3 ‘‘(I) the value of the plan’s assets 

4 for the plan year to which the notice 

5 relates, 

6 ‘‘(II) projected liabilities of the 

7 plan for the plan year to which the 

8 notice relates, and 

9 ‘‘(III) the ratio of the estimated 

10 amount determined under subclause 

11 (I) to the estimated amount deter12 mined under subclause (II);’’; and 

13 (2) by adding at the end (after and below 

14 clause (v)) the following: 

15 ‘‘For purposes of determining a plan’s projected 

16 liabilities for a plan year under clause (ii)(II), 

17 such projected liabilities shall be determined by 

18 projecting forward in a reasonable manner to 

19 the end of the plan year the liabilities of the 

20 plan to participants and beneficiaries as of the 

21 first day of the plan year, taking into account 

22 any significant events that occur during the 

23 plan year and that have a material effect on 

24 such liabilities, including any plan amendments 

25 in effect for the plan year.’’. 
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1 (d) STATEMENT OF PLAN’S FUNDING POLICY AND

2 METHOD OF ASSET ALLOCATION.—Section 101(f)(2)(B) 

3 of such Act (as amended by the preceding provisions of 

4 this section) is amended further—

5 (1) in clause (iv), by striking ‘‘and’’ at the end; 

6 (2) in clause (v), by striking the period and in7 serting ‘‘; and’’; and 

8 (3) by inserting after clause (v) the following 

9 new clause: 

10 ‘‘(vi) a statement setting forth the 

11 funding policy of the plan and the asset al12 location of investments under the plan (ex13 pressed as percentages of total assets) as 

14 of the end of the plan year to which the 

15 notice relates.’’. 

16 (e) NOTICE OF FUNDING IMPROVEMENT PLAN OR

17 REHABILITATION PLAN ADOPTED BY MULTIEMPLOYER

18 PLAN.—Section 101(f)(2)(B) of such Act (as amended by 

19 the preceding provisions of this section) is amended fur20 ther—

21 (1) in clause (v), by striking ‘‘and’’ at the end; 

22 (2) in clause (vi), by striking the period and in23 serting ‘‘; and’’; and 

24 (3) by inserting after clause (vi) the following 

25 new clause: 
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1 ‘‘(vii) a summary of any funding im2 provement plan, rehabilitation plan, or 

3 modification thereof adopted under section 

4 305 during the plan year to which the no5 tice relates.’’. 

6 (f) NOTICE PROVIDED TO ALTERNATE PAYEES.—

7 Section 101(f)(1) of such Act (29 U.S.C. 1021(f)(1)) is 

8 amended by adding at the end the following new sentence: 

9 ‘‘For purposes of this paragraph, the term ‘beneficiary’ 

10 includes an alternate payee (within the meaning of section 

11 206(d)(3)(K)) under an applicable qualified domestic rela12 tions order (within the meaning of section 

13 206(d)(3)(B)(i)) receiving benefits under the plan.’’. 

14 (g) NOTICE DUE 90 DAYS AFTER PLAN’S VALU15 ATION DATE.—Section 101(f)(3) of such Act (29 U.S.C. 

16 1021(f)(3)) is amended by striking ‘‘two months after the 

17 deadline (including extensions) for filing the annual report 

18 for the plan year’’ and inserting ‘‘90 days after the end 

19 of the plan year’’. 

20 (h) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to plan years beginning after De22 cember 31, 2005. 
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1 SEC. 502. ADDITIONAL DISCLOSURE REQUIREMENTS. 

2 (a) ADDITIONAL ANNUAL REPORTING REQUIRE3 MENTS.—Section 103 of the Employee Retirement Income 

4 Security Act of 1974 (29 U.S.C. 1023) is amended—

5 (1) in subsection (a)(1)(B), by striking ‘‘sub6 sections (d) and (e)’’ and inserting ‘‘subsections (d), 

7 (e), and (f)’’; and 

8 (2) by adding at the end the following new sub9 section: 

10 ‘‘(f)(1) With respect to any defined benefit plan, an 

11 annual report under this section for a plan year shall in12 clude the following: 

13 ‘‘(A)(i) The ratio of the number of inactive par14 ticipants under the plan as of the end of such plan 

15 year to the number of active participants as of the 

16 end of such plan year. 

17 ‘‘(ii) For purposes of clause (i)—

18 ‘‘(I) the term ‘active participant’ means an 

19 individual who is in covered service under the 

20 plan, and 

21 ‘‘(II) the term ‘inactive participant’ means 

22 an individual who is not in covered service 

23 under the plan who is in pay status under the 

24 plan or has a nonforfeitable right to benefits 

25 under the plan. 
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1 ‘‘(B) In any case in which any liabilities to par2 ticipants or their beneficiaries under such plan as of 

3 the end of such plan year consist (in whole or in 

4 part) of liabilities to such participants and bene5 ficiaries borne by 2 or more pension plans as of im6 mediately before such plan year, the funded ratio of 

7 each of such 2 or more pension plans as of imme8 diately before such plan year and the funded ratio 

9 of the plan with respect to which the annual report 

10 is filed as of the end of such plan year. 

11 ‘‘(C) For purposes of this paragraph, the term 

12 ‘funded ratio’ means, in connection with a plan, the 

13 percentage which—

14 ‘‘(i) the value of the plan’s assets is of 

15 ‘‘(ii) the liabilities to participants and 

16 beneficiaries under the plan. 

17 ‘‘(2) With respect to any defined benefit plan which 

18 is a multiemployer plan, an annual report under this sec19 tion for a plan year shall include the following: 

20 ‘‘(A) The number of employers obligated to con21 tribute to the plan as of the end of such plan year. 

22 ‘‘(B) The number of participants under the 

23 plan on whose behalf no employer contributions have 

24 been made to the plan for such plan year. For pur25 poses of this subparagraph, the term ‘employer con-
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1 tribution’ means, in connection with a participant, a 

2 contribution made by an employer as an employer of 

3 such participant.’’. 

4 (b) ADDITIONAL INFORMATION IN ANNUAL ACTU5 ARIAL STATEMENT REGARDING PLAN RETIREMENT PRO6 JECTIONS.—Section 103(d) of such Act (29 U.S.C. 

7 1023(d)) is amended—

8 (1) by redesignating paragraphs (12) and (13) 

9 as paragraphs (13) and (14), respectively; and 

10 (2) by inserting after paragraph (11) the fol11 lowing new paragraph: 

12 ‘‘(12) A statement explaining the actuarial as13 sumptions and methods used in projecting future re14 tirements and asset distributions under the plan.’’. 

15 (c) SUMMARY ANNUAL REPORT FILED WITHIN 15 

16 DAYS AFTER DEADLINE FOR FILING OF ANNUAL RE17 PORT.—Section 104(b)(3) of such Act (29 U.S.C. 

18 1024(b)(3)) is amended—

19 (1) by striking ‘‘Within 210 days after the close 

20 of the fiscal year,’’ and inserting ‘‘Within 15 busi21 ness days after the due date under subsection (a)(1) 

22 for the filing of the annual report for the fiscal year 

23 of the plan’’; and 

24 (2) by striking ‘‘the latest’’ and inserting 

25 ‘‘such’’. 
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1 (d) INFORMATION MADE AVAILABLE TO PARTICI2 PANTS, BENEFICIARIES, AND EMPLOYERS WITH RESPECT

3 TO MULTIEMPLOYER PLANS.—

4 (1) IN GENERAL.—Section 101 of the Employee 

5 Retirement Income Security Act of 1974 (29 U.S.C. 

6 1021) is amended—

7 (A) by redesignating subsection (j) as sub8 section (k); and 

9 (B) by inserting after subsection (i) the 

10 following new subsection: 

11 ‘‘(j) MULTIEMPLOYER PLAN INFORMATION MADE

12 AVAILABLE ON REQUEST.—

13 ‘‘(1) IN GENERAL.—Each administrator of a 

14 multiemployer plan shall furnish to any plan partici15 pant or beneficiary or any employer having an obli16 gation to contribute to the plan, who so requests in 

17 writing—

18 ‘‘(A) a copy of any actuary report received 

19 by the plan for any plan year which has been 

20 in receipt by the plan for at least 30 days, and 

21 ‘‘(B) a copy of any financial report pre22 pared for the plan by any plan investment man23 ager or advisor or other person who is a plan 

24 fiduciary which has been in receipt by the plan 

25 for at least 30 days. 
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1 ‘‘(2) COMPLIANCE.—Information required to be 

2 provided under paragraph (1) —

3 ‘‘(A) shall be provided to the requesting 

4 participant, beneficiary, or employer within 30 

5 days after the request in a form and manner 

6 prescribed in regulations of the Secretary, and 

7 ‘‘(B) may be provided in written, elec8 tronic, or other appropriate form to the extent 

9 such form is reasonably accessible to persons to 

10 whom the information is required to be pro11 vided. 

12 ‘‘(3) LIMITATIONS.—In no case shall a partici13 pant, beneficiary, or employer be entitled under this 

14 subsection to receive more than one copy of any re15 port described in paragraph (1) during any one 12-

16 month period. The administrator may make a rea17 sonable charge to cover copying, mailing, and other 

18 costs of furnishing copies of information pursuant to 

19 paragraph (1). The Secretary may by regulations 

20 prescribe the maximum amount which will constitute 

21 a reasonable charge under the preceding sentence.’’. 

22 (2) ENFORCEMENT.—Section 502(c)(4) of such 

23 Act (29 U.S.C. 1132(c)(4)) is amended by inserting 

24 ‘‘or 101(j)’’ after ‘‘101(f)(1)’’. 
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1 (3) REGULATIONS.—The Secretary shall pre2 scribe regulations under section 101(j)(2) of the 

3 Employee Retirement Income Security Act of 1974 

4 (added by paragraph (1) of this subsection) not later 

5 than 90 days after the date of the enactment of this 

6 Act. 

7 (e) NOTICE OF POTENTIAL WITHDRAWAL LIABILITY

8 TO MULTIEMPLOYER PLANS.—

9 (1) IN GENERAL.—Section 101 of such Act (as 

10 amended by subsection (e) of this section) is amend11 ed further—

12 (A) by redesignating subsection (k) as sub13 section (l); and 

14 (B) by inserting after subsection (j) the 

15 following new subsection: 

16 ‘‘(k) NOTICE OF POTENTIAL WITHDRAWAL LIABIL17 ITY.—

18 ‘‘(1) IN GENERAL.—The plan sponsor or ad19 ministrator shall furnish to any employer who has 

20 an obligation to contribute under the plan and who 

21 so requests in writing notice of—

22 ‘‘(A) the amount which would be the 

23 amount of such employer’s withdrawal liability 

24 under part 1 of subtitle E of title IV if such 
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•HR 2830 IH 

1 employer withdrew on the last day of the plan 

2 year preceding the date of the request, and 

3 ‘‘(B) the average increase, per participant 

4 under the plan, in accrued liabilities under the 

5 plan as of the end of such plan year to partici6 pants under such plan on whose behalf no em7 ployer contributions are payable (or their bene8 ficiaries), which would be attributable to such a 

9 withdrawal by such employer. 

10 For purposes of subparagraph (B), the term ‘em11 ployer contribution’ means, in connection with a par12 ticipant, a contribution made by an employer as an 

13 employer of such participant. 

14 ‘‘(2) COMPLIANCE.—Any notice required to be 

15 provided under paragraph (1)—

16 ‘‘(A) shall be provided to the requesting 

17 employer within 180 days after the request in 

18 a form and manner prescribed in regulations of 

19 the Secretary, and 

20 ‘‘(B) may be provided in written, elec21 tronic, or other appropriate form to the extent 

22 such form is reasonably accessible to employers 

23 to whom the information is required to be pro24 vided. 
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1 ‘‘(3) LIMITATIONS.—In no case shall an em2 ployer be entitled under this subsection to receive 

3 more than one notice described in paragraph (1) 

4 during any one 12-month period. The person re5 quired to provide such notice may make a reasonable 

6 charge to cover copying, mailing, and other costs of 

7 furnishing such notice pursuant to paragraph (1). 

8 The Secretary may by regulations prescribe the max9 imum amount which will constitute a reasonable 

10 charge under the preceding sentence.’’. 

11 (f) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to plan years beginning after De13 cember 31, 2005. 

14 SEC. 503. NOTICE TO PARTICIPANTS AND BENEFICIARIES 

15 OF SECTION 4010 FILINGS WITH THE PBGC. 

16 (a) IN GENERAL.—Section 4010 of the Employee Re17 tirement Income Security Act of 1974 (29 U.S.C. 1310) 

18 is amended by adding at the end the following new sub19 section: 

20 ‘‘(d) NOTICE TO PARTICIPANTS AND BENE21 FICIARIES.—

22 ‘‘(1) IN GENERAL.—Not later than 90 days 

23 after the submission by any person to the corpora24 tion of information or documentary material with re25 spect to any plan pursuant to subsection (a), such 
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1 person shall provide notice of such submission to 

2 each participant and beneficiary under the plan (and 

3 under all plans maintained by members of the con4 trolled group of each contributing sponsor of the 

5 plan). Such notice shall also set forth—

6 ‘‘(A) the number of single-employer plans 

7 covered by this title which are in at-risk status 

8 and are maintained by contributing sponsors of 

9 such plan (and by members of their controlled 

10 groups) with respect to which the funding tar11 get attainment percentage for the preceding 

12 plan year of each plan is less than 60 percent; 

13 ‘‘(B) the value of the assets of each of the 

14 plans described in subparagraph (A) for the 

15 plan year, the funding target for each of such 

16 plans for the plan year, and the funding target 

17 attainment percentage of each of such plans for 

18 the plan year; and 

19 ‘‘(C) taking into account all single-em20 ployer plans maintained by the contributing 

21 sponsor and the members of its controlled 

22 group as of the end of such plan year—

23 ‘‘(i) the aggregate total of the values 

24 of plan assets of such plans as of the end 

25 of such plan year, 
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1 ‘‘(ii) the aggregate total of the fund2 ing targets of such plans, as of the end of 

3 such plan year, taking into account only 

4 benefits to which participants and bene5 ficiaries have a nonforfeitable right, and 

6 ‘‘(iii) the aggregate funding targets 

7 attainment percentage with respect to the 

8 contributing sponsor for the preceding plan 

9 year. 

10 ‘‘(2) DEFINITIONS.—For purposes of this sub11 section—

12 ‘‘(A) VALUE OF PLAN ASSETS.—The term 

13 ‘value of plan assets’ means the value of plan 

14 assets, as determined under section 303(a)(2). 

15 ‘‘(B) FUNDING TARGET.—The term ‘fund16 ing target’ has the meaning provided under sec17 tion 303(d)(1). 

18 ‘‘(C) FUNDING TARGET ATTAINMENT PER19 CENTAGE.—The term ‘funding target attain20 ment percentage’ has the meaning provided in 

21 section 303(d)(2). 

22 ‘‘(D) AGGREGATE FUNDING TARGET AT23 TAINMENT PERCENTAGE.—The term ‘aggregate 

24 funding targets attainment percentage’ with re25 spect to a contributing sponsor for a plan year 
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1 is the percentage, taking into account all plans 

2 maintained by the contributing sponsor and the 

3 members of its controlled group as of the end 

4 of such plan year, which 

5 ‘‘(i) the aggregate total of the values 

6 of plan assets, as of the end of such plan 

7 year, of such plans, is of 

8 ‘‘(ii) the aggregate total of the fund9 ing targets of such plans, as of the end of 

10 such plan year, taking into account only 

11 benefits to which participants and bene12 ficiaries have a nonforfeitable right. 

13 ‘‘(E) AT-RISK STATUS.—The term ‘at-risk 

14 status’ has the meaning provided in section 

15 303(h)(3). 

16 ‘‘(3) COMPLIANCE.—

17 ‘‘(A) IN GENERAL.—Any notice required to 

18 be provided under paragraph (1) may be pro19 vided in written, electronic, or other appropriate 

20 form to the extent such form is reasonably ac21 cessible to individuals to whom the information 

22 is required to be provided. 

23 ‘‘(B) LIMITATIONS.—In no case shall a 

24 participant or beneficiary be entitled under this 

25 subsection to receive more than one notice de-
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1 scribed in paragraph (1) during any one 12-

2 month period. The person required to provide 

3 such notice may make a reasonable charge to 

4 cover copying, mailing, and other costs of fur5 nishing such notice pursuant to paragraph (1). 

6 The corporation may by regulations prescribe 

7 the maximum amount which will constitute a 

8 reasonable charge under the preceding sen9 tence.’’. 

10 (b) EFFECTIVE DATE.—The amendment made by 

11 this section shall apply with respect to plan years begin12 ning after 2006. 

13 TITLE VI—INVESTMENT ADVICE 

14 SEC. 601. AMENDMENTS TO EMPLOYEE RETIREMENT IN15 COME SECURITY ACT OF 1974 PROVIDING 

16 PROHIBITED TRANSACTION EXEMPTION FOR 

17 PROVISION OF INVESTMENT ADVICE. 

18 (a) EXEMPTION FROM PROHIBITED TRANS19 ACTIONS.—Section 408(b) of the Employee Retirement 

20 Income Security Act of 1974 (29 U.S.C. 1108(b)) is 

21 amended by adding at the end the following new para22 graph: 

23 ‘‘(14)(A) Any transaction described in subpara24 graph (B) in connection with the provision of invest-
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1 ment advice described in section 3(21)(A)(ii), in any 

2 case in which—

3 ‘‘(i) the investment of assets of the plan is 

4 subject to the direction of plan participants or 

5 beneficiaries, 

6 ‘‘(ii) the advice is provided to the plan or 

7 a participant or beneficiary of the plan by a fi8 duciary adviser in connection with any sale, ac9 quisition, or holding of a security or other prop10 erty for purposes of investment of plan assets, 

11 and 

12 ‘‘(iii) the requirements of subsection (g) 

13 are met in connection with the provision of the 

14 advice. 

15 ‘‘(B) The transactions described in this sub16 paragraph are the following: 

17 ‘‘(i) the provision of the advice to the plan, 

18 participant, or beneficiary; 

19 ‘‘(ii) the sale, acquisition, or holding of a 

20 security or other property (including any lend21 ing of money or other extension of credit associ22 ated with the sale, acquisition, or holding of a 

23 security or other property) pursuant to the ad24 vice; and 
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1 ‘‘(iii) the direct or indirect receipt of fees 

2 or other compensation by the fiduciary adviser 

3 or an affiliate thereof (or any employee, agent, 

4 or registered representative of the fiduciary ad5 viser or affiliate) in connection with the provi6 sion of the advice or in connection with a sale, 

7 acquisition, or holding of a security or other 

8 property pursuant to the advice.’’. 

9 (b) REQUIREMENTS.—Section 408 of such Act is 

10 amended further by adding at the end the following new 

11 subsection: 

12 ‘‘(g) REQUIREMENTS RELATING TO PROVISION OF

13 INVESTMENT ADVICE BY FIDUCIARY ADVISERS.—

14 ‘‘(1) IN GENERAL.—The requirements of this 

15 subsection are met in connection with the provision 

16 of investment advice referred to in section 

17 3(21)(A)(ii), provided to an employee benefit plan or 

18 a participant or beneficiary of an employee benefit 

19 plan by a fiduciary adviser with respect to the plan 

20 in connection with any sale, acquisition, or holding 

21 of a security or other property for purposes of in22 vestment of amounts held by the plan, if—

23 ‘‘(A) in the case of the initial provision of 

24 the advice with regard to the security or other 

25 property by the fiduciary adviser to the plan, 
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1 participant, or beneficiary, the fiduciary adviser 

2 provides to the recipient of the advice, at a time 

3 reasonably contemporaneous with the initial 

4 provision of the advice, a written notification 

5 (which may consist of notification by means of 

6 electronic communication)—

7 ‘‘(i) of all fees or other compensation 

8 relating to the advice that the fiduciary ad9 viser or any affiliate thereof is to receive 

10 (including compensation provided by any 

11 third party) in connection with the provi12 sion of the advice or in connection with the 

13 sale, acquisition, or holding of the security 

14 or other property, 

15 ‘‘(ii) of any material affiliation or con16 tractual relationship of the fiduciary ad17 viser or affiliates thereof in the security or 

18 other property, 

19 ‘‘(iii) of any limitation placed on the 

20 scope of the investment advice to be pro21 vided by the fiduciary adviser with respect 

22 to any such sale, acquisition, or holding of 

23 a security or other property, 

24 ‘‘(iv) of the types of services provided 

25 by the fiduciary adviser in connection with 
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1 the provision of investment advice by the 

2 fiduciary adviser, 

3 ‘‘(v) that the adviser is acting as a fi4 duciary of the plan in connection with the 

5 provision of the advice, and 

6 ‘‘(vi) that a recipient of the advice 

7 may separately arrange for the provision of 

8 advice by another adviser, that could have 

9 no material affiliation with and receive no 

10 fees or other compensation in connection 

11 with the security or other property, 

12 ‘‘(B) the fiduciary adviser provides appro13 priate disclosure, in connection with the sale, 

14 acquisition, or holding of the security or other 

15 property, in accordance with all applicable secu16 rities laws, 

17 ‘‘(C) the sale, acquisition, or holding oc18 curs solely at the direction of the recipient of 

19 the advice, 

20 ‘‘(D) the compensation received by the fi21 duciary adviser and affiliates thereof in connec22 tion with the sale, acquisition, or holding of the 

23 security or other property is reasonable, and 

24 ‘‘(E) the terms of the sale, acquisition, or 

25 holding of the security or other property are at 
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1 least as favorable to the plan as an arm’s 

2 length transaction would be. 

3 ‘‘(2) STANDARDS FOR PRESENTATION OF IN4 FORMATION.—

5 ‘‘(A) IN GENERAL.—The notification re6 quired to be provided to participants and bene7 ficiaries under paragraph (1)(A) shall be writ8 ten in a clear and conspicuous manner and in 

9 a manner calculated to be understood by the av10 erage plan participant and shall be sufficiently 

11 accurate and comprehensive to reasonably ap12 prise such participants and beneficiaries of the 

13 information required to be provided in the noti14 fication. 

15 ‘‘(B) MODEL FORM FOR DISCLOSURE OF

16 FEES AND OTHER COMPENSATION.—The Sec17 retary shall issue a model form for the disclo18 sure of fees and other compensation required in 

19 paragraph (1)(A)(i) which meets the require20 ments of subparagraph (A). 

21 ‘‘(3) EXEMPTION CONDITIONED ON MAKING RE22 QUIRED INFORMATION AVAILABLE ANNUALLY, ON

23 REQUEST, AND IN THE EVENT OF MATERIAL

24 CHANGE.—The requirements of paragraph (1)(A) 

25 shall be deemed not to have been met in connection 
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1 with the initial or any subsequent provision of advice 

2 described in paragraph (1) to the plan, participant, 

3 or beneficiary if, at any time during the provision of 

4 advisory services to the plan, participant, or bene5 ficiary, the fiduciary adviser fails to maintain the in6 formation described in clauses (i) through (iv) of 

7 subparagraph (A) in currently accurate form and in 

8 the manner described in paragraph (2) or fails—

9 ‘‘(A) to provide, without charge, such cur10 rently accurate information to the recipient of 

11 the advice no less than annually, 

12 ‘‘(B) to make such currently accurate in13 formation available, upon request and without 

14 charge, to the recipient of the advice, or 

15 ‘‘(C) in the event of a material change to 

16 the information described in clauses (i) through 

17 (iv) of paragraph (1)(A), to provide, without 

18 charge, such currently accurate information to 

19 the recipient of the advice at a time reasonably 

20 contemporaneous to the material change in in21 formation. 

22 ‘‘(4) MAINTENANCE FOR 6 YEARS OF EVIDENCE

23 OF COMPLIANCE.—A fiduciary adviser referred to in 

24 paragraph (1) who has provided advice referred to in 

25 such paragraph shall, for a period of not less than 
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1 6 years after the provision of the advice, maintain 

2 any records necessary for determining whether the 

3 requirements of the preceding provisions of this sub4 section and of subsection (b)(14) have been met. A 

5 transaction prohibited under section 406 shall not be 

6 considered to have occurred solely because the 

7 records are lost or destroyed prior to the end of the 

8 6-year period due to circumstances beyond the con9 trol of the fiduciary adviser. 

10 ‘‘(5) EXEMPTION FOR PLAN SPONSOR AND CER11 TAIN OTHER FIDUCIARIES.—

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), a plan sponsor or other person who 

14 is a fiduciary (other than a fiduciary adviser) 

15 shall not be treated as failing to meet the re16 quirements of this part solely by reason of the 

17 provision of investment advice referred to in 

18 section 3(21)(A)(ii) (or solely by reason of con19 tracting for or otherwise arranging for the pro20 vision of the advice), if—

21 ‘‘(i) the advice is provided by a fidu22 ciary adviser pursuant to an arrangement 

23 between the plan sponsor or other fidu24 ciary and the fiduciary adviser for the pro-
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1 vision by the fiduciary adviser of invest2 ment advice referred to in such section, 

3 ‘‘(ii) the terms of the arrangement re4 quire compliance by the fiduciary adviser 

5 with the requirements of this subsection, 

6 and 

7 ‘‘(iii) the terms of the arrangement 

8 include a written acknowledgment by the 

9 fiduciary adviser that the fiduciary adviser 

10 is a fiduciary of the plan with respect to 

11 the provision of the advice. 

12 ‘‘(B) CONTINUED DUTY OF PRUDENT SE13 LECTION OF ADVISER AND PERIODIC REVIEW.—

14 Nothing in subparagraph (A) shall be construed 

15 to exempt a plan sponsor or other person who 

16 is a fiduciary from any requirement of this part 

17 for the prudent selection and periodic review of 

18 a fiduciary adviser with whom the plan sponsor 

19 or other person enters into an arrangement for 

20 the provision of advice referred to in section 

21 3(21)(A)(ii). The plan sponsor or other person 

22 who is a fiduciary has no duty under this part 

23 to monitor the specific investment advice given 

24 by the fiduciary adviser to any particular recipi25 ent of the advice. 
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1 ‘‘(C) AVAILABILITY OF PLAN ASSETS FOR

2 PAYMENT FOR ADVICE.—Nothing in this part 

3 shall be construed to preclude the use of plan 

4 assets to pay for reasonable expenses in pro5 viding investment advice referred to in section 

6 3(21)(A)(ii). 

7 ‘‘(6) DEFINITIONS.—For purposes of this sub8 section and subsection (b)(14)—

9 ‘‘(A) FIDUCIARY ADVISER.—The term ‘fi10 duciary adviser’ means, with respect to a plan, 

11 a person who is a fiduciary of the plan by rea12 son of the provision of investment advice by the 

13 person to the plan or to a participant or bene14 ficiary and who is—

15 ‘‘(i) registered as an investment ad16 viser under the Investment Advisers Act of 

17 1940 (15 U.S.C. 80b–1 et seq.) or under 

18 the laws of the State in which the fiduciary 

19 maintains its principal office and place of 

20 business, 

21 ‘‘(ii) a bank or similar financial insti22 tution referred to in section 408(b)(4) or a 

23 savings association (as defined in section 

24 3(b)(1) of the Federal Deposit Insurance 

25 Act (12 U.S.C. 1813(b)(1))), but only if 
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1 the advice is provided through a trust de2 partment of the bank or similar financial 

3 institution or savings association which is 

4 subject to periodic examination and review 

5 by Federal or State banking authorities, 

6 ‘‘(iii) an insurance company qualified 

7 to do business under the laws of a State, 

8 ‘‘(iv) a person registered as a broker 

9 or dealer under the Securities Exchange 

10 Act of 1934 (15 U.S.C. 78a et seq.), 

11 ‘‘(v) an affiliate of a person described 

12 in any of clauses (i) through (iv), or 

13 ‘‘(vi) an employee, agent, or registered 

14 representative of a person described in any 

15 of clauses (i) through (v) who satisfies the 

16 requirements of applicable insurance, 

17 banking, and securities laws relating to the 

18 provision of the advice. 

19 ‘‘(B) AFFILIATE.—The term ‘affiliate’ of 

20 another entity means an affiliated person of the 

21 entity (as defined in section 2(a)(3) of the In22 vestment Company Act of 1940 (15 U.S.C. 

23 80a–2(a)(3))). 

24 ‘‘(C) REGISTERED REPRESENTATIVE.—

25 The term ‘registered representative’ of another 
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1 entity means a person described in section 

2 3(a)(18) of the Securities Exchange Act of 

3 1934 (15 U.S.C. 78c(a)(18)) (substituting the 

4 entity for the broker or dealer referred to in 

5 such section) or a person described in section 

6 202(a)(17) of the Investment Advisers Act of 

7 1940 (15 U.S.C. 80b–2(a)(17)) (substituting 

8 the entity for the investment adviser referred to 

9 in such section).’’. 

10 (c) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply with respect to advice referred to 

12 in section 3(21)(A)(ii) of the Employee Retirement In13 come Security Act of 1974 provided on or after January 

14 1, 2006. 

15 SEC. 602. AMENDMENTS TO INTERNAL REVENUE CODE OF 

16 1986 PROVIDING PROHIBITED TRANSACTION 

17 EXEMPTION FOR PROVISION OF INVESTMENT 

18 ADVICE. 

19 (a) EXEMPTION FROM PROHIBITED TRANS20 ACTIONS.—Subsection (d) of section 4975 of the Internal 

21 Revenue Code of 1986 (relating to exemptions from tax 

22 on prohibited transactions) is amended—

23 (1) in paragraph (14), by striking ‘‘or’’ at the 

24 end; 
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1 (2) in paragraph (15), by striking the period at 

2 the end and inserting ‘‘; or’’; and 

3 (3) by adding at the end the following new 

4 paragraph: 

5 ‘‘(16) any transaction described in subsection 

6 (f)(7)(A) in connection with the provision of invest7 ment advice described in subsection (e)(3)(B)(i), in 

8 any case in which—

9 ‘‘(A) the investment of assets of the plan 

10 is subject to the direction of plan participants 

11 or beneficiaries, 

12 ‘‘(B) the advice is provided to the plan or 

13 a participant or beneficiary of the plan by a fi14 duciary adviser in connection with any sale, ac15 quisition, or holding of a security or other prop16 erty for purposes of investment of plan assets, 

17 and 

18 ‘‘(C) the requirements of subsection 

19 (f)(7)(B) are met in connection with the provi20 sion of the advice.’’. 

21 (b) ALLOWED TRANSACTIONS AND REQUIRE22 MENTS.—Subsection (f) of such section 4975 (relating to 

23 other definitions and special rules) is amended by adding 

24 at the end the following new paragraph: 
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1 ‘‘(7) PROVISIONS RELATING TO INVESTMENT

2 ADVICE PROVIDED BY FIDUCIARY ADVISERS.—

3 ‘‘(A) TRANSACTIONS ALLOWABLE IN CON4 NECTION WITH INVESTMENT ADVICE PROVIDED

5 BY FIDUCIARY ADVISERS.—The transactions re6 ferred to in subsection (d)(16), in connection 

7 with the provision of investment advice by a fi8 duciary adviser, are the following: 

9 ‘‘(i) the provision of the advice to the 

10 plan, participant, or beneficiary; 

11 ‘‘(ii) the sale, acquisition, or holding 

12 of a security or other property (including 

13 any lending of money or other extension of 

14 credit associated with the sale, acquisition, 

15 or holding of a security or other property) 

16 pursuant to the advice; and 

17 ‘‘(iii) the direct or indirect receipt of 

18 fees or other compensation by the fiduciary 

19 adviser or an affiliate thereof (or any em20 ployee, agent, or registered representative 

21 of the fiduciary adviser or affiliate) in con22 nection with the provision of the advice or 

23 in connection with a sale, acquisition, or 

24 holding of a security or other property pur25 suant to the advice. 
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1 ‘‘(B) REQUIREMENTS RELATING TO PROVI2 SION OF INVESTMENT ADVICE BY FIDUCIARY

3 ADVISERS.—The requirements of this subpara4 graph (referred to in subsection (d)(16)(C)) are 

5 met in connection with the provision of invest6 ment advice referred to in subsection (e)(3)(B), 

7 provided to a plan or a participant or bene8 ficiary of a plan by a fiduciary adviser with re9 spect to the plan in connection with any sale, 

10 acquisition, or holding of a security or other 

11 property for purposes of investment of amounts 

12 held by the plan, if—

13 ‘‘(i) in the case of the initial provision 

14 of the advice with regard to the security or 

15 other property by the fiduciary adviser to 

16 the plan, participant, or beneficiary, the fi17 duciary adviser provides to the recipient of 

18 the advice, at a time reasonably contem19 poraneous with the initial provision of the 

20 advice, a written notification (which may 

21 consist of notification by means of elec22 tronic communication)—

23 ‘‘(I) of all fees or other com24 pensation relating to the advice that 

25 the fiduciary adviser or any affiliate 
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1 thereof is to receive (including com2 pensation provided by any third 

3 party) in connection with the provi4 sion of the advice or in connection 

5 with the sale, acquisition, or holding 

6 of the security or other property, 

7 ‘‘(II) of any material affiliation 

8 or contractual relationship of the fidu9 ciary adviser or affiliates thereof in 

10 the security or other property, 

11 ‘‘(III) of any limitation placed on 

12 the scope of the investment advice to 

13 be provided by the fiduciary adviser 

14 with respect to any such sale, acquisi15 tion, or holding of a security or other 

16 property, 

17 ‘‘(IV) of the types of services 

18 provided by the fiduciary adviser in 

19 connection with the provision of in20 vestment advice by the fiduciary ad21 viser, 

22 ‘‘(V) that the adviser is acting as 

23 a fiduciary of the plan in connection 

24 with the provision of the advice, and 
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1 ‘‘(VI) that a recipient of the ad2 vice may separately arrange for the 

3 provision of advice by another adviser, 

4 that could have no material affiliation 

5 with and receive no fees or other com6 pensation in connection with the secu7 rity or other property, 

8 ‘‘(ii) the fiduciary adviser provides ap9 propriate disclosure, in connection with the 

10 sale, acquisition, or holding of the security 

11 or other property, in accordance with all 

12 applicable securities laws, 

13 ‘‘(iii) the sale, acquisition, or holding 

14 occurs solely at the direction of the recipi15 ent of the advice, 

16 ‘‘(iv) the compensation received by the 

17 fiduciary adviser and affiliates thereof in 

18 connection with the sale, acquisition, or 

19 holding of the security or other property is 

20 reasonable, and 

21 ‘‘(v) the terms of the sale, acquisition, 

22 or holding of the security or other property 

23 are at least as favorable to the plan as an 

24 arm’s length transaction would be. 
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1 ‘‘(C) STANDARDS FOR PRESENTATION OF

2 INFORMATION.—The notification required to be 

3 provided to participants and beneficiaries under 

4 subparagraph (B)(i) shall be written in a clear 

5 and conspicuous manner and in a manner cal6 culated to be understood by the average plan 

7 participant and shall be sufficiently accurate 

8 and comprehensive to reasonably apprise such 

9 participants and beneficiaries of the information 

10 required to be provided in the notification. 

11 ‘‘(D) EXEMPTION CONDITIONED ON MAK12 ING REQUIRED INFORMATION AVAILABLE ANNU13 ALLY, ON REQUEST, AND IN THE EVENT OF MA14 TERIAL CHANGE.—The requirements of sub15 paragraph (B)(i) shall be deemed not to have 

16 been met in connection with the initial or any 

17 subsequent provision of advice described in sub18 paragraph (B) to the plan, participant, or bene19 ficiary if, at any time during the provision of 

20 advisory services to the plan, participant, or 

21 beneficiary, the fiduciary adviser fails to main22 tain the information described in subclauses (I) 

23 through (IV) of subparagraph (B)(i) in cur24 rently accurate form and in the manner re25 quired by subparagraph (C), or fails—
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1 ‘‘(i) to provide, without charge, such 

2 currently accurate information to the re3 cipient of the advice no less than annually, 

4 ‘‘(ii) to make such currently accurate 

5 information available, upon request and 

6 without charge, to the recipient of the ad7 vice, or 

8 ‘‘(iii) in the event of a material 

9 change to the information described in 

10 subclauses (I) through (IV) of subpara11 graph (B)(i), to provide, without charge, 

12 such currently accurate information to the 

13 recipient of the advice at a time reasonably 

14 contemporaneous to the material change in 

15 information. 

16 ‘‘(E) MAINTENANCE FOR 6 YEARS OF EVI17 DENCE OF COMPLIANCE.—A fiduciary adviser 

18 referred to in subparagraph (B) who has pro19 vided advice referred to in such subparagraph 

20 shall, for a period of not less than 6 years after 

21 the provision of the advice, maintain any 

22 records necessary for determining whether the 

23 requirements of the preceding provisions of this 

24 paragraph and of subsection (d)(16) have been 

25 met. A transaction prohibited under subsection 
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1 (c)(1) shall not be considered to have occurred 

2 solely because the records are lost or destroyed 

3 prior to the end of the 6-year period due to cir4 cumstances beyond the control of the fiduciary 

5 adviser. 

6 ‘‘(F) EXEMPTION FOR PLAN SPONSOR AND

7 CERTAIN OTHER FIDUCIARIES.—A plan sponsor 

8 or other person who is a fiduciary (other than 

9 a fiduciary adviser) shall not be treated as fail10 ing to meet the requirements of this section 

11 solely by reason of the provision of investment 

12 advice referred to in subsection (e)(3)(B) (or 

13 solely by reason of contracting for or otherwise 

14 arranging for the provision of the advice), if—

15 ‘‘(i) the advice is provided by a fidu16 ciary adviser pursuant to an arrangement 

17 between the plan sponsor or other fidu18 ciary and the fiduciary adviser for the pro19 vision by the fiduciary adviser of invest20 ment advice referred to in such section, 

21 ‘‘(ii) the terms of the arrangement re22 quire compliance by the fiduciary adviser 

23 with the requirements of this paragraph, 

24 ‘‘(iii) the terms of the arrangement 

25 include a written acknowledgment by the 
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1 fiduciary adviser that the fiduciary adviser 

2 is a fiduciary of the plan with respect to 

3 the provision of the advice, and 

4 ‘‘(iv) the requirements of part 4 of 

5 subtitle B of title I of the Employee Re6 tirement Income Security Act of 1974 are 

7 met in connection with the provision of 

8 such advice. 

9 ‘‘(G) DEFINITIONS.—For purposes of this 

10 paragraph and subsection (d)(16)—

11 ‘‘(i) FIDUCIARY ADVISER.—The term 

12 ‘fiduciary adviser’ means, with respect to a 

13 plan, a person who is a fiduciary of the 

14 plan by reason of the provision of invest15 ment advice by the person to the plan or 

16 to a participant or beneficiary and who 

17 is—

18 ‘‘(I) registered as an investment 

19 adviser under the Investment Advisers 

20 Act of 1940 (15 U.S.C. 80b–1 et seq.) 

21 or under the laws of the State in 

22 which the fiduciary maintains its prin23 cipal office and place of business, 

24 ‘‘(II) a bank or similar financial 

25 institution referred to in subsection 
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1 (d)(4) or a savings association (as de2 fined in section 3(b)(1) of the Federal 

3 Deposit Insurance Act (12 U.S.C. 

4 1813(b)(1))), but only if the advice is 

5 provided through a trust department 

6 of the bank or similar financial insti7 tution or savings association which is 

8 subject to periodic examination and 

9 review by Federal or State banking 

10 authorities, 

11 ‘‘(III) an insurance company 

12 qualified to do business under the 

13 laws of a State, 

14 ‘‘(IV) a person registered as a 

15 broker or dealer under the Securities 

16 Exchange Act of 1934 (15 U.S.C. 78a 

17 et seq.), 

18 ‘‘(V) an affiliate of a person de19 scribed in any of subclauses (I) 

20 through (IV), or 

21 ‘‘(VI) an employee, agent, or reg22 istered representative of a person de23 scribed in any of subclauses (I) 

24 through (V) who satisfies the require25 ments of applicable insurance, bank-
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1 ing, and securities laws relating to the 

2 provision of the advice. 

3 ‘‘(ii) AFFILIATE.—The term ‘affiliate’ 

4 of another entity means an affiliated per5 son of the entity (as defined in section 

6 2(a)(3) of the Investment Company Act of 

7 1940 (15 U.S.C. 80a–2(a)(3))). 

8 ‘‘(iii) REGISTERED REPRESENTA9 TIVE.—The term ‘registered representa10 tive’ of another entity means a person de11 scribed in section 3(a)(18) of the Securi12 ties Exchange Act of 1934 (15 U.S.C. 

13 78c(a)(18)) (substituting the entity for the 

14 broker or dealer referred to in such sec15 tion) or a person described in section 

16 202(a)(17) of the Investment Advisers Act 

17 of 1940 (15 U.S.C. 80b–2(a)(17)) (sub18 stituting the entity for the investment ad19 viser referred to in such section).’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply with respect to advice referred to 

22 in section 4975(c)(3)(B) of the Internal Revenue Code of 

23 1986 provided on or after January 1, 2006. 
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1 TITLE VII—DEDUCTION 

2 LIMITATIONS 

3 SEC. 701. INCREASE IN DEDUCTION LIMITS. 

4 (a) INCREASE IN DEDUCTION LIMIT FOR SINGLE5 EMPLOYER PLANS.—Section 404 of the Internal Revenue 

6 Code of 1986 (relating to deduction for contributions of 

7 an employer to an employees’ trust or annuity plan and 

8 compensation under a deferred payment plan) is amend9 ed—

10 (1) in subsection (a)(1)(A), by inserting ‘‘in the 

11 case of a defined benefit plan other than a multiem12 ployer plan, in an amount determined under sub13 section (o), and in the case of any other plan’’ after 

14 ‘‘section 501(a),’’, and 

15 (2) by inserting at the end the following new 

16 subsection: 

17 ‘‘(o) DEDUCTION LIMIT FOR SINGLE-EMPLOYER

18 PLANS.—For purposes of subsection (a)(1)(A)—

19 ‘‘(1) IN GENERAL.—In the case of a defined 

20 benefit plan to which subsection (a)(1)(A) applies 

21 (other than a multiemployer plan), the amount de22 termined under this subsection for any taxable year 

23 shall be equal to the amount determined under para24 graph (2) with respect to each plan year ending with 

25 or within the taxable year. 
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1 ‘‘(2) DETERMINATION OF AMOUNT.—The 

2 amount determined under this paragraph for any 

3 plan year shall be equal to the excess (if any) of—

4 ‘‘(A) the greater of—

5 ‘‘(i) the sum of—

6 ‘‘(I) 150 percent of the funding 

7 target applicable to the plan for such 

8 plan year, determined under section 

9 430(e), plus 

10 ‘‘(II) the target normal cost ap11 plicable to the plan for such plan 

12 year, determined under section 

13 430(b), or 

14 ‘‘(ii) in the case of a plan that is not 

15 in an at-risk status (as determined under 

16 430(g)), the sum of—

17 ‘‘(I) the funding target which 

18 would be applicable to the plan for 

19 such plan year if such plan were in an 

20 at-risk status, determined under sec21 tion 430(e) (with regard to section 

22 430(g)), plus 

23 ‘‘(II) the target normal cost 

24 which would be applicable to the plan 

25 for such plan year if such plan were 
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1 in an at-risk status, determined under 

2 section 430(b) (with regard to section 

3 430(g)), over 

4 ‘‘(B) the value of the plan assets (deter5 mined under section 430(e) as of the valuation 

6 date of the plan). 

7 ‘‘(3) SPECIAL RULE FOR TERMINATING

8 PLANS.—In the case of a plan which, subject to sec9 tion 4041 of the Employee Retirement Income Secu10 rity Act of 1974, terminates during the plan year, 

11 the amount determined under paragraph (2) shall 

12 not be less than the amount required to make the 

13 plan sufficient for benefit liabilities (within the 

14 meaning of section 4041(d) of such Act). 

15 ‘‘(4) DEFINITIONS.—Any term used in this sub16 section which is also used in section 430 shall have 

17 the same meaning given such term by section 430.’’. 

18 (b) INCREASE IN DEDUCTION LIMIT FOR MULTIEM19 PLOYER PLANS.—Section 404(a)(1)(D) of such Code is 

20 amended to read as follows: 

21 ‘‘(D) AMOUNT DETERMINED ON BASIS OF

22 UNFUNDED CURRENT LIABILITY.—

23 ‘‘(i) IN GENERAL.—In the case of a 

24 defined benefit plan which is a multiem25 ployer plan, except as provided in regula-
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1 tions, the maximum amount deductible 

2 under the limitations of this paragraph 

3 shall not be less than the unfunded current 

4 liability of the plan. 

5 ‘‘(ii) UNFUNDED CURRENT LIABIL6 ITY.—For purposes of clause (i), the term 

7 ‘unfunded current liability’ means the ex8 cess (if any) of—

9 ‘‘(I) 140 percent of the current 

10 liability of the plan determined under 

11 section 431(c)(6)(C), over 

12 ‘‘(II) the value of the plan’s as13 sets determined under section 

14 431(c)(2).’’. 

15 (c) TECHNICAL AND CONFORMING AMENDMENTS.—

16 (1) The last sentence of section 404(a)(1)(A) of 

17 such Code is amended by striking ‘‘section 412’’ 

18 each place it appears and inserting ‘‘section 431’’. 

19 (2) Section 404(a)(1)(B) of such Code is 

20 amended—

21 (A) by striking ‘‘In the case of a plan’’ and 

22 inserting ‘‘In the case of a multiemployer plan’’, 

23 (B) by striking ‘‘section 412(c)(7)’’ each 

24 place it appears and inserting ‘‘section 

25 431(c)(6)’’, 
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1 (C) by striking ‘‘section 412(c)(7)(B)’’ and 

2 inserting ‘‘section 431(c)(6)(A)(ii)’’, 

3 (D) by striking ‘‘section 412(c)(7)(A)’’ and 

4 inserting ‘‘section 431(c)(6)(A)(i)’’, and 

5 (E) by striking ‘‘section 412’’ and insert6 ing ‘‘section 431’’. 

7 (3) Section 404(a)(1) of such Code is amended 

8 by striking subparagraph (F). 

9 (4) Section 404(a)(7) of such Code is amend10 ed—

11 (A) in subparagraph (A)(ii), by striking 

12 ‘‘for the plan year’’ and all that follows and in13 serting ‘‘which are multiemployer plans for the 

14 plan year which ends with or within such tax15 able year (or for any prior plan year) and the 

16 maximum amount of employer contributions al17 lowable under subsection (o) with respect to any 

18 such defined benefit plans which are not multi19 employer plans for the plan year.’’, 

20 (B) by striking ‘‘section 412(l)’’ in the last 

21 sentence of subparagraph (A) and inserting 

22 ‘‘paragraph (1)(D)(ii)’’, and 

23 (C) by striking subparagraph (D) and in24 serting: 
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1 ‘‘(D) INSURANCE CONTRACT PLANS.—For 

2 purposes of this paragraph, a plan described in 

3 section 412(d)(3) shall be treated as a defined 

4 benefit plan.’’. 

5 (5) Section 404A(g)(3)(A) of such Code is 

6 amended by striking ‘‘paragraphs (3) and (7) of sec7 tion 412(c)’’ and inserting ‘‘sections 430(d)(1) and 

8 431(c) (3) and (6)’’. 

9 (d) EFFECTIVE DATE.—The amendments made by 

10 this section shall apply to contributions for taxable years 

11 beginning after 2005. 

12 SEC. 702. UPDATING DEDUCTION RULES FOR COMBINA13 TION OF PLANS. 

14 (a) IN GENERAL.—Subparagraph (C) of section 

15 404(a)(7) (relating to limitation on deductions where com16 bination of defined contribution plan and defined benefit 

17 plan) is amended by adding after clause (ii) the following 

18 new clause: 

19 ‘‘(iii) LIMITATION.—In the case of 

20 employer contributions to 1 or more de21 fined contribution plans, this paragraph 

22 shall only apply to the extent that such 

23 contributions exceed 6 percent of the com24 pensation otherwise paid or accrued during 

25 the taxable year to the beneficiaries under 
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1 such plans. For purposes of this clause, 

2 amounts carried over from preceding tax3 able years under subparagraph (B) shall 

4 be treated as employer contributions to 1 

5 or more defined contributions to the extent 

6 attributable to employer contributions to 

7 such plans in such preceding taxable 

8 years.’’. 

9 (b) CONFORMING AMENDMENTS.—Subparagraph (A) 

10 of section 4972(c)(6) of such Code (relating to nondeduct11 ible contributions) is amended to read as follows: 

12 ‘‘(A) so much of the contributions to 1 or 

13 more defined contribution plans which are not 

14 deductible when contributed solely because of 

15 section 404(a)(7) as does not exceed the 

16 amount of contributions described in section 

17 401(m)(4)(A), or’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to contributions for taxable years 

20 beginning after December 31, 2005.

Æ