Page 425 TITLE 29—LABOR § 1085a

AMENDMENTS

1989—Subsec. (b)(2)(A). Pub. L. 101–239, §7894(d)(3),

substituted a comma for period at end.

Subsec. (b)(2)(C). Pub. L. 101–239, §7891(a)(1), substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal

Revenue Code of 1954’’, which for purposes of codification was translated as ‘‘title 26’’ thus requiring no

change in text.

1987—Subsec. (a). Pub. L. 100–203 amended last sentence generally. Prior to amendment, last sentence

read as follows: ‘‘The interest rate applicable under any

arrangement entered into by the Secretary in connection with an extension granted under this subsection

shall be the rate determined under section 6621(b) of

title 26.’’

1986—Subsec. (a). Pub. L. 99–272, §11015(b)(1)(B), inserted provision that the interest rate applicable under

any arrangement entered into by the Secretary in connection with an extension granted under this subsection be the rate determined under section 6621(b) of

title 26.

Subsec. (c). Pub. L. 99–272, §11016(c)(3), added subsec.

(c).

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by section 7891(a)(1) of Pub. L. 101–239 effective, except as otherwise provided, as if included in

the provision of the Tax Reform Act of 1986, Pub. L.

99–514, to which such amendment relates, see section

7891(f) of Pub. L. 101–239, set out as a note under section

1002 of this title.

Amendment by section 7894(d)(3) of Pub. L. 101–239 effective, except as otherwise provided, as if originally

included in the provision of the Employee Retirement

Income Security Act of 1974, Pub. L. 93–406, to which

such amendment relates, see section 7894(i) of Pub. L.

101–239, set out as a note under section 1002 of this title.

EFFECTIVE DATE OF 1987 AMENDMENT

Amendment by Pub. L. 100–203 applicable in the case

of any application submitted after Dec. 17, 1987, and

any waiver granted pursuant to such an application,

see section 9306(f) of Pub. L. 100–203, set out as a note

under section 412 of Title 26, Internal Revenue Code.

EFFECTIVE DATE OF 1986 AMENDMENT

Amendment by Pub. L. 99–272 effective Jan. 1, 1986,

with certain exceptions, see section 11019 of Pub. L.

99–272, set out as a note under section 1341 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1057, 1085a, 1143,

1362 of this title; title 26 section 412.

§ 1085. Alternative minimum funding standard

(a) Maintenance of account

A plan which uses a funding method that requires contributions in all years not less than

those required under the entry age normal funding method may maintain an alternative minimum funding standard account for any plan

year. Such account shall be credited and

charged solely as provided in this section.

(b) Operation of account

For a plan year the alternative minimum

funding standard accounts shall be—

(1) charged with the sum of—

(A) the lesser of normal cost under the

funding method used under the plan or normal cost determined under the unit credit

method,

(B) the excess, if any, of the present value

of accrued benefits under the plan over the

fair market value of the assets, and

(C) an amount equal to the excess, if any,

of credits to the alternative minimum funding standard account for all prior plan years

over charges to such account for all such

years, and

(2) credited with the amount considered contributed by the employer to or under the plan

(within the meaning of section 1082(c)(10) of

this title) for the plan year.

(c) Interest

The alternative minimum funding standard

account (and items therein) shall be charged or

credited with interest in the manner provided

under section 1082(b)(5) of this title with respect

to the funding standard account.

(Pub. L. 93–406, title I, §305, Sept. 2, 1974, 88 Stat.

873.)

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1082 of this title.

§ 1085a. Security for waivers of minimum funding standard and extensions of amortization

period

(a) Security may be required

(1) In general

Except as provided in subsection (c) of this

section, the Secretary of the Treasury may require an employer maintaining a defined benefit plan which is a single-employer plan (within the meaning of section 1301(a)(15) of this

title) to provide security to such plan as a

condition for granting or modifying a waiver

under section 1083 of this title or an extension

under section 1084 of this title.

(2) Special rules

Any security provided under paragraph (1)

may be perfected and enforced only by the

Pension Benefit Guaranty Corporation or, at

the direction of the Corporation, by a contributing sponsor (within the meaning of section

1301(a)(13) of this title) or a member of such

sponsor’s controlled group (within the meaning of section 1301(a)(14) of this title).

(b) Consultation with the Pension Benefit Guaranty Corporation

Except as provided in subsection (c) of this

section, the Secretary of the Treasury shall, before granting or modifying a waiver under section 1083 of this title or an extension under section 1084 of this title with respect to a plan described in subsection (a)(1) of this section—

(1) provide the Pension Benefit Guaranty

Corporation with—

(A) notice of the completed application for

any waiver, extension, or modification, and

(B) an opportunity to comment on such application within 30 days after receipt of such

notice, and

(2) consider—

(A) any comments of the Corporation

under paragraph (1)(B), and

(B) any views of any employee organization representing participants in the plan

which are submitted in writing to the Secretary of the Treasury in connection with

such application.
§ 1085b TITLE 29—LABOR Page 426

Information provided to the corporation under

this subsection shall be considered tax return

information and subject to the safeguarding and

reporting requirements of section 6103(p) of title

26.

(c) Exception for certain waivers and extensions

(1) In general

The preceding provisions of this section

shall not apply to any plan with respect to

which the sum of—

(A) the outstanding balance of the accumulated funding deficiencies (within the

meaning of section 1082(a)(2) of this title and

section 412(a) of title 26) of the plan,

(B) the outstanding balance of the amount

of waived funding deficiencies of the plan

waived under section 1083 of this title or section 412(d) of title 26, and

(C) the outstanding balance of the amount

of decreases in the minimum funding standard allowed under section 1084 of this title or

section 412(e) of title 26,

is less than $1,000,000.

(2) Accumulated funding deficiencies

For purposes of paragraph (1)(A), accumulated funding deficiencies shall include any increase in such amount which would result if

all applications for waivers of the minimum

funding standard under section 1083 of this

title or section 412(d) of title 26 and for extensions of the amortization period under section

1084 of this title or section 412(e) of title 26

which are pending with respect to such plan

were denied.

(Pub. L. 93–406, title I, §306, as added Pub. L.

99–272, title XI, §11015(a)(1)(A)(ii), Apr. 7, 1986,

100 Stat. 264; amended Pub. L. 100–203, title IX,

§9306(e)(2), Dec. 22, 1987, 101 Stat. 1330–355; Pub.

L. 101–239, title VII, §7891(a)(1), Dec. 19, 1989, 103

Stat. 2445.)

PRIOR PROVISIONS

A prior section 306 of Pub. L. 93–406 was renumbered

section 308 and is classified to section 1086 of this title.

AMENDMENTS

1989—Subsecs. (b), (c). Pub. L. 101–239 substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue

Code of 1954’’, which for purposes of codification was

translated as ‘‘title 26’’ thus requiring no change in

text.

1987—Subsec. (c)(1). Pub. L. 100–203, §9306(e)(2), substituted ‘‘$1,000,000’’ for ‘‘$2,000,000’’.

EFFECTIVE DATE OF 1989 AMENDMENT

Amendment by Pub. L. 101–239 effective, except as

otherwise provided, as if included in the provision of

the Tax Reform Act of 1986, Pub. L. 99–514, to which

such amendment relates, see section 7891(f) of Pub. L.

101–239, set out as a note under section 1002 of this title.

EFFECTIVE DATE OF 1987 AMENDMENT

Amendment by Pub. L. 100–203 applicable in the case

of any application submitted after Dec. 17, 1987, and

any waiver granted pursuant to such an application,

see section 9306(f) of Pub. L. 100–203, set out as a note

under section 412 of Title 26, Internal Revenue Code.

EFFECTIVE DATE

Section 11015(a)(3) of Pub. L. 99–272 provided that:

‘‘The amendments made by this subsection [enacting

this section and amending section 1061 of this title and

section 412 of Title 26, Internal Revenue Code] shall

apply with respect to applications for waivers, extensions, and modifications filed on or after the date of the

enactment of this Act [Apr. 7, 1986].’’

§ 1085b. Security required upon adoption of plan

amendment resulting in significant underfunding

(a) In general

If—

(1) a defined benefit plan (other than a

multiemployer plan) to which the requirements of section 1082 of this title apply adopts

an amendment an effect of which is to increase current liability under the plan for a

plan year, and

(2) the funded current liability percentage of

the plan for the plan year in which the amendment takes effect is less than 60 percent, including the amount of the unfunded current liability under the plan attributable to the plan

amendment,

the contributing sponsor (or any member of the

controlled group of the contributing sponsor)

shall provide security to the plan.

(b) Form of security

The security required under subsection (a) of

this section shall consist of—

(1) a bond issued by a corporate surety company that is an acceptable surety for purposes

of section 1112 of this title,

(2) cash, or United States obligations which

mature in 3 years or less, held in escrow by a

bank or similar financial institution, or

(3) such other form of security as is satisfactory to the Secretary of the Treasury and the

parties involved.

(c) Amount of security

The security shall be in an amount equal to

the excess of—

(1) the lesser of—

(A) the amount of additional plan assets

which would be necessary to increase the

funded current liability percentage under

the plan to 60 percent, including the amount

of the unfunded current liability under the

plan attributable to the plan amendment, or

(B) the amount of the increase in current

liability under the plan attributable to the

plan amendment and any other plan amendments adopted after December 22, 1987, and

before such plan amendment, over

(2) $10,000,000.

(d) Release of security

The security shall be released (and any

amounts thereunder shall be refunded together

with any interest accrued thereon) at the end of

the first plan year which ends after the provision of the security and for which the funded

current liability percentage under the plan is

not less than 60 percent. The Secretary of the

Treasury may prescribe regulations for partial

releases of the security by reason of increases in

the funded current liability percentage.

(e) Notice

A contributing sponsor which is required to

provide security under subsection (a) of this sec-