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[113th Congress Public Law 97]
[From the U.S. Government Publishing Office]

[[Page 128 STAT. 1101]]

Public Law 113-97
113th Congress

                                 An Act

 
  To amend the Employee Retirement Income Security Act of 1974 and the 
   Internal Revenue Code of 1986 to provide for cooperative and small 
 employer charity pension plans. <<NOTE: Apr. 7, 2014 -  [H.R. 4275]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Cooperative and 
Small Employer Charity Pension Flexibility Act.>> 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) <<NOTE: 29 USC 1001 note.>>  Short Title.--This Act may be cited 
as the ``Cooperative and Small Employer Charity Pension Flexibility 
Act''.

    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Congressional findings and declarations of policy.
Sec. 3. Effective date.

 TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 
                          AND OTHER PROVISIONS

Sec. 101. Definition of cooperative and small employer charity pension 
           plans.
Sec. 102. Funding rules applicable to cooperative and small employer 
           charity pension plans.
Sec. 103. Elections.
Sec. 104. Transparency.
Sec. 105. Sponsor education and assistance.

          TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

Sec. 201. Definition of cooperative and small employer charity pension 
           plans.
Sec. 202. Funding rules applicable to cooperative and small employer 
           charity pension plans.
Sec. 203. Election not to be treated as a CSEC plan.

SEC. 2. <<NOTE: 29 USC 1001 note.>> CONGRESSIONAL FINDINGS AND 
                    DECLARATIONS OF POLICY.

    Congress finds as follows:
            (1) Defined benefit pension plans are a cost-effective way 
        for cooperative associations and charities to provide their 
        employees with economic security in retirement.
            (2) Many cooperative associations and charitable 
        organizations are only able to provide their employees with 
        defined benefit pension plans because those organizations are 
        able to pool their resources using the multiple employer plan 
        structure.
            (3) The pension funding rules should encourage cooperative 
        associations and charities to continue to provide their 
        employees with pension benefits.
SEC. <<NOTE: 29 USC 401 note.>> 3. EFFECTIVE DATE.

    Unless <<NOTE: Applicability.>>  otherwise specified in this Act, 
the provisions of this Act shall apply to years beginning after December 
31, 2013.

[[Page 128 STAT. 1102]]

 TITLE I--AMENDMENTS TO EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974 
                          AND OTHER PROVISIONS

SEC. 101. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY 
                        PENSION PLANS.

    Section 210 of the Employee Retirement Income Security Act of 1974 
(29 U.S.C. 1060) is amended by adding at the end the following new 
subsection:
    ``(f) Cooperative and Small Employer Charity Pension Plans.--
            ``(1) In general.--For purposes of this title, except as 
        provided in this subsection, a CSEC plan is an employee pension 
        benefit plan (other than a multiemployer plan) that is a defined 
        benefit plan--
                    ``(A) <<NOTE: Applicability.>>  to which section 104 
                of the Pension Protection Act of 2006 applies, without 
                regard to--
                          ``(i) section 104(a)(2) of such Act;
                          ``(ii) the amendments to such section 104 by 
                      section 202(b) of the Preservation of Access to 
                      Care for Medicare Beneficiaries and Pension Relief 
                      Act of 2010; and
                          ``(iii) paragraph (3)(B); or
                    ``(B) that, as of June 25, 2010, was maintained by 
                more than one employer and all of the employers were 
                organizations described in section 501(c)(3) of the 
                Internal Revenue Code of 1986.
            ``(2) Aggregation.--All employers that are treated as a 
        single employer under subsection (b) or (c) of section 414 of 
        the Internal Revenue Code of 1986 shall be treated as a single 
        employer for purposes of determining if a plan was maintained by 
        more than one employer under paragraph (1)(B).''.
SEC. 102. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL 
                        EMPLOYER CHARITY PENSION PLANS.

    (a) In General.--Part 3 of title I of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1081 et seq.) is amended by adding at 
the end the following new section:
``SEC. <<NOTE: 29 USC 1085a.>> 306. MINIMUM FUNDING STANDARDS.

    ``(a) General <<NOTE: Definition.>>  Rule.--For purposes of section 
302, the term `accumulated funding deficiency' for a CSEC plan means the 
excess of the total charges to the funding standard account for all plan 
years (beginning with the first plan year to which section 302 applies) 
over the total credits to such account for such years or, if less, the 
excess of the total charges to the alternative minimum funding standard 
account for such plan years over the total credits to such account for 
such years.

    ``(b) Funding Standard Account.--
            ``(1) Account required.--Each plan to which this section 
        applies shall establish and maintain a funding standard account. 
        Such account shall be credited and charged solely as provided in 
        this section.
            ``(2) Charges to account.--For a plan year, the funding 
        standard account shall be charged with the sum of--
                    ``(A) the normal cost of the plan for the plan year,

[[Page 128 STAT. 1103]]

                    ``(B) the amounts necessary to amortize in equal 
                annual installments (until fully amortized)--
                          ``(i) in the case of a plan in existence on 
                      January 1, 1974, the unfunded past service 
                      liability under the plan on the first day of the 
                      first plan year to which section 302 applies, over 
                      a period of 40 plan years,
                          ``(ii) in the case of a plan which comes into 
                      existence after January 1, 1974, but before the 
                      first day of the first plan year beginning after 
                      December 31, 2013, the unfunded past service 
                      liability under the plan on the first day of the 
                      first plan year to which section 302 applies, over 
                      a period of 30 plan years,
                          ``(iii) separately, with respect to each plan 
                      year, the net increase (if any) in unfunded past 
                      service liability under the plan arising from plan 
                      amendments adopted in such year, over a period of 
                      15 plan years,
                          ``(iv) separately, with respect to each plan 
                      year, the net experience loss (if any) under the 
                      plan, over a period of 5 plan years, and
                          ``(v) separately, with respect to each plan 
                      year, the net loss (if any) resulting from changes 
                      in actuarial assumptions used under the plan, over 
                      a period of 10 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                302(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 5 
                plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 5 plan years any amount credited to the 
                funding standard account under paragraph (3)(D), and
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be made under the plan but for the 
                provisions of section 302(c)(7)(A)(i)(I) (as in effect 
                on the day before the enactment of the Pension 
                Protection Act of 2006).
            ``(3) Credits to account.--For a plan year, the funding 
        standard account shall be credited with the sum of--
                    ``(A) the amount considered contributed by the 
                employer to or under the plan for the plan year,
                    ``(B) the amount necessary to amortize in equal 
                annual installments (until fully amortized)--
                          ``(i) separately, with respect to each plan 
                      year, the net decrease (if any) in unfunded past 
                      service liability under the plan arising from plan 
                      amendments adopted in such year, over a period of 
                      15 plan years,
                          ``(ii) separately, with respect to each plan 
                      year, the net experience gain (if any) under the 
                      plan, over a period of 5 plan years, and
                          ``(iii) separately, with respect to each plan 
                      year, the net gain (if any) resulting from changes 
                      in actuarial assumptions used under the plan, over 
                      a period of 10 plan years,
                    ``(C) the amount of the waived funding deficiency 
                (within the meaning of section 302(c)(3)) for the plan 
                year, and

[[Page 128 STAT. 1104]]

                    ``(D) in the case of a plan year for which the 
                accumulated funding deficiency is determined under the 
                funding standard account if such plan year follows a 
                plan year for which such deficiency was determined under 
                the alternative minimum funding standard, the excess (if 
                any) of any debit balance in the funding standard 
                account (determined without regard to this subparagraph) 
                over any debit balance in the alternative minimum 
                funding standard account.
            ``(4) Combining and offsetting amounts to be amortized.--
        Under <<NOTE: Regulations.>>  regulations prescribed by the 
        Secretary of the Treasury, amounts required to be amortized 
        under paragraph (2) or paragraph (3), as the case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts required to be 
                amortized under the other such paragraph, with the 
                resulting amount to be amortized over a period 
                determined on the basis of the remaining amortization 
                periods for all items entering into whichever of the two 
                amounts being offset is the greater.
            ``(5) Interest.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the funding standard account (and 
                items therein) shall be charged or credited (as 
                determined under regulations prescribed by the Secretary 
                of the Treasury) with interest at the appropriate rate 
                consistent with the rate or rates of interest used under 
                the plan to determine costs.
                    ``(B) Exception.--The interest rate used for 
                purposes of computing the amortization charge described 
                in subsection (b)(2)(C) or for purposes of any 
                arrangement under subsection (d) for any plan year shall 
                be the greater of--
                          ``(i) 150 percent of the Federal mid-term rate 
                      (as in effect under section 1274 of the Internal 
                      Revenue Code of 1986 for the 1st month of such 
                      plan year), or
                          ``(ii) the rate of interest determined under 
                      subparagraph (A).
            ``(6) Amortization schedules in effect.--Amortization 
        schedules for amounts described in paragraphs (2) and (3) that 
        are in effect as of the last day of the last plan year beginning 
        before January 1, 2014, by reason of section 104 of the Pension 
        Protection Act of 2006 shall remain in effect pursuant to their 
        terms and this section, except that such amounts shall not be 
        amortized again under this section.

    ``(c) Special Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this section, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) <<NOTE: Regulations.>>  In general.--For 
                purposes of this section, the value of the plan's assets 
                shall be determined on the basis of any reasonable 
                actuarial method of valuation which

[[Page 128 STAT. 1105]]

                takes into account fair market value and which is 
                permitted under regulations prescribed by the Secretary 
                of the Treasury.
                    ``(B) Dedicated bond portfolio.--The Secretary of 
                the Treasury may by regulations provide that the value 
                of any dedicated bond portfolio of a plan shall be 
                determined by using the interest rate under section 
                302(b)(5) (as in effect on the day before the enactment 
                of the Pension Protection Act of 2006).
            ``(3) <<NOTE: Determination.>>  Actuarial assumptions must 
        be reasonable.--For purposes of this section, all costs, 
        liabilities, rates of interest, and other factors under the plan 
        shall be determined on the basis of actuarial assumptions and 
        methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(4) Treatment of certain changes as experience gain or 
        loss.--For purposes of this section, if--
                    ``(A) a change in benefits under the Social Security 
                Act or in other retirement benefits created under 
                Federal or State law, or
                    ``(B) a change in the definition of the term `wages' 
                under section 3121 of the Internal Revenue Code of 1986 
                or a change in the amount of such wages taken into 
                account under regulations prescribed for purposes of 
                section 401(a)(5) of such Code,
        results in an increase or decrease in accrued liability under a 
        plan, such increase or decrease shall be treated as an 
        experience loss or gain.
            ``(5) Funding method and plan year.--
                    ``(A) Funding methods available.--All funding 
                methods available to CSEC plans under section 302 (as in 
                effect on the day before the enactment of the Pension 
                Protection Act of 2006) shall continue to be available 
                under this section.
                    ``(B) Changes.--If the funding method for a plan is 
                changed, the new funding method shall become the funding 
                method used to determine costs and liabilities under the 
                plan only if the change is approved by the Secretary of 
                the Treasury. If the plan year for a plan is changed, 
                the new plan year shall become the plan year for the 
                plan only if the change is approved by the Secretary of 
                the Treasury.
                    ``(C) Approval required for certain changes in 
                assumptions by certain single-employer plans subject to 
                additional funding requirement.--
                          ``(i) In general.--No actuarial assumption 
                      (other than the assumptions described in 
                      subsection (h)(3)) used to determine the current 
                      liability for a plan to which this subparagraph 
                      applies may be changed without the approval of the 
                      Secretary of the Treasury.
                          ``(ii) Plans to which subparagraph applies.--
                      This subparagraph shall apply to a plan only if--
                                    ``(I) the plan is a CSEC plan,

[[Page 128 STAT. 1106]]

                                    ``(II) the aggregate unfunded vested 
                                benefits as of the close of the 
                                preceding plan year (as determined under 
                                section 4006(a)(3)(E)(iii)) of such plan 
                                and all other plans maintained by the 
                                contributing sponsors (as defined in 
                                section 4001(a)(13)) and members of such 
                                sponsors' controlled groups (as defined 
                                in section 4001(a)(14)) which are 
                                covered by title IV (disregarding plans 
                                with no unfunded vested benefits) exceed 
                                $50,000,000, and
                                    ``(III) the change in assumptions 
                                (determined after taking into account 
                                any changes in interest rate and 
                                mortality table) results in a decrease 
                                in the funding shortfall of the plan for 
                                the current plan year that exceeds 
                                $50,000,000, or that exceeds $5,000,000 
                                and that is 5 percent or more of the 
                                current liability of the plan before 
                                such change.
            ``(6) Full funding.--If, as of the close of a plan year, a 
        plan would (without regard to this paragraph) have an 
        accumulated funding deficiency (determined without regard to the 
        alternative minimum funding standard account permitted under 
        subsection (e)) in excess of the full funding limitation--
                    ``(A) the funding standard account shall be credited 
                with the amount of such excess, and
                    ``(B) all amounts described in paragraphs (2)(B), 
                (C), and (D) and (3)(B) of subsection (b) which are 
                required to be amortized shall be considered fully 
                amortized for purposes of such paragraphs.
            ``(7) Full-funding limitation.--For purposes of paragraph 
        (6), the term `full-funding limitation' means the excess (if 
        any) of--
                    ``(A) the accrued liability (including normal cost) 
                under the plan (determined under the entry age normal 
                funding method if such accrued liability cannot be 
                directly calculated under the funding method used for 
                the plan), over
                    ``(B) the lesser of--
                          ``(i) the fair market value of the plan's 
                      assets, or
                          ``(ii) the value of such assets determined 
                      under paragraph (2).
                    ``(C) Minimum amount.--
                          ``(i) In general.--In no event shall the full-
                      funding limitation determined under subparagraph 
                      (A) be less than the excess (if any) of--
                                    ``(I) 90 percent of the current 
                                liability (determined without regard to 
                                paragraph (4) of subsection (h)) of the 
                                plan (including the expected increase in 
                                such current liability due to benefits 
                                accruing during the plan year), over
                                    ``(II) the value of the plan's 
                                assets determined under paragraph (2).
                          ``(ii) Assets.--For purposes of clause (i), 
                      assets shall not be reduced by any credit balance 
                      in the funding standard account.
            ``(8) Annual valuation.--
                    ``(A) <<NOTE: Regulations.>>  In general.--For 
                purposes of this section, a determination of experience 
                gains and losses and a valuation of the plan's liability 
                shall be made not less frequently

[[Page 128 STAT. 1107]]

                than once every year, except that such determination 
                shall be made more frequently to the extent required in 
                particular cases under regulations prescribed by the 
                Secretary of the Treasury.
                    ``(B) Valuation date.--
                          ``(i) Current year.--Except as provided in 
                      clause (ii), the valuation referred to in 
                      subparagraph (A) shall be made as of a date within 
                      the plan year to which the valuation refers or 
                      within one month prior to the beginning of such 
                      year.
                          ``(ii) Use of prior year valuation.--The 
                      valuation referred to in subparagraph (A) may be 
                      made as of a date within the plan year prior to 
                      the year to which the valuation refers if, as of 
                      such date, the value of the assets of the plan are 
                      not less than 100 percent of the plan's current 
                      liability.
                          ``(iii) Adjustments.--Information under clause 
                      (ii) shall, in accordance with regulations, be 
                      actuarially adjusted to reflect significant 
                      differences in participants.
                          ``(iv) Limitation.--A change in funding method 
                      to use a prior year valuation, as provided in 
                      clause (ii), may not be made unless as of the 
                      valuation date within the prior plan year, the 
                      value of the assets of the plan are not less than 
                      125 percent of the plan's current liability.
            ``(9) Time when certain contributions deemed made.--For 
        purposes of this section, any contributions for a plan year made 
        by an employer during the period--
                    ``(A) beginning on the day after the last day of 
                such plan year, and
                    ``(B) ending on the day which is 8\1/2\ months after 
                the close of the plan year,
        shall be deemed to have been made on such last day.
            ``(10) Anticipation of benefit increases effective in the 
        future.--In determining projected benefits, the funding method 
        of a collectively bargained CSEC plan described in section 
        413(a) of the Internal Revenue Code of 1986 shall anticipate 
        benefit increases scheduled to take effect during the term of 
        the collective bargaining agreement applicable to the plan.

    ``(d) Extension of Amortization Periods.--The period of years 
required to amortize any unfunded liability (described in any clause of 
subsection (b)(2)(B)) of any plan may be extended by the Secretary of 
the Treasury for a period of time (not in excess of 10 years) if such 
Secretary determines that such extension would carry out the purposes of 
this Act and provide adequate protection for participants under the plan 
and their beneficiaries, and if such Secretary determines that the 
failure to permit such extension would result in--
            ``(1) a substantial risk to the voluntary continuation of 
        the plan, or
            ``(2) a substantial curtailment of pension benefit levels or 
        employee compensation.

    ``(e) Alternative Minimum Funding Standard.--
            ``(1) In general.--A CSEC plan which uses a funding method 
        that requires contributions in all years not less than

[[Page 128 STAT. 1108]]

        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 subsection.
            ``(2) Charges and credits to account.--For a plan year the 
        alternative minimum funding standard account shall be--
                    ``(A) charged with the sum of--
                          ``(i) the lesser of normal cost under the 
                      funding method used under the plan or normal cost 
                      determined under the unit credit method,
                          ``(ii) the excess, if any, of the present 
                      value of accrued benefits under the plan over the 
                      fair market value of the assets, and
                          ``(iii) an amount equal to the excess (if any) 
                      of credits to the alternative minimum standard 
                      account for all prior plan years over charges to 
                      such account for all such years, and
                    ``(B) credited with the amount considered 
                contributed by the employer to or under the plan for the 
                plan year.
            ``(3) Interest.--The alternative minimum funding standard 
        account (and items therein) shall be charged or credited with 
        interest in the manner provided under subsection (b)(5) with 
        respect to the funding standard account.

    ``(f) Quarterly Contributions Required.--
            ``(1) In general.--If a CSEC plan which has a funded current 
        liability percentage for the preceding plan year of less than 
        100 percent fails to pay the full amount of a required 
        installment for the plan year, then the rate of interest charged 
        to the funding standard account under subsection (b)(5) with 
        respect to the amount of the underpayment for the period of the 
        underpayment shall be equal to the greater of--
                    ``(A) 175 percent of the Federal mid-term rate (as 
                in effect under section 1274 of the Internal Revenue 
                Code of 1986 for the 1st month of such plan year), or
                    ``(B) the rate of interest used under the plan in 
                determining costs.
            ``(2) Amount of underpayment, period of underpayment.--For 
        purposes of paragraph (1)--
                    ``(A) Amount.--The amount of the underpayment shall 
                be the excess of--
                          ``(i) the required installment, over
                          ``(ii) the amount (if any) of the installment 
                      contributed to or under the plan on or before the 
                      due date for the installment.
                    ``(B) Period of underpayment.--The period for which 
                interest is charged under this subsection with regard to 
                any portion of the underpayment shall run from the due 
                date for the installment to the date on which such 
                portion is contributed to or under the plan (determined 
                without regard to subsection (c)(9)).
                    ``(C) Order of crediting contributions.--For 
                purposes of subparagraph (A)(ii), contributions shall be 
                credited against unpaid required installments in the 
                order in which such installments are required to be 
                paid.
            ``(3) Number of required installments; due dates.--For 
        purposes of this subsection--

[[Page 128 STAT. 1109]]

                    ``(A) Payable in 4 installments.--There shall be 4 
                required installments for each plan year.
                    ``(B) Time for payment of installments.--

 
   ``In the case of the following required
                installments:                                           The due date is:
 
1st..........................................  April 15
2nd..........................................  July 15
3rd..........................................  October 15
4th..........................................  January 15 of the following year.
 

            ``(4) Amount of required installment.--For purposes of this 
        subsection--
                    ``(A) In general.--The amount of any required 
                installment shall be 25 percent of the required annual 
                payment.
                    ``(B) Required annual payment.--For purposes of 
                subparagraph (A), the term `required annual payment' 
                means the lesser of--
                          ``(i) 90 percent of the amount required to be 
                      contributed to or under the plan by the employer 
                      for the plan year under section 302 (without 
                      regard to any waiver under subsection (c) 
                      thereof), or
                          ``(ii) 100 percent of the amount so required 
                      for the preceding plan year.
                Clause (ii) shall not apply if the preceding plan year 
                was not a year of 12 months.
            ``(5) Liquidity requirement.--
                    ``(A) <<NOTE: Applicability.>>  In general.--A plan 
                to which this paragraph applies shall be treated as 
                failing to pay the full amount of any required 
                installment to the extent that the value of the liquid 
                assets paid in such installment is less than the 
                liquidity shortfall (whether or not such liquidity 
                shortfall exceeds the amount of such installment 
                required to be paid but for this paragraph).
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a CSEC plan other than a plan 
                described in section 302(d)(6)(A) (as in effect on the 
                day before the enactment of the Pension Protection Act 
                of 2006) which--
                          ``(i) is required to pay installments under 
                      this subsection for a plan year, and
                          ``(ii) has a liquidity shortfall for any 
                      quarter during such plan year.
                    ``(C) Period of underpayment.--For purposes of 
                paragraph (1), any portion of an installment that is 
                treated as not paid under subparagraph (A) shall 
                continue to be treated as unpaid until the close of the 
                quarter in which the due date for such installment 
                occurs.
                    ``(D) Limitation on increase.--If the amount of any 
                required installment is increased by reason of 
                subparagraph (A), in no event shall such increase exceed 
                the amount which, when added to prior installments for 
                the plan year, is necessary to increase the funded 
                current liability percentage (taking into account the 
                expected

[[Page 128 STAT. 1110]]

                increase in current liability due to benefits accruing 
                during the plan year) to 100 percent.
                    ``(E) Definitions.--For purposes of this paragraph--
                          ``(i) Liquidity shortfall.--The term 
                      `liquidity shortfall' means, with respect to any 
                      required installment, an amount equal to the 
                      excess (as of the last day of the quarter for 
                      which such installment is made) of the base amount 
                      with respect to such quarter over the value (as of 
                      such last day) of the plan's liquid assets.
                          ``(ii) Base amount.--
                                    ``(I) In general.--The term `base 
                                amount' means, with respect to any 
                                quarter, an amount equal to 3 times the 
                                sum of the adjusted disbursements from 
                                the plan for the 12 months ending on the 
                                last day of such quarter.
                                    
                                ``(II) <<NOTE: Certification. Determinati
                                on.>>  Special rule.--If the amount 
                                determined under subclause (I) exceeds 
                                an amount equal to 2 times the sum of 
                                the adjusted disbursements from the plan 
                                for the 36 months ending on the last day 
                                of the quarter and an enrolled actuary 
                                certifies to the satisfaction of the 
                                Secretary of the Treasury that such 
                                excess is the result of nonrecurring 
                                circumstances, the base amount with 
                                respect to such quarter shall be 
                                determined without regard to amounts 
                                related to those nonrecurring 
                                circumstances.
                          ``(iii) Disbursements from the plan.--The term 
                      `disbursements from the plan' means all 
                      disbursements from the trust, including purchases 
                      of annuities, payments of single sums and other 
                      benefits, and administrative expenses.
                          ``(iv) Adjusted disbursements.--The term 
                      `adjusted disbursements' means disbursements from 
                      the plan reduced by the product of--
                                    ``(I) the plan's funded current 
                                liability percentage for the plan year, 
                                and
                                    ``(II) the sum of the purchases of 
                                annuities, payments of single sums, and 
                                such other disbursements as the 
                                Secretary of the Treasury shall provide 
                                in regulations.
                          ``(v) Liquid assets.--The term `liquid assets' 
                      means cash, marketable securities and such other 
                      assets as specified by the Secretary of the 
                      Treasury in regulations.
                          ``(vi) Quarter.--The term `quarter' means, 
                      with respect to any required installment, the 3-
                      month period preceding the month in which the due 
                      date for such installment occurs.
                    ``(F) Regulations.--The Secretary of the Treasury 
                may prescribe such regulations as are necessary to carry 
                out this paragraph.
            ``(6) <<NOTE: Applicability.>>  Fiscal years and short 
        years.--
                    ``(A) Fiscal years.--In applying this subsection to 
                a plan year beginning on any date other than January 1, 
                there shall be substituted for the months specified in 
                this subsection, the months which correspond thereto.

[[Page 128 STAT. 1111]]

                    ``(B) <<NOTE: Regulations.>>  Short plan year.--This 
                subsection shall be applied to plan years of less than 
                12 months in accordance with regulations prescribed by 
                the Secretary of the Treasury.

    ``(g) Imposition of Lien Where Failure To Make Required 
Contributions.--
            ``(1) <<NOTE: Applicability.>>  In general.--In the case of 
        a plan to which this section applies, if--
                    ``(A) any person fails to make a required 
                installment under subsection (f) or any other payment 
                required under this section before the due date for such 
                installment or other payment, and
                    ``(B) the unpaid balance of such installment or 
                other payment (including interest), when added to the 
                aggregate unpaid balance of all preceding such 
                installments or other payments for which payment was not 
                made before the due date (including interest), exceeds 
                $1,000,000,
        then there shall be a lien in favor of the plan in the amount 
        determined under paragraph (3) upon all property and rights to 
        property, whether real or personal, belonging to such person and 
        any other person who is a member of the same controlled group of 
        which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection 
        shall apply to a CSEC plan for any plan year for which the 
        funded current liability percentage of such plan is less than 
        100 percent. This subsection shall not apply to any plan to 
        which section 4021 does not apply (as such section is in effect 
        on the date of the enactment of the Retirement Protection Act of 
        1994).
            ``(3) Amount of lien.--For purposes of paragraph (1), the 
        amount of the lien shall be equal to the aggregate unpaid 
        balance of required installments and other payments required 
        under this section (including interest)--
                    ``(A) for plan years beginning after 1987, and
                    ``(B) for which payment has not been made before the 
                due date.
            ``(4) Notice of failure; lien.--
                    ``(A) Notice of failure.--A person committing a 
                failure described in paragraph (1) shall notify the 
                Pension Benefit Guaranty Corporation of such failure 
                within 10 days of the due date for the required 
                installment or other payment.
                    ``(B) Period of lien.--The lien imposed by paragraph 
                (1) shall arise on the due date for the required 
                installment or other payment and shall continue until 
                the last day of the first plan year in which the plan 
                ceases to be described in paragraph (1)(B). Such lien 
                shall continue to run without regard to whether such 
                plan continues to be described in paragraph (2) during 
                the period referred to in the preceding sentence.
                    ``(C) Certain rules to apply.--Any amount with 
                respect to which a lien is imposed under paragraph (1) 
                shall be treated as taxes due and owing the United 
                States and rules similar to the rules of subsections 
                (c), (d), and (e) of section 4068 shall apply with 
                respect to a lien imposed by subsection (a) and the 
                amount with respect to such lien.

[[Page 128 STAT. 1112]]

            ``(5) Enforcement.--Any lien created under paragraph (1) may 
        be perfected and enforced only by the Pension Benefit Guaranty 
        Corporation, or at the direction of the Pension Benefit Guaranty 
        Corporation, by any contributing employer (or any member of the 
        controlled group of the contributing employer).
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (f), except that in the 
                case of a payment other than a required installment, the 
                due date shall be the date such payment is required to 
                be made under this section.
                    ``(B) Controlled group.--The term `controlled group' 
                means any group treated as a single employer under 
                subsections (b), (c), (m), and (o) of section 414 of the 
                Internal Revenue Code of 1986.

    ``(h) Current Liability.--For purposes of this section--
            ``(1) In general.--The term `current liability' means all 
        liabilities to employees and their beneficiaries under the plan.
            ``(2) Treatment of unpredictable contingent event 
        benefits.--
                    ``(A) In general.--For purposes of paragraph (1), 
                any unpredictable contingent event benefit shall not be 
                taken into account until the event on which the benefit 
                is contingent occurs.
                    ``(B) Unpredictable contingent event benefit.--The 
                term `unpredictable contingent event benefit' means any 
                benefit contingent on an event other than--
                          ``(i) age, service, compensation, death, or 
                      disability, or
                          ``(ii) an event which is reasonably and 
                      reliably predictable (as determined by the 
                      Secretary of the Treasury).
            ``(3) Interest rate and mortality assumptions used.--
                    ``(A) Interest rate.--The rate of interest used to 
                determine current liability under this section shall be 
                the third segment rate determined under section 
                303(h)(2)(C).
                    ``(B) Mortality tables.--
                          ``(i) Secretarial authority.--The Secretary of 
                      the Treasury may by regulation prescribe mortality 
                      tables to be used in determining current liability 
                      under this subsection. Such tables shall be based 
                      upon the actual experience of pension plans and 
                      projected trends in such experience. In 
                      prescribing such tables, the Secretary of the 
                      Treasury shall take into account results of 
                      available independent studies of mortality of 
                      individuals covered by pension plans.
                          ``(ii) <<NOTE: Regulations.>>  Periodic 
                      review.--The Secretary of the Treasury shall 
                      periodically (at least every 5 years) review any 
                      tables in effect under this subsection and shall, 
                      to the extent the Secretary of the Treasury 
                      determines necessary, by regulation update the 
                      tables to reflect the actual experience of pension 
                      plans and projected trends in such experience.
                    ``(C) Separate mortality tables for the disabled.--
                Notwithstanding subparagraph (B)--

[[Page 128 STAT. 1113]]

                          ``(i) In general.--In the case of plan years 
                      beginning after December 31, 1995, the Secretary 
                      of the Treasury shall establish mortality tables 
                      which may be used (in lieu of the tables under 
                      subparagraph (B)) to determine current liability 
                      under this subsection for individuals who are 
                      entitled to benefits under the plan on account of 
                      disability. The Secretary of the Treasury shall 
                      establish separate tables for individuals whose 
                      disabilities occur in plan years beginning before 
                      January 1, 1995, and for individuals whose 
                      disabilities occur in plan years beginning on or 
                      after such date.
                          ``(ii) <<NOTE: Applicability.>>  Special rule 
                      for disabilities occurring after 1994.--In the 
                      case of disabilities occurring in plan years 
                      beginning after December 31, 1994, the tables 
                      under clause (i) shall apply only with respect to 
                      individuals described in such subclause who are 
                      disabled within the meaning of title II of the 
                      Social Security Act and the regulations 
                      thereunder.
            ``(4) Certain service disregarded.--
                    ``(A) <<NOTE: Applicability.>>  In general.--In the 
                case of a participant to whom this paragraph applies, 
                only the applicable percentage of the years of service 
                before such individual became a participant shall be 
                taken into account in computing the current liability of 
                the plan.
                    ``(B) Applicable percentage.--For purposes of this 
                subparagraph, the applicable percentage shall be 
                determined as follows:

 
  ``If the years of participation  are:    The applicable percentage is:
 
1.......................................                              20
2.......................................                              40
3.......................................                              60
4.......................................                              80
5 or more...............................                            100.
 

                    ``(C) Participants to whom paragraph applies.--This 
                subparagraph shall apply to any participant who, at the 
                time of becoming a participant--
                          ``(i) has not accrued any other benefit under 
                      any defined benefit plan (whether or not 
                      terminated) maintained by the employer or a member 
                      of the same controlled group of which the employer 
                      is a member,
                          ``(ii) who first becomes a participant under 
                      the plan in a plan year beginning after December 
                      31, 1987, and
                          ``(iii) has years of service greater than the 
                      minimum years of service necessary for eligibility 
                      to participate in the plan.
                    ``(D) Election.--An employer may elect not to have 
                this subparagraph apply. Such an election, once made, 
                may be revoked only with the consent of the Secretary of 
                the Treasury.

[[Page 128 STAT. 1114]]

    ``(i) <<NOTE: Definition.>>  Funded Current Liability Percentage.--
For purposes of this section, the term `funded current liability 
percentage' means, with respect to any plan year, the percentage which--
            ``(1) the value of the plan's assets determined under 
        subsection (c)(2), is of
            ``(2) the current liability under the plan.

    ``(j) Funding Restoration Status.--Notwithstanding any other 
provisions of this section--
            ``(1) Normal cost payment.--
                    ``(A) <<NOTE: Definitions.>>  In general.--In the 
                case of a CSEC plan that is in funding restoration 
                status for a plan year, for purposes of section 302, the 
                term `accumulated funding deficiency' means, for such 
                plan year, the greater of--
                          ``(i) the amount described in subsection (a), 
                      or
                          ``(ii) the excess of the normal cost of the 
                      plan for the plan year over the amount actually 
                      contributed to or under the plan for the plan 
                      year.
                    ``(B) Normal cost.--In the case of a CSEC plan that 
                uses a spread gain funding method, for purposes of this 
                subsection, the term `normal cost' means normal cost as 
                determined under the entry age normal funding method.
            ``(2) Plan amendments.--In the case of a CSEC plan that is 
        in funding restoration status for a plan year, no amendment to 
        such plan may take effect during such plan year if such 
        amendment has the effect of increasing liabilities of the plan 
        by means of increases in benefits, establishment of new 
        benefits, changing the rate of benefit accrual, or changing the 
        rate at which benefits become nonforfeitable. This paragraph 
        shall not apply to any plan amendment that is required to comply 
        with any applicable <<NOTE: Termination date.>> law. This 
        paragraph shall cease to apply with respect to any plan year, 
        effective as of the first day of the plan year (or if later, the 
        effective date of the amendment) upon payment by the plan 
        sponsor of a contribution to the plan (in addition to any 
        contribution required under this section without regard to this 
        paragraph) in an amount equal to the increase in the funding 
        liability of the plan attributable to the plan amendment.
            ``(3) <<NOTE: Deadline. Certification.>>  Funding 
        restoration plan.--The sponsor of a CSEC plan shall establish a 
        written funding restoration plan within 180 days of the receipt 
        by the plan sponsor of a certification from the plan actuary 
        that the plan is in funding restoration status for a plan year. 
        Such funding restoration plan shall consist of actions that are 
        calculated, based on reasonably anticipated experience and 
        reasonable actuarial assumptions, to increase the plan's funded 
        percentage to 100 percent over a period that is not longer than 
        the greater of 7 years or the shortest amount of time 
        practicable. Such funding restoration plan shall take into 
        account contributions required under this section (without 
        regard to this paragraph). If a plan remains in funding 
        restoration status for 2 or more years, such funding restoration 
        plan shall be updated each year after the 1st such year within 
        180 days of receipt by the plan sponsor of a certification from 
        the plan actuary that the plan remains in funding restoration 
        status for the plan year.
            ``(4) <<NOTE: Deadline.>>  Annual certification by plan 
        actuary.--Not later than the 90th day of each plan year of a 
        CSEC plan, the plan actuary shall certify to the plan sponsor 
        whether or not

[[Page 128 STAT. 1115]]

        the plan is in funding restoration status for the plan year, 
        based on the plan's funded percentage as of the beginning of the 
        plan year. For this purpose, the actuary may conclusively rely 
        on an estimate of--
                    ``(A) the plan's funding liability, based on the 
                funding liability of the plan for the preceding plan 
                year and on reasonable actuarial estimates, assumptions, 
                and methods, and
                    ``(B) the amount of any contributions reasonably 
                anticipated to be made for the preceding plan year.
        Contributions described in subparagraph (B) shall be taken into 
        account in determining the plan's funded percentage as of the 
        beginning of the plan year.
            ``(5) Definitions.--For purposes of this subsection--
                    ``(A) Funding restoration status.--A CSEC plan shall 
                be treated as in funding restoration status for a plan 
                year if the plan's funded percentage as of the beginning 
                of such plan year is less than 80 percent.
                    ``(B) Funded percentage.--The term `funded 
                percentage' means the ratio (expressed as a percentage) 
                which--
                          ``(i) the value of plan assets (as determined 
                      under subsection (c)(2)), bears to
                          ``(ii) the plan's funding liability.
                    ``(C) Funding liability.--The term `funding 
                liability' for a plan year means the present value of 
                all benefits accrued or earned under the plan as of the 
                beginning of the plan year, based on the assumptions 
                used by the plan pursuant to this section, including the 
                interest rate described in subsection (b)(5)(A) (without 
                regard to subsection (b)(5)(B)).
                    ``(D) Spread gain funding method.--The term `spread 
                gain funding method' has the meaning given such term 
                under rules and forms issued by the Secretary of the 
                Treasury.''.

    (b) Separate Rules for CSEC Plans.--
            (1) In general.--Paragraph (2) of section 302(a) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1082(a)) is amended by striking ``and'' at the end of 
        subparagraph (B), by striking the period at the end of 
        subparagraph (C) and inserting ``, and'', and by inserting at 
        the end thereof the following new subparagraph:
                    ``(D) in the case of a CSEC plan, the employers make 
                contributions to or under the plan for any plan year 
                which, in the aggregate, are sufficient to ensure that 
                the plan does not have an accumulated funding deficiency 
                under section 306 as of the end of the plan year.''.
            (2) Conforming amendments.--Section 302 of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 1082) is 
        amended--
                    (A) by striking ``multiemployer plan'' the first 
                place it appears in clause (i) of subsection (c)(1)(A) 
                and the last place it appears in paragraph (2) of 
                subsection (d), and inserting ``multiemployer plan or a 
                CSEC plan'',
                    (B) by striking ``303(j)'' in paragraph (1) of 
                subsection (b) and inserting ``303(j) or under section 
                306(f)'',
                    (C)(i) by striking ``and'' at the end of clause (i) 
                of subsection (c)(1)(B),

[[Page 128 STAT. 1116]]

                    (ii) by striking the period at the end of clause 
                (ii) of subsection (c)(1)(B), and inserting ``, and'', 
                and
                    (iii) by inserting the following new clause after 
                clause (ii) of subsection (c)(1)(B):
                          ``(iii) in the case of a CSEC plan, the 
                      funding standard account shall be credited under 
                      section 306(b)(3)(C) with the amount of the waived 
                      funding deficiency and such amount shall be 
                      amortized as required under section 
                      306(b)(2)(C).'',
                    (D) by striking ``under paragraph (1)'' in clause 
                (i) of subsection (c)(4)(A) and inserting ``under 
                paragraph (1) or for granting an extension under section 
                306(d)'',
                    (E) by striking ``waiver under this subsection'' in 
                subparagraph (B) of subsection (c)(4) and inserting 
                ``waiver under this subsection or an extension under 
                306(d)'',
                    (F) by striking ``waiver or modification'' in 
                subclause (I) of subsection (c)(4)(B)(i) and inserting 
                ``waiver, modification, or extension'',
                    (G) by striking ``waivers'' in the heading of 
                subsection (c)(4)(C) and of clause (ii) of subsection 
                (c)(4)(C) and inserting ``waivers or extensions'',
                    (H) by striking ``section 304(d)'' in subparagraph 
                (A) of subsection (c)(7) and in paragraph (2) of 
                subsection (d) and inserting ``section 304(d) or section 
                306(d)'',
                    (I) by striking ``and'' at the end of subclause (I) 
                of subsection (c)(4)(C)(i) and adding ``or the 
                accumulated funding deficiency under section 306, 
                whichever is applicable,'',
                    (J) by striking ``303(e)(2),'' in subclause (II) of 
                subsection (c)(4)(C)(i) and inserting ``303(e)(2) or 
                306(b)(2)(C), whichever is applicable, and'',
                    (K) by adding immediately after subclause (II) of 
                subsection (c)(4)(C)(i) the following new subclause:
                                    ``(III) the total amounts not paid 
                                by reason of an extension in effect 
                                under section 306(d),'',
                    (L) by striking ``for waivers of'' in clause (ii) of 
                subsection (c)(4)(C) and inserting ``for waivers or 
                extensions with respect to'', and
                    (M) by striking ``single-employer plan'' in 
                subparagraph (A) of subsection (a)(2) and in clause (i) 
                of subsection (c)(1)(B) and inserting ``single-employer 
                plan (other than a CSEC plan)''.
            (3) Benefit restrictions.--Subsection (g) of section 206 of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1056) is amended by adding at the end thereof the following new 
        paragraph:
            ``(12) CSEC plans.--This subsection shall not apply to a 
        CSEC plan (as defined in section 210(f)).''.
            (4) Benefit increases.--Paragraph (3) of section 204(i) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1054(i)) is amended by striking ``multiemployer plans'' and 
        inserting ``multiemployer plans or CSEC plans''.
            (5) Section 103.--Subparagraph (B) of section 103(d)(8) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1023(d)(8)) is amended by striking ``303(h) and 304(c)(3)'' and 
        inserting ``303(h), 304(c)(3), and 306(c)(3)''.

[[Page 128 STAT. 1117]]

            (6) Section 502.--Subsection (c) of section 502 of the 
        Employee Retirement Income Security Act of <<NOTE: 29 USC 
        1132.>> 1974 is amended--
                    (A) by redesignating the last paragraph as paragraph 
                (11), and
                    (B) by adding at the end the following new 
                paragraph:
            ``(12) The Secretary may assess a civil penalty against any 
        sponsor of a CSEC plan of up to $100 a day from the date of the 
        plan sponsor's failure to comply with the requirements of 
        section 306(j)(3) to establish or update a funding restoration 
        plan.''.
            (7) Section 4003.--Subparagraph (B) of section 4003(e)(1) of 
        the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1303(e)(1)) is amended by striking ``303(k)(1)(A) and (B) of 
        this Act or section 430(k)(1)(A) and (B) of the Internal Revenue 
        Code of 1986'' and inserting ``303(k)(1)(A) and (B) or 
        306(g)(1)(A) and (B) of this Act or section 430(k)(1)(A) and (B) 
        or 433(g)(1)(A) and (B) of the Internal Revenue Code of 1986''.
            (8) Section 4010.--Paragraph (2) of section 4010(b) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1310(b)) is amended by striking ``303(k)(1)(A) and (B) of this 
        Act or section 430(k)(1)(A) and (B) of the Internal Revenue Code 
        of 1986'' and inserting ``303(k)(1)(A) and (B) or 306(g)(1)(A) 
        and (B) of this Act or section 430(k)(1)(A) and (B) or 
        433(g)(1)(A) and (B) of the Internal Revenue Code of 1986''.
            (9) Section 4071.--Section 4071 of the Employee Retirement 
        Income Security Act of 1974 (29 U.S.C. 1371) is amended by 
        striking ``section 303(k)(4)'' and inserting ``section 303(k)(4) 
        or 306(g)(4)''.
SEC. 103. ELECTIONS.

    (a) Election Not To Be Treated as a CSEC Plan.--Subsection (f) of 
section 210 of the Employee Retirement Income Security Act of 1974, as 
added by section 101, is amended by adding at the end the following new 
paragraph:
            ``(3) Election.--
                    ``(A) <<NOTE: Deadline.>>  In general.--If a plan 
                falls within the definition of a CSEC plan under this 
                subsection (without regard to this paragraph), such plan 
                shall be a CSEC plan unless the plan sponsor elects not 
                later than the close of the first plan year of the plan 
                beginning after December 31, 2013, not to be treated as 
                a CSEC plan. An election under the preceding sentence 
                shall take effect for such plan year and, once made, may 
                be revoked only with the consent of the Secretary of the 
                Treasury.
                    ``(B) Special rule.--If a plan described in 
                subparagraph (A) is treated as a CSEC plan, section 104 
                of the Pension Protection Act of 2006, as amended by the 
                Preservation of Access to Care for Medicare 
                Beneficiaries and Pension Relief Act of 2010, shall 
                cease to apply to such plan as of the first date as of 
                which such plan is treated as a CSEC plan.''.

    (b) Election To Cease To Be Treated as an Eligible Charity Plan.--
Subsection (d) of section 104 of the Pension Protection Act of 2006, as 
added by section 202 of the Preservation of Access to Care for Medicare 
Beneficiaries and Pension Relief Act of <<NOTE: 26 USC 401 note.>> 2010, 
is amended--

[[Page 128 STAT. 1118]]

            (1) by striking ``For purposes of'' and inserting ``(1) In 
        general.--For purposes of'', and
            (2) by adding at the end the following:
            ``(2) Election not to be an eligible charity plan.--A plan 
        sponsor may elect for a plan to cease to be treated as an 
        eligible charity plan for plan years beginning after December 
        31, 2013. Such election shall be made at such time and in such 
        form and manner as shall be prescribed by the Secretary of the 
        Treasury. Any such election may be revoked only with the consent 
        of the Secretary of the Treasury.
            ``(3) Election to use funding options available to other 
        plan sponsors.--
                    ``(A) A plan sponsor that makes the election 
                described in paragraph (2) may elect for a plan to apply 
                the rules described in subparagraphs (B), (C), and (D) 
                for plan years beginning after December 31, 2013. Such 
                election shall be made at such time and in such form and 
                manner as shall be prescribed by the Secretary of the 
                Treasury. Any such election may be revoked only with the 
                consent of the Secretary of the Treasury.
                    ``(B) Under the rules described in this 
                subparagraph, for the first plan year beginning after 
                December 31, 2013, a plan has--
                          ``(i) an 11-year shortfall amortization base,
                          ``(ii) a 12-year shortfall amortization base, 
                      and
                          ``(iii) a 7-year shortfall amortization base.
                    ``(C) <<NOTE: Applicability.>>  Under the rules 
                described in this subparagraph, section 303(c)(2)(A) and 
                (B) of the Employee Retirement Income Security Act of 
                1974, and section 430(c)(2)(A) and (B) of the Internal 
                Revenue Code of 1986 shall be applied by--
                          ``(i) in the case of an 11-year shortfall 
                      amortization base, substituting `11-plan-year 
                      period' for `7-plan-year period' wherever such 
                      phrase appears, and
                          ``(ii) in the case of a 12-year shortfall 
                      amortization base, substituting `12-plan-year 
                      period' for `7-plan-year period' wherever such 
                      phrase appears.
                    ``(D) <<NOTE: Applicability.>>  Under the rules 
                described in this subparagraph, section 303(c)(7) of the 
                Employee Retirement Income Security Act of 1974 and 
                section 430(c)(7) of the Internal Revenue Code of 1986 
                shall apply to a plan for which an election has been 
                made under subparagraph (A). Such provisions shall apply 
                in the following manner:
                          ``(i) The first plan year beginning after 
                      December 31, 2013, shall be treated as an election 
                      year, and no other plan years shall be so treated.
                          ``(ii) All references in section 303(c)(7) of 
                      such Act and section 430(c)(7) of such Code to 
                      `February 28, 2010' or `March 1, 2010' shall be 
                      treated as references to `February 28, 2013' or 
                      `March 1, 2013', respectively.
                    ``(E) For purposes of this paragraph, the 11-year 
                amortization base is an amount, determined for the first 
                plan year beginning after December 31, 2013, equal to 
                the unamortized principal amount of the shortfall 
                amortization base (as defined in section 303(c)(3) of 
                the Employee Retirement Income Security Act of 1974 and 
                section 430(c)(3) of the Internal Revenue Code of 1986) 
                that would

[[Page 128 STAT. 1119]]

                have applied to the plan for the first plan beginning 
                after December 31, 2009, if--
                          ``(i) the plan had never been an eligible 
                      charity plan,
                          ``(ii) <<NOTE: Applicability.>>  the plan 
                      sponsor had made the election described in section 
                      303(c)(2)(D)(i) of the Employee Retirement Income 
                      Security Act of 1974 and in section 
                      430(c)(2)(D)(i) of the Internal Revenue Code of 
                      1986 to have section 303(c)(2)(D)(i) of such Act 
                      and section 430(c)(2)(D)(iii) of such Code apply 
                      with respect to the shortfall amortization base 
                      for the first plan year beginning after December 
                      31, 2009, and
                          ``(iii) no event had occurred under paragraph 
                      (6) or (7) of section 303(c) of such Act or 
                      paragraph (6) or (7) of section 430(c) of such 
                      Code that, as of the first day of the first plan 
                      year beginning after December 31, 2013, would have 
                      modified the shortfall amortization base or the 
                      shortfall amortization installments with respect 
                      to the first plan year beginning after December 
                      31, 2009.
                    ``(F) <<NOTE: Applicability.>>  For purposes of this 
                paragraph, the 12-year amortization base is an amount, 
                determined for the first plan year beginning after 
                December 31, 2013, equal to the unamortized principal 
                amount of the shortfall amortization base (as defined in 
                section 303(c)(3) of the Employee Retirement Income 
                Security Act of 1974 and section 430(c)(3) of the 
                Internal Revenue Code of 1986) that would have applied 
                to the plan for the first plan beginning after December 
                31, 2010, if--
                          ``(i) the plan had never been an eligible 
                      charity plan,
                          ``(ii) the plan sponsor had made the election 
                      described in section 303(c)(2)(D)(i) of the 
                      Employee Retirement Income Security Act of 1974 
                      and in section 430(c)(2)(D)(i) of the Internal 
                      Revenue Code of 1986 to have section 
                      303(c)(2)(D)(i) of such Act and section 
                      430(c)(2)(D)(iii) of such Code apply with respect 
                      to the shortfall amortization base for the first 
                      plan year beginning after December 31, 2010, and
                          ``(iii) no event had occurred under paragraph 
                      (6) or (7) of section 303(c) of such Act or 
                      paragraph (6) or (7) of section 430(c) of such 
                      Code that, as of the first day of the first plan 
                      year beginning after December 31, 2013, would have 
                      modified the shortfall amortization base or the 
                      shortfall amortization installments with respect 
                      to the first plan year beginning after December 
                      31, 2010.
                    ``(G) For purposes of this paragraph, the 7-year 
                shortfall amortization base is an amount, determined for 
                the first plan year beginning after December 31, 2013, 
                equal to--
                          ``(i) the shortfall amortization base for the 
                      first plan year beginning after December 31, 2013, 
                      without regard to this paragraph, minus
                          ``(ii) the sum of the 11-year shortfall 
                      amortization base and the 12-year shortfall 
                      amortization base.

[[Page 128 STAT. 1120]]

            ``(4) <<NOTE: Deadline.>>  Retroactive election.--Not later 
        than December 31, 2014, a plan sponsor may make a one-time, 
        irrevocable, retroactive election to not be treated as an 
        eligible charity plan. Such <<NOTE: Effective date.>>  election 
        shall be effective for plan years beginning after December 31, 
        2007, and shall be made by providing reasonable notice to the 
        Secretary of the Treasury.''.

    (c) <<NOTE: 26 USC 410 note.>>  Deemed Election.--For purposes of 
the Internal Revenue Code of 1986, sections 4(b)(2) and 4021(b)(3) of 
the Employee Retirement Income Security Act of 1974, and all other 
purposes, a plan shall be deemed to have made an irrevocable election 
under section 410(d) of the Internal Revenue Code of 1986 if--
            (1) the plan was established before January 1, 2014;
            (2) the plan falls within the definition of a CSEC plan;
            (3) the plan sponsor does not make an election under section 
        210(f)(3)(A) of the Employee Retirement Income Security Act of 
        1974 and section 414(y)(3)(A) of the Internal Revenue Code of 
        1986, as added by this Act; and
            (4) the plan, plan sponsor, administrator, or fiduciary 
        remits one or more premium payments for the plan to the Pension 
        Benefit Guaranty Corporation for a plan year beginning after 
        December 31, 2013.

    (d) <<NOTE: 26 USC 1060 note.>>  Effective Date.--The amendments 
made by this section shall apply as of the date of enactment of this 
Act.
SEC. 104. TRANSPARENCY.

    (a) Notice to Participants.--
            (1) In general.--Paragraph (2) of section 101(f) of the 
        Employee Retirement Income Security Act of 1974 (29 U.S.C. 
        1021(f)) is amended by adding at the end the following new 
        subparagraph:
                    ``(E) Effect of csec plan rules on plan funding.--In 
                the case of a CSEC plan, each notice under paragraph (1) 
                shall include--
                          ``(i) a statement that different rules apply 
                      to CSEC plans than apply to single-employer plans,
                          ``(ii) for the first 2 plan years beginning 
                      after December 31, 2013, a statement that, as a 
                      result of changes in the law made by the 
                      Cooperative and Small Employer Charity Pension 
                      Flexibility Act, the contributions to the plan may 
                      have changed, and
                          ``(iii) in the case of a CSEC plan that is in 
                      funding restoration status for the plan year, a 
                      statement that the plan is in funding restoration 
                      status for such plan year.
                A copy of the statement required under clause (iii) 
                shall be provided to the Secretary, the Secretary of the 
                Treasury, and the Director of the Pension Benefit 
                Guaranty Corporation.''.
            (2) <<NOTE: 29 USC 1021 note.>>  Model notice.--The 
        Secretary of Labor may modify the model notice required to be 
        published under section 501(c) of the Pension Protection Act of 
        2006 to include the information described in section 
        101(f)(2)(E) of the Employee Retirement Income Security Act of 
        1974, as added by this subsection.

    (b) Notice of Failure To Meet Minimum Funding Standards.--
            (1) Pending waivers.--Paragraph (2) of section 101(d) of the 
        Employee Retirement Income Security Act of 1974 (29

[[Page 128 STAT. 1121]]

        U.S.C. 1021(d)) is amended by striking ``303'' and inserting 
        ``303 or 306''.
            (2) Definitions.--Paragraph (3) of section 101(d) of the 
        Employee Retirement Income Security Act of 1974 (21 U.S.C. 
        1021(d)) is amended by striking ``303(j)'' and inserting 
        ``303(j) or 306(f), whichever is applicable''.

    (c) Additional Reporting Requirements.--Section 103 of the Employee 
Retirement Income Security Act of 1974 (29 U.S.C. 1023) is amended by 
adding at the end the following new subsection:
    ``(g) Additional Information With Respect to Multiple Employer 
Plans.--With respect to any multiple employer plan, an annual report 
under this section for a plan year shall include a list of participating 
employers and a good faith estimate of the percentage of total 
contributions made by such participating employers during the plan 
year.''.
SEC. 105. <<NOTE: 29 USC 1304a.>>  SPONSOR EDUCATION AND 
                        ASSISTANCE.

    (a) Definition.--In this section, the term ``CSEC plan'' has the 
meaning given that term in subsection (f)(1) of section 210 of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1060(f)(1)) 
(as added by this Act).
    (b) Education.--The Participant and Plan Sponsor Advocate 
established under section 4004 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1304) shall make itself available to 
assist CSEC plan sponsors and participants as part of the duties it 
performs under the general supervision of the Board of Directors under 
section 4004(b) of such Act (29 U.S.C. 1304(b)).

          TITLE II--AMENDMENTS TO INTERNAL REVENUE CODE OF 1986

SEC. 201. DEFINITION OF COOPERATIVE AND SMALL EMPLOYER CHARITY 
                        PENSION PLANS.

    Section 414 of the Internal Revenue Code of 1986 <<NOTE: 26 USC 
414.>>  is amended by adding at the end the following new subsection:

    ``(y) Cooperative and Small Employer Charity Pension Plans.--
            ``(1) In general.--For purposes of this title, except as 
        provided in this subsection, a CSEC plan is a defined benefit 
        plan (other than a multiemployer plan)--
                    ``(A) <<NOTE: Applicability.>>  to which section 104 
                of the Pension Protection Act of 2006 applies, without 
                regard to--
                          ``(i) section 104(a)(2) of such Act;
                          ``(ii) the amendments to such section 104 by 
                      section 202(b) of the Preservation of Access to 
                      Care for Medicare Beneficiaries and Pension Relief 
                      Act of 2010; and
                          ``(iii) paragraph (3)(B); or
                    ``(B) that, as of June 25, 2010, was maintained by 
                more than one employer and all of the employers were 
                organizations described in section 501(c)(3).
            ``(2) Aggregation.--All employers that are treated as a 
        single employer under subsection (b) or (c) shall be treated as 
        a single employer for purposes of determining if a plan was 
        maintained by more than one employer under paragraph (1)(B).''.

[[Page 128 STAT. 1122]]

SEC. 202. FUNDING RULES APPLICABLE TO COOPERATIVE AND SMALL 
                        EMPLOYER CHARITY PENSION PLANS.

    (a) In General.--Subpart A of part III of subchapter D of chapter 1 
of subtitle A of the Internal Revenue Code of 1986 is amended by adding 
at the end the following new section:
``SEC. <<NOTE: 26 USC 433.>>  433. MINIMUM FUNDING STANDARDS.

    ``(a) General Rule.--For purposes of section 412, the term 
`accumulated funding deficiency' for a CSEC plan means the excess of the 
total charges to the funding standard account for all plan years 
(beginning with the first plan year to which section 412 applies) over 
the total credits to such account for such years or, if less, the excess 
of the total charges to the alternative minimum funding standard account 
for such plan years over the total credits to such account for such 
years.
    ``(b) Funding Standard Account.--
            ``(1) <<NOTE: Applicability.>>  Account required.--Each plan 
        to which this section applies shall establish and maintain a 
        funding standard account. Such account shall be credited and 
        charged solely as provided in this section.
            ``(2) <<NOTE: Time period.>>  Charges to account.--For a 
        plan year, the funding standard account shall be charged with 
        the sum of--
                    ``(A) the normal cost of the plan for the plan year,
                    ``(B) the amounts necessary to amortize in equal 
                annual installments (until fully amortized)--
                          ``(i) in the case of a plan in existence on 
                      January 1, 1974, the unfunded past service 
                      liability under the plan on the first day of the 
                      first plan year to which section 412 applies, over 
                      a period of 40 plan years,
                          ``(ii) in the case of a plan which comes into 
                      existence after January 1, 1974, but before the 
                      first day of the first plan year beginning after 
                      December 31, 2013, the unfunded past service 
                      liability under the plan on the first day of the 
                      first plan year to which section 412 applies, over 
                      a period of 30 plan years,
                          ``(iii) separately, with respect to each plan 
                      year, the net increase (if any) in unfunded past 
                      service liability under the plan arising from plan 
                      amendments adopted in such year, over a period of 
                      15 plan years,
                          ``(iv) separately, with respect to each plan 
                      year, the net experience loss (if any) under the 
                      plan, over a period of 5 plan years, and
                          ``(v) separately, with respect to each plan 
                      year, the net loss (if any) resulting from changes 
                      in actuarial assumptions used under the plan, over 
                      a period of 10 plan years,
                    ``(C) the amount necessary to amortize each waived 
                funding deficiency (within the meaning of section 
                412(c)(3)) for each prior plan year in equal annual 
                installments (until fully amortized) over a period of 5 
                plan years,
                    ``(D) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 5 plan years any amount credited to the 
                funding standard account under paragraph (3)(D), and
                    ``(E) the amount necessary to amortize in equal 
                annual installments (until fully amortized) over a 
                period of 20 years the contributions which would be 
                required to be

[[Page 128 STAT. 1123]]

                made under the plan but for the provisions of section 
                412(c)(7)(A)(i)(I) (as in effect on the day before the 
                enactment of the Pension Protection Act of 2006).
            ``(3) Credits to account.--For a plan year, the funding 
        standard account shall be credited with the sum of--
                    ``(A) the amount considered contributed by the 
                employer to or under the plan for the plan year,
                    ``(B) <<NOTE: Time periods.>>  the amount necessary 
                to amortize in equal annual installments (until fully 
                amortized)--
                          ``(i) separately, with respect to each plan 
                      year, the net decrease (if any) in unfunded past 
                      service liability under the plan arising from plan 
                      amendments adopted in such year, over a period of 
                      15 plan years,
                          ``(ii) separately, with respect to each plan 
                      year, the net experience gain (if any) under the 
                      plan, over a period of 5 plan years, and
                          ``(iii) separately, with respect to each plan 
                      year, the net gain (if any) resulting from changes 
                      in actuarial assumptions used under the plan, over 
                      a period of 10 plan years,
                    ``(C) the amount of the waived funding deficiency 
                (within the meaning of section 412(c)(3)) for the plan 
                year, and
                    ``(D) in the case of a plan year for which the 
                accumulated funding deficiency is determined under the 
                funding standard account if such plan year follows a 
                plan year for which such deficiency was determined under 
                the alternative minimum funding standard, the excess (if 
                any) of any debit balance in the funding standard 
                account (determined without regard to this subparagraph) 
                over any debit balance in the alternative minimum 
                funding standard account.
            ``(4) Combining and offsetting amounts to be amortized.--
        Under <<NOTE: Regulations.>>  regulations prescribed by the 
        Secretary, amounts required to be amortized under paragraph (2) 
        or paragraph (3), as the case may be--
                    ``(A) may be combined into one amount under such 
                paragraph to be amortized over a period determined on 
                the basis of the remaining amortization period for all 
                items entering into such combined amount, and
                    ``(B) may be offset against amounts required to be 
                amortized under the other such paragraph, with the 
                resulting amount to be amortized over a period 
                determined on the basis of the remaining amortization 
                periods for all items entering into whichever of the two 
                amounts being offset is the greater.
            ``(5) Interest.--
                    ``(A) <<NOTE: Regulations.>>  In general.--Except as 
                provided in subparagraph (B), the funding standard 
                account (and items therein) shall be charged or credited 
                (as determined under regulations prescribed by the 
                Secretary) with interest at the appropriate rate 
                consistent with the rate or rates of interest used under 
                the plan to determine costs.
                    ``(B) Exception.--The interest rate used for 
                purposes of computing the amortization charge described 
                in subsection (b)(2)(C) or for purposes of any 
                arrangement under subsection (d) for any plan year shall 
                be the greater of--

[[Page 128 STAT. 1124]]

                          ``(i) 150 percent of the Federal mid-term rate 
                      (as in effect under section 1274 for the 1st month 
                      of such plan year), or
                          ``(ii) the rate of interest determined under 
                      subparagraph (A).
            ``(6) Amortization schedules in effect.--Amortization 
        schedules for amounts described in paragraphs (2) and (3) that 
        are in effect as of the last day of the last plan year beginning 
        before January 1, 2014, by reason of section 104 of the Pension 
        Protection Act of 2006 shall remain in effect pursuant to their 
        terms and this section, except that such amounts shall not be 
        amortized again under this section.

    ``(c) Special Rules.--
            ``(1) Determinations to be made under funding method.--For 
        purposes of this section, normal costs, accrued liability, past 
        service liabilities, and experience gains and losses shall be 
        determined under the funding method used to determine costs 
        under the plan.
            ``(2) Valuation of assets.--
                    ``(A) In general.--For purposes of this section, the 
                value of the plan's assets shall be determined on the 
                basis of any reasonable actuarial method of valuation 
                which takes into account fair market value and which is 
                permitted under regulations prescribed by the Secretary.
                    ``(B) Dedicated bond portfolio.--The Secretary may 
                by regulations provide that the value of any dedicated 
                bond portfolio of a plan shall be determined by using 
                the interest rate under section 412(b)(5) (as in effect 
                on the day before the enactment of the Pension 
                Protection Act of 2006).
            ``(3) Actuarial assumptions must be reasonable.--For 
        purposes of this section, all costs, liabilities, rates of 
        interest, and other factors under the plan shall be determined 
        on the basis of actuarial assumptions and methods--
                    ``(A) each of which is reasonable (taking into 
                account the experience of the plan and reasonable 
                expectations), and
                    ``(B) which, in combination, offer the actuary's 
                best estimate of anticipated experience under the plan.
            ``(4) Treatment of certain changes as experience gain or 
        loss.--For purposes of this section, if--
                    ``(A) a change in benefits under the Social Security 
                Act or in other retirement benefits created under 
                Federal or State law, or
                    ``(B) a change in the definition of the term `wages' 
                under section 3121 or a change in the amount of such 
                wages taken into account under regulations prescribed 
                for purposes of section 401(a)(5),
        results in an increase or decrease in accrued liability under a 
        plan, such increase or decrease shall be treated as an 
        experience loss or gain.
            ``(5) Funding method and plan year.--
                    ``(A) Funding methods available.--All funding 
                methods available to CSEC plans under section 412 (as in 
                effect on the day before the enactment of the Pension 
                Protection Act of 2006) shall continue to be available 
                under this section.

[[Page 128 STAT. 1125]]

                    ``(B) Changes.--If the funding method for a plan is 
                changed, the new funding method shall become the funding 
                method used to determine costs and liabilities under the 
                plan only if the change is approved by the Secretary. If 
                the plan year for a plan is changed, the new plan year 
                shall become the plan year for the plan only if the 
                change is approved by the Secretary.
                    ``(C) Approval required for certain changes in 
                assumptions by certain single-employer plans subject to 
                additional funding requirement.--
                          ``(i) In general.--No actuarial assumption 
                      (other than the assumptions described in 
                      subsection (h)(3)) used to determine the current 
                      liability for a plan to which this subparagraph 
                      applies may be changed without the approval of the 
                      Secretary.
                          ``(ii) Plans to which subparagraph applies.--
                      This subparagraph shall apply to a plan only if--
                                    ``(I) the plan is a CSEC plan,
                                    ``(II) the aggregate unfunded vested 
                                benefits as of the close of the 
                                preceding plan year (as determined under 
                                section 4006(a)(3)(E)(iii) of the 
                                Employee Retirement Income Security Act 
                                of 1974) of such plan and all other 
                                plans maintained by the contributing 
                                sponsors (as defined in section 
                                4001(a)(13) of such Act) and members of 
                                such sponsors' controlled groups (as 
                                defined in section 4001(a)(14) of such 
                                Act) which are covered by title IV 
                                (disregarding plans with no unfunded 
                                vested benefits) exceed $50,000,000, and
                                    ``(III) the change in assumptions 
                                (determined after taking into account 
                                any changes in interest rate and 
                                mortality table) results in a decrease 
                                in the funding shortfall of the plan for 
                                the current plan year that exceeds 
                                $50,000,000, or that exceeds $5,000,000 
                                and that is 5 percent or more of the 
                                current liability of the plan before 
                                such change.
            ``(6) Full funding.--If, as of the close of a plan year, a 
        plan would (without regard to this paragraph) have an 
        accumulated funding deficiency (determined without regard to the 
        alternative minimum funding standard account permitted under 
        subsection (e)) in excess of the full funding limitation--
                    ``(A) the funding standard account shall be credited 
                with the amount of such excess, and
                    ``(B) all amounts described in paragraphs (2)(B), 
                (C), and (D) and (3)(B) of subsection (b) which are 
                required to be amortized shall be considered fully 
                amortized for purposes of such paragraphs.
            ``(7) Full-funding limitation.--For purposes of paragraph 
        (6), the term `full-funding limitation' means the excess (if 
        any) of--
                    ``(A) the accrued liability (including normal cost) 
                under the plan (determined under the entry age normal 
                funding method if such accrued liability cannot be 
                directly calculated under the funding method used for 
                the plan), over
                    ``(B) the lesser of--
                          ``(i) the fair market value of the plan's 
                      assets, or

[[Page 128 STAT. 1126]]

                          ``(ii) the value of such assets determined 
                      under paragraph (2).
                    ``(C) Minimum amount.--
                          ``(i) In general.--In no event shall the full-
                      funding limitation determined under subparagraph 
                      (A) be less than the excess (if any) of--
                                    ``(I) 90 percent of the current 
                                liability (determined without regard to 
                                paragraph (4) of subsection (h)) of the 
                                plan (including the expected increase in 
                                such current liability due to benefits 
                                accruing during the plan year), over
                                    ``(II) the value of the plan's 
                                assets determined under paragraph (2).
                          ``(ii) Assets.--For purposes of clause (i), 
                      assets shall not be reduced by any credit balance 
                      in the funding standard account.
            ``(8) Annual valuation.--
                    ``(A) <<NOTE: Determination. Deadline.>>  In 
                general.--For purposes of this section, a determination 
                of experience gains and losses and a valuation of the 
                plan's liability shall be made not less frequently than 
                once every year, except that such determination shall be 
                made more frequently to the extent required in 
                particular cases under regulations prescribed by the 
                Secretary.
                    ``(B) Valuation date.--
                          ``(i) Current year.--Except as provided in 
                      clause (ii), the valuation referred to in 
                      subparagraph (A) shall be made as of a date within 
                      the plan year to which the valuation refers or 
                      within one month prior to the beginning of such 
                      year.
                          ``(ii) Use of prior year valuation.--The 
                      valuation referred to in subparagraph (A) may be 
                      made as of a date within the plan year prior to 
                      the year to which the valuation refers if, as of 
                      such date, the value of the assets of the plan are 
                      not less than 100 percent of the plan's current 
                      liability.
                          ``(iii) Adjustments.--Information under clause 
                      (ii) shall, in accordance with regulations, be 
                      actuarially adjusted to reflect significant 
                      differences in participants.
                          ``(iv) Limitation.--A change in funding method 
                      to use a prior year valuation, as provided in 
                      clause (ii), may not be made unless as of the 
                      valuation date within the prior plan year, the 
                      value of the assets of the plan are not less than 
                      125 percent of the plan's current liability.
            ``(9) Time when certain contributions deemed made.--For 
        purposes of this section, any contributions for a plan year made 
        by an employer during the period--
                    ``(A) beginning on the day after the last day of 
                such plan year, and
                    ``(B) ending on the day which is 8\1/2\ months after 
                the close of the plan year,
        shall be deemed to have been made on such last day.
            ``(10) Anticipation of benefit increases effective in the 
        future.--In determining projected benefits, the funding method 
        of a collectively bargained CSEC plan described in section 
        413(a) shall anticipate benefit increases scheduled to

[[Page 128 STAT. 1127]]

        take effect during the term of the collective bargaining 
        agreement applicable to the plan.

    ``(d) <<NOTE: Determinations.>>  Extension of Amortization 
Periods.--The period of years required to amortize any unfunded 
liability (described in any clause of subsection (b)(2)(B)) of any plan 
may be extended by the Secretary for a period of time (not in excess of 
10 years) if the Secretary determines that such extension would carry 
out the purposes of the Employee Retirement Income Security Act of 1974 
and provide adequate protection for participants under the plan and 
their beneficiaries, and if the Secretary determines that the failure to 
permit such extension would result in--
            ``(1) a substantial risk to the voluntary continuation of 
        the plan, or
            ``(2) a substantial curtailment of pension benefit levels or 
        employee compensation.

    ``(e) Alternative Minimum Funding Standard.--
            ``(1) In general.--A CSEC 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 subsection.
            ``(2) Charges and credits to account.--For a plan year the 
        alternative minimum funding standard account shall be--
                    ``(A) charged with the sum of--
                          ``(i) the lesser of normal cost under the 
                      funding method used under the plan or normal cost 
                      determined under the unit credit method,
                          ``(ii) the excess, if any, of the present 
                      value of accrued benefits under the plan over the 
                      fair market value of the assets, and
                          ``(iii) an amount equal to the excess (if any) 
                      of credits to the alternative minimum standard 
                      account for all prior plan years over charges to 
                      such account for all such years, and
                    ``(B) credited with the amount considered 
                contributed by the employer to or under the plan for the 
                plan year.
            ``(3) Interest.--The alternative minimum funding standard 
        account (and items therein) shall be charged or credited with 
        interest in the manner provided under subsection (b)(5) with 
        respect to the funding standard account.

    ``(f) Quarterly Contributions Required.--
            ``(1) In general.--If a CSEC plan which has a funded current 
        liability percentage for the preceding plan year of less than 
        100 percent fails to pay the full amount of a required 
        installment for the plan year, then the rate of interest charged 
        to the funding standard account under subsection (b)(5) with 
        respect to the amount of the underpayment for the period of the 
        underpayment shall be equal to the greater of--
                    ``(A) 175 percent of the Federal mid-term rate (as 
                in effect under section 1274 for the 1st month of such 
                plan year), or
                    ``(B) the rate of interest used under the plan in 
                determining costs.
            ``(2) Amount of underpayment, period of underpayment.--For 
        purposes of paragraph (1)--

[[Page 128 STAT. 1128]]

                    ``(A) Amount.--The amount of the underpayment shall 
                be the excess of--
                          ``(i) the required installment, over
                          ``(ii) the amount (if any) of the installment 
                      contributed to or under the plan on or before the 
                      due date for the installment.
                    ``(B) Period of underpayment.--The period for which 
                interest is charged under this subsection with regard to 
                any portion of the underpayment shall run from the due 
                date for the installment to the date on which such 
                portion is contributed to or under the plan (determined 
                without regard to subsection (c)(9)).
                    ``(C) Order of crediting contributions.--For 
                purposes of subparagraph (A)(ii), contributions shall be 
                credited against unpaid required installments in the 
                order in which such installments are required to be 
                paid.
            ``(3) Number of required installments; due dates.--For 
        purposes of this subsection--
                    ``(A) Payable in 4 installments.--There shall be 4 
                required installments for each plan year.
                    ``(B) Time for payment of installments.--

 
   ``In the case of the following required
                installments:                                           The due date is:
 
1st..........................................  April 15
2nd..........................................  July 15
3rd..........................................  October 15
4th..........................................  January 15 of the following year.
 

            ``(4) Amount of required installment.--For purposes of this 
        subsection--
                    ``(A) In general.--The amount of any required 
                installment shall be 25 percent of the required annual 
                payment.
                    ``(B) Required annual payment.--For purposes of 
                subparagraph (A), the term `required annual payment' 
                means the lesser of--
                          ``(i) 90 percent of the amount required to be 
                      contributed to or under the plan by the employer 
                      for the plan year under section 412 (without 
                      regard to any waiver under subsection (c) 
                      thereof), or
                          ``(ii) 100 percent of the amount so required 
                      for the preceding plan year.
                Clause (ii) shall not apply if the preceding plan year 
                was not a year of 12 months.
            ``(5) Liquidity requirement.--
                    ``(A) In general.--A plan to which this paragraph 
                applies shall be treated as failing to pay the full 
                amount of any required installment to the extent that 
                the value of the liquid assets paid in such installment 
                is less than the liquidity shortfall (whether or not 
                such liquidity shortfall exceeds the amount of such 
                installment required to be paid but for this paragraph).
                    ``(B) Plans to which paragraph applies.--This 
                paragraph shall apply to a CSEC plan other than a plan

[[Page 128 STAT. 1129]]

                described in section 412(l)(6)(A) (as in effect on the 
                day before the enactment of the Pension Protection Act 
                of 2006) which--
                          ``(i) is required to pay installments under 
                      this subsection for a plan year, and
                          ``(ii) has a liquidity shortfall for any 
                      quarter during such plan year.
                    ``(C) Period of underpayment.--For purposes of 
                paragraph (1), any portion of an installment that is 
                treated as not paid under subparagraph (A) shall 
                continue to be treated as unpaid until the close of the 
                quarter in which the due date for such installment 
                occurs.
                    ``(D) Limitation on increase.--If the amount of any 
                required installment is increased by reason of 
                subparagraph (A), in no event shall such increase exceed 
                the amount which, when added to prior installments for 
                the plan year, is necessary to increase the funded 
                current liability percentage (taking into account the 
                expected increase in current liability due to benefits 
                accruing during the plan year) to 100 percent.
                    ``(E) Definitions.--For purposes of this paragraph--
                          ``(i) Liquidity shortfall.--The term 
                      `liquidity shortfall' means, with respect to any 
                      required installment, an amount equal to the 
                      excess (as of the last day of the quarter for 
                      which such installment is made) of the base amount 
                      with respect to such quarter over the value (as of 
                      such last day) of the plan's liquid assets.
                          ``(ii) Base amount.--
                                    ``(I) In general.--The term `base 
                                amount' means, with respect to any 
                                quarter, an amount equal to 3 times the 
                                sum of the adjusted disbursements from 
                                the plan for the 12 months ending on the 
                                last day of such quarter.
                                    ``(II) <<NOTE: Certification.>>  
                                Special rule.--If the amount determined 
                                under subclause (I) exceeds an amount 
                                equal to 2 times the sum of the adjusted 
                                disbursements from the plan for the 36 
                                months ending on the last day of the 
                                quarter and an enrolled actuary 
                                certifies to the satisfaction of the 
                                Secretary that such excess is the result 
                                of nonrecurring circumstances, the base 
                                amount with respect to such quarter 
                                shall be determined without regard to 
                                amounts related to those nonrecurring 
                                circumstances.
                          ``(iii) Disbursements from the plan.--The term 
                      `disbursements from the plan' means all 
                      disbursements from the trust, including purchases 
                      of annuities, payments of single sums and other 
                      benefits, and administrative expenses.
                          ``(iv) Adjusted disbursements.--The term 
                      `adjusted disbursements' means disbursements from 
                      the plan reduced by the product of--
                                    ``(I) the plan's funded current 
                                liability percentage for the plan year, 
                                and

[[Page 128 STAT. 1130]]

                                    ``(II) the sum of the purchases of 
                                annuities, payments of single sums, and 
                                such other disbursements as the 
                                Secretary shall provide in regulations.
                          ``(v) Liquid assets.--The term `liquid assets' 
                      means cash, marketable securities and such other 
                      assets as specified by the Secretary in 
                      regulations.
                          ``(vi) Quarter.--The term `quarter' means, 
                      with respect to any required installment, the 3-
                      month period preceding the month in which the due 
                      date for such installment occurs.
                    ``(F) Regulations.--The Secretary may prescribe such 
                regulations as are necessary to carry out this 
                paragraph.
            ``(6) Fiscal years and short years.--
                    ``(A) <<NOTE: Applicability.>>  Fiscal years.--In 
                applying this subsection to a plan year beginning on any 
                date other than January 1, there shall be substituted 
                for the months specified in this subsection, the months 
                which correspond thereto.
                    ``(B) <<NOTE: Regulations.>>  Short plan year.--This 
                subsection shall be applied to plan years of less than 
                12 months in accordance with regulations prescribed by 
                the Secretary.

    ``(g) Imposition of Lien Where Failure To Make Required 
Contributions.--
            ``(1) <<NOTE: Applicability.>>  In general.--In the case of 
        a plan to which this section applies, if--
                    ``(A) any person fails to make a required 
                installment under subsection (f) or any other payment 
                required under this section before the due date for such 
                installment or other payment, and
                    ``(B) the unpaid balance of such installment or 
                other payment (including interest), when added to the 
                aggregate unpaid balance of all preceding such 
                installments or other payments for which payment was not 
                made before the due date (including interest), exceeds 
                $1,000,000,
        then there shall be a lien in favor of the plan in the amount 
        determined under paragraph (3) upon all property and rights to 
        property, whether real or personal, belonging to such person and 
        any other person who is a member of the same controlled group of 
        which such person is a member.
            ``(2) Plans to which subsection applies.--This subsection 
        shall apply to a CSEC plan for any plan year for which the 
        funded current liability percentage of such plan is less than 
        100 percent. This subsection shall not apply to any plan to 
        which section 4021 of the Employee Retirement Income Security 
        Act of 1974 does not apply (as such section is in effect on the 
        date of the enactment of the Retirement Protection Act of 1994).
            ``(3) Amount of lien.--For purposes of paragraph (1), the 
        amount of the lien shall be equal to the aggregate unpaid 
        balance of required installments and other payments required 
        under this section (including interest)--
                    ``(A) for plan years beginning after 1987, and
                    ``(B) for which payment has not been made before the 
                due date.
            ``(4) Notice of failure; lien.--
                    ``(A) <<NOTE: Deadline.>>  Notice of failure.--A 
                person committing a failure described in paragraph (1) 
                shall notify the Pension

[[Page 128 STAT. 1131]]

                Benefit Guaranty Corporation of such failure within 10 
                days of the due date for the required installment or 
                other payment.
                    ``(B) Period of lien.--The lien imposed by paragraph 
                (1) shall arise on the due date for the required 
                installment or other payment and shall continue until 
                the last day of the first plan year in which the plan 
                ceases to be described in paragraph (1)(B). Such lien 
                shall continue to run without regard to whether such 
                plan continues to be described in paragraph (2) during 
                the period referred to in the preceding sentence.
                    ``(C) Certain rules to apply.--Any amount with 
                respect to which a lien is imposed under paragraph (1) 
                shall be treated as taxes due and owing the United 
                States and rules similar to the rules of subsections 
                (c), (d), and (e) of section 4068 of the Employee 
                Retirement Income Security Act of 1974 shall apply with 
                respect to a lien imposed by subsection (a) and the 
                amount with respect to such lien.
            ``(5) Enforcement.--Any lien created under paragraph (1) may 
        be perfected and enforced only by the Pension Benefit Guaranty 
        Corporation, or at the direction of the Pension Benefit Guaranty 
        Corporation, by any contributing employer (or any member of the 
        controlled group of the contributing employer).
            ``(6) Definitions.--For purposes of this subsection--
                    ``(A) Due date; required installment.--The terms 
                `due date' and `required installment' have the meanings 
                given such terms by subsection (f), except that in the 
                case of a payment other than a required installment, the 
                due date shall be the date such payment is required to 
                be made under this section.
                    ``(B) Controlled group.--The term `controlled group' 
                means any group treated as a single employer under 
                subsections (b), (c), (m), and (o) of section 414.

    ``(h) <<NOTE: Applicability.>>  Current Liability.--For purposes of 
this section--
            ``(1) In general.--The term `current liability' means all 
        liabilities to employees and their beneficiaries under the plan.
            ``(2) Treatment of unpredictable contingent event 
        benefits.--
                    ``(A) In general.--For purposes of paragraph (1), 
                any unpredictable contingent event benefit shall not be 
                taken into account until the event on which the benefit 
                is contingent occurs.
                    ``(B) Unpredictable contingent event benefit.--The 
                term `unpredictable contingent event benefit' means any 
                benefit contingent on an event other than--
                          ``(i) age, service, compensation, death, or 
                      disability, or
                          ``(ii) an event which is reasonably and 
                      reliably predictable (as determined by the 
                      Secretary).
            ``(3) Interest rate and mortality assumptions used.--
                    ``(A) Interest rate.--The rate of interest used to 
                determine current liability under this section shall be 
                the third segment rate determined under section 
                430(h)(2)(C).
                    ``(B) Mortality tables.--
                          ``(i) Secretarial authority.--The Secretary 
                      may by regulation prescribe mortality tables to be 
                      used

[[Page 128 STAT. 1132]]

                      in determining current liability under this 
                      subsection. Such tables shall be based upon the 
                      actual experience of pension plans and projected 
                      trends in such experience. In prescribing such 
                      tables, the Secretary shall take into account 
                      results of available independent studies of 
                      mortality of individuals covered by pension plans.
                          ``(ii) <<NOTE: Regulations.>>  Periodic 
                      review.--The Secretary shall periodically (at 
                      least every 5 years) review any tables in effect 
                      under this subsection and shall, to the extent the 
                      Secretary determines necessary, by regulation 
                      update the tables to reflect the actual experience 
                      of pension plans and projected trends in such 
                      experience.
                    ``(C) Separate mortality tables for the disabled.--
                Notwithstanding subparagraph (B)--
                          ``(i) In general.--In the case of plan years 
                      beginning after December 31, 1995, the Secretary 
                      shall establish mortality tables which may be used 
                      (in lieu of the tables under subparagraph (B)) to 
                      determine current liability under this subsection 
                      for individuals who are entitled to benefits under 
                      the plan on account of disability. The Secretary 
                      shall establish separate tables for individuals 
                      whose disabilities occur in plan years beginning 
                      before January 1, 1995, and for individuals whose 
                      disabilities occur in plan years beginning on or 
                      after such date.
                          ``(ii) Special rule for disabilities occurring 
                      after <<NOTE: Applicability.>> 1994.--In the case 
                      of disabilities occurring in plan years beginning 
                      after December 31, 1994, the tables under clause 
                      (i) shall apply only with respect to individuals 
                      described in such subclause who are disabled 
                      within the meaning of title II of the Social 
                      Security Act and the regulations thereunder.
            ``(4) Certain service disregarded.--
                    ``(A) In general.--In the case of a participant to 
                whom this paragraph applies, only the applicable 
                percentage of the years of service before such 
                individual became a participant shall be taken into 
                account in computing the current liability of the plan.
                    ``(B) Applicable percentage.--For purposes of this 
                subparagraph, the applicable percentage shall be 
                determined as follows:

 
  ``If the years of participation  are:    The applicable percentage is:
 
1.......................................                              20
2.......................................                              40
3.......................................                              60
4.......................................                              80
5 or more...............................                            100.
 

                    ``(C) Participants to whom paragraph applies.--This 
                subparagraph shall apply to any participant who, at the 
                time of becoming a participant--

[[Page 128 STAT. 1133]]

                          ``(i) has not accrued any other benefit under 
                      any defined benefit plan (whether or not 
                      terminated) maintained by the employer or a member 
                      of the same controlled group of which the employer 
                      is a member,
                          ``(ii) who first becomes a participant under 
                      the plan in a plan year beginning after December 
                      31, 1987, and
                          ``(iii) has years of service greater than the 
                      minimum years of service necessary for eligibility 
                      to participate in the plan.
                    ``(D) Election.--An employer may elect not to have 
                this subparagraph apply. Such an election, once made, 
                may be revoked only with the consent of the Secretary.

    ``(i) <<NOTE: Definition.>>  Funded Current Liability Percentage.--
For purposes of this section, the term `funded current liability 
percentage' means, with respect to any plan year, the percentage which--
            ``(1) the value of the plan's assets determined under 
        subsection (c)(2), is of
            ``(2) the current liability under the plan.

    ``(j) Funding Restoration Status.--Notwithstanding any other 
provisions of this section--
            ``(1) <<NOTE: Definitions.>>  Normal cost payment.--
                    ``(A) In general.--In the case of a CSEC plan that 
                is in funding restoration status for a plan year, for 
                purposes of section 412, the term `accumulated funding 
                deficiency' means, for such plan year, the greater of--
                          ``(i) the amount described in subsection (a), 
                      or
                          ``(ii) the excess of the normal cost of the 
                      plan for the plan year over the amount actually 
                      contributed to or under the plan for the plan 
                      year.
                    ``(B) Normal cost.--In the case of a CSEC plan that 
                uses a spread gain funding method, for purposes of this 
                subsection, the term `normal cost' means normal cost as 
                determined under the entry age normal funding method.
            ``(2) Plan amendments.--In the case of a CSEC plan that is 
        in funding restoration status for a plan year, no amendment to 
        such plan may take effect during such plan year if such 
        amendment has the effect of increasing liabilities of the plan 
        by means of increases in benefits, establishment of new 
        benefits, changing the rate of benefit accrual, or changing the 
        rate at which benefits become nonforfeitable. This paragraph 
        shall not apply to any plan amendment that is required to comply 
        with any applicable <<NOTE: Effective date.>> law. This 
        paragraph shall cease to apply with respect to any plan year, 
        effective as of the first day of the plan year (or if later, the 
        effective date of the amendment) upon payment by the plan 
        sponsor of a contribution to the plan (in addition to any 
        contribution required under this section without regard to this 
        paragraph) in an amount equal to the increase in the funding 
        liability of the plan attributable to the plan amendment.
            ``(3) <<NOTE: Deadline.>>  Funding restoration plan.--The 
        sponsor of a CSEC plan shall establish a written funding 
        restoration plan within 180 days of the receipt by the plan 
        sponsor of a certification from the plan actuary that the plan 
        is in funding restoration status for a plan year. Such funding 
        restoration plan shall consist of actions that are calculated, 
        based on reasonably anticipated experience and reasonable 
        actuarial assumptions,

[[Page 128 STAT. 1134]]

        to increase the plan's funded percentage to 100 percent over a 
        period that is not longer than the greater of 7 years or the 
        shortest amount of time practicable. Such funding restoration 
        plan shall take into account contributions required under this 
        section (without regard to this 
        paragraph). <<NOTE: Deadline. Certification.>>  If a plan 
        remains in funding restoration status for 2 or more years, such 
        funding restoration plan shall be updated each year after the 
        1st such year within 180 days of receipt by the plan sponsor of 
        a certification from the plan actuary that the plan remains in 
        funding restoration status for the plan year.
            ``(4) <<NOTE: Deadline.>>  Annual certification by plan 
        actuary.--Not later than the 90th day of each plan year of a 
        CSEC plan, the plan actuary shall certify to the plan sponsor 
        whether or not the plan is in funding restoration status for the 
        plan year, based on the plan's funded percentage as of the 
        beginning of the plan year. For this purpose, the actuary may 
        conclusively rely on an estimate of--
                    ``(A) the plan's funding liability, based on the 
                funding liability of the plan for the preceding plan 
                year and on reasonable actuarial estimates, assumptions, 
                and methods, and
                    ``(B) the amount of any contributions reasonably 
                anticipated to be made for the preceding plan year.
        Contributions described in subparagraph (B) shall be taken into 
        account in determining the plan's funded percentage as of the 
        beginning of the plan year.
            ``(5) Definitions.--For purposes of this subsection--
                    ``(A) Funding restoration status.--A CSEC plan shall 
                be treated as in funding restoration status for a plan 
                year if the plan's funded percentage as of the beginning 
                of such plan year is less than 80 percent.
                    ``(B) Funded percentage.--The term `funded 
                percentage' means the ratio (expressed as a percentage) 
                which--
                          ``(i) the value of plan assets (as determined 
                      under subsection (c)(2)), bears to
                          ``(ii) the plan's funding liability.
                    ``(C) Funding liability.--The term `funding 
                liability' for a plan year means the present value of 
                all benefits accrued or earned under the plan as of the 
                beginning of the plan year, based on the assumptions 
                used by the plan pursuant to this section, including the 
                interest rate described in subsection (b)(5)(A) (without 
                regard to subsection (b)(5)(B)).
                    ``(D) Spread gain funding method.--The term `spread 
                gain funding method' has the meaning given such term 
                under rules and forms issued by the Secretary.
                    ``(E) Plan sponsor.--The term `plan sponsor' means, 
                with respect to a CSEC plan, the association, committee, 
                joint board of trustees, or other similar group of 
                representatives of the parties who establish or maintain 
                the plan.''.

    (b) CSEC Plans.--Section 413 of the Internal Revenue Code of 
1986 <<NOTE: 26 USC 413.>>  is amended by adding at the end the 
following new subsection:

    ``(d) CSEC Plans.--Notwithstanding any other provision of this 
section, in the case of a CSEC plan--

[[Page 128 STAT. 1135]]

            ``(1) Funding.--The requirements of section 412 shall be 
        determined as if all participants in the plan were employed by a 
        single employer.
            ``(2) Application of provisions.--Paragraphs (1), (2), (3), 
        and (5) of subsection (c) shall apply.
            ``(3) Deduction limitations.--Each applicable limitation 
        provided by section 404(a) shall be determined as if all 
        participants in the plan were employed by a single employer. The 
        amounts contributed to or under the plan by each employer who 
        maintains the plan (for the portion of the taxable year included 
        within a plan year) shall be considered not to exceed such 
        applicable limitation if the anticipated employer contributions 
        for such plan year of all employers (determined in a reasonable 
        manner not inconsistent with regulations prescribed by the 
        Secretary) do not exceed such limitation. 
        If <<NOTE: Determination. Regulations.>>  such anticipated 
        contributions exceed such limitation, the portion of each such 
        employer's contributions which is not deductible under section 
        404 shall be determined in accordance with regulations 
        prescribed by the Secretary.
            ``(4) Allocations.--Allocations of amounts under paragraph 
        (3) and subsection (c)(5) among the employers maintaining the 
        plan shall not be inconsistent with the regulations prescribed 
        for this purpose by the Secretary.''.

    (c) Separate Rules for CSEC Plans.--
            (1) In general.--Paragraph (2) of section 412(a) of the 
        Internal Revenue Code of 1986 <<NOTE: 26 USC 412.>>  is amended 
        by striking ``and'' at the end of subparagraph (B), by striking 
        the period at the end of subparagraph (C) and inserting ``, 
        and'', and by inserting at the end thereof the following new 
        subparagraph:
                    ``(D) in the case of a CSEC plan, the employers make 
                contributions to or under the plan for any plan year 
                which, in the aggregate, are sufficient to ensure that 
                the plan does not have an accumulated funding deficiency 
                under section 433 as of the end of the plan year.''.
            (2) Conforming amendments.--Section 412 of such Code is 
        amended--
                    (A) by striking ``multiemployer plan'' in paragraph 
                (A) of subsection (a)(2), in clause (i) of subsection 
                (c)(1)(B), the first place it appears in clause (i) of 
                subsection (c)(1)(A), and the last place it appears in 
                paragraph (2) of subsection (d), and inserting 
                ``multiemployer plan or a CSEC plan'',
                    (B) by striking ``430(j)'' in paragraph (1) of 
                subsection (b) and inserting ``430(j) or under section 
                433(f)'',
                    (C)(i) by striking ``and'' at the end of clause (i) 
                of subsection (c)(1)(B),
                    (ii) by striking the period at the end of clause 
                (ii) of subsection (c)(1)(B) and inserting ``, and'', 
                and
                    (iii) by inserting the following new clause after 
                clause (ii) of subsection (c)(1)(B):
                          ``(iii) in the case of a CSEC plan, the 
                      funding standard account shall be credited under 
                      section 433(b)(3)(C) with the amount of the waived 
                      funding deficiency and such amount shall be 
                      amortized as required under section 
                      433(b)(2)(C).'',
                    (D) by striking ``under paragraph (1)'' in clause 
                (i) of subsection (c)(4)(A) and inserting ``under 
                paragraph (1) or for granting an extension under section 
                433(d)'',

[[Page 128 STAT. 1136]]

                    (E) by striking ``waiver under this subsection'' in 
                subparagraph (B) of subsection (c)(4) and inserting 
                ``waiver under this subsection or an extension under 
                433(d)'',
                    (F) by striking ``waiver or modification'' in 
                subclause (I) of subsection (c)(4)(B)(i) and inserting 
                ``waiver, modification, or extension'',
                    (G) by striking ``waivers'' in the heading of 
                subsection (c)(4)(C) and of clause (ii) of subsection 
                (c)(4)(C) and inserting ``waivers or extensions'',
                    (H) by striking ``section 431(d)'' in subparagraph 
                (A) of subsection (c)(7) and in paragraph (2) of 
                subsection (d) and inserting ``section 431(d) or section 
                433(d)'',
                    (I) by striking ``and'' at the end of subclause (I) 
                of subsection (c)(4)(C)(i) and inserting ``or the 
                accumulated funding deficiency under section 433, 
                whichever is applicable,'',
                    (J) by striking ``430(e)(2),'' in subclause (II) of 
                subsection (c)(4)(C)(i) and inserting ``430(e)(2) or 
                433(b)(2)(C), whichever is applicable, and'',
                    (K) by adding immediately after subclause (II) of 
                subsection (c)(4)(C)(i) the following new subclause:
                                    ``(III) the total amounts not paid 
                                by reason of an extension in effect 
                                under section 433(d),'', and
                    (L) by striking ``for waivers of'' in clause (ii) of 
                subsection (c)(4)(C) and inserting ``for waivers or 
                extensions with respect to''.
            (3) Benefit restrictions.--
                    (A) In general.--Paragraph (29) of section 401(a) of 
                such Code <<NOTE: 26 USC 401.>>  is amended by striking 
                ``multiemployer plan'' and inserting ``multiemployer 
                plan or a CSEC plan''.
                    (B) Conforming change.--Subsection (a) of section 
                436 of such Code <<NOTE: 26 USC 436.>>  is amended by 
                striking ``single-employer plan'' and inserting 
                ``single-employer plan (other than a CSEC plan)''.
            (4) Benefit increases.--Subparagraph (C) of section 
        401(a)(33) of such Code is amended by striking ``multiemployer 
        plans'' and inserting ``multiemployer plans or CSEC plans''.
            (5) Liquidity shortfalls.--
                    (A) In general.--Subparagraph (A) of section 
                401(a)(32) of such Code is amended by striking 
                ``430(j)(4)'' each place it appears and inserting 
                ``430(j)(4) or 433(f)(5)''.
                    (B) Period of shortfall.--Subparagraph (C) of 
                section 401(a)(32) of such Code is amended by striking 
                ``430(j)(3) by reason of section 430(j)(4)(A) thereof'' 
                and inserting ``430(j)(3) or 433(f) by reason of section 
                430(j)(4)(A) or 433(f)(5), respectively''.
            (6) Deduction limits.--Subsection (o) of section 404 of such 
        Code <<NOTE: 26 USC 404.>>  is amended by adding at the end the 
        following new paragraph:
            ``(8) <<NOTE: Applicability.>>  CSEC plans.--Solely for 
        purposes of this subsection, a CSEC plan shall be treated as 
        though section 430 applied to such plan and the minimum required 
        contribution for any plan year shall be the amount described in 
        section 412(a)(2)(D).''.

[[Page 128 STAT. 1137]]

            (7) Section 420.--Paragraph (5) of section 420(e) of such 
        Code <<NOTE: 26 USC 420.>>  is amended by striking ``section 
        430'' each place it appears and inserting ``sections 430 and 
        433''.
            (8) Coordination with section 4971.--
                    (A) Subsection (a) of section 4971 of such 
                Code <<NOTE: 26 USC 4971.>>  is amended by striking 
                ``and'' at the end of paragraph (1), by striking the 
                period at the end of paragraph (2) and inserting ``, 
                and'', and by adding at the end thereof the following 
                new paragraph:
            ``(3) in the case of a CSEC plan, 10 percent of the CSEC 
        accumulated funding deficiency as of the end of the plan year 
        ending with or within the taxable year.''.
                    (B) Subsection (b) of section 4971 of such Code is 
                amended--
                          (i) by striking ``or'' at the end of paragraph 
                      (1), by adding ``or'' at the end of paragraph (2), 
                      and by inserting immediately after paragraph (2) 
                      the following new paragraph:
            ``(3) a tax is imposed under subsection (a)(3) on any CSEC 
        accumulated funding deficiency and the CSEC accumulated funding 
        deficiency is not corrected within the taxable period,'', and
                          (ii) by striking ``minimum required 
                      contributions or accumulated funding deficiency'' 
                      and inserting ``minimum required contribution, 
                      accumulated funding deficiency, or CSEC 
                      accumulated funding deficiency''.
                    (C) Subsection (c) of section 4971 of such Code is 
                amended--
                          (i) by striking ``accumulated funding 
                      deficiency'' each place it appears in paragraph 
                      (2) and inserting ``accumulated funding deficiency 
                      or CSEC accumulated funding deficiency'',
                          (ii) by striking ``accumulated funding 
                      deficiency or unpaid minimum required 
                      contribution'' each place it appears in paragraph 
                      (3) and inserting ``accumulated funding 
                      deficiency, CSEC accumulated funding deficiency, 
                      or unpaid minimum required contribution'', and
                          (iii) by adding at the end the following new 
                      paragraph:
            ``(5) <<NOTE: Definition.>>  CSEC accumulated funding 
        deficiency.--The term `CSEC accumulated funding deficiency' 
        means the accumulated funding deficiency determined under 
        section 433.''.
                    (D) Paragraph (1) of section 4971(d) of such Code is 
                amended by striking ``accumulated funding deficiency or 
                unpaid minimum required contribution'' and inserting 
                ``accumulated funding deficiency, CSEC accumulated 
                funding deficiency, or unpaid minimum required 
                contribution''.
                    (E) Subsection (f) of section 4971 of such Code is 
                amended--
                          (i) by striking ``430(j)(4)'' in paragraph (1) 
                      and inserting ``430(j)(4) or 433(f)'',
                          (ii) by striking ``430(j)'' in paragraph 
                      (1)(B) and inserting ``430(j) or 433(f), whichever 
                      is applicable'', and
                          (iii) by striking ``412(m)(5)'' in paragraph 
                      (3)(A) and inserting ``430(j) or 433(f), whichever 
                      is applicable''.

[[Page 128 STAT. 1138]]

            (9) Excise tax on failure to adopt funding restoration 
        plan.--Section 4971 of such Code <<NOTE: 26 USC 4971.>>  is 
        amended by redesignating subsection (h) as subsection (i), and 
        by inserting after subsection (g) the following new subsection:

    ``(h) Failure of a CSEC Plan Sponsor To Adopt Funding Restoration 
Plan.--
            ``(1) <<NOTE: Taxes.>>  In general.--In the case of a CSEC 
        plan that is in funding restoration status (within the meaning 
        of section 433(j)(5)(A)), there is hereby imposed a tax on the 
        failure of such plan to adopt a funding restoration plan within 
        the time prescribed under section 433(j)(3).
            ``(2) <<NOTE: Time periods.>>  Amount of tax.--The amount of 
        the tax imposed under paragraph (1) with respect to any plan 
        sponsor for any taxable year shall be the amount equal to $100 
        multiplied by the number of days during the taxable year which 
        are included in the period beginning on the day following the 
        close of the 180-day period described in section 433(j)(3) and 
        ending on the day on which the funding restoration plan is 
        adopted.
            ``(3) Waiver by secretary.--In the case of a failure 
        described in paragraph (1) which the Secretary determines is due 
        to reasonable cause and not to willful neglect, the Secretary 
        may waive a portion or all of the tax imposed by such paragraph.
            ``(4) Liability for tax.--The tax imposed by paragraph (1) 
        shall be paid by the plan sponsor (within the meaning of section 
        433(j)(5)(E)).''.
            (10) Reporting.--
                    (A) In general.--Paragraph (2) of section 6059(b) of 
                such Code <<NOTE: 26 USC 6059.>>  is amended by striking 
                ``430,'' and inserting ``430, the accumulated funding 
                deficiency under section 433,''.
                    (B) Assumptions.--Subparagraph (B) of section 
                6059(b)(3) of such Code is amended by striking 
                ``430(h)(1) or 431(c)(3)'' and inserting ``430(h)(1), 
                431(c)(3), or 433(c)(3)''.
SEC. 203. ELECTION NOT TO BE TREATED AS A CSEC PLAN.

    (a) In General.--Section 414(y) of the Internal Revenue Code of 
1986, <<NOTE: 26 USC 414.>>  as added by section 201, is amended by 
adding at the end the following new paragraph:
            ``(3) Election.--
                    ``(A) <<NOTE: Deadline.>>  In general.--If a plan 
                falls within the definition of a CSEC plan under this 
                subsection (without regard to this paragraph), such plan 
                shall be a CSEC plan unless the plan sponsor elects not 
                later than the close of the first plan year of the plan 
                beginning after December 31, 2013, not to be treated as 
                a CSEC plan. An election under the preceding sentence 
                shall take effect for such plan year and, once made, may 
                be revoked only with the consent of the Secretary.
                    ``(B) Special rule.--If a plan described in 
                subparagraph (A) is treated as a CSEC plan, section 104 
                of the Pension Protection Act of 2006, as amended by the 
                Preservation of Access to Care for Medicare 
                Beneficiaries and Pension Relief Act of 2010, shall 
                cease to apply to such plan as of the first date as of 
                which such plan is treated as a CSEC plan.''.

[[Page 128 STAT. 1139]]

    (b) <<NOTE: 26 USC 414 note.>>  Effective Date.--The amendment made 
by this section shall apply as of the date of enactment of this Act.

    Approved April 7, 2014.

LEGISLATIVE HISTORY--H.R. 4275 (S. 1302):
---------------------------------------------------------------------------

CONGRESSIONAL RECORD, Vol. 160 (2014):
            Mar. 24, considered and passed House.
            Mar. 25, considered and passed Senate.

                                  <all>
```