II 

109TH CONGRESS 

1ST SESSION S. 1825 

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

Internal Revenue Code of 1986 to revise the funding and deduction 

rules for multiemployer defined benefit plans, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

OCTOBER 5, 2005 

Mr. SANTORUM (for himself and Ms. STABENOW) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

revise the funding and deduction rules for multiemployer 

defined benefit plans, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Multiemployer Plan 

5 Funding and Deduction Reform Act of 2005’’. 
2 

•S 1825 IS

1 TITLE I—FUNDING RULES FOR 

2 MULTIEMPLOYER DEFINED 

3 BENEFIT PLANS 

4 SEC. 101. FUNDING RULES FOR MULTIEMPLOYER DEFINED 

5 BENEFIT PLANS. 

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

7 the Employee Retirement Income Security Act of 1974 is 

8 amended by inserting after section 302 the following new 

9 section: 

10 ‘‘MINIMUM FUNDING STANDARDS FOR MULTIEMPLOYER

11 PLANS

12 ‘‘SEC. 302A. (a) IN GENERAL .—For purposes of sec13 tion 302, the accumulated funding deficiency of a multi14 employer plan for any plan year is— 

15 ‘‘(1) except as provided in paragraph (2), the 

16 amount, determined as of the end of the plan year, 

17 equal to the excess (if any) of the total charges to 

18 the funding standard account of the plan for all plan 

19 years (beginning with the first plan year for which 

20 this part applies to the plan) over the total credits 

21 to such account for such years, and 

22 ‘‘(2) if the multiemployer plan is in reorganiza23 tion any plan year, the accumulated funding defi24 ciency of the plan determined under section 4243. 

25 ‘‘(b) FUNDING STANDARD ACCOUNT.— 
3 

•S 1825 IS

1 ‘‘(1) ACCOUNT REQUIRED.—Each multiem2 ployer plan to which this part applies shall establish 

3 and maintain a funding standard account. Such ac4 count shall be credited and charged solely as pro5 vided in this section. 

6 ‘‘(2) CHARGES TO ACCOUNT.—For a plan year, 

7 the funding standard account shall be charged with 

8 the sum of— 

9 ‘‘(A) the normal cost of the plan for the 

10 plan year, 

11 ‘‘(B) the amounts necessary to amortize in 

12 equal annual installments (until fully amor13 tized)— 

14 ‘‘(i) in the case of a plan in existence 

15 on January 1, 1974, the unfunded past 

16 service liability under the plan on the first 

17 day of the first plan year to which this sec18 tion applies, over a period of 40 plan 

19 years, 

20 ‘‘(ii) in the case of a plan which comes 

21 into existence after January 1, 1974, the 

22 unfunded past service liability under the 

23 plan on the first day of the first plan year 

24 to which this section applies, over a period 

25 of 15 plan years, 
4 

•S 1825 IS

1 ‘‘(iii) separately, with respect to each 

2 plan year, the net increase (if any) in un3 funded past service liability under the plan 

4 arising from plan amendments adopted in 

5 such year, over a period of 15 plan years, 

6 ‘‘(iv) separately, with respect to each 

7 plan year, the net experience loss (if any) 

8 under the plan, over a period of 15 plan 

9 years, and 

10 ‘‘(v) separately, with respect to each 

11 plan year, the net loss (if any) resulting 

12 from changes in actuarial assumptions 

13 used under the plan, over a period of 15 

14 plan years, 

15 ‘‘(C) the amount necessary to amortize 

16 each waived funding deficiency (within the 

17 meaning of section 302(c)(3)) for each prior 

18 plan year in equal annual installments (until 

19 fully amortized) over a period of 15 plan years, 

20 ‘‘(D) the amount necessary to amortize in 

21 equal annual installments (until fully amor22 tized) over a period of 5 plan years any amount 

23 credited to the funding standard account under 

24 section 302(b)(3)(D) (as in effect on the day 

25 before the date of the enactment of the Multi-
5 

•S 1825 IS

1 employer Plan Funding and Deduction Reform 

2 Act of 2005), and 

3 ‘‘(E) the amount necessary to amortize in 

4 equal annual installments (until fully amor5 tized) over a period of 20 years the contribu6 tions which would be required to be made under 

7 the plan but for the provisions of section 302 

8 (c)(7)(A)(i)(I) (as in effect on the day before 

9 the date of the enactment of the Multiemployer 

10 Plan Funding and Deduction Reform Act of 

11 2005). 

12 ‘‘(3) CREDITS TO ACCOUNT.—For a plan year, 

13 the funding standard account shall be credited with 

14 the sum of— 

15 ‘‘(A) the amount considered contributed by 

16 the employer to or under the plan for the plan 

17 year, 

18 ‘‘(B) the amount necessary to amortize in 

19 equal annual installments (until fully amor20 tized)— 

21 ‘‘(i) separately, with respect to each 

22 plan year, the net decrease (if any) in un23 funded past service liability under the plan 

24 arising from plan amendments adopted in 

25 such year, over a period of 15 plan years, 
6 

•S 1825 IS

1 ‘‘(ii) separately, with respect to each 

2 plan year, the net experience gain (if any) 

3 under the plan, over a period of 15 plan 

4 years, and 

5 ‘‘(iii) separately, with respect to each 

6 plan year, the net gain (if any) resulting 

7 from changes in actuarial assumptions 

8 used under the plan, over a period of 15 

9 plan years, 

10 ‘‘(C) the amount of the waived funding de11 ficiency (within the meaning of section 

12 302(c)(3)) for the plan year; and 

13 ‘‘(D) in the case of a plan year for which 

14 the accumulated funding deficiency is deter15 mined under the funding standard account if 

16 such plan year follows a plan year for which 

17 such deficiency was determined under the alter18 native minimum funding standard under section 

19 305 (as in effect on the day before the date of 

20 the enactment of the Multiemployer Plan Fund21 ing and Deduction Reform Act of 2005), the 

22 excess (if any) of any debit balance in the fund23 ing standard account (determined without re24 gard to this subparagraph) over any debit bal-
7 

•S 1825 IS

1 ance in the alternative minimum funding stand2 ard account. 

3 ‘‘(4) SPECIAL RULE FOR AMOUNTS FIRST AM4 ORTIZED TO PLAN YEARS BEFORE 2006.—In the case 

5 of any amount amortized under section 302(b) (as 

6 in effect on the day before the date of the enactment 

7 of the Multiemployer Plan Funding and Deduction 

8 Reform Act of 2005) over any period beginning with 

9 a plan year beginning before 2006, in lieu of the am10 ortization described in paragraphs (2)(B) and 

11 (3)(B), such amount shall continue to be amortized 

12 under such section as so in effect. 

13 ‘‘(5) COMBINING AND OFFSETTING AMOUNTS

14 TO BE AMORTIZED.—Under regulations prescribed 

15 by the Secretary of the Treasury, amounts required 

16 to be amortized under paragraph (2) or paragraph 

17 (3), whichever is applicable— 

18 ‘‘(A) may be combined into one amount 

19 under such paragraph to be amortized over a 

20 period determined on the basis of the remaining 

21 amortization period for all items entering into 

22 such combined amount, and 

23 ‘‘(B) may be offset against amounts re24 quired to be amortized under the other such 

25 paragraph, with the resulting amount to be am-
8 

•S 1825 IS

1 ortized over a period determined on the basis of 

2 the remaining amortization periods for all items 

3 entering into whichever of the two amounts 

4 being offset is the greater. 

5 ‘‘(6) INTEREST.—Except as provided in sub6 section (c)(9), the funding standard account (and 

7 items therein) shall be charged or credited (as deter8 mined under regulations prescribed by the Secretary 

9 of the Treasury) with interest at the appropriate 

10 rate consistent with the rate or rates of interest used 

11 under the plan to determine costs. 

12 ‘‘(7) CERTAIN AMORTIZATION CHARGES AND

13 CREDITS.—In the case of a plan which, immediately 

14 before the date of the enactment of the Multiem15 ployer Pension Plan Amendments Act of 1980, was 

16 a multiemployer plan (within the meaning of section 

17 3(37) as in effect immediately before such date)— 

18 ‘‘(A) any amount described in paragraph 

19 (2)(B)(ii), (2)(B)(iii), or (3)(B)(i) of this sub20 section which arose in a plan year beginning be21 fore such date shall be amortized in equal an22 nual installments (until fully amortized) over 40 

23 plan years, beginning with the plan year in 

24 which the amount arose, 
9 

•S 1825 IS

1 ‘‘(B) any amount described in paragraph 

2 (2)(B)(iv) or (3)(B)(ii) of this subsection which 

3 arose in a plan year beginning before such date 

4 shall be amortized in equal annual installments 

5 (until fully amortized) over 20 plan years, be6 ginning with the plan year in which the amount 

7 arose, 

8 ‘‘(C) any change in past service liability 

9 which arises during the period of 3 plan years 

10 beginning on or after such date, and results 

11 from a plan amendment adopted before such 

12 date, shall be amortized in equal annual install13 ments (until fully amortized) over 40 plan 

14 years, beginning with the plan year in which the 

15 change arises, and 

16 ‘‘(D) any change in past service liability 

17 which arises during the period of 2 plan years 

18 beginning on or after such date, and results 

19 from the changing of a group of participants 

20 from one benefit level to another benefit level 

21 under a schedule of plan benefits which— 

22 ‘‘(i) was adopted before such date, 

23 and 

24 ‘‘(ii) was effective for any plan partici25 pant before the beginning of the first plan 
10 

•S 1825 IS

1 year beginning on or after such date, shall 

2 be amortized in equal annual installments 

3 (until fully amortized) over 40 plan years, 

4 beginning with the plan year in which the 

5 change arises. 

6 ‘‘(8) SPECIAL RULES RELATING TO CHARGES

7 AND CREDITS TO FUNDING STANDARD ACCOUNT.— 

8 For purposes of this part— 

9 ‘‘(A) WITHDRAWAL LIABILITY.—Any 

10 amount received by a multiemployer plan in 

11 payment of all or part of an employer’s with12 drawal liability under part 1 of subtitle E of 

13 title IV shall be considered an amount contrib14 uted by the employer to or under the plan. The 

15 Secretary of the Treasury may prescribe by reg16 ulation additional charges and credits to a mul17 tiemployer plan’s funding standard account to 

18 the extent necessary to prevent withdrawal li19 ability payments from being unduly reflected as 

20 advance funding for plan liabilities. 

21 ‘‘(B) ADJUSTMENTS WHEN AMULTIEM22 PLOYER PLAN LEAVES REORGANIZATION.—If a 

23 multiemployer plan is not in reorganization in 

24 the plan year but was in reorganization in the 

25 immediately preceding plan year, any balance in 
11 

•S 1825 IS

1 the funding standard account at the close of 

2 such immediately preceding plan year— 

3 ‘‘(i) shall be eliminated by an offset4 ting credit or charge (as the case may be), 

5 but 

6 ‘‘(ii) shall be taken into account in 

7 subsequent plan years by being amortized 

8 in equal annual installments (until fully 

9 amortized) over 30 plan years. The pre10 ceding sentence shall not apply to the ex11 tent of any accumulated funding deficiency 

12 under section 4243 (a) as of the end of the 

13 last plan year that the plan was in reorga14 nization. 

15 ‘‘(C) PLAN PAYMENTS TO SUPPLEMENTAL

16 PROGRAM OR WITHDRAWAL LIABILITY PAYMENT

17 FUND.—Any amount paid by a plan during a 

18 plan year to the Pension Benefit Guaranty Cor19 poration pursuant to section 4222 of this Act or 

20 to a fund exempt under section 501(c)(22) of 

21 the Internal Revenue Code of 1986 pursuant to 

22 section 4223 of this Act shall reduce the 

23 amount of contributions considered received by 

24 the plan for the plan year. 
12 

•S 1825 IS

1 ‘‘(D) INTERIM WITHDRAWAL LIABILITY

2 PAYMENTS.—Any amount paid by an employer 

3 pending a final determination of the employer’s 

4 withdrawal liability under part 1 of subtitle E 

5 of title IV and subsequently refunded to the 

6 employer by the plan shall be charged to the 

7 funding standard account in accordance with 

8 regulations prescribed by the Secretary of the 

9 Treasury. 

10 ‘‘(E) ELECTION FOR DEFERRAL OF

11 CHARGE FOR PORTION OF NET EXPERIENCE

12 LOSS.—If an election is in effect under section 

13 302(b)(7)(F) (as in effect on the day before the 

14 date of the enactment of the Multiemployer 

15 Plan Funding and Deduction Reform Act of 

16 2005) for any plan year, the funding standard 

17 account shall be charged in the plan year to 

18 which the portion of the net experience loss de19 ferred by such election was deferred with the 

20 amount so deferred (and paragraph (2)(B)(iv) 

21 shall not apply to the amount so charged). 

22 ‘‘(F) FINANCIAL ASSISTANCE.—Any 

23 amount of any financial assistance from the 

24 Pension Benefit Guaranty Corporation to any 

25 plan, and any repayment of such amount, shall 
13 

•S 1825 IS

1 be taken into account under this section and 

2 section 412 of the Internal Revenue Code of 

3 1986 in such manner as is determined by the 

4 Secretary of the Treasury. 

5 ‘‘(G) SHORT-TERM BENEFITS.—To the ex6 tent that any plan amendment increases the un7 funded past service liability under the plan by 

8 reason of an increase in benefits which, by its 

9 terms, is payable under the plan for a period 

10 that does not exceed 14 years from the effective 

11 date of such amendment, paragraph (2)(B)(iii) 

12 shall be applied separately with respect to such 

13 increase in unfunded past service liability by 

14 substituting the number of years of the period 

15 during which such benefits are payable for ‘15’. 

16 ‘‘(c) ADDITIONAL RULES.— 

17 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

18 FUNDING METHOD.—For purposes of this part, nor19 mal costs, accrued liability, past service liabilities, 

20 and experience gains and losses shall be determined 

21 under the funding method used to determine costs 

22 under the plan. 

23 ‘‘(2) VALUATION OF ASSETS.— 

24 ‘‘(A) IN GENERAL.—For purposes of this 

25 part, the value of the plan’s assets shall be de-
14 

•S 1825 IS

1 termined on the basis of any reasonable actu2 arial method of valuation which takes into ac3 count fair market value and which is permitted 

4 under regulations prescribed by the Secretary of 

5 the Treasury. 

6 ‘‘(B) ELECTION WITH RESPECT TO

7 BONDS.—The value of a bond or other evidence 

8 of indebtedness which is not in default as to 

9 principal or interest may, at the election of the 

10 plan administrator, be determined on an amor11 tized basis running from initial cost at purchase 

12 to par value at maturity or earliest call date. 

13 Any election under this subparagraph shall be 

14 made at such time and in such manner as the 

15 Secretary of the Treasury shall by regulations 

16 provide, shall apply to all such evidences of in17 debtedness, and may be revoked only with the 

18 consent of such Secretary. 

19 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA20 SONABLE.—For purposes of this section, all costs, li21 abilities, rates of interest, and other factors under 

22 the plan shall be determined on the basis of actu23 arial assumptions and methods— 
15 

•S 1825 IS

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

2 into account the experience of the plan and rea3 sonable expectations), and 

4 ‘‘(B) which, in combination, offer the actu5 ary’s best estimate of anticipated experience 

6 under the plan. 

7 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX8 PERIENCE GAIN OR LOSS.—For purposes of this sec9 tion, if— 

10 ‘‘(A) a change in benefits under the Social 

11 Security Act or in other retirement benefits cre12 ated under Federal or State law, or 

13 ‘‘(B) a change in the definition of the term 

14 ‘wages’ under section 3121 of the Internal Rev15 enue Code of 1986, or a change in the amount 

16 of such wages taken into account under regula17 tions prescribed for purposes of section 

18 401(a)(5) of such Code, 

19 results in an increase or decrease in accrued liability 

20 under a plan, such increase or decrease shall be 

21 treated as an experience loss or gain. 

22 ‘‘(5) FULL FUNDING.—If, as of the close of a 

23 plan year, a plan would (without regard to this para24 graph) have an accumulated funding deficiency in 

25 excess of the full funding limitation— 
16 

•S 1825 IS

1 ‘‘(A) the funding standard account shall be 

2 credited with the amount of such excess, and 

3 ‘‘(B) all amounts described in subpara4 graphs (B), (C), and (D) of subsection (b)(2) 

5 and subparagraph (B) of subsection (b)(3) 

6 which are required to be amortized shall be con7 sidered fully amortized for purposes of such 

8 subparagraphs. 

9 ‘‘(6) FULL-FUNDING LIMITATION.— 

10 ‘‘(A) IN GENERAL.—For purposes of para11 graph (5), the term ‘full-funding limitation’ 

12 means the excess (if any) of— 

13 ‘‘(i) the accrued liability (including 

14 normal cost) under the plan (determined 

15 under the entry age normal funding meth16 od if such accrued liability cannot be di17 rectly calculated under the funding method 

18 used for the plan), over 

19 ‘‘(ii) the lesser of— 

20 ‘‘(I) the fair market value of the 

21 plan’s assets, or 

22 ‘‘(II) the value of such assets de23 termined under paragraph (2). 

24 ‘‘(B) MINIMUM AMOUNT.— 
17 

•S 1825 IS

1 ‘‘(i) IN GENERAL.—In no event shall 

2 the full-funding limitation determined 

3 under subparagraph (A) be less than the 

4 excess (if any) of— 

5 ‘‘(I) 90 percent of the current li6 ability of the plan (including the ex7 pected increase in current liability due 

8 to benefits accruing during the plan 

9 year), over 

10 ‘‘(II) the value of the plan’s as11 sets determined under paragraph (2). 

12 ‘‘(ii) ASSETS.—For purposes of clause 

13 (i), assets shall not be reduced by any 

14 credit balance in the funding standard ac15 count. 

16 ‘‘(C) FULL FUNDING LIMITATION.—For 

17 purposes of this paragraph, unless otherwise 

18 provided by the plan, the accrued liability under 

19 a multiemployer plan shall not include benefits 

20 which are not nonforfeitable under the plan 

21 after the termination of the plan (taking into 

22 consideration section 411(d)(3) of the Internal 

23 Revenue Code of 1986). 

24 ‘‘(D) CURRENT LIABILITY.—For purposes 

25 of this paragraph— 
18 

•S 1825 IS

1 ‘‘(i) IN GENERAL.—The term ‘current 

2 liability’ means all liabilities to employees 

3 and their beneficiaries under the plan. 

4 ‘‘(ii) TREATMENT OF UNPREDICTABLE

5 CONTINGENT EVENT BENEFITS.—For pur6 poses of clause (i), any benefit contingent 

7 on an event other than— 

8 ‘‘(I) age, service, compensation, 

9 death, or disability, or 

10 ‘‘(II) an event which is reason11 ably and reliably predictable (as deter12 mined by the Secretary of the Treas13 ury), 

14 shall not be taken into account until the 

15 event on which the benefit is contingent oc16 curs. 

17 ‘‘(iii) INTEREST RATE USED.—The 

18 rate of interest used to determine current 

19 liability under this paragraph shall be the 

20 rate of interest determined under subpara21 graph (E). 

22 ‘‘(iv) MORTALITY TABLES.— 

23 ‘‘(I) COMMISSIONERS’ STANDARD

24 TABLE.—In the case of plan years be25 ginning before the first plan year to 
19 

•S 1825 IS

1 which the first tables prescribed under 

2 subclause (II) apply, the mortality 

3 table used in determining current li4 ability under this paragraph shall be 

5 the table prescribed by the Secretary 

6 of the Treasury which is based on the 

7 prevailing commissioners’ standard 

8 table (described in section 

9 807(d)(5)(A) of the Internal Revenue 

10 Code of 1986) used to determine re11 serves for group annuity contracts 

12 issued on January 1, 1993. 

13 ‘‘(II) SECRETARIAL AUTHOR14 ITY.—The Secretary of the Treasury 

15 may by regulation prescribe for plan 

16 years beginning after December 31, 

17 1999, mortality tables to be used in 

18 determining current liability under 

19 this subsection. Such tables shall be 

20 based upon the actual experience of 

21 pension plans and projected trends in 

22 such experience. In prescribing such 

23 tables, such Secretary shall take into 

24 account results of available inde-
20 

•S 1825 IS

1 pendent studies of mortality of indi2 viduals covered by pension plans. 

3 ‘‘(v) SEPARATE MORTALITY TABLES

4 FOR THE DISABLED.—Notwithstanding 

5 clause (iv)— 

6 ‘‘(I) IN GENERAL.—In the case 

7 of plan years beginning after Decem8 ber 31, 1995, the Secretary of the 

9 Treasury shall establish mortality ta10 bles which may be used (in lieu of the 

11 tables under clause (iv)) to determine 

12 current liability under this subsection 

13 for individuals who are entitled to 

14 benefits under the plan on account of 

15 disability. Such Secretary shall estab16 lish separate tables for individuals 

17 whose disabilities occur in plan years 

18 beginning before January 1, 1995, 

19 and for individuals whose disabilities 

20 occur in plan years beginning on or 

21 after such date. 

22 ‘‘(II) SPECIAL RULE FOR DIS23 ABILITIES OCCURRING AFTER 1994.— 

24 In the case of disabilities occurring in 

25 plan years beginning after December 
21 

•S 1825 IS

1 31, 1994, the tables under subclause 

2 (I) shall apply only with respect to in3 dividuals described in such subclause 

4 who are disabled within the meaning 

5 of title II of the Social Security Act 

6 and the regulations thereunder. 

7 ‘‘(vi) PERIODIC REVIEW.—The Sec8 retary of the Treasury shall periodically (at 

9 least every 5 years) review any tables in ef10 fect under this subparagraph and shall, to 

11 the extent such Secretary determines nec12 essary, by regulation update the tables to 

13 reflect the actual experience of pension 

14 plans and projected trends in such experi15 ence. 

16 ‘‘(E) REQUIRED CHANGE OF INTEREST

17 RATE.—For purposes of determining a plan’s 

18 current liability for purposes of this para19 graph— 

20 ‘‘(i) IN GENERAL.—If any rate of in21 terest used under the plan under sub22 section (b)(6) to determine cost is not 

23 within the permissible range, the plan shall 

24 establish a new rate of interest within the 

25 permissible range. 
22 

•S 1825 IS

1 ‘‘(ii) PERMISSIBLE RANGE.—For pur2 poses of this subparagraph— 

3 ‘‘(I) IN GENERAL.—Except as 

4 provided in subclause (II), the term 

5 ‘permissible range’ means a rate of 

6 interest which is not more than 5 per7 cent above, and not more than 10 per8 cent below, the weighted average of 

9 the rates of interest on 30-year Treas10 ury securities during the 4-year period 

11 ending on the last day before the be12 ginning of the plan year. 

13 ‘‘(II) SECRETARIAL AUTHOR14 ITY.—If the Secretary of the Treasury 

15 finds that the lowest rate of interest 

16 permissible under subclause (I) is un17 reasonably high, such Secretary may 

18 prescribe a lower rate of interest, ex19 cept that such rate may not be less 

20 than 80 percent of the average rate 

21 determined under such subclause. 

22 ‘‘(iii) ASSUMPTIONS.—Notwith23 standing paragraph (3)(A), the interest 

24 rate used under the plan shall be— 
23 

•S 1825 IS

1 ‘‘(I) determined without taking 

2 into account the experience of the 

3 plan and reasonable expectations, but 

4 ‘‘(II) consistent with the assump5 tions which reflect the purchase rates 

6 which would be used by insurance 

7 companies to satisfy the liability 

8 under the plan. 

9 ‘‘(7) ANNUAL VALUATION.— 

10 ‘‘(A) IN GENERAL.—For purposes of this 

11 section, a determination of experience gains and 

12 losses and a valuation of the plan’s liability 

13 shall be made not less frequently than once 

14 every year, except that such determination shall 

15 be made more frequently to the extent required 

16 in particular cases under regulations prescribed 

17 by the Secretary of the Treasury. 

18 ‘‘(B) VALUATION DATE.— 

19 ‘‘(i) CURRENT YEAR.—Except as pro20 vided in clause (ii), the valuation referred 

21 to in subparagraph (A) shall be made as of 

22 a date within the plan year to which the 

23 valuation refers or within one month prior 

24 to the beginning of such year. 
24 

•S 1825 IS

1 ‘‘(ii) USE OF PRIOR YEAR VALU2 ATION.—The valuation referred to in sub3 paragraph (A) may be made as of a date 

4 within the plan year prior to the year to 

5 which the valuation refers if, as of such 

6 date, the value of the assets of the plan are 

7 not less than 100 percent of the plan’s cur8 rent liability (as defined in paragraph 

9 (6)(D) without regard to clause (iv) there10 of). 

11 ‘‘(iii) ADJUSTMENTS.—Information 

12 under clause (ii) shall, in accordance with 

13 regulations, be actuarially adjusted to re14 flect significant differences in participants. 

15 ‘‘(iv) LIMITATION.—A change in fund16 ing method to use a prior year valuation, 

17 as provided in clause (ii), may not be made 

18 unless as of the valuation date within the 

19 prior plan year, the value of the assets of 

20 the plan are not less than 125 percent of 

21 the plan’s current liability (as defined in 

22 paragraph (6)(D) without regard to clause 

23 (iv) thereof). 

24 ‘‘(8) TIME WHEN CERTAIN CONTRIBUTIONS

25 DEEMED MADE.—For purposes of this section, any 
25 

•S 1825 IS

1 contributions for a plan year made by an employer 

2 after the last day of such plan year, but not later 

3 than two and one-half months after such day, shall 

4 be deemed to have been made on such last day. For 

5 purposes of this subparagraph, such two and one6 half month period may be extended for not more 

7 than six months under regulations prescribed by the 

8 Secretary of the Treasury. 

9 ‘‘(9) INTEREST RULE FOR WAIVERS AND EX10 TENSIONS.—The interest rate applicable for any 

11 plan year for purposes of computing the amortiza12 tion charge described in subsection (b) (2) (C) and 

13 in connection with an extension granted under sub14 section (d) shall be the rate of interest used under 

15 the plan for determining costs. 

16 ‘‘(d) EXTENSION OF AMORTIZATION PERIODS FOR

17 MULTIEMPLOYER PLANS.—In the case of a multiemployer 

18 plan— 

19 ‘‘(1) EXTENSION.—The period of years re20 quired to amortize any unfunded liability (described 

21 in any clause of subsection (b)(2)(B) or (b)(4)) of 

22 any multiemployer plan meeting the criteria of para23 graph (2) shall be extended (in addition to any ex24 tension under paragraph (2)) by the Secretary of the 
26 

•S 1825 IS

1 Treasury for a period of time as requested by the 

2 plan in its application, but not in excess of 5 years. 

3 ‘‘(2) CRITERIA.—A multiemployer pension plan 

4 meets the criteria of this paragraph if its actuary 

5 certifies that, based on reasonable assumptions— 

6 ‘‘(A) absent the extension, the plan would 

7 have an accumulated funding deficiency in the 

8 current plan year or any of the 9 succeeding 

9 plan years, 

10 ‘‘(B) the plan sponsor has adopted a plan 

11 to improve the plan’s funding status, and 

12 ‘‘(C) the plan is projected to have suffi13 cient assets to timely pay expected benefits and 

14 anticipated expenditures over the amortization 

15 period as extended. 

16 ‘‘(3) ADDITIONAL EXTENSION.—The period of 

17 years required to amortize any unfunded liability 

18 (described in any clause of subsection (b)(2)(B) or 

19 (b)(4)) of any multiemployer plan may be extended 

20 (in addition to any extension under paragraph (1) ) 

21 by the Secretary of the Treasury for a period of time 

22 (not in excess of 5 years) if such Secretary deter23 mines that such extension would carry out the pur24 poses of this Act and would provide adequate protec25 tion for participants under the plan and their bene-
27 

•S 1825 IS

1 ficiaries and if he determines that the failure to per2 mit such extension would— 

3 ‘‘(A) result in— 

4 ‘‘(i) a substantial risk to the voluntary 

5 continuation of the plan, or 

6 ‘‘(ii) a substantial curtailment of pen7 sion benefit levels or employee compensa8 tion, and 

9 ‘‘(B) be adverse to the interests of plan 

10 participants in the aggregate. 

11 The Secretary shall act upon any application for an 

12 extension under this paragraph within 180 days of 

13 the submission of such application. If the Secretary 

14 rejects the application for an extension under this 

15 paragraph, the Secretary shall provide notice to the 

16 plan detailing the specific reasons for the rejection, 

17 including references to the criteria set forth above. 

18 ‘‘(4) ADVANCE NOTICE.— 

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

20 Treasury shall, before granting an extension 

21 under this section, require each applicant to 

22 provide evidence satisfactory to such Secretary 

23 that the applicant has provided notice of the fil24 ing of the application for such extension to each 

25 affected party (as defined in section 
28 

•S 1825 IS

1 4001(a)(21)) with respect to the affected plan. 

2 Such notice shall include a description of the 

3 extent to which the plan is funded for benefits 

4 which are guaranteed under title IV and for 

5 benefit liabilities. 

6 ‘‘(B) CONSIDERATION OF RELEVANT IN7 FORMATION.—The Secretary of the Treasury 

8 shall consider any relevant information provided 

9 by a person to whom notice was given under 

10 paragraph (1).’’. 

11 (b) SHORTFALL FUNDING METHOD.— 

12 (1) IN GENERAL.—A multiemployer plan meet13 ing the criteria of paragraph (2) shall be permitted 

14 to adopt, or to cease using, the shortfall funding 

15 method. The adoption and use of such funding 

16 method, and the voluntary cessation of the use of 

17 such method, shall be deemed approved by the Sec18 retary under section 302(c)(5). 

19 (2) CRITERIA.—A multiemployer pension plan 

20 meets the criteria of this clause if— 

21 (A) 5 plan years have elapsed since the 

22 plan last elected to use (or cease the use of) the 

23 shortfall funding method, and 
29 

•S 1825 IS

1 (B) the plan is not operating under an am2 ortization period extension under subsection 

3 (d). 

4 (3) SHORTFALL FUNDING METHOD DEFINED.— 

5 As used in this subparagraph, the term ‘‘shortfall 

6 funding method’’ means the shortfall funding meth7 od described in section 1.412(c)(1)–2 of title 26 of 

8 the Code of Federal Regulations (26 C.F.R. 

9 1.412(c)(1)–2). 

10 (4) SECTION 302(c)(7) RESTRICTIONS TO

11 APPLY.—In the case of a multiemployer plan that is 

12 on the shortfall funding method pursuant to this 

13 subparagraph, the benefit restrictions in section 

14 302(c)(7) shall apply. 

15 (5) USE OF SHORTFALL METHOD NOT TO PRE16 CLUDE OTHER OPTIONS.—Nothing in this subsection 

17 shall be construed to affect a multiemployer plan’s 

18 ability to adopt the shortfall funding method with 

19 the Secretary of the Treasury’s permission under 

20 otherwise applicable regulations or to affect a multi21 employer plan’s right to change funding methods, 

22 with or without the Secretary of the Treasury’s con23 sent, as provided in applicable rules and regulations 

24 under this subsection. 

25 (c) CONFORMING AMENDMENTS.— 
30 

•S 1825 IS

1 (1) Section 301 of the Employee Retirement In2 come Security Act of 1974 (29 U.S.C. 1081) is 

3 amended by striking subsection (d). 

4 (2) The table of contents in section 1 of such 

5 Act is amended further by inserting after the item 

6 relating to section 302 the following new item: 

‘‘Sec. 302A. Minimum funding standards for multiemployer plans.’’. 

7 (d) EFFECTIVE DATE.— 

8 (1) IN GENERAL.—The amendments made by 

9 this section shall apply to plan years beginning after 

10 2006. 

11 (2) GRANDFATHER.—An extension under sec12 tion 304 of the Employee Retirement Security Act 

13 of 1974 granted by the Secretary with respect to 

14 any application filed with the Secretary on or before 

15 June 30, 2005 will be grandfathered and the inter16 est rate will be determined, for the duration of the 

17 extension and any modification of the extension ap18 proved by the Secretary, based upon the provisions 

19 of section 304(a) of the Employee Retirement Secu20 rity Act of 1974 as in effect prior to the date of en21 actment of this Act. 
31 

•S 1825 IS

1 SEC. 102. ADDITIONAL FUNDING RULES FOR MULTIEM2 PLOYER PLANS IN ENDANGERED OR CRIT3 ICAL STATUS. 

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

5 the Employee Retirement Income Security Act of 1974 (as 

6 amended by section 101) is amended by inserting after 

7 section 302A the following new section: 

8 ‘‘ADDITIONAL FUNDING RULES FOR MULTIEMPLOYER

9 PLANS IN ENDANGERED STATUS OR CRITICAL STATUS

10 ‘‘SEC. 302B. (a) ANNUAL CERTIFICATION BY PLAN

11 ACTUARY.— 

12 ‘‘(1) IN GENERAL.—During the 90-day period 

13 beginning on the first day of each plan year of a 

14 multiemployer plan, the plan actuary shall certify to 

15 the Secretary of the Treasury whether or not the 

16 plan is in endangered status for such plan year and 

17 whether or not the plan is in critical status for such 

18 plan year. 

19 ‘‘(2) ACTUARIAL PROJECTIONS OF ASSETS AND

20 LIABILITIES.— 

21 ‘‘(A) IN GENERAL.—In making the deter22 minations and projections under paragraph (1) 

23 and subsections (b)(2) and (c)(2), the plan ac24 tuary shall make projections required for the 

25 current and succeeding plan years, using rea26 sonable actuarial estimates, assumptions and 
32 

•S 1825 IS

1 methods, of the current value of the assets of 

2 the plan, and the present value of all liabilities 

3 to participants and beneficiaries under the plan 

4 for the current plan year as of the beginning of 

5 such year. The present value of liabilities as of 

6 the beginning of such year shall be determined 

7 based on the actuarial statement required under 

8 section 103(d) with respect to the most recently 

9 filed annual report or the actuarial valuation 

10 for the preceding plan year. 

11 ‘‘(B) DETERMINATIONS OF FUTURE CON12 TRIBUTIONS.—Any such actuarial projection of 

13 plan assets shall assume— 

14 ‘‘(i) reasonably anticipated employer 

15 contributions for the current and suc16 ceeding plan years, assuming that the 

17 terms of the 1 or more collective bar18 gaining agreements pursuant to which the 

19 plan is maintained for the current plan 

20 year continue in effect for succeeding plan 

21 years, or 

22 ‘‘(ii) that employer contributions for 

23 the most recent plan year will continue in24 definitely, but only if the plan actuary de25 termines there have been no significant de-
33 

•S 1825 IS

1 mographic changes that would make such 

2 assumption unreasonable. 

3 ‘‘(3) PENALTY FOR FAILURE TO SECURE TIME4 LY ACTUARIAL CERTIFICATION.—Failure of the ac5 tuary to certify the plan’s status under this sub6 section by the date specified in paragraph (1), shall 

7 be treated for purposes of section 502(c)(2) as a 

8 failure or refusal by the plan administrator to file 

9 the annual report required to be filed with the Sec10 retary under section 101(b)(4). 

11 ‘‘(4) NOTICE.—In any case in which a multiem12 ployer plan is certified to be in endangered or crit13 ical status under paragraph (1), the plan sponsor 

14 shall, not later than 30 days after the date of the 

15 certification, provide notification of the endangered 

16 or critical status to the participants and bene17 ficiaries, the bargaining parties, the Pension Benefit 

18 Guaranty Corporation, the Secretary of the Treas19 ury, and the Secretary of Labor. 

20 ‘‘(b) FUNDING RULES FOR MULTIEMPLOYER PLANS

21 IN ENDANGERED STATUS.— 

22 ‘‘(1) IN GENERAL.—In any case in which a 

23 multiemployer plan is in endangered status for a 

24 plan year and no funding improvement plan under 

25 this subsection with respect to such multiemployer 
34 

•S 1825 IS

1 plan is in effect for the plan year, the plan sponsor 

2 shall, in accordance with this subsection, adopt a 

3 funding improvement plan not later than 240 days 

4 following the required date for the actuarial certifi5 cation of endangered status under subsection (a)(1). 

6 ‘‘(2) ENDANGERED STATUS.—A multiemployer 

7 plan is endangered for a plan year if, as determined 

8 by the plan actuary under subsection (a), the plan 

9 is not in critical status for the plan year and ei10 ther— 

11 ‘‘(A) the plan’s funded percentage for such 

12 plan year is less than 80 percent, or 

13 ‘‘(B) the plan has an accumulated funding 

14 deficiency for such plan year under section 

15 302A or is projected to have such an accumu16 lated funding deficiency for any of the 6 suc17 ceeding plan years, taking into account any ex18 tension of amortization periods under section 

19 302A(d). 

20 ‘‘(3) FUNDING IMPROVEMENT PLAN.—A fund21 ing improvement plan shall consist of actions, in22 cluding actions to be proposed to the bargaining par23 ties, formulated to provide, under reasonable actu24 arial assumptions, for the attainment of (A) or (B) 

25 below, as applicable: 
35 

•S 1825 IS

1 ‘‘(A) CERTAIN ENDANGERED PLANS.—In 

2 the case of an endangered plan to which para3 graph (2)(B) does not apply, an increase in the 

4 plan’s funded percentage by the end of the 

5 funding improvement period. 

6 ‘‘(B) ALL OTHER ENDANGERED PLANS.— 

7 In the case of an endangered plan described in 

8 paragraph (2)(B)— 

9 ‘‘(i) an increase in the plan’s funded 

10 percentage such that— 

11 ‘‘(I) the difference between 100 

12 percent and the plan’s funded per13 centage at the end of the funding im14 provement period is not more than, 

‘‘(II) 2 15 ⁄3 of the difference between 

16 100 percent and the plan’s funded 

17 percentage at the beginning of the 

18 funding improvement period. 

19 ‘‘(ii) no accumulated funding defi20 ciency for any plan year during the fund21 ing improvement period (taking into ac22 count any extension of amortization peri23 ods under section 302A(d)). 

24 ‘‘(C) FUNDING IMPROVEMENT PERIOD.— 

25 The funding improvement period for any fund-
36 

•S 1825 IS

1 ing improvement plan adopted pursuant to this 

2 subsection is the 10-year period beginning on 

3 the first day of the first plan year of the multi4 employer plan following the earlier of — 

5 ‘‘(i) the second anniversary of the 

6 date of the adoption of the funding im7 provement plan, or 

8 ‘‘(ii) the expiration of the collective 

9 bargaining agreements in effect on the due 

10 date for the actuarial certification of en11 dangered status under subsection (a)(1) 

12 and covering, as of such due date, at least 

13 75 percent of the active participants in 

14 such multiemployer plan. 

15 ‘‘(D) SPECIAL RULES FOR CERTAIN SERI16 OUSLY UNDERFUNDED PLANS.— 

17 ‘‘(i) In the case of an endangered plan 

18 described in paragraph (2)(B) for which 

19 the funded percentage for the plan year for 

20 which the initial certification is made 

21 under subsection (a)(1) is 70 percent or 

22 less, paragraph (3) (B)(i)(II) shall be applied by substituting ‘4⁄5’ for ‘2 23 ⁄3’ and para24 graph (3)(C) shall be applied by sub-
37 

•S 1825 IS

1 stituting ‘the 15-year period’ for ‘the 10- 

2 year period’. 

3 ‘‘(ii) In the case of an endangered 

4 plan described in paragraph (2)(B) for 

5 which the funded percentage for the plan 

6 year for which the initial certification is 

7 made under subsection (a)(1) is more than 

8 70 percent but less than 80 percent, and— 

9 ‘‘(I) the plan actuary certifies 

10 within 30 days after the certification 

11 under subsection (a)(1) that, based on 

12 the terms of the plan and the collec13 tive bargaining agreements in effect 

14 at the time of such certification, the 

15 plan is not projected to be able to at16 tain the increase described in sub17 paragraph (B)(i) over the period de18 scribed in subparagraph (C), and 

19 ‘‘(II) the plan year is prior to the 

20 day described in subparagraph (C)(ii), 

21 subparagraph (B)(i)(II) shall be applied by 

substituting ‘4⁄5’ for ‘2 22 ⁄3’ and subparagraph 

23 (C) shall be applied by substituting ‘the 

24 15-year period’ for ‘the 10-year period’. 
38 

•S 1825 IS

1 ‘‘(iii) For any plan year following the 

2 year described in clause (ii)(II), subpara3 graph (B)(i)(II) and subparagraph (C) 

4 shall apply, except that for each plan year 

5 ending after such date for which the plan 

6 actuary certifies (at the time of the annual 

7 certification under subsection (a)(1) for 

8 such plan year) that, based on the terms 

9 of the plan and collective bargaining agree10 ments in effect at the time of that annual 

11 certification, the plan is not projected to be 

12 able to attain the increase described in 

13 subparagraph (B)(i) over the period de14 scribed in subparagraph (C), subparagraph 

15 (C) shall be applied by substituting ‘the 

16 15-year period’ for ‘the 10-year period’. 

17 ‘‘(E) REPORTING.—A summary of any 

18 funding improvement plan or modification 

19 thereto adopted during any plan year, together 

20 with annual updates regarding the funding 

21 ratio of the plan, shall be included in the an22 nual report for such plan year under section 

23 104(a) and in the summary annual report for 

24 such plan year under section 104(b)(3). 
39 

•S 1825 IS

1 ‘‘(4) DEVELOPMENT OF FUNDING IMPROVE2 MENT PLAN.— 

3 ‘‘(A) ACTIONS BY PLAN SPONSOR PENDING

4 COMMENCEMENT OF FUNDING IMPROVEMENT

5 PERIOD.—In the case of an endangered plan 

6 described in paragraph (2)(B), pending the 

7 commencement of the funding improvement pe8 riod, the plan sponsor shall take all reasonable 

9 actions consistent with the terms of the plan 

10 and applicable law and expected, based on rea11 sonable assumptions, to achieve— 

12 ‘‘(i) an increase in the plan’s funded 

13 percentage, and 

14 ‘‘(ii) postponement of an accumulated 

15 funding deficiency for at least 1 additional 

16 plan year. 

17 Such actions include applications for extensions 

18 of amortization periods under section 302A(d), 

19 use of the shortfall funding method in making 

20 funding standard account computations, 

21 amendments to the plan’s benefit structure, re22 ductions in future benefit accruals, and other 

23 reasonable actions consistent with the terms of 

24 the plan and applicable law. 
40 

•S 1825 IS

1 ‘‘(B) INFORMATION PROVIDED TO BAR2 GAINING PARTIES BY PLAN SPONSOR.— 

3 ‘‘(i) IN GENERAL.—Within 30 days 

4 after the adoption of a funding improve5 ment plan, the plan sponsor of an endan6 gered plan described in paragraph (2)(B) 

7 shall provide to the bargaining parties a 

8 schedule showing revised benefit struc9 tures, contribution structures, or both, 

10 which, if adopted, may reasonably be ex11 pected to enable the multiemployer plan to 

12 meet the applicable benchmarks described 

13 in paragraph (3) in accordance with the 

14 funding improvement plan. The schedule 

15 shall describe the reductions in future ben16 efit accruals and increases in contributions 

17 (if any) that the plan sponsor determines 

18 are reasonably necessary to achieve the 

19 benchmarks, assuming there are no in20 creases in contributions under the plan 

21 other than the increases necessary to 

22 achieve the benchmarks after future ben23 efit accruals have been reduced to the max24 imum extent permitted by law. 
41 

•S 1825 IS

1 ‘‘(ii) ALTERNATIVES AT PLAN SPON2 SOR’S DISCRETION.—The plan sponsor 

3 may, as it deems appropriate, prepare and 

4 provide the bargaining parties with addi5 tional information relating to contribution 

6 rates or benefit reductions, alternative 

7 schedules, or other information relevant to 

8 achieving the benchmarks under the fund9 ing improvement plan. 

10 ‘‘(5) MAINTENANCE OF CONTRIBUTIONS PEND11 ING ADOPTION OF FUNDING IMPROVEMENT PLAN.— 

12 Pending adoption of a funding improvement plan by 

13 the plan sponsor, the plan sponsor may not accept 

14 a collective bargaining agreement or participation 

15 agreement with respect to the multiemployer plan 

16 that provides for— 

17 ‘‘(A) a reduction in the level of contribu18 tions for any participants, 

19 ‘‘(B) a suspension of contributions with re20 spect to any period of service, or 

21 ‘‘(C) any new direct or indirect exclusion 

22 of younger or newly hired employees from plan 

23 participation. 

24 ‘‘(6) NO BENEFIT INCREASES PENDING ADOP25 TION OF FUNDING IMPROVEMENT PLAN.—Pending 
42 

•S 1825 IS

1 adoption of a funding improvement plan with respect 

2 to an endangered multiemployer plan— 

3 ‘‘(A) IN GENERAL.—No amendment of the 

4 plan which increases the liabilities of the plan 

5 by reason of any increase in benefits, any 

6 change in the accrual of benefits, or any change 

7 in the rate at which benefits become nonforfeit8 able under the plan may be adopted. 

9 ‘‘(B) EXCEPTION.—Subparagraph (A) 

10 shall not apply to any plan amendment which 

11 is required as a condition of qualification under 

12 part I of subchapter D of chapter 19 of subtitle 

13 A of the Internal Revenue Code of 1986 or to 

14 comply with other applicable law. 

15 ‘‘(7) PENALTY IF NO FUNDING IMPROVEMENT

16 PLAN ADOPTED.—A failure of the plan sponsor to 

17 adopt a funding improvement plan by the date speci18 fied in subsection (b)(1) shall be treated for pur19 poses of section 502(c)(2) as a failure or refusal by 

20 the plan administrator to file the annual report re21 quired to be filed with the Secretary under section 

22 101(b)(4). 

23 ‘‘(8) COMPLIANCE WITH FUNDING IMPROVE24 MENT PLAN.—Upon adoption of a funding improve-
43 

•S 1825 IS

1 ment plan with respect to an endangered multiem2 ployer plan— 

3 ‘‘(A) a plan described in paragraph (2)(B) 

4 may not be amended— 

5 ‘‘(i) so as to be inconsistent with the 

6 funding improvement plan, or 

7 ‘‘(ii) so as to increase benefits, includ8 ing future benefit accruals, unless the plan 

9 actuary certifies that, after taking into ac10 count the benefit increase, the plan is still 

11 reasonably expected to meet the applicable 

12 benchmarks under paragraph (3) in ac13 cordance with the schedule contemplated in 

14 the funding improvement plan, and 

15 ‘‘(B) a plan to which paragraph (2)(B) 

16 does not apply may not be amended— 

17 ‘‘(i) so as to be inconsistent with the 

18 funding improvement plan, or 

19 ‘‘(ii) so as to increase benefits, includ20 ing future benefit accruals, unless the ac21 tuary certifies that such increase is paid 

22 for out of contributions not required by the 

23 funding improvement plan to meet the ap24 plicable benchmarks under paragraph (3). 
44 

•S 1825 IS

1 ‘‘(9) UPDATES TO FUNDING IMPROVEMENT

2 PLAN AND SCHEDULES.— 

3 ‘‘(A) FUNDING IMPROVEMENT PLAN.—The 

4 funding improvement plan may be periodically 

5 updated by the plan sponsor. A copy of any up6 dated funding improvement plan shall be filed 

7 with the plan’s annual report under section 104 

8 of the Employee Retirement Income Security 

9 Act of 1974. 

10 ‘‘(B) SCHEDULES.—The plan sponsor may 

11 periodically update any schedule of contribution 

12 rates provided under this subsection to reflect 

13 the experience of the plan. 

14 ‘‘(C) DURATION OF SCHEDULE.—A sched15 ule of contribution rates provided by the plan 

16 sponsor and relied upon by bargaining parties 

17 in negotiating a collective bargaining agreement 

18 shall remain in effect for the duration of that 

19 collective bargaining agreement. 

20 ‘‘(D) DURATION OF FUNDING IMPROVE21 MENT PLAN.—A funding improvement plan 

22 adopted under this subsection shall remain in 

23 effect with respect to a multiemployer plan, 

24 with modifications if applicable, until a plan 

25 year in which the multiemployer plan is no 
45 

•S 1825 IS

1 longer in endangered status as certified by the 

2 actuary under subsection (a). 

3 ‘‘(c) FUNDING RULES FOR MULTIEMPLOYER PLANS

4 IN CRITICAL STATUS.— 

5 ‘‘(1) IN GENERAL.—In any case in which a 

6 multiemployer plan is in critical status for a plan 

7 year as described in paragraph (2) and no rehabili8 tation plan under this subsection with respect to 

9 such multiemployer plan is in effect for the plan 

10 year, the plan sponsor shall, in accordance with this 

11 subsection, adopt a rehabilitation plan. The rehabili12 tation plan shall be adopted not later than 240 days 

13 following the required date for the actuarial certifi14 cation of critical status under subsection (a)(1). 

15 ‘‘(2) CRITICAL STATUS.— 

16 ‘‘(A) ENTRY.—A multiemployer plan is in 

17 critical status for a plan year if, as determined 

18 by the plan actuary under subsection (a), the 

19 plan is described in paragraph (3) . 

20 ‘‘(B) EMERGENCE.—A plan that has been 

21 determined and certified as being in critical sta22 tus shall remain in such status until a plan 

23 year for which the plan actuary certifies, in ac24 cordance with subsection (a)(2), that the plan is 

25 not projected to have an accumulated funding 
46 

•S 1825 IS

1 deficiency for the plan year or any of the 9 suc2 ceeding plan years, without regard to use of the 

3 shortfall method or any extension of amortiza4 tion periods under section 302A(d). 

5 ‘‘(3) CRITICALITY DESCRIPTION.—For purposes 

6 of paragraph (2)(B), a plan is described in this 

7 paragraph if the plan is described in at least one of 

8 the following subparagraphs: 

9 ‘‘(A) A plan is described in this subpara10 graph if, as of the beginning of the current plan 

11 year— 

12 ‘‘(i) the funded percentage of the plan 

13 is less than 65 percent, and 

14 ‘‘(ii) the sum of— 

15 ‘‘(I) the market value of plan as16 sets, plus 

17 ‘‘(II) the present value of the 

18 reasonably anticipated employer con19 tributions for the current plan year 

20 and each of the 6 succeeding plan 

21 years, assuming that the terms of the 

22 1 or more collective bargaining agree23 ments pursuant to which the plan is 

24 maintained for the current plan year 

25 continue in effect for succeeding plan 
47 

•S 1825 IS

1 years, is less than the present value of 

2 all benefits projected to be payable 

3 under the plan during the current 

4 plan year and each of the 6 suc5 ceeding plan years (plus administra6 tive expenses for such plan years). 

7 ‘‘(B) A plan is described in this subpara8 graph if, as of the beginning of the current plan 

9 year, the sum of— 

10 ‘‘(i) the market value of plan assets, 

11 plus 

12 ‘‘(ii) the present value of the reason13 ably anticipated employer contributions for 

14 the current plan year and each of the 4 

15 succeeding plan years, assuming that the 

16 terms of the 1 or more collective bar17 gaining agreements pursuant to which the 

18 plan is maintained for the current plan 

19 year remain in effect for succeeding plan 

20 years, 

21 is less than the present value of all benefits pro22 jected to be payable under the plan during the 

23 current plan year and each of the 4 succeeding 

24 plan years (plus administrative expenses for 

25 such plan years). 
48 

•S 1825 IS

1 ‘‘(C) A plan is described in this subpara2 graph if— 

3 ‘‘(i) as of the beginning of the current 

4 plan year, the funded percentage of the 

5 plan is less than 65 percent, and 

6 ‘‘(ii) the plan has an accumulated 

7 funding deficiency for the current plan 

8 year or is projected to have an accumu9 lated funding deficiency for any of the 4 

10 succeeding plan years, not taking into ac11 count any extension of amortization peri12 ods under section 302A(d). 

13 ‘‘(D) A plan is described in this subpara14 graph if— 

15 ‘‘(i)(I) the plan’s normal cost for the 

16 current plan year, plus interest (deter17 mined at the rate used for determining 

18 costs under the plan) for the current plan 

19 year on the amount of unfunded benefit li20 abilities under the plan as of the last date 

21 of the preceding plan year, exceeds 

22 ‘‘(II) the present value, as of the be23 ginning of the current plan year, of the 

24 reasonably anticipated employer contribu25 tions for the current plan year, 
49 

•S 1825 IS

1 ‘‘(ii) the present value, as of the be2 ginning of the current plan year, of non3 forfeitable benefits of inactive participants 

4 is greater than the present value, as of the 

5 beginning of the current plan year, of non6 forfeitable benefits of active participants, 

7 and 

8 ‘‘(iii) the plan is projected to have an 

9 accumulated funding deficiency for the 

10 current plan year or any of the 4 suc11 ceeding plan years, not taking into account 

12 any extension of amortization periods 

13 under section 302A(d). 

14 ‘‘(E) A plan is described in this subpara15 graph if— 

16 ‘‘(i) the funded percentage of the plan 

17 is greater than 65 percent for the current 

18 plan year, and 

19 ‘‘(ii) the plan is projected to have an 

20 accumulated funding deficiency for the 

21 current plan year or for any of the suc22 ceeding 3 plan years, not taking into ac23 count any extension of amortization peri24 ods under section 302A(d). 

25 ‘‘(4) REHABILITATION PLAN.— 
50 

•S 1825 IS

1 ‘‘(A) IN GENERAL.—A rehabilitation plan 

2 shall consist of— 

3 ‘‘(i) actions such as reductions in plan 

4 expenditures (including plan mergers and 

5 consolidations), future benefit accruals or 

6 other benefits, or increases in contributions 

7 if agreed to by the bargaining parties, or 

8 any combination of such actions that are 

9 reasonably expected to enable, under rea10 sonable actuarial assumptions, the plan to 

11 cease to be in critical status by the end of 

12 the rehabilitation period, or 

13 ‘‘(ii) reasonable measures to emerge 

14 from critical status at a later point or to 

15 forestall possible insolvency (within the 

16 meaning of section 4245), if the plan spon17 sor determines that, based on reasonable 

18 actuarial assumptions and upon exhaustion 

19 of all reasonable measures, the plan can 

20 not reasonably be expected to cease to be 

21 in critical status by the end of the rehabili22 tation period. In such a case, the rehabili23 tation plan shall set forth the alternatives 

24 considered, explain why the plan is not 

25 reasonably expected to emerge from critical 
51 

•S 1825 IS

1 status within the stated time period, and 

2 specify when, if ever, the plan is expected 

3 to emerge from critical status in accord4 ance with the rehabilitation plan. 

5 ‘‘(B) REHABILITATION PERIOD.—The re6 habilitation period for a plan in critical status 

7 is the 10-year period beginning on the first day 

8 of the first plan year of the multiemployer plan 

9 following the earlier of— 

10 ‘‘(i) the second anniversary of the 

11 date of the adoption of the rehabilitation 

12 plan, or 

13 ‘‘(ii) the expiration of the collective 

14 bargaining agreements in effect on the 

15 date of the due date for the actuarial cer16 tification of critical status under subsection 

17 (a)(1) and covering, as of such date, at 

18 least 75 percent of the active participants 

19 in such multiemployer plan. 

20 ‘‘(C) REPORTING.—A summary of any re21 habilitation plan or modification thereto adopt22 ed during any plan year, together with annual 

23 updates regarding the funding ratio of the plan, 

24 shall be included in the annual report for such 

25 plan year under section 104(a) and in the sum-
52 

•S 1825 IS

1 mary annual report under section 104(b)(3) for 

2 that plan year. 

3 ‘‘(5) SCHEDULES OF CONTRIBUTIONS, BENE4 FITS AFFECTED.— 

5 ‘‘(A) PRESENTATION BY PLAN SPONSOR.— 

6 ‘‘(i) IN GENERAL.—Within 30 days 

7 after the adoption of a rehabilitation plan, 

8 the plan sponsor of a plan in critical status 

9 shall provide to the bargaining parties a 

10 schedule showing revised benefit struc11 tures, contribution structures, or both, 

12 which, if adopted, may reasonably be ex13 pected to enable the multiemployer plan to 

14 emerge from critical status in accordance 

15 with its rehabilitation plan. The schedule 

16 shall describe the reductions in future ben17 efit accruals, and increases in contributions 

18 (if any) that the plan sponsor determines 

19 are reasonably necessary to emerge from 

20 critical status, assuming there are no in21 creases in contributions under the plan 

22 other than the increases necessary to 

23 emerge from critical status after future 

24 benefit accruals have been reduced to the 

25 maximum extent permitted by law. 
53 

•S 1825 IS

1 ‘‘(ii) ALTERNATIVES AT PLAN SPON2 SOR’S DISCRETION.—The plan sponsor 

3 may, as it deems appropriate, prepare and 

4 provide the bargaining parties with addi5 tional information relating to contribution 

6 rates or benefit reductions, alternative 

7 schedules or other information relevant to 

8 emerging from critical status under the re9 habilitation plan. 

10 ‘‘(iii) LIMITATION ON REDUCTION IN

11 RATES OF FUTURE ACCRUALS.—The 

12 schedule described in subparagraph (A)(i) 

13 of this paragraph shall not reduce the rate 

14 of future accruals below— 

15 ‘‘(I) a monthly benefit equal to 1 

16 percent of the contributions required 

17 to be made with respect to a partici18 pant or the equivalent standard ac19 crual rate for a participant or group 

20 of participants under the collective 

21 bargaining agreements in effect as of 

22 the first day of the plan year in which 

23 the plan enters critical status with 

24 such monthly benefit payable as a sin25 gle life annuity commencing at the 
54 

•S 1825 IS

1 participant’s normal retirement date, 

2 or 

3 ‘‘(II) if lower, the accrual rate 

4 under the plan on such date. 

5 The equivalent standard accrual rate shall 

6 be determined by the plan sponsor based 

7 on the standard or average contribution 

8 base units that they determine to be rep9 resentative for active participants and such 

10 other factors as they determine to be rel11 evant. 

12 ‘‘(B) UPDATES TO REHABILITATION PLAN

13 AND SCHEDULES.— 

14 ‘‘(i) REHABILITATION PLAN.—The re15 habilitation plan shall be annually updated 

16 by the plan sponsor and filed with the 

17 plan’s annual report under section 104 of 

18 the Employee Retirement Income Security 

19 Act of 1974. 

20 ‘‘(ii) SCHEDULES.—The plan sponsor 

21 may periodically update any schedule of 

22 contribution rates provided under this sub23 section to reflect the experience of the 

24 plan, except that the schedule or schedules 
55 

•S 1825 IS

1 under subparagraph (A) shall be updated 

2 at least once every 3 years. 

3 ‘‘(iii) DURATION OF SCHEDULE.—A 

4 schedule of contribution rates provided by 

5 the plan sponsor and relied upon by bar6 gaining parties in negotiating a collective 

7 bargaining agreement shall remain in ef8 fect for the duration of that collective bar9 gaining agreement. 

10 ‘‘(C) DEFAULT SCHEDULE.— 

11 ‘‘(i) IN GENERAL.—If the collective 

12 bargaining agreement providing for con13 tributions under a multiemployer plan that 

14 was in effect at the time the plan entered 

15 critical status has expired and, after re16 ceiving a schedule from the plan sponsor 

17 under subparagraph (A), the bargaining 

18 parties have not adopted bargaining-agree19 ment terms consistent such a schedule, the 

20 schedule described in subparagraph (A)(i) 

21 shall go into effect with respect to those 

22 bargaining parties. 

23 ‘‘(ii) DEEMED WITHDRAWAL.—Upon 

24 the failure of an employer that has an obli25 gation to contribute under the plan to 
56 

•S 1825 IS

1 make contributions in compliance with a 

2 schedule that goes into effect under this 

3 subparagraph, that failure may, at the dis4 cretion of the plan sponsor, be treated as 

5 a withdrawal by the employer from the 

6 plan under section 4203 or a partial with7 drawal by the employer under section 

8 4205. 

9 ‘‘(6) TEMPORARY RESTRICTIONS ON CONTRIBU10 TION RATES.—Pending adoption of a rehabilitation 

11 plan by the plan sponsor, the plan sponsor may not 

12 accept a collective bargaining agreement or partici13 pation agreement with respect to the multiemployer 

14 plan that provides for— 

15 ‘‘(A) a reduction in the level of contribu16 tions for any participants, 

17 ‘‘(B) a suspension of contributions with re18 spect to any period of service, or 

19 ‘‘(C) any new direct or indirect exclusion 

20 of younger or newly hired employees from plan 

21 participation. 

22 ‘‘(7) RESTRICTIONS ON BENEFIT INCREASES.— 

23 ‘‘(A) PENDING ADOPTION OF REHABILITA24 TION PLAN.—Pending adoption of a rehabilita-
57 

•S 1825 IS

1 tion plan with respect to a multiemployer plan 

2 in critical status— 

3 ‘‘(i) IN GENERAL.—No amendment of 

4 the plan which increases the liabilities of 

5 the plan by reason of any increase in bene6 fits, any change in the accrual of benefits, 

7 or any change in the rate at which benefits 

8 become nonforfeitable under the plan may 

9 be adopted. 

10 ‘‘(ii) EXCEPTION.—Clause (i) shall 

11 not apply to any plan amendment which is 

12 required as a condition of qualification 

13 under part I of subchapter D of chapter 

14 19 of subtitle A of the Internal Revenue 

15 Code of 1986 or to comply with other ap16 plicable law. 

17 ‘‘(B) AFTER ADOPTION OF A REHABILITA18 TION PLAN.—After adoption of a rehabilitation 

19 plan with respect to a multiemployer plan in 

20 critical status, the multiemployer plan may not 

21 be amended— 

22 ‘‘(i) so as to be inconsistent with the 

23 rehabilitation plan, or 

24 ‘‘(ii) so as to increase benefits, includ25 ing future benefit accruals, unless the plan 
58 

•S 1825 IS

1 actuary certifies that such increase is paid 

2 for out of additional contributions not con3 templated by the rehabilitation plan, and, 

4 after taking into account the benefit in5 crease, the multiemployer plan still is rea6 sonably expected to emerge from critical 

7 status by the end of the rehabilitation pe8 riod on the schedule contemplated in the 

9 rehabilitation plan. 

10 ‘‘(d) EXPEDITED RESOLUTION OF PLAN SPONSOR

11 DECISIONS.—If, within 60 days of the due date for adop12 tion of a funding improvement plan under subsection (b) 

13 or a rehabilitation plan under subsection (c), the plan 

14 sponsor of a plan in endangered status or a plan in critical 

15 status has not agreed on a funding improvement plan or 

16 rehabilitation plan, then any member of the board or 

17 group that constitutes the plan sponsor may require that 

18 the plan sponsor enter into an expedited dispute resolution 

19 procedure for the development and adoption of a funding 

20 improvement plan or rehabilitation plan. 

21 ‘‘(e) NONPARTICIPATION.— 

22 ‘‘(1) BOTH BARGAINED AND NON-BARGAINED

23 EMPLOYEE-PARTICIPANTS.—In the case of an em24 ployer that contributes to a multiemployer plan with 

25 regard both to employees who are covered by 1 or 
59 

•S 1825 IS

1 more collective bargaining agreements and to em2 ployees who are not covered by such an agreement, 

3 if the plan is in endangered status or in critical sta4 tus, benefits of and contributions for the non-bar5 gained employees shall be determined as if those 

6 non-bargained employees were covered under the 

7 first to expire of the employer’s collective bargaining 

8 agreements in effect when the plan went into endan9 gered or critical status. 

10 ‘‘(2) NON-BARGAINED EMPLOYEES ONLY.—In 

11 the case of an employer that contributes to a multi12 employer plan only with respect to employees who 

13 are not covered by a collective bargaining agreement, 

14 subsections (b) and (c) shall be applied as if the em15 ployer were the bargaining parties, and its participa16 tion agreement with the plan was a collective bar17 gaining agreement with a term ending on the first 

18 day of the plan year beginning after the employer is 

19 provided the schedule or schedules described in sub20 sections (b) and (c). 

21 ‘‘(3) EMPLOYEES COVERED BY ACOLLECTIVE

22 BARGAINING AGREEMENT.—Whether an employee is 

23 considered to be covered by a collective bargaining 

24 agreement for purposes of this section shall be deter-
60 

•S 1825 IS

1 mined without regard to the special rule in Treas. 

2 Reg. section 1.410(b)-6(d)(ii)(D). 

3 ‘‘(f) DEFINITIONS; ACTUARIAL METHOD.—For pur4 poses of this section— 

5 ‘‘(1) BARGAINING PARTY.—The term ‘bar6 gaining party’ means, in connection with a multiem7 ployer plan— 

8 ‘‘(A) an employer that has an obligation to 

9 contribute under the plan, and 

10 ‘‘(B) an employee organization which, for 

11 purposes of collective bargaining, represents 

12 plan participants employed by such an em13 ployer. 

14 ‘‘(2) FUNDED PERCENTAGE.—The term ‘fund15 ed percentage’ means the percentage expressed as a 

16 ratio— 

17 ‘‘(A) the numerator of which is the value 

18 of the plan’s assets, as determined under sec19 tion 302A(c)(2), and 

20 ‘‘(B) the denominator of which is the ac21 crued liability of the plan, determined using ac22 tuarial assumptions described in section 

23 302A(c)(3). 
61 

•S 1825 IS

1 ‘‘(3) ACCUMULATED FUNDING DEFICIENCY.— 

2 The term ‘accumulated funding deficiency’ has the 

3 meaning provided such term in section 302A(a). 

4 ‘‘(4) ACTIVE PARTICIPANT.—The term ‘active 

5 participant’ means, in connection with a multiem6 ployer plan, a participant who is in covered service 

7 under the plan. 

8 ‘‘(5) INACTIVE PARTICIPANT.—The term ‘inac9 tive participant’ means, in connection with a multi10 employer plan, a participant, or the beneficiary or 

11 alternate payee of a participant, who— 

12 ‘‘(A) is not in covered service under the 

13 plan, and 

14 ‘‘(B) is in pay status under the plan or has 

15 a nonforfeitable right to benefits under the 

16 plan. 

17 ‘‘(6) PAY STATUS.—A person is in ‘pay status’ 

18 under a multiemployer plan if— 

19 ‘‘(A) at any time during the current plan 

20 year, such person is a participant or beneficiary 

21 under the plan and is paid an early, late, nor22 mal, or disability retirement benefit under the 

23 plan (or a death benefit under the plan related 

24 to a retirement benefit), or 
62 

•S 1825 IS

1 ‘‘(B) to the extent provided in regulations 

2 of the Secretary of the Treasury, such person 

3 is entitled to such a benefit under the plan. 

4 ‘‘(7) OBLIGATION TO CONTRIBUTE.—The term 

5 ‘obligation to contribute’ has the meaning provided 

6 such term under section 4212(a). 

7 ‘‘(8) ACTUARIAL METHOD.—Notwithstanding 

8 any other provision of this section, the actuary’s de9 terminations with respect to a plan’s normal cost, 

10 actuarial accrued liability and improvements in a 

11 plan’s funded percentage under this section shall be 

12 based upon the unit credit funding method (whether 

13 or not that method is used for the plan’s actuarial 

14 valuation).’’. 

15 (b) CAUSE OF ACTION TO COMPEL ADOPTION OF

16 FUNDING IMPROVEMENT OR REHABILITATION PLAN.— 

17 Section 502(a) of the Employee Retirement Income Secu18 rity Act of 1974 shall be amended by (1) striking ‘‘or’’ 

19 at the end of paragraph (8) thereof, (2) striking 

20 ‘‘amounts.’’ at the end of paragraph (9) and substituting 

21 therefor ‘‘amounts; or’’ and adding, after paragraph (9), 

22 the following: 

23 ‘‘(9) In the case of a multiemployer plan that 

24 has been certified by the actuary to be in endan25 gered or critical status under section 302B, if the 
63 

•S 1825 IS

1 plan sponsor has not adopted a funding improve2 ment or rehabilitation plan under subsection (b) or 

3 (c) of such section by the deadline established in 

4 that section for the adoption of such a funding im5 provement plan or rehabilitation plan, by an em6 ployer that has an obligation to contribute with re7 spect to the multiemployer plan or an employee or8 ganization that represents active participants in the 

9 multiemployer plan, for an order compelling the plan 

10 sponsor to adopt a funding improvement or rehabili11 tation plan.’’. 

12 (c) 4971 EXCISE TAX INAPPLICABLE.—Section 4971 

13 of the Internal Revenue Code of 1986 is amended by re14 designating subsection (g) as subsection (h), and inserting 

15 after subsection (f) the following: 

16 ‘‘(g) MULTIEMPLOYER PLANS IN CRITICAL STA17 TUS.—Any tax under this section shall not apply with re18 spect to a multiemployer plan in critical status pursuant 

19 to 302B of the Employee Retirement Income Security Act 

20 of 1974, provided that the plan adopts a rehabilitation 

21 plan in accordance with such section and complies with 

22 such rehabilitation plan (as amended from time to time).’’. 

23 (d) NO ADDITIONAL CONTRIBUTIONS REQUIRED.— 
64 

•S 1825 IS

1 (1) Section 302(c)(11) of Employee Retirement 

2 Income Security Act of 1974 is amended by adding 

3 at the end thereof the following new subparagraph: 

4 ‘‘(C) MULTIEMPLOYER PLANS IN CRITICAL

5 STATUS.—Subparagraph (A) shall not apply in 

6 the case of a multiemployer plan for any plan 

7 year in which the plan is in critical status pur8 suant to section 302B, provided that the plan 

9 adopts a rehabilitation plan in accordance with 

10 section 302B(c) and complies with such reha11 bilitation plan (as amended from time to 

12 time).’’. 

13 (2) Section 412(c)(11) of the Internal Revenue 

14 Code of 1986 is amended by adding at the end the 

15 following new subparagraph: 

16 ‘‘(C) MULTIEMPLOYER PLANS IN CRITICAL

17 STATUS.—Subparagraph (A) shall not apply in 

18 the case of a multiemployer plan for any plan 

19 year in which the plan is in critical status pur20 suant to 302B of the Employee Retirement In21 come Security Act of 1974, provided that the 

22 plan adopts a rehabilitation plan in accordance 

23 with such section and complies with such reha24 bilitation plan (as amended from time to 

25 time).’’. 
65 

•S 1825 IS

1 (e) CONFORMING AMENDMENT.—The table of con2 tents in section 1 of such Act (as amended by section 101 

3 of this Act) is amended further by inserting after the item 

4 relating to section 302A the following new item: 

‘‘Sec. 302B. Additional funding rules for multiemployer plans in endangered 

status or critical status.’’. 

5 (f) EFFECTIVE DATE.—The amendment made by 

6 this section shall apply with respect to plan years begin7 ning after 2006. 

8 SEC. 103. MEASURE TO FORESTALL INSOLVENCY OF MULTI9 EMPLOYER PLANS. 

10 Section 4245(d)(1) of the Employee Retirement In11 come Security Act of 1974 (29 U.S.C. 1426(d)(1)) is 

12 amended— 

13 (1) by striking ‘‘3 plan years’’ the second place 

14 it appears and inserting ‘‘5 plan years’’, and 

15 (2) by adding at the end the following new sen16 tence: ‘‘If the plan sponsor makes such a determina17 tion that the plan will be insolvent in any of the next 

18 5 plan years, the plan sponsor shall make the com19 parison under this paragraph at least annually until 

20 the plan sponsor makes a determination that the 

21 plan will not be insolvent in any of the next 5 plan 

22 years.’’ 
66 

•S 1825 IS

1 SEC. 104. WITHDRAWAL LIABILITY REFORMS. 

2 (a) REPEAL OF LIMITATION ON WITHDRAWAL LI3 ABILITY IN THE EVENT OF CERTAIN SALES OF EM4 PLOYER ASSETS TO UNRELATED PARTIES.— 

5 (1) IN GENERAL.—Section 4225 of the Em6 ployee Retirement Income Security Act of 1974 (29 

7 U.S.C. 1405) is repealed. 

8 (2) CONFORMING AMENDMENT.—The table of 

9 contents in section 1 of such Act is amended by 

10 striking the item relating to section 4225. 

11 (3) EFFECTIVE DATE.—The amendments made 

12 by this section shall apply with respect to sales oc13 curring on or after January 1, 2007. 

14 (b) REPEAL OF LIMITATION TO 20 ANNUAL PAY15 MENTS.— 

16 (1) IN GENERAL.—Section 4219 (c) (1) of such 

17 Act (29 U.S.C. 1399(c)(1)) is amended by striking 

18 subparagraph (B). 

19 (2) EFFECTIVE DATE.—The amendment made 

20 by this section shall apply with respect to with21 drawals occurring on or after January 1, 2007. 

22 (c) WITHDRAWAL LIABILITY CONTINUES IF WORK

23 CONTRACTED OUT.— 

24 (1) IN GENERAL.—Clause (i) of section 

25 4205(b)(2)(A) of such Act (29 U.S.C. 1385(b 
67 

•S 1825 IS

1 (2)(A)) is amended by inserting ‘‘or to another party 

2 or parties’’ after ‘‘to another location’’. 

3 (2) EFFECTIVE DATE.—The amendment made 

4 by this subsection shall apply with respect to work 

5 transferred on or after the date of the enactment of 

6 this Act. 

7 (d) REPEAL OF SPECIAL RULE FOR LONG AND

8 SHORT HAUL TRUCKING INDUSTRY.— 

9 (1) IN GENERAL.—Subsection (d) of section 

10 4203 of such Act (29 U.S.C. 1383(4)) is repealed. 

11 (2) EFFECTIVE DATE.—The repeal under this 

12 subsection shall apply with respect to cessations to 

13 have obligations to contribute to multiemployer 

14 plans and cessations of covered operations under 

15 such plans occurring on or after January 1, 2007. 

16 (e) APPLICATION OF RULES TO PLANS PRIMARILY

17 COVERING EMPLOYEES IN THE BUILDING AND CON18 STRUCTION.— 

19 (1) IN GENERAL.—Section 4210(b) of such Act 

20 (29 U.S.C. 1390(b)) is amended— 

21 (A) by striking paragraph (1), and 

22 (B) by redesignating paragraphs (2) 

23 through (4) as paragraphs (1) through (3), re24 spectively. 
68 

•S 1825 IS

1 (2) RESTART RULE.—Section 4211(c) of such 

2 Act is amended— 

3 (A) by striking ‘‘, other than a plan which 

4 primarily covers employees in the building and 

5 construction industry,’’, and 

6 (B) by striking the second sentence there7 of. 

8 (3) EFFECTIVE DATE.—The amendments made 

9 by this subsection shall apply with respect to plan 

10 withdrawals occurring on or after January 1, 2007. 

11 SEC. 105. SPECIAL RULE FOR CERTAIN BENEFIT RESTORA12 TIONS. 

13 In the case of a multiemployer plan for which the 

14 plan document, the trust agreement, or formal written 

15 communication from the plan sponsor to the participants 

16 provided before June 30, 2005, for the restoration of bene17 fits reduced due to benefit reductions adopted on or after 

18 January 1, 2002, and before June 30, 2005, any benefit 

19 restorations pursuant to such document, agreement, or 

20 communication shall not be subject to the amendments 

21 made by this Title to sections 302A(b)(2)(B)(iii), 

22 302B(b)(6), 302B(b)(8)(A)(ii), 302B(b)(8)(B)(ii), 

23 302B(c)(7)(A), and 302B(c)(7)(B)(ii) of the Employee In24 come Security Act of 1974. 
69 

•S 1825 IS

1 TITLE II—DISCLOSURE 

2 SEC. 201. MULTIEMPLOYER DEFINED BENEFIT PLAN FUND3 ING NOTICES. 

4 (a) INCLUSION OF STATEMENT OF THE RATIO OF IN5 ACTIVE PARTICIPANTS TO ACTIVE PARTICIPANTS.—Sec6 tion 101(f)(2)(B) of the Employee Retirement Income Se7 curity Act of 1974 (29 U.S.C. 1021(f)(2)(B)) is amend8 ed— 

9 (1) in clause (iii), by striking ‘‘and’’ at the end; 

10 (2) in clause (iv), by striking ‘‘apply.’’ and in11 serting ‘‘apply; and’’; and 

12 (3) by adding at the end the following: 

13 ‘‘(v) a statement of the ratio, as of 

14 the end of the plan year to which the no15 tice relates, of— 

16 ‘‘(I) the number of participants 

17 who were not in covered service under 

18 the plan during the plan year; to 

19 ‘‘(II) the number of participants 

20 who were in covered service under the 

21 plan during the plan year.’’. 

22 (b) COMPARISON OF VALUE OF PLAN ASSETS TO AN23 NUAL LIABILITY FOR BENEFITS.—Section 101(f)(2)(B) 

24 of such Act (29 U.S.C. 7 1021(f)(2)(B)) (as amended by 

25 the preceding provisions of this section) is amended— 
70 

•S 1825 IS

1 (1) by striking clause (ii) and inserting the fol2 lowing: 

3 ‘‘(ii) a statement of a reasonable esti4 mate of— 

5 ‘‘(I) the value of the plan’s assets 

6 as of the last day of the plan year to 

7 which the notice relates; 

8 ‘‘(II) the liability of the plan for 

9 benefit payments and administrative 

10 expenses for the plan year to which 

11 the notice relates; and 

12 ‘‘(III) the ratio of the amount de13 termined under subclause (I) to the 

14 amount determined under subclause 

15 (II);’’; and 

16 (2) by adding at the end of clause (v) the fol17 lowing: ‘‘A plan’s estimated assets and estimated li18 ability for benefit payments and expenses for a plan 

19 year under clause (ii) shall be determined based on 

20 the most reliable information reasonably available to 

21 the plan sponsor by the date that is 30 days before 

22 the due date for the notice.’’. 

23 (c) STATEMENT OF PLAN’S FUNDING POLICY AND

24 METHOD OF ASSET ALLOCATION.—Section 101(f)(2)(B) 

25 of such Act, as amended by this Act, is amended— 
71 

•S 1825 IS

1 (1) in clause (iv), by striking ‘‘and’’ at the end; 

2 (2) in clause (v), by striking the period and in3 serting ‘‘; and’’; and 

4 (3) by inserting after clause (v) the following 

5 new clause: 

6 ‘‘(vi) a statement setting forth the 

7 funding policy of the plan and the asset al8 location of investments under the plan (ex9 pressed as percentages of total assets) as 

10 of the end of the plan year to which the 

11 notice relates.’’. 

12 (d) NOTICE OF FUNDING IMPROVEMENT PLAN OR

13 REHABILITATION PLAN.—Section 101(f)(2)(B) of such 

14 Act, as amended by this Act, is amended— 

15 (1) in clause (v), by striking ‘‘and’’ at the end; 

16 (2) in clause (vi), by striking the period and in17 serting ‘‘; and’’; and 

18 (3) by inserting after clause (vi) the following: 

19 ‘‘(vii) a summary of any funding im20 provement plan, rehabilitation plan, or 

21 modification thereof adopted under section 

22 302B during the plan year to which the 

23 notice relates.’’. 

24 (e) NOTICE DUE 90 DAYS AFTER END OF PLAN

25 YEAR.— 
72 

•S 1825 IS

1 (1) IN GENERAL.—Section 101(f)(3) of such 

2 Act (29 U.S.C. 1021(f)(3)) is amended by striking 

3 ‘‘two months after the deadline (including exten4 sions) for filing the annual report for the plan year’’ 

5 and inserting ‘‘90 days after the end of the plan 

6 year’’. 

7 (2) MODEL NOTICE.—Not later than 270 days 

8 after the date of the enactment of this Act, the Sec9 retary of Labor shall publish a model version of the 

10 notice required by section 101(f) of the Employee 

11 Retirement Income Security Act of 1974. 

12 (f) ADDITIONAL ANNUAL REPORTING REQUIRE13 MENTS.—Section 103 of the Employee Retirement Income 

14 Security Act of 1974 (29 U.S.C. 1023) is amended— 

15 (1) in subsection (a)(1)(B), by striking ‘‘sub16 sections (d) and (e)’’ and inserting ‘‘subsections (d), 

17 (e), and (f)’’; and 

18 (2) by adding at the end the following sub19 section: 

20 ‘‘(f) With respect to any multiemployer defined ben21 efit plan, an annual report under this section for a plan 

22 year shall include the following: 

23 ‘‘(1) The ratio, as of the end of such plan year, 

24 of— 
73 

•S 1825 IS

1 ‘‘(A) the number of participants who were 

2 not in covered service under the plan during the 

3 plan year, to 

4 ‘‘(B) the number of participants who were 

5 in covered service under the plan during the 

6 plan year. 

7 ‘‘(2) In any case in which any liabilities to par8 ticipants or their beneficiaries under such plan as of 

9 the end of such plan year consist (in whole or in 

10 part) of liabilities to such participants and bene11 ficiaries under 2 or more pension plans as of imme12 diately before such plan year— 

13 ‘‘(A) the funded percentage of each of such 

14 2 or more pension plans as of the last day of 

15 the plan year immediately before such plan 

16 year; and 

17 ‘‘(B) the funded percentage of the plan 

18 with respect to which the annual report is filed 

19 as of the last day of such plan year. 

20 ‘‘(3) For purposes of paragraph (2), the term 

21 ‘funded percentage’ means, the funded percentage of 

22 the plan as defined in section 302B(f)(2).’’. 

23 (g) ADDITIONAL INFORMATION IN ANNUAL ACTU24 ARIAL STATEMENT OF MULTIEMPLOYER PLAN REGARD-
74 

•S 1825 IS

1 ING PLAN RETIREMENT PROJECTIONS.—Section 103(d) 

2 of such Act (29 U.S.C. section 1023(d)) is amended— 

3 (1) by redesignating paragraphs (12) and (13) 

4 as paragraphs (13) and (14), respectively; and 

5 (2) by inserting after paragraph (11) the fol6 lowing paragraph: 

7 ‘‘(12) In the case of a multiemployer plan, a 

8 statement explaining the actuarial assumptions and 

9 methods used in projecting future retirements and 

10 forms of benefit distributions under the plan.’’. 

11 (h) MULTIEMPLOYER PLANS’ FILING AFTER 275 

12 DAYS AFTER PLAN YEAR ONLY IN CASES OF HARD13 SHIP.—Section 104(a)(1) of such Act (29 U.S.C. 

14 1024(a)(1)) is amended by inserting after the first sen15 tence the following new sentence: ‘‘The Secretary shall 

16 prescribe regulations to permit extensions in cases of 

17 hardship, on a case-by-case basis, of the deadline for filing 

18 the annual report past 275 days after the close of the plan 

19 year for multiemployer pension plans.’’. 

20 (i) INTERNET DISPLAY OF INFORMATION.—Section 

21 104(b) of such Act (29 U.S.C. 1024(b)) is amended by 

22 adding at the end the following: 

23 ‘‘(5) INTERNET DISPLAY OF INFORMATION.— 

24 ‘‘(A) IN GENERAL.—Identification and 

25 basic plan information and actuarial informa-
75 

•S 1825 IS

1 tion included in the annual report of a multiem2 ployer plan for any plan year shall be filed with 

3 the Secretary in an electronic format which ac4 commodates display on the Internet, in accord5 ance with regulations prescribed by the Sec6 retary. 

7 ‘‘(B) DISPLAY BY SECRETARY.—The Sec8 retary shall develop an Internet site which dis9 plays such information described under sub10 paragraph (A) within 90 days after the date of 

11 the filing of the annual report. The Secretary 

12 shall provide for the display of such information 

13 through other appropriate media. 

14 ‘‘(C) DISPLAY BY PLAN SPONSOR.—The 

15 Secretary shall promulgate regulations requir16 ing the plan sponsor to display the information 

17 described under subparagraph (A) on any Inter18 net site maintained by such plan sponsor.’’. 

19 (j) SUMMARY ANNUAL REPORT OF A MULTIEM20 PLOYER PLAN POSTED WITHIN 15 DAYS AFTER DEAD21 LINE FOR FILING OF ANNUAL REPORT.—Section 

22 104(b)(3) of such Act (29 U.S.C. 1024(b)(3)) is amended 

23 by— 

24 (1) striking ‘‘(3) Within’’ and inserting ‘‘(3)(A) 

25 Within’’; 
76 

•S 1825 IS

1 (2) inserting after ‘‘fiscal year of the plan’’ the 

2 following: ‘‘(in the case of a multiemployer plan, 

3 within 15 business days after the due date under 

4 subsection (a)(1) for the filing of the annual report 

5 for the fiscal year of the plan),’’; and 

6 (3) adding at the end the following: 

7 ‘‘(B) In the case of a multiemployer plan, post8 ing the text of the summary annual report on the 

9 plan sponsor’s Internet site by the deadline in sub10 paragraph (A) shall be treated as furnishing such 

11 report by that deadline, if such report is furnished 

12 as soon as practicable thereafter and in no event 

13 later than 15 business days after the date described 

14 for such plans in subparagraph (A).’’. 

15 (k) DISCLOSURE OF PLAN ASSETS AND LIABILITIES

16 IN SUMMARY ANNUAL REPORT OF A MULTIEMPLOYER

17 PLAN.—Section 104(b)(3)(B) of such Act (as amended by 

18 subsection (j)) is amended further by adding at the end 

19 the following: 

20 ‘‘(C) In the case of a multiemployer plan, the 

21 material provided pursuant to subparagraph (A) to 

22 summarize the latest annual report shall— 

23 ‘‘(i) be written in a manner calculated to 

24 be understood by the average plan participant; 

25 and 
77 

•S 1825 IS

1 ‘‘(ii) shall set forth the total assets and li2 abilities of the plan for the plan year for which 

3 the latest annual report was filed and for each 

4 of the 2 preceding plan years, as reported in 

5 the annual report for such plan year under this 

6 section.’’. 

7 (l) INFORMATION MADE AVAILABLE TO PARTICI8 PANTS, BENEFICIARIES, AND EMPLOYERS WITH RESPECT

9 TO MULTIEMPLOYER PLANS.— 

10 (1) IN GENERAL.—Section 101 of the Employee 

11 Retirement Income Security Act of 1974 (29 U.S.C. 

12 1021) is amended— 

13 (A) by redesignating subsection (j) as sub14 section (k); and 

15 (B) by inserting after subsection (i) the 

16 following: 

17 ‘‘(j) MULTIEMPLOYER PLAN INFORMATION MADE

18 AVAILABLE ON REQUEST.— 

19 ‘‘(1) IN GENERAL.—Each administrator of a 

20 multiemployer plan shall furnish to any plan partici21 pant or beneficiary or any employer having an obli22 gation to contribute to the plan, upon written re23 quest— 

24 ‘‘(A) a copy of the actuarial valuation for 

25 any plan year and the projections and analyses 
78 

•S 1825 IS

1 on which the actuary’s certification under sec2 tion 302B(a) was based, once such projections 

3 and analyses have been in the plan’s possession 

4 for at least 30 business days; and 

5 ‘‘(B)(i) a copy of any quarterly, semi-an6 nual or annual financial report prepared for the 

7 plan by any plan investment manager or advi8 sor or other plan fiduciary, which summarizes 

9 the plan’s investment portfolio and experience 

10 and which has been in the plan’s possession for 

11 at least 30 business days; or 

12 ‘‘(ii) if determined appropriate by the plan 

13 sponsor, a quarterly summary of the informa14 tion contained in such reports. 

15 ‘‘(2) COMPLIANCE.—Information required to be 

16 provided under paragraph (1)— 

17 ‘‘(A) shall be provided to the requesting 

18 participant, beneficiary, or employer within 30 

19 days after the request in a form and manner 

20 prescribed in regulations of the Secretary; 

21 ‘‘(B) may be provided in written, elec22 tronic, or other appropriate form to the extent 

23 such form is reasonably accessible to persons to 

24 whom the information is required to be pro25 vided; and 
79 

•S 1825 IS

1 ‘‘(C) shall not include individually identifi2 able information regarding any plan partici3 pant, beneficiary, employee, fiduciary or con4 tributing employer or reveal any proprietary 

5 business information regarding the plan, any 

6 contributing employer or any entity providing 

7 services to the plan. 

8 ‘‘(3) LIMITATIONS.—In no case shall a partici9 pant, beneficiary, or employer be entitled under this 

10 subsection to receive more than copy of any report 

11 described in paragraph (1) during any one 12-month 

12 period. The administrator may make a reasonable 

13 charge to cover copying, mailing, and other costs of 

14 furnishing copies of such report. The Secretary may 

15 by regulation prescribe the maximum amount which 

16 constitutes a reasonable charge under the preceding 

17 sentence.’’. 

18 (2) ENFORCEMENT.—Section 502(c)(4) of such 

19 Act (29 U.S.C. 1132(c)(4)) (as amended by section 

20 103(b)(2)(B)) is further amended by striking ‘‘sec21 tion 302(b)(7)(F)(iv)’’ and inserting ‘‘subsection (j) 

22 of section 101, and 302(b)(7)(F)(iv)’’. 

23 (3) REGULATIONS.—The Secretary shall pre24 scribe regulations under section 101(j)(2) of the 

25 Employee Retirement Income Security Act of 1974 
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1 (added by paragraph (1)) not later than 270 days 

2 after the date of the enactment of this Act. 

3 (m) NOTICE OF POTENTIAL WITHDRAWAL LIABILITY

4 TO MULTIEMPLOYER PLANS.— 

5 (1) IN GENERAL.—Section 101 of such Act (as 

6 amended by this section) is amended— 

7 (A) by redesignating subsection (k) as sub8 section (l); and 

9 (B) by inserting after subsection (j) the 

10 following new subsection: 

11 ‘‘(k) NOTICE OF POTENTIAL WITHDRAWAL LIABIL12 ITY.— 

13 ‘‘(1) IN GENERAL.—The plan sponsor or ad14 ministrator of a multiemployer plan shall furnish to 

15 any employer who has an obligation to contribute 

16 under the plan and who so requests in writing notice 

17 of— 

18 ‘‘(A) the estimated amount which would be 

19 the amount of such employer’s withdrawal li20 ability under part 1 of subtitle E of title IV if 

21 such employer withdrew on the last day of the 

22 plan year preceding the date of the request; and 

23 ‘‘(B) an explanation of how such estimated 

24 liability amount was determined, including the 

25 actuarial assumptions and methods used to de-
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1 termine the value of plan liabilities and assets 

2 and the data regarding employer contributions, 

3 unfunded vested benefits, annual changes in the 

4 plan’s unfunded vested benefits and the applica5 tion of any relevant limitations on the estimated 

6 withdrawal liability. 

7 ‘‘(2) COMPLIANCE.—Any notice required to be 

8 provided under paragraph (1)— 

9 ‘‘(A) shall be provided to the requesting 

10 employer within 180 days after the request in 

11 a form and manner prescribed in regulations by 

12 the Secretary (or, subject to such regulations, 

13 such longer time as may be necessary in the 

14 case of a plan that determines withdrawal liabil15 ity based on the attributable method under sec16 tion 4211(c)(4) or a modified attributable 

17 method approved by the Pension Benefit Guar18 anty Corporation under section 4211(c)(5)); 

19 and 

20 ‘‘(B) may be provided in written, elec21 tronic, or other appropriate form to the extent 

22 such form is reasonably accessible to employers 

23 to whom the information is required to be pro24 vided. 
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1 ‘‘(3) LIMITATIONS.—In no case shall an em2 ployer be entitled under this subsection to receive 

3 more than one notice described in paragraph (1) 

4 during any one 12-month period. The person re5 quired to provide such notice may make a reasonable 

6 charge to cover copying, mailing, and other costs of 

7 furnishing such notice. The Secretary may by regu8 lation prescribe the maximum amount which con9 stitutes a reasonable charge under the preceding 

10 sentence.’’. 

11 (2) ENFORCEMENT.—Section 502(c)(4) of such 

12 Act (29 U.S.C. 1132(c)(4)) (as amended by para13 graph (1)) is further amended by striking ‘‘sub14 sections (j)’’ and inserting ‘‘subsections (j) and (k)’’. 

15 (n) MODEL FORM.—Not later than 270 days after 

16 the date of the enactment of this Act, the Secretary of 

17 Labor shall publish a model form for providing the state18 ments, schedules, and other material required to be pro19 vided under section 104(b)(3) of the Employee Retirement 

20 Income Security Act of 1974, as amended by this section. 

21 (o) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to plan years beginning after De23 cember 31, 2006. 
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1 TITLE III—DEDUCTION 

2 LIMITATIONS 

3 SEC. 301. INCREASE IN DEDUCTION LIMITS. 

4 (a) INCREASE IN DEDUCTION LIMIT FOR MULTIEM5 PLOYER PLANS.—Section 404(a)(1)(D) of the Internal 

6 Revenue Code of 1986 is amended to read as follows: 

7 ‘‘(D) AMOUNT DETERMINED ON BASIS OF

8 UNFUNDED CURRENT LIABILITY.— 

9 ‘‘(i) IN GENERAL.—In the case of a 

10 defined benefit plan which is a multiem11 ployer plan, except as provided in regula12 tions, the maximum amount deductible 

13 under the limitations of this paragraph 

14 shall not be less than the unfunded current 

15 liability of the plan. 

16 ‘‘(ii) UNFUNDED CURRENT LIABIL17 ITY.—For purposes of clause (i), the term 

18 ‘unfunded current liability’ means the ex19 cess (if any) of— 

20 ‘‘(I) 140 percent of the current 

21 liability of the plan determined under 

22 section 302B(c)(6)(C) of the Em23 ployee Retirement Income Security 

24 Act of 1974, over 
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1 ‘‘(II) the value of the plan’s as2 sets determined under section 

3 302B(c)(2) of such Act.’’. 

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

5 this section shall apply to contributions for taxable years 

6 beginning after 2006. 

7 SEC. 302. UPDATING DEDUCTION RULES FOR COMBINA8 TION OF PLANS. 

9 (a) IN GENERAL.—Subparagraph (C) of section 

10 404(a)(7) of the Internal Revenue Code of 1986 (relating 

11 to limitation on deductions where combination of defined 

12 contribution plan and defined benefit plan) is amended by 

13 adding after clause (ii) the following new clauses: 

14 ‘‘(iii) LIMITATIONS.—In the case of 

15 employer contributions to 1 or more de16 fined contribution plans, this paragraph 

17 shall only apply to the extent that such 

18 contributions exceed 6 percent of the com19 pensation otherwise paid or accrued during 

20 the taxable year to the beneficiaries under 

21 such plans. For purposes of this clause, 

22 amounts carried over from preceding tax23 able years under subparagraph (B) shall 

24 be treated as employer contributions to 1 

25 or more defined contribution plans to the 
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1 extent attributable to employer contribu2 tions to such plans in such preceding tax3 able years. 

4 ‘‘(iv) MULTIEMPLOYER PLANS.—Con5 tributions to a multiemployer pension plan 

6 shall not be taken into account in applying 

7 the requirements of subparagraph (A).’’. 

8 (b) CONFORMING AMENDMENT.—Subparagraph (A) 

9 of section 4972(c)(6) of such Code (relating to nondeduct10 ible contributions) is amended to read as follows: 

11 ‘‘(A) so much of the contributions to 1 or 

12 more defined contribution plans which are not 

13 deductible when contributed solely because of 

14 section 404(a)(7) as does not exceed the 

15 amount of contributions described in section 

16 401(m)(4)(A), or’’. 

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

18 this section shall apply to contributions for taxable years 

19 beginning after December 31, 2006. 

Æ