II 

113TH CONGRESS 

1ST SESSION S. 1302 

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

Internal Revenue Code of 1986 to provide for cooperative and small 

employer charity pension plans. 

IN THE SENATE OF THE UNITED STATES 

JULY 16 (legislative day, JULY 15), 2013 

Mr. HARKIN (for himself, Mr. ROBERTS, Mrs. MURRAY, Ms. MURKOWSKI, and 

Mr. FRANKEN) introduced the following bill; which was read twice and 

referred to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 and the Internal Revenue Code of 1986 to 

provide for cooperative and small employer charity pension plans. 

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; TABLE OF CONTENTS. 

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

5 ‘‘Cooperative and Small Employer Charity Pension Flexi6 bility Act’’. 

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

8 this Act is as follows: 


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Sec. 1. Short title; table of contents. 

Sec. 2. Congressional findings and declarations of policy. 

Sec. 3. Definition of cooperative and small employer charity pension plans. 

Sec. 4. Funding rules applicable to cooperative and small employer charity pension plans. 

Sec. 5. Transparency. 

Sec. 6. Elections. 

Sec. 7. Pension insurance program modifications. 

Sec. 8. Sponsor education and assistance. 

Sec. 9. Effective date. 

1 SEC. 2. CONGRESSIONAL FINDINGS AND DECLARATIONS OF 

2 POLICY. 

3 Congress finds as follows: 

4 (1) Defined benefit pension plans are a cost-ef5 fective way for cooperative associations and charities 

6 to provide their employees with economic security in 

7 retirement. 

8 (2) Many cooperative associations and chari9 table organizations are only able to provide their em10 ployees with defined benefit pension plans because 

11 those organizations are able to pool their resources 

12 using the multiple employer plan structure. 

13 (3) The pension funding rules should encourage 

14 cooperative associations and charities to continue to 

15 provide their employees with pension benefits. 

16 SEC. 3. DEFINITION OF COOPERATIVE AND SMALL EM17 PLOYER CHARITY PENSION PLANS. 

18 (a) AMENDMENT TO ERISA.—Section 210 of the 

19 Employee Retirement Income Security Act of 1974 (29 


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1 U.S.C. 1060) is amended by adding at the end the fol2 lowing new subsection: 

3 ‘‘(f) COOPERATIVE AND SMALL EMPLOYER CHARITY

4 PENSION PLANS.— 

5 ‘‘(1) IN GENERAL.—For purposes of this title, 

6 except as provided in this subsection, a CSEC plan 

7 is a defined benefit plan (other than a multiemployer 

8 plan)— 

9 ‘‘(A) to which section 104 of the Pension 

10 Protection Act of 2006 applies, without regard 

11 to— 

12 ‘‘(i) section 104(a)(2) of such Act; 

13 ‘‘(ii) the amendments to such section 

14 104 by section 202(b) of the Preservation 

15 of Access to Care for Medicare Bene16 ficiaries and Pension Relief Act of 2010; 

17 and 

18 ‘‘(iii) paragraph (3)(B); or 

19 ‘‘(B) that, as of January 1, 2013, was 

20 maintained by more than one employer and all 

21 of the employers were organizations described 

22 in section 501(c)(3) of the Internal Revenue 

23 Code of 1986. 

24 ‘‘(2) AGGREGATION.—All employers that are 

25 treated as a single employer under subsection (b) or 


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1 (c) of section 414 of the Internal Revenue Code of 

2 1986 shall be treated as a single employer for pur3 poses of determining if a plan was maintained by 

4 more than one employer under paragraph (1)(B).’’. 

5 (b) AMENDMENT TO CODE.—Section 414 of the In6 ternal Revenue Code of 1986 is amended by adding at the 

7 end the following new subsection: 

8 ‘‘(y) COOPERATIVE AND SMALL EMPLOYER CHARITY

9 PENSION PLANS.— 

10 ‘‘(1) IN GENERAL.—For purposes of this title, 

11 except as provided in this subsection, a CSEC plan 

12 is a defined benefit plan (other than a multiemployer 

13 plan)— 

14 ‘‘(A) to which section 104 of the Pension 

15 Protection Act of 2006 applies, without regard 

16 to— 

17 ‘‘(i) section 104(a)(2) of such Act; 

18 ‘‘(ii) the amendments to such section 

19 104 by section 202(b) of the Preservation 

20 of Access to Care for Medicare Bene21 ficiaries and Pension Relief Act of 2010; 

22 and 

23 ‘‘(iii) paragraph (3)(B); or 

24 ‘‘(B) that, as of January 1, 2013, was 

25 maintained by more than one employer and all 


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1 of the employers were organizations described 

2 in section 501(c)(3). 

3 ‘‘(2) AGGREGATION.—All employers that are 

4 treated as a single employer under subsection (b) or 

5 (c) shall be treated as a single employer for purposes 

6 of determining if a plan was maintained by more 

7 than one employer under paragraph (1)(B).’’. 

8 SEC. 4. FUNDING RULES APPLICABLE TO COOPERATIVE 

9 AND SMALL EMPLOYER CHARITY PENSION 

10 PLANS. 

11 (a) AMENDMENTS TO ERISA.— 

12 (1) MINIMUM FUNDING STANDARDS UNDER

13 ERISA.—Part 3 of title I of the Employee Retire14 ment Income Security Act of 1974 (29 U.S.C. 1081 

15 et seq.) is amended by adding at the end the fol16 lowing new section: 

17 ‘‘SEC. 306. MINIMUM FUNDING STANDARDS. 

18 ‘‘(a) GENERAL RULE.—For purposes of section 302, 

19 the term ‘accumulated funding deficiency’ for a CSEC 

20 plan means the excess of the total charges to the funding 

21 standard account for all plan years (beginning with the 

22 first plan year to which section 302 applies) over the total 

23 credits to such account for such years or, if less, the excess 

24 of the total charges to the alternative minimum funding 


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1 standard account for such plan years over the total credits 

2 to such account for such years. 

3 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

4 ‘‘(1) ACCOUNT REQUIRED.—Each plan to which 

5 this section applies shall establish and maintain a 

6 funding standard account. Such account shall be 

7 credited and charged solely as provided in this sec8 tion. 

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

10 the funding standard account shall be charged with 

11 the sum of— 

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

13 plan year, 

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

15 equal annual installments (until fully amor16 tized)— 

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

18 on January 1, 1974, the unfunded past 

19 service liability under the plan on the first 

20 day of the first plan year to which section 

21 302 applies, over a period of 40 plan years, 

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

23 into existence after January 1, 1974, but 

24 before the first day of the first plan year 

25 beginning after December 31, 2013, the 


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1 unfunded past service liability under the 

2 plan on the first day of the first plan year 

3 to which section 302 applies, over a period 

4 of 30 plan years, 

5 ‘‘(iii) in the case of a plan that comes 

6 into existence on or after the first day of 

7 the first plan year beginning after Decem8 ber 31, 2013, the unfunded past liability 

9 under the plan on the first day of the first 

10 plan year to which section 302 applies, 

11 over a period of 15 years, 

12 ‘‘(iv) in the case of a plan that is sub13 ject to section 303 for the last plan year 

14 beginning before January 1, 2014, the sum 

15 of— 

16 ‘‘(I) the plan’s funding standard 

17 carryover balance and prefunding bal18 ance (as such terms are defined in 

19 section 303(f)) as of the end of such 

20 plan year, and 

21 ‘‘(II) the unfunded past service 

22 liability under the plan for the first 

23 plan year beginning after December 

24 31, 2013, 

25 over a period of 15 years, 


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1 ‘‘(v) 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 ‘‘(vi) separately, with respect to each 

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

8 under the plan, over a period of 5 plan 

9 years, and 

10 ‘‘(vii) 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 10 

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 5 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 paragraph (3)(D), and 


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

2 equal annual installments (until fully amor3 tized) over a period of 20 years the contribu4 tions which would be required to be made under 

5 the plan but for the provisions of section 

6 302(c)(7)(A)(i)(I) (as in effect on the day be7 fore the enactment of the Pension Protection 

8 Act of 2006). 

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

10 the funding standard account shall be credited with 

11 the sum of— 

12 ‘‘(A) the amount considered contributed by 

13 the employer to or under the plan for the plan 

14 year, 

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

16 equal annual installments (until fully amor17 tized)— 

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

19 plan year, the net decrease (if any) in un20 funded past service liability under the plan 

21 arising from plan amendments adopted in 

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

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

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


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1 under the plan, over a period of 5 plan 

2 years, and 

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

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

5 from changes in actuarial assumptions 

6 used under the plan, over a period of 10 

7 plan years, 

8 ‘‘(C) the amount of the waived funding de9 ficiency (within the meaning of section 

10 302(c)(3)) for the plan year, 

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

12 the accumulated funding deficiency is deter13 mined under the funding standard account if 

14 such plan year follows a plan year for which 

15 such deficiency was determined under the alter16 native minimum funding standard, the excess 

17 (if any) of any debit balance in the funding 

18 standard account (determined without regard to 

19 this subparagraph) over any debit balance in 

20 the alternative minimum funding standard ac21 count, and 

22 ‘‘(E) for the first plan year beginning after 

23 December 31, 2013, in the case of a plan that 

24 is subject to section 303 for the last plan year 

25 beginning before January 1, 2014, the sum of 


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1 the plan’s funding standard carryover balance 

2 and prefunding balance (as such terms are de3 fined in section 302(f)) as of the end of the last 

4 plan year beginning before January 1, 2014. 

5 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS

6 TO BE AMORTIZED.—Under regulations prescribed 

7 by the Secretary of the Treasury, amounts required 

8 to be amortized under paragraph (2) or paragraph 

9 (3), as the case may be— 

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

11 under such paragraph to be amortized over a 

12 period determined on the basis of the remaining 

13 amortization period for all items entering into 

14 such combined amount, and 

15 ‘‘(B) may be offset against amounts re16 quired to be amortized under the other such 

17 paragraph, with the resulting amount to be am18 ortized over a period determined on the basis of 

19 the remaining amortization periods for all items 

20 entering into whichever of the two amounts 

21 being offset is the greater. 

22 ‘‘(5) INTEREST.— 

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

24 subparagraph (B), the funding standard ac25 count (and items therein) shall be charged or 


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1 credited (as determined under regulations pre2 scribed by the Secretary of the Treasury) with 

3 interest at the appropriate rate consistent with 

4 the rate or rates of interest used under the plan 

5 to determine costs. 

6 ‘‘(B) EXCEPTION.—The interest rate used 

7 for purposes of computing the amortization 

8 charge described in subsection (b)(2)(C) or for 

9 purposes of any arrangement under subsection 

10 (d) for any plan year shall be greater of (i) 150 

11 percent of the Federal mid-term rate (as in ef12 fect under section 1274 of the Internal Revenue 

13 Code of 1986 for the 1st month of such plan 

14 year), or (ii) the rate of interest determined 

15 under subparagraph (A). 

16 ‘‘(6) AMORTIZATION SCHEDULES IN EFFECT.— 

17 Amortization schedules for amounts described in 

18 paragraphs (2) and (3) that are in effect as of the 

19 last day of the last plan year beginning before Janu20 ary 1, 2014, by reason of section 104 of the Pension 

21 Protection Act of 2006 shall remain in effect pursu22 ant to their terms and this section, except that such 

23 amounts shall not be amortized again under this sec24 tion. In the case of a plan that is subject to section 

25 303 for the last plan year beginning before January 


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1 1, 2014, any amortization schedules and bases for 

2 plan years beginning before such date shall be re3 duced to zero. 

4 ‘‘(c) SPECIAL RULES.— 

5 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

6 FUNDING METHOD.—For purposes of this section, 

7 normal costs, accrued liability, past service liabilities, 

8 and experience gains and losses shall be determined 

9 under the funding method used to determine costs 

10 under the plan. 

11 ‘‘(2) VALUATION OF ASSETS.— 

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

13 section, the value of the plan’s assets shall be 

14 determined on the basis of any reasonable actu15 arial method of valuation which takes into ac16 count fair market value and which is permitted 

17 under regulations prescribed by the Secretary of 

18 the Treasury. 

19 ‘‘(B) DEDICATED BOND PORTFOLIO.—The 

20 Secretary of the Treasury may by regulations 

21 provide that the value of any dedicated bond 

22 portfolio of a plan shall be determined by using 

23 the interest rate under section 302(b)(5) (as in 

24 effect on the day before the enactment of the 

25 Pension Protection Act of 2006). 


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1 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA2 SONABLE.—For purposes of this section, all costs, li3 abilities, rates of interest, and other factors under 

4 the plan shall be determined on the basis of actu5 arial assumptions and methods— 

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

7 into account the experience of the plan and rea8 sonable expectations) or which, in the aggre9 gate, result in a total contribution equivalent to 

10 that which would be determined if each such as11 sumption and method were reasonable, and 

12 ‘‘(B) which, in combination, offer the actu13 ary’s best estimate of anticipated experience 

14 under the plan. 

15 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX16 PERIENCE GAIN OR LOSS.—For purposes of this sec17 tion, if— 

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

19 Security Act or in other retirement benefits cre20 ated under Federal or State law, or 

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

22 ‘wages’ under section 3121 of the Internal Rev23 enue Code of 1986 or a change in the amount 

24 of such wages taken into account under regulaVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 tions prescribed for purposes of section 

2 401(a)(5) of such Code, 

3 results in an increase or decrease in accrued liability 

4 under a plan, such increase or decrease shall be 

5 treated as an experience loss or gain. 

6 ‘‘(5) FUNDING METHOD AND PLAN YEAR.— 

7 ‘‘(A) FUNDING METHODS AVAILABLE.—All 

8 funding methods available to CSEC plans under 

9 section 302 (as in effect on the day before the 

10 enactment of the Pension Protection Act of 

11 2006) shall continue to be available under this 

12 section. 

13 ‘‘(B) NOT AFFECTED BY CESSATION OF

14 BENEFIT ACCRUALS.—The availability of any 

15 funding method, including all spread gain fund16 ing methods, shall not be affected by whether 

17 benefit accruals under a plan have ceased. Ex18 cept as otherwise provided in subparagraph (C) 

19 or in regulations prescribed by the Secretary of 

20 the Treasury, if benefit accruals have ceased 

21 under a plan, the spread gain funding methods 

22 may be applied by amortizing over the average 

23 expected future lives of all participants. 

24 ‘‘(C) MINIMUM AMOUNT.—In the case of a 

25 plan amortizing over the average expected fuVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 ture lives of all participants pursuant to sub2 paragraph (B), such amortization amount for 

3 any plan year shall not be less than the sum 

4 of— 

5 ‘‘(i) the amount determined by amor6 tizing, as of the first year for which the 

7 plan amortizes over the average future 

8 lives of all participants, the entire un9 funded past service liability in equal in10 stallments over 15 years, and 

11 ‘‘(ii) the amount determined by amor12 tizing any increase or decrease in such un13 funded past service liability in any subse14 quent year, other than an increase or de15 crease attributable to contributions or ex16 pected experience, in equal installments 

17 over 15 years. 

18 ‘‘(D) CHANGES.—If the funding method 

19 for a plan is changed, the new funding method 

20 shall become the funding method used to deter21 mine costs and liabilities under the plan only if 

22 the change is approved by the Secretary of the 

23 Treasury. The preceding sentence shall not 

24 apply to any change made pursuant to, or per25 mitted by, subparagraph (B) if such change is 


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1 made for the first plan year beginning after De2 cember 31, 2013. Any such change may be 

3 made without the approval of the Secretary of 

4 the Treasury. If the plan year for a plan is 

5 changed, the new plan year shall become the 

6 plan year for the plan only if the change is ap7 proved by the Secretary of the Treasury. 

8 ‘‘(6) FULL FUNDING.—If, as of the close of a 

9 plan year, a plan would (without regard to this para10 graph) have an accumulated funding deficiency (de11 termined without regard to the alternative minimum 

12 funding standard account permitted under sub13 section (e)) in excess of the full funding limitation— 

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

15 credited with the amount of such excess, and 

16 ‘‘(B) all amounts described in paragraphs 

17 (2)(B), (C), (D), and (E) and (3)(B) of sub18 section (b) which are required to be amortized 

19 shall be considered fully amortized for purposes 

20 of such paragraphs. 

21 ‘‘(7) FULL-FUNDING LIMITATION.—For pur22 poses of paragraph (6), the term ‘full-funding limita23 tion’ means the excess (if any) of— 

24 ‘‘(A) the accrued liability (including nor25 mal cost) under the plan (determined under the 


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1 entry age normal funding method if such ac2 crued liability cannot be directly calculated 

3 under the funding method used for the plan), 

4 over 

5 ‘‘(B) the lesser of— 

6 ‘‘(i) the fair market value of the 

7 plan’s assets, or 

8 ‘‘(ii) the value of such assets deter9 mined under paragraph (2). 

10 ‘‘(C) MINIMUM AMOUNT.— 

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

12 the full-funding limitation determined 

13 under subparagraph (A) be less than the 

14 excess (if any) of— 

15 ‘‘(I) 90 percent of the current li16 ability (determined without regard to 

17 paragraph (4) of subsection (h)) of 

18 the plan (including the expected in19 crease in such current liability due to 

20 benefits accruing during the plan 

21 year), over 

22 ‘‘(II) the value of the plan’s as23 sets determined under paragraph (2). 

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

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


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1 credit balance in the funding standard ac2 count. 

3 ‘‘(8) ANNUAL VALUATION.— 

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

5 section, a determination of experience gains and 

6 losses and a valuation of the plan’s liability 

7 shall be made not less frequently than once 

8 every year, except that such determination shall 

9 be made more frequently to the extent required 

10 in particular cases under regulations prescribed 

11 by the Secretary of the Treasury. 

12 ‘‘(B) VALUATION DATE.— 

13 ‘‘(i) CURRENT YEAR.—Except as pro14 vided in clause (ii), the valuation referred 

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

16 a date within the plan year to which the 

17 valuation refers or within one month prior 

18 to the beginning of such year. 

19 ‘‘(ii) USE OF PRIOR YEAR VALU20 ATION.—The valuation referred to in sub21 paragraph (A) may be made as of a date 

22 within the plan year prior to the year to 

23 which the valuation refers if, as of such 

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


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1 not less than 100 percent of the plan’s cur2 rent liability. 

3 ‘‘(iii) ADJUSTMENTS.—Information 

4 under clause (ii) shall, in accordance with 

5 regulations, be actuarially adjusted to re6 flect significant differences in participants. 

7 ‘‘(iv) LIMITATION.—A change in fund8 ing method to use a prior year valuation, 

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

10 unless as of the valuation date within the 

11 prior plan year, the value of the assets of 

12 the plan are not less than 125 percent of 

13 the plan’s current liability. 

14 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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

16 contributions for a plan year made by an employer 

17 during the period— 

18 ‘‘(A) beginning on the day after the last 

19 day of such plan year, and 

‘‘(B) ending on the day which is 81 20 ⁄2

21 months after the close of the plan year, 

22 shall be deemed to have been made on such last day. 

23 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES

24 EFFECTIVE IN THE FUTURE.—In determining pro25 jected benefits, the funding method of a collectively 


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1 bargained CSEC plan described in section 413(a) 

2 (other than a multiemployer plan) shall anticipate 

3 benefit increases scheduled to take effect during the 

4 term of the collective bargaining agreement applica5 ble to the plan. 

6 ‘‘(d) EXTENSION OF AMORTIZATION PERIODS.—The 

7 period of years required to amortize any unfunded liability 

8 (described in any clause of subsection (b)(2)(B)) of any 

9 plan may be extended by the Secretary of the Treasury 

10 for a period of time (not in excess of 10 years) if such 

11 Secretary determines that such extension would provide 

12 adequate protection for participants under the plan and 

13 their beneficiaries and if such Secretary determines that 

14 the failure to permit such extension would result in— 

15 ‘‘(1) a substantial risk to the voluntary continu16 ation of the plan, or 

17 ‘‘(2) a substantial curtailment of pension ben18 efit levels or employee compensation. 

19 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STAND20 ARD.— 

21 ‘‘(1) IN GENERAL.—A CSEC plan which uses a 

22 funding method that requires contributions in all 

23 years not less than those required under the entry 

24 age normal funding method may maintain an alter25 native minimum funding standard account for any 


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1 plan year. Such account shall be credited and 

2 charged solely as provided in this subsection. 

3 ‘‘(2) CHARGES AND CREDITS TO ACCOUNT.— 

4 For a plan year the alternative minimum funding 

5 standard account shall be— 

6 ‘‘(A) charged with the sum of— 

7 ‘‘(i) the lesser of normal cost under 

8 the funding method used under the plan or 

9 normal cost determined under the unit 

10 credit method, 

11 ‘‘(ii) the excess, if any, of the present 

12 value of accrued benefits under the plan 

13 over the fair market value of the assets, 

14 and 

15 ‘‘(iii) an amount equal to the excess 

16 (if any) of credits to the alternative min17 imum standard account for all prior plan 

18 years over charges to such account for all 

19 such years, and 

20 ‘‘(B) credited with the amount considered 

21 contributed by the employer to or under the 

22 plan for the plan year. 

23 ‘‘(3) SPECIAL RULES.—The alternative min24 imum funding standard account (and items therein) 

25 shall be charged or credited with interest in the 


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1 manner provided under subsection (b)(5) with re2 spect to the funding standard account. 

3 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

4 ‘‘(1) IN GENERAL.—If a CSEC plan which has 

5 a funded current liability percentage for the pre6 ceding plan year of less than 100 percent fails to 

7 pay the full amount of a required installment for the 

8 plan year, then the rate of interest charged to the 

9 funding standard account under subsection (b)(5) 

10 with respect to the amount of the underpayment for 

11 the period of the underpayment shall be equal to the 

12 greater of— 

13 ‘‘(A) 175 percent of the Federal mid-term 

14 rate (as in effect under section 1274 of the In15 ternal Revenue Code of 1986 for the 1st month 

16 of such plan year), or 

17 ‘‘(B) the rate of interest used under the 

18 plan in determining costs. 

19 ‘‘(2) AMOUNT OF UNDERPAYMENT, PERIOD OF

20 UNDERPAYMENT.—For purposes of paragraph (1)— 

21 ‘‘(A) AMOUNT.—The amount of the under22 payment shall be the excess of— 

23 ‘‘(i) the required installment, over 

24 ‘‘(ii) the amount (if any) of the in25 stallment contributed to or under the plan 


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1 on or before the due date for the install2 ment. 

3 ‘‘(B) PERIOD OF UNDERPAYMENT.—The 

4 period for which interest is charged under this 

5 subsection with regard to any portion of the un6 derpayment shall run from the due date for the 

7 installment to the date on which such portion is 

8 contributed to or under the plan (determined 

9 without regard to subsection (c)(9)). 

10 ‘‘(C) ORDER OF CREDITING CONTRIBU11 TIONS.—For purposes of subparagraph (A)(ii), 

12 contributions shall be credited against unpaid 

13 required installments in the order in which such 

14 installments are required to be paid. 

15 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; 

16 DUE DATES.—For purposes of this subsection— 

17 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.— 

18 There shall be 4 required installments for each 

19 plan year. 

20 ‘‘(B) TIME FOR PAYMENT OF INSTALL21 MENTS.— 

‘‘In the case of the following 

required installments: The due date is: 

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

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

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

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


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1 ‘‘(4) AMOUNT OF REQUIRED INSTALLMENT.— 

2 For purposes of this subsection— 

3 ‘‘(A) IN GENERAL.—The amount of any 

4 required installment shall be 25 percent of the 

5 required annual payment. 

6 ‘‘(B) REQUIRED ANNUAL PAYMENT.—For 

7 purposes of subparagraph (A), the term ‘re8 quired annual payment’ means the lesser of— 

9 ‘‘(i) 90 percent of the amount re10 quired to be contributed to or under the 

11 plan by the employer for the plan year 

12 under section 302 (without regard to any 

13 waiver under subsection (c) thereof), or 

14 ‘‘(ii) 100 percent of the amount so re15 quired for the preceding plan year. 

16 Clause (ii) shall not apply if the preceding plan 

17 year was not a year of 12 months. 

18 ‘‘(5) LIQUIDITY REQUIREMENT.— 

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

20 paragraph applies shall be treated as failing to 

21 pay the full amount of any required installment 

22 to the extent that the value of the liquid assets 

23 paid in such installment is less than the liquid24 ity shortfall (whether or not such liquidity 

25 shortfall exceeds the amount of such installVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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•S 1302 IS

1 ment required to be paid but for this para2 graph). 

3 ‘‘(B) PLANS TO WHICH PARAGRAPH AP4 PLIES.—This paragraph shall apply to a CSEC 

5 plan other than a plan described in section 

6 302(l)(6)(A) (as in effect on the day before the 

7 enactment of the Pension Protection Act of 

8 2006) which— 

9 ‘‘(i) is required to pay installments 

10 under this subsection for a plan year, and 

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

12 quarter during such plan year. 

13 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

14 purposes of paragraph (1), any portion of an 

15 installment that is treated as not paid under 

16 subparagraph (A) shall continue to be treated 

17 as unpaid until the close of the quarter in 

18 which the due date for such installment occurs. 

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

20 amount of any required installment is increased 

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

22 shall such increase exceed the amount which, 

23 when added to prior installments for the plan 

24 year, is necessary to increase the funded cur25 rent liability percentage (taking into account 


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•S 1302 IS

1 the expected increase in current liability due to 

2 benefits accruing during the plan year) to 100 

3 percent. 

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

5 paragraph: 

6 ‘‘(i) LIQUIDITY SHORTFALL.—The 

7 term ‘liquidity shortfall’ means, with re8 spect to any required installment, an 

9 amount equal to the excess (as of the last 

10 day of the quarter for which such install11 ment is made) of the base amount with re12 spect to such quarter over the value (as of 

13 such last day) of the plan’s liquid assets. 

14 ‘‘(ii) BASE AMOUNT.— 

15 ‘‘(I) IN GENERAL.—The term 

16 ‘base amount’ means, with respect to 

17 any quarter, an amount equal to 3 

18 times the sum of the adjusted dis19 bursements from the plan for the 12 

20 months ending on the last day of such 

21 quarter. 

22 ‘‘(II) SPECIAL RULE.—If the 

23 amount determined under subclause 

24 (I) exceeds an amount equal to 2 

25 times the sum of the adjusted disVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 bursements from the plan for the 36 

2 months ending on the last day of the 

3 quarter and an enrolled actuary cer4 tifies to the satisfaction of the Sec5 retary of the Treasury that such ex6 cess is the result of nonrecurring cir7 cumstances, the base amount with re8 spect to such quarter shall be deter9 mined without regard to amounts re10 lated to those nonrecurring cir11 cumstances. 

12 ‘‘(iii) DISBURSEMENTS FROM THE

13 PLAN.—The term ‘disbursements from the 

14 plan’ means all disbursements from the 

15 trust, including purchases of annuities, 

16 payments of single sums and other bene17 fits, and administrative expenses. 

18 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

19 The term ‘adjusted disbursements’ means 

20 disbursements from the plan reduced by 

21 the product of— 

22 ‘‘(I) the plan’s funded current li23 ability percentage for the plan year, 

24 and 


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1 ‘‘(II) the sum of the purchases of 

2 annuities, payments of single sums, 

3 and such other disbursements as the 

4 Secretary of the Treasury shall pro5 vide in regulations. 

6 ‘‘(v) LIQUID ASSETS.—The term ‘liq7 uid assets’ means cash, marketable securi8 ties and such other assets as specified by 

9 the Secretary of the Treasury in regula10 tions. 

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

12 means, with respect to any required install13 ment, the 3-month period preceding the 

14 month in which the due date for such in15 stallment occurs. 

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

17 Treasury may prescribe such regulations as are 

18 necessary to carry out this paragraph. 

19 ‘‘(6) FISCAL YEARS AND SHORT YEARS.— 

20 ‘‘(A) FISCAL YEARS.—In applying this 

21 subsection to a plan year beginning on any date 

22 other than January 1, there shall be substituted 

23 for the months specified in this subsection, the 

24 months which correspond thereto. 


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1 ‘‘(B) SHORT PLAN YEAR.—This subsection 

2 shall be applied to plan years of less than 12 

3 months in accordance with regulations pre4 scribed by the Secretary of the Treasury. 

5 ‘‘(g) IMPOSITION OF LIEN WHERE FAILURE TO

6 MAKE REQUIRED CONTRIBUTIONS.— 

7 ‘‘(1) IN GENERAL.—In the case of a plan to 

8 which this section applies, if— 

9 ‘‘(A) any person fails to make a required 

10 installment under subsection (f) or any other 

11 payment required under this section before the 

12 due date for such installment or other payment, 

13 and 

14 ‘‘(B) the unpaid balance of such install15 ment or other payment (including interest), 

16 when added to the aggregate unpaid balance of 

17 all preceding such installments or other pay18 ments for which payment was not made before 

19 the due date (including interest), exceeds 

20 $1,000,000, 

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

22 amount determined under paragraph (3) upon all 

23 property and rights to property, whether real or per24 sonal, belonging to such person and any other perVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00030 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 son who is a member of the same controlled group 

2 of which such person is a member. 

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

4 This subsection shall apply to a CSEC plan for any 

5 plan year for which the funded current liability per6 centage of such plan is less than 100 percent. This 

7 subsection shall not apply to any plan to which sec8 tion 4021 does not apply (as such section is in effect 

9 on the date of the enactment of the Retirement Pro10 tection Act of 1994). 

11 ‘‘(3) AMOUNT OF LIEN.—For purposes of para12 graph (1), the amount of the lien shall be equal to 

13 the aggregate unpaid balance of required install14 ments and other payments required under this sec15 tion (including interest)— 

16 ‘‘(A) for plan years beginning after 1987, 

17 and 

18 ‘‘(B) for which payment has not been 

19 made before the due date. 

20 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

21 ‘‘(A) NOTICE OF FAILURE.—A person 

22 committing a failure described in paragraph (1) 

23 shall notify the Pension Benefit Guaranty Cor24 poration of such failure within 10 days of the 


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•S 1302 IS

1 due date for the required installment or other 

2 payment. 

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

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

5 the required installment or other payment and 

6 shall continue until the last day of the first plan 

7 year in which the plan ceases to be described in 

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

9 run without regard to whether such plan con10 tinues to be described in paragraph (2) during 

11 the period referred to in the preceding sentence. 

12 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

13 amount with respect to which a lien is imposed 

14 under paragraph (1) shall be treated as taxes 

15 due and owing the United States and rules 

16 similar to the rules of subsections (c), (d), and 

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

18 a lien imposed by subsection (a) and the 

19 amount with respect to such lien. 

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

21 paragraph (1) may be perfected and enforced only 

22 by the Pension Benefit Guaranty Corporation, or at 

23 the direction of the Pension Benefit Guaranty Cor24 poration, by the contributing sponsor (or any memVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00032 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 ber of the controlled group of the contributing spon2 sor). 

3 ‘‘(6) DEFINITIONS.—For purposes of this sub4 section— 

5 ‘‘(A) DUE DATE; REQUIRED INSTALL6 MENT.—The terms ‘due date’ and ‘required in7 stallment’ have the meanings given such terms 

8 by subsection (f), except that in the case of a 

9 payment other than a required installment, the 

10 due date shall be the date such payment is re11 quired to be made under this section. 

12 ‘‘(B) CONTROLLED GROUP.—The term 

13 ‘controlled group’ means any group treated as 

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

15 (m), and (o) of section 414 of the Internal Rev16 enue Code of 1986. 

17 ‘‘(h) CURRENT LIABILITY.—For purposes of this sec18 tion— 

19 ‘‘(1) IN GENERAL.—The term ‘current liability’ 

20 means all liabilities to employees and their bene21 ficiaries under the plan. 

22 ‘‘(2) TREATMENT OF UNPREDICTABLE CONTIN23 GENT EVENT BENEFITS.— 

24 ‘‘(A) IN GENERAL.—For purposes of para25 graph (1), any unpredictable contingent event 


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1 benefit shall not be taken into account until the 

2 event on which the benefit is contingent occurs. 

3 ‘‘(B) UNPREDICTABLE CONTINGENT

4 EVENT BENEFIT.—The term ‘unpredictable 

5 contingent event benefit’ means any benefit 

6 contingent on an event other than— 

7 ‘‘(i) age, service, compensation, death, 

8 or disability, or 

9 ‘‘(ii) an event which is reasonably and 

10 reliably predictable (as determined by the 

11 Secretary of the Treasury). 

12 ‘‘(3) INTEREST RATE AND MORTALITY ASSUMP13 TIONS USED.— 

14 ‘‘(A) INTEREST RATE.—The rate of inter15 est used to determine current liability under 

16 this section shall be the third segment rate de17 termined under section 303(h)(2)(C). 

18 ‘‘(B) MORTALITY TABLES.— 

19 ‘‘(i) COMMISSIONERS’ STANDARD

20 TABLE.—In the case of plan years begin21 ning before the first plan year to which the 

22 first tables prescribed under clause (ii) 

23 apply, the mortality table used in deter24 mining current liability under this sub25 section shall be the table prescribed by the 


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•S 1302 IS

1 Secretary of the Treasury which is based 

2 on the prevailing commissioners’ standard 

3 table (described in section 807(d)(5)(A) of 

4 the Internal Revenue Code of 1986) used 

5 to determine reserves for group annuity 

6 contracts issued on January 1, 1993. 

7 ‘‘(ii) SECRETARIAL AUTHORITY.—The 

8 Secretary of the Treasury may by regula9 tion prescribe for plan years beginning 

10 after December 31, 1999, mortality tables 

11 to be used in determining current liability 

12 under this subsection. Such tables shall be 

13 based upon the actual experience of pen14 sion plans and projected trends in such ex15 perience. In prescribing such tables, the 

16 Secretary of the Treasury shall take into 

17 account results of available independent 

18 studies of mortality of individuals covered 

19 by pension plans. 

20 ‘‘(iii) PERIODIC REVIEW.—The Sec21 retary of the Treasury shall periodically (at 

22 least every 5 years) review any tables in ef23 fect under this subsection and shall, to the 

24 extent the Secretary of the Treasury deter25 mines necessary, by regulation update the 


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•S 1302 IS

1 tables to reflect the actual experience of 

2 pension plans and projected trends in such 

3 experience. 

4 ‘‘(C) SEPARATE MORTALITY TABLES FOR

5 THE DISABLED.—Notwithstanding subpara6 graph (B)— 

7 ‘‘(i) IN GENERAL.—In the case of 

8 plan years beginning after December 31, 

9 1995, the Secretary of the Treasury shall 

10 establish mortality tables which may be 

11 used (in lieu of the tables under subpara12 graph (B)) to determine current liability 

13 under this subsection for individuals who 

14 are entitled to benefits under the plan on 

15 account of disability. The Secretary of the 

16 Treasury shall establish separate tables for 

17 individuals whose disabilities occur in plan 

18 years beginning before January 1, 1995, 

19 and for individuals whose disabilities occur 

20 in plan years beginning on or after such 

21 date. 

22 ‘‘(ii) SPECIAL RULE FOR DISABILITIES

23 OCCURRING AFTER 1994.—In the case of 

24 disabilities occurring in plan years begin25 ning after December 31, 1994, the tables 


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•S 1302 IS

1 under clause (i) shall apply only with re2 spect to individuals described in such sub3 clause who are disabled within the meaning 

4 of title II of the Social Security Act and 

5 the regulations thereunder. 

6 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 

7 ‘‘(A) IN GENERAL.—In the case of a par8 ticipant to whom this paragraph applies, only 

9 the applicable percentage of the years of service 

10 before such individual became a participant 

11 shall be taken into account in computing the 

12 current liability of the plan. 

13 ‘‘(B) APPLICABLE PERCENTAGE.—For 

14 purposes of this subparagraph, the applicable 

15 percentage shall be determined as follows: 

‘‘If the years of participation 

are: 

The applicable percentage 

is: 

1 .................................................................... 20

2 .................................................................... 40

3 .................................................................... 60

4 .................................................................... 80

5 or more ...................................................... 100. 

16 ‘‘(C) PARTICIPANTS TO WHOM PARAGRAPH

17 APPLIES.—This subparagraph shall apply to 

18 any participant who, at the time of becoming a 

19 participant— 

20 ‘‘(i) has not accrued any other benefit 

21 under any defined benefit plan (whether or 


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1 not terminated) maintained by the em2 ployer or a member of the same controlled 

3 group of which the employer is a member, 

4 ‘‘(ii) who first becomes a participant 

5 under the plan in a plan year beginning 

6 after December 31, 1987, and 

7 ‘‘(iii) has years of service greater than 

8 the minimum years of service necessary for 

9 eligibility to participate in the plan. 

10 ‘‘(D) ELECTION.—An employer may elect 

11 not to have this subparagraph apply. Such an 

12 election, once made, may be revoked only with 

13 the consent of the Secretary of the Treasury. 

14 ‘‘(i) FUNDED CURRENT LIABILITY PERCENTAGE.— 

15 For purposes of this section, the term ‘funded current li16 ability percentage’ means, with respect to any plan year, 

17 the percentage which— 

18 ‘‘(1) the value of the plan’s assets determined 

19 under subsection (c)(2), is of 

20 ‘‘(2) the current liability under the plan. 

21 ‘‘(j) TRANSITION.—The Secretary of the Treasury 

22 may prescribe such rules as are necessary or appropriate 

23 with respect to the transition of a CSEC plan from the 

24 application of section 303 to the application of this sec25 tion.’’. 


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1 (2) SPECIAL RULE.—Section 210(a) of the Em2 ployee Retirement Income Security Act of 1974 (29 

3 U.S.C. 1060(a)) is amended by adding at the end 

4 the following new paragraph: 

5 ‘‘(4) Notwithstanding any other provision of 

6 this section, in the case of a CSEC plan, the require7 ments of section 302 shall be determined as if all 

8 participants in the plan were employed by a single 

9 employer.’’. 

10 (3) SEPARATE RULES FOR CSEC PLANS.— 

11 (A) IN GENERAL.—Paragraph (2) of sec12 tion 302(a) of the Employee Retirement Income 

13 Security Act of 1974 (29 U.S.C. 1082(a)) is 

14 amended by striking ‘‘and’’ at the end of sub15 paragraph (B), by striking the period at the 

16 end of subparagraph (C) and inserting ‘‘, and’’, 

17 and by inserting at the end thereof the fol18 lowing new subparagraph: 

19 ‘‘(D) in the case of a CSEC plan, the em20 ployers make contributions to or under the plan 

21 for any plan year which, in the aggregate, are 

22 sufficient to ensure that the plan does not have 

23 an accumulated funding deficiency under sec24 tion 306 as of the end of the plan year.’’. 


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1 (B) CONFORMING AMENDMENTS.—Section 

2 302 of the Employee Retirement Income Secu3 rity Act of 1974 (29 U.S.C. 1082) is amended 

4 by— 

5 (i) striking ‘‘multiemployer plan’’ in 

6 the first place it appears in clause (i) of 

7 subsection (c)(1)(A), and in the last place 

8 it appears in paragraph (2) of subsection 

9 (d), and inserting ‘‘multiemployer plan or 

10 a CSEC plan’’, 

11 (ii) striking ‘‘303(j)’’ in paragraph (1) 

12 of subsection (b) and inserting ‘‘303(j) or 

13 under 306(f)’’, 

14 (iii)(I) striking ‘‘and’’ at the end of 

15 clause (i) of subsection (c)(1)(B), 

16 (II) striking the period at the end of 

17 clause (ii) of subsection (c)(1)(B), and in18 serting ‘‘, and’’, and 

19 (III) inserting the following new 

20 clause after clause (ii) of subsection 

21 (c)(1)(B): 

22 ‘‘(iii) in the case of a CSEC plan, the 

23 funding standard account shall be credited 

24 under section 306(b)(3)(C) with the 

25 amount of the waived funding deficiency 


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•S 1302 IS

1 and such amount shall be amortized as re2 quired under section 306(b)(2)(C).’’, 

3 (iv) striking ‘‘under paragraph (1)’’ in 

4 clause (i) of subsection (c)(4)(A) and in5 serting ‘‘under paragraph (1) or for grant6 ing an extension under section 306(d)’’, 

7 (v) striking ‘‘waiver under this sub8 section’’ in subparagraph (B) of subsection 

9 (c)(4) and inserting ‘‘waiver under this 

10 subsection or an extension under 306(d)’’, 

11 (vi) striking ‘‘waiver or modification’’ 

12 in subclause (I) of subsection (c)(4)(B)(i) 

13 and inserting ‘‘waiver, modification, or ex14 tension’’, 

15 (vii) striking ‘‘waivers’’ in the heading 

16 of subsection (c)(4)(C) and of clause (ii) of 

17 subsection (c)(4)(C) and inserting ‘‘waivers 

18 or extensions’’, 

19 (viii) striking ‘‘304(d)’’ in subpara20 graph (A) of subsection (c)(7) and in para21 graph (2) of subsection (d) and inserting 

22 ‘‘section 304(d) or section 306(d)’’, 

23 (ix) striking ‘‘and’’ at the end of sub24 clause (I) of subsection (c)(4)(C)(i) and 

25 adding ‘‘or the accumulated funding defiVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00041 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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•S 1302 IS

1 ciency under section 306, whichever is ap2 plicable,’’, 

3 (x) striking ‘‘303(e)(2),’’ in subclause 

4 (II) of subsection (c)(4)(C)(i) and inserting 

5 ‘‘303(e)(2) or 306(b)(2)(C), whichever is 

6 applicable, and’’, 

7 (xi) adding immediately after sub8 clause (II) of subsection (c)(4)(C)(i) the 

9 following new subclause: 

10 ‘‘(III) the total amounts not paid 

11 by reason of an extension in effect 

12 under section 306(d),’’, 

13 (xii) striking ‘‘for waivers of’’ in 

14 clause (ii) of subsection (c)(4)(C) and in15 serting ‘‘for waivers or extensions with re16 spect to’’, 

17 (xiii) striking ‘‘304(d)’’ in paragraph 

18 (2) of subsection (d) and inserting ‘‘304(d) 

19 or 306(d), whichever is applicable’’, and 

20 (xiv) striking ‘‘single-employer plan’’ 

21 in subparagraph (A) of subsection (a)(2) 

22 and in clause (i) of subsection (c)(1)(B) 

23 and inserting ‘‘single-employer plan (other 

24 than a CSEC plan)’’. 

25 (4) BENEFIT RESTRICTIONS.— 


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1 (A) IN GENERAL.—Subsection (g) of sec2 tion 206 of the Employee Retirement Income 

3 Security Act of 1974 (29 U.S.C. 1056) is 

4 amended by adding at the end thereof the fol5 lowing new paragraph: 

6 ‘‘(12) CSEC PLANS.—This subsection shall not 

7 apply to a CSEC plan (as defined in section 

8 210(f)).’’. 

9 (B) EFFECTIVE DATE.—Any restriction 

10 under section 206(g) of the Employee Retire11 ment Income Security Act of 1974 that is in ef12 fect with respect to a CSEC plan as of the last 

13 day of the last plan year beginning before Jan14 uary 1, 2014, shall cease to apply as of the first 

15 day of the following plan year. 

16 (5) BENEFIT INCREASES.—Paragraph (3) of 

17 section 204(i) of the Employee Retirement Income 

18 Security Act of 1974 (29 U.S.C. 1054(i)) is amend19 ed by striking ‘‘multiemployer plans’’ and inserting 

20 ‘‘multiemployer plans or CSEC plans’’. 

21 (6) SECTION 103.—Subparagraph (B) of section 

22 103(d)(8) of the Employee Retirement Income Secu23 rity Act of 1974 (29 U.S.C. 1023(d)(8)) is amended 

24 by striking ‘‘303(h) and 304(c)(3)’’ and inserting 

25 ‘‘303(h), 304(c)(3), and 306(c)(3)’’. 


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1 (7) SECTION 4003.—Subparagraph (B) of sec2 tion 4003(e)(1) of the Employee Retirement Income 

3 Security Act of 1974 (29 U.S.C. 1303(e)(1)) is 

4 amended by striking ‘‘303(k)(1)(A) and (B) of this 

5 Act or section 430(k)(1)(A) and (B) of the Internal 

6 Revenue Code of 1986’’ and inserting ‘‘303(k)(1)(A) 

7 and (B) or 306(g)(1)(A) and (B) of this Act or sec8 tion 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) 

9 of the Internal Revenue Code of 1986’’. 

10 (8) SECTION 4010.—Paragraph (2) of section 

11 4010(b) of the Employee Retirement Income Secu12 rity Act of 1974 (29 U.S.C. 1310(b)) is amended by 

13 striking ‘‘303(k)(1)(A) and (B) of this Act or sec14 tion 430(k)(1)(A) and (B) of the Internal Revenue 

15 Code of 1986’’ and inserting ‘‘303(k)(1)(A) and (B) 

16 or 306(g)(1)(A) and (B) of this Act or section 

17 430(k)(1)(A) and (B) or 433(g)(1)(A) and (B) of 

18 the Internal Revenue Code of 1986’’. 

19 (9) SECTION 4071.—Section 4071 of the Em20 ployee Retirement Income Security Act of 1974 (29 

21 U.S.C. 1371) is amended by striking ‘‘section 

22 303(k)(4)’’ and inserting ‘‘section 303(k)(4) or 

23 306(g)(4)’’. 

24 (b) AMENDMENTS TO CODE.— 


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•S 1302 IS

1 (1) MINIMUM FUNDING STANDARDS UNDER

2 THE INTERNAL REVENUE CODE.—Subpart A of part 

3 III of subchapter D of chapter 1 of subtitle A of the 

4 Internal Revenue Code of 1986 is amended by add5 ing at the end the following new section: 

6 ‘‘SEC. 433. MINIMUM FUNDING STANDARDS. 

7 ‘‘(a) GENERAL RULE.—For purposes of section 412, 

8 the term ‘accumulated funding deficiency’ for a CSEC 

9 plan means the excess of the total charges to the funding 

10 standard account for all plan years (beginning with the 

11 first plan year to which section 412 applies) over the total 

12 credits to such account for such years or, if less, the excess 

13 of the total charges to the alternative minimum funding 

14 standard account for such plan years over the total credits 

15 to such account for such years. 

16 ‘‘(b) FUNDING STANDARD ACCOUNT.— 

17 ‘‘(1) ACCOUNT REQUIRED.—Each plan to which 

18 this section applies shall establish and maintain a 

19 funding standard account. Such account shall be 

20 credited and charged solely as provided in this sec21 tion. 

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

23 the funding standard account shall be charged with 

24 the sum of— 


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•S 1302 IS

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

2 plan year, 

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

4 equal annual installments (until fully amor5 tized)— 

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

7 on January 1, 1974, the unfunded past 

8 service liability under the plan on the first 

9 day of the first plan year to which section 

10 412 applies, over a period of 40 plan years, 

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

12 into existence after January 1, 1974, but 

13 before the first day of the first plan year 

14 beginning after December 31, 2013, the 

15 unfunded past service liability under the 

16 plan on the first day of the first plan year 

17 to which section 412 applies, over a period 

18 of 30 plan years, 

19 ‘‘(iii) in the case of a plan that comes 

20 into existence on or after the first day of 

21 the first plan year beginning after Decem22 ber 31, 2013, the unfunded past liability 

23 under the plan on the first day of the first 

24 plan year to which section 412 applies, 

25 over a period of 15 years, 


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•S 1302 IS

1 ‘‘(iv) in the case of a plan that is sub2 ject to section 430 for the last plan year 

3 beginning before January 1, 2014, the sum 

4 of— 

5 ‘‘(I) the plan’s funding standard 

6 carryover balance and prefunding bal7 ance (as such terms are defined in 

8 section 430(f)) as of the end of such 

9 plan year, and 

10 ‘‘(II) the unfunded past service 

11 liability under the plan for the first 

12 plan year beginning after December 

13 31, 2013, 

14 over a period of 15 years, 

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

16 plan year, the net increase (if any) in un17 funded past service liability under the plan 

18 arising from plan amendments adopted in 

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

20 ‘‘(vi) separately, with respect to each 

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

22 under the plan, over a period of 5 plan 

23 years, and 

24 ‘‘(vii) separately, with respect to each 

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


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1 from changes in actuarial assumptions 

2 used under the plan, over a period of 10 

3 plan years, 

4 ‘‘(C) the amount necessary to amortize 

5 each waived funding deficiency (within the 

6 meaning of section 412(c)(3)) for each prior 

7 plan year in equal annual installments (until 

8 fully amortized) over a period of 5 plan years, 

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

10 equal annual installments (until fully amor11 tized) over a period of 5 plan years any amount 

12 credited to the funding standard account under 

13 paragraph (3)(D), and 

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

15 equal annual installments (until fully amor16 tized) over a period of 20 years the contribu17 tions which would be required to be made under 

18 the plan but for the provisions of section 

19 412(c)(7)(A)(i)(I) (as in effect on the day be20 fore the enactment of the Pension Protection 

21 Act of 2006). 

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

23 the funding standard account shall be credited with 

24 the sum of— 


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1 ‘‘(A) the amount considered contributed by 

2 the employer to or under the plan for the plan 

3 year, 

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

5 equal annual installments (until fully amor6 tized)— 

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

8 plan year, the net decrease (if any) in un9 funded past service liability under the plan 

10 arising from plan amendments adopted in 

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

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

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

14 under the plan, over a period of 5 plan 

15 years, and 

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

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

18 from changes in actuarial assumptions 

19 used under the plan, over a period of 10 

20 plan years, 

21 ‘‘(C) the amount of the waived funding de22 ficiency (within the meaning of section 

23 412(c)(3)) for the plan year, 

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

25 the accumulated funding deficiency is deterVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00049 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 mined under the funding standard account if 

2 such plan year follows a plan year for which 

3 such deficiency was determined under the alter4 native minimum funding standard, the excess 

5 (if any) of any debit balance in the funding 

6 standard account (determined without regard to 

7 this subparagraph) over any debit balance in 

8 the alternative minimum funding standard ac9 count, and 

10 ‘‘(E) for the first plan year beginning after 

11 December 31, 2013, in the case of a plan that 

12 is subject to section 430 for the last plan year 

13 beginning before January 1, 2014, the sum of 

14 the plan’s funding standard carryover balance 

15 and prefunding balance (as such terms are de16 fined in section 430(f)) as of the end of the last 

17 plan year beginning before January 1, 2014. 

18 ‘‘(4) COMBINING AND OFFSETTING AMOUNTS

19 TO BE AMORTIZED.—Under regulations prescribed 

20 by the Secretary, amounts required to be amortized 

21 under paragraph (2) or paragraph (3), as the case 

22 may be— 

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

24 under such paragraph to be amortized over a 

25 period determined on the basis of the remaining 


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1 amortization period for all items entering into 

2 such combined amount, and 

3 ‘‘(B) may be offset against amounts re4 quired to be amortized under the other such 

5 paragraph, with the resulting amount to be am6 ortized over a period determined on the basis of 

7 the remaining amortization periods for all items 

8 entering into whichever of the two amounts 

9 being offset is the greater. 

10 ‘‘(5) INTEREST.— 

11 ‘‘(A) Except as provided in subparagraph 

12 (B), the funding standard account (and items 

13 therein) shall be charged or credited (as deter14 mined under regulations prescribed by the Sec15 retary) with interest at the appropriate rate 

16 consistent with the rate or rates of interest 

17 used under the plan to determine costs. 

18 ‘‘(B) The interest rate used for purposes of 

19 computing the amortization charge described in 

20 subsection (b)(2)(C) or for purposes of any ar21 rangement under subsection (d) for any plan 

22 year shall be greater of— 

23 ‘‘(i) 150 percent of the Federal mid24 term rate (as in effect under section 1274 

25 for the 1st month of such plan year), or 


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1 ‘‘(ii) the rate of interest determined 

2 under subparagraph (A). 

3 ‘‘(6) AMORTIZATION SCHEDULES IN EFFECT.— 

4 Amortization schedules for amounts described in 

5 paragraphs (2) and (3) that are in effect as of the 

6 last day of the last plan year beginning before Janu7 ary 1, 2014, by reason of section 104 of the Pension 

8 Protection Act of 2006 shall remain in effect pursu9 ant to their terms and this section, except that such 

10 amounts shall not be amortized again under this sec11 tion. In the case of a plan that is subject to section 

12 430 for the last plan year beginning before January 

13 1, 2014, any amortization schedules and bases for 

14 plan years beginning before such date shall be re15 duced to zero. 

16 ‘‘(c) SPECIAL RULES.— 

17 ‘‘(1) DETERMINATIONS TO BE MADE UNDER

18 FUNDING METHOD.—For purposes of this section, 

19 normal 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 section, the value of the plan’s assets shall be 


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1 determined 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. 

5 ‘‘(B) DEDICATED BOND PORTFOLIO.—The 

6 Secretary may by regulations provide that the 

7 value of any dedicated bond portfolio of a plan 

8 shall be determined by using the interest rate 

9 under section 412(b)(5) (as in effect on the day 

10 before the enactment of the Pension Protection 

11 Act of 2006). 

12 ‘‘(3) ACTUARIAL ASSUMPTIONS MUST BE REA13 SONABLE.—For purposes of this section, all costs, li14 abilities, rates of interest, and other factors under 

15 the plan shall be determined on the basis of actu16 arial assumptions and methods— 

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

18 into account the experience of the plan and rea19 sonable expectations) or which, in the aggre20 gate, result in a total contribution equivalent to 

21 that which would be determined if each such as22 sumption and method were reasonable, and 

23 ‘‘(B) which, in combination, offer the actu24 ary’s best estimate of anticipated experience 

25 under the plan. 


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1 ‘‘(4) TREATMENT OF CERTAIN CHANGES AS EX2 PERIENCE GAIN OR LOSS.—For purposes of this sec3 tion, if— 

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

5 Security Act or in other retirement benefits cre6 ated under Federal or State law, or 

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

8 ‘wages’ under section 3121 or a change in the 

9 amount of such wages taken into account under 

10 regulations prescribed for purposes of section 

11 401(a)(5), 

12 results in an increase or decrease in accrued liability 

13 under a plan, such increase or decrease shall be 

14 treated as an experience loss or gain. 

15 ‘‘(5) FUNDING METHOD AND PLAN YEAR.— 

16 ‘‘(A) FUNDING METHODS AVAILABLE.—All 

17 funding methods available to CSEC plans under 

18 section 412 (as in effect on the day before the 

19 enactment of the Pension Protection Act of 

20 2006) shall continue to be available under this 

21 section. 

22 ‘‘(B) NOT AFFECTED BY CESSATION OF

23 BENEFIT ACCRUALS.—The availability of any 

24 funding method, including all spread gain fund25 ing methods, shall not be affected by whether 


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1 benefit accruals under a plan have ceased. Ex2 cept as otherwise provided in subparagraph (C) 

3 or in regulations prescribed by the Secretary, if 

4 benefit accruals have ceased under a plan, the 

5 spread gain funding methods may be applied by 

6 amortizing over the average expected future 

7 lives of all participants. 

8 ‘‘(C) MINIMUM AMOUNT.—In the case of a 

9 plan amortizing over the average expected fu10 ture lives of all participants pursuant to sub11 paragraph (B), such amortization amount for 

12 any plan year shall not be less than the sum 

13 of— 

14 ‘‘(i) the amount determined by amor15 tizing, as of the first year for which the 

16 plan amortizes over the average future 

17 lives of all participants, the entire un18 funded past service liability in equal in19 stallments over 15 years, and 

20 ‘‘(ii) the amount determined by amor21 tizing any increase or decrease in such un22 funded past service liability in any subse23 quent year, other than an increase or de24 crease attributable to contributions or exVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00055 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 pected experience, in equal installments 

2 over 15 years. 

3 ‘‘(D) CHANGES.—If the funding method 

4 for a plan is changed, the new funding method 

5 shall become the funding method used to deter6 mine costs and liabilities under the plan only if 

7 the change is approved by the Secretary. The 

8 preceding sentence shall not apply to any 

9 change made pursuant to, or permitted by, sub10 paragraph (B) if such change is made for the 

11 first plan year beginning after December 31, 

12 2013. Any such change may be made without 

13 the approval of the Secretary. If the plan year 

14 for a plan is changed, the new plan year shall 

15 become the plan year for the plan only if the 

16 change is approved by the Secretary. 

17 ‘‘(6) FULL FUNDING.—If, as of the close of a 

18 plan year, a plan would (without regard to this para19 graph) have an accumulated funding deficiency (de20 termined without regard to the alternative minimum 

21 funding standard account permitted under sub22 section (e)) in excess of the full funding limitation— 

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

24 credited with the amount of such excess, and 


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1 ‘‘(B) all amounts described in paragraphs 

2 (2)(B), (C), (D), and (E) and (3)(B) of sub3 section (b) which are required to be amortized 

4 shall be considered fully amortized for purposes 

5 of such paragraphs. 

6 ‘‘(7) FULL-FUNDING LIMITATION.—For pur7 poses of paragraph (6), the term ‘full-funding limita8 tion’ means the excess (if any) of— 

9 ‘‘(A) the accrued liability (including nor10 mal cost) under the plan (determined under the 

11 entry age normal funding method if such ac12 crued liability cannot be directly calculated 

13 under the funding method used for the plan), 

14 over 

15 ‘‘(B) the lesser of— 

16 ‘‘(i) the fair market value of the 

17 plan’s assets, or 

18 ‘‘(ii) the value of such assets deter19 mined under paragraph (2). 

20 ‘‘(C) MINIMUM AMOUNT.— 

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

22 the full-funding limitation determined 

23 under subparagraph (A) be less than the 

24 excess (if any) of— 


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1 ‘‘(I) 90 percent of the current li2 ability (determined without regard to 

3 paragraph (4) of subsection (h)) of 

4 the plan (including the expected in5 crease in such current liability due to 

6 benefits accruing during the plan 

7 year), over 

8 ‘‘(II) the value of the plan’s as9 sets determined under paragraph (2). 

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

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

12 credit balance in the funding standard ac13 count. 

14 ‘‘(8) ANNUAL VALUATION.— 

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

16 section, a determination of experience gains and 

17 losses and a valuation of the plan’s liability 

18 shall be made not less frequently than once 

19 every year, except that such determination shall 

20 be made more frequently to the extent required 

21 in particular cases under regulations prescribed 

22 by the Secretary. 

23 ‘‘(B) VALUATION DATE.— 

24 ‘‘(i) CURRENT YEAR.—Except as pro25 vided in clause (ii), the valuation referred 


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

2 a date within the plan year to which the 

3 valuation refers or within one month prior 

4 to the beginning of such year. 

5 ‘‘(ii) USE OF PRIOR YEAR VALU6 ATION.—The valuation referred to in sub7 paragraph (A) may be made as of a date 

8 within the plan year prior to the year to 

9 which the valuation refers if, as of such 

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

11 not less than 100 percent of the plan’s cur12 rent liability. 

13 ‘‘(iii) ADJUSTMENTS.—Information 

14 under clause (ii) shall, in accordance with 

15 regulations, be actuarially adjusted to re16 flect significant differences in participants. 

17 ‘‘(iv) LIMITATION.—A change in fund18 ing method to use a prior year valuation, 

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

20 unless as of the valuation date within the 

21 prior plan year, the value of the assets of 

22 the plan are not less than 125 percent of 

23 the plan’s current liability. 

24 ‘‘(9) TIME WHEN CERTAIN CONTRIBUTIONS

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


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1 contributions for a plan year made by an employer 

2 during the period— 

3 ‘‘(A) beginning on the day after the last 

4 day of such plan year, and 

‘‘(B) ending on the day which is 81 5 ⁄2

6 months after the close of the plan year, 

7 shall be deemed to have been made on such last day. 

8 ‘‘(10) ANTICIPATION OF BENEFIT INCREASES

9 EFFECTIVE IN THE FUTURE.—In determining pro10 jected benefits, the funding method of a collectively 

11 bargained CSEC plan described in section 413(a) 

12 (other than a multiemployer plan) shall anticipate 

13 benefit increases scheduled to take effect during the 

14 term of the collective bargaining agreement applica15 ble to the plan. 

16 ‘‘(d) EXTENSION OF AMORTIZATION PERIODS.—The 

17 period of years required to amortize any unfunded liability 

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

19 plan may be extended by the Secretary for a period of 

20 time (not in excess of 10 years) if such Secretary deter21 mines that such extension would provide adequate protec22 tion for participants under the plan and their beneficiaries 

23 and if such Secretary determines that the failure to permit 

24 such extension would result in— 


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1 ‘‘(1) a substantial risk to the voluntary continu2 ation of the plan, or 

3 ‘‘(2) a substantial curtailment of pension ben4 efit levels or employee compensation. 

5 ‘‘(e) ALTERNATIVE MINIMUM FUNDING STAND6 ARD.— 

7 ‘‘(1) IN GENERAL.—A CSEC plan which uses a 

8 funding method that requires contributions in all 

9 years not less than those required under the entry 

10 age normal funding method may maintain an alter11 native minimum funding standard account for any 

12 plan year. Such account shall be credited and 

13 charged solely as provided in this subsection. 

14 ‘‘(2) CHARGES AND CREDITS TO ACCOUNT.— 

15 For a plan year the alternative minimum funding 

16 standard account shall be— 

17 ‘‘(A) charged with the sum of— 

18 ‘‘(i) the lesser of normal cost under 

19 the funding method used under the plan or 

20 normal cost determined under the unit 

21 credit method, 

22 ‘‘(ii) the excess, if any, of the present 

23 value of accrued benefits under the plan 

24 over the fair market value of the assets, 

25 and 


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1 ‘‘(iii) an amount equal to the excess 

2 (if any) of credits to the alternative min3 imum standard account for all prior plan 

4 years over charges to such account for all 

5 such years, and 

6 ‘‘(B) credited with the amount considered 

7 contributed by the employer to or under the 

8 plan for the plan year. 

9 ‘‘(3) SPECIAL RULES.—The alternative min10 imum funding standard account (and items therein) 

11 shall be charged or credited with interest in the 

12 manner provided under subsection (b)(5) with re13 spect to the funding standard account. 

14 ‘‘(f) QUARTERLY CONTRIBUTIONS REQUIRED.— 

15 ‘‘(1) IN GENERAL.—If a CSEC plan which has 

16 a funded current liability percentage for the pre17 ceding plan year of less than 100 percent fails to 

18 pay the full amount of a required installment for the 

19 plan year, then the rate of interest charged to the 

20 funding standard account under subsection (b)(5) 

21 with respect to the amount of the underpayment for 

22 the period of the underpayment shall be equal to the 

23 greater of— 


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1 ‘‘(A) 175 percent of the Federal mid-term 

2 rate (as in effect under section 1274 for the 1st 

3 month of such plan year), or 

4 ‘‘(B) the rate of interest used under the 

5 plan in determining costs. 

6 ‘‘(2) AMOUNT OF UNDERPAYMENT, PERIOD OF

7 UNDERPAYMENT.—For purposes of paragraph (1)— 

8 ‘‘(A) AMOUNT.—The amount of the under9 payment shall be the excess of— 

10 ‘‘(i) the required installment, over 

11 ‘‘(ii) the amount (if any) of the in12 stallment contributed to or under the plan 

13 on or before the due date for the install14 ment. 

15 ‘‘(B) PERIOD OF UNDERPAYMENT.—The 

16 period for which interest is charged under this 

17 subsection with regard to any portion of the un18 derpayment shall run from the due date for the 

19 installment to the date on which such portion is 

20 contributed to or under the plan (determined 

21 without regard to subsection (c)(9)). 

22 ‘‘(C) ORDER OF CREDITING CONTRIBU23 TIONS.—For purposes of subparagraph (A)(ii), 

24 contributions shall be credited against unpaid 


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1 required installments in the order in which such 

2 installments are required to be paid. 

3 ‘‘(3) NUMBER OF REQUIRED INSTALLMENTS; 

4 DUE DATES.—For purposes of this subsection— 

5 ‘‘(A) PAYABLE IN 4 INSTALLMENTS.— 

6 There shall be 4 required installments for each 

7 plan year. 

8 ‘‘(B) TIME FOR PAYMENT OF INSTALL9 MENTS.— 

‘‘In the case of the following 

required installments: The due date is: 

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

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

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

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

10 ‘‘(4) AMOUNT OF REQUIRED INSTALLMENT.— 

11 For purposes of this subsection— 

12 ‘‘(A) IN GENERAL.—The amount of any 

13 required installment shall be 25 percent of the 

14 required annual payment. 

15 ‘‘(B) REQUIRED ANNUAL PAYMENT.—For 

16 purposes of subparagraph (A), the term ‘re17 quired annual payment’ means the lesser of— 

18 ‘‘(i) 90 percent of the amount re19 quired to be contributed to or under the 

20 plan by the employer for the plan year 


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1 under section 412 (without regard to any 

2 waiver under subsection (c) thereof), or 

3 ‘‘(ii) 100 percent of the amount so re4 quired for the preceding plan year. 

5 Clause (ii) shall not apply if the preceding plan 

6 year was not a year of 12 months. 

7 ‘‘(5) LIQUIDITY REQUIREMENT.— 

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

9 paragraph applies shall be treated as failing to 

10 pay the full amount of any required installment 

11 to the extent that the value of the liquid assets 

12 paid in such installment is less than the liquid13 ity shortfall (whether or not such liquidity 

14 shortfall exceeds the amount of such install15 ment required to be paid but for this para16 graph). 

17 ‘‘(B) PLANS TO WHICH PARAGRAPH AP18 PLIES.—This paragraph shall apply to a CSEC 

19 plan other than a plan described in section 

20 412(l)(6)(A) (as in effect on the day before the 

21 enactment of the Pension Protection Act of 

22 2006) which— 

23 ‘‘(i) is required to pay installments 

24 under this subsection for a plan year, and 


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

2 quarter during such plan year. 

3 ‘‘(C) PERIOD OF UNDERPAYMENT.—For 

4 purposes of paragraph (1), any portion of an 

5 installment that is treated as not paid under 

6 subparagraph (A) shall continue to be treated 

7 as unpaid until the close of the quarter in 

8 which the due date for such installment occurs. 

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

10 amount of any required installment is increased 

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

12 shall such increase exceed the amount which, 

13 when added to prior installments for the plan 

14 year, is necessary to increase the funded cur15 rent liability percentage (taking into account 

16 the expected increase in current liability due to 

17 benefits accruing during the plan year) to 100 

18 percent. 

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

20 paragraph: 

21 ‘‘(i) LIQUIDITY SHORTFALL.—The 

22 term ‘liquidity shortfall’ means, with re23 spect to any required installment, an 

24 amount equal to the excess (as of the last 

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1 ment is made) of the base amount with re2 spect to such quarter over the value (as of 

3 such last day) of the plan’s liquid assets. 

4 ‘‘(ii) BASE AMOUNT.— 

5 ‘‘(I) IN GENERAL.—The term 

6 ‘base amount’ means, with respect to 

7 any quarter, an amount equal to 3 

8 times the sum of the adjusted dis9 bursements from the plan for the 12 

10 months ending on the last day of such 

11 quarter. 

12 ‘‘(II) SPECIAL RULE.—If the 

13 amount determined under subclause 

14 (I) exceeds an amount equal to 2 

15 times the sum of the adjusted dis16 bursements from the plan for the 36 

17 months ending on the last day of the 

18 quarter and an enrolled actuary cer19 tifies to the satisfaction of the Sec20 retary that such excess is the result of 

21 nonrecurring circumstances, the base 

22 amount with respect to such quarter 

23 shall be determined without regard to 

24 amounts related to those nonrecurring 

25 circumstances. 


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1 ‘‘(iii) DISBURSEMENTS FROM THE

2 PLAN.—The term ‘disbursements from the 

3 plan’ means all disbursements from the 

4 trust, including purchases of annuities, 

5 payments of single sums and other bene6 fits, and administrative expenses. 

7 ‘‘(iv) ADJUSTED DISBURSEMENTS.— 

8 The term ‘adjusted disbursements’ means 

9 disbursements from the plan reduced by 

10 the product of— 

11 ‘‘(I) the plan’s funded current li12 ability percentage for the plan year, 

13 and 

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

15 annuities, payments of single sums, 

16 and such other disbursements as the 

17 Secretary shall provide in regulations. 

18 ‘‘(v) LIQUID ASSETS.—The term ‘liq19 uid assets’ means cash, marketable securi20 ties and such other assets as specified by 

21 the Secretary in regulations. 

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

23 means, with respect to any required install24 ment, the 3-month period preceding the 


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1 month in which the due date for such in2 stallment occurs. 

3 ‘‘(F) REGULATIONS.—The Secretary may 

4 prescribe such regulations as are necessary to 

5 carry out this paragraph. 

6 ‘‘(6) FISCAL YEARS AND SHORT YEARS.— 

7 ‘‘(A) FISCAL YEARS.—In applying this 

8 subsection to a plan year beginning on any date 

9 other than January 1, there shall be substituted 

10 for the months specified in this subsection, the 

11 months which correspond thereto. 

12 ‘‘(B) SHORT PLAN YEAR.—This subsection 

13 shall be applied to plan years of less than 12 

14 months in accordance with regulations pre15 scribed by the Secretary. 

16 ‘‘(g) IMPOSITION OF LIEN WHERE FAILURE TO

17 MAKE REQUIRED CONTRIBUTIONS.— 

18 ‘‘(1) IN GENERAL.—In the case of a plan to 

19 which this section applies, if— 

20 ‘‘(A) any person fails to make a required 

21 installment under subsection (f) or any other 

22 payment required under this section before the 

23 due date for such installment or other payment, 

24 and 


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1 ‘‘(B) the unpaid balance of such install2 ment or other payment (including interest), 

3 when added to the aggregate unpaid balance of 

4 all preceding such installments or other pay5 ments for which payment was not made before 

6 the due date (including interest), exceeds 

7 $1,000,000, 

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

9 amount determined under paragraph (3) upon all 

10 property and rights to property, whether real or per11 sonal, belonging to such person and any other per12 son who is a member of the same controlled group 

13 of which such person is a member. 

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

15 This subsection shall apply to a CSEC plan for any 

16 plan year for which the funded current liability per17 centage of such plan is less than 100 percent. This 

18 subsection shall not apply to any plan to which sec19 tion 4021 of the Employee Retirement Income Secu20 rity Act of 1974 does not apply (as such section is 

21 in effect on the date of the enactment of the Retire22 ment Protection Act of 1994). 

23 ‘‘(3) AMOUNT OF LIEN.—For purposes of para24 graph (1), the amount of the lien shall be equal to 

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1 ments and other payments required under this sec2 tion (including interest)— 

3 ‘‘(A) for plan years beginning after 1987, 

4 and 

5 ‘‘(B) for which payment has not been 

6 made before the due date. 

7 ‘‘(4) NOTICE OF FAILURE; LIEN.— 

8 ‘‘(A) NOTICE OF FAILURE.—A person 

9 committing a failure described in paragraph (1) 

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

12 due date for the required installment or other 

13 payment. 

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

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

16 the required installment or other payment and 

17 shall continue until the last day of the first plan 

18 year in which the plan ceases to be described in 

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

20 run without regard to whether such plan con21 tinues to be described in paragraph (2) during 

22 the period referred to in the preceding sentence. 

23 ‘‘(C) CERTAIN RULES TO APPLY.—Any 

24 amount with respect to which a lien is imposed 

25 under paragraph (1) shall be treated as taxes 


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1 due and owing the United States and rules 

2 similar to the rules of subsections (c), (d), and 

3 (e) of section 4068 of the Employee Retirement 

4 Income Security Act of 1974 shall apply with 

5 respect to a lien imposed by subsection (a) and 

6 the amount with respect to such lien. 

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

8 paragraph (1) may be perfected and enforced only 

9 by the Pension Benefit Guaranty Corporation, or at 

10 the direction of the Pension Benefit Guaranty Cor11 poration, by the contributing sponsor (or any mem12 ber of the controlled group of the contributing spon13 sor). 

14 ‘‘(6) DEFINITIONS.—For purposes of this sub15 section— 

16 ‘‘(A) DUE DATE; REQUIRED INSTALL17 MENT.—The terms ‘due date’ and ‘required in18 stallment’ have the meanings given such terms 

19 by subsection (f), except that in the case of a 

20 payment other than a required installment, the 

21 due date shall be the date such payment is re22 quired to be made under this section. 

23 ‘‘(B) CONTROLLED GROUP.—The term 

24 ‘controlled group’ means any group treated as 


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

2 (m), and (o) of section 414. 

3 ‘‘(h) CURRENT LIABILITY.—For purposes of this sec4 tion— 

5 ‘‘(1) IN GENERAL.—The term ‘current liability’ 

6 means all liabilities to employees and their bene7 ficiaries under the plan. 

8 ‘‘(2) TREATMENT OF UNPREDICTABLE CONTIN9 GENT EVENT BENEFITS.— 

10 ‘‘(A) IN GENERAL.—For purposes of para11 graph (1), any unpredictable contingent event 

12 benefit shall not be taken into account until the 

13 event on which the benefit is contingent occurs. 

14 ‘‘(B) UNPREDICTABLE CONTINGENT

15 EVENT BENEFIT.—The term ‘unpredictable 

16 contingent event benefit’ means any benefit 

17 contingent on an event other than— 

18 ‘‘(i) age, service, compensation, death, 

19 or disability, or 

20 ‘‘(ii) an event which is reasonably and 

21 reliably predictable (as determined by the 

22 Secretary). 

23 ‘‘(3) INTEREST RATE AND MORTALITY ASSUMP24 TIONS USED.— 


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1 ‘‘(A) INTEREST RATE.—The rate of inter2 est used to determine current liability under 

3 this section shall be the third segment rate de4 termined under section 430(h)(2)(C). 

5 ‘‘(B) MORTALITY TABLES.— 

6 ‘‘(i) COMMISSIONERS’ STANDARD

7 TABLE.—In the case of plan years begin8 ning before the first plan year to which the 

9 first tables prescribed under clause (ii) 

10 apply, the mortality table used in deter11 mining current liability under this sub12 section shall be the table prescribed by the 

13 Secretary which is based on the prevailing 

14 commissioners’ standard table (described 

15 in section 807(d)(5)(A)) used to determine 

16 reserves for group annuity contracts issued 

17 on January 1, 1993. 

18 ‘‘(ii) SECRETARIAL AUTHORITY.—The 

19 Secretary may by regulation prescribe for 

20 plan years beginning after December 31, 

21 1999, mortality tables to be used in deter22 mining current liability under this sub23 section. Such tables shall be based upon 

24 the actual experience of pension plans and 

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1 scribing such tables, the Secretary shall 

2 take into account results of available inde3 pendent studies of mortality of individuals 

4 covered by pension plans. 

5 ‘‘(iii) PERIODIC REVIEW.—The Sec6 retary shall periodically (at least every 5 

7 years) review any tables in effect under 

8 this subsection and shall, to the extent the 

9 Secretary determines necessary, by regula10 tion update the tables to reflect the actual 

11 experience of pension plans and projected 

12 trends in such experience. 

13 ‘‘(C) SEPARATE MORTALITY TABLES FOR

14 THE DISABLED.—Notwithstanding subpara15 graph (B)— 

16 ‘‘(i) IN GENERAL.—In the case of 

17 plan years beginning after December 31, 

18 1995, the Secretary shall establish mor19 tality tables which may be used (in lieu of 

20 the tables under subparagraph (B)) to de21 termine current liability under this sub22 section for individuals who are entitled to 

23 benefits under the plan on account of dis24 ability. The Secretary shall establish sepa25 rate tables for individuals whose disabilVerDate Mar 15 2010 02:55 Jul 17, 2013 Jkt 029200 PO 00000 Frm 00075 Fmt 6652 Sfmt 6201 E:\BILLS\S1302.IS S1302

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1 ities occur in plan years beginning before 

2 January 1, 1995, and for individuals 

3 whose disabilities occur in plan years be4 ginning on or after such date. 

5 ‘‘(ii) SPECIAL RULE FOR DISABILITIES

6 OCCURRING AFTER 1994.—In the case of 

7 disabilities occurring in plan years begin8 ning after December 31, 1994, the tables 

9 under clause (i) shall apply only with re10 spect to individuals described in such sub11 clause who are disabled within the meaning 

12 of title II of the Social Security Act and 

13 the regulations thereunder. 

14 ‘‘(4) CERTAIN SERVICE DISREGARDED.— 

15 ‘‘(A) IN GENERAL.—In the case of a par16 ticipant to whom this paragraph applies, only 

17 the applicable percentage of the years of service 

18 before such individual became a participant 

19 shall be taken into account in computing the 

20 current liability of the plan. 

21 ‘‘(B) APPLICABLE PERCENTAGE.—For 

22 purposes of this subparagraph, the applicable 

23 percentage shall be determined as follows: 

‘‘If the years of participation 

are: 

The applicable percentage 

is: 

1 .................................................................... 20


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‘‘If the years of participation 

are: 

The applicable percentage 

is: 

2 .................................................................... 40

3 .................................................................... 60

4 .................................................................... 80

5 or more ...................................................... 100. 

1 ‘‘(C) PARTICIPANTS TO WHOM PARAGRAPH

2 APPLIES.—This subparagraph shall apply to 

3 any participant who, at the time of becoming a 

4 participant— 

5 ‘‘(i) has not accrued any other benefit 

6 under any defined benefit plan (whether or 

7 not terminated) maintained by the em8 ployer or a member of the same controlled 

9 group of which the employer is a member, 

10 ‘‘(ii) who first becomes a participant 

11 under the plan in a plan year beginning 

12 after December 31, 1987, and 

13 ‘‘(iii) has years of service greater than 

14 the minimum years of service necessary for 

15 eligibility to participate in the plan. 

16 ‘‘(D) ELECTION.—An employer may elect 

17 not to have this subparagraph apply. Such an 

18 election, once made, may be revoked only with 

19 the consent of the Secretary. 

20 ‘‘(i) FUNDED CURRENT LIABILITY PERCENTAGE.— 

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1 ability percentage’ means, with respect to any plan year, 

2 the percentage which— 

3 ‘‘(1) the value of the plan’s assets determined 

4 under subsection (c)(2), is of 

5 ‘‘(2) the current liability under the plan. 

6 ‘‘(j) TRANSITION.—The Secretary may prescribe such 

7 rules as are necessary or appropriate with respect to the 

8 transition of a CSEC plan from the application of section 

9 430 to the application of this section.’’. 

10 (2) CSEC PLANS.—Section 413 of the Internal 

11 Revenue Code of 1986 is amended by adding at the 

12 end thereof the following new subsection: 

13 ‘‘(d) CSEC PLANS.—Notwithstanding any other pro14 vision of this section, in the case of a CSEC plan— 

15 ‘‘(1) FUNDING.—The requirements of section 

16 412 shall be determined as if all participants in the 

17 plan were employed by a single employer. 

18 ‘‘(2) APPLICATION OF PROVISIONS.—Para19 graphs (1), (2), (3), and (5) of subsection (c) shall 

20 apply.’’. 

21 (3) SEPARATE RULES FOR CSEC PLANS.— 

22 (A) IN GENERAL.—Paragraph (2) of sec23 tion 412(a) of the Internal Revenue Code of 

24 1986 is amended by striking ‘‘and’’ at the end 

25 of subparagraph (B), by striking the period at 


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1 the end of subparagraph (C) and inserting ‘‘, 

2 and’’, and by inserting at the end thereof the 

3 following new subparagraph: 

4 ‘‘(D) in the case of a CSEC plan, the em5 ployers make contributions to or under the plan 

6 for any plan year which, in the aggregate, are 

7 sufficient to ensure that the plan does not have 

8 an accumulated funding deficiency under sec9 tion 433 as of the end of the plan year.’’. 

10 (B) CONFORMING AMENDMENTS.—Section 

11 412 of the Internal Revenue Code of 1986 is 

12 amended by— 

13 (i) striking ‘‘multiemployer plan’’ in 

14 paragraph (A) of subsection (a)(2), in 

15 clause (i) of subsection (c)(1)(B), in the 

16 first place it appears in clause (i) of sub17 section (c)(1)(A), and in the last place it 

18 appears in paragraph (2) of subsection (d), 

19 and inserting ‘‘multiemployer plan or a 

20 CSEC plan’’, 

21 (ii) striking ‘‘430(j)’’ in paragraph (1) 

22 of subsection (b) and inserting ‘‘430(j) or 

23 under 433(f)’’, 

24 (iii)(I) striking ‘‘and’’ at the end of 

25 clause (i) of subsection (c)(1)(B), 


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1 (II) striking the period at the end of 

2 clause (ii) of subsection (c)(1)(B), and in3 serting ‘‘, and’’, and 

4 (III) inserting the following new 

5 clause after clause (ii) of subsection 

6 (c)(1)(B): 

7 ‘‘(iii) in the case of a CSEC plan, the 

8 funding standard account shall be credited 

9 under section 433(b)(3)(C) with the 

10 amount of the waived funding deficiency 

11 and such amount shall be amortized as re12 quired under section 433(b)(2)(C).’’, 

13 (iv) striking ‘‘under paragraph (1)’’ in 

14 clause (i) of subsection (c)(4)(A) and in15 serting ‘‘under paragraph (1) or for grant16 ing an extension under section 433(d)’’, 

17 (v) striking ‘‘waiver under this sub18 section’’ in subparagraph (B) of subsection 

19 (c)(4) and inserting ‘‘waiver under this 

20 subsection or an extension under 433(d)’’, 

21 (vi) striking ‘‘waiver or modification’’ 

22 in subclause (I) of subsection (c)(4)(B)(i) 

23 and inserting ‘‘waiver, modification, or ex24 tension’’, 


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1 (vii) striking ‘‘waivers’’ in the heading 

2 of subsection (c)(4)(C) and of clause (ii) of 

3 subsection (c)(4)(C) and inserting ‘‘waivers 

4 or extensions’’, 

5 (viii) striking ‘‘431(d)’’ in subpara6 graph (A) of subsection (c)(7) and in para7 graph (2) of subsection (d) and inserting 

8 ‘‘section 431(d) or section 433(d)’’, 

9 (ix) striking ‘‘and’’ at the end of sub10 clause (I) of subsection (c)(4)(C)(i) and in11 serting ‘‘or the accumulated funding defi12 ciency under section 433, whichever is ap13 plicable,’’, 

14 (x) striking ‘‘430(e)(2),’’ in subclause 

15 (II) of subsection (c)(4)(C)(i) and inserting 

16 ‘‘430(e)(2) or 433(b)(2)(C), whichever is 

17 applicable, and’’, 

18 (xi) adding immediately after sub19 clause (II) of subsection (c)(4)(C)(i) the 

20 following new subclause: 

21 ‘‘(III) the total amounts not paid 

22 by reason of an extension in effect 

23 under section 433(d),’’, 

24 (xii) striking ‘‘for waivers of’’ in 

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1 serting ‘‘for waivers or extensions with re2 spect to’’, and 

3 (xiii) striking ‘‘431(d)’’ in paragraph 

4 (2) of subsection (d) and inserting ‘‘431(d) 

5 or 433(d), whichever is applicable’’. 

6 (4) BENEFIT RESTRICTIONS.— 

7 (A) IN GENERAL.—Paragraph (29) of sec8 tion 401(a) of the Internal Revenue Code of 

9 1986 is amended by striking ‘‘multiemployer 

10 plan’’ and inserting ‘‘multiemployer plan or a 

11 CSEC plan’’. 

12 (B) CONFORMING CHANGE.—Subsection 

13 (a) of section 436 of the Internal Revenue Code 

14 of 1986 is amended by striking ‘‘single-em15 ployer plan’’ and inserting ‘‘single-employer 

16 plan (other than a CSEC plan)’’. 

17 (C) EFFECTIVE DATE.—Any restriction 

18 under sections 401(a)(29) and 436 of the Inter19 nal Revenue Code of 1986 that is in effect with 

20 respect to a CSEC plan as of the last day of 

21 the last plan year beginning before January 1, 

22 2014, shall cease to apply as of the first day of 

23 the following plan year. 

24 (5) BENEFIT INCREASES.—Subparagraph (C) 

25 of section 401(a)(33) of the Internal Revenue Code 


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1 of 1986 is amended by striking ‘‘multiemployer 

2 plans’’ and inserting ‘‘multiemployer plans or CSEC 

3 plans’’. 

4 SEC. 5. TRANSPARENCY. 

5 (a) NOTICE TO PARTICIPANTS.— 

6 (1) IN GENERAL.—Paragraph (2) of section 

7 101(f) of the Employee Retirement Income Security 

8 Act of 1974 (29 U.S.C. 1021(f)) is amended by add9 ing at the end the following new subparagraph: 

10 ‘‘(E) EFFECT OF CSEC PLAN RULES ON

11 PLAN FUNDING.— 

12 ‘‘(i) IN GENERAL.—In the case of a 

13 CSEC plan, each notice under paragraph 

14 (1) shall include— 

15 ‘‘(I) a statement that different 

16 rules apply to CSEC plans than apply 

17 to single-employer plans, 

18 ‘‘(II) for the first 2 plan years 

19 beginning after December 31, 2013, a 

20 statement that, as a result of changes 

21 in the law made by the Cooperative 

22 and Small Employer Charity Pension 

23 Flexibility Act, the contributions to 

24 the plan may have changed, and 


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1 ‘‘(III) for the first 2 plan years 

2 beginning after December 31, 2013, a 

3 statement that participants and par4 ticipating employers may request a 

5 table which shows (determined both 

6 with and without regard to such dif7 ferent rules) the required minimum 

8 contributions to the plan for the appli9 cable plan year and each of the 2 pre10 ceding plan years. 

11 ‘‘(ii) APPLICABLE PLAN YEAR.—For 

12 purposes of this subparagraph, the term 

13 ‘applicable plan year’ means any plan year 

14 beginning after December 31, 2013, for 

15 which— 

16 ‘‘(I) the plan has a funding 

17 shortfall (as defined in section 

18 303(c)(4)) greater than $1,000,000, 

19 and 

20 ‘‘(II) the plan had 50 or more 

21 participants on any day during the 

22 preceding plan year. 

23 For purposes of any determination under 

24 subclause (II), the aggregation rule under 


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1 the last sentence of section 303(g)(2)(B) 

2 shall apply. 

3 ‘‘(iii) SPECIAL RULE FOR PLAN YEARS

4 BEGINNING BEFORE 2014.—In the case of 

5 a preceding plan year referred to in clause 

6 (i)(III) which begins before January 1, 

7 2014, the information described in such 

8 clause shall be provided only without re9 gard to the different rules applicable to 

10 CSEC plans.’’. 

11 (2) MODEL NOTICE.—The Secretary of Labor 

12 may modify the model notice required to be pub13 lished under section 501(c) of the Pension Protec14 tion Act of 2006 to include the information de15 scribed in section 101(f)(2)(E) of the Employee Re16 tirement Income Security Act of 1974, as added by 

17 this subsection. 

18 (b) NOTICE OF FAILURE TO MEET MINIMUM FUND19 ING STANDARDS.— 

20 (1) PENDING WAIVERS.—Paragraph (2) of sec21 tion 101(d) of the Employee Retirement Income Se22 curity Act of 1974 (29 U.S.C. 1021(d)) is amended 

23 by striking ‘‘303’’ and inserting ‘‘303 or 306’’. 

24 (2) DEFINITIONS.—Paragraph (3) of section 

25 101(d) of the Employee Retirement Income Security 


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1 Act of 1974 (21 U.S.C. 1021(d)) is amended by 

2 striking ‘‘303(j)’’ and inserting ‘‘303(j) or 306(f), 

3 whichever is applicable’’. 

4 (c) ADDITIONAL REPORTING REQUIREMENTS.—Sec5 tion 103 of the Employee Retirement Income Security Act 

6 of 1974 (29 U.S.C. 1023) is amended by adding at the 

7 end the following new subsection: 

8 ‘‘(g) ADDITIONAL INFORMATION WITH RESPECT TO

9 CSEC PLANS.—With respect to any CSEC plan, an an10 nual report under this section for a plan year shall include 

11 a list of participating employers and a good faith estimate 

12 of the percentage of total contributions made by such par13 ticipating employers during the plan year.’’. 

14 SEC. 6. ELECTIONS. 

15 (a) ELECTION NOT TO BE TREATED AS A CSEC 

16 PLAN.— 

17 (1) AMENDMENT TO ERISA.—Subsection (f) of 

18 section 210 of the Employee Retirement Income Se19 curity Act of 1974, as added by section 3, is amend20 ed by adding at the end the following new para21 graph: 

22 ‘‘(3) ELECTION.— 

23 ‘‘(A) IN GENERAL.—If a plan falls within 

24 the definition of a CSEC plan under this sub25 section (without regard to this paragraph), such 


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•S 1302 IS

1 plan shall be a CSEC plan unless the plan 

2 sponsor elects not later than the close of the 

3 first plan year of the plan beginning after De4 cember 31, 2013, not to be treated as a CSEC 

5 plan. An election under the preceding sentence 

6 shall take effect for such plan year and, once 

7 made, may be revoked only with the consent of 

8 the Secretary of the Treasury. 

9 ‘‘(B) SPECIAL RULE.—If a plan described 

10 in subparagraph (A) is treated as a CSEC plan, 

11 section 104 of the Pension Protection Act of 

12 2006, as amended by the Preservation of Ac13 cess to Care for Medicare Beneficiaries and 

14 Pension Relief Act of 2010, shall cease to apply 

15 to such plan as of the first date as of which 

16 such plan is treated as a CSEC plan.’’. 

17 (2) AMENDMENT TO THE CODE.—Section 

18 414(y) of the Internal Revenue Code of 1986, as 

19 added by section 3, is amended by adding at the end 

20 the following new paragraph: 

21 ‘‘(3) ELECTION.— 

22 ‘‘(A) IN GENERAL.—If a plan falls within 

23 the definition of a CSEC plan under this sub24 section (without regard to this paragraph), such 

25 plan shall be a CSEC plan unless the plan 


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1 sponsor elects not later than the close of the 

2 first plan year of the plan beginning after De3 cember 31, 2013, not to be treated as a CSEC 

4 plan. An election under the preceding sentence 

5 shall take effect for such plan year and, once 

6 made, may be revoked only with the consent of 

7 the Secretary. 

8 ‘‘(B) SPECIAL RULE.—If a plan described 

9 in subparagraph (A) is treated as a CSEC plan, 

10 section 104 of the Pension Protection Act of 

11 2006, as amended by the Preservation of Ac12 cess to Care for Medicare Beneficiaries and 

13 Pension Relief Act of 2010, shall cease to apply 

14 to such plan as of the first date as of which 

15 such plan is treated as a CSEC plan.’’. 

16 (b) ELECTION TO CEASE TO BE TREATED AS AN

17 ELIGIBLE CHARITY PLAN.— 

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

19 104 of the Pension Protection Act of 2006, as added 

20 by section 202 of the Preservation of Access to Care 

21 for Medicare Beneficiaries and Pension Relief Act of 

22 2010, is amended by— 

23 (A) striking ‘‘For purposes of’’ and insert24 ing ‘‘(1) IN GENERAL.—For purposes of’’, and 

25 (B) adding at the end the following: 


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1 ‘‘(2) ELECTION NOT TO BE AN ELIGIBLE CHAR2 ITY PLAN.—A plan sponsor may elect for a plan to 

3 cease to be treated as an eligible charity plan for 

4 plan years beginning after December 31, 2013. Such 

5 election shall be made at such time and in such form 

6 and manner as shall be prescribed by the Secretary 

7 of the Treasury. Any such election may be revoked 

8 only with the consent of the Secretary of the Treas9 ury. 

10 ‘‘(3) ELECTION TO USE FUNDING OPTIONS

11 AVAILABLE TO OTHER PLAN SPONSORS.— 

12 ‘‘(A) A plan sponsor that makes the elec13 tion described in paragraph (2) may elect for a 

14 plan to apply the rules described in subpara15 graphs (B), (C), and (D) for plan years begin16 ning after December 31, 2013. Such election 

17 shall be made at such time and in such form 

18 and manner as shall be prescribed by the Sec19 retary of the Treasury. Any such election may 

20 be revoked only with the consent of the Sec21 retary of the Treasury. 

22 ‘‘(B) Under the rules described in this sub23 paragraph, for the first plan year beginning 

24 after December 31, 2013, a plan has— 


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1 ‘‘(i) an 11-year shortfall amortization 

2 base, 

3 ‘‘(ii) a 12-year shortfall amortization 

4 base, and 

5 ‘‘(iii) a 7-year shortfall amortization 

6 base. 

7 ‘‘(C) Under the rules described in this sub8 paragraph, section 303(c)(2)(A) and (B) of the 

9 Employee Retirement Income Security Act of 

10 1974, and section 430(c)(2)(A) and (B) of the 

11 Internal Revenue Code of 1986 shall be applied 

12 by— 

13 ‘‘(i) in the case of an 11-year shortfall 

14 amortization base, substituting ‘11-plan15 year period’ for ‘7-plan-year period’ wher16 ever such phrase appears, and 

17 ‘‘(ii) in the case of a 12-year shortfall 

18 amortization base, substituting ‘12-plan19 year period’ for ‘7-plan-year period’ wher20 ever such phrase appears. 

21 ‘‘(D) Under the rules described in this sub22 paragraph, section 303(c)(7) of the Employee 

23 Retirement Income Security Act of 1974, and 

24 section 430(c)(7) of the Internal Revenue Code 

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1 tion has been made under subparagraph (A). 

2 Such provisions shall apply in the following 

3 manner: 

4 ‘‘(i) The first plan year beginning 

5 after December 31, 2013, shall be treated 

6 as an election year, and no other plan 

7 years shall be so treated. 

8 ‘‘(ii) All references in section 

9 303(c)(7) of such Act and section 

10 430(c)(7) of such Code to ‘February 28, 

11 2010’ or ‘March 1, 2010’ shall be treated 

12 as references to ‘February 28, 2013’ or 

13 ‘March 1, 2013’, respectively. 

14 ‘‘(E) For purposes of this paragraph, the 

15 11-year amortization base is an amount, deter16 mined for the first plan year beginning after 

17 December 31, 2013, equal to the unamortized 

18 principal amount of the shortfall amortization 

19 base (as defined in section 303(c)(3) of the Em20 ployee Retirement Income Security Act of 1974 

21 and section 430(c)(3) of the Internal Revenue 

22 Code of 1986) that would have applied to the 

23 plan for the first plan beginning after Decem24 ber 31, 2009, if— 


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1 ‘‘(i) the plan had never been an eligi2 ble charity plan, 

3 ‘‘(ii) the plan sponsor had made the 

4 election described in section 

5 303(c)(2)(D)(i) of the Employee Retire6 ment Income Security Act of 1974 and in 

7 section 430(c)(2)(D)(i) of the Internal 

8 Revenue Code of 1986 to have section 

9 303(c)(2)(D)(i) of such Act and section 

10 430(c)(2)(D)(iii) of such Code apply with 

11 respect to the shortfall amortization base 

12 for the first plan year beginning after De13 cember 31, 2009, and 

14 ‘‘(iii) no event had occurred under 

15 paragraph (6) or (7) of section 303(c) of 

16 such Act or paragraph (6) or (7) of section 

17 430(c) of such Code that, as of the first 

18 day of the first plan year beginning after 

19 December 31, 2013, would have modified 

20 the shortfall amortization base or the 

21 shortfall amortization installments with re22 spect to the first plan year beginning after 

23 December 31, 2009. 

24 ‘‘(F) For purposes of this paragraph, the 

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1 mined for the first plan year beginning after 

2 December 31, 2013, equal to the unamortized 

3 principal amount of the shortfall amortization 

4 base (as defined in section 303(c)(3) of the Em5 ployee Retirement Income Security Act of 1974 

6 and section 430(c)(3) of the Internal Revenue 

7 Code of 1986) that would have applied to the 

8 plan for the first plan beginning after Decem9 ber 31, 2010, if— 

10 ‘‘(i) the plan had never been an eligi11 ble charity plan, 

12 ‘‘(ii) the plan sponsor had made the 

13 election described in section 

14 303(c)(2)(D)(i) of the Employee Retire15 ment Income Security Act of 1974 and in 

16 section 430(c)(2)(D)(i) of the Internal 

17 Revenue Code of 1986 to have section 

18 303(c)(2)(D)(i) of such Act and section 

19 430(c)(2)(D)(iii) of such Code apply with 

20 respect to the shortfall amortization base 

21 for the first plan year beginning after De22 cember 31, 2010, and 

23 ‘‘(iii) no event had occurred under 

24 paragraph (6) or (7) of section 303(c) of 

25 such Act or paragraph (6) or (7) of section 


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1 430(c) of such Code that, as of the first 

2 day of the first plan year beginning after 

3 December 31, 2013, would have modified 

4 the shortfall amortization base or the 

5 shortfall amortization installments with re6 spect to the first plan year beginning after 

7 December 31, 2010. 

8 ‘‘(G) For purposes of this paragraph, the 

9 7-year shortfall amortization base is an amount, 

10 determined for the first plan year beginning 

11 after December 31, 2013, equal to— 

12 ‘‘(i) the shortfall amortization base for 

13 the first plan year beginning after Decem14 ber 31, 2013, without regard to this para15 graph, minus 

16 ‘‘(ii) the sum of the 11-year shortfall 

17 amortization base and the 12-year shortfall 

18 amortization base.’’. 

19 (c) DEEMED ELECTION.—For purposes of sections 

20 4(b)(2) and 4021(b)(3) of the Employee Retirement In21 come Security Act of 1974, and for all other purposes, 

22 a plan shall be deemed to have made an irrevocable elec23 tion under section 410(d) of the Internal Revenue Code 

24 of 1986 if— 


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1 (1) the plan was established before January 1, 

2 2014; 

3 (2) the plan falls within the definition of a 

4 CSEC plan; 

5 (3) the plan sponsor does not make an election 

6 under section 210(f)(3)(B)(i) of the Employee Re7 tirement Income Security Act of 1974 and section 

8 414(y)(3)(B)(i) of the Internal Revenue Code of 

9 1986, as added by this Act; and 

10 (4) the plan, plan sponsor, administrator, or fi11 duciary remits one or more premium payments for 

12 the plan to the Pension Benefit Guaranty Corpora13 tion for a plan year beginning after December 31, 

14 2013. 

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

16 this section shall apply as of the date of enactment of this 

17 Act. 

18 SEC. 7. PENSION INSURANCE PROGRAM MODIFICATIONS. 

19 (a) FLAT-RATE PREMIUM.—Subparagraph (A) of 

20 section 4006(a)(3) of the Employee Retirement Income 

21 Security Act of 1974 (29 U.S.C. 1306(a)(3)) is amend22 ed— 

23 (1) in clause (i)— 

24 (A) by striking ‘‘in the case of a single-em25 ployer plan’’ and inserting ‘‘except as provided 


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1 in clause (vi), in the case of a single-employer 

2 plan’’; and 

3 (B) in subclause (III), by striking the pe4 riod and inserting a comma; 

5 (2) in clause (iv), by striking ‘‘or’’ at the end; 

6 (3) in clause (v), by striking the period at the 

7 end and inserting ‘‘, or’’; and 

8 (4) by adding at the end thereof the following 

9 new clause: 

10 ‘‘(vi) in the case of a CSEC plan (as 

11 defined in section 210(f)), an amount for 

12 each individual who is a participant in 

13 such plan during the plan year equal to the 

14 sum of the additional premium (if any) de15 scribed under subparagraph (K) and 

16 $42.’’. 

17 (b) VARIABLE-RATE PREMIUM.—Paragraph (3) of 

18 section 4006(a) of such Act (29 U.S.C. 1306(a)) is 

19 amended by adding at the end the following: 

20 ‘‘(K)(i) The additional premium deter21 mined under this subparagraph with respect to 

22 any plan for any plan year— 

23 ‘‘(I) shall be an amount equal to the 

24 amount determined under clause (ii) di25 vided by the number of participants in 


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1 such plan as of the close of the preceding 

2 year; and 

3 ‘‘(II) in the case of plan years begin4 ning in a calendar year after 2013, shall 

5 not exceed the dollar amount described in 

6 subparagraph (E)(i)(II) (without the appli7 cation of subparagraph (J)). 

8 ‘‘(ii) The amount determined under this 

9 clause for any plan shall be an amount equal to 

10 $9.00 for each $1,000 (or fraction thereof) of 

11 unfunded vested benefits under the plan as of 

12 the close of the preceding plan year. For this 

13 purpose, the term ‘unfunded vested benefits’ 

14 shall have the meaning given such term under 

15 clauses (iii) and (iv) of subparagraph (E).’’. 

16 (c) STUDY OF CSEC PLANS.— 

17 (1) IN GENERAL.—The Pension Benefit Guar18 anty Corporation shall conduct a study to determine 

19 if there is empirical evidence to support modifying 

20 the premium structure under section 4006(a)(3) of 

21 the Employee Retirement Income Security Act of 

22 1974 (29 U.S.C. 1306(a)(3)(A)) for CSEC plans. 

23 (2) DATA.—The study under paragraph (1) 

24 shall include data with respect to— 


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1 (A) the portion of the Pension Benefit 

2 Guaranty Corporation’s total liabilities that are 

3 attributable to CSEC plans; 

4 (B) the ratio of such portion to the total 

5 of the funding targets of CSEC plans; and 

6 (C) with respect to single-employer plans 

7 other than CSEC plans, the ratio of— 

8 (i) the portion of the Pension Benefit 

9 Guaranty Corporation’s total liabilities 

10 that are attributable to such plans, to 

11 (ii) the total of the funding targets of 

12 such plans. 

13 (3) ESTIMATES.—In carrying out paragraph 

14 (2), the Pension Benefit Guaranty Corporation shall 

15 make such reasonable estimates as are necessary or 

16 appropriate in providing the data described in such 

17 paragraph. 

18 (4) REPORT.—The Pension Benefit Guaranty 

19 Corporation shall report the results of the study con20 ducted under paragraph (1), together with any rec21 ommendations for legislative changes, to the Com22 mittee on Health, Education, Labor, and Pensions 

23 of the Senate and the Committee on Education and 

24 the Workforce of the House of Representatives. 


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1 (5) PARTICIPANT AND PLAN SPONSOR ADVO2 CATE.—The report described in paragraph (4) shall 

3 include a section prepared by the Participant and 

4 Plan Sponsor Advocate of the Pension Benefit Guar5 anty Corporation that includes a statement setting 

6 forth the position of such Participant and Plan 

7 Sponsor Advocate on the process underlying the 

8 study and the conclusions set forth in the report. 

9 (6) DEFINITIONS.—In this section— 

10 (A) the term ‘‘CSEC plan’’ has the mean11 ing given such term in section 210 of the Em12 ployee Retirement Income Security Act of 1974 

13 (as added by section 3); and 

14 (B) the term ‘‘funding target’’ has the 

15 meaning given that term in section 303(d)(1) of 

16 such Act (29 U.S.C. 1083(d)(1)). 

17 SEC. 8. SPONSOR EDUCATION AND ASSISTANCE. 

18 (a) DEFINITION.—In this section, the term ‘‘CSEC 

19 plan’’ has the meaning given that term in subsection (f)(1) 

20 of section 210 of the Employee Retirement Income Secu21 rity Act of 1974 (as added by this Act). 

22 (b) EDUCATION.—Not later than 6 months after the 

23 date of the enactment of this Act, the Pension Benefit 

24 Guaranty Corporation shall take reasonable steps to make 

25 the sponsors of existing CSEC plans aware of— 


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1 (1) the changes to the Employee Retirement In2 come Security Act of 1974 made by this Act; and 

3 (2) the help and assistance available through 

4 the Participant and Plan Sponsor Advocate estab5 lished under section 4004 of such Act (29 U.S.C. 

6 1304). 

7 SEC. 9. EFFECTIVE DATE. 

8 Unless otherwise specified in this Act, the provisions 

9 of this Act shall apply to years beginning after December 

10 31, 2013. 

Æ 


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